Chapter 1 and 10, Intro to Information Systems

What's New in MIS?

- New technologies (cloud, Big Data, mobile phones, globalization!!!) - Management (online collaboration, virtual meetings) - Organizations (social media being used by businesses, Telework gains momentum in the workplace, co-creation of business model)

E-Commerce Revenue Models

1. Advertising 2. Sales 3. Subscription 4. Free/Freemium 5. Transaction Fee 6. Affiliate

Table 10.1 The Growth of E-commerce (see book)

1. Business Transformation E-commerce remains the fastest-growing form of commerce when compared to physical retail stores, services, and entertainment. Social, mobile, and local commerce have become the fastest-growing forms of e-commerce. 2. Technology Foundations Wireless Internet connections (Wi-Fi, WiMax, and 4G smartphones) continue to expand. Things like Fitbit, and social media are changing the game 3. New Business Models Emerge literally everything has been disrupted in this tech renaissance we've got going on

Drivers of information systems

1. Operational Excellence (saves money, time efficient, no paper, faster) 2. improved decision making 3. customer and supplier intimacy (becomes friends with customers) 4. create competitive advantage 5. survival (Blockbuster v. Netflix) 6. creating new products, services, and business models

How has e-commerce transformed marketing?

1. long term marketing 2. internet advertising 3. behavioral targeting 4. Programmatic ad buying 5. Native advertising

Table 10.7 Features of SOCIAL Commerce

1. newsfeed 2. timelines 3. social sign-on 4. collaborative shopping (Pinterest) 5. network notification (Facebook Like Button) 6. social search (recommendations)

Table 10.5 Internet Business Models

1. portal 2. e-tailer 3. content provider 4. transaction broker 5. market creator 6. service provider 7. community provider

new ways of B2B buying and selling

1. private industrial networks 2. net marketplaces 3. exchanges

long tail marketing

Ability of firms to market goods profitably to very small online audiences, largely because of the lower costs of reaching very small market segments. it makes it easier for entrepreneurs to sell stuff

information systems literacy

Broad-based understanding of information systems that includes behavioral knowledge about organizations and individuals using information systems as well as technical knowledge about computers.

survival

Business firms also invest in information systems and technologies because they are necessities of doing business. Sometimes these necessities are driven by industry-level changes. Many federal and state statutes and regulations create a legal duty for companies and their employees to retain records, including digital records.

types of E-commerce

Business-to-consumer (B2C) Business-to-business (B2B) Consumer-to-consumer (C2C) e-commerce can also be categorized by platform (ex. mobile commerce)

operational excellence

Businesses continuously seek to improve the efficiency of their operations to achieve higher profitability. Information systems and technologies are some of the most important tools available to managers for achieving higher levels of efficiency and productivity in business operations, especially when coupled with changes in business practices and management behavior. (saves money, time efficient, no paper, faster)

content provider

Creates revenue by providing digital content, such as news, music, photos, or video, over the web. The customer may pay to access the content, or revenue may be generated by selling advertising space. ex. WSJ.com, Youtube, blogs, Spotify

wisdom of crowds

Creating sites where thousands, even millions, of people can interact offers business firms new ways to market and advertise and to discover who likes (or hates) their products. In a phenomenon called the wisdom of crowds, some argue that large numbers of people can make better decisions about a wide range of topics or products than a single person or even a small committee of experts. ex. Yelp, Amazon reviews, ratings in general

business-to-consumer (B2C) e-commerce

E-commerce in which businesses and final consumers interact ex. BarnesandNoble.com, Amazon.com

e-commerce

E-commerce refers to the use of the Internet and the web to transact business. For the most part, this refers to transactions that occur over the Internet and the web. Retail e-commerce revenues grew 15-25 percent per year until the recession of 2008-2009, when they slowed measurably. In 2017, e-commerce revenues grew at an estimated 16 percent annually.

Why E-Commerce is Different (8 things)

Figure 10.2 Eight Unique Features of E-commerce Technology ubiquity, global reach, universal standards, increases richness, interactivity, information density, personalization/customization, social technology

indirect goods

Goods not directly used in the production process, such as office supplies.

digital goods

Goods that can be delivered over a digital network Cost of producing first unit is almost entire cost of product 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.) ex. Apple iTunes Store has sold more than 50 billion songs for 99 cents each since opening in 2003, providing the industry with a digital distribution model that has restored some of the revenues lost to digital music channels. Yet the download business is rapidly fading at Apple, down more than 25 percent in recent years, as streaming becomes the dominant consumer path to music. ex Quiz Question: Which of the following is not / correct in terms of digital goods? SEE TABLE 10.4

improved decision making

In the past 10 years, information systems and technologies have made it possible for managers to use real-time data from the marketplace when making decisions. ex. Verizon Corporation, one of the largest regional telecommunications operating companies in the United States, uses a web-based digital dashboard to provide managers with precise real-time information on customer complaints, network performance for each locality served, and line outages or storm-damaged lines.

New Products, Services, and Business Models

Information systems and technologies enable firms to create new products, services, and business models. a BUSINESS MODEL describes how a company produces, delivers, and sells a product or service to create wealth. ex. Apple has prospered from a continuing stream of innovations, including the original iPod, iPod nano, iTunes music service, iPhone, and iPad.

Key Concepts in E-commerce: Digital Markets and Digital Goods in a Global Marketplace Internet and digital markets have changed the way companies conduct business by.... (6 things)

Internet and digital markets have changed the way companies conduct business 1. reduces information asymmetry 2. lowers menu costs 3. enables dynamic pricing 4. reduce/increase switching costs 5. Delayed gratification 6. Disintermediation

Table 10.4 How the Internet Changes the Markets for Digital Goods

Marginal cost unit Zero Cost of production High (most of the cost) Copying cost Approximately zero Distributed delivery cost Low Inventory cost Low Marketing cost Variable Pricing More variable (bundling, random pricing games)

lowers menu costs

Merchants' costs of changing prices. Digital markets are very flexible and efficient because they operate with reduced search and transaction costs, lower menu costs (merchants' costs of changing prices), greater price discrimination, and the ability to change prices dynamically based on market conditions. its free to change the costs on the web, while in acme you need a worker to go around and manually change all of the prices!

market creator

Provides a digital environment where buyers and sellers can meet, search for products, display products, and establish prices for those products; can serve consumers or B2B e-commerce, generating revenue from transaction fees. ex. Ebay, Etsy, Priceline.com (hotels and bookings)

community provider

Provides an online meeting place where people with similar interests can communicate and find useful information. ex. Facebook, Twitter

service provider

Provides applications such as photo sharing, video sharing, and user-generated content as services; provides other services such as online data storage and backup. ex. Google Apps, Dropbox, Canvas

portal

Provides initial point of entry to the web along with specialized content and other services. ex. Yahoo, Bing, Google

Transaction broker

Saves users money and time by processing online sales transactions and generating a fee each time a transaction occurs. ex. Expedia.com (they own nothing, they are just providing an online service that processes transactions!!!) ex. ETrade.com (does one's stocks!)

Electronic Data Interchange (EDI)

The direct computer-to-computer exchange between two organizations of standard business transactions, such as orders, shipment instructions, or payments. EDI enables the computer-to-computer exchange between two organizations of standard transactions such as invoices, bills of lading, shipment schedules, or purchase orders. Transactions are automatically transmitted from one information system to another through a network, eliminating the printing and handling of paper at one end and the inputting of data at the other. Each major industry in the United States and much of the rest of the world has EDI standards that define the structure and information fields of electronic transactions for that industry. OLD WAY

Disintermediation

The removal of organizations or business process layers responsible for intermediary steps in a value chain is called disintermediation E-commerce has also given rise to a completely new set of new intermediaries such as Amazon, eBay, PayPal, and Blue Nile. Therefore, disintermediation differs from one industry to another.

social graph

The social graph is synonymous with the idea of a social network used to describe offline relationships. You can map your own social graph (network) by drawing lines from yourself to the 10 closest people you know. If they know one another, draw lines between these people. If you are ambitious, ask these 10 friends to list and draw in the names of the 10 people closest to them. What emerges from this exercise is a preliminary map of your social network. Now imagine if everyone on the Internet did the same and posted the results to a very large database with a website. Ultimately, you would end up with Facebook or a site like it. literally facebook or wikipedia or google lol

Personalization/Customization

The technology allows personalized messages to be delivered to individuals as well as groups. business significance: Personalization of marketing messages and CUSTOMIZATION of products and services are based on individual characteristics.

social technology

The technology promotes user content generation and social networking business significance: New Internet social and business models enable user content creation and distribution and support social networks. User Content Generation and Social Networking!!!!

global reach

The technology reaches across national boundaries, around Earth business significance: Commerce is enabled across cultural and national boundaries seamlessly and without modification. The marketspace includes, potentially, billions of consumers and millions of businesses worldwide.

interactivitiy

The technology works through interaction with the user. business significance: Consumers are engaged in a dialogue that dynamically adjusts the experience to the individual and makes the consumer a participant in the process of delivering goods to the market. you do what you want to do and see what you want to see!

10-4 How has e-commerce affected business-to-business transactions?

The total amount of B2B trade in the United States in 2017 was estimated to be about $13.3 trillion, with B2B e-commerce (online B2B) contributing about $6.3 trillion of that amount About 80 percent of online B2B e-commerce is still based on proprietary systems for Electronic Data Interchange (EDI)

mobile commerce (m-commerce)

The use of handheld wireless devices for purchasing goods and services from any location is termed mobile commerce or m-commerce. All three types of e-commerce transactions can take place using m-commerce technology

universal standards

There is one set of technology standards, namely Internet standards. business significance: With one set of technical standards across the globe, disparate computer systems can easily communicate with each other. The universal technical standards of the Internet and e-commerce greatly lower MARKET ENTRY COSTS—the cost merchants must pay simply to bring their goods to market for consumers, universal standards reduce SEARCH COSTS—the effort required to find suitable products.

richness

Video, audio, and text messages are possible. business significance: Video, audio, and text marketing messages are integrated into a single marketing message and consumer experience.

customer and supplier intimacy

When a business really knows its customers and serves them well, the way they want to be served, the customers generally respond by returning and purchasing more. This raises revenues and profits. Likewise with suppliers: the more a business engages its suppliers, the better the suppliers can provide vital inputs. This lowers costs. ex. Mandarin Oriental in Manhattan and other high-end hotels exemplify the use of information systems and technologies to achieve customer intimacy. These hotels use information systems to keep track of guests' preferences, such as their preferred room temperature, check-in time, frequently dialed telephone numbers, and television programs, and store these data in a giant data repository.

create competitive advantage

When firms achieve one or more of these business objectives—operational excellence; new products, services, and business models; customer/supplier intimacy; and improved decision making—chances are they have already achieved a competitive advantage. ex. Google over Bing ex. Whole Foods over Acme

subscription revenue model

a company offers its users content or services and charges a subscription fee for access to some or all of its offerings on an ongoing basis ex. Netflix, eHarmony (dating services), Ancestry.com (genealogy research), and Microsoft Xbox Live.

transaction fee revenue model

a company receives a fee for enabling or executing a transaction ex. eBay provides an online auction marketplace and receives a small transaction fee from a seller if the seller is successful in selling an item, PayPal

advertising revenue model

a website generates revenue by attracting a large audience of visitors who can then be exposed to advertisements. The advertising model is the most widely used revenue model in e-commerce, and arguably, without advertising revenues, the web would be a vastly different experience from what it is now because people would be asked to pay for access to content. Content on the web—everything from news to videos and opinions—is free to visitors because advertisers pay the production and distribution costs in return for the right to expose visitors to ads. clickbait!!!!!

native advertising

an online marketing concept in which the advertiser attempts to gain attention by providing content in the context of the user's experience in terms of its content, format, style, or placement

Location-based services

applications that use location information to provide a service A geosocial service can tell you where your friends are meeting. (snapmap) Geoadvertising services can tell you where to find the nearest Italian restaurant (google maps) Geoinformation services can tell you the price of a house you are looking at or about special exhibits at a museum you are passing. (Zillow)

information system (IS)

can be defined technically as a set of interrelated components that collect (or retrieve), process, store, and distribute information to support decision making, coordinating, and control in an organization. In addition, information systems may also help managers and workers analyze problems, visualize complex subjects, and create new products. see figure 1.1: Data and information INFO SYSTEMS CONVERTS DATA INTO INFORMATION input into output to solve a business problem!!! Using information systems effectively requires an understanding of the ORGANIZATION, PEOPLE, and INFORMATION TECHNOLOGY shaping the systems. An information system provides a solution to important business problems or challenges facing the firm. (Figure 1.3)

reduce/increase switching costs

changing from iPhone to Android an inconvenience a headache! These new digital markets can either reduce or increase switching costs, depending on the nature of the product or service being sold ex. of switching costs = AA Rewards Points, brand loyalty, if you 80,000 points with AA why fly Delta Airlines???? LOYALTY PROGRAMS CREATE/SHOWCASE SWITCHING COSTS

sales revenue model

companies derive revenue by selling goods, information, or services to customers Companies such as Amazon (which sells books, music, and other products), LLBean.com, and Gap.com all have sales revenue models.

information technology (IT)

consists of all the hardware and software that a firm needs to use to achieve its business objectives. This includes not only computers, storage technology, and mobile handheld devices but also software, such as the Windows or Linux operating systems, the Microsoft Office desktop productivity suite, and the many thousands of computer programs that can be found in a typical large firm.

revenue model

describes how the firm will earn revenue, generate profits, and produce a superior return on investment

Consumer-to-consumer e-commerce

e commerce between consumers often referred to as c2c ex. eBay, Etsy, Redbubble

Business-to-business e-commerce

e-commerce in markets where businesses buy from and sell to other businesses ex. Elemica's website for buying and selling chemicals and energy is an example of B2B e-commerce. ex. OfficeDepot.com

reduces information asymmetry

exists when one party in a transaction has more information that is important for the transaction than the other party. That information helps determine their relative bargaining power. In digital markets, consumers and suppliers can see the prices being charged for goods, and in that sense, digital markets are said to be more transparent than traditional markets. people can all get the same info now!

free/freemium revenue model

firms offer basic services or content for free and charge a premium for advanced or special features. ex. Pandora, Spotify

computer literacy

focuses primarily on knowledge of information technology

direct goods

goods used in a production process, such as sheet steel for auto body production

exchanges

independently owned third-party Net marketplaces that connect thousands of suppliers and buyers for spot purchasing. Many exchanges provide vertical markets for a single industry, such as food, electronics, or industrial equipment, and they primarily deal with direct inputs. For example, Go2Paper enables a spot market for paper, board, and craft among buyers and sellers in the paper industries from more than 75 countries.

Crowdsourcing

inviting broad communities of people - customers, employees, independent scientists and researchers, and even the public at large - into the new product innovation process GoFundMe.com, KickStarter.com

e-tailer

online retail store Sells physical products directly to consumers or to individual businesses. ex. Amazon.com

net marketplaces

suppliers and buyers conduct trade in a single internet-based environment

enables dynamic pricing

the price of a product varies depending on the demand characteristics of the customer or the supply situation of the seller. For instance, online retailers from Amazon to Walmart change prices on many products based on time of day, demand for the product, and users' prior visits to their sites. like Uber charging $1000 on NYE!!! or prices varying by zip code!

Reintermediation

the reintroduction of an intermediary between a goods producer and consumers

ubiquity

the state of being everywhere at once (or seeming to be everywhere at once) Internet/web technology is available everywhere: at work, at home, and elsewhere by desktop and mobile devices. business significance: The marketplace is extended beyond traditional boundaries and is removed from a temporal and geographic location. Marketspace is created; shopping can take place anytime, anywhere. Customer convenience is enhanced, and shopping costs are reduced. The result is called a MARKETSPACE—a marketplace extended beyond traditional boundaries and removed from a temporal and geographic location. UBIQUITY REDUCES TRANSACTION COSTS

information density

the technology reduces information costs and raises quality business significance: Information processing, storage, and communication costs drop dramatically, whereas currency, accuracy, and timeliness improve greatly. Information becomes plentiful, cheap, and more accurate. big data baby!!!! PRICE TRANSPARENCY refers to the ease with which consumers can find out the variety of prices in a market; COST TRANSPARENCY refers to the ability of consumers to discover the actual costs merchants pay for products. This allows merchants to segment the market into groups that are willing to pay different prices and permits the merchants to engage in PRICE DISCRIMINATION—selling the same goods, or nearly the same goods, to different targeted groups at different prices.

delayed gratification

they might cause some extra delay in gratification due to shipping times. Unlike a physical market, you can't immediately consume a product such as clothing purchased over the web (although immediate consumption is possible with digital music downloads and other digital products). it takes longer to get your stuff cause it has to ship

the field of management information systems (MIS)

tries to achieve this broader information systems literacy. MIS deals with behavioral issues as well as technical issues surrounding the development, use, and impact of information systems that managers and employees in the firm use.

private industrial networks (private exchange)

typically consist of a large firm using a secure website to link to its suppliers and other key business partners (see Figure 10.7). The buyer owns the network, and it permits the firm and designated suppliers, distributors, and other business partners to share product design and development, marketing, production scheduling, inventory management, and unstructured communication, including graphics and email. Another term for a private industrial network is a private exchange. ex. Volkswagon An example is VW Group Supply, which links the Volkswagen Group and its suppliers. VW Group Supply handles 90 percent of all global purchasing for Volkswagen, including all automotive and parts components. meaning the firm pretty much owns everything

behavioral targeting

using online consumer tracking data to target advertisements and marketing offers to specific consumers

social shopping

using the internet to communicate about product preferences with other shoppers Pinterest

affiliate revenue model

websites (called affiliate websites) send visitors to other websites in return for a referral fee or percentage of the revenue from any resulting sales. Community feedback sites such as Epinions and Yelp receive much of their revenue from steering potential customers to websites where they make a purchase. Amazon uses affiliates that steer business to the Amazon website by placing the Amazon logo on their blogs. Personal blogs often contain display ads as part of affiliate programs #SponsoredPost!!!

What Issues Must Be Addressed When Building an E-Commerce Presence?

•Most important management challenges -Developing clear understanding of business objectives -Knowing how to choose the right technology to achieve those objectives •Develop an e-commerce presence map -Four areas: websites, email, social media, offline media •Develop a timeline: milestones -Breaking a project into discrete phases