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1BV00 essentials of MIS
Business Modeling (Technische Universiteit Eindhoven)
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1BV00 - Fundamentals of
business information systems
Essentials of management information systems
Week 1:
Chapter 1: business information systems in your career
1-1 why are information systems so essential for running and managing a business
today?
If you and your business aren’t connected to the internet, chances are you are not being
as e ective as you could be.
Supply chains have become faster paced, with companies of all sizes depending on the
delivery of just-in-time inventory. If you are not part of this new supply chain management
economy, chances are your business is not as e cient as it could be.
What makes management information systems the most exciting topic in business is the
continual change in technology, management use of the technology, and the impact on
business succes.
In the technology area are three interrelated changes:
1. The mobile digital platform composed of smartphones and tablet devices
2. The growing business use of big data, including the Internet of Things (IoT) driven
by billions of data-producing sensors
3. The growth in cloud computing, by which more and more business software runs
over the internet
The strength of cloud computing and the growth of the mobile digital platform mean that
organizations rely more telework, remote work, and distributed decision making. This
same platforms means rms can outsource more work and rely on markets (rather than
employees) to build value. It also means that rms can collaborate with suppliers and
customers to create new products or make existing products more e ciently.
The internet and global communications have made the world at. Because of
information systems, the costs of operating and transacting on a global scale have been
greatly reduced.
Business drivers of information systems:
• Operational excellence
• New products, services, and business models
• Customer and supplier intimacy
• Improved decision making
• Competitive advantage
• Survival
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1-2 what exactly is an information system? How does it work? What are its people,
organizational, and technology components?
Information technology (IT) = all the hardware and software that a rm needs to use to
achieve its business objectives.
Information system (IS) = a set of interrelated components that collect (or retrieve),
process, store, and distribute information to support decision making, coordinating, and
control in an organization
Information = data that have been shaped into a form that is meaningful and useful to
human beings
Data = streams of raw facts representing events occurring in organizations or the physical
environment before they have been organized and arranged into a form that people can
understand and use
Feedback = output that is returned to appropriate members of the organization to help
them evaluate or correct the input stage
Three activities in an information system:
Input captures raw data from within the organization or its external environment,
processing converts this raw data into a meaningful form, output transfers the
processed information to people who will use it.
Information systems literacy = behavioral as well as a technical approach to studying
information systems
Computer literacy = focuses primarily on knowledge of information technology
Management information systems (MIS) = tries to achieve this broader information
systems literacy, deals with behavioral issues as well as technical issues surrounding the
development, use and impact of information systems used by managers and employees
in the rm
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Dimensions of information systems:
• organizations (accomplishes and coordinates work through this structured hierarchy
and through its business processes)
- Business processes: logically related tasks and behaviors for accomplishing work
• Developing a new product
• Hiring a new employee
- Culture: fundamental set of assumptions, values, and ways of doing things that
has been accepted by most of its members
• People (a business is only as good as the people who work there and run it)
- Technology is relatively inexpensive these days, but people are the only ones
capable of business problem solving and converting information technology into
useful business solution
• Information technology
- Computer hardware
- Computer software
- Data management technology: software governing the organization of data on
physical storage media
- Networking and telecommunications technology: consisting of both physical
devices and software, links the various pieces of hardware and transfers data from
one physical location to another
• Network: links two or more computers to share data or resources
• Internet: global ‘ network of networks’
• World Wide Web: service provided by the internet that uses universally
accepted standards for storing, retrieving, formatting, and displaying
information in a page format on the internet
Intranet:
internal corporate networks based on internet technology
•
• Extranets: private intranets extended to authorized users outside the
organizations
All of these technologies, along with the people required to run and manage them
represent resources that can be shared throughout the organization and constitute the
rm’s information technology (IT) infrastructure.
1-3 how will a four-step method for business problem solving help you solve
information system-related problems?
Problem solving process:
• Problem identi cation: de ne the problem
• Solution design: design multiple solutions
• Solution evaluation and choice: choose the best solution
• Implementation: implementing the chosen solution and measure the outcomes,
feedback
-> change management: many techniques used to bring about successful change
in a business
Critical thinking = the sustained suspension of judgment with an awareness of multiple
perspectives and alternatives
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Critical thinking involves at least four elements:
1. Maintaining doubt and suspending judgement
- Take a fresh, creative look from time to time
2. Being aware of di erent perspectives
- Technology, organization, people
3. Testing alternatives
4. Being aware of organization and personal limitations
1-4 what information skills and knowledge are essential for business careers?
How information systems a ect business careers in:
• Accounting
- Because so many transactions are occurring over the internet, accountants need
to understand online transactions and reporting systems
• Finance
- The relationship between information systems and the practice of modern
nancial management and services is very strong
• Marketing
- Product branding and customer communication are moving online at a fast pace
• Operations management in services and manufacturing
- Production managers, administrative service managers, and operations analysts
will be employing information systems and technologies every day
• Management
- Managers use information systems to support decision making and to monitor
the performance of the rm
• Information systems
- Most fast-changing and dynamic of all the business professions because
information technologies are among the most important tools for achieving
business rms’ key objectives
Outsourcing and o shoring: outsourcing to domestic U.S. rms, o shoring to low-wage
countries
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Week 2:
Chapter 2: global E-business and collaboration
2-1 what major features of a business are important for understanding the role of
information systems?
Business = a formal organization whose aim is to produce products or provide services
for a pro t
Strategic choice: decision of what to produce
Four major functions of a business:
1. Manufacturing and production
2. Sales and marketing
3. Finance and accounting
4. Human Resources
Five basic entities that make up a business:
1. Suppliers
2. Customers
3. Employees
4. Invoices/payments
5. Products and services
Business processes = the actual steps and tasks that describe how work is organized in
a business
Hierarchy of management:
• Senior management: makes long-range strategic decision
• Middle management: carries out the programs and plans of senior management
- Knowledge workers: design products or services and create new knowledge for
the rm (engineers, scientists, architects)
• Operational management: monitoring the daily activities of the business
- Data workers: assist with administrative work at all levels of the rm (secretaries,
clerks)
- Production or service workers: produce the product and deliver the service
The business environment includes speci c groups like:
• Customers
• Suppliers
• Competitors
• Regulations
• Stockholders
Besides these groups, the broader general environment also in uences the business like:
• Economy
• Politics
• International change (stock-exchange)
• Technology and science
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2-2 how do systems serve di erent management groups in a business, and how do
systems that link the enterprise improve organizational performance?
Transaction processing systems (STP) = systems that performs and records the daily
routine transactions necessary to conduct business (sales order entity, payroll, shipping)
Business intelligence systems = data and software tools for organizing, analyzing, and
providing access to data to help managers make more informed decisions
Management information systems (MIS) = the study of information systems in business
and management
Decision-support decisions (DSS) = focus on problems that are unique and rapidly
changing, for which the procedure for arriving at a salutation may not be fully prede ned
in advance
Executive support systems (ESS) = systems that help senior managers make decisions
about strategic issues and long term trends, both in the rm and in the external
environment
Often the information from an ESS is delivered to senior executives through a portal,
which uses a web interface to present integrated personalized business content.
Digital dashboards (graphs and charts of key performance indicators on a single screen)
are becoming an increasingly popular tool for management decision makers.
Enterprise applications = systems that span functional areas, focus on executing
business processes across the business rm, and include all levels of management
The four major enterprise applications are:
1. Enterprise Systems (ERP)
• To integrate business processes in manufacturing and production, nance and
accounting, sales and marketing, and human resources into a single software
system
2. Supply Chain Management Systems (SCM)
• To help manage relationships with their suppliers
• One type of inter-organizational because they automate the ow of information
across organizational boundaries
3. Customer Relationship Management Systems (CRM)
• To help manage relationships with their customers
4. Knowledge Management Systems (KMS)
• Enable organizations to better manage processes for capturing and applying
knowledge and expertise
Intranets and extranets are alternative tools for increasing integration and expediting the
ow of information within the rm, and with customers and suppliers.
Electronic business / e-business = the use of digital technology and the internet to
execute the major business processes in the enterprise
Electronic commerce / e-commerce = part of e-business that deals with the buying and
selling goods and services over the internet, it also encompasses activities such as
marketing, customer support, security, delivery, and payment
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E-government = the use of digital technology and the internet to enable government
relationships with citizens, businesses, and other arms of government
2-3 why are systems for collaborating and social business so important, and what
technologies do they use?
Collaboration = working with others to achieve shared and explicit goals
Teams: have a speci c mission that someone in the business assigned to them
Collaboration and teamwork are more important today than ever for variety of reasons:
• Changing nature of work
• Growth of professional work
• Changing organization of the rm
• Changing scope of the rm
• Emphasis on innovation
• Changing culture of work and business
Social business = the use of social networking platforms, including Facebook, Twitter,
and internal corporate social tools, to engage their employees, customers and suppliers
Business bene ts of collaboration and social business:
• Productivity
• Quality
• Innovation
• Customer service
• Financial service
Tools and technologies for collaboration and social business:
• E-mail and Instant Messaging (IM)
• Wikis
• Virtual Worlds
• Collaboration and Social Business Platforms
- Virtual meeting systems (videoconferences)
Telepresence: an integrated audio and visual environment which allows a
person to give the appearance of being present at a location other than his or
her true physical location
- Cloud Collaboration Services: Google Tools and Cyberlockers
Cyberlockers: online le-sharing services that allow users to upload les to
secure online storage sites from which the les can be shared with others
- Microsoft Sharepoint
Browser-based collaboration and documents management platform,
combined with a powerful search engine that is installed on corporate servers
- Lotus Notes
A collaborative software system with capabilities for sharing calendars,
collective writing and editing, shared database access, and electronic
meeting, with each participant able to see and display information from others
and other activities
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Enterprise social networking tools = create business value by connecting the members
of an organization through pro les, updates, and noti cations, similar to Facebook
features, but tailored to internal corporate uses
2-4 what is the role of the information system function in a business?
Information system department = formal organizational unit responsible for information
technology services
The information systems department consists:
• Programmers: who write the software instructions for computers
• Systems analysts: translate business problems and requirements into information
requirements and systems
• Information systems manager: leaders of teams of programmers and analysts,
project managers, physical facility managers, telecommunication managers, or
database specialists
The information systems department is headed by:
• Chief information o cer (CIO): oversees the use of information technology in the
rm
Chief
security o cer (CSO): in charge of information systems security for the rm
•
• Chief privacy o cer (CPO): responsible for ensuring that the company complies with
existing data privacy laws
• Chief knowledge o cer (CKO): responsible for the rm’s knowledge management
program
End users = representatives of departments outside the information systems group for
whom applications are developed
Services provided by the information systems department include the following:
• Computing platforms
• Telecommunications services
• Data management services
• Application software devices
• Physical facilities
• IT management services
• IT standards services
• IT educational services
• IT research and development services
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Chapter 6: foundations of business intelligence: databases and
information management
6-1 what is a database, and how does a relational database organize data?
Database = a collection of related les containing records on people, places, or things
Entity = generalized category representing a person, place, or thing on which we store
and maintain information
Attributes = speci c characteristics from an entity
Relational database = organized data into two-dimensional tables (called relations) with
columns and rows
Field = a eld represents an attribute for the entity
Rows in a relational database tables are commonly referred to as records or tuples.
Key- eld, primary key = this key eld is the unique identi er for all the information in any
row of the table, and this primary key cannot be duplicated
Foreign key = a eld that refers to another relational database table
Entity-relationship diagram = used to clarify table relationships in a relational database
Normalization = The process of streamlining complex groups of data to minimize
redundant data elements, many-to-many relationships, and increase stability and
exibility
Relational database systems enforce referential integrity rules to ensure that
relationships between coupled tables remain consistent
6-2 what are the principles of a database management system?
Database management systems (DBMS) = a speci c type of software for
creating, storing, organizing, and accessing data from a database
The logical view presents data as end users or business specialist would perceive
them, whereas the physical view shows how data are actually organized and
structured on physical storage media, such as a hard disk
Three basic operations of a relational DBMS:
• Select operation: creates a subset consisting of all records in the le that meet
stated criteria
• Join operation: combines relational tables to provide the user with more
information than is available in individual tables
• Project operation: creates a subset consisting of columns in a table, permitting
the user to create new tables that contain only the information required
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Capabilities of database management systems:
• Data de nition: capability to specify the structure of the content of the
database
• Data dictionary: an automated or manual le that stores de nitions of data
elements and their characteristics
• Data manipulating language: this language contains commands that permit
end users and programming specialists to extract data from the database to
satisfy information requests and develop applications
Most prominent data manipulation language today is Structured Query Language
(SQL).
Report generators are used to display the data of interest in a more structured
and polished format.
Non-relational database management systems = use a more exible data
model and are designed for managing large data sets across many distributed
machines and for easily scaling up or down
6-3 what are the principle tools and technologies for accessing information from
databases to improve business performance and decision making?
Big data = datasets with volumes so huge that they are beyond the ability of typical
DBMS to capture, store and analyze
Data warehouse = a database that stores current and historical data of potential interest
to decision makers throughout the company
Data mart = a subset of data warehouse in which a summarized or highly focused
portion of the organization’s data is placed in a spate database for a speci c population
of users
Hadoop = an open-source software framework that enables distributed parallel
processing of huge amounts of data across inexpensive computers
In-memory computing = way of facilitating big data analysis which relies primarily on a
computer’s main memory (RAM) for data storage
Commercial database vendors have developed specialized high-speed analytic
platforms using both relational and non-relational technology that are optimized for
analyzing large datasets.
Analytical tools:
• Online analytical processing (OLAP): supports multidimensional data analysis,
enabling users to view the same data in di erent ways using multiple dimensions
• Data-mining: provides insights into corporate data that cannot be obtained with
OLAP by nding hidden patterns and relationships in large databases and inferring
rules from them to predict future behavior:
- Associations
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- Sequences
- Classi cation
- Clustering
- Forecasting
• Text-mining: tools to help business analyze text data
- Sentiment analysis: software which is able to mine text comments in an e-mail,
message to detect favorable and unfavorable opinions about speci c subjects
• Web-mining: the discovery and analysis of useful patterns and information from the
internet
Database server = a computer where the DBMS resides on
6-4 why are information policy, data administration, and data quality assurance
essential for managing the rm’s data resources?
Information policy = speci es the organization’s rules for sharing, disseminating,
acquiring, standardizing, classifying and inventorying information
Data administration = responsible for the speci c policies and procedures through
which data can be managed as an organizational resource
Database administration = responsible for de ning and organizing the structure and
content of the database, and maintaining the database
Data quality audit = a structured survey of the accuracy and level of completeness of the
data in an information system
Data cleansing / data scrubbing = consists of activities for detecting and correcting
data in a database that are incorrect, incomplete, improperly formatted, or redundant
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Week 3:
Chapter 3:
3-1 how do Porter’s competitive forces model, the value chain model, synergies,
core competencies, and network-based strategies help companies use information
systems for competitive advantage?
Porter’s competitive forces model:
• Traditional competitors
• New market entrants
• Substitute products and services
• Customers
• Suppliers
The basic principle of IT strategy for a business is to ensure that technology serves the
business, and not the other way around.
How to achieve alignment of IT with the business:
1. Identify your business strategy and goals
2. Break these strategic goals down into concrete activities and processes
3. Identify how you will measure progress towards the business goals
4. Ask yourself, “how can information technology help me achieve progress towards
our business goals and how will it improve our business processes and activities?”
5. Measure actual performance
Four generic competitive strategies:
• Low-cost leadership
• Product di erentiation
• Focus on market niche
• Strengthen customer and supplies intimacy
E cient customer response system = directly links consumer behavior to distribution
and production and supply chains
Mass customization = the ability to o er individually tailored products or services using
the same production resources as mass production
Switching costs = the cost of switching from one product or service to a competitor
Value chain model = highlights speci c activities in the business where competitive
strategies can be applied and where information systems are most likely to have a
strategic impact
Value chain model:
• Primary activities: related to the production and distribution of the rm’s products and
services, which create value for the customer
• Support activities: make the delivery of the primary activities possible and consist:
- Organization structure (administration and management)
- Human Resources (employee recruiting, hiring and training)
- Technology (improving products and the production process)
- Procurement (purchasing input)
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Benchmarking = comparing the e ciency and e ectiveness of your business processes
against strict standard and then measuring performance against those standards
Industry best practices are usually identi ed by consulting companies, research
organizations, government agencies, and industry associations as the most successful
solutions or problem-solving methods for consistently and e ectively achieving a
business objective
Value web = a networked system that can synchronize the value chains of business
partners within an industry to respond rapidly to changes in supply and demand
Information systems can improve:
• Synergies
• Enhancing core competencies
- Core competence: an activity for which a rm is a world-class leader
• Network-based strategies
- Network economics: using the web and internet communication tools to build
communities
- Virtual company: uses networks to link people, assets, and ideas, enabling it to ally
with other companies to create and distribute products and services without being
limited by traditional boundaries or physical locations
Disruptive technologies = substitute products that perform as well as or better than
anything currently produced
3-2 how do information systems help businesses compete globally?
The emergence of the internet has drastically reduced the costs of operating on a global
scale, deepening the possibilities for large companies but simultaneously creating many
opportunities for small and medium-sized rms.
Global business and system strategies:
• Domestic exporter: heavy centralization of corporate activities in the home country of
origin
• Multinational: concentrates nancial management and control out of a central home
base while decentralizing production, sales and marketing operations to units in other
countries
• Franchisers: products are created, designed, nanced, and initially produced in the
home country but rely heavily on foreign personnel for further production, marketing,
and human resources
• Transnational: all the value-adding activities are managed from a global perspective
without reference to national borders, optimizing sources of supply and demand
wherever they appear and taking advantage of any local competitive advantages
Global system con gurations:
• Centralized system → domestic exporter
• Duplicated system → franchiser
• Dencentralized → multinational
• Networked → transnational
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3-3 how do information systems help businesses compete using quality and
design?
Quality = conformance to speci cations or the absence of variation from those
speci cation (producer), durability, safety, ease of use, installation, quality of service
(customer)
Total quality management (TQM) = makes quality the responsibility of all people and
functions within an organization
Six sigma = speci c measure of quality, representing 3.4 defects per million opportunities
How information systems improve quality:
• Reduce cycle time and simplify the production process
- Cycle time = total elapsed time from the beginning of a process to its end
• Benchmarks
• Use customer demands to improve products and services
• Improve design quality and precision
- Computer-aided design (CAD system): automates the creation and revision of
design, using computers and sophisticated graphics software
• Improve production precision and tighten production tolerances
3-4 what is the role of business process management (BPM) in enhancing
competitiveness?
Business process management (BPM) = an approach to business that aims to
continuously improve business processes
Business process management:
1. Identify processes for change
2. Analyze existing processes
3. Design the new process
4. Implement the new process
5. Continuous measurement
Business process reengineering (BPR) = radical rethinking and redesign of business
processes
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Week 4:
Chapter 9: achieving operational excellence and customer intimacy:
enterprise applications
9-1 How do enterprise systems help businesses achieve operational excellence?
Enterprise systems feature a set of integrated software modules and a central database
that enables data to be shared by many di erent business processes and functional areas
throughout the enterprise.
Enterprise software is built around thousands of prede ned business processes that
re ect best practices:
• Financial and accounting processes
• Human Resources processes
• Manufacturing and production processes
• Sales and marketing processes
Enterprise software is unusually complex, and extensive customization may degrade
system performance, compromising the information and process integration that are the
main bene ts of the system.
Enterprise systems provide value both by improving:
• Operational e ciency
• Management decision making
9-2 How do supply chain management systems coordinate planning, production,
and logistics with suppliers?
Supply chain = a network of organizations and business processes for procuring raw
materials, transforming these materials into intermediate and nished products, and
distributing the nished products to customers
Materials, information, and payments ow through the supply chain in both directions.
Supply chain’s proportions:
• Upstream: includes all suppliers and the processes for managing relationships with
them
• Downstream: organizations and processes for distributing and delivering products to
the nal customers
Just-in-time strategy = components arrive exactly at the moment they are needed and
nished goods ship as they leave the assembly line
The safety stock acts as a bu er for the lack of exibility in the supply chain.
Bullwhip e ect = information about the demand for a product gets distorted as it passes
from one entity to the next across the supply chain
The bullwhip e ect is tamed by reducing uncertainties about demand and supply chain
when all members of the supply chain have accurate and up-to-date information (sharing
dynamic information)
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Supply chain planning systems enable the rm to model its existing supply chain,
generate demand forecasts for products, and develop optimal sourcing and
manufacturing plans.
Demand planning = how much product a business needs to make to satisfy all of its
customer’s demand
Supply chain execution systems manage the ow of products through distribution
centers and warehouses to ensure that products are delivered to the right locations in the
most e cient manner.
Global supply chain may need to re ect foreign government regulations and cultural
di erences.
Push-based model = production master schedules are based on forecasts or best
guesses of demand for products
Pull-based model = customer order or purchases trigger events in the supply chain
The internet makes it possible to move from sequential supply chains to concurrent
supply chains, where information ows in many directions simultaneously among
members of a supply chain network.
By implementing a networked and integrated supply chain management system,
companies:
• Match supply to demand
• Reduce inventory levels
• Improve delivery service
• Speed product time to market
• Use assets more e ectively
9-3 How do customer relationship management systems help rms achieve
customer intimacy?
Touch point = a method of interaction with the customer
Customer relationship management (CRM) aspects:
• Sales
• Service
• Marketing
Customer relationship management (CRM) software contains modules for:
• Partner relationship management (PRM)
• Helps distributor or retailer channels to sell to customers directly
Employee
relationship management (ERM)
•
• Deals with employee issues
Sales
force automation (SFR)
•
• Helps sales sta increase their productivity by focusing sales e orts on the most
pro table customers
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• Customer service
• Provide information and tools to increase the e ciency of call centers, help desks,
and customer support sta
Marketing
•
• Providing capabilities for capturing prospect and customer data
• Tools for analyzing marketing and customer data
• Cross-selling: marketing of complementary products to customers
Operational CRM = includes customer-facing applications
Analytical CRM = includes applications that analyze customer data generated by
operational CRM applications to provide information for improving business performance
Customer lifetime value (CLTV) is based on the relationship between the revenue
produced by a speci c customer, the expenses incurred in acquiring and servicing that
customer, and the expected life of the relationship between the customer and the
company
Churn rate = measures the number of customers who stop using or purchasing products
or services from a company
9-4 What are the challenges that enterprise applications pose, and how are
enterprise applications taking advantage of new technologies?
Enterprise application challenges:
• Very expensive to purchase and implement
• Implementation takes very long
• Requires fundamental changes in the way the business operates
• Operating problems and losses during the startup phase
• New enterprise application introduces ‘ switching costs’
Social CRM tools enable a business to connect customer conversations and
relationships from social networking sites to CRM processes.
Enterprise application vendors have added business intelligence features to help
managers obtain more meaningful information from the massive amounts of data
generated by these systems.
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Week 5:
Chapter 10: e-commerce: digital markets, digital goods
10-1 What are the unique features of e-commerce, digital markets, and digital
goods?
E-commerce refers to the use of the internet and the Web to transact business. One of
the biggest changes is the extent to which e-commerce has become more social, mobile,
and local.
E-commerce technology dimensions:
• Ubiquity: available everywhere at all times
- Marketspace: a marketplace extended beyond traditional boundaries and
removed from a temporal and geographic location
- Reduced transaction costs: costs of participating in a market
• Global reach: no national boundaries to a global audience
• Universal standards: technical standards of the internet and, therefore, the technical
standards for conducting e-commerce are universal standards
- Lower market entry costs: the cost merchants must pay simply to bring their
goods to the market
- Reduced search costs: the e ort required to nd suitable products
Richness:
refers to the complexity and content of a message
•
• Interactivity: the ability for a two-way communication between merchant and
consumer
• Information density: the total amount and quality of information available to all market
participants, consumers, and merchants alike
- Makes prices and costs more transparent:
• Price transparency: refers to the ease with which consumers can nd out the
variety of prices in a market
• Cost transparency: refers to the ability of consumers to discover the actual
costs merchants pay for products
- Price discrimination: selling the same goods to di erent targeted groups at
di erent prices
Personalization/customization
•
- Personalization: adjusting the message to a person’s clickstream behavior,
name, interests and past purchases
- Customization: changing the delivered product or service based on a user’s
preferences or prior behavior
Social
technology: user content generation and social networking
•
- The new internet and e-commerce empower users to create and distribute
content on a large scale, and permit users to program their own content
consumption
The internet reduces information asymmetry.
Information asymmetry = when one party in a transaction has more information that is
important for the transaction than the other party
Digital markets are very exible and e cient because the operate with reduced search
and transaction costs, lower menu costs, greater price discrimination, and the ability to
change prices dynamically based on market conditions.
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Menu costs = merchants’ costs of changing prices
Dynamic pricing = the price of a product varied depending on the demand
characteristics of the customer of the supply situation of the seller
Disintermediation = removal of organizations or business process layers responsible for
intermediary steps in a value chain
Digital goods = goods that can be delivered over a digital network
10-2 What are the principal e-commerce business and revenue models?
Three major electronic commerce categories:
1. Business-to-consumer (B2C): involves retailing products and services to
individual shoppers
2. Business-to-business (B2B): involves sales of goods and services among
business
3. Consumer-to-consumer (C2C): involves consumers selling directly to consumers
Mobile (m-)commerce = the use of handheld wireless devices for purchasing goods and
services from any location
E-commerce business models:
• Portals: gateways to the Web (like Yahoo, Google)
• E-tailer: online retail stores
• Content provider: “content” is de ned broadly to include all forms of intellectual
property
- Intellectual property: refers to all forms of human expression that can be put
into a tangle medium (text, CDs, DVDs) or stored on any digital (or other) media,
including the Web
- Podcasting: a method of publishing audio or video broadcasts via the Internet
- Streaming: a method of publishing music and video les that ows a continuous
stream of content to a user’s device without being stored locally on the device
• Transaction broker: sites that process transactions for consumers normally handled in
person, by phone, or by mail
• Market creator: build a digital environment in which buyers and sellers can meet,
display products, search for products, and establish prices
• Service provider: o er services online
• Community provider: sites that create a digital online environment where people with
similar interests can interact, share interests, photos, videos, and communicate
E-commerce revenue models:
• Advertising revenue model: generating revenue by attracting a large audience of
visitors who can then be exposed to advertisements
• Sales revenue model: generating revenue by selling goods, information, or services
to customers
- Micropayment systems: provide content providers with a cost-e ective
method of processing high volumes of very small monetary transactions
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• Subscription revenue model: generating revenue by o ering content or services for a
subscription fee for access to some or all of its o erings on an ongoing basis
• Free/freemium revenue model: rms o er basic services or content for free, while
charging a premium for advanced or special features
• Transaction fee revenue model: a company receives a fee for enabling or executing
a transaction
• A liate revenue model: web sites send visitors to other web sites in return for a
referral fee or percentage of the revenue from any resulting sales
Social shopping = swap shopping ideas with friends through web sites
In a phenomenon called “the wisdom of crowds”, some argue that large numbers of
people can make better decisions about a wide range of topics or products than a single
person or even a small committee of experts.
Crowdsourcing = enlisting the aid of customers in solving some business problems
Prediction markets = established as peer-to-peer betting markets where participants
make bets on speci c outcomes of, say quarterly sales of a new product, designs for new
products, or political elections
The internet provides marketers with new ways of identifying and communicating with
millions of potential customers at far lower costs, called long tail marketing.
Behavioral targeting = refers to tracking the clickstreams of individuals on thousands of
Web sites for the purpose of understanding their interests and intentions, and exposing
them to advertisements that are uniquely suited to their behavior
Social graph = a mapping of all signi cant online relationships
The challenge of B2B e-commerce is changing existing patterns and systems of
procurement, and designing and implementing new internet-based B2B solutions
Electronic data interchange (EDI) = enables the computer-to-computer exchange
between two organizations of standard transactions such as invoices, bills of lading,
shipment schedules, or purchase orders
Private industrial networks / private exchange = large rm using a secure web site to
link to its suppliers and other key business partners
Net marketplaces = provide a single, digital marketplace based on internet technology
for many di erent buyers and sellers
Direct goods = goods used in a production process
Indirect goods = all other goods that are not directly involved in the production process
Exchanges = independent owned third-party net marketplaces that connect thousands
of suppliers and buyers for spot purchasing
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10-3 How has e-commerce transformed marketing?
Mobile e-commerce (m-commerce) is the fastest growing type of B2C e-commerce
although it represents only a small part of all e-commerce.
M-commerce applications and services:
• Location-based services: makes use of global positioning systems (GPS)
• Geosocial service: tells where your friends are meeting
• Geoadvertising service: where to nd the nearest Italian restaurant for example
• Geoinformation service: the price of a house you are looking at for example
10-4 How has e-commerce a ected business-to-business transactions?
The two most important management challenges in building a successful e-commerce
presence are:
1. Developing a clear understanding of your business objectives
2. Knowing how to choose the right technology to achieve those objectives
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Week 6:
Chapter 11: improving decision making and managing knowledge
11-1 what are the di erent types of decisions, and how does decision making
process work?
One of the main contributions of information systems has been to improve decision
making, both for individuals and groups.
Improved decision making is important to add business value.
Decision classi cations:
• Unstructured decisions: the decision maker must provide judgement, evaluation,
and insight to solve the problem, there is no procedure (senior management)
• Semistructured decisions: decisions that have elements of both types (middle
management)
• Structured decisions: repetitive and routine, and they involve a de nite procedure for
handling them (operational management)
Four di erent stage in decision making, Simon (1960):
• Intelligence: discovering, identifying, and understanding the problems
• Design: identifying and exploring various solutions to the problem
• Choice: choosing among solution alternatives
• Implementation: making the chosen alternative work and continuing to monitor how
well the solution is working
Quality dimensions of decision making:
• Accuracy
• Comprehensiveness
• Fairness
• Speed (e ciency)
• Coherence
• Due process
11-2 how do business intelligence and business analytics support decision
making?
Business Intelligence (BI) is a term used to describe the infrastructure for warehousing,
integrating, reporting and analyzing data that come from the business environment.
The six elements in the business intelligence environment:
1. Data from the business environment: data needs to be integrated and organized
so that they can be analyzed and used by human decision makers
2. Business intelligence infrastructure: powerful database system that captures all
the relevant data to operate the business
3. Business analytics toolset: software tools to analyze data and produce reports
4. Managerial users and methods: managers impose order on the analysis of data
using a variety of managerial methods that de ned strategic business goals and
specify how progress will be measured
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5. Delivery platform - MIS, DSS, ESS: the results from BI and analytics are delivered
to managers and employees in a variety of ways
6. User interface: visual representation of data, software using data visualization
Five analytic functionalities that BI systems deliver:
1. Production reports: pre-de ned reports based on industry-speci c requirements
2. Parameterized reports: entering several parameters to lter data and isolate
impacts of parameters
3. Dashboards/scorecards: visual tools for representing performance data de ned
by users
4. Ad hoc query/search/report creation: creating own reports based on queries
and searches
5. Drill down: the ability to move from a high level summary to a more detailed view
6. Forecasts, scenarios, models: include capabilities for linear forecasting, scenario
analysis, and analyzing data using standard statistical tools
Predictive analysis = the use of statistical analysis, data mining techniques, historical
data, and assumptions about future conditions to predict future trends and behavior
patterns
Predictive analysis are now taking advantage of big data accumulated in both private and
public sectors.
Location analysis = the ability to gain business insight from the location (geographic)
component of data
Geographic information systems (GIS) = provide tools to help decision makers visualize
problems that bene t from mapping, ties location data about the distribution of people or
other resources to points, lines and areas on a map
Support for semistructured decisions:
• Sensitivity analysis models: ask what-if questions repeatedly to predict a range of
outcomes when one or more variables are changed multiple times
• Pivot tables: are used to identify and understand patterns in business information that
may be useful for semistructured decision making
Support for senior management:
• Balanced scorecard method: a framework for operationalizing a rms strategic plan
by focusing on measurable outcomes on four dimensions of rm performance:
• Financial
• Business process
• Customer
• Learning and growth
- Performance on each dimension is measured using key performance
indicators (KPIs)
• Business performance management (BMP): systematically translate a rm’s
strategies into operational targets
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Group decision-support system (GDSS) = an interactive computer-based system for
facilitating the solution of unstructured problems by a set of decision makers working
together as group in the same location or in di erent locations
11-3 what are the business bene ts of using arti cial intelligence techniques in
decision making and knowledge management?
Intelligent techniques consist of:
• Expert systems: captures human expertise in a limited domain of knowledge as a set
of rules in a software system that can be used by others in the organization
- Knowledge base: a set of rules that de ne the human knowledge model
- Inference engine: strategy used to search through the collection of rules and
formulate conclusions
Case-based
reasoning (CBR): knowledge and past experiences of human specialists
•
are represented as cases and stored in a database for later retrieval when the user
encounters a new case with similar parameters
• Genetic algorithms: useful for nding the optimal solution for a speci c problem by
examining a very large number of alternative solutions for that problem
• Neural networks: used for solving complex, poorly understood problems for which
large amounts of data have been collected
• Fuzzy logic: a rule-based technology that represents imprecision by creating rules
that use approximate or subjective values
• Intelligent agents: software programs that work in the background without direct
human intervention to carry out speci c, repetitive, and predictable tasks for an
individual user, business process, or software application
These techniques are based on arti cial intelligence (AI) technology, which consists of
computer-based systems that attempt to emulate human behavior and thought patterns.
11-4 what types of systems are used for enterprise-wide knowledge management
and knowledge work, and how do they provide value for businesses?
Knowledge management = refers to the set of business processes developed in an
organization to create, store, transfer, and apply knowledge
Knowledge management system types:
• Enterprise-wide knowledge management systems: general-purpose, rmwide
systems that collect, store, distribute, and apply digital content and knowledge using
(un)structured and tacit knowledge
- Enterprise content management (ECM) systems: help organizations manage
structured and semistructured or unstructured knowledge, they have capabilities
for knowledge capture, storage, retrieval, distribution, and preservation to help
rms improve their business processes and decisions
• Digital asset management systems: help rms classify, store and
distribute digital objects
- Knowledge network systems: provide an online directory of corporate experts
and their pro les, with details about their job experience, projects, publications,
and educational degrees
- Collaboration tools and learning management systems
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• Social bookmarking: makes it easier to search for and share information
by allowing users to save their bookmarks to web pages on a public web
site and tag these bookmarks with keywords
• Folksonomies: user-created taxonomies created for shared bookmarks
and social tagging
• Learning management systems (LMS): provides tools for the
management, delivery, tracking, and assessment of various types of
employee learning and training
• Massive open online course (MOOCs): online courses made available
via the web to a very large number of participants
• Knowledge work systems (KWS): specialized systems for engineers, scientists, and
other knowledge workers that are designed to promote the creation of knowledge and
to ensure that new knowledge and technical expertise are properly integrated into
business
- Require strong links to external knowledge bases in addition to specialized
hardware and software
- Examples of knowledge work systems:
• CAD systems
• Virtual reality systems: use interactive graphics software to create
computer generated simulations that are close to reality that users almost
believe they are participating in a real-world situation
• Augmented reality (AR): provides a live direct or indirect view of a physical
real-world environment whose elements are augmented by virtual computergenerated imagery
- Virtual reality modeling language (VRML): a standard used for
virtual reality applications developed for the web
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Week 7:
Chapter 12: building information systems and managing projects
12-1 what are the core problem-solving steps for developing new information
systems?
System analysis:
• De ne and understand the problem
• Information requirements: who needs what information, where, when, and how
• Develop alternative solutions
• Choose the best solution
• Feasibility study: to determine whether each proposed solution is feasible, or
achievable, from a nancial, and organizational standpoint
• Implement the solution
• System design: shows how the chosen solution should be realized
The nal steps of implementing a system solution:
• Hardware selection and acquisition
• Software development and programming
• Testing
- Test plan: includes all of the preparation of the following tests:
• Testing process: requires detailed testing of individual computer programs,
called unit testing, as well as system testing, which tests the performance
of the information system as a whole
• Acceptance testing: provides the nal certi cation that the system is ready
to be used in a production setting
• Training and documentation
- Documentation: showing how the system works from both a technical and enduser standpoint
• Conversion: the process of changing from the old to the new system
- Parallel strategy: both the old and its potential replacement are run together for
a time until everyone is assured that the new one functions correctly
- Direct cutover strategy: new systems replaces old systems entirely on an
appointed day
- Phased approach: introduces the system in stages
Production
and maintenance
•
- Production: after the new system is installed and conversion is complete
- Maintenance: changes in hardware, software, documentation, or procedures to
a production system to correct errors, meet new requirements, improve
processing e ciency
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12-2 what are the alternative methods for building information systems?
Alternative methods for building systems:
• Systems development lifecycle (SDLC): phased approach to building a system,
dividing systems development into a series of formal stages:
1. System analysis
2. System design
3. Programming
4. Testing
5. Conversion
6. Production and maintenance
• Prototyping: building an experimental system rapidly and inexpensively for end users
to evaluate, consist of four steps:
1. Identify the user’s basic requirements
2. Develop and initial prototype
3. Use the prototype
4. Revise and enhance the prototype
End-user
development: allow end users to create simple information systems on
•
their own, with little or no help from professional system analysts or programmers
• Purchasing solutions
• Application software packages
• Customization features: allow a software package to be modi ed to meet an
organization’s unique requirements without destroying the integrity of the
packaged software
Outsourcing
•
• Mobile application development
• Mobile web site: a version of a regular web site that is scaled down in content and
navigation for easy access and search on a small mobile screen
• Mobile web app: an application which resides on a server and is accessed via the
mobile web browser built into a smartphone or tablet computer
• Native app: a standalone application designed to run on a speci c mobile platform
and it must be installed directly onto the device
• Responsive web design: enables web sites to automatically change layouts
according to the visitor’s screen resolution, whether on a desktop, laptop, tablet, or
smartphone
Rapid
application development for e-business
•
• Rapid application development (RAD): the process of creating workable systems
in a very short period of time
• Joint application design (JAD): brings end users and information system
specialists together in an interactive session to discuss the system’s design
Request of Proposal (RFP) = a detailed list of questions submitted to external vendors
to see how well they meet the requirements for the proposed system
12-3 what are the principal methodologies for modeling and designing systems?
Alternative methodologies for modeling and designing systems:
• Structured methodology
• Structured: refers to the fact that the techniques are step by step, with each step
building on the previous one
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• Data ow diagram (DFD): speci es the processes or transformations that occur
within each module and the interfaces that exists between them
• Process speci cations: describe the transformation occurring within the lowest
level of the data ow diagrams, showing the logic for each process
• Structure chart: a top-down chart, showing each level of design, its relationship
to other levels, and its place in the overall design structure
Object-oriented
development: uses the object as the basic unit of systems analysis
•
and design
• Based on the concepts of class and inheritance
Component-based development = approach to software development where groups of
objects are assembled into software components for common functions and where the
components can be combined to create large-scale business applications
Computer-aided software engineering (CASE) = provides software tools to automate
the methodologies described above to reduce the amount of repetitive work in systems
development
12-4 how should information systems projects be selected and managed?
Project = a planned series of related activities for achieving a speci c business objective
Project management = the application of knowledge, skills, tools, and techniques to
achieve speci c targets within speci ed budget and time constraints
Project management for information systems must deal with ve major variables:
• Scope: de nes what work is or is not included in a project
• Time: amount of time required to complete the project
• Cost: based on the time to complete a project multiplied by the daily cost of human
resources required to complete the project
• Quality: indicator of how well the end result of a project satis es the objectives
speci ed by management
Tangible bene ts = can be quanti ed and assigned a monetary value
Intangible bene ts = cannot be immediately quanti ed
Information systems plan = shows how speci c information systems t into a
company’s overall business plan and business strategy
Major components of an information systems plan:
1. Purpose of the plan
2. Strategic business plan rationale
3. Current systems
4. New developments
5. Management strategy
6. Implementation of the plan
7. Budget requirements
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Portfolio analysis = inventories all of the rm’s information systems projects and assets,
including infrastructure, outsourcing, contracts, and licenses
Scoring model = gives alternative systems a single score based on the extent to which
they meet selected objectives
Implementation = refers to all the organizational activities working toward the adoption
and management of an innovation, such as new information system
The relationship between end users and information systems specialists has traditionally
been a problem area for information systems implementation e orts because of di ering
backgrounds, interests, and priorities. These di erences create a user-designer
communications gap.
Formal planning and tools:
• Gantt chart: lists project activities and their corresponding start and completion dates
• PERT charts: stands for Program Evaluation and Review Technique, graphically
depicts project tasks and their interrelationships
Project Management Software = commercial software tools to automate the creation of
Gantt and PERT charts and to facilitate the project management process
Ergonomics = refers to the interaction of people and machines in the work environment
Organizational impact analysis = used to identify transformations in job functions,
organizational structure, power relationship, and behavior during system analysis
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