REVIEW
FOR
EXAM 3
BUS3500 - Abdou Illia, Spring 2005
1
Information Systems For
E-Business
Part 1
2
Who are you? How far you can go digital?
- What product/service?
- How customers find, purchase, pay prod./serv.
- How product/service are delivered?
Who are your customers?
E-Business
Triangle
What kind of issues/concerns
you have to deal with?
What technologies would help
implement your E-Business model?
What technologies would
take care of my concerns?
3
E-Business models
B2B
B2C
C2C
E-Gvt: G2B, G2C
E-Business
Triangle
E-Business Issues
E-Business Technologies
Copyright
Privacy
Security
Intellectual Property
Taxation
Trust
Jurisdiction
Web design
TCP/IP
Java
Firewalls
Electronic Payments,
Online Billing
Encryption
4
Components of E-Business


Each component could be Physical or Digital.
The extent to which a Business is an e-Business
depends on the extent to which the components
are digital.
Processes: Process of finding the product, purchasing and paying.
5
E-Business Models

Business-to-Consumer – B2C


Business-to-Business – B2B


Business sells product directly to the
consumer.
Businesses sell to other businesses.
Consumer-to-Consumer – C2C

Consumers sell directly to other consumers.
6
B2C Models

Subscription



Consumers pay to have regular access to site.
Consumersreports.com
Online storefront


Web site acts as intermediary between
manufacturer and consumer.
Amazon.com
7
B2C Models (continued)

Bricks-and-clicks

Combines a traditional retail outlet with an
online storefront


CircuitCity.com
Advertising

Sell advertising space on web site to other
companies

Sports.yahoo.com
8
B2C Models (continued)

Internet presence

Use web presence to provide information about
products and services


Exxon.com
Intermediary

New types of intermediaries connect buyers
and sellers

E-Trade.com
9
B2B Models

B2B is much larger than B2C



Information exchanges



Size estimates range from $543 Billion to $6.8 Trillion
Increase 50% per year
Exchange business documents over the Internet
EDI via the Internet
Direct sellers

Direct sales model, direct to other businesses



Dell Premier pages
Cisco
New intermediaries

Virtual hubs match buyers and sellers

E-Hospitality
10
C2C Models

Online garage sales

Online auctions



C2C services



Allows consumers to buy and sell goods with other
consumers
EBay.com
Sell expertise directly to other customers
Keen.com
Online communities



Allow people with similar interests to come together
Chat rooms
Discussion boards
11
E-Government Business Models

Government-to-citizen (G2C)

Provide government services to citizens over the
Internet



Vehicle registration renewal
Online voting
Government-to-business (G2B)


Helps government and business work together more
efficiently
Reduces paperwork and costs for business and
government
12
E-Business Issues

E-Business raises a number of difficult
legal, social, and ethical issues




Protection of intellectual property
Taxation of e-business transactions
Jurisdiction – whose laws apply when a
transaction crosses many international
boundaries
Trust

TRUSTe
13
Security
Hackers: who attempts to gain
unauthorized access to a computer system
 Spoofing (spoof attacks)
 Denial of service attacks
 Distributed denial of service attacks
 Ping of Death attacks

14
15
Summary Questions
Malaga
Notes
1) What are the three elements of the e-business
triangle?
2) (a) Which business model do online auction sites use?
(b) Which ones governments use?
3) (a) What is a Denial of service attack? What is a
spoof attack? What is a Ping of Death attack?
4) Do Encryption protect the data stored on a server
computer?
16
Information Systems For
Decision-Making
Part 2
17
The Decision-Making Process

Simon’s model of the decision-making
process



Intelligence
Design
Choice
18
Intelligence Phase


Scan the environment
for a problem.
Determine if decisionmaker can solve the
problem.


Within scope of
influence
Fully define the
problem by gathering
more information
about the problem.
Data source
Scan Environment for
problem to be solved
or decision to be made
Problem ?
No
MIS
END
Yes
Problem within
scope of influence?
No
Gather more information
about the problem
END
Internal &
External
data
19
Design Phase

Develop a model of
the problem.



Determine type of
model.
Verify model.
Develop and
analyze potential
solutions.
Develop a model of
problem to be solved
Verify that the
model is accurate
Develop potential
solutions
20
Choice Phase

Select the solution to implement.



More detailed analysis of selected solutions
might be needed.
Verify initial conditions.
Analyze proposed solution against real-world
constraints.
21
Decision Support Systems

Major components

Data management subsystem


Internal and external data sources
Model management subsystem


User
Interface
Typically mathematical in nature
User interface


How the people interact with the DSS
Data visualization is the key
 Text
 Graphs
 Charts
Model Management
-
Sensitivity Analysis
What-if Analysis
Simulation
Goal-seeking Analysis
Data Management
-
Transactional Data
Data warehouse
Business partners data
Economic data
22
Modeling Tools and Techniques

Simulation

Used to examine proposed solutions and their impact

Sensitivity analysis
 Determine how changes in one part of the model influence
other parts of the model

What-if analysis
 Manipulate variables to see what would happen in given
scenarios

Goal-seeking analysis
 Work backward from desired outcome
Determine monthly payment given various
interest rates.
Works backward from a given monthly payment
23to
determine various loans that would give that payment.
Groups Decision Support Systems
DSS designed to help groups make decisions
with the help of a Group Facilitator
 GDSS Tools:






Brainstorming tools: Allow users enter ideas simultaneously & anonymously
Commenter tools: Allow users to anonymously comment on others’ ideas
Categorizing tools: Groups ideas into categories
Idea-ranking tools: Ranks ideas. Identify the best ones.
Electronic-voting tools: Allow users to vote for their favorite ideas.
Front Screen
GDSS tools
24
Executive Information Systems

Computer-based tool that specifically
helps top-level management make
strategic decisions



Processes both internal and external data
Presents data in summary form
Drill-down is a key feature – gives the
manager the ability to see more details when
needed
25
26
KWS. Expert Systems

AI systems that codify human expertise in a
computer system


Main goal is to transfer knowledge from one person to
another
Wide range of subject areas



Medical diagnosis
Computer purchasing
Knowledge engineer elicits the expertise from the expert
and encodes it in the expert system
27
Expert Systems Components




Knowledge base: database of the expertise, often in IF THEN rules.
Inference engine: derives recommendations from knowledge base and
problem-specific data
User interface: controls the dialog between the user and the system
Explanation system: Explain the how and why of recommendations
User
Domain
Expert
Expertise
Knowledge
Engineer
Encoded
expertise
Knowledge
base
Example of rules
User
Interface
Inference
Engine
Explanation
System
System
Engineer
IF
family is albatross AND
color is white
THEN
bird is laysan albatross.
IF
family is albatross AND
color is dark
THEN
bird is black footed albatross
28
Summary Questions
Malaga
Notes
1) What are the steps of a decision making process
according to the Simon’s model? Explain each step.
2) (a) What are the major components in a DSS? (b)
What is the function of each?
3) (a) What is the difference between a DSS and a
GDSS? What is a Group facilitator? What are the main
tools used in a GDSS to help users reach a decision?
4) What is an EIS? What is the difference between a
DSS and an EIS?
5) What is an Expert System? What are the main
components of an Expert system? What is a
knowledge engineer?
29
Information Systems For
Business Integration
Part 3
30
Business Integration?
I
V n
e t
r e
t g
i r
c a
a t
l i
o
n
Suppliers
Production
Department
Sales
Department
Logistics
Department
Horizontal
Integration
Customers
31
Systems for Horizontal Integration

Enterprise Resource Planning (ERP) system

integrate all the internal processes through a common
information system
Production
Department
Process1
Warehouse
Process2
Process1
Sales
Department
Process1
Marketing
Department
Process1
Process2
Process2
Process2
Logistics
Department
Process1
Process2
Common
Database
Accounting
Department
Process1
Process2
ERP system
32
Integrating Internal Processes
with ERP

ERP systems integrate all the functions and
departments within an organization through a
common information system

Most common modules for an ERP system

Finance
Manufacturing: helps from product development to production
Human resources: Handles all HR functions
Procurement: helps manage the purchase of office supply & raw

Marketing: manage relationship with customers




material
ERP mainly used by medium and large businesses


Average lifetime cost: $15 Million (in 2003)
Implementation process: up to 5 years
33
Vertical Integration with suppliers

Possible problems:



Raw material shortage
Receiving more raw material than needed
Etc.
Suppliers
Lack of good integration
Company’s Internal processes
Production
Department
Process1
Process2
Sales
Department
Process1
Process2
Delivery
Department
Process1
Process2
Q: What kind of solution can provide business integration in this specific case?
34
Systems for Vertical Integration

Electronic Data Interchange (EDI):

Direct computer-to-computer transfer of
business documents in electronic form
Suppliers
Value Added Network (VAN)
or
Private network connection
EDI System
Company’s Internal processes
Production
Department
Process1
Process2
Sales
Department
Process1
Process2
Delivery
Department
Process1
Process2
35
Electronic Data Interchange (EDI)

Allows automatic transfer of electronic order
forms and their automatic processing

EDI relies on a pair of message standards



Advantages:




ANSI X12 – used in North America
EDIFACT – international, but widely used in Europe
Eliminates paperwork
Reduces errors
Speeds supply process
Disadvantages:


Provides connection only between two companies
Doesn’t help in supply planning.
36
Systems for Vertical Integration

Supply chain management (SCM) system

provide a direct electronic connection with suppliers
Suppliers
Three main functions
- Forecast demand
- Handle purchase of supply
- Manage storage + shipping
Network connection
SCM System
Company’s Internal processes
Production
Department
Process1
Process2
Sales
Department
Process1
Process2
Delivery
Department
Process1
Process2
37
Supply Chain Management (SCM)

Stages of SCM (SC Council’s Reference Model):
1) Planning: develop and implement processes that
attempt to forecast demand for products and services

Goal: Balance demand with supply of raw material
2) Sourcing: determine who should supply the items
required

Goal: Be supplied on time, within budget
3) Production: make the product
1) Schedule production
2) Ensure raw materials are on hand when needed
4) Product delivery (logistics)
1) Everything from receiving a customer inquiry to invoicing
2) Warehouse management is one very important factor
5) Returns: managing returns of raw materials as well as
38
finished goods
Vertical Integration with customers

Possible problems:



Out of product
Poor customer support
Etc.
Company’s Internal processes
Production
Department
Process1
Process2
Sales
Department
Process1
Process2
Delivery
Department
Process1
Process2
Lack of good integration
Customers
Q: What kind of solution can provide business integration in this specific case?
39
Systems for Vertical Integration

Customer Relationship Management (CRM)


information system to manage all the functions that deal
with customers
Goal of CRM is to increase sales and repeat
business by learning the customer



Remember the customer’s needs and preferences
Determine the customer’s satisfaction with service
Determine which customers are in the magic 20 percent
(or have the potential to become part of it)
40
CRM software

CRM software modules include




Personalization
Marketing automation
Sales force automation
Service and support
41
Summary Questions
Malaga
Notes
1) What is the difference between Horizontal integration
and Vertical integration?
2) (a) What king of IS could be used for horizontal
integration of business processes? (b) What kind of
IS could be used for vertical integration of business
processes?
3) (a) What are the common modules found in ERP
systems? (b) Name few ERP software vendors. (c)
What are the success factors of ERP implementation?
4) What is EDI? What kind of network connections are
usually used in EDI? What is the EDI message
standard used in the U.S.?
5) What is a SCM system? What is the main goal of an
SCM system? What are the stages of SCM?
5) What is a CRM software used for? What is their goal?
42
Information Systems For
Strategic Advantage
Part 4
43
Value Chain?
Purchase Price + Added Value + Profit Margin = Sales Price
Suppliers
Purchasing
Process
Warehousing
Process
Sales
Process
Marketing/
Service
Process
Production
Process
Accounting
Process
Delivery
Process
Customers
Human Resources
Process
Internal Business Processes
Q1: Which internal processes are directly related to getting raw materials and
transforming them into something of greater value?
44
Value Chain?

Business processes directly related to
taking raw materials and transforming
them into something of greater value.

Business processes that support Value
Chain activities but do not directly add
value to a product or service.
45
Inbound logistics: Purchasing and receiving raw materials
Operations: Actual conversion of raw material into finished products
Outbound logistics: Getting the product to the customers
Marketing & Sales: Getting the customers buy the products
Service: Keeping products work after purchase
Q2: In a Value Chain, primary activities include function such as Accounting
Q3: The cost of implementing and managing IS is part of the value chain
T
T
F
F 46
Porter’s Value Chain Analysis tool
Tool for analyzing internal business
activities that bring products and services
to market.
 Process of analyzing the activities within
an organization’s value chain
 Companies gain strategic value by
focusing on a particular portion of the
value chain
 IT can help reduce the costs of these
processes, thus increasing profit margins

47
Porter’s Competitive Forces Model:
Dealing with external factors
Industry
competition
Industry Competition: Rivalry with the industry
New Entrants: Potential competitors. E.g. IBM could decide to use Dell’s direct selling model
Suppliers: Bargaining power of suppliers. The more suppliers, the less their bargaining power
Customers: Bargaining power of customers. Individual has less bargaining power than corporations.48
Substitutes: Potential for substitute products to undercut our market share.
Porter’s Competitive Forces Model

Five components






Uses for CFM




Level of competition in industry
Threat of new entrants into industry
Bargaining power of customers
Bargaining power of suppliers
Threat of substitute products
Determine company’s own position within industry
Identify competitive forces and threats early
Analyze industries and market segments to
determine their future prospects
Possible strategic decisions based on CFM


Begin producing substitute product
Exit a declining market segment
49
Summary Questions
Malaga
Notes
1) What is Value Chain? What group of activities are there
in Porter’s Value Chain Analysis tool?
2) Could companies gain strategic value by focusing on
only one activity in the value chain?
3) What kind of Information systems could help
performing each of the primary and support activities
of Porter’s Value Chain?
4) What are the possible uses of Porter’s Competitive
Force Model?
10
5) What kind of Information systems could help dealing
with Competitive Forces issues?
50
Managing the Development
and Purchase of IS
Part 5
51
Traditional Systems Development
Planning
Life Cycle (SDLC)
Analysis

Seven phases
1)
2)
3)
4)
Planning
Systems Analysis
Systems Design
Development
Design
5) Testing
6) Implementation
7) Maintenance
Development
Testing
Implementation

Usually complete one phase
before beginning the next

Problem in later phase may require
return to previous phase
Maintenance
52
SDLC: Recap
Steps
Key actors
Tools/Techniques
1. Planning
Project Manager
2. System Analysis
System Analyst, Users.
Interviews, observing users at
work, DFD
3. System Design
System analyst (or system
designer)
System Flowchart, Structure chart
4. Development
Programmers, database
developers, network engineers
Program Flowchart, Pseudo code,
programming languages, DBMS
5. Testing
Development team, Users
6. Implementation
Development team, Users
7. Maintenance
internal IS staff, external
consultant
Direct cutover, parallel conversion,
pilot testing, staged conversion
53
Summary Questions
Malaga
Notes
1) What is a System Development Methodology? What is
it used for?
2)
What are the 7 phases of the SDLC methodology?
3) What are kind of Feasibility analyses need to be
performed during the Planning phase? Why is the
system development schedule important?
4) What are the two steps in the Systems Analysis phase?
What techniques and tools are used during the
Systems Analysis phase?
5) What tools do programmers usually use during the
Development phase?
6) What is the difference between the Verification and the
Validation tests performed during systems testing?
54
Prototyping
Actors
Identify basic
requirements
Operational
prototype
YES
Development team, Users
Develop a
prototype
System analyst, programmer
Use the
prototype
Users
Is User
satisfied?
NO
Develop final system
(improved prototype)
Revise the
prototype
System analyst, programmer
55
Prototyping

Advantages




Working model ready to use quickly
Works in situation where requirements are
changing
Works in situations where users cannot
explicitly express their requirements
Disadvantage

Only a limited number of users involved
56
Joint Application Development (JAD)
A


SDM that addresses:
The limited scale of users involvement problem of Prototyping
Potential implementation problem due to limited user involvement
A
SDM that brings together the
Development team and a significant
number of users to define system
requirements and develop a prototype.
57
Joint Application Development (JAD)
Identify a valid
sample of users
Objectives
Set a JAD team
(Users, IS professionals, scribe)
Run the 1st JAD session
(JAD team + Facilitator)
Identify agreed systems requirements
Develop system prototype
(based on agreed requirements)
Run the 2nd JAD session
(JAD team + Facilitator)
Test the system and identify agreed changes
Improve system prototype
(based on JAD session results)
58
Joint Application Development (JAD)

Advantages:



Helps alleviate conflicting requirements
Greater user involvement leads to greater user
acceptance of final system
Disadvantages

Could be expensive and time consuming
59
Rapid Application Development (RAD)
Combines JAD, Prototyping, and
integrated CASE (ICASE) tools to decrease
the time for systems development
 ICASE tools provide code generating
capability



ICASE tools can produce a completed program
based on the diagrams developed by systems
analysts
ICASE tools can generate table for a database
based on detailed system specifications
60
Summary Questions
Malaga
Notes
1) What are the main problems associated with SDLC?
2)
What is Prototyping? What are the steps of
Prototyping? In what kind of situations Prototyping
might be the best SDM to use?
3) What is JAD? Typically, who could be a member of a
JAD team? Usually, what is the main objective of the 1st
JAD session ? What is the main problem associated
with JAD?
4) What is RAD? What is an ICASE tool
61
Object-Oriented Analysis and
Design (OOAD)


Uses same phases as SDLC
System Analysis and Design phases view system



OOAD identifies each object in the system along with



In terms of objects (e.g. customers, employees, products)
NOT in terms of processes
its properties (e.g. SSN, Name, address, etc. for Student)
its procedures (e.g. Register for a class, Apply for graduation)
Advantages


Reduces time to develop system (objects’ reuse)
Can lead to high-quality systems (reuse of tested objects and
procedures)
62
Purchasing Software

Commercial off-the-shelf (COTS) software



Less expensive
May not contain all the needed features
Phases in COTS SDLC






System planning
Systems analysis
Request for proposals
Proposal evaluation
Implementation
Maintenance
}here is the difference
63
Request for Proposals (RFP)

Details the requirements for the new
systems and invites interested parties
to submit a proposal for the system

Sections in an RFP






Summary of existing systems
Specific description of the features of the
new system
Proposal evaluation criteria
Budget constraints
Timetable for deliverables
Details of other miscellaneous information
64
Request for Proposals (RFP)

Summary of existing systems




Description of the features of the new system







Features, reliability, speed, etc.
Budget constraints


Requirements for hardware
Requirements for software
Requirements databases
Requirements for network
How many transactions per minutes?
etc
Proposal evaluation criteria


Internal business processes
Type of computers used
etc.
Maximum budget vs. No budget information
Details of other miscellaneous information

Vendor’s past projects, client references, etc.
65
Evaluating Proposals

Usually using a point-system



Number of points for each requirement
More points to more important requirements
Evaluation approaches

Specific requirements



Demonstrations


Eliminate proposals that don’t meet requirements
Compare remaining proposals
At vendor’s location vs. At client site
Benchmarks

Running system with sample data to see how it
performs
66
Summary Questions
Malaga
Notes
1) What is the difference between OOAD and SDLC? What
is an object’s property? What is a procedure? What are
the main advantages of OOAD?
2)
What is a COST software? How does the Traditional
SDLC SDM differ from COST SDLC? In what kind of
situations Prototyping might be the best SDM to use?
3) What are the common sections found in a Request For
Proposals? What is a point-system for evaluating
proposals? What are the common proposal evaluation
approaches?
67