MIS
Chapter 1
Internet and global communications have greatly reduced economic and cultural advantages of
developed countries
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Drastic reduction of costs of operating and transacting on a global scale
Customers no longer rely on local businesses for product and services
Developed countries compete with less developed world for jobs, markets, resources, and ideas
Business Objectives of Information Systems
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Operational Excellence
o Improved operational efficiency results in higher profitability
o Information systems and technologies help to improve higher levels of efficiency and
productivity
New products, services, and business models
o Information systems and technologies enable firms to create new products services and
business models
o A business model includes how a company produces, delivers, and sells its products and
services to create
Customer and supplier intimacy
o Customers who are served well become repeat customers who purchase more
o Close relationships with supplies result in lower costs
Improved decision making
o A company’s bottom line can be hurt by managers being swamped with data that are
neither timely nor helpful, forcing them to use guesswork
o Real time data gave improved the ability of managers to make decisions
Competitive Advantage
o Achieving one or more of the previously mentioned business objectives often leads to
competitive advantage
o Advantages over competitors include charging less for superior products, better
performance
Survival
o Business may need to invest in information systems out of necessity
o Necessity arises from keeping up with competitors
o Necessity also arises from federal and state regulations
Information Technology vs Information Systems
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Information technology is the hardware and software a business uses to achieve its objectives
Information systems consist of interrelated components working together to collect, process,
store and disseminate information to support decision making, coordination, control, analysis
and visualization
Data vs information
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Data are streams of raw facts representing events and occurrences
Information refers to the data shaped and given meaning
Turn Data into Information
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Three activities in an information system produce the information need to make decisions,
control operations, analyze problems and create new products or services
o Input – captures raw data
o Processing – converts raw input into meaningful form
o Output – transfers processed information to those people or activities for which it is
needed
Information Systems Literacy vs Computer Literacy
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Information systems literacy
o Includes behavior and technical approach
Computer literacy
o Focuses mostly on knowledge of technology
Management information systems
o Focuses on broader information systems literacy
o Issues surrounding the development, use and impact of information systems used by
managers and employees
Dimensions of Information Systems
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Organizations
o Technology changes organizations and vice versa
o Must know something about the structure, history, and culture of the organization to
understand how a specific organization uses its systems
People
o Information systems are useless without skilled people to build, maintain, and
use/understand them
o Employee attitudes affect ability to use systems productively
Technology
Problem Solving Approach
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Few business problems are simple or straightforward
Information systems and technologies can provide solutions to business challenges and
problems
Most business problems involve several major factors that can be categorized as organization,
technology, and people
Typical organizational problems:
o Outdated business processes
o Unsupportive culture and attitudes
o Political in fighting
o Turbulent business environment, change
o Complexity of task
o Inadequate resources
Typical technology problems:
o Insufficient or aging hardware
o Outdated software
o Inadequate database capacities
o Insufficient telecommunications capacity
o Incompatibility of old systems with new technology
o Rapid technological change
Typical people problems:
o Lack of employee training
o Difficulties of evaluating performance
o Legal and regulatory compliance
o Work environment, ergonomics
o Poor indecisive management
o Lack of employee support and participation
o Wrong incentive
A model of the problem-solving process
Problem identification  solution design  solution evaluation and choice  implementation
Constant feedback loop 
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Problem Identification
Solution design
o Try to consider as many different solutions are possible
o Most successful solutions usually involve an integrated approach
Solution evaluation and choice
o Factors to consider are:
 Cost of the solution
Implementation
o Building or purchasing solution
o Testing solution, employee training
o Change management
o Measurement of outcomes
o Feedback, evaluation of solution
The importance of critical thinking in problem solving
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Without critical thinking, it is easy to jump to conclusions, misjudge a problem and waste
resources
Critical thinking
o The sustained suspension of judgment with an awareness of multiple perspectives and
alternatives
Four elements of critical thinking
o Maintaining doubt and suspending judgment
o Being aware
Chapter 3 – Achieving Competitive Advantage with Information Systems
Competitive Advantage
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A firm’s ability to do something better, faster, cheaper, or uniquely when compared with rival
firms in the market
Firms main gain a competitive advantage because they have access to special resources, or they
can use resources more efficiently
Porter’s Competitive Forces Model
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Provides a general view of those things that affect a firm’s strategic position
The five competitive forces are:
o Traditional competitors
o New market entrants
o Substitute products and services
o Customers
o Suppliers
Organizations may focus on one or more of these generic strategies
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Low-cost leadership
o Using IS to achieve the lowest operational cots and the lowest prices
Product differentiation
o Use IS to enable new products and services
o Greatly change the customer convenience in using your existing products and services
Focus on market niche
o Using IS to enable specific market focus, and serve this narrow target market better
than competitors
Strengthen customer and supplier intimacy
o Using IS to tighten linages with suppliers and develop intimacy with customers
The internets impact on competitive advantage
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Enables new products and services
Transforms industries
Increases bargaining power of customers and reduces bargaining power of suppliers
Intensifies competitive rivalry
Creates new opportunities for building brand and large customer bases
The value chain model
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A value chain is a business model that describes the full range of activities need to create a
product or service
The purpose of a value chain analysis is to increase production efficiency so that a company can
deliver maximum value for the least possible cost
Using the value chain model will encourage you to benchmark your business processes against
your competitors and identify industry best practices
o Benchmarking – setting strict standards for products, services, or activities and then
measuring performance against those standards
o Best practices – industry standard business processes that have been identified as the
most successful solutions or problem-solving methods for consistently and effectively
achieving a business objective
Extending the value chain to a value web
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A firm’s value chain is linked to the value chains of its suppliers, distributors, and customers
Internet technology has made it possible to create highly synchronized industry value chains
called value webs
A value web is a networked system that can synchronize the value chains of business partners
within an industry to respond rapidly to changes in supply and demand
Competing on quality & design
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What is quality?
o For the producer: conformance to specifications and absence of variation from specs
o For the customer: physical quality, quality of service, psychological quality
What is total quality management (TQM)
o Makes quality the responsibility of all people and functions within an organization
What is lean six sigma
o Lean focuses on reducing waste or inefficiencies in a process. Six sigma is focused on the
quality in a process
Using IS to improve quality
o Reduce cycle time by simplifying the product and production process
o Benchmarking
o Use customer demands to improve products and services
o Improve design and precision
o Improve production precision and tighten production tolerances
What is Business Process Management (BPM)
o An approach to business which aims to continuously improve business processes
o Often, the steps required to accomplish a task are combined and streamlined to
eliminate repetitive and redundant work
o BPM is never concluded because continuous improvement requires continual change
Steps for effective BPM
o Identify processes for change
o Analyze existing processes
o Design the new process
o Implement the new process
o Continuous measurement
Chapter 4
Ethics and information systems
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Ethics refers to the principles of right and wrong that individuals, acting as free moral agents,
use to make choices to guide their behaviors
Ethical issues in information systems have been given new urgency by the rise of the Internet
and electronic commerce
When using IS, it is essential to ask what the ethical and socially responsible course of action is
Five moral dimensions of the information age
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Information rights and obligations
o Primarily deals with privacy issues
Property rights and obligations
o Primary deals with intellectual property issues
Accountability and control
o Primarily deals with issues of liability for unintentional consequences of system use
System quality
o Primarily deals with issues of data quality and system errors
Quality of life
o Primarily deals with negative social consequences
Key technology trends that raise ethical concerns
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Doubling of computer power
o Most organizations use information systems for critical operations, increasing our
dependence on systems and our vulnerability to system errors and poor data quality
Declining data storage costs
o Has made it possible for organizations to easily maintain detailed databases on
individuals, which has made the routine violation of individual privacy both cheap and
effective
Data analysis advances
o Made it possible to analyze vast quantities of data to develop detailed profiles of
individual behavior; these profiles may be sold to other companies or government
agencies
o Nonobvious relationship awareness combines data from multiple sources to find
obscure connections that might help identify criminals or terrorist
Networking advances
o Has made it possible to copy data from one location to another as well as access
personal data from remote locations creating unimaginable privacy issues
Growth in mobile devices
o Makes it easy to track individuals without their knowledge
Basic Ethical Concepts
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Responsibility and accountability
o Individuals, organizations, and societies are responsible for the actions they take and
should be held accountable to others for the consequences of their actions
Liability
o Extends responsibility into the area of law by permitting individuals to recover damages
Due process
o A process in which laws are known and understood
o Ability to appeal to higher authorial to ensure laws applied correctly
Ethics in an IS
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Professional code of conduct
o Often professionals take on special rights and obligations because of their special claims
to knowledge, wisdom, and respect
o Professional codes of conduct are promulgated by associates of professionals
o Code of ethics are promises by professionals to regulate themselves in the general
interest of society
Information rights: Privacy and freedom in the Internet Age
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Privacy is the claim of individuals to be left alone, free of surveillance or interference from other
individuals, organizations, or the state
Most privacy law is based on a 1973 set of rules called Fair Information Practices.
In 1998, FIP was extended to provide guidelines for protecting online privacy and in 2012 was
extended again to address the issue of regulating behavioral targeting
Internet challenges to privacy
o Cookies
 Tiny files deposited on a computer hard drive that tracks a user’s visit to a
website
 May be used to customize content for each visitor based on their interests
and/or to create a detailed profile of a visitor
o Web bugs
 Tiny graphics files embedded in e – mail messages and web pages that are
designed to monitor online internet user behavior
o Spyware
 Technology that aids in gathering information about a person or organization
without their knowledge
o Opt out vs. opt in
 Opt out model permits collection of personal info until consumer requests the
data not to be collected, whereas opt in model prohibits business from
collecting personal info unless consumer specifically takes action to approve
information and collect use
Property rights: Protecting intellectual property
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Copyright
o A statutory grant that protects creators of intellectual property against copying by
others for any purpose during the life of the author plus an additional 70 years after the
authors death
o Protection for book, music, maps, artwork, software, etc.
o The drawback to copyright protection is that the underlying ideas behind a work are not
protected
Patent
o Grants the owner an exclusive monopoly on the ideas behind an invention for 20 years
o Protection for machines, devices, or methods
o The key concepts in patent law are originality, novelty, and invention
Chapter 5
Computer Networks and client/server computing
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Client/Server computing - A model for computing that splits processing between and servers on
a network
Multitiered client/server architecture (n – tier) – Balances load of network over several levels of
servers
Storage Technology
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Primary storage - Part of the computer that temporarily stores program instructions and data
being used by the instructions
o RAM
 Provides temporary storage for computer operation
 Stores data programs and data currently in use
 Instructions are considered volatile
Secondary Storage – Relatively long term, nonvolatile storage of data outside the CPU and
primary storage
o Flash memory
 USB flash drive
 SSD
o Magnetic disk
 Magnetic disk hard rive
o Optica disk
o Magnetic Tape
Contemporary hardware trends
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The mobile digital platform
o Emerged as alternatives to PCs and larger computer
o Quickly becoming the primary means of accessing the internet
o Mobile devices, smartphones, netbooks, and tablet computers
Virtualization
o Allows multiple virtual machines, with heterogeneous operating systems to run in
isolation, side by side on the same physical machines
Cloud Computing
o Refers to a model of computing in which firms and individuals obtain computing
resources and software applications over the internet
Green Computing
o Refers to practices and technologies for the designing, manufacturing, using, and
disposing of computer hardware to minimize the impact on the environment
o Key priority is power reduction
System software vs application software
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System software – generalized programs that manage the computers resources such as the
central processor, communication links and peripheral devices
o Includes operating systems, language translations, and utility programs
Application software – programs written for a specific application to preform functions specified
by end users
o Includes programing languages, 4th generation languages, and desktop productivity tools
Software Trends
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Open-Source Software
Cloud based software services/tools
Principal issues in managing hardware and software technology
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Capacity planning
o The process of predicting when a computer hardware system becomes saturated
o Ensures that the firm has enough computing power for its current and future needs
Scalability
o The ability of a computer, product, or system to expand to serve a large number of users
without breaking down
Total cost of ownership
o Designates the total cost of owning technology resources, including initial purchase
costs, the cost of hardware and software upgrades, maintenance, technical support, and
training
Using technology service providers
o Outsourcing – the practice of contracting computer center operations,
telecommunications networks, or applications development to external vendors
o Using cloud services
Chapter 7
Network Interface Device - Each computer on the network contains a network interface device to link
the computer to the network; serves as a unique identifier
Connection Medium - Used to link network components
Network Operating System – Routes and manages communications on the network and coordinates
network resources. May reside on every computer or on a dedicated server
– Device used to connect network components, sending packets of data to all other connected devices.
Least intelligent and expensive
Switch – Used to filter and forward data to a specified destination on the network. More efficient than
hub
Router – a special communications processor used to route packets of data through different networks,
ensuring that the data sent gets to the correct address. Smartest and most complicated
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Key Digital Networking Technologies
o Packet switching
 Allows millions of users to send chunks of data across the Internet concurrently
 Messages are broken down into small, fixed bundles of data called packets
 Based on the concept of turn taking, packets from each user are alternated in
the shared network
 Does not require a dedicated circuit
o Protocols
 A set of rules and procedures governing transmission of information between
two points in a network
 Transmission control protocol/internet protocol
 Provides a universally agreed on method for breaking up digital
messages into packets, routing them to the proper address, and then
reassembling them into coherent messages
o TCP
 Preforms packetizing
 Breaks the data into smaller packets
 Numbers them
 Ensures each packet is reliably delivered
 Puts them in the proper order at the destination
 IP Address
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Types of networks
o Local Area Network (LAN)
 Designed to connect personal computers and other digital devices within a half
mile
o Wide Area Network
 Spean large geographical distances
 Typically used to connect wo or more LANs
o Metropolitan Area Network
Connection Medium – Physical Transmission Media
o Twisted wire – Two or more pairs of insulated copper wires twisted together
o Coaxial cable – contains a solid inner copper conductor surrounded by insulation and
outer braided copper or foil shield
o Fiber optics – Made of light conducting glass or plastic core, surrounded by more glass,
called cladding and a tough outer sheath
o Three kinds of wireless networks used by computers:
 Microwave – uses a high frequency radio signal that is sent through the air using
either terrestrial or satellite systems to transmit data over long distances
 Cellular – uses radio waves to communicate with radio antennas
 WiFi – may use LAN or mobile access port
o Advantages/Disadvantages
 Most wireless media is susceptible to EMI and eavesdropping
 Costs start out moderate with high frequency radio and terrestrial microwave,
and rise sharply with satellite microwave
The internet – a large worldwide collection of networks that use a common protocol to
communicate with each other
o Created in the early 1970s by DARPA to link scientists and university professors around
the world
o Connect to the internet is provided by an ISP or through your organization, university,
etc. which has a designated Internet domain
Internet Addressing and Architecture
o IP Address
 Each domain is associated with one or more IP addresses, which serves as a
destination address
 Any device on a network must have its own unique address
o Domain Name System
 Provides a service analogous to an address book lookup
 Special DNS servers on the internet are dedicated to performing the translation
from a domain name to an IP address and vice versa
o IPv6
 The world ran out of IP addresses using the existing addressing convention in
2012
o Internet2
 Advanced networking consortium of over 500 universities, business government
agencies and other institutions
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Internet services and communication tools
o E – mail
o Chat/instant messaging
o File transfer protocol
The World Wide Web
o Voice over IP – uses the IP to deliver voice information in digital form of suing packet
switching
o VPN – a secure connection between two points across the internet to transmit
corporate data. Provides a low-cost alternative to a private network
o video and save it all in a text file that any computer can read
Chapter 8
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System Vulnerability/Malfunctions
o Hardware problems (breakdowns, configuration errors, damage from improper use or
crime)
o Software problems (programming errors, installation errors, unauthorized changes)
o Disasters (power failures, flood, fires, etc)
o Internet
 The internet is more vulnerable than internal networks because it is virtually
open to anyone, making the organizations information systems more vulnerable
to actions from outsiders
o Wireless Networks
 Vulnerable to penetration because radio frequency bands are easy to scan
Malicious Software
o Malware – malicious software programs
 Virus – a software program that attaches itself to other software programs or
data files to be executed, often causing hardware and software malfunctions
 Worm – Independent software programs that propagate themselves to disrupt
the operation of computer networks or destroy data and other programs
 Trojan Horse – a software program that appears legitimate but contains a
second hidden function that may cause damage
 Malware
 SQL Injection Attack – take advantage of vulnerability in poorly coded
web application software to introduce code into a company systems
and networks
 Ransomware – Tries to extort money from users by taking control of
their computers or displaying annoying pop up messages
 Spyware – Monitors web activity and serves up advertising
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Hackers and Computer Crimes
o The US Department of Justice defines a computer crime as any violations of criminal law
that involve a knowledge of computer technology for their perpetration, investigation,
or prosecution
o Hacker – An individual who intends to gain unauthorized access to a computer system
o Cybervandals – Intentional disruption, defacement destruction of website or corporate
information system
o DoS – Flooding server with thousands of false requests to crash the network
o DDoS – Use of numerous computers to launch a DoS
o Spoofing – Misrepresenting oneself by using fake e mail addresses or masquerading as
someone else
o Sniffing – Eavesdropping program that monitors information traveling over network
Identity Theft
o A crime in which an imposter obtains key pieces of personal information that is used to
obtain merchandise and/or services in the name of the victim or to obtain false
credentials
o Phishing – a form of spoofing involving setting up fake websites or sending e – mail
messages that look like those of legitimate businesses to ask users for personal
information
o Evil Twins – Wireless networks that pretend to be legitimate WiFi networks to entice
participants to log on and reveal passwords and credit card numbers
o Pharming – Redirects users to bogus web pages, even when the individual types of the
correct web pages address into his or her browser
Other Computer Crimes
o Click Fraud – Occurs when an individual or computer program fraudulently clicks on an
online ad without any intention of learning more about the advertiser or making a
purchase
o Cyberterrorism – The use of computer and networking technologies against persons or
property to intimidate or coerce civilians, government, or any part of society to attain
political, religious, or ideological goals
o Cyberwar – An organized attempt by a country’s military to disrupt or destroy the
information and communications systems of another country
Internal Threats – Employees
o Security threats often originate inside an organization from:
o Inside knowledge
 Employees have access to a lot of privileged information
o Sloppy security procedures
o Social engineering
 Tricking employees into revealing their passwords by pretending to be
legitimate members of a company
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Software Vulnerability
o Commercial software contains hidden bugs or program code defects
o Patches – Vendors release small pieces of software to repair flaws
Legal and Regulatory Requirements
o HIPPA
o Gramm – Leach – Bliley Act of 1999
o Sarbanes – Oxley Act of 2002
Electronic Evidence and Computer Forensics
o The scientific collection, examination authentication, preservation and analysis of data
held on or retrieved from computer storage media in such a way that information can
be used as evidence in a court of law
A framework for security and control
o Risk assessment
 Determines the level of risk to a firm if a specific activity or process is not
properly controlled
o Security Policy
 Outlines how the company is going to protect itself
o Acceptable Use Policy
 Defines acceptable use of the firm’s information resources and computing
equipment as well as the consequences for noncompliance
o Disaster recovery planning
 Devises plans for restoration of computing and communications services after
they have been disrupted
Security Technologies/Tools
o Authentication
 The ability of each party in a transaction to ascertain the identity of the other
party
o Token
 A physical device usually small enough to fit on a key ring
 Smart cards
o Firewall
 A combination of hardware and software that acts as a gatekeeper and prevents
unauthorized users from accessing private networks by monitoring and
controlling the flow of incoming and outgoing network traffic
o Intrusion Detection Systems
 Feature full time monitoring tools placed at the most vulnerable points or hot
sports of corporate networks to protect against suspicious network traffic and
attempts to access fields and databases
o Encryption
 The process of encoding messages before they enter the network or airwaves,
and then decoding at the receiving end
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Security Technologies/Tools
o Two methods:
 SSL and the successor TSL
 S – HTTP
Chapter 9
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Business value of enterprise systems
o Increases operational efficiency
 Standardize and coordinate business processes
o Provide firm wide information to support decision making
o Enable rapid responses to customer requests for information or products
o Include analytical tools to evaluate overall organizational performance
The Supply Chain
o Network of organizations and processes for procuring raw materials, transforming them
into products and distributing the products
o Upstream supply chain
 Firm’s suppliers, suppliers suppliers, processes for managing relationships with
them
Information systems and supply chain management
o Inefficiencies cut into a company’s operating costs
o Just in time strategy
 Components arrive as they are needed
 Finished goods shipped after leaving the assembly line
o Safety stock
 Buffer for lack of flexibility in supply chain
o Bullwhip effect
 Information about product demand gets distorted as it passes from one entity
to next across supply chain
Supply chain management software
o Supply chain planning systems
 Model existing supply chain
 Demand planning
 Optimize sourcing, manufacturing plans
 Establish inventory levels
 Identify transportation modes
o Supply chain execution systems
 Manage flow of products through distribution centers and warehouses
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Global supply chains and the internet
o Global supply chain issues
 Greater geographical distances
 Greater time differences
 Participants from different countries
 Different performance standards
 Different legal requirements
o Internet helps companies manage global
 Warehouse management
 Transportation management
 Logistics
o Outsourcing
Demand driven supply chains
o Supply chain management systems
 Push based model
 Pull based model
 Help businesses move from sequential supply chains to concurrent supply
chains
Business Value of Supply Chain Management Systems
o Match supply to demand
o Reduce inventory levels
o Improve delivery service
o Speed product time to market
o Use assets more effectively
o Reduced supply chain costs lead to increased profitability
o Increase sales
Customer relationship management
o Knowing the customers
 In large businesses, too many customers and too many ways customers interact
with firm
o Customer relationship management (CRM)
 Capture and integrate customer data from all over the organization
 Consolidate and analyze customer data
 Distribute customer information to various systems and customer touch points
across enterprise
 Provide single enterprise view of customers
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CRM software
o CRM packages range from niche tools to large scale enterprise applications
o More comprehensive have modules for:
 Partner relationship management (PRM)
 Employee relationship management (ERM)
o Packages typically include tools for
 Sales prospect and contact information, sales quote generation capabilities
 Customer service
 Assigning and managing customer service requests, web based self
service capabilities
 Marketing
 Capturing prospect and customer data, scheduling and tracking direct
marketing mailing or e – mail, cross selling
Operational and Analytical CRM
o Operational CRM
 Customer facing applications such as sales force automation, call center and
customer service support and marketing automation
o Analytical CRM
 Based on data warehouse populated by operational CRM systems and customer
touch points
Business value of customer relationship management
o Business benefits
 Increased customer satisfaction
 Reduced direct marketing costs
 More effective marketing
o Churn rate – number of customers who stop using or purchasing products or services
from a company
Next gen enterprise applications
o Social CRM
 Incorporating social networking technologies
 Company social networks
o Business intelligence
 Inclusion of BI with enterprise applications