Management Information Systems - Laudon - Summary

Management  Information  Systems  (MIS)    

Chapter  1   Information  Systems  in  Business  today  

  NBA  makes  a  slam  dunk  with  information  technology   • Problem:  no  hard  data  usable  in  decision  making  processes,  costly  and   competitive  market   • Solutions:  new  system  designed  to  collect  and  organize  data  using  video  clips,   video  tagging  with  descriptive  categories,  streaming   • =  Innovation  and  improving     Business  Challenge  à  management  +  organization  +  technology  à  Informaton  System   à  Business  Solution    

    Role  of  IS  in  business  today     Capital  investment  in  IT,  hardware,  software,  communication  equipment,  grew  from   32%  to  52%  of  all  invested  capital  between  1980  and  2009  because  better  ROI  (return   on  investment).  As  manager  know  how  to  invest  this  money  wisely  on  IS  and  technology.       How  are  IS  transforming  business?   • Increased  wireless  technology  use,  web  sites   • Increased  business  use  of  web  2.0  tech   • Cloud  computing,  mobile  digital  platform  allow  more  distributed  word,  decision-­‐ making,  and  collaboration   • Mobile  phones,  e-­‐mail,  online  conferencing  (5  billion  cell  phone  subscribers   worldwide)     Why  are  more  parcels  distributed?   • Just  in  time  production,  Lean  production,  As  little  inventory  as  possible  

• Resond  to  rapidly  changing  customer  demand   • Get  to  market  faster,  reduce  overhead  costs   A  lot  of  digital  information  to  store  and  handle.   • Get  news  online,  reading  and  writing  blogs,  social  networking   • Connect  employees,  customers,  managers  worldwide   • Internet  advertising  and  e-­‐commerce  continue  to  expand   • Laws  requiring  to  store  this  data  for  several  years    

  3  interrelated  changes  in  technology  (accuracy,  speed,  richness  of  decision  making)   1. Emerging  mobile  digital  platform  (desktop  PC  à  mobile  device  to  coordinate   work,  communicate,  provide  info  for  decision  making)   2. Growth  of  online  software  as  a  service  /SAAS  (wikis,  Web  2.0,  collaboration  tools   à  better  and  faster  decisions,  online  teams  and  projects    

 

3. Growth  in  cloud  computing  (rely  on  telework,  remote  work,  distributed  decision   making,  outsource,  collaborate  with  suppliers  and  customers  to  create  new   products   Globalization  opportunities  and  challenges     • Internet  has  drastically  reduced  costs  of  operating  on  global  scale   • Communication  is  instant  and  virtually  free  (e.g.  price  information  24/7)   • Presents  both  challenges  and  opportunities  (outsourcing,  offshoring,  low  wages,   fight  for  jobs  and  products,  but  expanding  employment  in  IS,  accelerated   development  of  new  IS)   • “The  world  is  flat  –  The  globalized  world  in  the  21st  century”  by  Thomas  L.   Friedman  à  10  “Flatteners”  (advantage  developed  countries  =  past)   o Collapse  of  Berlin  Wall   o Netscape  (first  browser  of  this  company)  and  the  Internet  revolution,   connectivity  through  fiber-­‐optic  cables   o Workflow  software   o Uploading   o Open  sourcing   o Outsourcing   o Offshoring  (e.g.  India,  cheaper,  better  know-­‐how)   o Supply  chaining,  insourcing   o In-­‐forming   o The  Steroids   • Employee:  high  level  skills,  firm:  choice  of  markets   • IS  enables  globalization     In  the  emerging  fully  digital  firm   • Business  relationships  are  digitally  enabled  and  mediated   • Core  business  processes  are  accomplished  through  digital  networks   o Business  processes  =  logically  related  tasks/behaviors  developed  over   time  to  produce  specific  business  results,  e.g.  creating  an  marketing  plan   • Key  corporate  assets  (property,  financial,  human  assets)  are  managed  digitally     Greater  flexibility  in  organization  and  management  (time  shifting  =  24/7,  space  shifting   =  global  workplace)  =  anytime/anywhere,  flexibility    

IT  is  a  foundation  of  doing  business  in  the  21st  century.  

 

 

Growing  interdependence  between  ability  to  use  IT  and  ability  to  implement  corporate   strategies  and  achieve  corp.  goals.  (fig.  1.2)   6  strategic  business  objectives   1. Operational  excellence  (efficiency,  productivity)  à  Walmart  RetailLink     2. New  products,  services,  business  models  (how  a  company  produces,  delivers  and   sells)  à  iPod,  iPhone   3. Customer  supplier  intimacy  (engaging  à  returning,  e.g.  track  of  preferences  in  a   database,  JIT,  lowers  costs)   4. Improved  decision  making  (right  information,  right  time  instead  of   forecasts/luck  à  Verizon  digital  dashboard  for  managers   5. Competitive  advantage  (faster,  cheaper,  superior,  real  time  responses)   6. Survival  (necessity)  à  ATM     Depending  on  type  and  quality  of  IS!     IT=  All  the  hardware  +  software  to  achieve  business  objectives     IS  =     • Set  of  interrelated  components;     • Collect,  process,  store,  and  distribute  information;  produce  new  information;   • Support  decision  making,  coordination,  control;     • Solve  tasks  automatically,  create  new  products,  analyze  problems   • Information  about  significant  people,  places,  things     Information  vs.  data  (fig.  1.3)   • Data  are  streams  of  raw  facts  (supermarket  checkout  counter)   • Information  is  data  shaped  into  meaningful  form  (total  unit  sales  of  dish   detergent,  total  sales  revenue  for  specific  store)     Function  of  an  IS  (fig.  1.4)  

 

Input  (captures  raw  data)  à  Processing  (Classify,  Arrange,  Calculate)  (converts  raw   data  into  meaningful  form)à  Output  (transfers  processed  information  to  people  or   activities  that  use  it)  à  Feedback  (output  returned  to  appropriate  members  of   organization  to  help  evaluate  or  correct  input  stage)     !  Computers  and  Software  are  only  part  of  an  IS!  (  =  technical  foundation  and  tools)    

Perspectives  n  IS    (fig.  1.5)  =  IS  literacy   • 1. 2. 3.

Computer  literacy  is  only  knowledge  of  IT   Organizations   Technology   Management  

  Organizational  dimension   • IS  =  integral  part   • Key  elements:  people,  structure,  business  processes,  politics,  culture   • Different  levels/specialties,  hierarchy  or  pyramid  structure   o Upper  level:  managerial,  professional,  technical  employees   o Lower  level:  operational  personnel   o Senior  Mgt.:  long-­‐term  strategic  decisions,  financial  performance   o Middle  Mgt.:  carries  out  programs  and  plans   o Operational  Mgt.:  monitoring  daily  activities    

 

  • • • •

Separation  business  functions   Unique  business  processes  with  formal  rules,  developed  over  time  to  guide   employees  (IS  automate  many  business  processes)   Unique  culture  =  fundamental  set  of  assumptions,  values,  ways  to  do  things   IS  come  out  of  organizational  conflicts  

Management   • Make  decisions,  formulate  action  plans,  solve  organizational  problems   • Perceive  business  challenges  ,  strategy  to  respond,  allocate  resources   • Creative  work  driven  by  knowledge  and  information  (new  products,  recreate   organization))     Information  Technology  (IT)   • Computer  hardware  (input,  processing,  output,  several  linked  devices)   • Computer  software  (details,  preprogrammed  instructions  to  control/coordinate)   • Data  management  technology  (sotware  governing  organization  of  data  and   storage  media)   • Networking  and  telecommunications  technology  (devices  and  software  linking   hardware  and  transferring  data)   o Network  links  computers  to  share  data  and  resources  (e.g.  printer)   o Internet  =  network  of  networks  (technology  platform)   o WWW  =  service  provide  by  Internet   • All  these  technologies  =  resources  =  IT  infrastructure   • IT  infrastructure  =  foundation  to  build  IS  (carefully  design  and  manage)     UPS  Package  Tracking  System   • Organized  in  sales  and  production  functions  (delivery  is  the  product/service)   • Procedures  for  identifying  packages,  inventory,  tracking  en  route,  status  reports   • Also  provide  information  to  satisfy  needs  of  managers  and  workers   • Trained  to  use  the  system  =  effective  +  efficient   • Management:  monitors  service  level  and  costs  for  promoting  strategy  (low  costs,   high  service)   • Decision  to  use  computer  systems  increase  ease  for  sending  and  updating,   reducing  costs,  increasing  sales   • Technology:  handheld  computers,  bar  code  scanners,  communication  networks,   desktop  PCs,  data  center,  storage  technology,  tracking  software,  software  for   WWW  access    

Business  perspective   • • • •

Investment  because  IS  (instrument)  =  real  economic  corporate  value  to  the   business   ROI  will  be  superior  to  other  investments  (buildings,  machines  etc.)   Increases  in  productivity,  revenues  (à  stock  market  value),  long-­‐term  strategic   positioning  (à  future  revenues)   Decreases  costs  because  of  information  for  better  decisions,  better  execution  of   business  processes.  

  Business  information  value  chain   • Raw  data  acquired  and  transformed  through  stages  that  add  value  to  that   information   • Value  of  information  system  determined  in  part  by  extent  to  which  it  leads  to   better  decisions,  greater  efficiency,  and  higher  profits     An  IS  represents  an  organizational  and  management  solution,  based  on  IT,  to  a  challenge   or  problem  posed  by  the  environment.    

à  PROFITABILITY  

 

 

Complementary  assets   • • • • • • • •

   

Some  firms  achieve  better  results  with  IS  than  others   Invest  great  deal  or  little  a  amount,  receive  low  or  much  returns   IT  investments  alone  are  not  enough     Organization  and  Management:  supportive  values,  structures,  behavior  patterns   (=  complementary  assets)   Adopt  right  business  model  that  suits  the  new  technology     Complementary  assets  =  assets  required  to  derive  value  from  a  primary   investment  à  receive  superior  returns   E.g.  new  business  models,  business  processes,  management  behavior,   organizational  culture,  training   Investment  in  organizational  and  management  capital   o Organizational  assets,  e.g.   § Appropriate  business  model   § Efficient  business  processes   o Managerial  assets,  e.g.   § Incentives  for  management  innovation   § Teamwork  and  collaborative  work  environments   o Social  assets  (not  by  company,  society  in  gerneal)  e.g.   § The  Internet  and  telecommunications  infrastructure   § Technology  standards  

Contemporary  Approaches  to  IS   • •

Multidisciplinary  field     IS  =  sociotechnical  systems  (machines,  devices,  physical  tech,  social,   organizational,  intellectual  investments  

    Technical  approach   •  Emphasizes  mathematically  based  models   •  Computer  science  (computability,  data  storage  +  access),  management  science,   operations  research  (transportation,  inventory  control,  transaction  costs)      Behavioral  approach  (development,  long-­‐term  maintenance)   •  Behavioral  issues  (strategic  business  integration,  implementation,  design..)   •  Psychology  (human  perceive  and  use),  economics  (production,  dynamics   market)  ,  sociology  (groups)   o IST  stimulus  for  behavioral  problem/issue   o Changes  in  attitudes,  management,  organizational  policy,  behavior       Four  main  actors   •  Suppliers  of  hardware  and  software  (technologists)   •  Business  firms  (investments,  seeking  value)   •  Managers  and  employees   •  Firm’s  environment  (legal,  social,  cultural  context)   • à  Management  Information  Systems  (MIS)   o Combines  computer  science,  management  science,  operations  research   and  practical  orientation  with  behavioral  issues     Sociotechnical  view   • Optimal  organizational  performance  achieved  by  jointly  optimizing  both  social   and  technical  systems  used  in  production  (technic  and  behavior)   • Helps  avoid  purely  technological  approach   • Mutual  adjustment  of  both  technology  and  organization    

Chapter  2   Global  E-­‐Business  and  Collaboration    

Business  Processes  

=  Unique  manner  in  which  work  is  organized,  coordinated,  focused  to  produce  valuable   products  and  services   • Workflows  of  material,  information,  knowledge  (coordinated  by  Management   and  Organization)   • Performance  depending  on  design  and  coordination  of  bp   • Competitive  strength,  innovation  (assets)  or  liabilities   •  Sets  of  activities,  steps   •  May  be  tied  to  functional  area  or  be  cross-­‐functional  (e.g.  fulfilling  customer   order)   • Businesses:  collection  of  bp  à  information  must  flow  rapidly  between   departments,  supplier,  customer,  business  partners      

 

  •

Information  technology  enhances  business  processes  in  two  main  ways:   o Increasing  efficiency  of  existing  processes   § Automating  steps  that  were  manual   o Enabling  entirely  new  processes  that  are  capable  of  transforming  the   businesses  (new  business  models)   § Change  flow  of  information   § Replace  sequential  steps  with  parallel  steps   § Eliminate  delays  in  decision  making  

 

Types  of  IS   • • •

Typical:  different  kinds  of  systems  supporting  processes  for  each  major  business   function   Large-­‐scale  cross-­‐functional  systems,  integrate  related  activities   Different  systems  supporting  decision  making  needs  management  groups   o Transaction  processing  system   o Management  information  system   o Decision-­‐support  system   o System  for  business  intelligence  

Transaction  processing  systems  /  TPS   • Perform  and  record  daily  routine  transactions  necessary  to  conduct  business   (Examples:  sales  order  entry,  payroll,  shipping)   • Answer  routine  questions,  flow  of  transactions   • Allow  managers  to  monitor  status  of  operations  and  relations  with  external   environment   • Serve  operational  levels  (predefined  tasks,  resources,  goals)   • Serve  predefined,  structured  goals  and  decision  making   • Producing  information  for  other  business  functions    

    Management  information  systems  /  MIS   •  Specific  category  of  IS  to  serve  middle  management,  Are  things  working  well?   •  Provide  reports  on  firm’s  current  performance,  based  on  data  from  TPS,  monitor,   control,  predict  future   •  Provide  answers  to  routine  questions,  predefined  procedure  for  answering   •  Typically  have  little  analytic  capability,  low  flexibility      

 

Decision  support  systems  /  DSS   •  Serve  middle  management,  support  non-­‐routine  decision  making   •  Example:  What  is  impact  on  production  schedule  if  December  sales  doubled?   •  Often  use  external  information  as  well  from  TPS  and  MIS   o Model  driven  DSS  (Voyage-­‐estimating  systems)   o Data  driven  DSS  (Intrawest’s  marketing  analysis  systems)  

    Business  intelligence   • Class  of  software  applications  (organizing,  analyzing,  providing  access)   • Analyze  current  and  historical  data  to  find  patterns  and  trends  and  aid  decision-­‐ making  (long-­‐term)   • Used  in  systems  that  support  middle  and  senior  management   o Data-­‐driven  DSS     o Executive  support  systems  (ESS)     Executive  support  systems   • Support  senior  management  in  non-­‐routine  decisions  (portal)   • Requiring  judgment,  evaluation,  and  insight   • Incorporate  data  about  external  events  (e.g.  new  tax  laws  or  competitors)  as  well   as  summarized  information  from  internal  MIS  and  DSS   • Example:  Digital  dashboard  with  real-­‐time  view  of  firm’s  financial  performance:   working  capital,  accounts  receivable,  accounts  payable,  cash  flow,  and  inventory      

Enterprise  applications   • • • •

   

 Systems  for  linking  the  enterprise  +  span  functional  areas    Execute  business  processes  across  firm  (customer,  supplier,  business  partner)    Include  all  levels  of  management    Four  major  applications:   o  Enterprise  systems   o  Supply  chain  management  systems   o  Customer  relationship  management  systems   o  Knowledge  management  systems  

Enterprise  systems  /  ERP   • Collects  data  from  different  firm  functions  and  stores  data  in  single  central  data   repository  (serves  variety  of  groups)   • Resolves  problem  of  fragmented,  redundant  data  sets  and  systems   • Enable:  coordination  of  daily  activities,  efficient  response  to  customer  orders   (production,  inventory),  Provide  valuable  information  for  improving   management  decision  making       Supply  chain  management  (SCM)  systems     • Manage  firm’s  relationships  with  suppliers,  interorganizational  system   • Share  information  about  orders,  production,  inventory  levels,  delivery  of   products  and  services   • Goal:  right  amount  of  products  to  destination  with  least  amount  of  time  and   lowest  cost       Customer  relationship  management  systems  /  CRM   • Provide  information  to  coordinate  all  of  the  business  processes  that  deal  with   customers  in  sales,  marketing,  and  service  to  optimize  revenue,  customer   satisfaction,  and  customer  retention   • Integrate  firm’s  customer-­‐related  processes  and  consolidate  customer   information  from  multiple  communication  channels       Knowledge  management  systems  (KMS)   • Support  processes  for  acquiring,  creating,  storing,  distributing,  applying,   integrating  knowledge   • How  to  create,  produce,  distribute  products  and  services   • Collect  internal  knowledge  and  experience  within  firm     • Link  to  external  sources  of  knowledge       Alternative  tools  that  increase  integration  and  expedite  the  flow  of  information   •  Intranets:    Internal  company  Web  sites  accessible  only  by  employees   •  Extranets:  Company  Web  sites  accessible  externally  only  to  vendors  and   suppliers     E-­‐business:  Use  of  digital  technology  and  Internet  to  drive  major  business  processes   E-­‐commerce:  Subset  of  e-­‐business;  Buying  and  selling  goods  and  services  through   Internet   E-­‐government:  Using  Internet  technology  to  deliver  information  and  services  to   citizens,  employees,  and  businesses      

Systems  for  Collaboration  and  Teamwork   •

•

Work  with  others  to  achieve  goals   o Short-­‐lived  or  long-­‐term   o Informal  or  formal  (teams)   o Team:  specific  mission   Growing  importance  of  collaboration:   o Changing  nature  of  work  (jobs  with  interaction)   o Growth  of  professional  work  –  “interaction  jobs”  (specialists)   o Changing  organization  of  the  firm  (hierarchy  à  teams/groups)  

o Changing  scope  of  the  firm  (multiple  locations)   o Emphasis  on  innovation  (=  group  process)   o Changing  culture  of  work  (diversity,  crowdsourcing)  

    Business  benefits  of  collaboration  and  teamwork   • Investments  in  collaboration  technology  can  produce  organizational   improvements  returning  high  ROI   • Productivity,  Quality,  Innovation,  Customer  service,  Financial  performance   • Requirement:    

    Building  a  collaborative  culture  and  business  processes   • “Command  and  control”  organizations  (no  value  placed  on  teamwork  or  lower-­‐ level  participation  in  decisions,  vertical  communication)   • Collaborative  business  culture   o Senior  managers  rely  on  teams  of  employees   o Policies,  products,  designs,  processes,  systems  rely  on  teams   o Managers  purpose  is  to  build  teams,  giving  reward  to  teams,  and  indiv.     Tools  +  Technology  for  collaboration  and  teamwork    

Social  Networking     Wikis        

   

   

Virtual  Worlds  (SecondLife)    

 

Internet-­‐Based  Collaboration  Environments   • Virtual  meeting  systems  (telepresence)   • Google  Apps/Google  sites   • Microsoft  SharePoint   • Lotus  Notes       • Two  dimensions  of  collaboration  technologies   o Space  (or  location)  –  remote  or  colocated   o Time  –  synchronous  or  asynchronous    

 

  •

 Six  steps  in  evaluating  software  tools   1.  What  are  your  firm’s  collaboration  challenges?   2.  What  kinds  of  solutions  are  available?     3.  Analyze  available  products’  cost  and  benefits  (incl.  training)   4.  Evaluate  security  risks   5.  Consult  users  for  implementation  and  training  issues   6.  Evaluate  product  vendors  

 

Information  Systems  Function   • •

Responsibility  for  running  described  systems   Managing  technology  

  Information  systems  department   • Formal  organizational  unit  responsible  for  information  technology  services   • Headed  by  chief  information  officer  (CIO)  àOther  senior  positions  include  chief   security  officer  (CSO),  chief  knowledge  officer  (CKO),  chief  privacy  officer  (CPO)   • Programmers  (trained  technical,  specialists,  software  instructions)   • Systems  analysts  (translate  business  problems  into  IS)   • Information  systems  managers  (leaders  of  teams,  analysts,  project  managers,   facility  managers,  ,  database  specilists…)  

End  users   • Representatives  of  other  departments  for  whom  applications  are  developed   • Increasing  role  in  system  design,  development     IT  Governance   • Strategies  and  policies  for  using  IT  in  the  organization   • Specifies  decision  rights  and  framework  for  accountability   • Organization  of  information  systems  function  (centralized,  decentralized,  ROI,   monitoring  etc.)   • Being  able  to  use  IT  efficiently  and  effectively  has  become  more  and  more   essential  to  a  business’  success.    

Chapter  3   Information  Systems,  Organizations,  and  Strategy    

 

 

Organizations  and  Information  Systems    

 

• • • • • •

Information  technology  and  organizations  influence  one  another   IS  built  by  managers  to  serve  interest  of  business  firm   Orga  must  be  open  to  IS  to  benefit  from  technologies   Complex  interaction,  influenced  by  mediating  factors   Manager:  decide  which  systems  to  build,  what  they  will  do  +  how  they  will  be   implemented   Not  all  changes  can  be  foreseen,  results  may  or  not  meet  expectations  

  What  is  an  Organization?   • Technical  definition:     o Stable,  formal  social  structure  that  takes  resources  from  environment  and   processes  them  to  produce  outputs   o 3  elements:  Capital  +  labor  production  factors  from  environment;   transformation  from  organization  into  products/services;  outputs   consumed  by  environment   o Formal  legal  entity  with  internal  rules  and  procedures,  as  well  as  a  social   structure   • Behavioral  definition:  (more  realistic)   o Collection  of  rights,  privileges,  obligations,  and  responsibilities  that  is   delicately  balanced  over  a  period  of  time  through  conflict  and  conflict   resolution   o Working  people  develop  customary  ways  of  working,  attachments  to   existing  relationships,  arrangements  with  subordinates  and  superiors   about  how  to  work,  amount,  conditions  (informal)   • Relation  to  IS:  technical  view:  easy  to  change  arrangement  of  workers  and   machines,  substitution  capital  and  labor;  but  behavior:  IS  change  balance  of   rights,  privileges,  obligations,  responsibilities,  feelings  à  time  and  resources     technical  

behavioral  

 

Features  of  Organizations   • Use  of  hierarchical  structure  (specialists)   • Accountability,  authority  in  system  of  impartial  +  universal  decision  making   (abstract  rules  or  procedures)   • Promote  employees  on  basis  of  technical  qualification  +  professionalism   • Adherence  to  principle  of  efficiency  (may  output,  min  input)   • Routines  and  business  processes     • Organizational  politics,  culture,  environments  and  structures     • Routines  and  business  processes   o Routines  (standard  operating  procedure  –  SOP):  precise  rules,  procedures   and  practices  developed  tocope  with  all  expected  situations  à   productive/efficient   o Business  processes:  Collections  of  routines   o Business  firm:  Collection  of  business  processes   • Organizational  politics     o Divergent  viewpoints  lead  to  political  struggle,  competition,  and  conflict   o Political  resistance  greatly  hampers  organizational  change   • Organizational  culture   o Taken  for  granted,  Encompasses  set  of  assumptions  that  define  goal  and   product  (What  products  the  organization  should  produce,  how  and  where,   for  whom)   o May  be  powerful  unifying  force  as  well  as  restraint  on  change   • Organizational  Environments   o Organizations  and  environments  have  a  reciprocal  relationship   o Open  to,  and  dependent  on,  the  social  and  physical  environment   o Organizations  can  influence  their  environments   o Environments  generally  change  faster  than  organizations  (new  products,   public  tastes,  values,  political  conflict,  raised  by  changes,  threat  to  closely   held  cultural  values,  inhibit  to  make  significant  changes)   o Information  systems  can  be  an  instrument  of  environmental  scanning,  act   as  a  lens  

 

Disruptive  technologies     • Technology/business  innovation  à  radical  change  in  business  landscape  +   environment  (industries  +  markets)   • Substitute  product,  working  much  better  than  current  product  (e.g.  iPods)   • Industries  put  out  of  business,  extended  market  ,  low-­‐cost  competitors   • Riding  with  the  wave  (create  technology),  adapt  business,  others  become   obsolete,  no  firms  benefit  only  customer   • First  movers,  fast  followers     • Organizational  Structure  (5  basic  kinds)   o Entrepreneurial   o Machine  bureaucracy   o Divisionalized  bureaucracy   o Adhocracy  

 

  •

 

Other  organizational  features   o Goals  (coercive,  utilitarian,  normative)   o Constituencies  (benefiting  members,  clients,  stockholders,  public)   o Leadership  styles  (democratic,  authoritarian)   o Tasks  (routine,  nonroutine)   o Surrounding  environments  

Economic  impacts   • • • •

•

IT  changes  relative  costs  of  capital  and  the  costs  of  information   IS  technology  is  a  factor  of  production,  like  capital  and  labor  (also  a  substitute  for   middle  managers,  buildings,  machinery)   IT  affects  the  cost  and  quality  of  information  and  changes  economics  of   information   Firms  contract/shrink  in  size  because  IT  can  reduce  transaction  costs  (cost   participating  in  markets,  e.g.  locating  distant  suppliers)  à  outsourcing  (same  ore   more  revenues  with  less  employees)   Firms  experience  agency  costs  (cost  of  managing  +  supervising  self-­‐interested   parties  =  agents  (employees))  (nexus  of  contracts)  à  IT  analyzes  info,  easier  for   manager  to  oversee  greater  number  of  employees  à  reducing  costs  

X=  cost   Y=size  

Organizational  and  behavioral  impacts   • IT  flattens  organizations   o Decision  making  pushed  to  lower  levels  (empowering,  higher  educational   level)   o Fewer  managers  needed  (IT  enables  faster  decision  making  and  increases   span  of  control,  eliminating  middle  managers)   • Postindustrial  organizations   o Organizations  flatten  because  in  postindustrial  societies,  authority   increasingly  relies  on  knowledge  and  competence  rather  than  formal   positions  =self  management   o Decentralization  because  knowledge  also  decentralized   o IT  –>  task  force  networked  organization,  groups  of  professionals   o New  approaches  for  evaluating,  organizing,  informing  workers  required   • Organizational  resistance  to  change   o IS  bound  up  in  organizational  politics  because  influence  access  to  a  key   resource  –  information   o IS  potentially  change  organization’s  structure,  culture,  politics,  and  work   à  often  considerable  resistance   o Most  common  reason  for  failure  of  large  projects  is  due  to  organizational   and  political  resistance  to  change  

    Internet  and  organizations   • Internet  increases  accessibility,  storage,  distribution  of  information  +  knowledge   for  organizations   • Internet  can  greatly  lower  transaction  and  agency  costs  (distribution  manuals,   instant  price  info,  sales  info  +  replenishment  orders)   • Simpler  business  processes,  fewer  employees,  flatter  organizations     IS  Design  consider:   • Environment   • Structure  (hierarchy,  routines,  business  processes)   • Culture  and  politics   • Organization  type,  leadership  style   • Main  interest  groups  affected  by  system,  attitudes  of  end  users   • Tasks,  decisions,  business  process  the  system  will  assist    

Using  IS  for  competitive  advantage   • •

Firms  do  better  than  others  (revenue  growth,  profitability,  productivity)  à   higher  stock  market  valuations   Access  to  special  resources  or  use  common  resources  more  efficiently    

Porter’s  competitive  forces  model   • Provides  general  view  of  firm,  its  competitors,  and  environment   • Five  competitive  forces  shape  fate  of  firm   1. Traditional  competitors  (share  market  space  with  competitors  with  new   products,  services,  efficiencies,  switching  costs)   2. New  market  entrants  (high  barriers  to  entry,  new  companies  with  new   equipment,  younger  workers,  innovation,  little  brand  recognition)   3. Substitute  products  and  services  (when  prices  to  high,  lesser  control  about   prices  and  lower  profit  margins)   4. Customers  (ability  to  attract  and  retain  customers,  switch  to  competitors   products?,  price  alone  in  transparent  marketplace  or  product  differentiation)   5. Suppliers  (market  power,  when  firm  cannot  raise  prices  as  fast  as  suppliers)       4  strategies  for  dealing  with  competitive  forces   • Enabled  by  IT  +  IS   • Low-­‐cost  leadership     • Product  differentiation   • Focus  on  market  niche   • Strengthen  customer  and  supplier  intimacy     • Low-­‐cost  leadership   o Produce  products  and  services  at  a  lower  price  than  competitors  while   enhancing  quality  and  level  of  service   o Examples:  Walmart’s  continuous  replenishment  system,  high  speed,  no   large  inventory,  adjust  purchases  depending  on  demands  =efficient   customer  response  system   • Product  differentiation   o Enable  new  products  or  services,  greatly  change  customer  convenience   and  experience  (IS  to  customize  +  personalize  to  fit  precise  specifications   à  mass  customization   o Examples:  Google,  Nike  (NIKEiD),  Apple  (iPod  +  iTunes)   •  Focus  on  market  niche   o Use  IS  to  enable  a  focused  strategy  on  a  single  market  niche;  specialize,   analyzing,  buying  patterns,  tastes,  preferences  à  marketing  campaigns   o Example:  Hilton  Hotels  OnQ  guest  preferences    profitable  customers   additional  privileges  ,  credit  cards   • Strengthen  customer  and  supplier  intimacy   o Use  IS  to  develop  strong  ties  and  loyalty  with  customers  and  suppliers;   increase  switching  costs   o Example:  Netflix,  Amazon  (recommended  books)     Internet’s  impact  on  competitive  advantage   • Transformation,  destruction,  threat  to  some  industries,  also  opportunities   • Competitive  forces  still  at  work,  but  rivalry  more  intense   • Universal  standards  allow  new  rivals,  entrants  to  market   • New  opportunities  for  building  brands  and  loyal  customer  bases   • Easier  substitution,  bargaining  power,  positioning          

Business  value  chain  model   • Where  to  start  to  gain  operational  excellence   • Views  firm  as  series  of  activities  that  add  value  to  products  or  services  (primary   vs.  support  activities)   o Primary  act.:  Most  directly  related  to  production/distribution  create  value   for  customer  (inbound  logistics,  operations,  outbound  logistics,  sales,   marketing,  service)   o Supportive  act.:    make  delivery  of  p.a.  possible,  organization   infrastructure,  HR,  technology,  procurement)   • Highlights  activities  where  competitive  strategies  can  best  be  applied  (IS  most   strategic  impact)   • At  each  stage,  determine  how  information  systems  can  improve  operational   efficiency  and  improve  customer  and  supplier  intimacy   • Utilize  benchmarking  (comparing  efficiency,  effectiveness),  industry  best   practices  (consulting  companies,  research),  result:  SCMS,  CRMS  

• •

  Analyzing  various  stages  à  candidate  applications  of  IS     Decide  which  to  develop  first,  making  improvement  in  own  value  chain    

  Value  Web  (Extending  Value  Chain)   • Collection  of  independent  firms  using  highly  synchronized  IT  to  coordinate  value   chains  to  produce  product  or  service  collectively  (industrial  standards,  higher   entry  costs,  lesser  substitution,  increase  efficiency,  networks))   • Strategic  advantage:  link  own  value  chain  with  vc  of  other  partners  (Amazon:   Marketplace,  quick  paying,  shipment  system,  tracking)   • More  customer  driven,  less  linear  operation  than  traditional  value  chain   • Value  web  =  highly  synchronized  industry  value  chains,  flexible  +  adaptive  to   changes  in  supply/demand,  accelerate  time  to  market  +  customers  

    Synergies   • Output  of  some  units  used  as  inputs  to  others,  organizations  pool  markets  and   expertise   • Lower  costs,  generate  profits  (e.g.  merging  banks)   • IT:  tie  together  operations  of  disparate  business  units  (act  as  whole)     Enhancing  core  competencies   • Activity  for  which  firm  is  world-­‐class  leader   • Relies  on  knowledge,  experience,  and  sharing  this  across  business  units   • Enhance  existence,  help  employees  become  aware  of  external  knowledge,   leverage  to  related  markets   • Example:  Procter  &  Gamble’s  InnovationNet  and  directory  of  subject  matter   experts     Network-­‐based  strategies   • Take  advantage  of  firm’s  abilities  to  network  with  each  other   • Include  use  of:  network  economics,  virtual  company  model,  business  ecosystems   • Traditional  economics:  Law  of  diminishing  returns   o The  more  any  given  resource  is  applied  to  production,  the  lower  the   marginal  gain  in  output,  until  a  point  is  reached  where  the  additional   inputs  produce  no  additional  outputs   • Network  economics:   o Marginal  cost  of  adding  new  participant  almost  zero,  with  much  greater   marginal  gain   o Value  of  community  grows  with  size  (e.g.  communities  à  customer   loyalty,  enjoyment)  

•

•

o Value  of  software  grows  as  installed  customer  base  grows   Virtual  company  strategy   o uses  networks  to  ally  with  other  companies  to  create  and  distribute   products  without  being  limited  by  traditional  organizational  boundaries   or  physical  locations  (link  people,  assets,  ideas)   o when  cheaper  to  acquire  products,  services…,  or  when  to  move  quickly   o E.g.  Li  &  Fung  manages  production,  shipment  of  garments  for  major   fashion  companies,  outsourcing  all  work  to  over  7,500  suppliers     Business  ecosystems  (modification  Porter)   o Industry  sets  of  firms  (instead  of  only  one  industry)  providing  related   services  and  products,  loosely  coupled,  but  interdependent  networks   o Theory:  Value  web  but  with  many  industries  (not  only  firms)  –  e.g   Walmart,  Microsoft   o Keystone  firms:  Dominate  ecosystem  and  create  platform  used  by  other   firms   o Niche  firms:  Rely  on  platform  developed  by  keystone  firm   o Individual  firms  can  consider  how  IT  will  help  them  become  profitable   niche  players  in  larger  ecosystems   o Use  IS  to  develop  into  keystone  firm   o E.g.:  ecosystem  mobile  digital  platform  (device  makers,  wireless  telefirms,   application  providers,  internet  service  providers  

 

 

 

Management  Issues   •

Strategic  IS  change  organizationa,  product,  services,  procedures,  new  behavioral   patterns   Success  is  a  challenge,  requiring  precise  coordination  of  techolgy,  orga  and  mgt.  

•   Sustaining  competitive  advantage   • Because  competitors  can  retaliate  and  copy  strategic  systems,  competitive   advantage  is  not  always  sustainable;     • Systems  may  become  tools  for  survival,  required  to  stay  in  business   • Globalization:  even  more  rapid  changes,  unpredictable  

  Aligning  IT  with  business  objectives   a. The  more  successfully  a  firm  can  align  IT  with  business  goals,  the  more  profitable   it  will  be   b. Only  one  quarter  of  firms  achieve  this  alignment  because  IT  takes  life  of  its  own,   doesn’t  serve  management  interest,  instead  of  shaping  IZ  to  enterprise,  often   ignored  and  worked  around    Performing  strategic  systems  analysis   •  What  is  structure  of  industry?  à  competitive  forces,  new  entrants,  relative   power  of  suppliers,  customers,  substitute  products,  services,  prices   •  What  are  value  chains  for  this  firm,  businesses,  industry?  à  value  for  customer,   lower  prices,  better  quality,  using  best  practices,  maximum  advantage  of  SCM  +   CRM,  ERP,  leverage  core  competencies,  changes  beefit  or  harming,  strategic   partnerships,  value  webs,  where  greatest  value  of  IS   • IT  aligned  with  business  strategy  and  goals?  à  correctly  articulated,  IT   improving  right  bp,  right  metrics  to  measure  

  Managing  strategic  transitions   •

                                                       

• •

Adopting  strategic  systems  requires  changes  in  business  goals,  relationships  with   customers  and  suppliers,  and  business  processes  (=  sociotechnical  changes  =   strategic  transisions  =  movement  between  levels  of  sociotechnical  systems   Blurring  orga  boundaries  (external  +  internal)     Linked  customers  and  suppliers,  sharing  responsibilities  

Chapter  4   Ethical  and  Social  Issues  in  Information  Systems  

  Understanding  Ethical  and  Social  Issues   • Lapses  in  management  ethical  and  business  judgment   • Judges  sentence  executives  based  on  the  monetary  vale,  prevention,  hide  the   crime,  failure  to  corporate   • Past  companies  often  paid  for  employees  in  civil  charges,  now  firms  cooperate   with  prosecutors  to  reduce  charges  against  entire  firm   • Decide  as  a  manager  and  employee  about  ethical  and  legal  conduct   • Ethics  =  principles  of  right  and  wrong  to  guide  behaviors  (free  moral  agents)   • IS  opportunity  for  intense  social  change,  threatening  existing  distributions  of   power,  money,  right,  obligations,  new  kinds  of  crime   • Used  to  achieve  social  progress,  commit  crimes,  threaten  social  values  (benefits  +   costs)   • Concerns  about  appropriate  use  of  customer  information,  protection  privacy,   intellectual  property   • Accountability  for  consequences  of  IS?,  standards?     Model  for  thinking  about  ethical,  social,  political  issues   • Society  =  calm  pond  with  individuals,  institutions,  rules,  laws   • New  IT:  rock  à  ripple  effect  à  raising  issues     • 5  moral  dimensions  of  the  information  age:     o Information  rights  and  obligations  (possessing,  protecting)   o Property  rights  and  obligations  (easy  ignoring,  protecting)   o System  quality  (standards  of  data)   o Quality  of  life  (values  reserved,  protect  institutions  from  violation,  cultural   values  and  practices)   o Accountability  and  control  (when  harm  done  to  so.)   • time  to  respond  with  etiquette  and  laws  (legal  gray  area)    

 

• • • • • •

Is  for  core  production  process  à  dependence  on  system  +  vulnerability   Data  storage_  cheap  and  effective,  combine  detailed  info  from  different  sources.   Electronic  dossiers  à  profiling  (e.g.  credit  cards)   e.g  DoubleClick  (info  about  online  visitors.  Habits  spending,  computing   e.g.  ChoicePoint  (info  police,  criminal,  motor  vehicle  records)  =  data  broker   business   New  technology:  nonobvious  relationship  awareness  (NORA)  à  find  hidden   connections     Data  from  Watch  Lists,  Incident  and  Arrest  Systems,  Customer  Transactions   Systems,  Telephone  records,  Human  Resources  Systems  

  Ethics  in  Information  Society   • Ethics  =  concern  of  humans  who  have  a  freedom  of  choice   • Choosing  the  correct  moral  choice  à  responsibility  (key  element)   • Responsibility:  accept  potential  costs,  duties,  obligations   • Accountability:  feature  of  systems/social  institutions,  determine  who  is   responsible   • Liability:  feature  of  political  systems,  body  of  laws,  permits  indiv.  recover  from   damages   • Due  process:  Laws  are  well  known  and  understood,  with  an  ability  to  appeal  to   higher  authorities     • You  can/will  be  held  accountable,  recover  through  set  of  laws  by  due  process     Ethical  Analysis   1. Identify  and  describe  clearly  the  facts   2. Describe  conflict  and  dilemma  and  identify  the  higher-­‐order  values  involved   3. Identify  the  stakeholders   4. Identify  the  options  that  you  can  reasonably  take   5. Identify  the  potential  consequences  of  your  options     Ethical  Principles  (after  analysis)   • Golden  Rule:  Do  unto  others  as  you  would  have  them  do  unto  you  (putting   yourself  in  the  place  of  others)   • Categorical  Imperative  (Immanuel  Kant):  If  an  action  is  not  right  for  everyone  to   take,  it  is  not  right  for  anyone   • Rule  of  Change  (Descartes):  If  an  action  cannot  be  taken  repeatedly  it  is  not  right   to  take  at  all.   • Utilitarian  Principle:  Take  the  action  that  achieves  the  higher  or  greater  value   • Risk  Aversion  Principle:  Take  the  action  that  produces  the  least  harm  or  the  least   potential  cost  

 

•

Ethical  “no  free  lunch”  rule:  Assume  that  virtually  all  tangible  and  intangible   objects  are  owned  by  someone  else,  unless  there  is  a  specific  declaration   otherwise  

  Processional  Codes  of  Conduct   • Professionals:  special  rights/obligations,  because  of  special  claims  knowledge,   wisdom,  respect   • Codes  of  conduct  promulgated  (verkünden)  by  associations  of  professionals     • Codes  of  ethics  =  promises  to  regulate  themselves  in  interest  of  society   • Real  world  ethical  dilemmas:  set  of  interests  pitted  against  another    

Information  Rights:  privacy  and  freedom   •

• • •

 

•

• •

Privacy:  claim  of  individuals  to  be  left  alone/  free  from  surveillance/interference   from  other  individuals,  organizations,  state.  Claim  to  be  able  to  control   information  about  yourself   IT:  threaten  claims  by  making  invasion  cheap,  profitable,  effective   US  privacy:  First  Amendment  (freedom  of  speech),  Fourth  Amendment   (unreasonable  search  and  seizure),  Add.  Federal  statues  (Privacy  Act)   Most  laws  based  on  regime  Fair  Information  Practices  (FIP)  =  set  of  principles   governing  the  collection  and  use  of  information  about  individuals,  guidelines  to   drive  changes  in  privacy  legislation  (advertising,  personal  identification   numbers)    

  EU:  1998  Commissions  Data  Protection  Directive,  costumer  must  consent  before   companies  legally  can  use  data,  disclosure  how  stored  and  used,  no  transfer  to   countries  without  similar  protection   Informed  consent  =  consent  given  with  knowledge  of  all  the  facts  needed  to  make   a  rational  decision   Safe  harbor  framework  =  private  self-­‐regulating  policy  and  enforcement   mechanism,  meets  objectives  of  government  regulators  

  Internet  Challenges  to  Privacy   • Cookies  =small  text  files,  identify  web  browser,  track  visits,  updated,  customize     • Combining  data  from  different  sources  à  detailed  profile   • Web  beacons  (Web  bugs)  =  tiny  object  invisibly  embedded  in  e-­‐mail  messages,  to   monitor  behavior  (IP  address,  time,  how  long,  type  of  browser,  cookie  values   • Spyware  secretly  install  itself  ,  send  banner  ads,  report  activity  on  the  computer     • GOOGLE:  used  by  75%  of  internet  users  à  largest  collection  of  personal  info   • Behavioral  targeting:  target  ads  google  search,  gmail,  blogginh,  youtube  etc.   • US  businesses  allowed  to  gather  and  use  info  without  informed  consenst  

• • • • •

Opt-­‐out  models  permits  use  until  request  to  stop   Preferred  by  advocates:  opt-­‐in  models     Online  industry  preffering  self-­‐regulation  to  privacy  legislation,  Alliances  à   online  seals  (TRUSTe,  Network  Advertising  Initiative)   Ebusiness  do  little  to  protect  privacy,  customers  do  not  enough   Consumers  want  more  access  and  control  

  Technical  Solutions   • Technologies  to  protect  privcy  (e.g  encryption,  anonymous,  prevent  cookies,   detect  and  eliminate  spyware)   • Tools  to  determine  kind  od  extracted  date   • P3P  (Platform  for  Privacy  Preferences):     o Allows  Web  sites  to  communicate  privacy  policies  to  visitor’s  Web   browser  –  user   o User  specifies  privacy  levels  desired  in  browser  settings   o E.g.  “medium”  level  accepts  cookies  from  first-­‐party  host  sites  that  have   opt-­‐in  or  opt-­‐out  policies  but  rejects  third-­‐party  cookies  that  use   personally  identifiable  information  without  an  opt-­‐in  policy   • Policies  need  to  be  codified  according  to  P3P  rules,  only  works  with  this  web  sites      

Property  Rights:  Intellectual  Property   • • • •

•

Intangible  property  created  by  individuals  or  corporations   IT  difficult  to  protect,  easy  copied  and  distributed   Trade  Secrets  =  any  intellectual  work  product  (formula,  device,  pattern,   compilation)  used  for  business  purpose,  not  in  the  public  domain   Copyright:  Statutory  grant  protecting  intellectual  property  from  being  copied  for   the  life  of  the  author,  plus  70  years,  corporate  owned  95  years,  not  protecting  the   idea,  only  the  manifestation  in  a  creative  work,  ideas  and  expression  merge  =   expression  can  not  be  copyrighted   Patents:  Grants  creator  of  invention  an  exclusive  monopoly  on  ideas  behind   invention  for  20  years,  machine,  devices,  methods  à  full  rewets,  licensing;   criteria:  nonobviousness,  originality,  novelty,  years  of  waiting  

  Challenges  to  intellectual  property  rights   • Digital  media  different  from  physical  media  (e.g.  books):  Ease  of  replication,  ease   of  transmission  (networks,  Internet).  Difficulty  in  classifying  software,   Compactness,  Difficulties  in  establishing  uniqueness   • Easiy  to  share  files  online,  illegal,  piracy,  normal  for  songs  and  movies  à   developing  mechanism  to  sell  intellectual  property  legally   • Digital  Millennium  Copyright  Act  (DMCA)  makes  it  illegal  to  circumvent   technology-­‐based  protections  of  copyrighted  materials     Accountability,  Liability,  and  Control   • Computer-­‐related  liability  problems:    If  software  fails,  who  is  responsible?   • If  seen  as  part  of  machine  that  injures  or  harms,  software  producer  and  operator   may  be  liable   • If  seen  as  similar  to  book,  difficult  to  hold  author/publisher  responsible   (exception:  fraud,  defamation)   • Software  different  from  book:  expectations  of  infallibility,  inspected,  perform  a   task,  people  depend  on  services,  liability  law  extending  to  include  software  

  System  Quality:  Data  Quality  and  System  Errors   • What  is  an  acceptable,  technologically  feasible  level  of  system  quality?  Flawless   software  is  economically  unfeasible   • Three  principal  sources  of  poor  system  performance:   o Software  bugs,  errors   o Hardware  or  facility  failures   o Poor  input  data  quality  (most  common  source  of  business  system  failure)     Quality  of  life:  Equity,  access,  and  boundaries  (Negative  social  consequences  of  systems)   • Many  not  violations  of  property  crimes,  but  can  be  very  harmful,  potentially  can   destroy  valuable  elements  of  our  culture  and  society,  even  when  the  bring   benefits   • Balancing  power:  Although  computing  power  decentralizing,  key  decision-­‐ making  remains  centralized   • Rapidity  of  change:  Businesses  may  not  have  enough  time  to  respond  to  global   competition  à  just  in  time  society,  jobs,  families,  vacations   • Maintaining  boundaries:  Computing,  Internet  use  lengthens  work-­‐day,  infringes   on  family,  personal  time   • Dependence  and  vulnerability:  Public  and  private  organizations  ever  more   dependent  on  computer  systems   • Computer  crime  and  abuse   o Computer  crime:  Commission  of  illegal  acts  through  use  of  compute  or   against  a  computer  system  –  computer  may  be  object  or  instrument  of   crime   o Computer  abuse:  Unethical  acts,  not  illegal  (e.g.  Spam:  High  costs  for   businesses  in  dealing  with  spam   o Conduct  surveillance  of  employees  and  ordinary  citizens   • Employment:  Reengineering  work/redesign  business  processes)  resulting  in  lost   jobs   • Equity  and  access  –  the  digital  divide:  Certain  ethnic  and  income  groups  in  the   United  States  less  likely  to  have  computers  or  Internet  access   • Health  risks:   o Repetitive  stress  injury  (RSI):  most  common,  largest  source  is  computer   keyboards,  Carpal  Tunnel  Syndrome  (CTS)   o Back,  neck  pain,  leg  stress,  foot  pain   o Computer  vision  syndrome  (CVS)  –  eyestrain  condition   o Technostress:  aggravations,  hostility  towards  humans,  impatience,  fatigue   o Role  of  radiation,  screen  emissions,  low-­‐level  electromagnetic  fields  not   been  proved,  unknown  effects   o Digital  technologies  are  damaging  ability  to  think  clearly  and  focus,  try  to   multitask,  concentration,  interruptions                    

Chapter  5   IT  Infrastructure  and  Emerging  Technologies  

  IT  Infrastructure   • Shared  technology  resources  providing  platform  for  specific  IS  applications   • Investment  in  hardware,  software,  services  (consulting,  education,  training)   • Foundation  for  serving  customers,  working  with  vendors,  managing  business   process   • Set  of  physical  devices  and  software  required  to  operate  enterprise   • Set  of  firmwide  services   o Computing  platforms  providing  computing  services  (e.g  desktop   computer,  laptop)   o Telecommunications  services   o Data  management  services  (+analyzing)   o Application  software  services  (ERP,  CRM,  SCM,  KMS)   o Physical  facilities  management  services   o IT  management  (plan  infrastr.  Coordinate  with  BU),  standards  (policies),   education  (training)  ,  research  and  development  services  (future   investments)   • “Service  platform”  perspective  more  accurate  view  of  value  of  investments     Evolution  of  IT  Infrastructure   • General-­‐purpose  mainframe  &  minicomputer  era:  1959  to  present   o 1958  IBM  first  mainframes  introduced  (centralized)  –  support  thousands   online  remote  terminals  connected   o 1965  Less  expensive  DEC  minicomputers  (more  decentralized)   • Personal  computer  era:  1981  to  present   o 1981  Introduction  of  IBM  PC   o Proliferation  in  80s,  90s  resulted  in  growth  of  personal  software   o Wintel  PC  (95%)   • Client/server  era:  1983  to  present   o Desktop  clients  networked  to  servers,  with  processing  work  split  between   clients  and  servers   o Network  may  be  two-­‐tiered  or  multitiered  (N-­‐tiered)   o Various  types  of  servers  (network,  application,  Web)   o Smaller,  inexpensive  machines,  costs  less,  computing  power  explosion  

 

 

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Enterprise  computing  era:  1992  to  present   o Move  toward  integrating  disparate  networks,  applications  using  Internet   standards  and  enterprise  applications   o Free  information  flow,  link  different  types  of  hardware,  includes  public   infrastructures,  link  applications,  web  services   Cloud  and  Mobile  Computing:  2000  to  present   o Refers  to  a  model  of  computing  where  firms  and  individuals  obtain   computing  power  and  software  applications  over  the  Internet  or  other   network  (shared  pool  of  computing  resources)   o Fastest  growing  form  of  computing  

  Technology  drivers  of  infrastructure  evolution   • Moore’s  law  and  microprocessing  power   o Computing  power(2)/microprocessing  power  (1)  doubles  every  18   months;  the  price  for  computing  falls  by  half  every  18  months  (3)   o Nanotechnology:  Shrinks  size  of  transistors  to  size  comparable  to  size  of  a   virus,  width  of  several  atoms   • Law  of  Mass  Digital  Storage   o The  amount  of  data  being  stored  each  year  doubles   o Cost  is  falling  at  an  exponential  rate  of  100%/year   • Metcalfe’s  Law  and  network  economics   o Value  or  power  of  a  network  grows  exponentially  as  a  function  of  the   number  of  network  members   o As  network  members  increase,  more  people  want  to  use  it  (demand  for   network  access  increases)   • Declining  communication  costs  and  the  Internet   o An  estimated  1.8  billion  people  worldwide  have  Internet  access   o As  communication  costs  fall  toward  a  very  small  number  and  approach  0,   utilization  of  communication  and  computing  facilities  explodes  à  fimrs   greatly  expand  Internet  connections,  power  of  their  networks…   • Technology  standards  and  network  effects   o Specifications  that  establish  the  compatibility  of  products  and  the  ability   to  communicate  in  a  network   o Unleash  powerful  economies  of  scale  and  result  in  price  declines  as   manufacturers  focus  on  the  products  built  to  a  single  standard   o E.g.  Win  OS,  Microsoft  office,  Unix  (enterprise  server),  Ethernet,  TCP/IP     7  main  IT  Infrastructure  components   1. Computer  hardware  platforms  (Dell,  IBM,  Sun,  HP;  Apple,  Linux)   o Client  machines  and  servers  (blade  servers:  ultrathin  computers  stored  in   racks)   o Mainframes:  IBM  mainframe  equivalent  to  thousands  of  blade  servers   o Top  chip  producers:  AMD,  Intel,  IBM   o Top  firms:  IBM,  HP,  Dell,  Sun  Microsystems   2. Operating  system  platforms  (Windows  –  75%  server  –  90%  clients,  Unix  +  Linux  -­‐ 25%  server,  Mac  OS  X,  Google  Chrome  –  cloud  computing,  iOs,  Android  for   handheld  devices)   3. Enterprise  software  applications  (SAP,  Oracle,  middleware  provider:  BEA,   Microsoft)  

4. Data  management  and  storage  (IBM  DB2,  Oracle,  Microsoft  SQL  Server,  Sybase,   MySQL)   o Data  management  software:  responsible  for  organizing/managing  data,   efficiently  accessed  and  used   o Physical  Data  Storage:  EMC  Corp.  (large  scale),  Seagate,  Maxtor,  WD)   o Storage  area  networks  (SANs):  Connect  multiple  storage  devices  on   dedicated  network   5. Networking/telecommunications  platforms  (Linux,  Novell,  Cisco,  Alcatel-­‐Lucent)   o Telecommunication  services  (cable,  telephones,  voice  lines,  Internet)   o Network  Operating  Systems  (Windows  Server,  Unix  …)   o Network  hardware  providers  (Cisco,  Alcatel…)   6. Internet  platforms  (Apache,  Unix,  Cisco,  Java)   o Hardware,  software,  management  services  to  support  company  Web  sites,   (including  Web  hosting  services)  intranets,  extranets   o Trend  to  server  consolidation,  reducing  number  by  increasing  power   o Internet  hardware  server  market:  Dell,  HP/Compaq,  IBM   o Web  development  tools/suites:  Microsoft    (FrontPage,  .NET)  IBM   (WebSphere)  Sun  (Java),  independent  software  developers:  Adobe,   RealMedia   7. Consulting  system  integration  services  (IBM,  EDS,  Accenture)   o Consulting  and  system  integration  services   o Even  large  firms  do  not  have  resources  for  a  full  range  of  support  for  new,   complex  infrastructure   o Software  integration:  ensuring  new  infrastructure  works  with  legacy   systems   o Legacy  systems:  older  Transaction  Processing  Systems  created  for   mainframes  that  would  be  too  costly  to  replace  or  redesign     7  Contemporary  Hardware  Platform  Trends     The  emerging  mobile  digital  platform   • Cell  phones,  smartphones  with  data  transmission,  web  surfing,  e-­‐mail,  and  IM   • Netbooks,  low-­‐cost  lightweight  notebooks  optimized  for  wireless  communication   and  core  computing  tasks   • Tablets  and  networked  e-­‐readers   Grid  computing   • Connects  geographically  remote  computers  into  a  single  network  to  combine   processing  power  and  create  virtual  supercomputer   • Provides  cost  savings,  speed,  agility   Virtualization   • Allows  single  physical  resource  to  act  as  multiple  resources  (i.e.,  run  multiple   instances  of  OS)   • Allows  multiple  physical  resources  to  appear  as  a  single  logical  resource   • Reduces  hardware  and  power  expenditures,  facilitates  hardware  centralization,   higher  utilization  rates   Cloud  computing   • On  demand  self  service  obtained  over  network   • Ubiquitous  network  access  using  standard  network  and  internet  devices   • Location  independent  resource  pooling     • Rapid  elasticity  to  meet  changing  user  demand  

Measured  service,  charged  for  amount  of  resources  used   • Infrastructure  as  a  service  à  use  spare  capacity  e.g.  Amazon  S3   • Platform  as  a  service  à  use  to  develop  own  applications  e.g.  IBM,  Salesforce.com   • Software  as  a  service  à  use  software  over  network  e.g  Google  Apps   • Cloud  can  be  public  or  private   • Allows  companies  to  minimize  IT  investments  (pay  what  you  use  =  utility   computing,  on  demand  computing),  more  flexibility   • Drawbacks:    Concerns  of  security,  reliability,  dependence   Green  computing   • Practices  and  technologies  for  manufacturing,  using,  disposing  of  computing  and   networking  hardware  to  minimize  impact  on  environment   • Reducing  computer  power  consumption  =  high  priority  (power  and  cooling)  à   energy  and  greenhouse  gases   Autonomic  computing   • Industry-­‐wide  effort  to  develop  systems  that  can  configure,  heal  themselves   when  broken,  and  protect  themselves  from  outside  intruders   • Similar  to  self-­‐updating  antivirus  software;  Apple  and  Microsoft  both  use   automatic  updates   High  performance,  power-­‐saving  processors   • Multicore  processors  (chip  more  processor  cores  enhancing  performance,   reduced  power  consumption,  efficient  simultaneous  processing  of  multiple  tasks)     4  Contemporary  Software  Platform  Trends     Linux  and  open-­‐source  software   • Open-­‐source  software:  Produced  by  community  of  programmers,  free  and   modifiable  by  user   • Linux:  Open-­‐source  software  OS,  integration,  works  on  all  major  hardware   Software  for  the  Web   • Java:  Object-­‐oriented  programming  language,  OS  and  processor-­‐independent,   works  on  all  devices,:  Java  Virtual  machine,  applets  run  on  a  web  browser   • Ajax:  Asynchronous  JavaScript  and  XML,  Allows  client  and  server  to  exchange   small  pieces  of  data  without  requiring  the  page  to  be  reloaded   Web  Services   • Software  components  that  exchange  information  using  Web  standards  and   languages,  regardless  of  OS  or  code   • XML:  Extensible  Markup  Language,  More  powerful  and  flexible  than  HTML,   Tagging  allows  computers  to  process  data  automatically,  classifying  presentation   communication  and  storage  of  data   • SOAP:  Simple  Object  Access  Protocol,  Rules  for  structuring  messages  enabling   applications  to  pass  data  and  instructions   Dollar  Rent  A   Car  Webb   • WSDL:  Web  Services  Description  Language,  Framework  for  describing  task   Services  link   performed  by  Web  service  and  capabilities   to  other  web   • UDDI:  Universal  Description,  Discovery,  and  Integration,  Directory  for  locating   sites  booking   system,  no   Web  services   new  code   • SOA:  Service-­‐oriented  architecture:  set  of  self-­‐contained  services  that   required   communicate  with  each  other  to  create  a  working  software  application,   Software  developers  reuse  these  services  in  other  combinations  to  assemble   other  applications  as  needed   •

Software  outsourcing  and  cloud  services   Three  external  sources  for  software:   • Software  packages  (pre-­‐written,  commercially  available)  and  enterprise  software   (large  scale,  single  integrated  worldwide  software  system)   • Software  outsourcing  (development,  maintenance)   o Domestic:  Primarily  for  middleware,  integration  services,  software   support   o Offshore:  Primarily  for  lower  level  maintenance,  data  entry,  call  centers,   although  outsourcing  for  new-­‐program  development  is  increasing   • Cloud-­‐based  software  services   o Software  as  a  service  (SaaS)  accessed  with  Web  browser  over  Internet   o Ranges  from  free  or  low-­‐cost  services  for  individuals  to  business  and   enterprise  software     o Users  pay  on  subscription  or  per-­‐transaction  e.g.  Salesforce.com   o Service  Level  Agreements  (SLAs):  formal  agreement  with  service   providers,  performance  measurement,  support  options   • (Web)  Mashups:  Combinations  of  two  or  more  online  applications,  such  as   combining  mapping  software  (Google  Maps)  with  local  content   • Apps:  Small  pieces  of  software  that  run  on  the  Internet,  on  computer,  or  cell   phone,  Generally  delivered  over  the  Internet   o Success  of  mobile  platform  depends  in  lage  part  on  quantity  and  quality  of   apps,  high  switching  costs     4  Management  Issues     Dealing  with  platform  and  infrastructure  change   • As  firms  shrink  or  grow,  IT  needs  to  be  flexible  and  scalable   • Scalability:  Ability  to  expand  to  serve  larger  numbers  of  users  w/o  break  down   • For  mobile  computing  and  cloud  computing:  new  policies  and  procedures  for   managing,  Contractual  agreements  with  firms  running  clouds  and  distributing   software  required  (SLA)     Management  and  governance   • Who  controls  IT  infrastructure?   • How  should  IT  department  be  organized?   o Centralized:  Central  IT  department  makes  decisions   o Decentralized:  Business  unit  IT  departments  make  own  decisions   • How  are  costs  allocated  between  divisions,  departments?     Making  wise  infrastructure  investments   • Amount  to  spend  on  IT  is  complex  question  (too  much  =  idle  times,  too  less  =  no   delivering,  outperforming  competitors  à  rent  vs.  buy,  security   • Total  cost  of  ownership  (TCO)  model     o Analyzes  direct  and  indirect  costs   o Hardware,  software  account  for  only  about  20%  of  TCO   o Other  administration  costs:  Installation,  training,  support,  maintenance,   infrastructure,  downtime,  space  and  energy   o TCO  can  be  reduced  through  better  management,  use  of  cloud  services,   greater  centralization  and  standardization  of  hardware  and  software   resources  

Competitive  forces  model  for  IT  infrastructure  investment   1. Market  demand  for  firm’s  services  (inventory  of  current  services  meet  needs  of   groups  of  customers,  suppliers,  employees,  complaining?)   2. Firm’s  business  strategy  (analyze  5  year  business  strategy,  requirement  to   achieve  strategic  goals?)   3. Firm’s  IT  strategy,  infrastructure,  and  cost  (TCO  analysis,  5  years  IT  strategy)   4. Information  technology  assessment  (behind  or  on  the  bleeding  edge  to  be   avoided,  standards  should  be  established,  multiple  cost  competing  vendors)   5. Competitor  firm  services  (quantitative  and  qualitative  measures  to  compare)   6. Competitor  firm  IT  infrastructure  investments  (benchmark  expenditures  for  IT   infrastructure)    

                                   

 

Chapter  6   Foundations  of  Business  Intelligence:  Database  and  Information   Management    

• •

Effective  IS  provides  accurate,  timely  and  relevant  information   Often:  poorly  organized  and  maintained  data  

  File  organization  concepts   • Field:  Group  of  characters  as  word(s)  or  number   o Describes  an  entity  (person,  place,  thing  on  which  we  store  information)   o Attribute:  Each  characteristic,  or  quality,  describing  entity   • Record:  Group  of  related  fields,  describing  entitiy   • File:  Group  of  records  of  same  type     • Database:  Group  of  related  files    

    Problems  with  traditional  file  environment   • Traditional  approach:  files  maintained  separately  by  different  departments  with   unique  data  files  and  own  applications   • Data  redundancy:  Presence  of  duplicate  data  in  multiple  files,  waste  storage  res.   • Data  inconsistency:  Same  attribute  has  different  values,  or  names,  coding  systems   • Program-­‐data  dependence:  When  changes  in  program  requires  changes  to  data   accessed  by  program,  other  programs  don’t  work  anymore   • Lack  of  flexibility,  only  routine  scheduled  reports,  no  ad  hoc  requests   • Poor  security,  not  knowing  who  has  access  and  changes  the  data   • Lack  of  data  sharing  and  availability  (no  trust  in  accuracy)    

Database  Approach  to  Data  Management   Database   • Serves  many  applications  by  centralizing  data  and  controlling  redundant  data   using  a  DBMS   Database  management  system  (DBMS)   • Software  to  organize,  centralize,  manage  data  efficiently,  provide  access   • Interfaces  between  applications  and  physical  data  files   • Separates  logical  and  physical  views  of  data  (user  don’t  need  to  know  where  the   data  actually  is  stored  and  organized  (physical  view),  only  see  the  data  as  they   would  be  perceived  (logical  view)  à  available  for  different  logical  views   • Solves  problems  of  traditional  file  environment   o Controls  redundancy  by  minimizing  isolated  files   o Eliminates  inconsistency   o Uncouples  programs  and  data   o Enables  organization  to  centrally  manage  data  and  data  security,  reducing   costs,  ad  hoc  queries   Relational  DBMS   • Keep  track  of  entities,  attributes,  relationships   • Represent  data  as  two-­‐dimensional  tables  called  relations  or  files   • Each  table  contains  data  on  entity  and  its  attributes   • E.g.  Microsoft  Access  =  relational  DBMS  for  desktop  systems,  MySQL   Table:  grid  of  columns  and  rows   • Rows  (tuples):  Records  for  different  entities   • Fields  (columns):  Represents  attribute  for  entity   • Key  field:  Field  used  to  uniquely  identify  each  record,     • Primary  key:  Field  in  table  used  for  key  fields,  cannot  be  duplicated   • Foreign  key:  Primary  key  used  in  second  table  as  look-­‐up  field  to  identify  records   from  original  table    

  Operations  of  a  Relational  DBMS  (Three  basic  operations  to  develop  useful  sets  of  data)   • SELECT:  Creates  subset  of  data  of  all  records  that  meet  stated  criteria   • JOIN:  Combines  relational  tables  to  provide  user  with  more  information  than   available  in  individual  tables   • PROJECT:  Creates  subset  of  columns  in  table,  creating  tables  with  only  the   information  specified    

 

Object-­‐Oriented  DBMS  (OODBMS)   • Stores  data  and  procedures  as  objects,  can  be  automatically  retrieved  and  shared   • Objects  can  be  graphics,  multimedia,  Java  applets,  not  only  structured  numbers   and  characters,  integrate  from  various  sources   • Relatively  slow  compared  with  relational  DBMS  for  processing  large  numbers  of   transactions   • Hybrid  object-­‐relational  DBMS:  Provide  capabilities  of  both  OODBMS  and   relational  DBMS     Databases  in  the  cloud   • Typically  less  functionality  than  on-­‐premises  DBs   • Now:  used  by  web-­‐focused  start-­‐ups,  lower  prices   • Amazon  Web  Services  (MySQL,  license  Oracle),  Microsoft  SQL  Azure  (integrating   with  existing  software)   • Charged  based  on  usage  time,  volume  data  stored,  input  requests,  amount  read  or   written   • Able  to  scale  computing  resources  in  response  to  real-­‐time  demand,  costs  low     Capabilities  of  Database  Management  Systems   • Organize,  Manage,  Access  data  in  the  database   • Data  definition  capability:  Specifies  structure  of  database  content,  used  to  create   tables  and  define  characteristics  of  fields   • Data  dictionary:  Automated  or  manual  file  storing  definitions  of  data  elements   and  their  characteristics  (name,  description,  size,  type,  format,  usage,  ownership,   authorization,  security,  individuals,  business  functions,  programs,  reports)   • Data  manipulation  language:  Used  to  add,  change,  delete,  retrieve  data     o Structured  Query  Language  (SQL)   o Large/midrange  computers:  DB2,  Oracle,  SQL  Server  employ  SQL   o Microsoft  Access  use  user-­‐friendly  tools  of  SQL  for  querying  databases   • Many  DBMS  have  report  generation  capabilities  for  creating  polished  reports   (Crystal  Reports  =  very  popular  report  generator),  developing  system   applications  for  data  entry  screens,  reports,  logic  for  processing  transactions     Designing  Databases   • Conceptual  (logical)  design:  Abstract  model  from  business  perspective   • Physical  design:  How  database  is  arranged  on  direct-­‐access  storage  devices   • Understand  relationship  among  data,  type  of  data,  grouping,  usage,  changes   • Relationships  among  data  elements,  redundant  database  elements   • Most  efficient  way  to  group  data  elements  to  meet  business  requirements,  needs   of  application  programs   • Normalization:  Streamlining  complex  groupings  of  data  to  minimize  redundant   data  elements  and  awkward  many-­‐to-­‐many  relationships  (small,  stable,  flexible   data  structures)   • Enforce  referential  integrity  rules,  ensure  relationships  remain  consistent  (e.g.  no   parts  from  nonexistent  suppliers)   • Entity-­‐relationship  diagram:  Used  by  database  designers  to  document  the  data   model,  Illustrates  relationships  between  entities   • Distributing  databases:  Storing  database  in  more  than  one  place   • Partitioned:  Separate  locations  store  different  parts  of  database   • Replicated:  Central  database  duplicated  in  entirety  at  different  locations    

  Understand  organizations  data  and  how  it  should  be  represented  in  a  database  to  serve   business  well  with  your  data  model,  or  the  data  will  be  inaccurate,  incomplete,  and   difficult  to  retrieve!     Using  Databases  to  improve  business  performance  and  decision-­‐making   • Keep  track  of  basic  transactions   • Provide  information  to  run  business  more  efficiently,  make  better  decisions   • Very  large  databases  and  systems  require  special  capabilities,  tools  to  analyze   large  quantities  of  data,  to  access  data  from  multiple  systems   • Data  warehousing,  data  mining,  tools  for  accessing  internal  databases  through   web     Data  warehousing   • Stores  current  +  historical  data  from  many  core  operational  transaction  systems   • Consolidates  and  standardizes  information  for  use  across  enterprise,  but  data   cannot  be  altered   • Data  warehouse  system  will  provide  query,  analysis,  and  reporting  tools   • E.g.  Catalina  Marketing  largest  loyalty  database  in  the  world,  US  Internal  Revenue   Service  (IRS)  with  Compliance  Data  Warehouse  consolidating  taxpayer  data  from   different  resources  into  relational  structure  (find  out  who  cheats)       Data  marts   • Subset  of  data  warehouse,  smaller,  decentralized   • Summarized  or  highly  focused  portion  of  firm’s  data  for  use  by  specific   population  of  users   • Typically  focuses  on  single  subject  or  line  of  business,  constructed  more  rapidly,   lower  costs   • E.g.  Barnes  and  Noble  point-­‐of-­‐sale,  college  bookstore,  online  sales     Business  Intelligence   • Tools  for  consolidating,  analyzing,  and  providing  access  to  vast  amounts  of  data   to  help  users  make  better  business  decisions  (patterns,  relationships,  insights)   • Principle  tools  include:  Software  for  database  query  and  reporting,   multidimensional  online  analytical  processing  (OLAP),  data  mining     Online  analytical  processing  (OLAP)   • Supports  multidimensional  data  analysis:  Viewing  data  using  multiple   dimensions,  each  aspect  of  information  (product,  pricing,  cost,  region,   time  period)  is  different  dimension   • OLAP  enables  rapid,  online  answers  to  ad  hoc  queries  

• •

Building  3d  cubes  of  data,  can  be  nested  within  cubes  à  complex  views   Either  multidimensional  database  or  tool  creating  multidimensional  views  in   relational  databases  

  Data  mining   • More  discovery  driven  than  OLAP:  finds  hidden  patterns,  relationships  in  large   databases  and  infers  rules  to  predict  future  behavior   • Applications  for  all  functional  areas  of  business,  government,  scientific  work   • E.g.,  Finding  patterns  in  customer  data  for  one-­‐to-­‐one  marketing  campaigns  or  to   identify  profitable  customers.   • Types  of  information  obtainable  from  data  mining   o Associations,  occurrences  linked  to  a  single  event  (coke,  chips,  promotion)   o Sequences,  events  linked  over  time  (house  à  fridge,  oven)   o Classification,  inferring  set  of  rules,  patterns  that  describe  group  item   belongs  (discover  characteristics  of  customers  who  are  likely  to  leave)   o Clustering,  similar  to  classification  where  no  groups  defined  (partitioning   database  into  groups  of  customers  based  on  demographics)   o Forecasting,  use  series  of  existing  values  to  forecast  what  other  values  will   be  (finding  patterns  to  estimate  future  value  of  continuous  variables)   • High  level  analyses  of  patterns  or  trends,  can  also  drill  down  and  provide  more   detail  when  needed   • Predictive  analysis:  Uses  data  mining  techniques,  historical  data,  and   assumptions  about  future  conditions  to  predict  outcomes  of  events  (e.g.   probability  a  customer  will  respond  to  an  offer)     Text  mining   • Extracts  key  elements  from  large  unstructured  data  sets  (e.g.,  stored  e-­‐mails)   • 80%  of  organizations  useful  information   • Discover  patterns,  relationships,  summarize   • New  myriad  ways  unstructured  data  is  generated  by  consumers  and  the  business   uses  for  this  data     Web  mining   • Discovery  and  analysis  of  useful  patterns  and  information  from  WWW  (E.g.,  to   understand  customer  behavior,  evaluate  effectiveness  of  Web  site)   • Web  content  mining  (Knowledge  extracted  from  content  of  Web  pages)   • Web  structure  mining  (E.g.,  links  to  and  from  Web  page)   • Web  usage  mining  (User  interaction  data  recorded  by  Web  server)     Databases  and  the  Web   • Companies  use  Web  to  make  some  internal  databases  available  to  customers   • Typical  configuration  includes:   o Web  server  (accessed  via  web  browser,  client  computer),     o Application  server/middleware/CGI  scripts  (compact  program  using   Common  Gateway  Interface  specification  for  processing  data  on  a  web   server),  translation  HTML  to  SQL,  transfer  information,  handling  all   application  operations  incl.  transaction  processing,  data  access  btw.   Browser  and  database,  takes  requests,  runs  logic  process  transactions,   provides  connectivity   o Database  server  (hosting  DBM)  

•

Advantages  of  using  Web  for  database  access:   o Ease  of  use  of  browser  software   o Web  interface  requires  few  or  no  changes  to  database   o Inexpensive  to  add  Web  interface  to  system   Creating  new  efficiencies,  opportunities,  business  models  

•   Managing  Data  Resources   Establishing  an  information  policy   • Firm’s  rules,  procedures,  roles  for  sharing,  managing  (disseminating,  acquiring,   classifying,  inventorying),  standardizing  data/information   • Specific  procedures  and  accountabilities   • Data  administration:  Firm  function  responsible  for  specific  policies  and   procedures  to  manage  data  as  a  corporate  organizational  resource  (develop  info   policy,  planning  for  data,  overseeing  logical  database  design,  data  dictionary   development,  monitoring  usage)   • Data  governance:  Policies  and  processes  for  managing  availability,  usability,   integrity,  and  security  of  enterprise  data,  especially  as  it  relates  to  government   regulations,  promoting  privacy,  security,  quality,  compliance   • Database  administration:  Defining,  organizing,  implementing,  maintaining   database;  access  rules,  security  procedures,  performed  by  database  design  and   management  group       Ensuring  data  quality   • More  than  25%  of  critical  data  in  Fortune  1000  company  databases  are   inaccurate  or  incomplete  leading  to  incorrect  decisions,  product  recalls,  financial   losses   • Most  data  quality  problems  stem  from  faulty  input,  esp.  now  when  companies   move  business  to  web  and  customers/suppliers  enter  data  directly   • Before  new  database  in  place,  need  to:   o Identify  and  correct  faulty  data     o Establish  better  routines  for  editing  data  once  database  in  operation   • Data  quality  audit:  Structured  survey  of  the  accuracy  and  level  of  completeness  of   the  data  in  an  IS  (Survey  samples/entire  from  data  files,  or  Survey  end  users  for   perceptions  of  quality)   • Data  cleansing  (scrubbing):  Software  to  detect  and  correct  data  that  are   incorrect,  incomplete,  improperly  formatted,  or  redundant   o Enforces  consistency  among  different  sets  of  data  from  separate  IS                            

Chapter  7   Telecommunications,  the  Internet  and  Wireless  Technology    

Networking  and  communication  trends   • Convergence:  Past:  telephone  networks  (voice  communication,  voice   transmission  tech)  and  computer  networks  (data  traffic)  à  now  converging  into   single  digital  network  using  Internet  standards   • Broadband  access:  more  powerful  (faster)  and  more  portable  (smaller),  less   expensive   • Broadband  wireless:  voice  and    data  communication,  cell  phones..     What  is  a  computer  network?   • Two  or  more  connected  computers   • Major  components  in  simple  network:     • Client  computer  and  Server  computer  (perform  important  network  functions,   serving  web  pages,  storing  data  and  NOS),     • Network  interfaces  (cards:  NICs)  –  build  in  motherboard,     • Connection  medium  (telephone  wire,  coaxial  cable,  radio  signal),     • Network  operating  system  (NOS,  routes  and  manages  communication,   coordinates  network  resources),  Windows  Server,  Linux,  Novell   • Hub  (simple  device,  send  data  to  all  connected  devices)  or  switch  (more   intelligence,  filter  and  forward  data  to  specific  destination)  acting  as  a  connection   point     • Routers:  Device  used  to  route  packets  of  data  through  different  networks,   ensuring  that  data  sent  gets  to  the  correct  address     Networks  in  large  companies  (problem:  coherent  system,  integrations)   • Hundreds  of  local  area  networks  (LANs)  linked  to  firmwide  corporate  network   • Various  powerful  servers  (Website,  Corporate  intranet,  extranet,  Backend)   • Mobile  wireless  LANs  (Wi-­‐Fi  networks)   • Videoconferencing  system   • Separate  Telephone  network  +  Wireless  cell  phones     Key  networking  technologies  (3)   Client/Server  computing   • Distributed  computing  model   • Powerful  Clients  linked  through  network  controlled  by  server  computer   • Server  sets  rules  of  communication,  provides  client  with  an  address   • Has  largely  replaced  centralized  mainframe  computing   • The  Internet:  Largest  implementation  of  client/server  computing     Packet  Switching   • Slicing  digital  messages  into  parcels  (packets),  sending  packets  along  different   communication  paths  as  they  become  available,  reassembling  packets  at   destination   • Previous  circuit-­‐switched  networks  required  assembly  of  complete  point-­‐to-­‐ point  circuit  (expensive,  wasting  capacity)   • More  efficient  use  of  network’s  communications  capacity    

Data  

TCP/IP  and  connectivity   • Connectivity  between  computers  (different  hardware  and  software)  enabled  by   protocols  (Rules  that  govern  transmission  of  information  between  two  points)   • Transmission  Control  Protocol/Internet  Protocol  (TCP/IP):  Common  worldwide   standard  that  is  basis  for  Internet   • TCP:  handles  movement  of  data,  establishes  connection,  sequences  transfer  of   packets   • IP:  responsible  for  delivery  of  packets,  dissembling  and  reassembling  of  packets   during  transmissions   • Four  layers  (department  of  defense  reference  model)   o Application  layer  (enables  apps  access  to  other  layers,  exchange  data   protocol  like  HTTP  (hyper  Text  Transfer  Protocol)   o Transport  layer  (provide  app  layer  with  communication  and  packet   services,  TCP  and  other  protocols)   o Internet  layer  (addressing,  routing,  IP  datagrams  (packaging  data  packets)   o Network  interface  layer  (bottom,  placing  packets,  receiving  them  from   network  medium)     Signals:  digital  vs.  analog   • Analog:  continuous  waveform,  used  for  voice  communications   • Digital:  discrete,  binary  waveform,  strings  of  two  discrete  states  (1  +  0),  on  and   off  electrical  pulses   • Modem:  translates  digital  signals  into  analog  forms  (computing  to  telephone  lines   and  cables)  –  modulator-­‐demodulator     Types  of  networks   Local-­‐area  networks  (LANs)   • Connect  personal  and  other  digital  devices  within  500m  radius   • 1  dedicated  network  file  server,  providing  access  to  shared  resources,  determine   who  gets  access,  in  which  sequence,  large:  various  dedicated  servers   • Router  connects  LAN  to  other  networks  (external  information  exchange)   • Ethernet  =  dominant  LAN  Standard,  physical   • Peer-­‐to-­‐peer  =  treat  all  processors  equally,  exchange  data  by  direct  access,  charge   peripheral  devices  without  server  (Windows:  workgroup,  not  domain  network)   • Topologies  (way  components  are  connected):  star  (single  hub),  bus  (single   transmission  segment,  both  directions,  most  common,  same  signals),  ring  (closed   loop,  ones  station  transmits  at  a  time)   • Campus-­‐area  networks  (CANs),  1000m  radius   • Wide-­‐area  networks  (WANs)  à  e.g.  Internet   • Metropolitan-­‐area  networks  (MANs)     Physical  transmission  media   • Twisted  wire  (modems),  telephone  analog  communication,  but  also  usable  for   digital  (copper)  –  100m,  up  to  1  Gbps   • Coaxial  cable,  larger  volume,  1  Gbps,  longer  distances  (insulated  copper)   • Fiber  optics  and  optical  networks  (bound  strands  glass  fiber,  pulses  of  light)   o Faster,  lighter,  more  durable  for  large  volumes,  expensive   o Dense  wavelength  division  multiplexing  (DWDM)   • Wireless  transmission  media  and  devices  (radio  signals)  

•

o Microwave:  high  frequencx,  high  vlume,  long  distance,  point  to  point,  fllow   straight  line  (station  every  37  miles)   o Satellites  for  TV  and  Internet   o Cellular  telephones:  radio  waves  +  protocols,  radio  antennas  (towers)  in   cells,  information  passing  from  cell  to  cell   Transmission  speed  (hertz  =  number  of  cycles  per  second,  bandwidth  =  range  of   frequencies  =  difference  between  highest  and  lowest  frequency  on  a  single   channel):  bits  per  second,  function  of  frequency  

  The  Global  Internet   • Connection  by  subscribing  to  Internet  service  provider  (ISP)  with  permanent   connection  selling  temporary  access   • Traditional  telephone  line  and  modem  (56.6  kbps),  Digital  subscriber  line  (DSL,  9   Mbps),  cable  (15  mbps),  satellite,  T  lines  (t1  =  1.54  mbps,  t3  =  45  mbps)   international  telephone  standards,  guaranteed  service  levels)     Internet  addressing  and  architecture   • Internet  Protocol  (OP)  address  unique  per  computer  (4  stings  of  number,  32  bit)   • Decomposed  message  into  packets  with  destination  address  using  TCP  protocol   • The  Domain  Name  System  (DNS)  converts  domain  names  to  IP  addresses   o Hierarchical  structure  (top:  root  domains)   o Top-­‐level  domains  (child  of  root),  .com,  .gov,  .edu,  .de   o Second  level  domain:  two  part,  addition  to  top  level   • Internet  Architecture  and  Governance   o Transcontinental  high  speed  backbone  networks  owned  by  telephone   companies  (network  service  providers)  and  national  governments   o Local  connections  owned  by  regional  telephone/cable  comp.,  leasing   o Organization  pays  for  own  networks,  local  connections  services,  part  to   long  distance  trunk  line  owners,  individuals  subscription  fee  (flat)   o Payments  not  based  on  heaviness,  volume  à  network  neutrality  debate   o Network  access  pints  (NAP),  metropolitan  are  exchanges  (MAEs)  =  hubs   ton  intersection  backbone  and  regional/local  networks     o No  formal  management  but  policies  and  influences  by  IAB  (internet   architecture  board),  ICANN  (internet  corporation  for  assigned  names  and   numbers,  assigning  IP  addresses),  W3C  (world  wide  web  consortium,   HTML  standards)   o Goal  keeping  internet  operating  efficiently,  conform  to  laws  of  the   sovereign  nation-­‐states,  technical  infrastructures   • The  Future  Internet:  IPv6  (more  possibilities,  128bit)  and  Internet2  (=  Next   Generation  Internet  NGI)  -­‐>  working  on  new  robust,  performance  internet  (200   companies,  universities,  governments)  –  developing  new  technologies  routing   practices,  levels  of  service,  importance  of  data,  distributed  computing                  

Internet  Services  and  Communication  Tools  

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VoIP   VPN  

Implemented  by  one  or  more  software  programs   Run  on  single  server  computer  or  different  machine   Increase  work  productivity  but  not  always  the  case   Monitoring  or  regulating  online  activity,  ethical  and  privacy  concerns  

  VoIP  reducing  communication  costs  by  20-­‐30%   IP  network:  lowering  long  distance  costs,  eliminating  monthly  fees  for  private   lines,  single  voica  data  infrastructure  for  telecommunications  and  computing,   flexibility  (easy  adding  new  phones,  voce  and  email  combined  into  single   directory  (Bayer  did  that!))   Merge  disparate  communication  modes  into  a  single  universally  accessible   service  using  unified  communications  technology   Past:  dedicated  and  expensive  private  network     Today:  less  expensive  virtual  private  network  (VPN)  within  public  Internet   o Secure,  encrypted,  private  within  public  network   o Advantage  of  economies  of  scale     o Combining  voice  and  data  networks   o Point  to  Point  Tunneling  Protocol  (PPTP)  –  packets  encrypted  and   wrapped  inside  IP  packets  

  World  Wide  Web   • Most  popular  Internet  service,  with  universally  accepted  standards  for  storing,   retrieving,  formatting,  and  displaying  information   • Web  site  =  connection  web  pages  linked  to  a  home  page,  links  to  other  media  

 

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HTML  (Hypertext  Markup  Language):  Formats  documents  for  display  on  Web,   incorporates  dynamic  links  to  other  media   Hypertext  Transfer  Protocol  (HTTP):  Communications  standard  used  for   transferring  Web  pages   Uniform  resource  locators  (URLs):  Addresses  of  Web  pages   Web  servers:  Software  for  locating  and  managing  Web  pages,  most  common:   open  source  Apache  HTTP  Server  (54%)  

  Searching  for  Information  on  the  Web   • 100  billion  web  pages  public  available,  but  also  deep  web  à  900  billion   additional  pages  cannot  be  visited  without  access  code,  protected   • Search  engines  =  killer  app”  of  Internet  era,  sift  through  different  files   • Started  in  early  1990s  as  relatively  simple  software  programs  using  keyword   indexes,  now  Google    (page  rank  system),  Yahoo,  Bing   • Major  source  of  Internet  advertising  revenue  via  search  engine  marketing,   using  complex  algorithms  and  page  ranking  techniques  to  locate  results   • Sponsors,  paid  search  results  on  top  à  at  the  right  time  match  consumer  interes   • Search  engine  optimization:  better  search  engine  recognitions,  higher  ranks,  on   top  of  the  search  result  list,  improve  quality  and  volume  of  Web  traffic,  popularity   (links  to  that  web  site)   • Challenging  searching  videos   • Intelligent  Agent  shopping  bots:  software  agents  with  built  in  intelligence,  gather   info,  perform  tasks  to  assist  users,  making  purchase  filter,  pricing  and  availability     Web  2.0   • Collaboration,  sharing,  creating  new  services   • 4  defining  features:  Interactivity,  real-­‐time  user  control,  social  participation,   user-­‐generated  content   • Technologies/services:  Cloud  computing,  Blogs/RSS,  Mashups    &  widgets  (mix   and  match  content  or  software  components,  e.g.  Flickr),  Wikis,  Social  networks   • Blog:  chronological  entries,  blog  roll,  trackbacks,  comments,  Templates  (no  HTML   skills  needed)  à  blogosphere   • RSS:  Rich  Site  Summary,  Really  Simple  Syndication  à  syndicates  content,  feeds,   subscribe  and  automatically  receive  new  content   • Wikis:  collaborative  web  sites,  visitors  add,  modify  content,  monitoring  work  à   easy  to  share  information   • Social  networks:  build  communities,  profiles.  Interactivity,  real  time  user  control,   opinions,  how  communicate,  stay  in  touch,  advertising,  +  application   development  platforms     Web  3.0/  future  Web   • Effort  of  W3C  to  add  meaning  to  existing  Web  (woven  all  digital  information,   contacts  together  into  single  meaningful  experience)  =  Semantic  Web   • Make  searching  more  relevant  to  user,  meaningful  +  productive  (better  results)   • More  “intelligent”  computing,  analyze  and  manipulate,  reduce  amount  of  human   involvement  in  searching  and  processing  web  information   • 3D  Web  (walk  through  pages)   • Pervasive  Web  (controls  everything,  managing)   • Increase  in  cloud  computing,  SaaS,  Ubiquitous  connectivity  between  mobile  and   other  access  devices,  Make  Web  a  more  seamless  experience  

The  Wireless  Revolution   • Cell  phones,  laptops,  handheld  devices  à  portable  computing  platforms,   performing  tasks  we  used  to  do  at  our  desks   • Stay  in  touch  with  customers,  suppliers,  employees   • Flexible  arrangements  for  organizing  works   • Creation  of  new  products,  services,  sales  channels   • Smartphones:  email,  messaging,  wireless  Internet,  digital  photography,  personal   information  management  à  small  mobile  computers     Cellular  Systems   • Competing  standards  for  cellular  service   o CDMA(Code  Division  Multiple  Access):  United  States  (Verizon,  Sprint),   transmits  several  frequencies,  entire  spectrum   o GSM  (Global  System  for  Mobile  Communication):  Rest  of  world,  plus  AT&T   and  T-­‐Mobile,  international  roaming  capability   • Third-­‐generation  (3G)  networks:  Suitable  for  broadband  Internet  access  ,  144   Kbps  –  2Mbps,  special  cards  for  PCs   • 4G  networks:  Entirely    packet-­‐switched,  100  Mbps  –  1Gbps,  premium  quality,   high  security  à  Pre-­‐4G:    Long  Term  Evolution  (LTE),  mobile  WiMax     Wireless  computer  networks  and  Internet  access   • Bluetooth  (802.15)     o Links  up  to  8  devices  in  10-­‐m  area,  low  power  radio  signals   o Useful  for  personal  are  networking  (PANs)  and  in  business  to  transmit   data  from  handheld  devices  to  other  transmitters   • Wi-­‐Fi  (802.11)   o Set  of  standards:  802.11a,  802.11b  (11  mbps,  30-­‐50  m),  802.11g  (54   mbps),  802.11n  (100  mbps)   o Used  for  wireless  LAN  and  wireless  Internet  access   o Use  access  points:  bridge  device  with  radio  receiver/transmitter,  antennas   for  connecting  wireless  devices  to  a  wired  LAN,  router,  hub   o Hotspots:  Access  points  in  public  place  to  provide  maximum  wireless   coverage  for  a  specific  area   o Provide  low,  costs  wireless  LANs  and  internet  access   o Weak  security  features,  vulnerable  to  intruders   o Susceptibility  to  interference  from  nearby  systems,  solved  by  n-­‐standard:   multiple  antennas,  MIMO  (multiple  input,  multiple  output)   • WiMax  (802.16)  –  Worldwide  Interoperability  for  Microwave  Access   o Wireless  access  range  of  31  miles,  75  mbps   o Require  WiMax  antennas   o Sprint  Nextel  building  WiMax  network  as  foundation  for  4G  networks     Radio  Frequency  identification  (RFID)   • Use  tiny  tags  with  embedded  microchips  containing  data  about  an  item  and   location,  and  antenna   • Tags  transmit  radio  signals  over  short  distances  to  special  constantly   transmitting  RFID  readers,  which  send  data  over  network  to  computer  for   processing   • Active  RFID:  Tags  have  batteries,  data  can  be  rewritten,  range  is  hundreds  of  feet,   more  expensive  

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Passive  RFID:  Range  is  shorter,  also  smaller,  less  expensive,  powered  by  radio   frequency  energy   Common  uses:   o Automated  toll-­‐collection     o Tracking  goods  in  a  supply  chain   o E.g.  Walmart  combining  data  point  of  sale  systems  with  RFID  data    to   determine  which  items  will  soon  be  depleted,  automatically  generates  lists   Requires  companies  to  have  special  hardware  and  software,  massive  amount  of   data  à  Software  to  filter  and  aggregate,  applications  designed  to  accept  large   data  and  share  it  with  other  applications   Reduction  in  cost  of  tags  making  RFID  viable  for  many  firms  

  Wireless  sensor  networks  (WSNs)   • Networks  of  hundreds  or  thousands  of  interconnected  wireless  devices   embedded  into  physical  environment  to  provide  measurements  of  many  points   over  large  spaces   • Devices  (nodes)  have  built-­‐in  processing,  storage,  and  radio  frequency  sensors   and  antennas   • Require  low-­‐power,  long-­‐lasting  batteries  and  ability  to  endure  in  the  field   without  maintenance   • Used  to  monitor  building  security,  detect  hazardous  substances  in  air,  monitor   environmental  changes,  traffic,  or  military  activity   • Data  flowing  to  a  server  with  grater  processing  power,  gateway  to  network  based   on  Internet  technology                                                      

Chapter  8   Securing  Information  Systems  

  System  Vulnerability  and  Abuse   • Security:  Policies,  procedures  and  technical  measures  to  prevent  unauthorized   access,  alteration,  theft,  or  physical  damage   • Controls:  Methods,  policies,  and  organizational  procedures  ensure  safety  of   organization’s  assets;  accuracy  and  reliability  of  accounting  records;  and   operational  adherence  to  management  standards   • Vulnerability  through  technical,  organizational  and  environmental  factors,  poor   management  decisions,  communication  layers   • Accessibility  of  networks   • Hardware  problems  (breakdowns,  configuration  errors,  damage  from  improper   use  or  crime)   • Software  problems  (programming  errors,  installation  errors,  unauthorized   changes)   • Disasters  (fires,  floods..)   • Use  of  networks/computers  outside  of  firm’s  control   • Loss  and  theft  of  portable  devices      

  Internet  vulnerabilities   • Network  open  to  anyone,  Size:  abuses  can  have  wide  impact   • Use  of  fixed  Internet  addresses  creates  fixed  targets  hackers   • Unencrypted  VOIP  (no  use  of  VPN)   • E-­‐mail,  P2P,  IM:  Interception,  Attachments  with  malicious  software,  Transmitting   trade  secrets     Wireless  security  challenges   • Radio  frequency  bands  easy  to  scan   • SSIDs  (service  set  identifiers):  Identify  access  points,  Broadcast  multiple  times   • War  driving:  Eavesdroppers  drive  by  buildings  and  try  to  detect  SSID  and  gain   access  to  network  and  resources,  set  up  rogue  access  points   • WEP  (Wired  Equivalent  Privacy)  WPA2  (WiFi  Protected  Access)   o Security  standard  for  802.11;  use  is  optional   o Uses  shared  password  for  both  users  and  access  point  

 

Malware  (malicious  software)   • Viruses:  Rogue  software  program  that  attaches  itself  to  other  software  programs   or  data  files  in  order  to  be  executed,  deliver  “payload”,  spread  through  humans   • Worms:  Independent  computer  programs  that  copy  themselves  from  one   computer  to  other  computers  over  a  network   • Trojan  horses:  Software  program  that  appears  to  be  benign  but  then  does   something  other  than  expected,  does  not  replicate   • Computers,  mobile  devices,  web  2.0  applications   • SQL  injection  attacks:  Hackers  submit  data  to  Web  forms  that  exploits  site’s   unprotected  software  and  sends  rogue  SQL  query  to  database   • Spyware:  Small  programs  install  themselves  surreptitiously  on  computers  to   monitor  user  Web  surfing  activity  and  serve  up  advertising   • Key  loggers:  Record  every  keystroke  on  computer  to  steal  serial  numbers,   passwords,  launch  Internet  attacks     Hackers  and  computer  crime   • Hackers  vs.  crackers  (criminal  intent):  unauthorized  access,  weakness  in  security   protections   • System  intrusion  +  System  damage   • Cybervandalism:  Intentional  disruption,  defacement,  destruction  of  Web  site  or   corporate  information  system   • Spoofing   o Misrepresenting  oneself  by  using  fake  e-­‐mail  addresses  or  masquerading   as  someone  else   o Redirecting  Web  link  to  address  different  from  intended  one,  with  site   masquerading  as  intended  destination   • Sniffer   o Eavesdropping  program  that  monitors  information  traveling  over   network   o Enables  hackers  to  steal  proprietary  information  such  as  e-­‐mail,  company   files,  etc.   • Denial-­‐of-­‐service  attacks  (DoS):  Flooding  server  with  thousands  of  false  requests   to  crash  the  network.   • Distributed  denial-­‐of-­‐service  attacks  (DDoS):  Use  of  numerous  computers  to   launch  a  DoS   • Botnets:  Networks  of  “zombie”  PCs  infiltrated  by  bot  malware   • Computer  crime:  “any  violations  of  criminal  law  that  involve  a  knowledge  of   computer  technology  for  their  perpetration,  investigation,  or  prosecution”   o Computer  may  be  target  of  crime,  e.g.:  Breaching  confidentiality  of   protected  data,  Accessing  a  computer  system  without  authority   o Computer  may  be  instrument  of  crime,  e.g.:  Theft  of  trade  secrets,  Using  e-­‐ mail  for  threats  or  harassment   • Identity  theft:  Theft  of  personal  Information  (social  security  id,  driver’s  license  or   credit  card  numbers)  to  impersonate  someone  else   • Phishing:  Setting  up  fake  Web  sites  or  sending  e-­‐mail  messages  that  look  like   legitimate  businesses  to  ask  users  for  confidential  personal  data.   • Evil  twins:  Wireless  networks  that  pretend  to  offer  trustworthy  Wi-­‐Fi   connections  to  the  Internet  (e.g  log  credit  card  numbers)   • Pharming:  Redirects  users  to  a  bogus  Web  page,  even  when  individual  types   correct  Web  page  address  into  his  or  her  browser  (possible  when  they  gain  

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•

access  to  the  Internet  Address  Information  stored  by  internet  service  providers   to  speed  up  web  browsing  and  the  ISP  companies  have  flawed  software  in  their   servers,  hack  into  and  change  addresses)   Click  fraud:  Occurs  when  individual  or  computer  program  fraudulently  clicks  on   online  ad  without  any  intention  of  learning  more  about  the  advertiser  or  making   a  purchase   Global  threats:  Cyberterrorism  and  Cyberwarfare,  targeting  software  that  runs   electrical  power  grids,  air  traffic  control  systems,  networks  of  major  banks  

  Internal  threats:  employees   • Security  threats  often  originate  inside  an  organization  leaking  Inside  knowledge   • Sloppy  security  procedures,  User  lack  of  knowledge   • Social  engineering:  Tricking  employees  into  revealing  their  passwords  by   pretending  to  be  legitimate  members  of  the  company  in  need  of  information   • End  users  entering  faulty  data,  not  following  instructions   • IS  specialists:  errors  in  design,  development,  maintenance   Software  vulnerability   • Commercial  software  contains  flaws  that  create  security  vulnerabilities   – Hidden  bugs  (program  code  defects),  Zero  defects  cannot  be  achieved   because  complete  testing  is  not  possible  with  large  programs   – Flaws  can  open  networks  to  intruders,  impede  performance   • Patches:  Vendors  release  small  pieces  of  software  to  repair  flaws  (patch   management  by  users),  However  exploits  often  created  faster  than  patches  be   released  and  implemented     Business  Value  of  Security  and  Control   • Failed  computer  systems  can  lead  to  significant  or  total  loss  of  business  function   • Confidential  personal  and  financial  data,  Trade  secrets,  new  products,  strategies   • A  security  breach  may  cut  into  firm’s  market  value  almost  immediately   • Inadequate  security  and  controls  also  bring  forth  issues  of  liability   • Strong  security:  high  ROI,  employees  productivity,  lower  operational  costs     Legal  and  regulatory  requirements  for  electronic  records  management  and  privacy   protection   • Protection  data  from  abuse,  exposure,  unauthorized  access   • HIPAA:  Medical  security  and  privacy  rules  and  procedures   • Gramm-­‐Leach-­‐Bliley  Act:  Requires  financial  institutions  to  ensure  the  security   and  confidentiality  of  customer  data   • Sarbanes-­‐Oxley  Act:  Imposes  responsibility  on  companies  and  their  management   to  safeguard  the  accuracy  and  integrity  of  financial  information  that  is  used   internally  and  released  externally   Electronic  evidence   • Evidence  for  white  collar  crimes  often  in  digital  form  Data  on  computers,  e-­‐mail,   instant  messages,  e-­‐commerce  transactions   • Proper  control  of  data  can  save  time  and  money  when  responding  to  legal   discovery  request   Computer  forensics:     • Scientific  collection,  examination,  authentication,  preservation,  and  analysis  of   data  from  computer  storage  media  for  use  as  evidence  in  court  of  law   • Includes  recovery  of  ambient  and  hidden  data,  plan  needed  

Establishing  a  Framework  for  Security  and  Control   à  Where  company  at  risk,  what  controls  must  be  in  place,  security  policy,  plans  for   keeping  business  running  if  IS  not  operational   Information  systems  controls     • Manual  and  automated  controls   • General  and  application  controls     General  controls   • Govern  design,  security,  and  use  of  computer  programs  and  security  of  data  files   in  general  throughout  organization’s  IT  infrastructure.   • Apply  to  all  computerized  applications   • Combination  of  hardware,  software,  and  manual  procedures  to  create  overall   control  environment   • Types  of  general  controls:  Software  controls,  Hardware  controls,  Computer   operations  controls,  Data  security  controls,  Implementation  controls,   Administrative  controls     Application  controls   • Specific  controls  unique  to  each  computerized  application,  such  as  payroll  or   order  processing   • Include  both  automated  and  manual  procedures   • Ensure  that  only  authorized  data  are  completely  and  accurately  processed  by   that  application   • Input  controls:  authorization,  conversion,  editing,  error  handling   • Processing  controls:  updating   • Output  controls     Risk  assessment     • Determines  level  of  risk  to  firm  if  specific  activity  or  process  is  not  properly   controlled   • Determine  value  of  info  assets,  points  of  vulnerability,  likely  frequency  of  the   problem,  potential  for  damage   • Concentration  on  the  control  points  with  greatest  vulnerability  and  potential  for   loss     Security  policy   • Ranks  information  risks,  identifies  acceptable  security  goals,  and  identifies   mechanisms  for  achieving  these  goals,  most  important  assets   • Acceptable  use  policy  (AUP):  Defines  acceptable  uses  of  firm’s  information   resources  and  computing  equipment,  unacceptable,  consequences   • Authorization  policies:  Determine  differing  levels  of  user  access  to  information   assets   Identity  management   • Business  processes  and  tools  to  identify  valid  users  of  system  and  control  access:   Identifies  and  authorizes  different  categories  of  users,  Specifies  which  portion  of   system  users  can  access,  Authenticating  users  and  protects  identities   • Identity  management  systems:  Captures  access  rules  for  different  levels  of  users     Disaster  recovery  planning:  Devises  plans  for  restoration  of  disrupted  services   Business  continuity  planning:  Focuses  on  restoring  business  operations  after  disaster  

MIS  audit   • Examines  firm’s  overall  security  environment  as  well  as  controls  governing   individual  information  systems,  data  quality   • Reviews  technologies,  procedures,  documentation,  training,  and  personnel   • Simulate  disaster  to  test  response  of  technology,  IS  staff,  other  employees   • Lists  and  ranks  all  control  weaknesses  and  estimates  probability  of  their   occurrence,  Assesses  financial  and  organizational  impact  of  each  threat     Technologies  and  Tools  for  Protecting  Information  Resources   Identity  management  software   • Automates  keeping  track  of  all  users  and  privileges   • Authenticates  users,  protecting  identities,  controlling  access   • Authentication:  Password  systems,  Tokens,  Smart  cards,  Biometric       Firewall:  Combination  of  hardware  and  software  that  prevents  unauthorized  users  from   accessing  private  networks   • Static  packet  filtering:  examines  selected  fields  in  headers  of  individual  packets   • Stateful  inspections:  track  info  over  multiple  packets,  part  of  approved   conversation,  legitimate  connection   • Network  address  translation  (NAT):  conceals  ip  addresses  of  internal  host   computers   • Application  proxy  filtering:  examines  app  content  of  packets     Intrusion  detection  systems:   • Monitor  hot  spots  on  corporate  networks  to  detect  and  deter  intruders   • Examines  events  as  they  are  happening  to  discover  attacks  in  progress   • Raises  alarm  or  shuts  down  sensitive  network  part   Antivirus  and  antispyware  software:   • Checks  computers  for  presence  of  malware  and  can  often  eliminate  it  as  well   • Require  continual  updating   Unified  threat  management  (UTM)  systems:  firewalls,  VPNs,  IDS,  web  content  filtering,   anti  spam  software     Securing  wireless  networks   • WEP  security  can  provide  some  security  by  Assigning  unique  name  to  network’s   SSID  and  not  broadcasting  SSID,  Using  it  with  VPN  technology   • Wi-­‐Fi  Alliance  finalized  WAP2  specification,  replacing  WEP  with  stronger   standards:  Continually  changing  keys,  Encrypted  authentication  system  with   central  server     Encryption   • Transforming  text  or  data  into  cipher  text  that  cannot  be  read  by  unintended   recipients,  encryption  key   • Secure  Sockets  Layer  (SSL)  and  successor  Transport  Layer  Security  (TLS)   between  2  computers   • Secure  Hypertext  Transfer  Protocol  (S-­‐HTTP)  limited  to  individual  messages   • Symmetric  key  encryption:  Sender  and  receiver  use  single,  shared  key   • Public  key  encryption:  Uses  two,  mathematically  related  keys:  Public  key  and   private  key,  Sender  encrypts  message  with  recipient’s  public  key,  Recipient   decrypts  with  private  key  

Digital  certificate:     • Data  file  used  to  establish  the  identity  of  users  and  electronic  assets  for   protection  of  online  transactions   • Uses  a  trusted  third  party,  certification  authority  (CA),  to  validate  a  user’s   identity   • CA  verifies  user’s  identity,  stores  information  in  CA  server,  which  generates   encrypted  digital  certificate  containing  owner  ID  information  and  copy  of   owner’s  public  key   Public  key  infrastructure  (PKI)   • Use  of  public  key  cryptography  working  with  certificate  authority   • Widely  used  in  e-­‐commerce     Ensuring  system  availability:  Online  transaction  processing  requires  100%  availability,   no  downtime   • Fault-­‐tolerant  computer  systems:  Contain  redundant  hardware,  software,  and   power  supply  components  that  create  an  environment  that  provides  continuous,   uninterrupted  service   • High-­‐availability  computing   o Helps  recover  quickly  from  crash,  Minimizes  not  eliminates  downtime   o Backup  servers,  multiple  server  distribution,  high  capacity  storage,  god   disaster  recovery  and  business  continuity  plans   • Recovery-­‐oriented  computing:  Designing  systems  that  recover  quickly  with   capabilities  to  help  operators  pinpoint  and  correct  of  faults  in  multi-­‐component   systems   • Controlling  network  traffic:  Deep  packet  inspection  (DPI)  Video  and  music   blocking,  using  prioritizing   • Security  outsourcing:  Managed  security  service  providers  (MSSPs)     Security  in  the  cloud   • Responsibility  for  security  resides  with  company  owning  the  data   • Firms  must  ensure  providers  provides  adequate  protection   • Service  level  agreements  (SLAs)  including  controls     Securing  mobile  platforms   • Security  policies  should  include  and  cover  any  special  requirements  for  mobile   devices   • Tools  to  authorize  all  devices  in  use,  maintain  inventory  records,  updates,  lock     Ensuring  software  quality  (software  metrics  and  testing)   • Software  metrics:  Objective  assessments  of  system  in  form  of  quantified   measurements,  identify  problems  as  they  occur   • Carefully  designed,  formal,  objective,  used  consistently     • Examples:  Number  of  transactions,  Online  response  time,  Payroll  checks  printed   per  hour,  Known  bugs  per  hundred  lines  of  code   • Early  and  regular  testing  to  uncover  errors   • Walkthrough:  Review  of  specification  or  design  document  by  small  group  of   qualified  people   • Debugging:  Process  by  which  errors  are  eliminated      

Chapter  9   Achieving  Operational  Excellence  and  Customer  Intimacy:  Enterprise   Applications  

  Enterprise  Systems  =  Enterprise  Resource  Planning  Systems  (ERP)   • Suite  of  integrated  software  modules  and  a  common  central  database   • Collects  data  from  many  divisions  of  firm  for  use  in  internal  business  activities   • Information  entered  in  one  process  is  immediately  available  for  other  processes     Enterprise  Software   • Built  around  thousands  of  predefined  business  processes  that  reflect  best   practices   • Finance/accounting,  Human  resources,  Manufacturing/production,   Sales/marketing   • To  implement,  firms:  Select  functions  of  system  they  wish  to  use,  Map  business   processes  to  software  processes,  Use  software’s  configuration  tables  for   customizing   • Leading  ES  vendors:  SAP,  Oracle,  Infor  Global  Solutions,  Microsoft   • Communicate  with  customers,  suppliers,  other  entities     Business  value  of  enterprise  systems   • Increase  operational  efficiency   • Provide  firm  wide  information  to  support  decision  making   • Enforce  standard  practices  and  data   • Enable  rapid  responses  to  customer  requests  for  information  or  products,  reduce   cycle  time  and  costs,  centralize   • Include  analytical  tools  to  evaluate  overall  organizational  performance,  improved   decision  making     Supply  Chain  Management  Systems   Supply  Chain   • Network  of  organizations  and  processes  for:   o Procuring  raw  materials  (procurement)   o Transforming  them  into  products  (manufacturing)   o Distributing  the  products  (distribution)   • Flow  of  materials,  information,  payments  in  both  directions   • Primary,  secondary,  tertiary  suppliers  (tier  1,2,3)   • Upstream  supply  chain:  Firm’s  suppliers,  suppliers’  suppliers,  processes  for   managing  relationships  with  them   • Downstream  supply  chain:  Organizations  and  processes  responsible  for   delivering  products  to  customers                    

Information  and  supply  chain  management   • Inefficiencies  caused  by  inaccurate/untimely  information  cut  into  operating  costs   • Just-­‐in-­‐time  strategy:  Components  arrive  as  they  are  needed,  Finished  goods   shipped  after  leaving  assembly  line   • Safety  stock:  Buffer  for  lack  of  flexibility  in  supply  chain   • Bullwhip  effect:  Information  about  product  demand  gets  distorted  as  it  passes   from  one  entity  to  next  across  supply  chain,  more  inventory,  ripples,  magnifying   change  à  excess  inventory,  production,  warehousing,  shipping  costs   • Tamed  by  reducing  uncertainties  by  demand  and  supply,  accurate  and  up-­‐to  date   information,  share  dynamic  info    

    Supply  chain  management  software   • Supply  chain  planning  systems:  Model  existing  supply  chain   o Demand  planning  (determine  amount  of  products  to  satisfy  demands)   o Optimize  sourcing,  manufacturing  plans   o Establish  inventory  levels   o Identifying  transportation  modes   • Supply  chain  execution  systems:  Manage  flow  of  products  through  distribution   centers  and  warehouses,  efficiency     Global  Supply  Chains  and  the  Internet   • Global  supply  chains  typically  span  greater  geographic  distances  and  time   differences   • Different  performance  standards   • More  complex  pricing  issues  (local  taxes,  transportation,  etc.)   • Foreign  government  regulations,  cultural  differences   • Internet  helps  companies  manage  many  aspects  of  global  supply  chains:  sourcing,   transportation,  communications,  international  finance  (no  slow  downs,  errors,   uncertainty)  à  outsourcing  to  third  party  logistic  providers,  contract   manufacturing     Supply  chain  management  systems   • Push-­‐based  model  (build-­‐to-­‐stock):  Schedules  based  forecasts  of  demand   • Pull-­‐based  model  (demand-­‐driven,  build-­‐to-­‐order):  Customer  orders  trigger   events  in  supply  chain   • Sequential  supply  chains:  Information  and  materials  flow  sequentially  from   company  to  company   • Concurrent  supply  chains:  Information  flows  in  many  directions  simultaneously   among  members  of  a  supply  chain  network   • Future  Internet  driven:  digital  logistics  nervous  system  

Business  value  of  SCM  systems   • Streamline  internal  and  external  supply  chain  processes   • Match  supply  to  demand   • Reduce  inventory  levels   • Improve  delivery  service   • Speed  product  time  to  market   • Use  assets  more  effectively   • Reduced  supply  chain  costs  lead  to  increased  profitability   • Increased  sales     Customer  Relationship  Management  Systems   • In  large  businesses,  too  many  customers  and  too  many  ways  customers  interact   with  firm   • Capture  and  integrate  customer  data  from  all  over  the  organization   • Consolidate  and  analyze  customer  data   • Distribute  customer  information  to  various  systems  and  customer  touch  points   (contact  point)  across  enterprise   • Provide  single  enterprise  view  of  customers  to  increase  sales  and  service     Customer  Relationship  Management  Software   • CRM  packages  range  from  niche  tools  to  large-­‐scale  enterprise  applications   • Partner  relationship  management  (PRM)   o Integrating  lead  generation,  pricing,  promotions,  order  configurations,   and  availability   o Tools  to  assess  partners’  performances   • Employee  relationship  management  (ERM)   o E.g.  Setting  objectives,  employee  performance  management,  performance-­‐ based  compensation,  employee  training   • Major  vendors:  Siebel  Systems  (Oracle),  PeopleSoft,  SAP,  Salesforce.com,   Microsoft  Dynamics  CRM     CRM  packages  typically  include  tools  for:   • Sales  force  automation  (SFA):  increase  productivity,  focusing  on  profitable   customers  E.g.  sales  prospect  and  contact  information,  and  sales  quote   generation  capabilities,  personalized  recommendations   • Customer  service:  increase  efficiency  call  center,  help  desks,  support  staff,  E.g.   assigning  and  managing  customer  service  requests;  Web-­‐based  self-­‐service   capabilities   • Marketing:  support  direct  marketing  campaigns  E.g.  capturing  prospect  and   customer  data,  opportunities  for  cross  selling  (complementary  products)                      

Operational  and  Analytical  CRM   • Operational  CRM:  Customer-­‐facing  applications,  E.g.  sales  force  automation,  call   center  and  customer  service  support,  and  marketing  automation   • Analytical  CRM:  Analyze  customer  data  output  from  operational  CRM   applications,  Based  on  data  warehouses  populated  by  operational  CRM  systems   and  customer  touch  points  (online  analytical  processing  –  OPLAP),  Customer   lifetime  value  (CLTV)    

    Business  value  of  CRM   • Increased  customer  satisfaction   • Reduced  direct-­‐marketing  costs   • More  effective  marketing   • Lower  costs  for  customer  acquisition/retention   • Increased  sales  revenue   • Reduce  churn  rate     o Number  of  customers  who  stop  using  or  purchasing  products  or  services   from  a  company.     o Indicator  of  growth  or  decline  of  firm’s  customer  base     Enterprise  Application  Challenges   • Highly  expensive  to  purchase  and  implement   • Require  Technological  changes   • Require  Business  process  changes   • Require  Organizational  changes   • Switching  costs,  dependence  on  software  vendors   • Data  standardization,  management,  cleansing     Next-­‐generation  enterprise  applications   • Move  is  to  make  applications  more  flexible,  Web-­‐enabled,  integrated  with  other   systems   • Enterprise  suites   o Software  to  enable  CRM,  SCM,  and  enterprise  systems  work  together  and   with  suppliers  and  client  systems   o Utilize  Web  services,  SOA  (Service  Oriented  Architecture)   • Open  source  &  on-­‐demand  solutions   • Mobile  compatible;  Web  2.0  capabilities   • Complementary  analytics  products    

Service  platform   • Integrates  multiple  applications  to  deliver  a  seamless  experience  for  all  parties,   E.g.  Order-­‐to-­‐cash  process   • Portal  software:  Used  to  integrate  information  from  enterprise  applications  and   legacy  systems  and  present  it  as  if  coming  from  a  single  source    

                                   

 

Chapter  10   E-­‐commerce:  Digital  Markets,  Digital  Goods  

  E-­‐commerce  today:     • Use  of  the  Internet  and  Web  to  transact  business;  digitally  enabled  transactions   • Began  in  1995  and  grew  exponentially,  still  growing  even  in  a  recession   • Companies  that  survived  the  dot-­‐com  bubble  burst  and  now  thrive   • E-­‐commerce  revolution  is  still  in  its  early  stages,  increasing  number  of  online   products,  broadband  access    

Reduced   Transaction   costs  

Lower   Market     Entry   Cost,     Search   cost  

Price     Cost   Trans   Parenc   Y   Price   Discrim   ination  

   

 

Key  concepts  in  e-­‐commerce   • Digital  markets  reduce   o Information  asymmetry   o Search  costs   o Transaction  costs   o Menu  costs  (merchants  costs  of  changing  prices)   • Digital  markets  enable   o Price  discrimination   o Dynamic  pricing  based  on  market  conditions   o Disintermediation  (removal  of  organizations,  layers  in  value  chain)   • Reduce  or  increase  switching  costs,  may  cause  extra  delay  in  gratification     Digital  goods   • Goods  that  can  be  delivered  over  a  digital  network   • Cost  of  producing  first  unit  almost  entire  cost  of  product:  marginal  cost  of  2nd   unit  is  about  zero   • Costs  of  delivery  over  the  Internet  very  low   • Marketing  costs  remain  the  same;  pricing  highly  variable   • Industries  with  digital  goods  are  undergoing  revolutionary  changes  (publishers,   record  labels,  etc.)     Types  of  e-­‐commerce   • Business-­‐to-­‐consumer  (B2C)   • Business-­‐to-­‐business  (B2B)   • Consumer-­‐to-­‐consumer  (C2C)   • Mobile  commerce  (m-­‐commerce)            

                   

Content   provider:   includes   intellectual   property,   podcasting   (subscribe),   streaming    

E-­‐commerce  revenue  models   • Advertising  (retain  user  attention  à  higher  rates)  (Google)   • Sales  (+  micropayments)  (ITunes)   • Subscription  (Netflix)   • Free/Freemium  (Flickr)   • Transaction  Fee  (Ebay)   • Affiliate  (receive  referential  fees,  Blogs)     Most  popular  Web  2.0  service:  social  networking   • Social  networking  sites  sell  banner  ads,  user  preference  information,  and  music,   videos  and  e-­‐books   • Social  shopping  sites:  Swap  shopping  ideas  with  friends  (Kaboodle,  ThisNext)   • Wisdom  of  crowds/crowdsourcing:  Large  numbers  of  people  can  make  better   decisions  about  topics  and  products  than  a  single  person   • Prediction  markets:  Peer-­‐to-­‐peer  betting  markets  on  specific  outcomes   (elections,  sales  figures,  designs  for  new  products)     E-­‐commerce  marketing   • Internet  provides  marketers  with  new  ways  of  identifying  and  communicating   with  customers   • Long  tail  marketing:  Ability  to  reach  a  large  audience  inexpensively   • Behavioral  targeting:  Tracking  online  behavior  of  individuals  on  thousands  of   Web  sites,  privacy  concerns   • Advertising  networks  à  profiling   • Advertising  formats  include  search  engine  marketing,  display  ads,  rich  media,   and  e-­‐mail     Administrative  overhead:  processing  paper,  approving  puchase  decisions,  telephone,  fax   machines,  search  for  products,  arrange  purchases,  arranging  and  shipping,  receiving   goods  à  100$  for  each  curporate  purchase  order  for  supporting  products     Business-­‐to-­‐business  e-­‐commerce   • Promise:  reduce  costs,  prices,  increase  productivity,  economic  wealth   • Challenge:  chahing  existing  patterns  and  systems  of  procurement,  designing  and   implementing  new  Internet-­‐based  B2B  solutions   Electronic  data  interchange  (EDI)   • Computer-­‐to-­‐computer  exchange  of  standard  transactions  such  as  invoices,   purchase  orders   • Major  industries  have  EDI  standards  that  define  structure  and  information  fields   of  electronic  documents  for  that  industry   • More  companies  increasingly  moving  away  from  private  networks  to  Internet  for   linking  to  other  firms  E.g.  Procurement:  Businesses  can  now  use  Internet  to   locate  most  low-­‐cost  supplier,  search  online  catalogs  of  supplier  products,   negotiate  with  suppliers,  place  orders,  etc.   Private  industrial  networks  (private  exchanges)   • Large  firm  using  extranet  to  link  to  its  suppliers,  distributors  and  other  key   business  partners   • Owned  by  buyer,  eg.  Volkswagen  Group  Supply   • Permits  sharing  of:  Product  design  and  development,  Marketing,  Production   scheduling  and  inventory  management,  Unstructured  communication    

Net  marketplaces  (e-­‐hubs)   • Single  market  for  many  buyers  and  sellers   • Industry-­‐owned  or  owned  by  independent  intermediary   • Generate  revenue  from  transaction  fees,  other  services   • Use  prices  established  through  negotiation,  auction,  RFQs,  or  fixed  prices   • May  focus  on  direct  or  indirect  goods   • May  be  vertical  or  horizontal  marketplaces   • E.g.  Exostar  long  term  contract  purchasing,  aero  defense  industry,  Elemica   serving  chemical  industry   Exchanges   • Independently  owned  third-­‐party  Net  marketplaces   • Connect  thousands  of  suppliers  and  buyers  for  spot  purchasing   • Typically  provide  vertical  markets  for  direct  goods  for  single  industry  (food,   electronics)   • Proliferated  during  early  years  of  e-­‐commerce;  many  have  failed:  Competitive   bidding  drove  prices  down  and  did  not  offer  long-­‐term  relationships  with  buyers   or  services  to  make  lowering  prices  worthwhile     M-­‐commerce   • Location-­‐based  services  (Loopt,  Wikitude)   • Software  application  sales   • Entertainment  downloads   • Mobile  display  advertising   • Banking  and  financial  services   • Wireless  advertising  and  retailing   • Games  and  entertainment     Building  an  E-­‐Commerce  Web  Site   • Developing  a  clearunderstanding  of  your  business  objectives   • Knowing  how  to  choose  the  right  technology  to  achieve  those  objectives   • Assembling  a  team  with  the  skills  required  to  make  decisions  about:   o Technology   o Site  design   o Social  and  information  policies   o Hardware,  software,  and  telecommunications  infrastructure   • Customer’s  demands  should  drive  the  site’s  technology  and  design   • Business  decisions  drive  the  technology  –  not  the  reverse   • Business  objectives:  Capabilities  the  site  should  have,  E.g.  execute  a  transaction   payment   • System  functionality  :  Technological  capability  to  achieve  this  objective,  E.g.  a   shopping  cart  or  other  payment  system   • Information  requirements,E.g.  secure  credit  card  clearing,  multiple  payment   options     The  Building  Decision   • Pre  built  template,  least  costly  and  simple  solution,  limited   • Build  yourself_  customization,  variety  of  tools,  risky  complexity,  delays   • Packages  to  customize      

The  Hosting  Decision   • Outsource,  pay  monthly  fee,  vendor  responsible   • Co-­‐location:  purchase  Web  server  and  locate  in  a  vendors  physical  facility,   • Rent  capabilities  of  cloud  computing  center   • Fees  based  on  size  of  website,  bandwidth,  storage,  support   •  

  Web  site  budgets   • Several  thousand  to  millions  /  year   • 50%  of  a  budget  is    system  maintenance  and  content  creation    

           

 

 

Chapter  11   Managing  Knowledge  

  The  Knowledge  Management  Landscape   • Knowledge  management  systems  among  fastest  growing  areas  of  software   investment   • Knowledge  and  information  related,  useful  and  actionable  when  shared,  major   source  of  wealth   • Substantial  part  of  a  firm’s  stock  market  value  is  related  to  intangible  assets:   knowledge,  brands,  reputations,  and  unique  business  processes   • Well-­‐executed  knowledge-­‐based  projects  can  produce  extraordinary  ROI,  difficult   to  measure   • Data  =  flow  of  events/transactions,  info  =  organized  data,  knowledge  =  additional   resources  to  discover  patterns,  wisdom  =  Collective  and  individual  experience  of   applying  to  solve  problems,  Involves  where,  when,  and  how  to  apply  knowledge   • Both  individual  and  collective  attribute   • Cognitive,  psychological  eent  inside  peoples  heads   • Tacit  (not  documented)  and  explicit  (documented)  knowledge   • Has  a  locations,  sticky,  not  universally  applicable,  situational,  contextual   • Important  asset  of  firm,  Knowing  how  to  do  things  effectively  and  efficiently  in   ways  others  cannot  duplicate  is  prime  source  of  profit  and  competitive  advantage    

 

Organizational  learning  (Process  in  which  organizations  learn)   • Gain  experience  through  collection  of  data,  measurement,  trial  and  error,  and   feedback   • Adjust  behavior  to  reflect  experience:  Create  new  business  processes,  Change   patterns  of  management  decision  making     The  Knowledge  Management  Value  Chain   • Knowledge  management:  Set  of  business  processes  developed  in  an  organization   to  create,  store,  transfer,  and  apply  knowledge     • Knowledge  management  value  chain:  Each  stage  adds  value  to  raw  data  and   information  as  they  are  transformed  into  usable  knowledge    

    Knowledge  acquisition   • Documenting  tacit  and  explicit  knowledge   o Storing  documents,  reports,  presentations,  best  practices   o Unstructured  documents  (e.g.,  e-­‐mails)   o Developing  online  expert  networks   • Creating  knowledge  (discover  patterns,  knowledge  workstations)   • Tracking  data  from  TPS  (sales,  payments,  inventory,  customers),  external  sources   Knowledge  storage   • Databases,  expert  systems  corporate  in  business  processes   • Document  management  systems   • Role  of  management:   o Support  development  of  planned  knowledge  storage  systems   o Encourage  development  of  corporate-­‐wide  schemas  for  indexing   documents   o Reward  employees  for  taking  time  to  update  and  store  documents   properly   Knowledge  dissemination   • Portals,  Push  e-­‐mail  reports,  Search  engines,  Collaboration  tools   • A  deluge  of  information   • Training  programs,  informal  networks,  and  shared  management  experience  help   managers  focus  attention  on  important  information  

Knowledge  application     • To  provide  return  on  investment,  organizational  knowledge  must  become   systematic  part  of  management  decision  making  and  become  situated  in   decision-­‐support  systems   • Create  New  business  practices,  New  products  and  services,  New  markets     New  organizational  roles  and  responsibilities   • Chief  knowledge  officer  executives   • Dedicated  staff  /  knowledge  managers   • Communities  of  practice  (COPs)     o Informal  social  networks  of  professionals  and  employees  within  and   outside  firm  who  have  similar  work-­‐related  activities  and  interests   o Activities  include  education,  online  newsletters,  sharing  experiences  and   techniques   o Facilitate  reuse  of  knowledge,  discussion   o Reduce  learning  curves  of  new  employees     3  major  types  of  knowledge  management  systems  (CAD  =  computer  aided  design)  

  Three  major  types  of  knowledge  in  enterprise   • Structured  documents  (formal  docs  and  rules)   • Semistructured  documents   • Unstructured,  tacit  knowledge  (+  semi  =  80%)     Enterprise  content  management  systems   • Help  capture,  store,  retrieve,  distribute,  preserve   • Corporate  repositories  ans  capabilities  to  collect  and  organize  semistructured   • Bring  in  external  sources  (News  feeds,  research)   • Tools  for  communication  and  collaboration   • Key  problem  –  Developing  taxonomy  =  classification  scheme  (Knowledge  objects   must  be  tagged  with  categories  for  retrieval)   • Digital  asset  management  systems:  Specialized  content  management  systems  for   classifying,  storing,  managing  unstructured  digital  data  like  Photographs,   graphics,  video,  audio   Knowledge  network  systems  (expertise  location  and  management  systems)   • Provide  online  directory  of  corporate  experts  in  well-­‐defined  knowledge  domains  

 

• •

Use  communication  technologies  to  make  it  easy  for  employees  to  find   appropriate  expert  in  a  company   May  systematize  solutions  developed  by  experts  and  store  them  in  knowledge   database  (Best-­‐practices,  Frequently  asked  questions  (FAQ)  repository)  

  Collaboration  Tools     • Enterprise  knowledge  portals:    Access  to  external  and  internal  information   (News  feeds,  research,  Capabilities  for  e-­‐mail,  chat..)   • Use  of  consumer  Web  technologies  (Blogs,  Wikis,  Social  bookmarking  –  user-­‐ created  taxonomies  for  shared  bookmarks  =  folksonomies)   Learning  Management  Systems  (LMS)   • Provide  tools  for  management,  delivery,  tracking,  and  assessment  of  various   types  of  employee  learning  and  training   • Support  multiple  modes  of  learning     • Automates  selection  and  administration  of  courses   • Assembles  and  delivers  learning  content   • Measures  learning  effectiveness     Knowledge  Work  Systems  =  Systems  for  knowledge  workers  to  help  create  new   knowledge  and  integrate  that  knowledge  into  business   Knowledge  workers  =  Researchers,  designers,  architects,  scientists,  engineers  who   create  knowledge  for  the  organization   1. Keeping  organization  current  in  knowledge   2. Serving  as  internal  consultants  regarding  their  areas  of  expertise   3. Acting  as  change  agents,  evaluating,  initiating,  and  promoting  change  projects     Requirements  of  knowledge  work  systems   • Hardware  Platform:  knowledge  workstation   • Substantial  computing  power  for  graphics,  complex  calculations   • Powerful  graphics  and  analytical  tools   • Communications  and  document  management   • Access  to  external  databases   • User-­‐friendly  interfaces   • Optimized  for  tasks  to  be  performed  (design  engineering,  financial  analysis)     Examples  of  knowledge  work  systems   • CAD  (computer-­‐aided  design):     o Automate  creation  and  revision  of  design   o Creation  of  engineering  or  architectural  designs   • Virtual  reality  systems:     o Simulate  real-­‐life  environments   o 3-­‐D  medical  modeling  for  surgeons   o Augmented  reality  (AR)  systems  –  additional  info  to  enhance  the   perception  of  reality,  more  interactive  and  meaningful     o VRML  (virtual  realty  modeling  language)  =  set  of  specifications  for   interactive  3D  modeling  on  the  WWW,  can  organize  multiple  media  types   • Investment  workstations  in  financial  industry    =  Streamline  investment  process   and  consolidate  internal,  external  data  for  brokers,  traders,  portfolio  managers      

Intelligent  techniques:  Used  to  capture  individual  and  collective  knowledge  and  to   extend  knowledge  base   • To  capture  tacit  knowledge:  Expert  systems,  case-­‐based  reasoning,  fuzzy  logic   • Knowledge  discovery:  Neural  networks  and  data  mining   • Generating  solutions  to  complex  problems:  Genetic  algorithms   • Automating  tasks:  Intelligent  agents   Artificial  intelligence  (AI)  technology:  Computer-­‐based  systems  that  emulate  human   behavior     Expert  systems:     • Capture  tacit  knowledge  in  very  specific  and  limited  domain  of  human  expertise   • Capture  knowledge  of  skilled  employees  as  set  of  rules  in  software  system  that   can  be  used  by  others  in  organization     • Typically  perform  limited  tasks  that  may  take  a  few  minutes  or  hours,  e.g.   Diagnose  malfunctioning  machine,  Determining  whether  to  grant  credit  for  loan   • Used  for  discrete,  highly  structured  decision-­‐making   How  expert  systems  work     • Knowledge  base:  Set  of  hundreds  or  thousands  of  interconnected  rules   • Inference  engine:  Strategy  used  to  search  knowledge  base   o Forward  chaining:  Inference  engine  begins  with  information  entered  by   user  and  searches  knowledge  base  to  arrive  at  conclusion   o Backward  chaining:  Begins  with  hypothesis  and  asks  user  questions  until   hypothesis  is  confirmed  or  disproved   • Benefits:  improved  decisions,  reduced  errors,  reduced  costs,  and  training  time,   higher  levels  of  quality  and  service   Successful  expert  systems   • Con-­‐Way  Transportation  built  expert  system  to  automate  and  optimize  planning   of  overnight  shipment  routes  for  nationwide  freight-­‐trucking  business   Most  expert  systems  deal  with  problems  of  classification   • Have  relatively  few  alternative  outcomes     • Possible  outcomes  are  known  in  advance     Many  expert  systems  require  large,  lengthy,  and  expensive  development  and   maintenance  efforts  à  Hiring  or  training  more  experts  may  be  less  expensive     Case-­‐based  reasoning  (CBR)   • Descriptions  of  past  experiences  of  human  specialists  (cases),  stored  in   knowledge  base   • System  searches  for  cases  with  problem  characteristics  similar  to  new  one,  finds   closest  fit,  and  applies  solutions  of  old  case  to  new  case   • Successful  and  unsuccessful  applications  are  grouped  with  case   • Stores  organizational  intelligence:  Knowledge  base  is  continuously  expanded  and   refined  by  users   • CBR  found  in:  Medical  diagnostic  systems,  Customer  support     Fuzzy  logic  systems   • Rule-­‐based  technology  that  represents  imprecision  used  in  linguistic  categories   (e.g.,  “cold,”  “cool”)  that  represent  range  of  values  (Doppeldeutig)   • Describe  a  particular  phenomenon  or  process  linguistically  and  then  represent   that  description  in  a  small  number  of  flexible  rules  

•

Provides  solutions  to  problems  requiring  expertise  that  is  difficult  to  represent   with  IF-­‐THEN  rules   o Autofocus  in  cameras   o Detecting  possible  medical  fraud   o Sendai’s  subway  system  acceleration  controls  

  Neural  networks   • Find  patterns  and  relationships  in  massive  amounts  of  data  too  complicated  for   humans  to  analyze   • “Learn”  patterns  by  searching  for  relationships,  building  models,  and  correcting   over  and  over  again  (construct  hidden  layer  of  logic)   • Humans  “train”  network  by  feeding  it  data  inputs  for  which  outputs  are  known,   to  help  neural  network  learn  solution  by  example     • Used  in  medicine,  science,  and  business  for  problems  in  pattern  classification,   prediction,  financial  analysis,  and  control  and  optimization  only  as  aids!   • E.g  Visa  Credit  Card  Fraud  monitoring  transactions   • Machine  learning:  Related  AI  technology  allowing  computers  to  learn  by   extracting  information  using  computation  and  statistical  methods   • Used  in  data  mining     Genetic  algorithms   • Useful  for  finding  optimal  solution  for  specific  problem  by  examining  very  large   number  of  possible  solutions  for  that  problem   • Conceptually  based  on  process  of  evolution:  Search  among  solution  variables  by   changing  and  reorganizing  component  parts  using  processes  such  as  inheritance,   mutation,  and  selection   • Used  in  optimization  problems  (minimization  of  costs,  efficient  scheduling,   optimal  jet  engine  design)  in  which  hundreds  or  thousands  of  variables  exist   • Able  to  evaluate  many  solution  alternatives  quickly     Hybrid  AI  systems   • Genetic  algorithms,  fuzzy  logic,  neural  networks,  and  expert  systems  integrated   into  single  application  to  take  advantage  of  best  features  of  each   • E.g.,  Matsushita  “neurofuzzy”  washing  machine  that  combines  fuzzy  logic  with   neural  networks     Intelligent  agents   • Work  in  background  to  carry  out   specific,  repetitive,  and  predictable   tasks  for  user,  process,  or  application   • Use  limited  built-­‐in  or  learned   knowledge  base  to  accomplish  tasks  or   make  decisions  on  user’s  behalf   (Deleting  junk  e-­‐mail,  Finding  cheapest   airfare)   • Agent-­‐based  modeling  applications:     o Systems  of  autonomous  agents   o Model  behavior  of  consumers,   stock  markets,  and  supply   chains;  used  to  predict  spread  of  epidemics    

Chapter  12   Enhancing  Decision  Making  

  Types  of  decisions:   • Unstructured:  Decision  maker  must  provide  judgment,  evaluation,  and  insight  to   solve  problem,  novel,  non-­‐routine  and  important  decisions  à  Senior   management   • Structured:  Repetitive  and  routine;  involve  definite  procedure  for  handling  so   they  do  not  have  to  be  treated  each  time  as  new  à  operational  management   • Semistructured:  Only  part  of  problem  has  clear-­‐cut  answer  provided  by  accepted   procedure  à  Middle  management     The  4  stages  of  the  decision  making  process   1. Intelligence:  Discovering,  identifying,  and  understanding  the  problems  occurring   in  the  organization   2. Design:  Identifying  and  exploring  solutions  to  the  problem   3. Choice:  Choosing  among  solution  alternatives   4. Implementation:  Making  chosen  alternative  work  and  continuing  to  monitor  how   well  solution  is  working     Managers  and  Decision  making  in  the  real  world   • Information  systems  can  only  assist  in  some  of  the  roles  played  by  managers   • Classical  model  of  management:  5  functions  =  Planning,  organizing,  coordinating,   deciding,  and  controlling   • More  contemporary  behavioral  models  =  less  systematic,  more  informal,  less   reflective,  more  reactive,  and  less  well  organized  than  in  classical  model   • Great  del  of  work  at  unrelenting  pace,  fragmented  activities,  prefer  current  and   specific  information,  prefer  oral  forms  of  communication,  maintain  complex  web   of  contacts     • Managerial  roles  =  expectations  of  the  activities  that  managers  should  perform  

 

3main  reasons  why  investments  in  information  technology  do  not  always  produce   positive  results   1. Information  quality:  High-­‐quality  decisions  require  high-­‐quality  information   (accuracy,  integrity,  consistency,  completeness,  validity,  timeliness,  accessibility)   2. Management  filters:  Managers  have  selective  attention  and  have  variety  of  biases   that  reject  information  that  does  not  conform  to  prior  conceptions   3. Organizational  inertia  and  politics:  Strong  forces  within  organizations  resist   making  decisions  calling  for  major  change     High  velocity  automated  decision-­‐making   • Made  possible  through  computer  algorithms  precisely  defining  steps  for  a  highly   structured  decision   • Humans  taken  out  of  decision,  E.g.  High-­‐speed  computer  trading  programs   • Require  safeguards  to  ensure  proper  operation  and  regulation     Business  intelligence:  Infrastructure  for  collecting,  storing,  analyzing  data  produced  by   business  (warehousing,  integrating,  reporting,  analyzing  data);  Databases,  data   warehouses,  data  marts   Business  analytics:  Tools  and  techniques  for  analyzing  data;  OLAP  (online  analytical   processing),  statistics,  models,  data  mining   Business  intelligence  vendors:  Create  business  intelligence  and  analytics  purchased   by  firms  (SAP,  Oracle,  IBM,  SAS  Institute,  Microsoft),  market:  10.5billion,  growing  20%    

    Business  intelligence  and  analytics  capabilities   • Goal  is  to  deliver  accurate  real-­‐time  information  to  decision-­‐makers   • Main  functionalities  of  BI  systems   1. Production  reports  (pre-­‐defined,  based  on  industry  requirements)   2. Parameterized  reports  (user  enters  different  parameters  to  filter  data)   3. Dashboards/scorecards  (visual  tools,  presenting  performance  data)   4. Ad  hoc  query/search/report  creation  (create  own  report  based  on  queries,   searches)  

5. Drill  down  (from  high-­‐level  summary  to  detailed  view)   6. Forecasts,  scenarios,  models  (analyze  using  standard  statistical  tools)  

  Business  intelligence  users   • 80%  are  casual  users  relying  on  production  reports   • Senior  executives  àUse  monitoring  functionalities   • Middle  managers  and  analysts  à  Ad-­‐hoc  analysis   • Operational  employees  à  Prepackaged  reports  (E.g.  sales  forecasts,  customer   satisfaction,  loyalty  and  attrition,  supply  chain  backlog,  employee  productivity)  

    Examples  of  BI  applications  à  mostly  pre-­‐packaged  production  reports   • Predictive  analytics:  Use  patterns  in  data  to  predict  future  behavior  (E.g.  Credit   card  companies  determine  customers  at  risk  for  leaving,  screen  potential   customers,  prediction  how  customer  respond  to  price  changes)   • Data  visualization:  Help  users  see  patterns  and  relationships  that  would  be   difficult  to  see  in  text  lists   • Geographic  information  systems  (GIS):  Ties  location-­‐related  data  to  maps,   modeling  capabilities  (e.g.  calculate  response  times  to  natural  disasters,  best   locations  for  new  ATMs     2  Management  strategies  for  developing  BI  and  BA  capabilities   Competitive  market  place  and  given  to  hyperbole   1. One-­‐stop  shopping  (totally  integrated  solution)   • Hardware  firms  sell  software  that  run  optimally  on  their  hardware   • Makes  firm  dependent  on  single  vendor  (but  on  a  global  scale)  –  switching  costs  +   pricing  power   2. Multiple  best-­‐of-­‐breed  solution   • Software  firms:  encourage  firms  to  adopt  „best  of  breed“  software,  chose  package   from  vendor  you  believe  is  best   • Greater  flexibility  and  independence   • Potential  difficulties  in  integration  with  own  hardware  and  other  software   • Must  deal  with  multiple  vendors    

Business  Intelligence  Constituencies   Operational  and  middle  managers   • Monitor  day  to  day  business  performance  (e.g  down-­‐time  machines,  hourly  sales)   • Make  fairly  structured  decisions     • Use  MIS  à  output  =  set  of  routine  production  reports  based  on  data  from   transaction  processing  systems  (TPS)   • Increased  online  usage  with  queries   „Super  user”  and  business  analysts   • Use  more  sophisticated  analysis  to  find  patterns  in  data,     • Create  customized  reports,  relying  heavily  on  modeling   • Use  DSS  (decision  support  systems)  support  semistructured  decision  making   Decision  support  systems   • Use  mathematical  or  analytical  models   • Allow  varied  types  of  analysis   o “What-­‐if”  analysis  (working  forward  from  known  conditions,  test  results   to  predict  outcomes)   o Sensitivity  analysis  (repeated  what  if  questions  to  predict  range  of   outcomes,  when  variables  changed  multiple  times)   o Backward  sensitivity  analysis  (helps  with  goal  seeking)   o Multidimensional  analysis  /  OLAP  (E.  g.  pivot  tables)   Decision-­‐support  for  senior  management   • Executive  support  systems  (ESS)  help  executives  focus  on  important   performance  information  affect  overall  profitability  and  success   • Balanced  scorecard  method:  (methodology  for  understanding  really  important   information)  à  Measures  outcomes  on  four  dimensions:     o Financial,  Business  process,  Customer,  Learning  &  growth   o Key  performance  indicators  (KPIs)  measure  each  dimension    

 

Business  performance  management  (BPM)   • Translates  firm’s  strategies    (e.g.  differentiation,  low-­‐cost  producer,  scope  of   operation)  into  operational  targets   • KPIs  developed  to  measure  progress  towards  targets   • Stronger  strategy  flavor  than  balanced  scorecard     Data  for  ESS     • Internal  data  from  enterprise  applications  (ERP,  SCM,  CRM)   • External  data  such  as  financial  market  databases,  economic  information   • Drill-­‐down  capabilities   • Enhancing  effectiveness:  organizational  performance,  track  activities  of   competitors,  recognize  changing  market  conditions,  identify  problems  and   opportunities   • Decentralized  decision  making,  taking  place  on  lower  operating  levels,  increase   span  of  control   • =  Information  driven  management  or  management  by  facts  à  real-­‐time     Group  Decision  Support  Systems  (GDSS)   • Interactive  system  to  facilitate  solution  of  unstructured  problems  by  group   • Specialized  hardware  and  software;  typically  used  in  conference  rooms   o Overhead  projectors,  display  screens   o Software  to  collect,  rank,  edit  participant  ideas  and  responses   o May  require  facilitator  and  staff   • Enables  increasing  meeting  size  and  increasing  productivity   • Promotes  collaborative  atmosphere,  guaranteeing  anonymity   • Uses  structured  methods  to  organize  and  evaluate  ideas                                                    

Chapter  13   Building  Information  Systems  

  Structural  organizational  changes  enabled  by  IT   1. Automation   • Increases  efficiency  and  effectively  à  assisting  employees   • Replaces  manual  tasks   2. Rationalization  of  procedures   • Streamlines  standard  operating  procedures   • Revealed  bottlenecks  due  to  automatization   • Often  found  in  programs  for  making  continuous  quality  improvements   o Total  quality  management  (TQM)  –  achieving  quality  as  goal  and   responsibility  of  all  employees   o Six  sigma  =  specific  measure  of  quality  (3.6  defects  per  million   opportunities)  –  usually  just  a  goal   3. Business  process  redesign  (more  powerful,  higher  risk)   • Analyze,  simplify,  and  redesign  business  processes   • Reorganize  workflow,  combine  steps,  eliminate  repetition  and  sometimes  jobs   • Ambitious  and  new  vision  how  to  organize  process   4. Paradigm  shifts  (often  fail,  high  rewards)   • Rethink  nature  of  business,  radical,  reengineering  strategies   • Define  new  business  model   • Change  nature  of  organization     Business  Process  Redesign   Business  Process  Management  (BPM)   • Variety  of  tools,  methodologies  to  analyze,  design,  optimize  processes   • Used  by  firms  to  manage  business  process  redesign   • Never  concluded  à  continual  change   • Barrier:  organizational  culture,  resisting  change,  not  simple     1. Identify  processes  for  change:  what  processes  are  important  and  how  improving   these  will  help  performance   2. Analyze  existing  processes:  modeled  and  documented,  identify  redundant  steps  and   inefficiencies,  existing  processes  measured  in  times  and  cost   3. Design  the  new  process:  improve  processes  by  designing  new  one,  “to-­‐be”  process  à   comparison  streamlined  processes,  justifying  by  reducing  time,  cost,  enhancing   service  and  value   4. Implement  the  new  process:  translation  in  new  set  of  procedures  and  rules,   implement  IS  to  support,  uncover  and  address  problems,  recommended   improvements   5. Continuous  measurement:  employees  fall  back  in  old  methods,  processes  lose   effectiveness  due  to  other  changes     Variety  of  tools  for  BPM,  to   • Identify  and  document  existing  processes,  Identify  inefficiencies   • Create  models  of  improved  processes     • Capture  and  enforce  business  rules  for  performing  processes   • Integrate  existing  systems  to  support  process  improvements  

• • •

Analytics  to  Verify  that  new  processes  have  improved   Measure  impact  of  process  changes  on  key  business  performance  indicators   Automate  some  parts  of  business  process  and  enforce  business  rules  à  perform   more  consistently  and  efficiently   Help  integrate  existing  systems  to  support  process  improvements  

•   Systems  development   Activities  that  go  into  producing  an  information  system  solution  to  an  organizational   problem  or  opportunity    

    Systems  analysis     • Analysis  of  problem  to  be  solved  by  new  system   • Defining  the  problem  and  identifying  causes,  Specifying  solutions  (Systems   proposal  report  identifies  and  examines  alternative  solutions),  Identifying   information  requirements   • Analyst:  creates  roadmap  of  existing  organization,  identifying  primary  owners  of   data,  hardware,  software  à  examining  à  problem  areas  and  objectives   • Includes  feasibility  study:  financial,  technical,  organizational  standpoint,  good   investment,  skills?   • Written  systems  proposal:  costs,  benefits,  disadvantages,  advantages  of  each   alternative     • Establishing  information  requirements   o Who  needs  what  information,  where,  when,  and  how   o Define  objectives  of  new/modified  system   o Detail  the  functions  new  system  must  perform   • Faulty  requirements  analysis  is  leading  cause  of  systems  failure  and  high  systems   development  cost     Systems  design   • Describes  system  specifications  that  will  deliver  functions  identified  during   systems  analysis  à  form  and  structure  (blueprint)   • Should  address  all  managerial,  organizational,  and  technological  components  of   system  solution  à  fulfill  user  requirements  

•

Role  of  end  users   o User  information  requirements  drive  system  building   o Users  must  have  sufficient  control  over  design  process  to  ensure  system   reflects  their  business  priorities  and  information  needs   o Insufficient  user  involvement  in  design  effort  is  major  cause  of  system   failure  

  Completing  System  Development  Process   Translate  solution  specifications  into  operational  info  system   • Programming:  Translate  System  specifications  into  software  program  code   • Testing:  Ensures  system  produces  right  results   o Unit  (program)  testing:  Tests  each  program  in  system  separately   o System  testing:  Test  functioning  of  system  as  a  whole     o Acceptance  testing:  system  is  ready  to  be  used  in  production  setting   (evaluated  by  users,  reviewed  by  management)   o Test  plan:  All  preparations  for  series  of  tests,  general  condition  tested  =   record  change   Conversion  =  Process  of  changing  from  old  system  to  new  system   1. Parallel  strategy:  both  old  and  new  systems  run  together  =  safe  and  expensive   2. Direct  cutover:  total  replacement  on  an  appointed  day  =  risky     3. Pilot  study:  introduction  to  limited  area   4. Phased  approach:  introduction  in  stages  (by  functions,  units)   • Requires  end-­‐user  training   • Finalization  of  detailed  documentation  showing  how  system  works  from   technical  and  end-­‐user  standpoint     Production  and  maintenance  =  System  reviewed  to  determine  if  revisions  needed   • May  include  post-­‐implementation  audit  document   • Maintenance:  Changes  in  hardware,  software,  documentation,  or  procedures  to  a   production  system  to  correct  errors,  meet  new  requirements,  or  improve   processing  efficiency   o 20%  debugging,  emergency  work   o 20%  changes  to  hardware,  software,  data,  reporting   o 60%  of  work:  User  enhancements,  improving  documentation,  recoding  for   greater  processing  efficiency  

 

Modeling  and  Designing  System   1.  Structured  Methodologies   • Structured:  Techniques  are  step-­‐by-­‐step,  progressive,  top-­‐down   • Process-­‐oriented:  Focusing  on  modeling  processes/actions  that  manipulate  data   à  data  flow  (no  well  modeling  of  data,  only  processes)   • Separate  data  from  processes  (real  world:  unnatural)   • Data  flow  diagram:  Primary  tool  for  representing  system’s  component  processes   and  flow  of  data  between  them  (ANALYSIS)   o Offers  logical  graphic  model  of  information  flow   o High-­‐level  and  lower-­‐level  diagrams  can  be  used  to  break  processes  down   into  successive  layers  of  detail   • Data  dictionary:  Defines  contents  of  data  flows  and  data  stores   • Process  specifications:  Describe  transformation  occurring  within  lowest  level  of   data  flow  diagrams  (logic  for  each  process)   • Structure  chart:  Top-­‐down  chart,  showing  each  level  of  design,  relationship  to   other  levels,  and  place  in  overall  design  structure  (DESIGN)  

    2.  Object-­‐Oriented  Development   • Object  =  basic  unit  of  systems  analysis  and  design   • Object:  Combines  data  and  the  processes  that  operate  on  those  data   • Data  encapsulated  in  object  can  be  accessed  and  modified  only  by  operations,  or   methods,  associated  with  that  object   • Object-­‐oriented  modeling  based  on  concepts  of  class  and  inheritance   o Objects  belong  to  a  certain  class  and  have  features  of  that  class   o May  inherit  structures  and  behaviors  of  a  more  general,  ancestor  class   • More  iterative  and  incremental  than  traditional  structured  development   o Systems  analysis:  Interactions  between  system  and  users  analyzed  to   identify  objects     o Design  phase:  Describes  how  objects  will  behave  and  interact;  grouped   into  classes,  subclasses  and  hierarchies   o Implementation:  Some  classes  may  be  reused  from  existing  library  of   classes,  others  created  or  inherited   • Objects  =  reusable  à  can  potentially  reduce  time  and  cost  of  development     Computer-­‐aided  software  engineering  (CASE)   • Software  tools  to  automate  development  and  reduce  repetitive  work,  including   • Facilitate  creation  of  clear  documentation  +  coordination  of  team  development   efforts  

•

• •

Graphics  facilities  for  producing  charts  and  diagrams,  Screen  and  report   generators,  reporting  facilities,  Analysis  and  checking  tools,  Data  dictionaries,   Code  and  documentation  generators   Increase  productivity  and  quality   Support  iterative  design  by  automating  revisions  and  changes  and  providing   prototyping  facilities   Require  organizational  discipline  to  be  used  effectively  

•   Alternative  Systems-­‐building  Approaches   Traditional  systems  lifecycle   • Oldest  method  for  building  information  systems   • Phased  approach  divides  development  into  formal  stages   • “Waterfall”  approach:    Tasks  in  one  stage  finish  before  another  stage  begins   • Formal  division  of  labor  between  end  users  and  information  systems  specialists   • Emphasizes  formal  specifications  and  paperwork   • Still  used  for  building  large  complex  systems   • Can  be  costly,  time-­‐consuming,  and  inflexible     Prototyping   • Building  experimental  system  rapidly  and  inexpensively  for  end  users  to  evaluate   • Prototype:  Working  but  preliminary  version  of  information  system  à  Approved   prototype  serves  as  template  for  final  system     • Iterative  Steps  in  prototyping  (can  be  repeated)   1. Identify  user  requirements   2. Develop  initial  prototype   3. Use  prototype   4. Revise  and  enhance  prototype     Advantages   Disadvantages   • Useful  if  some  uncertainty  in   • May  gloss  over  essential  steps   requirements  or  design  solutions   • May  not  accommodate  large   • Often  used  for  end-­‐user  interface   quantities  of  data  or  large  number   design   of  users   • More  likely  to  fulfill  end-­‐user   • May  not  undergo  full  testing  or   requirements   documentation     End-­‐user  development:   • Uses  fourth-­‐generation  languages  to  allow  end-­‐users  to  develop  systems  with   little  or  no  help  from  technical  specialists   • Fourth  generation  languages:  Less  procedural  than  conventional  programming   • Require:  cost-­‐justification  of  end-­‐user  system  projects,  Establish  hardware,   software,  and  quality  standards     Advantages   Disadvantages   • More  rapid  completion  of  projects   • Not  designed  for  processing-­‐ intensive  applications   • High-­‐level  of  user  involvement  and   satisfaction   • Inadequate  management  and   control,  testing,  documentation   • Loss  of  control  over  data  

  Application  software  packages   • Save  time  and  money:  pre-­‐written,  designed,  tested,  maintenance     • Many  offer  customization  features   • Evaluation  criteria  for  systems  analysis  include:  Functions  provided  by  the   package,  flexibility,  user  friendliness,  hardware  and  software  resources,  database   requirements,  installation  and  maintenance  efforts,  documentation,  vendor   quality,  and  cost       • Request  for  Proposal  (RFP):  Detailed  list  of  questions  submitted  to  packaged-­‐ software  vendors,  Used  to  evaluate  alternative  software  packages     Outsourcing   • Cloud  and  SaaS  providers:  Subscribing  companies  use  software  and  computer   hardware  provided  by  vendors   • External  vendors:  Hired  to  design,  create  software   o Domestic:  Driven  by  firms  need  for  additional  skills,  resources,  assets   o Offshore:  Driven  by  cost-­‐savings,  better  assets,  skills     Advantages   Disadvantages   • Allows  organization  flexibility  in  IT   • Hidden  costs,  e.g.  Identifying  and   needs   selecting  vendor,  Transitioning  to   vendor   • Usually  at  least  15%  cost  saving   even  in  worst  case  scenario   • Opening  up  proprietary  business   processes  to  third  party  

 

Application  Development  for  the  Digital  Firm   Rapid  application  development  (RAD)   • Process  of  creating  workable  systems  in  a  very  short  period  of  time  (less   sequential,  parts  occur  simultaneously   • Visual  programming  and  other  tools  for  building  graphical  user  interfaces   • Iterative  prototyping  of  key  system  elements   • Automation  of  program  code  generation   • Close  teamwork  among  end  users  and  information  systems  specialists     Joint  application  design  (JAD)   • Used  to  accelerate  generation  of  information  requirements  and  to  develop  initial   systems  design     • Brings  end  users  and  information  systems  specialists  together  in  interactive   session  to  discuss  system’s  design     • Can  significantly  speed  up  design  phase  and  involve  users  at  intense  level     Agile  development   • Focuses  on  rapid  delivery  of  working  software  by  breaking  large  project  into   several  small  sub-­‐projects   • Subprojects:  Treated  as  separate,  complete  projects,  Completed  in  short  periods   of  time  using  iteration  and  continuous  feedback   • Emphasizes  face-­‐to-­‐face  communication  over  written  documents  à  collaboration   and  faster  decision  making     Component-­‐based  development   • Groups  of  objects  that  provide  software  for  common  functions  (e.g.,  online   ordering)  and  can  be  combined  to  create  large-­‐scale  business  applications   • Web  services   o Reusable  software  components  that  use  XML  and  open  Internet  standards   (platform  independent)   o Enable  applications  to  communicate  with  no  custom  programming   required  to  share  data  and  services     o Can  engage  other  Web  services  for  more  complex  transactions   o Using  platform  and  device-­‐independent  standards  can  result  in  significant   cost-­‐savings  and  opportunities  for  collaboration  with  other  companies                                

Chapter  14   Managing  Projects  

  The  Importance  of  Project  Management   • Runaway  projects:  30%  -­‐  40%  IT  projects:  Exceed  schedule,  budget,  Fail  to   perform  as  specified,  less  benefits   • Types  of  system  failure   o Fail  to  capture  essential  business  requirements   o Fail  to  provide  organizational  benefits   o Complicated,  poorly  organized  user  interface   o Inaccurate  or  inconsistent  data     Project  management   • Project:  planned  series  of  related  activities  for  achieving  specific  business   objective   • Activities:  planning  work,  assessing  risk,  estimating  resources  required,   organizing  work,  assigning  tasks,  controlling  project  execution,  reporting   progress,  analyzing  results   • Five  major  variables   o Scope  à  what  work  to  (not)  include     o Time  à  amount  to  complete  project,  schedule   o Cost  à  hr,  hardware,  software,  work  space   o Quality  à  result  satisfies  specified  objectives   o Risk  à  potential  problems  threatening  success     Selecting  Projects  

 

Linking  Systems  Projects  to  the  Business  Plan   Information  systems  plan   • Identifies  systems  projects  that  will  deliver  most  business  value,  links   development  to  business  plan   • Corporate  goals,  milestones,  target  dates,  key  management  decisions     • Road  map  indicating  direction  of  systems  development,  includes:   o Purpose  of  plan   o Strategic  business  plan  rationale   o Current  systems/situation   o New  developments  to  consider   o Management  strategy   o Implementation  plan   o Budget   • In  order  to  plan  effectively,  firms  need  to  inventory  and  document  existing   software,  hardware,  systems     Critical  Success  Factors   • Clear  understanding  of  both  long-­‐term  and  short-­‐term  information  requirements   • Strategic  analysis  or  critical  success  factors  (CSF)  approach:  Sees  information   requirements  as  determined  by  a  small  number  of  critical  success  factors   • Shaped  by  industry,  firm,  manager,  broader  environment   • Principal  method:  personal  interviews  with  top  managers  à  identify  goals  +  CSFs   à  aggregation  to  firm  CSFs  à  systems  build  to  deliver  information  on  CSFs   • Suitable  for  top  management,  building  DSS  and  ESS   • Disadvantages:  No  clear  methods  for  aggregation,  Confusion  between  individual   and  organizational  CSFs,  Bias  towards  top  managers     Portfolio  analysis   • Used  to  evaluate  alternative  system  projects   • Inventories  all  of  the  organization’s  information  systems  projects  and  assets   • Each  system  has  profile  of  risk  and  benefit   • To  improve  return  on  portfolio,  balance  risk  and  return  from  systems   investments   • Determine  optimal  mix  of  investment  risk  and  reward   • Aligned  with  business  strategy:  superior  return  on  IT  assets,  better  alignment   with  business  objectives,  and  better  coordination  if  IT  investments  

 

 

Scoring  models   • Selecting  projects  where  many  criteria  must  be  considered   • Assigns  weights  to  various  features  of  system  and  calculates  weighted  totals   • Most  important:  not  score  but  agreement  on  criteria  to  judge  system   • Requires  experts  understanding  issue  and  technology   • Used  to  confirm,  rationalize  and  support  decisions     Establishing  the  business  value  of  Information  Systems   Information  Systems  Costs  and  Benefits   • Tangible  benefits  (cost  savings):  Can  be  quantified  and  assigned  monetary  value   • Systems  that  displace  labor  and  save  space:  Transaction  and  clerical  systems   • Intangible  benefits:  Cannot  be  immediately  quantified  but  may  lead  to   quantifiable  gains  in  the  long  run   • Systems  that  influence  decision  making:  ESS,  DSS,  collaborative  work  systems   • Capital  budgeting  models:  Measure  value  of  investing  in  long-­‐term  capital   investment  projects   • Rely  on  measures  the  firm’s   o Cash  outflows:  Expenditures  for  hardware,  software,  labor   o Cash  inflows:  Increased  sales,  Reduced  costs   • Difference  out-­‐  und  in  flows  used  for  calculating  financial  worth  of  investment   • Various  capital  budgeting  models  used  for  IT  projects:  Payback  method,   accounting  rate  of  return  on  investment,  net  present  value,  internal  rate  of  return   (IRR)     Real  options  pricing  models  (ROPM)   • Can  be  used  when  future  revenue  streams  of  IT  projects  are  uncertain  and  up-­‐ front  costs  are  high   • Use  concept  of  options  valuation  borrowed  from  financial  industry  (option  =   right  but  not  obligation  to  act  at  some  future  date,  buy  at  fixed  rate)   • Initial  expenditure  on  technology  creates  right  (not  obligation)  to  obtain  the   benefits  associated  with  further  development  and  deployment  of  the  technology   as  long  as  management  has  freedom  to  cancel,  defer,  restart,  or  expand  project   • Gives  managers  flexibility  to  stage  IT  investment  or  test  the  waters  with  small   pilot  projects  or  prototypes  to  gain  more  knowledge  about  risks  before  investing   in  entire  implementation   • Disadvantage:  estimating  all  ley  variables  affecting  option  value       Limitations  of  financial  models   • Do  not  take  into  account  social  and  organizational  dimensions  that  may  affect   costs  and  benefits   • No  consideration  costs  from  organizational  disruptions  (training,  learning   curves)   • Overlooked  benefits  like  enhanced  employee  learning  and  expertise       Dimensions  of  Project  Risk  –  level  influenced  by   • Project  size:  Indicated  by  cost,  time,  number  of  organizational  units  affected,   Organizational  complexity  also  an  issue   • Project  structure:  Structured,  defined  requirements  run  lower  risk   • Experience  with  technology  

Change  Management   • Required  for  successful  system  building   • New  information  systems  have  powerful  behavioral  and  organizational  impact   • Changes  lead  to  new  distributions  of  authority  and  power   • Internal  organizational  change  breeds  resistance  and  opposition   • Implementation:  All  organizational  activities  working  toward  adoption,   management,  and  routinization  of  an  innovation   • Change  agent:  One  role  of  systems  analyst     o Redefines  the  configurations,  interactions,  job  activities,  and  power   relationships  of  organizational  groups   o Catalyst  for  entire  change  process     o Responsible  for  ensuring  that  all  parties  involved  accept  changes  created   by  new  system   • Role  of  end  users:  With  high  levels  of  user  involvement   o System  more  likely  to  conform  to  requirements   o Users  more  likely  to  accept  system   • User-­‐designer  communication  gap:  Users  and  information  systems  specialists   o Different  backgrounds,  interests,  and  priorities   o Different  loyalties,  priorities,  vocabularies   o Different  concerns  regarding  a  new  system   • Management  support  and  commitment   o Positive  perception  by  both  users  and  technical  staff   o Ensures  sufficient  funding  and  resources   o Enforcement  of  required  organizational  changes   • Very  high  failure  rate  among  enterprise  application  and  BPR  projects  (up  to  70%   for  BPR)  à  Poor  implementation  and  change  management  practices   • Mergers  and  acquisitions:  Similarly  high  failure  rate  of  integration  projects   • Merging  of  systems  of  two  companies  requires:  Considerable  organizational   change,  Complex  systems  projects     Controlling  risk  factors   • 1st  step  in  managing  project  risk:  identifying  nature  and  level  of  risk  of  project   • Each  project  managed  with  tools  and  risk-­‐management  approaches  geared  to   level  of  risk   • Managing  technical  complexity  à  Internal  integration  tools   o Project  leaders  with  technical  and  administrative  experience   o Highly  experienced  team  members   o Frequent  team  meetings   o Securing  of  technical  experience  outside  firm  if  necessary   • Formal  planning  and  formal  control  tools:  GANTT  and  PERT  charts   o Gantt  chart  lists  project  activities  and  corresponding  start  and  completion   dates,  visually  representing  timing  and  duration  +  hr   o Pert  charts  (Program  Evaluation  and  Review  Technique)  graphically   depicts  project  task  and  interrelationships  in  a  network  diagram   o Determine  bottlenecks,  impact  problems  will  have   • External  integration  tools:  ways  to  link  work  of  implementation  team  to  users  at   all  organizational  levels  (Active  involvement  of  users,  team’s  responsiveness)   • User  resistance  to  organizational  change:  believe  change  is  detrimental  to  their   interests,  counter  implementation:  strategy  to  thwart  implementation  of  an  IS  

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Strategies  to  overcome  user  resistance   o User  participation   o User  education  and  training   o Management  edicts  and  policies   o Incentives  for  cooperation   o Improvement  of  end-­‐user  interface   o Resolution  of  organizational  problems  prior  to  introduction  of  new  system  

  Designing  for  the  organization   • Information  system  projects  must  address  ways  in  which  organization  changes   with  new  system   • Planning:  Procedural  changes,  Job  functions,  Organizational  structure,  Power   relationships,  Work  structure   • Ergonomics:  Interaction  of  people  and  machines  in  work  environment  including   Design  of  jobs,  Health  issues,  End-­‐user  interfaces   • Organizational  impact  analysis:  explains  how  system  will  affect  organizational   structure,  attitudes,  decision  making,  operations   • Sociotechnical  design:  Addresses  human  and  organizational  issues   o Separate  sets  of  technical  and  social  design  solutions   o Final  design  is  solution  that  best  meets  both  technical  and  social   objectives  à  higher  job  satisfaction  and  productivity     Project  management  software   • Can  automate  many  aspects  of  project  management   • Capabilities  for  Defining,  ordering,  editing  tasks,  Assigning  resources  to  tasks,   Tracking  progress   • Microsoft  Project  2010  =  Most  widely  used  project  management  software,   capabilities  of  producing  PERT,  Gantt  Charts,  critical  path  analysis   • Increase  in  SaaS,  open-­‐source  project  management  software  à  more  flexile,   collaborative  and  user-­‐friendly     • Project  portfolio  management:  helps  organizations  manage  portfolios  of  projects   and  dependencies  among  them                                        

Chapter  15   Managing  Global  Systems  

  Growth  of  International  Information  Systems   • Global  economic  system  and  global  world  order  driven  by  advanced  networks   and  information  systems   • Growth  of  international  trade  radically  altered  domestic  economies  around  globe     Developing  an  International  Information  Systems  Architecture   1. Understand  global  environment:  Business  drivers  pushing  your  industry  toward   global  competition,  Inhibitors  creating  management  challenges   2. Develop  corporate  strategy  for  competition:  How  firm  should  respond  to  global   competition   3. Develop  organization  structure  and  division  of  labor:  Where  will  production,   marketing,  sales,  etc.,  be  located   4. Consider  management  issues:  Design  of  business  procedures,  reengineering,   managing  change   5. Consider  technology  platform     Global  drivers   General  cultural  factors  lead  toward  internationalization  and  result  in  specific  business   globalization  factors  

  Business  Challenges  

  State  of  the  art   • Most  companies  have  inherited  patchwork  international  systems  using  1960s-­‐ era  batch-­‐oriented  reporting,  manual  entry  of  data  from  one  legacy  system  to   another,  and  little  online  control  and  communication  

 

 

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Significant  difficulties  in  building  appropriate  international  architectures   o Planning  a  system  appropriate  to  firm’s  global  strategy   o Structuring  organization  of  systems  and  business  units   o Solving  implementation  issues   o Choosing  right  technical  platform  

  Global  strategies  and  business  organization   • Three  main  kinds  of  organizational  structure   o Centralized:  In  the  home  country   o Decentralized/dispersed:  To  local  foreign  units   o Coordinated:  All  units  participate  as  equals   • Four  main  global  strategies   o Domestic  exporter:  heavy  centralization  of  corporate  activities  in  the   home  country  of  origin  (often  starting  point)   o Multinational:  concentrate  financial  management  and  control  out  of  home   base,  decentralizing  production,  sales,  marketing,  adapted  products  to   local  market  conditions   o Franchisers:  mix  of  old  and  new,  design  in  home  country,  further   production…  foreign  personnel   o Transnational:  stateless,  truly  globally  managed  firms  with  many  regional   headquarters,  frame  of  reference:  globe  

  Global  systems  to  fit  the  strategy   • Configuration,  management,  and  development  of  systems  tend  to  follow  global   strategy  chosen   • 4  main  types  of  systems  configuration   1. Centralized:  Systems  development  and  operation  totally  at  domestic  home  base   2. Duplicated:  Development  occurs  at  home  base  but  operations  are  handed  over  to   autonomous  units  in  foreign  locations   3. Decentralized:  Each  foreign  unit  designs  own  solutions  and  systems   4. Networked:    Development  and  operations  in  coordinated  fashion  across  all  units    

 

 

Reorganizing  the  Business   1. Organize  value-­‐adding  activities  along  lines  of  comparative  advantage  (E.g.,  Locate   functions  where  they  can  best  be  performed,  for  least  cost  and  maximum  impact)   2. Develop  and  operate  systems  units  at  each  level  of  corporate  activity—  local  (host   country  systems  units),  regional  (regional  systems  units  handle  telecommunications   and  systems  development)),  national,  and  international  (transnational  systems  units   create  link  across  major  regional  areas)   3. Establish  at  world  headquarters:  Single  office  responsible  for  development  of   international  systems  +  Global  CIO  position     Managing  Global  Systems   Principle  Management  Challenges  in  developing  global  systems  

  Typical  scenario:  Disorganization  on  a  global  scale   • Traditional  multinational  consumer-­‐goods  company  based  in  U.S.  and  operating   in  Europe  would  like  to  expand  into  Asian  markets   • World  headquarters  and  strategic  management  in  U.S.,  Only  centrally   coordinated  system  is  financial  controls  and  reporting     • Separate  regional,  national  production  and  marketing  centers   • Foreign  divisions  have  separate  IT  systems   • E-­‐mail  systems  are  incompatible   • Each  production  facility  uses  different  ERP  system,  different  hardware  and   database  platforms,  etc.     Global  systems  strategy   • Share  only  core  systems:  Core  systems  support  functionality  critical  to  firm   • Partially  coordinate  systems  that  share  some  key  elements  (Do  not  have  to  be   totally  common  across  national  boundaries,  Local  variation  desirable)   • Peripheral  systems:  Need  to  suit  local  requirements  only     1. Define  core  business  processes  (business  process  analysis)  +  best  performer   2. Identify  core  systems  to  coordinate  centrally   3. Choose  an  approach  (best:  salami  strategy)   • Piecemeal  and  grand  design  approaches  tend  to  fail   • Evolve  transnational  applications  incrementally  from  existing  applications   4. Make  benefits  clear   • Global  flexibility   • Gains  in  efficiency   • Global  markets  and  larger  customer  base  unleash  new  economies  of  scale  at   production  facilities   • Optimizing  corporate  funds  over  much  larger  capital  base  

 

The  management  solution:  Implementation   • Agreeing  on  common  user  requirements  à  Short  list  of  core  business  processes   à  Develop  common  language,  understanding  of  common  elements  and  unique   local  qualities   • Introducing  changes  in  business  processes  à  Success  depends  on  legitimacy   (extent  on  which  authority  is  accepted  =  competence,  vision  etc.),  authority,   ability  to  involve  users  in  change  design  process   • Coordinating  applications  development  à  Coordinate  change  through   incremental  steps  à  Reduce  set  of  transnational  systems  to  bare  minimum   • Coordinating  software  releases  à  Institute  procedures  to  ensure  all  operating   units  update  at  the  same  time  à  compatible   • Encouraging  local  users  to  support  global  systems  à  Cooptation:  Bringing  the   opposition  into  design  and  implementation  process  without  giving  up  control   over  direction  and  nature  of  the  change   o Permit  each  country  unit  to  develop  one  transnational  application   o Develop  new  transnational  centers  of  excellence     Technology  challenges  of  global  systems   • Global  business  model  and  strategy  à  hardware,  software,  networking   standards,  key  system  applications   • Standardization:  global  computing  platform,  international  work  teams   Computing  platforms  and  systems  integration   • How  new  core  systems  will  fit  in  with  existing  suite  of  applications  developed   around  globe  by  different  divisions     • Standardization:  Data  standards,  interfaces,  software,  etc.   Connectivity   • Ability  to  link  systems  and  people  into  single  integrated  network  (voice,  data,   image  transmissions)   • Internet  foundation  but  does  not  guarantee  any  level  of  service   • Many  firms  use  private  networks  and  VPNs   • Low  penetration  of  PCs,  outdated  infrastructures  in  developing  countries   • High  costs  and  monitored  transmissions  by  governments    

    Software  Localization   • Integrating  new  systems  with  old  (+  testing)   • Human  interface  design  issues,  languages  à  mastered  quickly   • Software  localization:  converting  software  to  operate  in  second  language  

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Most  important  software  applications:   o TPS  and  MIS  (basic  transaction  and  management  reporting  systems)   o Increasingly,  SCM  and  enterprise  systems  to  standardize  business   processes  à  not  always  compatible  with  differences  in  languages,   heritage,  business  processes  in  other  countries   o Problems:  not  technically  sophisticated  company  units   o Applications  that  enhance  productivity  of  international  teams  like  EDI,   SCM;  Collaboration  systems,  email,  videoconferencing