Professional Documents
Culture Documents
Chapter 1 Information Systems in Business Today
Chapter 1 Information Systems in Business Today
Chapter 1 Information Systems in Business Today
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
• Computer
literacy
is
only
knowledge
of
IT
1. Organizations
2. Technology
3. 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
Virtual
Worlds
(SecondLife)
Wikis
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)
àOther
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)
X=
cost
• Firms
experience
agency
costs
(cost
of
managing
+
supervising
self-‐interested
Y=size
parties
=
agents
(employees))
(nexus
of
contracts)
à
IT
analyzes
info,
easier
for
manager
to
oversee
greater
number
of
employees
à
reducing
costs
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
• 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
• WSDL:
Web
Services
Description
Language,
Framework
for
describing
task
Car
Webb
Services
link
performed
by
Web
service
and
capabilities
to
other
web
• UDDI:
Universal
Description,
Discovery,
and
Integration,
Directory
for
locating
sites
booking
Web
services
system,
no
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
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
Data
• 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
• 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
• 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
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
àUse
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-‐
• High-‐level
of
user
involvement
and
intensive
applications
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
• Usually
at
least
15%
cost
saving
vendor
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
• 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
• 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
• 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