Information Systems:

the connection of people and resources

for innovation
ISYE 4530 Information Systems

Industrial and Systems Engineering

Rensselaer Polytechnic Institute
Troy, NY 12180-3590
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Quiz: the opening of your IS mind

for lifelong learning and innovation
Name two most powerful (and obvious) information
systems (IS) in your world are you a stakeholder there?
Give top five examples to show why you cannot live without
the Web at work/school as well as for daily life
Show that students anywhere in the world increasingly can
learn from the same materials as you do in the US, and
compete for your job (or collaborate with you)
Make a case that your IE skills are predicated on IS (think
data collection, parameters of models, and input to R)
Make a case that every IE job uses/needs IS (Excel)
Who should provide you the IS YOU need? Is YOUR value
depending on always having the right IT help around?
Who designed iPhone, Facebook, the Web? And how?
IS is a human value network; but what could it mean?
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First, let us define what is Information

System from a connectionist view
Information System (IS):
the networking of IS Elements (people,
processes, information resources, computing
platform, and communications infrastructure) in
the connected world for value creation.
Questions:
What is networking?
What are IS elements?
What is the connected world?
What is value creation?
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The Great Migration of Work Force

CIA Report 2009 - 40 years growth of Service: (%A,G,S)
China: 142 % (49%, 22%, 29%) Model A: with increasing G
Russia: 64% (10%, 21%, 64%)
Brazil: 61% (20%, 14%, 66%)
Japan: 45% (5%, 28%, 67%) Model B: with decreasing G
Germany: 42% (3%, 33%, 64%)
India: 35% (60%, 17%, 23%)
Indonesia: 34% (45%, 16%, 39%)
US: 23% (1%, 23%, 76%) fastest in any sector since 1950
UK BRS 2009: 82% STEM graduates working in Service
Clear parallel to the IT/Information/Comm growth

Moral of the story: knowledge economies are

service-oriented economies. What is service?
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An IBM Vision: the Smarter Planet

What is smart? How does it concern an IE?
Are they all information systems?

Smart traffic
systems

Intelligent
oil field
technologies

Smart food
systems

Smart
healthcare

Smart energy
grids

Smart water
management

Smart supply
chains

Smart
countries

Smart
weather

Smart
regions

Smart retail

Smart cities

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Smartness Riddles What is it?

What does a connected world mean isnt the world
always connected?
How could National Grid, Time-Warner, Microsoft, OnStar
and the whole world be connected at your command?
Where does the new smartness lie in the connected world?
Isnt the smart connection built on enabling analytics as
much as on information resources and IT infrastructure?
How can you plot a revolution or promote a cause using
FaceBook, Twitter, Google, YouTube, mobile Apps?
Who first achieved giga-, tera-, peta- and exa-scale (10 to
18th) computing? 1M+ SETI PCs, 40K PS3 folding@home,
~1M BOINC PCs at HOME
Who designed smartness? Who promoted smartness?
What is human value network? (people collaborate to
create values using the smart connections; businesses
thrive from facilitating this value creation, via free services
and personalization) Can you expand yourself this way?
What is the role of IS in this smarter world? The ISE role?
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When IE Collides with IS and Network

Science: the Networked Innovation
What is the largest information system in the world (or
indeed in human history)? Who invented it? Who created it?
Who continue to grow it? (all for one and one for all)
What smartness does this IS possess? (enabling analytics)
Can you name some Web sites that provide connection
(use interface), analytics, resources, computing, and
infrastructure for your use? (open sources and providers)
Who substantiated Facebook, Wikipedia, open sources,
social networks? Who gave smartness to smart phones?
(speedy grassroots innovation by serendipity)
What is networked innovation? (human value networks)
What is the role of STEM in networked innovation?
What is the Small World Phenomenon? Scale Free laws?
What is a hyper-network?
Does networking require analytics?
What is the ISE role in this big picture?
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Now, look closer

How does the Web concern you? Your study? Your life?
What are the basic (IS) elements that constitute this IS?
Can you interpret the Web as systems of IS? How?
What does this system comprise - i.e., what are the basic
elements of this IS? Can you generalize them for all ISs?
How does this IS compare to RPIs Student Information
System (and the difference is not their scale)?
What are SIS IS elements? How does it work (who controls
what; and how can it be used to do your transactions)?
If every IE job has an SIS of its own (using, e.g., Excel)
then, why should these systems be connected? (Access)
Does the Web conduct all transactions for you in a tightly
controlled manner similar to SIS? What does it miss?

Do you expect the Web to evolve into a personal resource

(iWeb?) to help you further life aspirations?
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The Basic IS Elements: They constitute

the Enterprise Information Architecture
People: end users (using the IS to perform non-IS jobs),
Professional IS staff (IS jobs: administration, support), and
personal digital access tools to the IS (chip, smartphone, etc.)
Process resources: enterprise analytics and processes
(application programs, decision and control models, user
interface and other software for processing information)
Information Resources: digital software assets (media files,
databases, knowledgebases, documents, and repositories of
digital tools, models, and methods).
Computing Resources: digital hardware (servers, clients, and
other information acquiring and processing devices).
Infrastructure Resources: networks and (wired or wireless)
telecommunications systems
Where do YOU, the IE, belong in this IS worldview?
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Quiz: What system of IS makes

amazon.com and netflix.com tick?
The Web presence and personalized marketing
(retailing offerings and proactive advertising and/or
recommendation by personalization analytics)
The data center (production with information resources)
The logistics centers (distribution of physical products)
The business center (administration and finance)
What integrates these centers/systems?
What are the basic IS elements of the integration?
How do these IS elements encompass all enterprise
systems/centers and thereby connect them together?
Can you name some basic types of data and business
analytics/processes for the Enterprise IS?
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Quiz: Understand the Web as an IS

Briefly answer the following questions:
1.Consider the whole Web as an IS: what are its core IS
elements? Is RPI SIS a part of this IS?
2.Name some of the core IS elements for Amazon.com,
Netflix.com, and Google.
3.Conceive an IS that is built from connecting Facebook,
Twitter, Google, and some other Web sites of your choice. That
is: First, define a particular mission (value proposition) for the
IS using the Internet; e.g., promoting world peace by
synchronized meditation; campaigning for someone or some
cause by social networking; or selling your resume by ?
4.Second, determine the particular IS elements needed for
such an Internet-based IS (e.g., for synchronized meditation).
5.Finally, recognize the open sites/sources that contain some
of these elements for you to connect and build the particular
IS. Adjust your mission to fit these available resources.
6.What are Web services and SaaS? How can you use
them to develop additional IS elements such as analytics for
your IS; or in general, for any enterprise IS?
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Analytics: customer recommendation

How do Amazon.com and Netflix.com make product
recommendations? Is this e-marketing important to YOU?
Which company does it better? (accuracy and versatility)
What kinds of data you must have? (records and
attributes on customer, product, and order)
What is the basic logic of recommending based on similar
customers? (define similar, clustering attributes, data)
What is the basic logic of recommending based on similar
products? (define similar, clustering attributes, data)
Can you network customers and products to do better?
(define the dynamic behaviors of purchase, data)
Suggest some simple ideas to improve search/chaining
on YouTube (recent viewings)? Ideas for Nteflix.com?
What basic data and statistics do these ideas require?
Moral: search and recommendation are Web marketing.
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Exercise: Build dynamic behaviors

A simple-minded algorithm based on similar customers Step 1:
determine a set of defining attributes (say, 10) for similar customers and
collect/analyze data on them. Some of the attributes must indicate the
customers preference for product types using, e.g., survey (rating) and
past records.
Step 2: compute the similarity indicator, S-C(i) = w(j)a(j) over j attributes
for each customer i, then group customers based on their S-C(i) scores
(or use other schemes)
Step 3: recommend the additional products that the similar customers
prefer most (statistics) add specific details
Why is this scheme unsatisfactory? (Static, Aggregate)
Improvement? (use purchased items over preferred types)
Develop a basic algorithm for using similar products S-P(i)
Develop an algorithm using customers-products networking (compute
similar behaviors from rating/purchase and regress them on attributes, by
sub-groups; need database design)
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Information System: the connection of

people and resources for innovation
The world is connected through digitization - Think
human communications (e.g., mails, phone, and TV)
Explain the difference amongst letter, fax and email
Then, consider the changes in information resources
(books, photos, movies); physical objects and environment
(cars, machines, buildings, highways) and even humans;
mechanisms of transactions Is there an end to the list?
Explain, what are RFID chips and wireless sensor networks?
Isnt the difference being the scalability of connection?
Now, explain what is the connected world? What is
underlying the scaling of economic activities? How are you
personally connected? What service models do mainframe
computer, PC/the iPad, and cloud computing represent?
Isnt it being the scaling of digital connections?
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Innovation: Digital Connections Scaling

(society-scale digital convergence)
Digitization: the platform. What to digitize - IS elements.
(Recognize IS elements in the smartness riddles.)
Connections: the convergence. What to connect - IS
elements. (Indicate what elements to connect in the riddles.)
Scaling: the value. What to scale - IS elements. (Explain the
scope of connection in each of the smartness riddles.)
DCS: the vision of design, driven by value propositions.
What is Digital Connections Scaling up, down, and
transformationally? Use the smartness riddles to answer.
(enterprise assets, personalized assistance, new design).
What is Service? Service Science? Knowledge Economy?
(value proposition, value cocreation, and scaling)
Digital Connections Scaling (DCS) is all for one and one
for all (open accumulation, networking, and ecosystem)
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Digital Connections Scaling: scale up,

down, and transformationally
Scale Up: cover the whole domain (population) of the
economic activities intended and accumulate reusable
resources and knowledge from the population and
about the population ex. Internet search engines
Scale Down: personalize for individual customers or
users by using the accumulated population knowledge,
to facilitate personal life cycle tasks ex. e-Marketing
Scale Transformationally: configure new business
designs and models to better utilize the accumulated
resources and the personalized capacity to create new
basic values ex. e-Commerce and social networking
Moral: value drives DCS; DCS achieves innovation;
and IS achieves DCS this is IS for innovation.
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Your Innovation: think DCS

How can you check numerous credentials (for, e.g., hiring)?
How can you manage exotic animal imports with few staff?
Whos afraid of IRS digital reforms?
Who cares about Radio-Frequency ID? (Listen to the battle
cry from Wal-Mart and homeland securityand the
global outsourcing to CHINA and INDIA?)
How do Twitter, FaceBook, YouTube, Buzz, LinkedIn,
GoToMeet, World of WarCraft, and Google make
money? How can IBM, mom-and-pops, and YOU use the
Web to do the same (innovation)?
What might be the next waves of e-Commerce/e-Business?
(Just when you think its safe to forever trash the
Internet hypes and bash the dot-com suckers)
Now, can you the industrial engineer identify some basic
enterprises processes, applications, or systems that
any
innovation must investigate to change?
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A Humbling IS Project: The Universal

Library by Google and Partnering Libraries
The Recorded Human History:
- 750 million books and volumes
- 25 million songs and music works
- 500 million paintings and drawings
- 500 Thousand movies (feature films)
- 3 million short films and TV programs
- 100 billion homepages
Total: 5,000,000,000,000,000 bits (5PBs)
Digital Library Projects: The Library of Congress,
Amazon.com, Stanford, Google Britain, EU, Japan, China
(post 1949 publications)
Issues: copyrights, business models, liberty
Who cares and why bother? (think DCS for business)
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Basic Principles of IS Planning

Basic values of IS: the reduction of transaction cost and
cycle time. (IS evaluation)
Innovation: networked/collaborated creation of value to
renew products/services, and shared utilization and/or
concurrent processing of resources to improve quality and
productivity. (IS strategic planning)
Enterprising: the design of connection of IS elements to
realize the innovation. (IS engineering)
Sustainability: the openness, scalability, and reconfigurability of IS (IS master plan/roadmap)
Embedment in societal cyber-infrastructure: the use of
open source technology for IS. (IS design)
Person-centered: the deployment/collaboration of IS
resources around people. (IS construction)
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Quiz: What are the basic values of IS?

Briefly answer the following:
Why do people throw away bottles but not nickels?
How can you measure the value of an IS to a professional
who uses the IS to get information (from colleagues)?
What is the transaction cost of buying/selling a house?
If a project requires 1,000 man-hours, then what is the
minimum labor required to complete it in one hour?
How can you turn a sequential office workflow (e.g., job
interview) into concurrent and reduce its overall cycle time?
How can you measure the value of cycle time reduction?
Economists consider a human organization an information
processor for facilitating data handling, information
exchange, and decision making among all the stakeholders to
discharge their common missions. According to this theory,
what is the role of IS in the Knowledge Economy?
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Pro Forma IS Activities: the basic

nervous system tasks for the enterprise
Performs mundane data acquisition and processing jobs; such as
sales, human resources, and inventory
Provides routine operational and managerial information for
organizational control; such as sales/competition analysis,
performance statistics, and production status
Supports executive decision making and furnishes on- demand
decision information; such as strategic reviews, customer
relationships/knowledge center, new product planning, and shortterm/long-term goal setting
Enables online transactions of various scale, timeliness, and
automation, and sharing/flow of pre-determined or requested
information across the organization; such as point-of-sale, eretailing, e-marketing, and much more
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Information System Engineering:

innovate the value chain by DCS
Digitization: build/expand IS elements - convert paperbased data resources, manual processes, and user access
into (proprietary) digital systems (IS), typically focusing on
individual applications and functions (islands of IS).
Enterprise Transformation: connect IS elements
integrate systems to reduce transaction costs and cycle time
(scaling up: enterprise assets; down: personalized reuse;
transformational: process simplification and fluidity).
Enterprise Collaboration and Beyond: globally connect
IS elements achieve the same DCS goals across the
extended enterprise value chains (e.g., supply chain and
demand chain), using open and scalable technology.
Society-Scale Digital Convergence: societal DCS
centered on persons as both customers and providers
The ultimate journey: service orientation of economies
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The Model of Enterprise Transformation

Objective: Reduce intra-enterprise transaction cost and

cycle time (better alignment of business processes and

resources with value propositions) proprietary IS elements
Means: use (open and scalable) enterprise cyberinfrastructure to integrate (on-demand) IS elements; i.e.,
- Connect (on demand) users and tasks with data and
knowledge, and process resources (Subject oriented)
- Provide (on demand) enterprise informatics to users and
enable sharing of resources across tasks (Subject model)
- Simplify business processes toward a user- and taskcentered (on-demand) architecture (Subject paradigm)
- Convert sequential processes into concurrent (teams)
Scope: the enterprise and the clients (on demand); i.e.,
pursue the capabilities of (on-demand) value cocreation
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The Model of Enterprise Transformation

Objective: Reduce intra-enterprise transaction cost and

cycle time (better alignment of business processes and

resources with value propositions) proprietary IS elements
Means: use (open and scalable) enterprise cyberinfrastructure to integrate (on-demand) IS elements; i.e.,
- Connect (on demand) users and tasks with data and
knowledge, and process resources (Subject oriented)
- Provide (on demand) enterprise informatics to users and
enable sharing of resources across tasks (Subject model)
- Simplify business processes toward a user- and taskcentered (on-demand) architecture (Subject paradigm)
- Convert sequential processes into concurrent (teams)
Scope: the enterprise and the clients (on demand); i.e.,
pursue the capabilities of (on-demand) value cocreation
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The Model of Enterprises Collaboration

Objective: Reduce inter-enterprise/community transaction

cost and cycle time (join community resources and align

community processes) community-wise open IS elements
Means: use societal cyber-infrastructure to globally connect
the related IS elements across collaborating enterprises to
facilitate each partners respective life cycle tasks and
requirements (extended co-production); i.e.,
- Follow the value chain to form (on-demand) extended
enterprises and pursue opportunities of co-production.
- Apply the enterprise transformation model to extended
enterprises, recursively if possible. (Subject paradigm)
- Put the Person/Client at the center; i.e., renovate the
industrial value chain to connect (on-demand) enterprises
along the life cycle requirements of a person/client.
- Employ innovative virtual organizations (e-business).
Scope: Drill through the demand chain and/or supply chain
for community-wide capability of value cocreation.
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QUIZ: Analyze this

Read the Sharing IS Secrets article. Explain, exactly how did
the new extended enterprise (across Wal-Mart and WarnerLambert) reduce the transaction cost and cycle time i.e.,
where did the savings come from? Hint: identify the
simplification due to digital connection of forecasting with
replenishment - specify
What information system engineering model best describes the
CFAR vision? What principles best explain the above
reduction?
What IS elements did CFAR embody? To what extent are these
elements open and scalable?
Use CFAR to illustrate the model of digital connections scaling.
That is, what was the D, the C, and the S?
Analyze the smartness riddles; propose IS solutions to them;
and answer the above four questions for them.
How can you build an IS i.e., what could be the basic
process of information system development?
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Example: Collaboration
Demand
Forecasting

Inventory
Replenishment
Wal-Mart

CFAR
Internet

VAN

Production
Planning

Order
Processing
Warner-Lambert
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Engineering an Information System: The Life

Cycle and Rapid Prototyping Approaches

Planning: determine the use of the IS; i.e., develop

innovative ideas to realize the enterprises strategic
goals and acquire the commitment, resources, and
technology required to execute these ideas.
Analysis: determine the IS elements; i.e., identify the
enterprise processes involved in the above ideas and
goals, and characterize these processes using IS
elements (i.e., define them in terms of IS elements).
Design: specify the technical structure of the IS elements
and their configuration (connections), and create an
enterprise information architecture to represent them.
Implementation: construct the IS elements and their
connections, and validate the system for the enterprise.
Control: internalize, maintain, and evolve (updates, etc.)
the system to adapt to change.
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Make-to-Stock (MTS):
Inventory-Driven

Customer

Order Data
Date of Delivery

a
Readied Order and
Shipping Data

Distribution
Network

Billing
System

D1

General
Ledger

1
Process Order
Information

Order etc.

Demand Data

Order Entry
System

Inventory
Information

Forecast
Sales
Forecasting
System

Forecasts
Of Demand

Back Orders
Orders

b
D2

Inventory

Outstanding
D3 Demand

D4

Demand
Forecast

Distribution
D5 Policy

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Make-to-Stock (MTS):
Inventory-Driven

D2

Inventory

Continued from previous slide

Outstanding
D3 Demand

D4

Demand
Forecast

Distribution
D5 Policy
Policy Data

Inventory, in-process, in-transit, and on-hand

Short-term schedule
and work orders

Management

Three-yr Master
Production Plan

4
Schedule and
Monitor the
Production
(MRPII)

Replenishment
Schedule

Master
Production
Scheduleing

Plan for
replenishment
in the Network
Distribution
Resource
System

5
Distribution
Network

Progress on
Replenishment

Directive for
Replenishment

Monitor
Replenishment
in the Network
Distribution
Resource
System

Inventory in
transit and onhand

D2 Inventory
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Assemble to Order
(ATO)

Billing
System

Management

D3 Bill of Material
b

B.O.M

D1 Log

B.O.M

Updates
1

Order System
Entry Log

Order
Data

Process Order
Information
Order Entry
System

Date of
Delivery

D2 Availability
of Options
Available
Options

Options
Data

Confirmed Order

2
Schedule
Production
(Family of
Products)
Master
Scheduling
System

D4 General

Manufacturing
Orders Schedule
Production
Updates

Monitor
Production
Process
Manufacturing
Facility

D5 Outstanding

Ledger

Orders

Cost, Shipping, etc.

Shipping
Data

Outstanding
Orders

Sales,
A/R, etc.

Customer

Long Term
Schedule

Data of Completed Order

4

Pending
Orders

Completed
Order

Update Order
and Status
Accounting

Shipping
System

Manufacturing
Accounting
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Digitization: application-oriented standalone information systems

1.
2.
3.
4.
5.
6.
7.

Order Processing and Procurement

Warehousing, Logistics, and Distribution
Customer Service (CRM, Knowledge Center, etc.)
Accounts Payable, Accounts Receivable
General Ledger and Control
Marketing and Sales
Payroll/Personnel (Human Resources)

1.
2.
3.
4.
5.
6.

Product Design (CAD/CAE)

Process Planning (CAPP)
Production Planning (MRP)
Production and Inventory Control (MRP II)
Shop Floor Control (CAM, SCADA, MES)
Statistical Process Control and Quality Assurance
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Digital Connections: Enterprise-wide IS

Concurrent Engineering (CE): distributed design/alignment with production
Computer Integrated Manufacturing (CIM): integration of CAM, SCADA,
MES, Just-in-Time, and other manufacturing systems
Enterprise Resources Planning (ERP): integrated administration
Product Data Management (PDM): part-centered data management
Product Life Cycle Management (PLCM): integrate part data for the
product cycle (from market study to design, production and service)
Enterprise Engineering: total quality management, business process reengineering, virtual/horizontal enterprises, agile manufacturing, etc..
Supply chain management (SCM): manage the extended enterprise to
cascade the primes demand to the suppliers production schedules.
Industrial Exchanges: marketplace for company buyers and suppliers
E-Engineering: collaboration of engineering design across the supply chain
(with potential to coordinate production)
On-Demand Business/Service: provide demand chain service processes
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Quiz: How has IS innovated (DCS)

industrial and service processes?
What models are concerned with prime-supplier
collaboration? Treat each model as an extended
enterprise (as you did to, e.g., CFAR), what IS
elements do these models connect/integrate across
enterprises? Example: CE connects design processes
and information resources (CADs)
Which of these models provides the highest level of
integration for the supply chain?
How does the CIM model compare to the PDM and
PDLC models (all three are for single enterprises)?
How does e-Engineering compare to CAD and
Concurrent Engineering?
How does CE compare to PDM and PLCM?
How does On-Demand Business/Service compare to
previous Enterprise Engineering?
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Some related terminology

EDP (Electronic Data Processing)

MIS (Management Information Systems)

CBIS (Computer Based Information Systems)

EDI (Electronic Data Interchange)

DSS (Decision Support System)

ES/KBS (Expert System/Knowledge Based System)

EIS (Executive Information System)

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Quiz: Suppose YOU were the strategist...

A small bearings manufacturer has a computer-controlled
workshop, a professional staff of marketing, engineering,
information technology, and administration. It sells to
international buyers, as well as being a certified supplier
to such companies as GD, GE, GM, LMI, and Simens.
1.
2.
3.
4.
5.

How would the CE, CIM, ERP, PDM and PLCM models
work for the company, respectively?
How would the Industrial Exchange, e-Engineering, and
On-Demand Service/Manufacturing models work?
What information system engineering principles are at
work in each of the above models?
Suggest some ideas to further renovate the manufacturer.
What basic IS elements are involved in these ideas?

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Exercise I:
1. Analyze the CFAR model: how does it achieve
enterprise collaboration at the system level?
2. Visit Covisint, Perfect Commerce, and Ariba on the
Internet: what is an industrial exchange, and what
are some of its representative IS elements?
3. Investigate: what is e-Engineering (GE, etc.)?
What is On-Demand Business/Services (IBM, etc.)?
4. Explore: what do FreshDirect and amazon.com
have in common? Bloggers and wikipedia?
5. Study: identify how each of the above models
affects enterprise supply chain and demand chain.
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Exercise II:
What are Web Services (Internet-resident business
process services), Internet 2 and Grid Computing?
What is social networking?
What are open source technology and ontology?
Check/Google the Internet to gain an adequate
understanding about these three categories of
emerging technologies, and consider how they
might enable the emerging cyber-infrastructurebased enterprises (e.g., help innovate the current
practices, effect new collaborations, and afford new
models). Can you find some sample applications?

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