1 CHAPTER 1 INTRODUCTION : BUSINESS AND INFORMATION TECHNOLOGY

2 Learning Objectives Discuss business pressures and responses in today’s Information Age Differentiate between data and information, and describe the characteristics of high-quality data. Name and describe the components of an information system. Describe the capabilities expected of information systems in modern organizations. Describe opportunities for strategic use of information systems.

3 Case : Blades Board & Skate rapid growthThe Business Problem retailer of ice and inline skates and snowboards the business needed a computer system that could instantly track sales and inventory at all of its stores The Solution point-of-sales (POS) systems computerized cash registers that use specialized software to record transaction data such as the stock numbers of items sold, cost , time of sale, and information on the customer, such as name help retailers cut costs, increase profits, and serve customers better by making the most of sales information

4 Case (continued…) The ResultsQuicker, more accurate, and more detailed picture of sales and inventory Tied into the firm’s accounting software Order products from vendors only when needed, decreasing the amount of warehouse space

5 Case (continued…) What have we learned from this case??Information Technologies are woven into complex systems interrelating with other systems permeating every business process enabling tremendous gains in knowledge, productivity, and profitability A great variety of information can now be gathered at each part of each business process, and information can be distributed throughout the organization, giving knowledge and insight for competitive decision making and strategic advantage.

6 Business in the Information Age: PressuresGlobal Competition for Market and for Labor Need for Real-time Operations Changing Work Force Customer-Oriented Operations Technological Innovation and Obsolescence Information Overload Social Responsibility of Organizations Government Regulation and Deregulation Ethical Issues Organizational Responses to Business Pressures in the Information Age

7 Business in the Information Age: ResponsesStrategic Systems Customer Focus and Customer Service mass customization Continuous Improvement Efforts just-in-time (JIT)  total quality management (TQM) Business Process Reengineering Empowering Employees and Fostering Collaborative Work Team-based Structure Business Alliances supply chain management and enterprise resource planning (ERP) Electronic Commerce

8 Business Pressures & Organizational Responses : SummaryGlobal Competition for Market and Labor Need for Real-time Operations Changing Work Force Customer Orientation Technological Innovation and Obsolescence Information Overload Social Responsibility Government Regulation and Deregulation Ethical Issues Organizational Responses Strategic Systems Customer Focus and Customer Service Continuous Improvement Efforts (Just-in-Time, Total Quality Management) Business Process Reengineering (BPR) Team-based Structure Business Alliances Electronic Commerce

9 Why You Need to Learn About Information TechnologyIT is Generally Interesting IT Facilitates Work in Organizations IT Offers Career Opportunities IT is Used by All Departments Locating real estate at nations bank Using IT to strategic advantage at McDonald’s Canada Using IT to manage human resources at the City of Winnipeg in Manitoba, Canada

10 Why You Need to Learn About Information Technology (continued…)Web-based One-to-One Marketing at Liberty Financial Companies one-to-one Web Marketing aims to personalize a user’s online experience by offering services and advertisements that are likely to appeal to that person Web-site operator can use the information it collects on individuals to provide customized content used Web-based marketing software to build its database of customer profiles investors able to find exactly the information they need, quickly and easily from Web sites

11 What is a Computer-Based Information System?A computer-based information system (CBIS) is an information system that uses computer and often telecommunications technology to perform some or all of its intended tasks. An information technology is a particular component of a system, like a personal computer, a printer, or a network. But few information technologies are used alone. Rather, they are most effective combined into information systems. The basic components of information systems are the following: Hardware  Software Database  Network Procedures  People

12 Components of Computer-based Information SystemHARDWARE SOFTWARE DATABASE NETWORK PROCEDURES PEOPLE

13 Capabilities of Information SystemsProvide Fast and Accurate Transaction Provide Large Capacity, Fast Access Storage Provide Fast Communications (machine to machine, human to human) Reduce Information Overload Span Boundaries Provide Support for Decision Making Provide a Competitive Weapon General Technological Trends for IT

14 Strategic Questions and Information Technology AnswerInformation Technology and organizational strategy are inseparable Porter’s strategic analysis model (5 forces models) the relative power of buyers and suppliers, threats from substitute products and services, and the ease or difficulty with which new competitors can enter the industry Value chain the discrete steps involved in the manufacturing of a product or the provision of a service

15 Strategic Questions (continued…)Can we use IT to gain leverage over our suppliers? To improve our bargaining power? To reduce their bargaining power? Can we use IT to reduce purchasing costs? To reduce our order processing costs? To reduce suppliers’ billing costs? Can we use IT to identify alternative supply sources? To locate substitute products? To identify lower-price suppliers? Can we use IT to improve the quality of products and services we receive from suppliers? To reduce order lead times? To monitor quality? To leverage supplier service data for better service to our customers? Can we use IT to give us access to vital information about our suppliers that will help us reduce our costs? To select the most appropriate products? To negotiate price breaks? To monitor work progress and readjust our schedules? To assess quality control? Can we use IT to give our suppliers information important to them that will in turn yield a cost, quality, or service reliability advantage to us? To conduct electronic exchange of data to reduce their costs? To provide master production schedule changes?

16 Strategic Questions (continued…)Can we use IT to reduce our customer’s cost of doing business with us? To reduce paperwork for ordering or paying? To provide status information more rapidly? To reduce our costs and prices? Can we provide some unique information to our customers that will make them buy our products/service? Can we provide better billing or account status data? Can we provide options to switch to higher-value substitutes? Can we be first with an easy-to-duplicate feature that will provide value simply by being first? Can we use IT to increase our customers’ costs of switching to a new supplier? Can we provide proprietary hardware or software? Can we make customers dependent upon us for their data? Can we make our customer service more personalized? Can we use external database sources to learn more about our customers and discover possible market niches? To relate buying from us to buying other products? To analyze customers interactions with us and questions to us to develop customized products/services or methods of responding to customer needs?

17 Strategic Questions (continued…)Can we use IT to help our customers increase their revenues? To provide proprietary market data to them? To support their access to their markets through our channels? Can we use IT to raise the entry barriers of new competitors into our markets? To redefine product features around IT components? To provide customer services through IT? Can we use IT to differentiate our products/services? To highlight existing differentiations? To create new differentiations? Can we use IT to make a preemptive move over our competition? To offer something new because we have proprietary data? Can we use IT to provide substitutes? To simulate other products? To enhance our existing products? Can we use IT to match an existing competitor’s offerings? Are competitor products/services based on unique IT capabilities or technologies and capabilities generally available?

18 Information Technology Answer (continued…)Information Technology Answers Consolidated Stores invested $80 million in KBToys.com, a site it will jointly own with startup BrainPlay.com PetSmart plans to invest $16 million in 1999 in PetSmart.com, a site it will jointly own with startup PetJungle.com Toys “R” Us invested $80 million to relaunch Toysrus.com, which will be run as a standalone business CVS spent $30 million to buy online pharmacy Soma.com

19 The Plan of This Book Part 1 INFORMATION TECHNOLOGY IN THE BUSINESS ENVIRONMENT 1. Introduction : Business and Information Technology 2. Organizational Structure and Information Technology Part 2 INFORMATION TECHNOLGY INFRASTRUCTURE 3. Computer Hardware 4. Computer Software 5. Managing Organizational Data and Information 6. Telecommunications and Networks 7. The Internet and Intranets Part 3 APPLYING INFORMATION TECHNOLOGY FOR COMPETITIVE ADVANTAGE 8. Interorganizational and Global Information Systems 9. Functional and Enterprise Systems 10. Data, knowledge, and Decision Support 11. Intelligent Systems in Business 12. Electronic Commerce 13. Strategic Information Systems and Reorganization Part 4 DEVELOPING AND MANAGING INFORMATION SYSTEMS 14. Information Systems Development 15. Implementing IT:Ethics, Impacts, and Security

20 What’s in IT for Me? For Accounting For FinanceInformation systems capture, organize, analyze, and disseminate data and information throughout modern organizations For Finance Information systems turn financial world on speed, volume, and accuracy of information flow

21 What’s in IT for Me? (continued …)For Marketing The Internet and the World Wide Web have opened an entirely new channel for marketing and provided much closer contact between the consumer and the supplier For Production/Operations Management Every process in a product or service’s value chain can be enhanced by the proper use of computer-based information systems

22 What’s in IT for Me? (continued …)For Human Resource Management Employees can handle much of their personal business themselves, and the Internet makes a tremendous amount of information available to the job seeker For Management Information Systems (MIS) The opportunities for those planning a career in MIS grows as fast as the adoption of information technologies into organizations everywhere

23 CHAPTER 2 ORGANIZATIONS AND INFORMATION TECHNOLOGY SUPPORT

24 Learning Objectives Discuss major information systems concepts such as architecture and infrastructure. Describe the hierarchical structure of organizations and the corresponding information systems. Define various information systems and their evolution, and categorize specific systems. Describe the support provided to different types of employees in an organization. Describe how information resources are managed.

25 Chapter Overview Information Systems Infrastructure and ArchitectureOrganizations: Structure and Support Evolution and Types of Information Systems IT Support at Different Organizational Levels Managing Information Technology in Organizations Information Infrastructure Architecture Traditional Architectures New Organizational Structure Corresponding Information System Transaction Processing Systems Management Information Support Managers Knowledge Workers Clerical Staff Which resources are managed by whom? What is the role of the information systems department? Who runs the ISD and to whom does the department report? What are the relationships between ISD and end users?

26 Case : Burlington Coat FactoryThe Business Problem Burlingion is the largest retailer of coats in the United States sells clothes, linens, luggage, jewelry, baby furniture and accessories faces extremely strong competition wants to offer up to 60% off department store prices needs information to respond to demand needs to communicate and collaborate with both store mangers and suppliers quickly and effectively

27 Case (continued…) The Solution The Resultsa corporate computer-based communication system networks to a main processor transfers sales data by satellite technology executes routine transactions on the headquarters’ computer feeds information from the corporate databases into spreadsheets or word processors on desktop computers for end-user computing and decision support The Results dramatic decrease in communication problems steady increase in sales volume and profits

28 Case (continued…) What have we learned from this case??Characteristics of a networked corporate information system that are usually found in organizations several different information systems exist in one organization some of these systems may be completely independent, but most are interconnected information systems are connected by means of electronic networks the information system is composed of large and small computers and other hardware connected by different types of networks many information systems use client/server architecture

29 Information Systems ArchitecturePhysical facilities, hardware, software, databases services, and management that support all computing resources in an organization Five major components of infrastructure computer hardware general-purpose software networks and communication facilities database information management personnel Tells how specific computing resources are arranged, operated, and managed

30 Information Systems Architecture (continued …)Information Architecture a high-level map or plan of the information requirements a manner in which these requirements will be satisfied a guide for current IT operations a blueprint for future IT directions meets the organization’s strategic business needs must tie together the information requirements, the infrastructure, and the applications similar to the conceptual planning of a house

31 Information Systems Architecture (continued …)Traditional Architectures mainframe environment processing is done by a mainframe computer - a relatively large computer built to handle large amounts of data, thousands of user terminals, and millions of transactions modern versions of this architecture : personal computers (PCs) and network computing (NC) PC environment PCs form the hardware architecture distributed environment divides the processing work between two or more computers the participating computers can be all mainframe, all PCs, or (usually) a combination of the two

32 Information Systems Architecture (continued …)New Architectures client/server architecture several computers share resources and are able to communicate with many other computers a client - a computer such as a PC attached to the network, which is used to access shared network resources a server - a machine that is attached to the same network and provides clients with these services purpose : optimize the use of computer resources

33 Information Systems Architecture (continued …)Enterprisewide Architectures access to data, applications, services, and real-time flows of data in different LANs or databases use client/server architecture to create a cohesive, flexible, and powerful computing environment provide total integration of departmental and corporate IS resources increase the availability of information and thereby maximize the value of an organization

34 Information Systems Architecture (continued …)Internet-based Architectures based on the concepts of client/server architecture and enterprisewide computing the Internet is the basis for a network connection from the outside world to the company, as well as with the organization’s web site organization’s internal private Internet (intranet) - useful for distributing information throughout the organization

35 The network organization: Non-Company Manufacturers Customers Sales peoples and other mobile employees Distributors Market Non-Company Retailers Suppliers (Purchasing) Liquidators contractors Toy Industry Extranet Other Extranets Banks and other business partners Professional Associations, large suppliers, competitors Corporate Extranet Head Quarter Retail Stores Employees Manufacturing Toys Inc Corporate Intranet Public Travel agency Small customers Small retailers Small vendors Government EDI, VAN Internet The network organization: How a company uses the Internet, intranet and extranet

36 Organizations : Structure and IT Supportthe nature of organizations determines their activities, the information support they need, and the type of information systems they use profit-making business versus not-for-profit organizations exist manufacture goods versus services are delivered can be located in one place or in several places, some are global or multinational organizations

37 Organizations : StructureOrganizational Structure departmental functional structure specialize in the delivery of a certain function typical departments in an organization: Accounting Finance Marketing and Sales Production or Operations Management (POM) Human Resources Management (HRM) Information Systems and Technology

38 Organizations : StructureHierarchical Structure Headquarters Division A Division B Overseas Division Plant C Plant D Plant E Plant F POM Accounting Marketing Finance HRM Administration Services (legal, etc.)

39 Organizations : IT SupportThe Corresponding Information Systems Departmental Information Systems Plant Information Systems Divisional Information Systems Enterprisewide Information Systems Interorganizational Information Systems (IOS) Global Information System for an International or Multinational Corporation

40 Types of Information SystemsTransaction Processing Systems organizations perform routine, repetitive tasks a TPS supports the monitoring, collection, storage, processing, and dissemination of the organization’s basic business transactions frequently, several transaction processing systems exist in one company today’s transaction processing systems are much more sophisticated and complex

41 Types of Information Systems (continued …)Management Information Systems (MIS) provides periodic reports generates weekly and monthly summaries by product, customer, or salesperson initially, MIS had an historical orientation today, MIS reports may include summary reports, for the current period or for any number of previous periods - used for monitoring, planning, and control functional management information systems (MIS) access, organize, summarize, and display information for supporting routine decision making in the functional areas geared toward middle managers

42 Types of Information Systems (continued …)Major Outputs of a Functional Management Information System OUTPUT DESCRIPTION Statistical summaries Summaries of raw data such as daily production, and weekly and monthly usage of electricity. Exception reports Highlights of data items that are larger or smaller than designated levels. Periodic reports Statistical summaries and exception reports provided at scheduled, regular periods. Ad hoc reports Special, unscheduled reports provided on demand. Comparative analysis Performance comparison to that of competitors, past performance, or industry standards. Projections Advance estimates of trends in future sales, cash flows, market share, etc.

43 Types of Information Systems (continued …)Support Systems office automation systems (OAS) word processing systems computer-aided design and manufacturing (CAD/CAM) decision support systems (DSS) end-user computing executive information systems (EIS) group support systems (GSS) Intelligent Systems expert systems (ES) artificial neural network (ANN)

44 Types of Information Systems (continued …)Integrating Systems various computerized systems are being integrated to increase their functionalities one popular form of integrated system is enterprise resources planning (ERP) ERP plans and manages all of an organization’s resources and their use, including contacts with business partners

45 The Evolution Computer Based Information Systems 1940Scientific, military applications 1950 Routine business applications, TPS 1960 MIS, office automation 1970 DSS, LANs 1980 Client/server executive information system, PC’s, AI, Groupware 1990 Integration, intelligent systems the Web, intranets, extranets, ERP software 2000 Internet, Electronic commerce, Smart systems

46 IT Support at Different Organizational LevelsOffice Automation and Communication Systems Clerical Staff Operation Systems Line Managers, Operators Managerial Systems Middle Managers Staff Support Knowledge Workers, Professionals Strategic Systems Top Managers Information Infrastructure and TPS The information systems support of people in organizations

47 Knowledge Workers People who create information and knowledge and integrate it into the business Engineers, financial and marketing analysts, production planners, lawyers, and accountants Responsible for finding or developing new knowledge for the organization and integrating it with existing knowledge Act as advisors and consultants to the members of the organization Act as change agents by introducing new procedures, technologies, or processes 60 to 80 percent of all workers are knowledge workers Supported by a large variety of information systems from Internet search engines to expert systems, to computer-aided design, and by knowledge bases

48 Clerical Staff Support managers at all levelsData workers - use, manipulate, or disseminate information bookkeepers, secretaries who work with word processors, electronic file clerks, and insurance claim processors Supported by office automation and groupware, including document management, workflow, , and other personal productivity software

49 IT Support at Different Organizational Levels : A SummarySystem Employees Supported Detailed Discussion in Office automation Office workers Chapter 7, 9 Communication All employees Chapter 6, 8 Group support system People working in groups Chapter 10 Decision support system Decision makers, managers Chapter 10 Executive information Executives, top managers Chapter 10 TPS Line managers and employees Chapter 9 MIS Middle management Chapter 9 Intelligent systems Knowledge workers Chapter 11

50 Managing IT Resources IT resources are scattered throughout the organization Information systems have enormous strategic value Some IT resources change frequently. It may be rather difficult to manage IT resources It is essential to manage information systems properly The responsibility for the management of information resources is divided between a usually centralized information systems department (ISD) and the end users Which resources are managed by whom? Generally speaking, ISD is responsible for corporate-level and shared resources, and the end users are responsible for departmental resources

51 Managing IT Resources (continued …)What is the role of the information systems department? Traditional major IS functions: Managing systems development and systems project management Managing computer operations, including the computer center Staffing, training, and developing IS skills Providing technical services

52 Managing IT Resources (continued …)What is the role of the information systems department? (continued) New (additional) major IS functions: Initiating and designing specific strategic information systems Infrastructure planning, development, and control Incorporating the Internet and electronic commerce into the business Managing system integration including the Internet, intranets, and extranets Educating the non-IS managers about IT Educating the IS staff about the business Supporting end-user computing Partnering with the executive level that runs the business Actively participating in business processes reengineering Proactively using business and technical knowledge to the line with innovative ideas about IT Creating business alliances with vendors and IS departments in other organizations

53 Managing Information TechnologyKey MIS issues in two recent time periods Key Issues, 1994/1995 Key Issues, 1997 1. Building a responsive IT infrastructure 1. Improving productivity 2. Facilitating and managing business process redesign 2. Reducing costs 3. Developing and managing distributed systems 3. Improving decision making 4. Developing and implementing an information architecture 4. Enhancing customer relationships 5. Planning and managing communication networks 5. Developing new strategic applications

54 Managing Information Technology (continued …)Who Runs the ISD and to whom does ISD Report? run by MIS Director, Manager of Computing Services, Manager of Information Technology, or Chief Information Officer (CIO) reports to Chief Executive officer Functional Vice President Senior vice president Chief knowledge officer (CKO) - the director assigned to capture and make effective use of IT knowledge for an organization The executive committee provides the top-level oversight for the organization’s information resources. It guides the IS steering committee, which is usually chaired by the CIO.

55 Managing Information Technology (continued …)What are the relationships between the ISD and end users? A steering committee that represents all end users and the ISD. This committee sets IT policies, decides on priorities, and coordinates IS projects. Joint ISD/end-user project teams for planning, budgeting, applications development, and maintenance ISD representation on the top corporate executive committee Service agreements that define computing responsibilities and provide a framework for services rendered by the ISD to end users Technical and administrative support (including training) for end users A conflict resolution unit established by the ISD to handle end-user complaints quickly and resolve conflicts as soon as possible An information center that acts as help center to end users regarding purchase, operations, and maintenance of hardware and software

56 What’s in IT for Me? For Accounting For Finance For MarketingMany of the transactions handled in a TPS are data that the accounting department records and tracks For Finance Financial departments often use specialized DSS for forecasting and portfolio management For Marketing Marketing uses such IT-related concepts as customer databases, marketing decision making, sales automation, and customer relationship management (CRM)

57 What’s in IT for Me? (continued …)For Production/Operations Management Organizations are competing on price, quality, time (speed), and customer service which are enhanced and supported by IT For Human Resources Management Intranets help to disseminate relevant information throughout the organization. Internets are used for recruiting For MIS IS management function continues to grow in strategic value For Non-Business In all organizations, IT provides essential support to all functional areas`

58 CHAPER 3 COMPUTER HARDWARE

59 Learning Objectives Identify the major hardware components of a computer Describe the design and functioning of the central processing unit Discuss the relationships between microprocessor component designs and performance Describe the main types of primary and secondary storage Distinguish between primary and secondary storage along the dimensions of speed, cost, and capacity Describe the hierarchy of a computer according to power and their respective roles Differentiate the types of input and output technologies and their uses Describe what multimedia systems are and what technologies they use Discuss strategic issues that link hardware design and innovation to competitive business strategy

60 Chapter Overview The Central Processing Unit How the CPU WorksAdvances in Microprocessor Design Computer Memory Memory Capacity Primary Storage Secondary Storage Computer Hierarchy Supercomputers Mainframe Computers Minicomputers Workstations Microcomputer Computing Devices Input Technologies Human Data Entry Devices Source Data Automation Output Technologies Monitors • Printer Voice Output Multifunction Devices Multimedia Strategic Hardware Issues Productivity Changing Work Styles New Products and Services Improve Communications

61 Case: Cutting Edge Hardware Solutions for the Bellagio HotelThe Problem select to assure uptime and minimize the strain on their massive network tested the capabilities of the Intel Xeon processor The Solution Dell PowerEdge 6300 and PowerVault 650F five-channel storage - in addition to a mix of 100 Dell PowerEdge 2200 and 2300 workgroup-level servers The Results Able to implement the network they needed to help make this one of the truly great resorts in the world

62 Case (continued…) What have we learned from this case??selecting the right IT infrastructure ‘out of the box’ thinking - imagining how business processes could ideally be configured and supported, rather than incremental technology-based improvement of an outdated process model focus on three interrelated factors : capability (power and appropriateness of the task), speed, and cost evaluating new hardware options and figuring out how to integrate them with existing systems changing of computer hardware almost always means much of its software needs to be rewritten to run on the hardware’s new operating system

63 The Significance of HardwareSome basic understanding of computer hardware design and function is essential because firms (and individuals) frequently must assess their competitive advantage in terms of computing capability.

64 Desktop or Portable PC : The TradeoffsDesktop Personal Computer Portable Personal Computer Impractical for mobile computing Designed for mobile computing Lower cost Higher cost Easily expanded Difficult to expand Comfortable ergonomics Uncomfortable ergonomics (small keyboard, often with inconvenient placement of function keys) Easy-to-use mouse or other pointing device Awkward pointing devices (some allow traditional mouse to be connected) High resolution/brightness monitor Lower resolution, less bright High RAM and hard-drive capacity Somewhat less RAM and hard-drive capacity Easy serviceability More difficult to service/repair Can utilize all current PC chips Some models cannot use some chips, due to cooling problems

65 Computer Hardware The physical equipment used for the input, processing, output, and storage activities of a computer system Central processing unit (CPU) Memory (primary and secondary storage) Input technologies Output technologies Communication technologies

66 The Central Processing Unit (CPU)a microprocessor is made up of millions of microscopic transistors embedded in a circuit on a silicon wafer or “chip” Control unit controls the flows of information Arithmetic-logic unit performs the arithmetic calculations Registers stores very small amounts of data and instructions for short periods of time

67 PRIMARY STORAGE (MAIN MEMORY)CPU (continued …) How the CPU Works? THE MICROPROCESSOR CONTROL UNIT ARITHMETIC - LOGIC UNIT Instruction Instruction Instruction EDCODE EXECUTE FETCH STORE INPUT FROM SOFTWARE Instruction Results REGISTERS PRIMARY STORAGE (MAIN MEMORY)

68 CPU (continued …) Advances in Microprocessor Designincreasing miniaturization of transistors making the physical layout of the chip’s components as compact and efficient as possible new materials for the chip that improve the conductivity (flow) of electricity amount of basic instructions programmed into the chip complex instruction set computing (CISC) reduced instruction set computing (RISC)

69 Computer Memory Computer memory affects the type of program it can run and the work it can do, its speed, and both the cost of the machine and the cost of processing data Memory capacity bits - ‘0’ or ‘1’ eight bits are needed to represent any one of alphanumeric character or mathematical operation byte - eight-bit string kilobyte (KB) - 1,024 bytes (210 bytes) megabyte (MB) - 1,048,576 bytes (210 x 210 bytes) most PC have several megabytes of RAM memory gigabyte (GB) - 1,073,741,824 bytes (210 x 210 x 210 bytes) hard drive in modern PCs is often more than one GB terabyte - 1,078,036,791,296 bytes

70 Computer Memory (continued …)Primary storage stores for very brief periods of time three types of information data to be processed by the CPU instructions for the CPU as to how to process the data operating system programs that manage various aspects of the computer’s operation four types of primary storage registers random access memory (RAM) cache memory read-only memory

71 Computer Memory (continued …)Secondary storage stores very large amounts of data for extended periods of time can have memory capacity of a gigabyte or more can be non-volatile takes much more time to retrieve data can be much more cost effective than primary storage can take place on a variety of media, each with its own technology

72 Computer Memory (continued …)Secondary storage (cont’) Magnetic media - store data via magnetism Magnetic tape - kept on a large open reel or in a smaller cartridge or cassette Magnetic disks - allow much more rapid access to the data than does magnetic tape Hard drive (hard disk) - permanently mounted in a unit that may be internal or external to the computer Magnetic diskettes (floppy disks) - have much less capacity, ranging from 1.44 megabytes for a standard high-density disk to 200 megabytes for a disk formatted for a zip drive

73 Computer Memory (continued …)Secondary storage (cont’) Optical storage devices - a pinpoint laser beam is used to burn tiny holes into the surface of a reflective plastic platter Compact disk read-only memory (CD-ROM) - high-capacity, low cost, high durability, and read only but not written on Write once, read many disk (WORM) - can be written on, but requires the laser technology (the “CD burner”) to do so Rewritable CDs - allow the disk to be written upon and rewritten up to 1,000 times

74 Computer Hierarchy Supercomputer Mainframe Computerhas the most processing power especially valuable for large simulation models of real-world phenomena Mainframe Computer used in large corporations for centralized data processing and maintaining large databases allowing for data and information to be shared throughout the organization several hundreds or thousands of online computers can be linked to a mainframe

75 Computer Hierarchy (continued …)Minicomputers (midrange computer) perform the same functions as mainframe computers but to a limited extent designed to accomplish specific tasks such as process control, scientific research, and engineering applications Workstations based on RISC (reduced instruction set computer) architecture provide both very high-speed calculations and high-resolution graphic displays

76 Computer Hierarchy (continued …)Microcomputers (micros or personal computers, PCs) Desktop PCs - typical, familiar microcomputer system modular in design, with separate but connected monitor, keyboard, and CPU Network computers (NCs) - allow users to access a network Laptop and Notebook Computers - small, easily transportable, lightweight microcomputers designed for maximum convenience and transportability Palmtop Computer - hand-held microcomputers configured for specific applications and limited in the number of ways they can accept user input and provide output Personal digital assistants (PDAs) - a computer appliance

77 Computer Hierarchy (continued …)Computing Devices - ever-smaller computing/communication devices Wearable computers free users’ movements Embedded computers placed inside other products to add features and capabilities Active badges worn as ID cards by employees who wish to stay in touch at all times while moving around the corporate premises Memory buttons store a small database relating to whatever it is attached to

78 Input Technologies Human Data Entry Deviceskeyboard - designed like a typewriter but with many additional function keys mice and trackball - used to point a cursor at a desired place on the screen touch screens - touch the desired area to trigger an action stylus - a pen-style device joy stick - used primarily at workstations that can display dynamic graphics microphone - used to dictate to the computer

79 Input Technologies (continued …)Source Data Automation Cash transaction devices automated teller machines (ATMs) point-of-sale (POS) terminals Optical scanners - optical character recognition (OCR) software is used in conjunction with a scanner bar code scanners optical mark reader magnetic ink character readers Voice recognition Sensors Cameras

80 Output Technologies Monitors Printersthe video screen used with most computers that displays input as well as output Printers impact printers like typewriter, using some kind of striking action non-impact printers laser printer - uses laser beams to write information plotters uses computer-directed pens for creating high-quality images

81 Output Technologies (continued …)Voice Output can be played through speakers Multifunction Devices combine a variety of technologies - fax, printer, scanner, copy machine, and answering machine Multimedia computer-based integration of text, sound, still images, animation, and digitized motion video

82 Strategic Hardware IssuesProductivity businesses need to assess whether employees’ personal productivity is likely to increase as microprocessor power and speed increase Changing Work Styles organizations must consider whether new work styles will benefit employees and the firm as a whole New Products and Services organizations should consider whether they are ready and able to take advantage of the advances, and new products and services that hardware may make possible for the business Improved Communication businesses need to judge whether they are ready to use multimedia

83 CHAPER 4 COMPUTER SOFTWARE

84 Learning Objectives Differentiate between the two major types of software Describe the general functions of the operating system Differentiate among the three types of operating systems and describe each type Identify three methods for developing application software Describe the major types of application software Explain how software has evolved and its future evolution Describe enterprise software

85 Chapter Overview Software History and Significance The SoftwareCrisis Software Fundamentals Systems Software System Control Programs System Support Application Software Types of Application Software Types of Personal Application Software Suites Software Issues evaluation and Selection Software Licensing Software Upgrades Shareware, Freeware, and Cheapware Open Systems Programming Languages Machine Language Assembly Language Procedural Languages Nonprocedural Languages Natural Programming Language Visual Programming Language Hypertext Markup Language Virtual Reality Modelling Language Object-Oriented Programming Language Enterprise Software Streamlining Organizational SAP

86 Case: The IRS and the Millennium BugThe Problem Y2K problem has resulted from the high cost of mainframe computations and data storage in the 1950s and 1960s complex structure makes it almost impossible for the IRS to be Y2K compliant in time agency changed its software in response to changes in the tax code

87 Case (continued…) The Solution The ResultsIRS has spent more than $4 billion over the past decade to modernize its computer systems the agency has $1 billion dollars and 600 people dedicated to the Y2K project The Results no one will know until well into the year 2000

88 Case (continued…) What have we learned from this case??Failure to budget for continuing maintenance of software programs can have devastating results One programmer cannot begin with his portion of the problem until he receives another completed portion form someone else, as this other part or “module” may define the inputs or outputs that his own part must deal with

89 Software History and SignificanceWhen the first applications of computers in business were introduced in the early 1950s, software was less important (and less costly) in computer systems Today, software comprises a much larger percentage of the cost of modern computer systems The Software Crisis no software applications fast enough to keep up with rapidly changing business conditions and rapidly evolving technologies not only must new applications be developed quickly, but existing software must also be maintained increasing complexity, leads to the increased potential for “bugs” testing and “debugging” software is expensive and time-consuming

90 Software History and Significance (continued …)Software Fundamentals computer programs - sequences of instructions for the computer programming - process of writing (or coding) programs programmers - individuals who perform programming

91 System Software System softwarethe class of programs that control and support the computer system and its information processing activities facilitates the programming, testing, and debugging of computer programs usually independent of any specific type of application support application software by directing the basic functions of the computer

92 System Software (continued …)System Control Program programs that control the use of the hardware, software and data resources of a computer system operating system (main system control program) supervises the overall operation of the computer, including monitoring the computer’s status and scheduling operations, which include controlling the input and output processes allocates CPU time and main memory to programs running on the computer, and also provides an interface between the user and the hardware

93 System Software (continued …)System Control Program (continued …) Process management managing the program or programs running on the processor at a given time Multitasking (or multiprogramming) managing two or more tasks, programs, running on the computer system at the same time Time-sharing a number of users operate on-line with the same CPU, but each uses a different input/output terminal

94 System Software (continued …)System Control Program (continued …) Multithreading a form of multitasking that focuses on running multiple tasks within a single application simultaneously Multiprocessing a computer system with two or more processors that can run more than one program or thread at a given time by assigning them to different processors Virtual memory simulates more main memory than actually exists in the computer system

95 System Software (continued …)System Control Program (continued …) File Management and Security managing the arrangement of, and access to, files held in secondary storage Fault Tolerance the ability of a system to produce correct results and continue to operate even in the presence of faults or errors Graphical User Interface (GUI) allows users to have direct control of visible objects and actions that replace complex command syntax

96 System Software (continued …)System Control Program (continued …) Major Desktop Operating Systems MS-DOS Windows 3.xx Windows 98 Windows 95 Windows NT Windows 2000 Windows CE IBM’s OS/2 Macintosh Operating System UNIX Java Operating System (JavaOS)

97 System Software (continued …)System Control Program (continued …) Major Departmental Sever Operating System UNIX, Windows NT Server, IBM’s OS/2 Warp Server, Novell NetWare, and IBM’s OS/400 Major Enterprise Operating Systems IBM’s MVS (Multiple Virtual Storage), IBM’s VM (Virtual Machine), IBM’s VSE (Virtual Storage Extended), and Digital Open VMS (Virtual machine System)

98 System Software (continued …)System Support Programs System support programs support the operations, management, and users of a computer system System utility programs accomplish common tasks such as sorting records, checking the integrity of diskettes, creating directories and subdirectories, restoring accidentally erased files, locating files within the directory structure, managing memory usage, and redirecting output

99 System Software (continued …)System Support Programs (continued …) System performance monitors monitor the processing of jobs on a computer system and produce reports containing detailed statistics concerning the use of system resources System security monitors monitor the use of a computer system to protect it and its resources from unauthorized use, fraud, or destruction

100 Application Software Application Softwareinstructions that direct a computer system to perform specific information processing activities and provide functionality for users Types of Application Software Proprietary application software addresses a specific or unique business need for a company Off-the-shelf application software developed programs sold to many organizations may be customizable or may be standard package

101 Application Software (continued …)Personal Application Software one of the off-the-shelf application programs that are not linked to any specific business function, but instead support general types of processing Data management Encompassing spreadsheet Desktop publishing Publishing Word processing Communications Graphics Multimedia GroupWare Speech recognition software

102 Application Software (continued …)Software Suites collections of application software packages that integrate the functions of the packages examples : Microsoft Office, Novell Perfect Office, and Lotus SmartSuite generally include : a spreadsheet program, word processor, database program, and graphics package with the ability to move document, data. And diagrams among them

103 Software Issues Software Selection Selection factorssize and location of the current and future user base system administration tools initial and subsequent costs current and future system capabilities existing computing environment in-house technical skills

104 Software Issues (continued …)Software Evaluation evaluation checklist ease of use in development learning maintenance reporting capability graphic presentation general functionality data handling output options performance security environments and hardware documentation vendor support

105 Software Issues (continued …)Software Licensing copyright - exclusive legal right to reproduce, publish, and sell the software licenses - permission granted under the law to engage in an activity otherwise unlawful Software Upgrades revised software may offer valuable enhancements but may offer little in terms of additional capabilities revised software may contain bugs

106 Software Issues (continued …)Shareware, Freeware, and Cheapware Shareware - low price software Freeware - free copyrighted software Cheapware - free public-domain software Open Systems a paradigm of computing products that work together use the same operating system with compatible software on all the different computers in a system to empower designers to choose the best computer hardware, operating system, and application software

107 Programming LanguagesMachine Language (first generation of programming languages) the lowest level computer language composed of binary digits all other languages are translated into machine language before the computer can run the instructions Assembly Language (second generation of computer languages) a lower-level but more user-friendly language assembler - translates an assembly language program into machine language … .. ……

108 Programming Languages (continued …)Procedural Languages (third generation languages) much closer to natural language use common words rather than abbreviated mnemonics compiler - translates the entire program at once interpreter - translates and executes one source program statement at a time

109 Programming Languages (continued …)Nonprocedural Language (fourth generation languages) a high-level language allows the user to specify the desired result without having to specify the detailed procedures needed for achieving the result can be used by non technical users Natural Language programming Languages (fifth generation languages) translates natural languages into a structured, machine-readable from are extremely complex

110 Programming Languages (continued …)Visual Programming Languages used within a graphical environment example : Visual Basic and Visual C++ popular to non technical users Hypertext Markup Language (HTML) standard language used in World Wide Web contains text, images, and other types of information such as data files, audio, video, and executable computer programs

111 Programming Languages (continued …)Virtual Reality Modeling Language (VRML) a file format for describing three-dimensional interactive worlds and objects can be used with the World Wide Web Object-Oriented Programming Languages (OOP) based on the idea of taking a small amount of data and the instructions about what to do with that data and putting both of these together into what is called an object

112 Enterprise Software Difficulty in Most Organizationsthe sheer complexity that arises from all the different types of hardware and software that they use Package Wanted by an Organization support integration between functional (i.e., human resource, operations, marketing, finance, accounting, etc.) modules be quickly changed or enhanced present a common graphical look-and-feel help to reduce training and operation costs

113 Enterprise Software (continued …)manages a company’s vital operations, such as supply chain management (movement of raw material from suppliers through shipment of finished goods to customers), inventory replenishment, ordering, logistics coordination, human resource management, manufacturing, operations, accounting, and financial management

114 Enterprise Software (continued …)System Anwendung Produket (SAP) one of the largest vendors (holds 30% of the enterprise software market) strength :  high degree of integration  support for multi-site, multi-currency operations R / 3 - flagship client/server product has a high degree of functional integration across the enterprise criticism : complex, time-consuming and expensive to install and integrate with other systems decoupling the models of R/3 into separate components, each with its own database

115 CHAPTER 5 MANAGING ORGANIZATIONAL DATA AND INFORMATION

116 Learning Objectives Discuss traditional data file organization and its problems Explain how a database approach overcomes the problems associated with traditional file environment, and discuss the advantages of the database approach Describe how the three most common data models organize data, and the advantages and disadvantages of each model Describe how a multidimensional data model organizes data Distinguish between a data warehouse and a data mart Discuss the similarities and difference between data mining and text mining

117 Chapter Overview Basics of Data Arrangement and Access The DataHierarchy Storing and Accessing Records The Traditional File Environment Problems with the File Approach Databases: The Modern Approach Locating Data in Databases Creating the Database Database Management Systems Logical versus Physical View DBMS Components Logical Data Models Hierarchical Model Network Model Relational Model Advantages and Disadvantages of the Three Models Emerging Models Other Models Data Warehouse Multidimensional Model Data Marts Data Mining Text Mining

118 Case: FedEx Pinpoints Profitable CustomersThe Problem customers are classified as good , bad, or ugly by the cost of doing business with them and the profits they return keep the good customers, improve the bad customers, and drop the ugly ones easy to identify customers who spend money with them but difficult to identify customers who are profitable for them

119 Case (continued…) The Solution The Resultsuse a data warehouse, stocked with customer data, that allows the company to compare the complex mix of marketing and servicing costs that go into retaining each individual customer versus the revenues he, she, or it might bring in The Results “good” customers - expect a phone call if their shipping volumes falter, which can prevent defections before they occur “bad” customers – can be turned into profitable customers by charging higher shipping rates “ugly” customers – can be ignored

120 Case (continued…) What have we learned from this case??Organizations can now scrutinize their customers (or other data) very carefully with advanced data management and analysis tools Customized strategies can be developed to cut costs, transform the marginal customer into a profitable customer, and permit more profitable pricing structures Other types of data can give an organization important feedback about its products, services, markets, and coming trends

121 Basics of Data Arrangement and AccessThe Data Hierarchy Field - a logical grouping of characters into a word, a small group of words, or a complete number Record - a logical grouping of related fields File - a logical grouping of related records Database - a logical grouping of related files Entity - a person, place, thing, or event about which information is maintained Attribute - each characteristic or quality describing a particular entity Primary Key - field that uniquely identifies the record Secondary Key - field that has some identifying information, but typically does not identify the file with complete accuracy

122 Basics of Data Arrangement and Access (continued …)Storing and Accessing Records Indexed Sequential Access Method (ISAM) uses an index of key fields to locate individual records index - lists the key field of each record and where that record is physically located in storage track index - shows the highest value of the key field that can be found on a specific track Direct File Access Method uses the key field to locate the physical address of a record transform algorithm - translates the key field directly into the record’s storage location on disk

123 Traditional File Environment123 Introduction to Information Technology Turban, Rainer and Potter Chapter 4 Computer Software Traditional File Environment The organization has multiple applications with related data files Each application has a specific data file related to it, containing all the data records needed by the application Each application comes with an associated application-specific data file

124 Traditional File Environment (continued …)Problems with the file approach data redundancy - the same piece of information could be duplicated in several places data inconsistency - the various copies of the data no longer agree data isolation - difficulty in accessing data from different applications security - new applications may be added to the system on an ad hoc basis data integrity - data values must often meet integrity constraints application/data independence - the applications and data in computer systems should be independent

125 Database : The Modern ApproachDatabase Management System provides access to all the data Example : University administration Database Management System Academic Info. Team Data Employee Data Tuition Data Financial Aid Student Data Course Data Registration Data Registrar Office Class Programs Accounting Dept. Accounts Programs Athletics Dept. Sports Programs

126 Database : The Modern Approach (continued …)Locating Data in Databases Centralized database all the related files are in one physical location used on large, mainframe computers saves the expenses associated with multiple computers provides database administrators with the ability to work on a database as a whole at one location files are not accessible except via the centralized host computer recovery from disasters can be more easily accomplished at a central location vulnerable to a single pint of failure speed problem

127 Database : The Modern Approach (continued …)Locating Data in Databases (cont’) Distributed database complete copies of a database, or portions of a database, are in more than one location, which is usually close to the user replicated database - complete copies of the entire database are delivered to many locations, primarily to alleviate the single-point-of-failure problems of a centralized database as well as to increase user access responsiveness partitioned databases - these are subdivided, a portion of the entire database in each location

128 Centralized vs. Distributed DatabasesUser New York User Los Angeles User New York User Los Angeles Central Location New York Central Location New York Chicago New York Kansas City Los Angeles User Chicago User Kansas City Centralized Database Distributed Database

129 Database : The Modern Approach (continued …)Creating a Database Conceptual design - an abstract model of the database from the user or business perspective Physical design - shows the way a database is actually arranged with a storage devices Entity-relationship (ER) modeling process of planning the database design ER diagram - document of the conceptual data model Entity classes  Instance  Identifiers  Relationships Normalization method for analyzing and reducing a relational database to its most streamlined form for minimum redundancy, maximum data integrity, and best processing performance

130 Database Management SystemsA software program (or group of programs) that provides access to a databases Permits an organization to store data in one location, from which it can be updated and retrieved Provides access to the stored data by various application programs Provides mechanisms for maintaining the integrity of stored information, managing security and user access, recovering information when the system fails, and accessing various database functions form within an application written in a third-generation, fourth-generation, or object-oriented language

131 DBMS (continued …) Logical versus Physical ViewPhysical view - deals with the actual, physical arrangement and location of data in the direct access storage devices (DASD) Logical view - represents data in a format that is meaningful to a user and to the software programs that process that data

132 DBMS (continued …) DBMS Components Data modeldefines the way data are conceptually structured Data definition language (DDL) defines what types of information are in the database and how they will be structured functions of the DDL provide a means for associating related data indicate the unique identifiers (or keys) of the records set up security access and change restrictions

133 DBMS (continued …) DBMS Components (cont’)Data manipulation language (DML) used with third-generation, fourth-generation, or object-oriented languages to query the contents of the database, store or update information in the database, and develop database applications Structured query language (SQL) - most popular relational database language, combining both DML and DDL features Data Dictionary stores definitions of data elements and data characteristics

134 Logical Data Models A manager’s ability to use a database is highly dependent on how the database is structured logically and physically. In a logically structuring database, businesses need to consider the characteristics of the data and how the data will be accessed. Three common data models : hierarchical, network, and relational Using these models, database designer can build logical or conceptual view of data that can then be physically implemented into virtually any database with any DBMS.

135 Logical Data Models (continued …)Hierarchical Database Model structures data into an inverted “tree” in which each record contains two elements rigidly 1st : a single root or master field, often called a key, which identifies the type location or ordering of the records 2nd : a variable number of subordinate fields, which defines the rest of the data within a record all fields have only one “parent”, each parent may have many “children” advantage : speed and efficiency problem : access to data is predefined before the programs; and each relationship must be explicitly defined when the database is created

136 Hierarchical Data ModelSales Region East Coast Midwest West Coast Product Category China Stemware Flatware Plates Bowls Product

137 Logical Data Models (continued …)Network Database Model creates relationship among data through a linked-list structure in which subordinate records (members) can be linked to more than one data element (owner) pointer - explicit link, storage addresses that contain the location of a related record many-to-many relationships are possible complexity : for every set of linked data elements, a pair of pointers must be maintained

138 Logical Data Models (continued …)Relational Database Model based on a simple concept of tables in order to capitalize on characteristics of rows and columns of data relations - tables  tuple - row  attribute - column select operation - creates a subset consisting of all records in the file that meet stated criteria join operation - combines relational tables to provide the user with more information than is available in individual tables project operation - creates a subset consisting of columns in a table, permitting the user to create new tables that contain only the information required

139 Relational Database ModelSmith, A. Dir. Accounting 43 China Jones, W. Dir. Total Quality Management 32 Stemware Lee, J. Dir. Information Technology 46 China Durham, K. Manager, Production 35 Stemware Stone, L. Administrative Asst. 28 Flatware

140 Company Data Models MODEL ADVANTAGES DISADVANTAGES Hierarchicaldatabase Speed and efficiency in search Access to data is predefined by exclusively hierarchical relationships, predetermined by administrator. Limited search/ query flexibility. Not all data is naturally hierarchical. Network database Many more relationships between data elements can be defined. Greater speed and efficiency than relational database models. The most complicated model to design, implement, and maintain. Greater query flexibility than hierarchical model, but less than relational model. Relational database Conceptual simplicity; no predefined relationships among data. High flexibility in ad hoc querying. New data and records can be added easily Lower processing efficiency and speed. Data redundancy is common, requiring additional maintenance.

141 Logical Data Models (continued …)Emerging Data Models Object-oriented database model - an object - a small amount of data put together with all the data needed in order to perform an operation with that data Object - similar to an entity in that it represents a person, place, or thing, but it also contains all of the data that the object needs in order to perform an operation Attributes - characteristics that describe the state of that object Method - an operation, action, or a behavior the object may undergo Messages - from other objects activate operations contained within the object Class - all the messages to which the object will respond, as well as the way in which objects of this class are implemented

142 Logical Data Models (continued …)Emerging Data Models (cont’) Object-relational database model - adds new object storage capabilities to relational database management systems Hypermedia database model - stores chunks of information in a form of nodes connected by links established by the user Other Database Models Geographical information database - contains locational data for overlaying on maps or images Knowledge database- stores decision rules used to evaluate situations and help users make decisions like an experts Multimedia database - stores data on many media : sounds, video, images, graphics animation, and text.

143 Data Warehouses A data warehouse is a relational and or multidimensional database management system designed to support management decision making. The data in the “warehouse” is stored in a single, agreed-upon format even when underlying operational databases store the data differently.

144 Data Warehouses Framework and ViewAPIS M LDDLEWARE Access Data Mining Applications EIS/DSS Custom-Built Application (4GL tools) Production Reporting Tools Relational Query Tools OLAP/ROLAP Web Browsers Operational System/Data Legacy OLTT External Select Extract Transform Maintain Integrate Preparation Data Mart Marketing Risk Management Engineering Metadata Reposition Enterprise Data Warehouse Target Database(s) (RDB, MDDB)

145 Data Warehouses (continued ...)Data Warehouse Offers Many Business Advantages It provides business users with a “customer-centric” view of the company’s heterogeneous data by helping to integrate data from sales, service, manufacturing and distribution, and other customer-related business systems. It provides added value to the company’s customers by allowing them to access better information when data warehouse is coupled with Internet technology. It consolidates data about individual customers and provides a repository of all customer contacts for segmentation modeling, customer retention planning, and cross-sales analysis.

146 Data Warehouses (continued ...)Data Warehouse Advantages (cont’) It removes barriers among functional areas by offering a way to reconcile views from multiple sources, thus providing a look at activities that cross functional lines. It reports on trends across multidivisional and/or multinational operating units, including trends or relationships in areas such as merchandising, production planning, and so forth.

147 Data Warehouses (continued ...)Multidimensional Database Model can be the core of data warehouses data are stored in arrays consists of at least three dimensions dimensions are the edges of the cube, and represent the primary “views” of the business data the data are intimately related and can be viewed and analyzed from different perspectives, which are called dimensions allows for the effective, efficient, and convenient storage and retrieval of large volumes of data

148 Data Warehouses (continued ...)Data Marts a scaled-down version of a data warehouse that focuses on a particular subject area usually designed to support the unique business requirements of a specific department or business process. Example : Marketing data mart takes less time to build, costs less, and less complex the indiscriminate introduction of multiple data marts with no linkage to each other, or to an enterprise data warehouse, will cause problems

149 Data Warehouses (continued ...)Data Mining provides a means of extracting previously unknown, predictive information from the base of accessible data in data warehouses discovers hidden patterns, correlations, and relationships among organizational data predicts future trends and behaviors, allowing businesses to make proactive, knowledge-driven decisions functions of data mining classification » clustering » association sequencing » forecasting

150 What’s in IT for Me? For Accounting For FinanceData gathered about each transaction (business event) in the organization is stored in its databases For Finance Computerized databases external to the organization, such as CompuStat or Dow Jones, provides financial data on organizations in its industry

151 What’s in IT for Me? (continued …)For Marketing Databases including customer name, address, purchase, amount, etc, help to plan targeted marketing campaigns and to evaluate the success of previous campaigns. Data mining is critical for many marketing efforts to remain competitive. For Production/Operations Management Organizational databases are accessed for determining optimum inventory levels for parts in a production process Information in databases are used to know when to perform required service on machines

152 What’s in IT for Me? (continued …)For Human Resources Management Organizational databases contain extensive data on employees, such as name, address, gender, race, age, salary, hiring date, current job descriptions, past job descriptions, and past performance evaluations For MIS Vacancies for MIS include data entry and data storage management to database management and data analyst

153 CHAPTER 6 TELECOMMUNICATIONS AND NETWORKS

154 Learning Objectives Describe the components of a telecommunications system Describe the five basic types of communication media, including their advantages and disadvantages Classify the major types of networks Differentiate among the three types of distributed processing Identify seven telecommunications applications and describe how they help the organization attain competitive advantage

155 Chapter Overview Telecommunications Systems Signal Communicationsprocessors media and channels carriers and services Networks Local area networks Wide area networks Network Communication Software Network operating system Network management software Protocols Types of data transmission Network Processing Strategies Organizational distributed processing Open systems and enterprise networking Telecommunications Applications Electronic mail Video conferencing Electronic data interchange Electronic funds transfer Facsimile Telecommuting Distance learning

156 Case : Network Management at Southwest AirlinesThe Business Problem it had to make the transition from its legacy applications to client/sever technology to maintain service levels and keep up with network traffic volume The Solution Network Health to predict the possible ramifications of shifting network traffic to virtually add and subtract applications and make theoretical changes in transmission capacity through-out the network to help the network managers monitor network usage The Results Save almost $100,000 in staffing costs in the first year Able to smooth network traffic among reservations centers Shorten customers’ waiting time

157 Case (continued…) What have we learned from this case??Rarely in modern companies do computers work in isolation Exchange of data - facilitated by telecommunications technologies - brings a number of very significant changes Take management of resources very seriously Bring disastrous losses in revenues and customer satisfaction by minor disruption in telecommunications traffic Understand technology in order to gain and maintain competitive advantage

158 The Telecommunications SystemHardware - all types of computers and communication processors Communications media - the physical media through which electronic signals are transmitted ,including wireless media Communications networks- the links among computers and communications devices Communications software- software that controls the telecommunications system and the entire transmission process Data communications providers- regulated utilities or private firms that provide data communications services Communications protocols- the rules for transmitting information across networks Communications applications- electronic data interchange, teleconferencing, videoconferencing, electronic mail, facsimile, and electronic funds transfer, as well as others

159 The Telecommunications System (continued …)Computer Communications Processor Network Software Communications Channels and Media Transmitter Receiver

160 Communication ProcessorsModem an analog network to carry voice signals or sounds in an analog wave format Multiplexer an electronic device that allows a single communications channel to carry data transmissions simultaneously from many sources Front-end-Processor a small secondary computer dedicated solely to communication in computer system

161 Communication Media and ChannelsCable Media Twisted-pair wire Coaxial cable base band transmission broad band transmission Fiber optics optical networking Copper versus fiber the price differential between copper (cheap) and fiber (expensive) is beginning to narrow

162 Communication Media and Channels (continued …)Wireless Media Microwave - transmission stations : usually not spaced more than 30 miles apart Satellite - digital transmission Geostationary earth orbit (GEO) - 22,300 miles Medium earth orbit (MEO) - 6,000 miles Low earth obit (LEO) to 1,000 miles Global positioning system - 10,900 miles Radio use when you do not have to depend on microwave or satellite links, especially for short ranges

163 Communication Media and Channels (continued …)Wireless Media (continued ...) Infrared red light not commonly visible to human eyes commonly used in television or videocassette remote control units Cellular radio technology transfers calls from one cell to another Mobile computing occurs on Radio-based networks that transmit data to and from mobile computers Personal communication services uses lower-power and higher-frequency means

164 Communication Media and Channels (continued …)Characteristics of Communications Media Transmission speed Bandwidth - range of frequencies available Baud rate Measured in bits per second (bps) Transmission mode Asynchronous or Synchronous

165 Telecommunications CarriersCommon Carriers the long-distance telephone companies Value-added Carriers have developed private telecommunications systems and provide services for a fee Switched Lines a person can access from his or her computer to transmit data to another computer Dedicated provide a constant connection between two devices and require no switching or dialing

166 Telecommunications ServicesWide-area Telecommunications Services (WATS) method for billing customers who use voice band media extensively Telephone and Dialing Services Automatic Number Identification (ANI) Integrated Services Digital Network (ISDN) transfer voice, video, image, and data simultaneously Digital Subscriber Line (DSL) provide high-speed, digital data transmission

167 Networks Local Area Network (LAN) - connect two or more communicating devices within 2,000 feet LAN Technology the network gateway connects the LAN to public networks or other corporate networks so that the LAN can exchange information with networks external to it Private Branch Exchanges (a type of LAN) controls telephone switching at a company site carry both voice and data perform call waiting, call forwarding, and voice mail

168 Network Typologies Bus network Star network Hierarchical network RingMainframe Mini- computers Desktop computers

169 Networks (continued …)Wide Area Network (WAN) - long-haul, broadband (analog) networks covering wide geographic area Value-added Networks (VANs) private, data-only networks add message storage, tracking, and relay services as well as teleconferencing services Virtual Private Networks (VPNs) allow an organization to leverage the robust, shared communication infrastructure of the internet provide a gateway between a corporate LAN and the Internet allow access to a corporate network’s , shared files, or intranet, via an Internet connection

170 Network Communications SoftwareNetwork Operating Systems Network Management Software Protocols set of rules and procedures governing transmission of data across a network line access and collision avoidance identify each device in the communication path example : Ethernet10 BaseT and Transmission Control Protocol/Internet Protocol (TCP/IP) Open System Interconnection (OSI)

171 Seven Layers of the OSI Model1) Physical Layer Transmits raw bits over a communication channel. Its purpose is to provide a physical connection for the transmission of data among network entities and the means by which to activate and deactivate a physical connection. 2) Data Link Layer Provides a reliable means of transmitting data across a physical link;break up the input data into data frames sequentially and processes the acknowledgement frames sent back by data into data frames sequentially and processes the acknowledgement frames sent back by the receiver 3) Network Layer Routes information from one network computer to another; accepts messages from source host and sees to it that they are directed toward the destination. Computers may be physically located within the same network or within another network that is interconnected in some fashion.

172 Seven Layers of the OSI Model (continued …)4) Transport Layer Provides a network-independent transport service to the session layer, accepts data from session layer, splits it up into smaller units as required, passes these to the network layer, and ensures all pieces arrive correctly at other end. 5) Session Layer Provides user’s interface into network; where user must negotiate to establish connection with process on another machine. Once the connection is established, the session layer can manage the dialogue in an orderly manner. 6) Presentation Layer Translates message to and from the format used in the network to a format used at the application layer 7) Application Layer Includes activities related to users, such as supporting file transfer, handling messages, and providing security.

173 Types of Data TransmissionPacket Switching breaks up blocks of text into small, fixed bundles of data called packets Fiber Distributed Data Interface (FDDI) passes data around a ring, but with a bandwidth of 100 Mbps Asynchronous Transfer Mode (ATM) divides data into uniform cells eliminates the need for protocol conversion Switch Hub Technologies turns many small LANs into one big LAN

174 Network Processing StrategiesTypes of Organizational Distributed Processing Terminal-to-Host Processing File Server Processing Client/Server Architecture and Processing links two or more computers in an arrangement organizations can make their systems faster and save money five models of client/server implementation that partition the three components between the server and the client

175 Client/Server ConfigurationTYPES OF CLIENT/SERVER COMPUTING SEVERS: Distributed Presentation Remote Function Data Management Network CLIENTS: Difficult More Extremely

176 Benefits and Limitations of Client/Server Architecture for Network ProcessingThe network is not overloaded with entire files being transferred back and forth File integrity is much easier to maintain because only the server actually updates the files. File security easier to maintain with server in full control of file data Limitations Microcomputers with independent processing power are more difficult to coordinate and administer on a network. There is difficulty in writing software that divides processing among clients and servers. Specific servers can be slowed when too many clients need service.

177 Types of Organizational Distributed ProcessingClient/Server Architecture and Processing Peer-to-peer processing allows two or more computers to pool their resources benefits there is no need for a network administrator the network is fast and inexpensive to set up and maintain each computer can provide backup copies of its files to other computers for security it is the easiest network to build

178 Open Systems and Enterprise NetworkingOpen Systems - allows any computing device to be seamlessly connected to and interact with any other computing device, regardless of size, operating system, or application Connectivity - ability of the various computer resources to communicate with each other through network devices Enterprise-wide Network Manu- facturing Finance Marketing Account -ing Administrative Services and HRM Corporate Backbone WAN (Fiber optic cables; FDDI protocol) Mainframe Embedded LAN Backbone wide area network File server for backbone WAN

179 Telecommunications ApplicationsElectronic Mail ( ) - computer-based messages transmitted through telephone wires or wireless networks Videoconferencing - allows people to have “face-to-face” communications with a group in another location Electronic Data Interchange (EDI) - electronic transmission of routine, repetitive business documents directly between the computer systems Electronic Funds Transfer (EFT) - electronically routing funds, debits and credits, and charges and payments

180 Telecommunications Applications (continued …)Facsimiles (FAX) - convert modulated signals into white and black areas for printing Telecommuting - work at home, using personal computers and telecommunications technology to communicate via electronic mail with other workers, and to send and receive business work Distance Learning - the students are able to see and hear the professor, and the professor can hear the students off-site; students may be able to see each other

181 What’s in IT for Me? For Accounting For FinanceCorporate accountants perform cost/benefit analyses on the telecommunications infrastructure of the firm For Finance Financial managers use corporate networks to transfer and receive funds, complete transactions, and use EFT

182 What’s in IT for Me? (continued …)For Marketing Modern telecommunications technologies open huge conduits of information to and from an organization, and provide great strategic advantage to the marketing function For Production/Operations Management Telecommunications can make the linkage between the customer and the production function much more direct, making possible different manufacturing strategies

183 What’s in IT for Me? (continued …)For Human Resource Management Human resource managers utilize their corporate networks extensively for posting job openings, and use internal corporate networks to publish corporate policies, company newsletters and job openings

184 CHAPTER 7 THE INTERNET AND INTRANETS

185 Learning Objectives Describe what the Internet is, how it works, and how users connect to it Describe the capabilities that the Internet offers to users Describe the World Wide Web and differentiate it from the Internet Identify and describe the tools that allow users to view and search the Web Identify and briefly describe the management challenges caused by the Internet Define the term intranet and discuss how intranets are used by business

186 Chapter Overview The Evolution of the Internet The Internet todayThe infrastructure Internet2 The Operation of the Internet Addresses on the Internet Accessing the Internet Services Provided by the Internet Communications Services Information Retrieval Services The World Wide Web Browsers Offline Browsers Search Engines Push Technology Information Filters Clipping Services Personalized Web Services Collaborative Filtering Web Authoring Internet Challenges New Technologies Internet Regulation Internet Expansion Internet Privacy Intranets Teamware Security

187 Case : Schwab’s New Internet Business ModelThe Business Problem give top-notch advice and service but not to push products or recommend which stocks to buy; keen competition from both deep-discount Internet brokers and full-service investment firms The Solution coach people on investing through the Internet allow customers access to their own Web pages and initial public offerings; online interviews with top executives The Results the more they go online for routine business, the less the staff needs at Schwab’s service centers and branches earns its highest ratings on “customer confidence,” but not initially rated well in “ease-to-use”

188 Case (continued…) What have we learned from this case??Internet strategy is no longer just a source of competitive advantage; it is necessary for survival An innovative use of the Internet can bring competitive advantage but it may not be sustainable The Internet in its various incarnations is a powerful medium whose understanding is essential for the modern business competitor

189 What is the Internet? The Largest computer network in the world (a network of networks) Exchanges information seamlessly by using the same open, non-proprietary standards and protocols, within interconnected networks Forms a massive electronic communications network Provides a true democratic communications forum and has produced a democratization of information

190 The Evolution of the Internet1969 ARPANET Late 1970s USENET (User’s Network) Early 1980s Computer Science network (CSNET) and BITNET 1986 NSFNET Today Internet Tomorrow Internet 2; ???

191 The Internet Today The Internet is international, with users on all continents The cost of personal computers and Internet connections are prohibitively high for most of the population Political, cultural, and regulatory barriers have slowed the rate of Internet adoption The vast majority of sites are in English The vast majority of content is generated in the United States

192 The Infrastructure of the InternetCommercial communications companies now largely provide the physical network backbone of the Internet The U.S. government continues to contribute some funds to essential administrative processes The National Science Foundation (NSF), in the USA, pays for certain high-performance portions of the network backbone The Internet infrastructure is supplied by network service provider

193 Internet2 In 1996 a consortium of universities began establishing a faster network, Internet2, with limited access devoted exclusively to research purposes Internet2 grew from 34 to more than 110 U.S. research universities in one year Internet2 is capable of transmitting gigabits of information per second

194 The Operation of the InternetAddresses on the Internet IP address - uniquely identifies one from the other computers Domain name system (DNS) - derives the names of the computers Domain name - consists of multiple parts, separated by dots, and are translated from right to left; upper names are most important (the dot com; wiley.com)

195 The Operation of the Internet (continued …)Accessing the Internet Connect via LAN Server Connect via Serial Line Internet Protocol/Point Protocol (SLIP/PPP) Connect via an Online Service

196 Services Provided by the InternetCommunication Services Electronic Mail ( ) USENET Newsgroups (Forums) LISTSERV Telnet Streaming Audio and Video Internet Fax Chatting Internet Telephony Real-Time Audio and Video

197 Services Provided by the Internet (continued …)Information Retrieval Services File Transfer Protocol (FTP) Gophers Archie Wide Area Information Servers (WAIS) Veronica (Very Easy Rodent-Oriented Netwide Index to Computer Archives)

198 The World Wide Web The Internet - functions as the transport mechanismThe World Wide Web - an application that uses the Internet transport functions, a system with universally accepted standards for storing, retrieving, formatting, and displaying information via a client/server architecture Hypertext Markup Language (HTML) - standard hypertext language used in Web Standard Generalized Markup Language (SGML) - text-based language for describing the content and structure of digital documents Hyperlinks - from one Web page to another

199 The World Wide Web (continued …)Home Page - a text and graphical screen display; first, introductory page in a web site Web Site - all the pages of a company or individual Webmaster - the person in charge of a Web site Uniform Resource Locator (URL) - points to the address of a specific resource on the Web Hypertext transport Protocol (HTTP) - communications standard used to transfer pages across the WWW portion of the Internet

200 The World Wide Web (continued …)Browser (software application that is used to access and navigate the Web) Netscape Communicator a multipurpose suite that handles news, , audio- and video conferencing, and more Microsoft Internet Explorer Internet Explorer’s tight integration with Windows offers users the advantage of “one-stop computing” Offline Browser enables a user to retrieve pages automatically from Web sites at predetermined times, often during the night

201 The World Wide Web (continued …)Search Engines programs that return a list of Web sites or pages that match some user-selected criteria ways to select pages for inclusion in the database : Web Crawlers and Registration metasearch engines automatically enter search queries into a number of other search engines and return the results

202 The World Wide Web (continued …)Push Technology automatically supplies desirable information to users by means of a process running on either the user’s desktop or a network server provides timely, prioritized distribution of information over a corporate network in the workplace enhances traditional Web advertising in the consumer market used for software delivery and updates

203 The World Wide Web (continued …)Information Filters automated methods of sorting relevant from irrelevant information Clipping Services track news topics and retrieve articles from database of publications personalized Web Services offer the ability to generate Web content that is personalized for individual Web site visitors Collaborative Filtering a form of personalization services exemplified by Personalogic

204 The World Wide Web (continued …)Web Authoring (for page and site design) Standard HTML is the common denominator CompuServe Graphics Interchange Format (GIF) and Joint Photographic Experts Group (JPEG) is the common format of graphics files Enhancements to HTML cascading style sheets (CSSs) Dynamic HTML (DHYML) Extensible markup language (XML) Voice markup language (VoxML) Virtual reality modeling language (VRML)

205 Internet Challenges New Technologies Internet RegulationVendors are adopting new technologies more rapidly than many users and customers can implement them Internet Regulation Some technical organizations are not formally charged in any legal or operational sense with responsibility for the Internet Internet Expansion The massive growth of Internet traffic has strained some elements of the network

206 Internet Challenges (continued …)Internet Privacy (Web sites collect information with and without consumers’ knowledge) Cookie - small data file placed on users’ hard drives when they first visit a site three potential bills are in USA Congress the government should let groups develop voluntary privacy standards but not take any action now unless real problems arise the government should recommend privacy standards for the Internet but not pass laws at this time the government should pass laws now for how personal information can be collected and used on the Internet

207 Intranets A private network that uses Internet software and TCP/IP protocols Teamware (intranet software) used for team building, sharing ideas and documents, brainstorming, scheduling, and archiving decision to facilitate productivity Security public key security, encryption, digital certificates, firewall and assured pipelines

208 Examples of Intranet NationsBank’s Intranet improves relations with big business customers sales associates can get a global customer overview Philips Electronics cuts delivery time the intranet and the CAD eliminated the mislabelling of products, inaccurate manufacturing fulfilment, and correct areas of customer dissatisfaction How BD manages knowledge anyone at the company can find an in-house expert on the firm’s core competencies

209 What’s in IT for Me? For Accounting For FinanceAccounting personnel use corporate intranets to consolidate transaction data to provide an overall view of internal projects Internet keeps accounting personnel informed on legal and other changes affecting their profession For Finance Corporate intranets can provide a risk-evaluation model so that financial analysts can evaluate the risk of a project or an investment The Web can be a marketing and service provision channel

210 What’s in IT for Me? (continued …)For Marketing Marketing managers use corporate intranets to coordinate the activities of the sales force The Internet opens a completely new marketing channel For Production/Operations Management Intranet provides three-dimensional models and animation to speed product development The Internet is a great source of cutting-edge information for POM pros.

211 What’s in IT for Me? (continued …)For Human Resource Management On intranets, you publish corporate policy manuals, job postings, company telephone directories, and you conduct training classes Companies deliver online training obtained from the Internet to employees through their intranets the Internet supports worldwide recruiting efforts

212 CHAPTER 8 INTERORGANIZATIONAL AND GLOBAL INFORMATION SYSTEMS

213 Learning Objectives Describe the role, benefits and structure of interorganizational systems Distinguish between interorganizational and global information systems Describe EDI and compare a traditional EDI with an Internet-base EDI Define extranets and explain their infrastructure, types and benefits Describe planning and other issues related to interorganizational and global systems

214 Chapter Overview Electronic Data Inerchange and Electronic Funds Transfer EDI and IOS EFT and IOS Interorganizational Information Systems Response to Business Pressures Types of Interorganizational systems Global Information Systems Who Needs Global Systems? Benefits of Global IS Issues in Electronic Global Trading Global E-Commerce Implementing IOS Security Ethical and Social Issues Planning Extranets Components and Structure Types Benefits

215 Case: The Harper Group Collaborates With Honda in International TradeThe Problem highly competitive environment where hundreds of freight moving companies in the United States and abroad operate large amounts of information flow among several trading partners and support services HOW TO EFFECTIVELY MANAGE THE INFORMATION? HOW TO DO IT AT COMPETITIVE PRICES?

216 Case (continued…) The Solution The ResultsUse information technology that links the computers of involved organizations, resulting in a paperless flow of routine information The Results allows cheaper, faster, and more reliable information to flow among all business partners supports Harper’s global business maintains the company’s position as the second largest trading facilitator in the United States operates the company with thin profit margins adopted an intranet for improving the internal operations in 1997

217 Case (continued…) What have we learned from this case??Global information system - EDI enables efficient flow of large amounts of transactional information among several business partners around the globe keeps current customers attracts new customers

218 Interorganizational Information Systems (IOS)Objective efficient processing of transactions, such as transmitting orders, bills, and payments Major Characteristics determine customer-supplier relationship in advance built around privately or publicly accessible networks employ value-added networks (VANs) when use telecommunications companies for communication use the Internet with either an electronic data interchange (EDI), with extranets, or with EDI/Internet

219 IOS (continued …) IOS Response to Business Pressuresreduce the costs of routine business transactions improve the quality of the information flow by reducing or eliminating errors compress cycle time in the fulfilment of business transactions, regardless of geographical distance eliminate paper processing and its associated inefficiencies and costs make the transfer and processing of information easy for users

220 IOS (continued …) Types of Interorganizational SystemsGlobal systems - information systems connecting two or more companies in two or more countries Electronic data interchange (EDI) - the electronic movement of standard business documents between business partners Electronic funds transfer (EFT) - the transfer of money using telecommunication networks Extranets - link the intranets of business partners Shared databases - databases that can be shared by trading partners, often used to reduce time in communicating information between parties as well as arranging cooperative activities Integrated messaging - delivery of electronic mail and fax documents through a single transmission system that can combine electronic mail and electronic business documents

221 Global Information Systemconnect companies located in two or more countries Who Uses Global Systems? Multinational Companies companies that operate in several countries International Companies companies that do business with other companies in different countries Virtual Global Corporations joint ventures whose partners are form different countries

222 Benefits of Global Information SystemEffective communication at a reasonable cost Effective collaboration with groupware software, Group DSS, extranets, and teleconferencing devices Organizations access each other’s databases and frequently work on the same projects while their members are in different locations

223 Issues in Electronic Global Information SystemCultural Differences many different aspects ranging from legal and ethical issues to what information is considered offensive localization - use different names, colors, sizes, and packaging for overseas products and services Economic and Legal Differences differ considerably in their economical and legal environments Transfer of Data Across International Borders cross-border data transfer - several countries impose strict laws to control the flow of corporate data across their borders; to protect the privacy of their citizens

224 Global Electronic CommerceAccess to larger markets, the possibility of saving on taxes, and the flexibility to employ workers and manufacture products anywhere using a world telecommuting workforce Benefits the Internet and the extranets resulted in an inexpensive and flexible infrastructure can do business anytime and from anywhere can do it rapidly at a reasonable cost

225 Global Electronic Commerce (continued …)Barriers Legal barriers jurisdiction issues, export/import regulations and compliance; contacts Intellectual property (enforcement of ), privacy, and content issues Cryptography (encryption), security, authentication procedures, and notarized documents Cross-border transactions, as described earlier Consumer protection (e.g. liability for wrong transactions) Market access barriers building a telecommunications infrastructure capable of accommodating all users and all types of data is a necessity

226 Global Electronic Commerce (continued …)Barriers Financial barriers including taxation, customs and electronic payment systems, different currencies Others need to match buyers and sellers across international borders and establish trust between them existence of cultural diversity lack of sufficient international agreements deciding on the collection of sales and other taxes compliance with diversified export/import regulations and fees need for language translation (the Web page, transactions)

227 Electronic Data Interchange (EDI)Elements of EDI Data formatting standards to shorten the length of the messages, reducing long distance telephone charges and eliminating data entry errors EDI translators conversion of data into standard format Private line (VANs) versus the Internet VANs-based EDI - expensive, high security and capacity, incompatible hardware and software of the telecommunication companies Internet-based EDI - less security and capacity as compare to VAN-based EDI, but cheaper; requires coordination and integration with the company’s back-end processing systems

228 Order-delivery Cycle With and Without EDIStart Specifier Purchasing Accounting Mailroom Shipping Receiving Buyer P.O. delivery Order confirmation Bill delivery Sales Seller With EDI Receiving Buyer Seller Start Specifier PO Standardized PO Form Invoice Flash report Shipping EDI transmissions Computer Generates Standardized P.O. Form Instant data to : Sales Manufacturing Engineering Automatic billing Automatic order confirmation Approval Prices Availability

229 How the Benefit is Achieved?Benefits of EDI Benefits How the Benefit is Achieved? Speed, volume EDI enables companies to send and receive large amounts of routine transaction information quickly around the globe in a paperless environment Sales and other information is delivered to manufacturers, shippers, and warehouse almost in real time Once EDI documents are received ,they are automatically forwarded to the appropriate department for processing Accuracy There are very few errors in the transformed data as a result of computer-to-computer data transfer. Information is also consistent

230 Benefits of EDI (continued …)How to Benefit is Achieved? Collaboration Companies can access partners databases to retrieve and store standard transactions Commitment EDI fosters true (and strategic) partnership relationships, since it involves a commitment to a long-term investment and the refinement of the system over time Profit The time for collecting payments can be shortened by several weeks, benefiting the recipients of payments Cost saving EDI creates a complete paperless transfer processing environment, saving money and increasing efficiency EDI enables a just-in-time environment, which means lower (or no) inventories for manufacturers

231 EDI Applications Manufacturing - to communicate with suppliers, customers, and other business partners Retailing - to streamline deliveries of goods from the suppliers to the stores and reduce inventories Global trade - to shorten the elapse time by 70% or more and to reduce administrative expenses by 30% Service Industry - used EDI and its companion, electronic funds transfer, for a long time Large trading networks - provide efficient and effective trading environments (e.g. TradeNet)

232 Electronic Funds Transfer (EFT)transfer of money to and from financial institutions using telecommunication networks used as an IOS, a global system, and a communication system among organizations and to individuals fast - reduces delays associated with sending hard-copy documents and it eliminates returned checks security issues - how can a business ensure that a hacker is not bilking corporate accounts by electronically transferring funds to his account, or that competitive snoops are not gaining a complete picture of corporate financial assets?

233 TradeNet (Singapore) Trader(1) Trader fills up Inward declaration form on the terminal. (2) TDB retrieves and approves Inward declaration (It is an import permit). TDB (3) TradeNet automatically forwards approved Inward declaration to Customers Tradenet (4) Customers retrieves and approves Inward declaration (It is a customs permit). (5) Trader prints a form for Customs clearance (trader may inquire status of declaration at any time). (6) Port Authority retrieves data required for delivery of cargo. Port Authority Trader Customers

234 customers, suppliers, contractors, distributors, governmentExtranet A network that links business partners to one another over the Internet by providing access to certain areas of each other’s corporate intranets Components Servers TCP/IP protocols Web browsers as the Internet Structure Extranet Company A Intranet corporate data, , orders, customer data, inventory, documents Company B Other users customers, suppliers, contractors, distributors, government Corporate employees travelling or at home Internet

235 Types of Extranet A company and its dealers, customers, or supplierscentered around one company An industry’s extranet (Trading Network) teamed up and created by the major players in an industry (e.g. the automotive industry) Joint ventures and other business partnerships used as a vehicle for communications and collaboration among several companies partnering in a joint venture

236 Benefits of Extranets (continues …)Fewer help-desk employees are needed Improved quality Lower communications and travel costs Lower administrative and other overhead costs Faster processes and information flow Reductions in paperwork and delivery of accurate information in a timely manner Improved order entry and customer service Better communication

237 Implementing Interorganizational Information SystemSecurity protection mechanisms : firewalls and VPNs Ethical and Societal Issues takes a great risk for its trade secrets, the privacy of the employees and the controlling of some processes Planning complex IT planning when involving several organizations several IT planning teams should be created and supported by , extranets,and groupware

238 What’s in IT for Me? For Accounting For Financeprocedures in multinational corporations and issues in taxation include data collection and transfer and auditing For Finance EDI and EFT have been the pioneering systems for over 20 years; now global financial services and trading For Human Resource Management recruitment, HR development and training in a local and multinational corporations can be improved by using IT

239 What’s in IT for Me?(continued …)For Marketing marketing and sales in global markets can be enhanced by appropriate information systems For Production/Operations Management the logistics systems can be greatly improved by using IOSs For Non-Business everyone will encounter interorganizational systems in almost any organization, public or private

240 CHAPTER 9 FUNCTIONAL AND ENTERPRISE SYSTEMS

241 Learning Objectives Describe the role and characteristics of functional information systems State the objective and operations of transaction processing and how it is supported by IT Discuss the managerial and strategic applications in the accounting and finance areas that are supported by IT Understand the marketing and sales applications provided by IT

242 Learning Objectives (continued …)List the various production and operations management activities and describe how they are supported by IT Discuss the human resources management activities and how they can be improved by IT Discuss the need for integrating functional information systems and describe the role of ERP and supported software such as SAP

243 Chapter Overview Information Systems to Support Business FunctionsCharacteristic of functional Information Systems Functional Support for Managers; Management Transaction Processing Information Systems Tracking Business Transactions Objectives of TPS The Process of TPS Modernized TPS: From Online Processing to Intranet Typical TPS Tasks and Modules Accounting and Finance Systems Financial Planning and Budgeting Investment Management Controls

244 Chapter Overview (continued …)Marketing and Sales Systems Customer Service Telemarketing Distribution Channels Management Marketing Management Ethical and Societal Issues in IT-supported Sales Activities Production and Operations Systems Supply-Chain Management Logistics and Materials Management Planning Production/Operations Automatic Design Work and Manufacturing Human Resources Management Systems Recruitment HRM and Development HRM and Planning Intranet Applications in HRS Integrated Information Systems and Enterprise Resource Planning Why Integrate? How to Integrate? Extreme Integration: Putting it All Together

245 Case : Colonial Building SupplyThe Business Problem Needed a technology to monitor inventory and support-related decisions to provide it with current information about inventory levels and customer buying trends to show the price of the lumber fluctuates daily The Solution integrated system Point-of-sales (POS) terminals with hand-held automatic identification and data collection devices

246 Case (continued…) The Results What have we learned from this case??Lower costs for data entry labor Reduction in inventory and storage space Fast access to information Better customer service Higher employee satisfaction Stay competitive Increase its market share and profitability What have we learned from this case?? The system’s major applications are in logistics IT can be beneficial to a relatively small company An integration includes connection to business partners using the Internet

247 Characteristics of Functional Information SystemsComprises of several smaller information system Specific IS applications can be integrated to form a coherent departmental function system can be completely independent can be integrated across departmental lines Interface with each other to form the organization wide information system Interface with the environment

248 Management Information SystemsProvide routine information to managers in the functional areas Provide information in exception reports and ad hoc (demand) reports Business Transactions TPS Databases Internal, External Reports Scheduled, Exception, Demand, Others Functional applications, DSS Enterprise Application such as EIS A Management Information System Data Warehouse

249 Transaction Processing Information Systemsmajor business processes provide the mission-critical activities transaction may generate additional transaction simple transactions large volume and repetitive transactions Transaction Processing System (TPS) computerized information system supports the transaction processes

250 Characteristics of TPSLarge amounts of data are processed The sources of data are mostly internal, and the output is intended mainly for an internal audience The TPS processes information on a regular basis Large storage (database) capacity is required High processing speed is needed due to the high volume Input and output data are structured High level of detail is usually observable Low computation complexity is usually evident High level of accuracy, data integrity, and security is needed High processing reliability is required Inquiry processing is a must

251 Overview of typical transaction processingTPS (continued…) Customer makes a purchase of an item POS Terminal Transaction File Payment Processing  Queries, Answers Inventory File Sales Files The Items’ Processing System Master Files Report Overview of typical transaction processing

252 and entered automaticallyThe Process of TPS Data are collected and entered automatically Batch Processing Online Processing Hybrid System Modernized TPS: from OLTP to the Internet Online Transaction Processing (OLTP) created on a client/server architecture can save money Internet (Intranet) transaction Processing allow multimedia data transfer, fast response time, and storage of large databases of graphics and videos

253 Accounting & Finance SystemsFinancial Planning and Budgeting Financial and Economic Forecasting much of the interrelated indicators are available on the Internet many software packages conducting forecasting and planning Planning for Cash Management build a decision support model make decisions about when and how much to refinance Budgeting Budget 2000 and Comshare BudgetPlus are available to support budgeting and to facilitate communication among all participants in the preparation process

254 Accounting & Finance Systems (continued …)Major activities STRATEGIC SYSTEMS a. Strategic Planning b. Ratios and Financial Health c. Merger and Acquisition Analysis OPERATIONAL AND TRANSACTION PROCESSING SYSTEMS a. The General Ledger b. Sales Order Processing c. Accounts Payable and Receivable d. Receiving and Shipping e. Payroll f. Inventory Management g. Periodical Reports & Statements INTERNAL ENVIRONMENT Top Management Operation/ Production Marketing HRM Engineering EXTERNAL IRS SEC Vendors Clients CPA Companies Suppliers Customers Business Partners TACTIAL SYSTEMS a. Budgeting Preparation and Control b. Investment Management c. Capital Budgeting d. Cost Analysis and Control e. Tax Management f. Auditing g. Financial Planning

255 Accounting & Finance Systems (continued …)Investment Management Access to financial and economic reports hundreds of sources for the financial and economic reports and news Financial analysis is executed with a spreadsheet program, or with commercially available, ready-made decision support software

256 Accounting & Finance Systems (continued …)Financial Controls Budgetary Controls more sophisticated software attempts to tie expenditures to program accomplishment Auditing auditing software is especially suitable when computerized information systems are audited Financial Health Analysis supported by expert systems Profitability Analysis and Cost Control profitability analysis software allows accurate computation of profitability for individual products and for entire organizations

257 Marketing & Sales SystemsDistribution Channel provide the goods or services to the customer, and may extend through various intermediaries such as wholesalers and retailers Channel Systems support all marketing linkages, such as after-sales customer support

258 Marketing & Sales Systems (continued ...)CHANNEL SYSTEMS Market Intelligence Systems Target Marketing Sales Systems Customer Support Delivery Systems Dealer Systems COMPANY Manufacturing R & D/Design Distribution Accounting/ Finance

259 Marketing & Sales (continued ...)Customer Service Customer Profiles and Preference Analysis IT creates customer database and merges computerized lists Mass Customization Dell computers assembles computers according to the specifications of the buyers J.C. Penny measures you and transfers the data directly to the production floor Targeted Advertisement on the Web match appropriate ads with specific groups of customers Customer Inquiry Systems and Automated Help Desk expert systems and intelligent agents

260 Marketing & Sales (continued ...)Telemarketing Five major activities which are supported by IT : advertisement and reaching customers order processing  customer service sales support  account management Distribution Channels Delivery management DSS models are used to support decisions like use own outlets or distributors, and transportation mode Improving sales at retail stores IT reduces the long lines in stores by reengineering the checkout process

261 Marketing & Sales (continued ...)Marketing Management Pricing of Products or Services - online analytical processing is supporting pricing decisions Salesperson Productivity - sales-force automation provides salespeople in the field with portable computers, access to databases, and to the web Product-Customer Profitability Analysis - a cost-accounting system identifies profitable customers and frequency Sales Analysis and Trends - geographical information system (GIS) analyzes customers and competitors and examines potential strategies New Products, Services, and Market Planning - IT evaluates large number of factors and uncertainties and conducts survey

262 Marketing & Sales (continued ...)Ethical and Social Issues in IT-supported Sales Activities Example of Privacy Policy : 3M Corp. Information Collection personally identifiable information that you voluntarily provide through 3M’s website or correspondence general information (such as the type of browser you use, the files you request, and the domain name and country from which you submit the request for information) Use of Information responding to your inquires tracking orders you place with 3M supplying you with requested information on 3M products

263 Production Operations & LogisticsSupply-Chain Management (SCM) INFORMATION FLOW Supplier Manufacturing Transfer Distribution Transfer Retail Outlet Retail Transfer Consumer Transfer SCM plans and controls the flow of information and cash CASH FLOW

264 Production Operations & Logistics (continues …)Logistics and Material Management Inventory Management determining how much inventory to keep what to order, from whom, when to order and how much inventory model : economic order quantity (EOQ) many low cost commercial inventory software packages Quality Control providing information about the quality of incoming material and parts, as well as the quality of in-process semi-finished, and finished products standard quality control information systems and expert systems

265 Production Operations & Logistics (continues …)Planning Production/Operations Material Requirements Planning (MRP) - facilitates the plan for acquiring parts, subassemblies, or material Manufacturing Resource Planning (MRPII) - connects the regular MRP to other functional areas Just-in-Time Systems - minimizes waste of all kinds, improves processes and systems, and maintains respect for all workers Project Management - Program Evaluation and Review Technique (PERT) and Critical Path Method (CPM) Short-Term Schedules - schedule jobs and employees on a daily or weekly basis

266 Production Operations & Logistics (Continues …)Automatic Design Work and Manufacturing Computer-Aided Design (CAD) enables drawings to be constructed on a computer screen and subsequently stored, manipulated, and updated electronically Computer-Aided Manufacturing (CAM) facilitates planning, operation, and control of production jobs Computer-Integrated Manufacturing (CIM) concept or philosophy about the implementation of various integrated computer systems in factory automation

267 Human Resources Management SystemsRecruitment finding, testing, and deciding which employees to hire Positions inventory matching open positions with available personnel allowing data to be viewed by an employee over the intranet Employee Selection conducting interviews by video teleconferencing expediting the testing and evaluation process, assuring consistency in selection by using expert systems Using the Internet advertising position openings on the Internet

268 Human Resources Management Systems (continued …)Human Resources Maintenance and Development Training and Human Resources Development digital video-editing system - produces training videotapes Performance Evaluation online evaluations - supports many decisions, ranging from rewards to transfer to layoffs expert systems - provide an unbiased and systematic interpretation of performance over time paperless wage system (PWS) - tracks employee review dates and automatically initiates the wage review process Turnover, Tardiness, and Absenteeism Analyses DSS models - identifies causes and patterns

269 Human Resources Management Systems (continued …)Human Resources Management and Planning Personal files and skills inventory - computerized personnel files identify qualified employees within the company for open positions, promotion, transfer, special training programs, and layoffs Benefits administration - Networks and voice technology, or the intranets, specifying the value of each benefit and the available benefits balance of each employee Government reports - Availability of computerized personnel records greatly eases the reporting process Personnel planning - IT is used to collect, update, and process the information Succession planning and implementation - expert systems and personnel databases supporting and implementing planning Labor-Management Negotiations - DSS improve the negotiation climate and considerably reduce the time needed for reaching an agreement

270 Human Resources Management Systems (continued …)Intranet Applications in HRM Edify Corp.’s employee service system Oracle Corp.’s flexible benefits enrollment program on the intranet Aetna health Plan’s online directory of primary care physicians, hospitals, medical services, and health information Apple Computers’ extensive education and development activities on the intranet Merck Inc.’s intranet for HR transactions

271 Integrated Information SystemsReasons for Integration using twentieth-century computer technology, which is functionally oriented : cannot give employees all the information they need do not let different departments communicate effectively with each other in the same language crucial sales, inventory, and production data often have to be painstakingly entered manually into separate computer systems every time a person who is not a member of a specific department needs ac hoc information related to the specific department

272 How to Integrated Information SystemsConnect existing systems maximize the use of existing systems and minimize the changes in them allows the addition of new applications to existing ones and the connection of systems to intranets and the Internet Using supply chain management software use one integrated package in one or several functional areas overcomes the isolation of the traditional departmental structure where the functional areas are separated from one another

273 How to Integrated Information Systems (continued …)Enterprise resource planning (ERP) control all major business processes with a single software architecture in real time increased efficiency to improved quality, productivity, and profitability SAP software (R|3; my SAP.com) crosses functional departments and can be extended along the supply chain to both suppliers and customers composed of four major parts : accounting, manufacturing, sales and human resources

274 ERP SAP concept Sales Offices Central SAP Database & ServersThe factory automati- cally receives the sales order and can begin production. FACTORY The warehouse is si- multaneously informed about the order and can schedule shipping. WAREHOUSE Accounting gets up- dated sales and pro- duction data at every step of the process ACCOUNTING Headquarters can tap into up-to-the-minute data on sales, inven- tory, and production HEAD QUARTERS Central SAP Database & Servers

275 What’s in IT for Me? For Accounting For Finance For MarketingExecuting TPS effectively is a major concern of any accountant For Finance The use of IT helps financial analysts and managers perform their difficult tasks better For Marketing By understanding how ERP software operates, marketing people can greatly improve the software utilization by developing challenging corporate applications

276 What’s in IT for Me? (continued …)For Production/Operations Management Supply chain management and ERP are critical today for any medium and large manufacturing company, and for service organizations such as banks For Human Resources Management IT can improve the efficiency and effectiveness of the HRM activities conducting training on the intranet

277 What’s in IT for Me? (continued …)For Human Resource Management Human resource managers utilize their corporate networks extensively for posting job openings, and use internal corporate networks to publish corporate policies, company newsletters and job openings

278 CHAPTER 10 DATA, KNOWLEDGE, AND DECISION SUPPORT

279 Learning Objectives Describe the concepts of managerial decision making and computerized support decision making Understand the life cycle of processing data into information and knowledge for use in decision support Describe the framework for computerized decision support and the concept of decision support systems Describe executive information systems and group support systems, and analyze their roles in management support Describe data presentation methods and explain geographical information systems as a decision support tool Explain the concepts of knowledge management and organizational databases Describe knowledge discovery, online analytical processing, and data mining

280 Chapter Overview Management and Decision Making The Manager’s JobWhy Managers Need IT Support Data Management Life Cycle The Data Life Cycle Process Data Sources and Collection Data Quality Data Storage and Management Document Management Analytical Processing Decision Support Systems The Decision Support Process Modeling A Framework for Computerized DSS DSS Concepts, Characteristics, and Capabilities Components and Structure of DSS Enterprise Decision Support Executive Information Support Supporting Idea Generation and Creativity Group Decision Support Systems (GDSS) Data Visualisation Technologies Data Visualization Visual Interactive Decision Making Geographical Information Systems Knowledge Management and Organization Knowledge Bases What is knowledge Management? IT Support of Knowledge Management Activities Implementing Management Knowledge Discovery and Analysis The Foundations of Knowledge Discovery Online Analytical Processing Data Mining for Decision Support Ethical and Legal Issues

281 Case: Managing Global Business at 3M CorporationThe Business Problem The company had difficulties responding to new customers and markets in the global economy as each business unit kept separate databases and conducted independent decision support activities The Solution The Company created a global enterprise data warehouse (GEDW) The Results Distributors and retailers, as well as end-users, now receive information in minutes instead of weeks or months, including the delivery of rich multimedia Customers can find all their information in one place Inventories are lower, and better and quicker inventory decisions are made, even in globally remote locations

282 Case (continued…) What have we learned from this case??The case demonstrates the existence of vast amounts of important data in organizations, and the importance of organizing that data for optimum use The case shows the need to share a company’s data internally and with business partners and customers, and to make it available in a format that enables end users to process data quickly The case explains the data warehouse, and its role in supporting managerial decision making

283 Management and Decision Makinga process by which certain goals are achieved through the use of resources Managers - make decisions in every step of the process interpersonal roles : figurehead, leader, liaison informational roles : monitor, disseminator, spokesperson decisional roles : entrepreneur, disturbance handler, resource allocator, negotiator

284 Management and Decision Making (continued …)Why Managers Need IT Support processing information manually is growing increasingly difficult computerized modeling examining numerous alternatives very quickly providing a systematic risk analysis being integrated with communication systems and databases being used to support group work

285 The Data Management Life Cycle ProcessData Sources (databases) End Users: Decision Making and other Tasks; Data Visualization Data Warehouse (storage) Analytical Processing, Data Mining Generate Knowledge Organizational Knowledge Bases Purchased Knowledge Storage Direct Use Data Organization; Storage Use Use of Knowledge

286 The Data Management Life Cycle (continued …)Data Sources and Collection Internal Data - generated by the corporate transaction processing systems, functional user information systems, and other functions and individuals Personal Data - created for IS users or other corporate employees documenting their own expertise External Data - generated outside and organization, but relevant portions of it flow into the organization Methods for Collecting Raw Data manually or by instruments and sensors scanned or transferred electronically in the field; other times from within the organization or from people

287 The Data Management Life Cycle (continued …)Data Quality an extremely important issue since quality determines the data’s usefulness as well as the quality of the decisions based on these data need to be : accurate, secure, relevant, timely, complete, and consistent

288 The Data Management Life Cycle (continued …)Data Storage databases or in data warehouse and data marts Data Management difficulties in data management exponential increases of data with time data collected by several methods and devices various sources of raw data only small portions are relevant an ever-increasing amount of external data different legal requirements relating to data selecting data management tools - a problem data security, quality, and integrity

289 The Data Management Life Cycle (continued …)Document Management Document Management System (DMS) automates the control of electronic documents through their entire life cycle within an organization, from initial creating to final archiving retains an image of an electronic document creates an index of key-words puts the entire document into computer readable format manages (and limits) distribution Functions document identification, storage, and retrieval; tracking version control’ workflow management’ and presentation

290 The Data Management Life Cycle (continued …)Analytical Processing - the activity of analyzing accumulated data work directly with the existing operational systems, using software tools and components known as front-end tools work with the data warehouse

291 Decision Support Systems (DSS)The Decision Support Process  Intelligence Phase Design Phase Choice Phases REALITY Implementation of Solution  SUCCESS FAILURE Verification, Testing of Proposed Solution Verification of the Model Examination

292 DSS (continued …) Modeling in DSS Iconic (scale) models Analog modelsa physical replica of a system, usually based on a different scale form original Analog models a physical model, but the shape of the model differs from that of the actual system Mathematical (qualitative) model models complex relationships and conducts experimentations with them Mental models provide a description of how a person thinks about a situation

293 DSS (continued …) A Framework for Computerized Decision SupportProblem Complexity decision making processes fall along a continuum that ranges from highly structured to highly unstructured decisions Nature of Decisions strategic planning - the long-range goals and policies for resource allocation management control - the acquisition and efficient utilization of resources in the accomplishment of organizational goals operational control - the efficient and effective execution of specific tasks

294 DSS (continued …) Decision Support Framework Type of ControlType of Decision Operational Control Managerial Control Strategic Planning Support Needed Structured Semi-structured Unstructured Accounts Receivable Order entry Production scheduling inventory control Selecting a cover for a magazine, buying software approving loans Support Needed Budget analysis, short-term forecasting, personnel reports, make-of-buy analysis Credit evaluation, Budget Preparation, plan layout, project scheduling, rewarded systems design Negotiating, recruiting and executive, buying hardware, lobbying Financial management , warehouse location, distribution systems Building new plant, mergers and acquisitions, new product planning, compensation planning, quality assurance planning R & D planning, new technology development social responsibility planning MIS MS models F & S models DSS ES Neural Networks MIS, MS MS, DSS, EIS, ES EIS, ES, 1 2 3 4 5 6 7 8 9

295 DSS (continued …) Computer Support for Structured decisionsupport the nine cells, especially to the operational and managerial control type lower-level managers encounter on a regular basis typically have a high level of structure Management Science - adopts the view that managers can follow a fairly systematic process for solving problems Define the problem Classify the problem into a standard category Construct a standard mathematical model Find potential solutions Choose and recommend a specific solution

296 DSS (continued …) Concepts Characteristics and Capabilitiesan approach or a philosophy rather than a precise methodology Characteristics and Capabilities support decision makers at all managerial levels support several interdependent and/or sequential decisions support all phases of decision making and variety of decision-making processes and styles can be adopted over time to deal with changing conditions easy to construct utilize models integrate systems execute sensitivity analysis

297 DSS (continued …) Sensitivity Analysis What-if Analysisthe study of the effect that changes in one or more parts of a model have on other parts of the model What-if Analysis checks the impact of a change in the assumptions or other input data on the proposed solution Goal-seeking Analysis find the value of the inputs necessary to achieve a desired level of output

298 DSS (continued …) Components and Structure of DSS Data Managementincludes the database(s), which contains relevant data for the decision situation User Interface enables the users to communicate with and command the DSS Model Management includes software with financial, statistical, management science, or other quantitative models Knowledge Management supports any of the other subsystems or act as an independent component

299 Enterprise Decision SupportExecutive Information Support Capabilities of EIS Drill down Critical success factors and key performance indicators Status access Trend analysis Ad hoc analysis Exception reporting Intelligent EIS Integration with DSS

300 Enterprise Decision Support (continues …)DSS, EIS, and the Internet The DSS/EIS builder can access Web pages and view data that are related to the DSS project; thus saving time The Web supports interactive DSS-related queries and ad hoc report generation. Users have the capabilities of advanced DSS application without requiring special software

301 Enterprise Decision Support (continues …)Supporting Idea Generation and Creativity Generate ideas or be creative in order to generate alternative solutions for semi structured and unstructured situations Idea-generation software stimulates a single user or a group to produce new ideas, options, and choices encourages and pushes, something like a personal trainer increases the flow of ideas to the user

302 Enterprise Decision Support (continues …)Group Decision Support Systems (GDSS) an interactive computer-based system that facilitates the solution of semi structured and unstructured problems by a group of decision makers supports face-to-face meetings - decision room as well as meetings where members are in different locations to improve the productivity of decision making meetings, either by speeding up the decision-making process or by improving the quality of the resulting decisions, or both

303 Data Visualization Technologiespresents data by technologies such as digital images, geographical information systems, graphical user interfaces, multidimensional tables, and graphs, virtual reality, three-dimensional presentations, and animation allows people to spot problems that have existed for years, undetected by standard analysis methods can be integrated among themselves to create a variety of presentations

304 Data Visualization Technologies (continued …)Visual Interactive Decision Making Visual interactive modeling (VIM) use computer graphic displays to represent the impact of different management or operational decisions on goals such as profit or market share user can intervene in the decision-making process and see the results of the intervention Visual interactive simulation (VIS) the end-user watches the progress of the simulation model in an animated form using graphics terminals users may interact with the simulation and try different decision strategies

305 Geographical Information System (GIS)GIS Categories Surveying and Mapping Design and Engineering Facilities Management GIS Spatial Imaging Function Design and Planning Function Database Management Function Decision Modelling Function Strategic Planning and Decision Making Demographic and Market Analysis Transportation and Logistics

306 GIS (continued …) GIS Applications and Decision Making CompanyWhat the Application Does Helps select new Taco Bell and Pizza Hut restaurants, by combining demographic data and traffic patterns PepsiCo, Inc. Answers such questions as “How many CIGNA-affiliated physicians are within an 8-mile radius of a business?” CIGNA (health insurance) Creates a detailed demographic profile of store’s neighborhood to determine the store’s best product mix Western Auto (a subsidiary of Sears) Supports planning of truck routes Sears, Roebuck & Co. Tracks cancer rate to determine clinics’ expansion strategy and allocation of expensive equipment Health maintenance organizations Maps neighborhoods where temporary workers live; used for locating marketing and recruiting efforts in cities Wood Personnel Services (employment agency) Designs optimal sales territories and routes for their clients, reducing travel costs by 15 percent Wilkening & Co. (consulting services) Maps its entire cellular network to identify clusters of call disconnects and to dispatch technician accordingly CellularOne Corp.

307 GIS (continued …) Emerging GIS Applicationshelp reengineer the aviation, transportation, and shipping industries enables vehicles or aircraft equipped with a GPS receiver to pinpoint their location as they move include railroad car tracking and earth-moving equipment tracking

308 Knowledge Management and Organizational Knowledge BasesWhat is Knowledge Management? Knowledge assets - regarding markets, products, technologies, and organizations that a business owns or needs to own Best practices - collection of the most successful solutions and/or case studies Intellectual capital - collection of knowledge amassed by an organization over the years Knowledge system - collects knowledge, stores it in a database, maintains the database, and disseminates the knowledge to users competitive intelligence - collection of competitive information

309 IT Support of Knowledge Management ActivitiesKnowledge identification - determines what knowledge (information) is critical to decision making Knowledge discovery and analysis - using search engines, databases, and data mining, the proper knowledge must be found, analyzed, and put into proper context Establishment of organizational knowledge bases - it stores organizational knowledge and best practices Knowledge distribution and use - target audiences are defined and technologies are put into place to enable knowledge delivery when needed

310 Implementing Knowledge ManagementReorganize as knowledge-based organizations Created a new position, chief knowledge officer (CKO) crating knowledge management infrastructure build a knowledge culture make it pay off Facilitate organizational learning learn from their experiences in order to survive

311 Knowledge Discovery and AnalysisThe Foundations of Knowledge Discovery identify valid, novel, potentially useful data, and understand patterns in data supported by : massive data collection, powerful multiprocessor computers, and data mining algorithms tools : data warehousing and data access, multidimensionality, data mining, massive databases, and online analytical processing

312 Online Analytical Processing (OLAP)Analysis by end users from their desktop, online Analyze the relationships between many types of business elements Involve aggregated data Compare aggregated data over hierarchical time period present data in different perspectives Involve complex calculations between data elements Respond quickly to users requests

313 Data Mining for Decision SupportData Mining searches for valuable business information in a large database and “mines a mountain for a vein of valuable ore” Two capabilities automated prediction of trends and behaviors automated discovery of previously unknown patterns and relationships

314 Data Mining (continues ...)Data Mining Tools Neural computing learning approach by which historical data can be examined for patterns by a computer Intelligent agents retrieving information from the Internet or from intranet-based databases Association analysis using a specialized set of algorithms that sort through large data sets and expresses statistical rules among items

315 Data Mining (continues ...)Ethical Issues prohibited valuable data-mined information accountability for incorrect decisions human judgment Legal Issues discrimination of age or gender for promotions data security from external snooping or sabotage data ownership

316 What’s in IT for Me? For Accounting For Finance For Marketingplay major role in the justification of the creation of a knowledge base and in its auditing For Finance responsible for justifying major investments can be helped by most DSS applications in financial management and analysis For Marketing use the organization’s knowledge base and will participate in its creation

317 What’s in IT for Me? (continued …)For Production/Operations Management can get help in scheduling, logistics, maintenance For Human Resources Management use the knowledge base to find out how past cases were handled resolve the issue of compensating employees for contributing their knowledge

318 CHAPTER 11 INTELLIGENT SYSTEMS IN BUSINESS

319 Learning Objectives Describe artificial intelligence and compare it to conventional computing Identify the characteristics, structure, benefits,and limitations of expert systems Describe the major characteristics of natural language processing and voice technologies Describe neural computing and its capabilities Define intelligent agents and their role in IT Describe virtual reality

320 Chapter Overview Artificial Intelligence and Intelligent Systemsand Intelligent Behavior Comparing Artificial and Natural Conventional versus Al Computing Commercial Artificial Intelligence Systems Other Intelligence Systems Natural Language Processing and Voice Technology Neural Computing Card-Based Reasoning Fuzzy Logic Expert Systems Concepts of Expert Systems Benefits and Limitations of Processes and Components of Expert Systems Illustrative Applications Expert Systems and the Internet/intranets Virtual Reality: An Emerging Technology What is Virtual Reality? Applications of Virtual Reality? Ethical and Global Issues of Intelligent Systems Ethical and Social Issues Legal Issues Global Aspects of Intelligent Systems Intelligent Agents Characteristics of Applications of

321 Case: Analog Devices Uses Intelligent Systems to Support SalesThe Problem faced a problem of matching products to customers efficiently in the very competitive ICs industry The Solution using an intelligent technology call case-based reasoning to improve the customer-company communication The Results quality of the service makes the difference in this competitive market

322 Case (continued…) What have we learned from this case??how an intelligent system solved a difficult business problem by improving the communication and collaboration between the company and its customers the intelligent system solution was integrated with other information technologies (CD-ROM, Internet, extranet, search engine) as well as with a DSS

323 Intelligent Systems and Artificial IntelligenceArtificial Intelligence (AI) the branch of computer science that deals with ways of representing knowledge, using symbols rather than numbers, and heuristics, or rules of thumb, rather than algorithms for processing information involves studying the thought processes of humans deals with representing those processes via machines objectives: to make machines smarter to understand what intelligence is to make machines more useful

324 Comparing Artificial and Natural IntelligenceAI’s commercial advantages over natural intelligence more permanent less expensive consistent and thorough can be documented ease of duplication and dissemination Natural intelligence’s advantages over AI creative enables people to benefit form and directly use sensory experience enables people to recognize relationships enables people to make use of a wide context of experiences

325 Conventional vs. AI ComputingDimension Artificial Intelligence Conventional Programming Processing Include symbolic conceptualization Primarily algorithmic Nature of input Can be incomplete Must be complete Search approach Frequently uses rules and heuristics Frequently based on algorithms Explanation Provided Usually not provided Focus Knowledge Data, Information Maintenance and update Relatively easy changes can be made in self-contained modules Usually difficult Reasoning capability Yes No

326 Commercial AI Systems Expert systems (ESs) Natural language technologySpeech (voice) understanding Robotics and sensory systems Computer vision and scene recognition Intelligent computer-aided instruction (ICAI) Machine learning Handwriting recognizers

327 Expert Systems Expertise is transferredfrom an expert to a computer and it is stored there The computer can make inferences and arrive at a conclusion Users can call on the computer for specific advice as needed The computer program advises the nonexperts and explains, if necessary, the logic behind the advice

328 Benefits of Expert SystemsIncreased output and productivity Increased quality and reliability Capture of scarce expertise Ability to operate in hazardous environment Improved customer service Human-like intelligence Fault tolerance Complex problem solving and decision making Training capabilities Reduction of cycle time and downtime

329 Limitations of Expert SystemsLimited expertise No single correct solution Natural cognitive limits Narrowly defined subject areas Occasional incorrect recommendations Limited vocabulary or jargon Cost Lack of trust by end users Biases Liability issues

330 The Process of ES Consultation Environment Development EnvironmentUser interface Recommended action Explanation facility Inference engine draws conclusions Blackboard (workplace) Knowledge refinement Expert and documented knowledge engineer Knowledge bases Facts:What is know about the domain area Rules: Logical reference Knowledge acquisition Facts about the specific incident Consultation Environment Development Environment

331 The Components of ES The knowledge base contains knowledge necessary for understanding, formulating, and solving problems The Blackboard is an area of working memory set aside for the description of a current problem The inference engine is essentially a computer program that provides a methodology for reasoning and formulating conclusions The user interface in ES allows for user-computer dialog usually presented as questions and answers, and sometime supplemented by graphics The explanation subsystem can trace responsibility for conclusions to their source

332 ESs and the Internet/IntranetExpert Systems provide knowledge and advice to large numbers of user Net provide the opportunity to disseminate expertise and knowledge to mass audiences Support

333 Other Intelligent SystemsNatural Language Processing (NLP) Communicating with a computer in English or whatever language you may speak, instead of commands Voice Technology Voice (speech) recognition and understanding allows users to communicate with a computer by speaking to it Voice synthesis the technology by which computer ‘speak’

334 Other Intelligent Systems (continued …)Neural Computing or Artificial Neural Network (ANN) emulates a biological neural network receives information from other neurons or from external sources, transform the information, and pass it on to other neurons or as external outputs value : useful for pattern recognition, learning, and the interpretation of incomplete inputs

335 Other Intelligent Systems (continued …)Case-Based Reasoning (CBR) basic idea: adapt solutions that were used to solve old problems and use them to solve new problems an extremely effective approach in complex cases used by itself or it can be combined with other reasoning paradigms used to facilitate and expedite knowledge acquisition and information system development, enhance learning and training, and generate explanations to users of systems

336 Other Intelligent Systems (continued …)Fuzzy Logic deals with uncertainties by simulating the process of human reasoning, allowing the computer to behave less precisely and logically than conventional computers do rationale : not always a matter of true or false or black and white creative decision-making processes are often unstructured, playful, contentious, and rambling

337 Intelligent Agents (IA)Characteristics of Intelligent Agents capability to work on their own (autonomy) exhibition of goal-oriented behavior transportable over networks (mobility) dedication to a single repetitive task ability to interact with humans, systems, and other agents inclusion of knowledge base ability to learn

338 Applications of IA Application Description User interface agentsMonitor usage and suggest improvement. Operating systems agents Add accounts, do group management, manage access, add/remove programs and devices, monitor licenses. Spreadsheet agents Offer suggestions for improvements. Can tutor novice users. Workflow and task management agents Administer workflow management - monitor activities, alert, and remind. Software development agents Assist in routine activities such as data filtering.

339 Virtual Reality (VR) : Emerging TechnologyWhat Is Virtual Reality (VR)? most common definitions : interactive, computer-generated, three-dimensional graphics, delivered to the user through a head-mounted display technical definitions : environment and/or technology that provides artificially generated sensory cues sufficient to engender in the user some willing suspension of disbelief

340 Applications of VR Application Description ManufacturingWorker training Design, testing, and virtual prototyping of products and processes Engineering and ergonomic analysis Simulation of assemble, production, and maintenance Transportation Virtual aircraft mock-ups New-car design and testing of cars in virtual accidents Finance View stock prices and characteristics Architecture Display of building and other structures Military Training and battlefield simulation Medicine Training of surgeons and planning surgeries Planning physical therapy Marketing Store and product display Electronic shopping

341 Ethical and Global IssuesEthical and Society Issues Related to Intelligent Systems The Laws of Robotics Hal and Dave computer may refuse human orders Virtual Reality peoples’ behavior in a world where the distinction between the real and the virtual is unclear Privacy

342 Ethical and Global Issues (continued …)Legal and ethical Issues what is the value of an expert opinion when the expertise is encoded in a computer? who owns the knowledge in a knowledge base? should royalties be paid to experts who provide the knowledge to ES, and if so how much? can management force experts to contribute their expertise? who is an expert? what if several experts disagree?

343 Ethical and Global Issues (continued …)Global Aspects of Intelligent Systems Foreign trade Advising companies on how to exploit opportunities related to the NAFTA agreement Foreign exchange transactions FS System advises on trading currencies of various nations Employee training Intelligent systems cut the time to train employees online before they go to a foreign country Weather forecasting Climatic expert systems provide long-range climate forecasts Automatic language translations Intelligent systems translate languages, including voice in telephone conversations

344 What’s in IT for Me? For Accounting For FinanceIntelligent systems are used extensively in auditing to uncover irregularities, uncover and prevent fraud For Finance Intelligent systems can facilitate the use of spreadsheets and other computerized systems used in finance; and can help in reducing fraud in credit cards, stocks, and other financial markets

345 What’s in IT for Me? (continued …)For Marketing Intelligent systems are partially useful in mining customer databases and predicting customer behavior For Production/Operations Management Expert systems were developed for tasks ranging

346 What’s in IT for Me? (continued …)For Human Resource Management Intelligent agents can find resumes of applicants posted on the Web and sort them to match needed skill and can facilitate training and to manage fringe benefits programs Expert systems are used in evaluating candidates Neural computing is used to predict employee performance on the job and to pre

347 CHAPTER 12 ELECTRONIC COMEMRCE

348 Learning Objectives Describe electronic commerce, its dimensions, benefits, limitations, and process Describe the major applications of electronic commerce, both business-to-customer and business-to-business Discuss the importance and activities of market research and customer service Describe the electronic commerce infrastructure and support services Compare the various payment systems and describe the role of smart cards Discuss legal and other implementation issues

349 Case : Intel Corporation Embracing the WebThe Business Problem Intense competition in the ICs market Orders from thousands of customers, distributors and business partners worldwide were received by fax and phone; errors, delays, high cost The Solution E-customer service E-selling E-purchasing E-business programs using extranet and EDI

350 Case (continued…) The Results What have we learned from this case??Enhances competitive advantage by giving customers better tools for managing transactions The system brings substantial saving to Intel What have we learned from this case?? Illustrates a new and effective way for conducting business Demonstrates that electronic commerce involves not just selling electronically, but also providing customer service and improving organization’s internal business processes

351 Definitions Business-to-business EC Business-to-consumer ECtwo (or more) businesses make transactions electronically major benefits include: reduced cost, reduced cycle time, increased customer base and sales, and improved customer service Business-to-consumer EC companies sell directly to consumers over the Internet major benefits include increased revenues, the creation of new sources of revenues, and the elimination of costly intermediaries Intrabusiness transactions take place within an organization major benefits include increased productivity, speed, and quality and reduced cost

352 Definitions (continued…)Electronic Business (E-business) a broad definition of EC, not just buying and selling, but also servicing customers, collaborating with business partners, and conducting electronic transactions within an organization all about time cycle, speed, globalization, enhanced productivity, reaching new customers, and sharing knowledge across institutions for competitive advantage a very diverse and interdisciplinary topic, with issues ranging form technology, addressed by computer experts, to consumer behavior, addressed by behavioral scientists and marketing research experts

353 History and Scope History Scope Began in the early 1970sinnovations such as electronic transfer of funds (EFT) were limited to large corporations and a few daring small businesses Electronic Data Interchange (EDI) added other kinds of transaction processing and extended the types of participating companies Over the last five years innovative applications, from advertisement to auctions and procurement Scope home banking, shopping in electronic stores and malls, buying stocks, finding a job, conducting an auction, collaborating electronically with business partners around the globe, and providing customer service

354 A Framework for EC Management Infrastructure People: Buyers, Sellers,Electronic Commerce Applications • Direct Marketing • Stocks, Jobs • On-line banking • Procurement and purchasing • Malls • Procurement • Auctions • Travel • On-line publishing • Customer Services • Intrabusiness Transactions People: Buyers, Sellers, Intermediaries, Services, IS People and Management Public Policy : Taxes, Legal, Privacy Issues, Regulations, and Technical Standards Marketing and Advertisement: Market Research, Promotions, and Web content Supply Chain: Logistics and Business Partners Infrastructure (1) Common business services infrastructure (security, smart cards/authentication electronic payments, directories/catalogs (2) Messaging and information distribution infrastructure (EDI, , Hyper Text Transfer Protocol, Chat Rooms) (3) Multimedia content and network publishing infrastructure (HTML, JAVA, World Wide Web, VRML) (4) Network infrastructure (Telecom, cable TV wireless, Internet) (VAN, WAN, LAN, Intranet, Extranet) Access (cell phones) (5) Interfacing (The databases, logistics, customers, and applications) Management

355 Benefits of EC to OrganizationsExpands a company’s marketplace to national and international markets Allows a vendor to reach a large number of customers, anywhere around the globe, at a very low cost Enable companies to procure material and services from other companies, rapidly and at less cost Shortens or even eliminates marketing distribution channels; marketing products cheaper and vendors’ profits are higher Decrease the cost of creating, processing, distributing ,storing, and retrieving paper-based information Allows lower inventories by facilitating “pull”-type supply chain management, which starts from customer orders and uses just-in-time production and delivery processing Reduces the time between the outlay of capital and the receipt of products and services Lowers telecommunications costs because the Internet is much chapter than value-added networks (VANs) Helps small businesses compete against large companies Enables very specialized markets (e.g.

356 Benefits of EC to ConsumersFrequently provides less expensive products and services by allowing consumers to shop in many places and conduct online quick comparisons Gives consumers more choices - they can select from many vendors and many more products than they could locate otherwise Enables customers to shop or make other transactions 24 hours a day, year round, from almost any location Delivers relevant and detailed information in seconds, rather than in days or weeks Enables consumers to get customized products, from PCs to cars, at competitive or bargain prices Makes possible virtual auctions, in which consumers can find unique products and collectors’ items that might otherwise require them to travel long distances to a particular auction place at a specific time Allows consumers to interact with other consumers in electronic communities and to exchange ideas as well as compare experiences

357 Benefits of EC to SocietyEnables more individuals to work at home and to do less traveling, resulting in less traffic on the roads and lower air pollution Allows some merchandise to be sold at lower prices, so less affluent people can buy more and increase their standard of living Enables people in less developed countries and rural areas to enjoy products and services that otherwise are not available to them Facilitates delivery of public services, such as government entitlements, reducing the cost of distribution and fraud, and increasing the quality of the social services, police work, health care and education

358 Technical Limitations of ECLack of universally accepted standards for quality, security, and reliability Insufficient telecommunications bandwidth Still-evolving software development tools Difficulties in integrating the Internet and EC software with some existing (especially legacy) applications and databases There is a need for special Web servers in addition to the network servers (added cost) Internet accessibility is still expensive and/or inconvenient for many people

359 Non-Technical Limitations of ECMany legal issues are yet unresolved Lack of national and international regulations and standards for many circumstances Difficulty in measuring benefits of EC, such as Web advertising. Lack of mature methodologies for justifying EC Distrust of the new: Many sellers and buyers are waiting for EC to stabilize before they take part Customer resistance to the change from a physical to virtual stores Perception that electronic commerce is expensive and unsecured, so many do not want even to try it Insufficient number (critical mass) of sellers and buyers which needed for profitable EC operations

360 Electronic Retailing and MallsElectronic Commerce enables consumers to buy from home 24 hours a day, 7 days a week Electronic Commerce offers consumers a wide variety of products and services, including the most unique items, usually at lower prices Consumers can easily search for what they really want to buy, not just what is shown on television or in paper catalogs Consumers can get very detailed information on products, in seconds, and can easily search for and compare competitors’ products and prices Consumers can reduce (or eliminate) the pile of paper catalogs

361 Electronic Retailing Direct sale (business to consumers) through electronic storefronts or malls, usually designed around an electronic catalog format Solo storefronts maintain their own Internet name and Web site may or may not be affiliated with electronic malls may be extensions of a physical store, or it is a new businesses started by entrepreneurs who saw a niche on the Web can be found easily on the Internet - directories and hyperlinks from other Web sites and intelligent agents

362 Electronic Malls (Cybermall)A collection of individual shops under one Internet address Vendors that locate in brick-and-mortar shopping malls, or locate themselves in a virtual mall, give up a certain amount of independence Success depends on the popularity of the entire collection of stores as well as on its own efforts Malls generate streams of prospective customers who otherwise might never have stopped at the store

363 The Process of Electronic Shopping363 Introduction to Information Technology Turban, Rainer and Potter Chapter 12 Electronic Commerce The Process of Electronic Shopping  A user gains access to an online service or the internet and goes to a merchant’s Web site. He may know the address, find it in another Web site (refer to it by a search engine), or find it by browsing.  Customer service is established. Product may be returned or exchanged, for example maintenance information may be found on the Web site as needed.  Shipment is made, if needed, or permission to download products from the Internet is granted. Warranty is established.  The user enters the merchant’s storefront and goes to the product displays.  If the user does not find anything of interest, or want to do more shopping he or she may browse some additional merchant storefronts to search for the desired products or services.  The payment authorization is either approved or denied. If denied, the user is prompted for another form of payment .If approved, the transaction is executed.  When the user does find something of interest, he or she may elect to purchase it online. To finalize the decision, the user may need more information that can be found on the Web pages or obtained by .  When the user is ready to pay he is advised about the payment options the user makes a section and provides payment information (e.g., the credit care number)  The item is typically stored in a shopping cart. This allows the user to continue looking through this store, or even to visit other merchants, before paying for the items.  At any time, the user can review the items in the shopping cart and change quantities or delete items, This review continues until a final selection is made.

364 Advertising Online Advertisement Internet Advertisementan attempt to disseminate information in order to attract buyers Internet Advertisement can be updated any time at a minimal cost and therefore can always be timely can reach very large numbers of potential buyers, all over the world can be cheaper can efficiently use the convergence of text, audio, graphics, and animation can be interactive and targeted to specific interest groups and/or individuals

365 Advertising Methods Banners - Electronic Billboardsthe most commonly used form of advertising on the Internet, links to advertiser's site contains a short text or graphical message to promote a product or a vendor Keyword banners appear when a predetermined word is queried from the search engine effective for companies who want to narrow their target to consumers interested in particular topics Random banners appear randomly might be used to introduce new products to the widest possible audience, or to keep a well-known brand in the public memory

366 Advertising Methods (continued …)- emerging as an Internet advertising and marketing channel that permits cost-effective implementation and a better and quicker response rate than other advertising channels marketers develop or purchase a list of addresses marketers employing must take a long-term view and work towards the goal of motivating consumers to continue to open and read messages they receive marketers must decide what portion of their target market can be reached by and must supplement existing database information with data relevant to campaigns marketers should integrate inbound customer service with their outbound marketing efforts marketers must develop -specific editing skill and the ability to deliver multimedia-rich

367 Advertising Issues Customizing Ads - Filtering the Irrelevant Information BroadVision : One-to-One system/ads allows the rapid creation of secure Web sites that are visitor-friendly, using a customer database, with registration data and information gleaned from site visits Webcast : push technology delivers only the information users want or need users get the information they want; at the same time they also get the banner ads related to that information marketers will get a more customized audience if they place banners on a system that delivers via push technology

368 Advertising Issues (continued …)Attracting Visitors to a Site Making the top list of a search engine the search engine’s spider crawls through the submitted site, following and indexing all related content and links a company can get to the top of a search engine’s list by adding, removing, or changing a few sentences Online events, promotions, and attractions people generally like the idea of something funny or something free (or both) contests, quizzes, coupons, and free samples are an integral part of Internet commerce as much, or even more than, they are of offline commerce designed to attract visitors and to keep their attention

369 Advertising Issues (continued …)Attracting Visitors to a Site (CONT’) ATTRACTION HOW IT WAS USED Give away games and discount contests. Also, games sponsored by multiple companies Yoyodyne Inc. sponsors games and contests to get users to read product information of advertisers, ranging form Major League Baseball to Sprint Communication. In one contest, tax-preparer H&R Block paid $20,000 towards the winner’s federal taxes. Free Internet access Netzero and other offer this in exchange for viewing ads Personal, nonautomated selling uses real people to help you online. connects a sales rep with a customer over the phone and then “pushes” material and ads to your computer Monetary payment Cybergold (www.cybergold.com), Goldmine (www.goldmine.com), and others connect users with advertisers who pay them real money to read ads and explore the Web Sweepstakes Netstakes runs sqeepstakes that requires no skills. Users register only once and can randomly win prizes in different categories (see The site is divided into channels, and each channel has several sponsors. The sponsors pay Netstakes to send traffic. Netstakes runs online ads, both on the Web and in many lists that people request to be on.

370 Advertising Issues (continued …)Profiling Customers Using Intelligent Agents Product brokering some companies collect information about consumers for the purpose of creating a customer’s profile with this profile, the company can tailor ads to the specific customers, or offer them product information Example - Fujitsu’s agents profile consumers : is using a new agent-based technology called Interactive Marketing Interface (iMi) that allows advertisers to interact directly with targeted customers personal profiles submitted to iMi by consumers product announcements, advertisements, and marketing surveys are sent to customers via based on their profiles by answering marketing surveys or acknowledging receipt of advertisements, consumers earn iMi points, redeemable for gift certificates and phone cards

371 Electronic Catalogs On CD-ROM and On the Webcan be searched quickly with the help of special search engines effective comparisons involving catalog products customized catalogs a catalog assembled specifically for a company, usually for a regular customer of the catalog owner can be tailored to individual consumers let the system automatically identify customer characteristics based on their transaction records involve cookie technology and data mining technology

372 Advertising Online Interactive Advertising and Marketingadvertisers present customized, one-on-one advertising, which is followed by sales interactive : the ability to address an individual, to gather and remember that person’s response, and to serve that customer based on his or her previous, unique responses Coupons Online consumers can gather any discount coupons they want by accessing sites like or selecting the store where they plan to redeem the coupons

373 Services Online Cyberbankingnames : electronic banking, virtual banking, home banking, and banking online capabilities ranging form paying bills to securing a loan for customers : saving time and convenience for banks : offering an inexpensive alternative to branch banking and a chance to enlist remote customers

374 Services Online (continued…)Cyberbanking (CONT’) SFNB puts security first the first virtual bank offering secure banking transactions on the Web Hong Kong Bank grows without branches using HEXAGON, the bank has leveraged its reputation and infrastructure in the developing economies of Asia to become a major international bank rapidly Mark Twain supports foreign currency trading using electronic cash to support trading in 20 foreign currencies

375 Services Online (continued…)Online Stock Trading an online trade typically costs between $5 and $30, compared to an average fee of $100 from a full-service broker and $25-50 from a discount broker no waiting on busy telephone lines small chance of making mistakes which are made in oral communication orders can be placed from anywhere, any time can find considerable amount of information regarding investing in a specific company or in a mutual fund

376 Services Online (continued…)The Online Job Market Job seekers can reply to employment ads online can take the initiative and place resumes on their own home pages or on others’ Web sites, send messages to members of newsgroups asking for referrals, and use recruiting firms Job offerers advertise openings on their Web site use sites ranging form Yahoo!, to online services, bulletin boards, and recruiting firms Recruiting firms use their own Web pages to post available job descriptions and advertise their services in electronic malls and in other Web sites Newsgroups jobs in a certain category or location are posted, discussions are conducted, and resumes can be sent

377 Services Online (continued…)Travel Internet is an ideal place to plan, explore, and arrange almost any trip potential savings are available through special sales, auctions, and the elimination of travel agents allows to purchase airline tickets, reserve hotel rooms, and rent cars supports an itinerary-based interface ,including a fare-tracker feature links to weather sites, currency converters, adventure magazines, and chat forums, where users can share travel tips allows to set a price that people are willing to pay for an airline ticket or hotel accommodations, and the company then attempts to find a vendor for that price (www.priceline.com)

378 Services Online (continued…)Real Estate consumers can view many properties on the screen, saving time for themselves and the brokers consumers can sort and organize properties according to their criteria and preview the exterior and interior designs of the properties, shortening the search process consumers can find detailed information about the properties and frequently get even more details than brokers usually provide homebuilders now use virtual reality technology on their Web sites to demonstrate three-dimensional floor plans to potential home buyers

379 Services Online (continued…)Auctions Specialized auction sites ( ) Auctioning cars to dealers ( ) Art auctions ( & ); collectors’ items ( ) Airlines ( & ) Bartering the exchange of goods and/or services without a monetary transaction ( )

380 Business-to-Business ApplicationsProduct - specifications, prices, sales history Customer - sales history and forecasts Supplier - product line and lead times, sales terms and conditions Product process - capacities, commitments, product plans Transportation - carriers, lead times, costs Inventory - inventory levels, carrying costs, locations Supply chain alliance - key contracts, partners’ roles and responsibilities, schedules Competitor - benchmarking, competitive product offerings, market share Sales and marketing - point-of-sale (POS), promotions Supply chain process and performance - process descriptions, performance measures, quality, delivery time, customer satisfaction

381 Seller-Oriented MarketspaceOrganizations attempt to sell their products (services) to other organizations electronically (e-selling) The buyer is expected to visit the seller’s site or a mall, view catalogs, and place orders The buyer is an organization that may be a regular customer of the sellers Key Mechanisms : electronic catalog that can be customized for each large buyer, the ordering system, the payment system, and the integration of the incoming orders with the vendor’s logistics system EC is used to increase sales, reduce selling expenditures, increase delivery speed, and reduce administrative costs

382 Buyer-Oriented MarketspaceEC technology is used to reduce both the cost of items purchased and the administrative cost of procurement Request For Quotation (RFQ) on Buyer’s Web Site businesses submit bids electronically, and the bids are routed via the buyer’s intranet to the engineering and finance departments for an evaluation clarifications are made via the winner is notified electronically saves percent on the cost of the items placed for bid saves up to 85 percent on the administrative cost saves about 50 percent on cycle time known as e-purchasing or e-procurement

383 Intermediary-Managed MarketspaceElectronic Intermediaries A link between buyers and sellers Main function : market making PART - about 300 parts suppliers and dozens of airlines participate (by Boeing Aircraft Corp.) ProcureNet - more than 150,000 products, known as MROs (maintenance, repairs, and operations) Some of the online services make money, some of them only improve service for customers

384 Customers and Their BehaviorExamples of the importance of learning about customers Peapod providing supermarket products online the company was still incurring losses in 2000 problems : small customer base customers like to see and feel items before they buy them Amazon selling books published by others assesses the potential customers’ reaction, and correctly predicts books to be a desirable items for online sale

385 Market Research : Behavioral ModelPersonal Characteristics Age, Gender, Ethnicity, Education, Lifestyle, Psychological, Knowledge, Values, Personality Environmental Characteristics Social, Family, Communities Stimuli Marketing Price Promotion Product Quality Others Economical Technology Political Cultural Buyers’ Decisions Buy or Not What to Buy Where (Vendor) When How Much to Spend Repeat Purchases Decision Making Process Vendors’ Controlled Systems Logistic Support Payments, Delivery Technical Support Web Design, Intelligent Agents Customer Service FAQs, , Call Centers, One-to-One

386 Market Research (continued …)To find out what motivates consumers to buy To developed models that explain consumer behavior regarding purchasing decisions To identify new markets To investigate competitors and their products To test consumer interest in new products To help one-to-one marketing (allows one-to-one personal contact with customers, and provides marketing organizations with greater ability to understand consumers, the market, and the competition)

387 Market Research (continued …)Asking Customers What They Want interacting directly with consumers filling in electronic questionnaires vendors need to use inducements to motivate consumers to participate and be honest learning what consumer want from the directly obtained answers trying to infer from consumers’ preferences on other preferences

388 Market Research (continued …)Tracking Customer Activities on the Web observing consumers’ behavior on the internet site-tracking services, based on cookies or other approaches one of the most interesting tools for tracking customers on the Internet as well as helping them to shop with intelligent agents possible invasion of privacy

389 Electronic Commerce AgentsIntelligent agents computer programs that conduct routing tasks, search and retrieve information ,support decision making, and act as domain experts sense the environment and act autonomously without human intervention Software agents with no intelligence Learning agents exhibit some intelligent behavior

390 EC Agents (continued …)Intelligent agents for information search and filtering help to determine what to buy to satisfy a specific need Personalogic uses filtering process - consumers specify requirements and constraints, and the system returns a list of products that best meet the desired product Firefly used (until recently) a collaborative filtering process that can be described as “word of mouth” to build the profile (not available any more) its Passport generates a customer’s personal profile

391 EC Agents (continued …)Intelligent agents for Product and Vendor Finding help consumers decide where to buy by comparing merchants’ offers Bargainfinder from Andersen Consulting queried the price of a specific CD from a number of online vendors and returned the list of vendors and prices (Not in use any longer) Jango form NetBot/Excite originates the requests form the user’s site instead of Jango’s, so vendors can not block it Kasbah from MIT Laboratories allows users who want to sell or buy a product, assign the task to an agent that is sent out to actively seek buyers or sellers

392 EC Agents (continued …)Negotiation Agents help to take away some of the frustration some customers experience in the negotiating process and the technical limitations of being in different locations AuctionBot allows users create auction agents by specifying a number of parameters that vary depending on the type of auction selected Kasbah allows users create agents for the purpose of selling or buying process uses a number of different parameters: price, warranty, delivery time, service contracts, return policy, loan option, and other value-added services

393 Organizational BuyersMake purchase decisions in business-to-business situations More formalized purchasing decision The purchasing process may be more important than advertising activities in swaying purchase decisions Decisions may be made by a group

394 Customer Service Phases in the Customer Service Life CyclePhase 1 : Requirements assisting the customer to determine needs Phase 2 : Acquisition helping the customer to acquire a product or service Phase 3 : Ownership supporting the customer on an ongoing basis Phase 4 : Retirement helping the client to dispose of a service or product

395 Customer Service (continued …)Facilitating Customer Service Personalized Web pages - customers build individualized pages at the vendor’s site Chat rooms - customers can interact with each other and with vendor’s personnel who monitor the chat room - send confirmations, product information, and instructions to customers FAQs - provide online answers to questions customers ask most Tracking capabilities - enable customers to track the status of their orders, services, or applications Web-based call centers - a comprehensive communication center takes customers’ inquiries in any form they come and answers them quickly

396 EC Infrastructure COMPONENT DESCRIPTION AND ISSUES Networks Web seversA shift from VANs to the Internet. Increased use of VPNs (virtual private networks) to enhance security and capabilities over the Internet. Web severs Special Web servers are usually superior to dual-purpose servers. Available for rent. The interface to legacy systems may be a problem Web server support and software 1. Web site activity tracking. 2. Database connectivity. 3. Software for creating electronic forms. 4. Software for creating chat rooms and discussion groups. Electronic catalogs Product description, multimedia use, customized catalogs, inclusion in Web site design and construction, templates for construction. Web page design and construction software Web programming languages (HTML, JAVA, VRML, XML) Transactional software 1. Search engines for finding and comparing, products. 2. Negotiating software. 3. Encryption and payment. 4. Ordering (front office) inventory and back office software. Internet access components TCP/IP package, Web browsers, remote access server, client dial-in software, Internet connection device, leased line connection, connection to leased line, Internet kiosks Others Firewalls, , HTTP (transfer protocols), smart cards

397 Electronic Payment SystemsElectronic credit cards Payments using unencrypted credit card the buyer s her or his credit card number to the seller on the Internet risk here is that hackers will be able to read the credit card number Encrypted payments using public/private key encryption, credit card details can be encrypted for better security this can be done by simply using the SSL protocol in the buyer’s computer

398 Electronic Payment Systems (continued …)Electronic checks secured by public-key cryptography and may be suitable for some micropayments Step 1 : the customer establishes a checking account with a bank Step 2 : the customer contacts a seller, buys a product or a service, and s an encrypted electronic check signed with a digital signature Step 3 : the merchant deposits the check in his or her account: money is debited in the buyer’s account and credited to the seller’s account

399 Electronic Payment Systems (continued …)Electronic cash in your PC Step 1 : the customer opens an account with a bank and receives special software for his or her PC Step 2 : the customer buys “electronic money” from the bank by using the software Step 3 : the bank sends an electronic money note to this customer, endorsing it with a digital signature Step 4 : the money is stored on the buyer’s PC and can be spent in any electronic store that accepts e-cash Step 5 : the software is also used to transfer the e-cash from the buyer’s computer to the seller’s computer Step 6 : the seller can deposit the e-cash in a bank, crediting his or her regular or electronic account, or use the e-cash to make a purchases elsewhere

400 Electronic Payment Systems (continued …)Electronic payment cash (Smart Cards) with e-cash credit cards using magnetic strips contain only limited information , such as the card’s ID number cards to pay photocopies in the library, or to pay telephone calls storing a fixed amount of prepaid money card used by New York Metropolitan Transportation Authority (MTA) in buses, trains, interstate toll bridges, and tunnels cards containing microprocessor storing a considerable amount of information (more than 100 times more than a regular credit card) and allowing money to be stored in quantities that can be decreased as well as increased

401 Security Security RequirementsAuthentication - the buyer, the seller, and the paying institutions must be assured of the identity of the party with whom they are dealing Integrity - it is necessary to assure that data and information transmitted in EC, such as orders, reply to queries, and payment authorization, are not accidentally or maliciously altered or destroyed during transmission Non-repudiation - merchants need protection against the customer’s unjustifiable denial of placing an order; buyer needs protection against the vendor denial of shipment, or sending wrong order Privacy - many customers want their identity to be undisclosed Safety - customers want to be sure that it is safe to provide a credit card number on the Internet

402 Security (continued …)Security Protection Encryption - a process of making messages indecipherable except by those who have an authorized decryption key Single-key encryption the sender of the electronic message (or payment) encrypted the information with a key the receiver used an identical key to decrypt the information to a readable form the same code had to be in the possession of both the sender and the receiver problems : if a key were transmitted and intercepted illegally, it could be used to read all encrypted messages or to steal money

403 Security (continued …)Security Protection : Encryption (continued …) Public/private key encryption uses two different keys - public key and private key several authorized people may know the public key, but only its owner knows the private key every person has one private key and one public key encryption and decryption can be done with either key if encryption is done with the public key, the decryption can be done only with the private key and vice versa

404 Security (continued …)Security Protection :Encryption (continued …) Public/private key encryption Message Text Sender Receiver Encryption Decryption Public Key of Recipient Private Key of Signature Private Key of Sender Public Key of Sender Ciphered

405 Security (continued …)Security Protection : Protocols Secure Socket Layer (SSL) the most common protocol used in EC main capability is to encrypt messages Secure Electronic Transaction Protocol (SET) the major proposed standard for credit card processing allows consumers to shop anywhere as conveniently and securely as possible by incorporating digital signatures, certification, encryption, and an agreed-upon payment gateway

406 Market Practices Fraud on the Internetinternet fraud and its sophistication have grown as much and even faster than the Internet itself stocks manipulations, selling bogus investments and phantom business opportunities examples: stock promoters falsely spread positive rumors about the prospects of the companies they touted the information provided might have been true, but the promoters did not disclose that they were paid to promote the companies

407 Buyer Protection Tips for safe electronic shopping include:look for reliable brand names at sites like Wal-Mart Online, Disney Online, and Amazon.com search any unfamiliar selling site for company’s address and phone and fax number check out the seller with the local Chamber of Commerce and/or Better Business Bureau investigate how secure the seller’s site is by reading the posted privacy notice, and evaluate how well the site is organized examine the money-back guarantees, warranties, and service agreements compare prices to those in regular (suspect the too cheap sites) ask friends what they know about the vendor find out what your rights are in case of a dispute consult the National Fraud Information Center check for a listing of useful resources

408 Seller Protection Be protected against consumers who refuse to pay or pay with bad checks and buyers’ claims that the merchandise did not arrive Be protected against the use of their name by others as well as use of their unique words and phrases, slogans and Web address Have legal recourse against customer who download copyrighted software and/or knowledge and sell it to others

409 Ethical Issues Privacy The Human Element Web Trackingmost electronic payment systems know who the buyers are; therefore, it may be necessary to protect the buyers’ identity The Human Element the technology is new to many IS directors and employees and so many require new sets of skills Web Tracking by using sophisticated software it is possible to track individual movements on the internet Disintermediation the use of EC may result in the elimination of some of a company’s employees as well as brokers and agents

410 Legal Issues Domain Names Taxes and Other Fees Copyrightseveral companies that have similar or same names (in different countries) compete over a domain name that is not a registered trademark Taxes and Other Fees particularly complex for interstate and international commerce (A tax moratorium until October 2001) Copyright intellectual property is protected by copyright laws and cannot be used freely

411 What’s in it for Me? For Accounting For Finance For MarketingThe implications of replacing paper documents by electronic may impact many of the accountants’ tasks, especially the auditing of EC activities and systems For Finance The world of banking ,stocks, and commodities markets, and other financial services are being reengineered due to EC For Marketing The revolution is affecting many marketing theories, ranging form consumer behavior to advertisement strategies

412 What’s in IT for Me? (continued …)For Production/Operations Management EC is changing the manufacturing system form a product-push mass production to an order-pull mass customization For Human Resource Management Modern HRM has tremendous opportunities to exploit Internet capabilities to improve the productivity of HRM personnel, recruit and maintain top employees, and increase job satisfaction to very high levels

413 CHAPER 13 STRATEGIC INFORMATION SYSTEMS AND REORGANIZAITON

414 Learning Objectives Describe strategic information systems and explain their advantages Describe Porter’s competitive forces model and how IT helps improve competitiveness Describe representative strategic information systems and the advantage they provide with the support of IT Understand the role of business processes in organizations and the reasons why reengineering is necessary Demonstrate the role of IT in supporting BPR and especially mass customization, cycle time reduction, self-directed teams, and empowerment Describe virtual corporations and their IT support

415 Chapter Overview Strategic Advantage and Information TechnologyStrategic Information Systems The Role of IT in Strategic Competitive Intelligence Porter’s Competitive Forces Model and IT Porter’s Model Response strategies How the Model is Used Illustrative Strategic Information Systems Sustaining a Competitive Advantages A Framework for Global Competition Ineffective Organizations in the information Age The Need for a Fundamental Change The Need for Integration Business Process Reengineering Principles of BPR The Enabling Role of Informative Technology Major Reengineering Activities Restructuring Entire Organizations Ethical and Social Issues Virtual Corporations and IT Characteristics of Virtual Corporations How IT Supports

416 Case: Dell’s Reengineering Efforts. Supported by Strategic InformationCase: Dell’s Reengineering Efforts Supported by Strategic Information Systems made IT World’s Champion The Problem As a result of price war with Compaq, it had a loss from inventory write downs The Solution IT-supported innovations emergence of electronic commerce The Results its stock price zoomed more than 2000 percent increases its market share and profitability simultaneously consistently be considered to be one of the most well managed and profitable corporations in the world by the 21st century

417 Case (continued…) What have we learned from this case??competition on price, quality, speed, and customer service can be very intense, especially when large corporations are involved providing quality products at a low prices is necessary, but may not be sufficient using conventional strategies may not be sufficient fundamental change may be the only way to succeed, or even to survive using IT, a company can gain a significant competitive advantage

418 Strategic Advantage and Information TechnologyStrategic Information Systems (SISs) support or shape an organization’s competitive strategy outward: aiming at direct competition in an industry inwardly: they are focused on enhancing the competitive position of the firm by increasing employee’s productivity, improving teamwork, and enhancing communication strategic alliances: two or more companies share an inter-organizational system strategic systems: one of the organization’s critical responses to business pressures

419 Strategic Advantage and Information Technology (continued …)The Role of Information Technology IT creates applications that provide direct strategic advantage to organizations IT supports strategic changes such as reengineering IT provides for technological innovations or acts as an enabler of innovation IT provides competitive intelligence by collecting and analyzing information about innovations, markets, competitors, and environmental changes Competitive Intelligence (Industrial espionage) drives business performance by increasing market knowledge, improving internal relationships, and raising the quality of strategic planning

420 Competitive Intelligence on the InternetIntelligence Search Strategy Description Review competitor’s Web sites Reveal information about marketing information Analyze related newsgroups Find out what people think about a company and its products Examine publicly available financial documents By entering a number of databases and analyze findings Do market research at your own Web site Pose questions to Web site visitors Use an information delivery service to gather news on competitors Find what is published on the Internet and provide any desired information Use corporate research companies Provide information ranging form risk analysis to stock market analysts’ reports about competitors Investigate chat rooms Enter and challenge participants to express opinions regarding competitors’ products

421 Porter’s Competitive Forces Model and ITcompetition - at the core of a firm’s success or failure be used to develop strategies for companies to increase their competitive edge demonstrates how IT can enhances the competitiveness of corporations 5 major forces: Threat of entry of new competitors Threat of substitute products or services Bargaining power of suppliers Bargaining power of customers (buyers) Rivalry among existing firms in the industry

422 Porter’s Five Forces ModelIndustry Competitors Intensity of Rivalry New Entrants Substitute Suppliers Buyers Threat of Bargaining Power of Suppliers Substitutes of Buyers Entry Barriers Determinants of Supplier Power Determinants of Substitution Threat Determinants of Buyer Power Rivalry Determinants

423 Porter’s Competitive Forces Model and IT (continued …)Response Strategies (Per Porter and Others) Response strategies to competitive forces Cost leadership strategy - producing at lowest cost Differentiation strategy - being unique Focus strategy - selecting a narrow-scope segment Growth strategy - increasing market share Alliances strategy - working with business partners Innovation strategy - developing new products Internal efficiency strategy - improving the manner in which business processes are executed Customer-oriented strategy - concentrating on making customers happy

424 Porter’s Competitive Forces Model and IT (continued …)How the Model is Used The Players in each force are listed An Analysis is made to relate the determinants to each player listed Devise a strategy to defend a company against the forces, based on specific players and the determinants Look for supportive information technologies

425 Impact of Competitive Forces and the Role of ITKey Forces Affecting the Industry Business Implications Potential IT Responses Threat of new entrants Additional capacity Reduced prices New basis for competition Provide entry barriers/ reduce access by: exploiting existing economies of scale differentiating products/services, controlling distribution channels segmenting markets High power suppliers Raise prices/costs Reduce quality of supply Reduce availability Implement sourcing systems Extend quality control into suppliers’ operations Use forward planning with suppliers

426 426 Key Forces Affecting the Industry Business ImplicationsPotential IT Responses High power buyers Forces prices down Higher quality demanded Service flexibility required Encourage competition Differentiate products/ services and improve Increase switching costs of buyers Facilitate buyers product selection Substitute products threatened Limits potential and profit Imposes price ceilings Use differentiation strategy Incorporate IT into product, service, or method of provision Intense competition from rivals Price competition Need to develop new products and services Distribution and service become critical Customer loyalty required Improve price/performance Redefine products and services to increase value Redefine market segments Differentiate products and services in distribution channels and to consumers Get closer to the end consumer - understand the user requirements

427 Impact of Competitive Forces and the Role of IT (continued …)Sustaining a Competitive Advantage When SISs are combined with structural changes in the organization, they can provide a sustainable strategic advantage Example: comprehensive strategic information system used by Federal Express provides a strategic advantage by building and maintaining a first-class personnel system

428 Ineffective Organizations in the Information AgePrinciples and Methods that enhance the development of the Industrial Revolution Specialization of labor Mass production (producing large quantities, storing them, selling them at a later time) Hierarchical organizational structure following functional specialties with top-down lines of authority Assembly lines that bring the work to the worker whenever possible Complex support systems for planning and budgeting, resource allocation, coordination, and control

429 Ineffective Organizations in the Information Age (continued …)Vendors, Suppliers Distribution Logistics Service Purchasing Finance R & D Production Sales Distribution Product development Order fulfilllmetn Planning, resourcing and control Customer service Organization Customers Business processes across functional areas and organizational boundaries

430 Ineffective Organizations in the Information Age (continued …)The Need for Integration Integration should cross not only departmental boundaries, but also organizational ones, reaching suppliers and customers Account numbers in an information systems developed along departmental lines may not be logically related and so cannot be used for cross-referencing a customer’s accounts Managers want to send letters to specific customers

431 Business Process Reengineering - The SolutionTraditional solutions may not be effective BPR = copy the definition BPR = overcomes the problems cited earlier

432 BPR (continued …) Principles of BPR several jobs are combined into oneemployees make decision steps in the business process are performed in a natural order, and several jobs get done simultaneously processes may have multiple versions work is performed where it makes the most sense controls and checks are minimized reconciliation is minimized a hybrid centralized/decentralized operation is used a single point of contact is provided to customers

433 BPR (continued …) BPR, continuous improvement programs, and IT supportRapid intense unpredictable changes? Continuous improvements TOM, traditional strategies BPR and networked organization IT Support Changes in Environometal Drivers no yes Pressure

434 BPR (continued …) The Enabling Role of Information TechnologyThe IT tools for BPR Simulation and visual simulation tools - to support the modeling activities of BPR Flow diagrams - made by specialized BPR tools that are usually integrated with other tools Work analysis - accomplished with tools that conduct forecasting, risk analysis, and optimization Workflow software - places system controls in the hands of end-user departments

435 Changes in Work Rules Brought by ITOld Rule Intervening Technology New Rule Information appears in only one place at one time Shared databases, client/server architecture, electronic mail Information appears simultaneously wherever needed Only an expert can perform complex work. Expert systems, neural computing Novices can perform complex work. Managers make all decisions. Decision support systems, enterprise support systems, expert systems Decision making is part of everyone’s job Field personnel need offices to receive, send, store, and process information. Wireless communication and portable computers, information highways, electronic mail Field personnel can manage information from any location. You have to locate items manually. Tracking technology, groupware, workflow software, client/server Items are located automatically Plans get revised periodically. High-performance computing systems Plans get revised instantaneously whenever needed.

436 Changes in Work Rules Brought by ITOld Rule Intervening Technology New Rule People must come to one place to work together. Groupware and group support systems, telecommunication, electronic mail, client/server People can work together from different locations. Customized products and services are expensive and take a long time to develop. CAD-CAM, CASE tools, online systems for JIT decision making, expert systems Customized products can be made fast and inexpensively (mass customization). A long period of time is spanned between the inception of an idea and its implementation (time to market) CAD-CAM, electronic data interchange, groupware, imaging (document) processing Time-to-market can be reduced by 90 percent Work should be moved to countries where labor is inexpensive (off-shore production). Robots, imaging technologies, object-oriented programming, expert systems Work can be also done in countries with high wages and salaries.

437 Major Reengineering ActivitiesRedesign of processes From mass production to mass customization mass production produces a large quantity of an identical, standard product mass customization produces large volumes, yet customizes the products to the specifications of individual customers increases with the spread of electronic commerce, which transforms the supply chain from a traditional push model to a pull model

438 Major Reengineering Activities (continued …)Cycle time reduction IT makes a major contribution in shortening cycle times by allowing companies to combine or eliminate steps, and to expedite various activities in the business process Cycle time reduction can result in gain a substantial market share

439 Restructuring Entire OrganizationsCustomer demographics Checking accounts Installment loans Savings accounts Mortgage loans Trusts Etc Expert system Statement Account manager supported by ... Backed up by ... Checking expect Loan expect Consolidated statement Reengineered bank with integrated system

440 Restructuring Entire Organizations (continued …)Networked organization resemble computer networks and are supported by computerized systems away from the hierarchical organization toward the networked organization due to the evolution from an industrial-based economy to an information-based economy

441 Hierarchical vs. Networked OrganizationFormal Highly structured Manage Control Direct Employees a cost Information management-owned Hierarchical organizations Risk avoidance Individual contributions Hierarchical Organization Informal Loosely structured Delegate/lead Ownership/participation Empower Employees an asset Information shared ownership Flatter/ manageable organizations Risk management Team contributions Networked Organization

442 The Roles of Managers and SubordinatesUse of Authority by the manager Area of Freedom for Subordinates Hierarchical Organization Flattened Organization Network Organization Manager makes decisions and announces or “sells” it. Manager presents ideas and invites questions. Manager presents tentative decision subject to change. Manager presents problem, gets suggestions, makes decision. Manager defines limits; asks group to make decision. Manager permits subordinates to function within limits defined by superior. Manager allows situational leadership to occur based on which node of the network is best equipped to solve problem.

443 Restructuring Entire Organizations (continued …)Empowerment - the vesting of decision-making or approval authority in employees in instances where such authority traditionally was a managerial prerogative Empowerment’s relationship to information technology the provision of right information, at the right time allows employees to make decisions enhances the creativity and productivity of employees, as well as the quality of their work training can be enhanced by IT enables non-managers to make decisions

444 Ethical and Societal IssuesUnethical tactics pressuring competitor’s employees to reveal information using software that is the intellectual property of other companies without permission using IT to monitor the activities of their employees and customers, and in so doing they may invade the privacy of individuals Societal Issues Reengineering efforts involve dramatic changes in people’s jobs and working relationships Jobs are eliminated

445 Virtual Corporations Characteristics of Virtual Corporations (VC)Excellence. Each partner brings its core competence (area of excellence) so an all-star winning team is created. No single company can match what the virtual corporation can achieve. Full utilization of resources. Some resources of the business partners are sometimes underutilized when not in a VC. Opportunism. The partnership is opportunistic. A VC is organized to seize market opportunities. Lack of borders. It redefines traditional boundaries. Trust. Business partners in a VC must be far more reliant on each other and more trusting than ever before. Adaptability to change. The VC can adapt quickly to environmental changes because its structure is relatively simple. Technology. IT makes the VC effective and efficient.

446 Virtual Corporations (continued …)How IT Supports Virtual Corporations IT allows communication and collaboration among the dispersed business partners Standard transactions are supported by electronic data interchange and EFT Modern database technologies and networking permit business partners to access each other’s databases Lotus Notes and other groupware tools permit diversified interorganizational collaboration

447 What’s in IT for Me? For Accounting For FinanceThe accountant must understand these technologies and the role of IT to collect the data for justification of the investment For Finance Finance people must understand the nature of these technologies and the manner in which they enable organizations to seize opportunities and solve problems

448 What’s in IT for Me? (continued …)For Marketing SIS and/or BPR are likely to change distribution channels, order fulfillment, customer service, and many tasks that are under the control of marketing and sales For Production/Operations Management BPRs are most likely to completely change existing business processes including production lines, materials handling, design, and inventory systems

449 What’s in IT for Me? (continued …)For Human Resource Management What makes SIS and BPR different is the magnitude of the organizational changes that could disrupt the operation of the organization if not handled properly by management and HRM

450 CHAPTER 14 INFORMATION SYSTMES DEVELOPMENT

451 Learning Objectives Discuss the concept of a systems development life cycle (SDLC) Describe the information systems planning process Discuss the advantages and disadvantages of the traditional development, prototyping, rapid application development, object-oriented development, and end-user development life cycles Identify the advantages and disadvantages of CASE tools Evaluate the alternatives to in-house systems development Discuss the key features of Internet and intranet development

452 Chapter Overview Information Systems Planning The IS Strategic PlanThe IS Operational Plan The Traditional SDLC System Investigation Systems Analysis Systems Design Programming Testing Implementation Operation and Maintenance Alternative Methods for Systems Development Prototyping Join Application Design (JAD) Rapid Application Development (RAD) Integrated Computer-Assisted Software Engineering (ICASE) Tools Object-Oriented Development Building Internet and Intranet Applications An Internet and Intranet Development Strategy Java - A Promising Tool Systems Development Outside the IS Department End-User development External Acquisition of Software Outsourcing

453 Case: Success in Systems Development at Inland Steel is a Team EffortThe Business Problem How to complete Inland Steel’s Order Fulfillment System (OFS), a huge systems development project, successfully on time and on budget The Solution reviewed all requests from the business units for changes and enhancements, and approved only a dozen, to minimize the tendency of a project’s goals to grow beyond initial specifications during the development process The Results reduce by 50 percent the response time to customer inquiries upgraded and expanded some jobs from clerical to professional functions integrating information in an IBM DB2 relational database that previously had resided in isolated databases

454 Case (continued…) What have we learned from this case??Information system’s timely and careful development is a very high priority Many firms no longer attempt a major systems development by themselves System development is a team effort that often includes end users, top management, IS professional, vendors, consultants, and whatever other specialized expertise is necessary

455 Information Systems PlanningOrganization Mission Business Assessment Organization Strategic Plan Current Information Technology Architecture New information Technology Architecture IS Operational Plan IS Development Projects IS Strategic Plan IS Planning Process

456 IS Planning (continued …)The IS Strategic Plan Objectives it must be aligned with the organization’s strategic plan it must provide for an IT architecture that enables users, applications, and databases to be seamlessly networked and integrated it must efficiently allocate IS development resources among competing projects, so the projects can be completed on time, within budget, and have required the functionality Issues : efficiency; effectiveness; competitiveness

457 IS Planning (continued …)The IS Operational Plan Mission : the mission of the IS function IS environment : the summary of the information needs of the functional areas and of the organization as a whole Objectives of the IS function : the IS function’s current best estimate of its goals Constraints on the IS function : technological, financial, and personnel limitations on the IS function Long-term systems need : a summary of the processes needed by a company and the IS projects selected to support them and reach organizational goals Short-range plan : an inventory of current projects, and a detailed plan of projects to be developed or continued during the current year

458 The Traditional Systems Development Life Cycle (SDLC)SDLC - the development method used by most organizations today for large, complex systems Waterfall Approach - a sequence of steps in the SDLC with cycles returned to previous stops Systems Analysts - IS professionals who specialize in analyzing and designing information systems Programmers - IS professionals who modify existing computer programs or write new computer programs to satisfy user requirements Technical Specialists - experts in a certain type of technology, such as databases or telecommunications

459 (1) Systems Investigation Go Back to a previous Stage or StopSDLC (continued …) (1) Systems Investigation An eight-stage systems development life cycle (SDLC) (2) Systems Analysis (3) Systems Design (4) Programming (5) Testing (6) Implementation (7) Operation (8) Maintenance Go Back to a previous Stage or Stop

460 SDLC (continued …) Systems Investigation (Step 1)Feasibility Study determines the probability of success of proposed system’s development project and assesses the project’s technical feasibility : determines if the hardware, software, and communication components can be developed or acquired to solve the business problem economic feasibility : determines if the project is an acceptable financial risk and if the organization can afford the expense and time needed to complete the project behavioral feasibility : addresses the human issues of the project

461 SDLC (continued …) Systems Analysis (Step 2)the examination of the business problem that the organization plans to solve with information systems produces the following information strengths and weaknesses of the existing system functions that the new systems must have to solve the business problem user information requirements for the new systems

462 SDLC (continued …) Systems Design (Step 3)describes how the system will accomplish the task technical design system outputs, inputs, and user interfaces hardware, software, databases, telecommunications, personnel, and procedures how these components are integrated local systems design : what the system will do Physical systems design : how the system will perform its functions

463 SDLC (continued …) Programming (Step 4)the translation of the design specifications into computer code structured programming techniques : improve the logical flow of the program by decomposing the computer code into modules, which are sections of code sequence structure decision structure loop structure

464 SDLC (continued …) Testing (Step 5)checks to see if the computer code will produce the expected and desired results under certain conditions syntax errors : misspelled word or a misplaced comma logic errors : permit the program to run, but result in incorrect output

465 SDLC (continued …) Implementation (Step 6)the process of converting from the old system to the new system four major conversion strategies parallel conversion : the old and new systems operate simultaneously for a period of time direct conversion : the old system is cut off and the new systems is turned on at a certain point in time pilot conversion : introduces the new system in one part of the organization phased conversion : introduces components of the new systems in stages

466 SDLC (continued …) Operation (Step 7) Maintenance (Step 8)the new systems will operate for a period of time, until it no longer meets its objectives Maintenance (Step 8) debugging the program updating the system to accommodate changes in business conditions add new functionality to the system

467 Prototyping Prototyping obtain only a general idea of user requirements Advantages: speeds up the development approach gives the users the opportunity to clarify their information requirements useful in the development of decision support systems and executive information systems Disadvantages: replaces the systematic analysis and design stages of the SDLC - quality may be sacrificed can result in an excess of iterations

468 Joint Application Design (JAD)JAD is a group-based method for collecting user requirements and creating staged designs Advantages: saves time greater support for, and acceptance of new systems produces higher quality systems easier implementation lower training costs Disadvantages: very difficult to get all users to JASD meetings all the problems that may be caused by any group process

469 Rapid Application Development (RAD)RAD is a systems development method that can combine JAD, prototyping, and integrated CASE tools, to rapidly produce a high-quality system Advantages: active involvement of users in the development process speeds the development process reduces development costs can create applications that are easier to maintain and modify Disadvantages: may result in systems with limited functionality and adaptability for change

470 Integrated Computer-Assisted Software Engineering (ICASE) ToolsICASE Tools automate many of the tasks in the SDLC Upper CASE, lower CASE and integrated CASE Advantages: produces systems with a longer effective operational life speeds up the development process and result in systems that are more flexible and adaptable to changing business conditions results in excellent documentation Disadvantages: more expensive to build and maintain initial system requires more extensive and accurate definition of user needs and requirements difficult to customize and may be difficult to use with existing system

471 Object-Oriented DevelopmentObject-Oriented Development based on a fundamentally different view of computer systems than that found in traditional SDLC development approaches Advantages: reduces the complexity of systems development and leads to systems that are easier and quicker to build an maintain improves programmers’ productivity and quality more flexible allows systems analysts to think the real-world systems ideal for developing Web applications depicts the various elements of an information systems in user standing of what the new system does and how it meets its objectives Disadvantages runs more slowly needs to retain the programmers

472 Systems Development outside the IS DepartmentEnd-User Development users will continue to do more ad hoc programming Types of end-user computing: non programming end users : enter data, use applications command-level users : access data, print reports end-user programmers : develop applications for personal use functional support personnel : develop applications for others to use end-user computing support personnel : training, hotline, help users develop applications programmers : develop complex applications

473 Systems Development outside the IS Department (continues …)End-User Development (CONT’) Factors that drive the trends toward increased end-user computing and end-user development increasingly powerful desktop hardware declining hardware costs increase diverse software capabilities increasingly computer literate population backlog of IS projects development speed business orientation small applications control Apparent cost savings User friendly software

474 Systems Development outside the IS Department (continues …)Advantages of End-User Development gives users control over both the initial development of an application and the ongoing maintenance no need to explain user requirements to IS analysts gives users control over the development budget results in the possibility of greater user acceptance Disadvantages of End-User Development needs some additional spending difficult for managers outside the IS area to evaluate end-user development activities fail to produce adequate documentation for the systems security may be breached

475 Systems Development outside the IS Department (continues …)External Acquisition of Software factors considered during make-or-buy decision on-time on-budget full functionality user acceptance favorable costs-to-benefits ratio low maintenance scalability integration with other systems minimal negative cross-impacts reusability

476 Systems Development outside the IS Department (continues …)Outsourcing purchase of any product or service from other company advantages: economies of scale of hardware economies of scale of staffing specialization tax benefits Disadvantages: limited economies of scale staffing lack of business expertise contract problems internal cost reduction opportunities guidelines: write short-period contracts subcontracting selective outsourcing

477 Building Internet and Intranet ApplicationsAn Internet and intranet Development Strategy identify the objectives for organizational Web site(s) and pages adequately cover infrastructure requirements as well as security are legal issues identify and prioritize potential projects

478 Internet and Intranet JAVA - A Promising Toolsthe most important programming language for putting extra features into Web pages an object-oriented language can be sent from a Web server over the Internet and then run on the computer that is viewing the Web page has numerous security features to prevent downloaded programs from damaging files or creating other problems on the receiving computer

479 What’s in IT for Me? For Accounting For Finance For Marketingaccounting functions are traditionally data-intensive properly developed systems are a must For Finance those acquainted with systems development methodologies are better equipped to assist in getting the right systems developed in the right way and budget For Marketing marketing functions are hotbed of systems development

480 What’s in IT for Me? (continued …)For Production/Operations Management increasingly computer-controlled and integrated with other allied systems, from design to logistics to inventory control to production planning For Human Resources Management new systems may require terminating employees, hiring new employees, or changing job descriptions

481 CHAPTER 15 IMPLEMENTING IT: ETHICS, IMPACTS, AND SECURITY

482 Learning Objectives Describe the major ethical issues related to information technology and identify situations in which they occur Identify the major impacts of information technology on organizational structure, power, jobs, supervision, and decision making Understand the potential dehumanization of people by computers and other potential negative impacts of information technology Identify some of the major societal effects of information technology Describe the many threats to information security Understand the various defense mechanisms of information systems Explain IT auditing and planning for disaster recovery

483 Chapter Overview Ethical Issues A Framework for EthicsProtecting Privacy Protecting Intellectual Property Impacts of IT on Organizations and Jobs How will Organizations be changed? How will Jobs be Changed? Other Considerations Impacts on Individuals at Work Will my Job be Eliminated? Dehumanization and Psychological Impacts Impact on Health and Safety Other Impacts Societal Impacts and Internet Communities Improved Quality of life Internet Communities Telecommuting Security is a Concern for Everyone Threats to information Systems Systems Vulnerability Computer Crimes Protecting Information Systems Defence Strategies: How do we Protect IT? Auditing Information Systems Disaster Recovery Planning Security in the 21st Century

484 Case: Music Retailer Finds Commerce in CommunitiesThe Business Problem N2K, a retailer in the music industry, merged with an Internet Music store called Music Boulevard (www.musicblvd.com), but sales were small The Solution The company created genre-specific sites where each is focused on the specific needs of an Internet community. The Internet is viewed as a network that provides new kinds of “spaces,” a world of online communities and virtual chat room. The Results Increased sales dramatically High level of members’ loyalty to the site Minimal inventory cost

485 Case (continued…) What have we learned from this case??The concept of internet communities can offer the opportunity to significantly increase an online company’s revenue and profit IT has had an impact on society as well as on corporate operations and marketing methods

486 Ethical Issues Ethics is a branch of philosophy that deals with what is considered to be right and wrong What is unethical is not necessarily illegal Codes of ethics is a collection of principles intended as a guide for members of a company or an association Ethics differ in countries and companies

487 Ethical Issues (continued …)A Framework for Ethics Issues Privacy Issues What information about oneself should an individual be required to reveal to others? What kind of surveillance can an employer use on its employees? Accuracy Issues Who is responsible for the authenticity, fidelity, and accuracy of information collected? How can we ensure that information will be processed properly and presented accurately to users? Property Issues Who owns the information? What are the just and fair prices for its exchange? Accessibility Issues Who is allowed to access information? How much should be charged for permitting accessibility to information?

488 Ethical Issues (continued …)Protecting Privacy privacy - different things to different people four stages of privacy solitude intimacy anonymity reserve too expensive, cumbersome, and complex to invade information privacy personal computers, powerful software, large databases, and the internet have created an entirely new dimension of accessing and using personal data

489 Ethical Issues (continued …)Electronic Surveillance (monitoring computer users) American Civil Liberties Union (ACLU) estimates that tens of millions of computer users are monitored Personal Information in Databases people may not appreciate the intrusion of vendors commercial companies advise individuals about how to protect their rights, and it monitors several database

490 Ethical Issues (continued …)Information on Internet Bulletin Boards and Newsgroups how does society keep owners of bulletin boards from disseminating information that may be offensive to readers? highlights the conflict between freedom of speech, privacy, and ethics Privacy codes and Polices helps organizations avoid legal problems

491 International Aspects of PrivacyGuidelines to protect individuals’ privacy in the electronic age in Europe are very strict Collection limitation Data quality Purpose specification Use limitation Security safeguards Openness Individual participation

492 Privacy Policy Guidelines - A SamplerData Collection Data should be collected on individuals only for the purpose of accomplishing a legitimate business objective. Data should be adequate, relevant, and not excessive in relation to the business objective. Individuals must give their consent before data pertaining to them can be gathered. Data Accuracy Sensitive data gathered on individuals should be verified before it is entered into the database. Data should be accurate and, where and when necessary, keep current. The file should be made available so the individual can ensure that the data are correct. If there is disagreement about the accuracy of the data, the individual’s version should be noted and included with any disclosure of the file. Data Confidentiality Computer security procedures should be implemented to provide reasonable assurance against unauthorized disclosure of data. They should include physical, technical, and administrative security measures. Third parties should not be given access to data without the individual’s knowledge or permission, except as required by law. Disclosures of data, other than the most routine, should be noted and maintained for as long as the data are maintained. Data should not be disclosed for reasons incompatible with the business objective for which they are collected.

493 Protecting Intellectual PropertyIntellectual property - the intangible property created by individuals or corporations Protected under Copyright - a statutory grant that provides the creators of intellectual property with ownership of it for 28 years Trade secret - intellectual work such as a business plan which is a company secret and is not based on public information Patent - a document that grants the holder exclusive rights on an invention for 17 years

494 The Impacts of IT on Organizations and JobsHow will organizations be changed? Flatter organizational hierarchies It is reasonable to assume that fewer managerial levels will exist in many organizations, and there will be fewer staff and line managers. Changes in supervision an employee’s work is performed online and stored electronically introducing the possibility for greater electronic supervision. Powers and status Knowledge is power.

495 The Impacts of IT on Organizations and JobsHow will jobs be changed? Job content Changes in job content occur when work is redesigned Employee career ladders the use of IT may short-cut a portion of learning curve by capturing and more efficiently managing knowledge The manager’s job It can change the manner in which many decisions are made and consequently change managers’ jobs.

496 Impacts on Individuals at WorkWill my Job be Eliminated? IT can significantly increase the productivity of employees, restructuring their job content and changing the skill requirement of many jobs. Because computers are becoming “smarter” and more capable as time passes, the competitive advantage of replacing people with machines is increasing rapidly. But many computer-related job are being created.

497 Impacts on Individuals at Work (continues …)Dehumanization computers reduce or eliminate the human element that was present in the non-computerized systems computer-supported activities may dehumanize people Psychological impacts people may feel depression and loneliness if they work and shop from their living rooms the lack of social contacts could be damaging to children’s development if they are schooled at home through IT Job satisfaction Some jobs may become more routine and less satisfying

498 Impacts on Individuals at Work (continues …)Impacts on Health and Safety Job stress - computerization has created an ever-increasing workload on many people Video display terminals (VDTs) - radiation exposure has been associated with cancer and other health-related problems Repetitive strain injuries - backaches and muscle tension in the wrists and fingers Lessening the Negative Impact on Health and Safety - ergonomic techniques focus on creating an environment for workers that are well lit, comfortable and safe

499 Information Systems and the IndividualsElectronic Funds Transfer / Electric Commerce Leisure Time System Hotel Reservations Theatre and Entertainment Travel Reservations Public and Private Service System Police and Fire Accounting and Legal Insurance and Brokerage Home Information System Security Environmental and appliances Entertainment, Business, and Education Education and Medical System Central Medical Database Hospital Administration and Treatment Computer Assisted Education Education Administration and Records Financial System Integrated Financial Database Money Oared Real Estate Stocks Consumer System Supermarket Department Store Drug Store

500 Societal Impacts Improved Quality of LifeOpportunities for people with disabilities The integration of intelligent systems, such as speech and vision recognition, into a computer-based information system can create new employment opportunities for people with disabilities. Improvements in heath care IT brought about major improvements in health care delivery, ranging from better and faster diagnoses, to expedited research and development of new drugs, to more accurate monitoring of critically ill patients.

501 Societal Impacts (continued …)Improved Quality of Life Help for the consumer IT systems help the lay person perform tasks that require expertise. Robots performing hard and hazardous labor Robots can work in uncomfortable or dangerous environments. Crime fighting Improvement in education and other benefits

502 Internet Communities Communities of Interest : provide place for people to interact with each other on a specific topic Communities of Relations : be organized around certain life experiences Communities of Fantasy : provide place for participants create imaginary environments Communities of Transactions : facilitate buying and selling Communities of Professionals : support professional communication and the exchange of valuable work or research-related information

503 Telecommuting Benefits To the employees To the organization To societyLess stress Ability to go to school while working Improved family life Money is saved Commuting time is saved Ability to control schedule and manage time better Employment opportunities for housebound people To the organization Increased productivity Reduced real estate cost Reduced cost of parking Ability to retain skilled employees Ability to tap remote labor pool Lower labor and absenteeism cost Better interaction of employees with clients and suppliers To society Less use of fossil fuels Fewer traffic problems; including less air pollution More business for suburbs and rural areas

504 Telecommuting (continued …)Telecommuting and Productivity Increase productivity by increased motivation and satisfaction reduced absenteeism forces managers to manage by results instead of by overseeing Reduce productivity by some employees need to work with others not all jobs can be done while telecommuting not all managers can participate

505 Security Security Threats Systems Software Database HardwareApplication Programmer Terminals Terminal User Systems External Environment Database Radiation Operator Authorizer Access rules Crosstalk Tap Processor

506 Computer Crimes Types of computer crimes Criminalscomputers are the target of the crime computers are the medium of the attack by creating an environment in which a crime or fraud can occur computers are the tool by which the crime is perpetrated computers are used to intimidate or deceive Criminals hackers - outsider people who penetrate a computer system crackers - malicious hackers who may represent a serious problem for organizations

507 Computer Crime (continues ...)Methods of Attack Data tampering Programming fraud Viruses receiving its name from the program’s ability to attach itself to other computer programs, causing them to become viruses themselves Representative federal laws Computer Fraud and Abuse Act (1986) Computer Security act of 1987

508 Protecting Information SystemsSome of the reasons that make it complex or expensive to defend information systems Hundreds of potential threats exists. Computing resources may be situated in many locations. Many individuals control information assets. Computer networks can be outside the organization and difficult to protect. People tend to violate security procedures because the procedures are inconvenient

509 Protecting Information Systems (continued …)Defense strategies Controls for prevention and deterrence - prevent errors from occurring, deter criminals from attacking the system, deny access to unauthorized people Detection - the earlier it is detected, the earlier it is to combat and the less damage Limitation - minimizing losses once a malfunction has occurred Recovery - explains how to fix a damaged information system as quickly as possible Correction - prevent the problem from occurring again

510 Protecting Information Systems (continued …)General Controls - protect the system regardless of the specific application Physical controls provides protection against most natural hazards as well as against some human-created hazards Access controls restrict unauthorized user access to a portion of a computer system or to the entire system

511 Protecting Information Systems (continued …)General Controls (CONT’) Biometric controls verify the identity of a person, based on physiological or behavioral characteristics hand geometry, blood vessel pattern in the retina of an eye, voice, signature, keystroke dynamics, facial thermography, fingerprints Data security controls protect data from accidental or intentional disclosure to unauthorized persons, or from unauthorized modification or destruction

512 Protecting Information Systems (continued …)Application controls - protect specific application Input controls prevent data alteration or loss Processing controls allow only authorized users to access certain programs or facilities monitor the computer’s use by individuals Output controls ensure that outputs are sent only to authorized personnel

513 Network Protections and FirewallsAccess Control guards against unauthorized dial-in attempts Encryption encodes regular digitized text into unreadable scrambled text or numbers, to be decoded upon receipt Cable Testers finds almost any fault that can occur with LAN cabling Firewalls enforces an access control policy between two networks do not protect against viruses

514 Auditing Information Systemsadditional layer of controls or safeguards Types of Auditors and Audits internal auditor audit information systems external auditor reviews the findings of the internal audit and the inputs, processing, and outputs of information systems

515 How is Auditing Executed?Auditing around the computer Auditing through the computer Auditing with the computer

516 Disaster Recovery PlanningDisaster Recovery of Information Systems the chain of events linking planning to protection to recovery from a disaster keep the business running after a disaster occurs Disaster Avoidance an approach oriented toward prevention Back-up Arrangements an extra copy of data and/or programs are kept in another location

517 Disaster Recovery Planning (continued …)Planning for a recovery from Disasters Isolate data that change frequently Keep management and technical procedures separate Don’t include data in the plan if it can be obtained elsewhere after the disaster Write a plan that is independent of organization, positions, and personnel Gather data on a daily basis

518 IT Security in the 21st CenturyComputer control and security are receiving increased attention almost 70 percent of all U.S. corporations have battled computer viruses the latest technologies need to be employed to protect against viruses and computer crimes using intelligent systems for detecting intruders and crimes

519 How Technologies Improved IT SecurityArea IT Solution Fault tolerance systems, multiple disks Improved systems reliability Intelligent agents monitor performance, compare to standards, analyze profiles (e.g., Network Associates Inc.) Early or real time detection of intrusion, failures, or noncompliance with rules Neural computer can detect fraud and expert systems evaluate controls Auditing information systems Quick diagnosis by expert system, especially on networks and the Internet Troubleshooting Internet-based expert systems for self-assessment including planning and disaster recovery Disaster planning Smart cards Access protection

520 What’s in IT for Me? For Accounting For FinanceAccountant involved in Web-based auditing, security of data, and fraud prevention and detection programs For Finance Finance and banking industry is concerned about security and auditing in electronic commerce, computer criminals, the hazards and the available controls

521 What’s in IT for Me? (continued …)For Marketing Marketers do not want to be sued because of invasion of privacy in data collected, nor do they want their innovative marketing strategies to fall into the hands of competitors For Human Resources Management Motivation, supervision, career development, recruiting, and more are all affected by IT Telecommuting is implemented by HRM