MIS 302F Final Exam Review

Stages of Project Management

- Awareness Vision & Objectives - Initiate - Process Mapping - Redesign Process - Implement - Evaluate

Most Common Applications of Wireless Technology

- Basic voice, video, and data communication - Remote inventory management and vendor managed inventory - Asset tracking such as vehicle, equipment, human, and animals - Any meter reading including domestic meter reading - Wireless trading - Payments for bills and payment at vending machines - Videoconferencing

A company may choose to OUTSOURCE a process or task for many different reasons:

- Can focus on its core activity - Allows specialization and can produce better quality - Provides market-driven efficiency - Could create cost structure realignment - Allows better management of risk - Can improve time-to-market - May lower costs and cost certainty - More management of demand fluctuation may be possible

Guidelines for Change Management Success

- Communication is critical - Communicate the project benefits - Identify key players - Formulate incentive systems to retain talent and project completion on time - Manage transition to new system - Training

Unit 8: IT and Supply Chain Management

- Describe supply chain management and the objectives of supply chain management. - Identify criteria used to determine if a firm has the right supply chain.

Unit 7: Social Networks

- Describe the characteristics of social networks. - Analyze the effectiveness of a social network.

Unit 10: Project Management

- Describe the different processes and stages used during IT implementation. - Identify change management requirements for process re engineering. - Explain the reasons that change management is more critical than IT implementation processes during a large-scale software implementation project.

A company may choose to keep a process or task (KEEP) IN-HOUSE for many different reasons:

- Develops firm specific knowledge - Exploits internal social linkages - knowledge generation - Creates a critical differentiator - Provides better managerial control and coordination - Enables knowledge retention - Protects intellectual property - Manages risk - Enables management of employee morale (when local)

Some examples that can change realized opportunity value include the following:

- Different software/hardware/implementation assumptions - Changes in standards - Difficulty in systems integration - Unanticipated resistance - Increased capital expenditure - Changes in operating expenses

Unit 6: Data Mining

- Explain the concept of data mining and the uses of data mining for a company. - Describe the most common types of data mining methods used. - Perform basic data mining calculations.

Unit 9: Global Sourcing

- Explain the different global sourcing choices available to companies and when to implement each choice. - Explain and analyze the different cost implications associated with global sourcing options. - Describe the four decision stages of sourcing. - Explain how to assess, manage, and mitigate the risks companies face with global sourcing.

Characteristics of Software

- High upfront cost and low marginal cost (high supply-side EOS) - Need compatibility across software systems - Need interoperability between systems - Has significant switching cost and lock-in - Software exhibits network effect (Demand-side EOS) - Need complements (V(a+b) >> V(a) + V(b)) - More complements, more lock-in - Need standards - Maintenance support limited to two versions, then forced to upgrade - Potential for market tipping (when there is high EOS and lack of variety)

To effectively analyze a social network, start by asking the questions:

- How highly connected is an entity within a network? - What is an entity's overall importance in a network? - How central is an entity within a network? - How does information flow within a network?

A company may choose to OFFSHORE a process or task for many different reasons:

- Lowers costs (if selecting a low-wage country) - Creates a global presence in the global value chain - Provides 24 X 7 operations - Opens access to new markets - Gives access to new talent, resources, and capabilities - Enables IT pervasiveness (low coordination costs) - Creates country-specific incentives

three types of flow in any value chain:

- Material flow - Information flow (electronic or paper-based) - Financial flow

There are six process characteristics that firms should consider when deciding what business processes to outsource:

- Maturity - Strategic Criticality - Modularity - Human Capital Specificity - Intellectual Capital Specificity - IT and Business Coupling

Common IT project management mistakes that companies should avoid

- Poor Estimating or Scheduling - Ineffective Stakeholder Management - Insufficient Risk Management - Insufficient Planning - Short Changing Quality Assurance - Weak Personnel or Team Issues - Insufficient Project Sponsorship

A company may choose to keep a process or task domestic (KEEP DOMESTIC) for many different reasons:

- Removes distance and issues with culture, legal, language, time zones, and shared values - Limits offshore country risks such as operational risks (political/societal) - Decreases intellectual property risks - Provides better managerial control and coordination - Improves employee morale - Limits legal issues - Enables access to specialized talent

Relationship Between IT and Supply Chain Management

- SCM includes, most importantly, the demand management (also referred to as demand chain management) that drives the process of designing, producing, delivering, and servicing. Within this process, there are a number of decisions to make, such as whether a firm should make parts or buy parts. - If a firm decides to buy, then it needs to select the appropriate suppliers and procure them through the right channels. - A firm can also buy directly from a supplier, participate in electronic marketplaces, or outsource the activity of procurement. - Likewise, a firm can market, deliver, and service on its own or outsource the activities. - Whether a firm decides to make versus buy, outsource versus service on its own, all the activities must be efficiently coordinated and integrated. IT helps with this coordination. - Managing uncertainty within the supply chain is challenging. This uncertainty comes from price, quality, quantity, delivery, technology changes, substitutes, and more.

Risks that companies consider and then plot on the matrix can be grouped into four broad categories:

1. External Factors External factors that should be considered when sourcing include a favorable long term wage rate, favorable country environment, business interruption, socio or political backlash, onshore competitive cost disadvantage, and terrorism or war. 2. Internal Factors Examples of internal factors that should be considered when sourcing include global alignment, customer alignment, employee impacts, effective change management, senior management commitment, and diversity impacts. 3. Partner Factors When selecting an outsourcing partner, the company should consider the partner quality, partner alignment, partner relationship, diversity, and offshore employee turnover. 4. Implementation Factors Examples of implementation factors to consider include data security, internal controls, effective knowledge transfer, maintenance, well-defined and clear interfaces, and accessibility.

SWOT Analysis

A SWOT analysis is a valuable tool companies can use to help them make this decision. - A SWOT analysis requires you to think through all the components before making a critical decision that will impact all areas of a business. SWOT stands for: S = Strengths W = Weaknesses O = Opportunities T = Threats

Controlled migration implies which of these?

A firm keeps control of its technology and provides compatibility

Data mining is ______?

A powerful means of extracting new insights from data

Exact match keywords refers to which of these?

A search using that keyword only

Benefits to Controlled Product Strategies

A unique product - is a benefit when implementing a controlled product strategy. Having a unique product can certainly be an advantage that can get a company noticed among a large number of similar products. Less intra-rivalry - is another controlled product strategy benefit. Fewer competitors could mean that product prices will not get driven down. - As an example, how many companies make the iPhone? Only one company produces the iPhone and that's Apple. However, how many companies produce Android phones? Tons of companies create Android phones and these products tend to have lower prices due to rivalry.

When measuring an ad campaign and realizing that a particular publisher, such as Google or Bing or group of ads for that publisher, tends to have HIGH probability of transaction and HIGH CPC, what does this mean for your ad strategy?

Adjust the ad campaign tactics to improve CPC

Companies That Use Data Mining

Advanced Scout Advanced Scout is data mining software used by the National Basketball Association (NBA) to understand which players perform better and how these players fair against various opponents. General Mills General Mills uses a data warehouse to identify when and where to offer coupons to move its inventory. Google Google tracks users throughout the Internet to present them with custom advertising Target Target studies customer purchase patterns and tries to target consumers with ads. Walmart Walmart studies its customers carefully. It attempts to use this customer data to predict what customers will buy. If there is a hurricane in the area, the store knows to stock up on beer and Pop-Tarts.

Which of the following types of data can be used for data mining? All of these are used for data mining Transaction Data Surfing Data Emotions and Social Interaction Data Sensor Data

All of these are used for data mining

Which of these factors is critical to consider when analyzing the effectiveness of a social network? All of these factors are critical Extent of reach, the size of the network Ability to self promote to influence others Ability to influence targets through connections in social network

All of these factors are critical

Unit 10 Summary

Although the methods used for IT implementation are proven to work, many companies continue to make the same project management errors. Project managers must approach the project with a bird's eye view in order to appropriately analyze the risks of implementation, including conflicts arising from the dynamic market environment. IT projects are more about change management and less about actual IT. The implementation of an IT project challenges a company's existing norms, practices, and beliefs that have taken years to establish. During an IT project implementation, it is top management's responsibility to make sure company incentives align, the right people communicate at the right times, and project momentum is maintained. Project management skills are extremely critical to a company's overall success. Employees who understand how to effectively manage stakeholders and expectations, and assess project requirements are in great demand.

Hierarchical Clustering

Another approach to clustering is called hierarchical clustering. Here, each data point is treated as a separate cluster to begin with. Then, you iteratively merge two clusters that are closest to each other until there is only one group. An example is given below for the first two iterations. Here, you select the number of clusters you want from 1 to n clusters.

Apple's Hardware

Apple's product hardware is controlled, meaning it can only be made by Apple.

Imagine you want to buy a book on Amazon.com and you want to buy a book that is similar to another book you read in the past. What data mining method most likely could help you make your purchase?

Association rules

Setting project goals and creating a project task force occurs in which stage of project management?

Awareness Vision and Objectives

What is an example of non-software or non-hardware measure to ensuring IT Security?

Background checks

Which of these is a way Kodak and other companies could overcome the Innovator's Dilemma?

Be willing to cannibalize an existing cash-cow

Why is an understanding of CAPEX and OPEX relevant for IT projects?

Both CAPEX and OPEX are generally large expenses with different sets of trade-offs. A less costly initial solution (i.e., CAPEX) may have significant implications for future maintenance, repair, safety, and environmental issues (i.e., OPEX). More importantly, unplanned work stoppages can be costly and may impact the environment. So, managers need to recognize these trade-offs since those who are involved with CAPEX and OPEX have different drivers when making decisions. In simple terms, if less CAPEX is invested up front, then it could result in more cost on the backend as an OPEX. This means one must consider not only the upfront present costs, but the future costs one may incur after the project is implemented. As a result, managers need to recognize economic consequences and conflicts at each phase of project identification, selection, and design, and optimize opportunity value.

This term is used to describe how information is distorted from one end of a supply chain to the other end.

Bullwhip Effect

Capital Expenditures (CAPEX) and Operating Expenditures (OPEX)

CAPEX CAPital EXpenditures (CAPEX) includes money spent to create additional facilities, increase capacity, enhance productive life, or improve operating efficiency (assets that will serve for a number of years). CAPEX includes cost of software, hardware, implementation, plant and machinery (e.g., platforms, pipelines, production facilities, production wells), installation, and testing. OPEX OPerating EXpenditures (OPEX) are on-going and recurring expenses that keep assets running throughout the lifetime. OPEX includes cost of maintenance and repairs (preventive maintenance and consumables), insurance, repairs and makeovers, updates, and tariffs.

company that has mastered an efficient and effective supply chain?

CEMEX

Two Types of Networking

Circuit Switching and Packet Switching

Which of these is a commonly used predictive method?

Classification tree

This metric measures how connected vertex neighbors are to one another. It is the ratio of the number of edges among adjacent nodes and the total number of possible edges among the vertex's neighbors.

Cluster coefficient

When analyzing a social network, if there is too much ________, it may be challenging for users to find your company on the network and this may not be an effective network for your business.

Clutter

Compatibility Strategy

Compatibility as a strategy refers to products that are developed with the goal of connecting to or using technology already in existence or some earlier versions of the technology. The more compatible a product is, the more it can integrate with other devices or standards. - For example, when Microsoft releases a new version of Windows, they ensure that it will continue to run older versions of Office. The opposite of this would be when a gaming system takes large leaps forward in its technology and focuses so much on performance that the games from the old system can't play on the new system because they're not compatible.

Which of these terms means that one product increases the value of the other such that the sum is greater than the value of each product?

Complements

Akamai can be described as a platform that connects Internet service providers (ISPs) with ___________.

Content providers

Performance metrics used to determine if a sourcing option was successful include which of these?

Customer satisfaction

A Little More About Data Mining

Data mining is the process of identifying or discovering meaningful correlations, patterns, and trends using simple database queries and statistical and mathematical techniques. One of the keys to successful data mining is to extract non-obvious and hidden knowledge from data to create value.

Which of the following means to postpone IT investments with expected payoff and costs in order to learn about the potential outcomes before committing?

Defer

Creating Options in IT Investment

Defer Postpone IT investment with expected payoff V and costs I in order to learn about the potential outcomes before committing. Stage - Stop-Resume IT investment is realized (implemented) as a series of m development stages involving outlays of l1, l2,...lm to be made at time t1, t2, ...tm where implementation could be shutdown temporarily and resumed, or even abandoned in midstream. Benefits accrue at the end of the all implementation stages. Explore - Pilot/Prototype Invest in small scale with payoffs Vp and investment Ip. If the prototype is successful, then investment can be scaled up with full payoffs Pf and investment If. Alter Scale - Scale Up/Scale Down Operating scope of IT investments can be scaled up (expanded) or scaled down (contracted) depending on the observed conditions, with an extreme case of shutting down. For example, investing in greater transaction processing capacity after observing the demand assumes the cost is incremental which may be not the case. Outsource IT investment can be sub-contracted to a third party in order to transfer the risk of cost overrun, schedule, or complete failure of an in-house realization effort. This can also be a managed services model that is gaining in momentum. Lease IT investment realization resources can be leased and can be abandoned when payoffs are low. This is similar to the application service provider (ASP) model. Compound Involves two or more options discussed above. Strategic Growth and Necessity IT investments options up future investment opportunities as well as respond quickly to competitive or regulatory threats. (This is from the Sarbanes-Oxley act of 2002).

Metrics of Network Analysis

Degree Centrality - This is the number of direct connections a node has. That is, the number of edges from a node (referred to as a degree of a graph node). - Knowing the degree centrality will enable you to identify the important person or hub to others. However, degree centrality is not necessarily the most important since it may not link to other networks. A critical node is an indication of one level of connection. Betweenness Centrality This metric plays an important role in the network that connects two or more different sets of network cliques. A person or group with high betweenness centrality has significant influence over multiple sub-networks. Closeness Centrality This metric identifies the nodes that can reach other parts of the network in the shortest manner. These individuals probably have high visibility to other networks. Eigenvalue Coefficient Note that sometimes a connection to a popular individual is more important than a connection to a loner. This takes into account both the degree of the focal node and the degrees of the nodes that it is connected to Cluster Coefficient This metric measures how connected vertex neighbors are to one another. It is the ratio of the number of edges among adjacent nodes and the total number of possible edges among the vertex's neighbors.

Understanding different ______________of customers is descriptive.

Demographics

What spurred the Cable Industry in the 1990s to compete with telecomm companies and start providing Internet services?

Deregulation of industry

Two Common Types of Data Mining Methods

Descriptive Methods - These methods find interpretable human patterns that describe the data. Understanding different demographics of customers is descriptive. - Common descriptive methods include association rules and clustering analysis. Predictive Methods - These methods use variables to predict unknown or future values of the outcome. Predictive methods are also used for understanding influences, predicting fraud, sensing market trends, analyzing the market basket, mining emotions, and more. - The classification tree is a commonly used predictive method.

Advanced Scout is data mining software used by the National Basketball Association (NBA) to understand which of these?

Determine which NBA players perform best and identify how these players fair against various opponents

Sourcing options include all of the following except which of these?

Domestic Offshoring

Which of these qualifies as a two-sided market?

Facebook platform

Apple chooses to focus more on evolutionary changes versus revolutionary changes in its new products (iPod, iPhone, and iPad) because it is less risky.

False

ERP software is designed to disconnect the parts of the value chain so a company can slow the flow of information across the parts of a company.

False

Only about 30 percent of the original Forbes 100 list is no longer in existence.

False

Before beginning to conduct data mining, a business should do which of these?

Focus on its business and data mining goals

Change Management Failures

FoxMeyer Drug FoxMeyer Drugs was a $5 billion company. It claims its poor implementation of an ERP system drove it to bankruptcy. Hershey Foods Hershey attributes implementation of an ERP system resulted in severe distribution problems. The project cost over $112 million. Whirlpool Whirlpool blames shipping delays on its ERP implementation project. Dell Dell Computers abandoned its ERP software implementation project after spending more than $60 million. This happened because the solution the company was implementing was not unique enough to fit Dell's value chain and was constraining its processes. These constraints caused by the software required numerous customizations, and this was going to cost more than Dell was initially willing to invest. Nike Nike attributes its major financial problems to i2 implementation.

Garmin's OS

Garmin GPS has a controlled OS and hardware strategy. Yet, it's important to note that iPhones and Android phones can do what the Garmin device does because other types of maps and navigation applications exist..

One category of risk factors found on the risk matrix is Internal Factors. These factors can be described as which of these?

Global alignment, customer alignment, employee impacts, and effective change management

___________is a powerful platform that companies can use to learn more about who comes to their websites, what pages users visit, and how long users spend on a site.

Google Analytics

What Google tool allows a person to view aggregate search data?

Google Trends

Which of these is NOT one of three types of cloud services that exist for companies today?

HAAS - Hardware as a Service

Before and during an IT project, employees need to focus carefully on the sources of resistance to the changes of projects. Which of these are common sources of resistance to monitor?

Habits, job security, lack of knowledge of the purpose, disrupted values and culture, and power dissipation

The cluster coefficient measures __________________.

How connected vertex neighbors are to one another

How Companies View Outsourcing

IBM The media often reports that IBM has more employees in India than in the U.S. IBM is continuously reorganizing its workforce to obtain global talent. Innocentive.com Innocentive is a global market place that links talented people from across the globe to organizations that need those specific talents. If a company requests a skill, then this company uses a strategy similar to crowdsourcing to meet that company's need. KPO KPO stands for knowledge process outsourcing. As an example, consider the company Evalueserve.com located in India. Evalueserve is a pioneer in Knowledge Process Outsourcing, with operation centers across the globe. The company outsources its employees to businesses in need of that specific knowledge or skill. GM General Motors on the other hand, has a new campaign to move IT work back in-house. IT services at GM are currently provided by outsourcing companies while only 10 percent are done by GM employees. GM plans to flip those percentages to 90 percent GM staff, and 10 percent outsourcers. This IT transformation does not emphasize budget cuts but instead centers on delivering more value from IT. GE General Electric uses offshore insourcing for its research and development. GE has approximately 36,000 technicians working across its global research centers to solve some of the world's toughest problems for knowledge creation.

Konana's Ecosystem Model

Illustrates the software ecosystem's layers, like an operating system, hardware, applications, and more

One of the main objectives of supply chain management is which of these?

Improve financial performance and shareholder value

K-Means Clustering

In K-mean clustering, you select K number of clusters you want and then partition the data into K subgroups. It is called K-means because you select K means randomly and assign data points that are closest to these means. Once assigned, calculate the mean for each cluster and repeat the process until the clusters change little.

Unit 5 Summary

In Lesson 1, you were introduced to important concepts involved in search and online advertising. You should now be comfortable with the concepts cost-per-clicks, click through rates, and organic search results. Think about how companies can better optimize their online ad campaigns if they are aware of how effective their online ads are at converting users to customers. In Lesson 2, you learned that search is a big business and companies are willing to pay good money to optimize their search strategies. Companies are always anxious to maximize their advertising dollars by determining which ad strategies are effective, and which are ineffective. This helps companies decide where to further invest and where to cut funds. Not all firms can afford to spend the time and money on search optimization like Air France, but with a few free tools, such as Google Trends and Google Analytics, companies can set themselves up for online ad success.

Which of these best describes how the IT evolution affected the stock trading industry business model?

In the earliest stages of IT, mainframe computers were the only way to connect to the stock market via a stock broker's dummy terminal.

How did Apple change its strategy to increase complements?

Increased openness in app layer of ecosystem

Which type of search result is obtained when traffic is generated from a paid campaign?

Inorganic search

Two Clustering Methods

K-means clustering and hierarchical clustering

If a firm is worried about distance, country risk, employee morale, intellectual property protection, legal issues, and obtaining specialized talent, then which option is likely the best for this firm?

Keep domestic

Unit 7 Summary

Knowing what makes an effective network enables you to use the data in that network to better your own position or that of a firm. Using visualization is a first step in creating a social network strategy or plan. Knowing the important metrics behind a social network can help you visualize the social network and analyze the information available. To effectively analyze a social network, start by asking the questions here: How highly connected is an entity within a network? What is an entity's overall importance in a network? How central is an entity within a network? How does information flow within a network? Knowing the critical members, those with power, or the connectors, can help you influence that network or find the members with influence.

Renting a software solution may result in which of these disadvantages?

Less overall control of data

Unit 8 Summary

Lesson 1 explored the concept and purpose of supply chain management. Remember, SCM is the coordination and integration of all activities and flows (material, information, and financial) in the value system that includes suppliers and customers to maximize firm benefits. SCM also includes supplier relationship management (SRM), customer relationship management (CRM), and internal enterprise resource planning (ERP). SCM is now a strategic necessity for most firms. Many assume SCM is all about reducing cost, but this is only one of its objectives. As you learned from the readings, many industries, including chemical, construction, and others, report that the bulk of their expenses are supply chain costs. These costs can be search, coordination, contracting, monitoring, risk, and goods costs. Managing these costs and making a firm more efficient is critical. However, SCM is not only focused on costs and efficiency; it also includes expanding markets, locking-in customers, and instilling a culture of excellence. Lesson 2 examined the components and criteria of the ideal supply chain. As you learned from the reading, CEMEX is one company that has mastered an efficient and effective supply chain.

Unit 9 Summary

Lesson 1 focused on the idea that companies don't always choose to outsource low-skilled positions. There is a wide range of occupations that can be effectively outsourced. Additionally, it is critical to be aware of the different sourcing options companies should evaluate before making any decisions as to what and where to outsource. Review the four primary outsourcing options below: Offshore Insourcing Offshore Outsourcing Domestic Insourcing Domestic Outsourcing There are also four decision stages of sourcing: Stage 1: Identify WHICH business processes should be outsourced. Stage 2: Decide WHERE to locate the process. Stage 3: Determine WHOM to select as vendors. Stage 4: Explain HOW the new sourcing mechanism can be deployed and implemented successfully. Remember, for each sourcing decision, there are tangible production costs and intangible transaction costs a company must consider. In Lesson 3, you learned that risks have to be examined before outsourcing decisions can be made. Assessing and managing risks and creating contingency plans will help ensure a company's outsourcing strategy is a success.

Research shows that exposure to premium ads on some social networks can drive statistically significant ________in both online and in-store purchase incidence for a major retailer.

Lifts

Which of these terms describes the effect when a user cannot switch to something else easily?

Lock-in

Less popular products that have less demand than popular ones make up what is called the ___________.

Longtail

Social media has shown that it is able to increase the life of demand and length of popularity of books hereby increasing the area in the __________.

Longtail

Which of these is a primary reason that makes supply chain management so challenging?

Managing uncertainty

Data Mining in Industries

Manufacturing In car manufacturing, safety is a critical issue. How do you best track this? Well, many cars today are being built wifi-enabled. As part failures and vehicle breakdowns start to occur, this data can be collected and can enable companies to act proactively and discover if the flaw is with a specific vehicle, one entire model, one part type, or perhaps a batch of parts made on a certain day. The impact could mean more targeted recalls, as opposed to costly mass recalls, and increased safety. Financial Sector In investment banking, data mining is used to evaluate which stocks move together, called bond-rating characteristics. A bank wants to know which customers to target for credit cards and loans, and data mining is critical for this. Grocery Stores and Super Markets A grocery store chain uses data mining to understand its consumers' market baskets to better advertise, display, and target products to these customers. Drug Discovery Some drugs and drug interactions have been discovered using data mining applications. Government Homeland security and NSA are collecting data used to uncover money laundering or terrorism related activities. Weather Forecasting One of the most complex data mining methods is used to predict weather patterns. Genomics Database These databases collect organism genome sequences, annotate and analyze these sequences, and provide public access. For example, scientists try to find patterns between genes and diseases to help them better understand causes and possible cures. Clothing Retailers These companies use data to make decisions about their products and discounts. For example, data mining helps stores know when and how much to discount winter clothing in a certain region of the country.

Is Outsourcing Bad for Business?

Many think that if a company is outsourcing, then that company is greedy and trying to save money. Saving money is only one reason a company may outsource. In addition, cost savings are not always a given when outsourcing.

Uses of Data Mining

Market Segmentation Used to identify the common characteristics of customers who buy the same products from your company. Customer Churn Predicts which customers are likely to leave a company and go to a competitor. Fraud There are many ways to uncover fraud. Credit card companies can examine patterns in your purchases and see if there are any deviations to be concerned with. Typically credit card thieves will see if a card works by testing it at a gas station. Knowing this, credit card companies look for this pattern, deny the charge upfront, and put a hold on the card until you call to unlock it. Direct Marketing Identifies which prospects should be included in a mailing list to obtain the highest response rate. Interactive Marketing Predicts what each individual accessing a website is most likely interested in seeing. Market Basket Analysis Used to understand what products or services are commonly purchased together, such as beer and diapers. Trend Analysis Reveals the difference in the purchasing behavior among customers this month relative to a previous month. Cross Selling When a firm attempts to sell other products or services to a customer who has purchased some product or service from that firm. Using this process, a firm can increase revenue and customer reliance, and benefit from economies of scope. Up Selling When a firm attempts to sell more expensive products, upgrades, or accessories to existing customers to increase revenue. It is possible that a customer who doesn't want to upgrade, but is a drain on a firm's resource, can be divorced as well! Retention Keeps the customer from going to a competitor by better understanding what that customer wants or needs

Production costs include which of these?

Market efficiency

When a firm opens a technology to others to develop only the complements, which of these is true?

Market share of the technology may increase

four characteristics needed to monetize social networks:

Marketplace The network must be a marketplace. Defined Values The goods and services exchanged through the network must have defined values. Toll Booth A company must be able to capture a percent of the transaction value, and become a toll booth Stickiness Stickiness means that users must have a stake in the network effect that goes beyond the traditional value of the more users means more value concept

Microsoft's Windows OS

Microsoft's Windows OS is open. There are over 50 manufacturers of Windows products.

Capital Expenditures (CAPEX) include which of these?

Money spent to create additional facilities and increase capacity

If a company chooses to make its own hardware, this allows that company which of these?

More control of its OS and applications that are built off of this hardware.

What are known advantages of Akamai business model?

More scalable than storing in your own servers

In the Tesco case, which of the following was a finding that Tesco uncovered?

More white people bought ethnic food, which was not expected

Net Present Value (NPV)

NPV = Present Value of Expected Future Cash Flows - Cost Cash flow Cash flow is the net cash inflow resulting from its regular operations. It is nothing but the net income + non-cash expenses that were deducted in calculating net income (e.g., depreciation used to lower income is a non-cash expense). That is, there is no outflow of cash. Therefore, you add back depreciation cost to the net income to obtain cash flow. Present value A dollar is worth more today than a dollar tomorrow. Or, any cash flow obtained in the future is worth less today. Thus, any future value needs to be discounted to obtain the present value. We use a discount rate (that represents the cost of capital) to discount future cash flows to obtain present value. Future cash flow/(1 + r)n

Sourcing Options

Offshore In sourcing Offshore Outsourcing Domestic In sourcing Domestic Outsourcing

The Risk Matrix

One tool that a company can use to assist with its sourcing decisions is the risk matrix. Risks can be identified, grouped and then plotted on the matrix based on the likelihood of that risk occurring and the severity of the consequences that risk may create for a company.

If the applications a company builds do not comply with its __________, than those applications will not work properly.

Operating System

What term best describes the type of network Facebook or other social media networks are?

Opt-In

Performance Strategy

Performance as a product strategy refers to products that are developed with compelling and significant performance improvements likely resulting in little or no compatibility with existing products. - Apple products are known for luring customers away from other technology based on performance. Also, if you remember, the original iPod was focused 100% on performance. The device initially was not very compatible, in the sense that it only played Apple's song format. That meant that if you had an MP3 formatted song, you perhaps got through Napster or some other store, you couldn't play it on your iPod since it wasn't compatible. While performance sounds like the likely choice, one has to consider the limiting factors that go with not letting your project integrate with other products and standards.

Discontinuity

Performance combined with openness means that new technologies will replace existing ones, but there are likely multiple competitors as well. Firms who are best placed to provide value added services or software enhancements will benefit from this combination. - CD ROM audio systems and 3 ½-inch disks are examples of products that use this strategy.

One of the primary reasons most large IT implementation projects fail is which of these?

Poor change management

__________ methods are also used for understanding influences, predicting fraud, sensing market trends, analyzing the market basket, mining emotions, and more.

Predictive

The Communication Evolution

Prior to 1996, telecommunications and cable companies were tightly regulated monopolies located in each region specified for local calls and cable. Data communications were not available through wireless Internet, only through traditional networks, though the Internet could be accessed through dial-up.

Which of these are the two primary categories of outsourcing costs?

Production costs and transaction costs Production costs are tangible costs, such as the materials used to create a product or the labor costs associated with making that product. These costs are a necessity to a firm's operations. These costs are intangible and may be harder for a firm to identify when considering outsourcing options. The loss of resource control is considered an intangible cost, as well as searching for a vendor and risks to intellectual property. TOTAL COSTS = Production Costs + Transaction Costs

Process mapping is an important stage of project management because of which of these?

Project bottlenecks can be identified and fixed

The supply chain system where the customer is at the beginning of the chain and initiates production and is built-on-demand (BTD) or built-on-order (BTO) is called which of these?

Pull system

______________ is the reorganization of products, services, parts, or an entire company to minimize complexity of operations and enhance efficiencies. Duplication or redundancies are minimized, and this process lowers inventory levels, improves scheduling, and increases buying power through economies of scale, and hence profits.

Rationalization

Which of these is an effective strategy you should use to optimize your online search marketing campaign?

Set specific measurable goals for your campaign

To counter the bullwhip effect a firm may choose to do which of these?

Share information to lower uncertainty

Risks to Controlled Product Strategies

Slower time to market - is a risk when using a controlled product strategy. If your product is built from scratch, it is going to take longer. However, imitations and substitutes will be less of an issue. Cost to create is higher when you're starting from scratch versus adopting an existing open standard. - It took years for Apple to create the iPhone but far less for Android phone makes to create their phones. Higher risk to gain market share - is a common hazard of controlled product strategies. There is a lot of responsibility that comes with creating a new, proprietary product, and then convincing enough people to adopt a product. If you're not successful in gaining a large enough user base, more time and money will be wasted. Less time and money will be wasted if the product was developed using an open strategy.

Which of these is a term used to described manipulation of people performing actions or divulging confidential information?

Social engineering

Open source software means which of these?

Software source code is available for free to further customize or alter

Benefits to Adopters of an Open Product Approach

Speed - is a benefit when using an open platform, hardware, or app approach. An open strategy allows product development to move quickly because a company is not building a product from scratch. Look at the mobile market. It only took a few years for dozens of manufacturers to release Android phones and tablets to compete with the Controlled Apple iPhone. Cost savings - is another open product strategy benefit. There are fewer up front costs and less design time is needed when working with products using open strategies. Quick Growth - in number of users is possible if you move early, but also keep in mind that you are likely to be followed by many other adopters. If you look at Android, you'll see that many Android companies like Samsung, LG, HTC, Motorola, among others all have sold lots of phones because the size of the Android market is vast. One thing to keep in mind is that the market is highly competitive.

Which of the following is most likely a benefit to adopting an open product strategy?

Speed to market

There are four characteristics needed to monetize social networks. Which of these is not a characteristic? Stability Toll booth Defined values Marketplace

Stability

Four Decision Stages of Sourcing

Stage 1 The first stage helps managers decide WHICH business processes of the firm should be done in-house and which processes lend themselves to outsourcing. Stage 2 Once the insourcing or outsourcing decision is made, the second stage helps managers to decide WHERE to locate the process: domestic or offshore. Stage 3 The third stage helps managers to decide WHOM to select as vendors for the processes they want to buy. This stage aims to maximize the cultural fit between the firm and the vendor. Stage 4 The fourth stage provides guidance as to HOW the new sourcing mechanism can be deployed and implemented successfully.

There are four characteristics needed to monetize social networks. Which characteristic means that users must have a stake in the network effect that goes beyond the traditional value of the more users means more value concept?

Stickiness

Android's OS

The Android OS is somewhat open. It is not purely open source because the core code is still controlled by Google, but they allow developers, such as Samsung, to customize the user interface on top of the core.

Apple's OS

The Apple OS is controlled and cannot be licensed to other people.

Apple Apps

The Apple app development platform is open to anyone, but Apple controls what gets onto its App store, and what is eventually sold.

Cost-Per-Click vs. Quality Score

The Cost-Per-Click bid is set by the ad owner, while the Quality Score is determined by the search engine and should be based on user clicks, keyword matches, relevance, and landing page quality. - Ranking Index = CPC bid x Quality Score - Actual CPC = Next Ranking Index / Quality Score + .01

One of the quickest methods used to measure supply chain efficiency is which of these?

The cash conversion cycle (CCC)

Supply chain management is which of these?

The coordination and integration of all activities and flows in a company's value system

Return on ad dollars (RoA) refers to?

The net revenue of an online ad divided by the cost of the ad

Square Hardware

The payment platform Square has a controlled hardware strategy. To use Square, you must use its proprietary card scanner and application. You cannot build an application that works with Square hardware.

Net Present Value (NPV) is which of these?

The present value of future cash flows minus the initial investments

Why is the value chain framework useful?

The value chain allows a firm to track the cost of various activities, the inefficiencies, and the cost of such inefficiencies.

Firms often fail to identify and recognize intangible costs. Why is this often the case?

These costs are harder to quantify

Unit 6 Summary

Throughout Lesson 1, you explored the motivation, uses, and benefits of data mining. Lesson 2 introduced you to two categories of data mining methods: descriptive and predictive. Within each category are the different methods used: association rules, cluster analysis, and classification. Association rules are generally used to identify products/services that go together. Often, a confidence level is associated with these rules. Confidence level is simply how confident (or the likelihood) for this rule to occur. Cluster analysis groups similar records (or characteristics) together so that it will be useful for many business and scientific studies, like market segmentation, archaeology, medicine, population analysis, and more. In finance, cluster analysis is found useful in building portfolios that are balances. Classification is a simplistic form of data analysis used to classify data. For example, which consumers are likely to purchase a BMW car? Data mining is a powerful means of gathering and extracting data. The key issue here is to extract non-obvious and hidden knowledge from data to create value. Depending on the data goal, to describe or predict, a method can be selected and implemented to reveal the needed information.

Identifying key players is a critical part of IT software implementation because of which of these?

To be successful a project needs buy-in and support from key players

Why is it critical to communicate the IT project benefits during implementation?

To minimize rumors

The number of actual transactions or number of delivered clicks is which of these?

Transaction conversion rate (TCR)

A stakeholder could best be described as anyone that is affected by your project.

True

New innovations can become destructive to an industry if organizations and people in that industry have no competence in that new technology.

True

One argument that can be made for people that are pro net neutrality is the following: If companies like AT&T and Verizon charge content providers more for use of the network, that added cost could get passed on to consumers.

True

Outsourcing is for more than just low-skilled jobs.

True

The cost of 1 gigabyte of storage used to be over a thousand dollars in the early nineties and now is worth close to a penny.

True

Which of the following was NOT one of the methods Tesco used to beat Wal-mart?

Used coupons to attract customers to new and exciting products at Tesco

Which of these is one of the four decision stages of sourcing?

Where is the process located?

Lift ratio is

an indicator of the strength of an association rule. Here, you compare the confidence of the rule where you assume that the occurrence of the consequent item set in a transaction is independent of the occurrence of the antecedent for each rule with some benchmark value. The benchmark value is computed as here. Benchmark confidence = No. of transactions with consequent item set/No. of transactions in database Lift ratio = Confidence/Benchmark confidence

Association Rules

are generally used to identify products/services that go together. Often, a confidence level is associated with these rules. Confidence level is simply how confident (or the likelihood) for this rule to occur.

There are two common types of methods used in data mining:

descriptive and predictive.

Cluster analysis

groups similar records (or characteristics) together so that it will be useful for many business and scientific studies, like market segmentation, archaeology, medicine, population analysis, and more. In finance, cluster analysis is found useful in building portfolios that are balances.

Examples of ___________factors to consider include data security, internal controls, effective knowledge transfer, maintenance, well-defined and clear interfaces, and accessibility.

implementation

Classification

is a simplistic form of data analysis used to classify data. For example, which consumers are likely to purchase a BMW car?

Packet Switching

is the basis for newer forms of communication and is how the Internet works. Details about it include: - Many-to-many connection - Connectionless - Best effort, may drop off during high traffic - Quite scalable - Works in decentralized way - Cost drops over time

Circuit Switching

is the basis for old forms of communication like traditional phone LAN lines. Details about it include: - Point-to-point connection - Connection-oriented (i.e., dedicated connection between two points) - High quality of service - Limited channels so less scalable - Works in centralized way - Cost increases over time

Linux is an...

open-source operating system (OS). - Open source is a unique strategy that should also be considered within the software ecosystem.

Google's ad network is a distribution play meaning...

reaching more potential customers across more websites attracts more advertisers.

Innovative products need a(n) ___________ supply chain, while functional products need a(n) ____________ supply chain.

responsive, efficient

Moore's Law states that _______ will double every 2 years while the _______ will stay the same.

the amount of transistors on a chip; price of chip production

Confidence is

the ratio of number of transactions with both antecedent and consequent item sets and number of transactions with an antecedent item set. Confidence = No. of transactions with both antecedent and consequent item set/No. of transactions with antecedent item set This confidence is a conditional probability of consequent occurring given that antecedent has occurred. This is equivalent to the ratio of probability of both antecedent and consequent and probability of antecedent.

If a company off shores a process or product...

then it has moved the location of work to a different country. If a U.S. company opens a plant in China to develop a product, then that product is not outsourced, only offshored.

If a company outsources a process or product...

then it is getting that process or product from another party. This does not automatically mean that the product or process is outsourced to another country. Outsourcing can occur in the same country.

Three fundamental decisions a company can choose from:

- Build a custom software. - Buy an off-the-shelf software solution. - Rent a software solution.

Key formulas you can use to determine the actual price of online ads:

- Click Through Rate (CTR) = Clicks / Impressions - 5 clicks / 100 Impressions = CTR of 5%

Which statement best describes a platform?

Architecture or environment that can connect to parties of users

Unit 3: Platform-Based Competition

- Describe the characteristics of platforms. - Compare the benefits and risks of the latest platform strategies. - Describe the trade-offs between product strategies, such as open versus control and compatibility versus performance.

Unit 2: IT Networks

- Describe the software ecosystem and the critical characteristics of the ecosystem. - Identify the challenges to a traditional ecosystem. - Evaluate factors for selecting software and software vendors.

Unit 4: Communications Ecosystem

- Explain how the communication ecosystem has evolved over time. - Describe how key components of the communication ecosystem work, such as the Internet, cookies, and secure socket layer. - Explain how companies are evolving based on competition in the communication ecosystem. - Describe the reasons the Internet poses a great concern for the security of information.

Unit 5: Search as a Business

- Identify how search impacts a company. - Describe the metrics used in online ad campaigns. - Describe how online ad auctions work. - Explain how to optimize an online search marketing campaign.

In the Kodak case inertia, often called managerial inertia, occurred when:

- Middle and most of top-management resisted change and thrived on consensus. - Kodak management didn't know as much about digital imaging as it did the film business. - Employees are threatened by lack of skills and know-how about a new product, such as digital imaging. - A company is unwilling to give up or cannibalize its existing cash-cow, such as the film business. This would also degrade shareholder trust and cause a drop in stock price. - Price-performance early on is not appealing and the company is unwilling to envision future information technological progression.

Kodak, a company that did not embrace digital information technology for several reasons:

- Middle and most of top-management were resistant to change, and they didn't have knowledge of digital imaging. - Kodak was unwilling to give up, or cannibalize, its existing film business. - Price-performance was not appealing and Kodak was unwilling to envision a future technological progression. - Cultural lock-in kept Kodak from moving forward.

Content providers want as many advertisers as possible in ad networks because this increases the following:

- Price of advertising - Number of ads served - Accuracy of user targeting - Network effects - Revenue

There are two critical components of cultural lock-in that companies should watch for:

- Strong beliefs in existing cultures and value systems - Consensus-based value systems leading to rely more on the status quo

Types of Cloud Services

- The first, IAAS, is infrastructure as a service. - - The Second, PAAS, is platform as a service. - - The third, SAAS, is software as a service.

HTTP is a stateless protocol, which means which of these?

After the server delivers a page it cuts off the connection and forgets who you are

When a firm makes its technology controlled, which of these is true? It keeps competition low within its platform There is less potential for increasing complements There is great risk of gaining large market share All of these

All of these

Each time an ad is shown on a website or Google Search results, this is know as _________.

An Impression

Open Strategy

An open product strategy does not necessarily mean "open source." Openness refers more to whether you will give up some level of control to allow people to interact with your product or build in new products that complement and integrate with your product. The open approach, because it's open and easier to integrate with, tends to see more adopters and growth. - The IBM Windows Compatible PC and the Android OS are both examples of products that focus more on openness

Which Companies are Evolving or Dissolving?

Blockbuster Dissolving: Blockbuster continued to remain locked-in to the store delivery model for movie rentals and arrived late to the market with the online model similar to what Netflix used. By the time Blockbuster had gone online, Netflix was moving heavily into pure streaming. Blockbuster continued to try and maintain the brick and mortar model when trends showed that movie delivery was moving to online. Netflix has made attempts to become purely streaming and it appears Netflix will eventually move to be a purely streaming business. Best Buy Dissolving: Many are predicting the demise of Best Buy may be sooner rather than later. Online competitors such as Amazon seem to be more inline with what customers want. Barnes & Noble Barnes & Noble made mistakes similar to Blockbuster. As wireless communication and consumption of data digitally increased, the e-Reader market exploded. Barnes & Noble responded with its own reader years after the Kindle had been in the market. As wireless technology generations improved, this allowed people to move away from physical books and stream content such as books, shows, movies, and music wirelessly. Borders is now bankrupt and Barnes & Noble continues to see losses with the Nook as of September 2014. Netflix Evolving: Netflix continues to reinvent itself as technologies change. GM Evolving: GM now enables all of its new cars with LTE wireless communication thanks to its partnership with AT&T. This wireless ability creates a hotspot in cars and allows real-time data to be sent back to GM for tracking part failures and car performance. IBM IBM is evolving and changing the way it conducts business as the communication ecosystem changes. Now IBM is conducting business from offices all over the world thanks to its ability to network an entire business through its own WAN and inexpensive technologies like VOIP. Google Consider the Google driverless car. As the communication ecosystem evolves, you can see even inhuman objects communicate differently. For example, near-distance sensors are now being installed in cars that allow them to sense objects around them and communicate with other sensing vehicles. Cars built by Google can drive themselves without human intervention and even mainstream companies are building in automatic breaking features to help a car stop more quickly.

Based on what we learned in the Creative Destruction portion of Unit 1, we see that many companies are built on the hopeful assumption of ______, while capital markets exist with the assumption of ________.

Continuity, discontinuity

Higher risks to gain adopters, in terms of more development time needed and higher costs incurred, is a common hazard of what type of product strategy?

Controlled

The metric that states an advertiser pays each time a person does something such as make a purchase, is which of these?

Cost per action (CPA)

Metrics of Online Ad Campaigns

Cost per thousand (CPM) Advertiser pays for every thousand times an ad is displayed. Magazine advertising is paid for this way. Cost per action (CPA) Advertiser pays each time a person does something, such as make a purchase. Getting an online car insurance quote is an example of this. Cost-per-click (CPC) Advertiser pays each time a person clicks on ad. This is the method that Google ads use. Click through rate (CTR) Number of times an ad is clicked/number of delivered impressions times 100. Transaction conversion rate (TCR) Number of actual transactions/number of delivered clicks. This information would be determined from the number of tickets booked on a website. Return on Ad dollars (RoA) This is the net revenue of an online ad divided by the cost of the ad. Average revenue per booking This is the total revenue divided by the number of bookings.

Which of these is the inability to change the corporate culture even in the face of clear market threats?

Cultural lock-in

Benefits to Producers of an Open Product Approach

Growth - is expected in open approaches because the easier something is to integrate with and adopt, the more likely adopters will join your platform, growing your network effects. - For example, before the iPhone, Apple used to be completely closed on all parts of its ecosystem, meaning only Apple controlled its hardware, OS, and apps. Once the iPhone was released, they decided to take a more open approach to their application layer, allowing outside developers to create apps to submit to the App Store. The number of apps on the store grew quicker than it would have if Apple maintained complete controlled of app building. Another good example is Android because it is open in all layers of its ecosystem. You can adopt different hardware to it, alter the OS, and build apps. This explains why Android grew even quicker and now has the majority of smart phone market share world-wide.

The Software Ecosystem

Hardware is the core layer on which many subsequent software decisions are made.0 - For example, if Apple chooses to make its own hardware, it allows them to control its operating system and applications that are built off of this hardware. Outside layers of the ecosystem can only properly operate when they comply with the system's previous layers. The software ecosystem exhibits specific characteristics and major differences represented on a series of spectrums as demonstrated in the Software Ecosystem image below. At the core, they are called infrastructural technologies, and there is hardly any customization, while the ERP layer is highly customized. The type of knowledge is technical at the core and highly domain specific at the periphery.

Performance Play

High performance along with control is ideally suited for a company where the product has high performance and a firm controls it. However, this is the riskiest combination of all strategies, which means rewards are also the greatest. - Apple, Iomega zip drives, and Palm Pilots are examples of products that fit this combination. The challenges include collective switching costs when there is already an installed base, cannibalizing existing sales, and the ability to get complements on board. Of course, this is ideal when there is no installed base and requires no substantial switching costs. A firm must evaluate strengths and weaknesses and promote alliances to ignite positive feedback.

Unit 1 Summary

In Lesson 1, you learned that because of constant innovation and hyper-competition, IT is quickly and constantly evolving. It's clear that innovation occurs regularly, but what is the result of this constant innovation? Is it disruptive? If yes, who or what is being disrupted? In Lesson 2, you delved deeper into the concepts of creative destruction and disruptive innovation. Disruptive technologies do not follow traditional product paths and are often rejected by a company. It's easy to see how companies fail to recognize and ultimately dismiss disruptive information technologies. Terms like creative destruction and disruptive innovation are difficult to understand. Even CEOs of corporations struggle with these same concepts. However, it's clear how cultural lock-in can cause a company to fail. Companies built to tolerate change, even if that change is disruptive to the company itself, stand a better chance of surviving long into the future. In Lesson 3, you were introduced to Kodak, a company that did not embrace digital information technology for several reasons: Middle and most of top-management were resistant to change, and they didn't have knowledge of digital imaging. Kodak was unwilling to give up, or cannibalize, its existing film business. Price-performance was not appealing and Kodak was unwilling to envision a future technological progression. Cultural lock-in kept Kodak from moving forward.

Unit 4 Summary

In Lesson 1, you learned that the complex communications ecosystem of individuals, businesses, services, products, and technologies must be understood in order for new strategies to be developed to help companies adapt, compete, and innovate. In Lesson 2, you explored the idea that companies must be able to survey the ecosystem and select strategies that keep them moving forward to serve the changing needs of users. Technology innovation and change are not slowing down anytime soon, making it more challenging to look at successful companies of the past to determine what the best decisions are moving forward. It will be interesting to see how Google, Facebook, and Netflix evolve over the next decade given the net neutrality debate. Finally, in Lesson 3, you dug deeper into the technology security threats and solutions facing companies such as Target, Home Depot, and others.

Unit 3 Summary

In Lesson 1, you reviewed IT platforms from the perspective of Apple and its many products. Think about Apple's platform strategies and how those strategies likely differ from its competitors. In Lesson 2, you focused on even more specific strategies companies use to develop their products. The two critical product strategies, open versus control and performance versus compatibility, are found throughout technology product industries. In order to be successful in the marketplace, you need to know what results each of these product strategies will yield. Companies like Apple combine these different strategies with various products in their company

Unit 2 Summary

In Lesson 1, you were introduced to the software ecosystem and some of its unique characteristics, such as lock-in and switching costs. Remember, companies must align their hardware, operating system, databases, middleware, enterprise applications, enterprise management, and consumer applications as part of the software ecosystem to take advantage of these strategies and characteristics. In Lesson 2, you tackled the decision of building, buying, or renting software. It's clear that there are many considerations for each software decision: to build, buy, or rent. Remember, there is no one perfect solution; a company must consider all options and their impact. A SWOT analysis is a useful tool that companies should implement when making a software decision. This analysis will provide clarity on the benefits and weaknesses of each software decision.

Controlled Migration

In a compatibility and control product strategy, a product has high compatibility with other products, and yet a firm retains control. - The Intel Pentium chip and Microsoft's OS are examples of products that use this strategy combination. Upgrades of most software products also fall in this category. Migration to new products is controlled because that product needs to be compatible with other products. This has been a significant source of revenue for many software vendors, such as Microsoft, where upgrades provide some performance improvements, but are highly compatible with existing products. A firm leverages its installed base with this combination, and competitors cannot enter this market quickly because of substantial switching costs.

The study or use of systems (especially computers and telecommunications) for retrieving, storing, and sending information is best described by what term?

Information Technology

The innovator's dilemma faced by Kodak had which of the following impacts?

It did not commercialize the digital film technology it developed

Which of these is true about the history of wireless technology evolution?

It was easier for companies like Verizon to upgrade and grow their 4G network since they were using a standard technology

There are several characteristics of the software ecosystem that companies should consider when making software decisions.

Lock In One strategy many companies attempt is to lock-in their customers to their products or services. Having high switching costs can lead to lock-in by customers. Companies will try to subsidize some or all of a potential customers' switching costs to lure them away. - Consider airline loyalty programs. The more you fly a specific airline, the more free miles and other perks you will obtain. Switching Costs Switching costs are the costs customers will incur if they have to change products or services. These can be monetary costs as well as costs related to customer time. If a company can create high switching costs for customers, then those customers are more likely to stay within the company network. - - Microsoft Word is something many people have invested time into learning and have created many documents using this software. Switching costs would be high for most users to switch to Corel WordPerfect, which has a different file type and graphical user interface. Complementarity Companies can also leverage the concept of complementarity products. When a firm buys hardware, it also buys software and other networking gear that is compatible with that hardware. These are complementary in nature and may not be transferable to other hardware platforms. Even when hardware or software depreciates, a firm may incur substantial switching costs because of disruption in organizational activities, incompatibility with other systems within the organizations, and with trading partners. - For instance, the AS/400 mainframe computer from IBM may have substantially more life after it depreciates. It is not easy to switch to other systems since complementary investments such as software, applications, terminals, and other network solutions may be specific to that computer and creates a lock-in for customers. Compatibility Compatibility is another consideration for companies when looking at IT products and services. Note that vendors have no incentive to make their software easily compatible with other software since some vendors may lose the ability to lock-in customers. Because it's not easy to make these different modules work together, consulting firms have fertile ground to reap benefits. One of the reasons implementation costs for large IT projects are about 5 to 10 times more than that of the actual software or hardware costs is because firms design the software to be incompatible with other systems and software. - Think about some of the applications you can run on a Mac. These are not all compatible with a PC.

Probability Chart

Low (Probability of Transaction) > High (CPC) > Poor at generating sales, and high cost (Publisher Results) > Fund less or cut (Publisher Strategy) High (P.o.T) > High (CPC) > Excellent at generating sales, but high cost (Publisher Results) > Adjust campaign tactics (Publisher Strategy) High (P.o.T) > Low (CPC) > Low cost, excellent at converting impression to sale (Publisher Results) > Fund more (Publisher Strategy) Low (P.o.T) > Low (CPC) > Low cost, but poor at generating sales (Publisher Results) > Improve search of site-side copy (Publisher Strategy)

Which of these is NOT one of the ways Microsoft became very profitable?

Lowering lock-in for their customers

The concept that the value of a network increases exponentially as more users join the network is supported by what observation?

Metcalfe's Law

Which of these is NOT true of Circuit Switching? Point to Point Dedicated Channel More Scalable Cost goes up over time Centralize

More Scalable

Risks to Adopters of Open Product Strategies

More competition - is a risk when using an open product strategy. If your product is built on an open platform, there will be numerous competitors creating a similar product. You will have to make sure your product is somehow unique and stands out from the crowd. - Take Android phones for example: If you decide that you want to choose Android over Apple, it doesn't guarantee that Samsung will get your business. There are tons of Android options, which means there is an extra layer of intra-OS rivalry in the open Android market. This explains why most manufacturers of Android phones and IBM Compatible PCs are struggling to compete and make profit amid fierce competition and price wars. Less profit - is a possible result of more competition. More competition in the market means that profitability is at risk because prices for a product will be driven down. - Consider the numerous Android phones makers and many different PC makers and how these companies are all in a price war and battle to preserve profit.

Performance vs. Compatibility

Often, the choice between performance and compatibility can be characterized as a product evolution (focused more on compatibility) versus a product revolution (focused more on performance). There must be balance between these two decisions. One cannot only focus on compatibility because users will eventually want to see improved performance in upcoming versions of your product. Then again, one can't only focus on performance because users don't want products that are incompatible with previous versions, unless the performance gains are worth the switch cost.

Open Migration

Openness combined with compatibility is a product strategy often used in standardized environments. There are many competitors because of the open nature and consumers incur lower switching costs. Firms with cost leadership and manufacturing excellence tend to thrive in this environment. - Examples of products using this combination include modems and fax machines.

Organic Search Versus Inorganic Search

Organic Search Results Organic search results yield websites and links that appear without the company having paid the search engine. These results will be categorized as relevant to your search request, and therefore, the search engine will list them in your results. A company needs a good website to get organic traffic and to be found in an organic search. Inorganic Search Results/Campaign Traffic Inorganic search results, or campaign traffic, is all traffic that is generated from a paid campaign, including search network and display network traffic. The companies that pay may also appear as online ads and use pay-per-click advertising.

The majority of loss-causing security incidents according to most recent data involve ___________.

Organizational Insiders or Employees

There are three critical options a company must consider when considering a new software solution. Which of these is NOT one of those options?

Revise

SWOT of Using Software as a Service (SaaS)

S= - Low upfront cost—rental model - Capex versus Opex - Flexibility to abandon if the software doesn't meet the requirements. This is an option not usually available in traditional models with huge upfront costs. This is a real option. - Scale as the business grows - No upgrades or maintenance headaches - Need fewer IT workforce inside the department - Relatively lower lock-in and switching costs W= - No customization capabilities; limited to features provided by the service provider - Data resides with vendors—perceived threats - Regulation forces to keep data inside firm boundaries - Integration with other SaaS and internal systems - Perception that security is a problem O= - SaaS model is expanding to other functions in ERP - Expanded services for small, medium, and large businesses T= - Hybrid, flexible models from incumbents can be appealing - Incumbents like SAP, Microsoft enter SaaS with greater capabilities and integration

Controlled Strategy

The opposite of openness is closed, also known as, a controlled strategy. This is a proprietary strategy where you choose to control the entire product. You don't license your technology for others to build it. You choose to be the one who builds and controls the user experience. - For example, Blackberry and Apple both control their operating systems since they are the only ones that build and maintain them. The controlled approach can be riskier when starting out because growth is harder, especially in the presence of a more open and competitive product, but if the network effects are great enough, it can be highly profitable.

Two-Sided Market

The two-sided market strategy is when a network, or market, derives value from two sources of users.

Unit 1: The Macroeconomic Impact of IT

This unit provides you with an overview of how IT influences the way we live and how it has changed the firms we do business with. For example, we'll explore the idea that IT can be a creative destruction or disruptive innovation depending on which industry this concept it applied to. We'll also investigate the innovator's dilemma, how technology challenges can lead to a company's demise, and what are the potential solutions. We will use the company Kodak as an example to introduce Unit 1 core concepts and illustrate how changes in technology shape how companies do business.

When is a product compatible?

When it can connect to or use the technology already in existence