IT Infrastructure (I) ● Moore's Law ● Internet architecture ● Understand how the Web works ● Impact of mobile applications ● Who manages the Internet/Web? Gordon Moore (Intel’s Co-founder) ● No. of transistors on a chip (i.e. CPU power) doubles every 12 - 24 months (or simply regularly) ● Technology progresses at a fast pace that any of us at any point in time cannot imagine ● For the last 20 years, the power of PCs has increased by more than 10 thousand times ○ Yet, price dropped very significantly VR/AR ● ● Virtual Reality ○ Immersing users within virtual world ○ Typically uses head-mounted display (HMD) ○ Oculus Rift, Vive, PlayStation VR Augmented Reality ○ Overlaying virtual objects over the real world, via mobile devices or HMDs Internet architecture ● Internet Backbone → The globe of Internet is connected by fiber optic cables ● Internet Service Providers (ISPs) ○ Allow individual users to access to the Internet for a fee ○ Connect to the Internet via an ISP ○ Can anyone access the Internet ad hoc? ■ The job of ISPs is to share and rent out ○ Some ISPs in Hong Kong → PCCW-HKT Business Services Limited ○ A user may connect to an ISP in a number of ways → POTS, ISDN, DSL, optic fiber, cable modems, satellite, etc. ○ ISPs connect to the Internet through network access points (NAPs) ■ ● NAPs are: ● High-speed routers that form pillars of the Internet ● NAPs + fiber optic trunk lines = Internet backbone The Internet follows a hierarchical structure that is very similar to the highway system ○ Interstate highways → city streets → neighborhood streets ○ Ensure everyone (packet) arrives safely at destination Internet speed ● Refers to the speed at which data or content travels from the World Wide Web to your home computer, tablet, or smartphone ● The speed of this data is measured in megabits (1,000,000 bits) per second (Mbps) ● Download speed refers to the rate that digital data is transferred from the Internet to your computer, while upload speed is the rate that online data is transferred from your computer to the Internet ○ Download speed > upload speed, because a short request to the Web site (upload) results in a much larger download of Web pages, images and videos ● Nielsen's Law of Internet bandwidth states that “a high-end user's connection speed grows by 50% per year” The Internet and the World Wide Web (WWW/Web) ● The Internet is a large worldwide collection of networks that use a common protocol to communicate with each other ○ ● ● Based on internetworking, or combining networks to form larger networks The WWW is a system of interlinked documents on the Internet ○ Web protocols (ex. HTML and HTTP) ○ Web pages (documents containing HTML) ○ Web servers (provides access via a Website) ○ Web browsers (provides interface to Web pages) 구분하기: Internet → Hardware, Web → OS (Operating System of the Internet, user friendliness, you can click to move around different pages) Web Components ● Interconnected Web servers ● Packet switching (Issue: Traffic…) ○ No end-to-end connection (ex. No A to B) ○ Each message is broken down into small pieces called packets ○ Packets possibly routed to destination over different paths ○ Sends packets along different communication paths as they become available ○ Reassembles packets once they arrive at destination ○ Uses routers ○ Less expensive, wasteful than circuit switching *Slices digital messages into packets, Packets possibly routed to destination over different paths, Reassembles packets once they arrive at destination ● Client/server computing ○ Powerful personal computers (clients) connected in network with one or more servers ○ Servers perform common functions for the clients: ■ Storing files ■ Software applications ■ Access to printers, and so on ○ Server breaks into packets ○ Clients request Web page hosted on server ○ Packets stream over Internet to client ○ Client reassembles ○ Client can request retransmission of any missing packets ○ Web browser translates Web page into visible output *Extranets and Intranets ● Companies have confidential data ● Data still need to be shared on a limited basis ● ○ Intranet: password-protected website designed for sharing within the company ○ Extranet: password-protected web site designed for sharing with select partners Data and communication are protected by firewalls and virtual private networks (VPNs) *Protocols [ex. Bluetooth protocol, FTP (File Transfer Protocol), HTTP (HyperText Transfer Protocol), HTTPs (Secure HyperText Transfer Protocol), SMTP (Simple Mail Transfer Protocol), POP (Post Office Protocol), TCP (Transmission Control Protocol), IP (Internet Protocol)] ● Networking standards (protocols) are a format for transmitting data (packets) that has been agreed to by a standards organization or industry consortium ● ○ What travel on a network are – packets of data ○ Serves as a “language” for communication ○ Must speak same language on a network ○ A set of rules that governs the communications btw. computers on a network What Do Protocols do? ○ Main responsibilities: ■ Packet formatting ■ Routing – to ensure each packet follows an appropriate route ■ Reordering – to ensure receiving device is able to put received packets back in order ■ ○ ● Collision handling and management Packet-switching network Utilize Transmission Control Protocol/Internet Protocol (TCP/IP) ○ Form packets ○ Number packets in order ○ Send and receive packets and reorder them at destination ○ Establishes connections among sending and receiving computers ○ Handles assembly of packets at point of transmission, and reassembly at receiving end ● ● IP addresses ○ Routing packets to proper destination ○ Addressing DNS ○ A domain name is the unique name assigned to the IP address (which is hard to remember) expressed in natural language ● ○ The WWW translates domain names into IP addresses ○ Top-level domains (TLD) → 닷컴 같은거 ■ TLDs are not up to creation. ■ Must be pre-approved ■ Country Specific TLDs are available URL ○ A sequence of characters conforming to a standardized format, used for referring to resources ○ Every piece of resource on the Internet identified by a unique URL ○ Part of it is domain name *Wireless Local Area Network (WLAN) – based Internet Access ● Wi-Fi (High-speed, fixed broadband wireless LAN, wireless access point → “hot spots,” limited range but inexpensive) ● 5G Wireless Connection (Higher multi-Gbps peak data speeds, ultra low latency more reliability, massive network capacity, increased availability) ● Bluetooth (Short distance, easy to establish) ● Internet access drones (Google, Facebook initiatives) Key Takeaways: The internet is unique ● Size: largest network ever ● Approach: link up as many as possible by capitalizing on existing infrastructure ● Growth: exponential and organic ● Contribution: protocols to allow different networks to talk to each other ● Organization: minimally structured (only abt 7 groups of organizations ex. IETF, ISOC) ● Enablement: imagination is the limit IT Infrastructure (II) Open source software (Software that is usually free and where anyone can look at and potentially modify the codes) → needs user-friendliness 그래서 commercial ● Ex. Commercial: Photoshop, Whatsapp, MS Office, Windows..., respective open source counterparts: Gimp, Signal, Open Office, Linux… ● ● Codes → Source code for OSS products - Openly shared ○ Can be changed and redistributed by anyone ○ The Internet has enabled OSS Contrast ○ In contrast to the practice of conventional software firms which: ■ Treat their intellectual property as closely guarded secrets ■ Almost never provide the source code for their commercial products ■ But, it is changing … *Seen as a threat by some firms undermining their economic model *LAMP (Acronym for Linux, Apache Web server software, MySQL database, and Perl/Python/PHP → Powers many of the sites visited each day from Facebook to YouTube) ● Why open source? ○ Not just about cost ○ Reliability – “many eyes” ○ Security – “many eyes” ○ Scalability – Ability to either handle increasing workloads or to be easily expanded to manage workload increases ○ Agility and time to market – adapt/adopt (simply adopt…or adapt, you don’t need to create from scratch) ● Disproportionate Impact of OSS on IT Market ○ Lowers the cost of computing and makes computing options accessible to smaller firms (Can build websites as powerful as facebook…) ○ Reliable, secure, and lowers computing costs for all users ○ Diverts funds that can be used for other competitive initiatives and encouraging innovations (all of us can divert our money to something else, instead of spending a lot on commercial software) ● Business of Open Source (How vendors make money on open source through the Internet?) ○ Vendors make money on OSS by selling support and consulting services ○ Industry’s evolution (standards competition) ■ Pre-Linux days - Almost every major hardware manufacturer made its own incompatible version of the Unix operating system ● They had difficulty attracting third-party vendors to write application software ■ Now all major hardware firms run Linux resulting in a large, unified market attracting software developers *Linux 리눅스란? 윈도우 (Proprietary operating system)와 같은 하나의 독자적인 컴퓨터 운영체제 (OS) → 여러 사용자가 동시에 서버에 접속하여 사용하도록 고안 됨 Cloud computing → delivery of on-demand computing services over the internet on the pay as you go basis → rather than managing files on services on a local storage device, you use the internet. - Deployment model (available to the public, private → exclusively operated by a single organization, hybrid) - Service model (IAAS → users get access to basic computing infrastructure commonly used by IT administrators, PAAS → allows the users to deploy applications, SAAS → hosting and managing software applications) Benefits ● Pay for the amount you use (손해볼 일이 없음) ● Replacing computing with services provided over the Internet Software as a service (Saas) ● Firm subscribes to a third-party software and receives a service that is delivered online ● Money can be earned via a usage-based pricing model such as monthly subscription ● ○ Offer free services that are supported by advertising ○ Promote the sale of upgrades or premium versions for additional fees Benefits of SaaS to Corporate Users ○ Lower costs and financial risk mitigation ○ Faster deployment times and variable operating expense ○ Scalable systems ○ High quality and service levels ○ Remote access and availability ○ Limits development to a single platform ○ Tighter feedback loop ○ Ability to instantly deploy bug fixes and product enhancements ○ Lower distribution costs ● ○ Greater accessibility ○ Reducing software piracy Risks Associated with SaaS ○ Dependence on a single vendor ○ Concern about the long-term viability of partner firms ○ Users may be forced to migrate to new versions ■ ○ Possibly incurring unforeseen training costs and shifts in operating procedures Reliance on the Internet to access SaaS – stability and security issues? *Too cloudy? ● Data asset stored off-site may lead to security and legal concerns ● Limited configuration, customization, and system integration options compared to packaged software or alternatives developed in-house ● User interface of Web-based software is sometimes less sophisticated and lacks the richness of most desktop alternatives ● Ease of adoption may lead to pockets of unauthorized IT being used throughout a firm ○ IS governance issue: IT and application controls to assure validity, accuracy, and completeness of business data (violence of accounts..? Many accounts out of control) *Too cloudy? #2 ● Installing a complex set of systems on someone else’s hardware is very difficult ● Firms considering cloud computing need to do a thorough financial analysis ● Firms should enter the cloud cautiously, particularly where mission-critical systems are concerned Impact on IT Industry ● Shifting to cloud computing modifies the margin structure for many in the computing industry: product revenue to service revenue ● ● Microsoft Office is dropping in sale while Microsoft Office 365 is gaining momentum ○ 엑셀, 워드 등 문서 생성 도구에 그치지 않음. ○ 타인과 함께 작업도 가능함. Cloud computing can accelerate innovation: ○ Changes the desired skills mix and job outlook for IS workers ○ Enables organizations to spend less on hardware infrastructure and reinvest in strategic efforts and innovation Future of the Internet – Internet of Things (IoT) ● Vision of embedding low-cost sensors, processors, and communication into a wide array of products and the environment ○ Allow a vast network to collect data, analyze input, and automatically coordinate collective action ● 난방과 조명을 자동으로 조절하는 스마트 홈기기부터 산업 장비를 모니터링하여 문제를 찾은 후 고장 예방을 위해 자동으로 해결하는 스마트 팩토리에 이르기까지 다양한 분야에 응용되고 있음. ECommerce (I) One Platform ● Two-sided (or more generally multi-sided) ○ Enable interactions between end-users, and try to get the two (or multiple) sides “on board” and hopefully charging each side ○ Consumer side (buyer side) ○ Content/service provider side (seller side) ○ Logistics side (intermediary side) Two-sided Market (Multi-sided) (Platform Economy) → Network Effects ● Cross-side network effect: the more users on one side will attract more to the other side ○ Positive → buyers prefer many sellers, while sellers prefer many buyers ○ Negative → consumer reactions to online advertising Business model is a summary of a business’ strategic direction that outlines how the objectives will be achieved ● Revenue strategy: the way a firm generates income ○ How do you generate income? ■ Traditional sales: A consumer buys a product/service from the Web site/physical store produced by the firm e.g. IKEA, Apple ■ Transaction fees: A commission is paid to the business for aiding in the transaction e.g. HKTV mall, Expedia, Agoda ■ Web/mobile advertising: Advertising/promotion displayed on the websites/mobile apps (How to address the cross-side negative network effects?) e.g. Facebook, Google ■ Affiliate marketing: Paying businesses that bring or refer customers to another business e.g. Trivago, Hotelscombined ■ Subscription based: Users pay a monthly or yearly recurring fee for the use of the product/services e.g. Netflix, Spotify, Office 365, PlayStation Network ○ ● Marketing strategy: the promotion plan of your product/service ○ ● Not necessarily profitability yet How do you let your potential customer know about your product/service? Pricing strategy: the way a firm prices its products/services ○ How to maximize revenue/profitability? ○ Traditionally pricing based on → fixed costs, variable costs, demand curve ○ Price discrimination → Selling largely similar products/services to different people and groups based on their willingness to pay e.g. Dropbox/Google Drive: extra space, Netflix: screen resolution/no. of users ○ Bundling → Offers consumers two or more goods at cheaper price e.g. MS office suite; YouTube TV has added a new bundle, with streaming services HBO Max, Showtime and Starz now available for an extra $30 a month ○ Dynamic pricing → adjust prices according to demand/supply and other parameters e.g. Uber, Grab, Auction ○ Versioning → Creating multiple versions of product at minimal cost and selling essentially same product to different market segments at different prices e.g. Ad Vs adfree, Time limit Vs no limit, Choose Vs random, More space Vs less space, Annoying Vs less annoying; ex. YouTube → ad-free YouTube premium ○ Freemium → combination of “free” and “premium”. Users get basic features at no cost and can access richer functionalities for a fee e.g. Spotify, Dropbox, Google Drive ○ Free trial → allows a user to test a product or service for a limited time before buying the actual product → Many software developers have adopted this strategy ● Value proposition: the utility that the product/service has to offer to customers ○ Why do customers need your product/service? ■ Pursuit of competitive advantages/uniqueness ■ Market target (segment) ■ ● ● Mass and mainstream, e.g. nike.com ● Niche and long tail, e.g. Amazon Product differentiation Competitive environment: the existing players in the market and the nature of the competition ○ Who are your competitors? ○ How fierce is the competition? Presence of business ○ Where do you sell your products/services? ○ Online (Click Only)/offline (Brick and Mortar)/O2O (Click and Mortar) ■ ● ● Order and pay online, enjoy service offline Management team: the background and experience of the company leadership ○ Maybe/may not be relevant E-Commerce ● Online exchange of goods, services, and money among firms and their customers, and between customers, supported by communication technologies and, in particular, the Internet ● Characteristics ○ Reduces information asymmetry ○ Reduced search costs and transaction costs ○ Enables dynamic pricing ○ Increased market segmentation, so greater price discrimination ○ Stronger network effects How E-business Markets Differ From Traditional Ones? ● Network markets experience early, fierce competition → caused by feedback loop (word-ofmouth) inherent in network effects ● Firms are aggressive in the early stages because once a leader product has emerged, new adopters tend to favor the leading product over rivals → tips the market in favor of one dominant firm or standard Strategies for Competing in Markets with Network Effects ● Platform operator → Amazon, Taobao, App Store, Play Store, Uber ● Move early → Grab ● Subsidize product adoption → Paypal, Alipay ○ The product subsidy is offered to the consumers (e.g. tax rebates, feed-in tariffs, rewards, discounts) to lower the high up-front purchase cost and thereby directly encourages adoption ● Leverage viral promotion → Facebook feeds, Whatsapp, Google ● Expand by redefining the market to bring in new categories of users or through convergence → iPhone and Android phones ○ Converging as many product/services into their own offerings (need to have an excellent product → not easy) ● Establish distribution channels → App Store, Play Store, Microsoft bundling IE (Internet Explorer) with Windows ● Seed the market with complements ○ Tap into the market first without talking about the money → give out → hopefully you will be profitable e.g. Android ● Encourage the development of complementary goods e.g. App Store, Play Store, Facebook Major Types ● Business-To-Consumer (B2C) → Business or transactions conducted directly between a company and consumers who are the end-users of its products or services ○ Dis-intermediation + reintermediation (allowing customers to interact with you online, you can reduce intermediaries → lower cost → lower price → new intermediaries e.g. food panda, hotels.com; travel industry intermediary, purchases large blocks of hotel rooms at a big discount from properties around the world. Hotels.com then marks up the discounted room rates and resells the rooms directly to consumers from its website and app) ● Business-To-Business (B2B) ○ Opportunity e.g. Buy from Alibaba, Sell on IG ○ Involves exchanges between two or more businesses ○ Concentrates on business relationships at the wholesale level and the upstream of the supply chain ○ Facilitates the transfer of raw materials, parts and components from which additional profit is derived ● Consumer-To-Consumer (C2C) ○ Involves the electronically facilitated transactions between consumers and small businesses through third parties ○ ● The third party generally charges a flat fee or commission e.g. Uber Any more? ○ Business-To-Employee (B2E); e.g., online insurance company management ○ Consumer-To-Business (C2B); e.g., a photographer offering stock images to businesses ○ Online-To-Offline (O2O) ■ Refers to the fusion of using the Internet to drive real world commerce activity or using the Internet to facilitate transactional behavior in the real world ■ Order and pay online, enjoy service offline ■ O2O consumers enjoy part of the experience offline ■ Offers a good combination of online and offline experiences for total user experience (customers not so generous, they expect total user experience) ■ But, there are also associated challenges on how to integrate O2O ● How do you manage performance? ● Key success factor → offline experience ○ Government-To-Citizen (G2C) ○ Government-To-Business (G2B) ○ Government-To-Government (G2G) Crowdfunding ● Wisdom of the crowd, which is the collective opinion of a group of individuals rather than that of a single expert ● Crowdfunding is the financing of a project or a venture by a group of individuals instead of professional parties ○ It is also known as Internet financing ○ The concept of crowdfunding is extended from crowdsourcing ○ The rapid advancement in IT and the Internet has made online crowdfunding increasingly popular ● Types of crowdfunding ○ Equity-based → Investors receive stakes in the company ○ Donation-based → Givers make charitable contributions ○ Lending-based → Investors are repaid for their investment plus interests ○ Reward-based → Funders receive tangible items or services ECommerce (II) Fundamental driving force behind ECommerce → Long-tail ● Constraints of business in the past → limited product why? Customization was expensive, shelf/warehouse space? ● E-commerce → product variety unlimited, can display any item → cost of displaying an item is very low (수요가 많이 없어도 크게 상관 없음), infinite shelf space → offer an unlimited selection of high-margin items at a fraction of the cost required of a brick-and-mortar retailer ○ Netflix's strategy is based on the rules of the so-called “Long tail” theory, which argues that products with lower market demand or low sales volume may constitute a market share that rival or surpass the bestselling movies and current blockbusters, but only if the movie distribution channel is large enough ■ Netflix also offers its subscribers relatively unknown movies or TV shows targeting small markets. ■ The idea behind this is by expanding the portfolio of products/services they attract new subscribers who are part of these small markets that together form a large marketplace Social Media *studying facebook provides a context for examining: ● Network effects and platforms ● Partnerships ● Business value of social media Key questions to address ● What is a social graph? Is it all about social graphs for Facebook? ○ Social graph → global mapping of users, organizations, and how they are connected ■ ○ More complicated social graph is → more hidden information to leverage Friending → link between nodes in the social graph ■ Requires both users to approve the relationship → Network effects (so easy to become friends with other people) ■ ○ Offering something fun → customers → what are the reasons Switching costs for Facebook are extremely powerful → how “sticky” is your service/product? → Facebook e.g. friending ● What does it take to perfect a platform like Facebook? ● What is the concept of exclusive contents? How can it enable Facebook to compete with Google… as a search engine? ● What are the strategic benefits for Facebook to partner with other online businesses? Facebook Feeds ● Offering news feeds concentrated and released value from the social graph ● Feeds are lifetime of Facebook’s ability to strengthen, deliver user value from the social graph ● Introduced hashtags, which will: ○ Identify conversation trends ○ Help users discover conversation ○ Encourage more public sharing of content Exclusiveness of Facebook ● Internet content that can’t be indexed by Google and other search engines ● A lot of information on Facebook is private ● Provides access to user content, use opinions, trending news that Google cannot access ○ Facebook can tie together standard internet search with its private content allowing that search engine exclusive access to its content → indirectly compete with Google ■ Only some search engine to search more Facebook content Facebook in Platform Economy ● As a platform → make different stakeholders from different sides happy, facilitate smth on Facebook → allow third parties to use Facebook easily (while in control) by: ○ Publishing a set of application programming interfaces (APIs) that specified how programs could be written to run within and interact with it → facilitate and control ■ Programming hooks, or guidelines published by firms that tell other programs how to get a service to perform a task such as send or receive data ○ Programmers could write an application that would run inside a user’s profile What is API ● How do different devices send and receive data? → API ● Messenger that takes requests, tells the system what you want to do → responds back to you ○ E.g. Kitchen (system) → how to communicate your order? → waiter (messenger) → tells kitchen your order → brings the food back to you ● Book flight via online travel service (no direct access to the airline's database) aggregates information from many different airlines → travel service interacts with the airlines’ API → API can be asked by that travel service to get information from the airline system over the internet to choose seat, meal, baggage options... deliver airline’s response back to you ● FPS/faster payment system (?) → no need to visit bank in person (less 번거로움) Facebook in Platform Economy ● ● Developers are allowed to: ○ Charge for products ○ Offer them for free ○ Run ads ○ Keep what they made Each app potentially added more value and features to the site without putting in a lot of effort Facebook’s Integration w. as many services possible ● Allow developers to link web pages and app usage into the social graph → puts itself at the center of identity, sharing, and personalization ● Offers Website operators the choice to accept a user’s Facebook credentials for logging in → “Log in with Facebook” → convenience vs. privacy → operator can quickly earn your data on Facebook ● Allows firms to make their sites more personalized by leveraging its data *Strategic benefit → allowing facebook membership to increase in value by: ● Enhancing network effects ● Strengthening switching costs ● Creating larger sets of highly personalized data to leverage Enhancing Connection with Social Media ● Viral Marketing → build web of information → get platform viral, driven by WOM or Person-toPerson communication Organizational Issues for Using Social Media ● Employing social media as a tool e.g. Yammer, microsoft acquired. ○ ● Leads to communication, collaboration in a social media way → learning curve’s flat Various factors have to be taken into account when using social media applications in an organization setting ○ Yammer compatible with other existing systems? → so everything works seamlessly? ○ Generation gap → How about the old generation, not used to social media? ○ Security issue? → sharing sensitive information on Yammer Downsides and Dangers of Using Social Media Applications ● Online Product Reviews → negative posts of competitors or positive posts of themselves ○ ● Keep track of what ppl share, usually they don’t have a dedicated personnel to monitor Bad Vibes Going Viral → What if you have some bad vibes that go viral, how do you stop that from happening → you need to have some dedicated personnel to monitor it → social media team to look after social media? (not quite happening) ● Lessons Learned → Take it seriously, monitor your social media environment, act fast; the first 24 hours count → respond quickly, should come from senior management, who responds to the crisis Key Takeaways *E-Commerce is about: ● Paradigm shift in business model ● May or may not work ● Innovative ● Game Changer → Amazonization ○ Should change the game IS and Business Integration ● Understand how cheap, fast computing, and affordable software are together enabling a new age of decision making e.g. open source software ● Be aware that data-driven and fact-based decision making is becoming a norm The Four V’s of Big Data *Volume, Variety, Velocity, Veracity ● ● Volume → scale of data ○ Have a lot to investigate ○ How can we possibly analyze such huge amounts of data? Variety → different forms of data ○ Complication ○ Huge amount of data comes in a variety of forms/unstructured → how to analyze? (challenge) ● Velocity → analysis of streaming data ○ Generated at a very high speed continuously ○ How do you respond to data that are generated quickly → how to enable quick decision making based on data ● Veracity → uncertainty of data ○ Is the data believable? Trustful? ○ Not all data is correct → can make inaccurate decisions ○ With Ai potentially determine whether data is accurate or not? Plus, ● Volume-based value ○ The more comprehensive your integrate view of the customer and the most historical data you have on them, the most insight you can extract from it ○ In turn, you are making better decisions when it comes to acquiring, retaining, growing, and managing those customer relationships (CRM) ● Velocity-based value ○ The more rapidly you can process information into your data and analytics platform, the more flexibility you get to find answers to your questions via queries, reports, dashboards, etc. ○ A rapid data ingestion and rapid analysis capability provides you with the timely and correct decision achieve your customer relationship management (CRM) objectives ● Variety-based value ○ The more varied customer data you have from the CRM system, social media, callcenter logs, etc → the more multifaceted view you develop about your customers, thus enabling you to develop customer journey maps and personalization to engage more with customers ● Veracity-based value ○ Amassing a lot of data does not mean the data becomes clean and accurata ○ Data on customers must remain consolidated, cleansed, consistent, and current to make the right decisions ● One more V – VALUE *all about creating more value ○ It may seem painfully obvious to some, but a real objective is critical to this mashup of the four V’s. Will the insights you gather from analysis create a new product line, a cross-sell opportunity, or a cost-cutting measure? Or will your data analysis lead to the discovery of a critical causal/correlation effect that results in an action plan to address customer needs? ○ Turning data into actionable items → can we generate a meaningful output? Big data and decision making ● Big data → massive amount of data available to today’s managers ○ Unstructured, big, and costly to work through conventional databases ○ Made available by new tools for analysis and insight ○ Massive datasets collected from social media, online, and in-store customer data, etc. ○ ● Help create real-time, personalized shopping experiences Decision making is data-driven, fact-based and enabled by: ○ Standardized corporate data ○ Access to third-party datasets through cheap, fast computing, and easier-to-use software Business Analytics (BA) ● Business application of big data ○ Driving decisions and actions through extensive use of: ■ Data, statistical and quantitative analysis, explanatory and predictive models, fact-based management ○ Turning data into insights → figure out why certain things happen (e.g. why this product worked?) ○ Visualization Business Analytics Applications → Banking and Financial Services ● Locate fraudulence via identifying atypical patterns → predict future ● Enhance cross and up selling Data Driven Auditing *Data analytics → deliver insights (future) e.g. potential fraud, identify customers that can turn default, go beyond what you already know ● Historic snapshots à dynamic ● Insight + hindsight + foresight ● Discovering hidden patterns to identify irregularities/anomalies → can identify what can go wrong ● More evidence available with substantive testing to offer higher level of assurance Business Analytics Applications → Securities Trading ● Anticipate stock fluctuations ● Sensitivity analysis of market movements towards certain events ● Forecast bond prices by taking into account numerous facts ● Reveal fraudulence in trading activities Other applications ● Legal proceedings → run mock trials, profile your jury ex. By checking their social media ● Government ● Travelling industry ● Medical services ● Games and movies ● Sports → profiling players, visualize their performance, quantify it (e.g. homecourt) Key questions to address ● How to turn data into insights? ● Where to collect enterprise data? ● What are data aggregators? Tools for analytics ● IG Analytics → aggregates your followers profiles...age groups, gender groups, etc. ○ Data aggregator → find out smth about his/her followers ● Twitter Analytics ● Google Analytics ○ Google translate, drive, gmail, map … by providing products to aggregate data ○ Track what online behavior led purchases → use that data to make informed decisions about how to reach new, existing customers ○ ● E.g. Store can analyze geographical sales data, track customers’ purchase journey Facebook Analytics–Out of Control ○ Doesn’t always tell you that your information is being access by all sorts of people ■ ○ Collecting more user data than it supposed to be → loopholes in API In 2014, FB quiz invited users to find out their personality type → the app collected the data of those taking the quiz and also their friends → gathered information on up to 87 million people → some data sold to Cambridge Analytics (CA), which was used to psychologically profile voters in the U.S. ○ IT auditing → How do you audit this system, including API to make sure they work properly? How to convert data into insights? → Hadoop ● Open source software → likely is free (tableau is not free) ○ It provides massive storage for any kind of data, enormous processing power and the ability to handle virtually limitless concurrent tasks or jobs. ● Storing and processing big data in a distributed fashion → no need for supercomputer ● Why are SAS analytics and Hadoop packaged together? → hadoop need SAS → gives user friendliness (commercial) ● Advantages ○ Flexibility ○ Scalability ○ Cost effectiveness ○ Fault tolerance (not easy to crash) Information Visualization (Digital Dashboards) ● Digital dashboards are used to visually present key performance indicators used by management ○ While it’s a managerial decision to determine/specify what to look at, Ai may also suggest what to look at ● Data usually highly aggregate ● They use a variety of design elements to present data in a user friendly way Online Analytical Processing (OLAP) *performs multidimensional analysis of business data and provides the capability for complex calculations, trend analysis, and sophisticated data modeling ● Measures → facts, numerical data that can be aggregated ● Dimensions → provides a way to summarize the data, hierarchically arranged to enable drilldown and roll-up ● Cubes → Multidimensional structure of dimensions and measures ● Slicing and dicing → analyzing data on a subset of dimensions Tableau ● Tool to conduct business analytics to make insights (business intelligence) ● Import data sources from IG, Twitter, FB, Spotify, Airbnb, etc. to unleash power of data Capturing Transaction Data ● Record a transaction or some form of business-related exchange, such as a cash register sale, ATM withdrawal, or product return ● Loyalty card → system that provides rewards in exchange for consumers allowing tracking and recording of their activities → enhance data collection and represents a significant switching cost How Our Data Are Collected? ● ● Cookies can: ○ Provide capabilities that improve Web surfing experience ○ Gather accurate information about the site’s visitors A cookie is: ○ Able to gather information from your computer – what you do, what you see, etc. ○ Potentially dangerous, because it can be a virus or spyware in disguise How cookies work ● Cookies are not programs → they cannot “run” ● A cookie is a piece of text → from Web server, stored on a user’s hard disk ● Allow a Web site to store information on a user’s machine and later retrieve it → not all information; pointer to specific records in Web server/site’s database Aggregation of data ● Data aggregators ○ Firms that collect and resell data ○ E.g. DoubleClick → a business owned by Google that makes it money from online advertisers and publisher by Ad-serving (Online publishers use Doubleclick to display adverts on their websites), Ad delivery (Doubleclick will let advertisers control how often an ad is shown to a browser, how long it is shown for and how often it will appear), Behavioural targeting ● Aggregation of data can be extremely powerful ● Firm’s tradeoff → customer information is valuable, maybe too valuable Internal and External Data ● Both internal and external data are needed ● After all, need to decide: ○ Relevance (what is needed?) ○ Sourcing (where to get?) ○ Quantity and quality (how much and can be trusted?) ○ Hosting (Where to house the system, inhouse or Saas?) ○ Governance (How to properly manage data? Backup,legal, privacy, protection, etc.?) FB.. Key Takeaways ● Using computers to identify hidden patterns in, and to build models from, large data sets ○ Customer segmentation analysis ○ Marketing and promotion targeting ○ Fraud detection, financial modeling, and hiring and promotion ○ Customer Lifetime Value (CLV) → estimating the net profit attributed to the entire future relationship with a customer ○ Customer churn rate → the rate at which customers stop doing business with an entity, 서비스의 품질을 알려주는 주요 지표 ● ● Prerequisites ○ Organization must have clean, consistent data ○ Events in that data should reflect trends Bottom line → Still human experts to make decisions (다행인 것), before AI officially arrives IS and Society ● Ethics and Ethical Issues in Business ○ Ethics → Principles of conduct used in making choices and behavior in situations involving right and wrong ○ Business ethics involves two questions ■ How do managers decide on what is right in conducting business? ■ Once managers have recognized what is right, how do they achieve it? Just knowing what is right and wrong does not necessarily translate into action…, not easy to implement a certain decision ● Ethical Issues in Business ○ Firm has conflicting responsibilities to employees, shareholders, customers and the public → others like wholesalers, retailers… ■ Decisions have consequences that benefit or harm each group. ■ Seeking a balance is the manager’s ethical responsibility. ■ Benefits must outweigh risks, be fairly distributed to those who share the risk. ■ Decisions should be implemented to minimize and avoid all unnecessary risks. IS Ethical Issues #1 “The analysis of the nature and social impact of computer technology and the corresponding formulation and justification of policies for the ethical use of such technology…” ● Privacy relates to the desire to control what personal information is available to others. ○ ● Huge, shared databases raise the issue of ownership in the personal info. industry. Computer security is an attempt to prevent loss of confidentiality or data integrity. ○ Shared databases can cause irreparable harm to individuals by disseminating inaccurate info to authorized users. ● Ownership of property: ○ Real property laws extended to intellectual property. ○ What can be owned? Ideas? Media? Code? ○ Do copyright laws do more harm than good? IS Ethical Issues #2 ● Privacy ○ Do you really enjoy “free” online service? ○ Consumers tradeoff between convenience Vs privacy ● ○ Cannot enjoy more personalized services without “paying more” ○ New currency GDPR ○ EU General Data Protection Regulation ○ Came into force on 25th May 2018 ○ Not only applies to organisations located within the EU but also applies to organisations located outside of the EU if they offer goods or services to, or monitor the behaviour of, EU data subjects ○ Can be fined up to 4% of annual global turnover for breaching GDPR or €20 Million IS Ethical Issues #3 ● ● ● Equity in Access: ○ Digital divide ○ Internet access ○ Internet connection bandwidth Artificial Intelligence: ○ Who is responsible for the knowledge base or harm from implemented AI decisions? ○ Who owns the expertise once it is coded into a knowledge base? Unemployment & displacement: ○ ● Should employers be responsible for retraining workers? Misuse of computers: ○ Should laws regarding copying proprietary software be changed? ○ Is there harm if an employee uses a firm’s computers for personal benefit? ○ Is there a difference between looking at paper versus computer files? Sample question: Suppose you are hired as an IT innovation consultant by HKU’s Information Technology Services (ITS) department. Your task is to propose an application of the IoT technology that would benefit the study and campus life of HKU undergraduate students. Briefly summarize your proposal and clearly identify the benefits of your proposed IoT application. IoT Platform Ideas: ● Field of shopping → Ex. At the end of 2016, Amazon opened an automated supermarket Amazon Go. It has a Just Walk Out technology that processes payments automatically without ● ● cashier assistance. The technology behind the system is quite simple. The client downloads a mobile app and enters the store being pre-authorized. When finished shopping, the client's credit card is charged automatically upon exiting the store. ○ IoT to eliminate queues at the checkout Adopt block chain smart contract → real-time tracking of supply chain to increase transparency of the supply chain → establish trusted relationships Field of education → Conference Room and Study Room (Chiwah) Scheduling ○ With IoT occupancy sensors paired with devices such as tablets and laptops, students and staff can easily see when conference rooms and study spaces are occupied, and an IoT interface can provide scheduling options to facilitate room reservations. ○ Combining occupancy sensors with desk/ceiling and room booking software → provide a live view of occupancy and availability, so users can quickly find available desks, rooms or workspaces. Automatically check users into a room or desk booking by detecting their presence, allowing no-show bookings to be released. ○ In addition to desks and meeting rooms, build up a reliable picture of which areas of a building are most used and where people like to congregate. And equally, identify any parts of a building which are under-occupied, or even unused. Ex. The occupancy monitoring is done with wireless sensor devices. The sensors are placed on meeting spaces, where they report the occupancy with a very short interval through devices and the entire solution is integrated to a smart platform, where the users can see the occupancy information, book spaces, and further analyze the data for better space usage. 2019-20 (Sem 1) 1. Advantages of E-Commerce a. Facilitating online exchange of goods, services and moneys among firms and customers, and between customers using communication technologies, i.e. Internet. b. Reducing information asymmetry, search and transaction costs, i.e. providing abundant information to businesses and customers online. c. Amending firms’ pricing strategies by enabling dynamic pricing based on instant and forecast demand and supply. d. Increasing market segmentation and price discrimination by enabling businesses to search detailed customer information. e. Strengthening network effects, i.e. word-of-mouth marketing through social media. 2. Challenges of crowdfunding a. Fraud may occur, i.e. investors cannot get any rewards if the project is unsuccessful, which is difficult to verify. b. Lack of credibility of online fund transfer and absence of comprehensive regulations reduce public confidence. c. Misleading claims may occur, i.e. funds are not spent in the specified way. d. Lack of crowdfunding process transparency may lead to public doubt, i.e. staff pick may pre-determine the campaign success. e. Investors may constantly interfere with internal operation of the businesses. 3. Suggest possible value proposition/ways to enhance the success rate of E-commerce (?) a. Developing complementary goods, user reliance on the firm, i.e. I-Phone with App Store. b. Offering constant discounts and subsidies to customers, i.e. Starbucks offers a free drink or cake on a customer's birthday. c. Maximizing online and offline (O2O) performance, thus enhancing total user experience and establishing customers’ brand loyalty. d. Adopting personalized and targeted marketing, i.e. email marketing with personalized messages. e. Using social media to interact with customers and leverage viral promotion, thus strengthening customer loyalty. 4. Suggest promotion strategies a. Setting up Hong-Kong-exclusive Facebook and Instagram pages. b. Introducing the brand on these pages to arouse public awareness, i.e. history, choice of coffee beans. c. Adopting interactive communication with those commenting on its pages to enhance follower engagement. d. Leveraging viral promotion on both its original Facebook/Instagram pages and HongKong-exclusive ones to drive sales, i.e. promoting a “Hong-Kong-exclusive coffee”, offering discounts to first 20 customers. e. Inviting Key-Opinion-Leaders to try its products pre-opening and post reviews on social media. 5. Downsides and Dangers of Using Social Media Applications a. Competitors may leave negative comments or positive reviews of them on your page. i. Bad vibes go viral easily due to high circulation rate, severely harming the firm’s reputation and business relations. ii. Public relation mistakes can hardly be erased. iii. Lack of control over others’ actions and conduct on your page, i.e. users interacting in ways that spread negative publicity of your firm. iv. Lack of security, i.e. hackers may overtake the page ownership and spread fraudulent messages. 2019-20 (Sem 2) 1. Name an existing company that currently has more than three revenue streams (i.e., four or more). List this company’s revenue streams (e.g., advertising, subscription, etc.) and use its specific products or services to briefly explain each revenue stream. (5 marks; limit your answer to 150 words) a. Amazon has four main revenue streams: asset sale, licensing, subscription and brokerage fees. Amazon Go stores sell groceries to customers. Customers pay the product prices in return. Hence, Amazon earns revenue by selling its assets (grocery). b. Amazon provides cloud computing services/software to businesses and receives licensing fees. This is because Amazon grants firms licences to use its software (a copyrighted intellectual property) to aid their business operations. c. Amazon.com allows users to subscribe to e-books. Readers pay a subscription fee to enjoy continuous access to the e-book, i.e. read for multiple times, within a time period. d. Amazon receives brokerage fees from firms whose items are placed and sold on Amazon’s e-commerce platform. This is because Amazon provides intermediation services for buyers and sellers, e.g. facilitating the transaction between a toy company and buyers by introducing the toy on the platform or making recommendations so that buyers will click to buy toys. 2. A stakeholder is a party that has an interest in a company and can either affect or be affected by the company. The primary stakeholders of a public company include its investors, employees, customers and suppliers. Describe how the social media activities of each type of stakeholder can either affect or be used to predict the value of a public company. (8 marks; limit your answer to 150 words) a. Employees may rate employers’ leadership skills/friendliness on social media, e.g. Glassdoor. Public firms (“PF”) with high ratings likely have improved performance, ultimately higher firm value (“FV”). b. Investors may write predictions of PF’s performance/stock prices on social media platforms, e.g. Seeking Alpha. These opinions predict returns on investment, which reflects FV, as accurately as professional CFAs do. c. Customers’ online WOM on social media, e.g. Facebook comments about IPad, may influence others’ purchase decisions. If a popstar who has many followers, posts a positive comment about PF’s product, many fans may purchase it too, generating sales and a positive effect on FV. d. Suppliers may connect with multiple PF on social media, e.g. “liking” its partner supermarket’s Instagram page. Network analysis of suppliers’ relationships can check how closely these suppliers are connected with other reliable/large firms, hence suppliers’ reliability. This helps predict FV since reliable suppliers are critical to firms’ business. 3. How would you describe the similarities and differences between big data and artificial intelligence (AI) in your own words? You may use examples (e.g., a specific application, a product or service, etc.) to illustrate your points. Your answer should help companies better understand these technologies and make a more informed decision in investing in them. (12 marks; limit your answer to 200 words) a. Both big data (“BD”) and AI involve using large quantities of data to train machine learning algorithms (“MLAs”). For example, Target’s AI can predict whether customers are pregnant based on their purchase histories because Target fed multifarious data to train MLAs that classify and find patterns in pregnant customers’ purchases, e.g. unscented lotions. BD and AI share some techniques, e.g. text mining. For example, BD may provide much data for Siri, an AI, to understand the topic people said by topic modelling. b. However, AI may mimic or outperform humans’ thinking/learning process and does not solely rely on data. Artificial neural networks in AIs are loosely analogous to those in humans so AI has greater potential in learning new knowledge by developing/refuting hypotheses, thinking and making decisions on its own, and engaging in deep learning. For example, Alpha Go(AI) must understand the Go game like humans to win since Go is too complex. It cannot merely rely on BD techniques, e.g. analyzing much data and mapping out possibilities. Furthermore, autonomous cars(AI) can understand and guess signs and lanes that are unclear/blurred, and make its own decision in special circumstances to change lanes/decrease speed, despite not being fed such data. 2020-21 (Sem 1) 1. Name ONE online service that you are currently using, which has a subscription-based revenue model. List FOUR possible reasons why you may NOT continue to pay to enjoy the service. (4 points, limit your answer to 150 words) a. I am currently using Apple Music, which has a subscription-bsed revenue model. I am paying around $9.99 a month. I no longer plan to subscribe to this service anymore because: i. I am unable to see what friends are listening to like Spotify ii. Failing to connect; doesn’t get social → I am unable to collaborate on playlists iii. It is only supported by some devices, esp. Apple products iv. Lack of personalization → no recommendation v. Apple Music, an on-demand streamer at a $9.99 per-month price point, with a three-month free trial period, but no “freemium” ad-revenue model 2. Name ONE social media platform on which you are active. Articulate FIVE features that contribute to the switching cost/“stickiness” of that platform. Explain why TWO of those features may decrease in effectiveness in the future. (8 points, limit your answer to 200 words) Facebook: a. Friending (Facebook enables people to connect, share, discover, and communicate with each other on mobile devices and personal computers) b. Newsfeed (There are a number of different ways to engage with people on Facebook, including News Feed which displays an algorithmically-ranked series of stories and advertisements individualized for each person) c. Hashtags (Identify conversation trends, help users discover conversation, encourage more public sharing of content) → Hashtags can be used to cyberbully. Posting a picture on a social network and adding mean hashtags is a common way for kids to bully one another. They use hashtags such as #losr, #yousuck, and #peoplewhoshouldoffthemselves on photo captions bully or harass peers. d. Log-in credentials; log-in with Facebook to gain fast, convenience access → dangers: entering login credentials on unsecured websites make your account more vulnerable for sniffing/phishing attempts, someone might snoop on your login credentials ("sidejacking") and use them to impersonate you on Facebook. They could even lock you out of your own account. e. Free of Charge → Facebook gives you access to its system for free because it is in Facebook's interest that you spend time on the system and click link, you give them information to leverage → Collecting more user data than it supposed to be 3. AR/VR applications such as games and design are gaining popularity due to its rich features and interactive nature. However, it also has limits, either for individual users or businesses. List FIVE potential problems or concerns of AR/VR applications. (5 points, limit your answer to 150 words) a. Safety Issues → AR applications may distract users from their surroundings and lead to physical injuries. For instance, many people were injured while playing Pokemon Go. b. Security and Privacy Issues → The biggest issue is that no actual regulation designates what is allowed and what is not in the augmented reality environment. This means the technology can be used with malicious intent just as it can be used for entertainment i. For example, the “try before you buy” option for clothing, but instead of overlaying the cloth on your body someone may overlay another nude body and spread to damage your reputation or blackmail. c. Cost of VR devices → as with any new technology, the initial costs are extremely high. Even mediocre VR devices are priced fairly high. This trend is likely to continue for the decade to come until we figure out how to reduce costs for VR capable devices. d. Information overload → Many people argue that we live in a constantly switched on society and such a 24/7 technology on demand will radically change the way we see and think about reality. They often cite the danger of spending too much time in the virtual world and missing out on moments that are happening in the real world. e. AR/VR headsets are geeky looking and will be used only for specific applications; they will not be meant for everyday use in the foreseeable future. 4. Business Analytics has been widely used in retail, marketing, financial sector, human resources, etc. Tremendous amount of data is being analyzed every day to help businesses make better and wiser decisions. Your task is to think of a way to make use of data and help with the promotion of HKU on the global stage. Specify what kind of data you need to analyze and what kind of creative decisions you could make based on the analysis. (8 points, limit your answer to 200 words) a. Business analytics utilizes big data, statistical analysis, and data visualization to implement organization changes. b. Segmentation → Enable to prepare segment-wise reports, according to which HKU can determine where to concentrate his resources/promotional efforts c. Marketing Mix Optimization → BA can help determine the apt marketing mix as per the combinations. d. Competitor Analysis → HKU can compare the information with competitors, thereby determining the areas of improvement, or tactics to be employed to achieve an edge over the competitors. e. Campaign Analysis → HKU can make out the outcome of a campaign, by studying the trends of students/parents/secondary schools who give positive responses to the advertisements. With the help of historical data, the manager can accordingly direct the future campaigns to those, who are more likely to respond.
