Uploaded by sebastiaan.vantilborg


Digital Organisation
Chapter 1: Information Systems in Global Business Today
Opening case: Premier League: The Power of IT Analytics
Well known football clubs have a large budget to spend on their players or IT, less known clubs have to
come through with a smaller budget. Nevertheless, in 2016, a smaller club has won the Premier League
because of the usage of Big Data to improve their revenue and player training.
 Illustrates why information systems are so essential today.
Opening case: smart stores reinvent the retail space
Door nieuwe slimme camera’s moeten klanten in een winkel niet meer wachten bij de kassa. Deze camera’s doen aan
gezichtsherkenning maar ook aan productherkenning. Hierdoor gaat het sneller voor de klant maar is het ook voordelig
voor de winkel door de besparing van arbeidskosten.
3. How are information systems transforming business, and why are they so essential for
running and managing a business today?
An increased IT-related spending: from 21% up to 33% of the total investment
- Hardware, software, and telecommunications equipment
- Consulting services: to help their employees with the implementation of IT
Smartphones and other mobile devices
Widespread access to the internet: ex. a smart refrigerator
Online social networks: ex. costumer reviews on Yelp, Google
Laws requiring organizations to store digital records (GDPR)
Change management: Een vorm van management die zich in het bijzonder bezighoudt met het veranderen
van de structuur en/of de werkwijze van een organisatie.
The Gartner Hype Cycle can be used to identify interesting technologies that can be used in an
organisation. It shows the maturity and the adoption of these technologies. Digital technologies move
through 5 stages:
1) innovation trigger: a lot of media interest but it is not really
usable yet
2) peak of inflated expectations: there are some success
3) trough of disillusionment: more and more failures
4) slope of enlightenment: a better understanding of the
benefits that the technology could offer to an organisation
5) plateau of productivity: the product will be adopted
What is new in Management Information Systems
IT innovations
- Cloud computing: buy a subscription to have infrastructure (you don’t have to own the
hardware). Ex. Office 365
- Big data and the Internet of Things
- AI and machine learning
New business models
- Online video streaming services for ex. Netflix instead of Telenet or other on-demand
e-commerce services
E-commerce expanding
- Selling physical products (Zalando)
- Selling services (Netflix, Spotify)
- Selling both (Amazon)
Management changes
- Managers use social networks, collaboration tools
- Virtual meetings
Changes in firms and organizations
- More collaborative and teamwork between IT-teams and businesspeople, less
emphasis on hierarchy
- Higher-speed and more accurate decision making based on data and analysis
- More willingness to interact with consumers through social media
- Better understanding of the importance of IT: new employees are used to working
with technology
These digital organizations lead to a globalization with challenges and opportunities. Internet and
global communications have changed how and where business is done:
Drastic reduction of costs of operating and transacting on global scale. Ex. outsourcing from
another, less expensive, county  the wages are lower  less costs
Competition for jobs, markets, resources, ideas. Ex. outsourcing  more competition from all
over the world
Growing interdependence of global economies: more import and export
Requires new understandings of skills, markets, opportunities to distinguish yourself from
other, cheaper, workers
Information systems enable globalization of commerce
Because of the impact of IT on organizations, there are more and more digital firms. A digital firm is a
firm where:
Significant business relationships (relationships with customers, suppliers, employees) are
digitally enabled and mediated
Core business processes are accomplished through digital networks
Key corporate assets are managed digitally. KCP = human assets such as employees, financial
assets, …
These digital firms offer greater flexibility in organization and management for ex. time shifting and
space shifting (working from anywhere, anytime).
Strategic Business Objectives of Information Systems
There is a growing interdependence between:
o The ability to use information technology (information systems)
o The ability to implement corporate strategies and achieve corporate goals (organization)
Firms invest heavily in information systems to achieve six strategic business objectives:
1. Operational excellence
4. Improved decision making
2. New products, services, and business models
5. Competitive advantage
3. Customer and supplier intimacy
6. Survival
2.2.1 Operational excellence
Improve the efficiency of operations to achieve higher profitability. Information systems and
technologies help improve this efficiency and productivity which in the end will save you a lot of
money. When these new technologies are coupled with changes in the behaviour of employees or the
strategy of the organization, it will be even more efficient.
 Ex. Walmart is the most efficient retailer; Colruyt has ‘ugly’ stores, but they can guarantee a lowcost supermarket; Ikea saves a lot of money by having the costumers assemble their own furniture.
2.2.2 New products, services, and business models
Information systems and technology a major enabling tool for new products, services, and business
models. A business model is how a company produces, delivers, and sells its products and services.
 Ex. Uber is a taxi company but it does not need to buy taxis or drivers, because it links already
existing drivers with their own cars to a customer. This is a different business model than a taxi
2.2.3 Customer and supplier intimacy
Customer intimacy: if a customer is treated well, he/ she will come back another time.
 Ex. High-end hotels that use computers to track customer preferences (room
temperature, light settings) and then customize the room for each costumer.
o Supplier intimacy: building a close relationship with your suppliers to minimize your costs
 Example: Just-in-time (JIT) manufacturing
2.2.4 Improved decision making
Managers can’t always make the best decisions without accurate information. They have to make
forecasts, guesses which can lead to over- or underproduction, a misallocation of resources or poor
response times.
Technology or information systems can help them by enabling informed decision-making. This allows
managers to have the right information at the right time (real-time data).
 Ex. Verizon’s web-based digital dashboard to provide managers with real-time data (customer
complaints, network performance, line outages, …)
2.2.5 Competitive advantage
All these strategic business objectives could lead to a competitive advantage. This means that your
company is better at something than your competitors.
This can be achieved through:
- Delivering better performance
- Charging less for superior products
- Responding to customers and suppliers in real-time
 Ex. UPS, Walmart
2.2.6 Survival
Businesses may need to invest in information systems out of necessity, just because their competitors
have a technological advantage and your customers expect the same.
 Ex. Citibank’s introduction of ATMs.
Another reason why companies need to invest in technology are federal and state regulations and
reporting requirements.
 Ex. the Sarbanes-Oxley Act that requires companies to keep all emails for five years, this requires
a certain technology.
What is an information system? How does it work? What are its management,
organization, and technology components? Why are complementary assets essential for
ensuring that information systems provide genuine value for organizations?
What is an Information System (IS)?
An Information system (IS) is a:
o Set of interrelated components
o That will collect, process, store and distribute information
o And also support decision making and control
There is a difference between information and data:
o Data are streams of raw facts
o Information is data shaped into meaningful, useful form  information adds a meaning to
It is necessary that organizations use their data correctly to create information  translates data into
information. An Information System can be used for this.
How does it work? Activities in an information system that produce information organizational
decision-makers need:
o Input: captures raw data
o Processing: converts raw data into meaningful form (information)
o Output: transfers processed information to support decision-making
o Feedback: output returned to appropriate members of the organization to help them evaluate
or correct the input stage
There is a difference between a computer program and an Information System.
Computers and software are the technical foundation, but they have to be tailored
to a specific organization in order to become an Information System. In this course,
we will assume three dimensions of IS.
The three dimensions of Information Systems
3.2.1 Organizations
Senior Management: makes strategic decisions about products and
services to ensure firm performance
o Middle Management: carries out the plans of senior management
o Operational Management: responsible for monitoring daily
The Information System has to help one of these three levels.
These factors need to be taken into account when designing an Information System:
o Different business functions in which the technology will be used:
- Sales and marketing
- Human resources
- Finance and accounting
- Manufacturing and production
 The IS will be used to optimize each business function but also to make them all work
together better
o Unique business processes: ex. fulfilling an order, enrolling a student, …
 The IS will automate part of/ the entire business process
o Unique business culture  the IS has to support the business culture
o Organizational politics: there are a lot of different jobs and functions in an organization who
pursue their own interests
3.2.2 Management
Managers have an important role in an organization:
o They sense business challenges and opportunities in the environment: “what are the
o They set organizational strategy in response: “what is our strategy?”
o They allocate resources to carry out strategy: “how are we going to execute this strategy?”
In addition, managers must act creatively:
o Creating new products and services
o Re-inventing the organization. They have to figure out how to change their organization before
it becomes insignificant
3.2.3 Technology
Hardware and software  changes very quickly, this is a challenge for organizations
Data management technology
Network and communication technology (network, internet, intranet, extranet)
IT infrastructure: provides platform that system is built on
3.2.4 Example: UPS tracking system
1) Organizational
o The UPS tracking system is embedded in the sales and production business functions.
Business processes related to tracking packages, managing inventory and providing
information to customers are all embedded by the UPS tracking system.
UPS has a business culture where they put the customer first and deliver real-time information
about their packages
Managers have set the strategy of combining low cost and superior service
Allocate resources to carry out this strategy: using an information system to support this
Monitoring service levels and costs
3) Technology
Handheld computers, bar-code scanners, networks, desktop computers, etc.
It Isn’t Just Technology: A Business Perspective on Information Systems
Investing in information technology does not guarantee good returns. In some cases, it might even be
counterproductive such as in the 4th quadrant of the graph below.
The factors are:
o Adopting the right business model
o Investing in complementary assets (organizational and management capital) and not only
focusing on the technology
1: less investments, more business value
2: more investments, more business value
3: less investments, less business value
4: more investments, less business value?!  blindly
investing in technology (no O and M)
3.3.1 Complementary Assets: Organizational and Management capital
These are assets required to derive value from a primary investment. Firms supporting technology
investments with investment in complementary assets receive superior returns.
Complementary assets such as:
o Examples of organizational assets
- Appropriate business model
- Efficient business processes
o Examples of managerial assets
- Incentives for management innovation
- Teamwork and collaborative work environments
o Examples of social assets: investments not made by the organization itself (by the government)
- The Internet and telecommunications infrastructure
- Technology standard
Chapter 2: Global E-Business and Collaboration
Opening case: Social networking helps Sanofi Pasteur innovate and improve quality
Sanofi Pasteur is the vaccine division of the French multinational pharmaceutical company. This leads
to multiple problems, such as:
o Hierarchical top-down processes: a lot of employees who need to work together
o Large geographically dispersed workforce: all around the globe
o Lack of collaboration and idea sharing: this is necessary for innovation
Therefore, they have created some solutions:
o Develop knowledge sharing strategy and goals
o Redesign knowledge and collaboration processes
o Change organizational culture
o Implement Microsoft Yammer collaboration software: kind of a ‘Facebook for businesses’ with
groups and a newsfeed  improved their performance and enabled knowledge gathering and
sharing between employees
What are business processes? How are they related to information systems?
= Business processes are at the heart of the organization. It is a logically related set of tasks that
define how specific business tasks are performed. The total of all business processes is how a
business operates. In other words, businesses can be seen as collection of business processes.
It may be tied to functional area or be cross-functional. The following order fulfillment process is crossfunctional because it involves 3 functions (sales, accounting, production).
The order of these business processes is important. If for ex. they produce an order before the
customer credit is checked, it could lead to problems when it appears that they can’t really pay for it.
Other examples of functional business processes:
Business process(es)
Manufacturing and production
Assembling the product
Checking for quality
Sales and marketing
Identifying customers
Finance and accounting
Creating financial statements
Paying creditors
Human resources
Hiring employees
Business processes may be assets or liabilities:
 Assets: als door de business processen de organisatie beter en efficiënter te werk gaat.
 Liabilities: als er chaos veroorzaakt wordt door gebruik te maken van de business processen.
How Information Technology Improves Business Processes
Organisations will start by looking at their business processes, analyzing them and re-engineer them.
This is business process reengineering means thinking about how we can change the steps in our
process in the way tasks are performed to get some kind of benefit out of it.
o Increasing efficiency of existing processes
- Automating steps that were manual
o Enabling entirely new processes
- Changing flow of information
- Replacing sequential steps with parallel steps
- Eliminating delays in decision making
- Supporting new business models
2.1.1 Example Ford
At first, Ford had over 500 employees to make sure their orders were all
checked, and the vendors were being payed correctly. This was a very long
process which leaded to a long lead time between order and payment.
o Order was made (copy of purchase order)
o Products were received (receiving document)
o Vendor sent an invoice (invoice)
o The vendor was paid after the ‘accounts payable’ had a physical copy
of these 3 documents and they checked if everything on these
documents matched
Obviously, this was a long and complicated process, that could be easily
improved by introducing a database in which these 3 documents were stored
so that each department (purchasing, receiving and account payable) could
access each other’s documents. The business model also changed because they
didn’t have to check everything from the other 2 departments. This way, the
lead time was reduced drastically, and Ford could reduce their employees by
So, by both introducing this information technology and by changing their business processes, Ford
successfully reduced their business processes.
How do systems serve the different management groups in a business, and how
do systems that link the enterprise improve organizational performance?
Systems for different management groups (2)
Transaction processing systems (TPS)
- Support operational managers who are responsible for daily activities: perform and record
daily routine transactions necessary to conduct business.
 Ex. sales order entry, payroll, shipping.
Allows managers to monitor status of operations and relations
with external environment
Systems for business intelligence: transforming data into information
that enables managers to make better and smarter decisions (3)
- Management information systems
- Decision support systems
- Executive support systems
3.1.1 Management Information Systems (MIS)
Supports the middle management
Used periodically (not daily <-> transaction processing)
Provide reports on firm’s current performance, based on data from TPS
Provide answers to routine questions with predefined procedure for answering them (ex.
questions about trends in sales)
3.1.2 Decision Support Systems (DSS)
o Supports the middle management
o Support nonroutine decision making (ex. How much do we charge if we want to double our
profits? Or what is the impact on production schedule if December sales doubled?)
o Use TPS/ MIS data and/ or external information (ex. fluctuating electricity prices)
- These DSS may help let the managers handle these external forces
o Model driven DSS: ex. Voyage-estimating systems
o Data driven DSS: ex. Intrawest’s marketing analysis systems
3.1.3 Executive Support Systems (ESS)
Supports senior management who make strategic and future oriented decisions
Support nonroutine decision making (more important than DSS). They require judgment,
evaluation, and insight of the senior management (ex. Should we take over another company?)
Incorporate data about external events (e.g., new tax laws or competitors) as well as
summarized information from internal MIS and DSS
All of these systems use each other’s information to create new information. The systems
should be linked!
The ESS reports should be easy to use so that a senior manager can make decisions quickly 
ESS provides a ‘digital dashboard’ with real-time view of firm’s financial performance
Enterprise Applications
These are systems designed to link the enterprise.
o Combine different functional areas (sales, production, accounting, HR)
o Execute business processes across the firm
o Include all levels of management
o Four major applications (4)
- Enterprise systems
Supply chain management systems
Customer relationship management systems
Knowledge management systems
3.2.1 Enterprise Systems (ERP)
Also called enterprise resource planning (ERP) systems
Integrate data from key business processes into single system
Speed communication of information throughout firm
Enable greater flexibility in responding to customer requests, greater accuracy in order
Enable managers to assemble overall view of operations
3.2.2 Supply Chain Management Systems (SCM)
Manage relationships with suppliers, purchasing firms, distributors, and logistics companies.
Manage shared information about orders, production, inventory levels, …
Goal = move correct amount of product from source to point of consumption as quickly as
possible and at lowest cost
Interorganizational system: automating flow of information across different organizations 
this means that you should also know the business process of your suppliers, etc.  can be
used to enhance supplier intimacy
3.2.3 Customer Relationship Management Systems (CRM)
CRM Systems help manage relationship with customers and coordinate the business processes that
deal with customers in sales, marketing, and customer service.
o Goals:
- Optimize revenue
- Improve customer satisfaction and retention
- Identify and retain most profitable customers; see which customers aren’t profitable and
maybe invest less in these groups
- Increase in sales
3.2.4 Knowledge Management Systems (KMS)
This is used by organizations to let their employees learn new things.
 Ex. a webinar on how to treat your customers and their data.
They collect the relevant knowledge and make it available wherever needed in the enterprise to
improve business processes and management decisions.
Intranets and Extranets
These are some sort of internet-protected websites.
 Intranets are designed for internal employees
 extranets are designed for other people.
 They are technology platforms that increase integration and expedite the flow of information.
E-Business, E-Commerce, and E-Government
E-business: use of digital technology and Internet to drive major business processes
E-commerce: part of e-Business focusing on buying and selling goods and services through
E-government: using Internet to deliver information and services to citizens, employees, and
Why are systems for collaboration and social business so important, and what
technologies do they use?
o Sharp: een Japanse multinational die eerst aan top down decision making deed (De
leiders maakten eerst de beslissingen en de werknemers moesten dit gewoon
uitvoeren) maar nu meer en meer belang hecht aan two-way dialogue (Nu is er veel
meer dialoog tussen werkgever en werknemer bij het nemen van beslissingen).
 Functionalities:
 Create groups to collaborate on projects
 Share and edit documents
 Company news feed
 People directory
 Business benefits:
 Improved information flow
 More engaged employees
 Breeding ground for innovation
 Change in corporate culture
What is Collaboration?
There is a growing importance of collaboration within organizations (between employees) but also
between employees and their suppliers, customers, distributors, …
o Changing nature of work: the jobs that need to be done require more and more teamwork
o Growth of professional work “interaction jobs”: more and more jobs require interaction with
co-workers or externals for feedback, share information
o Changing organization of the firm: less hierarchical, flatter organizational structure
o Changing scope of the firm: everything is becoming global
o Emphasis on innovation to stay relevant and competitive (innovation comes from
o Changing culture of work: teams will produce a better output than individuals
What is Social Business?
Collaboration is important with employees, but also with customers and suppliers. This is social
business. It’s the use of social networking platforms (internal and external) to engage employees,
customers, and suppliers.
 Ex. Instagram, Facebook, LinkedIn
o Aims to deepen interactions and expedite information sharing
o “Conversations” to strengthen bonds with customers. Ex. COS posts pictures of their
costumers wearing their clothes  strengthen the relationship between brand and clients
o Seen as way to drive operational efficiency, spur innovation, accelerate decision making
Business benefits of collaboration and teamwork:
o Investment in collaboration technology can return large rewards, especially in sales and
marketing, research and development
o Productivity: share knowledge and resolve problems
o Quality: faster resolution of quality issues
o Innovation: more ideas for products and services
o Customer service: complaints handled more rapidly
o Financial performance: generated by improvements in factors above
When will collaboration result in firm performance?
o Collaboration capability: flattened organizational structure
o Collaboration technology
 lead to collaboration quality  lead to firm performance
Collaboration is not something that just happens, you need to nurture it to design your organization
to support collaboration. A key ingredient is a collaborative business culture:
o Senior managers rely on teams of employees
o Policies, products, designs, processes, and systems rely on teams
o The managers purpose is to build teams
o Collaboration needs to be rewarded, not individuality
Collaboration technologies
E-mail and instant messaging (IM)
Virtual worlds
Collaboration and social business platforms
- Virtual meeting systems (Blackboard Collaborate)
- Cloud collaboration services (Google Drive, Google Docs, etc.)
- Microsoft SharePoint
Enterprise social networking tools (Microsoft Yammer)
Managers have to decide which tools they use for collaboration. How do they evaluate and select these
collaboration and social software tools?
o Six steps in evaluating software tools
- Identify your firm’s collaboration challenges
- Identify what kinds of solutions are available
- Analyse available products’ cost and benefits
- Evaluate security risks
- Consult users for implementation and training issues
- Evaluate product vendors
o Time/space matrix
Same place, same time: face-to-face
Same place, different time: continuous tasks. Ex. a team room with a
whiteboard where you meet at different times
Different place, same time: video conferencing or livestreaming
Different place, different time: ex. watching a recording of a lesson
another time at home
What is the role of the information systems function in a business?
The Information Systems Department consists of:
o Often headed by chief information officer (CIO)
- Other senior positions include chief security officer (CSO), chief knowledge officer (CKO),
chief privacy officer (CPO), chief data officer (CDO)
o Programmers
o Systems analysts: identify what the Information Systems should be doing
o Information systems managers
o End users: should be included in the implementation of the Information Systems
IT governance is a way of thinking about how the IT investments can result in business value.
o Strategies and policies for using IT in the organization
o Decision rights and accountability
- Who makes what decisions?
- Who is accountable when something goes wrong?
o Structures, processes and relational mechanisms
- We need structures to make sure business value is coming from these IT investments. Ex.
interdisciplinary team where business and IT are working together
- Processes: how are decisions made
- Relational mechanisms: making sure business and IT understand each other
Chapter 3: Information Systems, Organizations, and Strategy
Which features of organizations do managers need to know about to build and
use information systems successfully?
Information technology and organizations influence each other:
o Structure
o Business processes
o Politics
o Culture
o Environment
o Management decisions
What are organizations?
1) A technical definitions  very mechanical
o Formal social structure that processes resources from environment to produce outputs
o A formal legal entity with internal rules and procedures, as well as a social structure
2) A behavioural definition  harder to change
o A collection of rights, privileges, obligations, and responsibilities that is delicately balanced
over a period of time through conflict and conflict resolution. Focus is more on relationships,
values and people.
Features of organizations
Use of hierarchical structure: each person is accountable for their own tasks
- Accountability, authority in system of impartial decision-making
Adherence to principle of efficiency
Routines and business processes
Organizational politics
Organizational culture
Organizational environments
Organizational structures
1.2.1 Routines and business processes
Organizations is a collection of business processes which also consists of collections routines or
standard operating procedures. These are precise rules, procedures, and practices developed to cope
with virtually all expected situations.
o Business processes: collections of routines
o Business firm: collection of business processes
When implementing new Information Systems, they will impact all these routines and therefore also
the business processes.
1.2.2 Organizational politics
Each employee who works at an organization might have their own individual goals and this can lead
to political struggle, competition, and conflict. This political resistance greatly hampers organizational
change. When implementing new Information Systems, employees might be resistant to this change.
1.2.3 Organizational culture
Contains a set of assumptions that define goal and product of an organization:
o What products the organization should produce
o How and where it should be produced
o For whom the products should be produced
May be powerful unifying force as well as restraint on change withing Information Systems.
1.2.4 Organizational environments
Organizations and environments have a reciprocal relationship (they influence each other):
o Organizations are open to, and dependent on, the social and physical environment: they need
employees coming from the environment
o Organizations can influence their environments. Ex. through advertising
Environments generally change faster than organizations. If organizations can’t cope with these
changes fast enough, it is called inertia. What causes this inertia? Politics, culture, …
Therefore, organizations should frequently scan the environmental and search for external changes
that may require an organizational response. Disruptive technologies
Technology that brings significant change to businesses, industries, markets.
Ex. PC’s, smartphones, Big Data, artificial intelligence, the Internet
As an organization, you have to be a first mover or a fast follower when it comes to these disruptive
o First movers: inventors of disruptive technologies. Ex. Citibank was the first bank in New York
that created the ATM’s
o Fast followers: firms with the size and resources to capitalize on that technology
o Slower followers might get into trouble and lose their clients to the other 2 groups
1.2.5 Organizational structures
There are 5 basic kinds of organizational structure (Mintzberg):
o Entrepreneurial: young and flat organizations; typically start-ups
o Machine bureaucracy: very centralized, large bureaucracies. Ex. manufacturing companies
focused on a small set of products
o Divisionalized bureaucracy: has multiple business units. ex. manufacturing companies with
different type of products
Professional bureaucracy: a central decision making but the quality of the products depend on
the employees. Typically, organizations that are built on expertise or specific employees, ex.
Adhocracy: multidisciplinary teams who work together for a short period of time  changes a
lot. Ex. a consulting firm
Information system often reflects organizational structure.
What is the impact of information systems on organizations?
Economic impact
Can be seen through 2 theories: transaction cost theory and the agency cost theory.
2.1.1 Transaction cost theory
Firms want to minimize their transaction costs (costs of participating in markets). This can lead to
vertical integration where organizations controls the entire supply chain, hiring more employees,
buying suppliers and distributors.
But IT can lower these transaction costs, making it worthwhile for firms to transact with other firms
rather than grow the number of employees.
o Ex. Communicating with suppliers (SCM systems), outsourcing (communication technologies).
2.1.2 Agency cost theory
A principal (owner) employs agents (employees) to perform work. The agents need to be supervised
to make sure that they act in the principal’s interest, instead of their own.
 when a firm grows, the agency costs (costs related to managing/supervising employees) also grows.
But IT can reduce agency costs, making it possible for firms to grow without adding to the costs of
supervising, and without adding employees.
 Werknemers mogen hun eigen persoonlijke doelen hebben die ze nastreven binnen een bedrijf
maar de manager moet ervoor zorgen dat deze persoonlijke doelen in lijn liggen met de doelen
van het bedrijf.
Organizational and behavioural impact
IT flattens organizations
- Decision making is pushed to lower levels
- Fewer managers are needed: IT enables faster decision
making (right information at the right time) and increases
span of control
Post-industrial organizations:
- Organizations flatten because in post-industrial societies, the
focus is more on knowledge and competence rather than
formal positions
2.2.1 Understanding organizational resistance to change
Information systems potentially change an organization’s structure, culture, politics, and work. The
most important reason of failure of Information Systems is resistance to change. This is why a lot of
consulting firms focus on change management within organizations.
What is change management? Involving your stakeholder early on in the process of implementing a
new IS; involving end-users in the beginning of this process and allowing them to give feedback.
The Internet and Organizations
What do we need to take into account when implementing a new IS?
The Internet increases the accessibility, storage, and distribution of information and
knowledge for organizations
The Internet can greatly lower transaction and agency costs
- Ex. a large firm delivers internal manuals to employees via a corporate website, saving
millions of dollars in distribution costs. Instead of printing and posting them, they could
just find it on the website.
Structure: hierarchy, specialization, routines, business processes
Culture and politics
Type of organization (family-owned or not) and style of leadership
Main interest groups affected by system (suppliers, customers); attitudes of end users
Tasks, decisions, and business processes the system will assist
How do Porter’s competitive forces model, the value chain model, synergies, core
competencies, and network economics help companies develop competitive strategies
using information systems?
Porter’s Competitive Forces Model (5)
There are five competitive forces that shape the strategic position
of a firm
Your competitors are in the same industry and experience the
same other 4 forces as you do, so you are in the same ‘circle’.
1) Traditional direct competitors:
- want to steal your customers by creating new products and services.
2) New market entrants:
- Some industries have high barriers to entry (capital costs, required expertise): higher
barriers, less market entrants
- New companies have new equipment, younger workers, but little brand recognition
3) Substitute products and services:
substitutes customers might use if your prices become too high. Not exactly the same
product, but fulfill the same needs (Spotify and Apple Music)  more substitutes weaken
your strategic position
4) Customers:
- Can customers easily switch to competitor's products? Can they force businesses to
compete on price alone in transparent marketplace? (more price transparency -> the customers bargaining
power is higher)
5) Suppliers:
- related to the number of suppliers a firm has. If there are a lot of suppliers available in the
market, then the supplier’s bargaining power is lower
3.1.1 Information Systems for dealing with competitive forces (4)
Low-cost leadership: produce products and services at a lower price than competitors
(Walmart’s efficient customer response system)
Product differentiation
- Enable new products or services, greatly change customer convenience and experience
- Mass customization: ex. Nike can customize each sneaker
Focus on market niche: use information systems to enable a focused strategy on a single
market niche; specialize (Hilton Hotels’ OnQ system)
Strengthen customer and supplier intimacy
- Use information systems to develop strong ties and loyalty with customers and suppliers
- Increase switching costs
 Ex. Amazon recommends other books after you purchased one, after a while the
recommendations are really interesting and the switching cost to another supplier
becomes higher
3.1.2 The Internet’s impact on competitive forces
The Internet is either a threat to some industries or can lead a transformation.
Competitive Force
Substitute products or services
Customers’ bargaining power
Suppliers’ bargaining power
Threat of new entrants
Rivalry among existing competitors
Impact of the Internet
Enables new substitutes to emerge (Wikipedia competes
with printed encyclopaedia)
Customers can quickly compare prices, increasing their
bargaining power
Internet lowers suppliers’ bargaining power
Internet reduces barriers to entry, increasing the threat of
new entry
Widens geographic market, increasing the number of
Internet of Things (IoT) also has an impact on these competitive forces. Smart products such as fitness
equipment or health trackers gather information from their customers and raise the switching costs.
o Ex. a smartwatch that tracks your runs: you are likely to keep using this watch because it
already has all your data from before and buying another brand means losing this data.
Impact IoT:
o Increasing rivalry between competitors: it is ‘easy’ to make smart products
o Raise switching costs
o Inhibit new entrants: it is difficult for new firms to gain new customers
o May decrease power of suppliers
The Business Value Chain Model
Views the firm as a series of activities that add value to products or services. We have 2 different kinds
of activities:
Primary activities: directly related to production and distribution of the products or services
Support activities: make the primary activities possible (HR, administration)
At each stage, you evaluate whether or not this contributes
to your competitive advantage and whether you could use
Information Systems to create a competitive advantage in
this specific activity. You determine how Information
Systems can improve operational efficiency and improve
customer and supplier intimacy.
The different activities are linked and therefore, their
different Information Systems can use each other’s data.
The top arrow represents a value chain of an individual
company; the bottom arrow is the industry value chain,
where each particle has its own firm value chain.
3.2.1 The Value Web
As an individual firm, you are part of this industry value chain. This industry value chain is sequential
and every organization in this chain changes very fast. The Value Web is something non-sequential to
adapt quickly to a changing environment.
It is some kind of network system where suppliers, firms and customers work together and can more
easily respond to changes in the market.
Value web: a highly synchronized industry value chain
Collection of independent firms using highly synchronized IT to
coordinate value chains to produce product or service collectively
More customer driven, less linear operation than traditional value
Synchronizes business processes of value partners
3.2.2 Synergies
Refers to benefits that an organization expects to realize when it merges with or acquires another
Ex. Google purchased YouTube and now there are Google video ads on YT; when you Google
something, a lot of YouTube clips show up in the search results.
When merging with another company, there could be problems with separately operating units. The
role of Information Systems is coordinating these operations of the separate units so that they can act
as a whole. This is very complex.
3.2.3 Core Competencies
Each organization has their own activity and core competencies for which this firm is a world-class
leader. This relies on knowledge, experience, and sharing this across business units.
Ex. Ford’s core competencies are manufacturing vehicles. When they started working together
with UPS (which core competencies are delivering products), they saved a lot on money on
vehicle inventory and inventory carrying cost. UPS has a web-enabled system that helps them
with their core competencies.  IS can help organizations work together with other
organizations and let them focus themselves on their core competencies.
3.2.4 Network-Based Strategies
Take advantage of firm’s abilities to network with one another.
Include use of:
o Network economics
o Virtual company model
o Business ecosystems Network economics
o The marginal cost of adding new participant almost zero, with much greater marginal gain
o When the economic value being produced depends on the number of people using a product
or service
o IS can be used to build and maintain the network/community
- Ex. the more people join eBay, the more interesting in becomes. When there are only 2
people on eBay and the first person sells a car and the second person wants to buy a
bike, it is not interesting. Virtual company model
A virtual company:
o Uses networks (private extranet) to work together with other companies
o Creates and distributes products without being limited by traditional organizational
boundaries or physical locations: they do not own factories or machinery, but they manage
multiple organizations that do own factories or machinery
Ex. Li & Fung:
o Manages production, shipment of garments for major fashion companies
o Does not own fabrics, factories, or machines
o Outsources all work to thousands of suppliers Business ecosystems and Platforms
o Instead of participating in a single industry, some firms participate in industry sets (so
collections of industries that provide related products or services)
o One or a few keystone firms that create platforms (ex. Microsoft and Facebook)
o Ex. Mobile internet platform:
- Device makers (Apple, Samsung, Huawei)
- Wireless telecommunication firms (Proximus, Orange)
- Independent software applications providers: they create apps
- Internet service providers (Proximus)
 These are 4 different industries that are working together
The difference between the Value Webs and these Business Ecosystems is that these Business
Ecosystems cross industry boundaries while the Value Webs typically stay within these industry
boundaries. They're both about collaboration between firms about searching for synergies.
What are the challenges posed by strategic information systems, and how should
they be addressed?
Sustaining competitive advantage is far more difficult than actually creating this advantage
- Competitors can copy strategic systems
- Systems may even become tools for survival
Aligning IT with business objectives (it is all about how you use IT to support your business
- First step is performing strategic systems analysis (Porter, Value Chain)
 Structure of industry
 Firm value chains
Managing strategic transitions
- Adopting strategic systems requires changes in business goals, relationships with
customers and suppliers, and business processes
Chapter 8: Securing Information Systems
Why are information systems vulnerable to destruction, error, and abuse?
Why systems are vulnerable?
There is a difference between IS Security and Controls:
o IS Security is the prevention of unauthorized access, alteration, theft, or physical damage to
information systems.
o Controls are the methods and organizational procedures that ensure safety of organization’s
assets; accuracy and reliability of its accounting records; and operational adherence to
management standards. How you can ensure your Information Systems are safe.
Main categories of threats to Information Systems (6):
o Network of systems provides multiple access points to which hackers can enter the system
o Hardware problems: server breaking down
o Software problems: programming errors, unauthorized changes
o Power failures, natural disasters: earthquakes
o Use of networks/computers outside of firm’s control: using your company computer for
personal reasons that are not congruent with the companies’ security policy
o Loss and theft of portable devices
 When organizations work with other organizations, they have to make sure those other firms also
think about their security because it can also harm you when they get hacked for example.
Internet vulnerabilities
Large public network open to anyone and the large number of Internet users means abuses
can have wide impact
Information systems connected to the Internet are vulnerable for external attacks
Unencrypted VOIP (voice-over IP): hackers can intercept your voice conversations
E-mail, instant messaging can be leaked
Wireless Security Challenges
Bluetooth and Wi-Fi networks are susceptible to sniffing. Sniffing means monitoring the network
traffic. How does this work?
o Hackers can pick up SSIDs (service set identifiers) from different users with their sniffer
programs and try to infiltrate this network.
War driving: a hacker can drive by buildings or park outside and try to detect their SSIDs to
intercept wireless network traffic. Once access point is breached, the intruder can gain access
to networked drives and files.
A hacker can create ‘rogue access points’ to which unsuspecting users connect, making their
username and password visible to the intruders
What do these hackers do after accessing your network? (7)
o Use malware (malicious software) that harms your Information Systems (3):
- Viruses: malicious code attached to a host file, reproduces itself
- Worms: spread from system to system without host file (autonomously). It works without
human interaction, so it works a lot faster than viruses
- Trojan Horses: a way for a virus to enter the system
o Worms and viruses spread by downloads and drive-by downloads, E-mail, IM (instant
messaging) attachments
o Mobile device malware
o Social network malware
o SQL injection attacks: technique used to try gain unauthorized access to databases underlying
websites (steal usernames and passwords used on a website)
o Ransomware: hackers break into your computer, encrypt your files and request payment for
o Spyware that monitors web-surfing by key loggers that record every keystroke made on a
Hackers and computer crime
Hackers and crackers both intend to gain unauthorized access to a system, but crackers have some sort
of criminal intent.
Certified Ethical Hacker (CEH) are ‘good’ hackers. They are hired by organizations to search for flaws
in their computer systems.
What kind of techniques do these hackers do? (5)
o Spoofing and sniffing
- Spoofing: re-directing to a fake website that looks like the real one. Ex. a fake site of ING
to gather your financial data.
- Sniffing: monitoring network traffic
o Denial-of-service attacks (DoS): this is a way of flooding a server with many false service
requests in order to crash their server or network.
- Distributed Denial-of-Service (DDoS): attack the server from various computers
- DDoS attack can be performed by botnet: many infected PCs (without owner’s knowing)
o Identity theft: obtaining key pieces of personal information to impersonate someone else (ex.
credit card information)
- Phishing: spoofing to obtain confidential data
- Evil twins: rogue Wi-Fi networks posing as legitimate. Ex. when you are at a café, use ‘their’
(but actually a false) Wi-Fi-network, they can gather your passwords, etc
Pharming: redirect a website's traffic to a rogue server: kind of like phishing but phishing
uses a false website and pharming uses a real website, but a bad server.
Click fraud: pay-per-click advertising: use techniques to click competitor’s ads frequently,
thereby increasing their marketing costs
Cyberwarfare: state-sponsored activities to attack computers and networks of other states.
Ex. Stuxnet that the US used to damage the nuclear programs of Iran
Internal threats: employees
Sometimes, the biggest threat to an organization aren’t hackers but their own employees  internal
threat. This is because they lack the knowledge of security and might let others use their passwords,
or login on multiple uncontrolled devices.
Social engineering is when attackers might trick employees in sharing their passwords by pretending
to be colleagues from internal IT helpdesk.
Software vulnerability (5)
Not only networks, but also the software itself, are vulnerable.
Commercial software contains defects (bugs) that create security vulnerabilities:
o Software without defects cannot be achieved because complete testing is not possible with
large programs
o Flaws can open networks to intruders
o Zero-day vulnerabilities: found by hackers, unknown to the creator  sold on the dark-web
Patches are small pieces of software to repair these flaws
o As an organization, it is better to wait a while before purchasing a new software so that most
potential bugs are already solved
What is the business value of security and control?
Failed computer systems can lead to significant or total loss of business function (“downtime”).
Ex. when Blackboard crashes, then the University’s business processes (teaching classes) is
Firms now are more vulnerable than ever because they capture a lot of confidential, personal and
financial data; but also trade secrets, new products, strategies.
A security breach may negatively affect a firm’s market value almost immediately.
Inadequate security and controls also bring forth issues of liability.
 Companies can be sued for not taking appropriate protective action to prevent loss of confidential
Legal and regulatory requirements for firms (3):
- Medical security and privacy rules and procedures
o Gramm-Leach-Bliley Act
- Requires financial institutions to ensure the security and confidentiality of customer data
o Sarbanes-Oxley Act
- Imposes responsibility on companies and their management to safeguard the accuracy
and integrity of financial information that is used internally and released externally
When you are sued, electronic evidence can be crucial.
o Legal cases increasingly rely on evidence represented as digital data
o Proper control of data can save time and money when responding to legal discovery request
Computer forensics are:
o Scientific collection, examination, authentication, preservation, and analysis of data from
computer storage media for use as evidence in court of law
o Recovery of ambient data: recovers deleted data
What are the components of an organizational framework for security and control?
How can an organization help prevent these security breach problems? Information System Controls,
Risk Assessment and a Security Policy.
Information System Controls
May be automated or manual (ex. making sure the physical servers are okay and no non-authorized
personnel can reach them).
o General controls: apply to all computerized applications
- Software controls, hardware controls, computer operations controls, data security
controls, system development controls, administrative controls,
o Application controls: unique to a computerized application
- Input controls, processing controls, output controls
Risk Assessment
An organization should determine various level of risk if specific activity or process is not properly
controlled. These risks are estimated by the likelihood that the event happens and the impact if it
Probability of
Loss Range (average)
Expected Annual Loss
Power failure
$5,000 − $200,000 $30,750
$50,000 $1,275
User error
$40,000 $19,698
 In de eerste kolom zie je de “risk”, in de 2de kolom de “likelihood” en in de 3de kolom staat de
 You can see that the likelihood of a user error is much greater than power failure, but the impact
of a power failure is bigger than a user error. Combined, the expected annual loss of a power failure
is way higher.
Security Policy
The security policy states your security goals and mechanisms for achieving these goals. A manager
should think about their assets and the costs if these assets are breached; the costs and benefits of the
security systems and the maximal level of risk that the organization is willing to take.
Drives other policies
- Ex. Acceptable use policy (AUP): defines acceptable uses of firm’s information resources
and computing equipment, and consequences of noncompliance
Identity management: defining different types of users and the access rights for each user
Disaster Recovery Planning and Business Continuity Planning
Thinking about what an organization should do in case of a disaster (power outage, earthquake). (2)
o Disaster recovery planning: focuses on restoring IT-operations after disaster
o Business continuity planning: focuses on restoring business operations after disaster
Both types of plans needed to identify firm’s most critical systems. A manager needs to do a business
impact analysis to determine impact of an outage on the business and then determine which systems
should be restored first.
Role of Auditing
Information systems audit is checking the 3 types of controls. It examines a firm’s overall security
environment as well as controls governing individual information systems.
Security audits (3)
o Audit security effectiveness
o Review technologies, procedures, documentation, training, and personnel
o May even simulate disaster to test responses
Auditors list and rank control weaknesses and the probability of occurrence but also assess financial
and organizational impact of each threat.
What are the most important tools and technologies for safeguarding
information resources?
Tools and technologies for safeguarding Information Systems (6)
Identity management software
- Automates keeping track of all system users and controlling their access
- Users can have different access rights at different systems
Authentication: password systems, tokens, smart cards, biometric authentication (irises,
fingerprint, face), two-factor authentication
- Combination of hardware and software that prevents unauthorized users from accessing
private networks
- Controls flow of incoming and outgoing network traffic
- Acts like a “gatekeeper” that checks each user’s credentials before granting access to the
network (identify IP address)
Intrusion detection system
- Monitor vulnerable spots on networks and identify suspicious behaviour (unauthorized
access) --> Alert, or even shut down (part of) network, in case of unauthorized traffic
Antivirus and antispyware software
- Prevents, detects, and removes malware from computers
- Requires continual updating to remain effective
Unified threat management (UTM) systems
- Comprehensive security management products
Encryption and Public Key Infrastructure
It is important to encrypt your data. This means transforming data into encrypted data that can only
be read by sender and intended receiver. This uses an encryption key, used to encrypt and decrypt.
Two methods:
o Symmetric key encryption
o Sender and receiver use single, shared key  exposes the key to outsiders for
interception  not the safest
o Public key encryption
o Uses two keys: the receiver has a public key (that is known to everyone) and a private
key  they are linked, but cannot be derived from each other
o Sender encrypts message with recipient’s public key
o Recipient decrypts with private key
Digital certificate is some sort of digital password that uses a trusted third party, certification authority
(CA), to validate a user's identity.
Public key infrastructure (PKI) is all about working with these certificate authorities.
Ensuring System Availability
Downtime is the loss of business function after a cyber-attack. In order to avoid this, we can ensure
system availability. This is necessary when dealing with online transactions because it requires 100%
Fault-tolerant computer systems are used for this. It is a back-up that provides continuous,
uninterrupted service and has built-in logic to detect hardware failures and automatically switch to a
backup device.
You can also outsource your company’s security to another organization whose core competency is
o Ex. Managed security service providers (MSSPs).
Security Issues for Cloud Computing and the Mobile Digital Platform
Cloud computing:
Organizations can store their data in the cloud. But regardless of where the data is stored, it is their
responsibility to make sure it is secure. Responsibility for security resides with company owning the
Mobile devices create their own kind of new security issues.
o Ex. in case an employee lost their mobile device you might want to lock it down immediately
or erase it.
Guest Lecture: KPMG
What is Information Security about? (CIA) (EXAMEN)
o Confidentiality: protecting information against unauthorized disclosure
 Have data available to only the people who are authorized to have access to the data
 Ex. nudes from Sean, Peter and Stan
o Integrity: protecting information against unauthorized modification
 make sure the data is really correct
o Availability: ensuring that information remains accessible
 Ex. ransomware: malware that encrypts your entire system and if
you don't pay the ransom you cannot decrypt your files and they
are no longer available to you.
De uitleg voor de volgende begrippen staat ook in de afbeelding rechts:
Threat actors are different people who want to gain access to your systems,
steal data, damage, …
Hacktivism: ex. Anonymous, Greenpeace
The insider: people who got fired that want to expose secrets, …
State-sponsored: ex. Rusland, Amerika,...
Internet of things: connects everything to the internet
IAM: Identity and Access Management
o Authentication
o Authorisation
o You want to secure all your cloud applications in a strong matter.
For example, by using multifactor authentication. It exists from
3 parts: (EXAMEN)
 Something you know: password, username, secret question
 Something you have: ID-card, smartphone, token (ex. card)
 Something you are: fingerprint, voice recognition, retina scan
How hackers operate (2 soorten):
o Classical hacking: trying to breach technical measures that someone takes (antivirus, firewall,
multifactor authentication).
o Hacking anno 2021: targeting the human factor by convincing them to do something stupid 
social engineering.
HTTP: Als iemand je communicatie kan onderscheppen kan deze persoon je gesprekken meelezen in normale woorden.
HTTPS: is veilig
Als bestanden eindigen met X (ppt,word,..) dan weet je dat er geen malware in zit (het niet gevaarlijk is)
Chapter 9: Achieving Operational Excellence and Customer Intimacy:
Enterprise Applications
How do enterprise systems help businesses achieve operational excellence?
Enterprise Systems are commonly referred to as Enterprise Resource Planning (ERP) systems.
It is a cross-functional system used to linking the enterprise (end-to-end). It is important that all the
different business functions work together well and have each other’s information.
Example: when an order is created by sales and marketing, it is
important that operations knows about this order so they can
start manufacturing it. Also, outbound logistics should know this
so they can start planning the distribution. If there is an
increasing amount of orders created by sales and marketing, it
might also be interesting for HR to know about it so they can
invest in extra personnel.
 Enterprise systems are all about bridging these
communication gaps between these different compartments
Enterprise Systems
Set of integrated software modules and one common central database  all about data
Brings together data from all over the firm for use in many internal business activities
Information entered in one process is immediately available for other processes  can lead
to significant increase in operational efficiency.
Enterprise Software
Collection of integrated software modules (Finance & accounting, sales & marketing, human
Built around many predefined business processes that reflect best practices (=a method or
technique that has been generally accepted as superior to any alternatives; seems to work well
for other organizations)
Firms can (2):
- Adapt its business processes to the best practices
- Customize the software to fit their specific business processes
 How should an organization decide whether they should adapt their business processes or
adapt their software? They decide whether or not a business process delivers a competitive
advantage. If a business process doing does not deliver a competitive advantage, the firm
might want to adapt it to the software to the best practice.
Business Value of Enterprise Systems
Increase operational efficiency  operational excellence
Provide firm-wide (and real-time) information to improve decision making
Enable rapid responses to customer requests for information or products
Include analytical tools to evaluate overall organizational performance and improve decisionmaking in (quasi) real- time
How do supply chain management systems coordinate planning, production, and
logistics with suppliers?
The supply chain is a network of organizations and business processes to move a product from a
supplier to a customer.
o Procuring materials, transforming these materials into products, and distributing the products
(finished goods) to customers
o It is a flow of information and can be supported by Information Systems
Different elements in the supply chain (3):
o Upstream supply chain
- Firm’s suppliers, suppliers’ suppliers, processes for managing relationships with them
o Downstream supply chain: everything happening towards the customers
- Organizations and processes responsible for delivering products to customers 
distributors and retailers
o Internal supply chain
- The employees that transform the raw materials, components and services into the actual
Information interesting for the upstream part of
the supply chain are: capacity, inventory level,
delivery schedule, payment terms.
Information interesting for the downstream part
of the supply chain are: orders, return requests,
repair and service requests, payments.
Supply chain management:
Inefficiencies in supply chain (ex. part shortage) increases operating costs. These inefficiencies
come from un-timely information/ imperfect information.
 effectively managing supply chain can save you money
Just-in-time (JIT) strategy (assumes perfect information)
- Components arrive as they are needed
- Finished goods shipped directly after leaving assembly line
- JIT assumes a low stock at all times
This is not realistic; this is why organizations use a safety stock. This is buffer for lack of
flexibility in supply chain and takes into account imperfect information
This leads to the bullwhip effect:
- Information about product demand gets distorted as it passes from one entity to next
across supply chain
- A small increase in demand by the customers can lead to a big effect in the upstream part
of the supply chain
- All caused by the inaccurate information
voorbeeld bullwhip effect: If the customers want more of a
product, then the retailer will supply just a little more than the
anticipated stock (just in case). Distribution will increase the
stock just a little more, and as you move further upstream, this
will amplify.
Supply Chain Management Software (2)
Supply chain planning systems
- Model existing supply chain
- Enable demand planning (generate demand forecasts):
guesses of what the demand will be in the future
- Optimize sourcing, manufacturing plans
- Establish inventory levels
- Identify transportation modes
Supply chain execution systems
- Manage flow of products through distribution centre’s and warehouses
- Ensure finished products are delivered to the right locations in the most efficient way
Global Supply Chains and the Internet
 When companies outsource their manufacturing to companies in low wage countries like
China, then a lot of participants on the supply chain are working in different regions and time
zones. Also, all these different people will have different performance standards or different
legal requirements. Global supply chain has some additional complexities.
Global supply chain issues
- Extend across multiple regions and time zones
- Participants from different countries
 Different performance standards
 Different legal requirements
Internet helps manage global complexities
- Outsourcing of manufacturing
- Warehouse management
- Logistics (by monitoring shipments)
Demand-Driven Supply Chains: From Push to Pull Manufacturing and Efficient
Customer Response
Business Value of Supply Chain of these Management Systems
Push-based model (“build-to-stock”)  traditional supply chain models
- Production schedules based on demand forecasts (guesses what the demand will be)
- Products are “pushed” to customers
Pull-based model (“build-to-order”)
- Customer orders trigger events in supply chain
- Actual order information drives production schedules
- Internet supports this model
Ex. Dell does not produce a computer until there is a specific order and then they will build
the computer to the customer’s specifications
Match supply to demand
Reduce inventory levels
Improve delivery service
Faster product time to market
Use assets more effectively: total supply chain costs can be 75% of operating budget 
managing the supply chain efficiently can really provide great benefits
Increase sales
How do customer relationship management systems help firms achieve customer
 The goal of CRM is to optimize customer satisfaction and retention, which will optimize
revenue and profitability. In order to do so, you really have to know your customers: Who
are they? How do we contact them? What kind of products are they interested in? How
much business do they generate? In large businesses, this is not as easy because there
often are too many customers to know them personally  use CRM systems.
CRM Systems
Capture and integrate customer data from all over the organization. Especially from sales,
marketing and service.
Consolidate and analyse customer data
Distribute customer information to various systems and customer touch points across
Provide single enterprise-wide view of customers
 customer will feel known and satisfied
CRM Software (3):
Sales force automation (SFA)
- Improve productivity of sales staff: focus on the most profitable customers
- Sales prospect and contact information
- Sales forecasts
Customer service: increase efficiency of call centres, help desks and customer support staff;
help manage customer service requests
- Capturing prospect and customer data
- Scheduling and tracking direct-marketing mailings or e-mail, support targeted marketing
- Cross-selling: marketing of complementary goods (products that most people buy together)
This figure shows the response on several promotional campaigns. The
response was highest via direct mails and lowers through social media. In the
future, they might not use social media for these kinds of promotional
The CRM Software packages range in size and complexity, normally it is just focused on sales,
customer service and marketing, but there are more larger packages such as (2):
o Partner relationship management (PRM)
- Extend past the borders of a firm to its selling partners
- Integrating lead generation, pricing, promotions, order configurations, and availability
- Tools to assess partners’ performances
o Employee relationship management (ERM)
- Focus on how employees perform and interact with customers
- Setting objectives, employee performance management, performance-based
compensation, employee training
Operational and Analytical CRM
Operational CRM includes everything that a company should provide to their employees who directly
interact with customers. Customer-facing applications such as:
o Sales force automation
o Call centre and customer service support
o Marketing automation
Analytical CRM is used by managers and decision makers to improve business performance.
o Applications that analyse customer data generated by operational CRM applications
o Identify buying patterns, create segments for targeted marketing, determine customer
o Let the decision makers determine a customer’s lifetime value for the firm
Business Value of CRM Systems
Increased customer satisfaction
Reduced direct-marketing costs
More effective marketing
Lower costs for customer acquisition/retention
Increased sales revenue
Reduce customer churn
- Churn rate is determined by customers who stop using or purchasing products or services
from a company. It indicates the decline of firm’s customer base.
- Compare with growth rate: churn rate < growth rate -> good
What are the challenges that enterprise applications pose, and how are enterprise
applications taking advantage of new technologies?
It is expensive to purchase and time intensive to implement these enterprise applications:
multi-million-dollar projects in 2018; long development times (±16 months)
Technology changes
Business process changes: trade-off between adapting business processes to the software and
the other way around
Organizational learning, changes: employees need to learn the new activities which are part
of the new business processes
- Importance of change management!
High switching costs, dependence on software vendors
- Vender locking: really high switching costs so you are ‘locked’ with one vender
Data standardization, management, cleansing
New technologies
Enterprise solutions/suites: make applications more flexible, web-enabled, integrated with
other systems
Cloud-based versions
Functionality for mobile platform
Social CRM
- Incorporating social networking technologies within these typical CRM systems
- Monitor social media activity; social media analytics
- Manage social and web-based campaigns
Business intelligence
- Inclusion of BI with enterprise applications
- Flexible reporting, ad hoc analysis, “what-if” scenarios, digital dashboards, data
Guest Lecture: AE
Ae betekenis: adapt and enable
AE is a business and ICT consulting company that helps other organizations into their digital
transformation journeys.
They have four business lines:
1) Transformation & innovation: helping other organizations with optimizing and digitizing their
business as usual.
2) Software engineering: building software applications for clients.
3) Data intelligence: helping organisations getting info out of their data.
4) Quality and time excellence: we focus on all of the 3 previous business lines on quality and time
Why are we here: provide firm-wide information to improve decision-making.
BAC case
BAC context
When choosing an Enterprise System, you can choose between buying it or building it.
- Standardization &
 Less flexibility
- Adjust according to
 More expensive
your needs
 Standardize your
processes to fit
 More uncertainty
- Often lower
implementation cost
- Can handle complex
Dagelijks zijn er ongeveer 70 000 passagiers op Brussels Airport.
Verschil Brussels airport en Brussels airport company:
o Brussels airport company facilitate in airport operations
In the case of Brussels Airport Company (BAC), they chose to build an Enterprise System. The goal was to:
o Facilitate processes in airport operations: infrastructure, buildings
o Provide planning, predict and forecast models
Brussels Airport Company has a lot of challenges:
o European sky is getting crowded: airport capacity is limited
o Complex ecosystems, many partners: require effective collaboration
o Weren’t scoring well on passenger happiness (ASQ)
How do they want to tackle these challenges? What are their goals?  AOP: Airports Operations Plan
o Become the n°1 transfer hub in Europe: passengers passing through Brussels Airport
o Increase customer satisfaction
o Increase control on airport operations
o Increase operational efficiency
o Boost collaboration between airport community
How to reach these goals:
o E2E approach
o From reactive to pro-active
o Insight driven improvement
o Work on all levels business, organisation & technology
Intro: case short connections
One of the main functionalities of the AE platform was short connections. A connection is the time you
have to wait between the arriving flight, and the departing flight (without leaving the airport).
They calculated the available time a passenger has between his two flights and the needed time to go
through the airport and catch their flight.
Short connections approach
Five steps:
1) Inside-out: looking at the operations between different parties in the airport and look at the
communication between the two parties
Process modelling:
 Why: to understand the inside-out processes of BAC
2) Outside-in: look at the perspective of the passenger and look at the different steps of their
3) Key locations: incoming gate, screening, border control, outgoing gate
• Identifying the key locations:
 Incoming gate
 Screening
 Border control
 Outgoing gate
4) Identify KPI’s (key performance indicators): passenger throughput, waiting times, punctuality
of flight
5) Enterprise application: developing the program
The program can tell if a certain connection is at risk or not. This means that the timeframe between
needed time and available time will be very small so the passenger might miss their flight.
If the connection is at risk, the program can provide certain methods for improving this (mitigation
 For example, just rebooking your flight or maybe opting for a fast-lane ticket that minimizes the
waiting line at screening or border control.
Next steps to improve the passenger experience (5)
Mitigation actions
Integration with other applications
Focus on waiting times
Passengers with reduced mobility (wheelchairs)
Key takeaways
An enterprise system:
o Can be an enabler to gain insights & to be more proactive
o Can help organizations having one single version of the truth
o Is not the holy grail. Transformation on business & organizational level is also needed.
By centralizing limited amounts of data, you can already create a lot of value on a short amount of
While the environment of your business changes constantly, your digitalization efforts should also
evolve continuously.
Chapter 10: E-commerce: Digital Markets, Digital Goods
What are the unique features of e-commerce, digital markets, and digital goods?
 E-Commerce is all digitally-enabled commercial transactions. It has
known an exponential growth: current e-commerce growth > offline
retail sales growth. Because of Covid-19, E-Commerce has gained even
more importance.
 The new e-commerce is social, mobile, local:
o Rapid growth of social media
- Social media marketing: towards more communication with
o Explosive adoption of smartphones
o Local merchants are increasingly engaged in e-commerce (Covid- 19)
Why E-Commerce is different
Ubiquity (omnipresent): digital markets are available everywhere, all the time
Global reach
- Commercial transactions can cross geographical (and cultural) boundaries easily
- Potential market size for e-commerce roughly equal to the world’s online population
Universal standards
- Technical standard for conducting e-commerce (i.e., internet) is universal  reduced
market entry costs to conduct global business (entry barriers): cheaper to enter new
markets around the globe because it is done the same way/ according to standards
Richness: supports video, audio, and text messages. Ex. when buying something online, the
site can add a video on how to use the product.
Allow for two-way communication between merchant and consumer (as opposed to for
instance mail ordering). Ex. a chat window on a website
Information density
- Greater price and cost transparency
Ex. comparing prices for the same product on different websites
- Merchants can discover much more about consumers (ex. # product page visits)
- Personalized marketing
- Recommender systems (based on past purchases). Ex. Zalando recommends products
based on your previous purchases.
Social technology
- Promotes user content generation and social networking. Ex. customer reviews/Q&A
between customers
- From “one-to-many” to “many-to-many” model of mass- communication
 One-to-many: the company communicates to their customers
 Many-to-many: mass communication -> many customers communicate to
other customers
Key concepts in E-Commerce: Digital Markets and Digital Goods in a global marketplace
Digital Markets
Internet and digital markets have changed the way companies conduct business:
o Higher information transparency
o Lower menu costs, search and transaction costs
- Menu costs: costs of changing your prices -> cheaper to change your prices online than in
a physical store
- Search costs: opportunity cost on time spend on searching
- Transaction costs: cost of participating in the market
o Dynamic pricing enabled
- Based on demand characteristics of the customer
- Based on the supply situation of the seller
o Switching costs
o Delayed gratification: the time between ordering and receiving the product (the shipping) can
delay the gratification of using the product
o “cutting out the middleman” which leads to a lower price
Digital Goods
Goods that can be delivered over a digital network
- Ex. Music, movies, books, magazines
- Physical counterparts decline in sales (less DVDs and CDs)
Cost of producing first unit is almost entire cost of product
- Marginal cost of extra unit is approximately zero. Ex. when you write a book, it is very easy
to make a new copy of that book when using an e-book
Costs of delivery over the internet very low
Marketing costs remain the same; pricing highly variable
Industries with digital goods are undergoing revolutionary changes (publishers, record labels)
What are the principal e-commerce business and revenue models?
Types of E-Commerce
Three major types (categorized by nature of participants):
o Business-to-consumer (B2C): ex. Zalando
o Business-to-business (B2B): ex. Vikingdirect.be (also has a B2C site)
o Consumer-to-consumer (C2C): ex. eBay, Vinted
Mobile commerce (m-commerce) is a subset of e-commerce (can be B2C, B2B, or C2C)  using apps
for the E-Commerce.
E-Commerce Business Models (7)
Portal: “entry points” to the web (Google, Bing): they create revenue by selling ads
E-tailer: online retail stores (Bol.com)
- “bricks-and-clicks”: combine physical store and e-commerce (Vanden Borre, Cool blue)
Content provider: provides digital content: offers intellectual property content that users can
purchase to use on their digital devices.
- Streaming services (Spotify, Netflix) or iTunes
Transaction broker: process transactions for customers over internet and saving them time
and money by doing so
- Financial services (BinckBank)
- Travel services (Booking.com)
Market creator: provide platform where buyers and sellers can meet (eBay, Vinted, Uber,
Service provider: offer services online: e-tailer for services
- Ex. Software as a service (SaaS) (Microsoft’s Office 365) or WeTransfer
Community provider: provide digital online environment: Social networking: ex. Facebook or
E-Commerce Revenue Models
o Advertising: ex. ads on YouTube
o Sales: Selling goods or services
o Subscription: Fee for access (Monthly payments): ex. Netflix
o Free/Freemium: Offer basic services or content for free, but charge for advanced features: ex.
o Transaction fee: fee for each transaction. Ex. eBay or Vinted
o Affiliate: Send visitors to other sites in return for referral fee (Lead-generation fees). Ex.
Influencers provide affiliated links to buy a product to their viewers
How has e-commerce transformed marketing?
Internet marketing provides new ways to identify and communicate with customers at a low
Long tail marketing: Internet enables inexpensive marketing for niche products. Focus on a
small group of people who most likely will be interested in your product instead of spending a
lot of money to reach a lot of people.
Behavioural targeting: tracking online behaviour of individuals (time spent on a page, what
products they viewed, how many clicks)  expose them to personalized ads
Advertising networks
- Track users at all members sites
- Database of clickstream behaviour
- Create profiles of (potential) customers
- Can show you the same personalized ads on different sites
Programmatic ad buying
- Buy specific targets (users that fit a profile) and show them personalized ads
- Increase ad effectiveness (show ads only to the right people at the right time)
Native advertising
- Placing ads in social network newsfeeds or within traditional editorial content
- Appear to be part of the story or the story itself: it looks like a part of the website, but it is
an ad
Social E-Commerce and Social Network Marketing
Social e-commerce based on digital social graph (=the network of people you are connected
to on the Internet)
- Features of social e-commerce driving its growth (social sign-on, social search
 Social sign-on: websites can let their users sign in through their Facebook or
Gmail  use information for personalized ads
 Social search: consumers can ask their friends for advice on products by
viewing their evaluations
Social media is the fastest growing media for branding and marketing
Social network marketing
- Seeks to leverage individuals’ influence over others
- Targeting a social network of people sharing interests and advice
Social shopping sites (Pinterest): share shopping ideas with friends
Wisdom of crowds
- Consult thousands of customers to make better decisions, create new ways to markets,
find out how customers feel about your product, …
Crowdsourcing: present a problem or opportunity online and let people provide suggestions,
advice, or feedback
How has e-commerce affected business-to-business (B2B) transactions?
Electronic Data Interchange (EDI)
Businesses can communicate over the Internet through EDI. It is a computer-to-computer exchange of
standard transactions such as invoices, purchase orders, …
o Major industries have EDI standards that facilitate communication between these businesses
- Define structure and information fields of electronic documents
o More companies are moving toward web-enabled private networks
- Allow them to link to a wider variety of firms than EDI allows
- Enable sharing a wider range of information
New ways of B2B buying and selling
Private industrial networks (“private exchange”)  Extranet
- Large firm using a secure web-based network to link to suppliers,
distributors and other key business partners for an efficient supply chain
Net marketplaces (“e-hubs”)
- Single digital marketplace for many buyers and sellers  not private
- May focus on direct or indirect goods
- May be vertical or horizontal marketplaces
Exchanges  net marketplaces for 1 purchase
- Independently owned third-party Net marketplaces for spot purchasing
What is the role of m-commerce in business, and what are the most important mcommerce applications?
M-commerce is the use of mobile devices for E-Commerce transactions.
o M-commerce in 2017 is 35% of all e-commerce
o Fastest growing form of e-commerce: growing at 20 percent or more per year
o Main areas of growth
- Mass market retailing (Amazon, eBay)
- Sales of digital content (iTunes)
- In-app sales to mobile devices
- Services (Uber, Airbnb)
Location-Based services and applications
Used by 74% of smartphone owners
Based on GPS technology
Geosocial services: to find out where friends are
Geo-advertising: to find out what shops are nearby through location-based ads
Geoinformation services: to find out the price of a house for sale you are passing
Other mobile commerce services
Financial account management apps: banks, credit card companies
Mobile advertising market
- Google and Facebook are largest markets
- Ads embedded in games, videos, and mobile apps
M-commerce websites and apps (Wish, Zalando, Cool blue, Amazon)
- 55% of online retailers have m-commerce websites
What issues must be addressed when building an e-commerce presence?
Most important management challenges
- Developing clear understanding of business objectives: which customers do we want to
reach with our e-commerce platform, what products do we want to sell
- Knowing how to choose the right technology to achieve those objectives: make sure the
platform is easy to use
Develop an e-commerce presence map
- Four areas: websites, e-mail, social media, offline media
Develop a timeline: milestones
- Breaking a project into discrete phases (development website, implementation, social
media plan, …)
Guest lecture: Bol.com
The power of platforms
In a marketplace, there are a lot of sellers and buyers so that everyone can find exactly what they are
looking for. It is an assembly so that every demand can be addressed.
VOOR de pandemie hadden we een verwachting van 2.6% groei v.d. offline markt en een groei van
10.4% online (dit was een verwachting voor het jaar 2025). NU zijn de verwachtingen veel hoger.
In Azië veranderd de online markt nog een stuk sneller dan in Europa omdat ze verder ontwikkelt zijn
in dit technologie.
Today, these marketplaces are also online. Ex. Deliveroo, Booking.com and Uber. But these
marketplaces also exist for shopping, ex. bol.com, 2dehands.be, Amazon, …
Bol.com’s strategy: “Together we can change retail in order to make everyday life easier with local
o Work together with local partners
• Het aandeel partners doorheen de jaren is enkel gestegen en dit wordt ook verwacht voor
de toekomst (in 2019 waren dit 24 000 partners en in 2021 zijn dit er al 47 000)
o Be present locally. Your packages can be delivered at home, but also at your local Albert Heijn
or Delhaize.
o Speak the local language (difference between Dutch of Belgium and The Netherlands)
o Local assortment: put the local partners in the spotlight with their local products. Ex. a
cookbook of Jeroen Meus will be more in the spotlight than one of Jamie Oliver.
o Local calendar: Belgium and The Netherlands celebrate the holidays a little different. In
Belgium, only children receive presents with Sinterklaas while in The Netherlands, both
children and adults receive presents.
Bol.com is for everybody: both independent entrepreneurs and known brands can sell on bol.com.
How bol.com changes the game (3)
Platform development
Be available wherever your customer goes
Grow your business
Reach new customers
Een combinatie van bovenstaande 3 zorgt voor het groeien van je merk (onderneming)!!
Shopper data
They use customers data (what they search, how many times they click on a certain product) to
optimize how the local partners can reach these customers better.
 A good title and specifications are more important than a unique
 Also a short delivery times and a Track&Trace can increase customers
Bol.com uses customers data to find ‘whitespots’. These are products that customers are looking for
but are not finding on the website. These are opportunities that bol.com can utilize.
Advertising technology
Bol.com is the 6th most viewed app in Benelux with over 3,5 million visits daily so it is the perfect base
for advertising.
Partners can place their products in the spotlight by paying per click. This way, you can extend your
reach and choose how much you want to invest in these sponsored products.
Cost per click:
Click thru rate:
Key Takeaways
1) Half of all future purchases will be made through platforms
2) Platforms offer a seamless customer experience
3) Adapting to local customer needs will make the difference
Partner: Claudia Lubbersen
Je kan een dienst of een product verkopen
Een partner van bol.com worden is gratis
Chapter 11: Managing Knowledge and Artificial Intelligence
What is the role of knowledge management systems in business?
Knowledge management systems among fastest growing areas of software investment
- It is used to share knowledge throughout the firm
Information economy: creating and managing knowledge is major source of business value
- 37% of US labour force are knowledge and information workers
- 55% of US GDP comes from knowledge and information sectors
Important dimensions of knowledge
What is knowledge in the context of an organization?
o Data, information, knowledge, and wisdom
- Data: transactions captured by an organization’s systems
- Information: organized data to provide understanding
- Knowledge: discover patterns, rules, and applicable contexts
- Wisdom: results from applying knowledge in problem-solving
o Knowledge can be tacit or explicit
- Tacit: resides in the head of employees
- Explicit: formally documented
o Knowledge can lead to a competitive advantage when the organization has knowledge-based
core competencies (=the things the firm does best)
o Organizational learning: a process in which organizations gain experience through collection
of data, measurement, trial and error, and feedback
The Knowledge Management Value Chain
Knowledge management is a set of business processes developed in an organization to create, store,
transfer, and apply knowledge.
In order to adequately manage your knowledge, you could consider the knowledge management value
o This is the process from creating (or acquiring) to applying knowledge
o Each stage adds value to raw data and information as they are transformed into usable
- Knowledge acquisition
- Knowledge storage
- Knowledge dissemination/ distribution
- Knowledge application
1.2.1 Knowledge acquisition
Documenting tacit and explicit knowledge (by storing documents/reports/presentations,
developing online expert networks)
Creating knowledge (by using data mining techniques on the data)
Tracking data from TPS (transaction processing systems) and external sources
Ex. a bank.
o Documenting the business process of granting someone a loan
o Using data of loans that very fully repaid and didn’t get repaid to create a model for granting
a loan
1.2.2 Knowledge storage
Document management systems: documents can be tagged so that they can be easily found
by employees
1.2.3 Knowledge dissemination/ distribution
Portals, wikis
E-mail, instant messaging
Search engines, collaboration tools (ex. Microsoft Yammer)
1.2.4 Knowledge application
Applying this knowledge to create:
o New business practices
o New products and services
o New markets
Knowledge management consists of Information System Activities and Management and
Organizational Activities.
Building Organizational and Management Capital: Collaboration, Communities of
Practice, and Office Environments
Organizations are developing new organizational roles and responsibilities for the acquisition of
knowledge because knowledge is becoming a strategic asset.
o Chief knowledge officer executives (CKO): designing methods for the different stages of the
Knowledge Management Chain
o Dedicated staff / knowledge managers
o Communities of practice (COPs)
- Informal social networks of professionals and employees
- Activities include education, online newsletters, sharing knowledge
Types of Knowledge Management Systems (3)
Enterprise-wide knowledge management systems
- General-purpose
- Firm-wide
- Collect, store, distribute, and apply digital content and knowledge
Knowledge work systems (KWS)
- Specialized systems built for knowledge workers (engineers, scientists) who are
responsible with discovering and creating new knowledge
- Ex. computer-aided design (CAD)
Intelligent techniques
- Diverse group of techniques such as data mining used for various goals: discovering
knowledge, distilling knowledge, discovering optimal solutions
- Ex. AI and machine learning
What are artificial intelligence (AI) and machine learning? How do businesses use AI?
What is Artificial Intelligence?
Systems that take data inputs, process them, and produce outputs (like all software programs)
AI programs differ from traditional software programs in the techniques and technologies they
They can perform many complex tasks that would be difficult or impossible for humans to
perform  more complex systems
Recognize millions of faces in seconds; interpret millions of CT scans in minutes; analyse millions of
financial records; detect patterns in very large Big Data databases; improve their performance over
time (“learn”); navigate a car in certain limited conditions; respond to questions from humans (natural
language); speech activated assistants like Siri, Alexa, and Cortana.
Major Types of AI (7):
o Expert systems
o Machine learning
o Neural networks and deep learning networks
o Genetic algorithms
o Natural language Processing
o Computer vision
o Robotics
Capturing Knowledge: Expert Systems
Capture tacit knowledge from an expert and transform it into explicit knowledge that a nonexpert user can use
Typically perform limited tasks (ex. diagnosing malfunctioning machine, determining whether
to grant credit for loan)
Used for highly-structured decision-making: capture knowledge as set of rules, typically IFTHEN-ELSE rules
Can be used to support decision making, but do not replace humans
Key elements:
- Knowledge base: Set of hundreds or thousands of rules (made by humans)
- Inference engine: Strategy used to search knowledge base
Machine Learning
How computer programs improve performance without explicit programming. The machine
learning software will recognize patterns and relationships in large data sets
Ex. Netflix or Amazon recommender systems, identify patterns of fraud for PayPal
Two types of learning:
- Supervised learning: a human will guide the computer to learn certain things and at some
point, the computer will begin to learn on its own  system is “trained” by providing
specific examples of desired inputs and outputs identified by humans in advance
- Unsupervised learning: same procedures, but humans do not feed the system examples
 system learns on its own
Neural Networks
Find patterns and relationships in massive amounts of data too complicated for humans to
analyse using pattern detection programs  a type of machine learning:
- Humans “train” network by feeding it data inputs for which outputs are known
- “Learn” patterns by searching for relationships, building models, and correcting over and
over again
Inspired by the structure of the human brain: contains highly interconnected units or nodes
Examples: speech recognition, targeted online ads
3 layers:
Input layer
The hidden layer will construct some kind of logic to interpret the inputs and turn them
into outputs.
Output layer
A deep learning network are multiple neural networks combined. Deep learning
algorithm must have more than 3 layers of neural networks.
Genetic Algorithms
Useful for finding optimal solution for specific problem by examining very large number of
possible solutions for that problem  able to evaluate many solution alternatives quickly
Used in optimization problems in which hundreds or thousands of variables exist
Ex. minimization of costs, efficient scheduling
Natural language processing (NLP)
Enable computers to understand, and speak in natural language, read natural language and
Typically based on machine learning, aided by very large databases of common phrases and
sentences in a given language
Ex. Google Translate or digital assistants: Siri, Alexa, Cortana, Google Assistant
Computer vision
Digital image systems that create a digital map of an image (like a face, or a street sign), and
recognize this image in large data bases of images in near real time
- Facebook’s Deep Face can identify friends in photos across their system, and the entire
- Autonomous vehicles can recognize signs, road markers, people, animals, and other
vehicles with good reliability
- Passport control at airports
- Identifying people in crowds
Design, construction, and operation of machines that can substitute for humans in many
factory, office, and home applications (home vacuums)
Generally programmed to perform specific and detailed actions in limited domains (ex. robots
spray paint autos, and assemble certain parts)
Can be used in dangerous situations where you don’t want to risk a human life (ex. bomb
Robotics also can be used in a medical context: surgical robots
Intelligent Agents
Work without direct human intervention to carry out repetitive, predictable tasks for example
deleting junk e-mail, finding cheapest airfare
Some are capable of self-adjustment using machine learning and NLP. Ex. Siri will adapt to the
user’s individual preferences over time
Example: chatbots for customer service
What types of systems are used for Enterprise-Wide Knowledge Management, and how
do they provide value for businesses?
There are three major types of knowledge in an enterprise:
1) Structured documents: reports, presentations, formal rules
2) Semi structured documents: e-mails, videos
3) Unstructured, tacit knowledge that resides in the minds of employees
And 80% of an organization’s business content is semi structured or
Enterprise Content Management Systems
Help organizations manage structured and semi structured knowledge
- Help capture, store, retrieve, distribute, preserve documents and semi structured
- Bring in external sources of information (from research)
- Tools for communication and collaboration (blogs, enterprise social networking)
Key problem: enabling employees to easily find and access the information or knowledge that
they need  developing taxonomy to easily find documents
Digital Asset Management Systems help companies classify, store and distribute digital objects
(photographs, video and audio content)
These Content Management Systems offer functionalities to locate and share expertise.
o They link employees who have tacit knowledge with other employees who need this
o Search tools enable employees to find appropriate expert in a company
o Social networking and social business tools for finding knowledge outside the firm
Learning Management Systems (LMS)
Provide tools for management, delivery, tracking, and assessment of employee learning and
- Support multiple modes of learning (Web-based classes, online forums, instructional
- Automates selection and administration of courses
- Assembles and delivers learning content
- Measures learning effectiveness
Massively open online courses (MOOCs): web course open to large numbers of participants
(Microsoft, Coursera)
What are the major types of knowledge work systems, and how do they provide value for
the firm?
Knowledge Workers and Knowledge Work
Knowledge workers are researchers, designers, architects, scientists, engineers who create knowledge
for the organization.
They have three key roles:
o Keeping organization’s knowledge up-to-date
o Serving as internal consultants/experts
o Acting as change agents (evaluating, initiating, and promoting change projects)
These workers are supported by Knowledge Work Systems. These are systems for knowledge workers
to help create new knowledge and integrate that knowledge into business.
Requirements of Knowledge Work Systems
Sufficient computing power for graphics, complex calculations
Powerful graphics and analytical tools to visualize the newly created knowledge
Communications and document management
Access to external databases
User-friendly interfaces
Designed and optimized for specific tasks to be performed (design engineering, financial
CAD (computer-aided design)
- Creation of engineering or architectural designs
- 3D printing
Virtual reality
- VR to let medical students learn a specific surgery
Augmented reality: different than VR because you are still in the same physical world but
enhanced by some kind of virtual image. Ex. you have an iPad with augmented reality
Chapter 12: Enhancing Decision-Making
What are the different types of decisions, and how does the decision-making
process work?
1.1 Types of decisions (3)
- Involves judgment, evaluation, and insight to solve problem  typically very complex
decisions; not taken daily
- Each decision is nonroutine, with no agreed-on procedure for making the decision
- Repetitive and routine  easy, simple decisions
- Involve definite procedure for handling
- Often supported by Knowledge Management Systems
Semi structured:
- Part of problem structured and part unstructured
The higher the organizational level, the more unstructured decisions become!
The Decision-Making Process (4)
Intelligence / Problem discovery
- Discover, identify, and understand the problems occurring in the organization  really try
to understand the problem
Design / Solution discovery
- Identify and explore different solutions to the problem
Choice / Choosing solutions
- Choose best solution
Implementation / Solution testing
- Making chosen alternative work and continuing to monitor how well solution is working
- Is the solution working? How can we make it work better?
How do business intelligence and business analytics support decision-making?
What is business intelligence
 Businesses collect a lot of data about their customers, suppliers, … Business intelligence and
business analytics are a way to make sense of these huge amount of data.
Business intelligence
- Infrastructure for collecting, storing, analyzing data
- The data is stored in data warehouses and/or data marts
 Difference data warehouse and database: in data warehouses, data is stored with
the goal of efficient data analysis (structured in a mathematic way).
 Data marts are subsets of the data warehouse: data about a specific business
function or business domain.
Business analytics
- Tools and techniques for analyzing data
- For instance, statistics and data mining
Business intelligence and analytics is about the enterprise- wide integration of data and then
analyse the data to support decision-making
The Business Intelligence Environment consists of 6 elements:
o Data from the business environment: from internal sources (call centers) and external sources
(social media)
o Business intelligence infrastructure: data warehouses and data marts
o Business analytics toolset
o Managerial users and methods  they make sure the data is being analysed in order to create
business value
o Delivery platform: MIS, DSS, ESS (chapter 2)
o User interface
o Data visualization tools
 Business Intelligence and Analytics require a strong database foundation, a set of analytical tools
and an involved management team. The goal is to deliver accurate real-time information to
decision makers. The result of business intelligence and analytics is delivered to the different
users through 3 systems (MIS, DSS and ESS).
Main analytic functionalities of BI systems (6):
o Production reports
o Parameterized reports: show the impact of different parameters on data
o Dashboards/scorecards to visualize data
o Ad hoc query/search/report creation: so that users can create their own reports
o Drill down: going from general data to specific data
o Forecasts, scenarios, models
Predictive Analytics
 Uses variety of data, techniques to predict/model future trends and behaviour patterns. It uses
statistical analysis, data mining, historical data to predict patterns of future trends.
 Incorporated into numerous BI applications for sales, marketing, finance, fraud detection,
healthcare. This works well with predicting behaviour that is repetitive and consistent over time,
such as customer behaviour. Ex. How will customers respond to price changes? How successful
will new sales locations be?
 Predictive Analytics does not work well in dynamic environments such as the stock market.
Big Data Analytics
Analysing massive datasets for different purposes.
- Big data: massive datasets collected from social media, online and in-store customer data
- Often discovery-oriented: we do not know what we are looking for in
advance Ex. online retailers: create real-time, personalized shopping
 Ex. smart cities: use public records, sensors, location data from
smartphones to make better decisions about running cities and
serving their residents.
Operational Intelligence and Analytics
Monitoring business activity on an operational level.
o Collection and use of data generated by sensors
o Internet of Things
o Ex. monitor and analyse the performance of power generators
Location Analytics and Geographic Information Systems
Location analytics
Ability to gain business insight from the location (geographic) component of data (location
data of mobile phones, sensors or scanning devices)
Ex. UPS’s package tracking to determine optimal delivery schedules and routes
Geographic information systems (GIS)
Visualize location data on maps and run business scenarios
Ex. identify the optimal location to open a new Starbucks without harming sales at other
Starbucks locations
How do different decision-making constituencies in an organization use business
intelligence, and what is the role of information systems in helping people working
in a group make decisions more efficiently?
There are two main categories of business intelligence users.
o Power users: the producers of the output of business intelligence
o Casual users: consumers of the output
Different employees in the organization will use business intelligence functions in different ways.
Decision Support for Operational and Middle Management
Management information systems (MIS)  mostly for operational management
- Delivery platform for BI to support structured decisions
- View reports on performance of key business aspects such as production reports
Decision-support systems (DSS)  mostly for middle management
- Delivery platform for BI to support semi structured decisions
- Relies more heavily on business analytics than MIS
- Use mathematical or analytical models
- Allow varied types of analysis
 “What-if” decisions use sensitivity analysis models: predict outcomes if changes
occur. Ex. What would happen if we increase a products price by 3%?
Multidimensional analysis
Decision Support for Senior Management
Executive support systems (ESS)
- Delivery platform for BI to support non-routine strategic decision-making (unstructured)
- Focus on information of strategic importance. Ex. ESS will help executives answer the
question: “what products should we be making in 5 years?”
Balanced scorecard
- Provides measurable outcomes related to strategic objectives on four dimensions
 Financial: what are the financial results of the
Business process: how efficiently are the business
Customer: how happy are the clients?
Learning and growth: how much training are the
employees following?
In order to determine how well the firm is doing in
regards of the strategy, the strategic objectives need to
be translated into these 4 dimensions.
Key performance indicators (KPIs) measure each dimension
ESS will help senior management follow up on these KPIs through for example a digital
The data used for ESS will come from:
Internal data from enterprise applications (ERP, CRM, SCM)
External data (financial market databases, news services)
Drill-down capabilities
Group Decision-Support Systems (GDSS)
Interactive system to facilitate solution of unstructured problems by group
- Virtual collaboration rooms
- Software to collect, rank, edit participant ideas and responses
- Stores information generated during meetings
- Enables collaboration between geographically separated employees
o Ex. Skype for Business, Miro
Guest lecture: KPMG Lighthouse
The KPMG Lighthouse is a department within KPMG that is building data driven solutions.
What is Business Intelligence?
Business intelligence and analytics is about the enterprise-wide integration of data and then
analyse the data to support decision-making.
A BI project is not just about the end product (data visualization), but there are a lot of
underlying processes.
Requirements gathering: what does the client want?
Data acquisition: what data do I need in order to solve the problem?
Data cleansing & transformation: import and harmonize data; start building the data model
Data exploration: deliver the insights you want to deliver
Data visualization: build a report, dashboard, …
• Enkel het tipje v.d. ijsberg, de rest is niet zichtbaar!!
Data visualization
Data visualization allows analysts to quickly identify patterns which are hard to see in a regular
Advanced Data visualization tools offer the possibility to discover these patterns and insights
faster thanks to highly interactive user interface.
A lot of data can be represented dynamically and analysed onto a single screen.
Common mistakes:
o Using happy faces to report for example shootings
o Using pie charts that does not add up to 100%
o Using wrong scaling when representing different percentages
How to do it right:
o Represent complex things in a simple way
o Use simple colours, simple language.
 Simple = efficient
Client cases
KPMG uses a methodology when dealing with a client (5):
o Strategy: build a total project plan
o High-level design: gain a further understanding of the business requirements
o Detailed design: design an application architecture
o Build: building the application architecture
o Implement: let the client use the application
A BI project (5)
Requirements gathering
Gain a thorough understanding of the problem and requirements
Client meetings
For this case:
o The client wants to gain insights on how they are performing compared to their competition.
o They would like to see this with respect to revenue and growth per product category and by
o The client expressed the need to have an updated report available on a monthly basis
Data acquisition
Figure out what system holds the required information
In what format is the data available? Structured, semi structured, unstructured?
Get this information on a monthly basis – can we ingest this data in an automated manner?
How classified is the information? Can anyone see it?
For this case: just Excel files:
o Sales figures with geographical information
o Product information
Data cleansing & transformation
Start importing and transforming the data.
o We need to ensure that all data is in a usable format so that we can use it in our data models
and reports: transform half structured data into structured data
o Depending on the size of the project– it can be done either directly within Power BI or the data
cleansing and transformations can be done somewhere else (ex. Data Warehouse)
Data exploration
Depending on the complexity of the report you’ll have to do some data exploration and
experimentation while building the report. Depending on the problem you’ll need to perform
advanced analytics to gather the insights you want.
Data visualization
Once we know what visuals we want to use and that it delivers the insights and information that is
required, we can start putting it all together to create a coherent (interactive) report.
Guest lecture: Delaware
The main goal is to align business and technology.
Delaware wants to be a one stop shop for their customers. They want to guide their customers from
the very beginning of the project to the end.
o Design & Consulting: what are the requirements? what do we want to build? how did the
process look like?
o Building & Integrate: building solutions and integrate with what the customers have already
o Train & Transform: training the people to work with it and transform the organisation
o Managed services: support the customers with whatever question they have
Delaware focused on bringing ERP on smaller organizations in a payable way.
Smart Enterprises
A smart enterprise can also be said to be one that is powered by digital technologies.
What do we expect from Smart Enterprises in 2020?
We expect 3 things from Smart Enterprises:
o Personalization
o Transparency in everything they do
o Comfort delivery
The Supply Chain of organizations is under pressure from all sides:
Technology and therefore Smart Enterprises offer a solution to the demanding customers, a cleaner
organization in the circular economy and the war for talent.
A smart business uses technology to work on better offerings, lower cost and faster time-to-market
with the goal of making their customers happier.
Example smart business: Swapfiets. They invested in technology and created an application to offer a
better experience to the customer.
What is a Smart Manufacturing Enterprise?
The application of these technologies for the improvement of efficiency, safety and productivity. The
use of cyber-physical systems in the manufacturing process is also called the fourth industrial
revolution or Industry 4.0.
The role of ERP in Smart Enterprises
o How are all the sensors connected?
o What about non-digitized processes?
o Where is all the data stored and centralized?
 ERP helps bring all these things together and make it a whole
Evolution role of ERP
Firstly, ERP helped to support secondary processes (accounting, finance). Later on, it also helped
supporting primary business processes (production, logistics). Eventually, ERP also adds value for
primary processes. The latest generation of ERP can also generate innovation of primary processes.
Growth path Smart Enterprise
1) Operational excellence: visualize all the business processes and implement them into the ERP
system so that it can add value to those processes
2) Smarter data: collect data from machines, warehouses and interpret the data, find
3) Predictive: use the data to predict the future
4) Artificial intelligence: refine the business model, be relevant for the customers and operate as
a truly top-efficient, integrated organization
How does this work?
Business Case
The Eastman Chemical Company is responsible for global distribution of amines, used for water
purification, crop protection, …
Use of technology in an everyday process
For example, a Brazilian farmer orders 20 barrels that is required for the protection of his harvest. The
product has to be there before a certain date, the start of the sowing season.
Firstly, a person of contact for Brazilian agriculture enters the client order from the farmer in
the ERP system (quantity, product sold, customer information).
Then, the factory in Gent starts production and the ERP system helps with the production
planning: sensors in silo’s are connected with the ERP system to calculate the production
quantity and stock.
Next, the drum filling line is managed through the ERP system.
Then, the truck is loaded with drums for transport to the port. The truck drives through a
weight station connected with the ERP system.
Challenges and lessons learned
Challenges of a rapidly changing market with increased digitization. It takes a lot of time, there is a
need for multi-skilled teams to implement such a project.
ERP is often the necessary first step towards Smart Enterprises
ERP projects can have long lead-times. A reactive attitude is detrimental to be ahead of
ERP business objects are central to collect all kinds of data and connect everything in an
organization (customer, employee, operators, machines)
Cross-domain teams are necessary because SMART is the combination of technology fit and
organizational fitness.
SMART is not just an IT related opportunity. Business models and processes need to evolve as
fast as IT does.
Guest lecture: Deloitte
Macro technology forces
Macro technology forces can drive purposeful, transformational change. Macro technology forces are
divided in 3 groups:
o Enablers
o Foundation: the heart of the business
o Disruptors
Originally, there were 6 forces (first two columns: digital experience, analytics, cloud, business of
technology, risk and core modernization). Over the years, technology gained more and more
importance in organizations. We also see other forces arising, like the last two columns.
Digital experience: how you experience a service
Analytics: companies need to make decisions based on data
Cloud: allows you to provide your software as a service
Business of technology: your IT needs to be efficient and effective
Risk: technologies brings a lot of new risks (ex. hackers)
Core modernization: technology puts pressure on organizations to modernize
Digital reality: to move beyond the screen (VR, augmented reality, Siri)
Cognitive: all the things related to AI and machine learning
Blockchain: an online register in which transactions are recorded
Ethical technology and trust
How can we position ourselves in such a way that we become more trustworthy? There are three
domains on which we can focus to further establish this trust.
Technology: how can we optimize in such a way that people trust us when they give us their
Processes: are there processes on how to manage the personal data?
People: how can we include everybody?
Encoding company’s values
Building a strong data foundation
Hardening defenses
Respecting differing cultural
Respecting stakeholder privacy
Organizations need to operate in line with their principles
Prevent users from engaging with technology in irresponsible
Be transparent in what data will be collected, how are we
managing this and how are we ensuring that it is not getting
Work on the cyber risk strategy (prevent hackers): security,
privacy, integrity and confidentiality
Acceptable norms in Europe might be different than in South
America  a service should be designed in a way that is
flexible, and able to respect the norms of different countries
Let your customers have the ability to know what we know
about them
Be transparent on what information you gather
Make sure to include all ethnic groups, economic backgrounds, levels of education, … when developing
a certain platform or delivering a certain service.
Finance and the future of IT
Organizations are trying to figure out how to balance the growing demand for innovation and digital
transformation with the realities of traditional budgeting, accounting and management of capital. This
offers IT and finance an opportunity to work together in a more consistent and effective way.
 IT and finance leaders work together to develop flexible approaches for funding innovation.
o Change within Finance: adapt their normal cycles of budgeting, funding and reporting
o Change within IT: Creating a clear road map for foundational tech investments
o Creative funding: when a company has the money but not the knowledge to innovate, they
can fund another company who has the knowledge
Central problems