Information System Trends
What managers need to know about
the emerging and enduring trends in
Information Systems management
© Gabriele Piccoli
Course Roadmap
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Part I: Foundations
Part II: Competing in the Internet Age
Part III: The Strategic use of Information Systems
Part IV: Getting IT Done
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Chapter 10: Funding Information Systems
Chapter 11: Creating Information Systems
Chapter 12: Information System Trends
Chapter 13: Security, Privacy and Ethics
© Gabriele Piccoli
Learning Objectives
1.
Understand the genesis of the enterprise systems (ES) trend and why so
many organizations employ them. Articulate their principal benefits and
risks.
2.
Define the term supply chain management and explain the role that
supply chain management applications play in modern organizations.
3.
Define the term best of breed and describe the benefits and drawbacks of
this approach to systems integration.
4.
Describe the term knowledge management, categorize the different types
of knowledge commonly found in organizations, and explain why
organizations feel the need to employ knowledge management
applications.
5.
Define the terms business intelligence (BI) and BI infrastructure. Be able
to identify and describe the role of the technologies that comprise a
modern BI infrastructure.
© Gabriele Piccoli
Learning Objectives
7.
Define the term customer relationship management (CRM) and articulate
both its benefits and limitations.
8.
Explain how the CRM and BI trends relate to one another.
9.
Define the term open source software and be able to identify the primary
commercial models that have been crafted around the open source
movement.
10.
Articulate the principal advantages and risks associated with the
implementation of open source solutions in modern organizations.
11.
Discuss the software as a service (SaaS) trend, identify its genesis, and
understand its principal characteristics.
© Gabriele Piccoli
Enterprise Systems
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In the early 1990s developers realized
the limitations of the functional approach
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This led to a class of standardized
software applications that would enable
and support integrated business
processes
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These applications are known as
Enterprise Systems (ESs)
© Gabriele Piccoli
Enterprise Systems
• Provide native integration
• Attempt to support all components of the firm’s
IT infrastructure.
• Defining characteristics:
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Modular
Integrated
Software applications
Span all organizational functions
Rely on one database at the core.
• Custom developed or purchased off-the-shelf
© Gabriele Piccoli
Characteristics of ESs
• Modularity
– Enables the organization to decide which
functionalities to enable and which ones not to
– Allows for flexibility at the design stage
– No need to pay for unnecessary components
© Gabriele Piccoli
Characteristics of ESs
• Application Integration:
– Events in one module automatically trigger
events in one or more separate modules
• Data Integration
– Data is stored in one
central database
© Gabriele Piccoli
Characteristics of ESs
• Configurable
– Enterprise Systems are parameterized
– Firms choose among a predefined set of
configuration options during the
implementation of the application
– The firm can extend the capabilities of the
standard application by creating “bolt-on
modules”
– This customization process further tailors the
ES to the specific needs of the organization
© Gabriele Piccoli
Advantages of Enterprise Systems
• Efficiency
– ESs are able to rein in complex, generally
hard-to-mange and support legacy IT
infrastructures
– Potential to reduce direct costs
• Example: No redundant data entry
– Potential to reduce indirect costs by
streamlining business processes and
operations
© Gabriele Piccoli
Advantages of Enterprise Systems
• Responsiveness
– ESs can deliver improvements in the firm’s
ability to respond to customers and market
demands
• Knowledge Infusion
– The application embeds the state of the art in
industry practice
– ES can be used to update obsolete business
processes within the firm
© Gabriele Piccoli
Advantages of Enterprise Systems
• Adaptability
– Offer a degree of customizability rarely offered
by off-the-shelf applications
– Achieved through the use of configuration
tables and bolt-on functionality
© Gabriele Piccoli
Limitations of Enterprise Systems
• Standardization and Flexibility
– Organizations are encouraged to implement as close
to a standard version of the software as possible.
– So called “Vanilla” implementation ensure that firms
take advantage of the economies of scale created by
the vendor
– But flexibility is sacrificed by this approach
– ESs are often referred to as software concrete
• Much of the adaptability only occurs during the
implementation process.
• Once set, ESs are difficult to change
© Gabriele Piccoli
Limitations of Enterprise Systems
• Limitations of best practice software
– It will force the firm to adapt
– It is unclear how “best practices” are defined
– The “best” practice may differ for different
firms
– Its not enough to implement a software
program to enact a new practice
– A firm’s own best practices may not be
supported by the new ES
© Gabriele Piccoli
Limitations of Enterprise Systems
• Strategic Clash
– A firm will have to choose amongst the set of
business processes supported by the
software
– What if one of your unique and differentiating
practices is not supported by the ES?
© Gabriele Piccoli
The Hype Cycle
• Technology Trigger: When a new technology
becomes available
• Peak of Inflated Expectations: When over
enthusiasm and unrealistic expectations fuel rapid
adoption
• Through of disillusionment: When failures
become public
• Slope of Enlightenment: when the true benefits
of the technology become apparent to the
organizations
• Plateau of Productivity: the phase when the
benefits and risks of the technology become
widely understood and accepted
© Gabriele Piccoli
The Hype Cycle
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Technology Trigger: When a
new technology becomes
available
Peak of Inflated Expectations:
When over enthusiasm and
unrealistic expectations fuel
rapid adoption
Through of disillusionment:
When failures become public
Slope of Enlightenment: when
the true benefits of the
technology become apparent to
the organizations
Plateau of Productivity: the
phase when the benefits and
risks of the technology become
widely understood and accepted
© Gabriele Piccoli
Supply Chain Management
• The set of coordinated entities that
contribute to move a product or service
from its production to its consumption
– Upstream
Supply Chain
– Downstream
Supply Chain
© Gabriele Piccoli
Modern Supply Chain Management
• Tight linkages between upstream (i.e.,
suppliers) and downstream firms (i.e.,
customers)
• Inter-organizational systems increasingly
supported by the Internet
• Integration with enterprise systems
• Increasing attention to IT-enabled supply
chain management
© Gabriele Piccoli
Supply Chain Management
© Gabriele Piccoli
Supply Chain Management Trends
• Radiofrequency Identification (RFID)
• A new frontier in SCM:
– No line of sight requirements
– Embedding potential
– Writing capabilities
– Storage capacity
– Speed up the receiving process
– Improve monitoring and control of inventories
© Gabriele Piccoli
Enterprise Application Integration
• “Re-architecting” existing programs so that
an intermediate layer, termed middleware,
is developed between the applications and
the databases
• Designed to make calls to the middleware
layer rather than the other applications
• Streamlines maintenance process
because changes to an application will not
affect all the interfaces connected to it
© Gabriele Piccoli
Typical Systems Infrastructure
© Gabriele Piccoli
The EAI Approach
Legacy
Application
Database
2
© Gabriele Piccoli
Middleware
ERP
Legacy
Application
SCM
Database
1
Service Oriented Architecture
• A software design perspective focused on
reusability of software components
• Enables the rapid creation of an
application by the combination of pre-built
services
• Built using separate but interoperable
components
© Gabriele Piccoli
Knowledge Management
“All the value of this company is in its
people. If you burned down all out plants,
and we just kept out people and out
information files, we should soon be as
strong as ever.”
--Thomas Watson, the CEO of IBM
© Gabriele Piccoli
Knowledge
• Knowing What: Based on the ability to
collect, categorize, and assimilate
information
• Knowing How: Ability to recognize or
create the sequence of steps that are
needed to complete a task
• Knowing Why: Based on understanding
of cause-effect relationships
© Gabriele Piccoli
Knowledge
• Categories of Knowledge
– Explicit Knowledge
• Can be articulated
• Codified
• Transferred with relative ease.
– Tacit Knowledge
• The type of knowledge that individuals possess but
find difficult to articulate
© Gabriele Piccoli
Knowledge Management
• Set of activities and processes used to:
– Create
– Codify
– Disseminate knowledge in the organization
• IT is a key component and enabler
• Aspects of knowledge management:
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Creating
Capturing
Storing
Disseminating
© Gabriele Piccoli
Creating Knowledge
• Knowledge creation is the first stage in
knowledge management:
– Generate new information
– Devise solutions to existing problems
– Identify new explanations for events
© Gabriele Piccoli
Capturing and Storing Knowledge
• Enables the organization to:
– Codify new knowledge
– Maintain an organizational memory
• Content Management Systems (CMSs):
– Applications used to capture and store
knowledge
– A knowledge repository is a central location
and search point for relevant knowledge
© Gabriele Piccoli
Disseminating Knowledge
• The last phase in a knowledge
management initiative
• When knowledge is formatted and easily
accessible, dramatic improvements in
effectiveness and efficiency can be
achieved.
© Gabriele Piccoli
Business Intelligence
• The ability to gather and make sense of
information about your business
– A set of techniques
– Processes
– Technologies
• Designed to enable managers to:
– Gain superior insight about the organization
– Gain superior understanding of the business
– Make better decisions
© Gabriele Piccoli
Business Intelligence
© Gabriele Piccoli
Components of BI
• Data Warehouse:
– A data repository
– Collects and consolidates data
– Multiple sources
• Characteristics:
– Large in size
– Large in scope
– Enabling data integration
– Designed for analytics
© Gabriele Piccoli
Components of BI
• Data Mart:
– A scaled-down version of a data warehouse
– Focuses on the needs of a specific audience
– Smaller in scope, thus easier to build
• Online Analytical Processing (OLAP):
– User-driven
– Enables a knowledge worker to easily and
selectively extract and view data from
analytical databases
© Gabriele Piccoli
Components of BI
• Data Mining:
– The process of automatically discovering non-obvious
relationships in large databases.
– Used to analyze historical information
– Machine-driven
• Possible Patterns:
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Associations
Sequences
Classifications
Forecasting
© Gabriele Piccoli
Customer Relationship
Management
• CRM is a strategic initiative, not a technology
• CRM relies on transactional data and is
designed to help the firm learn about customers
• Designed to use data to make inferences about
customer:
– Behaviors
– Needs
• The objective is to create value for the firm by
optimizing the relationship with each customer
© Gabriele Piccoli
CRM Infrastructure
© Gabriele Piccoli
The limitations of CRM
• CRM is firm centric
– Only relies on transactional and behavioral
data pertaining to the interactions of the
customer with the firm
• Limited predictive ability
– Some events are unforeseeable and only the
customer knows about their occurrence
© Gabriele Piccoli
Customer Managed Interactions
• In CMIs customer data is stored and
managed by the customer
• CMI solves the limitations of CRM
initiatives:
– The customer’s personal data warehouse
holds complete historical information
– Future events are more likely known
– Inferences are more precise
• Infomediaries may maintain customers’
data warehouses
© Gabriele Piccoli
Customer Managed Interactions
• CMI is not only about the lowest prices
– CMI completion may depend on lower price
– More likely will stem from the quality of the
recommendation
• CMI technology
– The Internet provides the infrastructure for
data transfer
– Falling costs of storage make personal data
warehouses a feasible alternative
© Gabriele Piccoli
Open Source
• Closed Source
– Proprietary software controlled by a software house
– Prevent users from accessing and modifying the
source code
– Example: Microsoft Windows
• Open Source license characteristics:
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Free distribution
Available source code
Derived works
No discrimination
Technology neutrality
© Gabriele Piccoli
Models of Open Source
• Sponsored Open Source:
– Foundations provide support and coordination to
open source efforts
• Open Source Service:
– Free licensing of the software, but charges for
installation, support, training, and other services
• Professional Open Source:
– A software house maintains tight control over the
software programs that they sell
© Gabriele Piccoli
Advantages of Open Source
• Robustness: More robust and more
reliable than proprietary applications
• Creativity: Harnesses the creativity of
thousands of developers
• Limited lock-in: Switching costs are lower
than those with proprietary software
• Free License: Open source can generally
be licensed for free
© Gabriele Piccoli
Disadvantages of Open Source
• Unpredictable Costs: There are many potential
costs along the way (TCO)
• Support Varies Widely
• Security:
– Open source code may give an advantage to those
who want to break its security since the code is
available
– But more vulnerabilities may be identified and
corrected for since the code is open
• Compatibility: There is no guarantee about
compatibility with other software
© Gabriele Piccoli
Software as a Service (SaaS)
• Focuses on the services (i.e.,
functionalities) being provided, not on the
physical products (software) being sold
• Application Service Provision (ASP)
– A provider hosts and manages a standard
application (e.g., Microsoft Word)
– Clients access the application over a network
(e.g., the Internet)
© Gabriele Piccoli
What we Learned
1.
Understand the genesis of the enterprise systems (ES) trend and why so
many organizations employ them. Articulate their principal benefits and
risks.
2.
Define the term supply chain management and explain the role that
supply chain management applications play in modern organizations.
3.
Define the term best of breed and describe the benefits and drawbacks of
this approach to systems integration.
4.
Describe the term knowledge management, categorize the different types
of knowledge commonly found in organizations, and explain why
organizations feel the need to employ knowledge management
applications.
5.
Define the terms business intelligence (BI) and BI infrastructure. Be able
to identify and describe the role of the technologies that comprise a
modern BI infrastructure.
© Gabriele Piccoli
What we Learned
7.
Define the term customer relationship management (CRM) and articulate
both its benefits and limitations.
8.
Explain how the CRM and BI trends relate to one another.
9.
Define the term open source software and be able to identify the primary
commercial models that have been crafted around the open source
movement.
10.
Articulate the principal advantages and risks associated with the
implementation of open source solutions in modern organizations.
11.
Discuss the software as a service (SaaS) trend, identify its genesis, and
understand its principal characteristics.
© Gabriele Piccoli