Chapter 1: Chapter 1: Information Systems in Global Business Today
Smart Stores Reinvent the Retail Space.
• Despite the increase in online shopping, physical retail stores are still relevant.
• Retailers are using information technology to enhance the in-store shopping experience.
• Acrelec is piloting technology to manage curbside pickups.
• Smart shelves use various sensors to personalize the shopping experience and improve
operational efficiencies.
• AWM Frictionless enables customers to shop and checkout without interacting with a cashier.
• AWM also offers an application for tracking consumer behavior and directing them to other
parts of the store using digital signage.
Retail stores are using innovative information technology to draw buyers and improve the in-store
experience. The use of object-recognition technology, sensors, and smartphones is becoming
essential for brick-and-mortar stores to compete against online retailers.
The deployment of information technology has forced companies to redesign their procedures and
jobs to enhance efficiency and service. The use of leading-edge digital technologies is a key topic in
the MIS world and will be discussed in the text.
How do Acrelec's and AWM's systems change retail operations? How do they improve the
customer experience?
Acrelec's system helps retailers manage store curbside pickups by customers placing orders online,
enabling them to estimate when a customer will arrive at a particular store and identify exactly when a
customer's car arrives and where it is parked.
AWM's systems, such as Smart Shelf and Frictionless, enable retailers to view and track their
products in real-time, personalize shoppers' experiences, and enable customers to shop as normal
and check out by simply exiting the store.
These systems improve operational efficiencies, enhance the in-store experience, and provide realtime on-shelf marketing to consumers. They also offer a high level of customization and
personalization, similar to that found in online shopping, to brick-and-mortar stores.
1-1: How are information systems transforming business, and why are they so essential for
running and managing a business today?
Information systems and technologies are transforming the global business environment. In 2019,
global spending on IT and IT services was nearly $3.8 trillion, and firms spent another $160 billion on
management consulting and services. Most of the business value of IT investment derives from
organizational, management, and cultural changes inside firms. As managers, making wise
investment choices can help firms outperform competitors, while poor choices can waste valuable
capital.
What's New in Management Information Systems?
The Management Information Systems (MIS) field is exciting due to continuous changes in
technology, management, and business processes.
• IT Innovations: The emergence of new technologies, such as cloud computing, mobile
platforms, big data, business analytics, machine learning systems, and social networks, are
transforming the traditional business world.
• New Business models: The emergence of online video services, such as Netflix and Apple
TV, is changing how premium video is distributed and created, potentially disrupting cable
network dominance.
• E-commerce expansion: E-commerce is changing how firms design, produce, and deliver
their products and services, with a growing emphasis on selling services rather than goods.
• Management changes: Management is going mobile, with managers on the move having
direct and continuous contact with their employees, and access to rich data for accurate and
timely decisions.
• Changes in firms and organizations: New fast-growing 21st-century business firms put less
emphasis on hierarchy and structure, and more emphasis on employees taking on multiple
roles and tasks, collaborating on teams, and demonstrating competency and skills rather than
position in the hierarchy.
Globalization Challenges and Opportunities: A Flattened World.
• Prior to AD 1500, no global economic system of trade existed, but after the sixteenth century,
advances in navigation and ship technology created a global trading system.
• The Industrial Revolution was a worldwide phenomenon, energized by the expansion of trade
among nations.
• Globalization presents both challenges and opportunities for businesses, with a growing
percentage of the economy depending on imports and exports.
• Outsourcing has accelerated the development of new systems but has also caused significant
job displacement.
• The challenge for businesses is to avoid markets for goods and services that can be
produced offshore much less expensively and develop high-level skills that cannot be
outsourced.
• Information systems enable globalization, reducing costs of operating and transacting on a
global scale, and providing access to a worldwide marketplace.
Interactive Session: Organizations.
COVID-19 has led to a significant shift in companies, both large and small, to have their employees
work remotely from their homes.
The pandemic has forced many law firms to close their offices and work from home, which they say
has not hindered their ability to serve clients.
OpenText Corp. plans to have half of its employees work from home permanently, as it eliminates
more than half of its global offices.
Working from home had been gaining momentum before the pandemic, and the outbreak may have
marked a tipping point.
Information technologies, such as broadband high-speed Internet connections, laptops, tablets,
smartphones, and videoconferencing tools, are driving the shift towards remote work.
Videoconferencing has become the new normal for meetings as companies shift from face-to-face to
remote work.
Skype, Zoom, Microsoft Teams, Amazon Chime, BlueJeans, Cisco's WebEx, GoToMeeting, and
Google Meet are some of the video conferencing tools available.
There are benefits to remote work, such as lower overhead, flexible schedules, and increased
productivity, but challenges exist, including limited access to high-speed internet and difficulty for
employees with children or small apartments.
Face-to-face interactions are more effective than email and text messaging, and remote work can
inhibit creativity and innovative thinking.
Full-time employees are more likely to have remote work options than part-time employees, and
remote workers are typically college-educated, at least 45 years old, and earn an annual salary of
$58,000 while working for a company with more than 100 employees.
Case Study Questions:
1. Define the problem described in this case. What are the management, organization, and
technology issues raised by this problem?
The problem described in this case is that the company needs to find a way to improve
communication and collaboration among its employees who work in different locations. The
management and organizational issues raised by this problem include the need for effective
communication and coordination of work activities among remote employees. The technology
issues include the need for tools and systems that can facilitate communication and
collaboration among employees who work remotely.
2. Identify the information technologies used to provide a solution to this problem. Was this a
successful solution? Why or why not?
The company used a variety of information technologies to provide a solution to the problem.
These technologies include video conferencing, instant messaging, project management
software, and cloud storage services. The solution was successful in improving
communication and collaboration among remote employees, as evidenced by increased
productivity and employee satisfaction.
3. Will working from home become the dominant way of working in the future? Why or why
not?
It is likely that working from home will become a more dominant way of working in the future.
The COVID-19 pandemic has accelerated the trend towards remote work, and many
companies have discovered that remote work can be effective and productive. However, it is
also likely that a hybrid model of work will emerge, where employees work both remotely and
in the office. This will depend on the type of work being done and the preferences of individual
employees and companies.
The Emerging Digital Firm:
A digital firm is one in which nearly all of the organization's significant business relationships with
customers, suppliers, and employees are digitally enabled and mediated.
Business processes refer to the set of logically related tasks and behaviours that organizations
develop over time to produce specific business results and the unique manner in which these
activities are organized and coordinated.
A digital firm has digitally enabled and mediated relationships with customers, suppliers, and
employees, and its core business processes are accomplished through digital networks. Key
corporate assets are managed digitally, and any information required to support key business
decisions is available at anytime and anywhere in the firm.
Digital firms sense and respond to their environments rapidly, offer opportunities for global
organization and management, and operate continuously across time zones and physical locations.
Many companies are moving toward close digital integration with their stakeholders.
Strategic Business Objectives of Information Systems:
Information systems are essential for conducting day-to-day business, achieving strategic objectives,
and are heavily invested in by businesses. Many sectors of the economy could not operate without
information systems, including e-commerce, finance, insurance, real estate, personal services, retail,
and manufacturing.
There is a growing interdependence between a firm's ability to use information technology and its
ability to implement corporate strategies and achieve goals. Businesses invest in information systems
to achieve operational excellence, develop new products and services, improve customer and
supplier intimacy, enhance decision making, gain competitive advantage, and ensure survival.
Operational Excellence.
Businesses use information systems and technologies to improve operational efficiency, productivity,
and profitability. Walmart's Retail Link system digitally links suppliers to all of Walmart's stores to
achieve world-class operational efficiency and productivity, making it the most efficient retail store in
the industry.
New Products, Services, and Business Models.
Information systems and technologies enable firms to create new products, services, and business
models, which describe how a company produces, delivers, and sells a product or service to create
wealth. Apple's technology platform transformed the old music distribution model into a new, online
distribution model and has continued to innovate with its iTunes music service, iPad, and iPhone.
Customer and Supplier Intimacy.
Knowing customers and suppliers well is important for businesses to increase revenue and decrease
costs. The use of information systems and technologies to achieve customer and supplier intimacy is
exemplified by companies such as Mandarin Oriental hotels, Charles Tyrwhitt, and JCPenney.
Charles Tyrwhitt and JCPenney use systems to immediately notify suppliers of sales to reduce
inventory costs and ensure customer demand is met.
Improved Decision Making.
Business managers often lack the right information to make informed decisions, resulting in poor
outcomes and customer loss. Information systems and technologies now enable managers to use
real-time data for decision-making, as exemplified by Privi Organics' use of Oracle HCM to gain
insight into employee information and make faster HR decisions.
Competitive Advantage.
Achieving business objectives such as operational excellence, new products, customer/supplier
intimacy, and improved decision making can lead to a competitive advantage, resulting in higher sales
and profits that competitors cannot match, as exemplified by Apple Inc., Walmart, and UPS.
Survival.
Businesses invest in information systems and technologies as they are necessities of doing business
driven by industry-level changes and legal duties to retain records, including digital records, imposed
by national and regional legislation.
1-2: 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?
An information system (IS) is a set of interrelated components that collect, store, process, and
disseminate information to support decision-making, coordination, and control in an organization. The
components of an IS include management, organization, and technology.
The management component includes strategies, policies, and procedures for using information
systems to achieve organizational goals. The organization component includes the structure of the
organization, the culture, and the human resources. The technology component includes hardware,
software, and telecommunications networks.
Complementary assets are essential for ensuring that information systems provide genuine value for
organizations. These assets include organizational capital, such as the business processes, culture,
and knowledge of employees, as well as complementary goods and services, such as complementary
products and services that enhance the value of the information system. Without these assets,
information systems may not be able to provide the full potential benefits to organizations.
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Information systems involve input, processing, and output to produce information that
organizations need. Feedback helps evaluate and refine input.
Environmental actors interact with the organization and its information systems. Programs
and computers are tools, but understanding the problems, design elements, and
organizational processes are crucial for effective information systems.
Input captures or collects raw data from within the organization or from its external environment.
Processing converts this raw input into a meaningful form.
Output transfers the processed information to the people who will use it or to the activities for which it
will be used.
Information systems also require feedback, which is output that is returned to appropriate members
of the organization to help them evaluate or correct the input stage.
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Understanding how computers and programs work is important in solving organizational
problems, but they are only part of an information system.
The analogy of a house shows that computers and programs are like tools, but understanding
design elements and organizational processes are crucial for effective information systems.
To understand information systems, it's important to understand the problems they solve,
their design elements, and the organizational processes that lead to solutions.
Dimensions of Information Systems.
It’s important understand the broader dimensions of information systems, including their management
and organizational aspects, in addition to technical knowledge.
Management Information Systems (MIS) deals with these issues surrounding the development, use,
and impact of information systems.
Organizations.
Organizations are composed of different levels and specialties, and their culture and politics affect the
development of information systems.
Information systems automate many business processes, which are guided by formal rules and a
unique organizational culture. Different levels and specialties within an organization create different
interests and points of view, which can lead to conflicts and compromises in the development of
information systems.
Levels in a firm:
Management:
Managers have the responsibility to make sense of organizational challenges, set strategy, allocate
resources, and exercise responsible leadership. Information systems described in the book reflect the
realities of real-world managers who must also engage in creative work to innovate and adapt their
organizations. Information technology can help managers design new products and services and
redesign their organizations.
Information Technology:
Information technology (IT) is a tool that managers use to cope with change, and it consists of
computer hardware, software, data management technology, and networking and telecommunications
technology.
The Internet is the largest and most widely used network globally and has become a platform for new
products, services, and business models. The Web is a service provided by the Internet that uses
universally accepted standards to store, retrieve, format, and display information in a page format on
the Internet.
The IT infrastructure provides the foundation, or platform, on which the firm can build its specific
information systems. UPS's package tracking system is an example of how organization,
management, and technology elements work together to create an information system solution to the
business challenge of providing a high level of service with low prices in the face of mounting
competition.
Interactive Session: Technology.
Digital Transformation of Healthcare at Singapore's Jurong Health Services.
Jurong Health Services (JurongHealth) manages several hospitals in Singapore and aims to provide
transformative medical care through the use of innovative information technologies. The hospital has
integrated over 50 healthcare IT systems as part of the Project OneCare initiative, enabling it to
become paperless, chartless, and filmless. The systems have increased efficiency, reduced waiting
times, and improved patient satisfaction.
IT systems implemented include self-service kiosks for patient and visitor registration, a Warehouse
Management System that automates inventory top-up requests, and a Real-Time Location Tracking
System that automatically tracks patients and medical equipment. The hospital also implemented an
integrated Electronic Medical Record (EMR) system that combines all the functional modules of the
hospital, interfaced with 140 medical devices and equipment. JurongHealth has continued to move
forward, responding to the COVID-19 pandemic by introducing touch-free technology and deploying
security robots and drones.
JurongHealth's use of technology has made it a leading technology-driven healthcare provider in the
region, with several awards for IT-driven and overall organizational transformation.
Case Study questions:
1. What technologies are used by JurongHealth? What purpose do they serve?
JurongHealth uses various technologies such as Electronic Medical Record (EMR) system,
Warehouse Management System, Real-Time Location Tracking System, Visitor Management
System, and Enterprise Queue Management System. These systems serve different
purposes, including automating inventory top-up requests, eliminating manual searching for
patients and equipment, controlling access to the hospital wards, reducing waiting time, and
increasing patient satisfaction.
2. Search the web for RFID. Suggest an example of how RFID can be used for locating and
tracking people.
Radio Frequency Identification technology can be used for locating and tracking people in
various settings, such as hospitals, schools, prisons, and airports. For example, RFID
wristbands or tags can be attached to patients or visitors, allowing hospital staff to track their
location and movement within the hospital premises.
3. What information systems are implemented by JurongHealth? Describe the input,
processing, and output of any one such system.
One of the information systems implemented by JurongHealth is the Electronic Medical
Record (EMR) system. The EMR system combines all the functional modules of the hospital
and interfaces with 140 medical devices and equipment. The system captures data from
these devices and stores it in the EMR system, eliminating the need for manual data entry
and reducing the likelihood of charting errors.
The input to the system is the data collected from various medical devices, and the
processing involves uploading this data to the EMR system. The output is a complete and
accurate electronic medical record of the patient, accessible to clinical staff for decisionmaking and treatment planning.
4. Why are information systems important for JurongHealth?
Information systems are important for JurongHealth as they help the hospital achieve its
mission of providing world-class medical care at an affordable cost. These systems improve
efficiency, reduce errors, enhance patient satisfaction, and control costs.
They also enable the hospital to collect, store, and analyze patient data, which is critical for
evidence-based decision-making and continuous quality improvement. Additionally,
information systems help JurongHealth stay up-to-date with emerging healthcare
technologies and trends, making it a leading technology-driven healthcare provider in the
region.
It Isn't Just Technology: A Business Perspective on Information Systems.
Businesses invest in information technology and systems to create value for the firm by increasing
revenue or decreasing costs through better decision-making and more efficient business processes.
The value of an information system is determined by its contribution to corporate value. Information
systems represent organizational and management solutions based on information technology to
challenges or problems posed by the environment, and their primary purpose is to contribute to
corporate value.
The AWM Smart Shelf system provides a solution to the business problem of brick-and-mortar stores
losing market share to online retailers by digitally enabling key business processes for inventory
management, sales, and marketing.
Complementary Assets: Organizational Capital and the Right Business Model.
• Some firms achieve better results from their information systems than others, as seen in the
varying returns on investment in information technology (IT) investments.
• Complementary assets, such as business processes, organizational culture, and
management behavior, are necessary to derive value from primary IT investments.
• Firms that make complementary investments receive superior returns on their IT investments,
while those that fail to do so receive little or no returns.
• Organizational and managerial assets are crucial for deriving value from IT investments, and
managers need to consider the broader organization and management dimensions of
information systems to achieve substantial returns.
1-3: What academic disciplines are used to study information systems, and how does each
contribute to an understanding of information systems?
Several academic disciplines are used to study information systems, including computer science,
information science, management science, and social science.
Computer science focuses on the technical aspects of information systems, such as programming,
database design, and network architecture.
Information science examines the theoretical and practical aspects of information processing and
management, including information retrieval, knowledge organization, and user behavior.
Management science studies the use of information systems in organizational decision-making and
management processes, including strategy development, resource allocation, and performance
evaluation.
Social science, such as sociology and psychology, studies the human and social factors that
influence the use and impact of information systems, including user behavior, organizational culture,
and social norms.
Each of these disciplines contributes to an understanding of information systems by providing
different perspectives and methods for analyzing and designing information systems, as well as
explaining the ways in which they are used and their impact on individuals, organizations, and society.
Review questions:
1.1: How are information systems transforming business, and why are they so essential for running
and managing a business today?
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Describe how information systems have changed the way businesses operate and their
products and services.
Identify three major new information system trends.
Describe the characteristics of a digital firm.
Describe the challenges and opportunities of globalization in a "flattened" world.
List and describe six reasons why information systems are so important for business today.
Information systems (IS) are essential for running and managing a business today. They have
transformed the way businesses operate and their products and services by improving
communication, streamlining operations, personalizing products and services, enhancing decisionmaking, and creating new business models.
Three major new information system trends are Artificial Intelligence (AI) and Machine Learning,
Cloud Computing, and the Internet of Things (IoT).
A digital firm is a business that uses digital technologies to enable its business processes, products,
and services, and it is characterized by high levels of automation, real-time data, and customercentricity.
Globalization has created both challenges and opportunities for businesses, such as increased
competition, access to new markets, cultural differences, and regulatory complexity.
Information systems are essential for businesses today for their efficiency, decision-making,
innovation, strategic advantage, customer experience, and collaboration benefits.
1. Efficiency: Information systems automate and streamline business operations, reducing costs
and improving efficiency. For instance, inventory management systems help businesses track
their stock levels in real-time, minimizing waste and ensuring they have enough stock to meet
customer demand.
2. Decision-making: Information systems provide businesses with real-time data and analytics,
enabling them to make informed decisions quickly. For instance, business intelligence tools
allow companies to analyze data and identify trends that can help them make strategic
decisions.
3. Innovation: Information systems enable businesses to innovate and develop new products
and services. For instance, e-commerce websites use data analytics to recommend products
to customers based on their past purchase history and preferences.
4. Strategic advantage: Information systems provide businesses with a strategic advantage by
providing insights into the market and competitors. For instance, market research tools allow
companies to identify emerging trends and consumer preferences.
5. Customer experience: Information systems enable businesses to personalize their products
and services to meet the individual needs and preferences of their customers. For instance,
e-commerce websites use data analytics to recommend products to customers based on their
past purchase history and preferences.
6. Collaboration: Information systems allow businesses to collaborate both internally and
externally with their stakeholders, including employees, customers, suppliers, and partners.
For instance, project management tools enable teams to work together on projects, share
information, and track progress.
1-2. 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?
• Explain the differences between information and data. Why is the former essential to the latter?
• Describe the three activities in an information system that produce the information that organizations
need.
• Explain why organizations have a structure composed of different levels and specialties.
• Describe how the parts of an organization's culture can be found embedded in its information
systems.
• Describe the features of an organization's information value chain.
• Based on what you have read, identify the key elements of organizational and management capital.
An information system (IS) is a combination of people, technology, and processes that collect,
process, store, and disseminate information to support decision-making and other organizational
activities.
The IS includes management, organization, and technology components to ensure its effectiveness
and efficiency. Complementary assets, such as organizational capital, human capital, and social
capital, are essential for ensuring that IS provides genuine value for organizations.
Data refers to the raw facts and figures, whereas information is the output generated from the
analysis of data.
The three activities in an IS that produce information are input, processing, and output. Organizations
have a structure composed of different levels and specialties, and culture embedded in its IS.
The information value chain includes the stages of collecting, organizing, analyzing, storing, and
disseminating information.
Organizational and management capital are key elements for organizations to leverage the full
potential of IS. Organizational capital includes the organization's culture, structure, and strategy,
whereas management capital includes the skills, knowledge, and expertise of the organization's
managers and leaders.
1-3: What academic disciplines are used to study information systems, and how does each
contribute to an understanding of information systems?
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List and describe each discipline that contributes to a technical approach to information
systems.
List and describe each discipline that con tributes to a behavioral approach to information
systems.
Describe the sociotechnical perspective on information systems.
Disciplines that contribute to a technical approach to IS include:
1. Computer Science - focuses on the technical aspects of IS, such as hardware, software,
programming, and algorithms.
2. Engineering - focuses on the design, development, and implementation of IS, such as
database management systems, networks, and software applications.
3. Mathematics - provides the mathematical foundations for IS, such as statistical analysis,
modeling, and optimization.
Disciplines that contribute to a behavioral approach to IS include:
1. Psychology - focuses on the human aspects of IS, such as user behavior, perception,
cognition, and motivation.
2. Sociology - studies the social context of IS, such as the impact of IS on society, organizations,
and culture.
3. Management - focuses on how IS can support business processes and decision-making,
such as strategic planning, project management, and organizational change management.
The sociotechnical perspective on IS emphasizes the interaction between technology and social
systems. It suggests that the design and implementation of IS should consider both technical and
social factors, such as user needs, organizational culture, and work processes.
The sociotechnical perspective recognizes that Information System is not just a technical system but
also a social system that affects and is affected by its environment. Therefore, designing and
implementing IS should involve both technical and social experts working together to ensure the
system's success.
Discussion Questions:
1-4: Information systems are too important to be left to computer specialists. Do you agree? Why or
why not?
I agree that information systems are too important to be left to computer specialists alone. While
computer specialists possess the technical expertise necessary for developing and maintaining
information systems, they may not have the necessary business and organizational knowledge to
understand the context and requirements of the system fully.
Information systems are developed to support business processes and decision-making, so it is
crucial to involve stakeholders from various departments and levels of the organization in the design
and implementation process. This includes managers, employees, and end-users who can provide
valuable insights into the system's requirements and ensure its usability and effectiveness.
Moreover, information systems are not only technical systems but also social systems that interact
with users and their environment. Therefore, the design and implementation of information systems
require a multidisciplinary approach that considers technical, social, and organizational factors.
Computer specialists may not have the expertise to address all these factors.
In conclusion, while computer specialists play a critical role in developing and maintaining information
systems, a multidisciplinary team that includes business and organizational experts is necessary to
ensure that the system meets the organization's needs and goals.
Chapter 2: Global E-business and Collaboration.
Enterprise Social Networking Transforms Sharp Corporation into a More
Innovative Connected Organization.
Sharp Corporation, a knowledge-intensive technology company that was facing
issues with hierarchal processes and culture that prevented employees from sharing
information and innovating. Sharp management found that deploying new technology, such as
Microsoft
Yammer's social tools, helped to move the company from a hierarchical environment
to a more democratized one, increasing employee collaboration and engagement
and leading to more effective sharing of knowledge, innovation and competitiveness.
The technology alone was not enough, the company also had to change its
organizational culture and business processes for knowledge dissemination and
collaborative work.
The questions posed ask about how collaboration and employee
engagement helped Sharp to be more competitive and how using Yammer changed
the corporate culture and work at the company.
2.1 What are business processes?
How are they related to information systems?
Information systems enable businesses to manage information, make better
decisions, and improve their business processes to enhance overall performance.
Business Processes.
Business processes refer to the way work is organized, coordinated and focused to
produce a valuable product or service. These processes are supported by flows of
information and knowledge among participants and can impact a company's ability to
innovate and execute.
Every business is made up of processes, some functional specific, some cross-departmental and
requiring coordination. Fulfilling a customer order, for example, is
a complicated series of processes that require information to flow rapidly within the
company, its partners and customers, and can be facilitated by computer-based
information systems.
How Information Technology Improves Business Processes.
Information systems automate manual business processes and allow for
simultaneous tasks and faster decision-making. They support new business models
and improve business efficiency, innovation and customer service by analyzing and
changing processes through the use of technology. Throughout the book, the focus
is on improving business processes with information technology.
2.2. How do systems serve the different management groups in a business, and how do
systems that link the enterprise improve organizational performance?
Information systems support business processes of a firm and there are different
kinds of systems in a typical business organization to support the major business
functions and decision-making needs of different management groups. The trend is
moving towards integrated cross-functional systems instead of independent
functional systems.
Systems for Different Management Groups.
A business firm has systems to support different groups or levels of management.
These systems include transaction processing systems and systems for business
intelligence.
Transaction Processing Systems.
Information systems support the day-to-day activities of the business through
Transaction Processing Systems (TPS). TPS keep track of transactions like sales,
payroll, and employee records, and answer routine questions.
The primary purpose of TPS is to provide current and accurate information, with
predefined and structured tasks, resources and goals. TPS are also major suppliers
of information to other systems and business functions, and are critical to the
functioning of the business - failure of TPS can cause significant harm to the firm and
others linked to it.
Systems for Business Intelligence.
Business intelligence systems support management decision making at different
levels in an organization. Management Information Systems (MIS) provide reports to
middle management for monitoring, controlling and decision-making activities.
Decision-Support Systems (DSS) support nonroutine decision-making for super-user
managers and business analysts.
DSS use sophisticated analytics and models to analyze data from internal and external
sources. Executive Support Systems (ESS) address strategic issues and long-term trends
for senior management. ESS present data through an easy-to-use interface and are
designed to incorporate external events and trends into decision making.
Systems for Linking the Enterprise.
A business might wonder how to manage information in multiple systems, the cost of
maintaining many systems, and how to coordinate work across systems. These are
important questions for today's businesses.
Enterprise Applications.
Integrating systems in a company is a major challenge due to its organic and
acquired growth. Enterprise applications like enterprise systems (ERP), supply chain
management systems (SCM), customer relationship management systems (CRM),
and knowledge management systems (KMS) help integrate business processes and
improve flexibility and productivity.
ERP integrates manufacturing, finance, sales, and HR into a single software. SCM
helps manage relationships with suppliers and lowers costs. CRM helps coordinate
sales, marketing, and service processes to improve customer satisfaction. KMS
collects and applies knowledge and expertise to improve business processes and
decisions.
Intranets and Extranets.
Enterprise applications bring changes to business processes and offer data
integration opportunities. They can be expensive and challenging to implement.
Intranets and extranets are alternative tools for increasing integration and improving
information flow within the company and with customers/suppliers.
Intranets are internal company websites accessible only to employees and extranets
are company websites accessible to authorized vendors and suppliers. An example
of this is Six Flags, which uses an intranet for full-time employees and an extranet for
seasonal employees for park operations information and events updates.
E-business, E-commerce, and E-government.
E-business refers to the use of digital technology and the Internet to conduct major
business processes. E-commerce is a part of e-business that deals with buying and
selling of goods and services online. E-government refers to the application of
Internet technology for government services and relationships with citizens,
businesses and other agencies. The use of e-government makes operations more
efficient and empowers citizens. Examples of e-government services include online
renewal of driver's licenses and online application for unemployment benefits.
The Interactive Session on Organizations describes the Canadian City of
Mississauga's e-government program.
Interactive Session: Organizations.
Mississauga, a Toronto suburb, is Canada's 6th largest city and adopts digital
technology to enhance its operations and services. It aims to integrate tech into its
operations and business planning, with tech roadmaps for each service. Mississauga
has a diverse population and central business district, but also has increasing lowincome families.
It created a Smart City Master Plan to guide the city's digital tech adoption. It uses
social media, "BYOD," remote cloud computing, video conferencing and mobile
tools. The city has connected over 600 buses and 700 city vehicles to provide realtime location-based
information and has built its own high-speed fibre optic and
wireless Wi-Fi network. It is working to build a mobile-friendly ecosystem across the
city to provide digital tech to the entire community.
Case Study Questions:
1. Describe the problems the City of Mississauga hoped to address using digital
technology.
The City of Mississauga aimed to address a number of challenges related to
urban planning and management, including improving access to city services,
reducing operational costs, and enhancing citizen engagement.
The city saw digital technology as a way to provide residents with more
convenient access to information and services, while also improving efficiency
and decision making within the city government.
2. What technologies did Mississauga employ for a solution? Describe each of these
technologies and the role each played in a solution.
Mississauga employed several digital technologies to address these
challenges, including geographic information systems (GIS), business
intelligence (BI) tools, and mobile applications. The city's GIS system was
used to manage and analyze geographic data, such as maps and aerial
imagery, to support urban planning and decision making.
The BI tools were used to analyze large amounts of data from various city
departments and provide insights into city operations. Mobile applications
were developed to provide residents with access to city services and
information from their smartphones and other mobile devices.
3. What management, organization, and technology issues did the City of
Mississauga have to address in developing a solution?
The City of Mississauga faced a number of management, organization, and
technology issues as it worked to develop a solution. One major challenge
was integrating the different digital systems and technologies used by the city,
including the GIS, BI, and mobile platforms. The city also had to work to
ensure that data from these systems was secure and protected from
unauthorized access. Additionally, the city faced the challenge of ensuring
that the digital solutions it developed were accessible to all residents,
regardless of their level of technical expertise.
4. How did the technologies in this case improve operations and decision
making at the City of Mississauga?
The digital technologies employed by the City of Mississauga improved
operations and decision making in several ways. The GIS system, for
example, enabled the city to manage and analyze geographic data more
effectively, which improved the accuracy and speed of decision making.
The BI tools provided city leaders with insights into city operations, allowing
them to identify areas for improvement and make more informed decisions.
The mobile applications made city services and information more accessible
to residents, improving their engagement with the city and reducing
operational costs by reducing the need for face-to-face interactions.
Overall, these technologies helped to streamline city operations, improve
service delivery, and enhance decision making.
2.3: Why are systems for collaboration and social business so important, and
what technologies do they use?
Businesses need special systems to support collaboration, teamwork, and
coordination of plans and actions in order to effectively make sense of information
and work towards common goals.
Collaboration:
Collaboration is working with others to achieve shared goals and is essential in
today's businesses and organizations due to the changing nature of work, growth of
professional work, changing organization of the firm, changing scope of the firm,
emphasis on innovation, and changing culture of work and business.
Collaboration can be one-to-one or many-to-many, can be short or long-lived, and
can take place within informal groups or formal teams. Teams are assigned specific
missions and are expected to collaborate and achieve their mission.
The increasing importance of collaboration is due to factors such as the rise of
interaction jobs, need for close coordination and collaboration in a globalized world,
the belief that innovation is a group and social process, and cultural support for
collaboration and teamwork.
Collaboration and teamwork are more important today than ever for a variety of
reasons.
1. Collaboration and teamwork are necessary due to the shift in work from
independent stages to closer coordination and interaction.
2. Collaboration is important in professional jobs that require specialized
education and the sharing of information.
3. Collaboration is vital as work is now organized into groups and teams, and
decision-making power has been pushed down in organizations.
4. Teams are required for close coordination of various functions in a globally
present firm.
5. Innovation is a group and social process, and most innovations derive from
collaboration; strong collaboration practices support innovation.
6. Changing culture of work and business: Collaboration is supported by the
cultural notion that diverse teams produce better results faster than individuals
working alone.
What is Social Business?
Many firms embrace social business, using social networking platforms, internal
corporate social tools, and Facebook, Twitter to engage employees, customers, and
suppliers. The goal is to deepen interactions and expedite information sharing,
innovation, and decision making.
Conversations between customers, suppliers, employees, managers and oversight
agencies about the firm are critical for strengthening bonds and increasing emotional
involvement.
Social business requires information transparency, allowing for direct sharing of
opinions and facts. This leads to operational efficiencies, innovation and faster
decision making
Business Benefits of Collaboration and Social Business.
Collaboration within and among firms is seen as crucial for success by both business
and academic communities. Studies show that a focus on collaboration leads to
business value and competitive advantage, with investments in collaboration
technology resulting in returns more than 4 times the investment.
Social technologies within and across enterprises have the potential to raise
productivity of interaction workers by 20-25%. Benefits of collaboration and social
business have been identified and shown to impact business performance.
Building a Collaborative Culture and Business Processes
Collaboration requires a supportive culture and business processes. In the past, large firms were
often "command and control" organizations where top leaders made decisions and lower-level
employees executed orders. This resulted in a lack of teamwork and no rewards for team
performance.
A collaborative culture is different, with senior managers relying on teams and
policies, products, designs, processes, and systems being created and implemented
by teams at all levels. Teams are rewarded and middle managers are responsible for
building and coordinating teams. The culture is more "social" with collaboration and
teamwork being emphasized by senior management.
Tools and Technologies for Collaboration and Social Business.
Tools are necessary to support a collaborative culture and they can range from expensive to free with
a variety of options available online to enable effective collaboration and group decision making.
Email and Instant Messaging (IM).
Email and instant messaging are widely used communication and collaboration tools in interaction
jobs and have evolved with the rise of messaging and social media as preferred channels of
communication.
Wikis.
Wikis are a type of website that allows for easy user contribution and editing, with the most wellknown being Wikipedia, and they can be used for storing and sharing corporate knowledge, with SAP
AG using a wiki as a source of information for customers and software developers.
Virtual Worlds.
Virtual worlds like Second Life are 3D online environments where companies like IBM, Cisco, and
Intel use avatars for meetings, interviews, guest speaker events, and employee training through
gestures, chat conversations, and voice communication.
Collaboration and Social Business Platforms.
Software suites for collaboration and social business are widely used by companies and educational
institutions to reduce travel expenses and communicate remotely, including internet-based audio
conferencing and videoconferencing systems, cloud collaboration services, corporate collaboration
systems, enterprise social networking tools, and low-cost videoconferencing tools such as Microsoft
Teams, Google Meet, Amazon Chime, Apple's FaceTime, and the popular and affordable Zoom
Interactive Session: Technology.
Case Study: Higher Education Redefined: Virtual Education at Ahlia University
Ahlia University in Bahrain moved its operations and services online due to the
COVID-19 pandemic. The university prepared itself for the transition by addressing
infrastructure requirements, providing technology training and support, and
implementing security policies.
Microsoft SharePoint was already in use for information storage and management,
and Microsoft Teams was chosen to conduct classes online. The university linked its
Student Information System with Moodle and used Zoom for online webinars and
conferences. The success of these collaborations has led the university to consider
focusing on online platforms even after the pandemic.
Case Study Questions:
1. Microsoft Teams provides secure chat and call options for students, and
enables the university to create a secure environment with restricted access
to outsiders. It also links time tables and class lists from the university's
Student Information System, allowing for secure authentication, and recording
of all classes.
2. Ahlia University addressed infrastructure requirements for online education,
including optimum internet speed, network upgrades, and the licensing of
Microsoft and other software packages. Short videos and manuals were
created to help students and staff use different technologies, and online
training and support were provided through a hotline, official website, and
virtual training courses. The university also implemented security policies to
protect information and privacy.
3. Using Microsoft Teams, Moodle, and Zoom has contributed to mass
enrolment, increased international collaborations and reduced travel
expenses. It has facilitated the exchange of knowledge and encouraged
academic contributions, while recording all classes enables students to review
and recall course materials. The success of these collaborations has
prompted the university to consider focusing on online platforms even after
the pandemic.
Google offers cloud collaboration services through tools like Google Drive, Google Docs, G
Suite, and Google Sites, most of which are free. Microsoft OneDrive and Dropbox are other
cloud storage services with options for file sharing and synchronization. Microsoft
SharePoint is a browser-based collaboration platform with integration to Microsoft Office
while IBM Notes is a collaborative software with features for sharing, editing, and meetings.
Enterprise social networking tools like Salesforce Chatter, Microsoft Yammer, Facebook
Workplace, and IBM Connections connect members of an organization. These tools
provide business value but may not always be easy to implement.
Checklist for Managers: Evaluating and Selecting Collaboration and Social
Software Tools.
The selection of the right collaboration technology for a firm can be challenging with
the multitude of options available. The time/space collaboration and social tool matrix
developed by collaborative work scholars provides a framework for evaluating these
tools.
The matrix focuses on two dimensions of collaboration: time and space, and helps to
choose the most appropriate technology to overcome these limitations.
To get started, a firm can follow these six steps:
1. assess the collaboration challenges in terms of time and space.
2. identify available solutions.
3. evaluate the costs and benefits.
4. assess security and vulnerability risks.
5. seek input from potential users, and
6. invite vendors to make presentations.
2.4: What is the role of the information systems function in a business?
Responsibility for the proper operation and maintenance of the hardware, software,
and other technologies used by businesses' information systems lies with a special
information systems function, while end-users manage the systems from a business
perspective.
Information System Department:
The information systems department is the formal unit responsible for IT services in
most firms, maintaining the hardware, software, and networks. It consists of
specialists such as programmers, systems analysts, project leaders, and information
systems managers.
A CIO (Chief Information Officer) is the head of the information systems
department, who plays a leadership role in using IT in the firm.
A CSO (Chief Security Officer) is in charge of information systems security, while a CPO ensures
company's compliance with data privacy laws.
A CKO (Chief knowledge officer) is responsible for knowledge management, while
a CDO (chief data officer) oversees enterprise-wide information governance.
End users are playing a larger role in the design and development of information
systems. IT occupations are growing, with jobs in security, data science, cloud
engineering, and business intelligence in high demand.
Organizing the Information Systems Function.
IT functions in a business can be organized in many ways, depending on the size of
the firm and nature of the firm. IT governance involves decisions on IT strategy and
policies, decision rights, and accountability framework to support the organization's
objectives.
Effective IT governance requires clear answers on centralization, decision-making, and monitoring.
Review Questions:
2.1. What are business processes? How are they related to information
systems?
• Describe with examples how business processes are tied to the specific
functional area of an organization.
• List and describe the business processes involved in fulfilling a customer
order.
Business processes are a set of activities that aim to achieve a specific
organizational goal. They are related to information systems as they are often
supported or automated by information technology.
Business processes are tied to specific functional areas of an organization and can
include activities such as marketing, sales, production, and customer service.
Example: A customer order fulfilment process includes various business processes
such as receiving the order, verifying availability of the product, processing payment,
arranging for delivery and updating the inventory system.
The business processes involved in fulfilling a customer order can include:
1. Order receipt
2. Order verification
3. Payment processing
4. Inventory management
5. Delivery arrangement
6. Order tracking and update.
2.2: How do systems serve the different management groups in a business, and how
do systems that link the enterprise improve organizational performance?
• Describe the characteristics of transaction processing systems (TPS) and the
roles they play in a business.
• Describe the characteristics of business intelligence and explain why it is
important in terms of decision-making.
• Identify which layer of management is most likely to use MIS and why.
• Describe how business intelligence systems also address the decisionmaking needs of
senior management.
• Explain how a digital dashboard works.
• Explain how and why an organization might want to implement enterprise
applications. What might be involved?
• Explain how customer relationship management helps an organization
manage their interactions with customers.
Business processes are the series of tasks performed by an organization to achieve
its goals and objectives. They are related to information systems in that these
systems automate and streamline these processes to improve efficiency and
accuracy.
TPS (Transaction Processing Systems) play a role in recording and processing
day-to-day business transactions. Business intelligence provides insights into data to
support informed decision-making and is important for all levels of management, but
especially for senior management.
A digital dashboard is a visual representation of key performance indicators and
data, allowing for real-time monitoring of the organization's performance.
Enterprise applications can improve organizational performance by integrating
different functions and data across the entire organization. Implementing these
systems may require significant investment and effort, but can result in increased
efficiency and better decision-making.
Customer relationship management (CRM) is a strategy that organizations use to
manage and analyze customer interactions and data throughout the customer
lifecycle. It helps organizations to understand customer behaviour, needs and
preferences, and then use that information to improve customer satisfaction and
increase customer loyalty.
CRM typically involves the use of software and other technologies to manage customer interactions
and data, track customer interactions and feedback, and create targeted marketing campaigns. This
leads to better decision-making, improved customer relationships and increased customer
satisfaction. (Salesforce, STRACK)
2.3. Why are systems for collaboration and social business so important, and what
technologies do they use?
• Define collaboration and social business and explain why they have become
so important in business today.
• List and describe the business benefits of collaboration and social business.
• Describe a supportive organizational culture and business processes for
collaboration.
• List and describe the various types of collaboration and social business tools.
Collaboration and social business refer to the use of technology and communication
tools to facilitate teamwork, information sharing, and customer interaction within an
organization.
They have become important as businesses aim to improve communication, collaboration, and
customer engagement. The benefits of collaboration and social business include increased
productivity, improved decision making, and enhanced customer experience. To support
collaboration, organizations need a culture that values teamwork and information sharing and
business processes that facilitate communication and collaboration.
The various types of collaboration and social business tools include enterprise
social networks, instant messaging, project management software, and
customer relationship management systems.
2.4. What is the role of the information systems function in a business?
• Describe how the information systems function supports a business.
• Compare the roles played by programmers, systems analysts, information
systems managers, the chief information officer (CIO), the chief security
officer (CSO), the chief data officer (CDO), and the chief knowledge officer
(CKO).
The information systems function in a business plays a critical role in supporting the
organization by providing technology-based solutions to improve efficiency, decision-making, and
communication.
Programmers develop software applications and systems to meet specific business needs, while
systems analysts help identify and design these solutions.
Information systems managers oversee the technology operations of the
organization, while the CIO is responsible for the overall strategic direction and
management of the information systems.
The CSO focuses on ensuring the security of the organization's information systems
and data, while the CDO is responsible for managing the organization's data as a
valuable asset. The CKO is responsible for managing and utilizing the organization's
knowledge resources.
Discussion Question.
2.5. How could information systems be used to support the order fulfillment process
illustrated in Figure 2.1? What are the most important pieces of information these
systems should capture? Explain your answer.
Information systems can be used to support the order fulfillment process by
automating various tasks, such as inventory management, order processing,
shipping, and invoicing.
The most important pieces of information these systems should capture include the
customer's order details, the availability of the product, shipping information,
payment information, and order status updates.
Capturing these pieces of information helps ensure that the process is efficient,
accurate, and transparent, and it also provides valuable data for analyzing and
improving the process in the future
2.6. Identify the steps that are performed in the process of selecting and checking out a book from a
college library and the information that flows among these activities. Diagram the process. Are there
any ways this process could be changed to improve the performance a library or a school? Diagram
the improved process. The steps performed in the process of selecting and checking out a book from
a college library are:
1. Search for the book in the library's catalog or database.
2. Locate the book in the library.
3. Verify that the book is available for checkout.
4. Present a library card or student ID to the library staff.
5. Check out the book by updating the library's database to reflect the change in
status.
6. Receive a receipt or electronic notification confirming the checkout.
The information that flows among these activities includes:
1. Book information from the library's database to the search system.
2. Book location information from the library's database to the patron.
3. Book availability information from the library's database to the patron.
4. Patron information from a library card or student ID to the library's database.
5. Checkout information from the library's database to the patron's account.
The process of selecting and checking out a book from a college library could
be improved by implementing the following changes:
1. Implementing a self-checkout system using a scanner or tablet.
2. Allowing patrons to renew or place holds on books online.
3. Implementing an RFID-based system to automate the process of tracking
book location.
4. Integrating the library's database with the school's student information system
to streamline the checkout process.
The improved process would look like:
1. Patron searches for book in the library's online catalog or database.
2. Patron locates the book in the library and scans it with a self-checkout
scanner.
3. The library's database updates the book's status to "checked out" and the
patron's account.
4. Patron receives a receipt or electronic notification confirming the checkout.
2.7. Use the time/space collaboration and social tool matrix to classify the collaboration and social
technologies used by the Sharp Corporation.
Hands-On MIS Projects: Management Decision Problems
2.8. Heli is a manager at MoiMoiPixel, a Finnish start up developing free, fast-paced casual games for
mobile platforms. MoiMoiPixel has been a success, gathering over 10 million returning players within
a very short time.
Nevertheless, the company is bleeding due to associated costs of hosting the game for all these
players and paying salaries to the current staff of 40. Heli realizes the company doesn't know the
players at all—when they play, why they play, where they live, and so on.
Further, there is no communication at all with the players, and simply meeting at the coffee machine
and sending emails is not enough to communicate efficiently with the growing staff. Help Heli by
providing three suggestions for improving revenue and communication using information systems.
1. Implement a customer relationship management (CRM) system: By capturing
data about the players and their behaviour within the game, a CRM system
can help Gamers Paradise gain a deeper understanding of its players and use
this information to improve marketing efforts, target advertisements more
effectively, and increase revenue.
2. Implement an internal collaboration platform: An internal collaboration
platform can help Gamers Paradise's growing staff communicate and
collaborate more efficiently, improving productivity and streamlining the
development process. This could also potentially lead to a reduction in costs,
such as reducing the need for physical meetings.
3. Implement a data analytics platform: By analyzing data on player behaviour
and performance, Gamers Paradise can identify areas where it can improve
its games, attract new players, and increase revenue. A data analytics
platform can also help the company identify trends and patterns, and make
informed decisions on how to allocate resources and prioritize projects.
2.9. PetFence is based in Birmingham, in the United Kingdom, and makes custom-made fences to
protect cats and dogs in household gardens. The company takes
orders via email, designs the fence together with the client, and builds it in the client's
garden. Finally, an invoice is sent to the client. PetFence depends on having just the right amount of
necessary parts—too few and the work is delayed; too many and the storage fills up quickly. As
business transactions are agreed on over the phone or by email, they sometimes forget to
charge clients and pay suppliers.
Moreover, email requests from prospective clients are often lost in the email flood,
leading to missed sales opportunities and credibility issues. In what ways could
information systems help PetFence? What issues can information systems not help
them with?
Information systems could help PetFence in several ways:
1. Order management system: Implementing an order management system
would automate the process of taking orders, tracking progress, and
generating invoices. This would reduce the chance of forgetting to charge
clients and increase accuracy.
2. Inventory management system: By using an inventory management system,
PetFence can accurately track the quantity and availability of necessary parts.
This would help the company optimize its inventory levels and reduce the risk
of stock shortages and excess inventory.
3. Customer relationship management (CRM) system: A CRM system would
allow PetFence to efficiently manage interactions with clients and prospects.
This would improve customer service and increase the likelihood of securing new business.
Information systems cannot help PetFence with certain issues such as:
1. Personal touch: Information systems cannot replace the personal touch and
human interaction that clients expect when customizing their fence.
2. Physical work: Information systems cannot perform the physical work of
building the fence.
3. Final approval: Information systems cannot replace the need for final approval
from the client.
Case Study: Is Social Business Good Business?
Workplace collaboration technology is being adopted globally by businesses to
promote employee collaboration and knowledge sharing, faster decision making, and
improved work engagement.
The growing number of emails and "app fatigue" are drivers of enterprise social
networking adoption. Studies show that collaboration tools can improve efficiency
and productivity, but its success depends on compatibility with the company's culture
and business processes.
The adoption of social media technology requires a change in thinking, leadership and behavioral
changes, and a design for the right workplace environment. The use of social networking in the
workplace can help or hurt the organization, and the social media platform chosen depends on its
specific business purpose. A successful social business strategy requires identifying the need for
social initiatives and overcoming employee biases and resistance. Management must
ensure that social networking efforts provide genuine value to the business.
Case Study Questions:
2.13. Identify the management, organization, and technology factors affecting
adoption of internal corporate social networks.
1. Management factors:
• Resistance to change and lack of buy-in from top management.
• Lack of clear objectives and strategy for social network use.
• Inadequate budget allocation and resource allocation.
• Poor leadership and governance structure for the network.
• Lack of employee training and support for network use
2. Organizational factors:
• Cultural and behavioral barriers to adoption.
• Lack of trust and privacy concerns
• Different departments and workgroups have different needs and
perspectives.
• Difficulty in integrating the network with existing systems and processes.
• Insufficient metrics to measure network success and effectiveness.
3. Technology factors:
• Integration and compatibility with existing systems.
• User experience and ease of use.
• Data security and privacy.
• Scalability to meet growing demand.
• Technical support and maintenance requirements.
2.14. Compare the experiences implementing internal social networks o f the
organizations described in this case. Why was Standard Bank successful? What role
did management play in this process?
Standard Bank was successful in implementing its internal social network due to
several factors:
1. Management Support: The bank's management team was fully committed to
the implementation and encouraged employees to use the platform.
2. Clear Communication: The bank effectively communicated the purpose,
benefits, and usage guidelines of the internal social network to all employees.
3. Employee Engagement: Standard Bank engaged employees in the
implementation process by involving them in pilot projects, providing training
and support, and rewarding early adopters.
4. Aligned with Business Goals: The internal social network was designed to
align with the bank's business goals and supported its business processes,
making it more useful and relevant to employees.
In contrast, ABC Inc. faced challenges with the implementation of its internal social
network.
1. Lack of Management Support: The lack of support from senior management
resulted in low employee participation and limited usage of the platform.
2. No Clear Communication: The company did not effectively communicate the
purpose and benefits of the internal social network, leading to confusion and
resistance among employees.
3. No Employee Engagement: ABC Inc. did not engage employees in the
implementation process, leading to a lack of buy-in and adoption.
4. Not Aligned with Business Goals: The internal social network was not
designed to align with the company's business goals, making it less relevant
and useful to employees.
In conclusion, management support and involvement played a crucial role in the
success of Standard Bank's internal social network implementation. Effective
communication, employee engagement, and alignment with business goals were
also critical factors in ensuring a successful implementation.
2.15. Should all companies implement internal enterprise social networks? Why or
why not?
It depends on the company's specific needs and goals. Internal enterprise social networks can bring
many benefits such as improved communication and collaboration, increased employee engagement,
and better knowledge sharing. However, implementing an internal social network requires significant
investment in terms of resources and technology, and may not be suitable for all companies.
Before deciding to implement an internal social network, companies should carefully consider their
organizational culture, technology infrastructure, and the specific needs of their employees. If a
company is not ready for the change, an internal social network can cause more harm than good.
The role of management in the implementation process is crucial. They need to create a clear vision
and strategy for the social network, communicate the benefits to employees, provide training and
support, and encourage its usage
Chapter 3: Information Systems, Organizations, and Strategy.
N26: A Bank without Branches.
N26 is a mobile bank founded in 2013 with over 5 million customers in 24 European countries. It
operates entirely in the cloud and uses a modern technology stack, with the aim of offering simple and
customer-centric processes. N26 is expanding globally, with plans to double its customer base and
reach break-even by the end of 2021. The company is investing in security measures, including AIbased solutions, to combat cyber-attacks.
N26 focuses on delivering a smooth, easy and accessible banking experience to its customers
through its mobile app. It operates completely online, with features such as video chat for
identification and instant access to contactless payments. N26 continuously invests in security
systems and customer support. With its cloud-based platform, modern technology stack and focus on
customer-centric services, N26 aims to disrupt the traditional banking industry and become a leading
fintech player globally.
3.1. Which features of organizations do managers need to know about to build and use information
systems successfully?
Information systems and organizations influence each other, with information systems being built to
serve the interests of the business firm. The interaction between these two entities is complex and is
affected by various factors like organization structure, business processes, culture, environment, etc.
Managers play a crucial role in deciding which systems to implement and the consequences of
these decisions may not always be predictable.
What is an Organization?
An organization is defined as a stable, formal social structure that processes resources to produce
outputs. This definition is not fully descriptive and a more realistic definition of an organization is a
collection of rights, privileges, obligations, and responsibilities that have been balanced over time
through conflict and resolution.
The technical definition of organizations emphasizes the combination of inputs to produce outputs
when technology changes are introduced, while the behavioral definition focuses on how the change
affects the balance of rights, privileges, obligations, and responsibilities within the organization.
Technological change requires changes in the control and ownership of information
and the procedures used to achieve outputs. Both definitions complement each other
and help explain the relationships between information systems and organizations.
Features of Organizations.
Organizations are bureaucratic with clear divisions of labour and hierarchy, following
rules and principles of efficiency, with features such as culture, politics, environment,
structure, goals, constituencies, and leadership that impact the information systems
used.
Routines and Business Processes.
Organizations become efficient over time through the development of routines, which
are precise rules and procedures that allow for increased productivity and efficiency,
reducing costs.
Organizational Politics.
People in organizations have differing viewpoints and interests, resulting in political
struggles for resources and competition, making organizational change and
implementation of new information systems politically charged events.
Organizational Culture.
Organizations have underlying assumptions that shape their goals and products and
these are embodied in their organizational culture, which includes unwritten, taken for-granted beliefs
about how the organization operates, and these beliefs drive the
way business processes are conducted.
Organizational Environments.
Organizations have a reciprocal relationship with their environment, as they need
resources from their environment to survive, but also have the power to influence
their environment. Information systems play a crucial role in helping organizations
adapt to changes in their environment.
Disruptive technologies can greatly affect the business landscape, leading to profit
for some firms, adaptation for others, and obsolescence for the rest. Disruptive
technologies can be tricky and not all firms benefit, but quick adaptation can lead to
success.
Organizational Structure.
Organizational structure affects the type of information systems present in a business firm.
Information systems in different types of organizations can vary, from parallel systems in professional
bureaucracies to poorly designed systems in small entrepreneurial firms to disparate systems in huge
multidivisional firms.
Other Organizational Features.
Organizations have different goals, constituencies and leadership styles, which impact the tasks they
perform and the technology they use. These goals range from coercive to normative, and
organizations serve different groups, such as members, clients, stockholders, or the public. The
nature of tasks also vary, with some being routine and rule-based, while others are nonroutine and
require judgement.
3.2. What is the impact of information systems on organizations?
Information systems have greatly impacted the operations and decision making of
organizations and have altered the economics of organizations through increased
possibilities for organizing work, which can be understood through theories and
concepts from economics and sociology.
Economic Impacts.
Information technology (IT) changes the economics of organizations by affecting the
relative costs of capital and information and increasing the possibilities for organizing
work. IT is substituted for traditional capital and labour, reducing the number of
middle managers and clerical workers, and lowering the cost of market participation
and internal management costs. As a result, firm size should shrink and revenue per
employee should increase over time as more capital is invested in IT.
Organizational and Behavioral Impacts.
Theories based in the sociology of complex organizations also provide some
understanding about how and why firms change with the implementation of new IT
applications.
IT Flattens Organizations.
Bureaucratic organizations are often inefficient and less competitive than new organizations, leading
to downsizing and reducing the number of employees and levels in the organizational hierarchy.
Information technology facilitates the flattening of hierarchies by empowering lower-level employees,
reducing management costs and increasing management efficiency, leading to the elimination of
many middle managers.
Post-industrial Organizations.
Post-industrial theories suggest that IT supports flattening of hierarchies by relying on knowledge and
competence rather than formal positions. IT may encourage task force-networked organizations
where professionals work together for a specific task and then move on to other teams. However,
there are challenges in evaluating, organizing, and informing virtual workers and not all companies
are able to make it effective.
Understanding Organizational Resistance to Change.
Organizational politics play a crucial role in the implementation of information systems, as they have
the potential to change the structure, culture, business processes and strategy of an organization,
leading to resistance from those involved.
The four factors affecting organizational resistance to IT innovation are the nature of the innovation,
organization structure, culture and tasks. To bring about change, technology, tasks, structure and
people need to be changed simultaneously.
However, many information technology investments fail due to organizational and
political resistance to change, making it the most common reason for project
implementation failure.
The Internet and Organizations.
The Internet and the World Wide Web have greatly impacted relationships between
firms and external entities and the organization of business processes. They
increase information accessibility, storage, and distribution, lowering transaction and
agency costs, leading to simpler business processes, fewer employees, and flatter
organization.
Implications for the Design and Understanding of Information Systems.
When planning a new information system, it is important to consider the
organization's environment, structure, culture and politics, type of organization and
style of leadership, and the attitudes of the workers who will be using the system, as
well as the tasks, decisions and business processes that the information system is
designed to support.
3.3. 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?
Firms that outperform others have a competitive advantage, which is due to their access to special
resources or more efficient use of commonly available resources, resulting in better revenue growth,
profitability, and productivity growth, leading to higher stock market valuations. Michael Porter's
competitive forces model explains the contribution of information systems to strategic advantages.
Porter's Competitive Forces Model.
Porter's competitive forces model outlines five forces that shape the fate of a firm
and its environment, considering the firm's dependence on its business environment.
Traditional Competitors
All firms share market space with other competitors who are continuously de vising
new, more-efficient ways to produce by introducing new products and services, and
attempting to attract customers by developing their brands and imposing switching
costs on their customers.
New Market Entrants
New companies entering the marketplace may have advantages such as not being
tied to old plants and equipment, hiring younger workers, not having old brand
names, and being highly motivated, but they also have weaknesses such as
dependence on outside financing, less experienced workforce, and lack of brand
recognition.
Substitute Products and Services
The presence of substitutes in an industry can reduce a company's control over
pricing and lower their profit margins. New technologies are constantly creating new
substitutes for traditional products and services.
Ethanol can substitute for gasoline in cars; vegetable oil for diesel fuel in trucks; and
wind, solar, and hydro power for industrial electricity generation. Likewise, Internet
and wireless telephone service can substitute for traditional telephone service.
Customers.
A profitable company's success depends on its ability to attract and retain customers
by charging high prices, but the customer's power grows if they can easily switch to
a competitor or if the marketplace is transparent with little product differentiation and
known prices, such as in the used college textbook market on the Internet, where
customers have significant power over suppliers.
Suppliers.
The market power of suppliers can affect firm profits, with more suppliers giving the
firm greater control over price, quality, and delivery schedules. Examples include
laptop manufacturers with multiple suppliers for key components.
Information System Strategies for Dealing with Competitive Forces.
The four generic strategies to counteract competitive forces are low-cost leadership,
product differentiation, focus on market niche, and strengthening customer and
supplier intimacy, which can be enabled by using information technology and
systems
Low-Cost Leadership.
Walmart uses information systems to achieve low operational costs and low prices.
Its continuous replenishment system quickly replenishes inventory, reducing the
need for large warehouse stocks and allowing for adjustments to meet customer
demand. This system is an example of an efficient customer response system and a
low-cost leadership strategy.
Case Study - Interactive Session: Organizations.
Shipping and delivery play a crucial role in the success of e-commerce, and
companies such as FedEx, UPS, and the US Postal Service have made billions of
dollars handling the large number of products ordered online. Online merchants have
a competitive advantage with their convenient and seamless online ordering and
shipping processes, as well as free or low-cost delivery options.
The "last mile," which is the final step in a delivery that takes the package to the
customer's doorstep, is particularly important in logistics. Instead of relying on the
traditional shipping companies, Amazon is building its own fleet of delivery vans and
expanding its fleet of airplanes, operated by Amazon Air, to transport packages
exclusively.
This move is expected to take billions of dollars in business away from the US Postal
Service, UPS, and FedEx. By having total control over the shipping process,
Amazon is able to provide a better customer experience and save on costs, which
will lead to even more growth for the company. FedEx, on the other hand, cancelled
its contract with Amazon in 2019 and is now focusing on its ground delivery service
and forming new partnerships with other retailers.
On the other hand, UPS is deepening its ties to Amazon and is relying more on the
US Postal Service for Sunday deliveries. The outcome of the retail shipping wars will
greatly impact the future of the e-commerce retail industry.
Case Study Questions:
1. Why is shipping so important for e-commerce? Explain your answer.
Shipping is crucial to the success of e-commerce because it is a critical
component of the customer experience. Convenient and seamless shipping
processes, along with free or low-cost delivery options, are a source of
competitive advantage for online merchants over traditional brick-and-mortar
retailers.
Moreover, shipping is a big revenue generator for shipping companies, with
FedEx, UPS, and the United States Postal Service (USPS) earning billions of
dollars from handling products ordered from Amazon and other e-commerce
sites.
2. Compare the shipping strategies of Amazon, FedEx, and UPS? How are they
related to each company's business model?
Amazon has a unique shipping strategy compared to FedEx and UPS. Instead of relying on
USPS, FedEx, or UPS for the "last mile" delivery, Amazon is building its own fleet of delivery
vans and airplanes for this purpose through Amazon Air.
This allows Amazon to have total control over the shipping process and to guarantee timely
delivery of packages to its Prime members. On the other hand, FedEx ended its express
delivery contract with Amazon in 2019 and shifted its focus to ground delivery services and
partnerships with other
retailers and brands. Meanwhile, UPS has deepened its ties to Amazon and wants to stay
neutral
in the e-commerce retail industry.
3. Will FedEx succeed in its push into ground ship ping? Why or why not?
The success of FedEx's push into ground shipping is uncertain. While FedEx
believes that handling more packages on its own will allow it to make better
use of its sorting and delivery facilities, some analysts are not sure that this
will generate the returns FedEx is seeking.
FedEx has initiated package delivery seven days a week to compete with
Amazon, but it remains to be seen if this will be enough to overtake Amazon
and become the fastest and most cost-efficient e-commerce delivery service.
Product Differentiation.
Big Tech companies like Google, Facebook, Amazon and Apple are investing billions
of dollars into research and deployment of new services and products to stay ahead
of competitors. They are using information systems to create products and services
that are customized and personalized to fit individual customer specifications.
Companies are differentiating their products not only by the features of the products
themselves but also by the entire experience of buying and using the product, known
as customer experience management.
Focus on Market Niche
Companies use information systems to serve their target market better than competitors by analyzing
customer buying patterns, tastes, and preferences to efficiently pitch advertising and marketing
campaigns, and drive one-to-one marketing through the use of sophisticated software tools and
customer relationship management (CRM) systems.
Strengthen Customer and Supplier Intimacy.
Companies use information systems to develop intimacy with customers and tighten
linkages with suppliers to increase customer loyalty and reduce switching costs, as
demonstrated by companies like Toyota, Ford, and Amazon.
The Internet's Impact on Competitive Advantage.
The Internet has intensified competitive rivalry and raised bargaining power of
customers, potentially leading to lower profits, but has also created new markets and
opportunities for building large and loyal customer bases through companies like
Amazon, eBay, and Google.
The Internet has also resulted in the decline or threat to traditional industries like
printed encyclopaedias and travel agencies, and has transformed entire industries by
forcing companies to change their business practices.
The Business Value Chain Model
The business value chain model helps in identifying specific activities in a business
where competitive strategies can be applied and the impact of information systems
can be maximized.
The value chain model views a firm as a series of activities that add value to its
products or services, categorized as primary activities and support activities.
By analyzing the various stages in the value chain and using information systems, a
firm can achieve operational excellence, lower costs, improve profit margins and
strengthen its relationship with customers and suppliers, resulting in competitive
advantage.
Interactive Session - Technology: Singapore as a Smart Nation
Singapore is a small island nation with a population of 5.8 million and a high GDP per capita. It is
transforming itself into a "smart nation" through the use of information technology, aimed at
addressing the challenges of urban density and an aging population. The government has launched a
national AI strategy as a key step in the development of its Smart Nation program.
Singapore is using various technologies to address traffic and housing issues, such as providing realtime traffic information, testing driverless vehicles, using virtual simulations for housing planning, and
installing smart lighting systems. In healthcare, patients can access medical advice
from home through video consultations, rehabilitation exercises using TeleRehab kit,
and RoboCoach for senior citizens.
Other initiatives include data exchange platforms, digital identification programs, and a territory-wide
data collection scheme. Singapore has been named the Smart City of 2018 for its efforts, but smart
city and nation projects have faced criticism for failing to deliver on their promises and posing
privacy and security issues.
1. What are the factors driving the Smart Nation initiative?
The factors driving the Smart Nation initiative in Singapore include the need to
address the challenges of increasing urban density and an aging population,
as well as the use of information technology to transform the city into a more
sustainable and modern city. The government has identified artificial
intelligence as a key step in the development of the Smart Nation program.
2. Describe the smart city initiatives of an urban center in your country or region.
In South Africa, smart city initiatives are becoming increasingly popular as cities look
to improve the quality of life for their citizens and enhance their competitiveness on a
global scale.
One example of a smart city initiative in South Africa is the City of Johannesburg's
"Smart Johannesburg" program. This program aims to create a more sustainable,
efficient, and livable city by leveraging technology and data to improve city services
and infrastructure. Some of the specific initiatives that fall under this program include
the implementation of smart grids, the use of smart meters to manage energy
consumption, the deployment of fiber-optic networks to support high-speed internet
access, and the use of data analytics to inform decision-making about city planning
and service delivery.
Another smart city initiative in South Africa is the City of Cape Town's "Smart Cape
Town" program. This program focuses on creating a more resilient city by improving
energy efficiency, reducing greenhouse gas emissions, and promoting sustainable
transportation. Some of the specific initiatives that fall under this program include the
installation of smart lighting systems, the deployment of electric vehicle charging
stations, and the use of data analytics to inform decision-making about transportation
planning and service delivery.
3. What are the possible downsides to the Smart Nation project?
The possible downsides to the Smart Nation project include the fact that smart
cities and smart nations have failed to deliver on many of their objectives in
the past ten years, such as reducing urban automobile congestion and
pollution, despite having large budgets. The implementation of technology and
solutions can take many years and the initiatives may be ignored by citizens
who do not see the benefits in their daily lives, especially for those who are
poor, elderly, or less tech-savvy. Additionally, these initiatives pose
extraordinary privacy and security issues.
Smart Products and the Internet of Things.
Smart products, such as wearable health trackers, farm tractors with sensors, and
smart aircraft, are part of the Internet of Things (IoT) and are changing competition
within industries. These smart products offer new functionality, improved customer
experience, increased rivalry among firms, raised switching costs, and decreased
power of suppliers, leading to the creation of information-intensive services sold by
firms.
The Business Value Chain Model.
The Business Value Chain Model provides a strategic framework for organizations to identify
opportunities for competitive advantage through the effective use of information systems. It
recognizes that a firm's activities can be categorized into primary activities directly related to the
production and distribution of products or services and support activities that facilitate these primary
activities. Information systems play a crucial role in improving operational efficiency and enhancing
customer and supplier relationships at each stage of the value chain.
By applying the business value chain model, organizations can critically examine their value-adding
activities, optimize business processes, and develop information system applications that address
specific needs. This approach also involves benchmarking against competitors and industry best
practices to identify areas for improvement.
Furthermore, the model highlights the importance of extending the value chain by connecting with
suppliers, distributors, and customers. Information systems can be used to establish industrywide
standards for electronic transactions, promoting efficiency and discouraging new entrants. Industry
participants can collaborate through IT-supported consortia and networks to coordinate activities and
gain a strategic advantage.
The emergence of value webs, driven by internet technology, has revolutionized industry value
chains. Value webs consist of independent firms using information technology to collectively produce
products or services in response to market demands. These value webs are adaptable, customerdriven, and offer flexibility in responding to changes in supply and demand, ultimately accelerating
time-to-market and improving customer satisfaction.
Synergies, Core Competencies, and Network-Based Strategies
The concepts of synergies, core competencies, and network-based strategies in the context of large
corporations and their use of information systems to gain competitive advantages.
1. Synergies: Synergies refer to the benefits that can be achieved when different units within a
corporation or even different organizations collaborate, share resources, and pool expertise.
Information systems play a crucial role in enabling these synergies by connecting and coordinating
disparate business units. For example, mergers like that of Bank of America and Countrywide
Financial Corporation aimed to leverage information systems to consolidate operations, reduce costs,
and enhance cross-marketing.
2. Enhancing Core Competencies: Core competencies are activities in which a firm excels and can
gain a competitive edge. Information systems can enhance core competencies by facilitating
knowledge sharing across business units. This sharing of practical knowledge, combined with longterm research efforts and committed employees, can lead to the development of core competencies.
For instance, Procter & Gamble uses information systems to connect employees globally, fostering
idea exchange and innovation.
3. Network-Based Strategies: In the era of the internet and networking technology, firms can create
competitive advantages by forming networks and alliances with other firms. These strategies include:
- Network Economics: This concept revolves around the idea that the value of a product or service
increases as more people use it. Network effects come into play, and the cost of adding new
participants is minimal compared to the value gained. Internet-based businesses like social networks
and ride-sharing platforms exemplify this.
- Virtual Company Model: Firms can operate as virtual companies, collaborating with external
vendors and partners through networks to deliver products and services without traditional
organizational constraints. This approach is useful for quick responses to market opportunities.
- Business Ecosystems and Platforms: Business ecosystems consist of loosely coupled but
interdependent networks of suppliers, distributors, technology manufacturers, and service providers.
Keystone firms often dominate these ecosystems, creating platforms that other firms can leverage.
For example, Microsoft and Facebook provide platforms used by numerous businesses. Becoming a
keystone firm or a profitable niche player within these ecosystems is a strategic consideration for
firms.
Overall, information systems play a pivotal role in realizing the potential of synergies, core
competencies, and network-based strategies, enabling firms to achieve competitive advantages in a
rapidly evolving business landscape.
3 - 4: What are the challenges posed by strategic information systems, and how should they
be addressed?
This passage discusses the challenges associated with strategic information systems and the
importance of addressing them effectively:
1. Changing Organizational Dynamics: Strategic information systems have the power to transform
an organization, impacting its products, services, and operational procedures. This often leads to new
behavioral patterns within the organization. Effectively using these systems to gain a competitive
advantage is challenging and requires precise coordination of technology, organizational changes,
and management.
2. Sustainability of Competitive Advantage: While strategic systems can confer competitive
advantages, these advantages may not last indefinitely. Competitors can respond and replicate these
systems, making sustained advantage difficult. Additionally, the business landscape is constantly
evolving due to market changes, shifting customer expectations, and technological advancements.
The Internet has accelerated these changes, making competitive advantages more transient.
Systems that were once strategic may become standard tools for survival, or they can hinder
organizations from making essential strategic changes.
3. Alignment of IT with Business Objectives: Research indicates that aligning information
technology with business goals is crucial for profitability. However, many firms struggle with this
alignment. Only a quarter of firms effectively align IT with their business objectives. The level of
alignment significantly impacts a business's profitability. Many organizations fail in this regard,
allowing IT to operate independently, which often leads to suboptimal performance. Successful firms
and managers actively understand the potential of IT, take an active role in shaping its use, and
measure its impact on revenue and profits.
In essence, the passage highlights the dynamic nature of strategic information systems, the need for
adaptability in the face of changing competitive landscapes, and the critical importance of aligning IT
with overarching business objectives to achieve sustained success and profitability.
Review Questions
3-1 Which features of organizations do managers need to know about to build and use
information systems successfully?
• How is interaction between information technology and organizations influenced by
mediating factors?
• How do the definitions of organizations relate to their use of information systems
technology?
3-2 What is the impact of information systems on organizations?
• Describe how information technology can
help an organization contract in size.
• List the four most common factors underpinning organizational resistance to
innovation.
• Explain how the Internet is radically changing key business practices.
• Identify three key organizational factors to
consider when planning a new system.
3-3 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?
• Define Porter's competitive forces model and explain how it works.
• Describe what the competitive forces model explains about competitive advantage.
• List and describe four competitive strategies enabled by information systems that firms can
pursue.
• Describe how information systems can support each of these competitive strategies
and give examples.
• Explain why aligning IT with business objectives is essential for strategic use of systems.
• Define and describe the value chain model.
• Explain how the value chain model can be used to identify opportunities for information
systems.
• Define the value web and show how it is related to the value chain.
• Explain how the value web helps businesses identify opportunities for strategic information
systems.
• Describe how the Internet has changed competitive forces and competitive advantage.
• Explain how information systems promote synergies and core competencies.
• Describe how promoting synergies and core competencies enhances competitive
advantage.
• Explain how businesses benefit by using network economics and ecosystems.
• Define and describe a virtual company and the benefits of pursuing a virtual company
strategy.
3-4 What are the challenges posed by strategic information systems, and how should they be
addressed?
• List and describe the management challenges posed by strategic information systems.
• Explain how to perform a strategic systems analysis.
3-5 It has been said that there is no such thing as a sustainable strategic advantage. Do you
agree? Why or why not?
3-6 It has been said that the advantage that leading-edge retailers such as Dell and Walmart
have over their competition isn't technology; it's their management. Do you agree? Why or
why not?
3-7 What are some of the issues to consider in determining whether the Internet would provide
your business with a competitive advantage?
Offline, Online, and Back: The Evolution of the UK Grocery Market.
The UK grocery market is expected to reach a value of £217.7 billion with a growth of 12.5% through
2024. The "Big Four" in the UK are Tesco, Sainsbury, ASDA, and Morrison's. Tesco initially focused
on offering the lowest costs to draw price-sensitive customers away from its competitors and
maintained its cost leadership through high utilization of assets, minimal costs, and strict supply chain
control. However, Aldi and Lidl have been continuously increasing their market share over the last few
years, leading Tesco to lose its cost leadership due to changing customer behavior during the
economic recession and inflation. Tesco has struggled to maintain its online platforms and compete
with huge online retailers such as Amazon and Argos. Aldi and Lidl's low-price grocery strategy has
changed the UK supermarket industry, and their services have been successful due to rising inflation,
stagnation in wages, and the COVID-19 crisis.
Case Study Questions:
3-13. Analyze the cost leadership strategy of Tesco based on Porter’s Competitive Forces
Model. Why would it be a smart move to close one of its online shopping sites?
Tesco's cost leadership strategy, as per Porter's Competitive Forces Model, involves minimizing costs
and offering lower prices than competitors. This approach helps Tesco gain a competitive advantage
by attracting price-sensitive customers.
By closing one of its online shopping sites, Tesco may be able to further reduce costs by
consolidating operations and eliminating redundancy. This move could also allow Tesco to focus
resources on improving the remaining online shopping site, potentially increasing its competitiveness
in the online retail market.
Overall, the decision to close one of its online shopping sites aligns with Tesco's cost leadership
strategy by reducing costs and improving operational efficiency.
3-14. Do you think Aldi and Lidl's strategy of venturing into e-commerce is a good idea?
Yes, I think Aldi and Lidl's strategy of venturing into e-commerce is a good idea. E-commerce is an
increasingly important channel for retail sales, and it allows retailers to reach a wider audience and
offer a more convenient shopping experience for their customers. By expanding into e-commerce,
Aldi and Lidl can increase their sales and customer base, and also compete more effectively with
other online retailers. Additionally, the COVID-19 pandemic has accelerated the shift towards online
shopping, making it even more important for retailers to have a strong online presence.
3-15. Comment on Tesco's strategy of opening a discount chain. Do you think it could recover
Tesco's former market position? Explain your answer.
Tesco's strategy of opening a discount chain is a smart move, as it enables the company to tap into a
new market segment and compete with discount retailers like Aldi and Lidl. However, whether or not it
can recover Tesco's former market position depends on various factors, such as the quality of the
products offered, pricing strategy, and customer experience. It is possible that the discount chain
could help Tesco regain market share, but it will also depend on how effectively the company
executes its strategy and differentiates itself from its competitors.
3-16. How much potential do you see for virtual stores (like the ones Tesco introduced in
South Korea) in the United Kingdom?
Virtual stores can have significant potential in the United Kingdom, especially in urban areas where
online shopping is already popular. However, the success of virtual stores in the UK will depend on
factors such as consumer behavior, infrastructure, and competition from established retailers. Tesco's
virtual store in South Korea was successful due to factors such as high population density and a
culture of convenience. It remains to be seen whether similar factors will be present in the UK market
to support the success of virtual stores.
Chapter 4: Ethical and Social Issues in Information Systems.
Your Smartphone: Big Brother's Best Friend.
Companies worldwide are tracking the precise locations of tens of millions of people with mobile
phones and storing the data in gigantic data repositories. Google Maps is perhaps the most popular
location-based app in the world, with over one billion users, and most of its users are having their
locations tracked. Smaller companies, such as Reveal Mobile, also collect location data from mobile
apps. Location data have many uses, but location data are often sent to marketing companies to
create targeted advertising. When downloading an app, a mobile phone user consents to the terms of
service, which can potentially allow the user's sensitive information to be exposed to ad networks,
data brokers, and other technology companies.
The use of mobile phone location tracking can provide benefits but also pose privacy challenges, as it
can be used to invade individuals' privacy and cause harm. Advances in data management and
analytics, mobile communications, and the Internet of Things (IoT) have enabled organizations to
track individuals' locations and behavior patterns. There are few privacy protections for mobile
location tracking, and managers need to be aware of ethical dilemmas involving information systems.
Questions to consider include whether analyzing mobile phone location data creates an ethical
dilemma and whether new privacy laws should be established to protect personal data.
4-1 What ethical, social, and political issues are raised by information systems?
The past 20 years have seen numerous examples of failed ethical judgement by business managers.
While information systems were not responsible for these lapses, they were instrumental in some
cases. Managers must decide what constitutes proper legal and ethical conduct as international
treaties and organizations have made it easier to extradite, prosecute, and imprison business
managers suspected of criminal activity. The development of information technology produces
benefits for many and costs for others, leading to new ethical questions that must be addressed.
A Model for Thinking about Ethical, Social, and Political Issues.
Ethical, social, and political issues are intertwined. Information technology can create ethical
dilemmas that disturb the equilibrium of society's social and political institutions. As a result, new
social responsibility, political correctness attitudes, and rules may be required to navigate ethical
issues.
Five Moral Dimensions of the Information Age.
The major ethical, social, and political issues that information systems raise include the following
moral dimensions.
• Information rights and obligations. What information rights do individuals and organizations
possess with respect to themselves? What can they protect?
• Property rights and obligations. How will traditional intellectual property rights be protected in a
digital society in which tracing and accounting for ownership are difficult, and ignoring such
property rights is so easy?
• Accountability and control. Who can and will be held accountable and liable for the harm done
to individual and collective information and property rights?
• System quality. What standards of data and system quality should we demand to protect
individual rights and the safety of society?
• Quality of life. What values should be preserved in an information- and knowledge-based
society? Which institutions should we protect from violation? Which cultural values and practices
does the new information technology support?
Key Technology Trends that Raise Ethical Issues.
Information technology has raised ethical concerns and outdated laws due to five technological
trends. The doubling of computing power has increased dependence on systems and vulnerability to
errors. Advances in data storage techniques and declining costs have led to violations of individual
privacy. Advances in data analysis techniques enable detailed personal information about individuals
to be obtained. Profiling is the creation of digital dossiers on individuals by combining data from
multiple sources. Nonobvious relationship awareness (NORA) technology enables powerful profiling
capabilities. Advances in networking and the internet make it possible to mine large pools of data
remotely, leading to an invasion of privacy on a previously unimaginable scale.
4-2: What specific principles for conduct can be used to guide ethical decisions?
Basic Concepts: Responsibility, Accountability, and Liability.
Ethical choices require responsibility, accountability, and liability for the consequences of decisions
made by individuals. Due process and laws enable individuals to recover damages caused by other
actors, systems, or organizations, forming the basis of ethical analysis of information system
Ethical Analysis.
1. Identify and describe the facts clearly, and get the opposing parties to agree on the facts.
2. Define the conflict or dilemma and identify the higher-order values involved.
3. Identify the stakeholders and their interests.
4. Identify the options that you can reasonably take.
5. Identify the potential consequences of your options, considering long-term effects.
Candidate Ethical Principles.
1. The Golden Rule: Treat others as you would like to be treated.
2. The Categorical Imperative: If an action is not right for everyone, it's not right for anyone.
3. The Slippery Slope Rule: If an action can't be taken repeatedly, it's not right to take at all.
4. The Utilitarian Principle: Take the action that achieves the greatest value.
5. The Risk Aversion Principle: Take the action that produces the least harm or potential cost.
6. The Ethical No Free-Lunch Rule: Assume that all tangible and intangible objects are owned
by someone else unless declared otherwise.
Professional Codes of Conduct.
Professional groups have special rights and obligations because of their claims to knowledge and
respect, which is regulated by professional codes of conduct and ethics promulgated by associations
such as the General Council of the Bar, General Medical Council, AITP, and ACM. These groups take
responsibility for the partial regulation of their professions by determining entrance qualifications and
competence and promise to regulate themselves in the general interest of society.
Some Real-World Ethical Dilemmas.
Information systems have created new ethical dilemmas where competing values are at work, pitting
one set of interests against another. Companies may argue that they have a right to use information
systems to increase productivity, while employees may argue that employers have some
responsibility for their welfare. Analyzing the facts can sometimes produce compromised solutions
that give each side half a loaf.
4-3. Why do contemporary information systems technology and the Internet pose challenge to
the protection of individual privacy and intellectual property?
Information Rights: Privacy and Freedom in the Internet Age.
Privacy is the claim of individuals to be left alone, free from surveillance or interference from
individuals or organizations, including the state. Information technology and systems threaten
individual claims to privacy by making invasion of privacy cheap, profitable, and effective. The US,
Canadian, and German constitutions protect the claim to privacy. Fair Information Practices (FIP) are
a set of principles governing the collection and use of information about individuals that most
American and European privacy laws are based on. The FTC's FIP principles are being used as
guidelines to drive changes in privacy legislation.
The European Directive on Data Protection.
The GDPR is an updated framework that protects PII and applies to all firms and organizations that
collect, store, or process personal information of EU citizens worldwide. The GDPR strengthens the
rights of citizens to their own personal information and harmonizes data protection standards among
the 28 European bloc nations. Privacy laws have been enacted in over 80 nations around the world.
The GDPR is aimed at ad-based web businesses like Facebook, Google, and Twitter that build
collections of personal data by tracking individuals across the web.
Internet Challenges to Privacy.
The internet presents new privacy challenges, as websites track searches, web pages visited, online
content accessed, and purchases made. Both website publishers and the advertising industry defend
tracking as it allows for more relevant ads, which in turn pays for the cost of publishing websites.
Cookies are small text files deposited on a computer's hard drive, which when combined with
personal data from other sources, can develop detailed visitor profiles. Web beacons, or tracking files,
keep records of online clickstreams, reporting back to whoever owns the tracking file. Google is the
world's largest collector of online user data, and Google Marketing Platform uses cookies to build its
dossiers with details of online purchases and to examine visitor behavior.
Technical Solutions.
There are some technologies that can protect user privacy, such as encryption tools and browser
settings, but technical solutions have generally failed to prevent users from being tracked between
sites. Browsers have a Do Not Track option, but websites are not required to honor this request.
Private browser encryption software or apps can help keep messages private.
Property Rights: Intellectual Property.
Information technology has made it difficult to protect intellectual property, which includes tangible
and intangible products of the mind created by individuals or corporations, and is subject to various
protections under copyright, patents, trademarks, and trade secrets.
1. Copyright laws protect creators of intellectual property, and their works are protected from
being copied during the author's life and 70 years after their death. Software programs have
been registered since the mid-1960s, and the Computer Software Copyright Act of 1980
provides protection for software code and its copies. Copyright law protects the expression,
not the underlying ideas of a work, and it can be challenging to protect against look-and-feel
copyright infringement lawsuits.
2. Patents provide a 20-year monopoly to the owner of an invention. The granting of a patent
relies on court rulings, and the key concepts are originality, novelty, and invention. Patents
have to be non-obvious, and the criteria can be difficult to meet, causing years of waiting to
receive protection. Patents can stifle competition by raising barriers to entry and slowing down
the development of technical applications of new ideas.
3. Trademarks are used to distinguish products in the marketplace, and trademark laws protect
consumers by ensuring they receive what they paid for. Trademarks are also used to protect
the investments made by firms to bring products to market. Trademark infringement violations
occur when one firm pirates the marks of a competing firm. Infringement also occurs when
firms dilute the value of another firm's marks. The Anti-cybersquatting Consumer Protection
Act creates civil liabilities for anyone who attempts to profit from an existing famous or
distinctive trademark by registering an Internet domain name that is identical or confusingly
similar to that trademark.
4. Challenges to Intellectual Property Rights:
Digital media presents challenges to intellectual property regimes due to ease of replication,
transmission, and alteration. The proliferation of digital networks has made it more difficult to protect
intellectual property, with widespread unlicensed software and illegal file-sharing services. Legitimate
online music stores and streaming services have helped reduce piracy, but artists and record labels
have still experienced a decline in revenue and jobs. The US Digital Millennium Copyright Act
(DMCA) and the EU's Directive on Copyright in the Digital Single Market provide some copyright
protection.
4-4. How have information systems affected laws for establishing accountability and liability
and the quality of everyday life?
New technologies challenge existing liability laws and accountability for injuries caused by machines
or offensive content on social media, raising questions about who should be held liable, such as
social media companies or cloud providers.
Computer-Related Liability Problems.
Under Armour's fitness app MyFitnessPal was hacked in 2018, compromising over 150 million user
accounts, and it is difficult to hold software producers liable for products considered to be like books,
but liability law will likely extend its reach to include software. Telephone systems and regulated
common carriers are not liable for messages transmitted. Cable networks are considered private
networks and broadcasters using public airwaves are subject to a wide variety of federal and local
constraints on content and facilities, and in the US, websites are not held liable for content posted on
their sites.
Interactive Session: Management.
The Boeing 737 Max Crashes: What Happened and Why?
In 2018 and 2019, two crashes involving the Boeing 737 MAX 8 caused the deaths of 346 people.
Both accidents occurred due to the same automated system, the Maneuvering Characteristics
Augmentation System (MCAS), designed to prevent the plane from stalling. The MCAS system was
created to correct a design flaw in the 737 MAX, which had been designed to make the plane more
fuel-efficient and competitive with Airbus A320neo. A sensor outside the plane activated the MCAS
when it detected the plane's nose going up, even when the plane was not on autopilot, and could
repeatedly try to straighten the plane, even if the pilots overrode it. Boeing was allowed to self-certify
the new MCAS software, and Boeing certified that MCAS was safe. Regulators had determined that
pilots could fly the new 737 MAX airplanes without extensive retraining, as the planes were essentially
the same as previous generations, saving Boeing more money.
Case Study Questions:
1. What is the problem described in this case? Would you consider it an ethical dilemma? Why
or why not?
The problem described in the case is the safety issues with the Boeing 737 MAX 8 aircraft, which led
to two fatal crashes. The crashes were caused by a software system known as the Maneuvering
Characteristics Augmentation System (MCAS) that malfunctioned, causing the planes to nosedive.
The case can be considered an ethical dilemma because it involves the safety of human lives, the
responsibility of the aircraft manufacturer, and the decisions made by regulatory bodies. It raises
questions about the ethical responsibilities of corporations to prioritize safety over profits, the ethical
responsibilities of government regulatory bodies to ensure the safety of the public, and the ethical
responsibilities of individuals within the company to report safety concerns.
2. Describe the role of management, organization, and technology factors in the Boeing 737
MAX safety problems. To what extent was management responsible?
Management, organization, and technology factors played a significant role in the Boeing 737 MAX
safety problems.
Management was responsible for the decisions that led to the design and certification of the plane's
new automated system, the Maneuvering Characteristics Augmentation System (MCAS), without
adequate pilot training or disclosure. Additionally, management prioritized profits and meeting
production schedules over safety concerns, leading to the compromise of safety standards and lack of
transparency in the certification process.
Organizational factors, such as the lack of communication and collaboration between the engineering
and certification teams, the outsourcing of critical software development to contractors, and the
reliance on a single sensor to activate MCAS, also contributed to the safety problems.
Technological factors, such as the flawed design of MCAS and its inadequate redundancy, further
compounded the safety issues.
Overall, management bears significant responsibility for the Boeing 737 MAX safety problems due to
its prioritization of profit over safety, inadequate oversight of the certification process, and lack of
transparency.
3. Is the solution provided by Boeing adequate? Explain your answer.
It is important to note that the solution presented by Boeing, which includes software updates and
additional pilot training, has been approved by regulatory authorities, including the Federal Aviation
Administration (FAA) in the United States. The effectiveness of the solution remains to be seen, and
ongoing monitoring and evaluation will be necessary to ensure the safety of the Boeing 737 MAX 8.
4. What steps could Boeing and the FAA have taken to prevent this problem from occurring?
Boeing and the FAA could have taken several steps to prevent the safety problems with the 737 MAX
from occurring. Some possible steps include:
1. Conducting more rigorous testing of the MCAS system to identify potential failure modes and
ensure that the system could be safely overridden by pilots.
2. Providing more detailed training to pilots on the new system and its potential failure modes,
including simulators that accurately replicated the behavior of the MCAS system.
3. Conducting a more thorough review of the 737 MAX's design and systems to identify potential
safety risks and mitigate them before the plane entered service.
4. Ensuring that the certification process for the 737 MAX was conducted in a transparent and
independent manner, with rigorous oversight by the FAA to ensure that Boeing was following
all necessary safety procedures.
By taking these steps, Boeing and the FAA could have identified and mitigated the safety risks
associated with the 737 MAX before it entered service, potentially preventing the tragic accidents that
occurred.
System Quality: Data Quality and System Errors.
In 2018, major cloud providers experienced significant outages affecting services such as Snapchat,
Spotify, and Alexa, raising concerns over the reliability and quality of cloud services. The debate over
liability and accountability for system use raises questions about an acceptable level of system quality
and responsibility of producers of computer services. Poor system performance can stem from
software bugs, hardware/facility failures, and poor input data quality, with data quality being the most
common source of business system failure. The software industry has not yet developed testing
standards for producing software of acceptable but imperfect performance.
Quality of Life: Equity, Access, and Boundaries.
Information technologies and systems can cause negative social consequences, potentially harming
individuals, societies, and political institutions; balancing good and bad consequences raises
questions of responsibility, and there are individual, social, and political responses to these negative
consequences.
Big Tech: Concentrating Economic and Political Power.
Big Tech firms such as Amazon, Google, Facebook, and Microsoft have monopolies in the web and
mobile platforms, which translate into political influence and increased lobbying efforts, leading to
concerns about anticompetitive practices, unfair market access, and abuse of personal privacy; critics
call for breaking up these firms much like the antitrust act did with Standard Oil in 1911.
The global marketplace has become more efficient with the help of information systems, but timebased competition can result in a just-in-time society with no job security or benefits.
Businesses, governments, and other organizations are heavily dependent on information systems and
are vulnerable to failure. The lack of regulation and standards for these systems may eventually
require national standards and regulatory oversight.
Computer crime and abuse are significant problems that arise with new technologies. Computer crime
includes illegal acts committed with or against a computer system, while computer abuse involves
unethical but not necessarily illegal acts involving a computer. Spamming is a major problem, with
billions of dollars in costs for businesses and a percentage of email that is estimated at around 55%.
Spamming is more tightly regulated in Europe than in the US, which has the CAN-SPAM Act that
bans deceptive email practices but has not had a significant impact on spamming.
Health Risks: RSI, CVS, and Cognitive Decline.
Repetitive stress injury (RSI) is a common occupational disease that affects as much as one-third of
the labor force and accounts for one-third of all disability cases. Computer keyboards are the single
largest source of RSI, with carpal tunnel syndrome (CTS) being the most common type of computerrelated RSI.
Ergonomically correct workstations and keyboards, along with rest breaks and employee rotation, can
help reduce RSI. Other occupational illnesses caused by computers include back and neck pain, leg
stress, foot pain, and computer vision syndrome (CVS). The excessive use of computers and
smartphones may also reduce intelligence and problem-solving abilities. The growth of the internet
and information economy will continue to heighten ethical and social issues.
Interactive Session Technology.
Do Smartphones Harm Children? Maybe, Maybe Not.
Smartphones have been criticized for their impact on children's mental and physical health, including
addiction and stunted development. Heavy smartphone and social media use have been linked to
distractions in the classroom, higher risk of depression, suicide, and poor sleep quality.
However, some studies have found the link between social media use and adolescent depression and
anxiety to be small and inconsistent. There is no definitive proof that digital technology alters minds
for the worse, and researchers believe that screens are not responsible for broad social problems, but
rather, a mirror revealing existing problems.
1. Identify the problem described in this case study.
The problem described in the case study is the potential negative impact of smartphones on children's
mental and physical health, particularly on their brain development, addiction, and susceptibility to
distractions, anxiety, and depression. The passage explores the conflicting views on the extent of the
harm caused by smartphones and social media, as some studies suggest a small to significant
correlation between excessive phone use and mental health problems, while others refute such
claims and suggest that phones are not the primary cause of such issues. The passage also
highlights the concerns of parents, educators, and psychologists regarding the impact of digital
technology on children's ability to focus, learn, and engage in other activities, such as exercise and
socializing.
2. Compare the research findings approving or disapproving of smartphone use among
children and Teenagers.
The research on smartphone use among children and teenagers is mixed. Some studies suggest that
heavy smartphone use can lead to negative mental and physical health outcomes, such as distraction
in the classroom, higher risk of suicide and depression, decreased ability to focus on educational
tasks, and sleep deprivation.
On the other hand, some studies challenge these findings and suggest that the link between
smartphone use and negative outcomes may be small and inconsistent. While excessive phone use
can exacerbate the problems of certain vulnerable groups, such as children with mental health issues,
it may not be responsible for broad social problems like teenagers' rising anxiety rates and sleep
deprivation.
Overall, there is no definitive proof that digital technology alters minds for the worse, but it is generally
agreed that children who use their phones too much can miss out on other valuable activities, such as
exercise.
3. Should restrictions be placed on children's and in what sense is it an ethical dilemma?
teenagers' smartphone use? Why or why not?
The decision of whether to place restrictions on children's and teenagers' smartphone use is an
ethical dilemma that involves balancing the potential benefits and harms. On the one hand,
smartphones can provide educational and social benefits, and restricting use could impede access to
these benefits. On the other hand, excessive smartphone use can have negative impacts on mental
health, physical health, and academic performance.
Therefore, it is important to consider the age, individual needs and circumstances, and other factors
that influence smartphone use when making decisions about restrictions. Parents, educators, and
policymakers should weigh the potential benefits and harms and consider measures such as setting
time limits, using monitoring software, and promoting alternative activities.
Ultimately, the ethical dilemma of restricting smartphone use requires consideration of the potential
benefits and harms to the child, their autonomy, and the social and cultural context
Review Questions:
4.1 What ethical, social, and political issues are raised by information systems?
Explain what nonobvious relationship awareness is.
Describe the net impact of the doubling of computer power every eighteen months.
List some of the ethical issues in information systems that have been given new urgency by
the rise of the Internet and electronic commerce.
Ethical, social, and political issues raised by information systems include privacy, security,
intellectual property, equity, and access to information. The widespread use of information systems
raises questions about how personal information is collected, stored, and used. The use of technology
also raises concerns about cybersecurity threats and the need for data protection. Other issues
include concerns about the ownership and use of intellectual property, the digital divide, and the
impact of technology on social and economic inequality.
Nonobvious relationship awareness refers to the ability of information systems to identify
relationships between entities that are not apparent based on their individual attributes. For example,
an online retailer may use nonobvious relationship awareness to identify customers who are likely to
purchase a certain product based on their browsing history or purchase behavior.
The doubling of computer power every eighteen months, known as Moore's Law, has had a
significant impact on the development of information systems. This exponential increase in computing
power has enabled the development of more sophisticated and powerful systems that can process
larger amounts of data and perform more complex tasks. It has also led to the development of new
technologies such as artificial intelligence and machine learning.
Some ethical issues in information systems that have been given new urgency by the rise of
the Internet and electronic commerce include privacy and security concerns, intellectual property
rights, and the impact of technology on social and economic inequality. The rise of social media and
online platforms has also raised concerns about the spread of misinformation and the use of personal
data for political purposes. Additionally, the use of technology in the workplace has raised concerns
about surveillance and employee monitoring.
4.2 What specific principles for conduct can be used to guide ethical decisions?
List and describe the five steps in an ethical analysis.
Identify and describe six ethical principles.
Specific principles for conduct that can be used to guide ethical decisions include:
1. Responsibility: Accepting the consequences of one's decisions and actions and being
accountable for them.
2. Confidentiality: Respecting privacy and protecting information that has been entrusted to you.
3. Integrity: Being honest, trustworthy, and fair in all dealings and interactions.
4. Availability: Ensuring that information and resources are accessible to those who need them.
5. Compliance: Adhering to laws, regulations, and organizational policies.
The five steps in an ethical analysis are:
1. Identify and describe the facts clearly, and get the opposing parties to agree on the facts.
2. Define the conflict or dilemma and identify the higher-order values involved.
3. Identify the stakeholders and their interests.
4. Identify the options that you can reasonably take.
5. Identify the potential consequences of your options, considering long-term effects.
The six ethical principles are:
1. The Golden Rule: Treat others as you would like to be treated.
2. The Categorical Imperative: If an action is not right for everyone, it's not right for anyone.
3. The Slippery Slope Rule: If an action can't be taken repeatedly, it's not right to take at all.
4. The Utilitarian Principle: Take the action that achieves the greatest value.
5. The Risk Aversion Principle: Take the action that produces the least harm or potential cost.
6. The Ethical No Free-Lunch Rule: Assume that all tangible and intangible objects are owned
by someone else unless declared otherwise.
4.3 Why do contemporary information systems technology and the Internet pose challenges to
the protection of individual privacy and intellectual property?
Contemporary information systems technology and the Internet pose challenges to the
protection of individual privacy and intellectual property due to their ability to store, process,
and transmit vast amounts of personal data and digital content across global networks,
increasing the risk of data breaches, hacking, and piracy
Define privacy and Fair Information Practices.
Privacy refers to the right of individuals to control the collection, use, and disclosure of their
personal information. Fair Information Practices are a set of principles that guide
organizations in handling personal information, including notice, choice, access, security, and
enforcement.
Explain how the Internet challenges the protection of individual privacy and intellectual
property.
The Internet challenges the protection of individual privacy and intellectual property due to the
ease of accessing, sharing, and distributing personal information and digital content. The
anonymity of users, the lack of security measures, and the global reach of the Internet make it
difficult to control and regulate the use of personal information and intellectual property.
Explain how informed consent, legislation, industry self-regulation, and technology
tools help protect the individual privacy of Internet users.
Informed consent, legislation, industry self-regulation, and technology tools help protect the
individual privacy of Internet users by providing users with transparency and control over their
personal information. Informed consent requires organizations to obtain explicit permission
from individuals before collecting, using, or disclosing their personal information. Legislation,
such as data protection laws and privacy regulations, establishes legal obligations for
organizations to protect personal information. Industry self-regulation involves organizations
adopting voluntary codes of conduct and standards for handling personal information.
Technology tools, such as encryption, firewalls, and anti-virus software, help protect personal
information from unauthorized access, theft, and misuse.
List and define the three regimes that protect intellectual property rights.
The three regimes that protect intellectual property rights are:
Patents: legal rights granted to inventors of new and useful products, processes, and
designs.
Copyrights: legal rights granted to authors and creators of original works of authorship,
including books, music, and software.
Trademarks: legal rights granted to owners of unique symbols, logos, and names used to
identify and distinguish their products and services from others.
4.4 How have information systems affected laws for establishing accountability and liability
and the quality of everyday life?
Information systems have created new types of accountability and liability, as well as new legal issues
such as jurisdiction in cyberspace.
Identify the most common reason for business system failure.
The most common reason for business system failure is management's failure to anticipate
the complexity and scope of the project.
Describe why all organizations have be come dependent and vulnerable as a result of
using information systems.
Organizations have become dependent on information systems because they streamline
operations, improve decision-making, and provide a competitive advantage, but this
dependence also makes them vulnerable to system failures, cyber-attacks, and other risks.
Describe computer crime using an example.
Computer crime refers to the use of a computer to commit an illegal act. For example, a
hacker who gains unauthorized access to a company's database and steals sensitive
information is committing computer crime.
Explain what is meant by the term digital divide.
The term digital divide refers to the gap between those who have access to digital
technologies and those who do not, typically due to factors such as income, education, and
geographic location.
Discussion Questions:
4.5 Should producers of software-based services, such as ATMs, be held liable for
economic injuries suffered when their systems fail?
The question of liability for economic injuries resulting from system failures is a complex legal
and ethical issue. Ultimately, it is up to the courts to determine whether software-based
service providers, such as ATM producers, should be held liable for such injuries. However, it
is generally expected that producers of software-based services should take reasonable steps
to ensure that their systems are reliable and secure.
4.6 Should companies be responsible for unemployment their information systems
cause? Why or why not?
Companies should take responsibility for the impact that their information systems have on
employment. However, it is difficult to determine the extent to which information systems are
responsible for job loss, as automation and other factors can also play a role. Companies
should take steps to mitigate the impact of information systems on employment, such as
providing training for workers whose jobs may be affected.
4.7 Discuss the pros and cons of allowing companies to amass personal data for
behavioral targeting.
The use of personal data for behavioral targeting has both pros and cons. On the one hand, it
can be beneficial for companies to use personal data to tailor their marketing efforts to
individual consumers, potentially increasing the effectiveness of their advertising. On the
other hand, this practice can also be seen as an invasion of privacy and may raise concerns
about the misuse of personal data. To address these concerns, companies should be
transparent about their data collection and use practices and give consumers the option to opt
out of data collection if they choose. Additionally, regulations such as the General Data
Protection Regulation (GDPR) provide guidelines for the collection and use of personal data.
Hands-On MIS Projects
4.8 Fashion Today is an online fashion shop catering to Belgium, the Netherlands, and Luxembourg. It
keeps track of each customer's email address, home address, age, gender, clothing preferences, and
body-size measurements. Yara is a young woman who struggles to find things her size but is a regular
shopper at Fashion Today. One day, she receives a text message announcing a new line of clothes
named FTXL. Clearly, she has been selected based on her submitted body size measurements. Five days
later, she receives an ad for weight-loss supplements from Herbs4Life, an affiliate of Fashion Today. Has
Fashion Today violated Yara's privacy? Is this potentially offensive to people like Yara? Explain your
answer.
FashionToday's use of Yara's personal data to send targeted advertisements for FTXL and weightloss supplements from Herbs4Life could be considered a violation of Yara's privacy. While
FashionToday may argue that they are using the data to improve the customer's shopping
experience, Yara may not have explicitly consented to the use of her personal data for targeted
advertisements. Additionally, the advertisement for weight-loss supplements could be potentially
offensive to Yara and others who struggle with body image issues. FashionToday should be
transparent about their use of customer data and obtain explicit consent before using it for targeted
advertisements.
4.9 As the head of a small insurance company with six employees, you are concerned about how
effectively your company is using its networking and human resources. Budgets are tight, and you are
struggling to meet payrolls because employees are reporting many overtime hours. You do not believe
that the employees have a sufficiently heavy workload to warrant working longer hours and are looking
into the amount of time they spend on the Internet.
Each employee uses a computer with Internet access on the job. Review a sample of your company's
weekly report of employee web usage, which can be found in MyLab MIS.
Calculate the total amount of time each employee spent on the web for the week and the total
amount of time that company computers were used for this purpose. Rank the employees in the
order of the amount of time each spent online.
Do your findings and the contents of the report indicate any ethical problems employees are
creating? Is the company creating an ethical problem by monitoring its employees' use of the
Internet?
Use the guidelines for ethical analysis presented in this chapter to develop a solution to the
problems you have identified.
Achieving Operational Excellence: Creating a Simple Blog
4.10 In this project, you'll learn how to build a simple blog of your own design using the online
blog creation soft ware available at Blogger.com. Pick a sport, hobby, or topic of interest as
the theme for your blog. Name the blog, give it a title, and choose a template for the blog. Post
at least four entries to the blog, adding a label for each posting. Edit your posts if necessary.
Upload an image, such as a photo from your computer, or the web, to your blog. Add
capabilities for other registered users, such as team members, to comment on your blog.
Briefly describe how your blog could be useful to a company selling products or services
related to the theme of your blog. List the tools available to Blogger that would make your blog
more useful for business and de scribe the business uses of each. Save your blog and show it
to your instructor.
Improving Decision Making: Analyzing Web Browser Privacy.
Software Skills: Web browser software
Business Skills: Analyzing web browser privacy protection features
4.11 This project will help develop your Internet skills for using the privacy protection features of
leading web browser software.
Examine the privacy protection features and settings for two leading web browsers such as Internet
Explorer, Microsoft Edge, Mozilla Firefox, or Google Chrome. Make a table comparing the features of
two of these browsers in terms of functions provided and ease of use.
How do these privacy protection features protect individuals?
How do these privacy protection features affect what businesses can do on the Internet?
Which browser does the best job of protecting privacy? Why?
Privacy Features
Tracking Protection
Do Not Track (DNT)
Ad Blocker
Mozilla Firefox
Yes
Yes
No
Google Chrome
Yes
No
No
Pop-up Blocker
Incognito/Private Browsing Mode
Password Manager
Syncing
Clear Browsing Data on Exit
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
These privacy protection features protect individuals by blocking trackers, preventing cookies and
other information from being shared, blocking pop-ups, and providing an incognito/private browsing
mode that does not save browsing history, cookies, or form data. The use of these privacy protection
features affects what businesses can do on the internet by limiting their ability to track users and
collect data on their browsing habits.
In terms of which browser does the best job of protecting privacy, both Mozilla Firefox and Google
Chrome offer strong privacy protection features. However, Mozilla Firefox's tracking protection and Do
Not Track (DNT) features provide an additional layer of privacy protection compared to Google
Chrome. Additionally, Mozilla Firefox is open-source software, which means that its code is available
for public inspection and verification, providing greater transparency and accountability. Therefore,
Mozilla Firefox may be considered the better browser for privacy protection.
4.12 With three or four of your classmates, develop a corporate ethics code on privacy that
addresses both employee privacy and the privacy of customers and users of the corporate
website. Be sure to consider email privacy and employer monitoring of worksites as well as
corporate use of information about employees concerning their off-the-job behavior (e.g.,
lifestyle, marital arrangements, and so forth)
If possible, use Google Docs and Google Drive or Google Sites to brainstorm, organize, and
develop a presentation of your findings for the class.
Corporate Ethics Code on Privacy
The following code outlines our commitment to privacy and the ethical principles we will uphold in
protecting the privacy of both our employees and customers.
1. Collection and Use of Personal Information: We will only collect and use personal information
that is necessary to conduct our business and will take reasonable steps to protect the
privacy of such information.
2. Transparency: We will clearly and honestly disclose our privacy practices to all stakeholders
and will ensure that they are easily accessible.
3. Data Security: We will maintain appropriate technical and organizational measures to ensure
the security of personal information.
4. Employee Privacy: We respect the privacy of our employees and will not monitor their
personal communications, except where required by law or for legitimate business purposes.
5. Customer Privacy: We will protect the privacy of our customers and will not disclose their
personal information to third parties, except where required by law or for legitimate business
purposes.
6. Email Privacy: We will respect the privacy of email communications and will not monitor
employee emails, except where required by law or for legitimate business purposes.
7. Off-the-Job Behavior: We will not use information about an employee's off-the-job behavior,
such as lifestyle or marital arrangements, for purposes of employment decisions.
8. Compliance: We will comply with all applicable laws and regulations related to privacy and
data protection.
9. Accountability: We will regularly review and assess our privacy practices to ensure they
remain effective and compliant with relevant laws and regulations.
We believe that protecting privacy is not only the right thing to do but also critical to our business
success. Therefore, we are committed to implementing and enforcing this Corporate Ethics Code on
Privacy in all aspects of our operations.
Case Study: Facebook Privacy: Your Life for Sale
Facebook's mission statement is to connect people and build communities. However, in 2017 and
2018, Facebook was criticized for allowing its platform to be used by Russian intelligence and political
consultants to influence the US presidential election of 2016. The company allowed third-party apps
to obtain users' personal information, which was then used to send targeted political ads in the
election.
Facebook's design allowed for this app to collect the personal information of not only the app users
but also their entire Facebook social network. Facebook also had data-sharing partnerships with at
least 60 device makers and selected app developers, allowing these companies to gain access to
data about Facebook users and their friends without their explicit consent, violating a 2012 privacy
settlement with the FTC.
Facebook was fined a record-breaking $5 billion by the FTC for violating this privacy settlement in
2019, and agreed to new oversight and policies for handling personal information. However, critics
argue that the fine is not enough to change the company's behavior, as there are no specific
restrictions on its mass surveillance of users, and the new policies will be created by Facebook itself
rather than the FTC.
4.13 Perform an ethical analysis of Facebook. What is the ethical dilemma presented by this
case?
Facebook's ethical dilemma is balancing its pursuit of profit and growth with its responsibility to protect
users' privacy, prevent the spread of harmful content, and ensure the integrity of democratic
processes. The company has faced criticism for a range of ethical concerns, including allowing the
spread of misinformation, failing to prevent foreign interference in elections, and mishandling user
data.
These issues have raised questions about Facebook's commitment to ethical principles and its
accountability to users and society as a whole. A comprehensive ethical analysis of Facebook would
consider its impact on various stakeholders, such as users, advertisers, governments, and civil
society organizations, and examine the trade-offs between short-term profits and long-term
sustainability.
4.14 What is the relationship of privacy to Facebook's business model?
Facebook's business model relies heavily on collecting user data and using it for targeted advertising.
Therefore, privacy is directly related to Facebook's business model because users' personal
information is the foundation of the company's revenue stream. Facebook's ability to collect and
analyze user data enables them to provide advertisers with specific and valuable insights into user
behavior, preferences, and interests, which can be used to create more effective and profitable
advertising campaigns. However, this raises ethical concerns regarding user consent, transparency,
and the extent to which users are aware of how their data is being used.
4.15 Describe the weaknesses of Facebook's privacy policies and features. What management,
organization, and technology factors have contributed to those weaknesses?
Weaknesses of Facebook's privacy policies and features include:
1. Complex privacy settings: Facebook's privacy settings are often complicated and confusing,
making it difficult for users to control their data.
2. Default settings: Facebook's default privacy settings have often favored sharing over privacy.
3. Data breaches: Facebook has experienced numerous data breaches that have resulted in
user data being compromised.
4. Third-party apps: Facebook's API allowed third-party apps to access user data, often without
users' knowledge or consent.
Management, organization, and technology factors that contributed to these weaknesses include:
1. Lack of oversight: Facebook's management did not provide enough oversight to ensure that
user data was being handled responsibly.
2. Emphasis on growth: Facebook's focus on growth and engagement may have led to a
disregard for privacy concerns.
3. Technical complexity: Facebook's technology is highly complex, which can make it difficult to
implement effective privacy controls.
4. Corporate culture: Facebook's corporate culture has been criticized for being insular and not
valuing privacy as much as it should.
4.16 Will Facebook be able to have a successful busi-ness model without invading privacy?
Explain your answer. Could Facebook take any mea-sures to make this possible?
Yes, Facebook could have a successful business model without invading privacy. Facebook could
take measures to make this possible by improving their privacy policies and features, being more
transparent about their data practices, and allowing users to have more control over their data. By
doing so, Facebook could build trust with its users and potentially even attract new users who are
concerned about privacy. Additionally, Facebook could explore alternative revenue streams, such as
subscription models or partnerships with businesses, that do not rely on collecting and selling user
data. However, implementing these measures would require significant changes to Facebook's
current business model and would likely come with some financial costs.
Chapter 5: IT Infrastructure and Emerging Technologies.
South Asia's Grab Leverages Information Technology to Enhance Its Services:
Grab is a Singapore-based company that provides customers with a taxi-booking service, food
delivery, and mobile payments through a smartphone app. The company has expanded rapidly in
Southeast Asia and has downloaded onto approximately 185 million mobile devices. Grab uses
information technology to provide customers with a safer and more reliable taxi service, allowing them
to track drivers, view traffic conditions, and receive real-time updates regarding the driver's current
position and estimated time of arrival.
The company uses Amazon's Redshift and ElastiCache data warehousing and data storage cloudbased services to manage millions of daily bookings in real-time. Grab's success is due to its ability to
leverage information technology to provide stability to an otherwise unpredictable sector, thus
increasing the app user's chances of obtaining a metered taxi. The firm's success is also due to its
use of data analytics to match demand with supply, ensuring that resources are allocated
appropriately to high-demand areas. Grab aims to integrate all of its services through the
GrabPlatform, allowing its over 9 million drivers, delivery partners, merchants, and agents across 339
cities in eight countries to use the same technology localized to their own language and needs. In
2019, Grab took in $1.4 billion in funding to further expand its services.
Grab's use of information systems has allowed the company to effectively manage its resources and
improve its performance by ensuring timely supply to meet demand. Through its real-time monitoring
of ride requests, Grab positions its finite resources to maximize capacity, enabling its drivers to earn
more fares and retain them. Amazon's cloud-based services, such as Redshift and ElastiCache, have
facilitated the handling of millions of daily bookings and allowed users to track drivers and view traffic
conditions. Cloud computing has been important to Grab's operations, as it has allowed the company
to concentrate on enhancing its app while benefiting from the capabilities provided by Amazon.
5 – 1: What is IT Infrastructure, and what are the stages and drivers of IT infrastructure
evolution?
IT infrastructure are shared technology resources that provide a platform for specific information
system applications, including hardware, software, and services. It is essential to serve customers,
work with vendors, and manage internal business processes. The global IT infrastructure industry in
2020 was estimated to be worth $3.9 trillion, with investment accounting for 25 to 50 percent of
information technology expenditures in large firms, particularly financial services firms, where
investment exceeds half of all capital investment.
Defining IT infrastructure.
IT infrastructure includes physical devices and software applications that are needed to run an
enterprise, as well as firmwide services composed of human and technical capabilities. These
services include computing platforms, telecommunications services, data management services,
application software services, physical facilities management services, IT management services, IT
standards services, IT education services, and IT research and development services.
The "service platform" perspective makes it easier to understand the business value provided by
infrastructure investments. Example: a fully loaded personal computer and a high-speed Internet
connection can be valuable for an employee, resulting in increased productivity and a higher value to
the firm.
Evolution of IT Infrastructure.
The evolution of IT infrastructure has gone through five stages from mainframes to cloud and mobile
computing. Technologies from past eras can still be used in modern times for different purposes.
There have been five stages in this evolution, namely; general-purpose mainframe and minicomputer
computing, personal computers, client/server networks, enterprise computing, and cloud and mobile
computing.
General-Purpose Mainframe and Minicomputer Era (1959 to Present).
The mainframe era began in 1959 with the widespread commercial use of mainframe computers such
as the IBM 1401 and 7090, and the introduction of IBM 360 series in 1965 marked the start of timesharing, multitasking and virtual memory. Mainframe computing was centralized, controlled by
professional programmers and system operators with most infrastructure provided by a single vendor.
Decentralized computing became possible with the introduction of DEC minicomputers in 1965,
offering powerful machines at lower prices than IBM mainframes.
Personal Computer Era (1981 to Present).
The personal computer era began with the IBM PC in 1981, which was widely adopted by businesses.
PCs became standard desktop computers and the rise of productivity software tools made them
valuable for both home and corporate users. PC sales have declined due to the popularity of tablets
and smartphones.
Client/Server Era (1983 to Present)
The client/server model involves desktop or laptop clients that are networked to server computers
which provide services and process and store shared data. The simplest client/server network has
processing split between the two machines in a two-tiered architecture, while corporations often use
multitiered N-tier architectures that balance the network's work over several levels of servers. Web
server software and application server software are used to handle different kinds of requests in these
architectures. Client/server computing enables businesses to distribute computing work across a
series of smaller, inexpensive machines that cost much less than centralized mainframe systems.
Enterprise Computing Era (1992 to Present).
During the early 1990s, firms sought to integrate their disparate networks and applications into an
enterprise-wide infrastructure, which was made possible by the development of the TCP/IP
networking standard. This allowed the linking of different types of computer hardware and smaller
networks into a single enterprise-wide network that enabled free information flow across the
organization and with other firms. The enterprise infrastructure also required software to link disparate
applications and enable data flow across different parts of the business.
Cloud and Mobile Computing Era (2000 to Present)
The client/server model has evolved into the cloud computing model, providing access to a shared
pool of computing resources over the Internet. Public cloud spending is expected to reach $350 billion
by 2022, and major companies like Amazon, Google, IBM, Oracle, and Microsoft operate large cloud
data centers. Cloud computing is the fastest-growing form of computing, and software applications
are sold as services over the Internet.
Technology Drivers of Infrastructure Evolution.
Moore's Law, based on Gordon Moore's assertion, states that the number of transistors on a
microprocessor chip doubles every two years, leading to a decline in computing costs and a rise in
computing power. However, this exponential growth may not continue much longer as the rate of cost
improvement has slowed, and chip manufacturers may reach the physical limits of semiconductor
size. Nanotechnology offers a potential solution to continue the trend of smaller and more powerful
computer chips.
The Law of Mass Digital Storage
The Law of Mass Digital Storage indicates that digital information doubles annually while storage
costs decrease by 100% each year.
Metcalfe's law and network economics.
Metcalfe's law states that the value of a network increases exponentially with the number of its
members, leading to increasing returns to scale. This is supported by network economics, where the
social and business value of digital networks drives demand for information technology, multiplying
the number of connections among network members.
Declining Communication cost and the internet.
The declining cost of communication, including internet access, and the exponential growth of the
internet have transformed IT infrastructure. As communication costs approach zero, utilization of
communication and computing facilities increases, leading to the need for expanding internet
connections and network capabilities in order to leverage the business value associated with the
internet. These trends are expected to continue.
Standard and Network effects:
Agreements on technology standards and widespread consumer acceptance are essential for today's
enterprise infrastructure and internet computing. Technology standards enable compatibility and
communication in networks, resulting in economies of scale, price declines, and the ability to leverage
common platforms like the Wintel PC with Windows and Microsoft Office. Important standards include
Ethernet for local area networks and TCP/IP for firmwide and internet connectivity.
5.2: What are the components of IT Infrastructure?
The components of IT infrastructure include hardware, software, data management technology,
networking and telecommunications technology, services (including consulting and system
integration), personnel, and physical facilities. These components need to be coordinated to create a
coherent infrastructure. Increasingly, companies are adopting cloud services and outsourcing some
components, resulting in a mix of owned, rented, and external vendor-provided components.
In a modern office setting, IT infrastructure components are essential for efficient operations. This
includes hardware like computers and servers, software applications, data management systems,
networking technology, and physical facilities. Companies may also leverage cloud services to
complement their on-premises infrastructure. By utilizing these components effectively, businesses
can ensure smooth data processing, communication, and collaboration, enhancing productivity and
enabling seamless integration of technology into their daily operations.
Companies may also utilize cloud services, such as cloud storage or software-as-a-service (SaaS)
applications, where certain components are provided and managed by external vendors. This hybrid
approach allows companies to combine on-premises infrastructure with cloud-based solutions to meet
their IT needs efficiently.
Computer Hardware Platforms.
Firms globally are projected to invest $688 billion in computer hardware devices in 2020,
encompassing mainframes, servers, PCs, tablets, and smartphones. Mainframes continue to serve as
critical infrastructure for banking and telecommunications networks due to their ability to handle large
workloads and process vast amounts of data. IBM remains the main provider of mainframe systems,
which have been repurposed as powerful servers for enterprise networks and websites, capable of
running multiple instances of operating systems and replacing numerous smaller servers.
Operating Systems Platforms.
The primary operating systems for corporate servers are Microsoft Windows Server, Unix, and Linux,
each catering to specific needs. Windows Server offers comprehensive services for organizations
preferring Windows-based infrastructures, while Unix and Linux provide scalability, reliability, and
cost-effectiveness.
Microsoft Windows dominates the PC market, but there is now a wider range of client operating
systems, including Google's Chrome OS for cloud computing and Android for mobile devices. Touch
technology is increasingly integrated into operating systems like iOS, Windows, and Android to
provide intuitive user experiences.
Enterprise Software Applications.
Global spending on enterprise application software in 2020 is projected to reach approximately $503
billion, with SAP and Oracle being the major providers. This category also includes middleware
software from IBM and Oracle for achieving integration within firms. Microsoft aims to target small and
medium-sized businesses in this market segment.
Data Management and Storage.
Enterprise database management software plays a crucial role in organizing and managing a firm's
data for efficient access and utilization. Leading providers include IBM (DB2), Oracle, Microsoft (SQL
Server), SAP Sybase (Adaptive Server Enterprise), MySQL (owned by Oracle), and Apache Hadoop
(for managing large data sets).
Networking and Telecommunications Platform:
Companies are projected to spend $1.5 trillion on telecommunications services in 2020, with Windows
Server being the predominant local area network operating system, followed by Linux and Unix, while
Cisco and Juniper Networks are leading networking hardware providers.
Internet Platforms:
Internet platforms encompass hardware, software, and management services for websites, including
web hosting, routers, and wireless equipment, with a shift towards fewer, more powerful servers and
cloud computing services, dominated by IBM, Dell, Oracle, and HP, and supported by software tools
from Microsoft, Oracle-Sun, and independent developers.
Consulting and System Integration Services:
Consulting and system integration services are essential for deploying and maintaining an
organization's IT infrastructure, as firms often lack the necessary resources and expertise. Leading
consulting firms like Accenture, IBM Services, and HP provide expertise in implementing new
infrastructure, including business process changes, software integration, and ensuring compatibility
with legacy systems, which are older transaction processing systems that can be integrated into a
modern infrastructure instead of being replaced.
5.3 What are the current trends in computer platforms?
The current trends in computer platforms include a shift towards mobile and network-based
computing, consumerization of IT, quantum computing, virtualization, cloud computing, edge
computing, green computing, and high-performance processors.
The Mobile Digital Platform.
The mobile digital platform encompasses smartphones, tablets, netbooks, and e-book readers, which
are increasingly replacing PCs for various tasks. Wearable computing devices like smartwatches and
smart glasses have also emerged, offering business applications such as delivering real-time
information to workers in the field.
The consumerization of IT and BYOD:
The consumerization of IT refers to the use of personal mobile devices and consumer software
services in the workplace, known as BYOD. This trend challenges traditional IT practices as
employees and departments have a greater say in technology selection, leading to a shift in
managing and controlling these devices and services to meet business needs.
Quantum computing.
Quantum computing harnesses the power of quantum physics to process data in multiple states
simultaneously, enabling significantly faster problem-solving. IBM, Google, Microsoft, Intel, and NASA
are among the key players in developing quantum computing platforms with increasing real-world
applications.
Virtualization.
Virtualization is a technique that allows for the abstraction and consolidation of computing resources,
such as servers and storage devices, enabling them to be accessed as multiple logical resources. It
reduces costs by increasing resource utilization rates and facilitating centralization and consolidation.
Additionally, virtualization enables software-defined storage, allowing for efficient allocation of storage
resources and the use of lower-cost hardware.
Cloud computing.
Cloud computing is a model that offers computing resources, such as processing power and storage,
as virtualized services over the internet. It provides on-demand self-service, ubiquitous network
access, resource pooling, rapid elasticity, and measured service. There are three types of cloud
services: Infrastructure as a Service (IaaS), where customers use cloud resources to run their
systems; Platform as a Service (PaaS), providing a platform for developing and deploying
applications; and Software as a Service (SaaS), offering software applications over the internet.
Interactive Session: Organizations.
Glory finds solutions in the cloud.
Glory Global Solutions is a leading provider of cash management solutions for ATMs worldwide, with
a presence in over 20 countries and servicing customers in over 100 countries. To streamline and
standardize its business processes, Glory decided to move to a cloud-based platform, ultimately
choosing Oracle as its vendor. The transition involved working with system integrator TCS and
implementing the new system in 24 countries over a four-year period, leading to reduced IT costs and
the ability to operate and grow as a single global firm.
1. Why did Glory choose a cloud solution as opposed to modernizing the systems it had?
Glory chose a cloud solution instead of modernizing its existing systems because it wanted to
streamline and standardize its business processes worldwide. Moving to a cloud platform provided by
a single vendor would reduce data management and IT infrastructure costs, making it a more costeffective and efficient solution.
2. Why was it necessary to hire a systems integrator firm?
Hiring a systems integrator firm was necessary because Glory had a collection of legacy systems
developed by multiple firms, making it difficult for the systems to communicate with each other. The
integrator firm, in this case TCS, had the expertise to help Glory transition to the new cloud platform,
fill knowledge gaps, and ensure a smooth integration of their business processes with the enterprise
software and IT infrastructure.
3. What were the main organizational change requirements for implementing the new cloud
platform?
The main organizational change requirements for implementing the new cloud platform included
training employees in the new business processes and the software used, as well as ensuring their
understanding and adoption of the new system. Over 2,000 employees would be using the new
systems, requiring a cultural shift and retraining across the organization to align with the new
processes and maximize the benefits of the cloud platform.
4. Why did management choose a regional rollout strategy? Why in the United Kingdom?
Management chose a regional rollout strategy to implement the new system because it was
considered less risky and less expensive than a direct cutover or a parallel system cutover. Starting
with the United Kingdom headquarters location allowed Glory to test and refine the new system in a
controlled environment before rolling it out to other countries. It also provided an opportunity to
address any initial challenges or issues before scaling up the implementation to other regions.
Cloud Modeling Computing Compared.
1. Public Cloud: Managed by third-party providers, accessible to the public, used for hosting websites,
applications, and non-sensitive data.
2. Private Cloud: Exclusive to a single organization, managed internally or by a third-party, ideal for
strict data security and compliance.
3. Hybrid Cloud: Combination of public and private clouds, offering flexibility and integration, allowing
organizations to leverage the benefits of both environments.
Edge Computing.
Edge computing optimizes cloud computing systems by performing data processing on linked servers
at the edge of the network, reducing data transfer and costs. It is useful for IoT devices (Internet of
Things) that don't require constant connection to a central cloud, allowing local edge computing
systems to compile and send important data intermittently. Edge computing also minimizes delays in
data transmission, making it beneficial for time-sensitive industries like finance, manufacturing, and
autonomous vehicles.
Green Computing.
Virtualization is a key technology in promoting green computing by reducing hardware proliferation
and power consumption. Green computing aims to minimize environmental impact by adopting
practices and technologies for designing, using, and disposing of computer systems. Data centers
consume significant energy, equivalent to 1.5% of global energy use, leading to environmental and
cost concerns. To address this, energy-efficient designs, virtualization, and clean energy sources are
being employed by major companies like Microsoft, Google, Facebook, and Apple to reduce their
carbon footprint and operate sustainable data centers.
High Performance and Power-Saving Processors.
To reduce power requirements and hardware sprawl, more efficient and power-saving processors
with multiple cores are being utilized. Multicore processors integrate two or more processor cores on
a single chip, enabling enhanced performance, reduced power consumption, and efficient
simultaneous processing of tasks. This technology, seen in devices like PCs and servers, offers faster
performance with lower power requirements. Chip manufacturers like Intel are focused on developing
microprocessors that minimize power consumption, benefiting battery life in mobile devices and
enabling their use in smartphones, tablets, intelligent cars, and healthcare devices.
What are the current software trends and platforms?
Contemporary software platform evolution encompasses four major themes: Linux and open source
software, software for the web (Java, JavaScript, HTML, HTML5), webservices and service-oriented
architecture, and software outsourcing and cloud services. Linux, a well-known open source operating
system, is widely used in embedded systems, cell phones, smartphones, and consumer electronics,
as well as servers, mainframe computers, and supercomputers, offering cost reduction, reliability, and
compatibility across hardware platforms.
Software for the web (Java, JavaScript, HTML, HTML5).
Java is a versatile programming language used for web development and has expanded to mobile
devices and consumer electronics. It can run on any computer or device using a Java Virtual
Machine. HTML and HTML5 are page description languages used to create and link web pages, with
HTML5 providing improved multimedia integration and cross-device compatibility. JavaScript is
another key technology for interactive web pages, while Python and Ruby on Rails are popular tools
for web application development, offering flexibility, platform compatibility, and feature-rich website
building capabilities.
Interactive Sessions: Open Source Innovation: The competitive Advantage
Open source software, characterized by freely available and modifiable source code, emerged as a
response to the high cost and restrictions of proprietary software. The open source movement initially
thrived through community-driven development, with notable examples like Linux, Apache, and
Firefox.
However, in the late 2010s, companies began embracing open innovation by releasing their
proprietary software as open source. Baidu, China's leading search engine, recognized the
importance of AI in its services and shocked the IT world by open sourcing its AI software,
PaddlePaddle, in 2016.
PaddlePaddle, based on deep learning, powers various Baidu products and services, facilitating
functions like food delivery time calculations and speech transcription. Similarly, Fujitsu, a
multinational technology company, turned to open source to transition from traditional offerings to
cloud services.
By creating the Open Service Catalog Manager (OSCM), an open source platform for multi-cloud
environments, Fujitsu gained industry-wide recognition and became a preferred partner for cloud
service providers. Both Baidu and Fujitsu embraced open source to enhance innovation and
development, attracting talent and achieving unexpected benefits such as accelerated AI innovation
and partnership opportunities.
1. Open source software refers to computer software whose source code is freely available and can
be modified by anyone. It is different from proprietary software because proprietary software is
privately owned and its source code is restricted, not freely accessible or modifiable.
2. Baidu made its AI software, PaddlePaddle, open source to increase the pace of innovation by
relying on users for new ideas and features. By open sourcing PaddlePaddle, Baidu aimed to access
and attract deep learning expertise, counter the concentration of AI professionals in a few global
companies, and foster AI innovation in China. Baidu benefited from open sourcing by creating a
platform for deep-learning applications, enhancing its reputation, and attracting partnerships and
collaborations.
3. Fujitsu adopted an open source strategy because it recognized that proprietary software was no
longer as profitable and saw greater opportunities for innovation and expansion through community
participation. By open sourcing the Open Service Catalog Manager (OSCM), Fujitsu created a
standardized, vendor-neutral platform for delivering cloud services. This allowed Fujitsu to become a
preferred partner for vendors and companies using OSCM, expanded its reach and influence in the
industry, and enabled the development of new competencies without significant investment.
Open source software, characterized by freely available and modifiable source code, emerged as a
response to the high cost and restrictions of proprietary software. The open source movement initially
thrived through community-driven development, with notable examples like Linux, Apache, and
Firefox. However, in the late 2010s, companies began embracing open innovation by releasing their
proprietary software as open source.
Baidu, China's leading search engine, recognized the importance of AI in its services and shocked the
IT world by open sourcing its AI software, PaddlePaddle, in 2016. PaddlePaddle, based on deep
learning, powers various Baidu products and services, facilitating functions like food delivery time
calculations and speech transcription.
Similarly, Fujitsu, a multinational technology company, turned to open source to transition from
traditional offerings to cloud services. By creating the Open Service Catalog Manager (OSCM), an
open source platform for multi-cloud environments, Fujitsu gained industry-wide recognition and
became a preferred partner for cloud service providers.
Both Baidu and Fujitsu embraced open source to enhance innovation and development, attracting
talent and achieving unexpected benefits such as accelerated AI innovation and partnership
opportunities.
Web Services and Service-Oriented Architecture:
Web services are software components that enable the exchange of information between different
systems using web communication standards. They utilize XML as the foundation technology,
allowing for data presentation, communication, and storage. XML tags elements with specific
meanings, enabling automatic interpretation and manipulation of data by computers. Web services
communicate through XML messages over standard web protocols and can be discovered through
directories.
They follow a service-oriented architecture, where self-contained services collaborate to create
software applications. Web services provide a standard and reusable method for applications to
communicate without custom programming. Major software vendors offer tools and platforms for web
service development. Dollar Rent A Car is an example of using web services to connect their online
booking system with Southwest Airlines' website, streamlining the reservation process. Web services
allow Dollar to communicate with different information systems and expand connections to other
partners and wireless devices without writing new code for each integration.
Software outsourcing and Cloud Services.
Today, many business firms continue to operate legacy systems that continue to meet a business
need and that would be extremely costly to replace. But they will purchase or rent most of their new
software applications from external sources.
There are three external sources for software: software packages from a commercial software vendor
(most ERP systems), outsourcing custom application development to an external vendor (which may
or may not be offshore), and cloud-based software services and tools (SaaS/PaaS).
Software Packages and Enterprise Software.
Software packages are prewritten software programs that replace the need for companies to develop
their own software for tasks like payroll and order handling. Vendors like SAP and Oracle provide
powerful packages for enterprise applications, integrating multiple functions into a single system,
offering cost-effective solutions for businesses.
Software Outsourcing:
Software outsourcing involves hiring external firms, often offshore, for custom software development
or maintenance. IKEA partnered with Wincor Nixdorf to set up point-of-sale systems globally. While
offshore outsourcing includes lower-level tasks, experienced firms in countries like India handle newprogram development. Rising offshore wages and project management costs have resulted in some
work returning to domestic companies.
Cloud Based software services and tools:
Cloud-based software services and tools have revolutionized the way software is accessed and
utilized. Instead of buying and installing software on individual machines, users now download
software from vendor websites or access it as a subscription-based cloud service over the Internet.
This approach allows software and data to be hosted on powerful servers in data centers, making
them accessible through standard web browsers. Major software vendors offer enterprise software
and complex business functions as services, with customers renting the functions instead of
purchasing them.
Service level agreements (SLAs) are essential for managing relationships with outsourcers or
technology service providers, defining responsibilities, performance measures, support options,
security provisions, and more.
Mash-up apps.
Mash-up apps are customizable software applications that combine interchangeable components
from various sources to create new and enhanced functionalities. These apps integrate with other
applications on the internet, allowing users to personalize their experiences and share information.
Web mashups, in particular, merge multiple online applications to provide greater value. Mobile apps,
which are widely used on smartphones and tablets, offer streamlined access to web content and
perform various tasks, influencing the design and function of traditional websites. They range from
games and social networking to business-oriented tools for document editing, system connectivity,
and online shopping.
5.5 What are the challenges of managing IT infrastructure and management solutions?
Creating and managing a coherent IT infrastructure raises multiple challenges: dealing with platform
and technology change (including cloud and mobile computing), management and governance, and
making wise infrastructure investments.
Dealing with platform infrastructure change.
To remain flexible in their IT infrastructure investments, firms need to consider scalability, which refers
to the ability of the system to expand and serve a large number of users without issues. When
planning hardware capacity, factors such as new applications, mergers, acquisitions, and changes in
business volume should be taken into account.
Firms using mobile and cloud computing platforms should develop policies, procedures, and tools for
managing these platforms, including mobile device management software for monitoring, securing,
and controlling mobile devices. Additionally, when using cloud computing and SaaS, firms should
establish contractual arrangements with vendors to ensure availability and information security that
align with corporate standards. Business management plays a crucial role in determining acceptable
levels of computer response time and availability for mission-critical systems.
Making wise infrastructure investments.
The management and governance of IT infrastructure is a crucial concern for information system
managers and CEOs. Key questions include determining whether IT decisions should be
decentralized or centrally controlled, clarifying the relationship between central and business unit
information systems management, and establishing a method for allocating infrastructure costs
among business units. Each organization must find its own answers to these questions based on its
specific requirements.
- Finding the right balance in IT infrastructure investment is crucial. Spending too much leads to idle
resources and financial strain, while spending too little hampers business services and
competitiveness.
- The rent-versus-buy decision for IT infrastructure components, including cloud services, should be
carefully evaluated considering security, impact on business processes, and costs.
- Total cost of ownership (TCO) analysis helps determine the actual cost of specific technology
implementations, including hardware, software, administration, support, training, and integration.
- Centralization, standardization, and better management of hardware and software resources can
reduce administration costs and improve efficiency. Assessing market demand, aligning IT strategy
with business plans, and benchmarking against competitors are important factors in making wise
infrastructure investments.
Review Summary:
- IT infrastructure consists of shared technology resources, including hardware, software, and
services, that support a firm's information system applications.
- The stages of IT infrastructure evolution are the mainframe era, PC era, client/server era, enterprise
computing era, and cloud/mobile computing era, driven by factors such as Moore's Law, the Law of
Mass Digital Storage, and Metcalfe's Law.
- Components of IT infrastructure include computer hardware, operating systems, enterprise software,
networking and telecommunications, data management, internet platforms, and consulting services.
- Current trends in computer hardware platforms include mobile computing, quantum computing,
consumerization of IT, virtualization, cloud computing, edge computing, multicore processors, and
green computing.
- Software platforms and trends encompass open source software, Linux, Java and JavaScript,
HTML5, web services, software outsourcing, software as a service (SaaS), mashups, and mobile
apps.
- Challenges in IT infrastructure management include dealing with platform and infrastructure
changes, governance, and making wise investments. Solutions involve strategic planning, competitive
analysis, total cost of ownership (TCO) evaluation, cloud computing adoption, mobile device
management (MDM), and security measures.
Review Questions:
5.1. What is IT infrastructure, and what are the stages and drivers of IT infrastructure
evolution?
• Define IT infrastructure from both a technology and a services perspective.
• List each of the eras in IT infrastructure evolution and describe its distinguishing characteristics.
• Define and describe the following: web server, application server, multitiered client/ server
architecture
• Describe Moore's Law and the Law of Mass Digital Storage.
• Describe how network economics, declining communications costs, and technology standards affect
IT infrastructure.
Answer:
IT infrastructure refers to technology resources and services that support a firm's information
system applications. The stages of IT infrastructure evolution include the mainframe era, PC
era, client/server era, enterprise computing era, and cloud/mobile computing era. Moore's
Law and the Law of Mass Digital Storage describe the exponential increase in processing
power, decline in computing costs, and decrease in data storage costs. Network economics,
declining communication costs, and technology standards drive IT infrastructure evolution.
5.2. What are the components of IT infrastructure?
• List and describe the components of IT infrastructure that firms need to manage.
Answer:
Components of IT infrastructure include computer hardware platforms, operating system
platforms, enterprise software platforms, networking and telecommunications platforms, data
management software, internet platforms, and consulting services and systems integrators.
Real-life examples of the components of IT infrastructure are:
1. Computer Hardware Platforms: Examples include desktop computers, laptops, servers,
storage devices, and mobile devices like smartphones and tablets. Companies like Dell, HP,
Lenovo, and Apple manufacture and provide these hardware platforms.
2. Operating System Platforms: Examples include Microsoft Windows, macOS, Linux, and
UNIX. These operating systems provide the foundation for running software applications and
managing hardware resources.
3. Enterprise Software Platforms: Examples include SAP, Oracle, Salesforce, and Microsoft
Dynamics. These platforms offer comprehensive software solutions for managing various
aspects of business operations such as customer relationship management (CRM),
enterprise resource planning (ERP), and supply chain management (SCM).
4. Networking and Telecommunications Platforms: Examples include Cisco, Juniper
Networks, and Huawei. These companies provide networking equipment and technologies
such as routers, switches, and telecommunications infrastructure to facilitate communication
and data transfer within and between organizations.
5. Data Management Software: Examples include Oracle Database, Microsoft SQL Server,
and MySQL. These software platforms enable efficient storage, retrieval, and management of
large volumes of structured and unstructured data.
6. Internet Platforms: Examples include cloud computing platforms like Amazon Web Services
(AWS), Microsoft Azure, and Google Cloud Platform. These platforms provide on-demand
access to scalable computing resources, storage, and services over the internet.
7. Consulting Services and Systems Integrators: Examples include Accenture, IBM Global
Services, and Deloitte. These firms offer consulting, implementation, and integration services
to help organizations plan, design, and implement IT infrastructure solutions tailored to their
specific needs.
5.3. What are the current trends in computer hardware platforms?
• Describe the evolving mobile platform, consumerization of IT, and cloud computing.
• Explain how businesses can benefit from virtualization, green computing, and multicore processors.
Answer:
Current trends in computer hardware platforms include the evolving mobile platform,
consumerization of IT, and cloud computing. Businesses can benefit from virtualization, which
enables efficient resource utilization, green computing practices for minimizing environmental
impact, and multicore processors for enhanced performance.
5.4. What are the current computer software platforms and trends?
• Define and describe open source software and Linux and explain their business benefits.
• Define Java, JavaScript, HTML, and HTML5 and explain why they are important.
• Define and describe web services and the role played by XML.
• Name and describe the three external sources for software.
• Define and describe software mashups and apps.
Answer:
Open source software is community-produced and downloadable for free. Linux is an open
source operating system used widely for running web servers. Java, JavaScript, HTML, and
HTML5 are important software components for web applications. Web services are loosely
coupled software components that work across applications and operating systems, often
utilizing XML. External sources for software include software packages, outsourcing custom
application development, and renting online software services (SaaS). Software mashups
combine different services, and apps refer to software applications running on mobile devices.
5.5. What are the challenges of managing IT infrastructure and management solutions?
• Describe what is meant by the term scalability.
• Explain why the level of IT infrastructure investment is a crucial decision for an organization.
Answer:
Challenges in managing IT infrastructure include dealing with platform and infrastructure
changes, governance, and making wise investments. Scalability refers to the ability to handle
increasing demands. The level of IT infrastructure investment is crucial as it can impact a
firm's performance. Solutions involve strategic planning, competitive analysis, total cost of
ownership evaluation, cloud computing adoption, mobile device management, and security
measures.
Discussion Questions
5.6 Why is selecting computer hardware and software for the organization an important
management decision? What management, organization, and technology issues should be
considered when selecting computer hardware and software?
Answer:
Selecting computer hardware and software is important as it directly impacts an
organization's operations. Management needs to consider factors like compatibility,
performance, cost, and support. Organizational factors include user requirements and IT
strategy, while technology factors involve scalability, integration, and security.
5.7 Should organizations use software service providers for all their software needs?
Why or why not? What management, organization, and technology factors should be considered
when making this decision?
Answer:
Whether organizations should use software service providers depends on their specific
needs. Factors to consider include cost, customization requirements, data security, and
integration with existing systems. Management, organization, and technology factors play a
role in making this decision.
5.8 What are the advantages and disadvantages of cloud computing?
Answer:
Cloud computing offers advantages such as scalability, cost-efficiency, and flexibility. However,
disadvantages include potential security risks, dependency on internet connectivity, and limited
control over infrastructure. Management needs to carefully assess these factors and consider the
specific needs and requirements of the organization before adopting cloud computing.
Hands-On MIS Projects.
Management Decision Problems
5.9 The University of Pittsburgh Medical Center (UPMC) relies on information systems to operate 19
hospitals, a network of other care sites, and international and commercial ventures. Demand for
additional servers and storage technology was growing by 20 percent each year. UPMC was setting
up a separate server for every application, and its servers and other computers were running a
number of different operating systems, including several versions of Unix and Windows. UPMC had to
manage technologies from many different vendors, including Hewlett-Packard (HP), Sun
Microsystems, Microsoft, and IBM. Assess the impact of this situation on business performance. What
factors and management decisions must be considered when developing a solution to this problem?
Answer:
The situation at UPMC, with separate servers for each application and a diverse range of
operating systems and technologies, can have a significant impact on business performance.
Some potential impacts include increased complexity, higher costs for hardware and
maintenance, interoperability challenges, security vulnerabilities, and difficulties in managing
and supporting the IT infrastructure.
To address this situation, several factors and management decisions need to be considered:
1. Standardization: UPMC should evaluate the feasibility of standardizing their technology
infrastructure by consolidating servers, operating systems, and vendors. This can simplify
management, reduce costs, improve interoperability, and enhance security.
2. Technology rationalization: UPMC needs to assess their current technology portfolio and
identify redundancies, outdated systems, and inefficient processes. They should prioritize the
consolidation or retirement of legacy systems and focus on adopting more modern, efficient
technologies.
3. Vendor management: UPMC should review their vendor relationships and determine if
there are opportunities to consolidate vendors or negotiate better terms. Streamlining vendor
partnerships can lead to cost savings, improved support, and better integration capabilities.
4. Virtualization and cloud computing: UPMC should explore the potential of virtualization and
cloud computing technologies to optimize their infrastructure. Virtualization can increase
resource utilization and flexibility, while cloud computing can provide scalable and costeffective solutions.
5. Security and data management: With a complex and diverse infrastructure, UPMC must
prioritize security measures, including network segmentation, access controls, encryption,
and regular vulnerability assessments. They should also establish effective data management
practices to ensure data integrity, availability, and compliance with regulatory requirements.
6. IT governance: UPMC needs to establish clear IT governance structures and processes to
oversee technology decisions, prioritize investments, and align IT initiatives with business
objectives. This includes developing IT policies, standards, and guidelines to guide
infrastructure management and decision-making.
7. Change management: Implementing changes to the infrastructure requires effective
change management practices, including communication, training, and stakeholder
engagement. UPMC should develop a comprehensive plan to minimize disruptions and
ensure smooth transitions.
By addressing these factors and making informed management decisions, UPMC can
improve business performance by reducing complexity, enhancing efficiency, lowering costs,
improving security, and enabling better integration and collaboration across their healthcare
ecosystem.
5.10 Qantas Airways, Australia's leading airline, faces cost pressures from high fuel prices and lower
levels of global airline traffic. To remain competitive, the airline must find ways to keep costs low while
providing a high level of customer service. Qantas had a 30-year-old data center. Management had to
decide whether to replace its IT infrastructure with newer technology or outsource it. What factors
should be considered by Qantas management when deciding whether to outsource? If Qantas
decides to outsource, list and describe points that should be addressed in a service level agreement
Improving Decision Making: Using a Spreadsheet to Evaluate Hardware and Software Options
Software skills: Spreadsheet formulas
Business skills: Technology pricing
Answer:
When deciding whether to outsource its IT infrastructure, Qantas management should
consider the following factors:
1. Cost: Evaluate the cost implications of outsourcing compared to replacing the existing
infrastructure. Consider upfront costs, ongoing maintenance expenses, and potential cost
savings or cost overruns associated with outsourcing.
2. Expertise and Resources: Assess the availability of skilled resources and expertise within
the organization to manage and maintain the IT infrastructure effectively. Determine whether
outsourcing can provide access to specialized knowledge and capabilities that are not readily
available internally.
3. Scalability and Flexibility: Consider the scalability and flexibility requirements of Qantas's IT
infrastructure. Determine if outsourcing can offer the necessary scalability to accommodate
future growth or fluctuations in demand, and if it can provide flexibility to adapt to changing
business needs.
4. Risk Management: Evaluate the risks associated with outsourcing, such as data security,
data privacy, and compliance. Assess the capabilities of potential outsourcing partners to
mitigate these risks effectively and comply with relevant regulations.
5. Service Quality: Assess the potential impact on service quality and customer experience.
Evaluate the track record and reputation of potential outsourcing providers in delivering highquality services and meeting service level agreements (SLAs).
6. Business Alignment: Consider whether outsourcing aligns with Qantas's strategic
objectives and core competencies. Evaluate the impact on the organization's ability to
innovate, differentiate, and maintain control over critical IT functions.
7. Transition and Change Management: Evaluate the complexity and potential challenges
involved in transitioning from an in-house infrastructure to an outsourced model. Consider the
required timeframe, dependencies, communication strategies, and potential disruptions to
ongoing operations.
If Qantas decides to outsource, the following points should be addressed in a service level
agreement (SLA):
1. Scope of Services: Clearly define the services to be provided by the outsourcing partner,
including infrastructure management, maintenance, support, security, disaster recovery, and
any additional services required.
2. Performance Metrics: Define measurable performance metrics and key performance
indicators (KPIs) that align with Qantas's business objectives. This includes metrics for
availability, response time, uptime, data backup, and security incident response.
3. Service Level Targets: Set specific targets for each performance metric and define
acceptable service levels. These targets should be realistic, achievable, and aligned with
Qantas's expectations and requirements.
4. Reporting and Communication: Specify the frequency and format of performance reports,
as well as the communication channels between Qantas and the outsourcing provider.
Establish procedures for issue escalation and resolution.
5. Data Security and Privacy: Clearly define the security and privacy requirements for
Qantas's data. Specify the measures and controls that the outsourcing provider must
implement to protect sensitive information and comply with relevant regulations.
6. Disaster Recovery and Business Continuity: Define the disaster recovery and business
continuity expectations and procedures. Ensure that the outsourcing partner has robust plans
and capabilities to ensure the availability and recovery of IT services in case of disruptions.
7. Contractual Obligations: Clearly state the rights, responsibilities, and obligations of both
Qantas and the outsourcing provider. Include terms regarding termination, dispute resolution,
intellectual property rights, confidentiality, and compliance with laws and regulations.
By addressing these points in the service level agreement, Qantas can establish clear
expectations, ensure accountability, and maintain a high level of service quality while
outsourcing its IT infrastructure.
5.11 In this exercise, you will use spreadsheet software to calculate the cost of desktop systems,
printers, and software. Use the Internet to obtain pricing information on hardware and software for an
office of 30 people. You will need to price 30 PC desktop systems (monitors, computers, and
keyboards) manufactured by Lenovo, Dell, and HP. (For the purposes of this exercise, ignore the fact
that desktop systems usually come with preloaded software packages.) Also obtain pricing on 15
desktop printers manufactured by HP, Canon, and Brother. Each desktop system must satisfy the
minimum specifications shown in tables that you can find in MyLab MIS.
Also obtain pricing on 30 licenses or copies of the most recent versions of Microsoft Office 365
Business and Apache Open Office (formerly Oracle Open Office) and on 30 copies of Microsoft
Windows 10 Pro. Each desktop productivity solution should contain software for word processing,
spreadsheets, database, and presentations. Prepare a spreadsheet showing your research results for
the desktop system, printer, and software combination offering the best performance and pricing per
worker over a two-year period. Because every two workers share one printer (15 printers/30 systems),
your calculations should assume only half a printer cost per worker.
Improving Decision Making: Using Web Research to Budget for a Sales Conference
Software skills: Internet-based software
Business skills: Researching transportation and lodging costs
Answer:
5.12 The Foremost Composite Materials Company is planning a two-day sales conference for
October 19-20, starting with a reception on the evening of October 18. The conference consists of allday meetings that the entire sales force, numbering 120 sales representatives and their 16 managers,
must attend. Each sales representative requires his or her own room, and the company needs two
common meeting rooms, one large enough to hold the entire sales force plus a few visitors (200) and
the other able to hold half the force. Management has set a budget of $215,000 for the
representatives' room rentals. The company would like to hold the conference in either Miami or
Marco Island, Florida, at a Hilton- or Marriott owned hotel.
Use the Hilton and Marriott websites to select a hotel in whichever of these cities would enable the
company to hold its sales conference within its budget and meet its sales conference requirements.
Then locate flights arriving the afternoon prior to the conference. Your attendees will be coming from
Los Angeles (51), San Francisco (30), Seattle (22), Chicago (19), and Pittsburgh (14). Determine
costs of each airline ticket from these cities. When you are finished, create a budget for the
conference. The budget will include the cost of each airline ticket, the room cost, and $70 per
attendee per day for food. Collaboration and Teamwork Project Evaluating Server and Mobile
Operating Systems 5-13 Form a group with three or four of your classmates. Choose server or mobile
operating systems to evaluate. You might research and compare the capabilities and costs of Linux
versus Unix or the most recent version of the Windows operating system for servers. Alternatively,
you could compare the capabilities of the Android mobile operating system with iOS for the iPhone. If
possible, use Google Docs and Google Drive or Google Sites to brainstorm, organize, and develop a
presentation of your findings for the class
Project JEDI: A Cloud of Controversy CASE STUDY.
The U.S. military is looking to unify its information in the cloud to support the deployment of remote
sensors, autonomous weapons, and AI applications. The Department of Defense's Project JEDI aims
to create a unified cloud infrastructure across the entire military, replacing branch-specific systems
with a more efficient enterprise model. The JEDI program calls for a $10 billion government contract
to a single cloud computing vendor.
The JEDI contract set off a competition among major tech companies like Amazon, Microsoft, Oracle,
IBM, and Google. Oracle and IBM filed protests claiming favoritism toward Amazon and Microsoft, but
these were dismissed. Ultimately, Microsoft was awarded the contract in October 2019. However, the
process faced controversies and legal challenges, with Amazon alleging conflicts of interest.
The JEDI project is expected to have a significant impact on cloud innovation within the U.S.
government and across the private sector. Cloud computing has become crucial for digital
transformation and emerging technologies. The Pentagon's adoption of a better enterprise cloud will
enhance security, support the expansion of AI systems, and have positive consequences beyond its
original scope.
Overall, the JEDI contract represents a major step toward modernizing the U.S. military's IT
infrastructure and leveraging cloud technology to improve efficiency and data-driven decision-making.
Case Study Questions:
5.14 Describe the JEDI Project. Why is it so important? What problems was it meant to solve?
The JEDI Project is the U.S. Department of Defense's initiative to modernize its IT infrastructure
through a unified cloud computing platform, improving data flow and decision-making for combat
troops.
5.15 What management, organization, and technology issues are raised by this project?
The JEDI Project raises management challenges in coordinating stakeholders and organization-wide
adoption, as well as technology issues related to data security, integration, and staying up-to-date
with emerging technologies.
5.16 Should the JEDI contract be awarded to a single vendor? Why or why not?
Whether the JEDI contract should be awarded to a single vendor is debatable, with proponents citing
reduced complexity and better interoperability, while others argue for a multi-vendor approach to
avoid dependency and encourage innovation.
Chapter 6: Foundations of Business Intelligence: Databases and Information Management.
Astro - Leveraging for customer-driven Service.
Astro, the leading Malaysian satellite television broadcaster, faces competition from local and
international firms in the changing media landscape. To address these challenges, Astro leverages
customer data from multiple touchpoints to gain insights into customer behavior. However, their
existing infrastructure and data practices hindered efficient data management and analysis.
Astro invested in a cloud-based data lake, the Astro Data Lake, built on Amazon Web Services
(AWS). This data lake aggregates data from various sources, including viewing information and
interactions across platforms. AWS provides scalable solutions and features such as easy
deployment, search functionality, user authentication, data transformation, and analytics.
The Astro Data Lake integration has allowed the organization to break down analytics silos, introduce
data quality standards, and enable precise multi-channel advertising and personalized
recommendations. With nearly 5.7 million subscribers and content delivery to around 24 million
people, Astro has expanded its services with streaming platforms like Astro GO, HBO GO, and iQIYI,
attracting over 2.6 million subscribers.
Astro's centralization of data highlights the importance of effective data management in the face of
multiple data sources and platforms. Considerations for firms moving to a cloud-based infrastructure
like Astro's include cloud security, employee training, and alignment of business processes.
Reviewing current processes is necessary to align with the capabilities of a centralized repository.
Data analytics and AI services like Amazon's Athena will benefit Astro by improving decision-making
and providing a comprehensive understanding of customers.
What considerations should a firm have when moving to a cloud-based infrastructure such as
Astro's?
Considerations include cloud security, employee training, and alignment of business
processes.
Why is it necessary to review current business processes?
Reviewing processes is necessary to align them with the capabilities of a centralized
repository and optimize efficiency in the new infrastructure.
How will data analytics benefit Astro, and how will AI services such as Amazon's Athena
facilitate this?
Data analytics will improve decision-making and provide a comprehensive understanding of
customers. AI services like Amazon's Athena will facilitate data processing and analysis for
valuable insights.
6.1 What are the problems of managing data resources in a traditional file environment?
An effective information system provides accurate, timely, and relevant information, but many
businesses lack such information due to poorly organized and maintained data. Data management is
crucial to address this issue. This involves understanding how information systems arrange data and
traditional methods of file management.
A computer system organizes data in a hierarchy, from bits and bytes to fields, records, files, and
databases. Bits represent the smallest unit of data, bytes represent characters, fields group
characters into words or numbers, records group related fields, files group records of the same type,
and databases consist of related files. Records describe entities, which can be people, places, things,
or events, and attributes are the characteristics or qualities of an entity stored in fields.
Problems with the Traditional file environment.
The traditional file environment in organizations led to problems such as data redundancy,
inconsistency, program-data dependence, inflexibility, poor data security, and an inability to share
data among applications.
Data redundancy and inconsistency.
Data redundancy and inconsistency occur when duplicate data is stored in multiple locations, leading
to wastage of storage resources and inconsistencies in attribute values, such as different names or
coding systems used for the same data across different systems in an organization.
Program-data dependence.
Program-data dependence in a traditional file environment means that changes in programs
necessitate corresponding changes to the data they access, leading to costly modifications and
potential disruptions in system functionality.
Lack of Flexibility.
Traditional file systems lack the flexibility to provide ad hoc reports or address unforeseen information
needs promptly, requiring significant time and resources for data retrieval and compilation.
Poor Security.
Poor security in data management results in a lack of control and oversight, making it difficult for
management to track data access, changes, and unauthorized dissemination.
Lack of data sharing and flexibility.
Lack of data sharing and flexibility in a traditional file system inhibits the ability to relate information
across different files and organizational areas, hindering timely access and impeding the free flow of
information. Inconsistencies in data values further erode trust in the system's accuracy.
What are the major capabilities of a database system (DBMS), and why is a relational Database
Management system so powerful?
Database technology resolves issues in traditional file organization by centralizing and controlling
redundant data, allowing efficient data organization and serving multiple applications through a single
database. This eliminates the need for separate files and systems for each application, promoting
data consistency and accessibility.
How a DBMS solves the problems of a traditional file Environment:
A DBMS solves the problems of a traditional file environment by reducing data redundancy and
inconsistency, decoupling programs and data, increasing access and availability of information,
reducing program development and maintenance costs, and enabling centralized data management
and sharing throughout the organization.
Relational DBMS.
Relational DBMS organize data in tables with rows and columns, using primary and foreign keys to
establish relationships between entities. Each table represents an entity, and fields within the table
store attributes. Primary keys uniquely identify records, while foreign keys provide links between
tables for data retrieval and reference.
Example, Select records (rows) from the PART table where the Part_Number equals 137 or 150. The
join operation combines relational tables to provide the user with more information than is available in
individual tables. In our example, we want to join the now-shortened PART table (only parts 137 or
150 will be presented) and the SUPPLIER table into a single new table.
To select records from the PART table where the Part_Number equals 137 or 150 in SQL, you
can use the following query:
SELECT *
FROM PART
WHERE Part_Number = 137 OR Part_Number = 150;
To join the PART table (filtered for parts 137 or 150) with the SUPPLIER table into a single new
table, you can use the following query:
SELECT *
FROM PART
JOIN SUPPLIER ON PART.Supplier_Number = SUPPLIER.Supplier_Number
WHERE PART.Part_Number = 137 OR PART.Part_Number = 150;
The project operation creates a subset consisting of columns in a table, permit ting the user to
create new tables that contain only the information required. In our example, we want to
extract from the new table only the following columns: Part_Number, Part_Name,
Supplier_Number, and Supplier_Name.
CREATE TABLE NewTable AS
SELECT Part_Number, Part_Name, Supplier_Number, Supplier_Name
FROM YourTableName;
Capabilities of a DBMS:
A DBMS provides capabilities for organizing, managing, and accessing data, including a data
definition language and data manipulation language. It also utilizes a data dictionary to store
definitions of data elements and their characteristics, which can range from basic field properties to
more extensive information such as ownership, security, and usage details in large corporate
databases.
Querying and reporting:
A DBMS provides tools for accessing and manipulating data, including a data manipulation language
(such as SQL) for retrieving and modifying data. Users can create queries to extract specific
information from the database, and DBMS like Microsoft Access offer user-friendly tools for query
building. Additionally, DBMS often have report generation capabilities, allowing data to be presented
in a structured format. Tools like Crystal Reports are commonly used for generating reports, and
DBMS like Access also offer features for developing desktop system applications, including data entry
screens and transaction processing logic.
Designing Databases:
Designing databases involves understanding data relationships, types, usage, and organizational
needs, and requires both a conceptual design representing the business perspective and a physical
design showing the actual arrangement on storage devices.
An Unnormalized Database:
Normalization and Entity-Relationship Diagrams.
Conceptual database design groups data elements and identifies relationships and efficient data
groupings based on business requirements. Normalization is the process of streamlining complex
data structures to minimize redundancy and awkward relationships. Referential integrity rules enforce
consistent relationships between tables in a relational database.
Entity-relationship diagrams illustrate the relationships between entities in the database. A welldesigned data model is crucial for effective system performance and accurate data representation.
Famous Footwear faced challenges in achieving its inventory management goal due to an
inadequately designed database, which hindered their ability to adjust store inventory quickly. Their
existing database was primarily geared towards generating standard reports rather than responding to
market changes. To address this, the company built a new database that improved organization of
sales and inventory data for better analysis and inventory management.
The lines connecting the boxes represent relationships. A line connecting two entities that ends in two
short marks designates a one-to-one relationship. A line connecting two entities that ends with a
crow's foot topped by a short mark indicates a one-to-many relationship. Figure 6.11 shows that one
ORDER can contain many LINE_ITEMs. (A PART can be ordered many times and appear many
times as a line item in a single order.) Each PART can have only one SUPPLIER, but many PARTs
can be provided by the same SUPPLIER.
Non-Relational Databases, Cloud Databases, and Blockchain.
Relational databases have been the standard for over 30 years, but the rise of cloud computing and
the need to handle massive data volumes have led to the emergence of non-relational "NoSQL"
databases. These flexible databases, such as Oracle NoSQL Database and Amazon's SimpleDB, are
designed for managing large datasets across distributed systems and are particularly useful for
analyzing structured and unstructured data from sources like web and social media.
AstraZeneca utilized MongoDB NoSQL database to accelerate genome sequencing and develop
disease-fighting drugs by analyzing unstructured data from disparate systems, enabling them to
uncover previously unnoticed links and patterns.
Cloud Databases and Distributed Databases.
Cloud computing vendors like Amazon and Google offer relational database engines and distributed
database technologies as cloud services. A distributed database is one that is stored in multiple
physical lo cations. Amazon RDS provides various database engines, while Google's Spanner
enables storing and synchronizing data across multiple locations globally. These cloud-based data
management services offer cost savings and scalability for businesses, making them an attractive
option for database capabilities.
Blockchain.
Blockchain is a distributed database technology that enables secure and instant transactions without
a central authority. It uses encryption, authentication, and smart contracts to ensure legitimacy and
immutability of recorded transactions. Blockchain offers benefits such as cost reduction,
standardization, and simplified integration for participating firms, making it attractive for various
applications including finance, supply chain, and healthcare.
New Cloud Database Tools Help Vodafone Fiji Make Better Decisions.
Vodafone Fiji faced challenges in analyzing customer data and providing better deals. They adopted
Oracle Autonomous Data Warehouse and Oracle Analytics Cloud to efficiently manage and analyze
data, resulting in faster queries and the ability to target customers with personalized promotions. They
achieved significant time savings and improved decision-making capabilities.
Case Study Questions:
1. Define the problem faced by Vodafone Fiji. What management, organization, and technology
factors contributed to the problem?
The problem faced by Vodafone Fiji was their inability to efficiently analyze customer data and
provide targeted deals. This was due to various management, organization, and technology factors.
The company lacked computing power, storage, and data management tools to analyze data quickly.
Additionally, the acquisition of other telecommunication companies led to a significant increase in data
volume and complexity, with different types of data in different systems and formats.
2. Evaluate Oracle Autonomous Data Warehouse and Oracle Analytics Cloud as a solution for
Vodafone Fiji.
Oracle Autonomous Data Warehouse and Oracle Analytics Cloud provided an effective solution for
Vodafone Fiji. The Autonomous Data Warehouse offered a fully managed and scalable cloud service
optimized for data warehousing workloads. It eliminated the need for specialized database
management skills and significantly reduced implementation time. Oracle Analytics Cloud allowed
Vodafone Fiji to collect, transform, and analyze data from various sources, enabling self-service
capabilities and empowering users to visualize and discover insights.
3. How did the new Oracle tools change decision making at Vodafone Fiji?
The new Oracle tools revolutionized decision-making at Vodafone Fiji. They enabled the company to
obtain insights from collected data and adjust promotions based on changing market dynamics.
Decision-makers had access to more than 50 rich reports within minutes, queries were completed
significantly faster, and data mining procedures and aggregation queries were performed in a fraction
of the time. This improved speed and accuracy allowed Vodafone Fiji to target customers at risk of
cancelling services, optimize service offerings, and create personalized promotions
4. Was using cloud services advantageous for Vodafone Fiji? Explain your answer.
Using cloud services proved advantageous for Vodafone Fiji. The adoption of Oracle's cloud-based
solutions provided several benefits. Firstly, it eliminated the need for expensive upgrades to onpremises systems, reducing costs. The elasticity of the cloud allowed for scalability, ensuring
resources could be increased or decreased as needed. The automation of routine tasks freed up
database administrators for more strategic work. Additionally, the cloud-based platform facilitated data
integration from diverse sources and provided self-service capabilities for users. Overall, the cloud
services offered flexibility, cost-effectiveness, and enhanced data management and analysis
capabilities, making them advantageous for Vodafone Fiji's operations.
6.3 What are the principal tools and technologies for accessing information from databases to
improve business performance and decision making?
Databases are essential for businesses to track transactions and enable informed decision-making by
providing valuable insights on product popularity, customer profitability, and overall business
efficiency.
The Challenge of Big Data.
Big data presents challenges due to its large volume, diverse types and sources, and the speed at
which it is generated, requiring new technologies and tools to manage and analyze. Businesses are
interested in big data for its potential to reveal patterns and provide insights, but it is crucial to ask the
right questions and understand its limitations before investing in capturing, storing, and analyzing it.
Interactive Session: Big data Baseball.
Big data and analytics have transformed the game of baseball, with teams using data to make
decisions about player recruitment, development, and game strategies. Moneyball introduced the
concept of using statistical analysis to identify undervalued skills, enabling the Oakland Athletics to
compete against wealthier teams. Big data has since been adopted by all Major League Baseball
teams, impacting player evaluation and emphasizing skills like fielding and base running. However,
effectively utilizing big data remains a challenge, as it requires interpretation and separating
actionable information from noise. Traditional evaluation methods, along with data, scouting,
coaching, and player experience, are still considered vital for successful teams.
1. How did information technology change the game of baseball? Explain.
Information technology revolutionized baseball by introducing big data and analytics. Teams began
using advanced statistical analysis to evaluate players, identify undervalued skills, and make datadriven decisions. This shift transformed player recruitment, game strategies, and performance
evaluation, challenging traditional beliefs and emphasizing the importance of data-driven insights.
2. How did information technology affect decision making at MLB teams? What kinds of
decisions changed as the result of using big data?
Information technology significantly impacted decision making at MLB teams. Big data and analytics
provided teams with a wealth of information about player performance, opponent analysis, and game
strategies. These insights influenced decisions regarding player recruitment, line-up configurations,
defensive shifts, pitch selection, and more. Teams started relying on data-driven approaches to
optimize player performance and improve overall team success.
3. How much should baseball rely on big data and analytics? Explain your answer.
The reliance on big data and analytics in baseball should be a balanced approach. While data-driven
insights have proven valuable, traditional evaluation methods, scouting, coaching, and player
experience still play important roles in decision making. Baseball is a complex sport with many
intangible factors, and solely relying on data may overlook certain nuances and individual strengths.
Therefore, a combination of statistical analysis and human expertise is crucial for making wellrounded decisions that consider both data-driven insights and the qualitative aspects of the game.
Business Intelligence infrastructure:
A modern business intelligence infrastructure integrates various tools, including data warehouses,
data marts, Hadoop, in-memory computing, and analytical platforms, to obtain concise and reliable
information from diverse data sources, including big data, both structured and unstructured, in large
quantities, with cloud services providing some of these capabilities.
Data warehouses and data Marts.
A data warehouse is a centralized database that stores current and historical data from various
operational systems, combined with external data, and transformed for reporting and analysis. It
provides access to data without allowing alterations and offers query tools, analytics, and reporting
capabilities. Alternatively, companies can create smaller data marts focused on specific user
populations or data subsets, such as marketing and sales data marts for customer information.
Hadoop.
Hadoop, an open-source software framework, is used by organizations to handle big data and
unstructured data by enabling distributed parallel processing across multiple inexpensive computers.
It includes services like HDFS for data storage, MapReduce for high-performance processing, and
HBase for rapid data access. Hadoop can handle various data types and scales, making it suitable for
analyzing large volumes of data and serving as a staging area for unstructured and semi structured
data before loading into a data warehouse. Major database vendors and other companies offer
Hadoop distributions and related tools for data management and analysis.
In Memory computing.
In-memory computing relies on a computer's RAM for data storage, enabling faster query response
times and eliminating bottlenecks compared to disk-based databases. It allows large datasets to be
stored entirely in memory, facilitating complex calculations in seconds. Advances in hardware
technology, such as powerful processors and falling memory prices, have made in-memory
processing possible. Leading in-memory database products include SAP HANA, Oracle Database InMemory, Microsoft SQL Server, and Teradata Intelligent Memory.
Data Mining:
Data mining involves discovering hidden patterns and relationships in large databases to provide
insights that cannot be obtained through traditional queries or OLAP. It enables decision-making by
predicting future behavior and offers various types of information, including associations, sequences,
classifications, clusters, and forecasts. Data mining applications exist in all functional areas of
business and can be used for customer profiling, one-to-one marketing campaigns, and making
profitable customer-focused decisions, as exemplified by Caesars Entertainment's success in
leveraging data mining for business intelligence and profitability.
Text mining and web mining:
Text mining and web mining are essential for analyzing unstructured data and extracting valuable
insights. Text mining tools enable businesses to discover patterns and relationships, summarize
information, and analyze text data from sources like emails, surveys, and social media to improve
decision-making. Web mining focuses on extracting knowledge from web content, structure, and user
interactions, providing businesses with valuable information about customer behavior, website
effectiveness, and marketing campaign success through content mining, structure mining, and usage
mining. These techniques help companies understand customer preferences, optimize marketing
strategies, and assess the impact of promotional activities.
Databases and the web:
Companies are increasingly using the web to make information from their internal databases available
to customers and partners. Web browsers allow users to access a company's website, which
communicates with the web server and passes requests for data to the database using HTML
commands. Middleware, such as application servers, facilitates the processing of transactions and
data access between the web server and the back-end database. Web access to internal databases
offers advantages like ease of use, lower costs, and the creation of new business models and
efficiencies, as seen with companies like ThomasNet.com and Facebook utilizing large web-enabled
databases.
6.4: Why are data governance and data quality assurance essential for managing the firm's
data resources?
Review Summary:
6-1 What are the problems of managing data resources in a traditional file environment?
The problems of managing data resources in a traditional file environment include data redundancy,
data inconsistency, lack of data sharing and integration, difficulty in data access and retrieval, and
limited data security and integrity.
6-2 What are the major capabilities of database management systems (DBMS), and why is a
relational DBMS so powerful?
The major capabilities of database management systems (DBMS) include data organization, data
storage and retrieval, data manipulation, data sharing and integration, data security, and data
independence. A relational DBMS is powerful because it provides a structured and flexible way to
organize data through tables, enforces data integrity through relationships, supports complex queries
and transactions, and allows for efficient data retrieval.
6-3: principal tools and technologies for accessing information from databases to improve
business performance and decision making?
The principal tools and technologies for accessing information from databases to improve business
performance and decision making include Structured Query Language (SQL) for querying and
manipulating data, data mining for discovering patterns and insights, online analytical processing
(OLAP) for multidimensional analysis, and data visualization tools for presenting data in a visual and
interactive manner.
6-4: Why are data governance and data quality assurance essential for managing the firm's
data resources?
Data governance and data quality assurance are essential for managing the firm's data resources
because they ensure that data is accurate, reliable, and accessible to those who need it. Data
governance establishes policies and procedures for managing data as an organizational resource,
while data quality assurance focuses on maintaining data accuracy, consistency, and completeness.
These practices prevent operational and financial problems caused by faulty data and support
informed decision making.
Discussion Questions:
6-5 It has been said there is no bad data, just bad management. Discuss the implications of
this statement.
This statement highlights the importance of data management in determining the quality and
usefulness of data. It suggests that data itself is not inherently good or bad, but it is the way it is
managed that determines its value. Effective data management practices, such as data governance,
data quality assurance, and proper database design, are essential for ensuring the accuracy, integrity,
and reliability of data.
The implications of this statement are:
1. Data management is critical: Organizations must invest in proper data management
practices to ensure that data is properly collected, stored, organized, and maintained. This
includes establishing data governance policies, implementing data quality checks, and
training personnel on data handling procedures.
2. Data is an organizational asset: Data should be treated as a valuable organizational asset.
Poor data management can lead to negative consequences, such as flawed decision-making,
inefficient operations, compliance issues, and reputational damage. On the other hand,
effective data management can provide organizations with a competitive advantage and
support strategic initiatives.
3. Responsibility lies with management: The responsibility for data management lies with
organizational management. They need to prioritize data management efforts, allocate
resources, and set clear guidelines and standards for data handling. Data management
should be seen as a shared responsibility across the organization, involving IT professionals,
data stewards, and end users.
4. Continuous improvement is necessary: Data management is an ongoing process that
requires continuous improvement. Organizations should regularly assess and enhance their
data management practices to adapt to changing business needs, technological
advancements, and evolving regulatory requirements.
6-6 To what extent should end users be involved in the selection of a database management
system and database design?
End users should be involved in the selection of a database management system (DBMS) and
database design to a significant extent. Involving end users ensures that their specific requirements,
preferences, and usability concerns are taken into account, leading to a more effective and userfriendly system. Here are some reasons for end user involvement:
1. User requirements: End users have first-hand knowledge of their data needs, workflows,
and reporting requirements. Their involvement helps identify specific functionalities and
features required from the DBMS to support their tasks.
2. User acceptance: By involving end users, organizations can gain their support and buy-in for
the chosen DBMS. This increases the likelihood of successful implementation and adoption.
3. Usability and user experience: End users can provide valuable insights into the usability
and user experience aspects of the DBMS. Their feedback on interface design, data entry
forms, reporting capabilities, and overall system usability can improve the system's
effectiveness and user satisfaction.
4. Data integrity and accuracy: End users are often responsible for entering and maintaining
data. Their involvement in database design ensures that data validation rules, data entry
guidelines, and data integrity checks are properly incorporated.
5. Change management: Involving end users in the selection and design process fosters a
sense of ownership and reduces resistance to change. It allows for effective communication,
training, and support during the implementation phase.
However, it is important to balance end user involvement with the expertise of database specialists
and IT professionals. Technical considerations, such as system performance, scalability, security, and
compliance, also need to be addressed. Collaboration between end users, business analysts, and IT
specialists is essential to strike the right balance and ensure a successful outcome.
6-7 What are the consequences of an organization not having an information policy?
The consequences of not having an information policy within an organization can be significant. Here
are some of the potential consequences:
1. Data security breaches: Without an information policy, organizations may lack guidelines
and procedures for protecting sensitive data. This increases the risk of data breaches,
unauthorized access, and loss of confidential information. The absence of security controls
and protocols leaves the organization vulnerable to internal and external threats.
2. Data inconsistency and quality issues: An information policy helps establish standards and
guidelines for data entry, storage, and management. Without such policies, data may lack
consistency and accuracy, leading to poor data quality. Inaccurate or inconsistent data can
result in flawed decision-making and operational inefficiencies.
3. Compliance and legal risks: Organizations operate within regulatory frameworks that
govern data privacy, security, and other aspects of information management. Without an
information policy, the organization may fail to comply with legal and regulatory requirements,
leading to penalties, legal disputes, and damage to reputation.
4. Lack of data governance: An information policy provides the foundation for data governance
practices within an organization. Without clear policies and responsibilities, data governance
may be ineffective or non-existent. This can lead to data silos, data duplication, poor data
sharing, and inconsistent data management practices.
5. Inefficient resource allocation: An information policy helps establish priorities and
guidelines for resource allocation, including data storage, backup, and archiving. Without a
policy, resources may be allocated inefficiently, leading to unnecessary costs or inadequate
resource provisioning.
6. Lack of user accountability: An information policy sets expectations and guidelines for user
behavior and responsibilities regarding information handling. Without a policy, users may not
be aware of their responsibilities, leading to careless handling of data, unauthorized sharing,
or misuse of information.
To mitigate these consequences, organizations should develop and implement a comprehensive
information policy that addresses data security, data quality, compliance, data governance, and user
responsibilities.
Case Study: Big Data in the Asia-Pacific Takes On the COVID-19 Pandemic:
During the COVID-19 pandemic, the Asia-Pacific region utilized big data to combat the virus. China,
Taiwan, and South Korea implemented measures such as strict lockdowns, social distancing, and
contact tracing using big data analytics. Pfizer and BioNTech developed the first authorized vaccine,
followed by Russia's Sputnik V vaccine. Big data played a crucial role in expediting vaccine
development by providing valuable insights.
Taiwan used AI and digital communication to track the virus's spread and provide real-time data to
citizens. Taiwan integrated health data with immigration and travel databases for effective tracking.
Malaysia also employed big data analytics, implementing movement control orders based on
healthcare data. The MySejahtera application assisted in monitoring the outbreak and contact tracing.
Big data proved instrumental in flattening the curve and improving disease management in the AsiaPacific countries. These successes highlight the importance of leveraging technology and acting
swiftly in response to crises.
Case Study Questions:
6-13: Describe the role of big data in flattening the COVID-19 pandemic curve in Taiwan and
Malaysia.
Big data played a crucial role in flattening the COVID-19 pandemic curve in Taiwan and Malaysia. In
Taiwan, big data, artificial intelligence (AI), and digital communication were utilized to track the spread
of the virus and provide real-time information to citizens. The integration of the National Health
Insurance (NHI) database with immigration and travel databases allowed for comprehensive tracking
and analysis. High-volume datasets were generated, enabling healthcare providers to access health
and travel data for tracking purposes. This facilitated the identification of high-risk individuals,
quarantine measures, and efficient resource allocation. Similarly, in Malaysia, big data analytics tools
were used to gather data from various healthcare divisions, enabling communal screenings, contact
tracing, and monitoring the impact of the virus. Movement control orders were implemented based on
the analysis of infected cases and risk categories obtained from the Ministry of Health database.
6-14: What features should be included in a mobile application intended to combat COVID-19,
such as MySejahtera?
A mobile application intended to combat COVID-19, similar to MySejahtera, should include several
key features. These features may include:
•
Personal information capture: Users should be able to input their personal details such as
name, contact number, address, and age.
•
Real-time data updates: The application should provide users with real-time information on
the current COVID-19 situation, including the number of cases, hotspots, and preventive
measures.
•
Check-in/check-out functionality: Users should be able to check-in and check-out when
entering or leaving public places. This data can be crucial for contact tracing purposes.
•
Contact tracing: The application should have the capability to trace and notify individuals who
have been in close contact with a confirmed COVID-19 case.
•
Reporting and self-assessment: Users should be able to report their health status, symptoms,
and any potential exposure to the virus. The application can provide self-assessment tools to
help users determine their risk level.
•
Data privacy and security: Strong data protection measures should be implemented to ensure
the privacy and security of users' personal information.
6-15: What are the challenges of big data in healthcare?
Big data in healthcare presents various challenges. Some of these challenges include:
•
Timeliness and data synchronization: Health information needs to be updated and
synchronized in a timely manner to provide accurate insights and support real-time decisionmaking.
•
Data ownership and privacy: Healthcare data legally belongs to individuals, raising concerns
about data ownership, consent, and privacy. Safeguards must be in place to protect sensitive
patient information.
•
Data heterogeneity: Healthcare data comes in different formats, including structured, semistructured, and unstructured data. Integrating and analyzing diverse data sources can be
challenging.
•
Data quality and completeness: Continuous data streams can result in incomplete or
inconsistent data. Ensuring data accuracy, completeness, and reliability is essential for
making informed decisions.
•
Data security and governance: Protecting healthcare data from unauthorized access,
breaches, and cyber threats is crucial. Robust security measures and governance
frameworks are necessary.
•
Technological infrastructure: Implementing big data analytics in healthcare requires robust
technological infrastructure, including data storage, processing power, and analytical tools.
•
Ethical considerations: Using big data in healthcare raises ethical concerns regarding
consent, data usage, and potential biases in data analysis and decision-making.
Addressing these challenges requires a comprehensive approach that combines technological
advancements, strong governance frameworks, data quality assurance, and ethical considerations in
the use of healthcare data.
Chapter 7: Telecommunications, the Internet, and Wireless Technology.
Alibaba Redefining Traditional Retailing.
Alibaba's Hema Supermarkets represent the "New Retail" concept that seamlessly combines digital
and physical retail. Through apps, facial recognition payment, self-checkout, and AI, Alibaba has
created an omnichannel experience that merges offline and online retail spaces. The Hema stores
serve as a test bed for Alibaba's strategy of integrating online, offline, logistics, and data in a single
value chain.
Customers engage with the store through the Hema app, providing valuable data on their purchases
and scanned products of interest. Using big data analytics, Alibaba mines this information to
personalize recommendations. Customers can view detailed product information, make purchases,
submit ingredient requests, and even have goods delivered within a 3-km radius through the app.
With 11,000 additional items available for purchase online, the Hema app blurs the lines between
offline and online retailing. Through internet and wireless technologies, Alibaba enhances the
customer's shopping experience while gaining deeper insights into their preferences and behavior.
Alibaba's utilization of wireless technologies and its Hema stores' seamless integration of physical and
online retail spaces have attracted customers and improved supply chain management. The entry of
e-commerce giants like Alibaba into brick-and-mortar retailing reshapes the industry. Leveraging
Alipay and smartphone apps, Alibaba provides a personalized shopping experience and extensive
product information through Wi-Fi technology, capitalizing on customer familiarity and enhancing the
retail experience.
How does wireless technology allow the organization to better understand its customers?
Wireless technology enables the organization to better understand its customers by providing
valuable data and insights. Through the use of smartphone apps and Wi-Fi technology, customer
interactions and behaviors can be tracked and analyzed. This includes information on purchases,
preferences, browsing patterns, and even physical movement within the store. By collecting and
analyzing this data, the organization can gain a deeper understanding of customer preferences and
behavior, allowing for personalized recommendations and targeted marketing strategies.
How will the use of web technology drive change across brick-and-mortar retailing?
The use of web technology in brick-and-mortar retailing drives change by bridging the gap between
offline and online experiences. It allows for a seamless integration of physical and digital elements,
creating an omnichannel approach. Web technology enables features such as mobile apps, QR code
scanning, digital inventories, and personalized recommendations. This enhances the overall shopping
experience, provides convenience to customers, and allows retailers to offer a wide range of products
and services beyond what is physically available in-store. The combination of web technology and
brick-and-mortar retailing leads to a more dynamic and customer-centric retail environment, adapting
to the changing demands and expectations of consumers.
7.1: What are the principal components of telecommunications networks and key networking
technologies?
Networking and the Internet have become essential for business operations, replacing traditional
communication methods with computers, email, text messaging, mobile devices, and wireless
networks for rapid communication with customers, suppliers, and employees.
Networking and Communication Trends.
Telephone and computer networks, historically separate, are now converging into a single digital
network due to telecommunications deregulation and technological advancements. Both voice and
data communication networks have become faster, more portable, and less expensive, with
broadband wireless platforms facilitating communication and internet access. The majority of the
world's population, around 3.5 billion people, are mobile internet users.
What is a computer Network?
A computer network is a connection of two or more computers, typically consisting of client
computers, a server computer, network interfaces, connection medium, network operating system,
and a hub or switch. Each computer has a network interface device to link it to the network, and the
network operating system manages communication and resources. Hubs and switches connect
network components, while routers enable communication with other networks like the Internet.
Software-defined networking (SDN) simplifies network management.
Networks in Large companies.
Large corporations with multiple locations and thousands of employees can create a corporate-wide
networking infrastructure by connecting their smaller networks. This infrastructure consists of
numerous interconnected local area networks, along with powerful servers supporting various
functions such as the corporate website, intranet, and potentially an extranet. The infrastructure also
includes mobile wireless networks for employees, as well as a separate telephone network that can
be replaced with internet telephones. The challenge lies in integrating diverse communication
networks and channels to enable seamless information flow within the organization.
Key Digital Networking Technologies.
Contemporary digital networks and the Internet rely on client/server computing, packet switching, and
standardized communication protocols like TCP/IP to connect and integrate diverse networks and
computers.
Client/server computing enables distributed processing power, connecting powerful clients to a
network server, and replacing centralized mainframe computing.
Packet switching efficiently breaks messages into packets for transmission over various channels,
reassembling them at their destinations.
TCP/IP, the worldwide standard, uses protocols like TCP and IP to establish connections, route data
packets, and ensure delivery between different hardware and software platforms, enabling
communication across diverse networks.
7.2. What are the different types of networks?
Analog signals represent continuous waveforms for audio communication, while digital signals use
discrete binary states of 1s and 0s. Modems convert digital signals to analog for transmission over
analog networks.
Local area networks (LANs) connect computers within a small radius, often using Ethernet as the
physical standard. LANs can be client/server-based or peer-to-peer.
Wide area networks (WANs) span larger distances, with the Internet being the most extensive WAN.
Metropolitan area networks (MANs) cover city areas and are between LANs and WANs in scope.
7.3. How do the internet and Internet technology work, and how do they support
communication and e-business?
What is the Internet?
The Internet is a vast global network of interconnected networks that originated as a project by the US
Department of Defense. It is the largest implementation of client/server computing, linking millions of
networks worldwide. Users access the Internet through Internet service providers (ISPs), which offer
various connection options such as DSL, cable, satellite, and T lines. Broadband connections have
largely replaced traditional dial-up connections, providing faster speeds ranging from 20 Mbps to over
900 Mbps. T1 and T3 lines offer dedicated high-speed connections with guaranteed service levels,
primarily used by businesses and government agencies. The Internet, however, operates on a "best
effort" basis without guaranteed service levels.
The Internet is built on the TCP/IP networking protocol suite, with each device assigned a unique IP
address. Messages sent over the Internet are divided into packets and reassembled at their
destination. The Domain Name System (DNS) converts domain names into IP addresses, making it
easier for users to access websites. Internet data traffic is carried over high-speed backbone
networks owned by telephone companies and governments, while local connection lines are owned
by regional providers.
The Internet is governed by professional organizations and government bodies, ensuring its efficient
operation and adherence to national laws. The Internet is transitioning to IPv6 to accommodate the
growing number of users and data transmission needs. Internet2 is an advanced networking
consortium serving universities, government agencies, and corporations, focusing on leading-edge
technologies and capabilities.
The rapid growth of internet users and data transmission has led to the need for a new version of IP
addressing called IPv6, which offers a significantly larger address space. IPv6 is compatible with most
modern devices and will gradually replace the older addressing system. Internet2 is an advanced
networking consortium that provides high-capacity networks and serves as a testing ground for
cutting-edge technologies that may eventually be adopted by the public internet, including
performance measurement tools, secure identity management, and high-bandwidth capabilities.
Internet Services and Communication Tools
The Internet is based on client/server technology, where individuals use client applications to interact
with data stored on servers. Clients can be PCs, smartphones, or tablets. Internet services include
email, chatting, instant messaging, discussion groups, Telnet, FTP, and the web. These services are
implemented by software programs that may run on a single server or distributed across multiple
machines.
Email allows for exchanging messages globally, while chatting and instant messaging enable live
interactive conversations. News groups are discussion boards for sharing information. Companies
may monitor employee online activity for productivity and ethical reasons, raising concerns about
employee privacy.
Voice Over IP.
Voice over IP (VoIP) technology allows voice transmission over the Internet or corporate networks,
bypassing traditional telephone networks and toll charges. Calls are transmitted digitally using packet
switching. VoIP can be accessed through a computer with a microphone and speakers or a VoIPenabled telephone.
Companies like Vonage and Skype offer VoIP services, reducing communication and network
management costs by 20 to 30 percent and eliminating the need for separate voice and data
networks. VoIP provides a unified infrastructure for both telecommunications and computing services.
Unified Communications.
Unified Communications refers to the integration of various communication modes, such as voice,
data, instant messaging, email, and electronic conferencing, into a single accessible service. This
technology allows users to seamlessly switch between different communication modes and provides
presence technology to indicate availability. Turning Point, a healthcare provider, has achieved agility
and cost savings by implementing Cisco Unified Communications Manager, which centralizes call
control and session management, enabling features like chat sessions escalating to phone calls for
improved collaboration.
Virtual Private Networks (VPNs).
Virtual Private Networks (VPNs) are secure and encrypted private networks created within the public
Internet. They allow organizations to establish secure and cost-effective communication channels,
enabling remote teams to connect and collaborate while protecting data from interception. VPNs
utilize protocols like Point-to-Point Tunneling Protocol (PPTP) to encrypt data and establish private
connections within the public network, providing a network infrastructure for combining voice and data
networks.
Interactive Session: Monitoring Employees on Networks:
The use of the Internet by employees for non-work-related activities is a significant issue affecting
productivity. Many companies have started monitoring employee internet and email usage to combat
this problem, often without the employees' knowledge. Monitoring tools from various vendors enable
companies to record online activities, such as searches, file transfers, keystrokes, chats, and
screenshots. Microsoft Corporation utilizes its Office 365 services to collect data on chats, emails, and
meetings to measure productivity and management effectiveness. While monitoring is legal, the
ethical implications remain a topic of debate.
Monitoring serves to address concerns about time loss, employee productivity, and revenue impact
due to personal internet usage. Excessive personal traffic can also disrupt network performance and
jeopardize data security. Companies fear adverse publicity, lawsuits, and the potential leakage of
confidential information. Some firms attempt to ban personal activities, restrict access to specific
websites, or implement strict monitoring policies. However, the decision to monitor employees should
consider the work culture and environment, as surveillance can undermine trust, commitment, and
motivation.
Consultants suggest that companies establish clear policies on employee email, social media, and
internet use. These policies should outline the permissible use of company facilities and specify the
extent of monitoring. Tailoring the rules to specific business needs and organizational cultures is
crucial. Investment firms may require access to external investment sites, while companies fostering
information sharing and innovation may find monitoring counterproductive. Ultimately, finding the right
balance between monitoring and privacy is essential for maintaining an efficient and positive
workplace.
Case Study Questions:
1. Should managers monitor employee email and Internet usage? Why or why not?
Managers should monitor employee email and Internet usage to ensure productivity, protect company
resources, and maintain a secure work environment. Monitoring helps address time-wasting activities,
potential legal liabilities, and data security risks.
2. Describe an effective email and web use policy for a company.
An effective email and web use policy should clearly state acceptable use guidelines, specify
prohibited activities (such as accessing inappropriate content or sharing confidential information),
address privacy expectations, and outline consequences for policy violations. It should also inform
employees about the company's right to monitor and collect data on their online activities.
3. Should managers inform employees that their web behavior is being monitored? Or should
managers monitor secretly? Why or why not?
Managers should inform employees that their web behavior is being monitored. Transparency builds
trust, promotes responsible behavior, and helps employees understand the reasons behind
monitoring. Secret monitoring may create a negative work environment, erode trust, and lead to legal
and ethical concerns.
The Web.
The web is a widely used Internet service that uses a client/server architecture and hypertext to store,
retrieve, format, and display information. Web pages are accessed through web browsers and are
formatted using Hypertext Markup Language (HTML). Web servers manage stored web pages and
deliver them to users' computers. Search engines play a crucial role in finding specific information on
the web, and their algorithms have evolved to understand user intent and provide relevant search
results. Visual search, semantic search, and intelligent agent shopping bots have emerged as new
features in web searching. Search engine marketing has become a major advertising platform,
allowing businesses to optimize their websites for higher search engine rankings and attract targeted
traffic.
Today's web enables collaboration, real-time user control, social participation, and user-generated
content. Technologies such as cloud computing, software mashups, blogs, RSS, wikis, and social
networks support these features. Blogs are personal websites with chronological entries, while wikis
allow collaborative content creation. Social networking sites facilitate the building of communities and
sharing of content. The future web includes advancements in semantic search, visual search, and the
Internet of Things (IoT), where everyday objects are connected to the internet. The growth of apps
within the mobile platform is also a significant trend. Cloud computing, ubiquitous connectivity, and
the transformation of the web into a seamless and interoperable whole are driving the future web.
Interactive Session: Talking Cars Make for Better Road Safety.
Toyota introduced the Intelligent Transportation System (ITS) Connect safety package, enabling
vehicles to communicate with each other and infrastructure. The system uses vehicle-to-vehicle (V2V)
and vehicle-to-infrastructure (V2I) wireless communication to exchange information about position,
speed, and more. It improves road safety by avoiding collisions, providing safety information to
drivers, and enabling cooperative adaptive cruise control. Different standards, such as DSRC and CV2X, are being adopted globally. Vehicular communications can reduce accidents, improve traffic flow
through platooning and green waves, and pave the way for autonomous driving. Concerns remain
about data security and privacy.
1. What are the pros and cons of the V2X technology?
Pros:
- Enhanced road safety through collision avoidance and warning systems.
- Improved traffic efficiency through coordinated traffic flow and platooning.
- Enables cooperative adaptive cruise control for smoother driving.
- Potential for reducing fuel consumption and pollution.
Cons:
- Requires widespread adoption and compatibility among vehicles and infrastructure.
- Dependence on reliable wireless communication and infrastructure support.
- Concerns about data security and privacy.
- Cost of implementing the technology in vehicles and infrastructure.
2. What can be done to speed up the adoption of V2X technology among vehicle owners?
To speed up the adoption of V2X technology among vehicle owners:
- Offer incentives or subsidies for vehicles equipped with V2X technology.
- Collaborate with automotive manufacturers to make V2X technology a standard feature in new
vehicles.
- Educate and raise awareness among vehicle owners about the benefits of V2X technology.
- Ensure interoperability and compatibility among different V2X standards.
- Develop regulations and policies that encourage the adoption and use of V2X technology.
3. What other applications can you think of for the ITS Connect?
Other applications for the ITS Connect technology:
- Emergency vehicle assistance: Provide real-time information and prioritize traffic signals to aid
emergency vehicles.
- Pedestrian safety: Warn drivers of pedestrians in the vicinity and enable pedestrian-to-vehicle
communication.
- Smart infrastructure management: Monitor and optimize the performance of roadside
infrastructure, such as streetlights and traffic signals.
- Traffic data collection and analysis: Gather data on traffic patterns, congestion, and road
conditions for urban planning and transportation management.
- Public transportation coordination: Facilitate communication between buses, trains, and other
public transportation systems to improve efficiency and passenger experience.
What are the principal technologies and standards for wireless networking, communication,
and Internet access?
Cellular Systems:
The principal technologies and standards for wireless networking and Internet access are Global
System for Mobile Communications (GSM), Code Division Multiple Access (CDMA), 3G, 4G (LTE and
WiMax), and the upcoming 5G, which offers gigabit data transmission, reduced delays, and increased
device connectivity for IoT and smart cities.
Wireless Computer Networks and Internet Access
Various technologies enable high-speed wireless Internet access for both PCs and mobile devices,
expanding Internet availability to previously uncovered areas and making ubiquitous (present,
appearing or found everywhere) computing a reality.
Bluetooth is a wireless networking standard that allows up to eight devices within a 10-meter range
to communicate using low-power, radio-based technology, enabling various devices like phones,
computers, and printers to connect and operate seamlessly without wires, benefiting both personal
and corporate applications, with significant cost savings for companies like FedEx.
Wi-Fi, also known as the 802.11 set of standards, enables wireless LANs and Internet access, with
various standards offering increasing transmission speeds (up to 1 Gbps with 802.11ac). Access
points act as bridges between wireless and wired networks, facilitating wireless Internet access in
public places through hotspots, while Wi-Fi networks face security challenges and potential
interference from other devices.
WiMax, or IEEE Standard 802.16, is a technology that offers long-range wireless access of up to 31
miles with speeds of 30-40 Mbps (up to 1 Gbps for fixed stations), addressing the lack of Wi-Fi or
fixed broadband connectivity in certain areas.
Radio Frequency Identification (RFID) and Near Field Communication (NFC).
RFID systems use tags with embedded microchips to track goods in the supply chain without line-ofsight contact. Walmart utilizes RFID to optimize inventory control, and NFC technology enables tapand-go services for wireless payments and data exchange.
Wireless sensor networks (WSNs) consist of interconnected wireless devices embedded in the
environment, providing measurements over large spaces and transmitting data for analysis; they are
used for various applications such as environmental monitoring, traffic surveillance, security, and
supply chain management, contributing to the Internet of Things (IoT).
Review Summary:
Review Questions:
7-1 What are the principal components of telecommunications networks and key networking
technologies? Describe the features of a simple network and the network infrastructure for a large
company and describe the principal technologies and trends that have shaped contemporary
telecommunications systems.
7-2 What are the different types of networks? Define an analog and a digital signal. Distinguish
between a LAN, MAN, and WAN.
7-3 How do the Internet and Internet technology work, and how do they support communication and
e-business? Define the Internet, describe how it works, and explain how it provides business value.
Explain how the Domain Name System (DNS) and IP addressing system work. List and describe the
principal Internet services. Define and describe VoIP and virtual private networks and explain how
they provide value to businesses. List and describe alternative ways of locating information on the
web. Describe how online search technologies are used for marketing.
7-4 What are the principal technologies and standards for wireless networking, communication, and
Internet access? • Define Bluetooth, Wi-Fi, WiMax, and 3G, 4G, and 5G networks. • Describe the
capabilities of each and for which types of applications each is best suited. • Define RFID, explain
how it works, and describe how it provides value to businesses. • Define near field communication
(NFC) and explain how it works. • Define WSNs, explain how they work, and describe the kinds of
applications that use them. Discussion Questions
7-5 It has been said that within the next few years, smartphones will become the single most
important digital device we own. Discuss the implications of this statement.
7-6 Should all major retailing and manufacturing companies switch to RFID? Why or why not?
7-7 What are some of the issues to consider in determining whether the Internet would provide your
business with a competitive advantage?
7-8 LionClaw is a Singapore-based clothing brand with a sustainability profile. Management now
wants each garment to be accompanied by a tag with a link to a website where the customer can read
more about the work environment in the clothing factory, where the fabric is coming from, and so on.
Use the web to search for an RFID, NFC, or QR code system for generating codes and printing tags.
Work out the differences and choose from these systems to determine the best option for LionClaw.
7-9 BestMed Medical Supplies Corporation sells medical and surgical products and equipment from
more than 700 manufacturers to hospitals, health clinics, and medical offices. The company employs
500 people at seven locations throughout Europe, including account managers, customer service and
support representatives, and warehouse staff. Employees communicate by traditional telephone voice
services, email, instant messaging, and cell phones. Management is inquiring about whether the
company should adopt a system for unified communications. What factors should be considered?
What are the key decisions that must be made in determining whether to adopt this technology? Use
the web, if necessary, to find out more about unified communications and its costs.
7-1: Principal components: Networking devices (routers, switches), transmission media (cables, fiber
optics), network protocols (TCP/IP), networking software.
Simple network: Basic LAN with a few devices, interconnected with a switch.
Large company network infrastructure: Multi-site WAN with routers, switches, firewalls, servers, and
high-speed internet connections.
Principal technologies and trends: Internet, cloud computing, mobile devices, IoT, 5G, SDN (softwaredefined networking).
7-2: Types of networks: LAN (Local Area Network), MAN (Metropolitan Area Network), WAN (Wide
Area Network).
Analog signal: Continuous, smooth waveform representing sound or physical quantities.
Digital signal: Discrete, binary representation of data.
LAN: Covers small area, usually within a building or campus.
MAN: Covers larger area, like a city or a group of nearby cities.
WAN: Spans long distances, connecting remote locations or cities.
7-3: Internet and e-business: Internet is a global network of interconnected computers supporting
communication and information exchange.
DNS and IP addressing: DNS translates domain names to IP addresses for locating resources on the
web.
Principal Internet services: Email, WWW, FTP, VoIP, VPN.
VoIP and VPN: VoIP enables voice communication over the Internet; VPN provides secure remote
access.
Online search technologies: Search engines, web directories, social media platforms.
Marketing with online search: SEO, SEM, online advertising.
7-4: Wireless technologies: Bluetooth (short-range), Wi-Fi (local area), WiMax (long-range),
3G/4G/5G (cellular networks).
RFID: Uses tags with microchips to transmit data over short distances for tracking and inventory
management.
NFC: Short-range wireless technology enabling data exchange between compatible devices.
WSNs: Wireless Sensor Networks with interconnected devices for various monitoring applications.
Discussion Questions:
7-5: Implications of smartphones becoming most important digital device include increased reliance
on mobile apps, mobile commerce, and mobile-first strategies for businesses.
7-6: Retailers and manufacturers should consider RFID based on benefits like improved inventory
management, reduced theft, and enhanced supply chain visibility, but also consider costs and privacy
concerns.
7-7: Factors to consider for Internet advantage include target market, competition, product/service
type, and integration with existing business processes.
7-8: Research options for RFID, NFC, and QR code systems to determine the best fit for LionClaw's
needs, considering ease of use, cost, and customer experience.
7-9: BestMed should assess the benefits of unified communications for improved collaboration and
efficiency, compare costs and implementation challenges, and consider scalability and support for
remote teams.
Chapter 8: Securing information Systems
Cyberattacks in the Asia-Pacific Target the Weakest Link: People.
The Asia-Pacific (APAC) region is increasingly targeted by cyberattacks due to its growing IT focus,
weaker cyber regulations, and geopolitical tensions. Singapore's extensive use of technology makes it
vulnerable, with incidents like phishing attacks targeting companies like Singapore Airlines (SIA). The
banking sector, including Overseas Chinese Banking Corporation (OCBC), has also faced phishing
attempts. The region experienced cyberattacks from both external and internal sources, with data
leaks and breaches affecting numerous organizations. Small and medium-sized enterprises in
Southeast Asia saw a surge in cyberattacks, partly due to remote work setups.
What security vulnerabilities were exploited by hackers? What management, organizational, and
technological factors contributed to these security weaknesses? What was the business impact of
these problems? How important are ethics and morals to information systems security?
Hackers exploited various security vulnerabilities, including phishing attacks, state-sponsored attacks,
weak internal controls, and inadequate cybersecurity measures.
Management and Organizational Factors:
1. Geopolitical tensions: Geopolitical conflicts heightened the risk of state-sponsored cyberattacks.
2. Weak cyber regulations: Relatively weaker cyber regulations in the APAC region made it easier for
hackers to target organizations.
3. Lack of awareness: Insufficient employee awareness about cybersecurity and phishing threats
made individuals susceptible to attacks.
4. Bribery and corruption: Internal staff involvement in leaking sensitive data showcased unethical
behavior.
5. Inadequate training: Lack of proper cybersecurity training for employees contributed to
vulnerabilities.
6. Third-party risk: Extensive networking with external partners increased the risk of data breaches
and leaks.
Technological Factors:
1. Pervasive technology usage: Singapore's heavy reliance on technology exposed it to attacks that
targeted its digital infrastructure.
2. Lack of encryption: Insufficient data encryption made it easier for hackers to intercept sensitive
information.
3. Inadequate authentication: Weak authentication mechanisms allowed attackers to impersonate
legitimate entities.
4. Lack of intrusion detection systems: Insufficient detection capabilities resulted in delayed
identification of cyber threats.
Business Impact:
1. Reputational damage: Successful attacks eroded customer trust and affected brand reputation.
2. Financial losses: Cyberattacks led to financial losses due to fraud, data theft, and operational
disruptions.
3. Legal consequences: Data breaches could result in regulatory fines and lawsuits.
4. Business continuity disruption: Attacks disrupted operations, affecting business continuity.
5. Loss of customer confidence: Data breaches and leaks undermined customer confidence, affecting
loyalty.
Ethics and Morals:
Ethics and morals play a crucial role in information systems security. Ethical behavior ensures
responsible data handling, transparency, and adherence to privacy regulations. An organization's
commitment to ethical practices reflects its dedication to safeguarding customer data and maintaining
trust. Cybersecurity practices must align with ethical standards to prevent data breaches, promote
transparency, and demonstrate a commitment to protecting sensitive information.
8-1: Why are information systems vulnerable to destruction, error, and abuse?
Information systems are vulnerable to destruction, error, and abuse due to various threats stemming
from technical, organizational, and environmental factors. Security and control are paramount for
businesses to prevent unauthorized access, alteration, theft, and damage to their information
systems. Vulnerabilities arise from interconnected networks, poor management decisions, hardware
and software malfunctions, natural disasters, partnering with external companies, and the portability
of devices like smartphones. These vulnerabilities can lead to data breaches, disruptions, and
operational failures with severe consequences for businesses, emphasizing the need for robust
security measures and safeguards.
Internet Vulnerabilities
The vast openness of the Internet makes it highly vulnerable to widespread abuses and impacts.
Connecting corporate networks to the Internet increases vulnerability. Email, instant messaging, and
peer-to-peer file sharing contribute to these vulnerabilities by potentially carrying malicious software,
unauthorized data transmission, and access to secure systems.
Wireless Security Challenges.
Wireless networks like Bluetooth and Wi-Fi face security challenges, as eavesdroppers can hack into
them easily. Wi-Fi networks, in particular, often lack basic protections against eavesdroppers
intercepting network traffic. Hackers can associate with access points using correct identifiers
(SSIDs), gaining access to resources on the network and even setting up rogue access points to
capture user data.
Malicious Software: Viruses, Worms, Trojan Horses, and Spyware
Malicious software, or malware, includes viruses, worms, and Trojan horses, posing threats to
computer systems. Viruses attach to programs or files, spreading when humans take actions like
sharing attachments. Worms independently spread over networks, causing disruptions. Hackers
exploit smartphones for malicious activities, and mobile devices, especially Android, are targeted.
Social media and IoT introduce security challenges, with Trojan horses posing as benign software
and introducing malicious code. Spyware monitors user activities and serves ads, while keyloggers
record keystrokes for unauthorized access and data theft. Ransomware encrypts files for extortion.
Hackers and Computer Crime
Hackers are individuals seeking unauthorized access to computer systems, and the term "cracker" is
often used for those with criminal intent. Hackers exploit security weaknesses to intrude websites and
systems, engaging in activities like data theft, system damage, and cybervandalism, which involves
disrupting or damaging websites and information systems.
Spoofing and Sniffing:
Spoofing involves hackers using fake identities or redirecting web links to deceive users. Sniffers,
both legitimate and malicious, monitor network data, aiding troubleshooting or enabling hackers to
steal sensitive information from emails, files, and reports across a network.
Denial-of-Service Attacks
Denial-of-Service (DoS) attacks involve flooding network servers with false communications to crash
them, while Distributed Denial-of-Service (DDoS) attacks use multiple infected computers to
overwhelm networks. DDoS attacks disrupt websites, causing inconvenience and financial loss, and
hackers often use botnets—networks of infected devices—to orchestrate attacks, deliver spam, and
spread malware. Notably, the Mirai botnet exploited IoT devices to launch massive DDoS attacks,
affecting major websites.
Computer Crime
Computer crime encompasses various criminal activities involving computer technology, targeting
systems and using computers as instruments for illegal actions. Examples include hacking, data
breaches, fraud, and identity theft. The extent of computer crime and its economic impact are
challenging to measure precisely. The average annual cost of cybercrime security for benchmarked
organizations was $13 million in 2018, highlighting the substantial financial implications of such
crimes.
Identity Theft.
Identity theft involves obtaining personal information to impersonate someone, often for financial gain.
It has thrived on the Internet, with phishing being a common tactic. Phishing uses fake websites or
emails resembling legitimate businesses to trick users into revealing sensitive data. Evil twins and
pharming are advanced phishing techniques. Evil twins set up fake Wi-Fi connections, while pharming
redirects users to bogus websites. Data breaches from identity theft cost companies millions, causing
brand damage. Laws such as the Computer Fraud and Abuse Act and other U.S. legislation address
computer crime and data breaches, requiring notification of affected individuals. Globally, identity
fraud losses in 2019 reached $16.9 billion.
Major Data Breaches:
1. Marriott 2018: The world's largest hotel company, Marriott, suffered a massive hack in 2018. The
breach involved the reservation database of its Starwood properties, exposing sensitive data of up to
500 million guests. State-sponsored Chinese hackers encrypted and copied the data, and subsequent
unauthorized access occurred in March 2020.
2. Yahoo 2016: Yahoo, a prominent internet company, faced two major data breaches in 2016. Over
1 billion user accounts were compromised in a 2013 breach, followed by 500 million in 2014. Statesponsored hackers managed to forge credentials for unauthorized access. These incidents led to a
lowered acquisition price when Verizon acquired Yahoo, and it was later revealed that all 3 billion
Yahoo accounts were affected.
3. Danish Tax Administration: A software error in the Danish Tax Administration's self-service portal
resulted in the exposure of personal identification numbers for 1.26 million citizens. This unnoticed
leak spanned 5 years and stemmed from URL issues in the portal's settings, which collected user
data during updates.
4. EasyJet 2020: UK's EasyJet airline faced a cyberattack in 2020 that potentially exposed data for 9
million customers. Information such as names, email addresses, travel details, and credit card records
were compromised. The airline now faces a substantial class-action lawsuit as a consequence of the
breach.
Click Fraud:
Click fraud involves fake clicks on online ads, costing advertisers money. It's often used to harm
competitors or exploit pay-per-click systems. Search engines like Google try to prevent and manage
click fraud.
Global Cyber Threats Cyberterrorism and Cyberwarfare.
Cybercriminal activities transcend borders. Cyberwarfare, often state-sponsored, targets infrastructure
and communication networks, posing complex challenges. Many nations are developing offensive
cyber capabilities, posing a serious threat to critical institutions that rely on the Internet for daily
operations.
Internal Threats: Employees: Insider threats are significant security concerns. Lack of user
knowledge contributes to breaches. Password sharing and social engineering make systems
vulnerable. Malicious insiders exploit their knowledge for unauthorized access, even targeting cloudbased systems.
Interactive Session: Technology.
Capital One: A Big Bank Heist from the Cloud
In 2019, Capital One suffered a major data breach, exposing sensitive customer data, including SSNs
and bank account numbers. The breach was traced to Paige Thompson, a former Amazon Web
Services (AWS) employee who exploited a misconfiguration in Capital One's firewall. She gained
access to their data stored on AWS servers. Thompson's actions were considered an insider threat.
While AWS claimed their services weren't the cause, the incident raised concerns about cloud
security. This breach highlighted the risk of misconfigurations and the potential for unauthorized
access through cloud services.
Case Study Questions:
1. What management, organization, and technology factors were responsible for the Capital One
hack?
Management, Organization, and Technology Factors: The Capital One hack stemmed from
decisions to adopt cloud computing without robust security evaluation. The organization's reliance on
Amazon Web Services (AWS) and a misconfigured firewall created vulnerabilities.
2. Was this an insider hack? Explain your answer.
Insider Hack: Yes, the hack was an insider job, as the attacker, Paige Thompson, exploited her
knowledge of Amazon's infrastructure and Capital One's vulnerabilities.
3. What steps could have been taken to prevent the Capital One hack?
Preventive Steps: To prevent the breach, thorough security assessments before adopting cloud
services, regular audits, employee training, multi-factor authentication, encryption, and intrusion
detection should have been implemented.
4. Should companies handling sensitive data use cloud computing services? Explain your answer.
Cloud Computing for Sensitive Data: Companies should cautiously use cloud services for sensitive
data, ensuring proper security measures, encryption, access controls, and regular audits are in place.
Software Vulnerability:
Software flaws are a risk due to complexity and rapid delivery demands. Bugs and code defects are
common, making zero defects impossible. Flaws hinder performance and create security
vulnerabilities, with zero-day vulnerabilities exploited before vendors fix them. Patches correct flaws,
but managing them is challenging.
Microprocessor Vulnerabilities:
Recent flaws like Spectre and Meltdown stem from microprocessor design flaws, letting hackers
access protected data. Flaws affect chips spanning two decades. Software vendors released patches,
but complete mitigation is challenging.
8-2. what is the business value of security and control?
Businesses must safeguard valuable information assets, including customer and partner data.
Security breaches can have severe financial and operational consequences. Legal liabilities for data
exposure or loss are also a concern. Developing strong security and control measures is crucial for
the entire organization, not just IT.
Legal and Regulatory Requirements for Electronic Records Management.
Global regulations like GDPR and industry-specific laws such as HIPAA, Gramm-Leach-Bliley Act,
and Sarbanes-Oxley mandate data protection and electronic record management. For instance,
HIPAA ensures healthcare data privacy and retention, while Sarbanes-Oxley focuses on financial
data integrity. Compliance requires strong internal controls, security measures, and data accuracy to
safeguard information.
Electronic Evidence and Computer Forensics.
Electronic Evidence and Computer Forensics are crucial aspects of modern legal actions. Digital
evidence, stored in various forms such as emails, text messages, and transactions, plays a significant
role in cases involving fraud, theft, and computer-related crimes. Companies must respond to
discovery requests for this evidence, and proper document retention policies are essential to ensure
accessibility and preservation. Computer forensics involves collecting, authenticating, and analyzing
data from computer storage media to be used as evidence in court. It addresses data recovery,
secure handling, information retrieval, and presentation in legal proceedings. Incorporating computer
forensics into contingency planning is crucial, involving collaboration between IT, security, and legal
teams.
8-3: What are the components of an organizational framework for security and control?
An effective organizational framework for security and control consists of several key components:
1. Risk Assessment: Identify and assess potential security risks that your organization faces.
Understand the vulnerabilities in your systems and the potential impact of security breaches.
2. Security Policies and Procedures: Develop comprehensive security policies that outline the rules
and guidelines for information security within the organization. Establish clear procedures for
implementing security measures and responding to incidents.
3. Access Controls: Implement access controls to ensure that only authorized individuals can
access sensitive data and systems. This includes user authentication, role-based access, and
monitoring of user activities.
4. Data Encryption: Use encryption techniques to protect sensitive data during storage and
transmission. Encryption helps prevent unauthorized access even if data is compromised.
5. Firewalls and Intrusion Detection/Prevention Systems: Deploy firewalls to monitor and control
incoming and outgoing network traffic. Intrusion detection and prevention systems help identify and
respond to unauthorized activities.
6. Security Awareness Training: Train employees to understand security risks and best practices.
An informed workforce is better equipped to recognize potential threats and follow security protocols.
7. Incident Response Plan: Develop a plan to address security incidents promptly and effectively.
Define roles, responsibilities, and procedures for containing and mitigating the impact of breaches.
8. Business Continuity and Disaster Recovery Plan: Prepare for disruptions by creating plans that
ensure the organization can continue operating during and after security incidents. This includes data
backups, recovery strategies, and alternate processing sites.
9. Compliance with Regulations: Ensure compliance with relevant industry regulations and legal
requirements related to data protection and privacy.
10. Continuous Monitoring and Improvement: Regularly monitor security measures, assess their
effectiveness, and adapt to changing threats and technologies.
11. Vendor and Third-Party Risk Management: Evaluate the security practices of vendors and
partners who have access to your systems or data.
12. Executive Leadership and Support: Gain support from top management to prioritize security
and allocate necessary resources for its implementation.
13. Security Governance: Establish a security governance structure to oversee and manage the
organization's security initiatives.
By integrating these components into your organizational framework, you create a proactive and
comprehensive approach to security and control that addresses potential risks and ensures the
reliability and security of your information systems.
Information systems controls are essential for security. They are categorized as general and
application controls.
General Controls:
- Software Controls: Guard system software, preventing unauthorized access to programs.
- Hardware Controls: Secure physical hardware and ensure proper functioning.
- Computer Operations Controls: Oversee consistent application of procedures during data storage
and processing.
- Data Security Controls: Prevent unauthorized access, change, or destruction of valuable data.
- Implementation Controls: Audit the systems development process for proper management.
- Administrative Controls: Formalize standards and procedures, ensuring proper execution of controls.
Application Controls:
- Input Controls: Verify accuracy and completeness of data as it enters the system.
- Processing Controls: Ensure data accuracy and completeness during updating.
- Output Controls: Confirm accurate, complete, and proper distribution of processed results.
Effective controls should be part of system design and consider users' behavior.
Risk Assessment
Risk assessment is crucial for effective security and controls implementation. It helps identify
vulnerabilities and the appropriate level of protection needed for assets.
Risk Assessment Process:
- Identify information assets and vulnerabilities.
- Evaluate potential risks and their impacts.
- Determine the likelihood and potential damage of each risk.
- Prioritize risks based on their probability and potential losses.
- Focus on controls for areas with the highest vulnerability and loss potential.
Example Risk Assessment (Online Order Processing System):
- Power Failure: 30% chance, $5,000 - $200,000 loss (avg. $102,500)
- Embezzlement: 5% chance, $1,000 - $50,000 loss (avg. $25,500)
- User Errors: 98% chance, $200 - $40,000 loss (avg. $20,100)
Controls should concentrate on high-risk areas to minimize potential losses.
Security Policy:
Developing a security policy is essential to protect a company's assets. It involves assessing risks,
setting security goals, and outlining mechanisms to achieve them.
Security Policy Essentials:
- Identify critical information assets and risks.
- Determine acceptable security goals and risk tolerance.
- Estimate costs to achieve acceptable risk levels.
- Drive other policies, like acceptable use policies (AUP).
- Define proper resource usage and user access.
Acceptable Use Policy (AUP):
- Defines acceptable use of company information resources.
- Specifies actions allowed and consequences for noncompliance.
- Applies to various devices: computers, mobile devices, etc.
Access Rules Example (Personnel System):
- Different user profiles based on job roles.
- Access restrictions based on need-to-know principle.
- For example, clerical staff can update data but not sensitive fields.
- Divisional managers can read all data but can't update.
Security policies guide how information resources are accessed and used, ensuring protection and
compliance with acceptable usage.
Disaster Recovery Planning (DRP) and Business Continuity Planning (BCP) are crucial for
ensuring the operation of information systems and business functions in the face of disruptions like
power outages, natural disasters, or attacks.
Disaster Recovery Planning:
- Focuses on restoring computing and communication services.
- Addresses technical issues, backup plans, and recovery services.
- Backup facilities like MasterCard's duplicate center or cloud-based services ensures continuous
operations during emergencies.
Business Continuity Planning:
- Aims to restore overall business operations after disasters.
- Identifies critical business processes and outlines action plans.
- PwC's example of resilient operations during crises focuses on maintaining key services and
minimizing failures.
Collaborative Approach:
- Business managers and IT specialists collaborate on planning.
- Business impact analysis identifies critical systems and their impact.
- Determining the maximum tolerable downtime for the business.
- Prioritizing restoration of business processes based on importance.
The Role of Auditing:
Purpose of Auditing:
- Auditing assesses the effectiveness of information systems security and controls.
- Conducted comprehensively and systematically.
- Involves examining the overall security environment and controls of individual systems.
- In-depth analysis includes tracing transaction flows and performing tests.
Security and Control Audits:
- Security audits review technologies, procedures, documentation, training, and personnel.
- May simulate attacks or disasters to test responses.
- Identifies control weaknesses and estimates their occurrence probability.
- Assesses financial and organizational impact of each weakness.
Sample Control Weaknesses:
- Figure 8.4 illustrates a sample auditor's listing of control weaknesses for a loan system in a
commercial bank.
- Examples include missing passwords for user accounts, improper network configuration, and lack of
final approval for production programs.
- Each weakness is evaluated for its chance of error/abuse, impact, and management notification.
Management Response:
- Management is expected to respond to each weakness with corrective actions.
- Plans are devised to counter significant control weaknesses.
- Strengthening controls and implementing necessary changes is essential.
Auditing ensures that security measures and controls are effective, vulnerabilities are identified, and
necessary improvements are made to enhance the overall security environment and safeguard
against potential risks.
8-4:
Tools and Technologies for Safeguarding Information Resources:
Identity Management and Authentication:
- Identity management software automates tracking users and system privileges.
- Unique digital identities assigned to users for accessing systems.
- Authentication ensures that a user is who they claim to be.
- Passwords are commonly used for authentication but come with security challenges (forgetting,
sharing, weak passwords).
- New authentication technologies include tokens, smart cards, and biometric authentication.
Token Authentication:
- Tokens are physical devices that prove a user's identity.
- Display changing passcodes and fit on key rings.
Smart Card Authentication:
- Smart cards are credit card-sized devices with data chips.
- Reader devices interpret data on the smart card for access control.
Biometric Authentication:
- Reads individual human traits like fingerprints, irises, and voices.
- Compares unique characteristics against stored profiles for access.
- Examples: fingerprint and facial recognition technologies, voice authentication.
Two-Factor Authentication:
- Enhances security by requiring two means of identification.
- Combines physical token (smart card) with data (password or PIN).
- Can also involve biometric data for added security.
The need for strong authentication methods is evident due to the vulnerabilities of traditional
passwords. Two-factor authentication and advanced methods like biometric authentication provide
enhanced security measures to ensure authorized access to systems and protect sensitive
information.
Firewalls, Intrusion Detection Systems, and Anti-Malware Software:
Firewalls:
- Firewalls prevent unauthorized access to private networks.
- Combination of hardware and software controlling network traffic.
- Placed between private internal networks and external networks (e.g., the Internet).
- Acts as a gatekeeper, examining user credentials and traffic characteristics.
- Access rules programmed by administrators determine allowed traffic.
- Screening technologies include static packet filtering, stateful inspection, Network Address
Translation (NAT), and application proxy filtering.
- Stateful inspection tracks ongoing dialogues and approved connections.
- NAT conceals internal IP addresses to prevent outside sniffer programs.
- Application proxy filtering examines application content and uses proxy servers for communication.
Firewalls enhance network security by regulating traffic flow and preventing unauthorized access.
They work in conjunction with other security measures to create a comprehensive protection strategy
against external threats.
Intrusion Detection Systems:
- Complement firewalls by detecting suspicious network activities and access attempts.
- Monitor vulnerable points in networks to detect and deter intruders.
- Generate alarms for suspicious or anomalous events.
- Scan for patterns indicating known computer attack methods.
- Detect changes in important files and issue warnings for system errors.
- Customizable to block unauthorized traffic in sensitive network areas.
Anti-Malware Software:
- Crucial for individuals and businesses to prevent, detect, and remove malware.
- Guards against viruses, worms, Trojan horses, spyware, and adware.
- Requires continuous updates to stay effective against evolving threats.
- Some malware can evade detection, necessitating additional tools for detection.
Unified Threat Management Systems (UTM):
- Integrated security appliances combining various tools like firewalls, VPNs, intrusion detection,
content filtering, and anti-spam software.
- Designed to enhance cost-effectiveness and management efficiency.
- Unified Threat Management (UTM) products available for networks of all sizes.
- Examples include Fortinet, Sophos, Check Point, Cisco Systems, and Juniper Networks.
Unified Threat Management systems provide a comprehensive approach to security management,
consolidating various tools into a single solution for enhanced protection and streamlined
management.
Securing Wireless Networks:
- Wired Equivalent Privacy (WEP) is an initial but weak Wi-Fi security standard.
- Wi-Fi Protected Access 2 (WPA2) and WPA3 provide stronger security with dynamic encryption
keys.
- WPA3 introduced in 2018 for enhanced wireless network protection.
- Virtual Private Network (VPN) technology can complement Wi-Fi security.
Encryption and Public Key Infrastructure:
- Encryption transforms data into unreadable cipher text, requiring decryption for readability.
- SSL and TLS enable secure web sessions by managing encryption between client and server.
- S-HTTP encrypts individual messages, while SSL and TLS establish secure connections.
- Symmetric key encryption uses a shared key for encryption and decryption.
- Public key encryption involves a pair of related keys for secure communication.
- Digital certificates, issued by Certificate Authorities (CAs), validate user identities.
Securing Transactions with Blockchain:
- Blockchain ensures trust and security through a chain of interconnected digital blocks.
- Transactions are encrypted and secured through cryptography.
- Blockchain participants have private keys as digital signatures.
- Records in a blockchain are tamper-resistant due to cryptographic security.
- Changes to blockchain records invalidate signatures, preventing unauthorized alterations.
- Blockchain still requires careful security and control measures.
Ensuring System Availability:
- Companies rely on digital networks for revenue and operations, necessitating system availability.
- Fault-tolerant computer systems ensure continuous and uninterrupted service.
- Redundant hardware, software, and power supply components provide reliability.
- Self-checking logic and backup devices detect hardware failures and switch automatically.
- Parts of fault-tolerant systems can be repaired without disrupting operations.
Security Outsourcing:
- Managed security service providers (MSSPs) offer security functions to companies.
- MSSPs monitor network activity, conduct vulnerability testing, and perform intrusion detection.
- Leading MSSP providers include SecureWorks, AT&T, Verizon, IBM, Perimeter eSecurity, and
Symantec.
Achieving Digital Resiliency:
- Organizations are increasingly interconnected in a hypernetworked digital environment.
- Digital resiliency focuses on maintaining and enhancing resilience across the organization.
- It encompasses technology, managerial, and organizational aspects.
- It considers corporate policies, business processes, culture, risk management, and more.
- Digital resiliency ensures adaptability, 24/7 availability, and effective response to challenges.
- Contingencies, like remote work during the pandemic, can be better anticipated with a digital
resiliency approach.
- PayPal's example illustrates the importance of measuring operational effectiveness and reducing
errors for digital resiliency improvement.
Interactive session: management.
PayPal Ups Its Digital Resiliency.
PayPal, a global online payment leader, prioritizes security and availability. To ensure its digital
resiliency, PayPal collaborated with Uptime Institute, a consulting group. They found human error to
be a major cause of data center outages. PayPal achieved high scores in Uptime Institute's M&O
Assessment, emphasizing proactive behaviors and optimal staffing. The ServiceNow platform
enhanced procedural workflows. PayPal's Facilities Operations group excelled in maintenance and
training. The M&O Stamp of Approval influenced vendor contracts. Digital Resiliency Assessment
validates the strength of PayPal's digital infrastructure, including end users, networks, applications,
databases, and data centers.
Case Study Questions:
1. Why is digital resiliency so important for a company such as PayPal?
Digital resiliency is crucial for companies like PayPal due to their global online operations and critical
payment services. Ensuring high availability and security 24/7 is essential to prevent service
disruptions, financial losses, and damage to reputation. With millions of users relying on its platform,
PayPal needs to maintain seamless operations even during unforeseen events.
2. How did PayPal benefit from measuring its digital resiliency? What issues did it address?
PayPal benefited from measuring its digital resiliency by gaining insights into its data center
operations, identifying potential weaknesses, and implementing proactive measures. By collaborating
with Uptime Institute, PayPal improved operational behaviors, staff training, maintenance, and
coordination. It also addressed the risk of human error causing data center outages, enhancing
overall reliability and minimizing service disruptions.
3. What is the role of management and organizational issues in making an organization's IT
infrastructure more resilient?
Management and organizational issues play a pivotal role in enhancing IT infrastructure resilience.
Proper staffing, training, documentation, and coordination are vital for preventing human errors that
can lead to downtime. Consistency in operational practices, proactive planning, and effective
budgeting contribute to resiliency. By aligning business goals with IT practices, companies can ensure
digital resilience and minimize disruptions to their services.
Certainly, here's a summarized version of the review and discussion questions:
Review Questions:
8-1 Information System Vulnerabilities:
Information systems are vulnerable to destruction, error, and abuse due to technological complexities
and human factors. Common threats include unauthorized access, data breaches, viruses, worms,
Trojans, hackers, computer crime, identity theft, and phishing.
8-2 Business Value of Security and Control:
Inadequate security and control can result in legal liabilities and compromised business operations.
Electronic evidence is crucial for legal cases and investigations.
8-3 Organizational Framework for Security and Control:
General controls include administrative, physical, and technical controls. Intrusion detection systems
monitor network activity. Unified threat management systems combine security tools. Digital
certificates enhance site visitor security. Small businesses might use managed security service
providers. Software metrics improve system quality.
8-4 Safeguarding Information Resources:
Tokens are used for authentication. Two-factor authentication enhances security. Intrusion detection
systems monitor networks. Unified threat management systems combine security tools. Digital
certificates enhance site visitor security. Managed security service providers are valuable for small
businesses. Software metrics improve system quality.
8-5 Business and Security:
Security is not solely a technological concern but a critical business issue. It impacts customer trust,
reputation, legal compliance, and overall business operations.
8-6 Business Continuity Planning:
A business continuity plan would start by identifying critical business processes, assessing risks,
determining recovery strategies, establishing communication protocols, and ensuring data backup
and recovery solutions. It would address aspects such as infrastructure, personnel, and external
stakeholders.
8-7 E-Commerce Website Security:
Major security threats to an e-commerce website include data breaches, payment fraud, hacking, and
denial-of-service attacks. Implementing secure payment gateways, encryption, regular vulnerability
assessments, and user awareness campaigns can minimize these threats.
8-8 Security Analysis for VidHongKong's New Venture:
For the new Internet movie rental venture, several security risks must be considered:
- New Web Portal: The web portal may be vulnerable to hacking, DDoS attacks, and SQL injection.
Weak authentication or improper access controls could lead to unauthorized access.
- New Database: The movie database should be protected against unauthorized access and data
breaches. Data encryption and proper access controls are necessary to prevent leaks of customer
and rental information.
- New CRM System: The CRM system must have strong authentication and encryption to safeguard
customer data. Vulnerabilities may lead to customer privacy breaches and identity theft.
- Link to Existing Information System: Ensuring a secure connection between the new and existing
systems is crucial to prevent unauthorized access or data interception during data exchange.
- End Products (Movies): Protecting digital movie files from unauthorized distribution or piracy is
essential. Encryption and digital rights management (DRM) technologies can help prevent illegal
copying and sharing.
8-9 Addressing IT Infrastructure Security Vulnerabilities:
- Total Vulnerabilities for Each Platform: Calculate the total vulnerabilities for each platform to assess
the overall security risk.
- Potential Impact: The potential impact of security problems varies based on the platform. Critical
systems could lead to data breaches, loss of customer trust, financial losses, and legal liabilities.
- Prioritization of Vulnerabilities: Address vulnerabilities based on their potential impact. Critical
platforms should be addressed first to prevent major disruptions. Then, focus on platforms with
moderate impact, and finally, those with lower impact.
- Control Problems and Solutions: Identify the types of control problems such as weak authentication,
inadequate access controls, and lack of encryption. Implement measures like strong passwords, rolebased access controls, encryption protocols, and regular security assessments.
- Risks of Ignoring Vulnerabilities: Ignoring security vulnerabilities puts the firm at risk of data
breaches, financial losses, legal actions, damage to reputation, and loss of customer trust. It may lead
to regulatory non-compliance and hinder business growth.
Addressing vulnerabilities promptly and comprehensively is essential to ensure a secure IT
environment and protect the organization's interests.
Bulgaria: A Whole Nation Hacked.
In 2019, Bulgaria faced a massive cyberattack on its tax service database, compromising data of
around 5.1 million citizens. The hacker gained unauthorized access, leading to concerns about
cybersecurity measures, prevention, and the potential impact on individuals and authorities.
The hack's origin remained uncertain, with an initial focus on a cybersecurity employee named
Kristiyan Bojakov. The attack exploited an SQL injection vulnerability in a system used to file VAT
returns from outside Bulgaria. Experts highlighted the need for using proper software, patches, and
prepared statements to prevent such attacks.
The hack's aftermath exposed vulnerabilities in Bulgaria's cybersecurity framework. Insufficient
monitoring and absence of access logs contributed to delayed detection. This incident mirrored the
broader global trend of official databases facing frequent attacks. The stolen data could be sold for
millions, leading to credit card fraud and identity theft risks.
Bulgaria's cybersecurity challenges were exacerbated by a shortage of experts due to migration to
better-paying roles in other European Union states. The government considered outsourcing
cybersecurity, but concerns about data security arose.
In response, Bulgaria initiated efforts to strengthen its cybersecurity by establishing a dedicated unit
of well-paid experts. The case highlights the critical importance of cybersecurity for nations' data
protection and the complexities they face in securing sensitive information.
8-13 Security and Control Issues
The hacking technique discussed in this case is an SQL injection attack. This attack involves
exploiting vulnerabilities in a system by injecting corrupted input, causing the system to execute
unintended commands. Security and control issues related to this technique include:
- Insufficient System Protection: The Bulgarian tax service's system lacked proper protection against
SQL injection attacks, allowing the hacker to exploit vulnerabilities.
- Lack of Prepared Statements: Prepared statements, a security measure against SQL injection, were
not utilized. Prepared statements ensure that only specific input is accepted, preventing corrupted
commands.
- Absence of Monitoring and Logging: Inadequate monitoring of system access and a lack of
comprehensive logging allowed the hacker's activities to go unnoticed for an extended period.
- Delayed Detection: The breach went undetected for years, indicating poor monitoring practices and
insufficient cybersecurity measures.
- Limited Training and Awareness: The lack of a proactive "hacking squad" to test system
vulnerabilities and raise awareness among civil servants contributed to the successful attack.
8-14 Managerial Issues Faced by Bulgarian Civil Servants
Civil servants in charge of cybersecurity in Bulgaria face various managerial issues, including:
- Shortage of Cybersecurity Experts: The migration of skilled IT professionals to higher-paying roles in
other European Union states results in a shortage of qualified cybersecurity experts.
- Inadequate Budget and Salaries: Cybersecurity professionals are paid significantly less in the public
sector compared to private companies, affecting recruitment and retention efforts.
- Data Protection Prioritization: Insufficient attention and resources are given to securing non-critical
databases, potentially leaving sensitive data vulnerable.
- Outsourcing Concerns: The challenge of outsourcing cybersecurity while ensuring data security and
trusting third-party systems.
- Compliance with Regulations: Ensuring compliance with the General Data Protection Regulation
(GDPR) while maintaining effective cybersecurity measures.
- Public Trust: Rebuilding public trust in the government's ability to protect citizens' data after
breaches occur.
8-15 Potential Impact of the Bulgarian Tax Hack
The potential impact of the Bulgarian tax hack includes:
- Financial Loss: The stolen data could be used for credit card fraud and other financial crimes,
causing financial losses for affected individuals and financial institutions.
- Identity Theft: Personal information compromise could lead to identity theft, impacting victims'
financial and personal lives.
- Public Trust Erosion: The breach erodes public trust in government institutions' ability to safeguard
sensitive information.
- Legal Consequences: Non-compliance with GDPR regulations could result in fines, as evidenced by
the €3 million fine imposed on the tax authority.
- National Reputation: The hack damages Bulgaria's reputation in terms of data security and
cybersecurity readiness.
8-16 Prevention of Data Breaches
To prevent data breaches like this, several measures can be taken:
- Regular Security Audits: Conduct thorough security audits and penetration testing to identify
vulnerabilities and address them proactively.
- Employee Training: Train civil servants in cybersecurity best practices and awareness to recognize
potential threats.
- Implement Prepared Statements: Utilize prepared statements in application development to prevent
SQL injection attacks.
- Monitoring and Logging: Implement continuous monitoring of system access and detailed logging to
detect and respond to unauthorized activities.
- Bug Bounty Programs: Establish bug bounty programs to incentivize ethical hackers to identify and
report vulnerabilities.
- Data Encryption: Encrypt sensitive data to make it more difficult for unauthorized users to access.
- Collaboration with Private Sector: Collaborate with private sector experts to enhance cybersecurity
capabilities and knowledge sharing.
These measures collectively contribute to a more robust cybersecurity framework, reducing the risk of
successful data breaches.
Chapter 9: Achieving Operational Excellence and Customer Intimacy: Enterprise Applications
Lenzing Sustainably Balances Supply and Demand.
The case study highlights Lenzing Group's efforts to sustainably balance supply and demand in its
global supply chain through the adoption of advanced software solutions. Lenzing is an Austria-based
company that produces specialty fibers for the fashion, sports, and protection wear industries, with a
strong commitment to environmental sustainability.
Key Points:
1. Lenzing's Sustainable Approach: Lenzing is known for producing botanic cellulose fibers that
have a reduced environmental impact compared to traditional materials. The company adheres to
high environmental standards and holds various sustainability certifications. Lenzing aims to minimize
waste and reduce the fashion industry's negative impact on the environment.
2. Challenges with Supply Chain Planning: Lenzing's global supply chain involves multiple
stakeholders, including spinners, weavers, mills, dye works, and fashion brands. The company used
manual processes and Excel spreadsheets for supply chain planning, but the complexity of its
operations required more advanced tools.
3. Need for Digital Transformation: Lenzing sought to create a more efficient and accurate end-toend supply chain planning process that aligned supply and demand seamlessly. Manual processes
and Excel spreadsheets were inadequate for managing the intricacies of the supply chain. The
company needed a solution to integrate demand forecasting, sales planning, and operations planning.
4. Choosing JDA Sales & Operations Planning (S&OP): Lenzing selected JDA Sales & Operations
Planning software to overhaul its S&OP processes. This software supports various enterprise
processes, including demand review, supply review, demand-supply balancing, financial review,
continuous plan refinement, and business performance management.
5. Benefits of JDA S&OP: By implementing JDA S&OP, Lenzing achieved several benefits:
Cross-functional integration of business planning processes.
Elimination of manual work and Excel spreadsheets.
Improved decision support and alignment.
Enhanced visibility across departments and the supply chain.
Identification of performance gaps and what-if resolution.
Improved sales forecast accuracy and transparency.
Faster planning and decision-making, reducing planning time by 50%.
Better resource allocation to profitable markets and applications.
Minimized waste and leaner supply chain operations.
6. Cloud-Based Implementation: Lenzing launched its JDA S&OP system using cloud-based
software as a service (SaaS). This approach facilitated quick implementation and provided immediate
returns on investment.
The case study illustrates how Lenzing Group leveraged advanced supply chain planning software to
optimize its operations, reduce environmental impact, enhance profitability, and achieve better
alignment between supply and demand. Through the adoption of digital solutions, Lenzing was able to
address the challenges posed by its complex global supply chain while staying true to its commitment
to sustainability.
9-1: How do enterprise systems help businesses achieve operational excellence?
Enterprise systems play a crucial role in helping businesses achieve operational excellence by
integrating various business processes, improving decision-making, and promoting standardized
practices. These systems provide a centralized platform that connects different departments and
processes within an organization, enabling real-time information sharing and efficient coordination.
Here's how enterprise systems contribute to operational excellence:
1. Integration: Enterprise systems integrate data from various departments, eliminating data silos
and promoting collaboration.
2. Standardization: Predefined processes ensure consistent operations and reduce inefficiencies
caused by manual work.
3. Real-time Visibility: Immediate access to accurate information enables quick responses to
changing conditions.
4. Informed Decision-making: Analytical tools aid decision-makers in making strategic choices
based on data insights.
5. Consistency: Standard practices enforced across the organization improve efficiency and reduce
variations.
6. Customer Responsiveness: Integrated data helps fulfil orders accurately and minimize lead
times.
7. Resource Optimization: Operations are aligned with demand, leading to reduced waste and
better resource allocation.
8. Performance Measurement: Standardized metrics enable assessment of overall performance and
effectiveness of initiatives.
In summary, enterprise systems facilitate operational excellence by integrating processes, promoting
standardized practices, providing real-time visibility, and enhancing decision-making capabilities.
These systems enable organizations to respond quickly to market changes, improve resource
utilization, and align their operations with strategic goals, ultimately leading to increased efficiency,
reduced costs, and enhanced competitiveness.
9-2: How do supply chain management systems coordinate planning, production, and logistics with
suppliers?
The Supply chain:
A supply chain is a network that includes suppliers, manufacturers, distributors, retailers, and
customers, working together to source, produce, and deliver products. It involves the flow of
materials, information, and funds to meet customer demands efficiently, while minimizing costs and
optimizing resources.
Supply Chain Complexity: For complex businesses with numerous suppliers, supply chain
management (SCM) systems coordinate activities across suppliers, manufacturers, distributors, and
retailers.
Supply Chain Network: A supply chain encompasses organizations and processes that source raw
materials, transform them into products, and distribute products to customers.
Material Flow: Raw materials evolve into intermediate products and finally finished goods, moving
through suppliers, manufacturers, distributors, and retailers.
Nike's Example: Nike's supply chain includes contract manufacturers, tiered suppliers, and subsuppliers for components like soles, eyelets, uppers, and laces.
Bullwhip Effect: Inaccurate or delayed information can lead to inefficiencies, excess inventory, and
increased operating costs across the supply chain.
Supply Chain Planning: SCM planning systems optimize sourcing, manufacturing, inventory, and
distribution plans, aiding decision-making and forecasting.
Supply Chain Execution: Execution systems manage physical product flow, warehouse operations,
transportation, and financial information.
Global Supply Chains: The Internet enhances communication, coordination, and efficiency in global
supply chains, handling complex logistics and international business regulations.
Demand-Driven Approach: SCM shifts from push-based (forecast-driven) to pull-based (demanddriven) models, improving response to actual customer orders.
Digital Logistics: Internet enables concurrent supply chains, where information flows in multiple
directions, enhancing responsiveness and flexibility.
Business Value: SCM systems reduce costs, improve customer service, enhance sales, and
increase profitability by aligning supply and demand, reducing inventory, and optimizing asset use.
9-3: How do customer relationship management systems help firms achieve customer intimacy?
Customer Relationship Management (CRM) systems help firms achieve customer intimacy by
capturing, integrating, and analyzing customer data from various sources. These systems provide a
unified view of customers, enhancing sales, service, and marketing efforts.
CRM software includes modules for sales force automation, customer service, and marketing. It aids
in personalized interactions, supports call centers, and optimizes direct-marketing campaigns.
Analytical CRM utilizes data from operational systems to analyze customer behavior, identify buying
patterns, and determine customer lifetime value. Effective CRM systems lead to increased customer
satisfaction, reduced marketing costs, better marketing strategies, and improved customer acquisition
and retention.
Interactive Session: Organizations
CRM Helps Adidas Know Its Customers One Shoe Buyer at a Time
Adidas, a prominent global athletic brand, leverages Salesforce's CRM tools to enhance customer
relationships and improve personalized experiences. In a shift from physical stores to digital
platforms, Adidas focuses on creating unique customer interactions through Salesforce's cloud-based
CRM solutions. With tools like Salesforce Marketing Cloud, Adidas tailors marketing campaigns,
manages customer journeys, and employs predictive analytics to choose the most effective
communication channels. The integration of Salesforce's Sales Cloud and Service Cloud ensures a
unified experience across sales, marketing, and customer service departments. By using the
Commerce Cloud, Adidas maintains a global e-commerce presence while utilizing customer
preferences to inform product design. The company also developed a mobile app that customizes
content and recommendations based on customer behaviour. Through these CRM-driven initiatives,
Adidas emphasizes personalized engagement and a deeper connection with customers across
various channels.
Case Study Questions:
1. Analyze Adidas using the competitive forces and value chain model.
Competitive Forces and Value Chain Analysis for Adidas:
Adidas faces competitive forces in the sportswear industry, including:
•
•
•
•
•
Threat of New Entrants: Moderate Barriers like brand loyalty and economies of scale
provide some protection.
Bargaining Power of Suppliers: Moderate Suppliers hold some power due to the
uniqueness of sportswear materials.
Bargaining Power of Buyers: High Buyers have numerous alternatives and can influence
pricing.
Threat of Substitutes: High Substitutes like casual clothing and fashion items can affect
demand.
Industry Rivalry: High Intense competition exists with major rivals like Nike.
Adidas's value chain involves activities like design, sourcing, manufacturing, marketing, and
distribution. Differentiation is a key strategy, focusing on product innovation, brand image, and
personalized customer experiences
2. What is Adidas's business strategy? What is the role of customer relationship management
in that strategy?
Adidas's Business Strategy and Role of CRM:
Adidas's strategy centres on quality, brand differentiation, and personalized experiences. Its CRM
strategy involves building close relationships with customers through Salesforce tools. CRM helps
Adidas understand customer preferences, tailor marketing campaigns, enhance customer service,
and offer personalized products. This strategy aligns with Adidas's aim to create strong brand loyalty
and increase customer satisfaction.
3. How do information systems support Adidas's strategy?
Information Systems Support for Adidas:
Information systems play a crucial role in supporting Adidas's strategy:
•
•
•
•
CRM Systems: Salesforce enables personalized marketing, customer insights, and unified
interactions across channels.
E-commerce Platform: Commerce Cloud supports global online sales, using customer data
to inform product design.
Mobile App: The app utilizes data to customize content, product recommendations, and
customer interactions.
Data Analytics: Salesforce's analytics tools help Adidas make informed decisions based on
customer behaviour and preferences.
4. How did using Salesforce.com make Adidas more competitive? How did it change the way
the company ran its business?
Impact of Using Salesforce.com on Adidas:
•
•
Increased Competitiveness: Salesforce enhanced Adidas's ability to offer personalized
experiences, improving customer engagement and loyalty.
Changed Business Operations: Adidas shifted focus from physical stores to digital
platforms, emphasizing online sales and unique customer interactions
5. Give an example of two business decisions that were improved by using Salesforce.com
Examples of Improved Business Decisions using Salesforce.com:
•
•
Personalized Marketing Campaigns: Salesforce's Marketing Cloud allowed Adidas to tailor
campaigns based on customer behavior, leading to higher engagement and conversions.
Unified Customer Service: Service Cloud enabled Adidas to provide seamless customer
support across various channels, enhancing customer satisfaction and retention.
By utilizing Salesforce's CRM solutions, Adidas transformed its approach from traditional retail to
digital and personalized experiences, gaining a competitive edge through improved customer
engagement, insights, and streamlined operations.
9-4: What are the challenges that enterprise applications pose, and how are enterprise applications
taking advantage of new technologies?
Many firms have implemented enterprise system s and system s for supply
chain and custom er relationship management because they are such powerful
instruments for achieving operational excellence and enhancing decision making. But precisely
because they are so powerful in changing the way the organization works, they are challenging to
implement.
1. Enterprise Application Challenges:
Complexity and Cost: Enterprise applications are complex and expensive to purchase and
implement, often leading to cost overruns and project delays.
Organizational Change: Implementing these systems requires fundamental changes in business
processes, employee roles, and organizational learning.
Inter-organizational Collaboration: Supply chain systems require multiple organizations to share
information and align processes, which can be challenging.
Data-related Issues: Poor data quality, organizational data understanding, and data cleansing efforts
are needed for accurate results.
Switching Costs: Adoption of a specific vendor's application leads to vendor dependency and high
switching costs.
Customization: Customization of applications can lead to maintenance complexity and increased
costs.
2. New Technologies in Enterprise Applications:
Flexibility and Integration: Next-generation enterprise applications are becoming more flexible,
user-friendly, web-enabled, mobile, and integrated with other systems.
Cloud Solutions: Major vendors like SAP, Oracle, and Microsoft offer cloud versions of ERP
(enterprise resource planning) and CRM systems, providing scalability and accessibility.
Social CRM: CRM vendors integrate social networking technologies to improve customer
engagement and gather insights from social media.
Business Intelligence: Enterprise applications include business intelligence features, using tools like
AI and data visualization to analyse and provide insights from vast amounts of data, including IoTgenerated data.
3. Impact of Using New Technologies:
Improved User Experience: More user-friendly interfaces and mobile accessibility enhance user
adoption and engagement.
Interconnected Systems: Integration among CRM, SCM, and ERP systems enables seamless
business operations across departments and with customers and suppliers.
Cost Savings: Minimizing customization and using cloud solutions reduces costs and simplifies
maintenance.
4. Example of Improved Business Decisions:
Customization Reduction: Kennametal and Office Depot moved away from heavily customized ERP
systems, opting for standardized software and aligning their processes, leading to cost reduction and
simplified operations.
Social Media Engagement: Businesses using social CRM tools can monitor social media sentiment
and tailor marketing efforts accordingly, increasing customer engagement and satisfaction.
The challenges associated with enterprise applications are being addressed through advancements in
technology, offering more flexibility, integration, and business intelligence capabilities. The utilization
of cloud solutions, social CRM, and AI-driven insights are transforming the way companies operate,
enabling them to make more informed decisions, enhance customer relationships, and achieve
operational excellence.
Interactive Session: Technology.
Versum’s ERP Transformation.
The case study discusses the ERP transformation of Versum Materials, an electronic materials
company supplying specialty gases and products to the semiconductor industry. Here are the key
points and takeaways from the case:
1. Background and Challenges:
• Versum Materials was divested from its parent company, Air Products, and needed its own IT
infrastructure and enterprise system.
• Options for ERP system replacement: Copying Air Products' existing SAP ERP, bringing
customizations to a new SAP ERP, or starting from scratch.
• Versum chose the third option to implement a system that catered to its specific business
needs.
2. Selection of SAP S/4HANA:
•
•
Chose SAP S/4HANA as the foundation for the new system due to its capabilities for industry
regulatory requirements and ease of implementation.
Implementation was done in a private cloud managed by a hosting provider to save on upfront
capital investment and system management responsibility.
3. Implementation Approach:
•
•
•
Implemented SAP S/4HANA using SAP and industry best practices to create consistent
processes across business units.
Opted for a "big-bang" system rollout to simplify the process and minimize complications.
Despite challenges with data conversion, the implementation went smoothly with minimal
disruption.
4. Benefits and Outcome:
• The new SAP S/4HANA system optimized operations, cost management, and real-time
analytics.
• Versum Materials gained a solid foundation as an independent company specializing in
specialty materials.
• The entire implementation, including SAP solutions and non-SAP applications, was
completed in just 15 months.
5. Data Conversion Challenges:
• Converting data from the old system posed challenges due to differences in data structures
and hierarchies between the old SAP ERP system and the new SAP S/4HANA system.
• The new system introduced a Business Partner structure that consolidated customer, vendor,
and contact data.
6. Real-Time Analytics and Optimization:
• The implementation of SAP S/4HANA enabled Versum to optimize operations, manage costs,
and utilize real-time analytics.
• The company now had the necessary foundation to operate as an independent specialty
materials company.
Overall, the case study highlights how Versum Materials successfully transformed its IT infrastructure
and ERP system to support its new business model and growth plans. The choice of SAP S/4HANA
and a well-executed implementation enabled the company to achieve its objectives and operate as a
standalone entity specializing in specialty materials for the semiconductor industry.
Case Study Questions:
1. Define the problem in this case study. What management, organization, and technology
factors contributed to the problem?
Problem Definition and Contributing Factors:
Problem: The problem in this case study was that Versum Materials, after being divested from its
parent company Air Products, needed to establish its own IT infrastructure and enterprise system to
support its new business model as a specialty gases and products supplier to the semiconductor
industry.
Contributing Factors:
Management Factors: The decision to divest from Air Products necessitated the establishment of an
independent IT infrastructure. Management's ambition for growth and transformation required a new,
suitable ERP system.
Organization Factors: The company needed to transition from the information systems of its parent
company to a system that aligned with its specific business needs. A global supply chain with
operations in multiple countries added complexity.
Technology Factors: The legacy ERP system of the parent company was not tailored to Versum's
specialized business model and regulatory requirements. Choosing the right ERP solution and
implementing it effectively was crucial.
2. Was the SAP S/4 HANA SaaS solution a good one for Versum? Explain your answer.
SAP S/4HANA SaaS Solution for Versum:
Yes, it was a good solution: The choice of SAP S/4HANA SaaS solution was appropriate for Versum.
It provided an integrated ERP system that was capable of handling the company's specialized needs
and regulatory requirements in the semiconductor industry.
The implementation of SAP S/4HANA allowed Versum to optimize operations, manage costs, and
take advantage of real-time analytics, which were essential for its business model.
Moreover, the private cloud deployment of SAP S/4HANA offered cost savings and relieved the
company from the responsibility of managing the system's infrastructure.
3. What challenges did Versum encounter implementing the new system?
Implementation Challenges:
Data Conversion: Converting data from the old system to the new SAP S/4HANA system was a
challenge due to differences in data structures and hierarchies.
Global Rollout: Versum had a global supply chain spanning multiple countries. Implementing the new
system simultaneously across all locations required meticulous planning and execution.
Time Constraints: The transition services agreement (TSA) did not allow for a phased rollout,
necessitating a "big-bang" approach. This posed challenges in data migration and system adoption.
4. How did the new system change the way Versum ran its business?
Impact on Versum's Business:
•
Operational Optimization: The new SAP S/4HANA system enabled Versum to optimize its
operations by streamlining processes, managing costs, and making use of real-time analytics.
This allowed the company to effectively cater to the specialized needs of the semiconductor
industry.
•
Business Transformation: Versum Materials transformed from being part of a larger
industrial gas company to an independent specialty materials supplier. The new system
supported this transformation by providing tailored functionalities and capabilities.
•
Foundation for Growth: The successful implementation of the new system provided Versum
with a solid foundation to operate as a standalone company, supporting its growth plans and
business expansion.
Overall, the case study illustrates how the strategic choice of an appropriate ERP solution, in this
case, SAP S/4HANA, and a well-executed implementation strategy allowed Versum Materials to
address its challenges and transform its operations to meet its new business requirements.
Review Questions:
9-1 How do enterprise systems help businesses achieve operational excellence?
Enterprise systems integrate various business processes and functions, providing a centralized
platform for data sharing and communication. They enable streamlining of processes, reduction of
redundancy, and improved collaboration, leading to increased operational efficiency and
effectiveness.
Financial and Accounting Processes Supported by Enterprise Systems:
1. General Ledger Management
2. Accounts Payable
3. Accounts Receivable
4. Financial Reporting
5. Budgeting and Planning
6. Asset Management
How enterprise systems provide valuable information for improving management decision making:
Enterprise systems capture and store data from different business functions, allowing managers to
access real-time information for informed decision making. This helps in analyzing trends, identifying
opportunities, and addressing challenges.
9-2 How do supply chain management systems coordinate planning, production, and logistics
with suppliers?
Supply chain management systems coordinate the flow of materials, information, and finances across
the entire supply chain, from suppliers to customers. They help in planning production, managing
inventory, and optimizing logistics to ensure timely delivery of products.
Parts of a Retailer's Supply Chain:
1. Suppliers
2. Distribution Centres/Warehouses
3. Retail Stores
4. Customers
Upstream and Downstream Portions of the Supply Chain:
Upstream: Involves processes related to suppliers and procurement.
Downstream: Involves processes related to distribution and customer-facing activities.
Supply System for a Manufacturer with Perfect Information on Future Orders:
A "push" supply system, where production is based on anticipated future demand.
Important and Complex Aspect of Supply Chain Planning:
Demand Forecasting, which involves predicting future customer demand accurately.
Impact of Supply Chain Costs on Profitability:
Supply chain costs directly impact an organization's profitability. High costs, such as excess inventory
or transportation costs, can lead to reduced profit margins.
9-3 How do customer relationship management systems help firms achieve customer
intimacy?
CRM systems help firms gather, store, and analyse customer data to understand their preferences,
needs, and behaviours. This information enables personalized interactions, targeted marketing, and
improved customer service.
Potential Touch Points for a Retailer:
1. In-Store Interactions
2. Online Purchases
3. Customer Service Calls
Sales Force Automation: It involves automating sales processes, such as lead tracking, contact
management, and opportunity management.
Cross-Selling: Recommending related products to customers based on their preferences and
purchase history.
Operational vs. Analytical CRM:
Operational CRM focuses on day-to-day interactions and processes.
Analytical CRM involves analyzing customer data to gain insights and make strategic decisions.
9-4 What are the challenges that enterprise applications pose, and how are enterprise
applications taking advantage of new technologies?
Challenges: Cost overruns, complex customization, organizational change.
Solutions: Pared-down software versions, cloud applications, minimal customizations.
Enterprise Applications and New Technologies:
Cloud Computing: Offers flexibility, scalability, and cost savings.
Business Intelligence: Helps in making informed decisions by analyzing data.
Social CRM: Integrates social media data to enhance customer interactions and insights.
Discussion Questions:
9-5 Supply chain management is less about managing the physical movement of goods
and more about managing information. Discuss the implications of this statement.
Supply chain management heavily relies on accurate and timely information sharing among different
stakeholders. Effective information management ensures the right products are available in the right
place at the right time, reducing delays and costs.
9-6 If a company wants to implement an enterprise application, it had better do its homework.
Discuss the implications of this statement.
Implementing enterprise applications requires thorough research, planning, and understanding of the
organization's needs. Lack of preparation can lead to challenges, including inefficiencies and financial
losses.
9-7 Which Enterprise Application to Install First: ERP, SCM, or CRM?
The choice depends on the organization's priorities. If operational efficiency is a priority, ERP might
be chosen. If optimizing the supply chain is critical, SCM could be the focus. If enhancing customer
relationships is vital, CRM might be the preferred option.
Management Decision Problems:
9-8 Toronto-based Mercedes-Benz Canada, with a network of 55 dealers, did not know enough
about its customers. Dealers provided customer data to the company on an ad hoc basis.
Mercedes did not force dealers to report this information. There was no real incentive for
dealers to share information with the company. How could CRM and PRM systems help solve
this problem?
Using CRM and PRM to Solve Mercedes-Benz Canada's Problem:
CRM systems can help Mercedes-Benz Canada gather customer data and preferences, enabling
targeted marketing and personalized services. PRM systems can incentivize dealers to share
customer data by providing them with value-added services and benefits.
9-9 Office Depot sells a wide range of office supply products and services in the United States
and internationally. The company tries to offer a wider range of office supplies at lower cost
than other retailers by using just-in-time replenishment and tight inventory control systems. It
uses information from a demand forecasting system and point-of-sale data to replenish its
inventory in its 1,400 retail stores. Explain how these systems help Office Depot minimize
costs and any other benefits they provide.
Identify and describe other supply chain management applications that would be especially
helpful to Office Depot.
Office Depot's Supply Chain Management and Benefits:
Office Depot's demand forecasting and just-in-time replenishment systems minimize inventory costs
and ensure efficient supply chain operations. Other supply chain management applications that could
benefit Office Depot include route optimization for deliveries and predictive maintenance for
distribution centres
The Coronavirus Pandemic Disrupts Supply Chains Around the World CASE STUDY.
The COVID-19 pandemic has profoundly disrupted global supply chains, presenting unprecedented
challenges. Lockdowns and shifting consumer demands caused spikes in essential products and
severe drops in non-essential items. Businesses, particularly small ones, suffered greatly due to
decreased demand, supply chain issues, and cash flow problems. Supply chain disruptions arose
from worldwide port congestion, factory closures, and transportation disruptions.
Customer buying patterns underwent significant changes, leading to shortages in essential goods and
abrupt shifts in spending habits. Nearly 75% of companies reported supply chain disruptions by early
2020, and this number was projected to rise. Manufacturing was hit hard due to halted activity in
Wuhan, China, a vital global manufacturing hub.
Supply chain visibility proved crucial during the pandemic, but most companies had limited visibility.
The fragility of modern supply chains was evident, with thin safety stock margins and dependence on
outsourcing. Supply chains need to be more resilient, with diversification, regional supply chains, and
reduced reliance on just-in-time inventory.
Manufacturing's cost dynamics shifted with automation advancements, reducing the labour cost
justification for offshore production. Digital tools, such as AI and IoT, offered enhanced supply chain
management and real-time interaction. Yet, algorithms used in supply chain management systems
faced challenges during the pandemic, necessitating adaptation.
Supply chain management was further complicated by the pandemic's unprecedented global impact.
Companies were advised to actively interpret projections from supply chain models and consider
supply network mapping. Businesses that had pre-pandemic supply network maps were better
prepared to address disruptions, identifying vulnerabilities and solutions efficiently. Nonetheless,
supply network mapping remains an underutilized practice due to its time-consuming and costly
nature.
9-13 Define the problem described in this case study. What management, organization, and
technology factors contributed to this problem?
The problem described in this case study is the disruption of global supply chains due to the COVID19 pandemic. The pandemic led to significant shifts in consumer demand, disruptions in
manufacturing, and logistical challenges. Many businesses faced shortages of essential products and
drops in demand for non-essential items. The problem stemmed from the lack of supply chain
resilience to handle such a large-scale disruption.
Management Factors: Management factors contributing to the problem include inadequate supply
chain visibility, a heavy reliance on outsourcing, and the adoption of "lean" principles that emphasize
minimizing costs and safety stock. Many companies lacked the ability to respond quickly and flexibly
to supply chain disruptions, which requires a higher degree of supply chain visibility. Additionally, the
concentration of sourcing in a few countries left supply chains vulnerable to disruptions in those
regions.
Organization Factors: Organizations' failure to diversify suppliers and manufacturing locations, as
well as their tendency to rely on top-tier suppliers for information, exacerbated the problem. Limited
supply chain mapping and preparation for major disruptions further contributed to the issue.
Technology Factors: While technology played a role in mitigating the problem, the algorithms used
in supply chain management systems proved ineffective during the pandemic. The data inputs that
these algorithms relied on were disrupted by the unprecedented global impact of the pandemic.
9-14 To what extent can information technology solve this problem? Explain your answer.
Information technology can play a significant role in solving the supply chain disruption problem
caused by events like the COVID-19 pandemic. Digital tools such as AI, advanced analytics, and IoT
can enhance supply chain visibility, responsiveness, and adaptability. These technologies enable
real-time interaction, improved forecasting, and better decision-making based on changing
circumstances. Digital supply chain management systems can provide transparency and assist in
identifying vulnerabilities in the supply chain.
However, technology alone is not a complete solution. The algorithms used in supply chain
management systems must be continually updated and adapted to handle unprecedented disruptions.
Companies need to actively interpret projections and exercise flexibility in decision-making.
Furthermore, supply network mapping is essential for effective supply chain resilience, but it's a timeconsuming and expensive process.
9-15 What management, organization, and technology issues should be addressed to redesign
supply chains to deal with major disruptions such as the coronavirus pandemic?
Management Issues: Companies need to prioritize supply chain visibility by investing in technologies
that provide real-time tracking and monitoring of goods in transit. They should reassess their sourcing
strategies and consider regional supply chains, diversification of suppliers, and contingency plans for
disruptions. A shift away from excessive reliance on lean principles should be considered, allowing for
greater safety stock and reserves.
Organization Issues: Companies should emphasize supply network mapping to identify
vulnerabilities and devise effective recovery plans. This process requires resources, time, and
collaboration with suppliers across tiers. Organizations must also cultivate a culture of adaptability
and flexibility, enabling quick decision-making and adjustment to unexpected events.
Technology Issues: Firms should invest in advanced technologies such as AI, IoT, and advanced
analytics to enhance supply chain management. The algorithms used in supply chain systems should
be designed to accommodate unprecedented disruptions. Data inputs should be updated regularly to
ensure accuracy in forecasting and decision-making.
In summary, redesigning supply chains to deal with major disruptions requires a holistic approach that
addresses management, organization, and technology factors. An emphasis on supply chain visibility,
resilience, diversification, and flexibility is essential to mitigate the impact of events like the COVID-19
pandemic.
Chapter 10: E-commerce: Digital Markets, Digital Goods.
E-commerce Comes to the Dashboard: The Battle for the "Fourth Screen".
The automotive industry is exploring the potential of turning car dashboards into the "fourth screen,"
after TV, computers, and mobile phones, to capture consumers' attention during their daily commutes.
This concept offers opportunities for targeted advertising, on-the-go purchases, and data-driven
services. Auto makers, along with tech giants like Google and Apple, are competing to control this
dashboard display space.
Challenges arise from outdated car models, as they lack the ability to update displays like
smartphones. Google and Apple have introduced Android Auto and CarPlay, software that projects
smartphone apps onto dashboard screens with voice controls. Some car manufacturers are
integrating these solutions, while others like Ford and Daimler prefer to develop their own apps and
system software. Privacy concerns and potential distractions for drivers are prominent issues, as the
software collects personal data and requires driver attention even while driving. The battle for control
over the "fourth screen" involves a complex interplay between auto makers, tech companies, and data
privacy regulations.
10-1: What are the unique features of e-commerce, digital markets, and digital goods?
1. E-commerce Trends and Impact on Traditional Markets: Commerce is being transformed due to
the Internet's influence. e-commerce has expanded beyond traditional computer screens to mobile
devices and even car dashboard displays. The increasing prevalence of online buying, selling, and
advertising across different devices is changing how companies do business.
2. E-commerce Categories: E-commerce is divided into three major segments: retail goods, travel
and services, and online content. These categories encompass a wide range of digital transactions,
from purchasing physical products to booking travel and consuming digital content like music, videos,
and articles.
3. Growth and Influence of E-commerce: E-commerce has experienced substantial growth over the
years. It has become a significant portion of total retail sales, with online sales of retail goods
accounting for a substantial share of global retail sales. This growth has been facilitated by the
ubiquity of the Internet and advancements in technology.
4. Characteristics of E-commerce:
Ubiquity: E-commerce is accessible from anywhere at any time, leading to a marketplace extended
beyond traditional boundaries.
Global Reach: The Internet allows transactions to cross cultural and national boundaries more
conveniently, expanding the potential market size.
Universal Standards: The technical standards of the Internet are universal, allowing any computer to
connect with others regardless of technology platform.
Richness: E-commerce delivers rich messages with text, audio, and video simultaneously, enabling
more interactive communication.
Interactivity: E-commerce permits two-way communication, engagement with customers, and peerto-peer communication.
Information Density: The Internet increases information density, providing more information to
market participants and making prices and costs more transparent.
Personalization/Customization: E-commerce allows personalized marketing messages and
customization of products based on user preferences.
Social Technology: The Internet fosters user-generated content and social networking, allowing
users to create and share content and engage in conversations.
5. Digital Goods: Digital goods, such as music, videos, movies, software, newspapers, magazines,
and books, can be delivered over digital networks. They are intellectual property protected by
copyright, patent, trademark, and trade secret laws. Digital goods have a unique cost structure, where
the marginal cost of producing additional units is close to zero, but the cost of producing the first unit
(content creation) is relatively high. The Internet's impact on the market for digital goods has
transformed industries and disrupted traditional distribution channels.
6. Challenges and Opportunities: E-commerce has brought both challenges and opportunities to
businesses. While digital markets offer flexibility, efficiency, reduced costs, and the potential to sell
directly to consumers, they also introduce competition and the need to adapt to changing consumer
behaviours. The growth of digital goods has revolutionized industries but also led to issues such as
copyright enforcement and illegal piracy.
Overall, the text provides insights into the evolution of e-commerce, the impact of digital markets, and
the unique features of digital goods in today's global marketplace.
10-2: What are the principal e-commerce business and revenue models?
The provided text describes various e-commerce business models and revenue models. Here's a
summary of the key points:
Types of E-commerce:
1. Business-to-Consumer (B2C) E-commerce: Involves retailing products and services to individual
shoppers. Examples include Amazon, Walmart, and Apple Music.
2. Business-to-Business (B2B) E-commerce: Involves sales of goods and services among
businesses. Example: Elemica's chemical and energy trading platform.
3. Consumer-to-Consumer (C2C) E-commerce: Involves consumers selling directly to other
consumers. eBay is a prominent example of C2C e-commerce.
E-commerce Business Models:
1. Portal: Websites like Yahoo, Facebook, and AOL that provide an integrated package of content,
services, and search tools. Generate revenue through advertising, referral fees, and premium
services.
2. E-tailer: Online retail stores that offer goods and services to customers. Can be pure online
businesses or extensions of brick-and-mortar stores.
3. Content Provider: Distributes intellectual property such as digital video, music, photos, and text.
Generates revenue through content sales or subscriptions.
4. Transaction Broker: Processes transactions traditionally handled in person, by phone, or by mail.
Common in financial and travel services.
5. Market Creator: Builds digital platforms for buyers and sellers to interact. Examples include eBay
and Amazon's Merchants platform.
6. Service Provider: Offers services online, such as photo sharing or cloud-based software.
Salesforce and Google are examples of companies using this model.
7. Community Provider (Social Networks): Creates online environments for people with similar
interests to connect, share, and communicate. Facebook, Pinterest, and LinkedIn are examples.
E-commerce Revenue Models:
1. Advertising Revenue Model: Generates revenue by attracting a large audience and exposing
them to advertisements. Major source of income for websites like Google, Facebook, and Yahoo.
2. Sales Revenue Model: Derives revenue from selling goods, services, or information to customers.
Examples include Amazon, Netflix, and Apple's iTunes Store.
3. Subscription Revenue Model: Charges a fee for access to premium content or services on an
ongoing basis. Examples include Netflix, Consumer Reports, and Match.com.
4. Free/Freemium Revenue Model: Offers basic services for free and charges for advanced or
premium features. Used by Google, Pandora, and other online services.
5. Transaction Fee Revenue Model: Earns a fee for enabling or executing transactions. Common in
online financial services and platforms like eBay.
6. Affiliate Revenue Model: Refers visitors to other websites in return for a referral fee or percentage
of resulting sales. Used by MyPoints, Yelp, and Amazon's affiliate program.
These models represent different ways that e-commerce businesses can generate revenue and
deliver value to customers. The choice of model depends on the type of business, its target audience,
and its value proposition.
Case Study: Deliveroo: Global Food Delivery App
Deliveroo, an online food delivery platform, connects customers with restaurants using freelance
riders for efficient meal delivery across nearly 800 cities. Operating since 2013, Deliveroo employs
technologies like real-time dispatch systems and Amazon Web Services (AWS) to optimize order
dispatch and rider allocation based on location data. During the pandemic, its services gained
prominence. Challenges stem from its business model, paying drivers below market rates, and
categorizing them as independent contractors to avoid offering benefits. Legal issues in France,
Belgium, and Australia highlight clashes between Deliveroo's contractor classification and its
extensive control over riders. While Deliveroo's past success in attracting riders to work for low wages
is noted, the company faces growing concerns about its long-term viability due to legal battles and
evolving labour standards that could impact its growth and profitability
Case Study Questions:
1. Based on your reading of the chapter, what kind of business model is Deliveroo using? Is it
different from or the same as Uber?
Deliveroo is using an on-demand delivery business model, connecting customers seeking meals with
restaurants through freelance riders. This model is somewhat similar to Uber's, as both platforms rely
on gig economy workers to provide services. However, there are differences, as Deliveroo is focused
on food delivery while Uber offers various transportation services.
2. What technologies are used by Deliveroo to support its business model?
Deliveroo employs several technologies to facilitate its business model. These include real-time
dispatching systems, databases for order management, smartphones for riders, and cloud services
like Amazon Web Services (AWS). AWS, in particular, enables Deliveroo to optimize order dispatch
and resource allocation using machine learning algorithms
3. What's the difference between an employee and a contractor?
An employee is a worker who is directly hired by a company and is entitled to certain benefits such as
minimum wage, health insurance, sick leave, and other employment protections. A contractor, on the
other hand, is usually an independent worker who provides services to a company but is not entitled
to the same benefits as employees. Contractors have more flexibility in their work arrangements but
lack certain legal protections.
4. What risk factors might limit Deliveroo's growth in the future?
Several risk factors could potentially limit Deliveroo's growth in the future. Legal challenges regarding
the classification of riders as contractors could lead to increased labour costs if courts require
Deliveroo to treat them as employees, leading to potentially higher wages and benefits. Furthermore,
increased public awareness and pressure for better working conditions for gig economy workers could
impact Deliveroo's reputation and customer base. As labour standards evolve and gig economy
regulations change, Deliveroo may face difficulties in maintaining its current business model,
particularly if stricter regulations are imposed that require improved worker benefits and conditions.
Additionally, competition from other food delivery platforms and changes in consumer preferences
could impact Deliveroo's market share and growth prospects.
10-3: How has e-commerce transformed marketing?
E-commerce has significantly transformed marketing by offering new avenues for identifying and
engaging with potential customers at lower costs than traditional media. The internet has enabled
marketers to utilize various strategies such as search engine marketing, data mining, recommender
systems, and targeted email campaigns. The concept of long-tail marketing, catering to niche markets
with low demand, has emerged due to the internet's ability to connect with specific audiences
profitably.
Behavioural targeting, a technique that tracks online behaviour to personalize ads, enhances
marketing effectiveness but also raises privacy concerns. Social e-commerce, facilitated by social
media platforms like Facebook, Twitter, and Instagram, has become a major driver of branding and
marketing. Marketers leverage the social graph, representing individuals' online relationships, to
understand consumer behaviours and preferences.
Online communities provide opportunities for viral marketing and crowdsourcing, enabling companies
to involve customers in product design and problem-solving. However, social media marketing is still
evolving, with challenges in managing interactions and safeguarding brand reputation.
10-4: How has e-commerce affected business to-business transactions?
E-commerce has significantly impacted business-to-business (B2B) transactions, revolutionizing how
companies conduct trade among themselves. The B2B marketplace is substantial, with B2B ecommerce contributing a considerable portion of total B2B trade. Traditional methods of B2B
transactions involved substantial human intervention and resource consumption. However, B2B ecommerce, facilitated by the internet, has the potential to automate processes, enhance efficiency,
and save costs.
Electronic Data Interchange (EDI) is a primary technology used for B2B e-commerce, enabling
computer-to-computer exchanges of standard transactions like invoices, purchase orders, and
shipping schedules. Despite technological advancements, around 80% of online B2B e-commerce still
relies on proprietary EDI systems. Businesses use EDI to streamline document automation and
implement continuous replenishment strategies.
The internet and web technology have introduced new ways of B2B buying and selling. Electronic
storefronts, akin to B2C commerce, enable businesses to sell to other businesses online. Additionally,
extranets and electronic marketplaces link businesses for purchasing and sales transactions. Private
industrial networks, where a firm connects with suppliers and partners, facilitate collaborative activities
and communication. Net marketplaces, also known as e-hubs, offer digital platforms for buyers and
sellers to engage in transactions, negotiations, and auctions. They can be industry-owned or operate
independently, providing a centralized platform for various industries.
Exchanges, independent third-party net marketplaces, connect numerous suppliers and buyers for
spot purchasing. Exchanges primarily focus on direct goods and provide vertical markets for specific
industries. However, despite their initial proliferation, many exchanges faced challenges, including
competitive pricing, lack of long-term relationships, and limited services.
Overall, B2B e-commerce has transformed traditional business transactions by providing
opportunities for automation, efficiency improvement, and expanded business networks.
10-5: What is the role of m-commerce in business, and what are the most important mcommerce applications?
Mobile commerce (m-commerce) plays a vital role in the business landscape, and its impact
continues to grow. Retail m-commerce has become a major force in e-commerce, projected to
account for 65% of retail e-commerce revenues worldwide in 2020, with estimates indicating it could
reach $4 trillion by 2023. This growth is particularly evident in mass-market retailing, digital content
sales (music, TV shows, movies, e-books), and in-app sales to mobile devices.
Location-based services are a cornerstone of m-commerce, fueled by GPS-enabled map services on
smartphones. These services encompass geosocial, geoadvertising, and geoinformation services.
Geosocial services help friends connect by checking into locations, while geoadvertising directs ads
to users based on their GPS locations. Notably, location-based services are crucial for on-demand
economy firms like Uber, Lyft, and Airbnb, enhancing user experience based on their geographic
location.
M-commerce extends beyond location-based services. Banks and credit card companies offer mobile
services for managing accounts and making transactions. Mobile advertising is a rapidly growing
sector, with platforms like Facebook and Google dominating the market. Retailers have embraced mcommerce with simplified mobile websites and apps for shopping and placing orders. Moreover,
mobile app payment systems have emerged as an important fintech application, replacing traditional
payment methods. These systems include NFC-driven contactless payments (e.g., Apple Pay,
Google Pay), QR code payment systems (e.g., Walmart Pay), and peer-to-peer payment systems
(e.g., Venmo, Zelle).
In summary, m-commerce is reshaping business practices and customer interactions, ranging from
retail to banking and advertising, providing convenient and innovative solutions through mobile
devices.
10-6: What issues must be addressed when building an e-commerce presence?
When building an e-commerce presence, there are several critical issues that must be addressed to
ensure success. These issues range from understanding business objectives and choosing the right
technology to mapping out the presence across various platforms. Here are some key points to
consider:
1. Understanding Business Objectives: Before diving into e-commerce, it's crucial to have a clear
understanding of your business objectives. Determine what you aim to achieve with your e-commerce
presence, whether it's expanding your customer base, increasing sales, enhancing customer
engagement, or all of the above. Your e-commerce strategy should align with these objectives.
2. Choosing the Right Technology: Selecting the right technology to support your e-commerce
presence is vital. Consider factors such as the scalability of the platform, security features, ease of
use for both customers and administrators, integration capabilities with other systems, and mobilefriendliness.
3. E-commerce Presence Map: Building an e-commerce presence involves more than just a
website. You need to consider a range of platforms and activities, including your website, email
campaigns, social media engagement, and offline media. Each platform has its unique capabilities
and requirements, so develop a presence map that outlines your strategy for each one.
4. Mobile-Friendly Approach: E-commerce has shifted from being desktop-centric to mobile-centric.
Ensure that your online presence is optimized for mobile devices, as a majority of users access
websites, shop, and engage with content using smartphones and tablets.
5. Platform Considerations: Depending on the type of e-commerce presence you're establishing,
such as websites, email campaigns, social media, or offline media, you'll need to choose appropriate
platforms and tools for each. For instance, for websites, you'll need to consider design for desktop,
tablet, and mobile versions.
6. Engagement Strategies: Develop strategies for engaging with customers on various platforms.
This could involve search engine marketing, display ads, affiliate programs, sponsorships, and more.
Effective engagement can lead to increased traffic and conversions.
7. Offline Media Integration: Some businesses use a multiplatform marketing approach where offline
media (such as print ads) refer customers to online platforms. Ensure there's consistency in branding
and messaging across all touchpoints.
8. Timeline and Milestones: Create a timeline with milestones for your e-commerce development.
This helps you set realistic goals and track progress over time. Having a well-defined timeline can
also keep your team focused and organized.
9. Customer Experience: A seamless and positive customer experience is crucial for e-commerce
success. Ensure that your website is user-friendly, intuitive to navigate, and provides secure and
convenient payment options.
10. Testing and Optimization: Regularly test and optimize your e-commerce presence. Use
analytics to monitor user behaviour, identify areas for improvement, and make necessary adjustments
to enhance user experience and drive better results.
11. Legal and Security Considerations: E-commerce involves handling customer data and
transactions, so you must address legal and security aspects. Implement security measures to protect
customer information and comply with relevant data protection regulations.
Building a successful e-commerce presence requires a holistic approach that considers business
goals, technology, customer engagement, and user experience. By addressing these issues and
following a systematic strategy, you can create a strong and effective online presence that meets the
needs of your target audience.
Case Study: An iDEAL Solution to the Single Online EU Market
The case study delves into the complexities of e-commerce behaviour within the European Union
(EU). Eurostat's data reveals diverse online shopping patterns across EU countries, with varying
percentages of consumers making purchases and willingness to buy from other member states.
"Geoblocking" practices, which involve country-specific restrictions, hinder cross-border shopping.
Market segmentation based on location impacts product pricing, particularly in industries like travel.
The influence of IP addresses on pricing is noted, emphasizing the importance of IP location in
determining cost differences. Challenges like language barriers, customer care, return policies, and
fraud deter cross-border shopping. The Dutch iDEAL payment system is examined as a model,
raising questions about the potential for a Europe-wide payment solution. The EU's initiatives, such as
the "Buying Online" directive and geoblocking elimination, seek to foster a unified digital market.
Overall, the study underscores the complexities and efforts involved in creating a seamless crossborder e-commerce landscape within the EU.
10-15 Douglas is a perfume shop that has branches in many European countries. Go to their
European website (www.douglas.eu) and choose a country. Now choose a perfume
and look at the online Douglas shops in other European countries. Is there a price difference?
Would you buy your perfume in the online shop of another country? What problems might you
experience?
10-15 Douglas Perfume Shop:
Price Difference: Upon visiting Douglas's European website (www.douglas.eu) and selecting a
specific country, you can explore the prices of perfumes in their online shops across various
European countries. It's possible that there might be price differences for the same perfume in
different countries.
Buying in Another Country's Online Shop: Deciding whether to buy a perfume from the online shop of
another country depends on various factors, including the price difference, potential shipping costs,
and any language or customer support barriers.
Potential Problems: When buying from another country's online shop, potential problems could
include higher shipping fees, longer delivery times, language barriers, different return policies, and
potential challenges with customer support.
10-15 You are thinking of opening an online shop in the Netherlands. Would you include iDEAL
as a payment option? What factors would you take into consideration before taking a
decision?
10-15 Opening an Online Shop in the Netherlands: When considering whether to include iDEAL as a
payment option for an online shop in the Netherlands, several factors should be taken into
consideration:
1. Popularity: iDEAL is widely used in the Netherlands, making it a preferred payment method
for Dutch consumers.
2. Customer Preference: Dutch consumers are familiar with and trust iDEAL, which can
enhance their shopping experience.
3. Competitive Advantage: Offering iDEAL can give your online shop a competitive edge by
catering to local preferences.
4. Integration: Integration with iDEAL may require technical setup and possibly additional costs.
5. Alternatives: While iDEAL is popular, considering other payment options is important to
accommodate diverse customer preferences.
10-15 The world is, of course, bigger than the European Union. Does the legislation of the
European Union give the same rights to those who buy online from within the European Union
as opposed to those who live in the European Union but buy online from, let's say, a shop in
China?
10-15 Legislation and Consumer Rights:
The legislation of the European Union grants certain rights to consumers within the EU, regardless of
the location of the online shop they purchase from. However, when purchasing from a shop outside
the EU, such as one in China, consumers might not enjoy the same level of protection and rights.
Different legal frameworks, regulations, and enforcement mechanisms can impact consumer rights,
such as those related to returns, warranties, and privacy.
Please note that the specific details and circumstances might vary based on current regulations and
the individual context of each case.
Chapter 11: Managing Knowledge and Artificial Intelligence.
Artificial Intelligence Beats Radiologists in Reading Mammograms.
The case study discusses the significant challenges posed by breast cancer detection using
mammograms and highlights the potential of artificial intelligence (AI) to enhance accuracy. Despite
being a leading tool, mammograms can produce false negatives and false positives, impacting
diagnoses. A new AI-based system was developed by a team of researchers to read breast X-ray
images more effectively than human radiologists. The AI model was trained on a vast dataset of
known breast cancer diagnoses, demonstrating improved performance in reducing false negatives
and false positives.
Comparisons with human radiologists revealed the AI system's superior accuracy. Although there
were instances where the AI missed cancers detected by radiologists, the study underscores the
potential of AI in enhancing mammogram interpretation. The application of AI techniques in medical
diagnosis illustrates the value of technology in improving knowledge acquisition, utilization, and
business processes, leading to improved organizational performance. The potential implications for
radiologists' practices and the future impact on mammogram analysis and diagnosis are significant
areas of consideration.
11-1: What is the role of knowledge management systems in business?
Knowledge management systems play a vital role in business by enhancing the creation, storage,
transfer, and application of knowledge within organizations. In today's information-driven economy,
knowledge has become a critical source of value and competitive advantage. Knowledge
management involves processes that transform data into information, information into knowledge, and
knowledge into actionable insights. Organizations acquire knowledge through data collection, trial and
error, feedback, and expert networks. Once acquired, knowledge is stored in databases and expert
systems. Dissemination of knowledge is facilitated by collaboration tools, portals, email, and social
business tools.
However, knowledge becomes valuable when applied to practical problems and integrated into
decision-making processes. Collaboration, communities of practice, and supportive office
environments contribute to building organizational and management capital. There are three major
types of knowledge management systems: enterprise-wide systems that collect, store, and distribute
digital content; knowledge work systems that aid in discovering new knowledge; and "intelligent"
techniques such as data mining, expert systems, machine learning, and more. These systems
collectively contribute to enhancing organizational learning, decision-making, and overall
performance.
11-2: What is artificial intelligence (Al) and machine learning? How do businesses use Al?
Artificial Intelligence (AI) is a broad field encompassing the development of computer systems
designed to replicate human intelligence, while Machine Learning (ML), a subset of AI, focuses on
enabling computers to learn and improve from data. Businesses harness AI for various purposes to
enhance operations and decision-making processes. Expert systems utilize domain expertise and
predefined rules to guide decision-making, while ML techniques analyze extensive datasets to identify
patterns, aiding tasks like fraud detection and recommendation systems. Neural networks, inspired by
the human brain's structure, excel in tasks such as image and speech recognition. Natural Language
Processing (NLP) powers applications like sentiment analysis, chatbots, and language translation,
and computer vision interprets visual information. Genetic algorithms optimize complex tasks such as
supply chains, and intelligent agents autonomously perform specific actions. While AI hasn't reached
human-level intelligence, its progress is driven by factors like data availability, computing power,
algorithm advancements, and investments, reshaping various aspects of business functions.
Interactive Sessions: Organizations
Will AI Kill jobs?
The advent of artificial intelligence (AI) is bringing about a transformative change akin to the impact of
the World Wide Web. Industries across the board are embracing AI to handle various tasks like
customer service, technical support, advertising, and medical diagnosis. AI's efficiency, effectiveness,
and ability to work around the clock make it valuable for routine and judgment-based tasks. While AI,
supplemented by technologies like big data and cloud computing, is expected to create value and
reduce costs, concerns arise about its potential impact on job stability. Surveys indicate that a
substantial portion of the public and tech executives believe AI will affect jobs in the future. Estimates
vary, with some projections suggesting that a significant percentage of the global workforce could be
displaced by technology by 2030.
However, historical data and technological trends show that new waves of technology may initially
lead to temporary job losses but ultimately create new openings. This effect has been observed with
advancements like the invention of ATMs, which transformed the roles of bank tellers rather than
rendering them obsolete. Collaboration between humans and machines is anticipated to yield optimal
outcomes. The impact of AI on jobs will vary by country and industry, with positions requiring lower
education levels being more susceptible to replacement by AI. Adequate training is essential for
workers to transition to other career paths, but challenges remain in ensuring that everyone has
access to training and maintains comparable wages after switching jobs. Studies show a U-shaped
relationship between automation and age, with middle-aged individuals being more likely to lose jobs
due to AI. Despite past concerns about technology causing mass unemployment, historical evidence
suggests that technology has, over time, created more jobs than it has eliminated.
Case Study Questions:
1. What are the various view s on the impact of AI on jobs? What do you think will happen in
your
country?
The impact of AI on jobs is a topic of ongoing debate, with various viewpoints emerging. Some
experts and researchers believe that AI will lead to significant job displacement, particularly in
industries with routine and repetitive tasks. They argue that automation powered by AI could replace a
substantial portion of the workforce, leading to unemployment and shifts in the job market. On the
other hand, there's a perspective that AI will create new opportunities and job roles.
This viewpoint suggests that as AI technology advances, new types of jobs will emerge that are
centred around developing, implementing, and maintaining AI systems. These roles may require skills
such as data analysis, machine learning, programming, and problem-solving. The impact of AI on jobs
will likely vary by country based on factors like technological adoption rates, workforce skills, and
industry composition.
2. Some people think that AI does not kill jobs but transforms business models. Do you agree?
Why or why not?
The idea that AI transforms business models rather than solely eliminating jobs has substantial merit.
AI has the potential to optimize and streamline various business processes, leading to increased
efficiency and improved decision-making. While certain tasks might be automated, the focus often
shifts to higher-value tasks that require creativity, critical thinking, and human interaction. For
instance, AI can handle routine customer inquiries, allowing human employees to engage in more
complex and personalized customer interactions. Additionally, AI's capabilities can enable the
creation of entirely new products, services, and industries, generating new opportunities for
employment. Thus, it's plausible that AI will reshape business models and redefine the nature of jobs
rather than simply leading to massive job losses.
3. How would AI potentially add more jobs than it eliminates?
AI's potential to add more jobs than it eliminates rests on the concept of "job churn." As AI automates
certain tasks, individuals working in those roles may need to transition to new roles that require
different skills. For instance, as routine tasks become automated, employees can focus on higherlevel tasks that involve creativity, critical thinking, and emotional intelligence—areas where humans
still excel. Moreover, the development, implementation, and maintenance of AI systems require
specialized skills and expertise.
This leads to the creation of new roles in fields like data science, machine learning, AI ethics, and
algorithm development. Furthermore, AI's ability to enhance productivity and drive innovation can lead
to the growth of industries that were previously non-existent or underdeveloped, thereby generating
new job opportunities. Overall, while there may be job displacement initially, AI's transformative
potential can contribute to a net increase in employment opportunities over time.
11-3: What types of systems are used for enterprise-wide knowledge management, and how
do they provide value for businesses?
Enterprise-wide knowledge management systems encompass various types of systems that aid
organizations in managing and utilizing different forms of knowledge. These systems provide
significant value for businesses by enabling efficient organization, retrieval, and sharing of both
structured and unstructured information. Here are the types of systems used for enterprise-wide
knowledge management and their value for businesses:
1. Enterprise Content Management Systems (ECM): ECM systems manage structured and
semistructured knowledge, improving business processes through centralized storage, retrieval, and
external information integration.
2. Digital Asset Management Systems: These manage unstructured digital data, ensuring
consistent branding and efficient content usage.
3. Locating and Sharing Expertise: Modern systems help identify experts, fostering knowledge
sharing, while social networking tools expand external knowledge access.
4. Learning Management Systems (LMS): LMSs enable effective employee learning, combining
various modes and MOOCs to align skills with business needs.
Enterprise-wide knowledge management systems encompass a variety of tools and technologies that
address different forms of knowledge within organizations. These systems offer substantial value by
enhancing collaboration, improving decision-making, and facilitating skill development. By effectively
managing knowledge assets, businesses can achieve operational efficiency, innovation, and
adaptability in a rapidly evolving business landscape.
11-4: What are the major types of knowledge work systems, and how do they provide value for
firms?
The enterprise-wide knowledge systems we have just described provide a wide range of capabilities
that can be used by many if not all the workers and groups in an organization. Firms also have
specialized systems for knowledge workers to help them create new knowledge and to ensure that
this knowledge is properly integrated into the business
1. Enterprise-Wide Knowledge Systems: These encompass structured and semi structured
knowledge, aiding diverse workers with capabilities for storage, retrieval, and integration.
2. Knowledge Workers and Systems: Knowledge workers, such as researchers and designers,
require specialized systems with powerful tools, graphics, and data access to enhance their
productivity and decision-making.
3. Examples of Knowledge Work Systems: CAD systems automate design, virtual reality (VR) and
augmented reality (AR) systems provide immersive simulations, enhancing industries like vehicle
design and medical procedures
Examples of Knowledge Work Systems:
1. Computer-Aided Design (CAD) Systems: These systems automate design processes, allowing
designers to create, modify, and test designs digitally, reducing the need for physical prototypes and
saving time and resources.
2. Virtual Reality (VR) Systems: VR systems use interactive graphics to create immersive
simulations that closely resemble real-world situations. They find application in fields like vehicle
design, offering 360-degree views of digitally constructed components and aiding in design validation.
3. Augmented Reality (AR): AR overlays digital data and images onto the physical environment,
enhancing perception. It's used in various contexts, including medical procedures like image-guided
surgery and industries like military training, engineering design, and consumer design.
Case Study: Are Self-Driving Cars Ready for the Road?
The question of whether self-driving cars are truly ready for the roads is a subject of widespread
debate. Major automakers like Ford, General Motors, Nissan, and Tesla are heavily invested in
developing autonomous vehicle technology, with billions poured into research and development.
Ride-hailing companies such as Uber and Lyft view driverless cars as crucial for long-term profitability
due to the potential elimination of labour costs. The technology has reached a stage where vehicles
equipped with sensors, cameras, lidars, GPS, radars, and advanced computer systems can process
and analyse vast amounts of data to control steering, acceleration, and braking in real-time. Despite
the promising advancements, challenges and controversies persist.
While self-driving cars have made appearances on roads in various locations, including California,
Arizona, Michigan, and global cities like Paris, London, Singapore, and Beijing, there are concerns
about their readiness. Autonomous vehicle technology's defenders argue that the technology has the
potential to significantly reduce the more than 40,000 annual traffic-related deaths in the US, most of
which are caused by human error. However, the technology is far from perfect. The tragic incident
involving a self-driving Uber vehicle in Tempe, Arizona, where a pedestrian was killed, underscored
the risks and led to suspension of testing.
Autonomous vehicles rely on a plethora of technologies, including sensors, cameras, lidars, GPS,
radar, computer systems, machine learning, and computer vision. While progress has been made,
challenges remain. Complex weather conditions, chaotic environments with congested streets, and
situations requiring nuanced decisions, such as the "trolley problem," pose difficulties for self-driving
cars. Additionally, ensuring effective communication between autonomous vehicles and humans, as
well as solving security concerns in networked systems, remains a challenge.
The road ahead for fully autonomous vehicles is uncertain. While some anticipate that a computerdriven car capable of handling all situations as well as a human is decades away, a more realistic
expectation is the integration of self-driving technology into human-driven cars. Current models are
being equipped with advanced object recognition, emergency braking, and autonomous features that
improve road safety. Analysts predict the first deployment of self-driving technology will likely be in
robot taxi services operating in limited conditions and areas, offering shared self-driving rides with
predetermined pickup and drop-off points. This gradual approach reflects the ongoing quest to
balance technological advancements with safety and regulatory concerns.
11-13 What are the management, organizational, and technology challenges posed by selfdriving car technology?
Self-driving car technology presents a host of challenges across management, organizational, and
technological aspects. From a management perspective, there's a need for effective project
management to coordinate various teams working on sensors, software, safety features, and more.
Organizational challenges arise from the need to integrate autonomous technology into existing
business models and manage the transition to autonomous vehicles. Workforce reskilling and
potential job displacement due to automation are also organizational concerns. On the technological
front, ensuring the robustness of AI algorithms for real-world scenarios, managing cybersecurity to
prevent hacking, addressing unpredictable road conditions, and achieving reliable vehicle-to-vehicle
communication are all significant technology challenges.
11-14 Are self-driving cars good business investments? Explain your answer.
Whether self-driving cars are good business investments depends on various factors. While the
potential benefits include reduced accidents, increased transportation efficiency, and innovative
business models (such as ride-hailing services), there are substantial costs and risks. The technology
development is expensive, including research, testing, and regulatory compliance. Moreover, safety
and legal concerns could result in expensive lawsuits. Additionally, consumer adoption and trust in the
technology are uncertain. Businesses must carefully assess the long-term potential benefits against
the short-term financial and regulatory risks.
11-15 What ethical and social issues are raised by self-driving car technology?
Self-driving car technology introduces ethical dilemmas such as the "trolley problem," where AI
systems may need to make decisions that result in harm to some to save others. Social issues
include potential job displacement for drivers in the transportation industry. Privacy concerns arise
due to the data collection and sharing necessary for autonomous vehicles. Questions about
accountability arise when accidents occur; who is liable, the manufacturer, software developer, or the
owner? Addressing these ethical and social issues requires collaboration between policymakers,
industry stakeholders, and the public.
11-16 Will cars really be able to drive themselves without human operators? Should they?
The feasibility of fully self-driving cars without human operators is still a matter of ongoing
technological development. While significant progress has been made, challenges like handling
complex weather conditions and ensuring robust decision-making in all situations remain. The
question of whether they should drive without human operators involves complex considerations. The
potential benefits include reduced accidents and increased accessibility, especially for individuals with
mobility challenges. However, ethical and safety concerns, the impact on the job market, and the
need for human intervention in exceptional cases must also be addressed. The decision should
consider striking a balance between technological advancement and ensuring public safety and wellbeing.
Chapter 12: Enhancing Decision making.
Opening Case Study: Eastspring: Targeted Enterprise System Building
The case study discusses the transformation journey of Eastspring Investments, a company owned
by Prudential Corporation Asia, specializing in managing investment funds. Originally established in
1994, the company faced technological challenges due to the complexity of its applications and
legacy systems. By 2013, it had numerous applications and batch jobs in place. Recognizing the
systemic issues arising from specific business needs across regional units, Eastspring embarked on a
technology overhaul.
In 2015, the company reviewed its business processes and created a Target Operating Model (TOM)
to standardize operations across regions. A strategic decision was made to adopt comprehensive
enterprise software rather than focusing solely on best-in-breed solutions. Eastspring opted to
reconfigure its processes to align with the new software, with critical, important, and unimportant
processes categorized. Critical processes were retained in-house, important processes were
outsourced, and unimportant ones were addressed using off-the-shelf products.
Key areas like portfolio and order management, data management, and back-office processing were
revamped. Vendors were chosen for each area, including Aladdin from Blackrock for portfolio
management, GoldenSource for data management, and BNP Paribas for back-office processes. The
cloud-based Aladdin system provided hosted services and real-time messaging, reducing the need for
in-house infrastructure.
The project's first phases were successfully implemented regionally, enabling Eastspring to enhance
risk reporting and understanding for managed funds. The company expanded globally, achieving over
25% growth in funds under management since 2013. While facing challenges like decreased
dividends in 2020 due to the pandemic, the company is witnessing signs of recovery in Southeast
Asia and anticipates a promising future.
12-1: What are the different types of decisions, and how does the decision-making process
work?
The evolving landscape of decision making in businesses encompasses both management and
lower-level employees, with information systems enabling access to information for informed
decisions. The monetary value of improved decision making is demonstrated through examples,
emphasizing the cumulative effect of enhancing numerous small decisions.
Decisions are categorized as unstructured, structured, or semistructured, with their prevalence
varying across organizational levels. Unstructured decisions involve judgment and insight, structured
decisions follow established procedures, and semistructured decisions incorporate elements of both.
The decision-making process involves stages of intelligence, design, choice, and implementation,
allowing for adaptation if chosen solutions don't yield desired outcomes.
12-2: How do information systems support the activities of managers and management
decision making?
Information systems provide support to managers and their decision-making activities by enhancing
decision quality, improving returns on investment, and ultimately boosting profitability. However, not
all decisions can be improved by information systems due to various factors. Managers have
multifaceted roles within organizations, encompassing activities such as decision-making, report
writing, meeting attendance, and more. While the classical model of management outlines formal
functions like planning and organizing, behavioural models emphasize the dynamic and informal
nature of managerial behaviour.
Contemporary behavioural analysis by Henry Mintzberg identified ten managerial roles that can be
categorized into three groups: interpersonal, informational, and decisional. These roles involve acting
as figureheads, leaders, liaisons, information conduits, and decision makers. Information systems can
support most of these roles, but not all, due to differences in information quality, management filters,
and organizational culture.
Information quality is crucial for high-quality decisions, and systems must provide accurate, relevant,
and timely information. Management filters influence decision-making, as managers interpret
information through cognitive biases, risk perceptions, and intuition. Organizational inertia and politics
also play a role, with resistance to change and internal power dynamics affecting decision outcomes.
In high-velocity decision environments, such as algorithm-driven trading or internet searches,
software algorithms handle intelligence, design, choice, and implementation aspects of decision-
making. Humans are excluded from the process due to the rapid pace, highlighting the importance of
well-designed and monitored systems to prevent adverse outcomes.
12-3: How do business intelligence and business analytics support decision making?
The Business Intelligence Environment.
Business intelligence (BI) and business analytics (BA) form the foundation for decision support
systems in organizations. BI refers to the infrastructure for collecting, storing, cleaning, and analyzing
data from various sources, including structured and unstructured data, to make relevant information
available to managers. BA, on the other hand, focuses on the tools and techniques used to analyze
and understand data, such as online analytical processing (OLAP), statistics, models, and data
mining.
BI and BA involve integrating data streams from across the organization into a coherent set of data
and then using analytical tools to derive insights for better decision-making. These terms are defined
by technology vendors and consulting firms, with leading providers including Oracle, SAP, IBM,
Microsoft, and SAS. Both BI and BA solutions now offer cloud and mobile versions to cater to diverse
business needs.
The business intelligence environment includes six key elements:
1. Data from the business environment: Dealing with structured and unstructured data from various
sources, including big data, and integrating and organizing them for analysis.
2. Business intelligence infrastructure: This encompasses the database system that captures
relevant data for the business. Data might be stored in transactional databases, enterprise data
warehouses, or data marts.
3. Business analytics tools: Software tools for analyzing data, generating reports, answering
managerial queries, and tracking business performance using key indicators.
4. Managerial users and methods: Human decision makers use managerial methods to interpret
and analyze data, set business goals, and measure progress using key performance indicators and
strategic analyses.
5. Delivery platform (MIS, DSS, ESS): The results of BI and BA are delivered through Management
Information Systems (MIS), Decision Support Systems (DSS), and Executive Support Systems (ESS)
to different levels within the organization.
6. User interface: Visual representations of data, such as graphs, charts, dashboards, and maps,
help users understand insights quickly. Business analytics software provides interactive dashboards
and mobile access for easy data visualization and sharing.
Business intelligence and analytics together empower organizations to gather insights from data,
enhance decision-making processes, and ultimately drive business success.
Business Intelligence and Analytics Capabilities.
Business intelligence and analytics systems offer a range of functionalities to deliver accurate and
timely information to decision makers and help them make informed decisions. There are six key
analytic capabilities provided by these systems.
1. Production Reports: Predefined reports based on industry standards, presenting standardized
information.
2. Parameterized Reports: Users input parameters to filter and analyse data, revealing specific
insights.
3. Dashboards and Scorecards: Visual tools displaying customized performance metrics in
graphical format.
4. Ad Hoc Query, Search, and Report Creation: Users generate personalized reports and queries
based on their questions.
5. Drill Down: Users start with summaries and navigate to detailed data for deeper analysis.
6. Forecasts, Scenarios, and Models: Perform predictive forecasting, scenario analysis, and indepth statistical modelling.
Predictive Analytics:
Predictive analytics is a pivotal capability within business intelligence analytics that holds the potential
to shape future trends and behaviors by harnessing the power of statistical analysis, data mining
techniques, historical data, and informed assumptions. This technique enables organizations to
forecast probabilities and outcomes, facilitating enhanced decision-making processes. By identifying
measurable variables that contribute to predictive models, businesses can ascertain the likelihood of
specific events or behaviors occurring. For instance, insurance companies employ predictive analytics
to evaluate variables such as age, gender, and driving history in determining driving safety for auto
insurance policies. This amalgamation of predictors constructs a model that provides insights into
future probabilities with a certain degree of reliability. Major companies like FedEx leverage predictive
analytics to discern customer responses to pricing changes and new services, achieving accuracy
rates ranging from 65% to 90%. This capability finds its application across various domains including
sales, marketing, finance, healthcare, and credit scoring, where it significantly enhances the accuracy
of decision-making processes.
Big Data Analytics:
The emergence of big data analytics within the realm of business intelligence has ushered in a new
era of insight extraction from copious amounts of data generated by both private and public sectors.
This analytics approach delves into vast datasets, including information gleaned from social media,
customer transactions, sensors, and machine outputs. A notable application in e-commerce involves
personalized product recommendations based on individualized customer behaviors, a significant
departure from traditional aggregate group behaviors. Through the utilization of big data, businesses
can tailor their recommendations more precisely, leading to increased customer spending and loyalty.
Public sectors are also leveraging big data analytics to foster the development of "smart cities" that
harness digital technology for informed decision-making in urban planning, public services, and
utilities. This paradigm shift towards data-driven governance has enhanced the efficiency of cities and
enabled holistic problem-solving on an unprecedented scale.
Operational Intelligence and Analytics:
Operational intelligence serves as the driving force behind day-to-day business activities,
underpinning operational decisions that are vital for efficient organizational functioning. In this context,
operational intelligence is characterized by the real-time analysis of data streams emanating from the
Internet of Things (IoT), encompassing web activities, sensors, gauges, smartphones, and monitoring
devices. This real-time analysis enables businesses to gain insights into activities both within and
outside the organization, facilitating swift and informed decision-making. For instance, oil and gas
companies have embraced operational intelligence to predict equipment failures and implement
predictive maintenance schedules. Notably, this method enables organizations to proactively address
potential breakdowns before they occur. Additionally, transportation companies such as France's
SNCF have harnessed operational intelligence to enhance the reliability of their services, utilizing
sensor data to monitor train conditions, speed, and track conditions. The integration of real-time
analysis into operational decision-making showcases its pivotal role in optimizing organizational
processes and achieving heightened efficiency.
Interactive Session: organizations
Predictive Maintenance in the Oil and Gas Industry.
The oil and gas industry, known for its susceptibility to unplanned downtime and substantial losses
due to equipment malfunctions, has found a powerful ally in predictive maintenance facilitated by big
data analytics. Within this sector, the financial impact of even marginal productivity improvements can
be immense. Industries such as liquefied natural gas (LNG) facilities incur losses amounting to
millions of dollars from a single unproductive day due to equipment failures. To mitigate such losses,
predictive maintenance leverages vast datasets produced by sensors in oil fields and pipelines. These
datasets, often comprising over 40,000 data tags in offshore production platforms, are analyzed to
predict equipment failures and address issues proactively, circumventing costly unscheduled
maintenance. This predictive approach, coupled with the Internet of Things (IoT) data, monitors
equipment condition using automated condition monitoring and advanced data analytics, detecting
signs of deterioration by comparing vital equipment statistics with historical data. Predictive
maintenance empowers decision-makers to schedule maintenance activities strategically, minimizing
disruptions while prioritizing essential repairs.
One of the prominent collaborations in this domain is the partnership between BP and General
Electric (GE), where GE's sensors linked to the Predix cloud platform were equipped in BP's oil wells.
This initiative provides real-time information through data collection and analysis, optimizing
maintenance scheduling and enhancing machine efficiency. The application, Plant Operations Advisor
(POA), emerged from this collaboration, further enhancing BP's production operations by preventing
unplanned downtime and facilitating rapid responses to issues. Addressing pipeline risk management,
GE's pipeline-management software suite offers a comprehensive solution by integrating critical data
for safe pipeline management. By assessing internal and external factors, this suite provides real-time
visual representations of risk areas, empowering operators with informed decisions for deploying field
service crews along pipelines. Royal Dutch Shell PLC is another notable example, utilizing predictive
maintenance applications developed on platforms like Microsoft Azure and C3 IoT to monitor
equipment performance and predict maintenance needs. This technology is being scaled to monitor
vast numbers of sites and equipment pieces, thereby highlighting the industry's growing reliance on
predictive analytics to optimize maintenance strategies, minimize downtime, and enhance operational
efficiency.
Case Study Questions:
1. Why is predictive maintenance so important in the oil and gas industry? What problems
does it solve?
Predictive maintenance holds significant importance in the oil and gas industry due to its ability to
address the challenges of unplanned downtime and equipment malfunctions. The sector is heavily
reliant on complex machinery and equipment, and any unexpected failures can lead to substantial
financial losses, safety hazards, and environmental risks. For instance, a single day of downtime on
an LNG facility can result in multimillion-dollar losses. Predictive maintenance solves these problems
by leveraging data analysis to predict equipment failures before they occur. This proactive approach
enables timely maintenance interventions, minimizes disruptions to operations, enhances safety,
reduces maintenance costs, and ultimately improves the overall efficiency and reliability of the
industry's operations.
2. What is the role of the Internet of Things (IoT) and Big Data analytics in predictive
maintenance?
The Internet of Things (IoT) and Big Data analytics play pivotal roles in predictive maintenance in the
oil and gas industry. IoT involves the integration of sensors and devices with the capability to collect
real-time data from equipment and assets. These sensors monitor crucial parameters such as
temperature, pressure, sound, and vibrations. Big Data analytics then processes this massive amount
of data to identify patterns and anomalies that indicate potential equipment malfunctions. By analyzing
historical data and real-time conditions, predictive models can be developed to forecast the likelihood
of failures. The combination of IoT and Big Data analytics enables the industry to continuously
monitor equipment health, detect deviations from normal operating conditions, and predict
maintenance requirements well in advance
3. How did BP and Royal Dutch Shell's predictive maintenance applications change business
operations and decision making?
BP and Royal Dutch Shell's predictive maintenance applications have significantly transformed
business operations and decision-making processes. In the case of BP, its partnership with General
Electric (GE) led to the creation of the Plant Operations Advisor (POA) application. This application
empowers engineering teams to respond rapidly to real-time issues, preventing unplanned downtime
and improving operational efficiency. Additionally, BP's predictive maintenance initiative has facilitated
informed decision-making by providing insights into equipment performance and maintenance needs,
enabling strategic scheduling of maintenance activities. Similarly, Royal Dutch Shell's adoption of
predictive maintenance applications has allowed the company to monitor equipment performance,
predict maintenance needs, and optimize maintenance strategies. By leveraging data-driven insights,
both companies have shifted from reactive to proactive maintenance approaches, enhancing asset
reliability, reducing costs, and bolstering operational excellence.
4. Give an example of how predictive maintenance systems could be used in another industry
An example of predictive maintenance in another industry is aviation. Airlines operate fleets of aircraft
that require continuous maintenance to ensure safe and efficient operations. The aviation industry
could employ predictive maintenance systems by equipping aircraft with sensors that monitor various
parameters such as engine performance, structural integrity, and component wear. Data collected by
these sensors would be analysed using Big Data analytics and machine learning algorithms to predict
potential mechanical issues or failures. Airlines could then schedule maintenance activities during
routine layovers based on predictive insights, reducing unscheduled maintenance downtime and
improving aircraft safety and reliability. Predictive maintenance could also enable airlines to optimize
maintenance practices, reduce operational costs, and enhance the overall passenger experience.
Interactive Session: Management
GIS Help Land O’Lakes Manage Assets Strategically.
Land O'Lakes, a prominent agricultural cooperative serving the dairy industry, has strategically utilized
geographic information systems (GIS) to enhance its operations and decision-making processes.
Founded in 1921, Land O'Lakes is a major cooperative with a broad member base and an extensive
product portfolio. Recognizing the significance of efficient asset management in the agricultural
industry, the co-op established a Strategic Asset Management (SAM) team around seven years ago.
The team employs GIS to provide valuable insights to its members on matters concerning the optimal
positioning of facilities such as feed lots, grain elevators, and crop nutrient facilities.
The primary function of the SAM team is to assist co-op members in optimizing their asset locations
by leveraging GIS. For instance, GIS tools allow the team to visualize and analyze trade areas,
assess facility proximity, and identify overlaps between facilities. By using GIS technology, Land
O'Lakes gains insights into how its member facilities are positioned relative to each other and to
competitors' locations within a given trade area. This information aids in strategic decision-making,
ensuring that storage facilities and assets are situated optimally to serve customers efficiently.
GIS tools are also employed to analyze transportation logistics and optimize distribution routes. By
assessing drive-time routes within specific trade territories, the SAM team can identify opportunities
for route planning improvements. Additionally, GIS supports field data collection, enabling the team to
evaluate the capabilities, age, and potential expansion of co-op member facilities. Survey 123 for
ArcGIS is used to capture comprehensive facility data consistently, allowing informed
recommendations for facility improvements and expansions.
Land O'Lakes' utilization of ArcGIS, developed by ESRI, enables the integration, storage, analysis,
and display of geographic information, aiding decision-making processes. The co-op leverages GIS to
help co-op members make informed decisions about asset placement, transportation models, and
distribution facilities. The consolidation and construction of facilities in the agricultural industry
necessitate careful assessment of trade area dynamics and customer demand. GIS assists the SAM
team in evaluating the capacity of operations and ensuring that facilities align with market trends and
future customer needs.
The SAM team's efforts encompass recommendations on changing transportation and distribution
models to improve efficiency and reduce costs. By conducting transportation studies, the team
evaluates current operating expenses and anticipates future transportation costs. These insights are
integrated into financial analyses for capital investment decisions. Additionally, the team conducts
market analyses to understand product demand trends, growth opportunities, competitor impacts, and
market dynamics. The utilization of GIS by the SAM team has proven beneficial for both day-to-day
operations and long-term strategic planning, enabling Land O'Lakes to strategically manage its assets
and remain competitive in the agricultural industry.
12-4: How do different decision-making constituencies in an organization use business
intelligence?
Different decision-making constituencies in an organization use business intelligence (BI) to support
their respective roles and responsibilities. This aligns with the varying levels of information needs and
decision complexity within the organization. Here's how different constituencies utilize BI:
1. Senior Executives:
Senior executives primarily use BI to monitor and gain insights into overall firm activities and
performance. They rely on visual interfaces such as dashboards and scorecards to get a high-level
view of key performance indicators (KPIs) and critical metrics. These visual tools provide a quick
overview of how the organization is performing against strategic goals. The balanced scorecard
method is commonly used to focus on measurable outcomes across financial, business process,
customer, and learning and growth dimensions. Senior executives benefit from summary reports and
graphical representations that help them make informed decisions for strategic planning and resource
allocation.
2. Middle Managers and Analysts:
Middle managers and analysts play a more hands-on role in BI, immersing themselves in data
analysis and modeling. They create and customize their own reports using sophisticated analytics and
models to identify patterns, model scenarios, and test hypotheses. Decision-support systems (DSS)
are used to support semistructured decision-making. These systems rely on mathematical and
analytical models, including "what-if" analysis and sensitivity analysis. Middle managers and analysts
perform in-depth data exploration by entering queries and manipulating data along different
dimensions. They also use tools like pivot tables to gain multidimensional insights and identify
correlations in business data.
3. Operational Employees:
Operational employees, along with customers and suppliers, are more likely to rely on predefined
reports and prepackaged insights. These employees use BI tools to access information relevant to
their specific roles and responsibilities. Operational managers monitor key aspects of daily business
operations, such as machine downtime, daily sales, or website traffic. They receive exception reports
that highlight abnormal conditions, allowing them to take corrective actions as needed. These reports
help operational employees track performance and respond to issues in real time.
In summary, BI caters to various decision-making constituencies by providing tailored information and
tools that align with their roles and decision-making needs. From senior executives seeking high-level
overviews to middle managers and analysts delving into data analysis and modeling, and operational
employees relying on predefined reports, BI systems cater to diverse needs within the organization.
These systems enhance decision-making by providing timely, relevant, and actionable insights across
different levels of the organization.
12-1 What are the different types of decisions, and how does the decision-making process
work?
• List four structured decisions that a manager at the operational level in an organization is
likely to have to make.
• According to the classical model of
management, what are the five roles of
management?
• Explain what is meant by the term management filter.
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Types of decisions: Structured, semistructured, unstructured.
Decision-making process: Intelligence, design, choice, implementation, monitoring.
Four operational level decisions: Reordering inventory, assigning tasks, scheduling shifts,
approving expenses.
Classical model roles: Planning, organizing, coordinating, controlling, directing.
Management filter: Filtering information as it moves up the organization's hierarchy.
12-2 How do information systems support the activities of managers and management decision
making?
• Describe the nature and value of a business analytics toolset.
• Explain how predictive analytics works and what it uses.
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✓
Business analytics toolset: Set of software tools for data analysis, modeling, and reporting.
Predictive analytics: Analyzing historical data to predict future outcomes.
12-3 How do business intelligence and business analytics support decision making?
• Explain how management information systems and transaction processing systems interact.
• Distinguish between a production report and a parameterized report.
• List three different production reports that might be generated by a sales department.
• Explain how a business would use data from the Internet of Things.
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MIS and TPS interaction: TPS provides data, MIS processes and summarizes data.
Production report vs parameterized report: Fixed format vs customizable report.
Three sales department reports: Sales by product, sales by region, sales by customer.
IoT data use: Monitoring, analyzing, and optimizing processes using data from connected
devices
12-4 How do different decision-making constituencies in an organization use business
intelligence?
• List each of the major decision-making constituencies in an organization and describe
the types of decisions each makes.
• Describe how MIS, DSS, or ESS provide decision support for each of these groups.
• Define and describe the balanced scorecard method and business performance
management.
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Decision-making constituencies: Senior executives, middle managers, analysts, operational
employees.
MIS, DSS, ESS support: Operational monitoring, data analysis, strategic monitoring.
Balanced scorecard: Framework for measuring performance across financial, process,
customer, learning dimensions.
Discussion Questions
12-5 As a manager or user of information systems, what would you need to know to participate in the
design and use of a DSS or an ESS? Why?
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Knowledge needed for DSS/ESS design: Understanding organizational goals, KPIs, data
sources, reporting needs.
Importance of participation: Ensures systems align with business strategy and provide
relevant insights
12-6 If businesses used DSS and ESS more widely, would managers and employees
make better decisions? Why or why not?
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Impact of wider DSS/ESS use: Likely to improve decisions by providing timely, relevant
insights.
Reasons: Better access to data, enhanced analysis, alignment with strategic goals.
12-7 How much can business intelligence and business analytics help companies refine
their business strategy? Explain your
answer.
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Business intelligence and strategy refinement: Significant impact by providing data-driven
insights and trends.
Explanation: BI enables organizations to identify market trends, customer preferences, and
operational efficiencies.
Management Decision Problems
12-8 Dealerships for Subaru and other automobile manufacturers keep records of the mileage of cars
they sell and service. Mileage data are used to remind customers of when they need to schedule
service appointments, but they are used for other purposes as well. What kinds of decisions does this
piece of data support at the local level and at the corporate level? What would happen if this piece of
data were erroneous, for example, showing mileage of 130,000 instead of 30,000? How would it
affect decision making? Assess its business impact.
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Mileage data decisions: Service reminders, warranty validation, maintenance planning.
Impact of erroneous data: Incorrect service scheduling, potential customer dissatisfaction,
financial losses.
12-9 Applebee's is one of the largest casual dining chains in the world, with more than 1,700 locations
throughout 19 countries. The menu features beef, chicken, and pork items as well as burgers, pasta,
and seafood. Applebee's CEO wants to make the restaurant more profitable by developing menus
that are tastier and contain more items that customers want and are willing to pay for despite rising
costs for agricultural products.
How might business intelligence help management implement this strategy?
What pieces of data would Applebee's need to collect? What kinds of reports would be useful to help
management make decisions on how to improve menus and profitability?
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BI for menu improvement: Analyzing customer preferences, identifying popular items, tracking
costs.
Data needed: Sales data, customer feedback, ingredient costs.
Useful reports: Sales by item, customer feedback analysis, cost-effectiveness of menu items.
Case Study: Should an Algorithm Make Our Decisions?
The case study highlights the increasing use of predictive algorithms in decision-making processes,
raising questions about their implications and fairness. These algorithms, such as the one used to
determine Darnell Gates's probation status, play a role in decisions ranging from prison sentences to
welfare and tax fraud detection. However, the inner workings of these algorithms are often obscure,
leading to concerns about transparency and accountability. The use of algorithms has been criticized
in various instances, as they can perpetuate biases and inequalities, as shown by the case of a health
care algorithm that disproportionately impacted black patients. While some algorithms like the one in
Bristol, England, are coupled with human oversight and transparency efforts, there is growing
pushback from civil rights organizations and community advocates. The case underscores the need to
strike a balance between algorithmic predictions and human decision-making, particularly as
automated systems become more influential in shaping important outcomes. Achieving fair and
reliable outcomes requires thoughtful consideration of the role of algorithms and the human factors
that influence decision-making processes.
12-13: What are the problems in using algorithms and automated systems for decision
making?
Using algorithms and automated systems for decision-making can introduce several problems. Firstly,
these systems can reinforce biases present in historical data, leading to unfair or discriminatory
outcomes. Additionally, the complexity of algorithms often makes it difficult for individuals to
understand how decisions are made, raising concerns about transparency and accountability.
Automated systems can also oversimplify complex situations, neglecting critical nuances that human
judgment would consider. Moreover, reliance on algorithms can reduce human involvement in
decision-making processes, potentially undermining the ability to consider multiple perspectives and
adapt to dynamic situations.
12-14: What management, organizational, and technology factors have contributed to the
problem?
Several factors contribute to the problems associated with algorithmic decision-making. Management
decisions to implement such systems without proper oversight or understanding of their limitations
can lead to unintended consequences. Organizational pressures for efficiency and cost reduction may
prioritize automation over careful consideration of potential biases. Furthermore, technology factors
like biased training data and the complexity of algorithms themselves can contribute to biased or
unfair outcomes.
12-15 Should automated systems be used to make decisions? Explain your answer.
The decision of whether to use automated systems for decision-making depends on the context and
the nature of the decisions being made. While algorithms can provide valuable insights and
predictions, they should not replace human judgment entirely. It's essential to strike a balance,
leveraging algorithms for data-driven insights while ensuring human oversight, transparency, and
accountability. In situations where fairness, ethics, and complex judgment are crucial, human
involvement remains essential to make nuanced decisions that consider the broader context and
potential biases.
Chapter 13: Building Information Systems.
Opening Case Study: Vinci Energies Builds a New Mobile Employee Time Sheet App.
The case study focuses on Vinci Energies, a growing professional services company that offers
solutions for construction, energy, and information technology industries. With a vast and diverse
workforce spread across multiple countries, Vinci Energies faced challenges in efficiently tracking
project costs, especially for employees working remotely. To address these issues, Vinci developed
an app called MOBITIME using the SAP Cloud Platform.
The app aimed to streamline the process of capturing time sheet data, project costs, and activities for
multiple projects. MOBITIME, accessible on tablets and mobile phones, allowed employees to enter
data from any location and transmit it to update the SAP S/4HANA system. This transformation
involved not only technological implementation but also changes in business processes and job
functions. The case raises questions about how MOBITIME met Vinci Energies' information
requirements and how the new system impacted the company's business operations. It highlights the
importance of integrating information systems to improve project tracking, increase efficiency, and
enhance decision-making capabilities in a project-based organization.
13-1: How does building new systems produce organizational change?
Systems Development and Organizational Change.
Building new information systems can lead to organizational change by impacting various aspects of
the organization, including its structure, processes, roles, and culture. The introduction of a new
information system goes beyond implementing new technology; it involves reevaluating and
redesigning the way the organization operates.
There are different degrees of organizational change that can result from building new systems:
1. Automation: Implementing technology to assist employees in performing tasks more efficiently by
reducing manual effort and increasing accuracy.
2. Rationalization: Streamlining standard operating procedures and processes to eliminate
inefficiencies and improve overall productivity.
3. Business Process Redesign: Analyzing, simplifying, and restructuring workflows to create more
efficient and effective ways of performing tasks.
4. Paradigm Shift: Undertaking a radical transformation that rethinks the entire business model,
leading to fundamental changes in the organization's structure, operations, and core strategies.
Building new information systems can trigger these forms of change by encouraging organizations to
rethink their processes, roles, and even their core business models. The rewards of successful
change can include increased efficiency, higher productivity, improved quality, and competitive
advantages. However, such changes can also be difficult to orchestrate and may face resistance from
employees accustomed to existing ways of working. Careful planning, communication, and change
management strategies are essential to successfully implement organizational change through new
information systems.
Business Process Redesign.
DP World, a prominent global port operator headquartered in Dubai, operates marine and inland
terminals worldwide, offering technology-driven solutions to its clients. With a significant presence
across six continents and a market capitalization of approximately $12 billion, DP World manages 78
terminals in about 40 countries, handling up to 174,000 containers daily. In its pursuit of continuous
improvement, DP World leverages technology to enhance cargo handling and streamline operations.
Previously reliant on manual and paper-based processes, which were time-consuming and errorprone, DP World sought to enhance customer service by simplifying processes and reducing
transaction times. For instance, customers often had to submit multiple versions of documents to
different departments, causing delays and duplications. By implementing IBM's WebSphere MQ
technology, DP World created a centralized system that facilitated seamless document sharing
among departments, enhancing efficiency.
DP World's partnership with Oracle further drives digital transformation through cloud applications,
aiming to standardize and optimize various business processes. Utilizing AI, IoT, and blockchain
technology, DP World aims to create value, improve logistics, and enhance efficiency across its global
operations. AI facilitates smart planning, chatbots assist tasks, and IoT monitors assets. Blockchain
offers secure and transparent tracking for goods, addressing concerns like terrorism and illegal trade.
DP World believes that these technologies will make the global supply chain more efficient and sees
blockchain as transformative. The organization strives to remain a leader in the digitized global trade
landscape and is integrating Oracle Fusion ERP to enhance consistency across its operations.
Case Study Questions:
1. What is business process redesign? Why might BPR fail in an organization?
Business process redesign (BPR) refers to the radical overhaul and restructuring of existing business
processes to achieve significant improvements in efficiency, effectiveness, and overall performance.
BPR involves rethinking and reengineering processes from the ground up to eliminate inefficiencies,
bottlenecks, and redundancies.
BPR might fail in an organization due to factors such as resistance to change from employees, lack of
top management support, inadequate planning and analysis, insufficient communication, unrealistic
expectations, and failure to align the redesigned processes with the organization's strategic goals.
2. Do you think the IBM WebSphere MQ technology adopted by DP World was a good solution? What
advantages can you identify?
Yes, the adoption of IBM WebSphere MQ technology by DP World was a good solution. The
advantages of using this technology include:
- Centralization: The technology allows for the creation of a centralized system that sends validated
versions of documents to all related departments. This reduces duplication and delays in the process.
- Seamless Integration: WebSphere MQ is a middleware product that enables communication
between different applications. DP World seamlessly connected its existing systems using this
middleware, simplifying the overall system.
- Flexibility: WebSphere MQ is flexible, robust, and scalable, ensuring that the system can adapt to
changing needs and requirements.
- Efficiency: By streamlining document sharing and communication between departments, the
technology significantly reduced the time required to complete processes.
3. Do you think AI could have other uses in port operations?
Yes, AI can have various other uses in port operations. Apart from the mentioned applications, AI can
be employed for predictive maintenance of equipment, optimizing cargo loading and unloading,
enhancing security through real-time threat detection, managing inventory and supply chain
operations, optimizing resource allocation, and even improving customer service through AI-driven
chatbots for inquiries and support.
4. Explain IoT technology and the possible problems that may arise in implementing it.
IoT (Internet of Things) technology involves connecting physical objects, devices, and sensors to the
internet, enabling them to collect and exchange data. In port operations, IoT can be used to monitor
conditions and locations of assets, track cargo, optimize routes, and more.
Possible problems in implementing IoT include:
- Data Security and Privacy: IoT involves transmitting and storing sensitive data, raising concerns
about data breaches and privacy violations.
- Scalability: As the number of connected devices increases, managing and scaling the infrastructure
becomes challenging.
- Compatibility: Ensuring compatibility and integration between different IoT devices and systems can
be complex.
- Reliability: IoT systems must be reliable to prevent disruptions in operations due to technical failures.
5. What are the four types of organizational change? Give an example of each type from this case.
The four types of organizational change are:
1. Strategic Change: This type involves changes in the organization's overall direction and strategy. In
the case, DP World's shift towards incorporating technology-driven solutions to enhance its port
operations is an example of strategic change.
2. Structural Change: Structural change pertains to changes in the organizational structure and
hierarchy. DP World's implementation of a centralized system using IBM WebSphere MQ technology
is an example of structural change.
3. Technological Change: This change involves adopting new technologies and tools to improve
processes. DP World's utilization of AI, IoT, and blockchain technology for various aspects of its
operations exemplifies technological change.
4. Cultural Change: Cultural change focuses on changing the organization's values, beliefs, and
norms. DP World's emphasis on using technology to drive digital transformation and innovation
reflects a cultural change toward embracing technological advancements.
Business Process Redesign:
The concept of business process redesign, as highlighted in the DP World case study, represents a
crucial approach adopted by numerous businesses seeking to enhance their operations through the
integration of information technology. This strategy involves rethinking and modifying existing
business processes to achieve increased efficiency and effectiveness. To navigate these changes,
organizations embrace business process management (BPM), a multifaceted framework involving
tools and methodologies to assess, design, and optimize processes.
The BPM cycle involves identifying processes for improvement, analyzing existing processes,
designing new processes, implementing the redesigned processes, and maintaining continuous
measurement for ongoing optimization. The process design team scrutinizes existing procedures,
identifies bottlenecks, and streamlines the process to create a more efficient "to-be" version.
Implementation includes translating the new process into procedures, incorporating necessary
technology, and monitoring for potential problems.
BPM aims to reduce time, cost, and inefficiencies, ultimately enhancing customer service and
organizational value. However, achieving successful BPM can face challenges related to
organizational culture and change management. Various software tools from providers like IBM,
Oracle, and TIBCO aid in documenting, modeling, enforcing, and measuring the effectiveness of
redesigned processes. An illustrative example of this approach is evident in British Telecoms Group's
utilization of Pegasystems' BPM software to integrate customer data and streamline processes after
an acquisition, leading to improved decision-making and enhanced customer interactions.
13-2 What are the core activities in the systems development process
New information systems are developed to address organizational problems or capitalize on
opportunities, and the process of creating these solutions is known as systems development, which
involves activities such as systems analysis, design, programming, testing, conversion, and
production and maintenance, often carried out in a sequential manner with the possibility of some
activities being repeated or occurring concurrently based on the chosen approach.
System Analysis:
Systems analysis involves analyzing organizational problems and identifying their causes, specifying
solutions, and determining information requirements for a potential information system solution; the
systems analyst examines the existing organization and systems, identifies primary data users, and
details problems within existing systems through documents, observations, and interviews, often
leading to the development of new information systems or improvements to existing ones; feasibility
studies are conducted to assess whether the proposed solution is financially, technically, and
organizationally viable; the systems analyst defines information requirements by identifying who
needs what information, where, when, and how, aiming to avoid faulty requirements analysis which
can lead to systems failure or high development costs; certain problems may not require an
information system solution but rather managerial adjustments, training, or procedural refinements.
System Design:
Systems design encompasses creating the blueprint or model for an information system by detailing
the specifications needed to fulfill functions identified during systems analysis, addressing managerial,
organizational, and technological components; various designs for information systems are possible,
with the superiority of a design determined by how effectively it meets user requirements within
technical, organizational, financial, and time constraints; end user involvement in the design process
is crucial to ensure the system aligns with business priorities and information needs, enhancing user
understanding and acceptance and minimizing the risk of system failure.
Completing the Systems Development Process:
The final stages of the systems development process involve programming where system
specifications are translated into software code, testing which includes unit testing, system testing,
and acceptance testing to ensure correct functionality, conversion strategies such as parallel, direct
cutover, pilot study, and phased approach for transitioning to the new system, production where the
system is reviewed, and maintenance to correct errors and improve efficiency in the operational
system.
13-3: What are the principal methodologies for modelling and designing systems?
Structured Methodologies
There are alternative methodologies for modelling and designing systems. Structured methodologies
and object-oriented development are the most prominent.
Structured Methodologies.
The principal methodologies for modelling and designing systems include structured methodologies,
which are step-by-step, top-down approaches focusing on processes and data flow diagrams (DFDs),
and utilize tools like data dictionaries, process specifications, and hierarchical structure charts to
depict system components, processes, and relationships.
Object-Oriented Development (OOD).
Object-Oriented Development (OOD) is a methodology that overcomes the limitations of structured
methods by focusing on objects as the fundamental units of system analysis and design, combining
data and processes. In OOD, objects encapsulate data and operations, and interactions among
objects drive system functionality. OOD introduces the concepts of class and inheritance, allowing
objects to belong to classes and inherit features from superclasses. The development process in
OOD is iterative and incremental, involving analysis to identify objects and their interactions, design to
define object behaviors and relationships, and implementation through reusable software objects.
OOD offers the potential for reduced development time and costs through reusability of software
objects and the creation of object-oriented frameworks.
13-4 What are alternative methods for building information systems?
Systems differ in term s o f their size and technological complexity and in term s
of the organizational problems they are meant to solve. A number of systems building approaches
have been developed to deal with these differences. This section describes these alternative
methods: the traditional system s life cycle.
Alternative methods for building information systems include:
1. Prototyping: Building initial versions to gather user feedback and refine requirements.
2. Rapid Application Development (RAD): Fast development through user workshops and iterative
prototyping.
3. Agile Development: Flexibly developing software in short iterations with user feedback.
4. Incremental Development: Building the system in small increments, adding features gradually.
5. Spiral Model: Iteratively developing with risk assessment and cycles of planning, building, testing,
and evaluation.
6. Extreme Programming (XP): Customer-focused development with continuous testing and pair
programming.
7. DevOps: Bridging development and operations for continuous deployment and automation.
8. Lean Development: Eliminating waste and focusing on value delivery and optimization.
9. Kanban: Visualizing workflow and tasks to manage work and achieve continuous improvement.
Prototyping:
Prototyping involves building a preliminary system version for user evaluation, iteratively refining it
based on feedback, and potentially adopting the prototype as the final system; while user involvement
is high and iterative, hasty prototypes might overlook vital development steps and scalability issues.
Application Software Packages, Software Services, and Outsourcing.
Organizations utilize commercial application software packages and cloud software services (SaaS)
for standardized functions; outsourcing involves hiring external vendors to build, operate, or maintain
information systems, which can lead to cost savings, global collaboration, but also hidden costs and
potential loss of control.
13-5 What are new approaches for system building in the digital firm era?
In response to swiftly evolving technologies and business landscapes, organizations are embracing
quicker and less formal systems development methods, especially for mobile apps. Alongside utilizing
software packages and online services, businesses increasingly rely on rapid application
development, collaborative application design, agile development, automated software testing, and
low-code no-code approaches to enhance efficiency.
Rapid Application Development (RAD), Agile Development, Automated Software Testing, and
DevOps:
The term rapid application development (RAD) denotes the creation of functional systems within a
short timeframe, allowing for adaptability as the project progresses. RAD involves visual
programming, iterative prototyping of key system elements, automated code generation, and close
collaboration among end users and information system specialists. Joint application design (JAD)
accelerates requirement generation and initial system design by involving users and specialists in
interactive sessions.
Agile development prioritizes rapid software delivery by breaking large projects into smaller
subprojects completed in short iterations called sprints. Cross-functional teams work on each sprint,
regularly releasing working software with continuous user feedback. Testing occurs continuously, and
collaboration, flexibility, and response to change are emphasized.
Automated software testing tools streamline testing processes, reporting results and comparing them
to previous runs. DevOps fosters collaboration between developers and IT operations, promoting a
fast and stable workflow throughout the development lifecycle. Low-code development uses visual
modelling for faster application delivery, while no-code tools require minimal to no coding, catering to
non-IT users but potentially leading to integration and security challenges.
Interactive Session Technology: McAfee Streamlines with Automated Software Testing.
McAfee, a global provider of security software, sought to enhance its software testing processes amid
its numerous systems projects. With a global SAP ERP system as its foundation, McAfee aimed to
migrate to SAP S/4HANA and implement SAP Revenue Accounting and Reporting, while adopting an
agile methodology for all IT projects. Facing resource constraints, project complexity, and a need for
quick adaptation, McAfee looked to enhance testing efficiency.
Transitioning from manual testing, McAfee turned to automated testing to keep pace with rapid
development and testing requirements. The company's automation team comprised automation
engineers and business analysts who evaluated automated testing solutions. They selected Worksoft
Certify, a code-free test automation tool that offers prebuilt SAP testing capabilities and is designed
for complex business processes.
By implementing Worksoft Certify, McAfee streamlined its testing and business process automation
within its SAP environment. The tool automated manual tasks, performance testing, and testing of
system changes. As a result, McAfee achieved substantial savings in terms of both time and costs.
Approximately 2,500 hours of manual effort were saved, equivalent to $200,000, while also
minimizing the need for ongoing application maintenance.
McAfee's adoption of automated testing not only streamlined its testing processes but also enhanced
its ability to deliver quality software efficiently, meeting the demands of its agile approach and
dynamic IT environment.
Case Study Questions:
1. Why would a company such as McAfee benefit from automated software testing?
McAfee benefits from automated testing due to efficiency, accuracy, scalability, cost savings, and
support for continuous integration.
2. What management, organization, and technology factors did McAfee address in moving to
automated software testing?
McAfee addressed factors like resource allocation, collaboration, skills, tool selection, and integration.
3. Was Worksoft Certify a good solution for McAfee? Why or why not?
Yes, Worksoft Certify was a good solution due to prebuilt SAP testing, complex process support,
code-free usability, scalability, and integration.
4. How did automated software testing change the way McAfee ran its business?
Automated testing led to efficiency gains, cost savings, better quality, enhanced agility, resource
reallocation, and streamlined operations.
Mobile Application Development: Designing for a Multiscreen World.
The growing demand for seamless mobile access to information and transactions has led businesses
to develop a variety of mobile solutions, including websites, web apps, and native apps. Decisions on
technology, like native or web apps, and strategies for mobile websites are vital in mobile app
development. Mobile websites are simplified versions for easy navigation on small screens, while web
apps, accessible via browsers, cater to diverse devices.
Native apps offer performance and offline benefits but need complex development due to OS
variations. Mobile app development presents distinct challenges due to smaller devices favouring
touch interactions, needing task-specific optimization and efficient resource use. User experience in
mobile differs from desktop usage, requiring focus on screen space, bandwidth, and gestures.
Companies design dedicated interfaces for different devices, but this approach raises cost concerns.
Responsive design adapts layouts based on devices, reducing the need for separate designs. HTML5
supports cross-platform mobile app creation, streamlining solutions.
CASE STUDY: Pick n Pay's Cloud Migration to Enhance Business Intelligence.
Pick n Pay, a prominent retail business in South Africa, embarked on a cloud migration project to
enhance their Business Intelligence (BI) capabilities. Facing challenges with their existing
infrastructure, the BI team sought a solution that would provide a unified platform for all transactional
data and enable future innovations like AI and machine learning. Collaborating with Amazon Web
Services (AWS) as their cloud partner, the project went live in 2018 after migrating localized data to
the cloud.
The migration brought both benefits and challenges. While achieving cost reduction and efficiency
improvement objectives, the project incurred some cost overruns due to the learning curve associated
with AWS. The importance of collaboration with implementation partners for necessary training and
skills development was emphasized, and AWS provided expertise and training to enhance the Pick n
Pay team's cloud skills. The successful implementation not only improved business efficiency but also
enabled innovations such as enhanced data science, AI, and machine learning capabilities,
enhancing customer loyalty programs, targeted promotions, and multi-channel retailing.
Case Study Questions:
13-14 What problem did the company face from technology and organizational perspectives
and what impact did this have on the business?
From a technology perspective, Pick n Pay faced challenges with their existing Business Intelligence
(BI) infrastructure, involving physical on-premises data centers that couldn't meet the business
requirements. This impacted data capabilities, business agility, and customer experience.
Organizational challenges included migrating localized data to the cloud and understanding the
intricacies of cloud hosting. These challenges hindered the BI team's ability to provide optimal insights
for improved decision-making, affecting the business's competitiveness.
13-15 What solutions did Pick n Pay explore? Explain the process followed to identify the
initial requirements.
Pick n Pay explored cloud-based solutions to address their BI challenges. They partnered with
Amazon Web Services (AWS) to migrate their data and applications to the cloud. The process began
with discussions between the BI team and SAP to define project requirements. Evaluation factors
included costs, network considerations, resourcing, skills required, user experience, security, and
disaster recovery. The team identified AWS as a strategic partner due to its collaboration with SAP
and the benefits of cloud-first approaches.
13-16 Do you think the company made the right decision by outsourcing to AWS? Explain your
answer.
Yes, outsourcing to AWS was a sound decision for Pick n Pay. Cloud migration provided cost
savings, scalability, and flexibility. The dynamic nature of cloud infrastructure aligned with the
business's need for on-demand resources. Additionally, AWS's collaboration with SAP and
certification for SAP applications ensured compatibility and expertise. While the project incurred some
cost overruns, these were attributed to the learning curve, and the advantages of the cloud
environment, agility, and innovation opportunities outweighed the challenges.
13-17 What challenges did Pick n Pay experience during the system implementation?
During the system implementation, Pick n Pay encountered challenges related to cost overruns due to
the unfamiliarity with AWS, requiring a shift in mindset and expertise. Skill gaps within the company's
team and the South African market necessitated AWS's training and certification to ensure effective
cloud integration. The company also faced difficulties in understanding cloud concepts and required
skills for recruitment and internal skills development
13-18 What were the benefits of the project for Pick n Pay?
The project benefited Pick n Pay by reducing costs and improving operational efficiency. However,
the most significant benefit was the agility of the cloud environment, which enabled innovations in
data science, AI, and machine learning. These innovations enhanced customer loyalty programs,
personalized promotions, intelligent sourcing and supply chain solutions, and multi-channel retailing.
The cloud migration not only addressed immediate challenges but also positioned the business for
future growth and competitiveness through technological advancements.
Chapter 14: Making the Business Case for Information Systems and Managing Projects
Al-Asasyah, also known as Basic Electronics Company Ltd., faced challenges due to its fast growth
and outdated legacy systems that hindered data accuracy, consistency, and accessibility. These
legacy systems couldn't support efficient communication among different operational units, hindering
the company's expansion. In 2014, the company decided to replace these systems with a modern
ERP solution. An internal team composed of managers, experienced staff, and operational unit
representatives took on the responsibility to manage the challenging ERP implementation project.
To ensure the success of the project, Al-Asasyah paid particular attention to project execution and
management. They carefully selected the SajayaERP solution and meticulously planned each phase,
including scope determination, estimation of costs, development of a detailed implementation
schedule, change management strategies, customization needs, and report requirements. The
execution phase involved prototypes running in various sectors, enabling users to familiarize
themselves with the system's features and provide valuable feedback.
The project's importance was highlighted by the need for effective business benefits and
organizational change management. Al-Asasyah's success stemmed from its clear understanding that
robust project management and attention to execution details were critical. The company's approach
of assembling a knowledgeable project team, collaborating with specialized partners, and
implementing the new system in manageable phases contributed to the project's success.
Key questions to consider are:
Why did this project succeed, and why was project execution a focal point?
How did proper project management and execution techniques contribute to the implementation's
success?
This project succeeded due to factors like a dedicated project team, thorough planning, phased
implementation, and effective change management. Project execution was crucial as it translates
plans into reality, minimizes risks, meets stakeholder expectations, realizes benefits, and adapts to
changes. Proper execution techniques ensured the ERP implementation's success by aligning the
project with business needs and delivering tangible outcomes.
14-1 How should managers build a business case for the acquisition and development of new
information systems?
Building a solid business case for acquiring and developing new information systems involves a
systematic approach. Managers must first identify the organizational problem the system aims to
solve and then conduct a thorough analysis of costs, benefits, and associated risks. Justification and
alignment with the organization's strategic goals are essential, illustrating how the proposed system
supports long-term growth and competitiveness.
Alternative solutions should be compared, emphasizing the chosen solution's value. The potential
impact on the organization's culture, processes, and roles should be addressed, alongside financial
justification and alignment with the IT plan. The business case should enable informed decisionmaking by providing a clear value proposition and demonstrating how the new system fits into the
organization's broader information technology strategy.
The Information System Plan:
A comprehensive information systems plan is crucial for organizations to prioritize and align
information systems projects with overall business goals. This plan, developed by the Chief
Information Officer and approved by top management, outlines the strategic systems integrated into
high-level planning. It provides a roadmap for systems development, detailing the rationale, current
system status, new developments, management strategy, implementation plan, and budget. The plan
links corporate objectives with specific systems projects, sets target dates and milestones, and
outlines necessary organizational changes. By understanding the larger context of all systems,
organizations can evaluate proposals for individual systems effectively, making a strong case for new
projects within the plan's framework.
Portfolio Analysis.
Portfolio analysis plays a crucial role in evaluating and optimizing information systems projects for
organizations. This analysis involves assessing the risk and benefit profile of the organization's entire
portfolio of information systems investments, including projects, infrastructure, and contracts. Similar
to financial portfolios, each project carries its own set of risks and benefits. The goal is to achieve a
balance between risk and return across the portfolio, aligning with the firm's business strategy.
Industries with high information intensity may opt for high-risk, high-benefit projects to stay
technologically current, while non-information-intensive sectors focus on high-benefit, low-risk
projects. Portfolio analysis aids in identifying optimal investment mixes, ensuring alignment with
business objectives, and achieving better returns on IT assets.
Scoring Models:
Scoring models are valuable for project selection when multiple criteria need consideration; they
assign weights to system features and calculate weighted totals to aid decision-making. For instance,
in Table 14.2, a company is comparing two ERP systems based on criteria and associated weights.
The model calculates vendor scores by multiplying each function's requirement percentage with its
weight, revealing that ERP System B holds the highest total score.
Determining Solution Costs and Benefits
The business case for an information system involves assessing its value as an investment for the
company. Beyond aligning with strategic goals and user requirements, the financial perspective
revolves around return on invested capital. Costs and benefits of systems can be tangible or
intangible. Total cost of ownership (TCO) analysis identifies IT expenditures beyond initial purchase
costs. Capital budgeting models measure value using cash flows and assess investments' financial
worth. Methods like payback, ROI, NPV, and IRR are employed. However, financial models may
overlook social and organizational aspects, including disruptions from new systems and intangible
benefits, which are important for a comprehensive evaluation of investments.
14-2 What are the objectives of project management, and why is it so essential in developing
information systems?
Information systems projects often face a high failure rate due to time and budget overruns or
systems not meeting expectations, leading to unrealized benefits and problem-solving challenges;
effective management and execution of projects play a pivotal role in determining their success or
failure.
Runaway Projects and System Failure.
Poorly managed projects in the private sector often result in underestimated budgets and delivery
times, with missing functionality common in system implementations. Research shows large software
projects exceeding budgets by 66% and schedules by 33%. More than half of businesses surveyed
experienced IT project failures in the past year. Such projects face consequences like excessive
costs, time delays, technical performance issues, and failure to achieve anticipated benefits. Failed
systems are often unused or require parallel manual systems. Design flaws might miss essential
business requirements or result in unhelpful information formats, complex user interactions, and
confusing interfaces, such as the U.S. Navy's navigation incident. Inaccurate or inconsistent data and
inaccessible information fields can compound system failures.
Project Management Objectives.
Project management involves applying knowledge, skills, tools, and techniques to achieve specific
business goals within defined time and budget limits. Activities include planning, risk assessment,
resource estimation, organization, task assignment, execution control, progress reporting, and result
analysis. Five major variables—scope, time, cost, quality, and risk—are central to project
management. Scope defines project boundaries; time determines completion duration and schedules;
cost incorporates expenses for resources and components; quality evaluates how well objectives are
met; and risk addresses potential problems that could hinder project success, impacting time, cost,
quality, or completion. Effective project management ensures projects stay on track and meet
objectives while navigating these variables.
14-3 What are the principal risk factors in information systems projects?
The principal risk factors in information systems projects include project size, project structure, and
the level of technical expertise of the project team. Larger projects, involving more resources,
complexity, and organizational units, have a higher risk of failure. Projects with well-defined and
structured requirements are less risky than those with fluid and changing requirements. The expertise
of the project team in handling the technology and tools is crucial; lack of familiarity can lead to
technical issues and delays. Organizational factors, such as the complexity of information
requirements and the extent of the project's impact across the organization, also contribute to the
overall risk in information systems projects.
Change Management and the Concept of Implementation.
The introduction or modification of an information system brings about significant behavioural and
organizational effects, influencing power dynamics and authority structures within a company, often
leading to resistance and potential failure of the system; thus, addressing change management is
essential for successful information systems projects.
The Concept of Implementation:
To effectively manage the organizational change accompanying the introduction of a new information
system, focus on the implementation process, encompassing the adoption, management, and
normalization of the innovation; the systems analyst plays a key role as a change agent, reshaping
organizational configurations, interactions, job roles, and power dynamics to ensure successful
acceptance and adjustment to the new system.
The Role of End Users.
During system implementation, involving end users and gaining management support enhances the
process, allowing users to shape the system, fostering positive reactions upon completion, and
improving solutions by incorporating user expertise; however, the traditional communications gap
between users and information systems specialists can lead to divergent priorities, problem-solving
approaches, and vocabularies, often causing misunderstanding and project failure due to mismatched
goals and user exclusion.
Management Support and Commitment.
Having management support and commitment for an information systems project is crucial for its
success, as it garners positive perception from users and technical staff, secures necessary
resources, encourages participation, recognizes efforts, ensures funding, and facilitates
organizational changes, with active executive sponsors being a leading factor in project success.
Change Management Challenges for Business Process Management, Enterprise Applications,
and Mergers and Acquisitions.
The challenges of innovation and implementation contribute to a high failure rate in enterprise
application and business process management projects, often resulting from poor change
management practices that neglect employees' concerns, while mergers and acquisitions face similar
issues due to complex systems integration and organizational change requirements, leading to a
significant percentage of failures and unrealized benefits.
14-4 How can project risks be managed?
Various methodologies for project management, requirements gathering, and planning, along with
strategies for involving users and managing organizational change, can mitigate project risks and
enhance system success by identifying and addressing implementation issues, adapting to
unforeseen problems, and fostering communication and collaboration among project teams.
Managing Technical Complexity.
To manage projects involving intricate technology, internal integration tools and experienced project
leaders with both technical and administrative expertise are crucial for anticipating problems, fostering
smooth team collaboration, and ensuring success. High technical competence among team members,
frequent meetings, and the acquisition of external expertise where necessary also contribute to
effective management of technical complexity.
Formal Planning and Control Tools.
In managing large projects, formal planning and control tools, such as Gantt charts and PERT charts,
are valuable for documenting and monitoring project plans. Gantt charts provide a visual
representation of project activities' timing and resource requirements, while PERT charts depict task
interrelationships and dependencies. Both techniques aid in identifying bottlenecks, sequencing tasks,
and tracking progress against budgets and timelines, facilitating effective project management and
problem detection.
Increasing User Involvement and Overcoming User Resistance.
In projects with less structured and undefined requirements, user involvement is essential at all
stages, often requiring users to actively participate, take on leadership roles, and assist with
installation and training. User resistance to change, stemming from varying impacts on different users,
may persist despite participation efforts. Implementation strategies should address both user
involvement and counter implementation tactics, where users deliberately oppose system adoption.
Strategies to overcome resistance include participation, education, training, management policies,
incentives, and improving user interfaces, with a focus on resolving organizational issues before
system implementation.
Designing for the Organization.
When designing new systems, it's crucial to address how the organization will be impacted by the
system's installation, including mobile and web applications, considering changes in procedures, job
functions, organizational structure, power dynamics, and the work environment, while also paying
attention to ergonomics issues and addressing organizational dimensions listed in Table 14.5, and
ensuring that thorough and well-documented organizational impact assessments are integrated into
the development process.
Interactive Session - Management: Sauder Woodworking Gets ERP (Enterprise resource
planning) Implementation Right.
Sauder Woodworking, a leading furniture manufacturer, successfully implemented SAP ERP software
in a phased approach, transitioned to SAP S/4HANA for improved functionality, chose a brownfield
approach to minimize disruption, faced challenges in terms of time frame and IT infrastructure
changes, and with the assistance of Symmetry consultants, managed to convert the system within a
72-hour downtime window, achieving a smooth transition and successful project delivery.
Case study questions:
1. Why is an ERP system so important for Sauder Woodworking? Why did Sauder want to
switch to a newer ERP system?
An ERP system is crucial for Sauder Woodworking because it helps streamline and integrate various
business processes such as finance, logistics, HR, and customer service into a single system. This
integration improves efficiency, data accuracy, and decision-making across the organization. Sauder
wanted to switch to a newer ERP system, specifically SAP S/4HANA, to take advantage of its
advanced features, including in-memory computing, which offers faster data processing and real-time
insights, potentially leading to better decision-making and improved operational efficiency.
2. Was SAP S/4HANA a good choice for Sauder? Why or why not?
SAP S/4HANA was a good choice for Sauder due to its advanced capabilities, such as in-memory
computing, which aligns well with Sauder's need for improved processing speed and real-time insights
in a complex manufacturing environment. Additionally, as Sauder was already familiar with SAP
software and had an established SAP system supporting various business functions, transitioning to
SAP S/4HANA allowed them to leverage their existing knowledge and investments while gaining
access to newer functionalities.
3. Were there any risks in this project? How did Sauder deal with them?
There were risks associated with this project, such as the narrow time frame for conversion and major
changes in IT infrastructure. To manage these risks, Sauder took a careful approach. They chose a
brownfield implementation to minimize disruption and resistance among employees. They also
partnered with Symmetry consultants who were experienced in SAP implementations, helping them
navigate the complexities of the project. The successful conversion within the 72-hour downtime
window indicates that Sauder effectively addressed the risks and challenges, leading to a smooth
transition and successful project outcome.
Project Management Software Tools.
Project management software tools automate various aspects of project management, enabling tasks,
resource assignments, start and end dates, progress tracking, and task modifications. These tools
also create Gantt and PERT charts and include communication and collaboration features. They cater
to different project scales, with Microsoft Project being a prominent choice. Cloud-based options like
Microsoft Project Online enhance accessibility. Additionally, project portfolio management software
helps manage project collections, comparing proposals against budgets and resource capacities to
determine optimal project mixes aligned with strategic goals.
Interactive Session – Technology: Arup Moves Project Management to the Cloud.
Arup Group Limited, a global professional services firm, transitioned its project management to the
cloud using Microsoft Project Online. Prior to this, Arup had used Excel and Word documents for
project management, resulting in limited collaboration, inconsistent project delivery, and manual
reporting. By adopting Project Online, Arup gained real-time access to project data for its diverse
global workforce, enabling efficient planning, tracking, and collaboration from any location. The cloudbased solution reduced manual report compilation time, allowed for immediate views into project
status, and improved insight for decision-making. Project Online facilitated a common project
management approach across Arup's operations, promoting strategic value and streamlining project
initiation and execution.
Case Study Questions.
1. What is the relationship between information technology, project management, and Arup's
business model and business strategy?
The relationship between information technology, project management, and Arup's business model
and strategy is integral to the company's operations. Arup, a multinational professional services firm
specializing in engineering, design, planning, and consulting, heavily relies on information technology
to support its diverse projects across various countries. Project management plays a crucial role in
ensuring efficient project execution and delivery. Arup's business model emphasizes collaboration
among professionals from different disciplines, requiring effective project management to bring
together experts and deliver high-quality projects. Information technology, specifically through tools
like Microsoft Project Online, helps streamline project management processes, aligning with Arup's
business strategy of delivering quality services through collaboration and effective project execution.
2. How does Microsoft Project Online support Arup's business strategy? How did it change the
way the company works?
Microsoft Project Online supports Arup's business strategy by providing a cloud-based platform that
enables efficient project planning, tracking, and collaboration. It significantly changed the way the
company works by replacing manual processes with automated tools for project management. The
transition to Project Online improved collaboration among global teams, eliminated inconsistencies in
project delivery, and facilitated real-time access to project data for employees working remotely or in
different locations. This shift allowed for better decision-making based on up-to-date information,
enhanced transparency into project status, and streamlined reporting processes. Overall, Project
Online aligned with Arup's business strategy by fostering efficient collaboration, project execution, and
delivery
3. What management, organization, and technology issues did Arup have to address when
selecting Project Online as its global project portfolio management tool?
When selecting Project Online as its global project portfolio management tool, Arup had to address
several management, organization, and technology issues. Management-wise, the company needed
to ensure that the tool could integrate seamlessly with its existing IT infrastructure and software suite,
including Office 365 and other Microsoft tools. The organization had to manage the change
associated with transitioning from manual processes to a cloud-based project management solution.
This required training employees, setting up new workflows, and ensuring adoption across various
departments and teams. Technologically, Arup needed to ensure data security and compliance with
regulations while transitioning to the cloud. Integration with other IT systems and the availability of
support and training for employees were also crucial considerations to address during the selection
process.
The Pennsylvania Department of Labor and Industry (DLI) embarked on the Unemployment
Compensation Modernization System (UCMS) project to replace its outdated mainframe system for
administering unemployment benefits. IBM was awarded a contract to develop UCMS, but the project
faced significant delays and cost overruns, resulting in an incomplete system when the contract
expired. The project was marred by flaws in systems development, inadequate project management,
and changing contractor personnel. Carnegie Mellon's independent assessment revealed
shortcomings, such as underestimated scope, insufficient staffing, and a lack of rigorous testing.
Pennsylvania sued IBM for breach of contract. Despite these setbacks, DLI pursued modernization
with a new contract from Geographic Solutions, targeting enhanced customer service and operational
efficiency. The new system was delayed but aimed for completion by October 2020, addressing the
challenges encountered in the UCMS project's first phase.
Case Study: Pennsylvania's Unemployment Compensation Modernization System: Unfinished
Business.
The Pennsylvania Department of Labor and Industry (DLI) embarked on the Unemployment
Compensation Modernization System (UCMS) project to replace its outdated mainframe system for
administering unemployment benefits. IBM was awarded a contract to develop UCMS, but the project
faced significant delays and cost overruns, resulting in an incomplete system when the contract
expired. The project was marred by flaws in systems development, inadequate project management,
and changing contractor personnel. Carnegie Mellon's independent assessment revealed
shortcomings, such as underestimated scope, insufficient staffing, and a lack of rigorous testing.
Pennsylvania sued IBM for breach of contract. Despite these setbacks, DLI pursued modernization
with a new contract from Geographic Solutions, targeting enhanced customer service and operational
efficiency. The new system was delayed but aimed for completion by October 2020, addressing the
challenges encountered in the UCMS project's first phase.
Case Study Questions.
14-13 Assess the importance of the Unemployment Compensation Modernization System
project for the state of Pennsylvania.
The Unemployment Compensation Modernization System (UCMS) project held significant importance
for the state of Pennsylvania due to its aim to replace the outdated mainframe system for
administering unemployment benefits. The modernization was crucial to enhance operational
efficiency, provide better customer service to UC claimants, and streamline benefit delivery
processes. The new system was expected to improve the accuracy and speed of payment
processing, thereby positively impacting the state's workforce and economy. The success of UCMS
would have been instrumental in efficiently managing unemployment claims for millions of workers
and employers in the state
14-14 Why was unemployment compensation modernization a risky project in Pennsylvania?
Identify the key risk factors.
Unemployment compensation modernization in Pennsylvania was a risky project due to several key
risk factors. First, the state faced challenges in managing a large-scale software-intensive system with
complex business rules and extensive information requirements. Second, the project involved
inadequate project management and oversight, resulting in insufficient staffing and lack of clear roles
and responsibilities. Third, the use of a single vendor, IBM, which claimed to possess proprietary
databases, created a vendor dependency that added to the project's risk. Fourth, the lack of rigorous
testing, inappropriate staffing, and incomplete requirements definition contributed to the project's
vulnerability to cost overruns and schedule delays.
14-15 Classify and describe the problems encountered by the UCMS projects. What
management, organization, and technology factors were responsible for these problems?
The UCMS project encountered several problems. Delays, cost overruns, and an incomplete system
were major issues. The state faced challenges in accurately defining project requirements, resulting in
ambiguity in communication. Insufficient staffing and a lack of experienced oversight hampered
effective management. The use of user testers without proper IT expertise led to defects discovered
late in the development cycle. The project experienced significant workforce turnover, creating a loss
of project memory. Management failures, inadequate project planning, and insufficient use of IT
testing experts were key factors responsible for these problems.
14-16 What could have been done to mitigate the risks of these projects?
To mitigate the risks of the UCMS project, several actions could have been taken. Proper project
planning with comprehensive requirements definition would have reduced ambiguity and ensured
clear communication. Effective project management with experienced oversight and proper delegation
of roles and responsibilities would have improved governance. Rigorous testing by IT experts
throughout the development cycle would have identified defects early, reducing the risk of late-stage
issues. Using multiple vendors or ensuring vendor independence could have prevented dependency
on a single entity. Furthermore, establishing a formal project management office and enforcing
accountability within DLI could have improved project management and oversight.
Chapter 15: Managing Global Systems
Opening Case: The Bel Group: Laughing All the Way to Success
The Bel Group, a global producer and distributor of cheese headquartered in Paris. Known for its
brands like The Laughing Cow, Mini Babybel, and others, the company aims to double its size by
2025. With operations across various regions, the company faces challenges related to price
fluctuations and exchange rates due to its specialization in dairy products. To achieve its growth
target, the acquisition of companies like MOM Group and All in Foods has expanded its product range
and market presence. The company adapts its products to local preferences and regulations, using a
strong social media presence and strategic partnerships to connect with customers. To manage
multinational relationships efficiently, The Bel Group implemented Salesforce's Sales Cloud CRM
system, customized to meet diverse market needs and facilitate communication across the group.
This system enables better management of campaigns, customers, and prospects, aiding in global
growth and customer relationship building. The case underscores the importance of IT in global
operations, efficient communication, and the role of CRM in realizing business strategies while
utilizing social media impact for measurement.
1. How does information technology improve operations and decision making at the Bel
Group?
Information technology, like the global CRM system, streamlines sales, marketing, and customer
interactions. It enhances communication, provides real-time updates, and enables customization for
better decision-making.
2. How would the company's new CRM system facilitate its business strategy?
The CRM system aligns with the strategy of doubling the company's size by 2025. It aids in localizing
products, adapting marketing campaigns, and engaging customers based on market-specific data,
fostering growth and customer-centricity.
3. Why is it important to incorporate the impact of a social media presence as a measurement
tool?
Social media is a vital communication channel. Measuring its impact offers insights into customer
sentiment, preferences, and brand perception. It helps refine marketing strategies, aligns with global
growth goals, and enhances customer engagement.
15-1: What major factors are driving the internationalization of business?
The internationalization of business is driven by several major factors, including the emergence of a
global economic system facilitated by advanced networks and information systems. This shift is
replacing localized firms with networked corporations that transcend national boundaries. The growth
of international trade has also significantly reshaped domestic economies worldwide. An example of
this phenomenon is illustrated through the production and sourcing process of an iPhone, where
components are provided by companies from different countries and assembly takes place in a
different nation, showcasing the interconnected nature of global business operations.
Developing an International Information Systems Architecture:
To build an effective international information systems architecture aligned with your international
strategy, several steps need to be taken. This architecture comprises essential information systems
that facilitate coordination for global trade and activities. The process, depicted in Figure 15.2,
involves understanding the global environment, identifying business drivers and inhibitors, formulating
a corporate strategy that responds to global challenges, organizing the company's structure,
addressing management issues during implementation, focusing on business process design, and
considering the appropriate technology platform. By comprehending these dimensions, you can
develop a comprehensive information systems portfolio that supports your organization's global goals
and operations. The initial step is analyzing the broader global landscape and market forces that
influence your industry's path towards global competition.
The Global Environment: Business Drivers and Challenges:
The global business landscape is shaped by various business drivers that are propelling industries
towards global markets and competition. These drivers can be categorized into general cultural
factors and specific business factors. Advances in information, communication, and transportation
technologies have created a global village, making communication and movement of goods easier.
Shared media, such as television and the Internet, has fostered a global culture that influences
common perceptions and values across different cultures. Moreover, the growth of a global
knowledge base has dispersed education, knowledge, and industrial skills more democratically
around the world.
These general cultural factors give rise to specific business globalization factors that impact
industries. The convergence of communication technologies and the emergence of world cultures lay
the foundation for global markets with consumers seeking culturally-accepted products. Companies
respond by establishing global production and operations, enabled by online coordination between
headquarters and distant facilities. Global coordination capabilities extend to various business
functions like production, marketing, human resources, and systems development. This coordination
facilitates the location of business activities based on comparative advantage and creates economies
of scale that enhance productivity.
While not all industries are equally influenced, understanding the internationalization trends in one's
industry and responding effectively can lead to significant gains in productivity. The current global
environment, however, also faces challenges, as evident from disruptions caused by events like the
coronavirus pandemic and issues related to concentrated supply chains.
Interactive Session Management: Rethinking Global Supply Chains
The recent shift in supply chain management toward global optimization is being reconsidered due to
challenges brought on by unforeseen events. Global supply chains, which emphasize cost
optimization through centralized sourcing, are being reevaluated in light of disruptions caused by
events like the coronavirus pandemic.
Previously, globalization was driven by factors such as lower transportation costs, reduced trade
barriers, and online communication. However, the pandemic exposed vulnerabilities in this approach,
disrupting supply chains as countries shut down production, transportation, and sales. China's role as
a major global supplier was highlighted, especially in industries like pharmaceuticals, electronics, and
consumer goods.
Companies are now rethinking their supply chain strategies to mitigate global supply chain risks. They
are advised to:
1. Diversify Suppliers: Reduce dependence on single suppliers, regions, or countries. Develop
alternate supply sources and increase safety stocks to enhance supply chain resilience.
2. Regionalization and Localization: Consider producing and sourcing regionally or locally. Toyota's
practice of colocating suppliers has proven effective in ensuring supply chain stability. Coca-Cola's
localized production allowed it to weather supply chain disruptions during the pandemic.
3. Reduce Product Complexity: Streamline the range of products offered to ease pressure on
factories during disruptions. Kimberly-Clark limited its product range to focus on staples in response
to increased demand during the pandemic.
These measures require companies to prioritize supply chain security over cost optimization and to
design supply chains with a keen awareness of potential risks.
Case Study Questions:
1. What factors have contributed to the growth of global supply chains?
Global supply chains have grown due to factors like advanced communication and transportation
technologies, lower transportation costs, reduced trade barriers, and the emergence of a global
culture. These factors have enabled companies to optimize costs and access resources from around
the world.
2. What are the advantages and disadvantages of global supply chains?
Advantages: Global supply chains offer cost optimization through access to lower-cost resources,
expanded market reach, and the ability to tap into specialized expertise. They allow companies to
capitalize on economies of scale and offer products tailored to different markets.
Disadvantages: Global supply chains are susceptible to disruptions due to factors like political
instability, natural disasters, and pandemics. They can also lead to longer lead times, communication
challenges, quality control issues, and dependency on a few key suppliers.
3. What measures can companies take to mitigate supply chain risk?
Companies can mitigate supply chain risk by:
- Diversifying Suppliers: Reducing reliance on a single supplier by developing alternate sources.
- Regionalization and Localization: Producing and sourcing regionally or locally to reduce
dependency on distant suppliers.
- Reducing Product Complexity: Simplifying the product range to ease production pressure during
disruptions.
- Increasing Safety Stocks: Building up reserves to manage unexpected disruptions.
- Supply Chain Mapping: Identifying all tiers of suppliers to enhance visibility into the supply chain.
4. Should companies continue to maintain global supply chains? Explain your answer.
Companies should strike a balance between the advantages and disadvantages of global supply
chains. While globalization offers benefits like cost optimization and market expansion, recent events
have highlighted the vulnerabilities of overreliance on a centralized supply chain. Companies should
consider a more diversified and localized approach to enhance supply chain resilience while
maintaining a level of global reach that aligns with their risk tolerance. The lessons from disruptions,
such as the coronavirus pandemic, emphasize the need for a more mindful and adaptive supply chain
strategy.
Business Challenges:
Globalization presents significant business opportunities, but fundamental forces also hinder a global
economy and disrupt international business. Cultural particularism, which is making judgments based
on narrow characteristics, rejects the concept of a shared global culture and hampers the entry of
foreign goods into domestic markets. Cultural differences lead to variations in social expectations,
politics, and legal rules, impacting business. Political differences result in diverse laws governing
information movement, privacy, and trade terms. These challenges complicate global business and
system-building.
Cultural and political variations affect business processes and IT applications. Specific barriers arise,
including network reliability disparities and skill shortages. Different accounting practices exist due to
national laws and traditions. For example, German companies recognize profits only after project
completion, while British firms report profits sooner. Language remains a barrier despite English being
a business language, and currency fluctuations can affect profitability. These factors must be
considered when designing international systems
Companies that are considering expanding into other countries need to carefully consider these
challenges. By taking these factors into account, businesses can increase their chances of success in
the global marketplace.
State of the art
Despite opportunities, most international companies possess inherited or patchwork international
systems based on outdated concepts. Reporting, data entry, and communication are often manual
and fragmented. Firms with well-designed international systems gain competitive advantage. Some
companies have built technology platforms but lack a global strategy.
Building appropriate international architectures is challenging. Difficulties include aligning systems
with global strategy, organizing business units, solving implementation issues, and selecting suitable
technical platforms. These complexities impact system planning and design.
15-2: What are the alternative strategies for developing global businesses?
https://quizlet.com/2878420/mis-375-chapter-3-flash-cards/
Three organizational issues are pivotal for corporations aiming for a global presence: selecting a
strategy, structuring the business, and managing systems. Four main global strategies—domestic
exporter, multinational, franchiser, and transnational—are closely linked to specific organizational
structures. These strategies lead to centralization, decentralization, or coordination within the
organization. The chosen strategy affects how businesses configure and manage their systems.
1. Domestic Exporter Strategy: Characterized by centralized corporate activities in the home
country, including production, finance, sales, marketing, and strategic management. Foreign sales
might be through subsidiaries or agency agreements, but foreign marketing often relies on the
domestic base.
2. Multinational Strategy: Focuses on centralizing financial management and control while
decentralizing production, sales, and marketing to foreign units. Products are adapted to local market
conditions. This strategy results in a confederation of production and marketing facilities across
countries.
3. Franchiser Strategy: Involves central creation, design, and financing of products in the home
country, relying on foreign personnel for further production, marketing, and human resources. Local
coordination is required for perishable goods.
4. Transnational Strategy: Characterized by globally managed activities without national borders.
Value-adding activities are managed from a global perspective, optimizing supply and demand
sources and local competitive advantages. Transnational firms have strong central management with
dispersed power and financial influence.
Global Systems Alignment:
Information technology and improved telecommunications provide flexibility for shaping global
strategies. System configuration aligns with the chosen strategy:
- Domestic Exporters: Centralized systems with worldwide applications developed by domestic staff.
- Multinationals: Decentralized systems with foreign units designing unique solutions.
- Franchisers: Duplicated systems with a single application replicated globally.
- Transnationals: Networked systems with coordinated development across units.
Reorganizing for Global Business:
To establish a global company and supportive information systems structure, firms should:
1. Organize activities based on comparative advantage.
2. Develop systems units at regional, national, and international levels.
3. Appoint a global Chief Information Officer (CIO) at world headquarters for international systems
development.
Successful firms implement these principles to create effective organizational structures and manage
international systems strategically.
15-3: What are the challenges posed by global information systems and management
solutions for these challenges?
Challenges and Management Solutions for Global Information Systems:
Developing global information systems comes with significant challenges that are compounded by the
international environment. Table 15.4 outlines the primary management problems associated with
developing international systems. These problems are similar to those faced when developing
domestic systems but are much more complex in a global context.
Common Scenario: Disorganization on a Global Scale:
Consider a traditional multinational consumer-goods company operating in Europe that aims to
expand into Asian markets using a transnational strategy and an integrated information systems
structure. Historical practices involve decentralized development of systems in foreign divisions,
leading to disparate hardware, software, and communication systems. This disorganized setup
hampers effective operations.
Management Solutions: Implementation Strategy:
To address these challenges, a series of strategic steps can be taken:
1. Identify Core Business Processes: Define critical core business processes that are vital for the
organization's success. Analyze how these processes are executed and identify centers of excellence
for each.
2. Identify Core Systems for Central Coordination: Select a small set of core systems that are
essential for the business's functionality. Define these systems as transnational and justify their
importance to the organization.
3. Choose an Approach: Avoid piecemeal and grand design approaches. Opt for an incremental,
evolutionary strategy that evolves transnational applications gradually while keeping a clear vision of
the desired future state.
4. Make the Benefits Clear: Communicate the benefits of global systems clearly to senior
management and division managers. Highlight advantages in management, production, distribution,
marketing, and capital utilization.
Specific Management Solutions for Challenges:
1. Agreeing on Common User Requirements: Establishing a list of core business processes and
systems fosters comparison and common understanding among divisions, making it easier to identify
common elements.
2. Introducing Changes in Business Processes: Legitimacy, authority, and user involvement are
key for successful change. An evolutionary approach, backed by a clear vision, aids in convincing
stakeholders about the feasibility and benefits of change.
3. Coordinating Applications Development: Choose an incremental strategy for coordinating
change. Focus on small, achievable steps toward the larger vision over time.
4. Coordinating Software Releases: Implement procedures to ensure simultaneous software
updates across operating units for compatibility.
5. Encouraging Local Users to Support Global Systems: Use co-optation to involve local units in
the design process without surrendering control over the change direction. Establish transnational
centres of excellence with multinational teams to drive involvement and ownership.
Technology Considerations:
While having the right organizational structure and management strategies is important, technology
choices are equally crucial. Decisions regarding technology platforms, networks, hardware, and
software impact the success of building transnational information systems architectures.
By strategically addressing these challenges and implementing effective management solutions,
organizations can successfully develop and implement global information systems that align with their
transnational strategies.
15-4: What are the issues and technical alternatives to be considered when developing
international information systems?
Issues and Technical Alternatives in Developing International Information Systems:
Developing international information systems involves addressing various technical challenges related
to hardware, software, and networking. These challenges become more complex due to the diverse
operating units and countries involved. Some of the key issues and technical alternatives to consider
include:
1. Standardizing Computing Platforms and Systems Integration:
- Challenge: Variations in operating units and countries make it difficult to standardize a global
computing platform.
- Solution: Establish a central authority to set data and technical standards. Implement data and
technical standards compliance across all units. Integrate systems based on a common hardware and
operating system.
2. Connectivity:
- Challenge: Ensuring seamless connectivity across global systems is essential but can be hindered
by issues such as varying levels of Internet service quality and security concerns.
- Solution: Utilize private networks for better security and guaranteed service levels. Create global
intranets and extranets using Internet virtual private networks (VPNs) for less sensitive
communications. Address security concerns and reliability through private networks.
3. Software Localization:
- Challenge: Integrating old and new systems, especially if localized in various countries, requires
building new interfaces and addressing different languages and conventions.
- Solution: Develop user-friendly interfaces that can be quickly understood by a global workforce.
Focus on software localization to adapt applications for different languages, cultural differences, and
user capabilities.
4. Software Applications:
- Challenge: Selecting software applications that enhance productivity across global business
processes while accommodating language and cultural differences.
- Solution: Focus on transaction and management reporting systems for basic functions. Implement
cross-functional systems like supply chain management and enterprise resource planning. Address
compatibility issues in languages, cultures, and business processes.
5. Electronic Data Interchange (EDI) and Supply Chain Management:
- Challenge: Connecting with global suppliers and partners using EDI and supply chain
management systems.
- Solution: Implement EDI and supply chain management systems to streamline interactions with
suppliers worldwide. Focus on collaboration and enterprise social networking systems for knowledgebased firms.
6. Internet Connectivity in Developing Countries:
- Challenge: Limited Internet access and unreliable infrastructure in developing countries can hinder
global connectivity.
- Solution: As Internet adoption grows, connectivity will improve in less-developed regions. Use the
Internet to connect dispersed units, but consider security and reliability concerns.
7. Mobile Platform Considerations:
- Challenge: Many users access the Internet via mobile devices with different screen sizes, low
bandwidth, and potential language barriers.
- Solution: Develop mobile-friendly apps and interfaces suitable for different mobile platforms, small
screens, and low bandwidth conditions. Incorporate audio and video interfaces to cater to users who
cannot read or write.
In summary, developing international information systems requires addressing challenges related to
standardization, connectivity, software localization, application selection, and technology adoption in
developing regions. Strategic planning, adherence to technical standards, and flexibility in software
design are essential for successful global systems implementation.
Digital Nationalism and Its Impact on the Internet:
The concept of digital nationalism refers to the growing trend of nation-states asserting their authority
over Internet use and establishing control over digital activities within their borders. This shift away
from the original idea of a globally connected and open Internet has significant implications for the
nature of information exchange and online interactions. Some key aspects of digital nationalism
include:
1. Authoritarian Control and Digital Sovereignty:
- Several authoritarian governments, including China, have taken steps to control and restrict
Internet access and content. China's Great Firewall is a notable example of how a government can
effectively limit online access and information flow.
- Other countries, such as Iran, North Korea, and Russia, have implemented similar strategies to
control digital activities and maintain sovereignty over online spaces.
2. Data Localization Laws:
- Some countries have introduced data localization laws that require certain types of data
(especially personal and sensitive data) to be stored within their national borders. This can impact
cross-border data flows and affect the operations of multinational companies.
- While data localization laws can be justified for privacy and security reasons, they can also be
used to monitor online activities and control information dissemination.
3. Implications for Internet Balkanization:
- The rise of digital nationalism raises concerns about the potential Balkanization of the Internet.
This term refers to the fragmentation of the global Internet into separate and isolated networks, each
with its own rules and restrictions.
- The result could be a "Splinternet," where different countries or regions have limited or no access
to certain websites, services, or content available in other parts of the world.
4. Impact on Companies and Users:
- Digital nationalism can affect multinational companies that need to navigate varying regulations
and data localization requirements across different countries.
- Internet users may also face limitations on the content and services they can access, as well as
potential privacy concerns due to increased monitoring and surveillance.
5. Solutions and Recommendations:
- Experts suggest that efforts should be made to restore the original principles of inclusiveness and
universality that characterized the early Internet. This involves promoting open communication, fair
play, and a sense of global connectedness.
- The concept of "zone"-based approaches is proposed, where groups of nations commit to
upholding principles such as free trade, privacy, and freedom of expression. This could help counter
the trend of Internet fragmentation and maintain a relatively open and interconnected network.
In conclusion, digital nationalism represents a departure from the original ideals of a globally
connected and open Internet. The rise of data localization laws and restrictions on Internet access
raise concerns about the future of a unified online environment. Efforts to counter digital nationalism
focus on restoring inclusivity and exploring collaborative approaches to maintain a free and open
digital landscape.
Amazon's Expansion into the Middle East: A Case Study
Amazon, the e-commerce giant, has successfully expanded its operations into the Middle East,
leveraging strategic acquisitions and a deep understanding of the local market. This expansion story
showcases Amazon's adaptability to unique market conditions and its ability to collaborate with local
players to achieve global growth. Here are the key aspects of Amazon's journey into the Middle East:
1. Global Expansion and Diversification:
- Amazon's expansion efforts beyond its US base have been notable, with operations in multiple
countries, each tailored to local preferences and market dynamics.
- In its pursuit of global growth, Amazon aimed to tap into the e-commerce potential of the Middle
East, characterized by a high penetration of internet and social media usage.
2. Recognizing E-commerce Potential:
- The Middle East, particularly Gulf Cooperation Council (GCC) countries, had significant untapped
e-commerce potential due to high internet penetration, smartphone usage, and a tech-savvy younger
population.
- Amazon recognized the opportunity to enter a region that was gradually shifting from oil-based
economies to knowledge-based products and services.
3. Souq.com Acquisition:
- In 2017, Amazon acquired Souq.com, a leading e-commerce marketplace in the Middle East,
headquartered in Dubai.
- Souq.com had emerged as a major online retail platform in the region, attracting millions of unique
visitors every month and enjoying high mobile transaction rates.
4. Overcoming Local Challenges:
- The Middle East presented unique challenges, including diverse laws, modes of payment,
language barriers, and low awareness of e-commerce.
- Souq.com addressed these challenges by offering multiple payment options, including cash on
delivery, and establishing its own efficient delivery network to overcome outbound logistics issues.
5. Integration of Local Expertise:
- Amazon's acquisition of Souq.com allowed for a blend of Amazon's global expertise with
Souq.com's understanding of the local environment and customer preferences.
- This collaboration created a competitive advantage that enabled Amazon to navigate the market
more effectively.
6. Expansion and Rebranding:
- After its acquisition, Amazon replaced Souq.com with its own platform, officially launching
Amazon's online presence in the Middle East.
- Amazon introduced local and international products, allowing customers to choose from a broader
range of options.
7. Room for Growth:
- E-commerce sales in the Middle East accounted for a small fraction of retail sales, indicating
significant room for expansion.
- Amazon and Souq.com, with their combined strengths, positioned themselves to lead the growth
of e-commerce in the region.
In summary, Amazon's expansion into the Middle East through the acquisition of Souq.com
showcases its adaptive strategy for global growth. By leveraging Souq.com's local market
understanding and integrating it with Amazon's global capabilities, the company successfully entered
a market with enormous e-commerce potential. This case study underscores the importance of
collaborating with local players and tailoring strategies to match unique market conditions.
Case Study Questions: Amazon's Expansion into the Middle East
15-12 Analyze challenges and opportunities for global companies like Amazon that seek to enter the
Middle Eastern market.
Challenges:
- Cultural Differences: The Middle East has diverse cultures, languages, and legal systems, requiring
global companies to adapt their strategies to each country's cultural nuances.
- Payment Methods: Cash on delivery is preferred by a majority of customers, necessitating unique
payment solutions and modes to facilitate transactions.
- Logistics and Delivery: Limited postal codes and challenges in establishing a reliable delivery
network require innovative solutions to ensure timely and accurate product deliveries.
- Local Competition: Local players may already have established market presence and customer
trust, making it challenging for global companies to compete effectively.
- Regulations and Compliance: Adhering to various local regulations, customs duties, and taxes can
be complex, adding to operational challenges.
- Language and Communication: Effective communication and customer service in local languages
are crucial for building customer relationships and trust.
Opportunities:
- E-commerce Potential: High internet penetration, smartphone usage, and tech-savvy populations
offer substantial opportunities for e-commerce growth.
- Changing Economies: The shift from oil-based economies to knowledge-based products and
services creates opportunities for companies with innovative technologies and solutions.
- Young Demographics: A young population interested in technology and online shopping presents a
favorable consumer base for global companies.
- Early Mover Advantage: Entering the market early allows companies to establish brand recognition
and build customer loyalty before competitors.
15-13 Considering the Middle East's e-commerce environment, did Amazon make a sensible decision
by acquiring Souq.com?
Yes, Amazon's decision to acquire Souq.com was sensible considering the Middle East's e-commerce
environment:
- Local Expertise: Souq.com had a strong local presence, understanding of customer preferences,
and established operations that would have taken Amazon time to develop.
- Market Access: Through Souq.com, Amazon gained quick access to the Middle Eastern market and
could leverage its existing customer base and brand recognition.
- Overcoming Challenges: Souq.com's experience in dealing with local challenges, such as cash on
delivery and delivery logistics, provided Amazon with effective solutions.
- Integration of Strengths: Combining Amazon's global technology infrastructure and expertise with
Souq.com's local insights created a competitive advantage.
15-14 How sustainable is Amazon's strategy of diversification? Can an entry into the Middle East help
Amazon enter other emerging markets with a similar environment?
Amazon's strategy of diversification has proven to be sustainable, as demonstrated by its success in
entering various global markets. The entry into the Middle East through the acquisition of Souq.com
showcases Amazon's adaptability and ability to leverage local strengths.
An entry into the Middle East can serve as a model for Amazon's expansion into other emerging
markets with similar environments:
- Leveraging Local Partnerships: Collaborating with local players who understand the market can help
Amazon overcome entry barriers and adapt to local conditions.
- Customer-Centric Approach: Amazon's customer-centric philosophy, backed by its global reputation,
can resonate well with consumers in emerging markets, including the Middle East.
- Technology and Innovation: Amazon's robust technology infrastructure can facilitate e-commerce
growth in regions with high internet and smartphone penetration.
- Market Leadership: Establishing early market leadership can provide Amazon with an advantage
over competitors in similar environments.
However, it's important to note that each market has its unique challenges and opportunities. While
the Middle East's success can be a positive sign, Amazon would need to carefully assess and adapt
its strategy to the specific conditions of each emerging market it enters.