CIS 9002
4 Operating Models (Coordination, Unification, Diversification, Replication)
know what each means
Socio-Technical Systems 3 Affects
Process Changes Job Changes Organizational Changes
Server
Provides specific data to other computers
4 Basic transactions and systems needed for FFTW
Purchasing - BID Sales - Inquiry Warehouse - Stock Financial - Balance Statement
Strassmann (1995) Outsourcing
Q: Are top management using outsourcing as an excuse for getting rid of responsibilities they have been unable to fulfill? - In other words, is outsourcing a positive strategic move? Personally acquainted with two huge outsourcing contracts that crippled information management for years - Made the companies unable to respond to competitive encroachments
The ___________ suggests internal strengths rather than just external threats are critical.
RESOURCE BASED VIEW
Iaas (Infrastructure as a service)
Renting all equipment (servers, storage, network components) from a third-party
Emergency-shutdown of the Hatch Nuclear Power Plant (2008):
Safety systems "detect" water drop in reservoirs that cool the fuel rods; 48-hour emergency shutdown ($5M) Problem traced to a software update for a business system that reset the control systems SO: Should define strict system boundaries, especially between safety-critical and business systems
Outsourcing 2012 by Deloitte
Sales/Marketing also has the most expected future increase to outsource compared to the current state. Finance and Human Resources have the greatest expected increase overall. IT has the most current outsourcing. --------------------------------------------------------------------- Damage of patents, unique skills and data security. Loss of quality control
Centralized
Single IT structure Consolidation of functions Career path for IS professionals Economies of the scale
IBM PC
1981
Fresh Direct Future
Need to add notes
Bells liquid model
Telephone
JPMorgan Chase cancels outsourcing after merger with Bank One (Flip Flop)
"We believe managing our own technology infrastructure is best for the long-term growth and success of our company, as well as our shareholders. Our new capabilities will give us competitive advantages, accelerate innovation, and enable us to become more streamlined and efficient." UHHH this is the same reason why they decide to outsource in the first place!!
Information Strategy
(Pearlson & Sanders) If you don't have the strength you need then you need to build your organization ORG STRATEGY! If we see an org strategy that will give us huge competitive advantage we wont just throw out if we dont have resources for it...you need to plan to move yourself where you can do it! Example: Project Based / Spinoff? High Value High Priced airline --> want to compete in lower cost so we create a new spinoff brand that is lower cost. TED for United Airlines! If we have new info tech then it can lead to new business strategy and the new business strategy can lead to new org strategy.
In sourcing: Have you ever terminated an Offshoring contract?
16% said yes. why? 13% terminated for cause 9% terminated for convenience 72% supplier performance 44% Inability to realize cost advantage 25% In sourced, post contract termination ---------------------------------------------------------------------- Off shoring has more political linguistic issue. This changed the answer a lot 94% neutral/satisfied, post insourcing 6% dissatisfied, post in sourcing
First commercially successful version of Windows
1992
First electronically stored computer program ran on Mark 1
21 June 1948
Explosion of Ariane 5 - Flight 501 (1996):
37 seconds into its maiden flight, the rocket veered off course. Broke up and exploded ($500M payload) Incorrect control signals caused the engines to swivel Traced to a program segment that attempted to convert a 64-bit floating point number to a 16-bit signed number Error shut down both the active and backup systems SO: Should test for what the system should do, and for what the system shouldn't do!
Digitized Platform
4 stages you need to go through to get competitive advantage. You cannot jump between the two must go in this natural way. You learn along the way.
In sourcing: Have you ever terminated an outsourcing contract?
48% said yes! why? 71% Overall Quality of service 33% Subject matter expertise 33% Pricing 34% Insourced, post contract termination -------------------------------------------------------------------- 79% satisfied / extremely satisfied post in sourcing 21% neutral post in sourcing NONE WERE NEGATIVE!!
IS/IT Infrastructure FFTW
5 key strategies including innovation...does our computer info systems give us the info we need?
4 Major reasons to outsource according to DCI
70%, cost savings - 37% complained of hidden costs 57%, access to best practices/quality/innovation - 31% stated vendors became complacent 35%, increased flexibility/capacity/scalability - But binding contracts add rigidity 35%, greater focus on core/strategic activities - 25% mis-labelled functions and had to "backsource"
Shipment in PCs, Tablets, Mobile Devices set to ___________ and desktop market is set to ______________
Increase , Decrease
World-Wide IT spend is ___________ in 2014 with majority of money spent in__________
Increasing, Telecom Services
STS: Emergent Properties Characteristic
A consequence of the relationship between system components (i.e., greater/less than the sum of its parts)
It is important to ensure the business strategy and the IS/IT strategy is _________
ALIGNED
Beginning of the Internet
ARPANET 1969 from UTAH
Importance of disengaging in the Game
Ability to disengage in Roses if you see they are not as profitable is a difficult decision but was necessary to continue to profit.
PaaS (Platform as a Service)
Accessing a virtual server running a specific operating system
SaaS (Software as a Service+)
Accessing applications on a remote server using a web browser
According to Porter (1996), competitive strategy is about being ____________
According to Porter (1996), competitive strategy is about being DIFFERENT
Crash of Air France Flight 447 (2009):
Airbus A330 flying from Rio de Janeiro to Paris crashed into the Atlantic ocean (216 passengers, 12 crew) Ice crystals forming on the pitot (airspeed) tubes caused autopilot to disengage and flight computers to shut down due to inconsistent data inputs. Pilots raised the nose of the plane causing it to climb and then stall SO: Similar to Ariane 5 and Mars Orbiter problems. Have we learned our lessons yet?
Top 3 priortities of CEO
Analystics/Business Intelligence Mobile Tech Cloud Computing
Enterprise Resource Planning (ERP)
Integrated applications (modules) that captures and shared real-time TPS-level data:
Three layer IS/IT Model
Better to use it this way. Lowest Level (layer one) IT Components...things users aren't interested in but should just work. - IT Components Second Level (Info System) Dedicated IT some org have specialized IT needs- Computer Based Info System Top Level - Business Processes Better to use this as this layers things based on how they work. The Business is at the top.
Information Flow for FFTW
Between FFTW and Auction - 4 data flows 1) Auction Details 2) Auction Bid 3) Bid Result 4) Payment Slip Between FFTW and Customer - 5 data flows 1) Customer Enquiry 2) Sales Quote 3) Quote Result 4) Delivery Note 5) Payment
The Flower Auction
Auction held @ 4am every Monday offered in lots = 100 flowers Roses-->Irises-->Daffodils in that order Costs $25 per 100 flowers storage
Strategic Management Strategy: Michael Porter Video
Big Three Mistakes Defining Strategy: - My strategy is to internationalize, outsource more...etc THOSE ARE STEPS NOT A STRATEGY! The Strategy is what unique position will we achieve by taking these steps? How will we have an advantage and sustain them. The company goes off a cliff because they don't understand why they are doing an action because it really is not a strategy. UNIQUE POSITION THAT JUSTIFIES THE STEPS YOUR CARRYING OUT. WHEN TAKING THE STEPS YOU SHOULD BE ABLE TO ANSWER WHY AND WHEN YOU SHOULD STOP
Value Chain vs. Supply Chain
Bottom Layer - Value Chain --> Primary activities that directly add value to the product being sold Supply Chain- Outbound Logistics = FINAL PRODUCT that starts the supply chain going vertical Supply chain management is inbound logistics - Outbound Logistics = SUPPLIERS
FFTW Management Structure
CEO ----- Purchasing Manager Sales Manager Financial Manager
Role of CIO In Organization (Operations, Network Architecture, Data Admin)
CIO: is it someone who is an asset or just someone that just costs money? - 44% report to CEO!! This is good! Means it matters - 18% for CFO and it means there concerned ab money Everyone under the CIO supports them: Operations people -->Run around and make sure the systems work Network Architecture --> Dedicated to making efficient Data Administration --> Understand how databases work and how to manipulate them...very important
Most popular method for assigning IT costs is _______ although _______ may inspire more innovative uses of IT
Chargeback, Corporate Budget
The Kodak Effect
Cumulative number of outsourcing projects announced...after only a few months so many different organizations decide to outsource as well!
Better Step: IT Architecture
Definition: Logical design that describes the structure of components and their inter-relationships Allows for: Planning, building, and/or modifying the physical implementation of the architectural design Architecture (Design) (Construction) Infrastructure (Implementation)
Which system was most necessary?
Depends on the role you played. Most wanted the system that was part of there role. Overall Warehousing was the biggest need.
PC
Designed for daily, everyday use
Babbage Difference Engine
Digital computer
Leonard Kleinrock with firm IMP
Internet
Problems with ERP
ERP systems assume a set of *best practices* which replace the organizations business processes: Any processes with *strategic* value will be lost, or combined with sub-optimal *workarounds* ERP implementation projects are also expensive and time-consuming: Failed ERP projects have resulted in: Driving a company to *bankruptcy* Financial losses of *$100M* Fall in * share price*
Silo Effect
Each group has there own applications that support specific functional areas. Not necessarily compatible and can cause issues ... first thing you should clean up
Maximizing IT
Escalate initial point of earned value by releasing in parts and adding to it as we go...this will also increase period of max benefit and range of max benefit by constantly upgrading.
Loss of communication between LAX Air Traffic Control Center and aircraft (2004):
FAA radio system and backup failed for 3 hours, affecting 600 flights (2 near misses) Microsoft-based replacement of an old Unix system needed to be reset every 50 days to prevent data overload Technician forgot to do the reset SO: Safety-critical systems should never be subject to such basic workarounds
Facilities Management v. Business Process Outsourcing (Front Office, Back office, Major players)
Facilities management relates to non-core support services, such as security, cleaning, catering, etc. - Major players include ISS (ranked #1 by IAOP, revenue of over $14B), Sodexo, etc. Business process outsourcing relates to specific business processes: - Front-office BPO Customer-oriented services, such as customer support, call centers, etc. - Back-office BPO Human resource management, accounting, finance, IT infrastructure management, etc. - Major players include Wipro (ranked #3, revenue of $8B), Infosys, CSC, etc.
Kodak and outsourcing
First major corporation to outsource it's entire IT department!!! July 1989, $500M, 10-year contract with IBM Consolidated four data centers into one (325 staff IBM)
3 Obsessions with being IT Savvy (Weill & Ross 2009)
Fix what's broken (operating model and IT funding model) Build a digitized platform (typically done in four stages) Exploit the platform (for profitable growth)
Golden Path / Last Mile / Attribution
GP: Sequence of events (moments of truth) that lead to a customer making a purchase LM:Sequence of events prior to a bad event (e.g., losing a customer) A:Gathering information about a customer in order to predict future needs
Carr Article (IT Doesn't Matter)
IT is a type of infrastructural technology - Stages of innovation, build-out, and price drop IT is a commodity - Any advantage based on IT can be easily copied -Therefore, IT has no strategic significance, it is a cost -Instead, the risks associated with IT should be managed and "IT management should become boring Any advantage can be copied easily...IT has no strategic significance. It is simply a cost that must be managed. Is he wrong? Yes!
Decentralized
IT organized within divisions Close to local problems Responsive to specific needs Problems of user ownership, costs
Distributed
IT units reporting to head office Separation of IS and user functions Support for unique local requirements Problems of user ownership, costs
OLTP
High volume transaction processing often using decentralized databases to balance load
Workstation
High-performance, task-specific computing
Longwall Method
Highly mechanized long wall methods were introduced in the 1940s: - Typically three shifts and cutting, clearing, and advancing the roof supports - Productivity and morale dropped, absenteeism increased
IT Funding Model
IT governance is crucial: - Have particular people/groups responsible for IT supported by a business case (no IT projects..just business projects that involve IT) - Involve business as well as IT people - Have continuous reviews and post reviews - Post-implementation reviews (PIRs) support organizational learning MOST IMPORTANT ROIbc - ROIpir ~= 0 if your accurate your ROI in bc should be the same as your PIR...even if more not necc good because you missed something in the BC then.
Stephen Hawking (the physicist) suggests true AI could spell the end of humankind:
It would be able to redesign itself at an ever increasing rate, soon matching or surpassing anything humans could do
First business application of a computer
LEO I computer at a bakery 1951
Christensen Disruptive Innovations
Large corporations are designed to deal with sustaining technology. Become good @ what you know and stay current Disruptive tech are new innovations that initially lack refinement, often have performance issues, and sometimes even lack practical application
FFTW
Large horticultural import/export and distribution company: - Founded in 1912, headquarters in New York - Flowers bought at auction each week in Aalsmeer - Sold directly to customers through a string of partnerships (flower shops) - Flowers stored in a refrigerated warehouse in Long Island (max. 3 weeks) Since 1994, specializes in the sale of Roses, Irises, and Daffodils
Four Stages of Digitization
Localizing - Priority on rapid growth. Systems are product (rather than customer) centered with little thought on sharing data Standardizing - Established market position. Seek cost savings by standardizing and consolidating technologies Optimizing - Focus on business process changes. Depending on operating model, emphasize standard processes or integrated data flow Reusing - Innovate. Business processes become reusable components to generate new business opportunities
Problems with outsourcing
Many companies that outsource were doing poorly prior to outsourcing. Outsourcing contracts for 10 years were cut short due to various reasons including - Overcharging - Mergers - Out of Business
FTD Mission and Vision
Mission Statement: To inspire, support and delight our customers when expressing life's most important sentiments. Vision Statement: To be the leading and most trusted floral and gifting company in the world.
Katherine Hudson Quote -VP of corporate IS for Kodak
My only interest as a manager is to plug my PC in and have data come out...doesn't matter where it comes from....IT isnt business...just need to make sure it happens according to Katherine Hudson
Business Alignment
Need to know what the goals are first! Org DRIVES THE NEED for Info Tech Info Tech ENABLES AND ENHANCES the Org If Info Tech is making a difference we should see IT getting leaner, quicker, smarter if it is an IT case study
Moores law
Number of transistors double every two years but initially predicted double every year
__________ effectiveness being the poorest form of competitive advantage.
OPERATIONAL
The IS Strategy Triangle suggests that _________ strategy is the third part of IS/IT business strategy.
ORGANIZATIONAL
National Air Traffic Services (NATS) center in Swanwick (London) controls aircraft over England and Wales (200K square miles):
Opens 5 years late (1997-2002) and 472% over budget (£132M-£623M) because of software problems Telephone glitches grounded aircraft in 2008, and 2013 Flight plan systems failure caused flight disruptions over London (2014).
FFTW Initial Setup
Overflow in Tarrytown Flown into LI (headquarters) in JFK Shipped to PNYNJ (ship in NJ) Total of 1,000 employees between NY and Aalsmeer
IT Architecture
Pearlson & Saunders (2009): "... provides a blueprint for translating business strategy into a plan for IS (p164)." Strategy--> goals from the strategy you want--> create business requirement to help you figure out what you want to do--> architecture of tech that will help to accomplish this all.
Components of Computer Based Info System (CBIS)
People and procedures need to be a part of this. Database is separate from software because you can have different software to access same database Really only need software. people. procedures Software really only application software
Hand-Got Method
People worked in groups Paid by the ton: - Filled cars with coal, hauled out by mules - No cars, no coal, no pay Group dynamics were crucial and often led to family units working together: - Could double output
5 Meta Strategies
State what our strategy is...what technologies are we going to suggest to support the strategy. Best Price- Internet Scraper to spit out best prices. Price tracking system. Need to understand what the prices are going to be based on tracking system. Strategic Alliance- Always have lowest price by having the right suppliers work with them. Make sure the grower grows what your going to need to deliver to customers. What system would allow for this to happen? 1) Modeling system to predict what customers will need. Brand Recognition- Find customers by using tech that will recognize new local flower shops that have opened...use marketing to understand where the market is and what flowers are wanted so we can advertise the correct flowers and be known as the company that has the right flowers at the right time. sponsorship Customer feedback Quality control if you want to make sure you have best flowers that you want to be known for. Customer Service: CRM (customer relationship management) system. - Tracks what customers think about you. Innovation: Discover a better way to store flowers to have them last much longer. New flower types Anything that can happen What info do I need? That's the connection between strategy and IS. Porter says you can either be best price or brand recognition. Adopt your assigned one and one other. Brand Recognition aligns with customer service and innovation
Loss of the Mars Climate Orbiter (1998):
Supposed to orbit at an altitude of 140-150km Navigation error caused it to drop to 57km, where atmospheric pressures destroyed the craft ($80M) Error in navigation software traced to subcontractor that had used imperial units of measurements instead of NASA-mandated metric system, underestimating the force of the thrusters by a factor of 4.45 SO: Should cross-check data to actual flight data
STS: Organizational Changes
Systems may change the political power structure of the organization If the organization depends on the system, those that control the system have more power -------------------------------------------------- Spinoff companies can become the future of business...by having eCommerce be a spinoff.
STS: Job Changes
Systems may de-skill users or cause changes in the way they work The status of certain individuals within the organization may be negatively affected by the new system
STS: Process Changes
Systems may require changes to business processes. Training may be required Significant changes may be resisted by users ------------------------------ Change system too much may be resisted WINDOWS 8 is an example!!
Socio-Technical Systems
Systems that include technical systems, operational processes, and people who interact with/use the technical system: - Dual focus and joint optimization Social system of people doing work. When you introduce technology you change EVERYTHING DUAL FOCUS AND JOINT OPTIMIZATION- have to appreciate what will change
Why you need good IS/IT Structure
The IS/IT infrastructure and CBIS you design for your organization will determine (and constrain) the intelligence of your decision-making: Senior management cannot hand-off the design of the organization's IS/IT infrastructure to others. If you want to be a smart manager you need to know the tech side to understand what you need and how it supports you.
OLAP
The analysis of complex data, often using pre-determined multi-dimensional 'cubes'
STS: Complex relationship with organizational objectives Characteristics
The extent to which the system supports organizational objectives does not just depend on the system itself THE WHOLE BASIS TO STS! ITS JUST ABOUT THE COMPLEXITY...doesn't matter how good you know everything there will always be something you don't know. Mix of people, systems and their environment
STS: Non-deterministic Characteristic
The same inputs will not always produce the same outputs, because system behavior is partially dependent on human operators Is there a limit to the extent to which we would leave all decision making to computers?
Outsourcing (Offshoring, Near Shoring, Captive Centers, Backsourcing)
The strategic use of outside resources to perform activities traditionally handled by internal staff and resources Offshoring (outsourcing offshore), Nearshoring Captive centers (overseas subsidiary)Buy out an overseas subsidiary so they are exclusive Backsourcing (returning a process in-house)Realize did something wrong...put it back in house Has political implications: Taking jobs away from local workers
The Swiss Cheese Model
There are layers that signify some sort of fault. Only have catastrophe if ALL the holes line up! Example: Narrows Bridge collapse because they did not account for the wind!
Toyota Example ( WATCH SLIDES)
Toyota Motor Marketing Europe 2002: - Sales growing dramatically: - 384K units in 1995, 727K units in 2002 Toyota Europe structured as 28 independently managed country operations: - Cars/parts ordered from 9 European manufacturing plants - Product/spare part inventories managed within countries - Different systems and processes in each country - Little transparency of supply/demand Operating loss FY 2002 ¥9.9B because of waste of how they are structured!! ------------------------------------- Initially Toyota was in the Diversification operating model: Decentralized independent country operations --> went to coordination to help them eventually centralized to one single business Toyota Europe and end up in the unification model Impact was dramatic! see picture
DSS,MIS,TPS
Transaction processing system - operational what we have done (Real-time processing of basic business activities) Management Info System- Tactical what should we do now Decision support system - Strategic what should we do tomorrow (Collates information from multiple sources in order to support high-level decision-making, such as planning)
Super Computer
Ultra high-performance computing using hundreds of thousands of processors
Mainframe
Ultra high-performance designed for high-volume, processor-intensive computing
Cloud Computing
When cloud services are provided by a third-party it is called a *public* cloud. If it is run by the organization it serves it's called a *private* cloud. A combination of both is called a *hybrid* cloud. When a third-party dedicates services (e.g., servers) to an organization, we have a *virtual private*cloud.
Martin Marietta Information Systems Group ran an advert in ComputerWorld, 1990:
You don't own a power plant for your electricity ... Why own a data center for your information systems?"
Business Strategy + Porters 5 Forces
[1]. Cost effectiveness, market access, differentiation [2]. Selection of supplier [3]. Selection of buyer, switching costs, differentiation [4]. Switching costs, market access, economies of scale [5]. Redefine product, improve price or performance
