IST 305 Exam 1 Ch. 1-4
Survival
- Information technologies as necessity of business - Industry-level changes • Example: Citibank's introduction of ATMs - Governmental regulations requiring record keeping • Examples: Toxic Substances Control Act, Sarbanes-Oxley Act • Dodd-Frank Act
Product differentiation
- Enable new products or services, greatly change customer convenience and experience - Example: Google, Nike, Apple - Mass customization
Transaction Cost Theory
- Firms seek to economize on transaction costs (the costs of participating in markets). • Vertical integration, hiring more employees, buying suppliers and distributors - IT lowers market transaction costs for firm, making it worthwhile for firms to transact with other firms rather than grow the number of employees.
Business Processes
- Flows of material, information, knowledge - Sets of activities, steps - May be tied to functional area or be crossfunctional Examples of functional business processes - Manufacturing and production • Assembling the product - Sales and marketing • Identifying customers - Finance and accounting • Creating financial statements - Human resources • Hiring employees
Four main actors of MIS
- Suppliers of hardware and software - Business firms - Managers and employees - Firm's environment (legal, social, cultural context)
Network-based strategies
- Take advantage of firm's abilities to network with one another - Include use of: •Network economics •Virtual company model •Business ecosystems
Traditional economics: Law of diminishing returns
- 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
E-business
- Use of digital technology and Internet to drive major business processes
Enterprise Resource Planning (ERP)
Collects data from different firm functions and stores data in single central data repository - Resolves problem of fragmented data - Enable: • Coordination of daily activities • Efficient response to customer orders (production, inventory) • Help managers make decisions about daily operations and longer-term planning
Management Information Systems
Combines computer science, management science, operations research, and practical orientation with behavioral issues
European Directive on Data Protection:
Companies must inform people information is collected and disclose how it is stored and used. • Requires informed consent of customer. - EU member nations cannot transfer personal data to countries without similar privacy protection. • U.S. businesses use safe harbor framework to work with EU personal data. - Stricter enforcements under consideration: • Right of access • Right to be forgotten
Tools for collaboration and teamwork
E-mail and instant messaging - Wikis - Virtual worlds - Collaboration and social business platforms • Virtual meeting systems (telepresence) • Cloud collaboration services (Google Tools, cyberlockers) • Microsoft SharePoint • IBM Notes • Enterprise social networking tools
Technical Approach
Emphasizes mathematically based models - Computer science, management science, operations research
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
Employment:
Reengineering work resulting in lost jobs
End Users
Representatives of other departments for whom applications are developed - Increasing role in system design, development
Management Information Systems (MIS)
Serve middle management - Provide reports on firm's current performance, based on data from TPS - Provide answers to routine questions with predefined procedure for answering them - Typically have little analytic capability
Information System
Set of interrelated components - Collect, process, store, and distribute information - Support decision making, coordination, and control
IT Governance
Strategies and policies for using IT in the organization - Decision rights - Accountability - Organization of information systems function • Centralized, decentralized, and so on
Substitute Products and services
Substitutes customers might use if your prices become too high, for example, iTunes substitutes for CDs
Knowledge management systems (KMS)
Support processes for capturing and applying knowledge and expertise • How to create, produce, deliver products and services - Collect internal knowledge and experience within firm and make it available to employees - Link to external sources of knowledge
Executive Support Systems (ESS)
Support senior management - Address nonroutine decisions • 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
Building a collaborative culture and business processes
"Command and control" organizations • No value placed on teamwork or lower-level participation in decisions - Collaborative business culture • Senior managers rely on teams of employees. • Policies, products, designs, processes, and systems rely on teams. • The managers purpose is to build teams.
Core competencies
- Activity for which firm is world-class leader - Relies on knowledge, experience, and sharing this across business units - Example: Procter & Gamble's intranet and directory of subject matter experts
Factors that investing in information technology does not guarantee good returns.
- Adopting the right business model - Investing in complementary assets (organizational and management capital)
Traditional Competitors
- All firms share market space with competitors who are continuously devising new products, services, efficiencies, and switching costs.
Complementary Assets
- Assets required to derive value from a primary investment - Firms supporting technology investments with investment in complementary assets receive superior returns - Example: Invest in technology and the people to make it work properly - Organizational assets, for example: • Appropriate business model • Efficient business processes - Managerial assets, for example: • Incentives for management innovation • Teamwork and collaborative work environments - Social assets, for example: • The Internet and telecommunications infrastructure • Technology standards
New Products, Services, and Business Models
- Business model: describes how company produces, delivers, and sells product or service to create wealth - Information systems and technology a major enabling tool for new products, services, business models • Examples: Apple's iPad, Google's Android OS, and Netflix
Equity and access—the digital divide:
- Certain ethnic and income groups in the United States less likely to have computers or Internet access
Computer crime and abuse
- Computer crime: commission of illegal acts through use of computer or against a computer system—computer may be object or instrument of crime - Computer abuse: unethical acts, not illegal • Spam: high costs for businesses in dealing with spam
3. Accountability, liability, 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. - What should liability be if software seen as service? Would this be similar to telephone systems not being liable for transmitted messages?
Internet challenges to privacy:
- Cookies • Identify browser and track visits to site • Super cookies (Flash cookies) - Web beacons (Web bugs) • Tiny graphics embedded in e-mails and Web pages • Monitor who is reading e-mail message or visiting site - Spyware • Surreptitiously installed on user's computer • May transmit user's keystrokes or display unwanted ads - Google services and behavioral targeting
Business Intelligence
- Data and software tools for organizing and analyzing data - Used to help managers and users make improved decisions
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
• Key technology trends that raise ethical issues
- Doubling of computer power • More organizations depend on computer systems for critical operations. - Rapidly declining data storage costs • Organizations can easily maintain detailed databases on individuals. - Networking advances and the Internet • Copying data from one location to another and accessing personal data from remote locations are much easier. - Advances in data analysis techniques • Profiling - Combining data from multiple sources to create dossiers of detailed information on individuals • Nonobvious relationship awareness (NORA) - Combining data from multiple sources to find obscure hidden connections that might help identify criminals or terrorists - Mobile device growth • Tracking of individual cell phones
Technical solutions to privacy issues
- E-mail encryption - Anonymity tools - Anti-spyware tools - Browser features • "Private" browsing • "Do not track" options - Overall, few technical solutions
E-Commerece
- Subset of e-business - Buying and selling goods and services through Internet
Three activities of information systems produce information organizations need
- Input: Captures raw data from organization or external environment - Processing: Converts raw data into meaningful form - Output: Transfers processed information to people or activities that use it
2. Property rights: Intellectual property
- Intellectual property: intangible property of any kind created by individuals or corporations - Three main ways that intellectual property is protected: • Trade secret: intellectual work or product belonging to business, not in the public domain • Copyright: statutory grant protecting intellectual property from being copied for the life of the author, plus 70 years • Patents: grants creator of invention an exclusive monopoly on ideas behind invention for 20 years
Business benefits of collaboration and teamwork
- Investments in collaboration technology can bring organization improvements, returning high ROI - Benefits: • Productivity • Quality • Innovation • Customer service • Financial performance - Profitability, sales, sales growth
Four generic strategies for dealing with competitive forces, enabled by using IT:
- Low-cost leadership - Product differentiation - Focus on market niche - Strengthen customer and supplier intimacy
Digital Millennium Copyright Act (DMCA)
- Makes it illegal to circumvent technology-based protections of copyrighted materials
Business Intelligence Systems
- Management information systems - Decision support systems - Executive support systems
Management dimension of information systems
- Managers set organizational strategy for responding to business challenges - In addition, managers must act creatively: • Creation of new products and services • Occasionally re-creating the organization
5. Quality of life: Equity, access, boundaries
- Negative social consequences of systems • 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 • 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
FTC FIP principles:
- Notice/awareness (core principle) • Web sites must disclose practices before collecting data. - Choice/consent (core principle) • Consumers must be able to choose how information is used for secondary purposes. - Access/participation • Consumers must be able to review and contest accuracy of personal data .- Security • Data collectors must take steps to ensure accuracy, security of personal data. - Enforcement • Must be mechanism to enforce FIP principles.
Dimensions of UPS tracking system
- Organizational: • Procedures for tracking packages and managing inventory and provide information - Management: • Monitor service levels and costs - Technology: • Handheld computers, bar-code scanners, networks, desktop computers, and so on
Professional codes of conduct
- Promulgated by associations of professionals • Examples: AMA, ABA, AITP, ACM - Promises by professions to regulate themselves in the general interest of society
Health risks:
- Repetitive stress injury (RSI) • Largest source is computer keyboards • Carpal tunnel syndrome (CTS) - Computer vision syndrome (CVS) • Eyestrain and headaches related to screen use - Technostress • Aggravation, impatience, fatigue
Basic concepts for ethical analysis
- Responsibility: • Accepting the potential costs, duties, and obligations for decisions - Accountability: • Mechanisms for identifying responsible parties - Liability: • Permits individuals (and firms) to recover damages done to them - Due process: • Laws are well-known and understood, with an ability to appeal to higher authorities
Routines and business processes
- Routines (standard operating procedures):Precise rules, procedures, and practices developed to cope with virtually all expected situations - Business processes: Collections of routines - Business firm: Collection of business processes
Decision Support Systems (DSS)
- Serve middle management - Support nonroutine decision making • Example: What is the impact on production schedule if December sales doubled? - May use external information as well TPS / MIS data - Model driven DSS • Voyage-estimating systems - Data driven DSS • Intrawest's marketing analysis systems
Transaction Processing Systems (TPS)
- Serve operational managers and staff - Perform and record daily routine transactions necessary to conduct business • Examples: sales order entry, payroll, shipping - Allow managers to monitor status of operations and relations with external environment - Serve predefined, structured goals and decision making
Customer and Supplier Intimacy
- Serving customers well leads to customers returning, which raises revenues and profits. • Example: High-end hotels that use computers to track customer preferences and used to monitor and customize environment - Intimacy with suppliers allows them to provide vital inputs, which lowers costs. • Example: JCPenney's information system which links sales records to contract manufacturer
Fair information practices:
- Set of principles governing the collection and use of information • Basis of most U.S. and European privacy laws • Based on mutuality of interest between record holder and individual • Restated and extended by FTC in 1998 to provide guidelines for protecting online privacy - Used to drive changes in privacy legislation • COPPA • Gramm-Leach-Bliley Act • HIPAA • Do-Not-Track Online Act of 2011
Collaboration & Growing importance of collaboration:
- Short lived or long term - Informal or formal (teams) - Changing nature of work - Growth of professional work—"interaction jobs" - Changing organization of the firm - Changing scope of the firm - Emphasis on innovation - Changing culture of work
New Market Entrants
- Some industries have high barriers to entry, for example, computer chip business. - New companies have new equipment, younger workers, but little brand recognition.
Two dimensions of collaboration technologies
- Space (or location)—remote or co-located - Time—synchronous or asynchronous
Social Business
- Use of social networking platforms, internal and external - Engage employees, customers, and suppliers - Goal is to deepen interactions and expedite information sharing - "Conversations" - Requires information transparency • Driving the exchange of information without intervention from executives or others
E-Government
- Using Internet technology to deliver information and services to citizens, employees, and businesses
Virtual company strategy
- Virtual company uses networks to ally with other companies to create and distribute products without being limited by traditional organizational boundaries or physical locations - Example: Li & Fung manages production, shipment of garments for major fashion companies, outsourcing all work to more than 7,500 suppliers
4. 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: • Software bugs, errors • Hardware or facility failures • Poor input data quality (most common source of business system failure)
Improved Decision Making
- Without accurate information: • Managers must use forecasts, best guesses, luck • Results in: - Overproduction, underproduction - Misallocation of resources - Poor response times • Poor outcomes raise costs, lose customers - Example: Verizon's Web-based digital dashboard to provide managers with real-time data on customer complaints, network performance, line outages, and so on
Business Perspective
Calls attention to organizational and managerial nature of information systems
Technology dimension of information systems
-Computer hardware and software -Data management technology -Networking and telecommunications technology -Networks, the Internet, intranets and extranets, World Wide Web -IT infrastructure: provides platform that system is built on
Operational Excellence
-Improvement of efficiency to attain higher profitability - Information systems, technology an important tool in achieving greater efficiency and productivity - Walmart's Retail Link system links suppliers to stores for superior replenishment system
Customers
Can customers easily switch to competitor's products? Can they force businesses to compete on price alone in transparent marketplace?
Five moral dimensions of the information age:
1. Information rights and obligations 2. Property rights and obligations 3. Accountability and control 4. System quality 5. Quality of life
What are the six strategic business objectives firms invest in IST to achieve?
1. Operational Excellence 2. New Products, Services, and Business models 3. Customer and Supplier Intimacy 4. Improved Decision Making 5. Competitive Advantage 6. Survival
Micheal Porters Competitive Forces
1. Traditional competitors 2. New market entrants 3. Substitute products and services 4. Customers 5. Suppliers
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. 4. Evaluate security risks. 5. Consult users for implementation and training issues. 6. Evaluate product vendors.
Behavioral Approach
Behavioral issues (strategic business integration, implementation, etc.) - Psychology, economics, sociology
The interdependence between organizations and Information technology
Business Firms -> information systems -Hardware - Data Management - Telecommunications
How cookies identify their web visitors
Cookies are written by a Web site on a visitor's hard drive. When the visitor returns to that Web site, the Web server requests the ID number from the cookie and uses it to access the data stored by that server on that visitor. The Web site can then use these data to display personalized information.
Information vs Data
Data are streams of raw facts Information is data shaped into meaningful form
Competitive Advantage
Delivering better performance - Charging less for superior products - Responding to customers and suppliers in real time - Examples: Apple, Walmart, UPS
Value chain model
Firm as series of activities that add value to products or services - Highlights activities where competitive strategies can best be applied • Primary activities vs. support activities - At each stage, determine how information systems can improve operational efficiency and improve customer and supplier intimacy - Utilize benchmarking, industry best practices
Agency Theory
Firm is nexus of contracts among self-interested parties requiring supervision. - Firms experience agency costs (the cost of managing and supervising) which rise as firm grows. - IT can reduce agency costs, making it possible for firms to grow without adding to the costs of supervising, and without adding employees.
Organizational dimension of Information Systems
Hierarchy of authority, responsibility • Senior management • Middle management • Operational management • Knowledge workers • Data workers • Production or service workers Separation of business functions • Sales and marketing • Human resources • Finance and accounting • Manufacturing and production - Unique business processes - Unique business culture - Organizational politics
Organizational and Behavioral impacts
IT flattens organizations • Decision making is pushed to lower levels. • Fewer managers are needed (IT enables faster decision making and increases span of control). - Postindustrial organizations • Organizations flatten because in postindustrial societies, authority increasingly relies on knowledge and competence rather than formal positions.
Information technology enhances business processes by:
Increasing efficiency of existing processes • Automating steps that were manual - Enabling entirely new processes • Change flow of information • Replace sequential steps with parallel steps • Eliminate delays in decision making • Support new business models
Business perspective on information systems
Information system is instrument for creating value - Investments in information technology will result in superior returns: • Productivity increases • Revenue increases • Superior long-term strategic positioning
Organizational Resistance to Change
Information systems become bound up in organizational politics because they influence access to a key resource—information. - Information systems potentially change an organization's structure, culture, politics, and work. - Most common reason for failure of large projects is due to organizational and political resistance to change.
Information Systems also used to 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 • Often used to coordinate supply chain
Supply Chain Management Systems (SCM)
Manage firm's relationships with suppliers - 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
Network economics:
Marginal cost of adding new participant almost zero, with much greater marginal gain - Value of community grows with size - Value of software grows as installed customer base grows
Suppliers
Market power of suppliers when firm cannot raise prices as fast as suppliers
• Real-world ethical dilemmas
One set of interests pitted against another • Example: right of company to maximize productivity of workers versus workers right to use Internet for short personal tasks
• The United States allows businesses to gather transaction information and use this for other marketing purposes.
Opt out opt in model
Ethics
Principles of right and wrong that individuals, acting as free moral agents, use to make choices to guide their behaviors
Challenges to Privacy and Intellectual Property. 1. Information rights: privacy and freedom in the Internet age
Privacy: Claim of individuals to be left alone • free from surveillance or interference from other individuals, organizations, or state - To determine when, how and to what extent personal information is communicated to others - In the United States, privacy protected by: • First Amendment (freedom of speech) • Fourth Amendment (unreasonable search and seizure) • Additional federal statues (e.g., Privacy Act of 1974)
Enterprise Social Networking Software Capabilities
Profiles - Content sharing - Feeds and notifications - Groups and team workspaces - Tagging and social bookmarking - Permissions and privacy
Customer Relationship Management Systems (CRM)
Provide information to coordinate all of the business processes that deal with customers • Sales • Marketing • Customer service - Helps firms identify, attract, and retain most profitable customers
Information systems can improve overall performance of business units by promoting synergies and core competencies
Synergies • When output of some units used as inputs to others, or organizations pool markets and expertise • Example: merger of Bank of NY and JPMorgan Chase • Purchase of YouTube by Google
Enterprise Applications
Systems for linking the enterprise - Span functional areas - Execute business processes across firm - Include all levels of management - Four major applications: • Enterprise systems • Supply chain management systems • Customer relationship management systems • Knowledge management systems
Levels in a firm
TOP -Senior Management MIDDLE - Middle management (Scientists and knowledge workers) BOTTOM - Operational Management (Production and service workers/Data workers)
What is an organization?
Technical definition: • Formal social structure that processes resources from environment to produce outputs • A formal legal entity with internal rules and procedures, as well as a social structure - Behavioral definition: • A collection of rights, privileges, obligations, and responsibilities that is delicately balanced over a period of time through conflict and conflict resolution
Disruptive Technologies
Technology that brings about sweeping change to businesses, industries, markets - Examples: personal computers, word processing software, the Internet, the PageRank algorithm - First movers and fast followers • First movers—inventors of disruptive technologies • Fast followers—firms with the size and resources to capitalize on that technology
The internet and Organizations
The Internet increases the accessibility, storage, and distribution of information and knowledge for organizations. - The Internet can greatly lower transaction and agency costs. • Example: Large firm delivers internal manuals to employees via a corporate Web site, saving millions of dollars in distribution costs
The Internet's impact on competitive advantage
Transformation or threat to some industries • Examples: travel agency, printed encyclopedia, media - 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
• Strengthen customer and supplier intimacy
Use information systems to develop strong ties and loyalty with customers and suppliers - Increase switching costs - Example: Netflix, Amazon
Focus on market niche
Use information systems to enable a focused strategy on a single market niche; specialize - Example: Hilton Hotels' OnQ system
How IST is shaped
Using information systems effectively requires an understanding of the organization, management, and information technology shaping the systems.
Information Systems Department
• Formal organizational unit responsible for information technology services • Often headed by chief information officer (CIO) • Other senior positions include chief security officer (CSO), chief knowledge officer (CKO), chief privacy officer (CPO) • Programmers • Systems analysts • Information systems managers
Information systems and ethics
• Intense social change, threatening existing distributions of power, money, rights, and obligations • New kinds of crime
(2003) First Energy Blackout
•massive electricity blackout that and shut down power to eight states and a part of Canada. •Computer failures leading to the loss of situational awareness in First Energy's control room and the loss of key First Energy transmission lines due to contacts with trees
