Section 1.

1 Business Driven Mis

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Business Driven Information Systems eBook
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Chapter1: Management Information Systems: Business Driven MIS

Section 1.1 Business Driven Mis
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LEARNING OUTCOMES
1.1 Describe the information age and the differences among data, information, business intelligence,
and knowledge.

1.2 Identify the different departments in a company and why they must work together to achieve
success.

1.3 Explain systems thinking and how management information systems enable business
communications.

COMPETING IN THE INFORMATION AGE

LO. 1.1:

Describe the information Did you know that … age and the The movie Avatar took more than four years to create and cost $450 million. differences Lady Gaga's real name is Stefani Joanne Angelina Germanotta. among data, Customers pay $2.6 million for a 30-second advertising time slot during the Super information, Bowl.2 business intelligence, and knowledge. A fact is the confirmation or validation of an event or object. In the past, people primarily learned facts from books. Today, by simply pushing a button people can find out anything, from anywhere, at any time. We live in the information age, when infinite quantities of facts are widely available to anyone who can use a computer. The impact of information technology on the global business environment is equivalent to the printing press's impact on publishing and electricity's impact on productivity. College student startups were mostly unheard of before the information age. Now, it's not at all unusual to read about a business student starting a multimillion-dollar company from his or her dorm room. Think of Mark Zuckerberg, who started Facebook from his dorm, or Michael Dell (Dell Computers) and Bill Gates (Microsoft), who both founded their legendary companies as college students.

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You may think only students well versed in advanced technology can compete in the information age. This is simply not true. Many business leaders have created exceptional opportunities by coupling the power of the information age with traditional business methods. Here are just a few examples: Amazon is not a technology company; its original business focus was to sell books, and it now sells nearly everything. Netflix is not a technology company; its primary business focus is to rent videos. Zappos is not a technology company; its primary business focus is to sell shoes, bags, clothing, and accessories. Amazon's founder, Jeff Bezos, at first saw an opportunity to change the way people purchase books. Using the power of the information age to tailor offerings to each customer and speed the payment process, he in effect opened millions of tiny virtual bookstores, each with a vastly larger selection and far cheaper product than traditional bookstores. The success of his original business model led him to expand Amazon to carry many other types of products. The founders of Netflix and Zappos have done the same thing for videos and shoes. All these entrepreneurs were business professionals, not technology experts. However, they understood enough about the information age to apply it to a particular business, creating innovative companies that now lead entire industries. Students who understand business along with the power associated with the information age will create their own opportunities and perhaps even new industries, as co-founders Chris DeWolfe and Tom Anderson did with MySpace and Mark Zuckerberg did with Facebook. Our primary goal in this course is to arm you with the knowledge you need to compete in the information age. The core drivers of the information age are: Data Information Business intelligence Knowledge

APPLY YOUR KNOWLEDGE

BUSINESS DRIVEN DISCUSSION

Pluses and Minuses
The line famously quoted in the film Spider-Man, “With great power comes great responsibility,” should apply to every type of technology you encounter in business. Technology provides countless opportunities for businesses, but it can also lead to countless pitfalls and traps. Online trading, for instance, brought many companies profits but cost many individual

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investors their life savings through fraud. Bernard Madoff, the owner of a high-profile New York investment company, forged investment statements and spent billions of dollars of his client's money. Sites such as Craigslist and eBay allow anyone to become a provider of goods and services and a few unethical individuals have even used it to run online prostitution rings. A manager must be able to analyze the good and the bad associated with technology. Review some companies that primarily operate on the Internet such as Netflix, Craigslist, or Amazon, and compile a list of the business opportunities and the potential pitfalls associated with doing business online.3

Data
Data are raw facts that describe the characteristics of an event or object. Before the information age, managers manually collected and analyzed data, a time-consuming and complicated task without which they would have little insight into how to run their business. Lacking data, managers often found themselves making business decisions about how many products to make, how much material to order, or how many employees to hire based on intuition or gut feelings. In the information age, successful managers compile, analyze, and comprehend massive amounts of data daily, which helps them make more successful business decisions. Figure 1.2 shows sales data for Tony's Wholesale Company, a fictitious business that supplies snacks to stores. The data highlight characteristics such as order date, customer, sales representative, product, quantity, and profit. The second line in Figure 1.2, for instance, shows that Roberta Cross sold 90 boxes of Ruffles to Walmart for $1,350, resulting in a profit of $450 (note that Profit = Sales − Costs). These data are useful for understanding individual sales; however, they do not provide us much insight into how Tony's business is performing as a whole. Tony needs to answer questions that will help him manage his day-to-day operations such as: Who are my best customers? Who are my least-profitable customers? What is my best-selling product? What is my slowest-selling product? Who is my strongest sales representative? Who is my weakest sales representative? What Tony needs, in other words, is not data but information.

FIGURE 1.2
Tony's Snack Company Data

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FIGURE 1.3
Tony's Data Sorted by Customer “Walmart” and Sales Representative “Roberta Cross”

Sorting the data reveals the information that Roberta Cross's total sales to Walmart were $20,243 resulting in a profit of $5,858. (Profit $5,858 = Sales $20,243 − Costs $14,385)

Information
Information is data converted into a meaningful and useful context. Having the right information at the

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right moment in time can be worth a fortune. Having the wrong information at the right moment; or the right information at the wrong moment can be disastrous. The truth about information is that its value is only as good as the people who use it. People using the same information can make different decisions depending on how they interpret or analyze the information. Thus information has value only insofar as the people using it do as well. Tony can analyze his sales data and turn them into information to answer all the above questions and understand how his business is operating. Figures 1.3 and 1.4, for instance, show us that Walmart is Roberta Cross's best customer, and that Ruffles is Tony's best product measured in terms of total sales. Armed with this information, Tony can identify and then address such issues as weak products and underperforming sales representatives. A variable is a data characteristic that stands for a value that changes or varies over time. For example, in Tony's data, price and quantity ordered can vary. Changing variables allows managers to create hypothetical scenarios to study future possibilities. Tony may find it valuable to anticipate how sales or cost increases affect profitability. To estimate how a 20 percent increase in prices might improve profits, Tony simply changes the price variable for all orders, which automatically calculates the amount of new profits. To estimate how a 10 percent increase in costs hurts profits, Tony changes the cost variable for all orders, which automatically calculates the amount of lost profits. Manipulating variables is an important tool for any business.

Business Intelligence
Business intelligence (BI) is information collected from multiple sources such as suppliers, customers, competitors, partners, and industries that analyzes patterns, trends, and relationships for strategic decision making. BI manipulates multiple variables and in some cases even hundreds of variables including such items as interest rates, weather conditions, and even gas prices. Tony could use BI to analyze internal data such as company sales, along with external data about the environment such as competitors, finances, weather, holidays, and even sporting events. Both internal and external variables affect snack sales, and analyzing these variables will help Tony determine ordering levels and sales forecasts. For instance, BI can predict inventory requirements for Tony's business for the week before the Super Bowl if, say, the home team is playing, average temperature is above 80 degrees, and the stock market is performing well. This is BI at its finest, incorporating all types of internal and external variables to anticipate business performance.

FIGURE 1.4
Information Gained after Analyzing Tony's Data

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APPLY YOUR KNOWLEDGE

BUSINESS DRIVEN MIS

Manipulating the Data to Find Your Version of the Truth
How can global warming be real when there is so much snow and cold weather? That's what some people wondered after a couple of massive snowstorms buried Washington, DC, in the winter of 2009–2010. Politicians across the capital made jokes and built igloos as they disputed the existence of climate change. Some concluded the planet simply could not be warming with all the snow on the ground. These comments frustrated Joseph Romm, a physicist and climate expert with the Center for American Progress. He spent weeks turning data into information and graphs to educate anyone who would listen as to why this reasoning was incorrect. Climate change is all about analyzing data, turning it into information to detect trends. You cannot observe climate change by looking out the window; you have to review decades of weather data with advanced tools to really understand the trends. Increasingly we see politicians, economists, and newscasters taking tough issues and boiling them down to simplistic arguments over what the data mean, each interpreting the data and spinning the data to support their views and agendas. You need to understand the data and turn them into useful information or else you will not understand when someone is telling the truth and when you are being lied to. Brainstorm two or three types of data economists use to measure the economy. How do they turn the data into information? What issues do they encounter when attempting to measure the economy? As a manager, what do you need to understand when reading or listening to economic and business reports?4

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Top managers use BI to define the future of the business, analyzing markets, industries, and economies to determine the strategic direction the company must follow to remain profitable. Tony will set the strategic direction for his firm, which might include introducing new flavors of potato chips or sport drinks as new product lines or schools and hospitals as new market segments.

Knowledge
Knowledge includes the skills, experience, and expertise, coupled with information and intelligence that creates a person's intellectual resources. Knowledge workers are individuals valued for their ability to interpret and analyze information. Today's workers are commonly referred to as knowledge workers and they use BI along with personal experience to make decisions based on both information and intuition, a valuable resource for any company. Imagine that Tony analyzes his data and finds his weakest sales representative for this period is Craig Schultz. If Tony considered only this information, he might conclude that firing Craig was a good business decision. However, because Tony has knowledge about how the company operates, he knows Craig has been out on medical leave for several weeks; hence, his sales numbers are low. Without this additional knowledge, Tony might have executed a bad business decision, delivered a negative message to the other employees, and sent his best sales representatives out to look for other jobs.

APPLY YOUR KNOWLEDGE

BUSINESS DRIVEN ETHICS AND SECURITY Information Issues in the Information Age
We live in the information age where the collection, storage, and use of data are hot topics. One example of inappropriate data handling occurred at a college where the monitoring of restrooms occurred every 15 seconds to observe the use of toilets, mirrors, and sinks. Students, faculty, and staff began complaining that the data collection was an invasion of their privacy and a violation of their rights. Another example of inappropriate data handling occurred when a professor of accounting at a college lost a flash drive containing information for more than 1,800 students, including Social Security numbers, grades, and names. Social Security numbers were included because the data went back to before 1993 when the college used Social Security numbers to identify students. What types of student data does your college collect? What could happen if your professor lost a thumb drive with all of your personal information? What types of issues could you encounter if someone stole your personal data? What can your college do to ensure this type of data storage violation does not occur?5

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The key point in this scenario is that it is simply impossible to collect all the information about every situation, and yet without that, it can be easy to misunderstand the problem. Using data, information, business intelligence, and knowledge to make decisions and solve problems is the key to finding success in business. These core drivers of the information age are the building blocks of business systems.

THE CHALLENGE: DEPARTMENTAL COMPANIES
Companies are typically organized by department or functional area such as: Accounting: Records, measures, and reports monetary transactions. Finance: Deals with strategic financial issues including money, banking, credit, investments, and assets. Human resources: Maintains policies, plans, and procedures for the effective management of employees. Marketing: Supports sales by planning, pricing, and promoting goods or services.

LO. 1.2:
Identify the different departments in a company and why they must work together to achieve success.

Operations management: Manages the process of converting or transforming or resources into goods or services. Sales: Performs the function of selling goods or services (see Figure 1.5). Each department performs its own activities. Sales and marketing focus on moving goods or services into the hands of consumers; they maintain transactional data. Finance and accounting focus on managing the company's resources and maintain monetary data. Operations management focuses on manufacturing and maintains production data, while human resources focuses on hiring and training people and maintains employee data. Although each department has its own focus and data, none can work independently if the company is to operate as a whole. It is easy to see how a business decision made by one department can affect other departments. Marketing needs to analyze production and sales data to come up with product promotions and advertising strategies. Production needs to understand sales forecasts to determine the company's manufacturing needs. Sales needs to rely on information from operations to understand inventory, place orders, and forecast consumer demand. All departments need to understand the accounting and finance departments' information for budgeting. For the firm to be successful, all departments must work together as a single unit sharing common information and not operate independently or in a silo (see Figure 1.6).

FIGURE 1.5
Departments Working Independently

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THE SOLUTION: MANAGEMENT INFORMATION SYSTEMS

LO. 1.3: Explain

systems thinking and how management information You probably recall the old story of three blind men attempting to describe an elephant. The first man, feeling the elephant's girth, said the elephant seemed very systems enable business much like a wall. The second, feeling the elephant's trunk, declared the elephant was like a snake. The third man felt the elephant's tusks and said the elephant was communications. like a tree or a cane. Companies that operate departmentally are seeing only one part of the elephant, a critical mistake that hinders successful operation. Successful companies operate cross-functionally, integrating the operations of all departments. Systems are the primary enabler of cross-functional operations. A system is a collection of parts that link to achieve a common purpose. A car is a good example of a system, since removing a part, such as the steering wheel or accelerator, causes the entire system to stop working.

FIGURE 1.6
Departments Working Together

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For example. This is not to say that MIS equals business success and innovation. 10 of 11 6/29/12 12:22 PM .mcgraw-hill. To perform the MIS function effectively. particularly large and medium-sized ones. the entire system fails. order fulfillment.Section 1.. an MIS for sales moves a single customer order across all functional areas including sales. have an internal MIS department. to fulfill product orders. FIGURE 1. billing. Systems thinking is a way of monitoring the entire system by viewing multiple inputs being processed or transformed to produce outputs while continuously gathering feedback on each part (see Figure 1. and finally customer service. Systems thinking provides an end-to-end view of how operations work together to create a product or service.7). however. If order fulfillment packages the wrong product. and customer service did their jobs right. then. MIS is a tool that is most valuable when it leverages the talents of people who know how to use and manage it effectively. which moves information about people. Although different functional areas handle different parts of the sale. almost all companies. products.1 Business Driven Mis http://highered.. Business students who understand systems thinking are valuable resources because they can implement solutions that consider the entire process. it will not matter that shipping.7 Overview of Systems Thinking Management information systems (MIS) is a business function. like accounting and human resources. MIS can be an important enabler of business success and innovation. Feedback helps the system maintain stability. For example. a car's system continuously monitors the fuel level and turns on a warning light if the gas level is too low. like the car without a steering wheel. shipping. Feedback is information that returns to its original transmitter (input. thanks to MIS. or output) and modifies the transmitter's actions. to the customer the sale is one continuous process. or that MIS represents business success and innovation. often called information technology (IT). MIS incorporates systems thinking to help companies operate cross-functionally.com/sites/0077338340/student_view. transform. not just a single component. since the customer will not be satisfied when he or she opens the package. and processes across the company to facilitate decision making and problem solving. If one part of the company is experiencing problems. billing.

Robert Lenzer. information systems (IS). and distributing company knowledge. availability.. 2009 McGraw-Hill Higher Education Any use is subject to the Terms of Use and Privacy Notice. Chief technology officer (CTO) is responsible for ensuring the speed.dll/article?AID = /20070627/NEWS08 /70627020.Section 1.com/sites/0077338340/student_view.com/2008/12/12/madoff-ponzi-hedge-pf-ii-in_rl_1212croesus_inl. and reliability of the MIS. they must have top managers who take responsibility for all these areas. we will refer to it as MIS.” Forbes. May 2010.interestingfacts. “Identity theft risk: BGSU notifies past. 2007 http://toledoblade. Job titles. McGraw-Hill Higher Education is one of the many fine businesses of The McGraw-Hill Companies.html. “Bernie Madoffʼs $50 Billion Ponzi Scheme. 2010. Clive. current students about loss of personal information” The Toledo Blade.forbes.mcgraw-hill. MIS Department Roles and Responsibilities MIS as a department is a relatively new functional area. 11 of 11 6/29/12 12:22 PM . 2 3 Interesting Facts. 4 5 Thompson.com/apps/pbcs. and responsibilities often differ from company to company. Chief privacy officer (CPO) is responsible for ensuring the ethical and legal use of information within a company. but the most common are these: Chief information officer (CIO) is responsible for (1) overseeing all uses of MIS and (2) ensuring that MIS strategically aligns with business goals and objectives. www. 2008 http://www. having been around formally for about 40 years.1 Business Driven Mis http://highered. “Do You Speak Statistics?” Wired.. Chief security officer (CSO) is responsible for ensuring the security of business systems and developing strategies and safeguards against attacks by hackers and viruses. Chief knowledge officer (CKO) is responsible for collecting. For the purpose of this text. 12. pp 36. roles. December. 2010. June 27. accessed June 15. While many companies may not have a different individual for each of these positions.org. or management information systems (MIS). Blade Staff. accuracy. accessed June 26. maintaining.

com/sites/0077338340/student_view. 1. 15 24 23 22 21 20 19 18 17 16 LEARNING OUTCOMES 1.4: Explain why competitive advantages are temporary. Developing new products or services.mcgraw-hill.6 Compare Porter's three generic strategies.7 Demonstrate how a company can add value by using Porter's value chain analysis. 1.4 Explain why competitive advantages are temporary. the top manager or leader ensures all participants are heading in the right direction and completing their goals and objectives.Section 1. Business Driven Information Systems eBook 3/e Content Chapter1: Management Information Systems: Business Driven MIS Section 1. 1.2 Business Strategy p.. To combat these challenges.. Entering new markets. Increasing sales. A business strategy is a leadership plan that achieves a specific set of goals or objectives such as: p. Attracting new customers. Good leaders also anticipate unexpected misfortunes. allowing the company the ability to ride out 1 of 16 6/29/12 12:23 PM . Companies lacking leadership quickly implode as employees head in different directions attempting to achieve conflicting goals.2 Business Strategy http://highered. from strikes and economic recessions to natural disasters. Their business strategies build in buffers or slack. IDENTIFYING COMPETITIVE ADVANTAGES Running a company today is similar to leading an army. Decreasing costs. 1. leaders communicate and execute business strategies (from the Greek word stratus for army and ago for leading). 14 LO.5 Describe Porter's Five Forces Model and explain each of the five forces. Increasing customer loyalty.

offers an excellent example.com/sites/0077338340/student_view. It means understanding and learning as much as possible as soon as possible about what is occurring outside the company to remain competitive. and within four months he had developed the first version of iTunes for the Mac. This first-mover advantage occurs when a company can significantly increase its market share by being first with a new competitive advantage. Apple created a significant competitive advantage in the marketplace. activities. Competitive advantages provide the same product or service either at a lower price or with additional value that can fetch premium prices. organizations must develop a strategy based on a new competitive advantage. to improve a company's ability to succeed. Other parcel delivery companies quickly began creating their own online services. such as its recently released iPad. including competitors' plans. Business strategies that match core company competencies to opportunities result in competitive advantages. any storm and defend against competitive or environmental threats. and entertainment. and track parcels online. business.mcgraw-hill. a brilliant merger of technology. a new trend in the industry catapulted by illegal online services such as Napster. and even product locations of competitors. FedEx created a first-mover advantage by developing its customer self-service software.8 APPLY YOUR KNOWLEDGE 2 of 16 6/29/12 12:23 PM . it gains a particular benefit. The introduction of Apple's iPod and iTunes. and hiring away key employees. a premier provider of snack foods such as Cracker Jacks and Cheetos. Steve Jobs was fixated on developing video editing software when he suddenly realized that millions of people were using computers to listen to music. Apple continues to create new and exciting products to gain competitive advantages.. which allows people to request parcel pickups.. however. does not send its sales representatives into grocery stores just to stock shelves. Of course. Frito-Lay uses this information to gain competitive intelligence on everything from how well competing products are selling to the strategic placement of its own products. such as Apple did with its iPod. Ways that companies duplicate competitive advantages include acquiring the new technology. With the combination of iTunes and iPod. a key to success! A competitive advantage is a feature of a product or service on which customers place a greater value than they do on similar offerings from competitors. Many firms began following Apple's lead by creating portable music players to compete with the iPod. a larger version of the iPod that functions more as a computer than a music player. print mailing slips. Unfortunately. inventory.2 Business Strategy http://highered. because competitors often quickly seek ways to duplicate them. they carry handheld computers and record the product offerings.6 When a company is the first to market with a competitive advantage. copying the business operations. In turn. In early 2000.Section 1. competitive advantages are typically temporary. Competitive intelligence is the process of gathering information about the competitive environment. updating business strategies is a continuous undertaking as internal and external environments rapidly change. customer self-service on the Internet is a standard feature of the parcel delivery business. Frito-Lay. and products. Jobs was worried that he was looking in the wrong direction and had missed the opportunity to jump on the online music bandwagon. He moved fast. In addition. Within nine months the iPod was born. Jobs' next challenge was to make a portable iTunes player that could hold thousands of songs and be completely transportable. Today.

identified the following pressures that can hurt potential sales: LO. Taiwan. 1. The Five Forces Model (for evaluating industry attractiveness). Value chain analysis (for executing business strategies). firms did not recognize these products as competition.S. appliances. For a long time U. 15 of the top 50 are Asian. 3. Asia is now on the rise in all industries from wind turbines to high-speed bullet trains. In hindsight. the majority of the top 25 are based outside the United States. toothpaste. running shoes.5: Describe Porterʼs Five Forces Model and explain each of the five forces. it is obvious that once these countries did begin designing and creating high-end products. Knowledgeable customers can force down prices by pitting rivals against each other. up from just 5 in 2006. How do you. view these statistics? What type of global business climate will you be competing in when you graduate? If you wanted to gather competitive intelligence about the job market. where would you look and what types of data would you want to analyze? What can you do to create personal competitive advantages to differentiate yourself when searching for a job?7 Managers use three common tools to analyze competitive intelligence and develop competitive advantages including: 1. BUSINESS DRIVEN GLOBALIZATION The Competitive Landscape for Students According to the Economic Policy Institute. they would have obvious competitive advantages. Factories in South Korea. According to Bloomberg Businessweek's 2010 ranking of the most innovative companies. with high-value research and development coupled with low-cost manufacturing of unbeatable goods and services.4 million factory jobs to China. 3 of 16 6/29/12 12:23 PM . 2.mcgraw-hill.2 Business Strategy http://highered. as a business student.. for the first time. The three generic strategies (for choosing a business focus).. and cars. computers. a university professor at Harvard Business School. over the past decade the United States has lost an estimated 2. they regarded Asia's high-tech products as second-rate knockoffs and believed Asian countries maintained a “factory culture”—they could imitate but not innovate.Section 1. In fact.com/sites/0077338340/student_view. THE FIVE FORCES MODEL—EVALUATING INDUSTRY ATTRACTIVENESS Michael Porter. and China are producing toys.

mcgraw-hill. customers can force a company and its competitors to compete on price.Section 1. includes the powerful intangible components of having to build relationships with the new doctor and nurses. which typically drives prices down.2 Business Strategy http://highered. as well as transferring all your medical history. Keeping track of the activities and accounts of many thousands or millions of customers covered by loyalty programs is not practical without large-scale business systems. The Internet also lets patients review websites for physician referrals. Factors used to assess buyer power include number of customers.11 FIGURE 1..8 Porter's Five Forces Model 4 of 16 6/29/12 12:23 PM . Substitute products can steal customers. patients can store their medical records on DVDs or thumb drives. competitive advantages. for instance. which reward customers based on their spending. however. allowing easy transferability. New market entrants can steal potential investment capital. Its purpose is to combat these competitive forces by identifying opportunities. they increase competition. their sensitivity to price.. Loyalty programs are thus a good example of using MIS to reduce buyer power. Switching costs include financial as well as intangible values. they decrease competition. Porter's Five Forces Model analyzes the competitive forces within the environment in which a company operates to assess the potential for profitability in an industry.com/sites/0077338340/student_view. If the forces are strong.9 Buyer Power Buyer power is the ability of buyers to affect the price they must pay for an item. size of orders. This section details each of the forces and its associated MIS business strategy (see Figure 1. The airline industry is famous for its frequent-flyer programs. Influential suppliers can drive down profits by charging higher prices for supplies. and availability of substitute products.10 Companies can also reduce buyer power with loyalty programs. upgrades.8). for instance. If buyer power is high. if the forces are weak. With MIS. however. One way to reduce buyer power is by manipulating switching costs. differences between competitors. costs that make customers reluctant to switch to another product or service. they are more likely to be loyal to or give most of their business to a single company. which takes some of the fear out of trying someone new. Formally defined. or hotel stays). Competition can steal customers. and competitive intelligence. Because of the rewards travelers receive (free airline tickets. The cost of switching doctors.

in obtaining raw materials or a product. Supplier power is the suppliers' ability to influence the prices they charge for supplies (including materials. Patient who need to purchase cancer-fighting drugs have no power over price and must pay whatever the drug company asks because there are few available alternatives. From The Five Competitive Forces That Shape Strategy. the supplier can influence the industry by: Charging higher prices. size of suppliers. labor. For a hypothetical example. Cancer patients can now use the Internet to research alternative medications and practices. Boston. directly or indirectly. a company will be both a supplier (to customers) and a customer (of other suppliers). the buyers will pass on the increase to their customers by raising prices on the end-product. and services).2 Business Strategy http://highered. Shifting costs to industry participants.9 Traditional Supply Chain Typically.. 5 of 16 6/29/12 12:23 PM . as illustrated in Figure 1.com/sites/0077338340/student_view. Using MIS to find alternative products is one way of decreasing supplier power.. such as pharmaceutical companies. uniqueness of services. Buyers can also use MIS to form groups or collaborate with other buyers. Supplier Power A supply chain consists of all parties involved. increasing the size of the buyer group and reducing supplier power. can exert a threat over an entire industry when substitutes are limited and the product is critical to the buyers.mcgraw-hill. In a typical supply chain. Source: Reprinted by permission of Harvard Business School Press. Limiting quality or services. by Michael Porter. buyers lose revenue because they cannot pass on the raw material price increase to their customers. Factors used to appraise supplier power include number of suppliers. When supplier power is high. something that was next to impossible just a few decades ago.12 FIGURE 1. Copyright © 2008 by the Harvard Business School Publishing Corporation.9. MA 2008. all rights reserved. Some powerful suppliers. when a supplier raises prices.Section 1. If supplier power is high. and availability of substitute products.

Ideally.14 Threat of New Entrants The threat of new entrants is high when it is easy for new competitors to enter a market and low when there are significant entry barriers to joining a market. making a traditional cell phone less of a substitute. For example.2 Business Strategy http://highered. Then the firm went bankrupt when people began taking digital pictures with everything from video cameras to cell phones. For example. online bill paying. but only temporarily.Section 1. At one time. For example. a new bank must offer its customers an array of MIS-enabled services. the first bank to offer such services gained a valuable first-mover advantage. travelers have numerous substitutes for airline transportation including automobiles. iPhones include capabilities for games. and online account monitoring. Companies can also offer various add-on services.13 Threat of Substitute Products or Services The threat of substitute products or services is high when there are many alternatives to a product or service and low when there are few alternatives from which to choose. A company can reduce the threat of substitutes by offering additional value through wider product distribution. including ATMs. trains. Technology even makes videoconferencing and virtual meetings possible. These are significant barriers to new firms entering the banking market.. An entry barrier is a feature of a product or service that customers have come to expect and entering competitors must offer the same for survival. a company would like to be in a market in which there are few substitutes for the products or services it offers. gas stations.15 FIGURE 1.mcgraw-hill.10 Strong and Weak Examples of Porter's Five Forces 6 of 16 6/29/12 12:23 PM . increasing the availability of soft drinks relative to other beverages. as other banking competitors developed their own MIS services.. Polaroid had this unique competitive advantage for many years until it forgot to observe competitive intelligence. Soft-drink manufacturers distribute their products through vending machines. eliminating the need for some business travel. making the substitute product less of a threat. the collective group of 30.com/sites/0077338340/student_view. and boats. videos.000 students from a university has far more power over price when purchasing laptops than a single student. and music. and convenience stores.

Most supermarket chains have implemented loyalty programs to provide customers special discounts while gathering valuable information about their purchasing habits. and Albertson's in the United States compete in many different ways. Threat of substitute products or services: The threat of substitute products is high from many transportation alternatives including automobiles. Assume a shipping company is deciding whether to enter the commercial airline industry. The retail grocery industry is intensively competitive. the overall trend is toward increased competition in almost every industry.com/sites/0077338340/student_view. and boats. Threat of new entrants: The threat of new entrants is high because new airlines are continuously entering the market. essentially trying to beat or match each other on price. Product differentiation occurs when a company develops unique differences in its products or services with the intent to influence demand. In the future. Supplier power: Supplier power is high since there are limited plane and engine manufacturers to choose from. the Five Forces Model helps managers set business strategy by identifying the competitive structure and economic environment of an industry. while many companies sell books and videos on the Internet. and websites such as Travelocity.com force them to compete on price (see Figure 1. Amazon begins to offer products tailored to that particular customer based on his or her profile.. Companies can use differentiation to reduce rivalry.2 Business Strategy http://highered.com repeatedly.10). including sky taxies offering low-cost on-demand air taxi service. For example.. they increase competition.mcgraw-hill. Buyer power: Buyer power is high because customers have many airlines to choose from and typically make purchases based on price. and from transportation substitutes such as videoconferencing and virtual meetings. not carrier.Section 1. It will thus be difficult to generate a profit.11). trains. To review. Safeway. Amazon differentiates itself by using customer profiling. an analysis of the five forces should determine that this is a highly risky business strategy because all five forces are strong. if the forces are weak.17 APPLY YOUR KNOWLEDGE BUSINESS DRIVEN INNOVATION 7 of 16 6/29/12 12:23 PM . In this way. Kroger. If performed correctly. If the forces are strong. they decrease it (see Figure 1. Rivalry among existing competitors: Rivalry in the airline industry is high. When a customer visits Amazon.16 Analyzing the Airline Industry Let us bring Porter's five forces together to look at the competitive forces shaping an industry and highlight business strategies to help it remain competitive. and unionized workforces (suppliers of labor) restrict airline profits. Amazon has reduced its rivals' power by offering its customers a differentiated service. Rivalry among Existing Competitors Rivalry among existing competitors is high when competition is fierce in a market and low when competitors are more complacent. Although competition is always more intense in some industries than in others. expect to see grocery stores using wireless technologies that track customer movements throughout the store to determine purchasing sequences.

no-frills LO. From The Five Competitive Forces That Shape Strategy.com/sites/0077338340/student_view.Section 1. Evaluate the U.com even keeps track of a customer's postal spending and can recommend optimal delivery methods. THE THREE GENERIC STRATEGIES —CHOOSING A BUSINESS FOCUS Once top management has determined the relative attractiveness of an industry and decided to enter it. If our sample company decided to join the airline industry. The U. Copyright © 2008 by the Harvard Business School Publishing Corporation. 8 of 16 6/29/12 12:23 PM . a website that allows you to customize and print your own stamps 24 hours a day.. the firm must formulate a strategy for doing so. MA 2008.com gives you postage discounts you can't get at the post office or with a postage meter. Stamps.2 Business Strategy http://highered.S. Fixing the Post Office Is there anything more frustrating than waiting in line at the post office? Not only are those lines frustrating. Boston. 1. it could compete as a low-cost. all rights reserved. Postal Service has faced multibillion-dollar losses every year for the past few years. Postal Service using Porter's Five Forces Model.S.. Getting married? Place a photo of the happy couple right on the stamp for the invitations. How could the Postal Service create new products and services to help grow its business? What types of competitive advantages can you identify for the Postal Service?18 FIGURE 1.mcgraw-hill.6: Compare Porterʼs three generic strategies. making for one of the greatest challenges in its history. Stamps. Starting a business? Place your business logo on your stamps. Plus.com. What is killing the post office? Perhaps it is Stamps.11 Five Forces Model in the Airline Industry Source: Reprinted by permission of Harvard Business School Press. by Michael Porter. but they are also unprofitable.

Both options offer different ways of achieving competitive advantages in a crowded marketplace. Its business strategy allows it to be a high-cost provider of premier designer jewelry to affluent consumers. 1998 by The Free press. Porter suggests adopting only one of the three generic strategies illustrated in Figure 1. since doing so makes it difficult to project a consistent image to the entire marketplace.12. 1.com/sites/0077338340/student_view. All rights reserved. The luxury airline spends on high-end service and first-class comforts and passes the costs on to the customer in the form of high prices. Copyright © 1980. Narrow market and low cost: Payless competes by offering a specific product.. Its business strategy offers a variety of specialty and upscale products to affluent consumers. which also sells low-cost shoes. Its business strategy is to be the low-cost provider of shoes.. Broad strategies reach a large market segment. airline or as a luxury airline providing outstanding service and first-class comfort. Its business strategy is to be the low-cost provider of goods for the cost-conscious consumer. The low-cost operator saves on expenses and passes the savings along to customers in the form of low prices. competes by offering a differentiated product. while focused strategies target a niche or unique market with either cost leadership or differentiation.mcgraw-hill.Section 1. jewelry. For this reason. Trying to be all things to all people is a recipe for disaster.. Payless competes with Walmart.7: Demonstrate 6/29/12 12:23 PM . Narrow market and high cost: Tiffany & Co. at high prices. a Division of Simon & Schuster.2 Business Strategy http://highered. Porter. Broad market and low cost: Walmart competes by offering a broad range of products at low prices. by offering a far bigger selection of sizes and styles. and (3) focused strategy. Porter has identified three generic business strategies for entering a new market: (1) broad cost leadership. at low prices. (2) broad differentiation. shoes.12 Porter's Three Generic Strategies Source: Reprinted with the permission of Free Press. Inc. Broad market and high cost: Neiman Marcus competes by offering a broad range of differentiated products at high prices. Figure 1. demonstrating the relationships among strategies (cost leadership versus differentiation) and market segmentation (broad versus focused). from Competitive Strategy: Techniques for Analyzing Industries and Competitors by Michael E.19 FIGURE 1. VALUE CHAIN ANALYSIS—EXECUTING 9 of 16 LO.13 applies the three strategies to real companies.

2 Business Strategy http://highered. how a company can add value by using Porterʼs value chain analysis. Hundreds of thousands of Apple devotees flocked to stores during Passover and Easter to be the first to obtain the new device.Section 1.13 Examples of Porter's Three Generic Strategies APPLY YOUR KNOWLEDGE BUSINESS DRIVEN DEBATE The iPad—Greatest Product in History or Just Another Gadget? Apple sold 300. To identify these competitive advantages. the firm will want to ensure the processes add value and create competitive advantages. it must then choose the business processes required to create its products or services.000 units of its highly anticipated iPad in the first 15 hours it was available for sale. BUSINESS STRATEGIES Firms make profits by taking raw inputs and applying business process to turn them into a product or service that customers find valuable. even though it is neither a phone nor a laptop computer and many people are still wondering what it's for.. which views a firm as a series of business processes that each add value to the product or service. FIGURE 1..com/sites/0077338340/student_view. Once a firm identifies the industry it wants to enter and the generic strategy it will focus on. Michael Porter created value chain analysis. such as processing a customer's order.mcgraw-hill. 10 of 16 6/29/12 12:23 PM . Of course. A business process is a standardized set of activities that accomplish a specific task.

21 Support value activities. The goal of value chain analysis is to identify processes in which the firm can add value for the customer and create a competitive advantage for itself.mcgraw-hill. The value chain groups a firm's activities into two categories.2 Business Strategy http://highered.14. Not surprisingly. and provide after-sales services. the iPad for business. Inbound logistics: acquires raw materials and resources and distributes to manufacturing as required. and compensation. 5. environment. 4. The iPad's modest features might represent an entirely new way of consuming media—video. human resource management. acquire raw materials and manufacture. and procurement.14 The Value Chain 11 of 16 6/29/12 12:23 PM . and even books. these support the primary value activities. shown at the bottom of the value chain in Figure 1. market. music.Section 1. 3. with a few control buttons along the edges and a home button at the bottom. include firm infrastructure.com/sites/0077338340/student_view. pictures. Primary value activities. technology development. and systems. 2. or could use.. FIGURE 1. What is the value of this device? That's the question everyone wants to answer. along the top of the value chain in Figure 1.14). Find three examples of the ways business are using. resources. Technology development: applies MIS to processes to add value. Marketing and sales: promotes. Shrink it. Do you consider it the next revolutionary device or just an overpriced music player?20 Value chain analysis is a useful tool for determining how to create the greatest possible value for customers (see Figure 1. deliver. Procurement: purchases inputs such as raw materials. and support value activities. Operations: transforms raw materials or inputs into goods and services.. Human resource management: provides employee training. and supplies. hiring. Service: Provides customer support after the sale of goods and services. Outbound logistics: distributes goods and services to customers. and it would look like an iPod Touch. with a cost advantage or product differentiation.14. sell. prices. 1. Firm infrastructure: includes the company format or departmental structures. The controversy over the usefulness of Apple's portable tablet began as soon as Apple announced the device was heading to market. At first glance. and sells products to customers. equipment. primary value activities. Web pages. Break into groups and review the current value of the iPad for business. the iPad is little more than a touch screen the size of a slim book.

Analyzing and constructing support value activities can help decrease the threat of new entrants. if the goal is to decrease buyer power. gift baskets. Value chain analysis is a highly useful tool that provides hard and fast numbers for evaluating the activities that add value to products and services.2 Business Strategy http://highered. or (3) perform some combination of the two. Then the competitive advantage decision for the firm is whether to (1) target high value-adding activities to further enhance their value.mcgraw-hill. How. thereby reducing marketing costs. All rights reserved. Analyzing and constructing primary value activities can help decrease the threat of substitute products or services. though. This step generates responses the firm can measure. For example.com/sites/0077338340/student_view. Copyright © 1985. It is easy to understand how a typical manufacturing firm takes raw materials such as wood pulp and transforms it into paper. a firm could survey customers about the extent to which they believe each activity adds value to the product or service. This will increase customers' switching costs and reduce their power. Inc.22 12 of 16 6/29/12 12:23 PM . The system could also identify employees who are at risk of quitting. from Competitive Advantage: Creating and Sustaining Superior Performance by Michael E... Source: Reprinted with the permission of Free Press. allowing manager's time to find additional challenges or opportunities that would help retain these employees and thus reduce turnover costs. Examining the firm as a value chain allows managers to identify the important business processes that add value for customers and then find MIS solutions that support them. MIS adds value to both primary and support value activities.Section 1. or upgraded rooms. thereby increasing sales.. (2) target low value-adding activities to increase their value.15. The system would also help the firm better pinpoint target market needs. a Division of Simon & Schuster. shown as percentages in Figure 1. to describe how each activity adds (or reduces) value. might a typical service firm take raw inputs such as time. and MIS and transform them into valuable customer service knowledge? A hotel might use MIS to track customer reservations and then inform front-desk employees when a loyal customer is checking in so the employee can call the guest by name and offer additional services. Managers can find additional value by analyzing and constructing the value chain in terms of Porter's Five Forces Model (see Figure 1. a company can construct its value chain activity of “service after the sale” by offering high levels of customer service. Porter. One example of a support value activity facilitated by MIS is the development of a human resources system that could more efficiently reward employees based on performance. 1998 by Michael E. When performing a value chain analysis.15). knowledge. Porter. Adding value in this example might include using high-quality raw materials or offering next-day free shipping on any order. One example of a primary value activity facilitated by MIS is the development of a marketing campaign management system that could target marketing campaigns more efficiently.

and message boards. She had tried everything including Facebook. Firms must continually adapt to their competitive environments. but so far nothing was working. which can cause business strategy to shift. Tatango. Decide whether any present potential new business opportunities. charitable events.mcgraw-hill. along with the relevant business strategy and associated MIS topics. brainstorm a list of problems you are currently experiencing. FIGURE 1.000—from any device. and if so.23 Revising Porter's three business strategies is critical. As Derek pondered his friend's dilemma. Johnson began researching mass text messaging products and was surprised to find that none existed for the average consumer. During lunch Derek's friend was telling him how hard it was to communicate with all of her sisters in the sorority. Figure 1. he came up with a solution: mass text messaging. Tatango offers customers subscription plans starting under $20 a month that allows groups to send text messages to all members at once—whether 10 or 10. email. Spotting an entrepreneurial opportunity. a few years later.com/sites/0077338340/student_view. APPLY YOUR KNOWLEDGE BUSINESS DRIVEN START-UP Want to Start Your Own Business? Just Find a Problem to Solve Derek Johnson. Within a few months he launched his website. She had to send out important announcements about meetings.15 The Value Chain and Porter's Five Forces Model 13 of 16 6/29/12 12:23 PM .. and began offering group text messaging at a reasonable price. a student at the University of Houston.Section 1.. analyze the potential using the tools introduced in this chapter. Derek quickly began working on a product.16 gives an overview of the remaining chapters.2 Business Strategy http://highered. Now. and even dues. In a group. In the remainder of this text we discuss how managers can formulate business strategies using MIS to create competitive advantages. was having lunch with his friend who happened to be the communications director for her sorority. Be prepared to present your new business to the class.

Porter. Source: Reprinted with the permission of Free Press.Section 1.2 Business Strategy http://highered.16 Overview of Business Driven Information Systems 14 of 16 6/29/12 12:23 PM . from Competitive Advantage: Creating and Sustaining Superior Performance by Michael E. a Division of Simon & Schuster.mcgraw-hill... FIGURE 1. Porter. All rights reserved.com/sites/0077338340/student_view.. Inc. 1998 by Michael E. Copyright © 1985.

2008 Michael E. “By the Numbers. http://news. 1985.. Ibid.com/Appleearnings-topestimates/2100-1041_3-5893289. April 15.” CNET News. On Competition. http://www.html?tag = lia.isc.htm. Competitive Strategy: Techniques for Analyzing Industries and Competitors. Harvard Business Review.businessweek. Michael E. accessed June 10. October 11.cnet.2 Business Strategy http://highered. 6 Ina Fried.Section 1. January. “Apple Earnings Top Estimates. The Harvard Business Review Book Series.hbs.” Bloomberg Businessweek. 7 Michael Arndt.com/magazine/content/10_17/b4175034779697. Porter.” CIO Magazine. 2010 http://www. “The Five Competitive Forces that Shape Strategy.. Harvard Institute for Strategy and Competitiveness. Bruce Einhorn. 15 of 16 6/29/12 12:23 PM .rcol accessed January 18. “The 50 Most Innovative Companies. 2010.edu/. October 2009. Porter. 8 9 Jon Surmacz. 2005.com/sites/0077338340/student_view. 10 11 Ibid. Porter. Michael E.” The Harvard Business Review Book Series.mcgraw-hill. Harvard Business Review. 2002. 2010. January.

On Competition. 19 Michael E.mcgraw-hill. Ibid.com/news/washington/2009-03-25-postal-woes_N. March 25. Harvard Institute for Strategy and Competitiveness. accessed June 10. 20 Yukari Iwatani Kane. Porter. April 6. 2010 http://online.. Ibid.”. “Postal Service Facing Losses of Historic Proportion. 22 23 Ibid..” The Harvard Business Review Book Series.wsj.isc.com/sites/0077338340/student_view. http://www.” USA Today. Joel Holland.com /magazine/entrepreneur/2010/may/206150. Porter. Ibid. Porter.usatoday. Michael E. January. 1985. Competitive Strategy: Techniques for Analyzing Industries and Competitors. 2010. http://www.hbs. 2002. Competitive Strategy: Techniques for Analyzing Industries and Competitors. accessed June 10. Michael E. ”Whatʼs Your Problem?. Harvard Institute for Strategy and Competitiveness.html. 2002.” Entrepreneur. Harvard Business Review.com/article /SB10001424052702304017404575165621713345324. http://www. “The Five Competitive Forces that Shape Strategy. Porter.html. 12 13 14 15 16 17 18 Ibid. On Competition. 2009. McGraw-Hill Higher Education is one of the many fine businesses of The McGraw-Hill Companies.edu/ . January. ”First-Day Sales of Appleʼs iPad Fall Short of Sky-High Hopes. 2009 McGraw-Hill Higher Education Any use is subject to the Terms of Use and Privacy Notice.2 Business Strategy http://highered. May 2010. 21 Michael E.” The Wall Street Journal. Porter. 2008 Michael E. 1985. Ibid. 2008 Michael E. The Harvard Business Review Book Series. Harvard Business Review.Section 1. Harvard Business Review.” The Harvard Business Review Book Series. 2010. Ibid. January. January. 16 of 16 6/29/12 12:23 PM .isc. The Harvard Business Review Book Series.hbs. http://www. Harvard Business Review. Porter.edu/.htm. “The Five Competitive Forces that Shape Strategy.entrepreneur. The Associated Press.

competitors. Business intelligence (BI) is information collected from multiple sources such as suppliers. and knowledge. Learning Outcome 1. and sales. business intelligence. and relationships for strategic decision making. marketing. business intelligence. Systems thinking is a way of monitoring the entire system by viewing multiple inputs being processed or transformed to produce outputs while continuously gathering feedback on each part. finance.1: Describe the information age and the differences among data. Learning Outcome 1. information. Although each department has its own focus and its own data. more precise support for decision making and problem solving. and industries that analyzes patterns.mcgraw-hill. none can work independently if the company is to operate as a whole. operations management. customers. every department or functional area must work together sharing common information and not be a “silo. and knowledge. Information is data converted into a meaningful and useful context. and gain insight into product availability based on production schedules. Companies are typically organized by department or functional area such as accounting. We live in the information age. A system is a collection of parts that link to achieve a common purpose.com/sites/0077338340/student_view. information. trends.. human resources. Feedback helps the system maintain stability. 25 26 Learning Outcome 1.. Knowledge includes the skills. Data are raw facts that describe the characteristics of an event or object.Learning Outcome Review http://highered. transform. Management information systems (MIS) is a business function. coupled with information and intelligence that creates a person's intellectual resources. It is easy to see how a business decision made by one department can affect other departments. As you move from data to knowledge you include more and more variables for analysis resulting in better.3: Explain systems thinking and how management information systems enable business communications. experience. In fact. partners. calculate transportation costs. The core drivers of the information age include data. functional areas are interdependent. For an organization to succeed. or output) and modifies the transmitter's actions.2: Identify the different departments in a company and why they must work together to achieve success. Feedback is information that returns to its original transmitter (input. when infinite quantities of facts are widely available to anyone who can use a computer. Functional areas are anything but independent in a business.” Information technology can enable departments to more efficiently and effectively perform their business operations. like 1 of 3 6/29/12 12:23 PM . Sales must rely on information from operations to understand inventory. place orders. Business Driven Information Systems eBook 3/e Content Chapter1: Management Information Systems: Business Driven MIS Learning Outcome Review p. and expertise.

Learning Outcome 1. A competitive advantage is a feature of a product or service on which customers place a greater value than they do on similar offerings from competitors. technology development. and processes across the company to facilitate decision making and problem solving. Porter's Five Forces Model analyzes the competitive forces within the environment in which a company operates. Ways that companies duplicate competitive advantages include acquiring the new technology. To identify competitive advantages. Focused strategies target a niche market. Michael Porter created value chain analysis. an MIS for sales moves a single customer order across all functional areas including sales.Learning Outcome Review http://highered. and hiring away employees. competitive advantages are typically temporary. and finally customer service. Not surprisingly. thanks to MIS.4: Explain why competitive advantages are temporary. sell.5: Describe Porter's Five Forces Model and explain each of the five forces. billing. Learning Outcome 1. Support value activities. Competitive advantages provide the same product or service either at a lower price or with additional value that can fetch premium prices. deliver. include firm infrastructure. In turn. Primary value activities acquire raw materials and manufacture. Rivalry among existing competitors is high when competition is fierce in a market and low when competition is more complacent. The value chain groups a firm's activities into two categories—primary value activities and support value activities. human resource management. Buyer power is the ability of buyers to affect the price they must pay for an item. Learning Outcome 1. and provide after-sales services. (3) focused strategy. Unfortunately. shipping. Threat of new entrants is high when it is easy for new competitors to enter a market and low when there are significant entry barriers to entering a market. copying business processes. The goal of value chain analysis is to identify processes in which the firm can add value for the customer and create a competitive advantage for itself. Focused strategies concentrate on either cost leadership or differentiation..mcgraw-hill. Broad strategies reach a large market segment. and services). Learning Outcome 1. and procurement. to the customer the sale is one continuous process. Supplier power is the suppliers' ability to influence the prices they charge for supplies (including materials. organizations must develop a strategy based on a new competitive advantage. along the top of the value chain in the figure. products. because competitors often quickly seek ways to duplicate them. 2 of 3 6/29/12 12:23 PM .. Organizations typically follow one of Porter's three generic strategies when entering a new market: (1) broad cost leadership. to fulfill product orders. with a cost advantage or product differentiation.6: Compare Porter's three generic strategies. which views a firm as a series of business processes that each add value to the product or service. to assess the potential for profitability in an industry. order fulfillment. MIS incorporates systems thinking to help companies operate cross-functionally. For example. labor. accounting and human resources. market. (2) broad differentiation. Threat of substitute products or services is high when there are many alternatives to a product or service and low when there are few alternatives from which to choose.com/sites/0077338340/student_view. Although different functional areas handle different parts of the sale. these support the primary value activities. which moves information about people.7: Demonstrate how a company can add value by using Porter's value chain analysis.

com/sites/0077338340/student_view.mcgraw-hill. 3 of 3 6/29/12 12:23 PM . 2009 McGraw-Hill Higher Education Any use is subject to the Terms of Use and Privacy Notice.Learning Outcome Review http://highered. McGraw-Hill Higher Education is one of the many fine businesses of The McGraw-Hill Companies...

14 Competitive intelligence. 12 First-mover advantage.Key Terms http://highered. 6 Entry barrier. 13 Chief security officer (CSO). 14 Information. 17 Fact. Business Driven Information Systems eBook 3/e Content Chapter1: Management Information Systems: Business Driven MIS Key Terms Business intelligence (BI).com/sites/0077338340/student_view. 13 Competitive advantage. 13 Chief privacy officer (CPO).. 13 Chief technology officer (CTO).. 20 Business strategy. 14 Buyer power. 14 Data. 16 Chief information officer (CIO). 5 Feedback. 8 1 of 3 6/29/12 12:31 PM . 8 Business process.mcgraw-hill. 13 Chief knowledge officer (CKO).

18 Rivalry among existing competitors. 16 Management information systems (MIS).Key Terms http://highered. 16 Supply chain. 21 Product differentiation. 16 System. 11 Systems thinking. 2 of 3 6/29/12 12:31 PM . 12 Threat of new entrants.com/sites/0077338340/student_view. 15 Primary value activities. McGraw-Hill Higher Education is one of the many fine businesses of The McGraw-Hill Companies. 17 Threat of substitute products or services.mcgraw-hill. 13 Porter's Five Forces Model. 9 Knowledge worker.. Information age. 18 Supplier power. 9 Loyalty program. 21 Switching costs. 8 2009 McGraw-Hill Higher Education Any use is subject to the Terms of Use and Privacy Notice. 17 Value chain analysis.. 5 Knowledge. 16 Support value activities. 21 Variable.

.Key Terms http://highered. 3 of 3 6/29/12 12:31 PM .mcgraw-hill.com/sites/0077338340/student_view..

Chief Technology Officer (CTO) C.lc904175.. 2012 11:10 PM July 1. JULY 1st › CHAPTER 1 QUIZ › Assessments › View All Submissions › View Attempt View Attempt 1 of 1 Title: Started: Submitted: Time spent: CHAPTER 1 QUIZ July 1. Your location: Home Page › DUE SUNDAY.usg. Which of the following represents a reason why competitive advantages are typically temporary? Student Value Response A.view.. Jeremy Bridges is an executive for Green Web Designs.edu/webct/urw/tp9214421899391.6667% Done 1. 2012 11:25 PM 00:15:00 Total score adjusted by 0.0 Maximum possible score: 15 Total score: 13/15 = 86. Chief Executive Officer (CEO) B. where his primary role is to ensure the security of business systems and develop strategies to protect the company from online viruses and hackers. Chief Security Officer (CSO) Score: 1/1 100% Value Correct Answer Feedback 2.View Attempt https://gpc. Chief Procurement Officer (CPO) D. What is Jeremy's role within the company? Student Response A. The competitor will hire Correct Answer Feedback 1 of 9 7/1/12 11:26 PM .

The competitor will purchase new technology D. Customers can pick-up and drop-off their videos without leaving their cars. A and B only E. All of the above Score: 1/1 100% Correct Answer Feedback 3. Greg's system is an example of a ____________. Student Value Response away your key employees B.edu/webct/urw/tp9214421899391. is attempting to recreate Greg's video drive-thru rental process.view. Business processing strategy D.lc904175. Greg is implementing a drive-thru rental process that is the same as you would find at a fast food restaurant.View Attempt https://gpc.. a competitor down the street. Student Value Response A. The competitor quickly seeks ways to duplicate your business operations C. Greg's new system has become so popular that Videos Plus. First-mover 100% advantage B. Supply chain power Score: 1/1 Correct Answer Feedback 2 of 9 7/1/12 11:26 PM .usg. Greg Provenzo owns and runs a Blockbuster video store.. Business Intelligence C.

gain customer loyalty 5.lc904175.usg.edu/webct/urw/tp9214421899391. Gina has recently been approached by Deep Blue Incorporated with an opportunity to run its corporate nation-wide marketing and sales division. B. Student Value Response 1. analyzing. which specializes in providing natural products for health conscious individuals. reduce switching costs 3. Aquarium Retail Services is the current market leader in Gina's city.. decrease supplier power 2. and evaluating daily sales numbers to determine the company's profitability and forecast production for the next day. Cheryl Steffan is the operations manager for Nature's Bread Company. Gina Brooks works for Aquarium Retail Services selling high-end salt water fish and tank supplies. Best-selling product changes when Tony the best baker is working. Gina decides to jump at the opportunity! Deep Blue is attempting to ___________ by stealing its competitor's key employees. 4.view..View Attempt https://gpc. remove an entry barrier 4. Which of the following is an example of the type of information Cheryl would be using to successfully perform her job? Student Value Response A. Cheryl is responsible for compiling. gain a 100% competitive advantage Score: 1/1 Correct Answer Feedback 5. Compare the costs of supplies including energy Correct Answer Feedback 3 of 9 7/1/12 11:26 PM .

.. Student Value Response over the last five years to determine the best-selling product by month. C. What is my best-selling product? C. What is this an example of in terms of Porter's Five 4 of 9 7/1/12 11:26 PM . Best-selling 100% product by day. but to gain deeper insight into a business. Who are my best customers? B. Score: 1/1 Correct Answer Feedback 6. and Albertson's in the United States experience fierce competition and offer similar marketing campaigns to compete.view.usg. Retail grocery stores such as Kroger. Data is useful for understanding individual sales. Which of the following offers an example of turning data into information? Student Value Response A. Some industries' competition is much more intense than others. data needs to be turned into information. What is my worstselling product? D. Score: 1/1 100% Correct Answer Feedback 7. All of the above. D.lc904175. Carig NewMark is customer number 15467. Safeway.edu/webct/urw/tp9214421899391.View Attempt https://gpc.

and speakers.view.. Threat of substitute products or services B. Rivalry among new entrants C. Victory Wireless offers customers who purchase an iPhone with a 2 year subscription a free Otter phone case. car charger.lc904175. Forces Model? Student Response A. 3..edu/webct/urw/tp9214421899391. Increase substitute products. Score: 1/1 100% Correct Answer Feedback 9.usg. 4. ear phones. Buyer Power D. what is Victory Wireless attempting to achieve with this marketing strategy:? Student Value Response 1. Decrease buyer power. Decrease supplier power. Rivalry 100% among existing competitors Score: 1/1 Value Correct Answer Feedback 8. Supplier Power E.View Attempt https://gpc. 5 of 9 7/1/12 11:26 PM . In terms of Porter's Five Forces Model. The Valley Wireless store in Denver is currently offering a fabulous marketing strategy for potential new iPhone customers. Increase buyer power. 2.

lc904175. they receive a free pound of coffee of their choice. Your boss. Universal 0% Correct Answer Feedback 6 of 9 7/1/12 11:26 PM . Decreasing supplier power with a differentiated product..edu/webct/urw/tp9214421899391. 3. called The Edgewater Cafe. 2. Increasing buyer power with a loyalty program. What is Callie attempting to create with her unique "Free Pound of Coffee" marketing program? Student Response 1. Established record labels like EMI. iTunes B.view.. Ty Jacob. 4. Reducing 100% buyer power with a loyalty program. Score: 1/1 Value Correct Answer Feedback 10. Walmart. Game systems like Wii. Sony. Callie Crystal owns and operates one of the most successful local coffee shops in Denver. Which of the following represents supplier power in the music industry? Student Value Response A. social networks like Facebook C. has asked you to analyze the music industry using Porter's Five Forces Model. Target.View Attempt https://gpc. Creating a substitute product.usg. Each time a customer purchases their 100th cup of coffee at The Edgewater Cafe.

Substitute Products C. Functionally independent between departments.. Student Value Response D. Threat of new entrants B. Supplier power Score: 1/1 100% Correct Answer Feedback 12. Together as one 0% department with little or no independence.edu/webct/urw/tp9214421899391.usg.. Interdependently between departments Value Correct Answer Feedback 7 of 9 7/1/12 11:26 PM . How does the textbook recommend that a company operate if it wants to be successful in the information age? Student Response A.lc904175.view. Taylor Swift. C. The Beatles. Buyer power D. The Stones Score: 0/1 Correct Answer Feedback 11. Which of the Five Forces is ABC Pharmaceutical using to increase its drug price? Student Value Response A. Beyonce. ABC Pharmaceuticals has decided to increase the cost of the drug from $8 a pill to $15 a pill. B. Due to its incredible success. Shawn McGill is on the executive board for ABC Pharmaceuticals. The company produces the number one selling cancer fighting drug on the market.View Attempt https://gpc.

Jennifer finds out that The Museum Company offers specialty products found only in museums around the world to affluent customers.usg. water. which of the following represents the feedback? Student Value Response A. Student Response D. If you were thinking about a washing machine as a system. C. Score: 1/1 100% Correct Answer Feedback 14. Correct Answer Feedback 8 of 9 7/1/12 11:26 PM . low cost. B.view... The clean clothes.edu/webct/urw/tp9214421899391. Each department acting as its own individual business unit.View Attempt https://gpc. Score: 0/1 Value Correct Answer Feedback 13. D. Jennifer Bloom is writing a paper and she must determine which of Porter's three generic strategies The Museum Company has implemented. and detergent. What would Jennifer determine The Museum Company is using as its generic strategy? Student Value Response A. Narrow market. The light indicating that the washer is off balance and has stopped. The dirty clothes. The wash and rinse cycle.lc904175.

Broad market. low cost. Buyer Power C. Student Value Response B..usg. high cost D. Low Cost Provider E.view. Which of the three generic strategies is Amazon using to achieve this competitive advantage? Student Response A. Product 100% Differentiation Score: 1/1 Value Correct Answer Feedback Done 9 of 9 7/1/12 11:26 PM . Amazon can offer products tailored to that particular customer's profile and buying pattern. Substitute Product B. Rivalry D.. high cost C. Score: 1/1 100% Correct Answer Feedback 15.com uses a customer profiling system whenever a customer visits its website.edu/webct/urw/tp9214421899391. Amazon. Narrow market.lc904175.View Attempt https://gpc. Broad market. Using this system.

2 Define critical success factors (CSFs) and key performance indicators (KPIs). Decisions range from routine choices. Business Driven Information Systems eBook 3/e Content Chapter2: Decisions and Processes: Value Driven Business Section 2. Today. managers are challenged to make highly complex decisions—some involving far more information than the human brain can 1 of 23 6/29/12 1:23 PM . and identify its five main types.com/sites/0077338340/student_view. 2. or focus.1 Decision Support Systems p. LO 2.. decision making is one of the most important and challenging aspects of management. and explain how managers use them to measure the success of MIS projects. 43 LEARNING OUTCOMES 2.3 Classify the different operational support systems. and strategic support systems.1 Explain the importance of decision making for managers at each of the three primary organization levels along with the associated decision characteristics. and explain how managers can use these systems to make decisions and gain competitive advantages. The most important and most challenging question confronting managers today is how to lay the foundation for tomorrow's success while competing to win in today's business environment.mcgraw-hill.. As we discussed in Chapter 1.1: Explain the importance of decision making for managers at each of the three primary organization levels along with the associated decision characteristics. 2. and value chain analysis to demonstrate how managers can learn the concepts and practices of business decision making to add value. To achieve these results. MAKING BUSINESS DECISIONS Porter's strategies outlined in Chapter 1 suggest entering markets with a competitive advantage in either overall cost leadership.4 Describe artificial intelligence. The goal of this section is to expand on Porter's Five Forces Model. 2. differentiation. 44 61 57 56 55 54 53 52 51 50 49 48 47 46 45 p. such as how many items to order or how many people to hire. managers must be able to make decisions and forecast future business needs and requirements.Section 2. three generic strategies. managerial support systems.1 Decision Support Systems http://highered. It will also highlight how companies heading into the 21st century are taking advantage of advanced MIS capable of generating significant competitive advantages across the value chain. to unexpected ones such as what to do if a key employee suddenly quits or needed materials do not arrive. with massive volumes of information available. A company will not have a future if it is not cultivating strategies for tomorrow.

Section 2.1 Decision Support Systems

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comprehend—in increasingly shorter time frames. Figure 2.1 displays the three primary challenges managers face when making decisions.

FIGURE 2.1
Managerial Decision-Making Challenges

The Decision-Making Process
The process of making decisions plays a crucial role in communication and leadership for operational, managerial, and strategic projects. There are numerous academic decision-making models; Figure 2.2 presents just one example.2

Decision-Making Essentials
A few key concepts about organizational structure will help our discussion of MIS decision-making tools. The structure of a typical organization is similar to a pyramid, and the different levels require different types of information to assist in decision making, problem solving, and opportunity capturing (see Figure 2.3). Operational At the operational level, employees develop, control, and maintain core business activities required to run the day-to-day operations. Operational decisions are considered structured decisions, which arise in situations where established processes offer potential solutions. Structured decisions are made frequently and are almost repetitive in nature; they affect short-term business strategies. Reordering inventory and creating the employee staffing and weekly production schedules are examples of routine structured decisions. Figure 2.4 highlights the essential elements required for operational decision making. All the elements in the figure should be familiar, except metrics which are discussed in detail below. Managerial At the managerial level, employees are continuously evaluating company operations to hone the firm's abilities to identify, adapt to, and leverage change. A company that has a competitive advantage needs to constantly adjust and revise its strategy to remain ahead of fast-following competitors. Managerial decisions cover short- and medium-range plans, schedules, and budgets along with policies, procedures, and business objectives for the firm. They also allocate resources and monitor the performance of organizational subunits, including departments, divisions, process teams, project teams, and other work groups. These types of decisions are considered semistructured decisions they

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occur in situations in which a few established processes help to evaluate potential solutions, but not enough to lead to a definite recommended decision. For example, decisions about producing new products or changing employee benefits range from unstructured to semistructured. Figure 2.5 highlights the essential elements required for managerial decision making.

FIGURE 2.2
The Six-Step Decision-Making Process

FIGURE 2.3
Common Company Structure

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FIGURE 2.4
Overview of Operational Decision Making

FIGURE 2.5
Overview of Managerial Decision Making

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Strategic At the strategic level, managers develop overall business strategies, goals, and objectives as part of the company's strategic plan. They also monitor the strategic performance of the organization and its overall direction in the political, economic, and competitive business environment. Strategic decisions are highly unstructured decisions, occurring in situations in which no procedures or rules exist to guide decision makers toward the correct choice. They are infrequent, extremely important, and typically related to long-term business strategy. Examples include the decision to enter a new market or even a new industry over, say, the next three years. In these types of decisions, managers rely on many sources of information, along with personal knowledge, to find solutions. Figure 2.6 highlights the essential elements required for strategic decision making.

METRICS: MEASURING SUCCESS
A project is a temporary activity a company undertakes to create a unique product, service, or result. For example, the construction of a new subway station is a project, as is a movie theater chain's adoption of a software program to allow online ticketing. Peter Drucker, a famous management writer, once said that if you cannot measure something, you cannot manage it. How do managers measure the progress of a complex business project?

LO 2.2:
Define critical success factors (CSFs) and key performance indicators (KPIs), and explain how managers use them to measure the success of MIS projects.

FIGURE 2.6
Overview of Strategic Decision Making

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Metrics are measurements that evaluate results to determine whether a project is meeting its goals. Two core metrics are critical success factors and key performance indicators. Critical success factors (CSFs) are the crucial steps companies perform to achieve their goals and objectives and implement their strategies. CSFs include: Create high-quality products. Retain competitive advantages. Reduce product costs. Increase customer satisfaction. Hire and retain the best business professionals. Key performance indicators (KPIs) are the quantifiable metrics a company uses to evaluate progress toward critical success factors. KPIs are far more specific than CSFs; examples include: Turnover rates of employees. Percentage of help desk calls answered in the first minute. Number of product returns. Number of new customers. Average customer spending. It is important to understand the relationship between critical success factors and key performance indicators. CSFs are elements crucial for a business strategy's success. KPIs measure the progress of CSFs with quantifiable measurements, and one CSF can have several KPIs. Of course, both categories will vary by company and industry. Imagine improve graduation rates as a CSF for a college. The KPIs to measure this CSF can include:

APPLY YOUR KNOWLEDGE

BUSINESS DRIVEN DISCUSSION

Driving Decisions
How do people make decisions? Almost daily you can read about someone who makes a decision most people would find mind-boggling. Here are a few examples: ■ A woman in Ohio was charged with child endangerment after police said she admitted to breast-feeding her child and talking on a cell phone while driving her other children to school.

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■ A woman in South Florida was caught driving while talking on a cell phone on her left shoulder and eating from a cup of soup in her left hand. The woman would take her right hand off the wheel to spoon soup, driving with no hands while she continued to talk on the phone. ■ A man in California was cited for driving while carrying a swimming pool. He drove with one hand while he held his new swimming pool on the roof of his car with the other. His three children were leaning out of the car windows, not wearing seat belts, to help hold onto the pool. ■ A woman in Baltimore was charged with diapering her child in the front seat of the car while driving at 65 miles per hour down the highway.3 Find an example of a company that found itself in trouble because its employees made bad decisions. What could the company have done to protect itself from these types of employee blunders?

Average grades by course and gender. Student dropout rates by gender and major. Average graduation rate by gender and major. Time spent in tutoring by gender and major. KPIs can focus on external and internal measurements. A common external KPI is market share, or the proportion of the market that a firm captures. We calculate it by dividing the firm's sales by the total market sales for the entire industry. Market share measures a firm's external performance relative to that of its competitors. For example, if a firm's total sales (revenues) are $2 million and sales for the entire industry are $10 million, the firm has captured 20 percent of the total market (2/10 = 20%) or a 20 percent market share. A common internal KPI is return on investment (ROI), which indicates the earning power of a project. We measure it by dividing the profitability of a project by the costs. This sounds easy, and for many departments where the projects are tangible and self-contained it is; however, for projects that are intangible and cross departmental lines (such as MIS projects), ROI is challenging to measure. Imagine attempting to calculate the ROI of a fire extinguisher. If the fire extinguisher is never used, its ROI is low. If the fire extinguisher puts out a fire that could have destroyed the entire building, its ROI is astronomically high. Creating KPIs to measure the success of an MIS project offers similar challenges. Think about a firm's email system. How could managers track departmental costs and profits associated with company email? Measuring by volume does not account for profitability, because one sales email could land a milliondollar deal while 300 others might not generate any revenue. Non-revenue-generating departments such as human resources and legal require email but will not be using it to generate profits. For this reason, many managers turn to higher-level metrics, such as efficiency and effectiveness, to measure MIS projects.

Efficiency and Effectiveness Metrics

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Efficiency MIS metrics measure the performance of MIS itself, such as throughput, transaction speed, and system availability. Effectiveness MIS metrics measure the impact MIS has on business processes and activities, including customer satisfaction and customer conversion rates. Efficiency focuses on the extent to which a firm is using its resources in an optimal way, while effectiveness focuses on how well a firm is achieving its goals and objectives. Peter Drucker offers a helpful distinction between efficiency and effectiveness: Doing things right addresses efficiency—getting the most from each resource. Doing the right things addresses effectiveness—setting the right goals and objectives and ensuring they are accomplished. Figure 2.7 describes a few of the common types of efficiency and effectiveness MIS metrics. KPIs that measure MIS projects include both efficiency and effectiveness metrics. Of course, these metrics are not as concrete as market share or ROI, but they do offer valuable insight into project performance.4

FIGURE 2.7
Common Types of Efficiency and Effectiveness Metrics

Large increases in productivity typically result from increases in effectiveness, which focus on CSFs. Efficiency MIS metrics are far easier to measure, however, so most managers tend to focus on them, often incorrectly, to measure the success of MIS projects. Consider measuring the success of automated teller machines (ATMs). Thinking in terms of MIS efficiency metrics, a manager would measure the number of daily transactions, the average amount per transaction, and the average speed per transaction

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to determine the success of the ATM. Although these offer solid metrics on how well the system is performing, they miss many of the intangible or value-added benefits associated with ATM effectiveness. Effectiveness MIS metrics might measure how many new customers joined the bank due to its ATM locations or the ATMs' ease of use. They can also measure increases in customer satisfaction due to reduced ATM fees or additional ATM services such as the sale of stamps and movie tickets, significant time savers and value-added features for customers. Being a great manager means taking the added viewpoint offered by effectiveness MIS metrics to analyze all benefits associated with an MIS project.

The Interrelationship Between Efficiency and Effectiveness MIS Metrics
Efficiency and effectiveness are definitely related. However, success in one area does not necessarily imply success in the other. Efficiency MIS metrics focus on the technology itself. While these efficiency MIS metrics are important to monitor, they do not always guarantee effectiveness. Effectiveness MIS metrics are determined according to an organization's goals, strategies, and objectives. Here, it becomes important to consider a company's CSFs, such as a broad cost leadership strategy (Walmart, for example), as well as KPIs such as increasing new customers by 10 percent or reducing new-product development cycle times to six months. In the private sector, eBay continuously benchmarks its MIS projects for efficiency and effectiveness. Maintaining constant website availability and optimal throughput performance are CSFs for eBay. Figure 2.8 depicts the interrelationships between efficiency and effectiveness. Ideally, a firm wants to operate in the upper right-hand corner of the graph, realizing both significant increases in efficiency and effectiveness. However, operating in the upper left-hand corner (minimal effectiveness with increased efficiency) or the lower right-hand corner (significant effectiveness with minimal efficiency) may be in line with an organization's particular strategies. In general, operating in the lower left-hand corner (minimal efficiency and minimal effectiveness) is not ideal for the operation of any organization. Benchmarks Regardless of what process is measured, how it is measured, and whether it is performed for the sake of efficiency or effectiveness, managers must set benchmarks, or baseline values the system seeks to attain. Benchmarking is a process of continuously measuring system results, comparing those results to optimal system performance (benchmark values), and identifying steps and procedures to improve system performance. Benchmarks help assess how an MIS project performs over time. For instance, if a system held a benchmark for response time of 15 seconds, the manager would want to ensure response time continued to decrease until it reached that point. If response time suddenly increased to 1 minute, the manager would know the system was not functioning correctly and could start looking into potential problems. Continuously measuring MIS projects against benchmarks provides feedback so managers can control the system.

FIGURE 2.8
The Interrelationships Between Efficiency and Effectiveness

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APPLY YOUR KNOWLEDGE

BUSINESS DRIVEN GLOBALIZATION

iYogi Help Desk Support
It is late at night and you are working on your final exam when your computer crashes. As your blood pressure climbs and your stress level skyrockets, you call your computer manufacturer's technical support number. Of course that person tells you the problem has nothing to do with the computer and must have a different source. What are you going to do? iYogi.net is a 24/7 online support service that allows technicians to take remote control of your computer from Gurgaon, India, and try to fix what ails it. iYogi provides technical support for all Walmart computer customers and sells its services through Walmart.com and Amazon.com. If the thought of turning control over to someone you never met half a world away fills you with terror, it shouldn't. All iYogi technicians are Microsoft, Cisco, and Hewlett-Packard certified.5 Describe the types of decisions iYogi technicians are required to make when helping a customer with a computer problem. What would potential CSFs and KPIs for iYogi be? What types of metrics would managers track so they could control operations?

SUPPORT: ENHANCING DECISION MAKING WITH MIS

LO 2.3:

Classify the different operational support Now that we've reviewed the essentials of decision making, we are ready to systems, understand the powerful benefits associated with using MIS to support managers managerial making decisions. support A model is a simplified representation or abstraction of reality. Models help systems, and managers calculate risks, understand uncertainty, change variables, and manipulate strategic time to make decisions. MIS support systems rely on models for computational and support analytical routines that mathematically express relationships among variables. For systems, and example, a spreadsheet program, such as Microsoft Office Excel, might contain explain how models that calculate market share or ROI. MIS have the capability and functionality to managers can express far more complex modeling relationships that provide information, business use these

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or withdrawing cash from an ATM. Operational Support Systems Transactional information encompasses all the information contained within a single business process or unit of work.Section 2. Using systems thinking. when customers are purchasing stocks.1 Decision Support Systems http://highered. systems to make decisions and gain competitive advantages. The most common example of a TPS is an operational accounting system such as a payroll system or an order-entry system. for example. FIGURE 2. and knowledge. A transaction processing system (TPS) is the basic business system that serves the operational level (analysts) and assists in making structured decisions. we can see that the inputs for a TPS are source documents. Managers use transactional information when making structured decisions at the operational level. and (3) update existing information to reflect the new information.. During OLTP. and its primary purpose is to support the performance of daily operational or structured decisions. the original 11 of 23 6/29/12 1:23 PM .mcgraw-hill. making an airline reservation. (2) store the information. the organization must capture every detail of transactions and events.9 highlights the three primary types of management information systems available to support decision making across the company levels. Figure 2. intelligence.com/sites/0077338340/student_view.9 Primary Types of MIS Systems for Decision Making Online transaction processing (OLTP) is the capture of transaction and event information using technology to (1) process the information according to defined business rules.. Transactional information is created. such as when analyzing daily sales reports to determine how much inventory to carry.

Managers use analytical information when making important semistructured decisions. product statistics.Section 2. Analyzing complex relationships among thousands or even millions of data items to discover patterns. reading. Transformation includes common procedures such as creating.. doctors may enter symptoms into a decision support system so it can help diagnose and treat patients. Armed with this business intelligence.1 Decision Support Systems http://highered. sales. which provides assistance in evaluating and choosing among different courses of action. Examples of analytical information are trends. and future growth projections.10 demonstrates the systems thinking view of a TPS. Analytical information includes transactional information along with other information such as market and industry information. DSSs enable high-level managers to examine and manipulate large amounts of detailed data from different internal and external sources. Insurance companies also use a DSS to gauge the risk of providing insurance to drivers who have imperfect driving records. The output includes cutting the paychecks and generating payroll reports. One company found that married women who are homeowners with one speeding ticket are rarely cited for speeding again. such as whether the organization should build a new manufacturing plant or hire additional sales reps. Online analytical processing (OLAP) is the manipulation of information to create business intelligence in support of strategic decision making. Decision support systems (DSSs) model information using OLAP. wage rates. For example. Figure 2. Source documents for a payroll system can include time sheets. the company achieved a cost advantage by lowering insurance rates to this specific group of customers. The following are common DSS analysis techniques.com/sites/0077338340/student_view. and employee benefit reports. and deleting (commonly referred to as CRUD) employee records. “What will happen to the supply chain if a hurricane in South Carolina reduces holding inventory from 30 percent to 10 percent?” A user would be able to observe and evaluate any 12 of 23 6/29/12 1:23 PM .10 Systems Thinking Example of a TPS What-If Analysis What-if analysis checks the impact of a change in a variable or assumption on the model.. For example. trends. and exception conditions is one of the key uses associated with a DSS.mcgraw-hill. updating. transaction record. FIGURE 2.6 Managerial Support Systems Analytical information encompasses all organizational information. and its primary purpose is to support the performance of managerial analysis or semistructured decisions. along with calculating the payroll and summarizing benefits.

a special case of what-if analysis. Optimization Analysis Optimization analysis. subject to specified constraints.1 Decision Support Systems http://highered. Users repeat this analysis with different variables until they understand all the effects of various situations. goal-seeking analysis sets a target value (a goal) for a variable and then repeatedly changes other variables until the target value is achieved.12 shows how TPSs supply transactional data to a DSS.11 Systems Thinking Example of a DSS Figure 2. FIGURE 2. which assist managers in making semistructured decision. Instead of observing how changes in a variable affect other variables. By changing revenue and cost variables in an optimization analysis. Figure 2.. such as limits on the amount of raw materials the company can afford to purchase and limits on employees available to meet production needs. Sensitivity analysis is useful when users are uncertain about the assumptions made in estimating the value of certain key variables.Section 2. repeatedly changing revenue in small increments to determine its effects on other variables would help a manager understand the impact of various revenue levels on other decision factors. For example.com/sites/0077338340/student_view. goal-seeking analysis could determine how many customers must purchase a new product to increase gross profits to $5 million. nonroutine 13 of 23 6/29/12 1:23 PM . an extension of goal-seeking analysis. is the study of the impact on other variables when one variable is changed repeatedly. For example. Sensitivity Analysis Sensitivity analysis. It is the reverse of what-if and sensitivity analysis. managers can calculate the highest potential profits. An executive information system (EIS) is a specialized DSS that supports senior-level executives and unstructured. long-term.mcgraw-hill. Constraints on revenue and cost variables can be taken into consideration. especially to a variable such as profits. Strategic Support Systems Decision making at the strategic level requires both business intelligence and knowledge to support the uncertainty and complexity associated with business strategies. The DSS then summarizes and aggregates the information from the different TPSs.11 shows the common systems view of a DSS. changes that occurred to the values in the model. Goal-Seeking Analysis Goal-seeking analysis finds the inputs necessary to achieve a goal such as a desired level of output. finds the optimum value for a target variable by repeatedly changing other variables..

mcgraw-hill. decisions requiring judgment. The greater the granularity. These insiders were authorized and active computer users 78 percent of the time. and insight.12 Interaction Between TPS and DSS to Support Semistructured Decisions APPLY YOUR KNOWLEDGE BUSINESS DRIVEN ETHICS AND SECURITY The Criminal in the Cube Next Door What if the person sitting in the cubicle next to you was running a scam that cost your company $7 billion? An employee at a French bank allegedly used his inside knowledge of business processes to bypass the system and place roughly $73 billion in bogus trades that cost the bank more than $7 billion to unwind. Secret Service's examination of 23 incidents conducted by 26 insiders determined that 70 percent of the time.. insiders took advantage of failures in business process rules and authorization mechanisms to steal from their company. the deeper the level of detail or fineness of data (see Figure 2. FIGURE 2.com/sites/0077338340/student_view.S. managers deal less with the details (“finer” information) and more with meaningful aggregations of information (“coarser” information). These decisions do not have a right or wrong answer. and a surprising 43 percent used their own user name and passwords to commit their crimes.7 14 of 23 6/29/12 1:23 PM . Granularity refers to the level of detail in the model or the decision-making process. only efficient and effective answers.1 Decision Support Systems http://highered.13). evaluation.. Moving up through the organizational pyramid. Findings from the U.Section 2.

DSS. and you need to protect these assets.Section 2. Many DSSs and EISs contain the business intelligence your company needs to operate effectively. and EIS? What problems could you encounter if one of your employees decided to steal the information housed in your DSS? How could you protect your EIS from unethical users? What would you do if you thought the person sharing your cube was a rogue insider? FIGURE 2. This is a daunting reminder that every employee has the potential to become a knowledgeable insider and.com/sites/0077338340/student_view... but typically DSS semistructured decisions rely on internal data only. FIGURE 2. What types of sensitive information is housed in a company's TPS. if started on a criminal path.14 Interaction Between a TPS and EIS 15 of 23 6/29/12 1:23 PM .13 Information Levels Throughout an Organization A DSS differs from an EIS in that an EIS requires data from external sources to support unstructured decisions (see Figure 2. This is not to say that DSSs never use data from external sources.14). to do tremendous damage to your company.1 Decision Support Systems http://highered.mcgraw-hill.

then a regional sales level. which tracks KPIs and CSFs by compiling information from multiple sources and tailoring it to meet user needs. data for different sales representatives can then be rolled up to an office level. A running line graph of planned versus actual production for the past 24 hours. A table showing actual versus forecasted product prices and inventories.Section 2. solve problems.. employees can react to information as soon as it becomes available and make decisions. refreshed every 15 minutes. more employees can perform their own analyses without inundating MIS staff with questions and requests for reports. A list of outstanding alerts and their resolution status. Digital dashboards. A graph of stock market prices.1 Decision Support Systems http://highered. Executive information systems use visualization to deliver specific key information to top managers at a glance. Digital dashboards enable employees to move beyond reporting to using information to directly increase business performance. then a state level. and change strategies daily instead of monthly. with little or no interaction with the system. APPLY YOUR KNOWLEDGE BUSINESS DRIVEN START-UP 16 of 23 6/29/12 1:23 PM . For example..com/sites/0077338340/student_view. A common tool that supports visualization is a digital dashboard. Visualization produces graphical displays of patterns and complex relationships in large amounts of data. With them. Following is a list of potential features included in a dashboard designed for a manufacturing team: A hot list of key performance indicators. deliver results quickly. whether basic or comprehensive. Digital dashboards offer the following capabilities: Consolidation Consolidation is the aggregation of data from simple roll-ups to complex groupings of interrelated information.mcgraw-hill. As they become easier to use.

“We wanted to harness that competitive.Section 2. garbage out.8 Why do you think competition is helping College Hunks Hauling Junk exceed its revenue goals? If you were to build a team competition dashboard for your school or your work. Digital Dashboard for Tracking Junk Do you enjoy kidnapping your rivals' team mascots or toilet-papering their frat houses? If so.com/sites/0077338340/student_view. The company hires college students and recent grads to pick up junk and take it away. he would set up his dashboard to track volume of junk collected and amount donated or recycled.. When the company launched in 2005. what types of metrics would you track? What types of motivators would you use to ensure your team is always in the green? What types of external information would you want tracked in your dashboard? Could an unethical person use the information from your dashboard to hurt your team or your organization? What can you do to mitigate these risks? Drill-Down Drill-down enables users to view details.1 Decision Support Systems http://highered. The winning team gains such things as bragging rights and banners.” If the transactional data used in the support system are wrong. prankster enthusiasm and channel it for good. the haulers from Virginia found their truck had been lathered in shaving cream and draped with a University of Maryland flag. “Garbage in. a user can view regional sales data and then drill down all the way to each sales representative's data at each office. Friedman decided to use this energy as an incentive instead of condemning the unorthodox behavior.. One slice of information could display all product sales during a given promotion.” he says. average job size. you might find your ideal career at College Hunks Hauling Junk. Managers should also ask. Nick Friedman. then the managerial analysis will be wrong and the DSS will simply assist in making a wrong decision faster. and details of details. and customer loyalty. Most employees check the dashboard daily to view their own and rivals' latest standings. Drill-down capability lets managers view monthly. The founder. and the right to eat first at the annual company meeting. and soon after dead fish were found on the seats of Maryland's truck.mcgraw-hill. Freidman made a bold move and decided that instead of tracking typical key performance indicators such as revenue. Another slice could display a single product's sales for all promotions. Slice-and-Dice Slice-and-dice is the ability to look at information from different perspectives. had a goal of capturing that friendly rivalry so often associated with college life and turn it into profits. Slicing and dicing is often performed along a time axis to analyze trends and find time-based patterns in the information. “What is the DSS not telling me before I make my final decision?” THE FUTURE: ARTIFICIAL INTELLIGENCE LO 2. This is the reverse of consolidation. Artificial intelligence (AI) simulates intelligence.4: Describe Executive information systems are starting to take advantage of artificial intelligence to artificial facilitate unstructured strategic decision making. of information. daily. or even hourly information. The Virginia haulers retaliated. modest monetary prizes. weekly. 17 of 23 6/29/12 1:23 PM . One thing to remember when making decisions is the old saying.

They include sensors. The FireFighter AI Robot can extinguish flames at chemical plants and nuclear reactors with water. and identify its five main types. Its ultimate goal is to build a system that can mimic human intelligence.com/sites/0077338340/student_view. Matsushita's courier robot navigates hospital hallways. powder. they include a knowledge base containing various accumulated experience and a set of rules for applying the knowledge base to each particular situation. wet winter days. Shell Oil's SmartPump keeps drivers in their cars on cold.mcgraw-hill. human thinking and behavior. (3) genetic algorithms. is a category of AI that attempts to emulate the way the human brain works.. and devices that emulate and enhance human capabilities. software. foam. Expert systems are the most common form of AI in the business arena because they fill the gap when human experts are difficult to find or retain or are too expensive.15). the Hefner AI Robot Cleaner alerts passengers to security and nonsmoking rules while it scrubs up to 65. learn or understand from experience. such as the ability to reason and learn. solve problems with incomplete information.600 square feet of floor per day. Neural networks analyze large quantities of information to establish patterns and characteristics in situations where the logic or rules are unknown. The robot puts distance between human operators and the fire. Expert Systems Expert systems are computerized advisory programs that imitate the reasoning processes of experts in solving difficult problems. Intelligent systems are various commercial applications of artificial intelligence.. Laser scanners and ultrasonic detectors keep it from colliding with passengers.Section 2. or inert gas. It can service any automobile built after 1987 that has been fitted with a special gas cap and a windshield-mounted transponder that tells the robot where to insert the pump. and medical supplies. The best-known systems play chess and assist in medical diagnosis. five of the most familiar are (1) expert systems.15 Examples of Artificial Intelligence 18 of 23 6/29/12 1:23 PM . make sense of ambiguous or contradictory information. and even use reasoning to solve problems and make decisions effectively. Intelligent systems perform such tasks as boosting productivity in factories by monitoring equipment and signaling when preventive maintenance is required.9 AI systems increase the speed and consistency of decision making. X-ray films. delivering patient files. They are beginning to show up everywhere: At Manchester Airport in England. Neural networks' many features include: FIGURE 2. There are many categories of AI systems. and (5) virtual reality (see Figure 2. (2) neural networks. Neural Networks A neural network. and resolve complicated issues that cannot be solved by conventional computing. also called an artificial neural network. Typically.1 Decision Support Systems http://highered. (4) intelligent agents.

and frequency of office visits.S. Here are some examples of neural networks in finance: Citibank uses neural networks to find opportunities in financial markets. These snippets of information can make a big difference to Citibank's bottom line in a very competitive financial market. laboratory tests. or that a U. MasterCard. Lending themselves to massive parallel processing. By carefully examining historical stock market data with neural network software. MasterCard estimates neural networks save it $50 million annually. Analyzing nonlinear relationships in information (they have been called fancy regression analysis systems). Insurance companies along with state compensation funds and other carriers use neural network software to identify fraud. and many other credit card companies use a neural network to spot peculiarities in individual accounts and follow up by checking for fraud. Coping with huge volumes of information with many dependent variables. For example. Learning and adjusting to new circumstances on their own. Zero represents information not included..mcgraw-hill. Treasury note is selling for 1 cent less in Japan than in the United States. The system searches for patterns in billing charges.. fuzzy logic allows people to analyze information with subjective financial values (intangibles such as goodwill) that are very important 19 of 23 6/29/12 1:23 PM .Section 2. while 1 represents inclusion or membership. A claim for which the diagnosis was a sprained ankle but treatment included an electrocardiogram would be flagged for the account manager.1 Decision Support Systems http://highered. Functioning without complete or well-structured information. For example. fuzzy logic is used in washing machines that determine by themselves how much water to use or how long to wash (they continue washing until the water is clean). The finance industry is a veteran in the use of neural network technology and has been relying on various forms for over two decades. In accounting and finance. Visa. Citibank financial managers learn of interesting coincidences or small anomalies (called market inefficiencies). The basic approach is to assign values between 0 and 1 to vague or ambiguous information.10 Fuzzy logic is a mathematical method of handling imprecise or subjective information. It uses neural networks to review loan applications and create patterns or profiles of applications that fall into two categories—approved or denied. it could be that whenever IBM stock goes up. so does Unisys stock.com/sites/0077338340/student_view.

One of the simplest examples of an intelligent agent is a shopping bot. In the past few years.000 connection points. of solutions are possible. and a flu epidemic have in common with an ant colony? They are all complex adaptive systems. artificial intelligence scientists can use hardware and software models that incorporate insect characteristics and behavior to (1) learn how people-based systems behave.mcgraw-hill. intelligent agents handle the majority of a company's Internet buying and selling and complete such processes as finding products. Genetic algorithms are best suited to decision-making environments in which thousands. Fuzzy logic and neural networks are often combined to express complicated and subjective concepts in a form that makes it possible to simplify the problem and apply rules that are executed with a level of certainty.. Multiagent Systems and Agent-Based Modeling What do cargo transport systems. By observing parts of Earth's ecosystem. the video game market. an intelligent agent can learn the types of competitor information users want to track. like ant colonies. Intelligent Agents An intelligent agent is a special-purpose knowledge-based information system that accomplishes specific tasks on behalf of its users. book distribution centers. bargaining over prices. such as the following: Business executives use genetic algorithms to help them decide which combination of projects a firm should invest in. AI research has made much progress in modeling complex organizations as a 20 of 23 6/29/12 1:23 PM . For instance.1 Decision Support Systems http://highered. or perhaps millions. Genetic algorithms can find and evaluate solutions with many more possibilities. and (3) improve human systems to make them more efficient and effective.Section 2. This process of learning from ecosystems and adapting their characteristics to human and organizational situations is called biomimicry. and executing transactions. taking complicated tax considerations into account. Investment companies use genetic algorithms to help in trading decisions. considerations in economic analysis.. faster and more thoroughly than a human. such as “Sherlock Holmes” for an information search agent. Genetic Algorithms A genetic algorithm is an artificial intelligence system that mimics the evolutionary. Increasingly. A genetic algorithm is essentially an optimizing system: It finds the combination of inputs that gives the best outputs. Intelligent agents usually have a graphical representation. (2) predict how they will behave under a given set of circumstances. Telecommunication companies use genetic algorithms to determine the optimal configuration of fiber-optic cable in a network that may include as many as 100. survival-of-the-fittest process to generate increasingly better solutions to a problem. The genetic algorithm evaluates millions of cable configurations and selects the one that uses the least amount of cable. and alert users when a significant event occurs. Another application for intelligent agents is in environmental scanning and competitive intelligence. continuously scan the Web for it.com/sites/0077338340/student_view. Intelligent agents also have the capability to handle all supply chain buying and selling. Organizations face decision-making environments for all types of problems that require optimization techniques. A shopping bot is software that will search several retailer websites and provide a comparison of each retailer's offerings including price and availability.

mcgraw-hill. Agent-based modeling is a way of simulating human organizations using multiple intelligent agents. and some workers need a busy environment to stay productive. groups of intelligent agents have the ability to work independently and to interact with each other. traffic congestion occurs daily for the 35. Who is filling all the orders. a company with a single critical success factor: Replace the labyrinth of conveyor belts and humans that most distributors rely on to pack items in the online mail-order business. and deprived of vital training and mentoring. Drawbacks include the fear among workers that they will jeopardize their careers by working from home.1 Decision Support Systems http://highered. The robots. secluded. Virtual workers also tend to feel alone. predict the escape routes people seek in a burning building. or bots. Working virtually offers several advantages such as fewer cars on the road. Virtual Reality Virtual reality is a computer-simulated environment that can be a simulation of the real world or an imaginary world.000 commuters. APPLY YOUR KNOWLEDGE BUSINESS DRIVEN INNOVATION Building Robots Humans are not permitted inside Staples' Denver distribution center. each of which follows a set of simple rules and can adapt to changing conditions.. Virtual reality enables telepresence where users can be anywhere in the world and use virtual reality systems to work alone or together at a remote site. Typically. to name just a few. you ask? Robots! This 100. Washington. estimate the effects of interest rates on consumers with different types of debt. 21 of 23 6/29/12 1:23 PM . Over 42 percent of IBMs 330. to the remote use of equipment in hazardous environments such as chemical plants and nuclear reactors. and decreasing real estate expenses. realistic. and Amazon. increases in worker productive. whole with the help of multiagent systems. In a multiagent system. and anticipate how changes in conditions will affect the supply chain. Companies using Kiva bots include Walgreens.000-square-foot space belongs to 150 orange robots that resemble overstuffed ottomans and race around with uncanny accuracy. multisensory human-computer interfaces. where surgeon and patient may be on opposite sides of the globe.Section 2. Virtual Workforce At Microsoft's headquarters in Redmond. this involves using a virtual reality system to enhance the sight and touch of a human who is remotely manipulating equipment to accomplish a task. are built by Kiva Systems. Agent-based modeling systems are being used to model stock market fluctuations. Virtual reality is a fast-growing area of artificial intelligence that had its origins in efforts to build more natural..000 employees work virtually saving over $100 million per year in real estate-related expenses. Examples range from virtual surgery. Zappos. The Gap.com/sites/0077338340/student_view. To alleviate the congestion Microsoft is offering its employees the ability to work virtually from home. They're making Staples employees more than twice as productive.

” MSNBC. March 2.teradata. “What is Systems Thinking.mscom /id/23065812/. Efficiency. From the quirky droids in Star Wars to the powerful fighting machines in Transformers. 1995).colorado.” Inc. McGraw-Hill Higher Education is one of the many fine businesses of The McGraw-Hill Companies. March 11. 2009.htm. “Robots at Your Service” Santa Fe Institute. its functions.” Bloomberg Businessweek.msnbc. http://searchcio. (ed.com /2009/03/02/breastfeeding-while-driving/.html.1 Decision Support Systems http://highered. “Texting and other Bad Driving Decisions. Faster Decision-Making in Your Sights. 2008 http://www.com/ managing/content/mar2008/ca20080311_211319.com/ technology/content/jun2010/tc2010061_798891. accessed June 24.” SearchCIO.com.com/magazine /20091001/letting-employees-battle-it-out. 9 “Put Better. Biacino and G. they seem to fascinate everyone. Arbib. “Neural Network Examples and Definitions.” ece-www. 2010. 10 Begley. 4 Ken Blanchard.Section 2.com/definition/systems-thinking accessed March 13.mcgraw-hill.anl.businessweek.com/sites/0077338340/student_view.businessweek.gov/abms/. and why customers would purchase your robot. “Breastfeeding While Driving. June 1.” Bloomberg Businessweek.yahoo. www. Michael A. 2009 McGraw-Hill Higher Education Any use is subject to the Terms of Use and Privacy Notice. 2010 http://www.autos. “Effectiveness vs.” Wachovia Small Business. March 11..dis. 5 6 Rich Jaroslovsky. 2009. www.htm. October 1. 2007. 2010. Be sure to describe your robot. The Handbook of Brain Theory and Neural Networks L. accessed June 24.nytimes.wachovia. “Letting Employees Battle it Out. 2008 http://www.” http://ca.11 2 Tom Davenport. Assume your professor has asked you to participate in The Robot Challenge. and you must design a robot that will enhance business operations.com. It must contain a digital dashboard and provide decision support capabilities for its owners.techtarget. February 8.” www.” Archive for Mathematical Logic. “Tom Davenport: Back to Decision-Making Basics. “Your Own Private Help Desk. 2007. “Software au Natural” McManus.” The New York Times.” Bloomberg Businessweek..com/p/1960/textingand-other-bad-driving-decisions. 3 Jeff Voth. Feel free to include a picture or diagram of how your robot works. 22 of 23 6/29/12 1:23 PM . http://parenting. 7 “French trader in scandal ordered behind bars. 2009 http://www. Gerla.blogs. “Soon that Nearby Worker might be a Robot. Robots have captured people's attention for years.inc.html. how the digital dashboard works and supports users. continuity and effectiveness. accessed October 14.edu/∼ecen4831/lectures/NNdemo. “Fuzzy logic. 11 Rachel King. 8 Leigh Buchanan.com.

23 of 23 6/29/12 1:23 PM .Section 2..mcgraw-hill.com/sites/0077338340/student_view..1 Decision Support Systems http://highered.

and differentiate between customer-facing and business-facing processes.7 Differentiate among business process improvements.5 Explain the value of business processes for a company.8 Describe business process management and its value to an organization. a company must continually evaluate all the business processes in its value chain. To avoid this pitfall and and protect its competitive advantage. streamlining. Understanding business processes helps a manager envision how the entire company businessfacing operates. 63 74 73 72 71 70 69 68 67 66 65 64 LEARNING OUTCOMES 2.mcgraw-hill. and reengineering. and compare As-Is and To-Be models.5: Explain the value of Most companies pride themselves on providing breakthrough products and services for customers. 2. But if customers do not receive what they want quickly. 62 FIGURE 2.. Business processes transform a set of inputs into a set of outputs facing and —goods or services—for another person or process by using people and tools. even fantastic offerings will not prevent a company from annoying a company. 2. Recall from Chapter 1 that a business process differentiate is a standardized set of activities that accomplish a specific task.com/sites/0077338340/student_view.6 Demonstrate the value of business process modeling. EVALUATING BUSINESS PROCESSES LO 2..2 Business Processes p.16 Sample Business Processes 1 of 17 6/29/12 1:23 PM .Section 2. Business Driven Information Systems eBook 3/e Content Chapter2: Decisions and Processes: Value Driven Business Section 2. accurately. such as processing a between customercustomer's order. p. customers and ultimately eroding its own financial performance. and business processes for hassle-free. 2.2 Business Processes http://highered. processes.

Section 2. Figure 2. such as ordering a product..com/sites/0077338340/student_view. and sending out bills and marketing information..18 displays the different categories of customer-facing and business-facing processes along with an example of each. and reservation handling. but also the way it is marketed and serviced. may be contained wholly within a single department. such as a programming process. They include fulfilling orders. The process of “order to delivery” focuses on the entire customer order process across functional departments (see Figure 2. providing post-sales service. most.12 FIGURE 2. Some processes. are invisible to the external customer but essential to the effective management of the business. they include goal setting. communicating with customers. Figure 2.16 illustrates several common business processes. However. Improving the efficiency and effectiveness of its business processes will improve the firm's value chain. also called front-office processes. Customer-facing processes. giving performance feedback and rewards. are cross-functional or cross-departmental processes and span the entire organization.2 Business Processes http://highered. Business-facing processes. Another example is “product realization.16 reflect functional thinking. The processes outlined in Figure 2. day-to-day planning.mcgraw-hill. loan processing. Some other crossfunctional business processes are taking a product from concept to market. The goal of this section is to expand on Porter's value chain analysis by detailing the powerful valueadding relationships between business strategies and core business processes. result in a product or service received by an organization's external customer. also called back-office processes. claim processing.17 Five Steps in the Order-to-Delivery Business Process 2 of 17 6/29/12 1:23 PM . and allocating resources.” which includes not only the way a product is developed.17). acquiring customers.

mcgraw-hill.. The map identified logistics and distribution as critical to the success of the move. This type of evaluation allowed National Semiconductor to identify the core business processes required to move assembly plants to Southeast Asia.13 MODELS: MEASURING PERFORMANCE LO 2. is the activity of creating a detailed flowchart or process map of a work process that shows its inputs.. Industry-Specific. and its purpose and To-Be models. and Business-Facing Processes 3 of 17 6/29/12 1:23 PM . This type of map conceptualizes the business as a value delivery system. that is.com/sites/0077338340/student_view.18 Customer-Facing. and process. tasks. A set of one or more process models details compare As-Is the many functions of a system or subject area with graphics and text. The move allowed National Semiconductor to save money by closing nine warehouses while maintaining excellence in logistics and distribution. and activities business process in a structured sequence. A firm can even create a value chain map of the entire industry to extend critical success factors and business process views beyond its boundaries.6: Demonstrate the value of Business process modeling. combining its outstanding manufacturing process and Federal Express's exceptional distribution processes. Focus attention on the process model interfaces. allowing managers to ensure all core business processes are operating as efficiently and effectively as possible. changing business processes can generate significant competitive advantages across the value chain. A business process model is a graphic description of a modeling. showing the sequence of process tasks. Provide a powerful process analysis and consistent design vocabulary. which is developed for a specific purpose and from a selected viewpoint.19 through 2. is to: Expose process detail gradually and in a controlled manner.Section 2. Encourage conciseness and accuracy in describing the process model. A company's strategic vision should provide guidance on which business processes are core. Thus. or mapping. (Figures 2.)14 FIGURE 2.22 provide examples of business process modeling.2 Business Processes http://highered. which are directly linked to the firm's critical success factors. to ensure reliable delivery of its products. As this example demonstrates. National Semiconductor contracted with Federal Express. Mapping these core business processes to the value chain reveals where the processes touch the customers and affect their perceptions of value.

20 Online Banking Process Model 4 of 17 6/29/12 1:23 PM . Figure 2... As-Is process models represent the current state of the operation that has been mapped.2 Business Processes http://highered. The next step is to build a To-Be process model that displays how the process problem will be solved or implemented. The To-Be process model shows how the what is to be realized.com/sites/0077338340/student_view. FIGURE 2. Business process modeling usually begins with a functional process representation of what the process problem is.19 Online Sales Process Model FIGURE 2. without any specific improvements or changes to existing processes.Section 2.23 displays the As-Is and To-Be process models for ordering a hamburger. This approach ensures that the process is fully and clearly understood before the details of a process solution are decided upon.mcgraw-hill. To-Be process models show the results of applying change improvement opportunities to the current (As-Is) process model. or an As-Is process model.

Section 2. 5 of 17 6/29/12 1:23 PM . remove redundant tasks. Improving order entry. a florist might have a key success factor of reducing delivery time. You need to be careful not to become inundated in excessive detail when creating an As-Is process model.25B). Business processes should drive MIS choices and should be based on business strategies and goals (see Figure 2.24 illustrates an As-Is process model of the order to delivery process using swim lanes to represent the relevant departments. Managers who make MIS choices and only then determine how their business processes should perform typically fail. and data flow of an organization.mcgraw-hill. FIGURE 2. Process improvement efforts focus on defining the most efficient and effective process identifying all of the illogical. or shipping delays can cause errors in the delivery process.21 Order Fulfillment Process Model As-Is and To-Be process models are both integral in business process reengineering projects. The primary goal is to simplify.25A). missing. Figure 2. and recognize smooth-running processes. For example. or scheduling processes can improve the delivery process. Taking down inaccurate orders. The swim lane layout arranges the steps of a business process into a set of rows depicting the various elements. Of course..com/sites/0077338340/student_view. or irrelevant processes.2 Business Processes http://highered. processes. Only after determining the most efficient and effective business process should an organization choose the MIS that supports that business process. incorrect addresses. production. A florist that has an inefficient ordering process or a difficult distribution process will be unable to achieve this goal. and improve the To-Be processes. Investigating business processes can help an organization find bottlenecks. and managers may find themselves in the difficult position of changing a business process because the system cannot support the ideal solution (see Figure 2.. eliminate. since these diagrams are very powerful in visualizing the activities. this does not always happen.

FIGURE 2.2 Business Processes http://highered.com/sites/0077338340/student_view..mcgraw-hill.Section 2..23 As-Is and To-Be Process Model for Ordering a Hamburger 6 of 17 6/29/12 1:23 PM .22 Purchasing an Item on eBay and Selling an Item on eBay Process Model FIGURE 2.

24 As-Is Process Model for Order Fulfillment FIGURE 2. Business Processes Should Drive MIS Choices 7 of 17 6/29/12 1:23 PM .mcgraw-hill. FIGURE 2.2 Business Processes http://highered..25 For Best Results..Section 2.com/sites/0077338340/student_view.

activities.. Figure 2. SUPPORT: CHANGING BUSINESS PROCESSES WITH MIS LO 2. How does a company know whether it needs to undertake the giant step of changing core business processes? Three conditions indicate the time is right to initiate a business process change: 1. step in a business process. Understanding workflow. There has been a pronounced shift in the market the process was designed to serve. and technology shift.com/sites/0077338340/student_view.7: Differentiate among business Workflow includes the tasks. advantages when internal or external circumstances change.. the competitive environment provides managers with the necessary ingredients to design and evaluate alternative business processes in order to maintain competitive and reengineering.26 Primary Types of Business Process Change 8 of 17 6/29/12 1:23 PM . Alternative business process should be effective (they deliver the intended results) and efficient (they consume the least amount of resources for the intended value).2 Business Processes http://highered. 3. To regain competitive advantage. the company must leapfrog competition on key dimensions.26 shows the three primary types of business process change available to firms and the business areas in which they are most often effective.Section 2. The company is markedly below industry benchmarks on its core processes.15 FIGURE 2. They should also be adaptable or flexible and support change as customers. market forces. customers' expectations. 2. and responsibilities required to execute each process improvements.mcgraw-hill. and streamlining.

companies began to look for new ways to use MIS to improve operations. and then calculate the amount due. Organizations begin by documenting what they currently do. which reduces costs and increases the speed of performing activities. track withholding and deductions. to create the paychecks. cross-check with wage rates.Section 2. thereby raising the competitive bar and the need to improve business processes dramatically. and finally identify improvement opportunities based on the collected information. Every two weeks accounting employees must gather everyone's hours worked.17 This method of improving business processes is effective for obtaining gradual. The next step is to implement process improvements and measure the performance of the new improved process..27 Business Process Improvement Model 9 of 17 6/29/12 1:23 PM .2 Business Processes http://highered. Calculating and tracking payroll for 5.com reinvented the supply chain for selling books online. However. sick time. incremental improvement. Automation is the process of computerizing manual tasks. Payroll offers an excellent example. Transaction processing systems (TPS) are primarily used to automate business processes. New technologies (such as wireless Internet access) rapidly bring new capabilities to businesses. They also track benefits. measure the performance. several factors have accelerated the need to radically improve business processes. Business process improvement attempts to understand and measure the current process and make performance improvements accordingly. lowering overall operational costs. and create paychecks for 5. since everything is performed by the system. The loop repeats over and over again as it is continuously improved. If the payroll process is automated. and vacation time.28 illustrates the basic steps for business process improvement. often they can simply click a mouse to find many other choices.27 displays a typical business process improvement model.16 Early adopters of MIS recognized that they could enhance their value chain through automation. Figure 2. The most obvious is technology. Automation improves efficiency and effectiveness and reduces head count. Amazon. FIGURE 2. For example. and managers recognized the benefits of pairing MIS with business processes by streamlining.000 employees is a highly labor-intensive process requiring 30 full-time employees. After gaining from automation. one employee can easily calculate payroll. follow the process. Improving Operational Business Processes—Automation Improving business processes is critical to staying competitive in today's electronic marketplace.000 people in a few hours. minus taxes and other withholding such as pension contributions and insurance premiums. making them more efficient and effective and dramatically lowering operational costs. We look at this improvement method next.mcgraw-hill. however. then they establish a way to measure the process. Organizations must improve their business processes because customers are demanding better products and services.. Figure 2. if customers do not receive what they want from one supplier.com/sites/0077338340/student_view.

2 Business Processes http://highered.28 Steps in Business Process Improvement Improving Managerial Business Processes—Streamlining Streamlining improves business process efficiencies by simplifying or eliminating unnecessary steps.mcgraw-hill.com/sites/0077338340/student_view.. FIGURE 2. It also eliminates redundancy. an important step if the efficiency and capacity of a business process are being increased. Bottlenecks occur when resources reach full capacity and cannot handle any additional demands. A computer working at its maximum capacity will be unable to handle increased demand and will become a bottleneck in the process. Streamlining removes bottlenecks. for 10 of 17 6/29/12 1:23 PM .. Redundancy occurs when a task or activity is unnecessarily repeated. they limit throughput and impede operations.Section 2.

Using the principles of streamlining. and they do not know which tasks need to be completed and when.2 Business Processes http://highered. put a note on your to-do list. example.Section 2. Reducing cycle time. most of which require a response or action. or delete it. This process continues all day. Many employees stop what they are working on and begin checking new email as soon as it arrives. FedEx soon identified 11 of 17 6/29/12 1:23 PM .mcgraw-hill. the sales department tends to say yes to any customer request.. APPLY YOUR KNOWLEDGE BUSINESS DRIVEN MIS Streamlining Your Email The biggest problem with email is that it interferes with workflow. The goal of streamlining is not only to automate but also to improve by monitoring. Removing these bottlenecks. the time required to process an order. Be sure to diagram the As-Is process and your newly created To-Be process. Here's an example based on a common source of tension in an organization. controlling. Employees begin dreading email and feel stressed because their workflow process is off track. Tennessee. It created one central hub in Memphis. and deal with each one immediately. if both the sales department and the accounting department check customer credit. and changing the business process. Increasing orders is a standard KPI for most marketing/sales departments. forward the email. you can designate certain times for email processing (at the top of the hour. When you do begin to check your emails. Automating a business process that contains bottlenecks or redundancies will magnify or amplify these problems if they are not corrected first. review them one at a time from top to bottom. they leave it in the in-box. To streamline workflow. If they do not have the time or capacity to answer it immediately. remove the bottlenecks and reduce redundancies. and you are less stressed because your in-box is empty. FedEx combined MIS and traditional distribution and logistics processes to create a competitive advantage. Now you are working far more efficiently and effectively. Either reply. is a common KPI for operations management. such as for rush or custom orders. FedEx streamlined every business process to provide a CSF of speedy and reliable delivery of packages. causing operations to fall below its benchmarked cycle time. or for 30 minutes at three set times a day. To meet this KPI. can create master streamlined business processes that deliver both standard and custom orders reliably and profitably.18 Choose a process in your life that is inefficient or ineffective and causing you stress. Rush and custom orders tend to create bottlenecks. for example).. that processed all its orders.com/sites/0077338340/student_view. however. It purchased its own planes to be sure it could achieve the desired level of service. Turning off email notification also ensures you are not interrupted during your workflow. however. and eventually the in-box is overflowing with hundreds of emails. creating a bottleneck.

com/sites/0077338340/student_view. rather than marginal processes that have little impact. it would look beyond automating and streamlining to find a completely different approach. it could have missed an entire customer segment. Companies need breakthrough performance and business process changes just to stay in the game. does not work.Section 2. Wine wholesalers in the United States must now compete globally. Because companies have tended to overlook the powerful contribution that processes can make to strategy. not realizing there might be a different.. companies looking for rapid change and dramatic improvement are turning to business process reengineering (BPR). When selecting a business process to reengineer. faster. wise managers focus on those core processes that are critical to performance. however. In the extreme. As the rate of change increases. Figure 2.2 Business Processes http://highered.19 Improving Strategic Business Processes—Reengineering The flat world (see Chapter 1) is bringing more companies and more customers into the marketplace. An organization can reengineer its cross-departmental business processes or an individual department's business processes to help meet its CSFs and KPIs. Companies often follow the same indirect path for doing business.. The firm had to reevaluate its strategy and realign its business processes to capture this market segment.mcgraw-hill. and more direct way. or is broken and must be overhauled from 12 of 17 6/29/12 1:23 PM .29 highlights an analogy to process improvement by explaining the different means of traveling along the same route. BPR assumes the current process is irrelevant. With a BPR mind-set. Had Federal Express focused only on improving its traditional delivery process to handle increased volume faster and more reliably. A company could improve the way it travels by changing from foot to horse and then from horse to car. another market segment of customers who cared a little less about speed and were willing to trade off early-morning delivery for delivery any time within the next day at a significantly lower price. The effort to reengineer a business process as a strategic activity requires a different mind-set than that required in continuous business process improvement programs. for instance. It would ignore the road and travel by air to get from point A to point B. the analysis and redesign of workflow within and between enterprises. greatly increasing competition. because customers can just as easily order a bottle of wine from a winery in France as from them. they often undertake process improvement efforts using their current processes as the starting point. Managers focusing on reengineering can instead use several criteria to identify opportunities: Is the process broken? Is it feasible that reengineering of this process will succeed? Does it have a high impact on the agency's strategic direction? Does it significantly impact customer satisfaction? Is it antiquated? Does it fall far below best-in-class? Is it crucial for productivity improvement? Will savings from automation be clearly visible? Is the return on investment from implementation high and preferably immediate? BPR relies on a different school of thought than business process improvement.

A true BPR effort does more for a company than simply improve a process by performing it better. and structures and their vision of the processes of the future.2 Business Processes http://highered. technologies. Given this knowledge base. Progressive Insurance's innovation was to offer a mobile claims process. and MIS often plays an important enabling role. surveying the scene and taking digital photographs. Progressive Insurance's BPR effort redefined best practices for an entire industry. Creating value for the customer is the leading reason for instituting BPR. Typically.30 displays the basic steps in a business process reengineering effort. When a customer has a car accident. scratch.Section 2. The adjuster then offers the customer on-site payment. assignment of fault. and new technology. towing services.21 13 of 17 6/29/12 1:23 PM . and cheaper. and which usually takes about a month (see Figure 2. Fundamentally new business processes enabled Progressive Insurance to slash its claims settlement time from 31 days to four hours. It is as if they are projecting themselves into the future and asking: What should the process look like? What do customers want it to look like? What do other employees want it to look like? How do best-in-class companies do it? How can new technology facilitate the process? Figure 2. and finds a ride home. It begins with defining the scope and objectives of the reengineering project and then takes the process designers through a learning process with customers. and an estimate of the cost of repairs.20 FIGURE 2. and a ride home. Starting from such a clean slate enables business process designers to disassociate themselves from today's process and focus on a new process.31). he or she calls in the claim on the spot. The customer then calls the insurance company to begin the claims process. which includes an evaluation of the damage. employees. whereas BPR occurs at the systems level or companywide level and the end-to-end view of a process. car insurance companies follow this standard claims resolution process: The customer gets into an accident..com/sites/0077338340/student_view.30 Business Process Reengineering Model System thinking plays a big role in BPR.mcgraw-hill. competitors. The Progressive claims adjuster comes to the accident site.. the designers can create a plan of action based on the gap between current processes. Automation and streamlining operate departmentally.29 Different Ways to Travel the Same Route FIGURE 2. It is then top management's job to implement the chosen solution. has the car towed. for instance. faster.

Changing business processes to meet operations management KPIs will thus reduce customer satisfaction KPIs. the redesign of any process within an integrated system requires appreciating the impact of the redesign on other processes. FIGURE 2. Thompson is seeking tuition reimbursement of $70. The Business Process Systems View Leveraging business processes has enormous implications for the business system as a whole. whether it is full or not. is filing a lawsuit against Monroe College stating that she is unable to find employment after graduating with her bachelor's degree. A systems view. the identification of business process flaws and implementation of proposed solutions will often fix only symptoms. the customer satisfaction KPIs measure the ability to make the order-to-delivery cycle time as short as possible. requiring the truck to leave as soon as the product is available. Conversely. Monroe College spokesman Gary Axelbank says Thompson's lawsuit is completely 14 of 17 6/29/12 1:23 PM . Changing business processes to meet customer satisfaction KPIs will lower operations management KPIs.com/sites/0077338340/student_view.. will allow managers to understand the impact business processes have across the entire organization. For example. so both can be improved. Without a systems view. on the other hand. a New York City resident.000 and states that she has been unable to find gainful employment since graduating because the school's Office of Career Advancement failed to provide her with the leads and career advice it promised.mcgraw-hill. operations management often wants to wait until a truck is full before sending it out for deliveries because the department's KPI measures cost-per-mile-transported.31 Auto Insurance Claims Processes APPLY YOUR KNOWLEDGE BUSINESS DRIVEN DEBATE Education Processes Trina Thompson. Therefore.Section 2.2 Business Processes http://highered. Many times what can make one process effective is what makes another process ineffective.. It requires recognition that any meaningful change within the organization affects the entire organization.

accessed May 10. Think of BPM as a way to build. and provide feedback. industry.2 Business Processes http://highered..com/sites/0077338340/student_view. Managing front-office and back-office business processes. BPM not only allows a business process to be executed more efficiently. Michael Hammer.mcgraw-hill. harnessing the power of ideas and insight and promoting systems thinking throughout the organization. With BPM the two systems function as one. performance. and information together. “Process Reengineering in Action: A Practical Guide to Achieving Breakthrough Results 15 of 17 6/29/12 1:23 PM . Now. 1996). simulation. and improved delivery. BPM's unified environment encourages people to observe. This ability is the foundation for creating an operation that gives a company competitive advantage. but it also provides the tools to measure performance and identify opportunities for improvement. Providing the flexibility for quick BPM change drives efficiency and effectiveness. process improvement initiatives focused on improving workflow or document-based processes that were completed by hand.com/me/bpr/.Section 2. 12 13 Business Process Reengineering Six Sigma. Breaking down the barriers between business areas and finding “owners” for the processes.8: Describe business process Creating a company that can quickly adapt to market. business process management (BPM) systems focus on evaluating and improving processes that include both person-to-person workflow and system-to-system communications. think. Richard Chang. How could your school reengineer the process to ensure it does not end up in litigation over an individual's expectation of automatically receiving a job after graduation? THE FUTURE: BUSINESS PROCESS MANAGEMENT LO 2. and monitoring. Until recently. implement. without merit and insists it helps its graduates find jobs. as well as to easily capture opportunities such as: Bringing processes. www. people. business organization. 2010. Beyond Reengineering: How the Process-Centered Organization Is Changing Our Work and Our Lives (New York: HarperCollins Publishers. creating optimal business processes. providing a high level of flexibility while reducing costs. and monitor automated processes that span organizational boundaries—a kind of next-generation workflow.22 Do you agree that students should be allowed to hold their academic institutions liable for their inability to find a job after graduation? Design the current (As-Is) business process at your school from the time a student begins his or her program until graduation.isixsigma. BPM systems include advanced features such as enhanced process modeling. allowing continual improvements to many business processes simultaneously and in real time. BPM uniquely offers two types of systems: (1) Customer-facing or front-office BPM focuses on personto-person workflow and (2) business-facing or back-office BPM focuses on system-to-system workflow. however. and economic changes management and its value to create a competitive advantage requires a new set of operating rules based on to an achieving speed.. execution.

1997). “Process Reengineering in Action: A Practical Guide to Achieving Breakthrough Results (Quality Improvement Series). Michael Hammer and James. Design. 2009 http://www. Hammer.Section 2. “Bronx graduate Trina Thompson sues Monroe College for $70. and Management of Business Process Improvement (New York: McGraw-Hill.com/. 1996). 19 Stever Robbins. Michael Hammer and James. Analysis. 1996). SmartDraw. Champy. 1997). Michael Hammer and James. Richard Chang. 15 Michael Hammer.” Harvard Business School. Beyond Reengineering: How the Process-Centered Organization Is Changing Our Work and Our Lives (New York: HarperCollins Publishers. Business Process Improvement Workbook: Documentation. Michael Hammer and James. “Reengineering the Corporation: A Manifest for Business Revolution..nydailynews. Hammer.2 Business Processes http://highered.” 1993. “Process Reengineering in Action: A Practical Guide to Achieving Breakthrough Results (Quality Improvement Series). Analysis.com/me/bpr/.” 1996.com/sites/0077338340/student_view. Beyond Reengineering. 21 H.html#ixzz1174LU5KS. Design. “Tips for Mastering E-mail Overload.html. October 25. 22 Phil Mansfield.edu/archive/4438.000 over unemployment.” NY Daily News. 1997). James Harrington.com. (Quality Improvement Series). Champy.smartdraw. 2010. James Harrington. Design. Beyond Reengineering. Design. James Harrington. and Management of Business Process Improvement (New York: McGraw-Hill. Champy. “Reengineering the Corporation: A Manifest for Business Revolution. “Reengineering the Corporation: A Manifest for Business Revolution.isixsigma. McGraw-Hill Higher Education is one of the many fine businesses of The McGraw-Hill Companies. 2010.hbs. www. Richard Chang. Business Process Improvement Workbook: Documentation. Champy. Hammer. 17 H.” 1993. and Management of Business Process Improvement (New York: McGraw-Hill. www. 1997). August 3. James Harrington. 16 of 17 6/29/12 1:23 PM . Hammer.. 14 Michael Hammer. Business Process Improvement Workbook: Documentation. 20 H. Analysis.” 1993. “Reengineering the Corporation: A Manifest for Business Revolution.mcgraw-hill. Beyond Reengineering. 18 H. Beyond Reengineering. Analysis.” 1996.com/ny_local/2009/08 /03/2009-08-03_student_. accessed May 11. 2009 McGraw-Hill Higher Education Any use is subject to the Terms of Use and Privacy Notice. Beyond Reengineering: How the Process-Centered Organization Is Changing Our Work and Our Lives (New York: HarperCollins Publishers. and Management of Business Process Improvement (New York: McGraw-Hill. 2009 http://hbswk. accessed May 10. Business Process Improvement Workbook: Documentation.” 1993.” 1996. 16 Business Process Reengineering Six Sigma.

Section 2.com/sites/0077338340/student_view.2 Business Processes http://highered.mcgraw-hill.. 17 of 17 6/29/12 1:23 PM ..

and maintain core business activities required to run the day-to-day operations. but not enough to lead to a definite recommended decision. and typically related to long-term business strategy.2: Define critical success factors (CSFs) and key performance indicators (KPIs).com/sites/0077338340/student_view. Operational decisions are considered structured decisions. they occur in situations in which a few established processes help to evaluate potential solutions. At the strategic level. 75 77 76 Learning Outcome 2. which arise in situations where established processes offer potential solutions. They are infrequent. and leverage change. examples include turnover rates of employees. employees are continuously evaluating company operations to hone the firm's abilities to identify.Learning Outcome Review http://highered. and reducing product costs. occurring in situations in which no procedures or rules exist to guide decision makers toward the correct choice. and competitive business environment. who make decisions that run the business. goals. at every company level. and budgets along with policies. CSFs are the crucial steps companies perform to achieve their goals and objectives and implement their strategies and include creating high-quality products. Decision-making skills are essential for all business professionals. managers develop overall business strategies. retaining competitive advantages.1: Explain the importance of decision making for managers at each of the three primary organization levels along with the associated decision characteristics. adapt to. and explain how managers use them to measure the success of MIS projects. and business objectives for the firm. It is important to understand the relationship between critical success factors and key performance 1 of 3 6/29/12 1:29 PM . These types of decisions are considered semistructured decisions. Metrics are measurements that evaluate results to determine whether a project is meeting its goals. Strategic decisions are highly unstructured decisions. extremely important. they affect short-term business strategies. KPIs are far more specific than CSFs. Structured decisions are made frequently and are almost repetitive in nature.mcgraw-hill. At the operational level. percentage of help-desk calls answered in the first minute. and objectives as part of the company's strategic plan.. Managerial decisions cover short. and number of products returned. At the managerial level. control. procedures. Business Driven Information Systems eBook 3/e Content Chapter2: Decisions and Processes: Value Driven Business Learning Outcome Review p..and medium-range plans. They also monitor the strategic performance of the organization and its overall direction in the political. Learning Outcome 2. economic. Two core metrics are critical success factors and key performance indicators. schedules. employees develop. KPIs are the quantifiable metrics a company uses to evaluate progress toward critical success factors.

.. managerial.5: Explain the value of business processes for a company.Learning Outcome Review http://highered. and differentiate between customer-facing and business-facing process. Learning Outcome 2. Strategic: An executive information system (EIS) is a specialized DSS that supports senior-level executives within the organization. Intelligent agents—a special-purpose knowledge-based information system that accomplishes specific tasks on behalf of its users. Without processes. CSFs are elements crucial for a business strategy's success. both categories will vary by company and industry. Imagine improved graduation rates as a CSF for a college. and identify its five main types. Without knowing what is occurring throughout the organization there is no way that managers and executives can make solid decisions to support the business. Expert systems—computerized advisory programs that imitate the reasoning processes of experts in solving difficult problems. and strategic support systems. and strategic support systems include: Operational: A transaction processing system (TPS) is the basic business system that serves the operational level (analysts) in an organization. and explain how managers can use these systems to make decisions and gain competitive advantages. Artificial intelligence (AI) simulates human thinking and behavior. calculate. 4. The different operational.mcgraw-hill. Being able to sort. 5. Virtual reality—a computer-simulated environment that can be a simulation of the real world or an imaginary world. 2. Customer-facing processes result in a product or service that is received by an organization's external customer. Learning Outcome 2. 2 of 3 6/29/12 1:29 PM . such as the ability to reason and learn. Genetic algorithm—a system that mimics the evolutionary. managerial support systems. organizations would not be able to complete activities. Learning Outcome 2. survival-of-the-fittest process to generate increasingly better solutions to a problem. Managerial: A decision support system (DSS) models information to support managers and business professionals during the decision-making process. Neural networks—attempts to emulate the way the human brain works. Business-facing processes are invisible to the external customer but essential to the effective management of the business.3: Classify the different operational support systems. The five most common categories of AI are: 1. The most common example of a TPS is an operational accounting system such as a payroll system or an order-entry system. 3.com/sites/0077338340/student_view. and slice-and-dice information is critical to an organization's success. analyze. such as processing a customer's order. and one CSF can have several KPIs. A business process is a standardized set of activities that accomplish a specific task. indicators. Of course.4: Describe artificial intelligence. KPIs measure the progress of CSFs with quantifiable measurements. Business processes transform a set of inputs into a set of outputs (goods or services) for another person or process by using people and tools.

Business process management (BPM) systems focus on evaluating and improving processes that include both person-to-person workflow and system-to-system communications. and compare As-Is and To-Be models. and reengineering. Streamlining removes bottlenecks. 2009 McGraw-Hill Higher Education Any use is subject to the Terms of Use and Privacy Notice. without any specific improvements or changes to existing processes.Learning Outcome Review http://highered.6: Demonstrate the value of business process modeling. they limit throughput and impede operations. BPM systems include advanced features such as enhanced process modeling. and monitoring... This approach ensures that the process is fully and clearly understood before the details of a process solution are decided upon. Business process modeling usually begins with a functional process representation of what the process problem is. streamlining.com/sites/0077338340/student_view. Business process improvement attempts to understand and measure the current process and make performance improvements accordingly. McGraw-Hill Higher Education is one of the many fine businesses of The McGraw-Hill Companies. Learning Outcome 2. or an As-Is process model. in a structured sequence. execution. and activities.mcgraw-hill. tasks. simulation. an important step if the efficiency and capacity of a business process are being increased. 3 of 3 6/29/12 1:29 PM .8: Describe business process management and its value to an organization. As-Is process models represent the current state of the operation that has been mapped. Learning Outcome 2. Learning Outcome 2. showing the sequence of process tasks. The next step is to build a To-Be process model that displays how the process problem will be solved or implemented. Business process modeling (or mapping) is the activity of creating a detailed flowchart or process map of a work process showing its inputs. providing a high level of flexibility while reducing costs. Business process reengineering (BPR) is the analysis and redesign of workflow within and between enterprises and occurs at the systems level or companywide level and the end-to-end view of a process. Streamlining improves business process efficiencies by simplifying or eliminating unnecessary steps. Bottlenecks occur when resources reach full capacity and cannot handle any additional demands.7: Differentiate among business process improvements. A business process model is a graphic description of a process. To-Be process models show the results of applying change improvement opportunities to the current (As-Is) process model. which is developed for a specific purpose and from a selected viewpoint.

 52       Artificial  intelligence  (AI)     Simulates  human  thinking  and  behavior  such  as  the  ability  to  reason  and  learn...  without  any  specific   improvements  or  changes  to  existing  processes.  62       Business  process  improvement     Attempts  to  understand  and  measure  the  current  process  and  make  performance  improvements   accordingly.Chapter  2:  Decisions  and  Processes:  Value  Driven  Business     Key  Terms     Analytical  information     Encompasses  all  organizational  information.  giving  performance  feedback  and  rewards.  and  identifying  steps  and  procedures  to  improve  system   performance.  57       As-­‐Is  process  model     Represents  the  current  state  of  the  operation  that  has  been  mapped.  50       Benchmarks     Baseline  values  the  system  seeks  to  attain..  and  allocating   resources.  69       Benchmarking     A  process  of  continuously  measuring  system  results.  they  limit   throughput  and  impede  operations..  they   include  goal  setting..  69       Business  process  management  (BPM)  system     Focus  on  evaluating  and  improving  processes  that  include  both  person-­‐to-­‐person  work  flow  and   system-­‐to-­‐system  communications.  and  its  primary  purpose  is  to  support  the  performing  of   managerial  analysis  or  semistructured  decisions..  64       Automation     Involves  computerizing  manual  tasks  making  them  more  efficient  and  effective  and  dramatically   lowering  operational  costs..  50       Bottlenecks     Occurs  when  resources  reach  full  capacity  and  cannot  handle  any  additional  demands.  74           .  70       Business-­‐facing  process     Invisible  to  the  external  customer  but  essential  to  the  effective  management  of  the  business...  day-­‐to-­‐day  planning.  comparing  those  results  to  optimal  system   performance  (benchmark  values)..

..  and  activities  in  a  structured  sequence.  which  is  developed  for  a   specific  purpose  and  from  a  selected  viewpoint.  nonroutine   decisions  requiring  judgment.  55       Drill-­‐down  Enables  users  to  view  details.  long-­‐term.  71       Decision  support  system  (DSS)     Model  information  using  OLAP.  and  details  of  details.  54       .  72       Consolidation     The  aggregation  of  data  from  simple  roll-­‐ups  to  complex  groupings  of  interrelated  information.  57       Effectiveness  MIS  metrics     Measure  the  impact  MIS  has  on  business  processes  and  activities  including  customer  satisfaction  and   customer  conversion  rates.  of  information.  and  system   availability.  63       Business  process  modeling  (or  mapping)     The  activity  of  creating  a  detailed  flowchart  or  process  map  of  a  work  process  that  shows  its  inputs.  52       Digital  dashboard     Tracks  KPIs  and  CSFs  by  compiling  information  from  multiple  sources  and  tailoring  it  to  meet  user   needs.  47       Customer-­‐facing  process  Results  in  a  product  or  service  that  is  received  by  an  organization’s   external  customer..Business  process  model     A  graphic  description  of  a  process.  62       Cycle  time     The  time  required  to  process  an  order.  49       Efficiency  MIS  metrics     Measure  the  performance  of  MIS  itself  such  as  throughput...  63       Business  process  reengineering  (BPR)     The  analysis  and  redesign  of  workflow  within  and  between  enterprises..  56       Critical  success  factors  (CSFs)     Crucial  steps  companies  perform  to  achieve  their  goals  and  objectives  and  implement  their   strategies..  showing  the  sequence  of  process  tasks.  which  provides  assistance  in  evaluating  and  choosing  among   different  courses  of  action....   tasks....  and  insight.  49       Executive  information  system  (EIS)     A  specialized  DSS  that  supports  senior-­‐level  executives  and  unstructured.  transaction  speed.  evaluation.

 51       Neural  network     A  category  of  AI  that  attempts  to  emulate  the  way  the  human  brain  works.  58       Online  analytical  processing  (OLAP)     The  manipulation  of  information  to  create  business  intelligence  in  support  of  strategic  decision   making..  57       Key  performance  indicators  (KPIs)     Quantifiable  metrics  a  company  uses  to  evaluate  progress  towards  critical  success  factors....  survival-­‐of-­‐the-­‐fittest  process  to   generate  increasingly  better  solutions  to  a  problem.  52             ..  47       Market  share     The  proportion  of  the  market  that  a  firm  captures....  59       Genetic  algorithm     An  artificial  intelligence  system  that  mimics  the  evolutionary...  53       Granularity     Refers  to  the  level  of  detail  in  the  model  or  the  decision-­‐making  process..  58       Fuzzy  logic     A  mathematical  method  of  handling  imprecise  or  subjective  information..  60       Intelligent  system     Various  commercial  applications  of  artificial  intelligence.  54       Intelligent  agent     A  special-­‐purpose  knowledge-­‐based  information  system  that  accomplishes  specific  tasks  on  behalf  of   its  users.  59       Goal-­‐seeking  analysis     Finds  the  inputs  necessary  to  achieve  a  goal  such  as  a  desired  level  of  output.  47       Model     A  simplified  representation  or  abstraction  of  reality.Expert  system     Computerized  advisory  programs  that  imitate  the  reasoning  processes  of  experts  in  solving  difficult   problems..  48       Metrics     Measurements  that  evaluate  results  to  determine  whether  a  project  is  meeting  its  goals.

.  60       Slice-­‐and-­‐dice     The  ability  to  look  at  information  from  different  perspectives.  finds  the  optimum  value  for  a  target  variable  by  repeatedly   changing  other  variables.  46       Sensitivity  analysis     A  special  case  of  what-­‐if  analysis.  53       Project  Temporary  activity  a  company  undertakes  to  create  a  unique  product....  70       Structured  decision     Involves  situations  where  established  processes  offer  potential  solutions.  is  the  study  of  the  impact  on  other  variables  when  one  variable  is   changed  repeatedly..  52       Optimization  analysis     An  extension  of  goal-­‐seeking  analysis.Online  transaction  processing  (OLTP)     The  capturing  of  transaction  and  event  information  using  technology  to  (1)  process  the  information   according  to  defined  business  rules.  but  not   enough  to  lead  to  a  definite  recommended  decision.  and  (3)  update  existing  information  to   reflect  the  new  information.  65       To-­‐Be  process  model     Shows  the  results  of  applying  change  improvement  opportunities  to  the  current  (As-­‐Is)  process   model...  service..  (2)  store  the  information...  57       Source  document     The  original  transaction  record.  52       Streamlining     Improves  business  process  efficiencies  simplifying  or  eliminating  unnecessary  steps.  or  result.  44       Swim  lane     Layout  arranges  the  steps  of  a  business  process  into  a  set  of  rows  depicting  the  various  elements...  subject  to  specified  constraints...  70       Return  on  investment  (ROI)  Indicates  the  earning  power  of  a  project.  46       Redundancy  Occurs  when  a  task  or  activity  is  unnecessarily  repeated.  53       Shopping  bot     Software  that  will  search  several  retailer  websites  and  provide  a  comparison  of  each  retailer’s   offerings  including  price  and  availability.  64       .  48       Semistructured  decision     Occurs  in  situations  in  which  a  few  established  processes  help  to  evaluate  potential  solutions.

.  55       What-­‐if  analysis     Checks  the  impact  of  a  change  in  a  variable  or  assumption  on  the  model.  60       Visualization     Produces  graphical  displays  of  patterns  and  complex  relationships  in  large  amounts  of  data.Transaction  processing  system  (TPS)     The  basic  business  system  that  serves  the  operational  level  (analysts)  and  assists  in  making   structured  decisions..  and  responsibilities  required  to  execute  each  step  in  a  business  process...  52       Transactional  information     Encompasses  all  of  the  information  contained  within  a  single  business  process  or  unit  of  work.  46       Virtual  reality     A  computer-­‐simulated  environment  that  can  be  a  simulation  of  the  real  world  or  an  imaginary   world.   68         .  51       Unstructured  decision     Occurs  in  situations  in  which  no  procedures  or  rules  exist  to  guide  decision  makers  toward  the   correct  choice...  53       Workflow     Includes  the  tasks..  and  its   primary  purpose  is  to  support  the  performing  of  daily  operational  or  structured  decisions.  activities.

Expert System Score: 1/1 100% Correct Answer Feedback 2. virtual reality B.. JULY 1st › CHAPTER 2 QUIZ › Assessments › View All Submissions › View Attempt View Attempt 1 of 1 Title: Started: Submitted: Time spent: CHAPTER 2 QUIZ July 1.lc904175. Genetic Algorithm C.. genetic algorithms 100% Correct Answer Feedback 1 of 9 7/1/12 11:43 PM . 2012 11:42 PM 00:13:20 Total score adjusted by 0. Neural Network D.View Attempt https://gpc. Virtual Reality B.edu/webct/urw/tp9214421899391. Student Value Response A.0 Maximum possible score: 15 Total score: 15/15 = 100% Done 1.usg. Your location: Home Page › DUE SUNDAY.view. What is a system that uses computerized advisory programs to imitate the reasoning processes of experts in solving difficult problems? Student Value Response A. neural networks C. 2012 11:29 PM July 1. expert systems D. The finance industry is a veteran in the use of ____________ to emulate the way the human brain works by analyzing large quantities of information to establish patterns and characteristics in situations where the logic or rules are unknown.

Golf courses create an automated golf cart that can offer swing suggestions.view.lc904175. Starbucks creates a system that works like a hand and lifts and moves Value Correct Answer Feedback 2 of 9 7/1/12 11:43 PM . B. while also asking guests if it can take their trays to the trash. C. Which of the below business ideas is not using AI? Student Response A... D. club suggestions. and even navigate the course for the driver. Best Buys 100% implementing a software system that will determine how many customers are needed to increase gross profits to $5 million. Score: 1/1 3.usg.edu/webct/urw/tp9214421899391.View Attempt https://gpc. McDonald's unveiling a robot that cleans and tidies the restaurant.

Bob Silver loves playing a game called World of Warcraft where he has the capability to create his own character and even his own life-like environment.View Attempt https://gpc. What is the difference between the As-Is process model and the To-Be process model? Student Value Response A.edu/webct/urw/tp9214421899391. The process models are not related. Correct Answer Feedback 3 of 9 7/1/12 11:43 PM . Multi-agent system D.lc904175.usg. B. Expert system B.view. Both process models determine how to solve the problem. Fuzzy logic system C. Score: 1/1 Value Correct Answer Feedback 4. Virtual reality Score: 1/1 100% Correct Answer Feedback 5... Under which AI system would you categorize World of Warcraft? Student Value Response A. Student Response the mixing pots for the coffees to and from the coffee machines to the counters.

Redundancy occurs 2.lc904175.edu/webct/urw/tp9214421899391.view. Bottlenecks occur 100% Value Correct Answer Feedback 4 of 9 7/1/12 11:43 PM . The As-Is process model begins with where to implement the solution. and the To-Be process model displays how the problem will be solved. Score: 1/1 Correct Answer Feedback 6. They limit throughput and impede operations.View Attempt https://gpc. D.. Student Value Response C. _____________ when resources reach full capacity and cannot handle any additional demands. and the To-Be process model displays why the problem needs to be fixed. Student Response 1. The As-Is 100% process model begins with what the process problem is.usg..

Optimization occurs 4.lc904175. Which of the following should a business follow for success? Student Value Response A. customer service processing. Technology choices should drive business strategies and goals D. and order shipping processing? 5 of 9 7/1/12 11:43 PM . All of the above depending on the industry. customer billing processing.view. A and C only 5.usg. and C only Score: 1/1 Value Correct Answer Feedback 7. B.. What type of process includes order processing. Score: 1/1 Correct Answer Feedback 8.View Attempt https://gpc. A. Student Response 3. Technology choices should drive business processes B.edu/webct/urw/tp9214421899391. sales processing. Business 100% processes should drive technology choices C..

.lc904175. Technology D. All of the above Score: 1/1 Correct Answer Feedback 9. Projecting future growth B.edu/webct/urw/tp9214421899391.. Making an airline reservation C. Which of the factors below is the most prevalent? Student Response A. A semi-structured decision to hire more employees 100% Value Correct Answer Feedback 6 of 9 7/1/12 11:43 PM . Discoveries C. Which of the activities below would create transactional information? Student Response A. Customer. Businessfacing processes 3.100% facing processes 2.view. Industryspecific businessfacing processes 4. Bottelnecking Score: 1/1 100% Value Correct Answer Feedback 10. Several factors can accelerate the need for a company to make improvements in their business processes.usg.View Attempt https://gpc. Student Value Response 1. Market shifts B.

. Effectiveness 100% MIS metrics B.View Attempt https://gpc. Key performance indicators are the metrics a company uses to evaluate progress toward critical success factors.usg.view. Create high-quality products C. Both efficiency and effectiveness MIS metrics C. What type of metrics measure customer satisfaction? Student Response Value Correct Answer Feedback A. Efficiency MIS metrics D.edu/webct/urw/tp9214421899391. Which of the below represents a key performance indicator? Student Response A. Percentage 100% of help desk calls answered in the the first minute Value Correct Answer Feedback 7 of 9 7/1/12 11:43 PM . Reduce product costs B.. Both ROI and market share metrics Score: 1/1 12.lc904175. Generating payroll reports Score: 1/1 Value Correct Answer Feedback 11. Student Response D.

. and ringing in sales. $1 million C.View Attempt https://gpc. One of her key duties is to ensure the company has 10 percent market share by the end of the year. Endurance MIS metrics C. $2 million 100% D. Andy Benton works at the local Starbucks coffee shop and his responsibilities include taking orders. A common mistake that many managers tend to make is focusing on only one type of metrics because they are easier to measure. What additional sales must Anne Marie's division meet to ensure they have 10 percent of the market by the end of the year? Student Value Response A. Student Response D.usg. $5 million Score: 1/1 Correct Answer Feedback 14.edu/webct/urw/tp9214421899391.lc904175. $10 million B.view. Product sales metrics Score: 1/1 100% Value Correct Answer Feedback 15. Efficiency MIS metrics D. Anne Marie Cole runs the sales division for a local auto insurance firm. Which type of metrics do they focus on? Student Response A.. fulfilling orders. Effectiveness MIS metrics B. At what level of the organizational pyramid would you categorize Andy? 8 of 9 7/1/12 11:43 PM . When evaluating the current sales numbers she determines that her sales division has total sales of $3 million and the entire industry has total sales of $50 million. Hire the best business professionals Score: 1/1 Value Correct Answer Feedback 13.

Operational 100% Score: 1/1 Correct Answer Feedback Done 9 of 9 7/1/12 11:43 PM ..View Attempt https://gpc. Owner C..view. Student Value Response A.usg.edu/webct/urw/tp9214421899391.lc904175. Strategic B. Managerial D.

founded in 1937.. 3.mcgraw-hill. go bankrupt? Perhaps company executives failed to use Porter's Five Forces Model to analyze the threat of substitute products or services.4 Describe the six ebusiness tools for connecting and communicating. and explain how the Internet and WWW caused business disruption.3 Compare the four categories of ebusiness models.1 Compare disruptive and sustaining technologies. would they have noticed the two threats—one-hour film processing and digital cameras—which eventually stole Polaroid's market share? Would they have understood that their customers.5 Identify the four challenges associated with ebusiness.2 Describe Web 1.2 WWW caused business disruption.1 Web 1. 90 101 100 99 98 97 96 95 94 93 92 91 LEARNING OUTCOMES 3.Section 3.0 LO 3. 3. becoming one of Wall Street's most prominent enterprises. Business Driven Information Systems eBook 3/e Content Chapter3: Ebusiness: Electronic Business Value Section 3. If they had.1 Web 1. which had innovative technology and a captive customer base. 3. The Polaroid camera. DISRUPTIVE TECHNOLOGIES AND WEB 1. How could a company such as Polaroid. the stock dropped to 8 cents Internet and and the company declared bankruptcy.0: Ebusiness p..1: Compare disruptive and Polaroid. was one of the most exciting sustaining technologies. 3.0: Ebusiness http://highered. technological advances the photography industry had ever seen. would be the first to try these alternatives? Could the company have found a way to compete with one-hour film processing and the digital camera to save Polaroid? 1 of 15 7/5/12 9:16 PM . people who want instant access to their pictures.0 along with ebusiness and its associated advantages. with and explain how the its stock trading above $60 per share in 1997. The company eventually went public. produced the first instant camera in the late 1940s. whose pictures developed themselves. In 2002.com/sites/0077338340/student_view.

1 Web 1.3 Disruptive technologies typically enter the low end of the marketplace and eventually evolve to displace high-end competitors and their reigning technologies. Disruptive technologies tend to open new markets and destroy old ones. and cheaper products in established markets. Many organizations face the same dilemma as Polaroid—what's best for the current business might not be what's best for it in the long term. produces an improved product customers are eager to buy. low-end transistor amplifiers that were suitable for home use and invested those revenues in improving the technology further. Digital Darwinism implies that organizations that cannot adapt to the new demands placed on them for surviving in the information age are doomed to extinction.Section 3.0: Ebusiness http://highered. Figure 3. Sustaining technologies tend to provide us with better.. Incumbent companies most often lead sustaining technology to market. Sony started as a tiny company that built portable. faster.1 positions companies expecting future growth from new investments (disruptive technology) and companies expecting future growth from existing investments (sustaining technology). Disruptive versus Sustaining Technology A disruptive technology is a new way of doing things that initially does not meet the needs of existing customers. all rights reserved. but they virtually never lead in markets opened by disruptive technologies. 2 of 15 7/5/12 9:16 PM . which produced still-better radios.4 FIGURE 3.1 Disruptive and Sustaining Technologies Source: Reprinted by permission of Harvard Business School Press. by Clayton Christensen. Some observers of our business environment have an ominous vision of the future—digital Darwinism. Boston. but customers were willing to overlook that for the convenience of portability. A sustaining technology.com/sites/0077338340/student_view. The sound quality was poor. With the experience and revenue stream from the portables.. Sony improved its technology to produce cheap. MA. Sony is a perfect example. From The Innovator's Dilemma.mcgraw-hill. Copyright © by the Harvard Business School Publishing Corporation. such as a faster car or larger hard drive. on the other hand. battery-powered transistor radios.

Millions of corporate.1 Web 1. graphics.S. Xerox. and software.5 The Internet and World Wide Web—The Ultimate Business Disruptors The Internet is a massive network that connects computers all over the world and allows them to communicate with one another.2 highlights several companies that launched new businesses by capitalizing on disruptive technologies. Department of Defense Advanced Research Project Agency (DARPA).6 Although the Internet was an excellent communication tool for scientists and government officials. forming the first official Internet network.2 Companies That Capitalized on Disruptive Technologies Source: Reprinted by permission of Harvard Business School Press. FIGURE 3. Internet users are expected to top the 2 billion mark. a book by Clayton M. and stakeholders. and video files that use a special formatting language 3 of 15 7/5/12 9:16 PM .com/sites/0077338340/student_view. Computers connected via the Internet can send and receive information including text. it was technically challenging for everyday people to operate. From The Innovator's Dilemma. universities that had defense-related funding installed ARPANET computers.Section 3. educational. This changed with the inventions of the World Wide Web and Web browsers. discusses how established companies can take advantage of disruptive technologies without hindering existing relationships with customers.S. all U. They may have placed too much emphasis on satisfying customers' current needs. invested aggressively in technology. and still lost their market-dominant positions. Originally the Internet was essentially an emergency military communications system operated by the U. IBM. graphics. about one-third of the world's population. and DEC all listened to existing customers. video. voice. which called the network ARPANET. by Clayton Christensen. In time.. the purpose of the network started shifting from a military pipeline to a communications tool for scientists. Boston. As users began to notice the value of electronic communications. and research networks now connect billions of computer systems and users in more than 200 countries.. Copyright © by the Harvard Business School Publishing Corporation. The Innovator's Dilemma. all rights reserved. audio. had their competitive antennae up. Figure 3. Christensen.mcgraw-hill. MA. Sears. The World Wide Web (WWW) provides access to Internet information through documents including text. while neglecting new disruptive technology to meet customers' future needs and thus losing market share. No one foresaw the dramatic impact it would have on both business and personal communications. partners.0: Ebusiness http://highered.

The Internet includes the WWW and also other forms of communication systems such as email. allow users to access the WWW.7 Web 1.0. called HTML.Section 3. A universal resource locator (URL) is the address of a file or resource on the Web such as www. such as Internet Explorer or Mozilla's Firefox. A domain name identifies a URL address and in the previous example apple..)8 FIGURE 3. they understood that it enabled a company to communicate with anyone.0: The Catalyst for Ebusiness As people began learning about the WWW and the Internet. Hypertext markup language (HTML) links documents.4 for an overview of industries revamped by the disruption of ebusiness. Web browsers. The WWW is just one part of the Internet.apple. allowing users to move from one to another simply by clicking on a hot spot or link. collaborating with partners. The competitive advantages for first movers would be enormous. and its primary use is to correlate and disseminate information. Deciding not to make the shift to ebusiness proved fatal for many companies (see Figure 3. Hypertext transport protocol (HTTP) is the Internet protocol Web browsers use to request and display Web pages using universal resource locators. anywhere. Ecommerce refers only to online transactions..com/sites/0077338340/student_view.com.com is the domain name. Figure 3. creating a new way to participate in business. Ebusiness includes ecommerce along with all activities related to internal and external business operations such as servicing customer accounts. During Web 1. thus spurring the beginning of the Web 1.1 Web 1.0 is a term to refer to the World Wide Web during its first few years of operation between 1991 and 2003. entrepreneurs began creating the first forms of ebusiness. Ebusiness created a paradigm shift. at anytime. Ebusiness opened up a new marketplace for any company willing to move its business operations online.3 lists the reasons for the massive growth of the WWW.0: Ebusiness http://highered.3 Reasons for Growth of the World Wide Web APPLY YOUR KNOWLEDGE 4 of 15 7/5/12 9:16 PM . A paradigm shift occurs when a new radical form of business enters the market that reshapes the way companies and organizations behave.mcgraw-hill. transforming entire industries and changing enterprisewide business processes that fundamentally rewrote traditional business rules. Notice that the Internet and the World Wide Web are not synonymous.0 Internet boom. Web 1. and exchanging real-time information. Ecommerce is the buying and selling of goods and services over the Internet.

what would you do? FIGURE 3.com and is just waiting for you to pay big bucks for the right to buy it. chances are a domain squatter has already purchased drink. Socializr..9 Do you agree that domain squatting should be illegal? Why or why not? If you were starting a business and someone were squatting on your domain. Yuuguu.” the practice of buying a domain to profit from a trademarked name.4 Ebusiness Disruption of Traditional Industries 5 of 15 7/5/12 9:16 PM . a branding consulting company.0: Ebusiness http://highered.mcgraw-hill. BUSINESS DRIVEN ETHICS AND SECURITY Unethical Disruption Did you know you can make a living naming things? Eli Altman has been naming things since he was six years old and has named more than 400 companies and brands while working for A Hundred Monkeys. and Oooooc. For example. Zoomr.Section 3. if you wanted to start a business called Drink. Rowdii.com/sites/0077338340/student_view.1 Web 1.. Domain squatting is illegal and outlawed under the 1999 Anticybersquatting Consumer Protection Act. Why are names like this becoming popular? The reason is “domain squatting” or “cyber squatting. Altman recently noticed an unfamiliar trend in the industry: nonsensical names such as Flickr.

Amazon uses personalization to create a unique portal for each of its customers. This strategy demonstrates how niche products can have viable and profitable business models when selling via ebusiness. 1. For example. outlined in Figure 3.mcgraw-hill. audio. a store is limited by shelf space when selecting products to sell..Section 3. improving customer satisfaction and ultimately sales. 7 days a week. In traditional sales models. For this reason.5 Ebusiness Advantages 6 of 15 7/5/12 9:16 PM . Buyers need information richness to make informed purchases.2: Describe Web Both individuals and organizations have embraced ebusiness to enhance productivity. editor-in-chief of Wired magazine. customers can order M&M's in special colors or with customized sayings such as “Marry Me.0 along with ebusiness and maximize convenience. FIGURE 3. say by tailoring its website to individuals or groups based on profile information. Ebusinesses operate 24 hours a day.0: Ebusiness http://highered. and the store is stocked with broad products as there is not room on the shelf for niche products that only a few customers might purchase.. graphic. Companies today need to its associated deploy a comprehensive ebusiness strategy. Promoting products online allows the company to precisely target its customers whether they are local or around the globe. since consumers no longer have to spend a lot of time researching purchases or traveling great distances to make them. store owners typically purchase products that will be wanted or needed by masses. describes niche-market ebusiness strategies as capturing the long tail. Ebusinesses such as Amazon and eBay eliminated the shelf-space dilemma and were able to offer infinite products. The faster delivery cycle for online sales helps strengthen customer relationships. while an online store has a global marketplace with customers and information seekers already waiting in line. This availability directly reduces transaction costs. referring to the tail of a typical sales curve.1 Web 1. A firm's website can be the focal point of a cost-effective communications and marketing strategy. or video information. or prior transactions.com/sites/0077338340/student_view. and improve communications. Expanding Global Reach Easy access to real-time information is a primary benefit of ebusiness. Chris Anderson. A physical location is restricted by size and limited to those customers who can get there. Opening New Markets Ebusiness is perfect for increasing niche-product sales.” Personalization occurs when a company knows enough about a customer's likes and dislikes that it can fashion offers more likely to appeal to that person.5. ADVANTAGES OF EBUSINESS LO 3. Information richness refers to the depth and breadth of details contained in a piece of textual. Let's look at each. and sellers need information reach to properly market and differentiate themselves from the competition. understand its advantages. Information reach measures the number of people a firm can communicate with all over the world. Mass customization is the ability of an organization to tailor its products or services to the customers' specifications. and business students need to advantages. demographics.

software. which occurs when a business sells directly to the customer online and cuts out the intermediary (see Figure 3. making the publisher obsolete. without physical shelf limitations..com anyone can publish and sell print-on-demand books. Thus Blockbuster's sales tail ends at title 3.com/sites/0077338340/student_view.mcgraw-hill. whereas Netflix. Netflix. The disintermediation of the travel agent occurred as people began to book their own vacations online.11 FIGURE 3. with no physical limitations. Netflix increases sales.6) However. FIGURE 3. whereas older selections are rented only a few times a month and don't repay the cost of keeping them in stock.. Looking at sales data. At Lulu. the majority of Blockbuster's revenue comes from new releases that are rented daily. can maintain 100. Netflix offers an excellent example of the long tail.7). often at a cheaper rate.000 (and with streaming video perhaps 200. Let's assume that an average Blockbuster store maintains 3. can extend its tail beyond 100.000). This business strategy lets the company shorten the order process and add value with reduced costs or a more responsive and efficient service. online music. By extending its tail. even if a title is rented only a few times.1 Web 1.10 Intermediaries are agents. or businesses that provide a trading infrastructure to bring buyers and sellers together.6 The Long Tail Source: Reprinted with permission of Chris Anderson. The introduction of ebusiness brought about disintermediation.000 movies in its inventory.7 Business Value of Disintermediation 7 of 15 7/5/12 9:16 PM .0: Ebusiness http://highered.Section 3.000 (see Figure 3.000 movies in its inventory. and custom calendars.

In reintermediation. As ebusiness matures it has become evident that to serve certain markets in volume. Communication is often faster. the lower the product price. because Dellʼs directto-customer sales model was the competitive advantage that had kept Dell the market leader for years. anyone can start an ebusiness with just a website and a great product or service. labor) to the cost of a bulk email campaign.13 One of the most exciting benefits of ebusiness is its low start-up costs. When Dell decided to sell its PCs through Walmart many were surprised. that let customers chat live with support or sales staff. Think about the cost of renting a physical location and operating phone lines versus the cost of maintaining an online site. such as Live Help.0: Ebusiness http://highered. the company realized it could gain a far larger market share by allowing all retailers to sell its products directly to customers. Levi Strauss originally thought it was a good business strategy to limit all online sales to its own website. Today. A few years later. Online ordering also offers the possibility of merging a sales order system with order fulfillment and delivery so customers can check the progress of their orders at all times. some reintermediation may be desirable. Switching to an ebusiness model can eliminate many traditional costs associated with communicating by substituting systems. and more effective. Even a dog-walking operation can benefit from being an ebusiness. The more intermediaries that are cut from the distribution chain. Online air travel reservations cost less than those booked over the telephone.com/sites/0077338340/student_view.. Customers can 8 of 15 7/5/12 9:16 PM . postage. more available. Improving Operations Ebusiness has had some of its biggest impacts on customer service.1 Web 1. Compare the cost of sending out 100 direct mailings (paper. encouraging customers to learn more about the product. steps are added to the value chain as new players find ways to add value to the business process. Ebusinesses can also inexpensively attract new customers with innovative marketing and retain present customers with improved service and support. Cybermediation refers to the creation of new kinds of intermediaries that simply could not have existed before the advent of ebusiness.12 Reducing Costs Operational benefits of ebusiness include business processes that require less time and human effort or can be eliminated.mcgraw-hill. including comparison-shopping sites such as Kelkoo and bank account aggregation services such as Citibank..Section 3.

using the content richness only a website can provide.0: Ebusiness http://highered. and television—provide few ways to track effectiveness. such as the amount of traffic on a site. radio. special messages. they must build a sense of community and collaboration.1 Web 1. Interactivity measures are a giant step forward for advertisers. Organizations use metrics to tie revenue amounts and number of new customers created directly back to the websites or banner ads.8 displays the ebusiness marketing initiatives allowing companies to expand their reach while measuring effectiveness. Through clickstream data they can observe the exact pattern of a consumer's navigation through a site. Companies can also use email. and private password access to special areas for top customers. often help themselves.14 FIGURE 3. Improving Effectiveness Just putting up a simple website does not create an ebusiness. for instance. add value. To interpret such data properly. number of pages viewed. Figure 3.mcgraw-hill. and number of repeat visits to the advertisement. managers try to benchmark against 9 of 15 7/5/12 9:16 PM .com/sites/0077338340/student_view.10 provides definitions of common metrics based on clickstream data. The best way to measure ebusiness success is to use effectiveness IT metrics. and they can both shop and pay online without having to leave the house. magazines. and provide useful information. don't tell the whole story. such as the revenue generated by Web traffic. including time spent viewing the ad.. Ebusiness websites must create buzz. and reductions in customer service calls resulting from Web traffic. Many websites with lots of traffic have minimal sales.. since traditional advertising methods—newspapers.Section 3. IT measures of efficiency.8 Marketing Received Tremendous Benefits from Ebusiness The ultimate outcome of any advertisement is a purchase. In short.9 displays different types of clickstream metrics. Figure 3. and Figure 3. They do not necessarily indicate large sales volumes. Interactivity measures advertising effectiveness by counting visitor interactions with the target ad. be innovative. number of new customers acquired by Web traffic.

delivers.Section 3. Radio and network television are broadcast free to anyone with a receiver.com/sites/0077338340/student_view.3: Compare the four A business model is a plan that details how a company creates. consumers seem to visit their preferred websites regularly. An ebusiness model is a plan that details how a company creates.0: Ebusiness http://highered. and sometimes it's not immediately clear who makes money and how much. and generates revenues on the Internet.11). For instance. even checking back multiple times during a given session. the company generates a profit.. If the company is successful. for instance. (2) business-to-consumer.15 EBUSINESS MODELS LO 3.mcgraw-hill. delivers. and generates revenues. FIGURE 3. advertisers pay the costs of programming.. Other models are less straightforward.9 Clickstream Data Metrics FIGURE 3. The majority of online business activities consist of the exchange of products and services either between businesses or between businesses and consumers. and (4) consumer-to-consumer (see Figure 3. Some models are quite simple: A company produces a good or categories of service and sells it to customers. other companies. sales exceed costs and ebusiness models.10 Website Metrics 10 of 15 7/5/12 9:16 PM . Ebusiness models fall into one of the four categories: (1) business-to-business.1 Web 1. (3) consumerto-business.

Section 3. By tightening and automating the relationship between the two parties. Business-to-Consumer (B2C) Business-to-consumer (B2C) applies to any business that sells its products or services directly to consumers online.12). and pure play (see Figure 3.0: Ebusiness http://highered.com. B2B relationships represent 80 percent of all online business and are more complex with greater security needs than the other types. and creating new sales channels. Electronic marketplaces.mcgraw-hill. consolidating supply chains. or emarketplaces.11 Ebusiness Models FIGURE 3.1 Web 1.. An eshop. they create structures for conducting commercial exchange. It can be an extension of an existing store such as The Gap or operate only online such as Amazon. is an online version of a retail store where customers can shop at any hour. There are three ways to operate as a B2C: brick-and-mortar. software sales and licensing. Examples include medical billing service. FIGURE 3. click-and-mortar. Carfax offers car buyers detailed histories of used vehicles for a fee. and virtual assistant businesses.12 Forms of Business-to-Consumer Operations 11 of 15 7/5/12 9:16 PM .com/sites/0077338340/student_view. are interactive business communities providing a central market where multiple buyers and sellers can engage in ebusiness activities. Business-to-Business (B2B) Business-to-business (B2B) applies to businesses buying from and selling to each other over the Internet. sometimes referred to as an estore or etailer..

. A general search term such as tropical vacation costs less than a more specific term such as Hawaiian vacation. Consumer-to-Consumer (C2C) Consumer-to-consumer (C2C) applies to customers offering goods and services to each other on the Internet.13 Ebusiness Forms 12 of 15 7/5/12 9:16 PM .16 Google's primary line of business is its search engine. and reverse auctions where buyers select goods and services from the seller with the lowest bid.com/sites/0077338340/student_view. Google then determines a price and a search ranking for those keywords based on how much other advertisers are willing to pay for the same terms. Ebusiness Forms and Revenue-Generating Strategies As more and more companies began jumping on the ebusiness bandwagon new forms of ebusiness began to emerge (see Figure 3. Whoever bids the most for a term appears in a sponsored advertisement link either at the top or along the side of the search-results page. Google is an excellent example of an ebusiness that did not figure out a way to generate profits until many years after its launch. Paid search is the ultimate in targeted advertising because consumers type in exactly what they want. eBay. the company does not generate revenue from people using its site to search the Internet. It generates revenue from the marketers and advertisers that pay to place their ads on the site.0: Ebusiness http://highered. a part of the Google site.. who set their own prices for items such as airline tickets or hotel rooms and wait for a seller to decide whether to supply them. Other types of online auctions include forward auctions where sellers market to many buyers and the highest bid wins.com. A good example of a C2C is an auction where buyers and sellers solicit consecutive bids from each other and prices are determined dynamically. Pricing for keywords can range from 5 cents to $10 a click. people from all over the world access Google to perform searches. Consumer-to-Business (C2B) Consumer-to-business (C2B) applies to any consumer who sells a product or service to a business on the Internet. One example is customers of Priceline. however. Many of the new forms of ebusiness went to market without clear strategies on how they were going to generate revenue.1 Web 1. The demand for C2B ebusiness will increase over the next few years due to customers' desire for greater convenience and lower prices.Section 3.13). About 200 million times each day. the Internet's most successful C2C online auction website. The advertisers simply enter in the keywords they want to bid on and the maximum amounts they want to pay per click per day. links like-minded buyers and sellers for a small commission.mcgraw-hill.17 FIGURE 3. AdWords. allows advertisers to bid on common search terms.

14 Ebusiness Revenue Models APPLY YOUR KNOWLEDGE 13 of 15 7/5/12 9:16 PM . For instance.Section 3.18 FIGURE 3..14 lists the different benefits and challenges of various ebusiness revenue models. or sell subscriptions or licensing rights? Figure 3. Ebusinesses must have a revenue model.mcgraw-hill.. will it accept advertising.1 Web 1. or a model for making money.com/sites/0077338340/student_view.0: Ebusiness http://highered.

. accessed June 24. info.com/pub/a/oreilly/tim/news/2005/09/30/what-is-web-20.ch. Brier Dudley “Changes in Technology Almost Too Fast To Follow. 9 Max Chafkin.0 Directory.html. 2009 http://www.com. www.0: Design Patterns and Business Models for the Next Generation of Software. accessed January 2006.cio. October 13. 2005 .com/2006.mcgraw-hill.cern.0: Design Patterns and Business Models for the Next Generation of Software.com. http://www. 17 Tim OʼReilly. 12 Reintermediation. “What Is Web 2. 1997).com/article /16807. Clayton Christensen. “You Paid What for That Flight?. accessed June 24..emarketer. http://online.” Inc. The Innovatorʼs Dilemma (Boston: Harvard Business School. 10 Chris Anderson. 13 Scott McCartney. “Good Domain Names Grow Scarce. accessed January 2006. and “Web 2. 1997). 2007. August 26.” www.asp accessed April 4. and “Web 2.html. http://whatis.” www.Section 3.. January 2010. “Kodakʼs Developing Situation.net/.00. January 20.com/article/16807. 2007.oreillynet.pcmag. and “Web 2. The Long Tail: Why The Future of Business is Selling Less of More.com/magazine /20090701/good-domain-names-grow-scarce. Clayton Christensen.longtail.cio. 15 “The Complete Web 2. “What Is Web 2. The Innovatorʼs Dilemma (Boston: Harvard Business School.com/encyclopedia_term /0. 176. accessed June 25.wsj.com/pub/a/oreilly/tim/news /2005/09/30/what-is-web-20.t=reintermediation&i=50364.” www. accessed June 25. 2005 .cio.” www.emarketer. 2007. 14 “The Complete Web 2.pcmag.go2web20. www. July 1. The Innovatorʼs Dilemma (Boston: Harvard Business School. Internet World Statistics.0 Directory. www.0 for CIOs.com/article /SB10001424052748704540904575451653489562606.html 2010.internetworldstats.2542. 11 Disintermediation. 2003.” The Seattle Times. p.0 for CIOs.” Fortune.html. 2010. accessed June 24.1 Web 1.inc. 1997).sid9_gci211962. Editor-in-Chief of Wired Magazine. http://www. 2007. 14 of 15 7/5/12 9:16 PM .oreillynet.com.0 for CIOs. TechTarget.com/definition/0.00.” www.0: Ebusiness http://highered.html accessed April 4.” The Wall Street Journal.com/article/16807.net/.com. CIO Magazine. www.com/sites/0077338340/student_view. Clayton Christensen.” www.” www.techtarget. accessed March 1. 16 Tim OʼReilly.go2web20. BUSINESS DRIVEN START-UP 2 3 4 5 6 7 8 Adam Lashinsky. 2010.

Section 3. 20 Tim OʼReilly.cio. accessed June 24.com/article/16807. McGraw-Hill Higher Education is one of the many fine businesses of The McGraw-Hill Companies.” www. July.mcgraw-hill. “What Is Web 2. 2007.com/magazine/entrepreneur/2010/july/207174. 18 Tim OʼReilly. 2007.. and “Web 2.0: Design Patterns and Business Models for the Next Generation of Software.com/pub/a/oreilly/tim/news /2005/09/30/what-is-web-20. 19 Joel Holland..0: Ebusiness http://highered. CIO Magazine.0 for CIOs. “What Is Web 2.com/article /16807.entrepreneur. and “Web 2.cio.oreillynet.oreillynet. CIO Magazine.” www. and “Web 2. accessed June 25. 2010 http://www. 2007. accessed June 24.” www.0 for CIOs.cio.” www.html.com/sites/0077338340/student_view. “Risk It When You Are Young. 2007.html. 2007. accessed June 24.com/article /16807.” www. CIO Magazine. 2009 McGraw-Hill Higher Education Any use is subject to the Terms of Use and Privacy Notice.html.com/pub/a/oreilly/tim/news /2005/09/30/what-is-web-20. 2007.1 Web 1.” Entrepreneur Magazine. accessed June 25. 15 of 15 7/5/12 9:16 PM .0: Design Patterns and Business Models for the Next Generation of Software.0 for CIOs.

106 116 115 114 113 112 111 110 109 108 107 LEARNING OUTCOMES 3.0.0 tools for collaborating. make a loan.org) and choose an entrepreneur that interests you.9 Explain Web 2. Explain the three challenges associated with Business 2. 105 APPLY YOUR KNOWLEDGE BUSINESS DRIVEN GLOBALIZATION Collaborating for Nonprofits—Kiva Kiva's mission is to connect people through lending for the sake of alleviating poverty. Explain how Business 2. then track your entrepreneur for the next 6 to 12 months while he or she builds the business and makes the funds to repay the loan.0: Business 2..0 and the next generation of online business.2 Web 2. If you want to participate in Kiva you simply browse the website (www. How is 1 of 16 7/5/12 9:17 PM .0: Business 2.Section 3.0 http://highered.0 is helping communities network and collaborate.10 Describe Web 3.0. 3.8 3.mcgraw-hill.2 Web 2. and identify its four characteristics. Describe the three Business 2. Kiva is a micro-lending online nonprofit organization that enables individuals to lend directly to entrepreneurs throughout the world..21 Kiva is an excellent example of blending ethics and information technology. p. When the loan is up you can relend the money to someone else who is in need.kiva.6 3.com/sites/0077338340/student_view.0 p.7 3. Business Driven Information Systems eBook 3/e Content Chapter3: Ebusiness: Electronic Business Value Section 3.

0 technologies provide a virtual environment that.0 (or Business 2.mcgraw-hill. Mozilla's Firefox now holds over 20 percent of the browser market and is quickly becoming a threat to Microsoft's Internet Explorer. Open source refers to any software whose source code is made available free (not on a fee or licensing basis as in ebusiness) for any third party to review and modify. Business 2. but they could not have been more wrong. distinctive communications platform characterized by new qualities such as collaboration.. When new online businesses began failing to meet earning expectations. Business 2.0 is capitalizing on open source software.6: Explain Web 2. Thousands of hardware devices and software applications created and sold by third-party vendors interoperate with computers. Analyze each of these risks for potential unethical issues that might arise when donating to Kiva. the bubble burst. Some then believed the ebusiness boom was over. sharing.0 http://highered. technical skills are no longer required to use and publish information to the World Wide Web. for example. Kiva operating differently than traditional nonprofits? What are the risks associated with investing in Kiva? When you invest in Kiva you run three primary risks: entrepreneur risk.0 In the mid-1990s the stock market reached an all-time high as companies took advantage of ebusiness and Web 1.0: ADVANTAGES OF BUSINESS 2. and employees picked up information by walking through the office or hanging out around the water cooler. and identify its four characteristics. and many believed the Internet was the wave of the future.0: Business 2. drawing software. however. such as iPods. offers its Firefox Web browser and Thunderbird email software free.0 encourages user participation and the formation of communities that contribute to the content. Traditional companies tended to view technology as a tool required to perform a process or activity. In Business 2. WEB 2.0. and country risk.22 Content Sharing Through Open Sourcing An open system consists of nonproprietary hardware and software based on publicly known standards that allows third parties to create add-on products to plug into or interoperate with the system. How do open source software companies generate revenues? Many people are still awaiting an answer to this very important question. for many new employees. Web 2. is just as vibrant and important as the physical environment.17 Characteristics of Business 2.. eliminating entry barriers for online business.Section 3. and free. Mozilla.0. it continuously develops free products by bringing together thousands of dedicated volunteers from around the world. Figure 3.0.com/sites/0077338340/student_view. LO 3. Mozilla believes the Internet is a public resource that must remain open and accessible to all. and mice. Business 2.0) is the next generation of Internet use—a more mature.23 FIGURE 3.17 highlights the common characteristics of Business 2.2 Web 2. Source code contains instructions written by a programmer specifying the actions to be performed by computer software.0.0 2 of 16 7/5/12 9:17 PM . local field partner risk.

Collaborating with other golf caddies can provide bigger tips for all. The course manager could compile all of the tips and publish a course 3 of 16 7/5/12 9:17 PM . evaluating. Collective intelligence is collaborating and tapping into the core knowledge of all employees.. “The rain makes the third hole play 10 yards shorter. KMS can distribute an organization's knowledge base by interconnecting people and digitally gathering their expertise. partners. Collaboration Inside the Organization A collaboration system is a set of tools that supports the work of teams or groups by facilitating the sharing and flow of information. User-Contributed Content (or user-generated content) is created and updated by many users for many users. One of the most popular forms of user-generated content is a reputation system. The most common form of collective intelligence found inside the organization is knowledge management (KM). move control of online media from the hands of leaders to the hands of users. Wikipedia. Knowledge can be a real competitive advantage for an organization.0 http://highered. and YouTube. eBay buyers voluntarily comment on the quality of service.” If a golf caddie is good and gives accurate advice it can lead to big tips. organization. Sellers comment about prompt payment from buyers or respond to comments left by the buyer. Business 2. Golf caddies give advice such as.. How can knowledge management make this happen? Caddies could be rewarded for sharing course knowledge by receiving prizes for sharing knowledge.com/sites/0077338340/student_view. and websites such as Yelp use customer reviews to express opinions on products and services. Business 2. and dissemination of knowledge (i. retrieving. User-Contributed Content Ebusiness was characterized by a few companies or users posting content for the masses.mcgraw-hill. Companies are embracing user-generated content to help with everything from marketing to product development and quality assurance. which involves capturing. Companies ranging from Amazon to restaurants are using reputation systems to improve quality and enhance customer satisfaction.2 Web 2. and sharing information assets in a way that provides context for effective decisions and actions.Section 3. The primary objective of knowledge management is to be sure that a company's knowledge of facts. Netflix and Amazon both use user-generated content to drive their recommendation tools.0: Business 2. sources of information. where buyers post feedback on sellers..0's collaborative mind-set generates more information faster from a wider audience. and promptness of shipping. know-how) throughout an organization. Websites such as Flickr. and customers. for example. A knowledge management system (KMS) supports the capturing. A great example of a knowledge worker is a golf caddie. their satisfaction with the item traded.e. and solutions are readily available to all employees whenever it is needed. classifying.0 is characterized by the masses posting content for the masses.

archived. In general. When they punch out for the last time. which refers to the wisdom of the crowd. often with the help of IT. While information technology in the form of email.com/sites/0077338340/student_view. The challenge inherent in tacit knowledge is figuring out how to recognize.Section 3. Individuals must determine what information qualifies as intellectual and knowledge-based assets. as firms capitalize on crowdsourcing by opening up a task or problem to a wider group to find better or cheaper results from outside the box.2 Web 2. For many years organizations believed that good ideas came from the top. and customer lists. Explicit and Tacit Knowledge Not all information is valuable. or the road warrior salesman. Collaboration Outside the Organization The most common form of collective intelligence found outside the organization is crowdsourcing. With Business 2. Examples of explicit knowledge are assets such as patents. and the course owners win as business increases. Here the caddies make bigger tips and golfers improve their play by benefiting from the collaborative experiences of the caddies. companies.0 http://highered. and codified. With Buisness 2.. notebook for distribution to all caddies. The idea that collective intelligence is greater than the sum of its individual parts has been around for a long time (see Figure 3. the knowledge they gleaned about their jobs. instant messaging. As a rule.18 Crowdsourcing: The Crowd Is Smarter Than the Individual 4 of 16 7/5/12 9:17 PM . The organization chart governed who should work with whom and how far up the chain of command a suggestion or idea would travel.0 this belief is being challenged.0: Business 2. explicit knowledge consists of anything that can be documented. The goal of a knowledge management system is that everyone wins. intellectual and knowledge-based assets fall into one of two categories: explicit or tacit. trademarks.18).. and manage knowledge that resides in people's heads. FIGURE 3. CEOs collaborated only with the heads of sales and marketing. KM has assumed greater urgency in American business over the past few years as millions of baby boomers prepare to retire. share. generate. Tacit knowledge is the knowledge contained in people's heads.0 the ability to efficiently tap into its power is emerging. identifying it in the first place can be a major obstacle. and related technologies can help facilitate the dissemination of tacit knowledge.mcgraw-hill. marketing research. the quality assurance expert. business plans. and industries during their long careers will walk out with them—unless companies take measures to retain their insights.

com.com. www.eBay.0 or Web 2.va. www. www.youtube. continuous connections are now expected in today's collaborative world.com.0. www. For the following be sure to use your personal websites as references. although present.mcgraw-hill. or both. are not widely adopted.. Web 2. APPLY YOUR KNOWLEDGE BUSINESS DRIVEN INNOVATION Is It Web 1. Some sites are easy to identify as Web 1.0 examples.0 in their approach: Craigslist. or both. www.2 Web 2. The principal content (product descriptions) is not user-created.gov.vatican. but social features such as friend links.foursquare. www. www. Websites do not have version numbers and many are dynamic enough to be in “permanent beta testing. or communication such as email in which the message and the response do not occur at the same time.paypal. www. 2. Ask a group of college students when they last spoke to their parents.0 brought synchronous communication.Section 3.. a driving force behind collaboration.” Facebook and MySpace are good Web 2. Business 2.com/sites/0077338340/student_view. or communications that occur at the same time such as IM or chat.Your college's website. people can be continuously connected. for example. Be sure to justify your answer with the characteristics that classify the website as 1. NETWORKING COMMUNITIES WITH BUSINESS 2.7: Explain how Business 2.0 http://highered. www.irs.google. Traditional ebusiness communications were limited to face-to-face conversations and one-way technologies that used asynchronous communications. For most the answer is less than hour ago. www.com. Amazon.0.0.0 is not as straightforward as it appears.com.Your Visa Card. Why would certain types of businesses choose to remain Web 1. emulates an email list server and has no public user profiles or dynamic pages.24 Review the following websites and categorize them as Web 1.com.0: Business 2.com launched in the mid-1990s and has gradually added features over time. primarily due to their social networking functions and their reliance on user-generated content.0.0 5 of 16 LO 3.amazon. Profiles of users do exist.0? Deciding whether a given site is Web 1. In business too.com.twitter.facebook.0 is helping 7/5/12 9:17 PM . Many other sites are hard to categorize.0 and not offer collaboration or open source capabilities? www. but much of the site's value is added by user reviews and ratings.Your Bank. as opposed to the traditional response of a few days ago.com.com.com With Business 2.0.0 or Web 2. www. www.com.

and Digg. to allow for multiple browseable paths through the items.mcgraw-hill.19). The first is the ability to create and maintain a profile that serves as an online identity within the environment.0: Business 2.0. ability to network is by far one of the greatest advantages of Business 2. Social networking analysis (SNA) maps group contacts (personal and professional) identifying who knows each other and who works together.2 Web 2.000 and two days at a conference to meet professional peers. With executive members from all the Fortune 500 companies. Social networking sites provide two basic functions.. FIGURE 3. Many employers also search social networking sites to find “dirt” and character references for potential employees. and tags can be changed with minimal effort (see Figure 3. In a company it can provide a vision of how employees work together. prospecting.0 http://highered.0 simplifies access to information and improves the ability to share it. The second is the ability to create connections between other people within the network.. and identifying experts on a topic. Keep in mind that what you post on the Internet stays on the Internet.26 Social Tagging Tags are specific keywords or phrases incorporated into website content for means of classification or taxonomy. Social networking sites can be especially useful to employers trying to find job candidates with unique or highly specialized skill sets that may be harder to locate in larger communities.Section 3. Social networking is the practice of expanding your business and/or social contacts by constructing a personal network (see Figure 3. A social network is an application network and that connects people by matching profile information. Instead of spending $1.19 Social Network Example25 Business 2.com/sites/0077338340/student_view. Social tagging describes the collaborative activity of marking shared online content with keywords or tags as a way to 6 of 16 7/5/12 9:17 PM . Social media refers to websites that rely on user participation and user-contributed communities content. such as Facebook. An item can have one or more tags associated with it. It can also identify key experts with specific knowledge such as how to solve a complicated programming problem or launch a new product. YouTube.20). business people can now use social networks such as LinkedIn to meet new contacts for recruiting. Providing individuals with the collaborate. LinkedIn has become one of the more useful recruiting tools on the Web.

The entire user community is invited to tag.Section 3.com/sites/0077338340/student_view. smart phone. filtering.21).. the content. because there is no complicated nomenclature to learn. and so on. After enough people have done so. They have been a point of discussion on the Web because the whole point of having a website is for your customers to find it.0 http://highered. BlackBerry.21 Folksonomy Example: The User-Generated Names for Cellular Phones 7 of 16 7/5/12 9:17 PM . The majority of websites are found through search terms that match the content. All these keywords.mcgraw-hill. the folksonomy could include mobile phone. For example.27 FIGURE 3. the resulting tag collection will identify images correctly and without bias.. Flickr allows users to upload images and tag them with appropriate keywords. or search. and thus essentially defines. organize it for future navigation. Users simply create and apply tags as they wish. should take a user to the same site. if searched.20 Social Tagging Occurs When Many Individuals Categorize Content FIGURE 3. Using the collective power of a community to identify and classify content significantly lowers content categorization costs. while cell phone manufacturers often refer to their products as mobile devices. Folksonomy is similar to taxonomy except that crowdsourcing determines the tags or keyword-based classification system. iPhone. Folksonomies reveal what people truly call things (see Figure 3. wireless phone.0: Business 2.2 Web 2.

2 Web 2. a website dedicated to social bookmarking. StumbleUpon is all about the users and the content they enjoy. Now. angry customers could write letters or make phone calls. Create an argument for or against the following statement: “Social networking has given power to the consumer that benefits society and creates socially responsible corporations.0 TOOLS FOR COLLABORATING Social networking and collaborating are leading businesses in new directions. LO 3.us. the more the system “learns” about your interests and the better it can show you websites that interest you. A website bookmark is a locally stored URL or the address of a file or Internet page saved as a shortcut. and their efforts can be instantly seen by millions of people. organize. disgruntled consumers can create a website or upload a video bashing a product or service.com/sites/0077338340/student_view. Blogs 8 of 16 7/5/12 9:17 PM .” allowing users to share ideas. categorize. power has clearly shifted to the consumer.0: Business 2.8: Describe the three Business 2.. Del.0 tools for collaborating. and share favorites.22 provides an overview of the tools that harness the “power of the people.0 http://highered. StumbleUpon represents a new social networking model in which content finds the users instead of the other way around.28 APPLY YOUR KNOWLEDGE BUSINESS DRIVEN DEBATE Anti-Social Networking Before the Internet. annotate. discuss business problems.” BUSINESS 2. but their individual power to find satisfaction or bring about change was relative weak. The more you use the service. and manage bookmarks.Section 3. Social bookmarking allows users to share.mcgraw-hill. provides users with a place to store. and Figure 3.. StumbleUpon is another popular social bookmarking website that allows users to locate interesting websites based on their favorite subjects.icio. search. Though many companies monitor the Internet and try to respond to such postings quickly. and collaborate on solutions.

In addition to facilitating syndication. RSS allows a website's frequent readers to track updates on the site. graphics. or Web log. Blogs are an ideal mechanism for many businesses since they can focus on topic areas more easily than traditional media. is an online journal that allows users to post their own comments.2 Web 2. News websites. word count. or publication deadline. the open encyclopedia that launched in 2001.22 Business 2. Microblogging is covered in detail in Chapter 7. press response. news headlines. allow open access. audio. Starbucks has developed a blog called My Starbucks Idea. sharing ideas..0: Business 2. or presentations. An RSS document or feed includes full or summarized text.0 Communication and Collaboration Tools Real Simple Syndication (RSS) Real Simple Syndication (RSS) is a Web format used to publish frequently updated works. A blog. such as blogs. and video.. Wikis A wiki (the word is Hawaiian for quick) is a type of collaborative Web page that allows users to add. and podcasts use RSS. Wikipedia. audio. Consider Sun Microsystem's Jonathan Schwartz and GM's Bob Lutz. remove. and change content.com/sites/0077338340/student_view. blogs. constantly feeding news to consumers instead of having them search for it. in a standardized format. email. wikis are based on open collaboration with any and everybody. and join discussions. They all deliver results of varying kinds. by default. Unlike traditional HTML Web pages. blog websites let writers communicate—and reader's respond—on a regular basis through a simple yet customizable interface that does not require any programming. and image shaping. or the Web.29 Microblogs Microblogging is the practice of sending brief posts (140 to 200 characters) to a personal blog. By far the most popular microblogging tool is Twitter.Section 3.mcgraw-hill. plus other information such as publication date and authorship. such as instant messaging. and video. tell Starbucks what they think of other people's ideas. While blogs have largely drawn on the creative and personal goals of individual authors. reaching an estimated 217 million unique visitors 9 of 16 7/5/12 9:17 PM . which can be easily organized and reorganized as required. who use their blogs for marketing.0 http://highered. gathering feedback. print. blogs are no different from marketing channels such as video. allowing customers to share ideas. with no limits on page size. has become one of the 10 most popular Web destinations. which allows users to send microblog entries called tweets to anyone who has registered to “follow” them. The main advantage of microblogging is that posts can be submitted by a variety of means.30 FIGURE 3. Senders can restrict delivery to people they want to follow them or. From a business perspective. either publicly or to a private group of subscribers who can read the posts as IMs or as text messages.

leading to the creation of mashup editors. software developer. administrator. a month. project management. protect the quality and accuracy of their information by assigning users roles such as reader. policy maker. reporting.31 A wiki user can generally alter the original content of any article. the greater the network effect and valued added for the company. the greater the network affect because more users attract more contributors. putting Jay-Z lyrics over a Radiohead song makes something old new. The corporate wiki can answer any questions about a business process or definition. photos. Content used in mashups is typically sourced from an application programming interface (API). They provide a visual interface to build a mashup. eBay. and so on to create content with a new purpose. Flickr.0 http://highered. such as Wikipedia. practice for news organizations to prepare 10 of 16 7/5/12 9:17 PM . online dictionaries. news feeds. The term is typically used in the context of music.. content maintainer.com/sites/0077338340/student_view. patroller. provide an API so that programmers can write applications consistent with them. Large wikis. editor. or What You See Is What You Get tools. A programmer then puts these building blocks together. such as Microsoft Windows. what U.2 Web 2. and tools for building software applications. across geographic distances. which is a set of routines. Mashups A mashup is a website or Web application that uses content from more than one source to create a completely new product or service. and an “order produced” in France. blog entries. Most operating environments. Mashup editors are WYSIWYG.. employees call a “sale” may be called “an order booked” in the United Kingdom. Of course.S. Companies are also using wikis for documentation. Amazon. protocols. For example. and so on. For example. and between functional business areas.0: Business 2. Wikipedia becomes more valuable to users as the number of its contributors increases. if not a little morbid. an “order scheduled” in Germany. often allowing the user to drag and drop data points into a Web application. The Web version of a mashup allows users to mix map data. Google.32 The network effect describes how products in a network increase in value to users as the number of users increases. The more users and content managers on a wiki. and system operator. and Yahoo APIs. and discussion groups. subject matter expert. APPLY YOUR KNOWLEDGE BUSINESS DRIVEN MIS Steve Jobs Resurrected from the Afterlife It's a common. Wikis internal to firms can be vital tools for collecting and disseminating knowledge throughout an organization.mcgraw-hill. the more employees who use the corporate wiki. Many people experimenting with mashups are using Microsoft. video. Access to some important or sensitive Wikipedia material is limited to users in these authorized roles.Section 3. whose work attracts more users. while the blog user can only add information in the form of comments.

all highlighted in Figure 3.0 As much as Business 2. or listening to free music on Pandora or watching on-demand television? As society becomes more technology-dependent.” In addition to publishing the obituary. a few challenges remain in open source software. the damage was already done. obituaries well in advance of celebrities' actual death. Bloomberg caught the mistake and pulled the obituary within minutes. and educational institutions. outages hold the potential to cause ever-greater havoc for people. Customers can personally monitor the production and treatment of their fruit from the tree to the grocer. unfortunately.0 http://highered. lists its organic certifications. former Vice President Al Gore (a member of Apple's board of directors).. The process assures customers that their bananas have been raised to proper organic standards on an environmentally friendly. Now Jobs' obituary is all over the Web. user-contributed content systems. Socially and environmentally conscious buyers can plug the numbers into Dole's website and look at a bio of the farm where the bananas were raised. the obit was accidently published in 2008 on Bloomberg's financial website. posts some photos.0: Business 2. holistically minded plantation. What kind of financial impact could a story like this have on Apple? With so many different forms of collaboration.. Bloomberg also accidentally published the list of people its reporters should contact when Steve Jobs does die. and their dependence on technology glues them to their Web connections for everything from Web conferencing for a university class or work project to making plans with friends for dinner. he has the unique opportunity to read his own obituary. That list includes Microsoft founder Bill Gates. If a connection is down.mcgraw-hill. but in today's instant information culture. and Google CEO Eric Schmidt. and offers a link to satellite images of the farm in Google Earth. LO 3. We'll briefly describe each one.2 Web 2.23 11 of 16 7/5/12 9:17 PM . text messaging. Technology Dependence Many people today expect to be continuously connected. a few stockholders may have gone into cardiac arrest after reading the obituary.34 THE CHALLENGES OF BUSINESS 2. businesses.Section 3.33 While Jobs was very much alive. The error occurred despite the markers on the story saying “Hold for Release” and “Do Not Use. FIGURE 3.com/sites/0077338340/student_view.0. The site tells the story of the farm and its surrounding community. what can a company do to rectify the situation? What types of safeguards can a company implement to ensure false information is not posted to a wiki or blog? Whoever thought technology could help sell bananas? Dole Organic now places three-digit farm codes on each banana and creates a mashup using Google Earth and its banana database. and collaboration systems.0 has positively changed the global landscape of business.23.9: Explain the three challenges associated with Business 2. and if he so desires. how will they function? How long can people go without checking email. how does a company monitor and track each one to ensure the content is error-free? Once erroneous content is posted to the Internet or written in a text message. So Bloomberg had a 17-page obituary for Apple's Steve Jobs ready to run on his death.

Wiki vandalism is a hot issue and for this reason wiki software can now store all versions of a Web page.10: Describe Web 3.0: Business 2. a huge issue when considering how easy and frequently wiki software is updated and changed.com/sites/0077338340/student_view.0 refers to static text-based information websites and Web 2. WEB 3.0 is about user-contributed content. machine-based learning and reasoning. tracking updates and changes and ensuring the site can be restored to its original form if the site is vandalized. let's look at a few sample relationships. Business leaders who explore its opportunities will be the first to market with competitive advantages.0. Allowing anyone to edit anything opens the door for individuals to purposely damage.mcgraw-hill. Lady Gaga is a singer. and ironically they are major challenges as well.0 offers a way for people to describe information such that computers can start to understand the relationships among concepts and topics. The real trick to wiki software is to determine which statements are true and which are false.0: DEFINING THE NEXT GENERATION OF ONLINE BUSINESS OPPORTUNITIES While Web 1. Clearly stated copyright and plagiarism policies are a must for all corporate blogs and wikis. was assistant to Attorney General Robert F. and intelligent applications.. and Hannah is friends with Sophie.0 http://highered.0 Information Vandalism Open source and sharing are both major advantages of Business 2. or vandalize website content. These are all examples of descriptions that can be added to Web pages allowing 12 of 16 7/5/12 9:17 PM .0 is based on “intelligent” Web applications using natural language processing. To demonstrate the power of Web 3. Web 3. such as Adam Sandler is a comedian. Kennedy..0. Challenges of Business 2. Seigenthaler did work as an assistant to Robert Kennedy. It can also color-code the background ensuring the user understands which areas have been validated and which areas have not. President John F.0 is the next step in the evolution of the Internet and Web applications. but he was never involved in the assassinations.35 Violations of Copyright and Plagiarism Online collaboration makes plagiarism as easy as clicking a mouse. destroy. Kennedy in the early 1960s and was thought to have been directly involved in the assassinations of both Kennedy and his brother. These topics are discussed in detail in Chapter 4. LO 3. Web 3.Section 3. Unfortunately a great deal of copyrighted material tends to find its ways to blogs and wikis where many times blame cannot be traced to a single person.2 Web 2. One of the most famous examples of wiki vandalism occurred when a false biography entry read that John Seigenthaler Sr.0 and the next generation of online business. Web 3.

0 that describes things in a way that computers can understand.. you need to take continuous access and connectivity seriously.0 browser.0 http://highered. Where Web 2.0 brings machines closer together using information. Tim Berners-Lee. and reservations tools. and more successful. After all. organize the results. machines.Section 3. semantic Web applications can collect information from many different sources. computers to learn about relationships while displaying the information to humans. and present them to the user. Applying this type of advanced relationship knowledge to a company can create new opportunities. more agile. 13 of 16 7/5/12 9:17 PM . concert tickets. instead of making multiple searches. With this kind of information in place. APPLY YOUR KNOWLEDGE BUSINESS DRIVEN DISCUSSION Connectivity Breakdown When you are considering connectivity services for your business.0 brings people closer together with information using machines.mcgraw-hill. What management and technical challenges do you foresee as people and businesses become increasingly dependent on connectivity? What can managers do to meet these challenges and prevent problems? One goal of Web 3. price).. laptops. Although Web 3. and information so a business can be smarter. the user might type a complex sentence or two in a Web 3. one of the founders of the Internet. What are my options?” The Web 3. For example.0 is to tailor online searches and requests specifically to users' preferences and needs. and so on is stored in a way that describes the information and associated resource files. combine it. as credit cards. These new relationships unite people. cars.2 Web 2. such as:36 Integration of legacy devices: the ability to use current devices such as iPhones. rather it describes the relationships between things (such as A is a part of B and Y is a member of Z) and the properties of things (size.0 is still a bit speculative. If information about music. businesses run on information. What if one of your employees is about to close a huge multimillion-dollar deal and loses the Internet connection.0: Business 2. The semantic Web is not about links between Web pages. weight. and so on.com/sites/0077338340/student_view. tickets.0. age. such as “I want to see a funny movie and then eat at a good Mexican restaurant. and present it to users in a meaningful way. jeopardizing the deal? What if a disgruntled employee decides to post your business's collective intelligence on an open-source blog or wiki? What if your patient scheduling software crashes and you have no idea which patients are scheduled to which operating rooms with which doctors? These are far worse scenarios than a teenage boy not gaining access to his email or Facebook page. search the Web for all possible answers. has described the semantic Web as a component of Web 3. quicker.0 browser will analyze the request. there will be a far richer interaction between people and machines with Web 3. some topics and features are certain to be included in it. Web 3.

2 Web 2.0: Business 2.S. transportation. Mobile banking—manage accounts.. and transfer funds..mcgraw-hill.0 http://highered. FIGURE 3. promotions. Mobile business (or mbusiness. receive alerts. 14 of 16 7/5/12 9:17 PM . games.com/sites/0077338340/student_view. ring tones. Mobile ticketing—purchase tickets for entertainment. gateway to all government information. and parking including the ability to automatically feed parking meters. the official U. mcommerce) is the ability to purchase goods and services through a wireless Internetenabled device.24 Extended Ebusiness Models Mbusiness: Supporting Anywhere Business Internet-enabled mobile devices are quickly outnumbering personal computers. One example of an egovernment portal. Figure 3. to local and tribal governments.24 highlights specific egovernment models. voting. The emerging technology behind mbusiness is a mobile device equipped with a Web-ready micro-browser that can perform the following services: Mobile entertainment—downloads for music. pay bills.Section 3. from the federal government.gov. Egovernment involves the use of strategies and technologies to transform government(s) by improving the delivery of services and enhancing the quality of interaction between the citizen-consumer within all branches of government. videos. Its powerful search engine and ever-growing collection of topical and customer-focused links connect users to millions of Web pages. to foreign nations around the world. and coupons. discounts. as well as text-based messaging services. FirstGov. Mobile sales/marketing—advertising. Egovernment: The Government Moves Online Recent business models that have arisen to enable organizations to take advantage of the Internet and create value are within egovernment. is the catalyst for a growing electronic government. campaigns.

org.” www.pdf accessed April 10.0 for CIOs. 2010 http://www.aspx?contentid=6328. 29 Gary Matuszak. 2010. Tim OʼReilly.kiva.com /od/socialbookmarking101/p/aboutsocialtags.” Wired.com/. accessed June 24. www.pcworld. Wikipedia: The Free Encyclopedia.pcworld. accessed June 25.. 2007. 2007. Technology is a primary force driving these changes. 2010. 2005 http://www. “Enterprise 2. http://en. 2010.com/pub/a/oreilly/tim/news/2005/09/30/what-is-web-20.” The New York Times.0: Design Patterns and Business Models for the Next Generation of Software. and “Web 2.com/businesscenter /article/204698/firefox_36_becomes_number_two_browser_as_ie6_declines.nytimes.. September 27. 2010. 2007./ Enterprise-2-Fad-or-Future.0 http://highered. CIO Magazine.com: Web Trends.0: Fad or Future.html. December 11. http://en.com /images?hl=en&q=social+network+image&wrapid=tlif12858857906612&um=1&ie=UTF-8 &source=univ&ei=Yg-lTJyNJYn6sAP0l9H-Dg&sa=X&oi=image_result_group&ct=title&resnum=1&ved= 0CCIQsAQwAA &biw=1362&bih=530. http://www. accessed April 3. 2007.com/Global/en/. and so on.. 25 Google Images. home delivery.org/wiki/Statistics Accessed April 15. “What Is Web 2.dole.” www. “Firefox 3.0 for CIOs. “Folksonomy. accessed April 10.0: Business 2. vending machines.com/pub/a/oreilly/tim/news/2005/09/30/what-is-web-20. /Enterprise.html. Wikipedia Statistics. http://www. 33 “Banana Code Connects Consumers and Farm. 26 27 About Us. and learn to operate in an entirely different way. accessed April 5. accessed June 25. http://webtrends. “LinkedIn. Daniel Pink. Mobile payments—pay for goods and services including in-store purchases. 30 31 32 Rachel Metz.” About.” www. 2010.wikipedia. September 1.” KPMG International..oreillynet.” www. Organizations face changes more extensive and far reaching in their implications than anything since the modern industrial revolution occurred in the early 1900s. 23 Tony Bradley. “What is Social Bookmarking.html. 24 Tim OʼReilly.oreillynet.2 Web 2. 15 of 16 7/5/12 9:17 PM . gas.cio.” DoleOrganic. accessed June 24.0: Design Patterns and Business Models for the Next Generation of Software. 2004. “Changing at the Push of a Button.cio. carry out required organizational changes in the face of it.google.com /NutritionInstituteLanding/NI_Articles/NI_DoleDiet/NI_DoleDiet_Detail/tabid/1058 /Default..” www.” www..html.linkedin.about.kpmg.Section 3.mcgraw-hill. 2010. CIO Magazine. “What Is Web 2.wikipedia. accessed April 19.htm.com. taxis.org/wiki/ Wikipedia:About accessed April 15.com/article/16807. and “Web 2.com. 2010. Organizations that want to survive must recognize the immense power of technology.com/article/16807. 28 Daniel Nations.com/sites/0077338340/student_view.” http://press.6 Becomes Number Two Browser as IE6 Declines. 21 22 “Kiva – Loans that Change Lives.com/2005/12 /11/magazine/11ideas1-21.

com/news/opinion/editorials/2005-11-29-wikipedia-edit_x. 36 Tim Berners-Lee. 2008 http://news. 34 Caroline McCarthy. 2005 http://www.com/sites/0077338340/student_view.Section 3.0 http://highered.w3.. 2010.2 Web 2.org/DesignIssues /Semantic.usatoday.html Accessed April 12.html Accessed April 19. http://www. McGraw-Hill Higher Education is one of the many fine businesses of The McGraw-Hill Companies. August 28. “A False Wikipedia Biography.mcgraw-hill. 2009 McGraw-Hill Higher Education Any use is subject to the Terms of Use and Privacy Notice.cnet.0: Business 2..htm.com/8301-13579_3-10027886-37. 1998. 16 of 16 7/5/12 9:17 PM . “Bloomberg Mistakenly Publishes Steve Jobs Obituary.” CNET News. “Semantic Web Road map. November 29. 35 John Seigenthaler. 2010.” October 14.” USA Today.

0 is a term to refer to the World Wide Web during its first few years of operation between 1991 and 2003. The Internet and WWW caused business disruption by allowing people to communicate and collaborate in ways that were not possible before the information age. Consumer-to-business (C2B) applies to any consumer that sells a product or service to a business over the Internet. open new markets and destroy old ones.0 along with ebusiness and its associated advantages. Sustaining technologies tend to provide us with better. Business-to-business (B2B) applies to businesses buying from and selling to each other over the Internet.Learning Outcome Review http://highered. employees communicate.. During Web 1.0. Learning Outcome 3. Disruptive technologies offer a new way of doing things that initially does not meet the needs of existing customers.. and exchanging real-time information.1: Compare disruptive and sustaining technologies. Ebusiness includes ecommerce along with all activities related to internal and external business operations such as servicing customer accounts. such as a faster car or larger hard drive. Ebusiness advantages include expanding global reach.mcgraw-hill. p. faster. Business-to-consumer (B2C) applies to any business that sells its products or services to consumers over the Internet. Business Driven Information Systems eBook 3/e Content Chapter3: Ebusiness: Electronic Business Value Learning Outcome Review p. Disruptive technologies redefine the competitive playing fields of their respective markets. and products are developed and sold.2: Describe Web 1.com/sites/0077338340/student_view. and cut into the low end of the marketplace and eventually evolve to displace high-end competitors and their reigning technologies. and explain how the Internet and WWW caused business disruption. opening new markets. Web 1. and improving operations and effectiveness. and cheaper products in established markets and virtually never lead in markets opened by new and disruptive technologies.3: Compare the four categories of ebusiness models. The Internet and WWW completely disrupted the way businesses operate. Learning Outcome 3. 118 Learning Outcome 3. Consumer-to-consumer (C2C) applies to sites primarily offering goods and services to assist consumers interacting with each other over the Internet. entrepreneurs began creating the first forms of ebusiness. 1 of 3 7/5/12 9:17 PM . collaborating with partners. reducing costs. 117 Sustaining technologies produce improved products customers are eager to buy.

deploying. photos. Social networking is the practice of expanding your business and/or social contacts by constructing a personal network. and Web conferencing.6: Explain Web 2. Learning Outcome 3.0.0 encourages user participation and the formation of communities that contribute to the content. The four characteristics of Web 2.com/sites/0077338340/student_view.0 include: Content sharing through open sourcing. managing consumer trust.0 tools for collaborating. wikis are based on open collaboration with any and everybody. A mashup is a website or Web application that uses content from more than one source to create a completely new product or service. and managing ebusiness systems is not always easy. Providing individuals with the ability to network is by far one of the greatest advantages of Business 2.mcgraw-hill. ensuring consumer protection. Learning Outcome 3.5: Identify the four challenges associated with ebusiness. and free. A social network is an application that connects people by matching profile information.0. While blogs have largely drawn on the creative and personal goals of individual authors. plus B2B is the dominant ebusiness force. network. representing 80 percent of all online business.. remove. videoconferencing. As firms began to move online. B2B relations are more complex and have higher security needs. and search for information. and video. distinctive communications platform characterized by new qualities such as collaboration.Learning Outcome Review http://highered. Learning Outcome 3. is an online journal that allows users to post their own comments. Learning Outcome 3.0 include blogs. In Web 2. and mashups. content management systems. Collaboration outside the organization. wikis. graphics. The challenges associated with ebusiness include identifying limited market segments.8: Describe the three Business 2. podcasting. The three tools that harness the “power of the people” for Business 2. technical skills are no longer required to use and publish information to the World Wide Web. sharing. Overall. User-contributed content. more MIS tools were created to support ebusiness processes and requirements.0. A wiki is a type of collaborative Web page that allows users to add. Business 2. is the next generation of Internet use—a more mature.. A mashup allows users to mix map data. Learning Outcome 3. video. eliminating entry barriers for online business. B2B customers are other businesses while B2C markets to consumers. or Web log.0 simplifies the way individuals communicate. instant messaging. and adhering to taxation rules. and identify its four characteristics.0. news feeds. 2 of 3 7/5/12 9:17 PM . Although the benefits of ebusiness are enticing.0.0 is helping communities network and collaborate. and change content.7: Explain how Business 2. Collaboration inside the organization.4: Describe the six ebusiness tools for connecting and communicating. or Business 2. The ebusiness tools used to connect and communicate include email. find employment. The primary difference between B2B and B2C are the customers. Web 2. Web 2. A blog. developing. which can be easily organized and reorganized as required. blog entries. Blog websites let writers communicate—and reader's respond—on a regular basis through a simple yet customizable interface that does not require any programming.

0 has positively changed the global landscape of business.0.10: Describe Web 3. and collaboration systems. 2009 McGraw-Hill Higher Education Any use is subject to the Terms of Use and Privacy Notice.0 offers a way for people to describe information such that computers can start to understand the relationships among concepts and topics. Learning Outcome 3.0 and the next generation of online business.. 3 of 3 7/5/12 9:17 PM . and the violation of copyrights and plagiarism. and intelligent applications.com/sites/0077338340/student_view. and so on to create content with a new purpose. user-contributed content systems.0 is based on “intelligent” Web applications using natural language processing.mcgraw-hill. a few challenges remain in open source software. Learning Outcome 3. McGraw-Hill Higher Education is one of the many fine businesses of The McGraw-Hill Companies. Web 3. Web 3.Learning Outcome Review http://highered.. vandalism of information on blogs and wikis.9: Explain the three challenges associated with Business 2. Web 3. machine-based learning and reasoning.0 is the next step in the evolution of the Internet and Web applications. These challenges include individuals forming unrealistic dependencies on technology. Business leaders who explore its opportunities will be the first to market with competitive advantages. As much as Business 2.

 storage.  99       Consumer-­‐to-­‐consumer  (C2C)   Applies  to  customers  offering  goods  and  services  to  each  other  on  the  Internet.Application  programming  interface  (API)   A  set  of  routines.  108       Blog.  106       Collective  intelligence   Collaborating  and  tapping  into  the  core  knowledge  of  all  employees.  103       ..  112       Asynchronous  communication   Communication  such  as  email  in  which  the  message  and  the  response  do  not   occur  at  the  same  time.   and  customers..  and  publication  of  their   website  content.  98       Clickstream  data   Exact  pattern  of  a  consumer's  navigation  through  a  site....   97       Business-­‐to-­‐business  (B2B)   Applies  to  businesses  buying  from  and  selling  to  each  other  over  the  Internet.   99       Content  management  system  (CMS)   Helps  companies  manage  the  creation.  111       Business  model   A  plan  that  details  how  a  company  creates..  partners.  and  tools  for  building  software  applications.  graphics..  and   video.   98       Business-­‐to-­‐consumer  (B2C)   Applies  to  any  business  that  sells  its  products  or  services  directly  to  consumers   online.  96       Collaboration  system   A  set  of  tools  that  supports  the  work  of  teams  or  groups  by  facilitating  the   sharing  and  flow  of  information..  and  generates  revenues.  or  Web  log   An  online  journal  that  allows  users  to  post  their  own  comments...  protocols..  106       Consumer-­‐to-­‐business  (C2B)   Applies  to  any  consumer  who  sells  a  product  or  service  to  a  business  on  the   Internet.  editing..  delivers.

.  often  with   the  help  of  IT.  90       Ebusiness   Includes  ecommerce  along  with  all  activities  related  to  internal  and  external   business  operations  such  as  servicing  customer  accounts.  115       Eshop  (estore  or  etailer)   An  online  version  of  a  retail  store  where  customers  can  shop  at  any  hour..  107       Cybermediation   Refers  to  the  creation  of  new  kinds  of  intermediaries  that  simply  could  not  have   existed  before  the  advent  of  ebusiness.  98       Explicit  knowledge   Consists  of  anything  that  can  be  documented.  delivers.  collaborating  with   partners.  and  codified.  archived...  and  generates  revenues  on   the  Internet.Crowdsourcing   Refers  to  the  wisdom  of  the  crowd.  107       Folksonomy   Similar  to  taxonomy  except  that  crowdsourcing  determines  the  tags  or  keyword-­‐ based  classification  system...  92       Egovernment   Involves  the  use  of  strategies  and  technologies  to  transform  government(s)  by   improving  the  delivery  of  services  and  enhancing  the  quality  of  interaction   between  the  citizen-­‐consumer  within  all  branches  of  government...  97       Ecommerce   The  buying  and  selling  of  goods  and  services  over  the  Internet...  and  exchanging  real-­‐time  information.  96       Digital  Darwinism   Implies  that  organizations  that  cannot  adapt  to  the  new  demands  placed  on   them  for  surviving  in  the  information  age  are  doomed  to  extinction.  109     ..  92       Ebusiness  model   A  plan  that  details  how  a  company  creates.  90       Disintermediation   Occurs  when  a  business  sells  direct  to  the  customer  online  and  cuts  out  the   intermediary.  95       Disruptive  technology   A  new  way  of  doing  things  that  initially  does  not  meet  the  needs  of  existing   customers..

 or  video  information..  audio.  101       Knowledge  management  (KM)   Involves  capturing....   graphic.  106       Knowledge  management  system  (KMS)   .  and  sharing  information   assets  in  a  way  that  provides  context  for  effective  decisions  and  actions..  94       Instant  messaging  (sometimes  called  IM  or  IMing)   A  service  that  enables  “instant”  or  real-­‐time  communication  between  people...  evaluating.  96       Intermediaries   Agents.  92       Hypertext  transport  protocol  (HTTP)   The  Internet  protocol  Web  browsers  use  to  request  and  display  Web  pages  using   universal  resource  locators.  103       Information  reach   Measures  the  number  of  people  a  firm  can  communicate  with  all  over  the  world.  95       Internet   A  massive  network  that  connects  computers  all  over  the  world  and  allows  them   to  communicate  with  one  another.  or  businesses  that  provide  a  trading  infrastructure  to  bring   buyers  and  sellers  together.  retrieving.....  number  of  pages  viewed.  91       Internet  service  provider  (ISP)   A  company  that  provides  access  to  the  Internet  for  a  monthly  fee.  software.  classifying.   102       Interactivity   Measures  advertising  effectiveness  by  counting  visitor  interactions  with  the   target  ad.Hypertext  markup  language  (HTML)   Links  documents  allowing  users  to  move  from  one  to  another  simply  by  clicking   on  a  hot  spot  or  link.  and   number  of  repeat  visits  to  the  advertisement.  including  time  spent  viewing  the  ad.  92       Information  architecture   The  set  of  ideas  about  how  all  information  in  a  given  context  should  be   organized.   94       Information  richness   Refers  to  the  depth  and  breadth  of  details  contained  in  a  piece  of  textual.

 111       Mobile  business  (mcommerce.  organization..  105       Open  system   Consists  of  non-­‐proprietary  hardware  and  software  based  on  publicly  known   standards  that  allows  third  parties  to  create  add-­‐on  products  to  plug  into  or   interoperate  with  the  system.  94       Mashup   A  website  or  Web  application  that  uses  content  from  more  than  one  source  to   create  a  completely  new  product  or  service..  112       Mass  customization   The  ability  of  an  organization  to  tailor  its  products  or  services  to  the  customers'   specifications..   know-­‐how)  throughout  an  organization.  mbusiness)   The  ability  to  purchase  goods  and  services  through  a  wireless  Internet-­‐enabled   device.  say  by  tailoring  its   .  112       Mashup  editor   WYSIWYGs  or  What  You  See  Is  What  You  Get  tools.  112       Open  source   Refers  to  any  software  whose  source  code  is  made  available  free  for  any  third   party  to  review  and  modify...   either  publicly  or  to  a  private  group  of  subscribers  who  can  read  the  posts  as   IMs  or  as  text  messages.  94       Microblogging   The  practice  of  sending  brief  posts  (140  to  200  characters)  to  a  personal  blog.  116       Network  effect   Describes  how  products  in  a  network  increase  in  value  to  users  as  the  number  of   users  increases.  and  dissemination  of  knowledge  (i....Supports  the  capturing..  106       Long  tail   Referring  to  the  tail  of  a  typical  sales  curve.  92       Personalization>   Occurs  when  a  company  knows  enough  about  a  customer's  likes  and  dislikes   that  it  can  fashion  offers  more  likely  to  appeal  to  that  person..  105       Paradigm  shiftOccurs  when  a  new  radical  form  of  business  enters  the  market   that  reshapes  the  way  companies  and  organizations  behave..e..

 search.  and  manage  bookmarks..  news   headlines..website  to  individuals  or  groups  based  on  profile  information.  101       Reintermediation   Steps  are  added  to  the  value  chain  as  new  players  find  ways  to  add  value  to  the   business  process.  108       Social  networking  analysis  (SNA)   Maps  group  contacts  identifying  who  knows  each  other  and  who  works   together.  109     .  94       Podcasting   Converts  an  audio  broadcast  to  a  digital  music  player.  filtering.  108       Social  networking   The  practice  of  expanding  your  business  and/or  social  contacts  by  constructing   a  personal  network.  organize..  such  as  blogs..  115       Social  bookmarking   Allows  users  to  share.  demographics.  110       Social  media   Refers  to  websites  that  rely  on  user  participation  and  user-­‐contributed  content...  112       Real-­‐time  communication   Occurs  when  a  system  updates  information  at  the  same  rate  it  receives  it.  audio..  or   search..  106       Semantic  Web   A  component  of  Web  3..   108       Social  network   An  application  that  connects  people  by  matching  profile  information.0  that  describes  things  in  a  way  that  computers  can   understand.  96       Reputation  system   Where  buyers  post  feedback  on  sellers.  and  video  in  a  standardized  format....  or   prior  transactions.  109       Social  tagging   Describes  the  collaborative  activity  of  marking  shared  online  content  with   keywords  or  tags  as  a  way  to  organize  it  for  future  navigation.  102       Real  Simple  Syndication  (RSS)   A  Web  format  used  to  publish  frequently  updated  works.

 92       User-­‐contributed  content  (also  referred  to  as  user-­‐generated  content)   Content  created  and  updated  by  many  users  for  many  users....  92       Web  2.  109       Taxonomy   The  scientific  classification  of  organisms  into  groups  based  on  similarities  of   structure  or  origin.   Source  code   Contains  instructions  written  by  a  programmer  specifying  the  actions  to  be   performed  by  computer  software...  107       Tags   Specific  keywords  or  phrases  incorporated  into  website  content  for  means  of   classification  or  taxonomy.  distinctive   communications  platform  characterized  by  new  qualities  such  as  collaboration.  103     .0   Refers  to  the  World  Wide  Web  during  its  first  few  years  of  operation  between   1991  and  2003.  108       Tacit  knowledge   The  knowledge  contained  in  people's  heads.com.  105       Sustaining  technology   Produces  an  improved  product  customers  are  eager  to  buy..  105       Web  browser   Allow  users  to  access  the  WWW.0  (or  Business  2.  such  as  a  faster  car   or  larger  hard  drive.apple..  92       Web  conferencing  (webinar)   Blends  videoconferencing  with  document-­‐sharing  and  allows  the  user  to  deliver   a  presentation  over  the  Web  to  a  group  of  geographically  dispersed   participants.  90       Synchronous  communication   Communication  such  as  email  in  which  the  message  and  the  response  do  not   occur  at  the  same  time.  and  free.   sharing....  103       Universal  resource  locator  (URL)   The  address  of  a  file  or  resource  on  the  Web  such  as  www.  106       Web  1.0)   The  next  generation  of  Internet  use—a  more  mature...

.   Website  bookmark   A  locally  stored  URL  or  the  address  of  a  file  or  Internet  page  saved  as  a  shortcut.   110       Wiki   A  type  of  collaborative  Web  page  that  allows  users  to  add.  remove..  audio.  which  can  be  easily  organized  and  reorganized  as  required.   graphics.  and  video  files  that  use  a  special  formatting  language  called   HTML.  and  change   content..  92       .  112       World  Wide  Web  (WWW)   Provides  access  to  Internet  information  through  documents  including  text.

.lc904175. Information richness D.View Attempt https://gpc. Interactivity C. A 100% sustaining technology B. such as a faster car or larger hard drive. Student Value Response A. Ecommerce C..0 Maximum possible score: 15 Total score: 15/15 = 100% Done 1. faster. Ebuiness Score: 1/1 Correct Answer Feedback 2. They tend to provide us with better. Mass customization B. 2012 9:43 PM July 5. How would you classify Amazon's ebusiness strategy? Student Response A.usg. Personalization 100% Score: 1/1 Value Correct Answer Feedback 1 of 8 7/8/12 9:08 PM . JULY 5th › CHAPTER 3 QUIZ › Assessments › View All Submissions › View Attempt View Attempt 1 of 1 Title: Started: Submitted: Time spent: CHAPTER 3 QUIZ July 5. ________________ produces an improved product customers are eager to buy. and cheaper products in established markets.edu/webct/urw/tp9214421899391. 2012 9:58 PM 00:15:08 Total score adjusted by 0. A disruptive technology D. Your location: Home Page › DUE THURSDAY. Amazon creates a unique recommendation listing for each customer that revisits its website.view.

Student Response A. data D. 3. When evaluating the business value of disintermediation. customers B. B and C 100% only Score: 1/1 Correct Answer Feedback 4.. Which of the statements below represents an example of why an employer would use social media? Student Value Response A. To attract new job candidates via YouTube D. the more ________ that are cut from the distribution chain. To find potential job candidates via LinkedIn B. the lower the product price.View Attempt https://gpc.. technology C.usg.lc904175. intermediaries 100% Score: 1/1 Value Correct Answer Feedback 5.edu/webct/urw/tp9214421899391.view. 2 of 8 7/8/12 9:08 PM . A. A and B only E. To review potential job candidates by viewing their Facebook page C.

Information richness D. Online companies that sell physical products have to pay sales tax and online companies that provide intangible services do not. Online companies do not have to pay any sales tax.View Attempt https://gpc. B.edu/webct/urw/tp9214421899391. D. Interactivity Score: 1/1 100% Value Correct Answer Feedback 6. All online companies must pay sales tax. Online 100% companies that are licensed to Correct Answer Feedback 3 of 8 7/8/12 9:08 PM .. Mass customization C. Which of the statements below is accurate when considering the ebusiness challenge of adhering to taxation rules? Student Value Response A. Personalization B. C. Nike offers people the opportunity to visit its website to create running shoes in the style and color they choose..view.usg.lc904175. How would you classify Nike's ebusiness strategy? Student Response A.

Businessto-consumer C.view. which of the following is the most crucial challenge to consider before engaging in social media? Student Response A. What form of ebusiness model are John and Jenny using? Student Response A. Susan teaches many individuals and business professionals the hows. Priceline allows individuals to set their own price for the amount they are willing to pay for airline tickets.View Attempt https://gpc.. Managing consumer relationships B. Consumerto-business D. John and Jenny have been saving for two years to take their six children on a vacation to Disneyworld. Student Value Response do business in the state where the customer lives. Score: 1/1 Correct Answer Feedback 7. Identifying limited market segments Value Correct Answer Feedback 4 of 8 7/8/12 9:08 PM .edu/webct/urw/tp9214421899391. benefits and challenges of using social media.lc904175.. They decide to try to find cheaper tickets on Pricline. Businessto-business Score: 1/1 100% Value Correct Answer Feedback 8. whys. Of the four ebusiness challenges. must pay sales tax. Consumerto-consumer B.usg. They are surprised to find out that airline tickets are far more expensive than they anticipated.

a Web browser D.. URL (universal resource locator) C.usg. Student Response C.S.view. DARPA (Department 100% Value Correct Answer Feedback 5 of 8 7/8/12 9:08 PM .edu/webct/urw/tp9214421899391. a network B. Originally. What is the Internet protocol Web browsers use to request and display Web pages using universal resource locators? Student Response A. HTTP (hypertext transport protocol) D.lc904175. Department of Defense Student Value Response A. _____________ was essentially an emergency military communications system operated by an agency of the U. Ensuring consumer protection Score: 1/1 Value Correct Answer Feedback 100% 9. the World Wide Web C. Adhering to taxation rules D. HTML (hypertext markup language) B.View Attempt https://gpc.. the Internet Score: 1/1 100% Correct Answer Feedback 10.

.lc904175. Student Response of Defense Advanced Research Protocol Association) Score: 1/1 Value Correct Answer Feedback 11. 6 of 8 7/8/12 9:08 PM . ______________________ implies that organizations that cannot adapt to the new demands placed on them for surviving in the information age are doomed to extinction. Open system B.view.. Reputation system Score: 1/1 Value 100% Correct Answer Feedback 12.View Attempt https://gpc. Facebook D. Google Chrome B. Which of the following is NOT a type of web browser? Student Value Response A. Internet Explorer C.usg.edu/webct/urw/tp9214421899391. Knowledge-based system C. Mozilla Firefox Score: 1/1 100% Correct Answer Feedback 13. What is the system that consists of non-proprietary hardware and software based on publicly known standards that allows third parties to create add-on products to plug into or inter-operate with the system? Student Response A. Management information system D.

What is the ebusiness model that represents 80% of all online business and is typically more complex requiring greater security needs? Student Response A. Virtual Score: 1/1 Correct Answer Feedback 15.. Ecommerce C. Consumerto-business B.view..edu/webct/urw/tp9214421899391. Businessto-consumer D. Pure-play B.lc904175. A sustaining technology Score: 1/1 100% Correct Answer Feedback 14. Student Value Response A. Ebusiness B. Which type of ebusiness operational model best describes Apple? Student Value Response A. A disruptive technology D. Businessto-business Score: 1/1 100% Value Correct Answer Feedback 7 of 8 7/8/12 9:08 PM . Digital Darwinism E.View Attempt https://gpc. Consumerto-consumer C. Click100% and-mortar C. Brickand-mortar D.usg.

lc904175.usg. Done 8 of 8 7/8/12 9:08 PM .edu/webct/urw/tp9214421899391..view.View Attempt https://gpc..

partners. the ethical issues surrounding copyright infringement and the violation of intellectual property rights are consuming the ebusiness world. Trust among companies. the outcome could sink the company. Copyright is the legal protection afforded an expression of an idea. Intellectual property is intangible creative work that is embodied in physical form and includes copyrights. Each time employees make a decision about a privacy issue. Privacy is related to confidentiality. LO. Technology poses new challenges for our ethics —the principles and standards that guide our behavior toward other people. INFORMATION ETHICS Ethics and security are two fundamental building blocks for all organizations. Chapter4: Ethics and Information Security: MIS Business Concerns Section 4. such as a song. Privacy is the right to be left alone when you want to be. 4. and murkiest.1 Explain the ethical issues in the use of information technology..com/sites/0077338340/student_view.1 Ethics http://highered. 4.1 Ethics p. Information ethics govern the ethical and moral issues arising from the development and use of 1 of 12 7/5/12 9:31 PM . ethical issues facing organizations today. the value of ethics and security should be evident. and patents. enormous business scandals along with 9/11 have shed new light on the meaning of ethics and security.Section 4. customers. or video game.2 Identify the six epolicies organizations should implement to protect themselves. and not to be observed without your consent.mcgraw-hill. Privacy is one of its main ingredients. As it becomes easier for people to copy everything from words and data to music and video. trademarks.1: Explain the ethical issues in the use of information technology. Consumers' concerns that their privacy will be violated because of their interactions on the Web continue to be one of the primary barriers to the growth of ebusiness. and suppliers is the support structure of ebusiness. The protection of customers' privacy is one of the largest.. to have control over your personal possessions. which is the assurance that messages and information remain available only to those authorized to view them. book. When the behavior of a few individuals can destroy billion-dollar organizations. In recent years. 135 144 143 142 141 140 138 137 136 LEARNING OUTCOMES 4.

Section 4. Figure 4...1 Ethics http://highered. Inevitably. information technologies. the only product that can be sold based on credit information is credit. to identify potential customers such as Joe Reidenberg. duplication. few hard and fast rules exist for always determining what is ethical.” However. responsibilities. and processing of information itself (with or without the aid of computer technologies). as well as the creation.2 Unfortunately. salaries. clear-cut situations but as clashes among competing goals. A representative for Equifax stated.” In other words.com/sites/0077338340/student_view.1 Ethically Questionable or Unacceptable Information Technology Use APPLY YOUR KNOWLEDGE BUSINESS DRIVEN DISCUSSION Information—Does It Have Ethics? A high school principal decided it was a good idea to hold a confidential conversation about teachers. Joe Reidenberg received an offer for AT&T cell phone service. The two primary areas concerning software include pirated software and counterfeit software. for example. and what might be ethical is not always legal. Counterfeit software is software that is manufactured to look like the real thing and sold as such. “As long as AT&T Wireless (or any company for that matter) is offering the cell phone service on a credit basis. distribution. AT&T used Equifax. and student test scores on his cellular phone in a local 2 of 12 7/5/12 9:31 PM .1. Knowing the law is important but that knowledge will not always help.mcgraw-hill. Unfortunately. Many people can either justify or condemn the actions in Figure 4. because what is legal might not always be ethical. duplication. this seemed like a good business opportunity between Equifax and AT&T wireless. collection. Pirated software is the unauthorized use. For example. the question remains—is it ethical?4 FIGURE 4. or sale of copyrighted software. a credit reporting agency. the Fair Credit Reporting Act (FCRA) forbids repurposing credit information except when the information is used for “a firm offer of credit or insurance. and loyalties. Ethical dilemmas in this area usually arise not as simple.1 contains examples of ethically questionable or unacceptable uses of information technology. distribution. such as allowing the use of the service before the consumer has to pay. Overall. it is in compliance with the FCRA. there will be more than one socially acceptable or “correct” decision.

2 shows the four quadrants of ethical and legal behavior.. It's just one tiny word. From the magazines. Not realizing that one of the student's parents was sitting next to him.com/sites/0077338340/student_view.mcgraw-hill. blogs. Technology has provided so many incredible opportunities.1 Ethics http://highered. Figure 4. these are true stories): A student raises her hand in class and states. that organizations face. decreased expenses. the principal accidentally divulged sensitive information about his employees and students.. electronic business. but it has monumental impact on every area of business. The irate parent soon notified the school board about the principal's inappropriate behavior and a committee was formed to decide how to handle the situation.3 With the new wave of collaboration tools.Section 4. if any. many still being defined. there are also disadvantages associated with remote workers such as new forms of ethical challenges and information security risks. “I can legally copy any DVD I get from Netflix because Netflix purchased the DVD and the copyright only applies to the company who purchased the product. The goal for organizations is to make decisions within quadrant I that are both legal and ethical. but it has also provided those same opportunities to unethical people. and newspapers you read to the courses you take.” 3 of 12 7/5/12 9:31 PM . Advantages associated with remote workers include increased productivity. Starbucks. discuss the following statement: Information Does Not Have Any Ethics. you will encounter ethics as it is a hot topic in today's electronic world. APPLY YOUR KNOWLEDGE BUSINESS DRIVEN ETHICS AND SECURITY Is IT Really Worth the Risk? Ethics. would you enforce on the principal? What types of policies would you implement across the school district to ensure this scenario is never repeated? Be sure to highlight how remote workers impact business along with any potential ethical challenges and information security issues. employees are finding themselves working outside the office and beyond traditional office hours. and the Internet. This is a good example of the ethical dilemmas. and boosts in morale as employees are given greater flexibility to choose their work location and hours. In a group. Discuss the ethical issues surrounding each of the following situations (yes. what types of questions would you want answered? What type of punishment. Unfortunately. If you were elected to the committee to investigate the principal's inappropriate Starbucks phone conversation.

Frequently. it falls to those who own the information to develop ethical guidelines about how to manage it.. Several students pay on the spot and upload the scanned textbook to their PCs. which he will gladly sell for $20. including his email backup. audit.3 provides an overview of some of the important laws individuals and firms must 4 of 12 7/5/12 9:31 PM . An employee is looking at the shared network drive and discovers his boss's entire hard drive. A student stands up the first day of class before the professor arrives and announces that his fraternity scans textbooks and he has the textbook for this course on his thumb drive.1 Ethics http://highered. FIGURE 4. sharing itself if it is sensitive or personal. digital information serves as key evidence in legal proceedings and it is far easier to search. Information compliance is the act of conforming. governance. Ediscovery (or electronic discovery)) refers to the ability of a company to identify. A senior manager is asked to monitor his employee's email to discover if she is sexually harassing another employee. A few years ago the ideas of information management. the only reliable way to truly obliterate digital information is to destroy the hard drives where the file was stored.mcgraw-hill. Today. Information governance is a method or system of government for information management or control. As the importance of ediscovery grows. Information management examines the organizational resource of information and regulates its definitions. or information inquiry. seize. value.2 Acting Ethically and Acting Legally Are Not Always the Same Information Does Not Have Ethics. A senior marketing manager is asked to monitor his employee's email because there is a rumor that the employee is looking for another job. A vice president of sales asks her employee to burn all of the customer data onto an external hard drive because she made a deal to provide customer information to a strategic partner. investigation. Therefore. so does information governance and information compliance. One student takes down the student information and contacts the publisher about the incident. and distribution ensuring it has the types of data/information required to function and grow effectively. uses. or revealing details to third parties.Section 4. It will not stop itself from spamming customers. An employee is accidently copied on an email listing the targets for the next round of layoffs. Figure 4. In fact. gather. Information cannot delete or preserve itself. People Do Information itself has no ethics. search. or yielding information. It does not care how it is used. primarily due to the role digital information plays in corporate legal proceedings or litigation. acquiescing.com/sites/0077338340/student_view. and compliance were relatively obscure. and filter than paper documents.. these concepts are a must for virtually every company. Digital information is also extremely difficult to destroy especially if it is on a corporate network or sent via email. organize. both domestic and global. has been copied to the network and is visible to all. or export digital information in responding to a litigation.

com/sites/0077338340/student_view. Building a corporate culture based on ethical principles that employees implement to protect can understand and implement is responsible management. 4. employee procedures.. Epolicies are policies and procedures that address information management along with the ethical use of computers and the Internet in the business environment.1 Ethics http://highered.Section 4. and themselves. a leading Internet poker site reported that a hacker 5 of 12 7/5/12 9:31 PM . Figure 4. at a minimum.mcgraw-hill. These policies set employee expectations about the organization's practices and standards and protect the organization from misuse of computer systems and IT resources.4 displays the epolicies a firm should implement to set employee expectations. follow in managing and protecting information.2: Identify the six epolicies organizations should Treating sensitive corporate information as a valuable resource is good management.3 Established Information Related Laws DEVELOPING INFORMATION MANAGEMENT POLICIES LO. If an organization's employees use computers at work. Ethical Computer Use Policy In a case that illustrates the perils of online betting. the organization should. organizational rules for information. Organizations should develop written policies establishing employee guidelines. implement epolicies.5 FIGURE 4..

If an organization were to have only one epolicy. which contains general principles regarding information privacy. For example. after appropriate warnings. Managers should make a conscientious effort to ensure all users are aware of the policy through formal training and other means. information is collected and stored for some purpose. Information Privacy Policy An organization that wants to protect its information should develop an information privacy policy. was an employee of AbsolutePoker.000 and $700. consent to abide by them.mcgraw-hill. FIGURE 4. the overriding principle should be informed consent. it might explicitly state that users should refrain from playing computer games during working hours. Then. The users should be informed of the rules and. it should be an ethical computer use policy because that is the starting point and the umbrella for any other policies the organization might establish. the company may terminate an employee who spends significant amounts of time playing computer games at work. For this reason.4 Overview of Epolicies Organizations can legitimately vary in how they expect employees to use computers.Section 4. and even at what time of day. but rather unintentionally. but in any approach to controlling such use. the unethical use of information happens not through the malicious scheming of a rogue marketer.. a sales or marketing professional 6 of 12 7/5/12 9:31 PM . which it follows. no-limit Texas hold-'em tournaments—the ability to see his opponents' hole cards. Just imagine what a sales and marketing department could do if it gained access to this information.1 Ethics http://highered.000 by one victim.6 One essential step in creating an ethical corporate culture is establishing an ethical computer use policy. exploited a security flaw to gain an insurmountable edge in high-stakes. This policy ensures the users know how to behave at work and the organization has a published standard to deal with infractions. Regardless of what business a company operates—even one that many view as unethical—the company must protect itself from unethical employee behavior.com and hacked the system to show that it could be done. The cheater.. Inovant bans the use of Visa's customer information for anything outside its intended purpose—billing. For example. In a large majority of cases. on which days.com/sites/0077338340/student_view. Innovant's privacy specialists developed a strict credit card information privacy policy. Visa created Inovant to handle all its information systems including its coveted customer information. Now Inovant is being asked if it can guarantee that unethical use of credit card information will never occur. which details how people are spending their money. An ethical computer use policy contains general principles to guide computer user behavior. in which stores. For instance. such as record keeping or billing. whose illegitimate winnings were estimated at between $400. by agreeing to use the system on that basis.

S. the Internet contains numerous materials that some believe are offensive. Because of the large amounts of computing resources that Internet users can expend. an Internet use policy: Describes the Internet services available to users. Generally. and the Internet. information systems. The information is “unintentionally” used for new purposes. Not performing any nonrepudiation.Section 4. Some organizations go so far as to create a unique information management policy focusing solely on Internet use. A nonrepudiation clause is typically contained in an acceptable use policy. if any. Not posting commercial messages to groups without prior permission. making regulation in the workplace a requirement. which started simply as a way to identify government retirement benefits and then was used as a sort of universal personal ID. which states the user agrees to adhere to certain stipulations.mcgraw-hill.1 Ethics http://highered.. it is essential that such use be legitimate. share it with partners. and protecting the organization's good name. are placed on that access. Google. Acceptable Use Policy An acceptable use policy (AUP) requires a user to agree to follow it to be provided access to corporate email. States the ramifications if the policy is violated. Users agree to the following in a typical acceptable use policy: Not using the service as part of violating any law. each customer is typically presented with an AUP. The classic example of this type of unintentional information reuse is the Social Security number. In addition. Google's systems were targeted by highly sophisticated hacker attacks aimed at obtaining proprietary information including personal data belonging to Chinese human rights activists who use Google's Gmail service. Defines the organization's position on the purpose of Internet access and what restrictions. properly handling offensive material. or sell it to a trusted third party.. which 7 of 12 7/5/12 9:31 PM . APPLY YOUR KNOWLEDGE BUSINESS DRIVEN GLOBALIZATION Censoring Google The Google debate over operations in China is an excellent example of types of global ethical and security issues U.com/sites/0077338340/student_view. When signing up with an email provider. Not attempting to break the security of any computer network or user. figures out another way to use it internally. Describes user responsibility for citing sources. An Internet use policy contains general principles to guide the proper use of the Internet. Many businesses and educational facilities require employees or students to sign an acceptable use policy before gaining network access. found on everything from drivers' licenses to savings accounts. Nonrepudiation is a contractual stipulation to ensure that ebusiness participants do not deny (repudiate) their online actions. companies face as they expand operations around the world.

.com/sites/0077338340/student_view.5). A mail bomb sends a massive amount of email to a specific person or system that can cause that user's server to stop functioning. Most working professionals use email as their preferred means of corporate communications.S. Describes the legitimate grounds for reading email and the process required before such action is performed. first-class mail. A typical email privacy policy: Defines legitimate email users and explains what happens to accounts after a person leaves the organization.5 Email Is Stored on Multiple Computers 8 of 12 7/5/12 9:31 PM . Explains backup procedure so users will know that at some point. this expectation is based on the false assumption that email privacy protection exists somehow analogous to that of U. even if a message is deleted from their computer. Informs users that the organization has no control over email once it has been transmitted outside the organization. originally agreed to filter search results based on Chinese government censorship rules. using work email for anything other than work is not a good idea.Section 4. Discourages sending junk email or spam to anyone who does not want to receive it. Why would China want to filer search results? Do you agree or disagree with China's censorship rules? Do you think Google was acting ethically when it agreed to implement China's censorship rules? Why do companies operating abroad need to be aware of the different ethical perspective found in other cultures?7 Email Privacy Policy An email privacy policy details the extent to which email messages may be read by others.. That means that if the organization wants to read everyone's email. Companies can mitigate many of the risks of using electronic messaging systems by implementing and adhering to an email privacy policy. To a large extent. Email is so pervasive in organizations that it requires its own specific policy. Basically. Generally. Prohibits attempting to mail bomb a site. the organization that owns the email system can operate the system as openly or as privately as it wishes. it can do so. Simply deleting an email from one computer does not delete it from the others. there are risks associated with using them. China called Google's plan to defy government censorship rules unfriendly and irresponsible and demanded Google shut down all operations in China. One major problem with email is the user's expectations of privacy.mcgraw-hill. While email and instant messaging are common business communication tools.1 Ethics http://highered. For instance. FIGURE 4. a sent email is stored on at least three or four computers (see Figure 4. Surveys indicate that the majority of large firms regularly read and analyze employees' email looking for confidential data leaks such as unannounced financial results or the sharing of trade secrets that result in the violation of an email privacy policy and eventual termination of the employee. decided to unfilter search results after what it called an infiltration of its technology and the email accounts of Chinese human-rights activists. it is still stored by the company.

and personal Twitter policies. But there are also tremendous risks as a few employees representing an entire company can cause tremendous brand damage. or software because there is no such thing as a universal litmus test for spam. The use of social media can contribute many benefits to an organization. Having a single social media policy might not be enough to ensure the company's online reputation is protected. Employee Twitter. Corporate YouTube policy. It is difficult to write anti-spam policies. corporate executives at Domino's did not know about the damaging tweets until it was too late.Section 4.. laws. from receptionist to CEO.mcgraw-hill. Additional. Employee social network and personal social network policies.com/sites/0077338340/student_view. Not having a Twitter account. Employee LinkedIn policy. An anti-spam policy simply states that email users will not send unsolicited emails (or spam). Employee Facebook usage and brand usage policy. Employee blog and personal blog policies. Companies can protect themselves by implementing a social media policy outlining the corporate guidelines or principles governing employee online communications. and clogs email systems and siphons MIS resources away from legitimate business projects. more specific..1 Ethics http://highered. Social Media Policy Did you see the YouTube video showing two Domino's Pizza employees violating health codes while preparing food by passing gas on sandwiches? Millions of people did and the company took notice when disgusted customers began posting negative comments all over Twitter. APPLY YOUR KNOWLEDGE BUSINESS DRIVEN MIS 9 of 12 7/5/12 9:31 PM . It plagues employees at all levels within an organization. Defining a set of guidelines implemented in a social media policy can help mitigate that risk. because it can vary widely not just from one company to the next. corporate Twitter. One person's spam is another person's newsletter. social media policies a company might choose to implement include:8 Employee online communication policy detailing brand communication. Spam is unsolicited email. End users have to decide what spam is. and implemented correctly it can become a huge opportunity for employees to build brands. but from one person to the next.

employee monitoring is not a choice. but for employees who do not spend countless hours on the Internet. Therefore. title.6 for an overview). Information technology monitoring tracks people's activities by such measures as number of keystrokes. and read most of your workplace communications. To combat these issues. and summary of every item tracked. Workplace Monitoring Policy Increasingly. CEO of the Bank of Ireland.” This might seem like common sense.com/sites/0077338340/student_view.. it is a risk-management obligation.mcgraw-hill. unless company policy specifically states otherwise (and even this is not assured). The CBC also discourages posting any political preferences in personal profiles. Several common stipulations an organization can follow when creating an employee monitoring policy include: 10 of 12 7/5/12 9:31 PM . your employer may listen. for example. Next.Section 4. computer terminals. blog. Basic rules state that reporters never allow one source to view what another source says and reporters want to ensure private conversations with sources remain private. through electronic and voice mail. Monitoring employees is one of the biggest challenges CIOs face when developing information management policies. especially on telephones. forcing Soden to resign. message boards.com creates digital dashboards allowing executives to view at a glance the date published. social networking sites. Sources Are Not Friends The Canadian Broadcasting Company (CBC) has issued a social networking policy directing journalists to avoid adding sources or contacts as friends on social networking sites such as Facebook or LinkedIn. a number of companies specialize in online social media monitoring. monitoring the hundreds of different social media sites can quickly become overwhelming. Michael Soden. he hired Hewlett-Packard to run the MIS department and illicit websites were discovered on Soden's own computer. and media sharing sites.9 Organizations must protect their online reputations and continuously monitor blogs. and when employees are using the Internet. The best path for an organization planning to engage in employee monitoring is open communication including an employee monitoring policy stating explicitly how. but also the influence of the particular person. The dashboard not only highlights what's being said. issued a mandate stating that company employees could not surf illicit websites with company equipment. when. commenting on bulletin boards or people's “Facebook wall. source. However. Trackur. and detail the types of social media policies that the company currently has or should implement. and number of transactions processed (see Figure 4.. error rate. It may also not be in a journalist's best interest to become a “friend” in a source's network. Adding sources as “friends” can compromise a journalist's work by allowing friends to view other friends in the network. Such monitoring is virtually unregulated.1 Ethics http://highered. especially social media policies? Research three companies you would like to work for upon graduation. or social media site. watch. and where the company monitors its employees. using social networking sites can be confusing and overwhelming. Why is it critical for any new hire to research and review all policies.10 New technologies make it possible for employers to monitor many aspects of their employees' jobs.

accessed May 27 11 of 12 7/5/12 9:31 PM . 2 Michael Schrage.cio. 2009.. IM. accessed April 17. Expressly communicate that the company reserves the right to monitor all employees. Most managers do not want their employees conducting personal business during working hours. If an organization does trust its employees.com/article/31780/ Build_the_Business_Case_Extracting_Value_from_the_Customer .. 2010.” CIO Magazine. network activity.) will be monitored.6 Internet Monitoring Technologies Be as specific as possible stating when and what (email. July 1. Internet. accessed April 17. it should ask itself. 2002.cio.com/sites/0077338340/student_view.Section 4.mcgraw-hill. then it might want to treat them accordingly. “Take the Data Pledge. then perhaps it should find new ones. “The CIO Code of Ethical Data Management.” Bloomberg BusinessWeek. http://www. and it might find the effects of employee monitoring are often worse than lost productivity from employee Web surfing. FIGURE 4. Before an organization implements monitoring technology. Many employees use their company's high-speed Internet access to shop. 4 Peter S. and they implement a Big Brother approach to employee monitoring.com .” CIO Magazine. Green. “Build the Business Case. An organization that follows its employees' every keystroke might be unwittingly undermining the relationships with its employees. 3 Scott Berinato. Always enforce the policy the same for everyone. Many management gurus advocate that organizations whose corporate cultures are based on trust are more successful than those whose corporate cultures are based on mistrust. 2003. State the consequences of violating the policy. etc. “What does this say about how we feel about our employees?” If the organization really does not trust its employees.1 Ethics http://highered. March 15. www. April 23. and surf the Web. browse. 2010.

msnbc. Volume 10.com/sites/0077338340/student_view. Defies China Government (Update4).” www.” The Wall Street Journal.com . March.com . 1986 http://www.net/2007/08/03/cbc-tells-journalists-how-to-behave-on-facebook/. 12 of 12 7/5/12 9:31 PM . 2010 . accessed April 15. 2010 .” Management Information Systems Quarterly.mcgraw-hill.com/apps/news?pid = newsarchive &sid = aaE9Owm3d5Bg.” Bloomberg BusinessWeek. 9 “CBC Tells Journalists How to Behave on E-Trade Facebook. 8 Raymund Flandez “Dominoʼs Response Offers Lessons in Crisis Management.html . 2009 McGraw-Hill Higher Education Any use is subject to the Terms of Use and Privacy Notice.1 Ethics http://highered.misq. “Online Poker Cheating Blamed on Employee. 10 Andy McCue. 7 Brian Womack. 2010.” ReportR. http://www. accessed June 2004.” MSNBC. April 20.com/id/21381022/ .. http://www. Number 1.bloomberg. accessed April 15.msn. McGraw-Hill Higher Education is one of the many fine businesses of The McGraw-Hill Companies. “Google Ends Self-Censorship. 2007. March 23.org/archivist/vol/no10/issue1 /vol10no1mason.com/independentstreet/2009/04/20/dominos-response-offerslessons-in-crisis-management/ . "http://www. “Bank Boss Quits after Porn Found on PC.Section 4. 5 Richard Mason.businessweek. 6 Mike Brunker.. 2009 http://blogs.wsj. October 19. 2010 . August 3. net . “Four Ethical Issues of the Information Age. 2007.reportr.

145 APPLY YOUR KNOWLEDGE BUSINESS DRIVEN DEBATE Fired for Smoking on the Weekend New technologies make it possible for employers to monitor many aspects of their employees' jobs. Numerous employees have been fired for smoking cigarettes on the weekend in the privacy of their own home. and read most of your workplace communications. employers are increasingly seeking to regulate employee behavior—at home as well as in the workplace. at home and on weekends.3 Describe the relationships and differences between hackers and viruses. p. 146 154 153 152 151 150 148 147 LEARNING OUTCOMES 4. watch. As health care costs escalate. 4. you read that correctly.. unless company policy specifically states otherwise (and even this is not assured).com/sites/0077338340/student_view.2 Information Security p. Business Driven Information Systems eBook 3/e Content Chapter4: Ethics and Information Security: MIS Business Concerns Section 4. computer terminals.. and (3) detection and response.Section 4.mcgraw-hill. (2) prevention and resistance.5 Provide an example of each of the three primary information security areas: (1) authentication and authorization.4 Describe the relationship between information security policies and an information security plan. Weyco. and employees' spouses. and when employees are using the Internet. your employer may listen. 4.2 Information Security http://highered. 1 of 13 7/5/12 9:31 PM . Yes. especially on telephones. Therefore. through electronic and voice mail. Employers are taking monitoring activity a step further and monitoring employees. Such monitoring is virtually unregulated.

Figure 4.. and even travel or legal expenses..Section 4.” Downtime refers to a period of time when a system is unavailable. Although natural disasters may appear to be the most devastating causes of MIS outages. they are hardly the most frequent or most expensive.mcgraw-hill. A few questions managers should ask when determining the cost of downtime are:12 How many transactions can the company afford to lose without significantly harming business? Does the company depend upon one or more mission-critical applications to conduct business? How much revenue will the company lose for every hour a critical application is unavailable? What is the productivity cost associated with each hour of downtime? How will collaborative business processes with partners.com/sites/0077338340/student_view. between Unplanned downtime can strike at any time for any number of reasons. damage to reputations.3: Describe the relationships To accurately reflect the crucial interdependence between MIS and business processes. If the employee failed the nicotine test a second time.2 Information Security http://highered. initiated a program requiring mandatory breath tests to detect for nicotine. but also with financial performance. A positive test means the employee must pay a monthly fee of $80 until the spouse takes a smokingcessation program and tests nicotine-free. viruses. what would be your argument supporting its smoking prohibition policies? Do you think Weyco's monitoring practices are ethical? Do you think Weyco's monitoring practices are legal? PROTECTING INTELLECTUAL ASSETS LO 4. from hackers and tornadoes to sink overflows to network failures to power outages (see Figure 4.11 Do you agree that companies have the right to hold employees accountable for actions they perform on weekends in the privacy of their own homes? If you were the CEO of Weyco. Weyco's smoking prohibition does not stop with employees but extends to spouses also who must pass monthly nicotine tests. we should update the old business axiom “Time is money” to say “Uptime and differences is money. suppliers. that person would be fired—no matter how long the employee had been with the company. and any employee testing positive would be sent home without pay for one month. an insurance benefits administrator in Michigan. and customers be affected by an unexpected IT outage? What is the total cost of lost productivity and lost revenue during unplanned downtime? FIGURE 4.8 demonstrates that the costs of downtime are not only associated with lost revenues.7 Sources of Unplanned Downtime 2 of 13 7/5/12 9:31 PM .7).

24/7 operations.com/sites/0077338340/student_view.Section 4. Information security is a broad term encompassing the protection of information from accidental or intentional misuse by persons inside or outside an organization..2 Information Security http://highered.. and overextended IT budgets and resources. global recession. Any unexpected downtime in today's business environment has the potential to cause both short.and long-term costs with far-reaching consequences.mcgraw-hill.8 The Cost of Downtime The reliability and resilience of IT systems have never been more essential for success as businesses cope with the forces of globalization. Understanding how to secure 3 of 13 7/5/12 9:31 PM . FIGURE 4. government and trade regulations. Information security is the primary tool an organization can use to combat the threats associated with downtime.

.10 shows how a virus is spread.Section 4.11 provides an overview of the most common types of viruses.9 lists the various types of hackers organizations need to be aware of. it seems it is also bad for company security as hackers regularly use smoking entrances to gain building access.. either for profit or just motivated by the challenge. Once inside they pose as employees from the MIS department and either ask for permission to use an employee's computer to access the corporate network. Two additional computer vulnerabilities include adware and spyware.9 Types of Hackers FIGURE 4. Some hackers create and leave viruses causing massive computer damage. and Figure 4.com/sites/0077338340/student_view.10 How Computer Viruses Spread One of the most common forms of computer vulnerabilities is a virus. Hackers and viruses are two of the hottest issues currently facing information security.2 Information Security http://highered. A virus is software written with malicious intent to cause annoyance or damage. Figure 4. Figure 4. or find a conference room where they simply plug-in their own laptop. also allows Internet advertisers to display advertisements without the consent of the computer user. Spyware is a special class of 4 of 13 7/5/12 9:31 PM . information systems is critical to keeping downtime to a minimum and uptime to a maximum.mcgraw-hill. Adware is software that. Security Threats Caused by Hackers and Viruses Hackers are experts in technology who use their knowledge to break into computers and computer networks. FIGURE 4. while purporting to serve some useful function and often fulfilling that function. Smoking is not just bad for a person's health.

..4: Describe the Organizations today are able to mine valuable information such as the identity of the relationship top 20 percent of their customers.Section 4.mcgraw-hill. and user names and passwords. an organization must put in place strong security measures to survive.2 Information Security http://highered. Most between information organizations view this type of information as intellectual capital and implement security security measures to prevent it from walking out the door or falling into the wrong policies and hands.13 Organizational information is intellectual capital. Not all adware programs are spyware and used correctly it can generate revenue for a company allowing users to receive free products. Spyware programs collect specific data about the user. At the same time. Social Security numbers. With security breaches and viruses on the rise and computer hackers everywhere.11 Common Forms of Viruses FIGURE 4. and partners to an 5 of 13 7/5/12 9:31 PM . customers. Figure 4. who usually produce 80 percent of revenues. address. adware that collects data about the user and transmits it over the Internet without the user's knowledge or permission. FIGURE 4. Just as organizations protect their tangible assets —keeping their money in an insured bank or providing a safe working environment for employees—they must also protect their intellectual capital. and browsing habits to credit card numbers.12 displays a few additional weapons hackers use for launching attacks.12 Hacker Weapons THE FIRST LINE OF DEFENSE—PEOPLE LO 4.com/sites/0077338340/student_view. they must enable employees. Spyware is a clear threat to privacy. everything from patents to transactional and analytical information. ranging from general demographics such as name.

such as requiring users to log off before leaving for lunch or meetings. the biggest problem is people as the majority of information security breaches result from people misusing organizational information. This becomes even more important with Web 2. Dumpster diving.. This could also include if downloading attachments is allowed and practices for safe downloading from trusted and untrustworthy sources. Figure 4. Organizations address security risks through two lines of defense. never sharing passwords with anyone. For example.13 displays the three areas where technology can areas: (1) aid in the defense against attacks.0 and as the use of mobile devices. A few details managers should consider surrounding people and information security policies include defining the best practices for14 Applications allowed to be placed on the corporate network.Section 4.5: Provide an example of each of the Once an organization has protected its intellectual capital by arming its people with a three primary information detailed information security plan. and (3) 6 of 13 7/5/12 9:31 PM . An information security plan details how an organization will implement the information security policies. and contractors are growing. The best way a company can safeguard itself from people is by implementing and communicating its information security plan. Insiders are legitimate users who purposely or accidentally misuse their access to the environment and cause some kind of business-affecting incident. and entertainment or freeware created by unknown sources (iPhone applications). the first is people. remote workforce. Information security policies identify the rules required to maintain information security.2 Information Security http://highered. (2) prevention and resistance.com/sites/0077338340/student_view. IM software.mcgraw-hill. and changing passwords every 30 days. characters to be included while choosing passwords. 4. leaving the door wide open for hackers. hackers use their social skills to trick people into revealing access credentials or other valuable information. authentication and authorization. it can begin to focus on deploying technology to security help combat attackers. many individuals freely give up their passwords or write them on sticky notes next to their computers. Surprisingly. Personal computer equipment allowed to connect to the corporate network. is another way hackers obtain information. Through social engineering.. Virus protection including how often the system should be scanned and how frequently the software should be updated. and frequency for password changes. Password creation and maintenance including minimum password length. especially various file sharing applications (Kazaz). access needed information electronically. THE SECOND LINE OF DEFENSE —TECHNOLOGY LO. Corporate computer equipment used for personal reason on personal networks. or looking through people's trash. information security plan. the second technology.

14 displays a phishing scam attempting to gain information for Bank of America. 2. Once a system determines the authentication of a user. People: Authentication and Authorization Identity theft is the forging of someone's identity for the purpose of fraud. 3. Something the user knows. phishing. ostensibly for accounting or auditing purposes. 7 of 13 7/5/12 9:31 PM . and pharming scams. Since the emails look authentic. you should never click on emails asking you to verify your identity as companies will never contact you directly asking for your user name or password. Authorization is the process of providing a user with permission including access levels and abilities such as file access. such as a user ID and password.. usually by means of fraudulent emails that look as though they came from legitimate businesses. detection and response. because thieves apply for and use credit cards or loans in the victim's name. such as a smart card or token..2 Information Security http://highered. and amount of allocated storage space. it can then determine the access privileges (or authorization) for that user. such as a fingerprint or voice signature.com/sites/0077338340/student_view. the most secure procedures combine all three: 1. Authentication and authorization techniques fall into three categories. Figure 4.15 FIGURE 4.mcgraw-hill. if you were to type in the URL to your bank. and typically ask for verification of important information such as passwords and account numbers. Something that is part of the user.Section 4. pharming could redirect to a fake site that collects your information. Something the user has. up to one in five recipients responds with the information and subsequently becomes a victim of identity theft and other fraud. with official-looking formats and logos. For example. The messages appear to be genuine. Two means of stealing an identity are phishing and pharming. hours of access. Authentication is a method for confirming users' identities. Authentication and authorization technologies can prevent identity theft. Phishing is a technique to gain personal information for the purpose of identity theft.13 Three Areas of Information Security Pharming reroutes requests for legitimate websites to false websites. The fraud is often financial.

something that is part of the user. The user enters his or her user ID and token-displayed password to gain access to the network. offers a much more effective way to identify individuals than a user ID and password. However..14 Bank of America Phishing Scam Something That Is Part of the User Such as a Fingerprint or Voice Signature The third kind of authentication. Tokens are small electronic devices that change user passwords automatically. using something the user knows. iris. or handwriting. a form of digital cash. Biometrics (narrowly defined) is the identification of a user based on a physical characteristic. 8 of 13 7/5/12 9:31 PM . face..Section 4. and a social engineer can coax a password from almost anybody. such as a fingerprint. voice. is by far the best and most effective way to manage authentication. which can cost an organization significant money. Unfortunately. this is actually one of the most ineffective ways for determining authentication because passwords are not secure. containing embedded technologies that can store information and small amounts of software to perform some limited processing. All it typically takes to crack one is enough time. Tokens and smart cards are two of the primary forms of this type of authentication. is the most common way to identify individual users and typically consists of a unique user ID and password.com/sites/0077338340/student_view. using something the user has. or a data storage device with the ability to store an entire medical record. FIGURE 4. Something the User Knows Such as a User ID and Password The first type of authentication. Something the User Has Such as a Smart Card or Token The second type of authentication. A smart card is a device about the size of a credit card. biometric authentication can be costly and intrusive. Smart cards can act as identification instruments. More than 50 percent of help-desk calls are password related.mcgraw-hill.2 Information Security http://highered.

to prevent the accidental or malicious transmission of unauthorized information. but once you start reviewing the costs associated with biometrics you quickly realize that this is not feasible. a form of unsolicited email.. whether the transmission was malicious or accidental. not the actual doodle (similar to handwriting recognition technologies).16 If you were going to deploy doodle passwords to your organization.2 Information Security http://highered. encryption.. people are finding the number of user names and passwords they need to remember growing exponentially. or simply write down their passwords on sticky notes and attach them to their computers. Of course the obvious answer is to deploy biometrics across the board. but not so great for system security. than biometrics. Content filtering occurs when organizations use software that filters content. The doodle password can be displayed to users. Organizations can use content filtering technologies to filter email and prevent emails containing sensitive information from transmitting. therefore offering great security. what issues and concerns do you think might occur? Do you agree that doodles are easier to 9 of 13 7/5/12 9:31 PM . such as emails. What is coming to the rescue to help with the password nightmare we have created? The doodle. APPLY YOUR KNOWLEDGE BUSINESS DRIVEN INNOVATION Doodling Passwords As our online world continues to explode.mcgraw-hill. Doodles are even described as being far more anonymous. For this reason many users will assign the same password for every log-on. Email content filtering can also filter for spam. Great for the person who needs to remember 72 different passwords. BDAS begins by recording the number of strokes it takes a user to draw a doodle and when the user wants to gain access to the system he simply redraws the doodle on a touchpad and it is matched against the stored prototype. If the doodle matches. Data: Prevention and Resistance Prevention and resistance technologies stop intruders from accessing and reading data by means of content filtering.Section 4. and they simply have to redraw it since the system analyzes how the user draws or the user's unique hand strokes. You are probably thinking that you'll end up right back in the same position having to remember all 72 of your password doodles. the user is granted access. and firewalls. It can also filter emails and prevent any suspicious files from transmitting such as potential virus-infected files. Background Draw-a-Secret (BDAS) is a new program created by scientists at Newcastle University in England. The good news is that with doodle passwords you don't have to remember a thing. choose easy to remember names and dates.com/sites/0077338340/student_view.

FIGURE 4. and users should enlist additional security 10 of 13 7/5/12 9:31 PM . who use that key to encrypt their information and send it via the Internet. Public keys are becoming popular to use for authentication techniques consisting of digital objects in which a trusted third party confirms correlation between the user and the public key. As Figure 4. The organization provides the public key to all customers. Encryption can switch the order of characters. A digital certificate is a data file that identifies individuals or organizations online and is comparable to a digital signature. frequently use encryption. replace characters with other characters. When it arrives at its destination. If there were a security breach and the stolen information were encrypted. Firewalls can even detect computers communicating with the Internet without approval. whether end consumers or other businesses. If they are missing.16 illustrates.. Companies that transmit sensitive customer information over the Internet. organizations typically place a firewall between a server and the Internet. the firewall prevents the information from entering the network. It screens all network traffic for proper passwords or other security codes and allows only authorized transmissions in and out of the network. the thief would be unable to read it.com/sites/0077338340/student_view.Section 4. such as VeriSign. Think of a firewall as a gatekeeper that protects computer networks from intrusion by providing a filter and safe transfer points for access to and from the Internet and other networks. A certificate authority is a trusted third party. such as credit card numbers.15 Public Key Encryption (PKE) Firewalls do not guarantee complete protection. or use a mathematical formula to convert the information into a code. even greater than biometrics? What types of unethical issues do you think you might encounter with doodle passwords? Encryption scrambles information into an alternative form that requires a key or password to decrypt.. Some encryption technologies use multiple keys. that validates user identities by means of digital certificates. Public key encryption (PKE) uses two keys: a public key that everyone can have and a private key for only the recipient (see Figure 4. remember than text passwords? Do you agree that doodles offer the most effective way to manage authentication and authorization. the organization uses the private key to unscramble it.mcgraw-hill. insert or remove characters.15).2 Information Security http://highered. A firewall is hardware and/or software that guard a private network by analyzing incoming and outgoing information for the correct markings.

Antivirus software must be frequently updated to protect against newly created viruses. After identifying an attack.2 Information Security http://highered. the removal of highly classified data files. and how quickly a backup system will be up and running. If a suspicious event or unauthorized traffic is identified. an MIS department can implement response tactics to mitigate the damage. and remove known viruses. detect.Section 4.. Antivirus software scans and searches hard drives to prevent. New York. technologies such as antivirus software and antispyware software..com/sites/0077338340/student_view. Response tactics outline procedures such as how long a system under attack will remain plugged in and connected to the corporate network. and spyware.mcgraw-hill. IDS protects against suspicious network traffic and attempts to access files and data. and Boston APPLY YOUR KNOWLEDGE BUSINESS DRIVEN START-UP LifeLock: Keeping Your Identity Safe 11 of 13 7/5/12 9:31 PM . the IDS will generate an alarm and can even be customized to shut down a particularly sensitive part of a network. Attack: Detection and Response The presence of an intruder can be detected by watching for suspicious network events such as bad passwords. Intrusion detection software (IDS) features full-time monitoring tools that search for patterns in network traffic to identify intruders. or unauthorized user attempts.16 Sample Firewall Architecture Connecting Systems Located in Chicago. adware. when to shut down a compromised system. FIGURE 4.

amanet.0%20security%20concerns. http://www. 2006 http://www.mcgraw-hill.com/stories/2005/10/28/60minutes/main990617.jhtml?articleID = 216402352&queryText = web%202. 17 Kim Zetter..gocsi. 2010. 2004. accessed April 15.cbsnews. 2010. “Web 2. 2009 McGraw-Hill Higher Education Any use is subject to the Terms of Use and Privacy Notice. Davis has been a victim of identity theft at least 13 times.com /threatlevel/2010/05/lifelock-identity-theft..htm.” CBS News . what type of marketing campaign would you launch next? Guaranteeing the safety of organization information is achieved by implementing the two lines of defense: people and technology. To protect information through people.” www.” InformationWeek. prevention and resistance.com-/releases /2007/10/071030091438. from http://www.htm.com/saphelp_nw72/helpdata/en/45/ 17396792ef5d79e10000000a11466f/content. 2007.com. email received Friday. Have you ever seen a LifeLock advertisement? If so. 15 16 Paige Baltzan. Technology-based lines of defense fall into three categories: authentication and authorization.” ScienceDaily.com/news/internet/web2. 14 Thomas Claburn. accessed March 1. 12 “Planned and Unplanned Downtime.0/showArticle. May 28.sciencedaily. 12 of 13 7/5/12 9:31 PM .informationweek.” www. and detection and response.60 Minutes. firms should develop information security policies and plans that provide employees with specific precautions they should take in creating. “Lifelockʼs CEO Identity Stolen 13 Times. 2009 http://www. July 16.Section 4.com/sites/0077338340/student_view.2 Information Security http://highered. accessed February 20. working with. April 1. 11 Daniel Schorn “Whose Life is it Anyway?. The first theft occurred when someone used his identity to secure a $500 loan from a check-cashing company.sap. 13 AMA Research. “Improving Password Protection With Easy To Remember Drawings. “2005 CSI/FBI Computer Crime and Security Survey. Davis discovered the crime only after the company called his wife's cell phone to recover the unpaid debt.0. and transmitting the organization's information assets. you know the Social Security number of LifeLock CEO Todd Davis because he posts it in all ads daring hackers to try to steal his identity. 2006.” SAP.wired. Internet Too Dangerous for Normal People.” Wired. do you think it would be a good idea to post your Social Security number in advertisements? Why or why not? What do you think happened that caused Davis' identity to be stolen? What types of information security measure should LifeLock implement to ensure Davis' Social Security number is not stolen again? If you were LifeLock's CEO. Newcastle University. May 21. “Workplace Monitoring and Surveillance.17 If you were starting an identity theft prevention company. http://help. November 1.shtml.org . 2010 .

.mcgraw-hill.2 Information Security http://highered..Section 4.com/sites/0077338340/student_view. McGraw-Hill Higher Education is one of the many fine businesses of The McGraw-Hill Companies. 13 of 13 7/5/12 9:31 PM .

For this reason. An ethical computer use policy contains general principles to guide computer user behavior. as well as the creation. either for profit or just motivated by the challenge. An acceptable use policy (AUP) is a policy that a user must agree to follow in order to be provided access to corporate email. A social media policy outlines the corporate guidelines or principles governing employee online communications. clear-cut situations but as clashes between competing goals. Inevitably. and to the Internet. duplication. A virus is software written with malicious intent to cause annoyance or damage. Information ethics govern the ethical and moral issues arising from the development and use of information technologies.mcgraw-hill. acting ethically and legally are not always the same. responsibilities.2: Identify the six epolicies organizations should implement to protect themselves. For example. An email privacy policy details the extent to which email messages may be read by others..Learning Outcome Review http://highered. it might explicitly state that users should refrain from playing computer games during working hours.3: Describe the relationships and differences between hackers and viruses.com/sites/0077338340/student_view. Learning Outcome 4. Hackers are experts in technology who use their knowledge to break into computers and computer networks. 1.1: Explain the ethical issues in the use of information technology. when. collection. 6. Learning Outcome 4.. information systems. 4. Ethical dilemmas in this area usually arise not as simple. An information privacy policy contains general principles regarding information privacy. and where the company monitors its employees. p. An employee monitoring policy states explicitly how. 3. there will be more than one socially acceptable or “correct” decision. Business Driven Information Systems eBook 3/e Content Chapter4: Ethics and Information Security: MIS Business Concerns Learning Outcome Review Learning Outcome 4. and loyalties. 1 of 2 7/5/12 9:31 PM . Some hackers create and leave viruses causing massive computer damage. 155 2. 5. and processing of information itself (with or without the aid of computer technologies). distribution.

An information security plan details how an organization will implement the information security policies. A firewall is hardware and/or software that guard a private network by analyzing incoming and outgoing information for the correct markings. and changing passwords every 30 days. hours of access.Learning Outcome Review http://highered. The best way a company can safeguard itself from people is by implementing and communicating its information security plan. Learning Outcome 4. Information security policies identify the rules required to maintain information security. Learning Outcome 4. (2) prevention and resistance. 2 of 2 7/5/12 9:31 PM . such as emails. In a security breach. such as requiring users to log off before leaving for lunch or meetings.5: Provide an example of each of the three primary information security areas: (1) authentication and authorization. Authentication and authorization: Authentication is a method for confirming users' identities. Once a system determines the authentication of a user.. 2009 McGraw-Hill Higher Education Any use is subject to the Terms of Use and Privacy Notice.mcgraw-hill. and amount of allocated storage space.com/sites/0077338340/student_view..4: Describe the relationship between information security policies and an information security plan. McGraw-Hill Higher Education is one of the many fine businesses of The McGraw-Hill Companies. Prevention and resistance: Content filtering occurs when organizations use software that filters content. to prevent the accidental or malicious transmission of unauthorized information. Detection and response: Intrusion detection software (IDS) features full-time monitoring tools that search for patterns in network traffic to identify intruders. it can then determine the access privileges (or authorization) for that user. a thief is unable to read encrypted information. Encryption scrambles information into an alternative form that requires a key or password to decrypt. and (3) detection and response. never sharing passwords with anyone. Authorization is the process of providing a user with permission including access levels and abilities such as file access.

 150       Authorization   The  process  of  providing  a  user  with  permission  including  access  levels  and   abilities  such  as  file  access..  such  as  a   fingerprint.  to   prevent  the  accidental  or  malicious  transmission  of  unauthorized  information.  147       Certificate  authority   A  trusted  third  party..  iris....  face.  detect.Acceptable  use  policy  (AUP)   A  policy  that  a  user  must  agree  to  follow  to  be  provided  access  to  corporate   email.  also  allows  Internet  advertisers  to  display  advertisements  without   the  consent  of  the  computer  user.  such  as  VeriSign.  and  remove  known  viruses.  information  systems.  and  spyware.  while  purporting  to  serve  some  useful  function  and  often  fulfilling   that  function.  that  validates  user  identities  by  means  of   digital  certificates.   adware..  142       Antivirus  software   Scans  and  searches  hard  drives  to  prevent.  and  amount  of  allocated  storage   space.  or  handwriting.  and  the  Internet.  151       Black-­‐hat  hackers   Breaks  into  other  people’s  computer  systems  and  may  just  look  around  or  may   steal  and  destroy  information.   151       Copyright   ...  135       Content  filtering   Occurs  when  organizations  use  software  that  filters  content.  hours  of  access.  152       Confidentiality   The  assurance  that  messages  and  information  remain  available  only  to  those   authorized  to  view  them.  voice.  153       Authentication   A  method  for  confirming  users’  identities..  such  as  emails..  150       Biometrics   The  identification  of  a  user  based  on  a  physical  characteristic.  140       Adware   Software..  148       Anti-­‐spam  policy   Simply  states  that  email  users  will  not  send  unsolicited  emails  (or  spam).

 139       .  139       Email  privacy  policy   Details  the  extent  to  which  email  messages  may  be  read  by  others.  or   information  inquiry..  149       Ediscovery  (or  electronic  discovery)   Refers  to  the  ability  of  a  company  to  identify.  audit..  147       Digital  certificate   A  data  file  that  identifies  individuals  or  organizations  online  and  is  comparable   to  a  digital  signature.  147       Cyberterrorists   Seek  to  cause  harm  to  people  or  to  destroy  critical  systems  or  information  and   use  the  Internet  as  a  weapon  of  mass  destruction.   143       Encryption   Scrambles  information  into  an  alternative  form  that  requires  a  key  or  password   to  decrypt.  book.  135       Counterfeit  software   Software  that  is  manufactured  to  look  like  the  real  thing  and  sold  as  such...  152       Downtime   Refers  to  a  period  of  time  when  a  system  is  unavailable..  and  where  the  company  monitors  its  employees.  seize.  or   video  game.  when.  135       Cracker   A  hacker  with  criminal  intent..  145       Dumpster  diving   Looking  through  people’s  trash...  141       Employee  monitoring  policy   States  explicitly  how...  139       Ethical  computer  use  policy   Contains  general  principles  to  guide  computer  user  behavior.  152       Epolicies   Policies  and  procedures  that  address  information  management  along  with  the   ethical  use  of  computers  and  the  Internet  in  the  business  environment..  search.  such  as  a  song.The  legal  protection  afforded  an  expression  of  an  idea.  gather.  investigation..  or  export   digital  information  in  responding  to  a  litigation.  another  way  hackers  obtain  information..

..  149       Information  compliance   The  act  of  conforming.  135       Information  governance   A  method  or  system  of  government  for  information  management  or  control.   149     ...  either  for  profit  or  motivated  by  the  challenge.  as  well  as  the  creation.  and  processing  of  information  itself  (with  or  without  the  aid  of   computer  technologies).  147       Information  security  plan   Details  how  an  organization  will  implement  the  information  security  policies.  acquiescing.  or  yielding  information.  uses..   138       Information  management   Examines  the  organizational  resource  of  information  and  regulates  its   definitions..   distribution.Ethics   The  principles  and  standards  that  guide  our  behavior  toward  other  people.....  duplication.  152       Hackers   Experts  in  technology  who  use  their  knowledge  to  break  into  computers  and   computer  networks.  138–139       Information  ethics   Govern  the  ethical  and  moral  issues  arising  from  the  development  and  use  of   information  technologies.  value.  135       Firewall   Hardware  and/or  software  that  guard  a  private  network  by  analyzing  incoming   and  outgoing  information  for  the  correct  markings.  147       Identity  theft   The  forging  of  someone’s  identity  for  the  purpose  of  fraud.  and  distribution  ensuring  it  has  the  types  of   data/information  required  to  function  and  grow  effectively..  147       Hactivists   Have  philosophical  and  political  reasons  for  breaking  into  systems  and  will   often  deface  the  website  as  a  protest..  collection.  140       Information  security   A  broad  term  encompassing  the  protection  of  information  from  accidental  or   intentional  misuse  by  persons  inside  or  outside  an  organization.  138       Information  privacy  policy   Contains  general  principles  regarding  information  privacy.

 140       Intrusion  detection  software  (IDS)   Features  full-­‐time  monitoring  tools  that  search  for  patterns  in  network  traffic  to   identify  intruders.  and  changing  passwords  every  30  days.  143       Insiders   Legitimate  users  who  purposely  or  accidentally  misuse  their  access  to  the   environment  and  cause  some  kind  of  businessaffecting  incident...  150       Phishing   A  technique  to  gain  personal  information  for  the  purpose  of  identity  theft.  142       Nonrepudiation   A  contractual  stipulation  to  ensure  that  ebusiness  participants  do  not  deny   (repudiate)  their  online  actions.  135       Internet  use  policy   Contains  general  principles  to  guide  the  proper  use  of  the  Internet.  149       Intellectual  property   Intangible  creative  work  that  is  embodied  in  physical  form  and  includes   copyrights..  such  as  requiring   users  to  logoff  before  leaving  for  lunch  or  meetings...  error  rate.  never  sharing  passwords   with  anyone.  distribution.  and  patents.  149       Information  technology  monitoring   Tracks  people’s  activities  by  such  measures  as  number  of  keystrokes.   and  number  of  transactions  processed.  153       Mail  bomb   Sends  a  massive  amount  of  email  to  a  specific  person  or  system  that  can  cause   that  user’s  server  to  stop  functioning.   Information  security  policies   Identify  the  rules  required  to  maintain  information  security.  140       Pharming   Reroutes  requests  for  legitimate  websites  to  false  websites.  duplication...   usually  by  means  of  fraudulent  emails  that  look  as  though  they  came  from   legitimate  sources..  or  sale  of  copyrighted  software.  149       Pirated  software   The  unauthorized  use.   135       Privacy   ....  trademarks.

.  147             .The  right  to  be  left  alone  when  you  want  to  be...  and  not  to  be  observed  without  your  consent.  142       Spam   Unsolicited  email.  150       Social  engineering   Hackers  use  their  social  skills  to  trick  people  into  revealing  access  credentials  or   other  valuable  information.  to  have  control  over  your   personal  possessions....  149       Social  media  policy   Outlines  the  corporate  guidelines  or  principles  governing  employee  online   communications.  148       Tokens   Small  electronic  devices  that  change  user  passwords  automatically.  148       White-­‐hat  hackers   Work  at  the  request  of  the  system  owners  to  find  system  vulnerabilities  and  plug   the  holes.  147       Smart  card   A  device  about  the  size  of  a  credit  card...  150       Virus   Software  written  with  malicious  intent  to  cause  annoyance  or  damage.  152       Script  kiddies  or  script  bunnies   Find  hacking  code  on  the  Internet  and  click-­‐and-­‐point  their  way  into  systems  to   cause  damage  or  spread  viruses.  135       Public  key  encryption  (PKE)   Uses  two  keys:  a  public  key  that  everyone  can  have  and  a  private  key  for  only  the   recipient.  containing  embedded  technologies  that   can  store  information  and  small  amounts  of  software  to  perform  some  limited   pro...  142       Spyware   A  special  class  of  adware  that  collects  data  about  the  user  and  transmits  it  over   the  Internet  without  the  user’s  knowledge  or  permission.

usg.view. Must frequently update the antivirus software to protect against newly created viruses D. Must download and execute a portable button to activate and maintain the antivirus software C. All of the above 0% Correct Answer Feedback 1 of 10 7/8/12 9:09 PM . To effectively protect your computer from newly created viruses.edu/webct/urw/tp9214421899391.lc904175.. Your location: Home Page › DUE THURSDAY.View Attempt https://gpc.. JULY 5th › CHAPTER 4 QUIZ › Assessments › View All Submissions › View Attempt View Attempt 1 of 1 Title: Started: Submitted: Time spent: CHAPTER 4 QUIZ July 5. 2012 10:00 PM July 5. Must never change vendors B.0 Maximum possible score: 15 Total score: 12/15 = 80% Done 1. what must one do with antivirus software? Student Value Response A. 2012 10:16 PM 00:15:45 Total score adjusted by 0.

Dumpster diving C. Non-Repudiation B. Intellectual Property C. book. such as a song.view. What type of information security breach would you consider this to be? Student Response A. Privacy D.lc904175.usg. Copyright B. User's 100% Expectation of Privacy Same as First-Class Mail Value Correct Answer Feedback 2 of 10 7/8/12 9:09 PM . or video game? Student Response A. Confidentiality Score: 1/1 Value 100% Correct Answer Feedback 3. Score: 0/1 2.. imagine you purchase a digital camera on eBay. An insider D. this email is not actually from eBay and as soon as you log in your information will be stolen.edu/webct/urw/tp9214421899391. Phishing Score: 1/1 100% Value Correct Answer Feedback 4. Three months later you might receive an email asking you to log in to the system and update your credit card or PayPal information.View Attempt https://gpc. For example. Of course. eBay is an example of an online company that has been faced with numerous security issues.. Social Engineering B. What is one of the major problems with email? Student Response A. What is the legal protection afforded an expression of an idea.

Insiders to hack the college system C. Email is Considered Intellectual Property D. resolving customer issues. Janet is a financial aid counselor at a local community college and she shares an office with her three coworkers.lc904175. She notices a steady increase in customer complaints and tracks back to find that the complaints started right around the time ABC Bank provided Internet access to all employees. Viruses and worms to spread through the college system B. Which policy should the company implement to help eliminate this problem? 3 of 10 7/8/12 9:09 PM .edu/webct/urw/tp9214421899391..view. Without realizing it. Student Response C. Jackie is the head teller at ABC Bank and her responsibilities include overseeing and managing the tellers.. Dumpster diving to find user names and passwords Score: 1/1 100% Value Correct Answer Feedback 6. All of the above E. and developing and implementing systems for an optimal and efficient team. Janet feels safe in her office environment and frequently leaves her username and password on a sticky note next to her computer. Jackie watched the tellers closely and found that they were spending significant amounts of time playing Internet games and posting on Facebook.usg.View Attempt https://gpc. e-Espionage D. None of the above Score: 1/1 Value Correct Answer Feedback 5. Janet is creating the potential for which type of information security breach to occur? Student Response A.

Pirated Software D. A workplace monitoring policy B. to have control over your personal possessions.edu/webct/urw/tp9214421899391. Mike Jones. An information privacy policy Score: 1/1 Correct Answer Feedback 7. Privacy C. is responsible for developing a new software game for the Wii. Ethics B. An email privacy policy C. Which of the following means the right to be left alone when you want to be. Student Value Response A..view.. Sophie is a little hesitant and unsure about accepting the game because LEGALLY it would be considered ____________. An Internet 100% use policy D. Sophie Black works as a computer programmer for a software company.lc904175. Mike gives all of the team members a free copy of the game without consent from the company. Counterfeit software B. and not to be observed without your consent? Student Value Response A. After completion of the project. Safety 100% Correct Answer Feedback 4 of 10 7/8/12 9:09 PM . Her boss. Unethical C. Ethical Score: 1/1 100% Correct Answer Feedback 8. Student Value Response A. Security D.View Attempt https://gpc.usg.

.. Building a strong brand identity B. Which of the following represents social media uses for a company? Student Value Response A.lc904175. B and C only E.edu/webct/urw/tp9214421899391.usg. Social media can be a very valuable tool for a company if used properly. Score: 1/1 9. Which of the following is an example of a way to maintain information security that a company should include in their information security policies? Student Value Response A. B and C 100% only Score: 1/1 Correct Answer Feedback 10.View Attempt https://gpc. Protecting the company reputation through counterdamage control C. Engaging directly with customers and prospective customers D. A. Requiring computer users to log off before leaving for lunch Correct Answer Feedback 5 of 10 7/8/12 9:09 PM .view.

Between 100% the server and the Internet C. Between a personal computer and a printer D. Between a personal computer and the server Score: 1/1 Correct Answer Feedback 12. 6 of 10 7/8/12 9:09 PM .view. Never sharing user or password information with anyone C.lc904175..edu/webct/urw/tp9214421899391. B and C only E. B and C 100% only Score: 1/1 Correct Answer Feedback 11.usg.View Attempt https://gpc. A.. Changing passwords every 30-60 days D. Student Value Response B. Between the server and the content filtering software B. Where do organizations typically place firewalls? Student Value Response A.

. D. or specific virtues. benefits to society.edu/webct/urw/tp9214421899391. B. 7 of 10 7/8/12 9:09 PM . usually in terms of rights.View Attempt https://gpc.lc904175. fairness.. Ethics consists of the standards of behavior our society accepts. E. obligations. C. Which of the following statements best describes the meaning of ethics? Student Value Response A. Ethics has to do with my religious beliefs.usg. Being ethical is doing what the law requires.view. Ethics 100% refers to well based standards of right and wrong that prescribe what humans ought to do. Score: 1/1 Correct Answer Feedback 13. Ethics has to do with what my feelings tell me is right or wrong.

like those provided by the Iron Mountain company. HIPPA.edu/webct/urw/tp9214421899391.usg. Answers A and C only E. D. Answer A.view..... The primary benefits of data protection and recovery services. Saves time and money C. SEC regulations. Reduces risks and complexity B. include which of the following: Student Response A. Good faith efforts C. Increases consistency demonstrating compliance with the law. Which of the following actions help companies demonstrate compliance with these types of laws? Student Response A. B and C only Score: 1/1 100% Value Correct Answer Feedback 14. A corporate governance policy B. All of the statements below are ethical issues that companies in the pharmaceutical industry like Raven Biotech face routinely EXCEPT. 8 of 10 7/8/12 9:09 PM . None of the above Score: 0/1 Value 0% Correct Answer Feedback 15.View Attempt https://gpc. Consistency in records management programs D.lc904175. the Patriot Act and other regulations demand records management compliance. Sarbanes-Oxley.

view.View Attempt https://gpc... C. Making false claims about a drug being researched to make their stock price go up. Offering terminally ill patients the option to try a promising drug that is not yet fully tested or approved by the FDA.lc904175. Student Value Response A.usg.edu/webct/urw/tp9214421899391. Setting 0% the price of a drug to either maximize profits so the company can continue to do research in the future or to offer the drug at the lowest price possible to get the drug in the hands of those who need it most. B. ignoring Correct Answer Feedback 9 of 10 7/8/12 9:09 PM .

edu/webct/urw/tp9214421899391. Using animals to test drugs prior to giving them to humans.usg. D. Score: 0/1 Correct Answer Feedback Done 10 of 10 7/8/12 9:09 PM .view.. Student Value Response the demands of investors..View Attempt https://gpc.lc904175.

 primary  business  focus  is  selling  shoes     § The  core  drivers  of  the  information  age   • Data   • Information   • Business  intelligence   • Knowledge     THE  CHALLENGE:  DEPARTMENTAL  COMPANIES   Common  Departments  Working  Independently     THE  SOLUTION:  MANAGEMENT  INFORMATION  SYSTEMS   Common  Departments  Working  Interdependently           .  primary  business  focus  is  renting  videos   • Zappos  –  Not  a  technology  company.CHAPTER  ONE   MANAGEMENT  INFORMATION  SYSTEMS:    BUSINESS  DRIVEN  MIS     COMPETING  IN  THE  INFORMATION  AGE   § Examples  of  the  power  of  business  and  technology   • Amazon  –  Not  a  technology  company.  primary  business  focus  is  selling  books   • Netflix  –  Not  a  technology  company.

 and  processes  across  the  company  to   facilitate  decision-­‐making  and  problem-­‐solving     IDENTIFYING  COMPETITIVE  ADVANTAGES   § Business  strategy  –  A  leadership  plan  that  achieves  a  specific  set  of  goals  or  objectives  such  as   § Developing  new  products  or  services   § Entering  new  markets   § Increasing  customer  loyalty   § Attracting  new  customers   § Increasing  sales     § Competitive  intelligence  –The  process  of  gathering  information  about  the  competitive  environment  to   improve  the  company’s  ability  to  succeed   § Competitive  intelligence  tools   • Porter’s  Five  Forces  Model   • Porter’s  Three  Generic  Strategies   • Porter’s  Value  Chain  Analysis     THE  FIVE  FORCES  MODEL  –  EVALUATING  INDUSTRY  ATTRACTIVENESS   Porter’s  Five  Forces  Model       .  like  accounting  and  human   resources.  which  moves  information  about  people.§   Systems  thinking  –  A  way  of  monitoring  the  entire  system  by  viewing  multiple  inputs  being  processed   or  transformed  to  produce  outputs  while  continuously  gathering  feedback  on  each  part       §   Management  Information  Systems  (MIS)  –            A  business  function.  products.

THE  THREE  GENERIC  STRATEGIES     CHOOSING  A  BUSINESS  FOCUS     Porter’s  Three  Generic  Strategies           VALUE  CHAIN  ANALYSIS  –  EXECUTING  BUSINESS  STRATEGIES     § Business  process  –  A  standardized  set  of  activities  that  accomplish  a  specific  task.  such  as  a  specific   process   § Value  chain  analysis  –  Views  a  firm  as  a  series  of  business  processes  that  each  add  value  to  the  product   or  service     Porter’s  Value  Chain             .

Value  Chain  and  Porter’s  Five  Forces  Model         CHAPTER  TWO   DECISIONS  AND  PROCESSES:  VALUE  DRIVEN  BUSINESS     MAKING  BUSINESS  DECISIONS   § Managerial  decision-­‐making  challenges   • Analyze  large  amounts  of  information   • Apply  sophisticated  analysis  techniques   • Make  decisions  quickly     DECISION-­‐MAKING  ESSENTIALS          Decision-­‐making  and  problem-­‐solving  occur  at  each  level  in  an  organization       .

 such  as  throughput.  and  system  availability   § Effectiveness  MIS  metrics  –  Measures  the  impact  MIS  has  on  business  processes  and  activities.  service.  or  result   § Metrics  –  Measurements  that  evaluate  results  to  determine  whether  a  project  is  meeting  its  goals     EFFICIENCY  AND  EFFECTIVENESS  METRICS   § Efficiency  MIS  metrics  –  Measure  the  performance  of  MIS  itself.METRICS:  MEASURING  SUCCESS   § Project  –  A  temporary  activity  a  company  undertakes  to  create  a  unique  product.   including  customer  satisfaction  and  customer  conversation  rates     SUPPORT:  ENHANCING  DECISION  MAKING  WITH  MIS   § Model  –  A  simplified  representation  or  abstraction  of  reality   § Models  help  managers  to   §  Calculate  risks   §  Understand  uncertainty   §  Change  variables   §  Manipulate  time  to  make  decisions     Types  of  Decision  Making  MIS  Systems       STRATEGIC  SUPPORT  SYSTEMS   Information  Levels  Throughout  An  Organization         .  transaction   speed.

 in  a  structured  sequence   § Business  process  model  -­‐  A  graphic  description  of  a  process.   which  is  developed  for  a  specific   • As-­‐Is  process  model     • To-­‐Be  process  model     .  tasks.  customer  service.  purchasing  raw  materials       MODELS:  MEASURING  PERFORMANCE   § Business  process  modeling  (or  mapping)  -­‐  The  activity  of  creating  a  detailed  flow  chart  or  process  map   of  a  work  process  showing  its  inputs.THE  FUTURE:  ARTIFICIAL  INTELLIGENCE  (AI)   § Artificial  intelligence  (AI)  –  Simulates  human  intelligence  such  as  the  ability  to  reason  and  learn   § Intelligent  system  –  Various  commercial  applications  of  artificial  intelligence     EVALUATING  BUSINESS  PROCESS   § Businesses  gain  a  competitive  edge  when  they  minimize  costs  and  streamline  business  processes       § § § §     Customer  facing  process  -­‐  Results  in  a  product  or  service  that  is  received  by  an  organization’s  external   customer     Order  processing.  customer  billing.  budget  forecasting.  sales  process.  and  activities.  tactical  planning.  order  shipping   Business  facing  process  -­‐  Invisible  to  the  external  customer  but  essential  to  the  effective  management   of  the  business     Strategic  planning.  showing  the  sequence  of  process  tasks.  training.

 transistor  radios.SUPPORT:  CHANGING  BUSINESS  PROCESSES  WITH  MIS   § Workflow  –  Includes  the  tasks.  and  Intel’s  8088  processor  all  have  in  common?       • Disruptive  technology  –  A  new  way  of  doing  things  that  initially  does  not  meet  the  needs  of   existing  customers   • Sustaining  technology  –  Produces  an  improved  product  customers  are  eager  to  buy     THE  INTERNET  AND  WORLD  WIDE  WEB  –  THE  ULTIMATE  BUSINESS  DISRUPTORS   § One  of  the  biggest  forces  changing  business  is  the  Internet  –  A  massive  network  that  connects   computers  all  over  the  world  and  allows  them  to  communicate  with  one  another   § Organizations  must  be  able  to  transform  as  markets.  and  responsibilities  required  to  execute  each  step  in  a   business  process     SUPPORT:  CHANGING  BUSINESS  PROCESSES  WITH  MIS   § Types  of  change  an  organization  can  achieve.  and  technologies  change   .  activities.  along  with  the  magnitudes  of  change  and  the  potential   business  benefit         THE  FUTURE:  BUSINESS  PROCESS  MANAGEMENT   § Business  process  management  (BPM)  –  Focuses  on  evaluating  and  improving  processes  that  include   both  person-­‐to-­‐person  workflow  and  system-­‐to-­‐system  communications     CHAPTER  THREE   E-­‐BUSINESS:  ELECTRONIC  BUSINESS  VALUE     DISRUPTIVE  TECHNOLOGIES  AND  WEB  1.0   § Digital  Darwinism  –  Implies  that  organizations  which  cannot  adapt  to  the  new  demands  placed  on   them  for  surviving  in  the  information  age  are  doomed  to  extinction   § How  can  a  company  like  Polaroid  go  bankrupt?     DISRUPTIVE  VERSUS  SUSTAINING  TECHNOLOGY   § What  do  steamboats.  economic  environments.

 opening  new  markets.  improving  operations.  and  generates  revenues  on  the   internet         EBUSINESS  TOOLS  FOR  CONNECTING  AND  COMMUNICATING     .  reducing  costs.  delivers.§   ADVANTAGES  OF  EBUSINESS     Focusing  on  the  unexpected  allows  an  organization  to  capitalize  on  the  opportunity  for  new  business   growth  from  a  disruptive  technology     Expanding  global  reach.  improving  effectiveness     EBUSINESS  MODELS   § Ebusiness  model  –  A  plan  that  details  how  a  company  creates.

0   § Web  2.  instant  messaging.0:  ADVANTAGES  OF  BUSINESS  2.  distinctive  communications  platform   characterized  by  three  qualities   • Collaboration   • Sharing   • Free     WEB  2.0  –  The  next  generation  of  Internet  use  –  a  more  mature.0   Characteristics  of  Business  2.email.  content  management  system.  web  conferencing.  podcasting     THE  CHALLENGES  OF  EBUSINESS       Identifying  limited  market  segments   Managing  consumer  trust   Ensuring  consumer  protection   Adhering  to  taxation  rules     WEB  2.0       Content  sharing  through  open  sourcing   User-­‐contributed  content   Collaboration  inside  the  organization   Collaboration  outside  the  organization       .  videoconference.0:  ADVANTAGES  OF  BUSINESS  2.

0  that  describes  things  in  a  way  that  computers  can   understand         .  Wikis     THE  CHALLENGES  OF  BUSINESS  2.NETWORKING  COMMUNITIES  WITH  BUSINESS  2.0   § Web  3.0   § Social  media  –  Websites  that  rely  on  user  participation  and  user-­‐contributed  content   § Social  network  –  An  application  that  connects  people  by  matching  profile  information   § Social  networking  –  The  practice  of  expanding  your  business  and/or  social  contacts  by  a  personal   network     BUSINESS  2.  and  intelligence  applications   § Semantic  Web  –  A  component  of  Web  2.  machine-­‐based   learning  and  reasoning.0  TOOLS  FOR  COLLABORATING     Blogs.0  –  Based  on  “intelligent”  Web  applications  using  natural  language  processing.  Mashups.0           Technology  Dependence   Information  Vandalism   Violations  of  Copyright  and  Plagiarism     WEB  3.

 and  not  to  be  observed  without  your  consent   • Confidentiality  –  the  assurance  that  messages  and  information  are  available  only  to  those  who   are  authorized  to  view  them   § Acting  ethically  and  legally  are  not  always  the  same         .  to  have  control  over  your  own   personal  possessions.MBUSINESS:  SUPPORTING  ANYWHERE  BUSINESS   § Mobile  business  -­‐    The  ability  to  purchase  goods  and  services  through  a  wireless  Internet-­‐enabled   device           CHAPTER  FOUR   ETHICS  AND  INFORMATION  SECURITY:  MIS  BUSINESS  CONCERNS     INFORMATION  ETHICS   § Business  issues  related  to  information  ethics   • Intellectual  property   • Copyright   • Pirated  software   • Counterfeit  software   § Privacy  is  a  major  ethical  issue   • Privacy  –  The  right  to  be  left  alone  when  you  want  to  be.

 PEOPLE  DO   § Information  does  not  care  how  it  is  used.  viruses.INFORMATION  DOES  NOT  HAVE  ETHICS.  it  will  not  stop  itself  from  sending  spam.  or  highly-­‐ sensitive  information   § Tools  to  prevent  information  misuse   • Information  management     • Information  governance   • Information  compliance   • Ediscovery     DEVELOPING  INFORMATION  MANAGEMENT  POLICIES   § Organizations  strive  to  build  a  corporate  culture  based  on  ethical  principles  that  employees  can   understand  and  implement   § Epolicies  typically  include:   • Ethical  computer  use  policy   • Information  privacy  policy   • Acceptable  use  policy   • Email  privacy  policy   • Social  media  policy   • Workplace  monitoring  policy     PROTECTING  INTELLECTUAL  ASSETS   § Organizational  information  is  intellectual  capital  -­‐  it  must  be  protected     § Information  security  –  The  protection  of  information  from  accidental  or  intentional  misuse  by  persons   inside  or  outside  an  organization   § Downtime  –  Refers  to  a  period  of  time  when  a  system  is  unavailable     How  Much  Will  Downtime  Cost  Your  Business?       Revenue:   Direct  loss   Compensatory  payments   Lost  future  revenue   Billing  losses   Investment  losses     .

 and  partners  to  access  information  electronically   § The  biggest  issue  surrounding  information  security  is  not  a  technical  issue.  but  a  people  issue   • Insiders   • Social  engineering   • Dumpster  diving       § The  first  line  of  defense  an  organization  should  follow  to  help  combat  insider  issues  is  to  develop   information  security  policies  and  an  information  security  plan   • Information  security  policies     • Information  security  plan           .  customers.Lost  productivity     Other  Expenses:   Temporary  employees   Equipment  rentals   Overtime  costs   Extra  shipping  charges   Travel  expenses   Legal  obligations     Financial  Performance:   Revenue  recognition   Cash  flow   Payment  guarantees   Credit  rating   Stock  price     Damage  Reputation:   Customers   Suppliers   Financial  markets   Banks   Business  partners     SECURITY  THREATS  CAUSED  BY  HACKERS  AND  VIRUSES   § Security  threats  to  ebusiness  include   • Elevation  of  privilege   • Hoaxes   • Malicious  code   • Packet  tampering   • Sniffer   • Spoofing   • Splogs   • Spyware     THE  FIRST  LINE  OF  DEFENSE  –  PEOPLE   § Organizations  must  enable  employees.

THE  SECOND  LINE  OF  DEFENSE  –  TECHNOLOGY   § There  are  three  primary  information  technology  security  areas     1. People:    Authentication  and  authorization   2. Encryption   3. Something  that  is  part  of  the  user       PREVENTION  AND  RESISTANCE   § Downtime  can  cost  an  organization  anywhere  from  $100  to  $1  million  per  hour   § Technologies  available  to  help  prevent  and  build  resistance  to  attacks  include   1. Firewalls     DETECTION  AND  RESPONSE   § If  prevention  and  resistance  strategies  fail  and  there  is  a  security  breach. Something  the  user  has     3. Something  the  user  knows     2. Data:    Prevention  and  resistance   3. Attack:    Detection  and  response     AUTHENTICATION  AND  AUTHORIZATION   § Authentication  –  A  method  for  confirming  users’  identities   § Authorization  –  The  process  of  giving  someone  permission  to  do  or  have  something   § The  most  secure  type  of  authentication  involves   1.  an  organization  can  use   detection  and  response  technologies  to  mitigate  the  damage   § Intrusion  detection  software  –  Features  full-­‐time  monitoring  tools  that  search  for  patterns  in  network   traffic  to  identify  intruders     . Content  filtering   2.

is maintained and secured. or perform when operating a system.. The three primary areas where enterprise architects focus when maintaining a firm's MIS infrastructure are: Supporting operations: Information MIS infrastructure identifies where and how important information. when combined. software. Learning Outcome 5. Business continuity plan: This details how a company recovers and restores critical business operations and systems after a disaster or extended disruption. and telecommunications equipment that. such as customer records. Supporting the environment: Sustainable MIS infrastructure identifies ways that a company can grow in terms of computing resources while simultaneously becoming less dependent on hardware and energy consumption..3: Describe the characteristics of an agile MIS infrastructure. provides the underlying foundation to support the organization's goals.2: Identify the three primary areas associated with an information MIS infrastructure. The three primary areas an information infrastructure provides to support continuous business operations are: Backup and recovery: A backup is an exact copy of a system's information. Learning Outcome 5.com/sites/0077338340/student_view.1: Explain MIS infrastructure and its three primary types. Business Driven Information Systems eBook 3/e Content Chapter5: Infrastructures: Sustainable Technologies Learning Outcome Review Learning Outcome 5. Disaster recovery plan: This plan provides a detailed process for recovering information or a system in the event of a catastrophic disaster. view. Supporting change: Agile MIS infrastructure includes the hardware. Accessibility refers to the varying levels that define what a user can access.mcgraw-hill. 1 of 2 7/11/12 12:26 PM .Learning Outcome Review http://highered. Recovery is the ability to get a system up and running in the event of a system crash or failure that includes restoring the information backup.

Learning Outcome 5. often geographically dispersed. 2009 McGraw-Hill Higher Education Any use is subject to the Terms of Use and Privacy Notice. The components of a sustainable MIS infrastructure include: Grid computing: A collection of computers. Availability refers to the time frames when the system is operational. such as different operating systems.. Reliability (or accuracy) ensures a system is functioning correctly and providing accurate information. 2 of 2 7/11/12 12:26 PM . Portability refers to the ability of an application to operate on different devices or software platforms. or broken electronic devices. that are coordinated to solve a common problem. Maintainability (or flexibility) refers to how quickly a system can transform to support environmental changes.5: Explain the three components of a sustainable MIS infrastructure along with their business benefits.Learning Outcome Review http://highered. Scalability describes how well a system can “scale up” or adapt to the increased demands of growth. Increased energy consumption. Sustainable MIS disposal refers to the safe disposal of MIS assets at the end of their life cycle. Learning Outcome 5. and increased carbon emissions are all associated with MIS.com/sites/0077338340/student_view.mcgraw-hill.4: Identify the environmental impacts associated with MIS. obsolete.. McGraw-Hill Higher Education is one of the many fine businesses of The McGraw-Hill Companies. Ewaste refers to discarded. The term comes (at least in part) from the image of a cloud to represent the Internet or some large networked environment. increased electronic waste. Cloud computing: The use of resources and applications hosted remotely on the Internet. Usability is the degree to which a system is easy to learn and efficient and satisfying to use. Virtualized computing: The creation of multiple “virtual” machines on a single computing device.

and share its data. In today's business environment. A client is a computer designed to request information from a server.. hardware consists of the physical devices associated with a computer system.3 Describe the characteristics of an agile MIS infrastructure. THE BUSINESS BENEFITS OF A SOLID MIS INFRASTRUCTURE Management information systems have played a significant role in business strategies.mcgraw-hill. generate growth. A server is a computer dedicated to providing information in response to requests. As more companies need to share more information. 169 178 177 176 175 174 173 172 171 170 LEARNING OUTCOMES 5. the network takes on greater importance in the infrastructure. most hardware and software is run via a network.1 MIS Infrastructures p. LO 5. 5. affected business decisions and processes.2 Identify the three primary areas associated with an information MIS infrastructure.com/sites/0077338340/student_view. Business Driven Information Systems eBook 3/e Content Chapter5: Infrastructures: Sustainable Technologies Section 5. Briefly defined. optimize business operations. processes. which includes the plans for how a firm will build. and MIS assets. and even changed the way companies operate. A solid MIS infrastructure can increase reduce costs. Anyone not familiar with the 1 of 12 7/11/12 12:25 PM .. A good way to understand this is when someone uses a Web browser (this would be the client) to access a website (this would be a server that would respond with the Web page being requested by the client). use. operations. 5. and profits? What supports the volume and complexity of today's user and application requirements? What protects systems from failures and crashes? It is the MIS infrastructure. Most companies use a specific form of network infrastructure called a client and server network. What is the foundation supporting all of these systems that enable business growth. improve productivity. and increase profitability. deploy. and software is the set of instructions the hardware executes to carry out specific tasks.1 MIS Infrastructures http://highered.1 Explain MIS infrastructure and its three primary types.1: Explain MIS infrastructure and its three primary types.Section 5. A network is a communications system created by linking two or more devices and establishing a standard methodology in which they can communicate.

a firm's MIS infrastructure must be revised to support the device. In the physical world. Firms employ enterprise architects to help manage change and dynamically update MIS infrastructure.mcgraw-hill. basics of hardware.1 MIS Infrastructures http://highered.1 displays the three primary areas where enterprise architects focus when maintaining a firm's MIS infrastructure.1 MIS Infrastructures Supporting operations: Information MIS infrastructure identifies where and how important information. fluent in business. such as water. 2 of 12 7/11/12 12:25 PM . Figure 5. electricity. is maintained and secured. such as an iPhone or BlackBerry. An MIS infrastructure is dynamic.. or networks should review Appendix A. “Networks and Telecommunications. and able to provide the important bridge between MIS and the business. MIS infrastructure is similar as it shows in detail how the hardware.. whether it is a few personal computers networked together sharing an Excel file or a large multinational company with thousands of employees interconnected around the world. is created and made available to the public. such as customer records. it continually changes as the business needs change. software. An enterprise architect is a person grounded in technology. regardless of size. “Hardware and Software.” and Appendix B. Every company. relies on some form of MIS infrastructure. software. FIGURE 5. and gas support the foundation of a building. Each time a new form of Internet-enabled device.com/sites/0077338340/student_view. and network connectivity support the firm's processes. This moves beyond just innovations in hardware to include new types of software and network connectivity.Section 5. a detailed blueprint would show how public utilities.” for more information.

com/sites/0077338340/student_view. not to mention that all-important 40-page paper that took you more than a month to complete. Recovery is the ability to get a system up and running in the event of a system crash or failure that includes restoring the information backup. assignments. Backup and Recovery Plan Each year businesses lose time and money because of system crashes and failures. Today. Managers must take every precaution to make sure their systems are operational and protected around the clock every day of the year.. and telecommunications equipment that. and security breaches to name just a few. Business continuity plan (see Figure 5.2). an information infrastructure provides three primary elements: Backup and recovery plan. Today's managers must act responsibly to protect one of their most valued assets. Supporting change: Agile MIS Infrastructure includes the hardware. 3 of 12 7/11/12 12:25 PM . In the past. as data storage technologies grow in capabilities while shrinking in size. The primary differences between them are speed and cost. A backup is an exact copy of a system's information. theft. An information MIS infrastructure identifies where and how important information is maintained and secured. To support continuous business operations. and when you associated turn around you find that your laptop has been stolen. external hard drives. emails. Many different types of backup and recovery media are available.2: Identify the three primary areas Imagine taking a quick trip to the printer on the other side of the room. malicious attacks via the Internet. information. How painful would you find this with an experience? What types of information would you lose? How much time would it take information MIS you to recover all of that information? A few things you might lose include music. including maintaining an identical replica or redundant of the storage server. when combined. saved passwords. earthquakes. provides the underlying foundation to support the organization's goals. software. SUPPORTING OPERATIONS: INFORMATION MIS INFRASTRUCTURE LO 5. and even DVDs.Section 5. floods. An information infrastructure supports day-to-day business operations and plans for emergencies such as power outages.mcgraw-hill.1 MIS Infrastructures http://highered. Disaster recovery plan. One way to minimize the damage of a system crash is to have a backup and recovery strategy in place. a person can simply walk out the front door of the building with the company's data files stored on a thumb drive or external hard drive. If this sounds painful then you want to pay particular attention to this section and learn how to eliminate this pain. Losing a laptop or experiencing bad weather in one part of the country simply cannot take down systems required to operate core business processes. thumb drives. Supporting the environment: Sustainable MIS infrastructure identifies ways that a company can grow in terms of computing resources while simultaneously becoming less dependent on hardware and energy consumption. infrastructure. someone stealing company information would have to carry out boxes upon boxes of paper. movies..

1 MIS Infrastructures http://highered. FIGURE 5. and only mission-critical applications and operations use it. For example. and find out that your computer has a virus and you just lost your entire document.. taking over from the secondary server.mcgraw-hill.. a specific type of fault tolerance. fault tolerance enables a business to support continuous business operations if there is a power failure or flood. Or perhaps you submit your final paper. Fault tolerance is the ability for a system to respond to unexpected failures or system crashes as the backup system immediately and automatically takes over with no loss of service.Section 5. but I'm Positive I Have a Virus Think how horrible it would be to finish your term paper at 4 a. the users are automatically directed to the secondary server or backup server. This is a high-speed and high-cost method of backup and recovery. and if the primary server crashes. and you frantically check email to find out what happened. Fault tolerance is an expensive form of backup. You return to find that you failed the course.2 Areas of Support Provided by Information Infrastructure APPLY YOUR KNOWLEDGE BUSINESS DRIVEN START-UP I Don't Have a Temperature. occurs when a redundant storage server offers an exact replica of the real-time data. Failback occurs when the primary machine recovers and resumes operations.m. Failover. which is worth 50 percent of your grade.com/sites/0077338340/student_view. A message from your professor informs you that your document was corrupt and couldn't be opened and that you had 24 hours to resend the 4 of 12 7/11/12 12:25 PM . and then head off to Colorado for winter break.

backups to storage servers. then it might require only weekly backups to external hard drives or thumb drives. hurricanes. water. Disaster Recovery Plan Disasters such as power outages. a weekly backup strategy will work. If it relies on small amounts of noncritical information. Disasters can have the following effects on companies and their business operations. This will alleviate the pain of having your laptop stolen or your system crash as you will still have access to your data. and stop the shipment of products. and natural gas. and even malicious activities such as hackers and viruses strike companies every day. perhaps hourly. and it will only be a few days old. Companies should choose a backup and recovery strategy in line with their goals and operational needs. if a system crash occurs. A company that backs up on a weekly basis is taking the risk that. Widespread communications outages. If the company deals with large volumes of critical information. days. fires.. Halting transportation: Disasters such as floods and hurricanes can have a deep effect on transportation. Deciding how often to back up information and what media to use is a critical decision. Blocking utilities: Public utilities. Disrupting communications: Most companies depend on voice and data communications for daily operational needs. If it is unacceptable. It is a good business practice to back up data at least once a week using a low-cost method.mcgraw-hill. can be interrupted for hours or days even in incidents that cause no direct damage to the physical infrastructure. can be as devastating to some firms as shutting down the whole business. If this risk is acceptable. or longer and risk losing customers whom they cannot then supply. Have you ever experienced having a file corrupted? If so.com/sites/0077338340/student_view.Section 5. such as the supply of electric power. Disruption to major highways. Therefore. These effects can devastate companies by causing them to cease operations for hours. thereby restricting access to retrieve documents or equipment. to combat these disasters a company can create a disaster recovery plan. and systems. it will require daily. roads. railroads. making structures unsafe and systems unusable. the company needs more frequent backup. Damaging physical infrastructures: Fire and flood can directly damage buildings. it could lose a week's worth of work. Law enforcement officers and firefighters may prohibit business professionals from entering a building. from either direct damage to the infrastructure or sudden spikes in usage related to an outside disaster. floods. equipment.1 MIS Infrastructures http://highered.. bridges. Buildings are often uninhabitable and systems unable to function without public utilities. which you missed because you were skiing down the slopes. and airports can prevent business professionals from reporting to work or going home. what could you have done to recover from this situation? Do you think your instructor ever receives corrupted files? How did the file become corrupted? Do you think your instructor would be suspicious if you submitted a corrupted file? How could an instructor prove that your file was purchased from this site? Using DVDs or thumb drives to store your data offers a low-speed and low-cost backup method. which is a detailed process for recovering information or 5 of 12 7/11/12 12:25 PM . file. slow the delivery of supplies.

a company must then determine the costs of recovery. A disaster recovery plan usually has a disaster recovery cost curve to support it. A disaster recovery cost curve charts (1) the cost to the company of the unavailability of information and technology and (2) the cost to the company of recovering from a disaster over time. A company might strategically maintain operations in New York and San Francisco. A warm site is a separate facility with computer equipment that requires installation and configuration. but they rise over time. This plan includes such factors as which files and systems need to have backups and their corresponding frequency and methods along with the strategic location of the storage in a separate physical site that is geographically dispersed.com/sites/0077338340/student_view. FIGURE 5. With those costs in hand.4 displays a disaster recovery cost curve and shows that the best recovery plan in terms of cost and time is where the two lines intersect. A hot site is a separate and fully equipped facility where the company can move immediately after a disaster and resume business.. Creating such a curve is no small task. those costs may be low.1 MIS Infrastructures http://highered. A cold site is a separate facility that does not have any computer equipment but is a place where employees can move after a disaster. a system in the event of a catastrophic disaster.3 Sites to Support Disaster Recovery FIGURE 5.4 Disaster Recovery Cost Curve 6 of 12 7/11/12 12:25 PM . A disaster recovery plan also foresees the possibility that not only the computer equipment but also the building where employees work may be destroyed.Section 5.mcgraw-hill. ensuring that a natural disaster would not impact both locations. Figure 5..3 outlines these resources that support disaster recovery. and across the whole company. During the first few hours of a disaster. Figure 5. Managers must consider the cost of losing information and technology within each department or functional area.

business processes. or critical systems so that the company can continue to operate if a disaster happens.000 inhabitants. All three methods provide notification using a variety of methods such as email. voice notification to a cell phone. and the maximum amount of time the business can continue to operate without functioning systems. If a company grows by 50 percent in a single year. for the Union Bank of California to be up and running again in the event of a disaster. Managers of these corporations are well aware of the potential disasters that exist along the San Andreas Fault and actively update their business continuity plans anticipating such issues as earthquakes and floods. Business Continuity Plan Natural disasters and terrorist attacks are on the minds of business professionals who take safeguarding their information assets seriously.com/sites/0077338340/student_view. Its disaster recovery plan includes hot sites where staff can walk in and start working exactly as if they were in their normal location. The plan will even detail the order in which functional areas should be restored. 1906. when combined. an infrastructure built for notifying people in the event of an emergency. San Francisco was rocked by an earthquake that destroyed large sections of the city and claimed the lives of more than 3. A firm will implement an emergency notification service to warn employees of unexpected events and provide them with instructions about how to handle the situation. or hosted remotely by an outside service provider. Disaster recovery plans traditionally contained information on systems and data.. SUPPORTING CHANGE: AGILE MIS INFRASTRUCTURE Agile MIS infrastructure includes the hardware. supplied by an outside service provider on company premises.mcgraw-hill. Radio stations' occasional tests of the national Emergency Alert System are an example of a very large-scale emergency notification system.3: Describe the characteristics of an agile MIS infrastructure. which details how a company recovers and restores critical business operations and systems after a disaster or extended disruption. This plan includes such factors such as identifying critical systems. and telecommunications equipment that. 7 of 12 7/11/12 12:25 PM . software. providing multiple means in which to get critical information to those that need it. The notifications can be sent to all the devices selected. LO 5. they can severely hinder the company's ability not only to grow but also to function. It would be a matter of minutes. not hours.Section 5. a rebuilt and more durable San Francisco serves as a central location for major MIS corporations as well as a major world financial center.2 Emergency Notification Services A business continuity plan can sometimes include an emergency notification service. More than a century later. its infrastructure and systems must be able to handle a 50 percent growth rate. ensuring the most critical are focused on first. The company employs hundreds of business professionals scattered around the world that coordinate plans for addressing the potential loss of a facility. Emergency notification services can be deployed through the firm's own infrastructure. provides the underlying foundation to support the organization's goals. For this reason many are turning to a more comprehensive and all-encompassing plan known as business continuity planning (BCP). that is.. If they cannot.1 MIS Infrastructures http://highered. and text messaging. The Union Bank of California is located in the heart of downtown San Francisco and maintains a highly detailed and well-developed business continuity plan. business professionals. ignoring cross-functional and intra-organizational issues for business processes and supply chain management. On April 18. departments.

view. or a student will need to access course information and billing information. Figure 5.Section 5. How painful would it be if someone stole your laptop right now? How much critical information would you lose? How many hours would it take you to re-create your data? Perhaps that will motivate you to implement a backup procedure. How many of you have a disaster recovery plan? Disaster recovery is needed when your best friend dumps a grande latte on your computer or you accidently wash your thumb drive. suppliers. Each person that accesses the system will have different needs and requirements. Users typing in your URL find a blank message stating the website is unavailable and to try back soon. they can get to your website but it takes three minutes to reload each time they click on a button.mcgraw-hill. For example. APPLY YOUR KNOWLEDGE BUSINESS DRIVEN MIS Disaster Recovery Backup and recovery are essential for any computer system. Unfortunately.. The characteristics of agile MIS infrastructures can help ensure your systems can meet and perform under any unexpected or unplanned changes. The future of a company depends on its ability to meet its partners. and the system crashes. Or even worse. chances are good you don't have to worry about hurricanes. Imagine owning an ebusiness and everyone on the Internet is tweeting and collaborating about how great your business idea is and how successful your company is going to be. or perform when operating a system. if you live in Colorado. How often does a company need to back up its data? Where should the backup be stored? What types of disasters should companies in your state prepare for in case of an emergency? Why is it important to test the backup? What could happen to a company if it failed to create a disaster recovery plan? Accessibility Accessibility refers to the varying levels that define what a user can access.1 MIS Infrastructures http://highered. and customers any time of the day in any geographic location.. Imagine the people at your college accessing the main student information system. for example. and you should ensure that your company has everything it needs to continue operations if there is ever a disaster. Each system user is provided with an access level that 8 of 12 7/11/12 12:25 PM . The buzz soon dies about your business idea as some innovative Web-savvy fast follower quickly copies your idea and creates a website that can handle the massive number of customers.5 lists the seven abilities of an agile infrastructure. You need to decide which disasters are worth worrying about and which ones are probably never going to occur. a payroll employee will need to access vacation information and salary information.com/sites/0077338340/student_view. you did not anticipate this many customers so quickly. such as 9/11. Suddenly. you have 5 million global customers interested in your website. but avalanches are another story. Disaster recovery plans are crucial for any business.

and fixes. Availability refers to the time frames when the system is operational. you would not want your students to be able to view payroll information or professor's personal information. or unrestricted access to the entire system. Administrator access can perform functions such as resetting passwords. One challenge with availability is determining when to schedule system downtime if the system is expected to operate continuously. business professionals need to use their systems whenever they want from wherever they want. which are completed during downtime.” A widely held but difficult-to-achieve standard of availability for a system is known as “five 9s” (99. Availability In a 24/7/365 ebusiness environment. and business professionals scattered around the globe may not be able to perform specific job functions if the systems they need are unavailable. FIGURE 5. Performing maintenance during the evening might seem like a great idea. This is where companies deploy failover systems so they can take the primary system down for maintenance and activate the secondary system to ensure continuous operations. and shutting down entire systems. High availability occurs when a system is continuously operational at all times.com/sites/0077338340/student_view. Some companies have systems available around the clock to support ebusiness operations..Section 5. deleting accounts.1 MIS Infrastructures http://highered. Sometimes systems must be taken down for maintenance. For example. also. details which parts of the system the user can and cannot access and what the user can do when in the system.5 Agile MIS Infrastructure Characteristics 9 of 12 7/11/12 12:25 PM . but evening in one city is morning somewhere else in the world.. Top-level MIS employees require administrator access. upgrades.mcgraw-hill. and online suppliers. some users can only view information and are not allowed to create or delete information. A system is called unavailable when it is not operating and cannot be used. Availability is typically measured relative to “100 percent operational” or “never failing.999 percent) availability. global customers.

Anticipating expected. which is not an easy or cheap task. iPhones.Section 5. when designing and building systems that support agile infrastructures.mcgraw-hill. as well as tomorrow's. Housing unreliable information on a website can put a company at risk of losing customers. Many users skip over Google search findings that correlate to Wikipedia for this reason. Many argue that the information contained in Wikipedia is unreliable. Because Apple insists on compatibility across its products. changes.com/sites/0077338340/student_view. when the first international order arrives. If a company grows faster than anticipated. iPods. and reconfigurations for unexpected business or environmental changes. the system will need to be redeveloped. Maintainability (or flexibility) refers to how quickly a system can transform to support environmental changes. such as different operating systems. Just think what might have happened if Facebook had to overhaul its entire system to handle multiple languages. Unfortunately. and iPad—which increases their target market and they hope their revenue. When building your systems. Building and deploying flexible systems allow easy updates. Systems must be flexible enough to meet all types of company changes. Maintainability Companies must watch today's needs. or new markets. it might experience a variety of problems.1 MIS Infrastructures http://highered. Because the Wikipedia entries can be edited by any user. a common mistake. Apple's iTunes is readily available to users of Mac computers and also users of PC computers. from running out of storage space to taking more time to complete transactions. and business changes. Performance measures how quickly a system performs a process or transaction. both software and hardware. there are examples of rogue users inaccurately updating information. new product lines. Scalability Estimating company growth is a challenging task. That certainly would not be efficient or effective for business operations. Performance is a key 10 of 12 7/11/12 12:25 PM . Another social networking business could easily have stepped in and become the provider of choice. the system will be unable to handle the request because it does not have the flexibility to be easily reconfigured for a new language or currency. Portability Portability refers to the ability of an application to operate on different devices or software platforms. and so on. When the company does start growing and operating overseas. you might not design them to handle multiple currencies and different languages. environmental changes. growth is key to building scalable systems that can support that development. or adapt to the increased demands of growth. or even making unreliable business decisions.. to handle multiple currencies and different languages. device. which might make sense if the company is not currently performing international business. iPod. in part because growth can occur in a number of different forms—the firm can acquire new customers. Inaccuracy can occur for many reasons. Apple can easily add to its product. iPads. from the incorrect entry of information to the corruption of information during transmissions. Scalability describes how well a system can scale up.. Many software developers are creating programs that are portable to all three devices—the iPhone. For example. Reliability Reliability (or accuracy) ensures a system is functioning correctly and providing accurate information. smart phones. which happens easily with ebusiness. and unexpected. and service offerings without sacrificing portability. when starting a small business you might not consider that you will have global customers. It is also a portable application. placing inaccurate supplier orders.

After performing a Google search. 11 of 12 7/11/12 12:25 PM .. Every time a user clicks on a sponsored link. and the highest bidder is posted first in the sponsored search results.1 MIS Infrastructures http://highered. you will notice three sections on the resulting page. This is also called pay-per-click and can cost anywhere from a few cents to a few dollars for each click. and allowing one additional user to access the system could degrade the video quality for every user. Now imagine if this occurs during your midterm exam and you miss the two-hour deadline because the system is so slow.0 is a big driver for capacity planning to ensure agile infrastructures can meet the business's operational needs. Delivering videos over the Internet requires enough bandwidth to satisfy millions of users during peak periods such as Friday and Saturday evenings. called AdWords. and the middle lists the organic search results. performance time could suffer. A general search term such as “tropical vacation” costs less than a more specific search term like “Hawaiian vacation. Planning for increases in capacity can ensure systems perform as expected. Along the top and side are the sponsored search results.com/sites/0077338340/student_view.mcgraw-hill. Clicking on the links in the organic search results does not incur any charges for the company that owns the link. loss of suppliers. APPLY YOUR KNOWLEDGE BUSINESS DRIVEN MIS Ranking the Ab-“ilities” Do you know how Google makes so much money? Unlike traditional businesses. Google makes money by charging the companies that want to appear in the sponsored section of a search result. Performance issues experienced by firms can have disastrous business impacts causing loss of customers. If a company purchases connectivity software that is outdated or too slow to meet demand.” Whichever company bids the most for the search term appears at the top of the sponsored section. Google does not make money from the users of its service. the company that owns the link has to pay Google. Waiting for a system to respond to requests is not productive.Section 5. It is cheaper for a company to design and implement agile infrastructure that envisions growth requirements than to update all the equipment after the system is already operational. Most users will wait only a few seconds for a website to return a request before growing frustrated and either calling the support desk or giving up and moving on to another website. Capacity planning determines future environmental infrastructure requirements to ensure high-quality system performance. Web 2. If a company with 100 workers merges with another company and suddenly there are 400 people using the system. allows companies to bid on common search terms. Just imagine your college's content management system suddenly taking five minutes to return a page after a button is pushed.. and even loss of help-desk employees. Google's innovative marketing program. its employees will waste a great deal of time waiting for systems to respond to user requests. Video transmissions over the Internet cannot tolerate packet loss (blocks of data loss). component of scalability as systems that can't scale suffer from performance issues.

2010.com/sites/0077338340/student_view. McGraw-Hill Higher Education is one of the many fine businesses of The McGraw-Hill Companies. Usability Usability is the degree to which a system is easy to learn and efficient and satisfying to use. And to ensure ease of use. shortcuts. and instructions for any system.mcgraw-hill. Apple also made the corresponding iTunes software intuitive and easy to use. Apple understood the importance of usability when it designed the first iPod. is recommended. http://earthquake. tips. Providing hints.. Be sure to provide the justification behind your ranking. One simple and efficient button operates the iPod. 2009 McGraw-Hill Higher Education Any use is subject to the Terms of Use and Privacy Notice. regardless of its ease of use.Section 5.usgs. 2 “The Great 1906 San Francisco Earthquake.” USGS. Rank the agile infrastructure ab-“ilities” for Google from most important to least important in terms of supporting Google's MIS infrastructure and business operations.gov/regional/nca/1906 /18april/index.1 MIS Infrastructures http://highered. making it usable for all ages. One of the iPod's initial attractions was the usability of the click wheel..php accessed July 14. 12 of 12 7/11/12 12:25 PM .

4: Identify the environmental impacts associated with MIS. Gordon Moore. and faster every year.. Business Driven Information Systems eBook 3/e Content Chapter5: Infrastructures: Sustainable Technologies Section 5..2 Building Sustainable MIS Infrastructures http://highered. Although Moore originally assumed a two-year period. or even a cell phone now) while doubling its capacity every two years. 179 LO 5. many sources today refer to the 18-month figure.4 Identify the environmental impacts associated with MIS. APPLY YOUR KNOWLEDGE BUSINESS DRIVEN DEBATE Laptop? Notebook? Netbook? Tablet? Thanks to Moore's Law. faster. observed in 1965 that continued advances in technological innovation made it possible to reduce the size of a computer chip (the brains of a computer. His prediction that this trend would continue has come to be known as Moore's Law. which refers to the computer chip performance per dollar doubles every 18 months.com/sites/0077338340/student_view. computing devices are getting smaller.Section 5.2 Building Sustainable MIS Infrastructures p. 5. MIS AND THE ENVIRONMENT The general trend in MIS is toward smaller.5 Explain the three components of a sustainable MIS infrastructure along with their business benefits. the world's largest producer of computer chips or microprocessors. and cheaper devices. 180 190 189 188 187 186 185 184 183 182 181 LEARNING OUTCOMES 5.mcgraw-hill. p. co-founder of Intel. allowing innovative companies to create new devices that are smaller and 1 of 15 7/11/12 12:25 PM . cheaper.

significant unintended side effects include our dependence upon fossil fuels and increased need for safe disposal of outdated computing equipment. microwaves. management. external hard drives. allowing more people from all income levels to purchase computing equipment. FIGURE 5. MIS describes the production. Building sustainable MIS infrastructures is a core initiative and critical success factor for socially responsible corporations. thumb drives.. Do you agree or disagree that Moore's Law will continue to apply for the next 20 years? Why or why not? Moore's Law is great for many companies as they can acquire large amounts of MIS equipment for cheaper and cheaper costs. cheaper. laptop. and so on. iPods. Increased Electronic Waste Moore's Law has made technological devices smaller. that is. VCRs. Figure 5.2 Building Sustainable MIS Infrastructures http://highered.. DVDs.mcgraw-hill. These are all different devices allowing users to connect and compute around the globe. and tablet computers. printer cartridges. This increased demand is causing numerous environmental issues. As ebusinesses continue to grow. This is great for supporting a connected corporation. obsolete. Just look at desktop. notebook. Sustainable.6 displays the three primary side effects of businesses' expanded use of technology. or green. and faster. A personal computer has a life expectancy of only three to five years and a cell phone is less than two years.6 Three Pressures Driving Sustainable MIS Infrastructures APPLY YOUR KNOWLEDGE 2 of 15 7/11/12 12:25 PM . use. Moore's Law has been accurate about computing power roughly doubling every 18 months. more powerful than current devices. or broken electronic devices. Sustainable MIS is a critical part of corporate social responsibility.com/sites/0077338340/student_view. DVD players. TVs.Section 5. Some say one human year is equivalent to seven years of technological advancements. cell phones. Ewaste refers to discarded. companies' acknowledged responsibility to society. and disposal of technology in a way that minimizes damage to the environment. Concern about these side effects has led many companies to turn to an ecological practice known as sustainable MIS. Ewaste includes CDs. companies equip their employees with multiple forms of electronic devices ranging from laptops to cell phones to iPads.

basements. computers. there may be as many as 1 billion surplus or obsolete computers and monitors in the world. BUSINESS DRIVEN ETHICS AND SECURITY Ewaste and the Environment By some estimates. where environmental enforcement is weak. Many companies.. and batteries. even recycling does not guarantee the equipment is disposed of safely. Beryllium is found in computer motherboards. MP3 players.000 different toxic substances. which can contain more than 1.4 Ewaste also occurs when unused equipment stored in attics. and water. land. Increased Energy Consumption 3 of 15 7/11/12 12:25 PM .com/sites/0077338340/student_view.mcgraw-hill. Retrieving the silver. and storage facilities never reaches a recycling center. found in many old laptops and computer chips. where 6.. If a computer ends up in a landfill. this enormous ewaste stream. In poorer countries. One of the most toxic chemicals known is cadmium. It ensures that ewaste does not end up in landfills causing environmental issues. lead. printers. While some recyclers process the material ethically. is harmful to human beings and the environment. Currently. and cadmium. chromium in floppy disks. lead in batteries and computer monitors. water. including public schools and universities. These areas have little use for obsolete electronic equipment so local recyclers resell some parts and burn the rest in illegal dumps. and other valuable metals from these devices is more efficient and less environmentally harmful than removing it from its natural environment. where the United States and Europe export some of their ewaste. and air. the toxic substances it contains can leach into our land. simply can't afford the recycling costs. others ship it to countries such as China and India. What could you do to inform citizens of the issues associated with ewaste and educate them on safe disposal practices? Sustainable MIS disposal refers to the safe disposal of MIS assets at the end of their life cycle. some are toxic. This action poses its own global environmental problems.3 Have you ever participated in ewaste? What can you do to ensure you are safely disposing of electronic equipment including batteries? What can governments do to encourage companies to safely dispose of ewaste? What can be done to protect poorer countries from receiving ewaste? Create a list of the ways you can safely dispose of cell phones. If not disposed of properly. ink cartridges.2 Building Sustainable MIS Infrastructures http://highered.Section 5. however. Consider California. gold. the full impact of the environmental damage is quickly being realized. and mercury in alkaline batteries. often near residential areas. releasing toxic and carcinogenic substances into the air. Recycling costs from $15 to $50 for a monitor or computer. such as mercury. A single computer contains more than 700 chemicals.000 computers become surplus every day. less than 20 percent of ewaste in the United States is recycled.

Section 5. are very likely responsible for the increases in climatic temperature over the past half a century. but it often means relying on coal for power. its energy needs are increasing almost exponentially. In the United States. Do you agree that Facebook made a wise business decision in selecting a utility provider that uses coal-fired power stations? What alternative sources of energy could Facebook have used to power its computing facility? Do you think Facebook's core customers care about the environment? What types of business challenges might Facebook encounter if it continues using coal-fired power stations? Increased Carbon Emissions The major human-generated greenhouse gases. which are major contributors of greenhouse gas emissions. Facebook recently commissioned a new computing facility in Oregon and is using power from PacifiCorp. The energy consumed by a computer is estimated to produce as much as 10 percent of the amount of carbon dioxide produced by an automobile. 5 pounds of nitrogen oxides. These huge increases in technology use have greatly amplified energy consumption. It draws energy 24 hours a day. When that coal is burned. and 1. Put in perspective. APPLY YOUR KNOWLEDGE BUSINESS DRIVEN DISCUSSION Facebook's Energy Use Cheap electricity is great for keeping business costs down. if greenhouse gas emissions are not reduced. Computer servers in the United States account for about 1 percent of the total energy needs of the country. coal provides more than 50 percent of electrical power. this is roughly equivalent to the energy consumption of Mississippi. the majority of computer equipment is never completely shut down.2 Building Sustainable MIS Infrastructures http://highered. To generate that much energy 24 hours a day for a year would require approximately 714 pounds of coal. For convenience and to allow for automatic updates and backup. it releases on average 5 pounds of sulfur dioxide. When left on continuously.com/sites/0077338340/student_view... Computers consume energy even when they are not being used. As more and more people subscribe to Facebook. with serious consequences for Earth's environment. a single desktop computer and monitor can consume at least 100 watts of power per hour. such as carbon emissions from energy use.5 SUPPORTING THE ENVIRONMENT: 4 of 15 LO 5. a utility that gets the majority of its energy from coal-fired power stations. Additional temperature increases are projected over the next hundred years.mcgraw-hill.852 pounds (that is almost a ton) of carbon dioxide.5: 7/11/12 12:25 PM .

com/sites/0077338340/student_view. Grid computing Cloud computing Virtualized computing Grid Computing When a light is turned on. Grid computing makes better use of MIS resources. often geographically dispersed. grid computing takes advantage of this unused processing power by linking thousands of individual computers around the world to create a “virtual supercomputer” that can process intensive tasks. and carbon emissions requires a firm to focus on creating sustainable MIS infrastructures. Grid computing is a collection of computers. instantly. allowing faster processing than could occur with a single system.6 FIGURE 5. Innovatively. that are coordinated to solve a common problem.Section 5.. Computers and networks can now work that way using grid computing. energy consumption.7). become more cost efficient. and solve problems that would be impossible to tackle with a single computer (see Figure 5.7 Grid Computing 5 of 15 7/11/12 12:25 PM . With grid computing a problem is broken into pieces and distributed to many machines.mcgraw-hill. A sustainable MIS infrastructure identifies ways that a company can grow in terms of computing resources while simultaneously becoming less dependent on hardware and energy consumption. the power grid delivers exactly what is needed. The components of a sustainable MIS infrastructure include: Explain the three components of a sustainable MIS infrastructure along with their business benefits. leaving more than 75 percent available for other tasks. SUSTAINABLE MIS INFRASTRUCTURE Combating ewaste.2 Building Sustainable MIS Infrastructures http://highered. allowing greater scalability as systems can easily grow to handle peaks and valleys in demand. Computers typically use less than 25 percent of their processing power..

fire. providing a potential competitive advantage and additional cost savings. Smart grids provide users with real-time usage monitoring. As shown in Figure 5. but also the way people interact with technology. Cloud computing could change not only the way businesses operate.9 FIGURE 5. It is meant to solve the problem of the world's outdated electrical grid. Madagascar.7 Solving the Energy Issue with Smart Grids A smart grid delivers electricity using two-way digital technology. such as a Web browser. However.000 smart grid meters since the $100 million program started several years ago.8 Cloud Computing Marketing materials continually promote new technologies that promise to radically change the way businesses operate. At peak production times. transparent to the users.mcgraw-hill. Cloud computing refers to the use of resources and applications hosted remotely on the Internet. Colorado. can monitor their use of electricity and control appliances remotely due to the city's large-scale smart grid system. making it more efficient and reliable by adding the ability to remotely monitor. users connect to the cloud from their personal computers or portable devices using a client. including the creative environment of animated movies. allowing it to complete scenes in days and hours instead of months. The uses of grid computing are numerous. Residents of Boulder. Shrek. software.. Xcel Energy has installed 21. DreamWorks dedicated more than 4.9. No more hard drives. Dreamworks Animation used grid computing to complete many of its hit films including Antz. unfortunately. To these individual users. these devices rarely live up to the hype. analyze. The term comes (at least in part) from the image of a cloud to represent the Internet or some large networked environment. power grid is said to have outlived its life expectancy by as much as 30 years. or document.8 Making Shrek 2 with Grid Computing 6 of 15 7/11/12 12:25 PM .2 Building Sustainable MIS Infrastructures http://highered. and How to Train Your Dragon.000 computers to its Shrek grid.com/sites/0077338340/student_view.Section 5. the DreamWork's animators were able to add more realistic movement to water. It is like storing all of your software and documents “in the cloud” and all you need is a device to access the cloud. Energy use by early adopters is down as much as 45 percent.S. and control the transmission of power. it might actually be true for one new development making this promise. device. The third Shrek film required more than 20 million computer hours to make (compared to 5 million for the first Shrek and 10 million for the second). or processing power—that is all located in the cloud.8). allowing them to choose off-peak times for noncritical or less urgent applications or processes. With the increased grid computing power. With grid computing a company can work faster or more efficiently. and magic scenes (see Figure 5. The current U.. the cloud appears as their personal application.

social networking sites such as Facebook or MySpace along with collaboration tools like videoconferencing and document storage use cloud computing. along with the software. Small to medium-size companies no longer have to make big capital investments to access the same powerful systems that large companies run. No more worries that you don't have enough memory to run a new program as the hardware is provided in the cloud. As the business grows and the user requires more employees to have access to the system.2 Building Sustainable MIS Infrastructures http://highered. data storage. and considerable computing power. Cloud computing services are changing the way everyone can access. Just imagine not having to purchase software to run on your computer such as Microsoft Office or Outlook. software. and you do not have to pay for the equipment required to carry the call around the 7 of 15 7/11/12 12:25 PM . a company would have to pay millions of dollars for the hardware.9 Cloud Computing With cloud computing. A cloud computing user can simply access the cloud and request a single license to a payroll application. You simply pay to access a vendor's service. greater reliability. or networking expenses. scalability. With the cloud. much as we use and pay for electricity. For flexibility. Cloud computing makes it easier to gain access to the computing power that was once reserved for large corporations.mcgraw-hill. and use information. cloud computing is quickly becoming a viable option for companies of all sizes. and networking equipment required to implement a large system such as payroll or sales management. You can think of this the same way you do with your telephone service.. companies can now reach to the cloud to combine software applications. you could simply purchase a single license at a far discounted rate and not worry about the hassle of installing and upgrading the software on your computer. For example. when they need them and where. The cloud offers a company higher availability. The user does not have to incur any hardware. software.Section 5. the business simply purchases additional licenses. In the past. You simply pay to access the program. improved accessibility—all with affordable high-speed access. an individual or business pays only for the services they need. Rather than running software on a local computer or server.com/sites/0077338340/student_view. deliver.. and cost efficiency. FIGURE 5.

it is always there in the cloud. and the like. Gmail. Picasa. some of which are free. If a company needs more processing power. You also don't have to worry about scalability as the system automatically handles peak loads. are:10 FIGURE 5. email. which are detailed in Figure 5. a cloud computing service that provides capacity for application developers. photos. And many smaller companies have launched their own Web-based applications to take advantage of the collaborative nature of cloud services. Just think of having your hard drive located in the sky and wherever you are you can access your information and programs using any device. Users are not physically bound to a single computer or network. Users no longer have to take on the task of upgrading application software or even remembering on what system a file is located. the information hosted in the cloud is safe and always available. Utility computing offers a pay-per-use revenue model similar to a metered service such as gas or electricity. Perhaps the most popular cloud computing services today are the Google family of applications —Google Docs & Spreadsheets. All these applications are hosted in the cloud. and available on a cost-efficient basis. IBM has established the Cloud Computing Center to deliver services and research to clients. and files. Microsoft offers a special edition of Office 2010 via the cloud as well as its Windows Live suite of Web-based applications. Other examples of cloud computing. Google Calendar. Cloud computing also offers new ways to store.2 Building Sustainable MIS Infrastructures http://highered.mcgraw-hill. such as preparing tax returns during tax season or increased sales transactions during certain holiday seasons. process.10 displays the benefits and challenges associated with cloud computing. are accessible to anyone with an Internet connection. such as instant messaging.Section 5. The best part is that even if your machine crashes.com/sites/0077338340/student_view. Because additional cloud resources are always available. globe. and can be used from anywhere in the world.11. Amazon has its Elastic Compute Cloud (EC2). and analyze information and connect people and resources from any location in the world where an Internet connection is available. which can be spread out among the systems in the cloud. Figure 5. access. whenever they need to. Many cloud computing service providers use utility computing cloud infrastructures.. is lost or stolen.10 Cloud Computing Benefits and Challenges 8 of 15 7/11/12 12:25 PM . immediately available to that user and to other authorized users. companies no longer have to purchase systems for infrequent computing tasks that need intense processing power. they can access their programs and documents from wherever they are. All that matters is that the application and file are in the cloud..

000. networking. which is a great business advantage considering some servers cost more than $100. Microsoft Hotmail—Web-based email services. Microsoft HealthVault—online medical records storage.mcgraw-hill. FIGURE 5. YouSendIt—file transfer services.11 Three Cloud Computing Service Delivery Models 9 of 15 7/11/12 12:25 PM .2 Building Sustainable MIS Infrastructures http://highered. much like a basic utility service such as electricity or gas. online presentation tool services. EC2 provides a Web interface through which customers can load and run their own applications on Amazon's computers. and stop services as needed. including the use of servers.Section 5.. Currently the most popular IaaS operation is Amazon's Elastic Compute Cloud. IaaS offers a cost-effective solution for companies that need their computing resources to grown and shrink as business demand changes. spreadsheet. Zoho Office—word processor. This is known as dynamic scaling. Mozy—online computer backup services. Infrastructure as a Service Infrastructure as a Service (IaaS) is a service that delivers hardware networking capabilities. and storage over the cloud using a pay-per-use revenue model. or simply EC2. The service is typically paid for on a usage basis. which is why Amazon describes EC2 as elastic..com/sites/0077338340/student_view. Customers control their own operating environment. With IaaS the customer rents the hardware and provides its own custom applications or programs. which means the MIS infrastructure can be automatically scaled up or down based on needed requirements. Prezi—online presentation services. so they can create. IaaS customers save money by not having to spend a large amount of capital purchasing expensive servers. run. generally known as Amazon EC2.

They also get the added benefits of scalability and flexibility to test new software on a rental basis. deployment. Usability was one of the biggest drivers for creating interest in and success for cloud computing service providers. that automates functions such as tracking sales leads and prospects and forecasting. lives in the cloud.com built and delivered a sales automation application. Platform as a Service Platform as a Service (PaaS) supports the deployment of entire systems including hardware. easy to maintain. When a customer scales beyond these initial limits. Google's App Engine is free and offers a standard storage limit and enough processing power and network usage to support a Web application serving about 5 million page views a month.. and maintaining Web development software. which builds and deploys Web applications for a company. management. and easy to scale as a company's Web-based application needs grow. and applications using a pay-per-use revenue model. The software is priced on a per-use basis with no up-front costs. networking. Cloud computing services offer these companies considerable cost savings where they can perform testing and analysis at levels that are not possible without access to additional and very costly computing infrastructure. With PaaS the development. Google's App Engine is easy to build. Tapping the power of SaaS can provide access to a largescale. so companies get the immediate benefit of reducing capital expenditures. Salesforce. Software as a Service Software as a Service was one of the first implementations of cloud computing Software as a Service (SaaS) delivers applications over the cloud using a pay-per-use revenue model. expensive to maintain. Every aspect of development. it can pay a fee to increase capacity and performance. and maintenance is based entirely in the cloud and performed by the PaaS provider. and customers. and challenging to use. SaaS offers a number of advantages. companies often spent huge amounts of money implementing and customizing specialized applications to satisfy their business requirements.mcgraw-hill. suitable for the typical salesperson. managing. Increased security. Many of these applications were difficult to implement. allowing the company to focus resources on its core initiatives. the most obvious is tremendous cost savings.com/sites/0077338340/student_view. Salesforce. This can turn into some huge costs savings for a small business that does not have enough initial capital to buy expensive hardware and software for its Web 10 of 15 7/11/12 12:25 PM . secure infrastructure. One of the most popular PaaS services is Google's App Engine.Section 5. IaaS is a perfect fit for companies with research-intensive projects that need to process large amounts of information at irregular intervals. including the software needed to create it and the hardware to run it.2 Building Sustainable MIS Infrastructures http://highered. suppliers. PaaS is a perfect solution for a business as it passes on to the service provider the headache and challenges of buying. Easy collaboration with partners. which is especially valuable for a start-up or small company with few financial resources. Before its introduction. such as those in the scientific or medical field. along with any needed support. Centralized information management. Increased speed to market with significantly less costs. PaaS helps companies minimize operational costs and increase productivity by providing all the following without up-front investment: Access to information anywhere and anytime..com is one of the most popular SaaS providers.

and ewaste. they can assign the hardware resources when and where they are needed. achieving the availability. Virtualization allows multiple virtual computers to exist on a single machine.2 Building Sustainable MIS Infrastructures http://highered. recovery. by virtually separating the operating system and applications from the hardware. computers were designed to run a single application on a single operating system. and later disposed of safely. if there is a disaster or hardware failure. and copy machine all on one physical machine. This left most computers vastly underutilized (as mentioned earlier. such as Google. or Amazon. In the past you had to purchase a fax machine. By increasing hardware usability by running multiple operating systems on a single computer. Also. computers can run multiple operating systems along with multiple software applications—all at the same time. and only one application. One of the primary uses of virtualization is for performing backup.mcgraw-hill. applications. and scalability a company needs to thrive and grow. making it difficult to find two systems with the same requirements that could share the same machine. Through the use of virtualization. these providers' data centers are built to withstand natural disasters and are typically located far away from big cities. it dedicates a single server to house the system. a two-person company can access the same computing resources as Google. at least at the moment. Managers no longer have to assign servers.12). This was expensive. required enough energy to run four separate machines. That makes good business sense. Mac computers have the ability to run both the Apple operating system and the Windows PC operating system. Virtualization is essentially a form of consolidation that can benefit sustainable MIS infrastructures in a variety of ways.11 Virtualized Computing Most computers and even servers typically run only one operating system. or network capacity permanently to single applications. Unfortunately. it is easy to port the virtual machine to a new physical machine allowing a company to recovery quickly from disasters. Virtualization is also one of the easiest and quickest ways to achieve a sustainable MIS infrastructure because it reduces power consumption and requires less equipment that needs to be manufactured. virtualization. APPLY YOUR KNOWLEDGE 11 of 15 7/11/12 12:25 PM . A good analogy is a computer printer. and disaster recovery. flexibility. This ensures the system has enough capacity to run during peak times and to scale to meet demand. answering machine. to run different applications and even different operating systems.. not to mention created additional amounts of ewaste. thereby reducing costs. maintained. Originally. Just think. for example: By increasing availability of applications that can give a higher level of performance depending on the hardware used. which allows it to share its resources. is not available for a PC to run Mac software. storage. 75 percent of most computing power is available for other tasks). many systems have specific hardware requirements along with detailed software requirements. Using virtual servers or a virtualization service provider. power requirements. such as memory and hard disk space. Also. and computer printer separately. answering machine. you can buy a virtualized computer printer that functions as a fax machine. Virtualization creates multiple “virtual” machines on a single computing device. Today. Also.Section 5. copy machine. When a company invests in a large system such as inventory management.com/sites/0077338340/student_view. Instead. with the use of virtualization software (see Figure 5. to host disaster recovery is more sustainable than a single company incurring the expense of having redundant physical systems. such as Windows or Mac OS.. Microsoft. By increasing energy efficiency by requiring less hardware to run multiple systems or applications.

com/sites/0077338340/student_view. Since the phones are idle the majority of the time. Visit ScanR. and one for personal calls. The individual services and application for each phone would be independently stored on the one device. OK. one for a company you are starting on the side. BUSINESS DRIVEN INNOVATION Virtualization for Your Cell Phone Virtualization is a challenging concept to understand. What are the potential environmental impacts associated with virtualization? What are the business advantages of virtualization? What are the business risks associated with virtualization? FIGURE 5. let's try that again in English. You could even use virtualization to turn your cell phone into a scanner. or whiteboard and upload it to ScanR's website and in minutes it is returned to you in a digital file. This saves time and money in expenses and maintenance. business card. You decide to use virtualization to help your situation..2 Building Sustainable MIS Infrastructures http://highered.mcgraw-hill. it sees three separate virtual phones. this would put three virtual cell phones on one device. The formal definition is that it creates multiple “virtual” machines on a single computing device.. especially when you are paying for cell service on each phone. For the most part the phones are idle and they seldom ever ring at the same time. From the device's perspective.12 Virtualization Allows an Apple Macintosh Computer to Run OS X and Windows 7 12 of 15 7/11/12 12:25 PM . Essentially.Section 5. one for the company you work for.com and for just $5 a month you can use the camera on your phone to scan documents.12 Virtualization is a hot topic these days as more and more businesses are focusing on social responsibility and attempting to find ways to reduce their carbon footprints. Take a photo of any document. Could be helpful if your friend has to miss class and you want to copy your lecture notes. Imagine you have three cell phones. Create an analogy similar to the cell phone that demonstrates virtualization. you notice that it is a waste of time and resources to support idle time.

audio and video files all contribute to the ever-expanding information footprint that requires storage. Washington. For this reason. inexpensive electricity. Microsoft. data storage systems.. power 13 of 15 7/11/12 12:25 PM . such as telecommunications and storage systems. presentations. each company can benefit from affordable land. as shown in Figure 5. is larger than 10 football fields and is powered entirely by hydroelectricity. APPLY YOUR KNOWLEDGE BUSINESS DRIVEN GLOBALIZATION Data Centers on the High Seas Google is considering constructing a floating data center three to seven miles offshore that could be both powered and cooled by the ocean. and networking equipment on barges or other platforms and could be located close to users wherever it is not feasible.mcgraw-hill. Backups. The ocean can provide two critical factors that support a sustainable MIS infrastructure—water for cooling and power.000 square feet without real estate fees.13. Bringing the data closer to the user allows the data to arrive quicker.13 What are the advantages and disadvantages of housing data centers in the ocean? Do you foresee any issues for these data centers with natural disasters? What types of security issues would Google encounter with a floating data center? Do you agree that it is good business sense to house a data center on a barge in the ocean? Why or why not? Virtual Data Centers A data center is a facility used to house management information systems and associated components. These factors are critical to today's large-scale data centers.2 Building Sustainable MIS Infrastructures http://highered. Data centers. data centers can be as large as 100. Microsoft's data center in Quincy. and Yahoo! have all created data centers along the Columbia River in the northwestern United States. In this area. documents. virtualization is having a profound impact on data centers as the sheer number of servers a company requires to operate decreases.Section 5. or efficient to build on land. graphics.com/sites/0077338340/student_view. One of the most effective ways to limit the power consumption and cooling requirements of a data center is to consolidate parts of the physical infrastructure. Google. particularly by reducing the number of physical servers through virtualization. plentiful water for cooling. consume power and require cooling and floor space while working to support business growth without disrupting normal business operations and the quality of service. sometimes referred to as server farms. whose sheer size and power needs far surpass those of the previous generation. thereby boosting growth and performance while reducing environmental impact. high-speed Internet access. Amazon. photos. The amount of data a data center stores has grown exponentially over the years as our reliance on information increases. cost-effective. And since the ocean is a rent-free space. and even more important.. It would consist of containers stacked with servers.

the benefits of integrating information MIS infrastructures. accessed April 3.Section 5.technologyreview. a company could easily create a backup of its software and important information in one or more geographically dispersed locations using cloud computing. 4 5 6 Ibid. In the case of a security breach.com/Virtualization-History. Ibid.com/energy/23706/. accessed January 23.intel.2 Building Sustainable MIS Infrastructures http://highered. For example.asp. accessed January 23.com.mcgraw-hill. 14 of 15 7/11/12 12:25 PM .com/download.virtualizationworks. environmental MIS infrastructures.hp.com/technology/mooreslaw.pdf.mvc /Whats-All-The-Smart-Grid-Buzz-About-0001. accessed April 3. and sustainable MIS infrastructures become obvious.pdf.com/sites/0077338340/student_view.electronicstakeback.13 Ways for Data Centers to Become Sustainable If we take a holistic and integrated approach to overall company growth.fieldtechnologiesonline.gov /ia/partners/prod_development/downloads/ EPA_Report_Exec_Summary_Final.” www. “Tech Update: What's All The Smart Grid Buzz About?. 2008. failover can be deployed as a virtual machine in one location of the cloud can be shut down as another virtual machine in a different location on the cloud comes online.energystar. 2010. accessed on April 2. “Talking to the Grid. 2010. 2010.www2. 10 “VMware-History of Virtualization. “Facts and Figures on E-Waste and Recycling.” www. Electronics TakeBack Coalition.. 2008.14 FIGURE 5.” www. “Switch on the Benefits of Grid Computing. Ibid. Ibid. “EPA Report to Congress on Server and Data Center Energy Efficiency. 2010.com/enterprise/downloads /7_Benefits%20of%20grid%20computing.” www. accessed April 2.” www. accessed April 3.. This would be far cheaper than building its own hot and cold sites in different areas of the country.” www. 2010. 3 “Moore's Law. 7 8 9 Ibid. generated from flowing water rather than from the burning of coal or other fossil fuel.” h20338.

com/archives/2008/03/27/googledata-center-faq/..com/sites/0077338340/student_view.com/Virtualization-History. accessed April 1. 13 Rich Miller.mcgraw-hill. accessed April 1. 12 “VMware-History of Virtualization. accessed January 23. 15 of 15 7/11/12 12:25 PM . 2008.asp.” www.” www.datacenterknowledge.” www.datacenterknowledge.datacenterknowledge.” www. “Google Data Center FAQ. “Google Data Center FAQ.2 Building Sustainable MIS Infrastructures http://highered. 2010. “Google Data Center FAQ. 2010. 14 Rich Miller.com/archives/2008/03/27/googledata-center-faq/. 11 Rich Miller.. accessed April 1. 2009 McGraw-Hill Higher Education Any use is subject to the Terms of Use and Privacy Notice.virtualizationworks. McGraw-Hill Higher Education is one of the many fine businesses of The McGraw-Hill Companies.com/archives/2008/03/27/googledata-center-faq/.Section 5. 2010.

 173       Corporate  social  responsibility   Companies'  acknowledged  responsibility  to  society.  provides  the  underlying  foundation  to  support  the  organization's  goals.  183       Cold  site   A  separate  facility  that  does  not  have  any  computer  equipment  but  is  a  place  where   employees  can  move  after  a  disaster.  179       Data  center   A  facility  used  to  house  management  information  systems  and  associated  components..  174       Capacity  planning   Determines  future  environmental  infrastructure  requirements  to  ensure  high-­‐quality   system  performance.  software....   such  as  telecommunications  and  storage  systems.  175       Agile  MIS  infrastructure   Includes  the  hardware.  171       Business  continuity  planning  (BCP)   Details  how  a  company  recovers  and  restores  critical  business  operations  and  systems   after  a  disaster  or  extended  disruption..  when   combined..  175       Backup   An  exact  copy  of  a  system's  information..  or  perform  when   operating  a  system..  177       Client   A  computer  designed  to  request  information  from  a  server.  189     .  and  telecommunications  equipment  that.  169       Cloud  computing   Refers  to  the  use  of  resources  and  applications  hosted  remotely  on  the  Internet.Chapter  5:  Infrastructures:  Sustainable  Technologies     Key  Terms     Accessibility   Refers  to  the  varying  levels  that  define  what  a  user  can  access.  175       Administrator  access   Unrestricted  access  to  the  entire  system..  view...   170       Availability   Refers  to  the  time  frames  when  the  system  is  operational.

..  obsolete..   Disaster  recovery  cost  curve   Charts  (1)  the  cost  to  the  company  of  the  unavailability  of  information  and  technology   and  (2)  the  cost  to  the  company  of  recovering  from  a  disaster  over  time.  occurs  when  a  redundant  storage  server  offers  an   exact  replica  of  the  real-­‐time  data.  and  able  to  provide  the  important   bridge  between  MIS  and  the  business.  179       Failback   Occurs  when  the  primary  machine  recovers  and  resumes  operations.  171       Failover   A  specific  type  of  fault  tolerance.  that  are  coordinated  to  solve   a  common  problem.  169       Ewaste   Refers  to  discarded.  171       Fault  tolerance   A  general  concept  that  a  system  has  the  ability  to  respond  to  unexpected  failures  or   system  crashes  as  the  backup  system  immediately  and  automatically  takes  over  with   no  loss  of  service.  often  geographically  dispersed....  and  if  the  primary  server  crashes  the  users  are   automatically  directed  to  the  secondary  server  or  backup  server.  fluent  in  business.  181       Hardware   Consists  of  the  physical  devices  associated  with  a  computer  system..  185       Emergency  notification  service   An  infrastructure  built  for  notifying  people  in  the  event  of  an  emergency.  171       Grid  computing   A  collection  of  computers.  175     .  174       Enterprise  architect   A  person  grounded  in  technology.  169       High  availability   Occurs  when  a  system  is  continuously  operational  at  all  times.  or  broken  electronic  devices..  173       Dynamic  scaling   Means  that  the  MIS  infrastructure  can  be  automatically  scaled  up  or  down  based  on   needed  requirements..  173       Disaster  recovery  plan   A  detailed  process  for  recovering  information  or  a  system  in  the  event  of  a  catastrophic   disaster..  taking  over  from   the  secondary  server..

 deploy.  177       Platform  as  a  Service  (PaaS)   Supports  the  deployment  of  entire  systems  including  hardware....  169       Performance   Measures  how  quickly  a  system  performs  a  process  or  transaction.  including  the  use  of  servers.  and   applications  using  a  pay-­‐per-­‐use  revenue  model...  171       Reliability  (or  accuracy)   Ensures  a  system  is  functioning  correctly  and  providing  accurate  information.  177         .  and  share  its  data.  networking.  and  storage  over  the  cloud  using  a  pay-­‐per-­‐use  revenue  model.  186       Portability   Refers  to  the  ability  of  an  application  to  operate  on  different  devices  or  software   platforms.  such  as  different  operating  systems..   Hot  site   A  separate  and  fully  equipped  facility  where  the  company  can  move  immediately  after   a  disaster  and  resume  business.  173       Information  MIS  infrastructure   Identifies  where  and  how  important  information.  such  as  customer  records.  use.   and  MIS  assets.  177       Recovery   The  ability  to  get  a  system  up  and  running  in  the  event  of  a  system  crash  or  failure  that   includes  restoring  the  information  backup.  169       Moore's  Law   Refers  to  the  computer  chip  performance  per  dollar  doubling  every  18  months.  176       MIS  infrastructure   Includes  the  plans  for  how  a  firm  will  build..  185       Maintainability  (or  flexibility)   Refers  to  how  quickly  a  system  can  transform  to  support  environmental  changes.   networking.  processes..  is   maintained  and  secured.....  170       Infrastructure  as  a  Service  (IaaS)   A  service  that  delivers  hardware  networking  capabilities.  178       Network   A  communications  system  created  by  linking  two  or  more  devices  and  establishing  a   standard  methodology  in  which  they  can  communicate.

.  MIS   Describes  the  production.  and  disposal  of  technology  in  a  way  that   minimizes  damage  to  the  environment....  179       Unavailable   When  a  system  is  not  operating  or  cannot  be  used.  186       Sustainable  MIS  disposal   Refers  to  the  safe  disposal  of  MIS  assets  at  the  end  of  their  life  cycle.  178       Utility  computing   Offers  a  pay-­‐per-­‐use  revenue  model  similar  to  a  metered  service  such  as  gas  or   electricity.  169       Smart  grid   Delivers  electricity  using  two-­‐way  digital  technology.  use.  170       Sustainable.  180       Sustainable  MIS  infrastructure   Identifies  ways  that  a  company  can  grow  in  terms  of  computing  resources  while   simultaneously  becoming  less  dependent  on  hardware  and  energy  consumption..  175       Usability   The  degree  to  which  a  system  is  easy  to  learn  and  efficient  and  satisfying  to  use.  173       ..  187       Warm  site   A  separate  facility  with  computer  equipment  that  requires  installation  and   configuration.  169       Software  as  a  Service  (SaaS)   Delivers  applications  over  the  cloud  using  a  pay-­‐per-­‐use  revenue  model...Scalability   Describes  how  well  a  system  can  scale  up  or  adapt  to  the  increased  demands  of   growth..  184       Virtualization   Creates  multiple  “virtual”  machines  on  a  single  computing  device.  182       Software   The  set  of  instructions  the  hardware  executes  to  carry  out  specific  tasks..  management....  or  green.  177       Server   A  computer  dedicated  to  providing  information  in  response  to  requests.

called the click wheel.edu/webct/urw/tp9214421899391. operates the iPod making it usable for all ages. what are the key factors to consider? Student Response A. Apple understood the importance of ___________ when it designed its iPod and iTunes system. availability C. Analyzing the accessibility and Value Correct Answer Feedback 1 of 9 7/12/12 8:47 PM . JULY 12th › CHAPTER 5 QUIZ › Assessments › View All Submissions › View Attempt View Attempt 1 of 1 Title: Started: Submitted: Time spent: CHAPTER 5 QUIZ July 12. reliability Score: 1/1 100% Correct Answer Feedback 2. One simple and efficient button. Your location: Home Page › DUE THURSDAY.. When building a scalable system that can support new company developments.. usability B. 2012 8:32 PM July 12. scalability E.0 Maximum possible score: 15 Total score: 15/15 = 100% Done 1. portability D.view. Organizing and deploying additional resources C.usg.lc904175. 2012 8:47 PM 00:14:16 Total score adjusted by 0. Student Value Response A. Understanding competitor products and services B. Apple also made the corresponding iTunes software intuitive and easy to use. and was key to its success.View Attempt https://gpc.

_________________ uses resources and applications hosted remotely on the Internet and might change the way businesses operate as well as the way people interact with technology.. Users of cloud computing always have the latest version of any software because updates happen automatically. Grid computing Score: 1/1 Correct Answer Feedback 4.lc904175. Information stored in the cloud is Value Correct Answer Feedback 2 of 9 7/12/12 8:47 PM . B.. Agile computing B. Cloud 100% computing D. Student Response availability of competitor systems D.edu/webct/urw/tp9214421899391. Smart grid computing C. Student Value Response A. Which of the following statements is NOT a benefit of cloud computing? Student Response A.usg.view. Anticipating expected and unexpected growth Score: 1/1 Value Correct Answer Feedback 100% 3.View Attempt https://gpc.

when combined.usg. Student Value Response A. even their own documents. Student Response A. software.View Attempt https://gpc. flash drives.edu/webct/urw/tp9214421899391. computers. microwaves and other electronic devices.view. and telecommunication equipment that. The _______________ MIS infrastructure includes the hardware. The increased demand in technology devices has caused an increase in discarded devices such as CDs. printer cartridges. Score: 1/1 5. cell phones. D. sustainable B. electronic sustainability Value Correct Answer Feedback 3 of 9 7/12/12 8:47 PM . agile Score: 1/1 100% Correct Answer Feedback 6. information D.. users of cloud computing cannot access anything.lc904175. Student Response automatically duplicated so information security is increased. Cloud computing offers almost limitless storage capacity. VCRs. provides the underlying foundation. If the 100% Internet is not available. This phenomenon is know as ____________. Value Correct Answer Feedback C. printers. TVs.. virtual C.

View Attempt https://gpc. such as different operating systems? Student Response A. Student Response B. environmental MIS C..usg. The _______________ MIS infrastructure identifies ways that a company can grow in terms of computing resources while simultaneously becoming less dependent on hardware and energy consumption. Student Value Response A.view.. 4 of 9 7/12/12 8:47 PM . Maintainability C. is maintained and secured. sustainable D. Flexibility D. Portability Score: 1/1 100% Value Correct Answer Feedback 9. agile C. The _______________ MIS infrastructure identifies where and how important information. Which of the following agile MIS infrastructure characteristics refers to the ability of an application to operate on different devices or software platforms. corporate social responsibility E. Usability E. such as customer records.lc904175. ewaste D. ergonomic code Score: 1/1 Value Correct Answer Feedback 100% 7.edu/webct/urw/tp9214421899391. Reliability B. information 100% Score: 1/1 Correct Answer Feedback 8. virtual B.

sustainable 100% C. where backup is the ability to get a system up and running in the event of a system crash or failure C. Backup is mandatory. Backup is 100% an exact copy of a system's information.lc904175. information D. where recovery is optional B. where recovery is the ability to get a system up and running in the event of a system crash or failure Value Correct Answer Feedback 5 of 9 7/12/12 8:47 PM .. agile B. virtual Score: 1/1 Correct Answer Feedback 10..view.edu/webct/urw/tp9214421899391. Recovery is an exact copy of a system's information.usg. Which of the following describes the difference between a backup plan and a recovery plan? Student Response A. Student Value Response A.View Attempt https://gpc.

Cloud computing Score: 1/1 Correct Answer Feedback 6 of 9 7/12/12 8:47 PM .. Student Response A. Server computing D. allowing it to complete scenes in days and hours instead of months.edu/webct/urw/tp9214421899391.usg. Grid 100% computing B. company server computer C. Madagascar and Antz? At peak production times. Grid computing takes advantage of the available 75% of unused processing power of a computer and links thousands of individual computers around the world creating a ______________. Recovery is mandatory. where backup is optional Score: 1/1 Value Correct Answer Feedback 11.000 computers to the making of Shrek. employee client computer Score: 1/1 Value Correct Answer Feedback 12.View Attempt https://gpc. DreamWorks dedicated more than 4. Agile computing C. personal computer B. Student Response D.lc904175.. DreamWorks Animation Company used which sustainable infrastructure component to complete many of its films including Shrek. virtual 100% supercomputer D. Student Value Response A.view.

energy waste. D.edu/webct/urw/tp9214421899391. Decreases in ewaste. Computers contain high levels of mercury. What are the three pressures driving sustainable MIS infrastructures? Student Response A.. Computers in landfills leak these toxic chemicals into our land. lead and cadmiumharmful toxins.View Attempt https://gpc..usg. A. water and air C. 13.lc904175. One computer contains more than 700 chemicals that can be toxic to the environment B.view. What are the ramifications of improper electronic recycling. A and B only E. B and C only Score: 1/1 100% Value Correct Answer Feedback 14. and carbon footprints Value Correct Answer Feedback 7 of 9 7/12/12 8:47 PM . when analyzing the example of a single desktop computer? Student Response A.

What is the primary reason a company has a failover system? Student Response A. and dynamic scaling Value Correct Answer Feedback C. To allow employees to work virtually C. Increases in 100% electronic waste. energy waste. while the secondary system activates to ensure continuous Value Correct Answer Feedback 8 of 9 7/12/12 8:47 PM . To use different systems continuously at the same time B. Increases in ewaste.. Student Response B.usg.view. energy consumption.View Attempt https://gpc. and carbon emissions D. Decreases in electronic waste.edu/webct/urw/tp9214421899391. and carbon emissions Score: 1/1 15.. To take down 100% the primary system for maintenance.lc904175. energy consumption.

Student Response operations D.. B and C only Score: 1/1 Value Correct Answer Feedback Done 9 of 9 7/12/12 8:47 PM .usg.edu/webct/urw/tp9214421899391..lc904175. A and B only E.View Attempt https://gpc.view.

1 of 2 7/11/12 12:39 PM .Multiple Choice Quiz http://highered.. The correct answer for each question is indicated by a . 1 INCORRECT What is recovery? A) Restoring the information backup B) The ability to get a system up and running in the event of a system crash or failure that includes restoring the information backup C) An exact copy of a system's information D) All of the above Feedback: Level: Easy This is the definition of recovery. 3 CORRECT What refers to how well a system can quickly transform to support environmental changes? A) Maintainability B) Reliability C) Scalability D) Availability Feedback: Level: Easy This is the definition of maintainability.com/sites/0077338359/student_view. 4 INCORRECT What refers to a system that is easy to learn and efficient and satisfying to use? A) Reliability B) Performance C) Flexibility D) Usability Feedback: Level: Easy This is the definition of usability.. 2 CORRECT What is a separate and fully equipped facility where the company can move immediately after a disaster and resume business? A) Hot site B) Disaster recovery plan C) Disaster recovery cost curve D) Cold site Feedback: Level: Easy This is the definition of hot site. 5 CORRECT What states that the computer chip performance per dollar doubles every 18 months? A) Moore's Law B) Network effect C) Corporate social responsibility D) Sustainable MIS infrastructure Feedback: Level: Easy This is the definition of Moore's law.mcgraw-hill.

.. 2 of 2 7/11/12 12:39 PM .com/sites/0077338359/student_view. 6 INCORRECT What delivers applications over the cloud using a pay-per-use revenue model? A) IaaS B) SaaS C) PaaS D) All of the above Feedback: Level: Medium This is the definition of software as a service.mcgraw-hill.Multiple Choice Quiz http://highered.

229 230 Learning Outcome 6. Business Driven Information Systems eBook 3/e Content Chapter6: Data: Business Intelligence Learning Outcome Review p. Many business managers are familiar with Excel and other spreadsheet programs they can use to store business data. and places (warehouses). accessibility. and increased information security. (2) information timeliness. people (employees). Learning Outcome 6. and retrieving data in a database. Information is data converted into a meaningful and useful context. increased information integrity (quality). a DBMS provides facilities for controlling data access and security. reduced information redundancy. a database management system.4: Explain the business benefits of a data-driven website.com/sites/0077338340/student_view. storing. (3) information quality. It is important to understand the different levels. Many companies use the Web to make some of the information in their internal databases available to customers and business partners. and granularities of information along with the four primary traits that help determine the value of information. From a business perspective.. relational databases offer many advantages over using a text document or a spreadsheet.Learning Outcome Review http://highered. Data-driven capabilities are especially useful when the website offers a great deal of information. events (transactions). updates. A database maintains information about various types of objects (inventory). and enforcing data integrity. Learning Outcome 6. (4) information governance. update. The relational database model allows users to create. which include (1) information type: transactional and analytical. increased scalability and performance. or services because visitors are frequently annoyed if they are buried under an avalanche of information when searching a website. Information can tell an organization how its current operations are performing and help it estimate and strategize about how future operations might perform. and delete data in a relational database. including increased flexibility. and flexibility and can rarely scale to support business growth. A database management system (DBMS) creates. Although spreadsheets are excellent for supporting some data analysis. In addition.3: Identify the business advantages of a relational database. updating.mcgraw-hill. they offer limited functionality in terms of security. products.1: Explain the four primary traits that determine the value of information. Learning Outcome 6. 1 of 3 7/11/12 12:50 PM . allowing data sharing. formats. and deletes data in a database while controlling access and security. A DBMS provides methodologies for creating.2: Describe a database.. reads. and the relational database model. read. A data-driven website is an interactive website kept constantly updated and relevant to the needs of its customers using a database.

let alone their biggest competitors. association detection. Learning Outcome 6. and loads it into a data warehouse. To distinguish between data warehouses and data marts. and provide a few reasons it can make a manager more effective. 2 of 3 7/11/12 12:50 PM . McGraw-Hill Higher Education is one of the many fine businesses of The McGraw-Hill Companies. more specifically. voice messages. Learning Outcome 6. A data mart contains a subset of data warehouse information. and statistical analysis. The data warehouse then sends portions (or subsets) of the information to data marts. The primary value of a data warehouse is to combine information. video clips. Managers today find themselves in the position of being data rich and information poor. the set of data also includes unstructured data such as voice mail. Unstructured data do not exist in a fixed location and can include text documents. PDFs.6: Explain ETL and the role of a data mart in business. due to enormous volumes of organizational data being inaccessible to all but the MIS department. Extraction.8: Identify the advantages of using business intelligence to support managerial decision making.Learning Outcome Review http://highered.mcgraw-hill. Data mining can also begin at a summary information level (coarse granularity) and progress through increasing levels of detail (drilling down). customer phone calls. emails. such as tweets from Twitter. think of data warehouses as having a more organizational focus and data marts as having a functional focus. text messages.7: Define data mining.. Data mining occurs on structured data that are already in a database or a spreadsheet. 2009 McGraw-Hill Higher Education Any use is subject to the Terms of Use and Privacy Notice. or the reverse (drilling up).. throughout an organization into a single repository in such a way that the people who need that information can make decisions and undertake business analysis. and they need to implement business intelligence systems to solve this challenge. that supports business analysis and decision making. along with numerous new forms of data. Three common forms for mining structured and unstructured data are cluster analysis.5: Define a data warehouse.com/sites/0077338340/student_view. Data mining is the process of analyzing data to extract information not offered by the raw data alone. gathered from many different operational databases. transformation. and loading (ETL) is a process that extracts information from internal and external databases. and explain the three common forms for mining structured and unstructured data. Learning Outcome 6. and so on. transforms it using a common set of enterprise definitions. strategic information. A data warehouse is a logical collection of information. Many organizations today find it next to impossible to understand their own strengths and weaknesses. Learning Outcome 6. Organization data include far more than simple structured data elements in a database.

mcgraw-hill.Learning Outcome Review http://highered.. 3 of 3 7/11/12 12:50 PM .com/sites/0077338340/student_view..

Figure 6.1 1 of 29 7/11/12 12:50 PM . a database management system.mcgraw-hill. and Databases p. For example. Employees must be able to correlate the different levels. Employees will need to compare these different types of information for what they commonly reveal to make strategic decisions. and granularities. and granularities of information when making decisions. Information. One supplier might send detailed information in a spreadsheet. Information granularity refers to the extent of detail within the information (fine and detailed or coarse and abstract).1 Data. 6. Managers in sales. and filter information is key to growth and success to any professional in any industry.1 Explain the four primary traits that determine the value of information. digest.2 Describe a database. marketing. formats. 206 217 210 205 216 215 214 213 212 211 209 208 207 p. and the relational database model.. human resources. and management need information to run their departments and make daily decisions. formats. analyze. Information comes at different levels. THE BUSINESS BENEFITS OF HIGH-QUALITY INFORMATION LO 6. Information can tell an organization how its current operations determine the are performing and help it estimate and strategize about how future operations might value of information. Business Driven Information Systems eBook 3/e Content Chapter6: Data: Business Intelligence Section 6.Section 6. When addressing a significant business issue. and still another might send a collection of information from emails. and granularities.com/sites/0077338340/student_view. Information. and Databases http://highered. The ability to understand.3 Identify the business advantages of a relational database. employees must be able to obtain and analyze all the relevant information so they can make the best decision possible. formats.. a company might be collecting information from various suppliers to make needed decisions. Information is everywhere in an organization.1: Explain the four primary traits that Information is powerful. 205 LEARNING OUTCOMES 6. only to find that the information is in different levels. Remember that new perspectives and opportunities can open up when you have the right data that you can turn into information and ultimately business intelligence.4 Explain the business benefits of a data-driven website. while another supplier might send summary information in a Word document. perform. 6. 6.1 Data.

compiling. Transactional information encompasses all of the information contained within a single business process or unit of work. capturing and storing of the transactional information are required. and Web links).mcgraw-hill. which keeps track of 400 million active users (along with their photos. and Granularities of Organizational Information Analytical information encompasses all organizational information. formats. Information Type: Transactional and Analytical As discussed previously in the text.Section 6. friends. and Databases http://highered. managers next want to look at the four primary traits that help determine the value of information: Information type: transactional and analytical.. displays the various levels. the two primary types of information are transactional and analytical. and granularities of organizational information. and its primary purpose is to support daily operational tasks. formats.1 Data. Information timeliness. a deposit or withdrawal is made from an ATM. in varied formats.com/sites/0077338340/student_view. Formats. After understanding the different levels. and exhibiting different granularities can provide tremendous insight into how an organization is performing. which handles more than 1 million customer transactions every hour. sorting. Information quality. new ways of reaching customers. and its primary purpose is to support 2 of 29 7/11/12 12:50 PM . Successfully collecting.. and even new methods of doing business.1 Levels. Information. and granularities of information. Information governance. In addition. and finally analyzing information from multiple levels. Exciting and unexpected results can include potential new markets. or a receipt is given at the gas pump. Organizations need to capture and store transactional information to perform operational tasks and repetitive decisions such as analyzing daily sales reports and production schedules to determine how much inventory to carry. and Facebook. every time a cash register rings up a sale. Consider Walmart. FIGURE 6.

prevent diseases. Each manager has gathered information at different times during the day to create a picture of the situation. Figure 6. credit card companies crunch through billions of transactional purchase records to identify fraudulent activity. Armed with the valuable information the retail chain was able to stock up on Pop-Tarts that were ready for purchase when customers arrived. but no more.2 displays different types of transactional and analytical information. Indicators such as charges in a foreign country or consecutive purchases of gasoline send a red flag highlighting potential fraudulent activity. keep smaller inventories. Information also needs to be timely in the sense that it meets employees' needs. Yes. Walmart was able to use its massive amount of analytical information to identify many unusual trends. and Databases http://highered. FIGURE 6. Real-time systems provide real-time information in response to requests. information that is a few days or weeks old can be relevant. Each manager's picture may be different 3 of 29 7/11/12 12:50 PM . Imagine the following scenario: Three managers meet at the end of the day to discuss a business problem. require up-to-the-second information. Information. If employees can absorb information only on an hourly or daily basis. require only daily or even weekly information.1 Data. such as 911 response centers.. the performing of managerial analysis tasks.. such as spot business trends.2 Transactional versus Analytical Information Most people request real-time information without understanding one of the biggest pitfalls associated with real-time information—continual change. Analytical information is useful when making important decisions such as whether the organization should build a new manufacturing plant or hire additional sales personnel. The growing demand for real-time information stems from organizations' need to make faster and more effective decisions. up-to-date information. while in others information that is a few minutes old can be almost worthless. such as a correlation between storms and Pop-Tarts. Some organizations.com/sites/0077338340/student_view. and track performance more carefully. stock traders. For example. Walmart discovered an increase in the demand for Pop-Tarts during the storm season. there is no need to gather real-time information in smaller increments. and fight crime. Real-time information means immediate. and banks. such as insurance and construction companies.Section 6. Other organizations. Many organizations use real-time systems to uncover key corporate transactional information. Analytical information makes it possible to do many things that previously were difficult to accomplish. In some firms or industries. operate more efficiently.mcgraw-hill. Information Timeliness Timeliness is an aspect of information that depends on the situation.

3 Five Common Characteristics of High-Quality Information 4 of 29 7/11/12 12:50 PM . Another issue with accuracy. Accuracy. 6. 5. There may be a duplication of information since there is a slight difference between the two customers in the spelling of the last name. This approach may not speed up decision making. Completeness. To ensure your systems do not suffer from data integrity issues. Data integrity issues occur when a system produces incorrect.Section 6.4 provides an example of several problems associated with using low-quality information including: 1. Data integrity issues can cause managers to consider the system reports invalid and will make decisions based on other sources. review Figure 6. 2. or duplicate data. inconsistent. because of the time differences. 4. Their views on the business problem may not match because the information they are basing their analysis on is continually changing.. The information is incomplete because there is not a valid area code for the phone and fax numbers. Figure 6. Another issue with completeness.3 for the five characteristics common to high-quality information: accuracy. FIGURE 6. Similar street addresses and phone numbers make this likely.mcgraw-hill. The street address contains only a number and not a street name. Another issue with completeness. There is inaccurate information because a phone number is located in the email address field. 3. Business decision makers must evaluate the timeliness for the information for every decision.1 Data. Consistency. Information Quality Business decisions are only as good as the quality of the information used to make them. Data inconsistency occurs when the same data element has different values. completeness. Organizations do not want to find themselves using real-time information to make a bad decision faster. This may be inaccurate information because the customer's phone and fax numbers are the same. and Databases http://highered. timeliness. Changing this information in only a few organizational systems will lead to data inconsistencies causing customer 123456 to be associated with two last names. Some customers might have the same number for phone and fax. Information. and uniqueness. Take for example the amount of work that needs to occur to update a customer who had changed her last name due to marriage. but the fact that the customer also has this number in the email address field is suspicious. The customer's first name is missing. consistency.. and it may actually slow it down.com/sites/0077338340/student_view.

mcgraw-hill. a company runs the risk of alienating its best customers.000 products in 200 countries. However.000 suppliers to sell more than 100. FIGURE 6. After some analysis.. and materials. it found that it had 9 million records of vendors. This created multiple accounts for the same customer. the company was unable to evaluate its business effectively. Without being able to identify customer profitability. obsolete. and Databases http://highered. The magazine is currently experiencing problems with its distribution list.. customers.Section 6.com/sites/0077338340/student_view. making it impossible to determine the true value of Nestlé's customers. More than 30 percent of the magazines mailed are returned because of incorrect address information. and each 5 of 29 7/11/12 12:50 PM . inaccurate. The analysis discovered that some records abbreviated vendor names while other records spelled out the vendor names. or incomplete.2 APPLY YOUR KNOWLEDGE BUSINESS DRIVEN MIS Determining Information Quality Issues Real People magazine is geared toward working individuals and provides articles and advice on everything from car maintenance to family planning. half of which were duplicated.4 Example of Low-Quality Information Nestlé uses 550. Information. due to poor information.1 Data.

Erroneous decisions in turn can cost time. Knowing how low-quality information issues typically occur can help a company correct them. 4. and Databases http://highered. month it receives numerous calls from angry customers complaining that they have not yet received their magazines. Inability to identify selling opportunities. Difficulty tracking revenue because of inaccurate invoices. 6 of 29 7/11/12 12:50 PM . Understanding the Costs of Using Low-Quality Information Using the wrong information can lead managers to make erroneous decisions. inaccuracies. Below is a sample of Real People's customer information. The four primary reasons for low-quality information are: 1. Addressing these errors will significantly improve the quality of company information and the value to be extracted from it. and solutions the company can follow to correct the situation.com/sites/0077338340/student_view. Data-entry personnel enter abbreviated information to save time or erroneous information by accident. Lost revenue opportunities from marketing to nonexistent customers.. Online customers intentionally enter inaccurate information to protect their privacy. Third-party and external information contains inconsistencies. 2.Section 6. money. 3. Information. Some of the serious business consequences that occur due to using low-quality information to make decisions are: Inability to accurately track customers. Different systems have different information entry standards and formats.1 Data. Difficulty identifying the organization's most valuable customers. Create a report detailing all the issues with the information. and even jobs. The cost of sending nondeliverable mail. reputations. potential causes of the information issues..mcgraw-hill. and errors.

and Detroit. accessibility. updated. the firm should deploy controls and procedures that enforce government regulations and compliance with mandates such as Sarbanes-Oxley. Broadly defined. The policy should clearly define the processes concerning how to store. archive. the company was able to strategically place its stores and launch its marketing campaigns. and deletes data in a database while controlling access and security.1 Data. Michigan. Arizona. A company that supports a data governance program has a defined a policy that specifies who is accountable for various portions or aspects of the data. Second is a structured query language (SQL) that asks users to write lines of code to answer questions against a database. integrity. One company discovered that even with its large number of golf courses. maintained. The success of the organization depends on appreciating and leveraging the true value of timely and high-quality information. Equipped with this valuable information. Every firm. and security of company data. Understanding the Benefits of Using High-Quality Information High-quality information can significantly improve the chances of making a good decision and directly increase an organization's bottom line. Managers typically interact with QBE tools. regardless of size. STORING INFORMATION IN A RELATIONAL DATABASE MANAGEMENT SYSTEM LO 6. model. To ensure a firm manages its information correctly. and MIS professionals have the skills required to code SQL. and completeness. and Databases http://highered. and the DBMS performs the actual manipulation of the data in the database. reads. Inability to build strong relationships with customers.com/sites/0077338340/student_view. and database places (warehouses).2: Describe a database. such information ensures that the basis of the decisions is accurate. because people ultimately make decisions and no one is perfect. updates.mcgraw-hill. is a database and a database management system. Information Governance Information is a vital resource and users need to be educated on what they can and cannot do with it. Phoenix.. In addition.Section 6. Then. An analysis revealed that typical golfers in Phoenix are tourists and conventioneers who usually bring their clubs with them. including its accuracy. should create an information policy concerning data governance.5 displays the 7 of 29 7/11/12 12:50 PM . Managers send requests to the DBMS. it will need special policies and procedures establishing rules on how the information is organized. However. people (employees). events (transactions). Figure 6.. New York. Information. High-quality information does not automatically guarantee that every decision made is going to be a good one. the company should create a set of procedures identifying accessibility levels for employees. and management system. a database The core component of any system. usability. First is a query-by-example (QBE) tool that helps users graphically design the answer to a question against a database. There are two primary tools available for retrieving information from a DBMS. A database management system (DBMS) creates. and secure the data. is not a good place to sell golf clubs. and accessed. and managers access these systems to answer operational questions such as how many customers purchased Product A in December or what were the average sales by region. a database maintains information about the relational various types of objects (inventory). Companies store their information in databases. The analysis further revealed that two of the best places to sell golf clubs in the United States are Rochester. Data governance refers to the overall management of the availability. back up. timeliness. large and small. consistency.

update. SQL Server. Consider TJX Co. and business rules. A data dictionary compiles all of the metadata about the data elements in the data model. FileMaker. and the relational database. and so on. Metadata about a text document could contain document length. such as Customer Name. and a user.com/sites/0077338340/student_view. purpose. Storing Data Elements in Entities and Attributes For flexibility in supporting business operations. Some of the more popular examples of DBMS include MySQL. binary value) and descriptions of potential predefined values such as a certain area code. network. DBMS use three primary data models for organizing information—hierarchical. and date created.1 Data. metadata for an image could include its size.mcgraw-hill. A relational database management system allows users to create. the parent company of T. date. Although the hierarchical and network models are important. address. and Databases http://highered. which had 45 million credit and debit card numbers stolen from its data systems. product name. image. Maxx. Information. discount rate.3 Who do you think is to blame for the T. T. numeric. quantity ordered.. The credit card industry provides security rules that mandate vendors encrypt credit card data and limit storage of credit card numbers from point-of-sale terminals. relationship between a database. Each data element is given a description.J. resolution. a DBMS. A relational database model stores information in the form of logically related two-dimensional tables. A data element (or data field) is the smallest or basic unit of information. and finally the relationship is defined. preferred shipping method.. Maxx did not have a data governance policy adhering to these stipulations and was actively storing the customer information and credit card numbers for years. Oracle. For example. APPLY YOUR KNOWLEDGE BUSINESS DRIVEN DEBATE Securing Credit Card Data Without a data governance policy. the most prevalent.. author's name. read.J. managers need to query or search for the answers to 8 of 29 7/11/12 12:50 PM . data created. this text focuses only on the relational database model. email. Microsoft Access. Maxx credit card data theft—the company for not implementing the proper data governance policies or the hackers? Metadata provides details about data. alphanumeric. Data elements can include a customer's name. and summary. metadata is provided for the type of data (text.Section 6. Looking at a data model along with reviewing the data dictionary provides tremendous insight into the database's functions. and delete data in a relational database. and FoxPro. a company might be leaving its data vulnerable to hackers and theft. Data models are logical data structures that detail the relationships among data elements using graphics or pictures.J.

. Simply searching the customer name would not be an ideal way to find the information because there might be 20 customers with the name Steve Smith. or event. thing. In the table RECORDINGS. for instance.N. and relationships.6 illustrates the primary concepts of the relational database model—entities. MUSICIANS. imagine you need to find information on a customer named Steve Smith. Using Steve Smith's unique ID allows a manager to search the database to identify all information associated with this customer. RECORDINGS. Monkey Business.mcgraw-hill. This is the reason the relational database model uses primary keys to uniquely identify each record. TrackTitle. In essence. place. Primary keys are a critical piece of a relational database because they provide a way of distinguishing each record in a table. In Figure 6. Its primary key. and Databases http://highered.6 the attributes for the entity TRACKS are TrackNumber.tiff.5 Relationship of Database. A record is a collection of related data elements (in the MUSICIANS table these include “3. MusicianID in the RECORDINGS table creates a logical relationship (who was the musician that made the recording) to the MUSICIANS table. FIGURE 6. Attributes for the entity MUSICIANS are MusicianID. you use primary keys and foreign keys to create logical relationships. gag. Each record in an entity occupies one row in its respective table. Black Eyed Peas in Figure 6. MusicianID. The entities. you create a relationship between the MUSICIANS and RECORDINGS tables that states the Black Eyed Peas (MusicianID 2) have several recordings including The E. Figure 6.com/sites/0077338340/student_view. 9 of 29 7/11/12 12:50 PM . attributes. Do not bring young kids to live shows”).6 are TRACKS. An entity (also referred to as a table) stores information about a person.1 Data. and MusicianNotes.” Notice that MusicianID also appears as an attribute in the RECORDINGS table. and User Attributes (also called columns or fields) are the data elements associated with an entity. is “2. Creating Relationships Through Keys To manage and organize various entities within the relational database model. A foreign key is a primary key of one table that appears as an attribute in another table and acts to provide a logical relationship between the two tables. TrackLength.Section 6. of interest in Figure 6. Lady Gaga. The relationships in the relational database model help managers extract this information. transaction.D. By matching these attributes. and Elepunk.. For instance. keys. business questions such as which artist sold the most albums during a certain month. and CATEGORIES.6 is one of the musicians appearing in the MUSICIANS table. the primary key is the field RecordingID that uniquely identifies each record in the table. MusicianPhoto. MusicianName. DBMS. Notice that each entity is stored in a different two-dimensional table (with rows and columns). and RecordingID. or tables. A primary key is a field (or group of fields) that uniquely identifies a given record in a table.. Information. Creating the logical relationship between the tables allows managers to search the data and turn it into useful information.

Information.. Dickerson innovatively created a hybrid bed and couch. During the day the Rylaxer functioned as a couch and during the night it transformed into a bed. calling his new product the Rylaxer. This was the experience of Ryan Dickerson. The Rylaxer is made of environmentally friendly foam and is available in two sizes and a variety of colors. and Databases http://highered.6 Primary Concepts of the Relational Database Model APPLY YOUR KNOWLEDGE BUSINESS DRIVEN START-UP The Rylaxer Living in a cramped dorm room is a common college occurrence. a Syracuse University student.mcgraw-hill.4 Why would a spreadsheet be ineffective for running Dickerson's business? Why would he want to create a database to support his business needs? If you were building the Rylaxer database. Of course. you can pay extra for a custom cover with your school's name. and chair.1 Data.com/sites/0077338340/student_view. what are a few of the entities and associated attributes you might create? Why would you want to create primary and foreign keys? How will you use these keys to turn data into information? 10 of 29 7/11/12 12:50 PM . or favorite sports team's logo. desk. Greek letters. FIGURE 6. Spotting an entrepreneurial opportunity.Section 6. who found himself wedged into a tiny dorm room with only enough room to fit a bed.. solving his limited space issue.

another user could perform an analysis to determine the distribution of recordings as they relate to the different categories. or are they evenly distributed? This example demonstrates that while a database has only one physical view. and Databases http://highered.org. Increased Flexibility Databases tend to mirror business structures. The distinction between logical and physical views is important in understanding flexible database user views. are there more R&B recordings than rock.5 11 of 29 7/11/12 12:50 PM . Another user. Reduced information redundancy. www. Increased information integrity (quality). For example.6. just as any business needs to be able to do. it can easily support multiple logical views that provides for flexibility.5 million images of ships' manifests. The logical view of information focuses on how individual users logically access information to meet their own particular business needs. generated more than 2.. including: Increased flexibility. in which case last name should appear before first name. one user could perform a query to determine which recordings had a track length of four minutes or more. Although spreadsheets are excellent for supporting some data analysis. USING A RELATIONAL DATABASE FOR BUSINESS ADVANTAGES Many business managers are familiar with Excel and other spreadsheet programs they can use to store business data. Increased Scalability and Performance In its first year of operation. and a database needs to handle changes quickly and easily. The database contains more than 25 million passenger names that are correlated to 3. accessibility. Consider another example—a mail-order business. LO 6. Information. and flexibility and can rarely scale to support business growth.1 Data. From a business perspective. they offer limited functionality in terms of security. for example. working with a catalog mailing system. In the database illustration from Figure 6. Increased scalability and performance. The physical view of information deals with the physical storage of information on a storage device. databases need to provide flexibility in allowing each user to access the information in whatever way best suits his or her needs.ellisisland.5 billion hits. but different logical views of the same physical information..3: Identify the business advantages of a relational database. relational databases offer many advantages over using a text document or a spreadsheet.Section 6. Equally important.com/sites/0077338340/student_view. Both are easily achievable. Increased information security. would want customer names appearing as first name and then last name.mcgraw-hill. the official website of the American Family Immigration History Center. The site offers immigration information about people who entered America through the Port of New York and Ellis Island between 1892 and 1924. One user might want a report presented in alphabetical format. At the same time.

mcgraw-hill. Increased Information Integrity (Quality) Information integrity is a measure of the quality of information. Redundant data can cause storage issues along with data integrity issues. and improves information quality. Employees become confused and frustrated when faced with incorrect information causing disruptions to business processes and procedures. or order zero pounds of raw materials from a supplier. The supplier might implement a business-critical integrity constraint stating that no product returns are accepted after 15 days past delivery. like any asset. but they should 12 of 29 7/11/12 12:50 PM . access levels to determine who can access the data. Databases today scale to exceptional levels.com/sites/0077338340/student_view. Relational integrity constraints are rules that enforce basic and fundamental information-based constraints. customer service representatives might need read-only access to customer order information so they can answer customer order inquiries. they might not have or need the authority to change or delete order information. the database needed to perform quickly under heavy use. Organizations that establish specific procedures for developing integrity constraints typically see an increase in accuracy that then increases the use of organizational information by business professionals. and suppliers. For example. from unauthorized users or misuse. allowing all types of users and programs to perform information-processing and information-searching tasks. makes performing information updates easier. security becomes an even bigger issue. and Databases http://highered. Information. Databases offer many security features including passwords to provide authentication. The specification and enforcement of integrity constraints produce higher-quality information that will provide better support for business decisions. and access controls to determine what type of access they have to the information. For example. Businesscritical integrity constraints tend to mirror the very rules by which an organization achieves success. One primary goal of a database is to eliminate information redundancy by recording each piece of information in only one place in the database. provide a markup percentage that was negative. Increased Information Security Managers must protect information. a relational integrity constraint would not allow someone to create an order for a nonexistent customer. Reduced Data Redundancy Data redundancy is the duplication of data. Consider a supplier of fresh produce to large grocery chains such as Kroger. Business-critical integrity constraints enforce business rules vital to an organization's success and often require more insight and knowledge than relational integrity constraints.. making it difficult to determine which values are the most current or most accurate.1 Data. partners. This saves disk space. or the storage of the same data in multiple places. The database design needs to consider integrity constraints.. The database had to be scalable to handle the massive volumes of information and the large numbers of users expected for the launch of the website. The database and the DBMS ensures that users can never violate these constraints. who all want to access and share the same information. There are two types of integrity constraints: (1) relational and (2) business critical. Integrity constraints are rules that help ensure the quality of information. That would make sense because of the chance of spoilage of the produce. customers. In addition. Managers might require access to employee files.Section 6. As systems become increasingly complex and highly available over the Internet on many different devices. Some organizations must be able to support hundreds or thousands of users including employees.

Companies even use data-driven websites to make information in their internal databases available to customers and business partners. and so on.1 Data. Once the user hits “go” the website automatically provides a custom view of the requested information. First. LO 6. Information.. year. a photograph. have access only to their own employees' files. Security risks are increasing as more and more databases and DBMS systems are moving to data centers run in the cloud. an automobile dealer. There are a number of advantages to using the Web to access company databases.com/sites/0077338340/student_view. Visitors can become quickly annoyed if they find themselves buried under an avalanche of information when searching a website. model. miles per gallon. The dealer would create a database containing data elements for each car it has available for sale including make. and Databases http://highered. DRIVING WEBSITES WITH DATA Websites change for site visitors depending on the type of information they request. update.Section 6. and delete automobile information as the inventory changes. Website visitors might click on Porsche and then enter their specific requests such as price range or year made. for example.4: Explain the business benefits of a data-driven website. The biggest risks when using cloud computing are ensuring the security and privacy of the information in the database. Second. color. the Web interface requires few or no changes to the database model. Various security features of databases can ensure that individuals have only certain types of access to certain types of information. Data-driven capabilities are especially useful when a firm needs to offer large amounts of information. Web browsers are much easier to use than directly accessing the database using a custom-query tool. navigation. Implementing data governance policies and procedures that outline the data management requirements can ensure safe and secure cloud computing. users can update data-driven website with little or no training. Finally.. and performance. Additional data-driven website advantages include: Easy to manage content: Website owners can make changes without relying on MIS professionals. or website structure. eliminating inconsistencies while ensuring all information is entered correctly. scalability.mcgraw-hill. not the employee files for the entire company. or services. The dealer must create. Consider. Website owners can use templates to implement changes for layouts. This improves website reliability. Easy to eliminate human errors: Data-driven websites trap data-entry errors. A data-driven website is an interactive website kept constantly updated and relevant to the needs of its customers using a database. it costs less to add a Web interface in front of a DBMS than to redesign and rebuild the system to support changes. APPLY YOUR KNOWLEDGE 13 of 29 7/11/12 12:50 PM . Easy to store large amounts of data: Data-driven websites can keep large volumes of information organized. products. A data-driven website can help limit the amount of information displayed to customers based on unique search requirements.

“Unexpected Insights.zappos. 2003. Information can tell an organization how its current operations determine the are performing and help it estimate and strategize about how future operations might value of information.inc. Remember that new perspectives and opportunities can open up when you have the right data that you can turn into information and ultimately business intelligence. 5 Mitch Betts. 6.” NewScientist. 54.3 Identify the business advantages of a relational database.com/sites/0077338340/student_view.Section 6. employees must be able to obtain and analyze all the relevant information so they can make the best decision possible. Way Different. “The TJX Security Breach. February 1. digest. 6 Jim Giles.” Inc.” CIO Magazine. and management need information to run their departments and make daily decisions.1 Data. 2007. 2003. and the relational database model. 2001.computerworld. a database management system. Information. 6. perform.4 Explain the business benefits of a data-driven website. When addressing a significant business issue. and 14 of 29 7/11/12 12:50 PM .. and Databases http://highered.cio.2 Describe a database. human resources. Information comes at different levels. January 8.” ComputerWorld. Magazine.1 Explain the four primary traits that determine the value of information. advice.com/ss/cool-collegestart-ups-2010. www. April 14. and filter information is key to growth and success to any professional in any industry.com/the-tjx-security-breach-this-ones-different-way-different. 6. 7 www.com. 2010..newscientist. “OLAP Gains Fans among Data-Hungry Firms. accessed on April 9. “Data sifted from Facebook wiped after legal threats.1: Explain the four primary traits that Information is powerful. March 31. 4 “America's College College Startups: 2010. www. accessed September 4.html. 2010. 2010 http://www.” ComputerWorld. BUSINESS DRIVEN ETHICS AND SECURITY 2 3 Julia Kiling. marketing. Information is everywhere in an organization. Allan Homes.mcgraw-hill.com. THE BUSINESS BENEFITS OF HIGH-QUALITY INFORMATION LO 6. p. The ability to understand.. This One's Different. analyze. formats.com/article/dn18721-data-sifted-from-facebook-wiped-after-legal-threats. LEARNING OUTCOMES 6. Managers in sales.

formats. compiling. while another supplier might send summary information in a Word document. Information. Formats.. capturing and storing of the transactional information are required. FIGURE 6.Section 6.1 Levels. a company might be collecting information from various suppliers to make needed decisions. friends. and Facebook. Information timeliness. One supplier might send detailed information in a spreadsheet.1 displays the various levels. Organizations need to capture and store transactional information to perform operational tasks and repetitive decisions such as analyzing daily sales reports and production schedules to determine how much inventory to carry. in varied formats. After understanding the different levels.com/sites/0077338340/student_view. and still another might send a collection of information from emails. and Granularities of Organizational Information 15 of 29 7/11/12 12:50 PM . and finally analyzing information from multiple levels.mcgraw-hill.1 Data. sorting. Exciting and unexpected results can include potential new markets. Transactional information encompasses all of the information contained within a single business process or unit of work. the two primary types of information are transactional and analytical. a deposit or withdrawal is made from an ATM.. every time a cash register rings up a sale. For example. and granularities of information when making decisions. Information Type: Transactional and Analytical As discussed previously in the text. formats. Figure 6. only to find that the information is in different levels. granularities. Employees must be able to correlate the different levels. or a receipt is given at the gas pump. and granularities. Successfully collecting. and its primary purpose is to support daily operational tasks. which handles more than 1 million customer transactions every hour. and exhibiting different granularities can provide tremendous insight into how an organization is performing. and Databases http://highered. In addition. Information governance. formats. formats. and granularities of organizational information. Information quality. and even new methods of doing business. managers next want to look at the four primary traits that help determine the value of information: Information type: transactional and analytical. new ways of reaching customers. Employees will need to compare these different types of information for what they commonly reveal to make strategic decisions. and Web links). Consider Walmart. and granularities of information. Information granularity refers to the extent of detail within the information (fine and detailed or coarse and abstract). which keeps track of 400 million active users (along with their photos.

Analytical information is useful when making important decisions such as whether the organization should build a new manufacturing plant or hire additional sales personnel. Many organizations use real-time systems to uncover key corporate transactional information. Armed with the valuable information the retail chain was able to stock up on Pop-Tarts that were ready for purchase when customers arrived. Walmart was able to use its massive amount of analytical information to identify many unusual trends. The growing demand for real-time information stems from organizations' need to make faster and more effective decisions.2 displays different types of transactional and analytical information.mcgraw-hill. require only daily or even weekly information. Analytical information encompasses all organizational information. Real-time systems provide real-time information in response to requests. such as 911 response centers.com/sites/0077338340/student_view. stock traders. require up-to-the-second information. Some organizations. Other organizations. and its primary purpose is to support the performing of managerial analysis tasks. Real-time information means immediate. If employees can absorb information only on an hourly or daily basis. FIGURE 6. and track performance more carefully. information that is a few days or weeks old can be relevant.1 Data. such as insurance and construction companies. such as a correlation between storms and Pop-Tarts. Walmart discovered an increase in the demand for Pop-Tarts during the storm season. operate more efficiently. and fight crime. In some firms or industries. such as spot business trends. For example.. Figure 6.Section 6. and Databases http://highered.2 Transactional versus Analytical Information 16 of 29 7/11/12 12:50 PM . credit card companies crunch through billions of transactional purchase records to identify fraudulent activity. Information.. keep smaller inventories. Analytical information makes it possible to do many things that previously were difficult to accomplish. but no more. while in others information that is a few minutes old can be almost worthless. up-to-date information. there is no need to gather real-time information in smaller increments. Information also needs to be timely in the sense that it meets employees' needs. Indicators such as charges in a foreign country or consecutive purchases of gasoline send a red flag highlighting potential fraudulent activity. Information Timeliness Timeliness is an aspect of information that depends on the situation. prevent diseases. Yes. and banks.

There may be a duplication of information since there is a slight difference between the two customers in the spelling of the last name. Another issue with completeness. but the fact that the customer also has this number in the email address field is suspicious. 5.3 for the five characteristics common to high-quality information: accuracy. 6. timeliness. review Figure 6. or duplicate data. The street address contains only a number and not a street name. Consistency. Changing this information in only a few organizational systems will lead to data inconsistencies causing customer 123456 to be associated with two last names.mcgraw-hill. completeness. Each manager's picture may be different because of the time differences. Most people request real-time information without understanding one of the biggest pitfalls associated with real-time information—continual change. Each manager has gathered information at different times during the day to create a picture of the situation. The information is incomplete because there is not a valid area code for the phone and fax numbers. FIGURE 6.4 provides an example of several problems associated with using low-quality information including: 1. Data inconsistency occurs when the same data element has different values. 4. and uniqueness. Business decision makers must evaluate the timeliness for the information for every decision. Information Quality Business decisions are only as good as the quality of the information used to make them. Similar street addresses and phone numbers make this likely. The customer's first name is missing..Section 6. inconsistent.3 Five Common Characteristics of High-Quality Information 17 of 29 7/11/12 12:50 PM . Information. Another issue with accuracy. Some customers might have the same number for phone and fax. Another issue with completeness. To ensure your systems do not suffer from data integrity issues. Data integrity issues can cause managers to consider the system reports invalid and will make decisions based on other sources. This may be inaccurate information because the customer's phone and fax numbers are the same.. and Databases http://highered. 2.com/sites/0077338340/student_view. Take for example the amount of work that needs to occur to update a customer who had changed her last name due to marriage. and it may actually slow it down. 3. This approach may not speed up decision making. Figure 6. There is inaccurate information because a phone number is located in the email address field.1 Data. consistency. Data integrity issues occur when a system produces incorrect. Completeness. Accuracy. Imagine the following scenario: Three managers meet at the end of the day to discuss a business problem. Their views on the business problem may not match because the information they are basing their analysis on is continually changing. Organizations do not want to find themselves using real-time information to make a bad decision faster.

the company was unable to evaluate its business effectively.4 Example of Low-Quality Information Nestlé uses 550. The analysis discovered that some records abbreviated vendor names while other records spelled out the vendor names. Without being able to identify customer profitability. However. and materials.. a company runs the risk of alienating its best customers..mcgraw-hill. obsolete. FIGURE 6. and Databases http://highered.Section 6. After some analysis. inaccurate. This created multiple accounts for the same customer. or incomplete.1 Data.000 products in 200 countries. half of which were duplicated.2 APPLY YOUR KNOWLEDGE BUSINESS DRIVEN MIS 18 of 29 7/11/12 12:50 PM . it found that it had 9 million records of vendors. making it impossible to determine the true value of Nestlé's customers. customers.000 suppliers to sell more than 100. due to poor information.com/sites/0077338340/student_view. Information.

Section 6. Third-party and external information contains inconsistencies. Addressing these errors will significantly improve the quality of company information and the value to be extracted from it. Data-entry personnel enter abbreviated information to save time or erroneous information by accident. money..com/sites/0077338340/student_view.mcgraw-hill. reputations. The four primary reasons for low-quality information are: 1. and errors. Different systems have different information entry standards and formats. Information. and each month it receives numerous calls from angry customers complaining that they have not yet received their magazines.1 Data. Online customers intentionally enter inaccurate information to protect their privacy. 3. Determining Information Quality Issues Real People magazine is geared toward working individuals and provides articles and advice on everything from car maintenance to family planning. Create a report detailing all the issues with the information. potential causes of the information issues. Knowing how low-quality information issues typically occur can help a company correct them. More than 30 percent of the magazines mailed are returned because of incorrect address information. 4. inaccuracies. 2. The magazine is currently experiencing problems with its distribution list. and even jobs. Some of the serious business consequences that occur due to using low-quality information to make decisions are: Inability to accurately track customers. Difficulty identifying the organization's most valuable customers. 19 of 29 7/11/12 12:50 PM . and Databases http://highered. Understanding the Costs of Using Low-Quality Information Using the wrong information can lead managers to make erroneous decisions. and solutions the company can follow to correct the situation. Below is a sample of Real People's customer information. Erroneous decisions in turn can cost time..

the company should create a set of procedures identifying accessibility levels for employees.. because people ultimately make decisions and no one is perfect. the company was able to strategically place its stores and launch its marketing campaigns.1 Data. should create an information policy concerning data governance. events (transactions). archive. model. Information. large and small. Data governance refers to the overall management of the availability. Then. maintained. and managers access these systems to answer operational questions 20 of 29 7/11/12 12:50 PM . Michigan. An analysis revealed that typical golfers in Phoenix are tourists and conventioneers who usually bring their clubs with them. and deletes data in a database while controlling access and security. Phoenix.Section 6. including its accuracy. consistency. A company that supports a data governance program has a defined a policy that specifies who is accountable for various portions or aspects of the data. A database management system (DBMS) creates. accessibility. and completeness. back up. Inability to build strong relationships with customers. Arizona. The analysis further revealed that two of the best places to sell golf clubs in the United States are Rochester.. In addition. The cost of sending nondeliverable mail. the firm should deploy controls and procedures that enforce government regulations and compliance with mandates such as Sarbanes-Oxley. Difficulty tracking revenue because of inaccurate invoices. it will need special policies and procedures establishing rules on how the information is organized. updated. is a database and a database management system. and database places (warehouses). regardless of size. reads. However. a database The core component of any system. High-quality information does not automatically guarantee that every decision made is going to be a good one. The success of the organization depends on appreciating and leveraging the true value of timely and high-quality information. and security of company data. and Databases http://highered. and management system. a database maintains information about the relational various types of objects (inventory). Equipped with this valuable information. One company discovered that even with its large number of golf courses. and secure the data. Inability to identify selling opportunities. The policy should clearly define the processes concerning how to store. is not a good place to sell golf clubs. and accessed. people (employees). Lost revenue opportunities from marketing to nonexistent customers. and Detroit. Understanding the Benefits of Using High-Quality Information High-quality information can significantly improve the chances of making a good decision and directly increase an organization's bottom line. Information Governance Information is a vital resource and users need to be educated on what they can and cannot do with it. New York. STORING INFORMATION IN A RELATIONAL DATABASE MANAGEMENT SYSTEM LO 6. Every firm. updates. Companies store their information in databases. usability. integrity. Managers send requests to the DBMS.mcgraw-hill.com/sites/0077338340/student_view. and the DBMS performs the actual manipulation of the data in the database. such information ensures that the basis of the decisions is accurate. timeliness. To ensure a firm manages its information correctly. Broadly defined.2: Describe a database.

Maxx did not have a data governance policy adhering to these stipulations and was actively storing the customer information and credit card numbers for years. A data element (or data field) is the smallest or basic unit of information. network. and summary. Data models are logical data structures that detail the relationships among data elements using graphics or pictures.. date. a company might be leaving its data vulnerable to hackers and theft.5 displays the relationship between a database. and the 21 of 29 7/11/12 12:50 PM . and date created. which had 45 million credit and debit card numbers stolen from its data systems. Maxx. Metadata about a text document could contain document length. Managers typically interact with QBE tools. such as how many customers purchased Product A in December or what were the average sales by region. Each data element is given a description. Some of the more popular examples of DBMS include MySQL. email.J. and FoxPro.. Second is a structured query language (SQL) that asks users to write lines of code to answer questions against a database. and MIS professionals have the skills required to code SQL. and a user.Section 6. alphanumeric. the parent company of T. purpose. Information. and business rules. discount rate. author's name. a DBMS. address. The credit card industry provides security rules that mandate vendors encrypt credit card data and limit storage of credit card numbers from point-of-sale terminals. There are two primary tools available for retrieving information from a DBMS. FileMaker. preferred shipping method. A data dictionary compiles all of the metadata about the data elements in the data model. image. Data elements can include a customer's name. and so on. quantity ordered. metadata for an image could include its size. metadata is provided for the type of data (text. and finally the relationship is defined. Looking at a data model along with reviewing the data dictionary provides tremendous insight into the database's functions.3 Who do you think is to blame for the T. SQL Server. For example. Oracle. such as Customer Name. product name. T.com/sites/0077338340/student_view. APPLY YOUR KNOWLEDGE BUSINESS DRIVEN DEBATE Securing Credit Card Data Without a data governance policy. Consider TJX Co.1 Data. Figure 6.J. data created.mcgraw-hill. resolution.J.. Maxx credit card data theft—the company for not implementing the proper data governance policies or the hackers? Metadata provides details about data. numeric. and Databases http://highered. binary value) and descriptions of potential predefined values such as a certain area code. First is a query-by-example (QBE) tool that helps users graphically design the answer to a question against a database. Microsoft Access. DBMS use three primary data models for organizing information—hierarchical.

A relational database model stores information in the form of logically related two-dimensional tables. A relational database management system allows users to create. and RecordingID. and Databases http://highered. keys. for instance. Using Steve Smith's unique ID allows a manager to search the database to identify all information associated with this customer. MUSICIANS. MusicianPhoto. In the table RECORDINGS. gag. The relationships in the relational database model help managers extract this information. managers need to query or search for the answers to business questions such as which artist sold the most albums during a certain month. In Figure 6. the primary key is the field RecordingID that uniquely identifies each record in the table. read. Notice that each entity is stored in a different two-dimensional table (with rows and columns). and MusicianNotes.com/sites/0077338340/student_view. This is the reason the relational database model uses primary keys to uniquely identify each record. Simply searching the customer name would not be an ideal way to find the information because there might be 20 customers with the name Steve Smith.Section 6. Storing Data Elements in Entities and Attributes For flexibility in supporting business operations. FIGURE 6. attributes. An entity (also referred to as a table) stores information about a person. relational database. this text focuses only on the relational database model.6 illustrates the primary concepts of the relational database model—entities. Figure 6. For instance. Although the hierarchical and network models are important.6 are TRACKS. and User Attributes(also called columns or fields) are the data elements associated with an entity. A foreign key is a primary key of one table that appears as an attribute in another table and acts to provide a logical relationship between the two tables. of interest in Figure 6.5 Relationship of Database.6 the attributes for the entity TRACKS are TrackNumber. place. Creating Relationships Through Keys To manage and organize various entities within the relational database model. The entities.. Do not bring young kids to live shows”). and delete data in a relational database. and relationships. Each record in an entity occupies one row in its respective table. and CATEGORIES. MusicianName. thing. update. RECORDINGS. Attributes for the entity MUSICIANS are MusicianID. imagine you need to find information on a customer named Steve Smith. Black Eyed Peas in Figure 6. A primary key is a field (or group of fields) that uniquely identifies a given record in a table. DBMS.mcgraw-hill. the most prevalent.. TrackLength. Primary keys are a critical piece of a relational database because they provide a way of distinguishing each record in a table. A record is a collection of related data elements (in the MUSICIANS table these include “3. or event. Information.6 is one 22 of 29 7/11/12 12:50 PM . Lady Gaga. you use primary keys and foreign keys to create logical relationships. or tables.tiff. transaction. TrackTitle.1 Data.

who found himself wedged into a tiny dorm room with only enough room to fit a bed. FIGURE 6. a Syracuse University student.N. is “2. This was the experience of Ryan Dickerson. you can pay extra for a custom cover with your 23 of 29 7/11/12 12:50 PM . of the musicians appearing in the MUSICIANS table. and Elepunk. During the day the Rylaxer functioned as a couch and during the night it transformed into a bed. Its primary key. solving his limited space issue.mcgraw-hill. and Databases http://highered. MusicianID.D. In essence.1 Data. desk.. Spotting an entrepreneurial opportunity. Creating the logical relationship between the tables allows managers to search the data and turn it into useful information. Information.6 Primary Concepts of the Relational Database Model APPLY YOUR KNOWLEDGE BUSINESS DRIVEN START-UP The Rylaxer Living in a cramped dorm room is a common college occurrence. The Rylaxer is made of environmentally friendly foam and is available in two sizes and a variety of colors. Monkey Business..com/sites/0077338340/student_view. you create a relationship between the MUSICIANS and RECORDINGS tables that states the Black Eyed Peas (MusicianID 2) have several recordings including The E. By matching these attributes. and chair. calling his new product the Rylaxer. Dickerson innovatively created a hybrid bed and couch.” Notice that MusicianID also appears as an attribute in the RECORDINGS table.. MusicianID in the RECORDINGS table creates a logical relationship (who was the musician that made the recording) to the MUSICIANS table.Section 6. Of course.

1 Data. For example. are there more R&B recordings than rock. databases need to provide flexibility in allowing each user to access the information in whatever way best suits his or her needs. relational databases offer many advantages over using a text document or a spreadsheet.3: Identify the business advantages of a relational database.6. From a business perspective. including: Increased flexibility. accessibility. and a database needs to handle changes quickly and easily. Increased scalability and performance. in which case last name should appear before first name. one user could perform a query to determine which recordings had a track length of four minutes or more. they offer limited functionality in terms of security. Both 24 of 29 7/11/12 12:50 PM . would want customer names appearing as first name and then last name. In the database illustration from Figure 6. One user might want a report presented in alphabetical format. Another user. LO 6. The logical view of information focuses on how individual users logically access information to meet their own particular business needs. just as any business needs to be able to do. Reduced information redundancy. or are they evenly distributed? This example demonstrates that while a database has only one physical view..com/sites/0077338340/student_view. Consider another example—a mail-order business. Although spreadsheets are excellent for supporting some data analysis. Greek letters. what are a few of the entities and associated attributes you might create? Why would you want to create primary and foreign keys? How will you use these keys to turn data into information? USING A RELATIONAL DATABASE FOR BUSINESS ADVANTAGES Many business managers are familiar with Excel and other spreadsheet programs they can use to store business data.mcgraw-hill. and flexibility and can rarely scale to support business growth.4 Why would a spreadsheet be ineffective for running Dickerson's business? Why would he want to create a database to support his business needs? If you were building the Rylaxer database. Information. The physical view of information deals with the physical storage of information on a storage device. The distinction between logical and physical views is important in understanding flexible database user views.Section 6. Equally important. for example. working with a catalog mailing system. Increased Flexibility Databases tend to mirror business structures. and Databases http://highered. Increased information security. Increased information integrity (quality). another user could perform an analysis to determine the distribution of recordings as they relate to the different categories. or favorite sports team's logo.. At the same time. school's name. it can easily support multiple logical views that provides for flexibility.

In addition. That would make sense because of the chance of spoilage of the produce. Reduced Data Redundancy Data redundancy is the duplication of data. Some organizations must be able to support hundreds or thousands of users including employees.5 billion hits.ellisisland. provide a markup percentage that was negative. The supplier might implement a business-critical integrity constraint stating that no product returns are accepted after 15 days past delivery. but different logical views of the same physical information. Organizations that establish specific procedures for developing integrity constraints typically see an increase in accuracy that then increases the use of organizational information by business professionals. For example. generated more than 2..5 The database had to be scalable to handle the massive volumes of information and the large numbers of users expected for the launch of the website. One primary goal of a database is to eliminate information redundancy by recording each piece of information in only one place in the database. Information. the database needed to perform quickly under heavy use. allowing all types of users and programs to perform information-processing and information-searching tasks. Increased Information Integrity (Quality) Information integrity is a measure of the quality of information. the official website of the American Family Immigration History Center. Integrity constraints are rules that help ensure the quality of information. Consider a supplier of fresh produce to large grocery chains such as Kroger. Business-critical integrity constraints enforce business rules vital to an organization's success and often require more insight and knowledge than relational integrity constraints. Databases today scale to exceptional levels.com/sites/0077338340/student_view.. Increased Scalability and Performance In its first year of operation. and improves information quality. Businesscritical integrity constraints tend to mirror the very rules by which an organization achieves success. are easily achievable. The database design needs to consider integrity constraints. and Databases http://highered. Employees become confused and frustrated when faced with incorrect information causing disruptions to business processes and procedures. This saves disk space. or order zero pounds of raw materials from a supplier. The site offers immigration information about people who entered America through the Port of New York and Ellis Island between 1892 and 1924. making it difficult to determine which values are the most current or most accurate.mcgraw-hill.1 Data. makes performing information updates easier. Relational integrity constraints are rules that enforce basic and fundamental information-based constraints. customers. who all want to access and share the same information. The database and the DBMS ensures that users can never violate these constraints. The database contains more than 25 million passenger names that are correlated to 3.org. partners. The specification and enforcement of integrity constraints produce higher-quality information that will provide better support for business decisions. www.5 million images of ships' manifests. or the storage of the same data in multiple places. Increased Information Security 25 of 29 7/11/12 12:50 PM . and suppliers. There are two types of integrity constraints: (1) relational and (2) business critical. a relational integrity constraint would not allow someone to create an order for a nonexistent customer. Redundant data can cause storage issues along with data integrity issues.Section 6.

Section 6. A data-driven website can help limit the amount of information displayed to customers based on unique search requirements. and performance. like any asset. an automobile dealer.4: Explain the business benefits of a data-driven website. they might not have or need the authority to change or delete order information. but they should have access only to their own employees' files. users can update data-driven website with little or no training. The dealer would create a database containing data elements for each car it has available for sale including make. security becomes an even bigger issue. Information. navigation. or website structure. or services. DRIVING WEBSITES WITH DATA Websites change for site visitors depending on the type of information they request. Additional data-driven website advantages include: Easy to manage content: Website owners can make changes without relying on MIS professionals. Visitors can become quickly annoyed if they find themselves buried under an avalanche of information when searching a website. from unauthorized users or misuse. Security risks are increasing as more and more databases and DBMS systems are moving to data centers run in the cloud. Various security features of databases can ensure that individuals have only certain types of access to certain types of information. Website owners can use templates to implement changes for layouts. 26 of 29 7/11/12 12:50 PM . First. customer service representatives might need read-only access to customer order information so they can answer customer order inquiries. model. There are a number of advantages to using the Web to access company databases. Consider. Companies even use data-driven websites to make information in their internal databases available to customers and business partners. update. As systems become increasingly complex and highly available over the Internet on many different devices. miles per gallon. the Web interface requires few or no changes to the database model. Implementing data governance policies and procedures that outline the data management requirements can ensure safe and secure cloud computing. Finally. Databases offer many security features including passwords to provide authentication. LO 6. not the employee files for the entire company. and Databases http://highered. and delete automobile information as the inventory changes. Website visitors might click on Porsche and then enter their specific requests such as price range or year made. Easy to store large amounts of data: Data-driven websites can keep large volumes of information organized. anagers must protect information. A data-driven website is an interactive website kept constantly updated and relevant to the needs of its customers using a database. For example. Data-driven capabilities are especially useful when a firm needs to offer large amounts of information.. scalability. and access controls to determine what type of access they have to the information. This improves website reliability. it costs less to add a Web interface in front of a DBMS than to redesign and rebuild the system to support changes. products. The dealer must create. a photograph. access levels to determine who can access the data. Second.com/sites/0077338340/student_view. year. for example.. Managers might require access to employee files. The biggest risks when using cloud computing are ensuring the security and privacy of the information in the database.1 Data. Once the user hits “go” the website automatically provides a custom view of the requested information. Web browsers are much easier to use than directly accessing the database using a custom-query tool. color. and so on.mcgraw-hill.

Warden collected data from more than 200 million Facebook profiles. Colorado.6 Do you agree or disagree that Warden's use of the information was unethical? Do you agree with Facebook's decision to have Warden delete all the data he collected? What other social networking sites could Warden use to collect public information? How much of your personal information do you think is available to the public for data collection efforts such as Warden's? Zappos credits its success as an online shoe retailer to its vast inventory of nearly 3 million products available through its dynamic data-driven website. The company built its data-driven website catering to a specific niche market: consumers who were tired of finding that their most-desired items were always out of stock at traditional retailers. He is a young entrepreneur from Boulder. When Facebook learned what Warden was doing. Figure 6. and social connections.1 Data. such as displaying links between people with similar income.mcgraw-hill. and secure database helped it rank as the most-available Internet retailer.7 displays Zappos data-driven website illustrating a user querying the database and receiving information that satisfies the user's request. Warden gathered the data from public profiles using “crawling” software similar to what search engines use to find content. scalable.7 FIGURE 6. Analyzing these data could provide useful information.. Zappos' highly flexible. eliminating inconsistencies while ensuring all information is entered correctly. employment. Warden did not have the funds required to fight the lawsuit and was forced to comply with Facebook's request and deleted the data.com—A Data-Driven Website 27 of 29 7/11/12 12:50 PM . and then he created a visualization map showing connections between locations that share friends. who used the online social networking site's data to illustrate people's interests and common names across the United States.com/sites/0077338340/student_view. the company threatened to sue him unless he deleted the data immediately.. Easy to eliminate human errors: Data-driven websites trap data-entry errors.7 Zappos.Section 6. APPLY YOUR KNOWLEDGE BUSINESS DRIVEN ETHICS AND SECURITY Facebook Fiasco Peter Warden is not your typical Facebook user. and Databases http://highered. Information.

mcgraw-hill. “The TJX Security Breach. on the database that is attached to the website can offer insight into the business. frequent requests. Allan Homes. January 8. 28 of 29 7/11/12 12:50 PM .com/ss/cool-collegestart-ups-2010. FIGURE 6. and so on. This One's Different. Information.8 BI in a Data-Driven Website Companies can gain valuable business knowledge by viewing the data accessed and analyzed from their website. Source: © 2011 Zappos..cio.” Inc. 2010 http://www. Inc. advice. February 1. 2 3 Julia Kiling. 2001. 4 “America's College College Startups: 2010. Reprinted with permission.com/the-tjx-security-breach-this-ones-different-way-different.” CIO Magazine.” ComputerWorld.1 Data.. items bought together. 54.. “OLAP Gains Fans among Data-Hungry Firms.inc.com. and Databases http://highered. such as items browsed.com/sites/0077338340/student_view. Magazine. Figure 6. 2007. p. such as a PivotTable.Section 6. Way Different.8 displays how running queries or using analytical tools. and its affiliates.

. accessed on April 9. 2009 McGraw-Hill Higher Education Any use is subject to the Terms of Use and Privacy Notice..newscientist. “Unexpected Insights. 29 of 29 7/11/12 12:50 PM . 5 Mitch Betts. 2003.” NewScientist. www. March 31. “Data sifted from Facebook wiped after legal threats. www.zappos. 2010.html. McGraw-Hill Higher Education is one of the many fine businesses of The McGraw-Hill Companies. Information. 6 Jim Giles.com/sites/0077338340/student_view. April 14.1 Data. and Databases http://highered. 2010.com/article/dn18721-data-sifted-from-facebook-wiped-after-legal-threats.com. accessed September 4. 2003.mcgraw-hill. 7 www.” ComputerWorld.Section 6.com.computerworld.

5 Define a data warehouse. and sales. 6. 6. and effective. such as accounting. data did not match and users did not get the data they really needed. customer service. 1 of 15 7/11/12 12:50 PM . which differed in granularities.mcgraw-hill. and levels. they found that traditional management information systems were too make a cumbersome to provide relevant information efficiently and efficiently. users could not rely on the data to make decisions. were often incorrect or incomplete. 219 228 226 225 224 223 222 221 220 LEARNING OUTCOMES 6. order entry. 6. and provide a few reasons it can make a manager more effective. Business Driven Information Systems eBook 3/e Content Chapter6: Data: Business Intelligence Section 6. Most of the manager more systems were in the form of operational databases that were designed for specific business functions. and explain the three common forms for mining structured and unstructured data.2 Business Intelligence http://highered.7 Define data mining.6 Explain ETL and the role of a data mart in business.2 Business Intelligence p. Poor data quality: The data.Section 6.. and provide a few reasons In the 1990s as organizations began to need more timely information about their why it can business. p.5: Define a data warehouse.com/sites/0077338340/student_view. formats. if available.8 Identify the advantages of using business intelligence to support managerial decision making.. were not appropriate for business analysis for the following reasons: Inconsistent data definitions: Every department had its own method for recording data so when trying to share information. Therefore. 218 Lack of data standards: Managers need to perform cross-functional analysis using data from all departments. THE BUSINESS BENEFITS OF DATA WAREHOUSING LO 6.

M/F. users had to wait to have their queries or questions answered by MIS professionals who could code SQL. the data warehouse was born as a place where relevant information could be stored and accessed for making strategic queries and reports. The data warehouse then is simply a tool that enables business users. gathered from many different operational databases. more specifically. Gender. During the latter half of the 20th century. Many large businesses found themselves with information scattered across multiple systems with different file types (such as spreadsheets. From this idea. Analyzing trends. Data warehouses go even a step further by standardizing information. completeness. Identifying financial issues. what was collected was not always useful for intended purposes.com/sites/0077338340/student_view. Understanding product performance.mcgraw-hill. Standardizing of data elements allows for greater accuracy. Female. A data warehouse is a logical collection of information. The primary purpose of a data warehouse is to combine information. including: Developing customer profiles. 1/0). databases. Users want and need answers in a timely fashion and waiting for MIS professionals to respond to queries frequently closed the window of opportunity. 2 of 15 7/11/12 12:50 PM .. A key idea within data warehousing is to collect information from multiple systems in a common location that uses a universal querying tool. typically managers. but it should be standardized on a data warehouse with one common way of referring to each data element that stores gender (M/F). Improving business operations.Section 6. Identifying new-product opportunities. while providing a common location using a familiar format for the strategic or enterprisewide reporting information.. and consistency as well as increases the quality of the information in making strategic business decisions. that supports business analysis activities and decision-making tasks. making it almost impossible for anyone to use the information from multiple sources. PERFORMING BUSINESS ANALYSIS WITH DATA MARTS Businesses collect a tremendous amount of transactional information as part of their LO 6. for instance can be referred to in many ways (Male. the numbers and types of operational databases increased. strategic information.2 Business Intelligence http://highered. Inadequate data usefulness: Users could not get the data they needed. Understanding competitors. Ineffective direct data access: Most data stored in operational databases did not allow users direct access. to be more effective in many ways. This allows operational databases to run where they are most efficient for the business. and even word processing files). throughout an organization into a single repository in such a way that the people who need that information can make decisions and undertake business analysis. Completing reporting requests across operational systems could take days or weeks using antiquated reporting tools that were ineffective for running a business.6: Explain ETL and the role of a data mart in business.

9 Data Warehouse Model The data warehouse modeled in Figure 6. ETL. FIGURE 6. sales. think of data warehouses as having a more organizational focus and data marts as having a functional focus. Extraction.com/sites/0077338340/student_view. averages. Marketing. transformation. and other departments would like to analyze these data to understand their operations better. Aggregation. and the like.9 provides an illustration of a data warehouse and its relationship to internal and external databases. Multidimensional Analysis A relational database contains information in a series of two-dimensional tables.Section 6. transforms it using a common set of enterprise definitions. the sale of a product) and events (hiring a new employee). and loading (ETL) is a process that extracts information from internal and external databases. The data warehouse then sends portions (or subsets) of the information to data marts. To distinguish between data warehouses and data marts.. Figure 6. transformation. routine operations. In a data warehouse 3 of 15 7/11/12 12:50 PM . A data mart contains a subset of data warehouse information.2 Business Intelligence http://highered.mcgraw-hill. counts. can include totals. and loads it into a data warehouse. and data marts. in this instance. While databases store the details of all transactions (for instance. and loading.9 compiles information from internal databases (or transactional and operational databases) and external databases through extraction. data warehouses store that same information but in an aggregated form more suited to supporting decision-making tasks..

The true value of a data warehouse is its ability to provide multidimensional analysis that allows users to gain insights into their information. querying a database to obtain an average of sales for Product B at Store 2 while Promotion III is under way might create a considerable processing burden for a database.10 displays a cube (cube a) that represents store information (the layers). most data warehouses and data marts are multidimensional databases. Users might want to add dimensions of information to a current analysis including product category. product information (the rows). region. users can analyze information in a number of ways and with any number of dimensions. aggregating that information into a data warehouse will be beneficial.10 displays a slice representing promotion II information for all products at all stores.. incorrect.2 Business Intelligence http://highered. at store 2. The second cube (cube b) in Figure 6. A cube is the common term for the representation of multidimensional information. product B.. Information Cleansing or Scrubbing Maintaining quality information in a data warehouse or data mart is extremely important.Section 6. A dimension is a particular attribute of information. By using multidimensional analysis. increasing the time it takes another person to enter a new sale into the same database. and even forecasted versus actual weather. Figure 6. information contains layers of columns and rows.10 A Cube of Information for Performing a Multidimensional Analysis on Three Stores for Five Products and Four Promotions Data warehouses and data marts are ideal for off-loading some of the querying against a database. Each layer in a data warehouse or data mart represents information according to an additional dimension. Information cleansing or scrubbing is a process that weeds out and fixes or discards inconsistent. FIGURE 6.mcgraw-hill. To increase the quality of organizational information and thus the effectiveness of decision making. businesses must formulate a strategy to keep information clean.10 displays only information for promotion III. For example. and data mart. If an organization performs numerous queries against a database (or multiple databases). 4 of 15 7/11/12 12:50 PM . and promotion information (the columns).com/sites/0077338340/student_view. The third cube (cube c) in Figure 6. For this reason. After creating a cube of information. or incomplete information. users can begin to slice-and-dice the cube to drill down into the information.

2 Business Intelligence http://highered. standardize.12 displays a customer name entered differently in multiple operational systems. Many firms complete data quality audits to determine the accuracy and completeness of its data. Accurate information is correct. Most organizations determine a percentage of accuracy and completeness high enough to make good decisions at a reasonable cost. match..11 Contact Information in Operational Systems FIGURE 6.14). In each system. Customer information exists in several operational systems. Ascential Software.13 displays the typical events that occur during information cleansing. Figure 6.Section 6. Colorado.mcgraw-hill. An address containing Denver. Companies can choose information cleansing software from several different vendors including Oracle. without a zip code is an example of accurate information that is incomplete. the more it costs (see Figure 6. SAS.. while complete information has no blanks. The more complete and accurate a company wants its information to be. FIGURE 6. all the details could change—from the customer ID to contact information—depending on the business process the user is performing (see Figure 6. correct. Ideally.com/sites/0077338340/student_view. such as 85 percent accurate and 65 percent complete. and Group 1 Software. A birth date of 2/31/10 is an example of complete but inaccurate information (February 31 does not exist). some of which can be external to the organization. Specialized software tools exist that use sophisticated procedures to analyze. In a data warehouse. Companies may also trade accuracy for completeness. This step is vitally important because data warehouses often contain information from several different databases.11). Achieving perfect information is almost impossible. Looking at customer information highlights why information cleansing is necessary. and consolidate data warehouse information. scrubbed information is accurate and consistent.12 Standardizing a Customer Name in Operational Systems 5 of 15 7/11/12 12:50 PM . Information cleansing allows an organization to fix these types of inconsistencies in the data warehouse. Figure 6. information cleansing occurs first during the ETL process and again once the information is in the data warehouse.

.13 Information Cleansing Activities 6 of 15 7/11/12 12:50 PM .com/sites/0077338340/student_view.mcgraw-hill.. FIGURE 6.2 Business Intelligence http://highered.Section 6.

data were housed forms for functionally in systems that were unable to talk to each other. and explain the three common Companies are collecting more data than ever.2 Business Intelligence http://highered.mcgraw-hill. finance.7: Define data mining. Data mining can also begin at structured and a summary information level (coarse granularity) and progress through increasing levels of detail (drilling down).Section 6.8 FIGURE 6. or the reverse (drilling up). Congratulations! You have just been hired as a consultant for Integrity Information Inc. Consider Best Buy. a start-up business intelligence consulting company.. UNCOVERING TRENDS AND PATTERNS WITH DATA MINING LO 6. Your first job is to help work with the sales department in securing a new client. and human resources.. and its primary business is 7 of 15 7/11/12 12:50 PM .14 The Cost of Accurate and Complete Information APPLY YOUR KNOWLEDGE BUSINESS DRIVEN GLOBALIZATION Integrity Information Inc. techniques to compile a complete picture of their operations. The Warehouse. Historically. The Warehouse has been operating in the United States for more than a decade. allowing them to identify trends and improve forecasts. Data mining is the process of analyzing data mining to extract information not offered by the raw data alone. so the company reorganized its stores to accommodate those customers. such as customer service.. Companies use data-mining unstructured data. which used data-mining tools to identify that 7 percent of its customers accounted for 43 percent of its sales.com/sites/0077338340/student_view. all within a single view.

mcgraw-hill. Thailand. The Warehouse is interested in hiring Integrity Information Inc. Data-mining tools use a variety of techniques to find patterns and relationships in large volumes of information that predict future behavior and guide decision making. when exposed to new information sets. the client would like your analysis of the following spreadsheet. users need data-mining tools. to clean up the data that are stored in its U. to sell wholesale low-cost products. perform a variety of information analysis functions. database.. The Warehouse is also interested in expanding globally and wants to purchase several independent wholesale stores located in Australia.9 To perform data mining. Japan.Section 6. Please create a list detailing the potential issues The Warehouse can anticipate encountering as it consolidates the global databases into a single data warehouse. which analysts use to build models that. and the United Kingdom. Data mining uncovers trends and patterns. it wants to understand what types of data issues it might encounter as it begins to transfer data from each global entity to the data warehouse.S. Some of the key areas where businesses are using data mining include: 8 of 15 7/11/12 12:50 PM .2 Business Intelligence http://highered. China. Data-mining tools for data warehouses help users uncover business intelligence in their data. Before the company moves forward with the venture.com/sites/0077338340/student_view. To determine how good your work is..

statistical tools. Clustering—segments a heterogeneous population of records into a number of more homogeneous subgroups. By mining demographic data from comment or warranty cards. Three common forms for mining structured and unstructured data are: Cluster analysis 9 of 15 7/11/12 12:50 PM . and customer demographics. Netflix uses data mining to analyze each customer's film-viewing habits to provide recommendations for other customers with Cinematch. In addition.. allowing the system to forward it to the right person. PDFs. Text mining a firm's customer support email might identify which customer service representative is best able to handle the question. Netflix's innovative use of data mining provides its competitive advantage in the movie rental industry. the retailer could develop products and promotions to appeal to specific customer segments.. Text mining analyzes unstructured data to find trends and patterns in words and sentences. a retailer could use point-of-sale records of customer purchases to send targeted promotions based on an individual's purchase history. customer satisfaction. and corporate profits and to drill down into summary information to view detail transactional data. With data mining. or staff skills. Estimation—determines values for an unknown continuous variable behavior or estimated future value. competition.mcgraw-hill. voice messages.10 Data mining uses specialized technologies and functionalities such as query tools. Detecting fraud by identifying deceptive spending patterns. and so on. Web mining analyzes unstructured data associated with websites to identify consumer behavior and website navigation. product positioning. it enables companies to determine the impact on sales. emails. Data mining occurs on structured data that are already in a database or a spreadsheet.2 Business Intelligence http://highered. Netflix can present customers with a number of additional movies they might want to watch based on the customer's current preferences. Unstructured data do not exist in a fixed location and can include text documents. and intelligent agents. Using Cinematch. Data mining approaches decision making with a few different activities in mind including: Classification—assigns records to one of a predefined set of classes. reporting tools. Affinity grouping—determines which things go together. multidimensional analysis tools.Section 6. and external factors such as economic indicators. Finding the best customers who spend the most money. Keeping customers from leaving or migrating to competitors. Building budgets and other financial information. Analyzing customer buying patterns to predict future marketing and promotion campaigns. Promoting and hiring employees to ensure success for both the company and the individual. its movie recommendation system. Data mining enables these companies to determine relationships among such internal factors as price.com/sites/0077338340/student_view.

com/sites/0077338340/student_view.2 Business Intelligence http://highered. demographics. Evaluating customer segments by zip code allows a business to assign a level of importance to each segment.mcgraw-hill. Zip codes offer valuable insight into such things as income levels. APPLY YOUR KNOWLEDGE BUSINESS DRIVEN DISCUSSION Google Dashboard Often criticized for accruing large amounts of data about people. Cluster analysis also has the ability to uncover naturally occurring patterns in information (see Figure 6.. and YouTube.15). Google is now giving users an easy way to find out what information it stores about them. Using the Dashboard. such as clusters of best customers or onetime customers. How is Google using data mining to collect information on users? What privacy issues does Google create by the massive amounts of personal data it stores? Will the Dashboard prevent Google from tracking users across the Web if it wants to? Cluster Analysis Cluster analysis is a technique used to divide information sets into mutually exclusive groups such that the members of each group are as close together as possible to one another and the different groups are as far apart as possible. Cluster analysis segments customer information to help organizations identify customers with similar behavioral traits. and spending habits. a business can decrease its costs while increasing the success rate of the marketing campaign. A great example of using cluster analysis in business is to create target-marketing strategies based on zip codes. FIGURE 6.11 Google Dashboard is giving users what they want—control over their own data. even allowing users to review and delete recent Google searches. users can then adjust their privacy settings for the various Google applications. Picasa Reader.. Association detection Statistical analysis.Section 6.15 Example of Cluster Analysis 10 of 15 7/11/12 12:50 PM . With target marketing. lifestyles. The company provides a service called Google Dashboard that summarizes the data that it collects in users' accounts on their products such as Gmail.

When discovering trends and seasonal variations in transactional information.mcgraw-hill.. examine the models' assumptions and validity. Forecasting is a common form of statistical analysis. such as transforming weekly information into monthly or seasonal information or hourly information into daily information. 11 of 15 7/11/12 12:50 PM . and other retail and marketing applications. Forecasting data-mining tools allow users to manipulate the time series for forecasting activities. events A and B occurred together. Formally defined.2 Business Intelligence http://highered. Many people refer to association detection algorithms as association rule generators because they create rules to determine the likelihood of events occurring together at a particular time or following each other in a logical progression. Percentages usually reflect the patterns of these events. Time-series information is time-stamped information collected at a particular frequency. they were followed by item C within three days. calculations. insurance.Section 6. and staffing decisions on a host of economic and market indicators in this manner. distributions. “55 percent of the time. investment.16). and compare and contrast the various models to determine the best one for a particular business issue. Association Detection Association detection reveals the relationship between variables along with the nature and frequency of the relationships. and finance) and for inventory control. use a time-series forecast to change the transactional information by units of time.com/sites/0077338340/student_view. shelf-product placement. forecasts are predictions based on time-series information. sales per month.” One of the most common forms of association detection analysis is market basket analysis. for example. and calls per day. Examples of time-series information include Web visits per hour. Forecasting models allow organizations to consider all sorts of variables when making decisions..” or “80 percent of the time that items A and B occurred together. Market basket analysis is frequently used to develop marketing campaigns for cross-selling products and services (especially in banking. Market basket analysis analyzes such items as websites and checkout scanner information to detect customers' buying behavior and predict future behavior by identifying affinities among customers' choices of products and services (see Figure 6. Companies base production. Statistical Analysis Statistical analysis performs such functions as information correlations. and variance analysis. Data-mining tools offer knowledge workers a wide range of powerful statistical capabilities so they can quickly build a variety of statistical models.

In some situations. The Problem: Data Rich. As he drills down into the data. the business manager is prepared for a productive meeting with his client. past order history. Even in today's electronic world. Organization data support managerial include far more than simple structured data elements in a database. by which time the information may be outdated and opportunities lost.. such as inventory levels. Many organizations find themselves in the position of being data rich and information poor. managers struggle with the challenge of turning their business data into business intelligence. Attempting to gather all of the client information would actually take hours or even days to compile. because the enormous volume intelligence to of organizational data is inaccessible to all but the MIS department. 12 of 15 7/11/12 12:50 PM . let alone their biggest competitors. text messages. video clips. Information Poor An ideal business scenario would be as follows: As a business manager on his way to meet with a client reviews historical customer data.2 Business Intelligence http://highered. responses can take days. For many companies the above example is simply a pipe dream. Armed with all this information. Managers send their information requests to the MIS department where a dedicated person compiles the various reports. He quickly calls the support team to find out all of the information and learns that a replacement for the defective part can be shipped in 24 hours.Section 6. With so much data available. He now understands the client's needs and issues. Twitter. he learns that the client has visited the website and requested information on a new product line.com/sites/0077338340/student_view. In addition. he notices the client had a support issue with a particular product. and he can address new sales opportunities with confidence.mcgraw-hill. the set of data decision also includes unstructured data such as voice mail.. along with numerous new forms of data. or shipping details. FIGURE 6. such as tweets from making. customer phone calls. he realizes that the client's ordering volume has substantially decreased. it is surprisingly hard for managers to get information.16 Market Basket Analysis SUPPORTING DECISIONS WITH BUSINESS INTELLIGENCE LO 6.8: Identify the advantages of using Many organizations today find it next to impossible to understand their own strengths business and weaknesses.

Once they understand why a certain location or product is experiencing an increase in sales.Section 6. experience. Where is the business now? Looking at the current business situation allows managers to take effective action to solve issues before they grow out of control. Marketing: Analyze customer demographics. Law enforcement: Track crime patterns. Once they understand the cause for a decrease in sales. and supporting frustrated customers. and distribution. Business intelligence can provide managers with the ability to make better decisions. or knowledge and preferably a combination of all three. Here are a few examples of how managers can use BI to answer tough business questions: Where has the business been? Historical perspective offers important variables for determining trends and patterns. they can take effective action to resolve the issue. Managers will drill down into the report looking for why sales are up or why sales are down.2 Business Intelligence http://highered. Health care: Compare the demographics of patients with critical illnesses. Technology: Predict hardware failures. Insurance: Predict claim amounts and medical coverage costs. Where is the business going? Setting strategic direction is critical for planning and creating solid business strategies. The Solution: Business Intelligence Employee decisions are numerous and they include providing service information. Retail: Predict sales.. inventory levels. Employees can base their decisions on data.com/sites/0077338340/student_view. offering new products. locations. APPLY YOUR KNOWLEDGE BUSINESS DRIVEN INNOVATION News Dots 13 of 15 7/11/12 12:50 PM . Banking: Understand customer credit card usage and nonpayment rates.. and criminal behavior. A few examples of how different industries use business intelligence include: Airlines: Analyze popular vacation locations with current flight listings.17 displays how organizations using BI can find the cause to many issues and problems simply by asking “Why?” The process starts by analyzing a report such as sales amounts by quarter.mcgraw-hill. Figure 6. they can share the information in an effort to raise enterprisewide sales.

production. The more frequently a certain topic is tagged. bank. almost similar to a giant social network. FIGURE 6. the majority of daily news overlaps as the people. The News Dots tool scans about 500 stories a day from major publications and then tags the content with important keywords such as people. and stories are frequently connected. Using News Dots you can visualize how the news fits together. The tool is interactive and users simply click on a dot to view which stories mention that topic and which other topics it connects to in the network such as a correlation among the U. and topics. suppliers. places. Gone are the days of staring at boring spreadsheets and trying to understand how the data correlate.12 How can data visualization help identify trends? What types of business intelligence could you identify if your college used a data visualization tool to analyze student information? What types of business intelligence could you identify if you used a data visualization tool to analyze the industry where you plan to compete? Ask a simple question—such as Who is my best customer or What is my worst-selling product—and you might get as many answers as you have employees. products. News Dots uses circles (or dots) to represent the tagged content and arranges them according to size.S. finances..17 How BI Can Answer Tough Customer Questions 14 of 15 7/11/12 12:50 PM . as a business student.2 Business Intelligence http://highered. data warehouses. They can also alert managers to inconsistencies or help determine the cause and effects of enterprisewide business decisions. Surprisingly. All business aspects can benefit from the added insights provided by business intelligence and you. and data marts can provide a single source of “trusted” data that can answer questions about customers. government. Slate. Federal Reserve. and Barack Obama. the larger the dot and its relationship to other dots. a news publication. will benefit from understanding how MIS can help you make intelligent decisions. Databases.com/sites/0077338340/student_view.. With innovative data visualization tools. developed a new data visualization tool called News Dots that offers readers a different way of viewing the daily news through trends and patterns. managers can arrange different ways to view the data. providing new forms of pattern recognition not offered by simply looking at numbers. fraud.mcgraw-hill. companies.Section 6. and even employees. Senate. places.

Section 6.com. 54. May 25. January 8.com/specialreports /displayStory.slate.mcgraw-hill. 11 www. accessed September 13.” http://labs. 8 “Data. Data Everywhere.. McGraw-Hill Higher Education is one of the many fine businesses of The McGraw-Hill Companies.google.” ComputerWorld. 2006. 10 Timothy Mullaney. 15 of 15 7/11/12 12:50 PM .com/sites/0077338340/student_view. “Netflix. p.” Bloomberg Businessweek.cfm?story_id=15557443.. 2003. 2009 McGraw-Hill Higher Education Any use is subject to the Terms of Use and Privacy Notice.” The Economist.2 Business Intelligence http://highered. 2010. 9 Julia Kiling. accessed on March 29. “News Dots: The Day's Events as a Social Network. www. www. “OLAP Gains Fans among Data-Hungry Firms.htm.businessweek. 12 Chris Wilson. 2001.com/articles/slatenews-dots/.economist.com/smallbiz/content/may2006/sb20060525_268860.

....  207       Data  integrity  issues     Occurs  when  a  system  produces  incorrect.  usability.  219       Data  dictionary     Compiles  all  of  the  metadata  about  the  data  elements  in  the  data  model.  214       Cluster  analysis     A  technique  used  to  divide  information  sets  into  mutually  exclusive  groups  such  that  the   members  of  each  group  are  as  close  together  as  possible  to  one  another  and  the  different   groups  are  as  far  apart  as  possible.  207       Data  mart     Contains  a  subset  of  data  warehouse  information.....  210       Data  inconsistency     Occurs  when  the  same  data  element  has  different  values.Chapter  6:  Data:  Business  Intelligence     Key  Terms     Association  detection     Reveals  the  relationship  between  variables  along  with  the  nature  and  frequency  of  the   relationships.  219       Data  mining     The  process  of  analyzing  data  to  extract  information  not  offered  by  the  raw  data  alone.  integrity.  and  security  of  company   data.  226       Attribute     The  data  elements  associated  with  an  entity  212     Business-­‐critical  integrity  constraint     Enforces  business  rules  vital  to  an  organization’s  success  and  often  requires  more  insight  and   knowledge  than  relational  integrity  constraints..  211       Data  element  (or  data  field)     The  smallest  or  basic  unit  of  information.  inconsistent.  210       Data  governance     The  overall  management  of  the  availability.  or  duplicate  data..  225       Cube     The  common  term  for  the  representation  of  multidimensional  information.  222         ..

 events  (transactions).  210       Data  quality  audit     Determines  the  accuracy  and  completeness  of  its  data.  transaction..  212           .  updates..  transforms  it  using   a  common  set  of  enterprise  definitions.  219       Forecasts     Predictions  based  on  time-­‐series  information..  224       Entity     Stores  information  about  a  person..  and  loads  it  into  a  data  warehouse.  226       Foreign  key     A  primary  key  of  one  table  that  appears  as  an  attribute  in  another  table  and  acts  to  provide  a   logical  relationship  between  the  two  tables.Data  model     Logical  data  structures  that  detail  the  relationships  among  data  elements  using  graphics  or   pictures.  and  deletes  data  in  a  database  while  controlling  access  and  security..  reads.  and  loading  (ETL)     A  process  that  extracts  information  from  internal  and  external  databases.  214       Data  warehouse     A  logical  collection  of  information.  place.  and  places  (warehouses).  that   supports  business  analysis  activities  and  decision-­‐making  tasks.  211       Extraction.  or  event.  gathered  from  many  different  operational  databases.  thing.....  215       Data-­‐mining  tool     Uses  a  variety  of  techniques  to  find  patterns  and  relationships  in  large  volumes  of  information   that  predict  future  behavior  and  guide  decision  making.  transformation..  218       Database     Maintains  information  about  various  types  of  objects  (inventory).   210       Data-­‐driven  website     An  interactive  website  kept  constantly  updated  and  relevant  to  the  needs  of  its  customers   using  a  database.   people  (employees).  or  the  storage  of  the  same  data  in  multiple  places.  210       Database  management  system  (DBMS)     Creates..  221       Data  redundancy     The  duplication  of  data..

 incorrect.  206       Record     A  collection  of  related  data  elements.  206       Real-­‐time  system     Provides  real-­‐time  information  in  response  to  requests..  212       Query-­‐by-­‐example  (QBE)  tool     Helps  users  graphically  design  the  answer  to  a  question  against  a  database...Information  cleansing  or  scrubbing   A  process  that  weeds  out  and  fixes  or  discards  inconsistent.  211     .  214       Logical  view     Shows  how  individual  users  logically  access  information  to  meet  their  own  particular  business   needs.  214       Integrity  constraint     Rules  that  help  ensure  the  quality  of  information..  up-­‐to-­‐date  information.  update.  and  delete  data  in  a  relational  database.  220       Information  granularity     A  process  that  weeds  out  and  fixes  or  discards  inconsistent..  212       Relational  database  management  system     Allows  users  to  create.....  211       Physical  view     The  physical  storage  of  information  on  a  storage  device.  210       Real-­‐time  information     Immediate.  226       Metadata     Details  about  data.  or  incomplete   information.....  or  incomplete   information.  205       Information  integrity     A  measure  of  the  quality  of  information.  incorrect..  read.  213       Primary  key     A  field  (or  group  of  fields)  that  uniquely  identifies  a  given  record  in  a  table.  213       Market  basket  analysis     Analyzes  such  items  as  websites  and  checkout  scanner  information  to  detect  customers’   buying  behavior  and  predict  future  behavior  by  identifying  affinities  among  customers’   choices  of  products  and  services.

 and  variance   analysis.  211       Relational  integrity  constraint     Rules  that  enforce  basic  and  fundamental  information-­‐based  constraints..  emails.  calculations..  voice   messages..  224       Web  mining     Analyzes  unstructured  data  associated  with  websites  to  identify  consumer  behavior  and   website  navigation..  210       Text  mining     Analyzes  unstructured  data  to  find  trends  and  patterns  in  words  and  sentences.  224       Time-­‐series  information     Time-­‐stamped  information  collected  at  a  particular  frequency..   Relational  database  model     Stores  information  in  the  form  of  logically  related  two-­‐dimensional  tables.  PDFs..  226       Structured  data     Data  already  in  a  database  or  a  spreadsheet...  226       Unstructured  data     Data  that  do  not  exist  in  a  fixed  location  and  can  include  text  documents.  214       Statistical  analysis     Performs  such  functions  as  information  correlations.  etc..  224       .  221       Structured  query  language  (SQL)     Users  write  lines  of  code  to  answer  questions  against  a  database.  distributions.

. 2012 10:43 PM 00:13:44 Total score adjusted by 0..View Attempt https://gpc.lc904175. 2012 10:29 PM July 12.usg. By using Web browsers to access company databases. Data-driven websites are interactive websites that are kept constantly updated using a database Value Correct Answer Feedback 1 of 10 7/14/12 10:21 PM . they are easier to use than custom query tools. B. Which of the statements about data-driven websites is FALSE? Student Response A. C.edu/webct/urw/tp9214421899391. Your location: Home Page › DUE THURSDAY. JULY 12th › CHAPTER 6 QUIZ › Assessments › View All Submissions › View Attempt View Attempt 1 of 1 Title: Started: Submitted: Time spent: CHAPTER 6 QUIZ July 12. The Web interface requires few or no changes to the database model.view.6667% Done 1.0 Maximum possible score: 15 Total score: 13/15 = 86.

Which of the following statements is TRUE? Student Response A. Value Correct Answer Feedback E.. D. The more complete and accurate an organziation wants to get its information. It costs less to add a Web interface in front of a DBMS than to redesign the system to support changes.View Attempt https://gpc.. Score: 1/1 2.lc904175.view. The more complete an Value Correct Answer Feedback 2 of 10 7/14/12 10:21 PM .usg.edu/webct/urw/tp9214421899391. Data-driven 100% Websites are often hard to eliminate human errors and have limited amounts of data storage available. Student Response and relevant to the needs of its customers. the less it costs B.

the less it costs C. The more 100% complete and accurate an organization wants to get its information.edu/webct/urw/tp9214421899391. the more it costs Score: 1/1 3. Uncovering competitors and market advantages Value 100% Correct Answer Feedback 3 of 10 7/14/12 10:21 PM . The more accurate an organization wants to get it information. the less it costs Value Correct Answer Feedback E. What are the two main objectives associated with data mining? Student Response A.usg.view.. The less accurate an organization wants to get its information. the more it costs D.View Attempt https://gpc.lc904175. Uncovering trends and patterns B.. Student Response organization wants to get its information.

usg. data marts have a functional focus B.. Data warehouses tackle ethical issues. Data rich.view. content poor Score: 1/1 100% Value Correct Answer Feedback 5.edu/webct/urw/tp9214421899391.. What is it called when a manager has so much data and information that they cannot make a decision? Student Response A. What are the primary differences between a data warehouse and a data mart? Student Response Value Correct Answer Feedback A. Data warehouses 100% have a more organization-wide focus. information poor C. data marts tackle 4 of 10 7/14/12 10:21 PM . Uncovering intelligence and unstructured data issues Score: 1/1 Value Correct Answer Feedback 4.lc904175. Uncovering tactics and plans D. Data rich. Student Response C. Data rich. communication poor B. Data rich.View Attempt https://gpc. intelligence poor D.

View Attempt https://gpc. Data warehouses make quick decisions. Which of the statements below is NOT an advantage of using a relational database? Student Value Response A. Increased flexibility Value Correct Answer Feedback 5 of 10 7/14/12 10:21 PM .usg. Data warehouses have a physical focus. Decreased information redundancy C. data marts have a logical focus Score: 1/1 Value Correct Answer Feedback 6.edu/webct/urw/tp9214421899391. Increased information quality B. Increased information security B.view. Student Response hypothetical issues C. Increased flexibility Score: 1/1 Correct Answer Feedback 7. Which of the following is NOT an advantage of database-stored information? Student Response A... Decreased 100% information security D.lc904175. data marts make slow decisions D.

view. and packing slips B. Increased scalability and performance E. sales receipts. Product sales results. Increased data integrity (quality) Score: 1/1 8. Which of the following are examples of transactional information? Student Response A. Student Response Value Correct Answer Feedback C.lc904175.View Attempt https://gpc. and another user could perform an analysis to determine the distribution of recordings as they relate to the different categories. Your textbook discussed a music store example where one user could perform a query to determine which recordings had a track length of four minutes or more.usg.edu/webct/urw/tp9214421899391. Increased 100% data redundancy D.. and growth projections Score: 0/1 0% Value Correct Answer Feedback 9. Trends and sales statistics D. Airline tickets and sales growth spreadsheets C.. Airline tickets. What database advantage is this an example of? 6 of 10 7/14/12 10:21 PM . grocery receipts.

Increased flexibility C. is a site that offers a database that can easily adjust to handle massive volumes of information. The example the book gave of www.org. Reduced information redundancy D.view.lc904175. Increased information security B. Drill-down Correct Answer Feedback 7 of 10 7/14/12 10:21 PM . Increased 100% scalability and performance D. Increased information security Score: 1/1 Value Correct Answer Feedback 11. Student Response A. Increased scalability and performance Score: 1/1 Value Correct Answer Feedback 100% 10.edu/webct/urw/tp9214421899391.EllisIsland.View Attempt https://gpc. What is this an example of? Student Response A. Increased flexibility B. which generates more than 2.. Reduced information redundancy C. What is a common association detection analysis technique where you analyze the items purchased by a customer to detect the customers' buying behavior and predict future buying behavior? Student Value Response A.5 billion hits..usg.

Student Value Response basket analysis B. Nestle is one of the companies shown as an example of low-quality information causing problems for the company. Which of the following are some of the errors they found in the data or information? Student Response A. Clustering factors Score: 1/1 100% Correct Answer Feedback 12.. They had 550.view.edu/webct/urw/tp9214421899391.View Attempt https://gpc. They had too many inaccuracies and duplications to be able Value Correct Answer Feedback 8 of 10 7/14/12 10:21 PM . Mashup technology D. yet the information reports showed over 9 million due to duplication and abbreviation inaccuracies B. Some of the vendor names were abbreviated where others were not C..usg.000 actual vendors. Market basket analysis C.lc904175.

and C only Score: 0/1 0% Value Correct Answer Feedback 14. A. It is often inconsistent C. It is difficult to determine which values are the most current B. A and B only E. B. A and C only F. A.lc904175..edu/webct/urw/tp9214421899391.. B and C only G.view. A and B only E.View Attempt https://gpc. Student Response to identify customer profitability D. 9 of 10 7/14/12 10:21 PM .usg. What is the primary problem with redundant data? Student Response A. B and C only Score: 1/1 Value Correct Answer Feedback 100% 13. It is difficult to determine which values are the most accurate D. B and C only F.

. In the relational database model. improvements B.usg. cleansing C. or event for which information is stored (often referred to as a table)? Student Response A. Most people request real-time information without understanding that continual _____________ is one of the biggest pitfalls.View Attempt https://gpc. what do we call a person. Attribute B. transaction. Entity Score: 1/1 100% Value Correct Answer Feedback Done 10 of 10 7/14/12 10:21 PM . place. Relationship E. Foreign Key D.view. clustering Score: 1/1 100% Value Correct Answer Feedback 15.lc904175..edu/webct/urw/tp9214421899391. Primary Key C. change D. thing. Student Response A.

Multiple Choice Quiz

http://highered.mcgraw-hill.com/sites/0077338359/student_view...

The correct answer for each question is indicated by a

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1 CORRECT

Which of the following represents the different information levels? A) Individual, department, enterprise B) Detail, summary, aggregate C) Document, presentation, spreadsheet, database D) None of the above Feedback: Level: Easy The different information levels include individual, department, and enterprise.

2 INCORRECT

What in the relational database model is a person, place, thing, transaction, or event about which information is stored? A) Attribute B) Primary key C) Entity D) Foreign key Feedback: Level: Easy This is the definition of entity.

3 INCORRECT

All of the following are advantages of database-stored information, except: A) Reduced information redundancy. B) Increased scalability and performance. C) Reduced information integrity. D) Increased flexibility. Feedback: Level: Easy Database-stored information increases information integrity (quality).

4 CORRECT

What is the duplication of data, or the storage of the same data in multiple places? A) Data redundancy B) Information integrity C) Scalability D) Performance Feedback: Level: Easy This is the definition of duplication of data.

5 INCORRECT

What are the rules that help ensure the quality of information? A) Relational integrity constraints B) Information integrity C) Integrity constraints D) Business-critical integrity constraints Feedback: Level: Easy This is the definition of integrity constraints.

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Multiple Choice Quiz
6 INCORRECT

http://highered.mcgraw-hill.com/sites/0077338359/student_view...

Which of the following describes ETL? A) A process that transforms information using a common set of enterprise definitions B) A process that loads information into a data warehouse C) A process that extracts information from internal and external databases D) All of the above Feedback: Level: Easy All of the above describe ETL.

7 INCORRECT

What is data mining? A) A particular attribute of information B) The common term for the representation of multidimensional information C) The process of analyzing data to extract information not offered by the raw data alone D) Uses a variety of techniques to find patterns and relationships in large volumes of information and infer rules from them that predict future behavior and guide decision making Feedback: Level: Easy Data mining is the process of analyzing data to extract information not offered by the raw data alone.

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Learning Outcome 7.1: Explain the five different networking elements creating a connected
world. Network categories: Networks are categorized based on geographic span: local area networks, wide area networks, and metropolitan area networks. Network providers: At the top of the hierarchy are national service providers (NSPs), private companies that own and maintain the worldwide backbone that supports the Internet. Regional service providers (RSPs) offer Internet service by connecting to NSPs, but they also can connect directly to each other. Another level down are the Internet service providers (ISPs); recall from Chapter 3 that an ISP provides access to the Internet for a monthly fee.

p. 273

Network access technologies: A modem is a device that enables a computer to transmit and receive data. Broadband is a high-speed Internet connection that is always connected. Digital subscriber line (DSL) allows high-speed digital data transmission over standard telephone lines. Internet cable connections provide Internet access using a cable television company's infrastructure and a special cable modem. A T1 line is a type of data connection able to transmit a digital signal at 1.544 Mpbs. Network protocols: A protocol is a standard that specifies the format of data as well as the rules to be followed during transmission. Network access technologies use a standard Internet protocol called transmission control protocol/Internet protocol (TCP/IP); it provides the technical foundation for the public Internet as well as for large numbers of private networks. Network convergence: Network convergence is the efficient coexistence of telephone, video, and data communication within a single network, offering convenience and flexibility not possible with separate infrastructures. Voice over IP (VoIP) uses IP technology to transmit telephone calls. Internet protocol TV (IPTV) distributes digital video content using IP across the Internet and private IP

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networks.

Learning Outcome 7.2: Identify the benefits of a connected world.
Before networks, transferring data between computers was time-consuming and labor-intensive. People had to physically copy data from machine to machine using a disk. Networks offer many advantages for a business including: Sharing resources Providing opportunities Reducing travel

Learning Outcome 7.3: Identify the challenges of a connected world.
Networks have created a diverse, yet globally connected world. By eliminating time and distance, networks make it possible to communicate in ways not previously imaginable. Even though networks provide many business advantages, they also create increased challenges in (1) security and (2) social, ethical, and political issues.

Learning Outcome 7.4: Explain the different wireless network categories.
There are four types of wireless networks—PAN, WLAN, WMAN, and WWAN. A PAN provides communication over a short distance that is intended for use with devices that are owned and operated by a single user. A WLAN is a local area network that uses radio signals to transmit and receive data over distances of a few hundred feet. A WMAN is a metropolitan area network that uses radio signals to transmit and receive data, and a WWAN is a wide area network that uses radio signals to transmit and receive data.

Learning Outcome 7.5: Explain the different wireless network business applications.
Mobile and wireless business applications and services are using satellite technologies. These technologies are GPS, GIS, and LBS. GPS is a satellite-based navigation system providing extremely accurate position, time, and speed information. GIS is location information that can be shown on a map. LBS are applications that use location information to provide a service used by both GPS and GIS.

Learning Outcome 7.6: Identify the benefits of business mobility.
A wireless network can enhance mobility, provide immediate data access, increase location and monitoring capabilities, provide mobile commerce opportunities, improve work flow, and provide an alternative to wiring.

Learning Outcome 7.7: Identify the challenges of business mobility.
There are several challenges of wireless networks including protecting against theft, protecting wireless connections, preventing viruses on mobile devices, and addressing privacy concerns with RFID and LBS. Any mobile device is vulnerable to loss no matter how big or small it is. The company may face significant exposure from stolen IDs, passwords, encryption keys, and confidential information if the

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device falls into the wrong hands, especially if the theft is not discovered or reported immediately and the company does not have time to revoke access. Network intrusions can occur if access codes or passwords are stored on a device that is lost or stolen. However, any time a wireless network connects to a wired one, the wireless network can serve as a conduit for a hacker to gain entry into an otherwise secure wired network. The potential for contracting viruses on mobile devices is becoming a reality. The need for virus protection at the device level is critical. Any device that can access the Internet or receive email is at risk of catching a virus and passing it on to other devices. As technology advances, the potential for privacy infringement does as well. RFID already has the capability to determine the distance of a tag from the reader location. LBS can track and monitor objects much like RFID. LBS risks the invasion of privacy and security caused by indiscreet location tracking.

2009 McGraw-Hill Higher Education Any use is subject to the Terms of Use and Privacy Notice. McGraw-Hill Higher Education is one of the many fine businesses of The McGraw-Hill Companies.

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LEARNING OUTCOMES
7.1 Explain the five different networking elements creating a connected world. 7.2 Identify the benefits of a connected world. 7.3 Identify the challenges of a connected world.

OVERVIEW OF A CONNECTED WORLD
Computer networks are continuously operating all over the globe supporting our 24/7/365 always on and always connected lifestyles. You are probably using several different networks right now without even realizing it. You might be using a schoolʼs network to communicate with teachers, a phone network to communicate with friends, and a cable network to watch TV or listen to the radio. Networks enable telecommunications or the exchange of information (voice, text, data, audio, video). The telecommunication industry has morphed from a government-regulated monopoly to a deregulated market where many suppliers ferociously compete. Competing telecommunication companies offer local and global telephony services, satellite service, mobile radio, cable television, cellular phone services, and Internet access (all of which are detailed in this chapter). Businesses everywhere are increasingly using networks to communicate and collaborate with customers, partners, suppliers, and employees. As a manager, you will face many different communication alternatives, and the focus of this chapter is to provide you with an initial understanding of the different networking elements you will someday need to select (see Figure 7.1 ). A detailed technical overview of networking and telecommunications can be found in Appendix B.

LO 7.1:
Explain the five different networking elements creating a connected world.

Network Categories
The general idea of a network is to allow multiple devices to communicate at the highest achievable

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speeds and, very importantly, to reduce the cost of connecting. How a particular network achieves these goals depends in part on how it is physically constructed and connected. Networks are categorized based on geographic span: local area networks, wide area networks, and metropolitan area networks. Today's business networks include a combination of all three. A local area network (LAN) connects a group of computers in close proximity, such as in an office building, school, or home. LANs allow sharing of files, printers, games, and other resources. A LAN also often connects to other LANs, and to wide area networks. A wide area network (WAN) spans a large geographic area such as a state, province, or country. Perhaps the best example is the Internet. WANs are essential for carrying out the day-to-day activities of many companies and government organizations, allowing them to transmit and receive information among their employees, customers, suppliers, business partners, and other organizations across cities, regions, and countries and around the world.

FIGURE 7.1
Networking Elements Creating a Connected World

WANs often connect multiple smaller networks, such as local area networks or metropolitan area networks. A metropolitan area network (MAN) is a large computer network usually spanning a city. Most colleges, universities, and large companies that span a campus use an infrastructure supported by a MAN. Figure 7.2 shows the relationships and a few differences between a LAN, WAN, and MAN. A cloud image often represents the Internet or some large network environment. While LANs, WANs, and MANs all provide users with an accessible and reliable network infrastructure, they differ in many dimensions; two of the most important are cost and performance. It is easy to establish a network between two computers in the same room or building, but much more difficult if they are in different states or even countries. This means someone looking to build or support a WAN either pays more or gets less performance, or both.

Network Providers
The largest and most important network, the Internet has evolved into a global information superhighway. Think of it as a network made up of millions of smaller networks, each with the ability to operate independently of, or in harmony with, the others. Keeping the Internet operational is no simple task. No one owns or runs it, but it does have an organized network topology. The Internet is a hierarchical structure linking different levels of service providers, whose millions of devices, LANs, WANs, and MANs supply all the interconnections. At the top of the hierarchy are national service providers (NSPs), private companies that own and maintain the worldwide backbone that supports the Internet. These include Sprint, Verizon, MCI (previously UUNet/WorldCom), AT&T, NTT, Level3, Qwest, and Cable & Wireless Worldwide. Network access points (NAPs) are traffic exchange points in the routing hierarchy of the Internet that connects NSPs. They typically have regional or national coverage

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and connect to only a few NSPs. Thus, to reach a large portion of the global Internet, a NAP needs to route traffic through one of the NSPs to which it is connected.2

FIGURE 7.2
Network Categories: LAN, WAN, and MAN

One step down in the hierarchy is the regional service provider. Regional service providers (RSPs) offer Internet service by connecting to NSPs, but they also can connect directly to each other. Another level down is the Internet service providers (ISPs), recall from Chapter 3 that an ISP provides access to the Internet for a monthly fee. ISPs vary services provided and available bandwidth rates. ISPs link to RSPs and, if they are geographically close, to other ISPs. Some also connect directly to NSPs, thereby sidestepping the hierarchy. Individuals and companies use local ISPs to connect to the Internet, and large companies tend to connect directly using an RSP. Major ISPs in the United States include AOL, AT&T, Comcast, Earthlink, and NetZero. The further up the hierarchy, the faster the connections and the greater the bandwidth. The backbone shown in Figure 7.3 is greatly simplified, but it illustrates the concept that basic global interconnections are provided by the NSPs, RSPs and ISPs.3

Network Access Technologies
Performance is the ultimate goal of any computer, computer system, or network. Performance is directly related to the network's speed of data transfer and capacity to handle transmission. A network that does not offer adequate performance simply will not get the job done for those who rely on it. Luckily, networks can be upgraded and expanded if performance is inadequate. We measure network performance in terms of bandwidth, the maximum amount of data that can pass from one point to another in a unit of time. Bandwidth is similar to water traveling through a hose. If the hose is large, water can flow through it quickly. Data differs from a hose in that it must travel great distances, especially on a WAN, and not all areas of the network have the same bandwidth. A network essentially has many different hoses of unequal capacity connected together, which will restrict the flow of data when one is smaller than the others. Therefore, the speed of transmission of a network is determined by the speed of its smallest bandwidth.

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FIGURE 7.3
Internet Topology

FIGURE 7.4
Bandwidth Speeds

A bit (short for binary digit) is the smallest element of data and has a value of either 0 or 1. Bandwidth is measured in terms of bit rate (or data rate), the number of bits transferred or received per unit of time. Figure 7.4 represents bandwidth speeds in terms of bit rates. A modem is a device that enables a computer to transmit and receive data. A connection with a traditional telephone line and a modem, which most residential users had in the 1990s, is called dial-up access. Today, many users in underdeveloped countries and in rural areas in developed countries still use dial-up. It has two drawbacks. First, it is slow, providing a maximum rate of 56 Kbps. (At 56 Kbps, it takes eight minutes to download a three-minute song and more than a day to download a two-hour movie.) Second, dial-up modem access ties up the telephone line so the user cannot receive and make phone calls while online. The good news is this is not as big an issue as it once was as many people have cell phones and no longer require using the telephone line for making phone calls.4 Once the most common connection method worldwide, dial-up is quickly being replaced by

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broadband. Therefore.7 A company must match its needs with Internet access methods. they are more reliable than either. Broadband is a high-speed Internet connection that is always connected. a type of data connection able to transmit a digital signal at 1. creating 24 separate connections through one line. which means everyone in a certain radius. because most users download more—including viewing Web pages—than they upload. the actual transfer rate for each will be significantly lower than if only one person were doing so. the available bandwidth using cable can range from 512 Kbps to 50 Mbps for downloading. The two most prevalent types of broadband access are digital subscriber line and cable connection. On average. such as AT&T or Qwest.6 In rural areas where neither DSL nor cable is available. (Most high-speed connections are designed to download faster than they upload. partners. If it always needs high bandwidth access to communicate with customers. Unlike DSL.. Internet cable connections provide Internet access using a cable television company's infrastructure and a special cable modem.1 Connectivity: The Business Value Of A Networked World http://highered. First. Figure 7. and T1 lines are more expensive than DSL or cable. a T1 line may be the most cost effective method. or suppliers. if several users are simultaneously downloading a video file. If a company has three separate plants that experience a high volume of data traffic. The bandwidths 5 of 17 7/13/12 10:23 AM .mcgraw-hill.com/sites/0077338340/student_view.. and 786 Kbps for uploading. FIGURE 7. Digital subscriber line (DSL) allows high-speed digital data transmission over standard telephone lines. it can transmit and receive data much faster—in the 1 to 2 Mbps range for downloading and 128 Kbps to 1 Mbps for uploading. Although this speed might not seem impressive.544 Mpbs. cable is a shared service. it might make sense to lease lines to connect them all with a reliable high bandwidth.Section 7.5 provides an overview of the main methods for Internet access.2. The most common are T1 lines.) The second major advantage is that because they have an “always on” connection to their ISP. a customer's telephone provider is also its ISP. Thus. DSL has two major advantages over dial-up. Satellite technologies are discussed in Section 7. Today. and the telephone line carries both data and telephone signals using a DSL modem. Consumers typically obtain DSL Internet access from the same company that provides their wired local telephone access. High-speed in this case refers to any bandwidth greater than 2 Mbps. Not long ago. broadband speeds were available only at a premium price to support large companies' high-traffic networks. inexpensive access is available for home use and small companies.5 While dial-up and DSL make use of local telephone infrastructure. shares the available bandwidth. users can simultaneously talk on the phone and access the Internet.5 Types of Internet Access Another alternative to DSL or cable is dedicated communications lines leased from AT&T or another provider. a satellite link can connect to the Internet at speeds of more than 1 Mbps. such as a neighborhood. Each is composed of 24 channels.

apple. IP (the IP part of TCP/IP) verifies the data are sent to the correct IP address. TCP (the TCP part of TCP/IP) verifies the correct delivery of data because data can become corrupt when traveling over a network. there represent average speeds.mcgraw-hill. Consider a letter that needs to go from the University of Denver to Apple's headquarters in Cupertino.com/sites/0077338340/student_view. It is the founding principle that all consumers should be able to use the 6 of 17 7/13/12 10:23 AM . and MANs to grow with each new connection. Here is another way to understand TCP/IP.6 illustrates this example. each device using an IP address to connect to the Internet must have a unique address or else it could not detect which individual device a request should be sent to.. Network access technologies use a standard Internet protocol called transmission control protocol/Internet protocol (TCP/IP). The Postal Service mainly uses street addresses and zip codes to get letters to their destinations. scalability. telling the letter carrier where to deliver the envelope and who it was from. TCP ensures the size of the data packet is the same throughout its transmission and can even retransmit data until delivered correctly.9 APPLY YOUR KNOWLEDGE BUSINESS DRIVEN DISCUSSION Net Neutrality: The Great Debate Net Neutrality—the great debate has been raging for some time now. actual speeds vary depending upon the service provider and other factors such as the type of cabling and speed of the computer. Figure 7. Computers using the same protocol can communicate easily. essentially allowing LANs.Section 7. and connectability between networks.17.. with the battle lines clearly drawn. IP acts as the sending and receiving labels. which is really what IP does with its addressing method. TCP makes sure the envelope is delivered and does not get lost along the way. California.15. which allows multiple people to share the same physical address.1 Connectivity: The Business Value Of A Networked World http://highered. providing accessibility. One of the most valuable characteristics of TCP/IP is how scalable its protocols have proven to be as the Internet has grown from a small network with just a few machines to a huge internetwork with millions of devices. However. the core of TCP/IP is the same as it was more than 25 years ago. numbers represented by four strings of numbers ranging from 0 to 255 separated by periods. the IP address of www. unlike the Postal Service. WANs. One of the primary reasons for developing TCP/IP was to allow diverse or differing networks to connect and communicate with each other.237. Net neutrality is about ensuring that everyone has equal access to the Internet. While some changes have been required periodically to support this growth. which provides the technical foundation for the public Internet as well as for large numbers of private networks.8 Network Protocols A protocol is a standard that specifies the format of data as well as the rules to be followed during transmission. For example.com is 97.

Countries also have domain names such as . such as Comcast. which can be legitimate in nature (such as downloading open source applications) or pirated (such as illegal copies of the latest Hollywood video).xxx domain was recently approved for pornographic content.237. FIGURE 7.pro (for accountants.com. such as www.1 Connectivity: The Business Value Of A Networked World http://highered. is net neutrality good or bad for business?10 If there is one flaw in TCP/IP. The Federal Communications Commission (FCC) recently required Comcast to stop slowing down or blocking subscriber access to many peer-to-peer file-sharing sites such as BitTorrent. Internet and be free to access its resources without any form of discrimination.com/sites/0077338340/student_view. instead of trying to remember 97. a federal appeals court overturned that decision. Users of many peer-to-peer networks often transfer large files. Do you agree that the government should control the Internet? Should website owners be legally forced to receive or transmit information from competitors or other websites they find objectionable? Provide examples of when net neutrality might be good for a business and when net neutrality might be bad for a business..museum (for museums). A metered service may also stifle the innovative opportunities the “open” Internet provides.aero (for the air-transport industry). However. it is the complexity of IP addresses. Overall. The ISPs argue more and more users accessing bandwidth-intense resources provided by the likes of YouTube and Hulu place huge demands on their networks.au (Australia). such as Google.17.11 The list of domain names is expected to expand in the coming years to include entities such as .. regulation on net neutrality is currently in flux. namely. The creation of an .Section 7.sp (Spain). unanimously ruling that the agency did not have the legal authority to tell Comcast what to do. and physicians). This is why we use a domain name system (DNS) to convert IP addresses into domains.apple. . that are building the Internet infrastructure and want to charge customers relative to their use. lawyers. or identifying labels that use a variety of recognizable naming conventions. . users can simply specify a domain name to access a computer or website.mcgraw-hill.7 lists the most common Internet domains. The content providers. Figure 7. Therefore. support the counterargument that if ISPs move toward metered schemes.15. and . this may limit the usage of many resources on the Internet such as iTunes and Netflix. On one side of the debate are the ISPs.6 Example of TCP/IP 7 of 17 7/13/12 10:23 AM .fr (France). the amount of bandwidth they consume. Shortly after the FCC ruling. They want Internet access to move from a flat-rate pricing structure to a metered service. and .

. .edu. with renewable rights.com. companies. and government agencies extensively engage in texting. Network convergence then allows the weaving together of voice. and one bill.8 The Benefits of Network Convergence 8 of 17 7/13/12 10:23 AM . and ebusiness. educational institutions.com. such as godaddy. so when requests are made to a popular site such as www. A single computer can also have several host names—for instance. each registrar is authorized to register domain names. Almost any type of information can be converted into digital form and exchanged over a network. they will not overload a single computer and the site does not go down if one computer fails. from a domain name registrar. Web surfing. online gaming. multiple devices. Some registrars only register domain names. much as an ISP works with hosting.7 Internet Domains Websites with heavy traffic often have several computers working together to share the load of requests.8. The benefits of network convergence allow for multiple services. ICANN (Internet Corporation for Assigning Names and Numbers) is a nonprofit governance and standards organization that certifies all domain name registrars throughout the world. With the certification. if a company is hosting several websites on a single server. video. applications. there is a convergence of network devices. as suggested by Figure 7. such as .facebook. This offers load balancing and fault tolerance. and services. FIGURE 7. Network convergence is the efficient coexistence of telephone. FIGURE 7..mcgraw-hill.org. while others provide hosting services for a fee. and video.Section 7. and data communication within a single network.1 Connectivity: The Business Value Of A Networked World http://highered. but one network. Domain names are essentially rented. or .com.com/sites/0077338340/student_view. data. Consumers. one vendor. offering convenience and flexibility not possible with separate infrastructures.12 Network Convergence In part due to the explosive use of the Internet and connectivity of TCP/IP. videoconference applications.

videoconference—to use with each business participant can be a challenge. VoIP service providers—specialists as well as traditional telephone and cable companies and some ISPs—allow users to call anyone with a telephone number. UC merges instant messaging. VoIP is providing an opportunity to bring about significant change in the way people communicate using the telephone. Skype has found a way to use this resource to provide value to its users. Peer-to-peer networks became an overnight sensation years ago through a service called Napster that distributed digital music illegally. and law enforcement for surveillance.. text message. For the first time in more than 100 years.. videoconferencing. plus a range of interesting features. whether local. services for the disabled. service can be affected if the bandwidth is not appropriate or Internet access is not available. FIGURE 7. email.mcgraw-hill. One of the challenges associated with network convergence is using the many different tools efficiently and productively. Figure 7. voice mail.14 As the popularity of VoIP grows.9 illustrates these two ways along with the use of VoIP-enabled phones.9 VoIP Connectivity 9 of 17 7/13/12 10:23 AM . Because it relies on the Internet connection. This can decrease the communication costs for a business while enhancing the way individuals communicate and collaborate.com/sites/0077338340/student_view. and VoIP. or international. however. bypassing the need for an adapter.Section 7. cellular. long distance. Skype uses a peer-to-peer network. UC integrates communication channels allowing participants to communicate using the method that is most convenient for them. Peer-to-peer (P2P) is a computer network that relies on the computing power and bandwidth of the participants in the network rather than a centralized server. The ability to receive personal or business calls via computer. Skype is a perfect example of IP applied to telephone use. Unified communications (UC) is the integration of communication channels into a single service. One area experiencing huge growth in network convergence is the use of the Internet for voice transmission. along with regulatory and other fees.1 Connectivity: The Business Value Of A Networked World http://highered.13 The biggest benefit of VoIP is its low cost. allowing scalability without a complex and expensive centralized infrastructure. Two ways to use VoIP for telephone calls are through a Web interface that allows users to make calls from their computer and through a phone attached to a VoIP adapter that links directly to the Internet through a broadband modem. Knowing which communication channel—PC. governments are becoming more interested in regulating it as they do traditional telephone services. Unlike typical VoIP systems that use a client and server infrastructure. such as: The ability to have more than one phone number. Voice over IP (VoIP) uses IP technology to transmit telephone calls. Skype's user directory is distributed among the users in its network. the Federal Communications Commission requires compliance among VoIP service providers comparable to those for traditional telephone providers such as support for local number portability. In the United States. including numbers with different area codes. VoIP services include fixed-price unlimited local and long-distance calling plans (at least within the United States and Canada). no matter where the user is physically located. Integrating email and voice mail so users can listen to their voice mail using their computer.

which distributes digital video content using IP across the Internet and private IP networks.2: Identify the benefits of a Before networks. and data available to anyone on the network. People had to physically copy data from machine to machine using a connected world.. An exciting and new convergence is occurring in the area of television with Internet Protocol TV (IPTV). allowing the user to select the program by selecting a channel. without regard to the physical location of the resource or the user.15 BENEFITS OF A CONNECTED WORLD LO 7. and responsible at the same time. With IPTV. IPTV uses a box that acts like a modem to send and receive the content (see Figure 7. Traditional television sends all program signals simultaneously to the television. Cloud computing (see Chapter 5) and virtualization 10 of 17 7/13/12 10:23 AM . transferring data between computers was time-consuming and labor-intensive. Sharing physical resources also supports a sustainable MIS infrastructure. allowing companies to be agile.mcgraw-hill.. the user selects a channel and the service provider sends only that single program to the television. efficient. Networks offer many advantages for a business including: Sharing resources Providing opportunities Reducing travel Sharing Resources Resource sharing makes all applications.com/sites/0077338340/student_view.Section 7. but also when they want to watch it. A few IPTV features include: Support of multiple devices: PCs and televisions can access IPTV services. Like cable TV. Interactivity with users: Interactive applications and programs are supported by IPTV's two-way communication path. Personalization: Users can choose not only what they want to watch. disk.1 Connectivity: The Business Value Of A Networked World http://highered. equipment (such as a high-volume printer).10). Low bandwidth: IPTV conserves bandwidth because the provider sends only a single channel. Comcast provides an example of a private IP network that also acts as a cable TV provider.

and more. browse the Web. porting Internet content to a HDTV screen seems like the next logical step. However. Google is competing with the likes of VUDU. While consumers can already watch TV shows on their computers as well as on a TV.. along with advertisement opportunities. this is a very crowded playing field with many firms competing for the living room space. consolidate information as well as systems that enhance the use of shared resources. FIGURE 7. By using shared resources. which is the magic of IPTV. TiVo. Yahoo! 11 of 17 7/13/12 10:23 AM .10 IPTV Components APPLY YOUR KNOWLEDGE BUSINESS DRIVEN DEBATE Google TV As more Internet-related services move beyond delivering content just to the computer. In a joint venture.com/sites/0077338340/student_view. storage. in an on-demand basis..mcgraw-hill.Section 7. and Intel would supply the processors that make it all happen. Google is teaming with Sony and Intel to introduce IPTV services either through new Internet accessible TVs or a new set-top box allowing consumers to search for content. view photo albums. Google wants to bring that content into the living room. and software. Google would provide the needed software.1 Connectivity: The Business Value Of A Networked World http://highered. cloud computing and virtualization allow for collective computing power. Sony would manufacture the new TVs.

and many others. with no clear winner. An intranet is a restricted network that relies on Internet technologies to provide an Internet-like environment within the company for information sharing. and tax information. in effect a “private tunnel” within the Internet. Netflix. especially with operations in remote locations. marketing. and thus only authorized users can access it. schedules. regardless of size. at least not at the moment..17 An extranet is an extension of an intranet that is available only to authorized outsiders. or billing—can do so. shipping. DivX. such as customers. distribution. and suppliers. By sharing data. Roku. and supplier relations. anyone in the company who needs to view it—whether in marketing. as suggested in Figure 7. Popbox. FIGURE 7.mcgraw-hill. Brainstorm the advantages and disadvantages of associated with IPTV. and the support of business processes.11. or MAN allows employees to share data quickly and easily and to use applications such as databases and collaboration tools that rely on sharing. Intranets and extranets let firms share their corporate information securely. purchasing. For example. subcontractors. Xbox 360. inventories. secure Internet access.Section 7. strategic directions. Most companies. for instance. as soon as an order is placed. Do you think Google TV will be successful? Why or why not?16 Perhaps even more important than sharing physical resources is sharing data. suppliers. Figure 7. Intranets provide a central location for all kinds of company-related information such as benefits. financial statements. called a virtual private network (VPN). collaboration. Apple TV. and employee directories. The extranet links the company to the outside world in a way that improves its operations. and others to access selected intranet websites and other company network resources that allow the sharing of information.12 illustrates using a VPN to connect to a corporate server.1 Connectivity: The Business Value Of A Networked World http://highered. and firewalls. Companies can establish direct private network links among themselves or create private.com/sites/0077338340/student_view. Web publishing. depend not just on their customer records. Having a common area where these parties can share information with employees about. communications. accounts receivable.11 Intranet Uses 12 of 17 7/13/12 10:23 AM . partners.. WAN. encryption. Rovi. consultants. manufacturing. Suppliers can ensure that the raw materials necessary for the company to function are in stock and can be delivered in a timely fashion. networks have made business processes more efficient. Networking with a LAN. business prospects. but also on their ability to share these. cost control. order and invoice processing can be a major competitive advantage in product development. CinemaNow. Connected TV. This network is protected by security measures such as passwords. Boxee. Extranets enable customers. Consultants and contractors can facilitate the design of new products or services. Customers can access ordering and payment functions and check order status.

Using networks. APPLY YOUR KNOWLEDGE 13 of 17 7/13/12 10:23 AM . they enable a company to customize interactive Web-enabled services for the intended audience. Networks allow companies to sell to consumers via the Internet too..mcgraw-hill. Most midsize and larger companies also have a marketing presence on the Web and provide extensive online information about their products and services. extranets can allow and improve collaboration with customers and other business partners.12 Using a VPN Extranets provide business value in several ways. Second. clothing.1 Connectivity: The Business Value Of A Networked World http://highered. and more. airline tickets.Section 7. First. Providing Opportunities Ebusiness can enhance the opportunities of manufacturers that buy parts from a variety of suppliers. which can now immediately tap potential customers online without hiring an expensive marketing company. FIGURE 7. Finally.. they can order parts electronically when needed. offering books.com/sites/0077338340/student_view. by relying on Web browsers they make customer and supplier access to company resources easy and fast. to build and strengthen strategic relationships with customers and suppliers. reducing the need for large inventories and enhancing efficiency. The Internet has lowered entry barriers for start-ups and small companies.

14 of 17 7/13/12 10:23 AM .000 participants. The company's flagship service. yet globally connected world. Telecommuting has been greatly enhanced by VPNs. while seeing and hearing each other as if they were in the same location. maintain the same access to information as they do at work. publish. networks make it possible to communicate in ways not previously imaginable. What are the advantages of using videoconferencing? What are the disadvantages of using videoconferencing? Would you participate in a teleconference with 10. Teleconference members can participate from any platform (PC or Mac) using a Web browser without having to download any proprietary viewer or needing any special hardware..mcgraw-hill. VuRoom can be used for both small videoconferences and big corporate Web-based training sessions. VuCast. including VuRoom. which uses a Skype plug-in that allows remote users to collaborate with presentation and desktop sharing functionalities. enables meeting organizers to create. and manage large-scale. some can telecommute using Internet connections for both data and voice and. BUSINESS DRIVEN STARTUP ViVu Videoconferencing ViVu is transforming the way people interact using videoconferencing. Even though networks provide many business advantages.000 users? Why or why not? What types of events does ViVu best serve?18 Reducing Travel Networks provide the means for videoconferencing. The company has several useful services. A company first has to ensure proper identification of users and authorization of network access. for example. Outside suppliers might be allowed to access production plans via the company's extranet. CHALLENGES OF A CONNECTED WORLD Networks have created a diverse. Security Networks are a tempting target for mischief and fraud. they also create increased challenges in (1) security and (2) social.. videoconferencing. employees at distant locations can meet without spending time and money on travel.1 Connectivity: The Business Value Of A Networked World http://highered. LO 7.Section 7. high-quality video events that can accommodate more than 10. thanks to intranets and extranets. The company uses a software-as-a-service (SaaS) model. but they must not be able to see other information such as financial records. By eliminating time and distance. Nor do all employees have to come to the office. and VoIP.3: Identify the challenges of a connected world. The company should also preserve the integrity of its data. Attendees only need a regular broadband Internet connection to receive the service. and political issues. ethical.com/sites/0077338340/student_view. allowing consumers to purchase a license to host an event of varying size. Using this technology.

even if anyone could. and the Internet. communication is hard to regulate. an electronic document that confirms the identity of a website or server and verifies that a public key belongs to a trustworthy individual or company. Social. Providing network access to those who want or need it helps to level the playing field and removes the digital divide. only qualified users should be allowed to change and update data. When a user enters a Web address using https:// the browser will encrypt the message.Section 7. With a variety of security methods. however. Secure hypertext transfer protocol (SHTTP or HTTPS) is a combination of HTTP and SSL to provide encryption and secure identification of an Internet server. Verisign is the leading Internet Certification Authority that issues SSL Certificates. how would they avoid violating users' rights to free 15 of 17 7/13/12 10:23 AM . or when someone posts an offensive message to someone else. Problems can begin when social media feature topics people can be sensitive about. Two methods for encrypting network traffic on the Web are secure sockets layer and secure hypertext transfer protocol. feel that like the post office or phone companies.. a worldwide gap giving advantage to those with access to technology. In summary. such as politics. programs. If the certificate fails on any one of these validation measures. HTTPS protects against interception of communications.com/sites/0077338340/student_view.. (Public key is described in Chapter 4. just as newspapers and magazines are. transferring credit card information safely and securely with special encryption techniques. Different countries have different and even conflicting laws about Internet use. However. If the topics are technical in nature or sports related such as cycling. To create an SSL connection. Millions of websites use SSL to protect their online transactions with their customers. the server receiving the message must be configured to receive HTTPS messages. Secure sockets layer (SSL) is a standard security technology for establishing an encrypted link between a Web server and a browser. each company needs to create a network security policy that specifies aspects of data integrity availability and confidentiality or privacy as well as accountability and authorization. its data. Some organizations are trying to bridge the divide such as the Boston Digital Bridge Foundation. Security problems intensify on the Internet where companies need to guard against fraud. a lock icon appears in the lower right-hand corner of the user's Web browser. invalid purchases. but because the Internet knows no physical boundaries.) Typically. If a website is using SSL.mcgraw-hill. a company can protect its most important asset. Some people believe network operators should be responsible for the content they carry. the browser will display a warning to the end user that the site is not secure. If they censored messages. makes sure it has not expired. and confirms a Certification Authority has issued it. and some people who have had access in the past have lost it due to changes in their circumstances such as unemployment or poverty.19 Another social issue with networking occurs with newsgroups or blogs where like-minded people can exchange messages. helping to make them knowledgeable about computers. Operators. or sex. and misappropriation of credit card information. and Political Issues Only a small fraction of the world's population has access to the Internet. few issues arise. When a browser connects to a secure site. an SSL Certificate will contain a domain name. a Web server requires an SSL Certificate. which concentrates on local schoolchildren and their parents. Other organizations provide inexpensive laptops and Internet access in low-income areas in developing countries. and only well-specified data. such as SSL and SHTTP.1 Connectivity: The Business Value Of A Networked World http://highered. the company name and address. Ethical. it retrieves the site's SSL Certificate. religion. ensuring that all data passed between them remain private. and the expiration date of the certificate and other details. they cannot be expected to police what users say.

“Bandwidth Meter Online Speed Test.corning. Social issues can even affect the government and its use of networks to snoop on citizens.pdf .savetheinternet.” ISP Planet http://www.” www. The system was originally called Carnivore but bad publicity caused it to be renamed DCS1000. accessed April 24.cnet.godaddy.” www.google. 2010 .1 Connectivity: The Business Value Of A Networked World http://highered. Ibid .” Cisco. accessed May 15.html . A common conception associated with networking technologies is “Big Brother is watching!” People are wary of how much information is available on the Internet and how easily it can fall into the wrong hands.com/ .html . www. Ibid .cisco. 2008.com/en/US/tech/tk652 /tk701/tsd_technology_ support_protocol_home. 2010 .networksolutions. they believe. 2008. www. accessed January 21.mcgraw-hill. its goal is the same—locate information on illegal activities by spying on millions of people. http://reviews. 2010 . 16 of 17 7/13/12 10:23 AM .Section 7. 10 11 12 “IP Telephony/Voice over IP (VoIP): An Introduction. 2010.20 2 “Top 23 U.vocalocity. http://www. While the name is much more generic. 3 4 Ibid .com/research/rankings /usa. 5 6 7 8 9 Ibid . speech? Many employers read and censor employee emails and limit employee access to distracting entertainment such as YouTube and social networks such as Facebook. “Broadband Technology Overview. http://www. accessed April 30. ISPs by Subscriber: Q3 2010.isp-planet.com/sites/0077338340/student_view.com/tv/ .com/docs/ opticalfiber/wp6321. 13 14 15 16 Ibid . “VoIP Business Solutions.com .com .. accessed May 16.” CNET Reviews. 2010 .com/internet-speed-test/ accessed June 2010. www.com/ accessed May 16. accessed February 1. Spending company time “playing” is not a good use of resources. The FBI has installed a system at many ISPs to scan all incoming and outgoing email for nuggets of interest. Ibid . Ibid ..S. Ibid .

2010 . 2009 McGraw-Hill Higher Education Any use is subject to the Terms of Use and Privacy Notice. McGraw-Hill Higher Education is one of the many fine businesses of The McGraw-Hill Companies. ViVu: Better Than Being There. 17 18 19 20 Internet 101. http://www. The Liberty Coalition.1 Connectivity: The Business Value Of A Networked World http://highered. 2006.org/ .net /node/247. 2010 . :Carnivore – DCS 1000. http://vivu.digitalbridgefoundation.com/sites/0077338340/student_view.internet101. accessed April 5..Section 7.” July 27.tv/vivuweb/ . 17 of 17 7/13/12 10:23 AM .. http://www. 2010 . Boston Digital Bridge Foundation. accessed May 4.org/ . http://www.mcgraw-hill.libertycoalition. accessed May 18.

Wireless networks have exploded since then. Italian inventor Guglielmo Marconi demonstrated a wireless telegraph.com/sites/0077338340/student_view.2 Mobility: The Business Value Of A Wireless World http://highered. 7.5 Explain the different wireless network business applications. WIRELESS NETWORK CATEGORIES LO 7. 7. and in 1927. satellite-relayed telephone service and television broadcasts became available.7 Identify the challenges of business mobility..2 Mobility: The Business Value Of A Wireless World p. the first communications satellite. 258 271 270 269 268 267 266 265 264 263 262 261 260 259 p.mcgraw-hill.4 Explain the different wireless network categories. Telstar. 7.. In 1964. the first radiotelephone system began operating between the wireless United States and Great Britain.section 7. and soon after. 1947. Close Business Driven Information Systems eBook 3/e Chapter7: Networks: Mobile Business section 7.4: Explain the different As far back as 1896. 257 LEARNING OUTCOMES 7. Automobile-based mobile telephones were offered in network categories. was launched.21 Before delving into a discussion of wireless networks. we should distinguish between mobile and 1 of 19 7/13/12 2:10 PM .6 Identify the benefits of business mobility. and newer technologies are now maturing that allow companies and home users alike to take advantage of both wired and wireless networks.

shut down the laptop. such as wireless home or office networks with stationary PCs and printers.13 Wireless Communication Network Categories Wireless LANs Wireless LANs are everywhere in the workplace. Most WLANs use an infrastructure in which a wireless device. users are both wireless and mobile. and all the special attachments that typically accompany personal computing devices.mcgraw-hill. WANs. and a thermostat.000 feet in open areas such as a city park and 250 to 400 feet in closed areas such as an office building. Mobile means the technology can travel with the user. 2 of 19 7/13/12 2:10 PM . An array of Bluetooth-equipped appliances. like a handshake. a mobile user commuting to work on a train can maintain a VoIP call and multiple TCP/IP connections at the same time. for example.2 Mobility: The Business Value Of A Wireless World http://highered. for instance. Up to eight can be paired simultaneously. wireless networking includes personal area networks (PAN) that provide communication over a short distance that is intended for use with devices that are owned and operated by a single user. such as a television set. Areas around access points where users can connect to the Internet are often called hotspots. wireless. a PAN can provide communication between a wireless headset and a cell phone or between a computer and a wireless mouse or keyboard. communicates through an access point or base station by means of. Wireless. refers to any type of operation accomplished without the use of a hard-wired connection. It eliminates the need for wires. Bluetooth is a wireless PAN technology that transmits signals over short distances among cell phones. Bluetooth operates at speeds up to 1 Mbps within a range of 33 feet or less. a worker can use a wired laptop at home. and Web pages onto a laptop or other mobile device for portable reading or reference. In many networked environments today. Some forms of mobility do not require a wireless connection. Wireless fidelity (Wi-Fi) is a means by which portable devices can connect wirelessly to a local area network. for instance. docking stations or cradles. email messages. can be controlled from a cell phone—all from a remote location. a stove. and MANs).. Personal Area Networks In addition to the three network types described in the previous section (LANs. and other devices. A wireless LAN (WLAN) is a local area network that uses radio signals to transmit and receive data over distances of a few hundred feet. Wi-Fi has a maximum range of about 1. users can download software. Devices that are Bluetooth-enabled communicate directly with each other in pairs. cafés. Information collected while on the road can be synchronized with a PC or company server. There are many environments in which the network devices are wireless but not mobile. For example. wireless fidelity. home. terms that are often use synonymously but actually have different meanings. drive to work. for instance. computers.. using access points that send and receive data via radio waves. and attach the laptop to the company's wired network. often a laptop.section 7.com/sites/0077338340/student_view. Figure 7. educational institutions. on the other hand.13 categorizes wireless networks by type. and airports and are one of the most important access network technologies in the Internet today.22 FIGURE 7. And Bluetooth is not just for technology devices.

. network administrators can keep Wi-Fi users continuously connected to a network or the Internet. where all the cars were purchased. which consists of a transmitter with an antenna that is often built into the hardware. translates it into a radio signal.com/sites/0077338340/student_view. Most laptop computers come with built-in wireless transmitters and software to enable computers to automatically discover the existence of a Wi-Fi network. If too many people try to use the Wi-Fi network at one time. The access point then sends the information to the Internet over a wired broadband connection. receives the signal and decodes it. no matter where they roam on the premises. the wireless access point takes the information from the Internet.. and sends it to the computer's wireless adapter.14 Wi-Fi Network APPLY YOUR KNOWLEDGE BUSINESS DRIVEN MIS Cars Hacked Who would have thought that a car could be hacked? But that is exactly what happened in Austin.section 7. they can experience interference or dropped connections.23 In a Wi-Fi network. The wireless access point. A local dealership. as illustrated in Figure 7.14. had installed a 3 of 19 7/13/12 2:10 PM .mcgraw-hill. campus. not by the usual method of either picking the lock or smashing a window but instead via a Wi-Fi connection.2 Mobility: The Business Value Of A Wireless World http://highered. About a hundred cars were broken into. Texas. or city. When receiving data. By positioning hotspots at strategic locations throughout a building. the user's laptop or other Wi-Fi-enabled device has a wireless adapter that translates data into a radio signal and transmits it to the wireless access point.24 FIGURE 7.

WMAN technologies have not been highly successful to date. However. BlackBerrys and iPhones can connect to an access point for data communications such as email and Web browsing. Cell phones are incorporating Wi-Fi so they can automatically switch from the cell network to a faster Wi-Fi network where available for data communications. In New York City. and even some printers are incorporating Wi-Fi technology into their design.15 outlines the bandwidths associated with a few of these standards.000 square miles of coverage. the password that allowed authorization to the black boxes was quickly changed. and where it is too expensive or physically difficult to install wires for the relatively few users.27 FIGURE 7. WiMAX operates like Wi-Fi.2 Mobility: The Business Value Of A Wireless World http://highered. only over greater distances and with higher bandwidths. In many respects. but the victims of a recently laid-off employee at the dealership who was seeking revenge by going into the Web-based system to disable the cars one by one. for example.. A WiMAX tower serves as an access point and can connect to the Internet or another tower. at least in the United States. netbooks. one or two WiMAX access points around the city might meet the heavy demand more cheaply than hundreds of Wi-Fi access points. Is the black box a good idea? Do you consider this an ethical business practice? If you had bought a car with a black box.mcgraw-hill. would you have it removed? How many customers do you think will consider buying another car from that dealership?25 Wi-Fi operates at considerably higher frequencies than cell phones use. WiMAX can also cover remote or rural areas where cabling is limited or nonexistent. After someone at the dealership figured out the cars had been hacked. so only a few are needed to cover an entire city. Wi-Fi-enabled black box under the dashboard that could disable the car and set off the horn if the owner did not make payments. mainly because they are not widely available. in this case. but not for voice unless they use the services of Skype or another VoIP.11.15 Wi-Fi Standards and Bandwidths 4 of 19 7/13/12 2:10 PM .26 An increasing number of digital devices. The bandwidths associated with Wi-Fi are separated according to several wireless networking standards. A single tower can provide up to 3. Figure 7. known as 802. the owners were not in arrears.. which allows greater bandwidth. including most laptops. tablets such as the iPad. One with the potential for success is Worldwide Interoperability for Microwave Access (WiMAX). for carrying out wireless local area network communication. a communications technology aimed at providing high-speed wireless data over metropolitan area networks.com/sites/0077338340/student_view. WiMAX can support data communications at a rate of 70 Mbps.section 7. Wireless MANs A wireless MAN (WMAN) is a metropolitan area network that uses radio signals to transmit and receive data.

cameras.28 Some cellular companies are evaluating WiMAX as a means of increasing bandwidth for a variety of data-intensive applications such as those used by smart phones. A non-line-of-sight service uses a small antenna on a mobile device that connects to a WiMAX tower less than six miles away where transmissions are disrupted by physical obstructions. Sprint Nextel and Clearwire are building a nationwide WiMAX network in the United States..2 Mobility: The Business Value Of A Wireless World http://highered. Figure 7.16 illustrates the WiMAX infrastructure. Nokia. Motorola. and the distance between the WiMAX tower and antenna can be as great as 30 miles.29 Wireless WAN—Cellular Communication System A wireless WAN (WWAN) is a wide area network that uses radio signals to transmit and receive data. and even cell phones are being manufactured by companies including Intel. This form of service is similar to Wi-Fi but has much broader coverage area and higher bandwidths. WiMAX can provide both line-of-sight and non-line-of-sight service. This option is much faster than non-line-of-sight service. WiMAX-capable gaming devices.mcgraw-hill..16 WiMAX Infrastructure 5 of 19 7/13/12 2:10 PM . FIGURE 7. A line-of-sight option offers a fixed antenna that points at the WiMAX tower from a rooftop or pole.section 7.com/sites/0077338340/student_view. WWAN technologies can be divided into two categories: cellular communication systems and satellite communication systems. and Samsung. laptops.

They offer different cell phones. One of the newer services is third-generation. Base station coverage areas are about 10 square miles and are called cells. computing. features. keeping track of contacts.mcgraw-hill. coverage areas. as Figure 7. weighed one pound and cost about $4. Figure 7. but it took 10 years for the technology to become commercially available. including the walkie-talkies of the 1940s and mobile radiophones of the 1950s. Sprint. The Motorola DynaTAC. Cellular technology has come a long way since then. T-Mobile. and it is no longer uncommon for cell phones to be the only phones people have.30 The first cell phone was demonstrated in 1973 by Motorola (it weighed almost 2 pounds). services that bring wireless broadband to mobile phones.000. much as computer users need an ISP to connect to the Internet.17 illustrates. emailing. The most popular mobile phone providers in the United States are AT&T. There are more cell phones than landline phones in many countries today. A cell phone is a device for voice and data.31 Cellular systems were originally designed to provide voice services to mobile customers and thus were designed to interconnect cells to the public telephone network. they provide data services and Internet connectivity. each of which is linked to its nearest neighbor stations. or 3G. sending text messages. They allow for Web browsing. and services. or mobile phones as they are collectively called. marketed in 1983. Cell phones and smart phones. 6 of 19 7/13/12 2:10 PM . and taking and sending photos. The Apple iPhone and RIM BlackBerry are examples of smart phones.18 lists the cell phone generations.17 Cell Phone Communication System Overview Although mobile communications have been around for generations. Increasingly.section 7. and Verizon.2 Mobility: The Business Value Of A Wireless World http://highered.com/sites/0077338340/student_view. listening to music. watching video.. FIGURE 7. communicating wirelessly through a collection of stationary ground-based sites called base stations.. it was not until 1983 that cellular telephony became available commercially. Cell phones have morphed into smart phones that offer more advanced computing ability and connectivity than basic cell phones. need a provider to offer services.

rural regions? How can people in rural areas turn owning a mobile phone into a small-scale business?33 FIGURE 7.2 Mobility: The Business Value Of A Wireless World http://highered. Grace Wachira runs a small knitting company.32 APPLY YOUR KNOWLEDGE BUSINESS DRIVEN GLOBALIZATION Fighting Poverty with Mobile Phones The mobile phone is helping to fight poverty and increase world economic development. It can dramatically improve living standards for people living on a few dollars a day by helping them find work. a direct benefit for mobile and wireless devices since they are still not as fast as their wired counterparts. The 3G networks let users surf Web pages. increased their profits by an average of 8 percent. Using her mobile phone.. download and play 3D games. The most obvious advantage is speed. The fishermen were able to call ahead to a port in order to identify a buyer. Streaming is a method of sending audio and video files over the Internet in such a way that the user can view the file while it is being transferred. What type of mobile phones are these people buying? What other uses can a mobile phone provide for people living in poor.. Streaming is not limited to cellular usage. or calling for medical help. India.18 Cell Phone Generations 7 of 19 7/13/12 2:10 PM . a group of poor fishermen in Kerala. and participate in social media and teleconferencing. providing information about crop prices. Kenya. she would walk hours to the nearest town to buy her supplies or meet customers. By using mobile phones to find the best local marketplace prices for sardines. watch video-on-demand programming.mcgraw-hill. she can now call for her supplies to be delivered and to communicate with her customers.com/sites/0077338340/student_view.section 7. enjoy streaming music. In Muruguru. Before using a mobile phone. all wireless and even wired networks can take advantage of this method.

including voice.com/sites/0077338340/student_view. The devices used for satellite communication range from handheld units to mobile base stations to fixed satellite dish receivers.19 briefly illustrates the satellite communication system.000 miles above Earth. Some build upon and improve existing capabilities. UPS. Wireless technologies have also aided the creation of new applications.2 Mobility: The Business Value Of A Wireless World http://highered. Government agencies such as the National Aeronautics and Space Administration and the Department of Defense have relied on satellite technologies for decades to track the movement of troops.. and to communicate over great distances. The peak data transmission speeds range from 2. and military assets. is combining several types of wireless network technologies from Bluetooth to WWANs and deploying scanners and wearable data-collection terminals to automate and standardize package management and tracking across all its delivery centers. the low-orbit satellite. Conventional communication satellites move in stationary orbits approximately 22.. the goal was to provide wireless voice and data coverage for the entire planet. businesspeople almost anywhere in the world have access to full communication capabilities. optimize the logistics of their global operations.34 BUSINESS APPLICATIONS OF WIRELESS NETWORKS LO 7. to receive and broadcast data. For the everyday mobile professional. Wireless WAN—Satellite Communication System he other wireless WAN technology is a satellite communication system. satellite technology is a viable solution.mcgraw-hill. and Internet access. With satellite networks. Areas experiencing tremendous growth using wireless technologies include: 8 of 19 7/13/12 2:10 PM . satellite communication may not provide a compelling benefit. A satellite is a space station that orbits the Earth receiving and transmitting signals from Earth-based stations over a wide area. and reduce theft and damage. but for people requiring voice and data access from remote locations or guaranteed coverage in nonremote locations. without the need for mobile phones to roam between many different provider networks. A newer satellite medium. for example. But by the time satellite networks were ready for commercial use. When satellite systems first came into consideration in the 1990s.section 7. weaponry.4 Kbps to 2 Mbps. Shipping and trucking companies developed some of the earliest wireless applications business applications.5: Explain the different wireless network Companies of all types and sizes have relied on wireless technology for years. Figure 7. videoconferencing. Low-orbit satellites also consume less power and cost less to launch than conventional satellites. they had already been overtaken by cellular systems. to help track vehicles and valuable cargo. perfect their delivery capabilities. travels much closer to Earth and is able to pick up signals from weak transmitters.

The reader receives a signal from the tag using its antenna.19 Satellite Communication System FIGURE 7. or included in items such as ID cards or packing labels. Radio-frequency identification (RFID).mcgraw-hill. or built-in as in printers. Location-based services. including a product number.2 Mobility: The Business Value Of A Wireless World http://highered. Radio-Frequency Identification (RFID) Radio-frequency identification (RFID) uses electronic tags and labels to identify objects wirelessly over short distances.section 7. and a computer system or server. The reader sends a wireless request that is received by all tags in the area that have been programmed to listen to wireless signals.. can be applied to books or clothing items as part of an adhesive bar-code label. Geographic information system. one or more readers. Tags receive the signal via their antennas and respond by transmitting their stored data. Tags. Global positioning system.com/sites/0077338340/student_view. as Figure 7. and transfers the data to the associated computer system or server. integrated with a mobile device for portable use. two or more antennas (one on the tag and one on each reader). interprets the information sent. Readers can be stand-alone devices.20 RFID Components 9 of 19 7/13/12 2:10 PM . It holds the promise of replacing existing identification technologies such as the bar code. RFID application software. RFID wirelessly exchanges information between a tagged object and a reader/writer. Examples of the innovative uses of RFID include: FIGURE 7. often smaller than a grain of rice. and history of activity (such as the date the item was shipped). A RFID system is comprised of one or more tags. The tag can hold many types of data.20 illustrates. such as for self-checkout in a grocery store. installation instructions..

The time measurements depend on high-powered clocks on each satellite and must be precise.36 GPS applications are in every kind of company vehicle these days—from police cars to bulldozers. RFID chips injected under the skin of animals using a syringe can help ranchers meet regulations. This measurement. and speed information. Walmart and other large retailers use RFID to maintain inventory. and data that provide location information for display on a 10 of 19 7/13/12 2:10 PM . is taken from three distinct satellites to provide precise location information. A GPS receiver can be a separate unit connected to a mobile device using cable or wireless technology such as Bluetooth. Geographic Information Systems (GIS) GPS provides the foundation for geographic information systems. which uses the speed of the signal to determine the distance. The U. Retail stores use RFID to track and monitor inventory. GPS uses 24 global satellites that orbit Earth. such as E-Pass and SunPass. sending signals to a receiver that can communicate with three or four satellites at a time. Hospitals track patients'. If a vehicle is missing. Department of Defense developed the technology in the early 1970s and later made it available to the public. time. while the receiver measures the time it takes for the signals to reach it. Hospitals and pharmaceutical companies meet government regulations and standards with RFID.com/sites/0077338340/student_view. Emergency response systems use GPS to track each of their vehicles and so dispatch those closest to the scene of an accident. from dump trucks to mayoral limousines. and nurses' locations to facilitate emergency situations and ensure safety. software.section 7. Car manufacturers install RFID antitheft systems. and speed-up customer checkout processes.. typically within 5 to 50 feet of the actual location (military versions have higher accuracy). GPS can produce very accurate results. doctors'. stop shoplifting. longitude. A geographic information system (GIS) consists of hardware. Toll roads use RFID to collect payments from passing cars. and return lost pets to their owners. because an error of one-thousandth of a second can result in a location variation of more than 200 miles.35 Global Positioning System (GPS) A global positioning system (GPS) is a satellite-based navigation system providing extremely accurate position. and elevation information.. track wild animals for ecological studies. or it can be included in devices such as mobile phones or vehicle navigation systems. its GPS locator can help locate it. RFID also tracks equipment location to ensure quick response times during an emergency.mcgraw-hill.2 Mobility: The Business Value Of A Wireless World http://highered. The satellites broadcast signals constantly. Even local libraries are using RFID to control theft and speed up the checkout process. GPS also provides latitude.S. American Express and MasterCard use RFID for automatic payments.

GIS can map population and event densities based on a standard area unit. Google Earth combines satellite imagery. the GIS finds sources within a defined radius. Mapping densities. fertilizer. Users may want to be notified when information relevant to them becomes available near their location. Location-Based Services (LBS) 11 of 19 7/13/12 2:10 PM . These might be entertainment venues. Airlines and shipping companies can plot routes with up-to-the-second information about the location of all their transport vehicles. Routing information can be especially helpful when combined with search services. such as finding the most feasible location to hold a conference according to where the majority of a company's customers live and work. Users can map quantities to find out where the most or least of a feature may be. Given a specific location. making it easy to see distributions and concentrations.. A GIS can find the closest gas station or bank or determine the best way to get to a particular location.37 A GIS can provide information and insight to both mobile users and people at fixed locations. GIS can provide directions to get there using either a map or step-by-step instructions. an instructor can use Google Earth to view that region. restaurants. such as square miles. and stores can map customer orders to identify ideal delivery routes. and population densities. Police can map crime incidents to determine where additional patrolling is required. geographic data. street layouts.2 Mobility: The Business Value Of A Wireless World http://highered. Farmers can use GIS to map and analyze fields. and city planners can determine where to build more parks. Some common GIS uses include: Finding what is nearby. GM offers the OnStar system. But it is also good at finding patterns. A commuter might want to know that a section of the highway has traffic congestion.section 7. Companies that deal in transportation combine GISs with database and GPS technology. GIS can present this information in a visually effective way. and Google's search capabilities to create a virtual globe that users can download to a computer or mobile device. Some mobile phone providers combine GPS and GIS capabilities so they can locate users within a geographical area about the size of a tennis court to assist emergency services such as 911. multidimensional map. Instead of just talking about the Grand Canyon.com/sites/0077338340/student_view. Not only does this provide useful business benefits.mcgraw-hill. medical facilities. Automobiles have GPSs linked to GIS maps that display the car's location and driving directions on a dashboard screen. Mapping quantities. someone interested in opening a specialty coffee shop can determine how many others are already in the area. or a shopper might want to be notified when a favorite store is having a sale on a certain item.. or gas stations. but it also allows for many educational opportunities. which sends a continuous stream of information to the OnStar center about the car's exact location. For example. Sending information alerts. telling them where to apply the proper amounts of seed. and herbicides. Once users have an idea where they want to go. Routing information. Users can also use GIS to locate vendors that sell a specific item they want and get the results as a map of the surrounding area or an address. Hospitals can locate their medical staff with GIS and sensors that pick up transmissions from ID badges. This information includes building locations.

and computing resources to a job location instead of forcing the job to be located at the company's site. and “machine-health” data and polls the machines daily.00 off a latte”). understands the business value of the data. Consider how mobile phones alone have changed the way most companies operate. mobility. sales. applications such as Foursquare. The company collects inventory. of Plano.mcgraw-hill.business equipped vending machines via wireless technology.39 Enhances Mobility Enhancing mobility is one of the greatest advantages provided by wireless networks. such as: Emergency services Emergency services Find-it services Mapping Navigation Tracking assets Traffic information Vehicle location Weather information Wireless advertising38 Just as Facebook and Twitter helped fuel the Web 2. Mobility means more 12 of 19 7/13/12 2:10 PM .com/sites/0077338340/student_view. Facebook and Twitter have added location-based services to complement their applications. GPS and GIS both utilize location-based services (LBS). LBS is designed to give mobile users instant access to personalized local content and range from 911 applications to buddy finders (“Let me know when my friend is within 1. applications that use location information to provide a service.000 feet”) to games (treasure hunts) to location-based advertising (“Visit the Starbucks on the corner and get $1. eliminating downtime during travel and speeding their response to customers. which monitors the operation of its antenna. information. It allows activities that were formerly tied to physical locations to be performed almost anywhere. BENEFITS OF BUSINESS MOBILITY LO 7. Texas. Figure 7.21 lists many of the advantages of wireless networks. Each application is a mobile phone service that helps social media users find their friends' location.. Dr Pepper/Seven-Up Inc.6: Identify the benefits of Mobile and wireless development has come a long way.0 revolution. The information collected is helpful for deciding where to place new vending machines. Consider Dr Pepper/Seven-Up Inc. both for daily operations and for data-mining purposes..2 Mobility: The Business Value Of A Wireless World http://highered. Executives and sales professionals can conduct business wherever they are. such as in front of a Target store or a high-traffic supermarket. Gowalla.. managers and salespeople can access the stored information via its intranet. and Loopt are bringing attention to LBS. Companies can bring employees.section 7. Many LBS applications complement GPS and GIS.

For example. Instead of returning periodically to their offices or other fixed location for information access or doing without. FIGURE 7. wireless technology is the only mobile option. they can rely on wireless technology to bring that access to them. Wireless networks can support a wide variety of immediate data access options. keep moving throughout the day.mcgraw-hill. production supervisors. A mobile worker can submit a status report or credit card scan or be notified about a new assignment. floor salespeople.. Even people with internal jobs. such as custodians. 13 of 19 7/13/12 2:10 PM . where and when they need it. a mobile checkout stand allows additional checkouts to be set up during holiday rushes and store sales events..21 Advantages of Wireless Networks Provides Immediate Data Access Mobility allows activities to be performed where needed. such as for stock transactions and credit card authorizations. however.2 Mobility: The Business Value Of A Wireless World http://highered. and emergency room doctors. providing immediate data access offers the value. face-to-face contact with customers and business partners. When up-to-the-second data are required.section 7. It allows for the redistribution of operations to gain efficiencies or react to changing conditions. from collecting usage data using Wi-Fi or RFID technologies when driving past a water meter to having full Internet access on a laptop or other mobile device. Mobility gives a company the power to place the right resources in the right place at the right time.com/sites/0077338340/student_view.

g. or text messaging.. Oil companies use wireless technology to monitor offshore oil rig equipment. take orders. such as listing resources near a given location or offering local traffic reports and driving directions. which normally requires desktop or laptop computers to connect to the Internet. and provides immediate access to results. Wireless applications can collect billing data. the process is costly. when mobile workers capture data on paper forms and clerical workers enter it into computer systems. and current order status significantly improves the quality of interactions with customers. companies can trace shipments from point of origin to final destination. The growing popularity of iPhones along with iPhone apps have helped fuel the growth of mbusiness. gather scientific measurements. Wireless technology offers the opportunity to redesign and simplify those processes to be faster. A service worker and appropriate information can be rerouted to a higher-priority assignment. We have seen that other wireless applications can tailor information to the needs of the user. Improves Work Flow Many work flows and job responsibilities are constrained by paper or wired processes. For example. integrate activities and services. An emergency room doctor can be notified of lab test results immediately upon completion. Whether through voice. the quality and frequency of information exchange increases with wireless access. or “push” it by sending an alert to a user's device or automatically refreshing data. gathers information from remote or difficult-to-reach locations. email. monitor operating conditions. Rental car staff members now use wireless devices to quickly and easily check and enter mileage.. Instant access to customer profiles. It provides consumers with the ability to obtain information and order goods and services quickly and easily using a mobile device. A salesperson can submit updates right after a sales call. Decision making is always improved by access to accurate and current information. LBS in cars provide driving directions and enable rescuers to locate the vehicle in case of an accident. generate quotes. and resolve problems all at the customer's site. difficult.section 7. Increases Location and Monitoring Capability The ability to locate and monitor assets reduces losses from theft and damage. RFID tags permit the tracking of assets from cattle to container shipments. and more responsive. enhances safety. Employees can “pull” data by linking to the source and requesting the desired information. Provides Mobile Business Opportunities Unlike ebusiness. A salesperson can check inventories. and relay requests for service from locations that are too dangerous. and redistribute tasks. mbusiness offers the advantages of making a purchase via the Internet an anywhere. and makes possible a new wave of personalized services. account history. suppliers. More advanced applications can monitor their condition (e. and damage for returning cars. time-consuming.com/sites/0077338340/student_view. fuel levels. and error-prone.mcgraw-hill. and business partners. Drivers receive faster service and staff can focus on providing value-added services. increases data accuracy. Field workers can identify problems with online manuals and diagnostic tools.. anytime experience. Through a combination of LBS devices and applications. Using a wireless device for the original data capture eliminates the need to reenter the data.2 Mobility: The Business Value Of A Wireless World http://highered. ensuring that refrigeration equipment is operating) and notify users of tampering or attempted theft. and to eliminate redundant activities. cheaper. or costly to access by other means. LBS devices send storm data from buoys far at sea. 14 of 19 7/13/12 2:10 PM .

The Chicago Bears. The sensors look like marshmallows that are stuffed between the helmet's padding and the outside shell. In other cases. For example. Many office buildings already have a maze of wires in their ceilings. The ability for merchants to capture and react to a user's current location and requirements can be a powerful tool for selling products and services. Mobile shopping. some forms of purchases lend themselves to mbusiness. The sensors have been programmed to detect hard hits. In manufacturing facilities or production lines with moving equipment or complex setups.. For example. Mobile banking and payments. The higher per unit cost of a wireless solution may be more than offset by its advantages over physical lines. wireless connections are simpler to implement and safer for workers. The most suitable purchase for a mobile user is for products that can be downloaded and used immediately such as music and (electronic) books.section 7. a mobile device can be used for making payments. however. Location-based services.. and now new devices can be used to communicate just how hard players are being hit in the head. a shopper in a retail store may want to first see what the current price of a product is from another vendor to ensure he is getting a good price. triggering a warning to pull the player for further assessment. Dallas Cowboys. In addition. Most forms of shopping may be impractical using mobile devices. floors.2 Mobility: The Business Value Of A Wireless World http://highered. A few mbusiness offerings include: Digital purchases. Before making a purchase. Each sensor can measure the acceleration of a player's head 15 of 19 7/13/12 2:10 PM . someone can order and pay for a Starbucks latte using a mobile device and app. APPLY YOUR KNOWLEDGE BUSINESS DRIVEN INNOVATION Crash Pad Many National Football League teams use wireless devices for communicating between players and coaches. and Jacksonville Jaguars tucked Wi-Fi sensors into helmets that send data to the sidelines every time a player is hit or tackled. having the ability to purchase movie tickets for a show playing the same evening can be quite valuable. and walls representing many generations of network technologies. Mobile devices can also be used for comparison shopping.40 Provides Alternative to Wiring Wireless networks provide an attractive alternative where physical constraints or convenience make wired solutions costly or impractical. essentially acting as digital cash. building design or aesthetic considerations make wired networks unattractive. Using a mobile device can provide access to personal bank accounts to view account history and execute transactions.mcgraw-hill.com/sites/0077338340/student_view. Tracing existing wires or adding new lines becomes increasingly cumbersome and difficult.

Once a player's helmet is hit.mcgraw-hill. WLANs enable attendees to bring laptops or other Wi-Fi-enabled devices for Internet access. In developing countries. and technology improvements. a mobile device lights up. alerting staff that a player's condition needs to be assessed. academic. productivity gains. magnitude. The company may face significant exposure from stolen IDs.. The NFL's new injury-related rules state that if a player exhibits any signs of a concussion. and confidential information if the device falls into the wrong hands.22 Challenges of Using Wireless Networks 16 of 19 7/13/12 2:10 PM . and recreational. Finally.7: Identify the challenges of The mobile employee has become the norm rather than the exception. CHALLENGES OF BUSINESS MOBILITY LO 7. FIGURE 7. protecting wireless connections. location on the head. driven by business lifestyle choices.. duration.com/sites/0077338340/student_view. preventing viruses on mobile devices. and seasonal selling areas. during a hit. Protecting Against Theft Any mobile device is vulnerable to loss no matter how big or small it is. especially if the theft is not discovered or reported immediately and the company does not have time to revoke access. Although the advantages of using wireless networks are significant.2 Mobility: The Business Value Of A Wireless World http://highered. passengers in airliners. and time of impact. In conference rooms. and addressing privacy concerns with RFID and LBS (see Figure 7. wireless technology allows voice and data connections with ships at sea. he must leave the field for the day. use wireless sensors in helmets? Why or why not? Should other sports such as hockey and cycling start using this technology? Why or why not?41 WLANs allow MIS employees to relocate equipment at will. it is a means to bypass the effort and expense of installing and maintaining telephone lines across inhospitable terrain. protecting against theft. determine the direction. attractive for trade shows. passwords. encryption keys. added challenges exist such as mobility. and travelers in remote locations.section 7. the sensors immediately transmit the data to staff on the sideline using mobile devices to receive the information.22). including professional. If the data sent determine that the hit exceeds a certain threshold. How else can wireless devices be used to prevent injury? Should all football teams. temporary offices.

the virus was created by a group of malware developers to prove it could be done. At present. Because of the memory limitations of most mobile devices..com/sites/0077338340/student_view. mobile phone viruses do not do much damage. and provides more sophisticated data encryption and user authentication. Companies need to consider encrypting and password-protecting data stored on the device. hackers generally had to be physically present within the corporate complex to gain access to a wired network. if not millions. Wired Equivalent Privacy (WEP). his or her log-on name and password are sent over the open airwaves. This threat has spawned a variety of different security techniques from firewalls to VPNs to SSL and HTTPS. some device management tools can send messages to a device to lock it or destroy its contents. The first known mobile phone virus. However. Anyone who wants to use an access point must know the WPA encryption key to access the Wi-Fi connection. In addition. of access points enabled by the Internet now allow hackers to work from a distance. WLANs that use Wi-Fi have a built-in security mechanism called Wi-Fi Protected Access (WPA). antivirus software has typically been hosted on a PC or laptop. including any flash drives or other mobile storage devices. Because Wi-Fi communications are broadcast. but if protective measures are not taken.. appeared several years ago and infected only a small number of Bluetooth-enabled phones that carried out no malicious action. Every time someone uses an unsecured website via a public Wi-Fi access point. The thousands.section 7. a wireless security protocol to protect Wi-Fi networks. This risk is especially high if the wireless network is not sufficiently secured in its own right.mcgraw-hill. and other vital information. which can be an attractive security feature. Before the emergence of the Internet. The need for virus protection at the device level is critical. Several techniques can secure wireless networks from unauthorized access whether used separately or in combination. so they could begin to develop a solution to a problem that promises to get a lot worse. Any device that can access the Internet or receive email is at risk of catching a virus and passing it on to other devices. named Cabir. One method is authenticating Wi-Fi access points. anyone within listening distance can intercept communications.2 Mobility: The Business Value Of A Wireless World http://highered. Power-on passwords—passwords implemented at the hardware level that must be entered before gaining access to the computer—are the first line of defense against unauthorized use. Companies should activate these passwords before giving their workforce the devices. The developers sent Cabir to anti-virus researchers. Preventing Viruses on a Mobile Device The potential for contracting viruses on mobile devices is becoming a reality. with a high risk that someone might “eavesdrop” or capture log-on names. they could be as devastating as their computer counterparts. credit card numbers. passwords. the wireless network can serve as a conduit for a hacker to gain entry into an otherwise secure wired network. It is an improvement on the original Wi-Fi security standard. any time a wireless network connects to a wired one. with the mobile device physically connecting to a PC or laptop to perform virus scanning. Protecting Wireless Connections Network intrusions can occur if access codes or passwords are stored on a device that is lost or stolen. They should also prohibit storing passwords on devices and periodically monitor compliance with the policy.43 APPLY YOUR KNOWLEDGE 17 of 19 7/13/12 2:10 PM .

..2 Mobility: The Business Value Of A Wireless World http://highered.com/sites/0077338340/student_view.mcgraw-hill.section 7. BUSINESS DRIVEN ETHICS AND SECURITY 18 of 19 7/13/12 2:10 PM .

19 of 19 7/13/12 2:10 PM . 2009 McGraw-Hill Higher Education Any use is subject to the Terms of Use and Privacy Notice..2 Mobility: The Business Value Of A Wireless World http://highered.mcgraw-hill.com/sites/0077338340/student_view. McGraw-Hill Higher Education is one of the many fine businesses of The McGraw-Hill Companies..section 7.

edu/webct/urw/tp9214421899391. A SSL Certificate C. Your location: Home Page › DUE SUNDAY. A firewall B. ______________ is a business application that is a satellite-based navigation system providing extremely accurate position. 2012 4:42 PM 00:14:57 Total score adjusted by 0..view. HTTPS 100% Correct Answer Feedback 1 of 12 7/14/12 10:20 PM . 2012 4:27 PM July 14. JULY 15th › CHAPTER 7 QUIZ › Assessments › View All Submissions › View Attempt View Attempt 1 of 1 Title: Started: Submitted: Time spent: CHAPTER 7 QUIZ July 14. Student Response Value Correct Answer Feedback A.0 Maximum possible score: 15 Total score: 10/15 = 66.lc904175.6667% Done 1. RadioFrequency Identification (RFID) D. Geographic Information Systems (GIS) Score: 1/1 2. ____________ is a combination of hypertext transfer protocol and secure socket layer that provides encryption and secure identification on an Internet server. RFID D. Global 100% Positioning Systems (GPS) B.usg.View Attempt https://gpc. time and speed information. Student Value Response A.. Location-Based Services (LBS) C.

offering convenience and flexibility not possible with separate infrastructures.. ______________ is a business application that uses location information to provide a service and is designed to give mobile users instant access to personalized local content. Global Positioning Systems (GPS) Score: 1/1 Value Correct Answer Feedback 4. Which of the following statements is a measure that is being considered by law makers to address privacy concerns with radio-frequency identification (RFIDs) and location based services (LBSs)? Student Value Response Correct Answer Feedback 2 of 12 7/14/12 10:20 PM . Score: 1/1 3. Location-Based 100% Services (LBS) D. Network communication Score: 1/1 Value 100% Correct Answer Feedback 5. Geographic Information Systems (GIS) B. A network protocol D. ____________________ is the efficient coexistence of telephone video.lc904175. Network convergence B.View Attempt https://gpc.. Student Response A. RadioFrequency Identification (RFID) C.view.usg.edu/webct/urw/tp9214421899391. Student Response A. and data communication within a single network. A networking category C.

Based on what we learned.view. F. Enhanced geography is interesting and helpful.edu/webct/urw/tp9214421899391.. Kill Codes would turn off all RFID tags when someone comes into contact with them. Score: 1/1 Correct Answer Feedback 6. which of the statements below is FALSE? Student Response A. Student Value Response A.View Attempt https://gpc. National Geographic took us on a tour of Asia using Geographic Information Systems (GIS) software. B and C 100% only. C. RSA Blocker Tags try to address privacy concerns. but not really essential to Value Correct Answer Feedback 3 of 12 7/14/12 10:20 PM . B.usg. A. E.lc904175. A and B only. D.. B and C only. Clearly labeled RFID tags on products would act as an alert mechanism to which items are being tracked.

Maps are no longer static but alive with visual displays of soil conditions. weather patterns. Which of the following methods are commonly used to secure network access in-house and over the Internet? Student Response A. mountain elevations. political boundaries. GIS software brings geography to life. GIS software 0% helps us to predict the weather.edu/webct/urw/tp9214421899391. volcanoes and other geographic events that change our world daily. Student Response helping us understand our interconnected world.. and other data.usg. B. earthquakes. Score: 0/1 7.view. A company first has to ensure proper identification Value Correct Answer Feedback 4 of 12 7/14/12 10:20 PM .View Attempt https://gpc.. D.lc904175. Value Correct Answer Feedback C.

. Data streaming rules and regulations Value Correct Answer Feedback 5 of 12 7/14/12 10:20 PM . None of the above. Student Response of users and authorization of network access.View Attempt https://gpc.edu/webct/urw/tp9214421899391. Score: 1/1 Value Correct Answer Feedback 100% 8. What is the standard Internet protocol which provides the technical foundation for the public Internet? Student Response A.view. D. B..lc904175. Secure Sockets layer (SSL) is a standard security technology for establishing an encrypted link between a Web server and a browser. C.usg. E. Secure hypertext transfer protocol (https) is a combination of HTTP and SSL to provide encryption and secure identification of an Internet server. All of the above.

Data streaming and DSL protocols C.edu/webct/urw/tp9214421899391. Student Response B. Business Department E.usg. Home Office C. All of the above F.view. Transmission Control 100% Protocol/Internet Protocol (TCP/IP) Score: 1/1 9. A divide between the economies of third world countries B. A deficiency in school-age children Value Correct Answer Feedback 6 of 12 7/14/12 10:20 PM . Which of the statements below best describes the term Digital Divide? Student Response A. College Campus B. Which of the following is a common example of a LAN? Student Response A.lc904175... Internet Protocol/Transmission Connection Protocol (IP/TCP) Value Correct Answer Feedback D. City Library 0% D.View Attempt https://gpc. A data interruption in the Internet connection C. None of the above Score: 0/1 Value Correct Answer Feedback 10.

. Firewalls screen packets--like customs at an airport--and prevent undesirable packets Value Correct Answer Feedback 7 of 12 7/14/12 10:20 PM . Student Response with computer knowledge Value Correct Answer Feedback D. Which of the following items that describe the various functions of devices used to support Internet traffic is INCORRECT? Student Response A.. Router Switches act like a pinball wizard to sort packets onto smaller networks within the Internet.lc904175.edu/webct/urw/tp9214421899391.usg. A worldwide gap 100% giving advantage to those countries/populations with access to technology Score: 1/1 11. D. Routers control the flow of traffic C.view. B. IP packets are the containers that contain pieces of data you wish to send over the Internet.View Attempt https://gpc.

B. Wireless gives users a live Internet connection via satellite or radio transmitters.usg. D. Other mediums such as wireless devices are not used. Both wireless and Wi-Fi use radio signals to 0% Value Correct Answer Feedback 8 of 12 7/14/12 10:20 PM . Packets only 100% travel by satellite or telephone lines. Cell phones use Internet infrastructure to to pass voice and data packets back and forth.View Attempt https://gpc. Mobile means the technology can travel with the user.. C.lc904175.view. Score: 1/1 12. Value Correct Answer Feedback E. Student Response from getting into a corporate intranet from the Internet. Which of the following statements is FALSE? Student Response A.. but it is not necessarily in real-time.edu/webct/urw/tp9214421899391.

E.. RFID chips can be used in passports and payment cards such as Mastercard and Visa. Score: 0/1 Value Correct Answer Feedback 13.edu/webct/urw/tp9214421899391. WiMAX is a communications technology aimed at providing high-speed wireless data over a metropolitan area up to 3. C.lc904175.view. B. RFID was first used in the military in 1941 to differentiate which planes were friend or foe. Student Response send and receive data.usg.000 square miles. Which of the following statements about radio frequency identification (RFID) are FALSE? Student Response A.. The most common use of RFID is in cell phones which use three different Value Correct Answer Feedback 9 of 12 7/14/12 10:20 PM .View Attempt https://gpc.

much like in the novel 1984 where "Big Brother Is Watching You. not the citizens..edu/webct/urw/tp9214421899391. Aid 0% empowers the authorities.View Attempt https://gpc. Score: 1/1 14. Value Correct Answer Feedback D.usg. from Bangladesh.lc904175.. Iqbal Quadir. Bluetooth) to identify your device. many fear RFIDs can be used to spy on us. RFID chips are used in keys to open your car. 10 of 12 7/14/12 10:20 PM . which of the statements below are FALSE? Student Response Value Correct Answer Feedback A." E. Based on his presentation. because they have only one place to go for help. Student Response types of RFID (IMEI.view. Because of 100% the long distance that RFID chips can cover. Wifi MAC. says that mobile phones fight poverty.

. The ability to easily and readily communicate with one another. C. increases productivity. Value Correct Answer Feedback 11 of 12 7/14/12 10:20 PM . such as access to cell phones. into the information age.usg. they provide no market. and are in a better position to make demands of those in charge.view. Production tools that help people to connect create buying power.. E. Connectivity is productivity. Because the poor lack buying power. Cell phones are bringing entire villages. Student Response B. D.lc904175.View Attempt https://gpc. especially in rural areas. especially across distances.edu/webct/urw/tp9214421899391. Citizens are empowered by technology.

OnStar is an example of such a system that General Motors offers with its vehicles. Location-Based Services (LBS) D.usg. Student Response Value Correct Answer Feedback A. Global 0% Positioning Systems (GPS) B.edu/webct/urw/tp9214421899391. Automobiles have ___________ linked to maps that display in a screen on the dashboard. RadioFrequency Identification (RFID) C.. Geographic Information Systems (GIS) Score: 0/1 Done 12 of 12 7/14/12 10:20 PM .. driving directions and exact location of the vehicle.lc904175. Score: 0/1 15.view.View Attempt https://gpc.

province.mcgraw-hill.. offering convenience and flexibility not possible with separate infrastructures Feedback: Level: Easy This is the definition of convergence. and data communication within a single network.Multiple Choice Quiz http://highered. or country? A) LAN B) WAN C) MAN D) PAN Feedback: Level: Easy This is the definition of WAN.com/sites/0077338359/student_view. 2 CORRECT What measures network performance? A) Bandwidth B) NSP C) NAP D) Broadband Feedback: Level: Easy Network performance is measured in terms of bandwidth. 1 INCORRECT What spans a large geographic area such as a state. 5 INCORRECT Which of the following is a challenge associated with a connected world? A) LBS issues B) GPS issues C) Political issues D) GIS issues Feedback: Level: Medium Political issues are a challenge associate with a connected world. 1 of 2 7/11/12 12:42 PM . 4 INCORRECT What is network convergence? A) Uses IP technology to transmit telephone calls B) The integration of communication channels into a single service C) Converts IP addresses into domains D) The efficient coexistent of telephone.. The correct answer for each question is indicated by a . such as the Digital Divide. video. 3 INCORRECT What is a device that enables a computer to transmit and receive data? A) Broadband B) Bandwidth C) Modem D) Bit rate Feedback: Level: Easy This is the definition of modem.

communications. collaboration.. http://highered..mcgraw-hill. 6 INCORRECT What is a restricted network that relies on Internet technologies to provide an Internet-like environment within the company for information sharing.Multiple Choice Quiz Divide. and the support of business processes? A) Extranet B) Intranet C) Internet D) All of the above Feedback: Level: Medium This is the definition of Intranet.com/sites/0077338359/student_view. Web publishing. 2 of 2 7/11/12 12:42 PM .

The primary challenges associated with supply chain management include costs and complexity. and suppliers' suppliers. and information flows between suppliers and customers. No more running to the store to replace your products as your store will come to you as soon as you need a new product. 318 Learning Outcome 8. suppliers. manufacturing efforts focused primarily on quality improvement efforts within the company. customers' customers. The next wave in supply chain management will be home-based supply chain fulfillment. Integrations allow separate systems to communicate directly with each other.mcgraw-hill.2: Describe supply chain management and its role in supporting business operations. Supply chain management (SCM) is the management of information flows between and among activities in a supply chain to maximize total supply chain effectiveness and corporate profitability. companies are turning to systems that provide demand forecasting. A supply chain consists of all parties involved. p. In the past. today these efforts reach across the entire supply chain. CRM allows an organization to gain insights into customers' shopping and buying behaviors..com/sites/0077338340/student_view.3: Identify the benefits and challenges of SCM along with its future.. To automate and enable sophisticated decision making in these critical areas. Customer relationship management (CRM) is a means of managing all aspects of a customer's relationship with an organization to increase customer loyalty and retention and an organization's profitability. Today's supply chain is an intricate network of business partners linked through communication channels and relationships.1: Explain integrations and the role they play in connecting a corporation. Business Driven Information Systems eBook 3/e Content Chapter8: Enterprise Applications: Business Communications Learning Outcome Review Learning Outcome 8. Every time a customer communicates with a company. eliminating the need for manual entry into multiple systems. in obtaining raw materials or a product. the firm has the chance to build a 1 of 3 7/13/12 11:39 AM .Learning Outcome Review http://highered. inventory control. directly or indirectly. Building integrations allows the sharing of information across databases along with dramatically increasing its quality. Improved visibility across the supply chain and increased profitability for the firm are the primary business benefits received when implementing supply chain management systems. Supply chain visibility is the ability to view all areas up and down the supply chain in real time. including customers. Learning Outcome 8. Learning Outcome 8.4: Describe customer relationship management and its role in supporting business operations.

Enterprise resource planning (ERP) integrates all departments and functions throughout an organization into a single IT system (or integrated set of IT systems) so employees can make decisions by viewing enterprisewide information about all business operations. however. The second generation of ERP systems extended its reach into the front office and primarily addressed customer issues including marketing and sales. They allow for the effective planning and controlling of all the resources required to plan. yet most organizations today have to piece together these systems. and training fees. Companies have to listen. and deliver goods and services. known as ERP-II. A decade ago if you had a complaint against a company you could make a phone call or write a letter. ERP systems contain multiple complex components that are not only expensive to purchase. and ERP are the backbone of ebusiness. trusting relationship with that particular customer. Costs can include the software itself. make.. Learning Outcome 8. A firm might choose its CRM components from Siebel. SCM components from i2.mcgraw-hill. Organizations are discovering a wave of other key business areas where it is beneficial to build strong relationships beyond customers.Learning Outcome Review http://highered. CRM. The third generation of ERP systems. making CRM the primary challenge facing organizations.. McGraw-Hill Higher Education is one of the many fine businesses of The McGraw-Hill Companies. 2009 McGraw-Hill Higher Education Any use is subject to the Terms of Use and Privacy Notice. source. Building successful customer relationships is not a new business practice. partner. The first generation of ERP systems focused on improving the manufacturing process through automation. and supplier needs. primarily addressing back-office business processes such as inventory ordering and product distribution. Companies that understand individual customer needs are best positioned to achieve success. and employee relationship management (ERM). plus consulting charges.7: Identify the benefits and challenges of ERP along with the future of the connected corporation. adopting an enterprisewide approach using the Internet to connect all participants in the value chain One of the biggest challenges of an ERP system is cost.com/sites/0077338340/student_view. but also expensive to implement. hardware expenses.5: Identify the benefits and challenges of CRM along with its future. Integrating all of these enterprise systems allows an organization to function as a single unit meeting customer. implementing CRM systems allows a company to operate more efficiently and effectively in the area of supporting customer needs. partner relationship management (PRM). Now you can contact people around the globe and voice your complaint or anger with a company or product. Learning Outcome 8. 2 of 3 7/13/12 11:39 AM . Learning Outcome 8.6: Describe enterprise resource management and its role in supporting business operations. Applications such as SCM. These include supplier relationship management (SRM). allows a company to compete on a functional level. and financial components and HR management components from Oracle. CRM moves far beyond technology by identifying customer needs and designing specific marketing campaigns tailored to each. Enterprise resource planning systems provide organizations with consistency.

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Business Driven Information Systems eBook 3/e Content Chapter8: Enterprise Applications: Business Communications Section 8. The army can now generate reports detailing its state of readiness and other essential intelligence. order fulfillment. 8.3. BUILDING A CONNECTED CORPORATION THROUGH INTEGRATIONS LO 8. Figure 8. and each system had its own database. Often. In the order entry system. The first is to create forward and backward integrations that link processes (and their underlying databases) in the value chain. These connections or integrations allow separate systems to communicate directly with each other. 290 296 295 294 293 292 291 p. To combat this challenge the ministry integrated its systems. for example.. or built connections among its many databases. Explain integrations and the role they play in connecting a corporation. solve problems.1 Supply Chain Management http://highered.1 Supply Chain Management p.com/sites/0077338340/student_view. requiring employees to manually input the corporation. A backward integration takes information entered into a given system and sends it automatically to all upstream systems and processes. Identify the benefits and challenges of SCM along with its future. 8. each department in the United Kingdom's Ministry of Defense and connecting a Army headquarters had its own information system.1: Explain integrations and the role they play in Until the 1990s. tasks that were nearly impossible before the integrations. Sharing information was difficult. Via the integrations. management could not even compile the information it needed to answer questions. that 1 of 9 7/13/12 11:39 AM . A forward integration takes information entered into a given system and sends it automatically to all downstream systems and processes. order entry.2 Describe supply chain management and its role in supporting business operations. and make decisions.mcgraw-hill. and billing.Section 8. Two common methods are used for integrating databases.1 demonstrates how this method works across the systems or processes of sales. eliminating the need for manual entry into multiple systems. 289 LEARNING OUTCOMES 8.. an employee can update the customer's information. same information into different systems multiple times.1. Building integrations allows the sharing of information across databases along with dramatically increasing its quality.

update.com/sites/0077338340/student_view.2 Integrating Customer Information among Databases 2 of 9 7/13/12 11:39 AM . Ideally. but they do ensure information consistency among multiple systems.Section 8. causing most organizations to invest in forward integrations only.2 provides an example of customer information integrated using this method across four different systems in an organization. The second integration method builds a central repository for a particular type of information.. However. FIGURE 8. integrations automatically send the new and/or updated customer information to the other systems. Figure 8. As users perform these tasks. The other systems limit users to read-only access of the customer information stored in them. integrations are expensive and difficult to build and maintain. which provide the flexibility to create. Both integration methods do not entirely eliminate information redundancy.. and delete information in any of the systems. and delete customer information only in the central customer database. information is sent upstream to the sales system and downstream to the order fulfillment and billing systems.1 Supply Chain Management http://highered.mcgraw-hill. update. Users can create.1 A Forward and Backward Customer Information Integration Example FIGURE 8. an organization wants to build both forward and backward integrations.

but highly customizable. customer relationship management. and deliver finished goods to retailers and customers are in high demand. the development tools for customization are complex programming tools that require specialist capabilities. Middleware translates information between disparate systems. For this reason. methods.1 Supply Chain Management http://highered. The remainder of this chapter covers the three enterprise systems most organizations use to integrate their disparate departments and separate operational systems: supply chain management (SCM). Enterprise application integration (EAI) middleware takes a new approach to middleware by packaging commonly used applications together..3). obtaining raw materials or a product. FIGURE 8. Enterprise systems are often available as a generic. at the and its role in supporting right cost. business manufacture products. manufacturing. EAI reviews how legacy systems fit into the new shape of the firm's business processes and devises ways to efficiently reuse what already exists while adding new systems and data.Section 8. SUPPLY CHAIN MANAGEMENT LO 8. Integrations are achieved using middleware —several different types of software that sit between and provide connectivity for two or more software applications. companies are turning to systems that provide demand forecasting. Figure 8. Generally. and tools aimed at integrating separate enterprise systems. group of programs for business functions such as accounting. It is not uncommon to hear of critical success factors focusing on getting the right products. and enterprise resource planning (see Figure 8.4 highlights the five basic supply chain activities a company undertakes to manufacture and distribute products. inventory control. reducing the time needed to integrate applications from multiple vendors. directly or indirectly. Integration Tools Enterprise systems provide enterprisewide support and data access for a firm's operations and business processes. at the right time. Enterprise application integration (EAI) connects the plans. A legacy system is a current or existing system that will become the base for upgrading or integrating with a new system.2: Describe The average company spends nearly half of every dollar it earns on suppliers and raw supply chain management materials to manufacture products.com/sites/0077338340/student_view. in operations. and marketing.3 The Three Primary Enterprise Systems 3 of 9 7/13/12 11:39 AM .. These systems can manage customer information across the enterprise. A supply chain consists of all parties involved.mcgraw-hill. to the right place. letting you view everything your customer has experienced from sales to support. tools that can help a company source raw materials. To automate and enable sophisticated decision making in these critical areas. and information flows between suppliers and customers.

Supply chain management systems manage and enhance these relationships with the primary goal of creating a fast.5): 1.Section 8. including customers. suppliers. manufacturing efforts focused primarily on quality improvement efforts within the company. SCM systems create the integrations or tight process and information linkages between all participants in the supply chain.4 The Five Basic Supply Chain Activities Supply chain management (SCM) is the management of information flows between and among activities in a supply chain to maximize total supply chain effectiveness and corporate profitability. customers' customers. 4 of 9 7/13/12 11:39 AM . Supply chain management performs three main business processes (see Figure 8.. Today's supply chain is an intricate network of business partners linked through communication channels and relationships.mcgraw-hill. Materials flow from suppliers and their upstream suppliers at all levels.. efficient. 2. and suppliers' suppliers. today these efforts reach across the entire supply chain. FIGURE 8.com/sites/0077338340/student_view. Materials are transformed into semifinished and finished products—the organization's own production processes. In the past.1 Supply Chain Management http://highered. and low-cost network of business relationships that take products from concept to market.

at which time the finished product is sent to the dealer or. The warehouse or distributor transfers the order information to P&G.com/sites/0077338340/student_view. The supply chain for a bike manufacturer includes all processes and people required to fulfill the customer's order (see Figure 8. brakes. Consider a customer purchasing a mountain bike from a dealer.mcgraw-hill. Walmart supplies the order information to its warehouse or distributor.6 Supply Chain for a Bike Manufacturer 5 of 9 7/13/12 11:39 AM . The customer generates order information by purchasing a product from Walmart. Effective and efficient supply chain management systems can enable an organization to have these impacts on Porter's Five Forces Model2: FIGURE 8. Products are distributed to customers and their downstream customers at all levels. rubber tires. accessories. The customer places an order with the dealer. 3.6).. in some cases. and packaging from different suppliers. Walmart and Procter & Gamble (P&G) have implemented a successful SCM system that links Walmart's distribution centers directly to P&G's manufacturing centers (see Figure 8. The raw materials are stored in the manufacturer's warehouse until a production order requires the bike to be built.5 A Typical Supply Chain FIGURE 8. which provides pricing and availability information to the store and replenishes the product to the distributor.Section 8. The dealer purchases the bike from the manufacturer.1 Supply Chain Management http://highered. directly to the customer. Payment is transferred electronically.7). Dozens of steps are required to complete this transaction from beginning to end. The manufacturer purchases the raw materials required to make the bike such as aluminum..

Create entry barriers to reduce the threat of new entrants. Increase efficiencies while seeking a competitive advantage through cost leadership (see Figure 8.mcgraw-hill.8 Effective and Efficient Supply Chain Managementʼs Effect on Porterʼs Five Forces THE BENEFITS OF SCM LO 8.1 Supply Chain Management http://highered.. FIGURE 8. Technology advances have significantly improved the ability to perform the five basic supply chain challenges of activities such as access to advanced modeling and simulation tools that can combine SCM along with its future.com/sites/0077338340/student_view. FIGURE 8.3: Identify the benefits and Better forecasts for tomorrow result in better preparedness today.8). Increase its supplier power.. 6 of 9 7/13/12 11:39 AM .Section 8. Increase buyers' switching costs to reduce the threat of substitute products or services.7 Supply Chain for a Product Purchased from Walmart Decrease the power of its buyers.

Today. Ideally. it is only recently that advances in MIS have brought these dreams to life.. To react to demand. for instance. For example.com/sites/0077338340/student_view. ensuring that supply always meets demand. FIGURE 8. the supply chain consists of multiple firms that function as efficiently and effectively as a single firm. information from multiple sources to build forecasts that look days. Figure 8.1 Supply Chain Management http://highered. with full information visibility. Supply chain execution systems ensure supply chain cohesion by automating the different activities of the supply chain. for suppliers to participate in product development and for retailers to contribute to marketing campaigns. Considerable evidence shows that supply chain integration results in superior supply chain capabilities. not realizing that the dealerships are actually challenged with selling the inventory. sales. and distribution capabilities. if a car dealership is having a hard time moving a particular brand of car. however. magnifying the issue and creating excess inventory and costs for all. integrated supply chains provide managers with the visibility to see their suppliers' and customers' supply chains. It is now common. The misinformation regarding a slight rise in demand for a product could cause different members in the supply chain to stockpile inventory.9 details how supply chain planning and supply chain execution systems interact with the supply chain. For example. supply chain participants are blind to the supply and demand needs occurring in the marketplace. and months ahead. The bullwhip effect occurs when distorted product-demand information ripples from one partner to the next throughout the supply chain. weeks.9 Supply Chain Planningʼs and Supply Chain Executionʼs Roles in the Supply Chain 7 of 9 7/13/12 11:39 AM . orders. Supply chain planning systems use advanced mathematical algorithms to improve the flow and efficiency of the supply chain while reducing inventory. Although firms have dreamed of integrating their supply chains for a long time. To improve visibility across the supply chain. supply chain planning systems require information inputs that are correct and up-to-date regarding customers. manufacturing. a standard format for the electronic exchange of information between supply chain participants. Without this critical information. an organization needs to know all customer events triggered upstream and downstream and so must their suppliers and their suppliers' suppliers. firms can use supply chain planning systems and supply chain execution systems. the car manufacturer might see a rise in demand for this particular brand of car and increase production orders.. Improved Visibility Supply chain visibility is the ability to view all areas up and down the supply chain in real time. Without this information. which drives a firm's profitability. it might offer significant discounts to try to move the inventory. Improved visibility across the supply chain and increased profitability for the firm are the primary business benefits received when implementing supply chain management systems. A good example of inventory issues that occur when a company does not have a clear vision of its entire supply chain is the bullwhip effect.Section 8.mcgraw-hill. a factor required to implement successful business strategies. To yield accurate results. a supply chain execution system might electronically route orders from a manufacturer to a supplier using electronic data interchange (EDI). These changes ripple throughout the supply chain.

when they want it.1 Supply Chain Management http://highered. Demand planning systems generate demand forecasts using statistical tools and forecasting techniques. such as having to pay more to procure raw materials for immediate production needs or increasing costs due to expedited shipping services. Increased Profitability Supply chain management systems can increase profitability across an organization. so companies can respond faster and more effectively to consumer demands through supply chain enhancements. they know exactly what they want. APPLY YOUR KNOWLEDGE 8 of 9 7/13/12 11:39 AM . allowing a firm to adjust business strategies to increase profitability across the enterprise. Inventory cycle time: The time it takes to manufacture a product and deliver it to the retailer. A few of the common supply chain management metrics include: Back order: An unfilled customer order for a product that is out of stock. Customer order cycle time: The agreed upon time between the purchase of a product and the delivery of the product. Firms are implementing demand planning systems to understand customer demand and production capabilities so they can estimate supply chain costs that ultimately impact the firm's performance and business strategies. For example. However. Couple supply chain complexity with today's demanding customers and a firm's costs can easily escalate out of control. such as radio-frequency identification (RFID). are also enabling companies to operate with improved speed and accuracy. A supply chain is only as strong as its weakest link. Innovative wireless technologies. Companies use supply chain management metrics to measure the performance of supply chains to quickly identify weak links.Section 8. Only an end-to-end view or an integrated supply chain would uncover these issues.. ensuring that they can satisfy continuously changing customer demands.mcgraw-hill. a manufacturing plant manager might focus on keeping the inventory of Product A as low as possible. Because information is so readily available. If your company can't meet their demand. the competition is simply a mouse-click away. Inventory turnover: The frequency of inventory replacement. the plant manager and the business might not realize that these savings are causing increased costs in other areas. and how they want it delivered. which will directly reduce the manufacturing costs and make the plant manager look great. Customers are also more demanding than ever before.com/sites/0077338340/student_view..

Section 8. The Machine That Changed the World (New York. 1991). “Post Office Losses Reach $4.com/sites/0077338340/student_view. 2010.” CBS News. accessed April 10.1 Supply Chain Management http://highered. Daniel Jones. McGraw-Hill Higher Education is one of the many fine businesses of The McGraw-Hill Companies. Womack. Harper Perennial.shtml.mcgraw-hill.com/stories /2009/08/05/national/main5216012.kiva. 3 4 www. 2009 McGraw-Hill Higher Education Any use is subject to the Terms of Use and Privacy Notice. 9 of 9 7/13/12 11:39 AM .com. August 5. 2009 http://www.7B for Year.cbsnews. BUSINESS DRIVEN ETHICS AND SECURITY 2 James P... and Daniel Roos.

2 Customer Relationship Management and Enterprise. HOG offers a wide array of events. Business Driven Information Systems eBook 3/e Content Chapter8: Enterprise Applications: Business Communications Section 8. Harley-Davidson started the Harley's Owners Group (HOG). CUSTOMER RELATIONSHIP MANAGEMENT LO 8. the firm has the chance to build a trusting 1 of 23 7/13/12 11:39 AM . Identify the benefits and challenges of CRM along with its future. Harley-Davidson and its role in supporting offers an excellent example of a company that knows the value of customer loyalty.mcgraw-hill.5 Customer relationship management (CRM) is a means of managing all aspects of a customer's relationship with an organization to increase customer loyalty and retention and an organization's profitability. most competitors are simply a mouse-click away.000 members. Knowing the value of its customers.Section 8. Customers are one of a firm's most valuable assets.com/sites/0077338340/student_view. business and it finds itself in the coveted position of demand outweighing its supply. and benefits to its members and is a key competitive advantage as it helps to build a strong sense of community among Harley-Davidson owners.6 Describe enterprise resource management and its role in supporting business operations. and sound of a Harley-Davidson..4 Describe customer relationship management and its role in supporting business operations. 8. No other motorcycle in the world has the look. feel. a difficult task to accomplish in any industry. 299 317 316 315 314 313 312 311 310 309 308 307 305 304 303 302 301 p.. Every time a customer communicates with a company.. 298 LEARNING OUTCOMES 8. Demand operations.7. http://highered.2 Customer Relationship Management and Enterprise Resource Planning p. CRM allows an organization to gain insights into customers' shopping and buying behaviors. which is the largest motorcycle club in the world with more than 600. Identify the benefits and challenges of ERP along with the future of the connected corporation. and building management strong loyal customer relationships is a key competitive advantage. 8.5. and this intense competition customer is forcing firms to switch from sales-focused business strategies to customer-focused relationship business strategies. Harley-Davidson has built a customer following that is extremely loyal. for Harley-Davidson motorcycles outweighs supply and some models have up to a two-year waiting list. 8..4: Describe Today. rides.

the company strives to deliver unforgettable experiences along with its top-quality products.com.6 Harley-Davidson still monitors online customer metrics such as time taken to process orders. allowing it to send customized product offers. FIGURE 8...com/sites/0077338340/student_view. This strategy ensured that the dealers remained the focus point of each customer's buying experiences. excellent customer service consistently to all its loyal customers. The selected dealership is then responsible for fulfilling the order.10). websites. communications. With a CRM system a firm can obtain an overview of the customer's products. preferences. and other marketing and sales techniques that can greatly add to sales and profits. Responding to customer inquiries within 24 hours. relationship with that particular customer. this is not the ideal time to try to up-sell or cross-sell products to this particular customer. A CRM system can track every form of customer communication providing this information to all employees (see Figure 8.. The complicated piece of this puzzle is that customers have many communication channels they can use to contact a company including call centers.mcgraw-hill. Imagine an irate customer that has just spent an hour on the phone with your call center complaining about a defective product. While the customer is on the phone.2 Customer Relationship Management and Enterprise. ensure satisfaction. and telephones. who depend on the high-margin accessories for store revenues. email. which might help restore the relationship with the customer and provide opportunities for future sales. http://highered. A primary component of managing a customer relationship is knowing when and why the customer is communicating with the company. a single customer can communicate with a firm using all of the different communication channels multiple times. Keeping track of customer communications is important if the firm wants to continue to build and manage that relationship. which prompts customers to select a participating Harley-Davidson dealership before placing any online orders. Shipping online orders within 24 hours. account information. your sales representative decides to drop by the customer's office in an attempt to sell additional products.. For this reason. faxes. Obviously. The solution was to deploy Harley-Davidson. number of returned orders. and number of incorrect orders. A customer relationship management system would inform the sales representative that the customer was on the phone with customer service and even provide details of the call.10 Customer Relationship Management Overview 2 of 23 7/13/12 11:39 AM . Then your sales representative could stop by and offer assistance in resolving the product issue. When the company began selling products online it found itself facing a dilemma—its online strategy for selling accessories directly to consumers would bypass Harley-Davidson's dealers. To guarantee that every customer has a highly satisfying online buying experience. expedite shipping. guaranteeing that the company delivers on its critical success factor of providing prompt.Section 8. The firm can then implement strategies for the best ways to communicate effectively with each and every customer. and purchasing history. To make matters even more complex. Harley-Davidson realizes that it takes more than just building and selling motorcycles to fulfill the dreams of its loyal customers. the company asks the dealers to agree to a number of standards including: Checking online orders twice daily.

frequency. Firms can find their most valuable customers by using the RFM formula—recency. the firm can analyze it to identify patterns and create marketing campaigns and sales promotions for different customer segments. THE BENEFITS OF CRM LO 8.com/sites/0077338340/student_view.Section 8. it can focus on ensuring these customers are always satisfied and receive the highest levels of customer service. If a certain customer segment purchases shoes but never accessories. an organization must track: How recently a customer purchased items. building successful customer relationships is not a new business challenges of CRM along practice. gaining important insights into their buying preferences and shopping behaviors. Identifying the most valuable customers allows a firm to ensure that these customers receive the highest levels of customer service and are offered the first opportunity to purchase new products..2 Customer Relationship Management and Enterprise. Firms that treat their customers well reap the rewards and generally see higher profits and highly loyal customers. In other words. Of course. however. Evolution of CRM 3 of 23 7/13/12 11:39 AM .5: Identify the Companies that understand individual customer needs are best positioned to achieve benefits and success. If the firm determines that its top 20 percent of customers are responsible for 80 percent of the revenue. the firm can offer discounted accessories with the purchase of a new pair of shoes. How frequently a customer purchases items. and monetary value. http://highered. This enables a firm to treat customers as individuals. After gathering this initial CRM information. efficiently and effectively in the area of supporting customer needs. implementing CRM systems allows a company to operate more with its future... The monetary value of each customer purchase.. For example. the firm should send a special offer during the off-season. if a customer buys only at the height of the season.mcgraw-hill. CRM moves far beyond technology by identifying customer needs and designing specific marketing campaigns tailored to each.

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There are three phases in the evolution of CRM: (1) reporting, (2) analyzing, and (3) predicting. CRM reporting technologies help organizations identify their customers across other applications. CRM analysis technologies help organizations segment their customers into categories such as best and worst customers. CRM predicting technologies help organizations predict customer behavior, such as which customers are at risk of leaving. Figure 8.11 highlights a few of the important questions an organization can answer in these areas by using CRM technologies.

FIGURE 8.11
Evolution of CRM

APPLY YOUR KNOWLEDGE

BUSINESS DRIVEN GLOBALIZATION

Banking on Customer Relationships
Barclays Bank, a leader in the global financial markets, maintains business operations in more than 70 countries. Barclays chose to invest in CRM technologies to help it gain valuable insights into its personal and business customers, many of which carry credit cards. The purpose of the CRM system was to predict the financial behavior of individual customers and assess whether a customer is likely to pay back a loan in full within the agreed-upon time period and interest rate. Surprisingly, Barclays' CRM system quickly identified that about 50 percent of its customers were nonprofitable, and that 90 percent of its profits were generated by fewer than 30 percent of its customers. This valuable information allowed Barclays to revamp its offerings and charge customers an interest rate based on risk assessment. Barclays also identifies groups of profitable customers, both on a corporate and personal level, which it can then target

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for new financial products.7 How can a business like Barclays use RFM (recency, frequency, and monetary value) to improve customer relations? Provide three examples of questions a bank would ask in each of the following categories: CRM reporting technologies, CRM analysis technologies, and CRM predicting technologies.

Operational and Analytical CRM
The two primary components of a CRM strategy are operational CRM and analytical CRM. Operational CRM supports traditional transactional processing for day-to-day front-office operations or systems that deal directly with the customers. Analytical CRM supports back-office operations and strategic analysis and includes all systems that do not deal directly with the customers. Figure 8.12 provides an overview of the two.

FIGURE 8.12
Operational CRM and Analytical CRM

Figure 8.13 shows the different technologies marketing, sales, and customer service departments can use to perform operational CRM.

Marketing and Operational CRM
Companies are no longer trying to sell one product to as many customers as possible; instead, they are trying to sell one customer as many products as possible. Marketing departments switch to this new way of doing business by using CRM technologies that allow them to gather and analyze customer information to tailor successful marketing campaigns. In fact, a marketing campaign's success is directly proportional to the organization's ability to gather and analyze the right customer information. The three primary operational CRM technologies a marketing department can implement to increase customer satisfaction are:

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1. List generator. 2. Campaign management. 3. Cross-selling and up-selling. List Generator List generators compile customer information from a variety of sources and segment it for different marketing campaigns. These sources include website visits, questionnaires, surveys, marketing mailers, and so on. After compiling the customer list, it can be filtered based on criteria such as household income, gender, education level, political facilitation, age, or other factors. List generators provide the marketing department with valuable information on the type of customer it must target to find success for a marketing campaign.

FIGURE 8.13
Operational CRM Technologies

Campaign Management Campaign management systems guide users through marketing campaigns by performing such tasks as campaign definition, planning, scheduling, segmentation, and success analysis. These advanced systems can even calculate the profitability and track the results for each marketing campaign. Cross-Selling and Up-Selling Two key sales strategies a marketing campaign can deploy are cross-

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selling and up-selling. Cross-selling is selling additional products or services to an existing customer. For example, if you were to purchase Tim Burton's movie Alice in Wonderland on Amazon, you would also be asked if you want to purchase the movie's soundtrack or the original book. Amazon is taking advantage of cross-selling by offering customers goods across its book, movie, and music product lines. Up-selling is increasing the value of the sale. McDonald's performs up-selling by asking customers whether they would like to super-size their meals for an extra cost. CRM systems offer marketing departments all kinds of information about customers and products, which can help identify up-selling and cross-selling opportunities to increase revenues.

Sales and Operational CRM
Sales departments were the first to begin developing CRM systems. They had two primary motivations to track customer sales information electronically. First, sales representatives were struggling with the overwhelming amount of customer account information they were required to maintain and track. Second, managers found themselves hindered because much of their vital customer and sales information remained in the heads of their sales representatives, even if the sales representative left the company. Finding a way to track customer information became a critical success factor for many sales departments. Figure 8.14 depicts the typical sales process, which begins with an opportunity and ends with billing the customer for the sale. Leads and potential customers are the lifeblood of all sales organizations, whether they sell computers, clothing, consulting, or cars. How leads are handled can make the difference between revenue growth and decline.

FIGURE 8.14
A Typical Sales Process

Sales force automation (SFA) automatically tracks all the steps in the sales process. SFA products focus on increasing customer satisfaction, building customer relationships, and improving product sales. The three primary operational CRM technologies a sales department can adopt are: 1. Sales management CRM systems.

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2. Contact management CRM systems. 3. Opportunity management CRM systems. Sales Management CRM Systems Sales management CRM systems automate each phase of the sales process, helping individual sales representatives coordinate and organize all their accounts. Features include calendars, reminders for important tasks, multimedia presentations, and document generation. These systems can even provide an analysis of the sales cycle and calculate how each individual sales representative is performing during the sales process. Contact Management CRM Systems A contact management CRM system maintains customer contact information and identifies prospective customers for future sales, using tools such as organizational charts, detailed customer notes, and supplemental sales information. For example, a contact management system can take an incoming telephone number and automatically display the person's name along with a comprehensive history including all communications with the company. This allows the sales representative to personalize the phone conversation and ask such things as, “How is your new laptop working, Sue?” or “How was your family vacation to Colorado?” The customer feels valued since the sales associate knows her name and even remembers details of their last conversation. Opportunity Management CRM Systems Opportunity management CRM systems target sales opportunities by finding new customers or companies for future sales. They determine potential customers and competitors and define selling efforts including budgets and schedules. Advanced systems can even calculate the probability of a sale, which can save sales representatives significant time and money when qualifying new customers. The primary difference between contact management and opportunity management is that contact management deals with existing customers and opportunity management with new or potential customers.

Customer Service and Operational CRM
Most companies recognize the importance of building strong customer relationships during the marketing and sales efforts, but they must continue this effort by building strong post-sale relationships also. A primary reason firms lose customers is due to negative customer service experiences. Providing outstanding customer service is challenging, and many CRM technologies can assist organizations with this important activity. The three primary ones are: 1. Contact center. 2. Web-based self-service. 3. Call scripting. Contact Center A contact center or call center is where customer service representatives answer customer inquiries and solve problems, usually by email, chat, or phone. It is one of the best assets a customer-driven organization can have because maintaining a high level of customer support is critical to obtaining and retaining customers. Figure 8.15 highlights a few of the services contact center systems offer. Contact centers also track customer communication histories along with problem resolutions —information critical for providing a comprehensive customer view to the service representative. Representatives who can quickly comprehend the customer's concerns provide tremendous value to the customer and to the company. Nothing makes frustrated customers happier than not having to explain

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their problems all over again to yet another customer service representative.

APPLY YOUR KNOWLEDGE

BUSINESS DRIVEN INNOVATION

Nice Emotions
New emotion-detection software called Perform, created by Nice Systems, helps firms improve customer service by identifying callers who are displeased or upset. Perform determines a baseline of emotion and can detect emotional issues during the first few seconds of a call; any variation from the baseline activates an alert. When an elderly person who was highly distressed over medical costs hung up during a phone call to the insurance company, Perform identified the customer's frustration and automatically emailed a supervisor. The supervisor was able to review a recording of the conversation and immediately called the customer back suggesting ways to lower the costs.8 How do you think emotion-detection software will affect customer relationships? What other departments or business processes could benefit from its use? Create a new product that uses emotion-detection software. What business problem would your product solve and who would be your primary customers?

FIGURE 8.15
Common Services Provided by Contact Centers

Web-Based Self-Service Web-based self-service systems allow customers to use the Web to find answers to their questions or solutions to their problems. FedEx uses Web-based self-service systems to let customers electronically track packages without having to talk to a customer service representative. Another feature of Web-based self-service is click-to-talk functions, which allow customers to click on a button and talk with a representative via the Internet. Powerful customer-driven features such as these add value to any organization by providing customers with real-time information that helps resolve their concerns. Call Scripting Companies that market and sell highly technical products have a difficult time finding

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competent customer service representatives. Call scripting systems gather product details and issue resolution information that can be automatically generated into a script for the representative to read to the customer. These systems even provide questions the representative can ask the customer to troubleshoot the problem and find a resolution. This feature not only helps reps answer difficult questions quickly but also presents a uniform response so customers don't receive different answers.

Analytical CRM
Analytical CRM provides information about customers and products that was once impossible to locate, such as which type of marketing and sales campaign to launch and which customers to target and when. Unlike operational CRM, which automates call centers and sales forces with the aim of enhancing customer service, analytical CRM works by using business intelligence to identify patterns in product sales and customer behaviors. Analytical CRM tools can slice-and-dice vast amounts of information to create custom views of customers, products, and market segments highlighting opportunities for crossselling and up-selling. Website personalization occurs when a website has stored enough data about a person's likes and dislikes to fashion offers more likely to appeal to that person. Many marketers use CRM to personalize customer communications and decide which customers are worth pursuing. Here are a few examples of the information insights analytical CRM can help an organization gain. Find new profitable customers: Analytical CRM could highlight that the most profitable market segment consists of women between 35 and 45 years old who drive SUVs and live within 30 miles of the city limits. The firm could then find a way to locate these customers for mailings and other opportunities. Exceed customer expectations: Analytical CRM helps a firm move past the typical “Dear Mr. Smith” greeting by personalizing communications. For example, if the firm knows the customer's favorite brand and size of shoe it can notify the customer that a pair of size 12 Nike cross trainers are available for him to try on the next time he visits the store. Discover the activities the firm performs the best: Analytical CRM can determine what an organization does better than its competitors. If a restaurant caters more lunches to midsized companies than its competition does, it can purchase a specialized mailing targeting these customers for future mailings. Eliminate competition: Analytical CRM can determine sales trends allowing the company to provide customers with special deals outsmarting its competition. A sports store might identify its best customers for outdoor apparel and invite them to a private sale right before the competition runs its sale. Care about customers: Analytical CRM can determine what customers want and need, so a firm can contact them with an invitation to a private sale, reminder that a product needs a tune-up, or send them a personalized letter along with a discount coupon to help spark a renewed relationship.

Measuring CRM Success
Using CRM metrics to track and monitor performance is a best practice for many companies. Figure 8.16 displays a few common CRM metrics a manager can use to track the success of the system. Just remember that you only want to track between five and seven of the hundreds of CRM metrics available.

THE CHALLENGES OF CRM
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A standard rule of business states that the customer is always right. Although most businesses use this as their motto, they do not actually mean it. Ebusiness firms must adhere to this rule as the power of the customer grows exponentially in the information age. Various websites and videos on YouTube reveal the power of the individual consumer (see Figure 8.17). A decade ago if you had a complaint against a company you could make a phone call or write a letter. Now you can contact hundreds or thousands of people around the globe and voice your complaint or anger with a company or product. You—the customer—can now take your power directly to millions of people and companies have to listen.

FIGURE 8.16
CRM Metrics

FIGURE 8.17
The Power of the Customer

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APPLY YOUR KNOWLEDGE

BUSINESS DRIVEN START-UP

Straightjacket Customer Service
You might not want to put the fact that you won the Straightjacket Award on your résumé unless you worked for Rackspace, a Texas company that specializes in hosting websites. At Rackspace, the coveted Straightjacket Award is won by the employee who best delivers “fanatical customer support,” one of the firm's critical success factors. The company motivates its customer service representatives by dividing them into teams, each responsible for its own profitability. The company then measures such things as customer turnover, up-selling, cross-selling, and referrals. The team with the highest scores wins the Straightjacket Award and each member receives a 20 percent bonus.9 Assume your professor has hired you as the employee relationship manager for your class. What type of award would you create to help increase class participation? What type of award would you create to help increase the overall average on exams? What type of award would you create to help increase student collaboration? Be sure to name your awards and describe their details. Also, what type of metrics would you create to measure your awards? How could a CRM system help you implement your awards?

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com/sites/0077338340/student_view. It can then determine the best supplier to collaborate with and develop strong relationships with to streamline processes. ENTERPRISE RESOURCE PLANNING Today's managers require real-time views into their businesses so they can make decisions when they need to. allowing a company to expand its market by offering specialized products and services. inconsistencies can occur throughout the company.. Many organizations fail to maintain consistency across business operations. inventory availability. make. partner relationship management (PRM). They allow for the effective planning and controlling of all the resources required to plan. These include supplier relationship management (SRM). pricing strategies.. and operations can become discontinuous.. and employee relationship management (ERM). outsource services. consolidates and correlates it. decides to implement a new system without considering other departments. and business focus or strategies. such as sales.2 Customer Relationship Management and Enterprise. SRM applications help companies analyze suppliers based on a number of key variables including prices. and generates enterprisewide organizational reports. Figure 8. like silos. and provide products the firm could not offer alone.6: Describe enterprise resource management and its role in supporting business operations. and shipping information.18 Enterprise Resource Planning System Overview 13 of 23 7/13/12 11:39 AM . Employee relationship management (ERM) provides Web-based self-service tools that streamline and automate the human resource department. Enterprise resource planning systems provide organizations with consistency. Employees are the backbone of an enterprise and the communication channel to customers. Partner relationship management (PRM) discovers optimal sales channels by selecting the right partners and identifying mutual customers.18 shows how an ERP system takes data from across the enterprise.mcgraw-hill. Supplier relationship management (SRM) focuses on keeping suppliers satisfied by evaluating and categorizing suppliers for different projects. Enterprise resource planning (ERP) integrates all departments and functions throughout an organization into a single IT system (or integrated set of IT systems) so employees can make decisions by viewing enterprisewide information about all business operations. A PRM system offers real-time sales channel information about such things as inventory availability. LO 8. FIGURE 8. and suppliers. partners. http://highered. like marketing and accounting. THE FUTURE OF CRM Organizations are discovering a wave of other key business areas where it is beneficial to build strong relationships beyond customers. If a single department.Section 8. and deliver goods and services. source.. Their relationship with the company is far more complex and long-lasting than the relationship with customers. thus many enterprises are turning to ERM systems to help retain key employees.

2 Customer Relationship Management and Enterprise.. such as employee benefits and financial reporting. inventory levels. and delivery schedules. For example. FIGURE 8.. ERP systems can support numerous business processes far beyond order processing. http://highered. Once the order is complete. ERP systems facilitate the order process.. sales representatives can access the ERP system to view all necessary information to process orders such as credit rating. An ERP system can also support supplier and customer business processes infiltrating the entire value chain and helping the organization achieve greater operational efficiency (see Figure 8. the ERP system automatically routes it to the next department in the order process.com/sites/0077338340/student_view..Section 8. it is automatically updated throughout the entire system. FIGURE 8. At the core of an ERP system is a central database that gathers transactional data from operational systems across the company.19. Each time information is altered. as illustrated in Figure 8.19 ERP Process Flow The key word in enterprise resource planning is enterprise.20).mcgraw-hill.20 The Organization Before and After ERP 14 of 23 7/13/12 11:39 AM . order history. ensuring customers receive their purchases faster and with fewer errors.

com/sites/0077338340/student_view.Section 8. APPLY YOUR KNOWLEDGE BUSINESS DRIVEN MIS Classic Cars Classic Cars Inc.. top-of-the-line mechanics.. The company is proud of its extensive inventory. Each location 15 of 23 7/13/12 11:39 AM .. operates high-end automotive dealerships that offer luxury cars along with luxury service. and especially its exceptional service. http://highered.mcgraw-hill.. The company currently has 40 sales representatives at four locations. which includes operating a cappuccino bar at each dealership.2 Customer Relationship Management and Enterprise.

all his or her customer information is lost.7: Identify the The first generation of ERP systems focused on improving the manufacturing process benefits and challenges of through automation.22 provides an example of an ERP system with its core and extended components. Sales representatives send their customers to other dealerships to see specific cars that turn out not to be on the lot. Production and materials management.. The current generation of ERP. Sales representatives frequently steal each other's customers and commissions. The owner of Classic Cars Inc. ERP-II is composed of two primary components—core and extended. THE BENEFITS OF ERP LO 8. such as: A customer can get different quotes at different dealerships for the same car.. Accounting and finance. The three most common core ERP components focusing on internal 2. Core ERP Components operations are: 1. You work for Customer One. enterprisewide approach using the Internet to connect all participants in the value chain. Extended ERP components are the extra components that meet organizational needs not covered by the core components and primarily focus on external operations. maintains its own computer systems.. primarily addressing back-office business processes such as ERP along inventory ordering and product distribution. This splintered approach to operations causes numerous problems in customer communication.. http://highered. Develop a proposal detailing how an ERP system can alleviate the company's problems and create new sales opportunities. a small consulting company that specializes in enterprisewide strategies. Figure 8. Marketing campaigns are typically generic and not designed to target specific customers.21 shows how ERP has grown to accommodate the needs of the entire organization.mcgraw-hill. Figure 8.com/sites/0077338340/student_view. known as connected ERP-II. has hired you to help him formulate a strategy to put his company back on track. The third generation of ERP systems.2 Customer Relationship Management and Enterprise. Core ERP components are the traditional components included in most ERP systems and primarily focus on internal operations.Section 8. If a sales representative quits. pricing strategy. and inventory control. 16 of 23 7/13/12 11:39 AM . and all sales representatives have their own contact management systems. allows a company to compete on a functional level by adopting an corporation. The second generation of ERP systems with the future extended its reach into the front office and primarily addressed customer issues of the including marketing and sales.

FIGURE 8.com/sites/0077338340/student_view.. accounts receivable... and asset management. http://highered. Most organizations manage 17 of 23 7/13/12 11:39 AM .21 The Evolution of ERP FIGURE 8.22 Core ERP Components and Extended ERP Components Accounting and Finance ERP Components Accounting and finance ERP components manage accounting data and financial processes within the enterprise with functions such as general ledger. accounts payable. budgeting.mcgraw-hill.Section 8. 3. One of the most useful features of an ERP accounting/finance component is credit management.2 Customer Relationship Management and Enterprise.. Human resources.

and quality control. job cost accounting.com/sites/0077338340/student_view. their relationships with customers by setting credit limits. The four most common extended ERP components are: 1. They even allow the organization to perform detailed employee analysis.. enabling a firm to effectively manage customer relationships by responding to customer needs and demands while identifying the most (and least) valuable customers so the firm can better allocate its marketing resources. Business intelligence. The goal is to provide an integrated view of customer data. 2. The business intelligence components of ERP systems typically collect information used throughout the organization (including data used in many other ERP components). and business partners outside the organization. organize it. compensation. Human Resources ERP Components Human resources ERP components track employee information including payroll. Customer relationship management. Ebusiness. Demand forecasting helps determine production schedules and materials purchasing. benefits. http://highered. sales force automation. Extended ERP Components Extended ERP components meet the organizational needs not covered by the core components and primarily focus on external operations. 3. Customer Relationship Management ERP Components ERP vendors now include additional functionality that provides services formerly found only in CRM systems. 4... and advanced marketing functions. ERP financial systems correlate customers' orders with their account balances to determine credit availability.mcgraw-hill. suppliers. and performance assessment and ensure compliance with all laws. such as online training and long-distance telephone services. Production and Materials Management ERP Components Production and materials management ERP components handle production planning and execution tasks such as demand forecasting. maximizing total supply chain effectiveness and profitability. Business Intelligence ERP Components Many organizations have found that ERP tools can provide even greater value with the addition of powerful business intelligence systems. Human resource components can also identify which employees are using which resources. Supply Chain Management ERP Components ERP vendors are expanding their systems to include SCM functions that manage the information flows between and among supply chain stages.2 Customer Relationship Management and Enterprise. Many are Internet-enabled and require interaction with customers.. SCM components allow a firm to monitor and control all 18 of 23 7/13/12 11:39 AM . The CRM components in ERP systems include contact centers. production scheduling. and apply analytical tools to assist managers with decisions. and whether the most talented people are working in areas where they can have the greatest impact. They also perform all types of advanced profitability modeling techniques. or limits on how much a customer can owe at any one time. Supply chain management.Section 8. Data warehouses are one of the most popular extensions to ERP systems. and a company that buys products for resale develops a materials requirement plan. A company that makes its own product prepares a detailed production schedule. such as identifying who is likely to leave the company unless additional compensation or benefits are provided.

and innovation. 4.Section 8. an adequate story for industrial age companies for which investments in long-term capabilities and customer relationships were not critical for success. suppliers.. for guiding and evaluating the journey that information age companies must make to create future value through investment in customers. Kaplan and Norton describe the balanced scorecard as follows: “The balanced scorecard retains traditional financial measures.. The financial perspective (see Figure 8.mcgraw-hill. The company had all the toys in the warehouse. but it could not organize the basic order processing function to get the toys delivered to consumers on time. http://highered. But financial measures tell the story of past events. Two of the primary features of ebusiness components are elogistics and eprocurement. The internal business process perspective.23). The balanced scorecard is a management system. technology. both from the Harvard Business School. A common mistake many businesses make is jumping into online business without properly integrating the entire organization on the ERP system. employees. 3. allowing continuous improvement. Measuring ERP Success One of the best methods of measuring ERP success is the balanced scorecard. It provides feedback for both internal and external business processes.”10 The balanced scorecard uses four perspectives to monitor an organization: 1. David Norton. The customer perspective. These financial measures are inadequate. The learning and growth perspective. FIGURE 8. processes. Ebusiness ERP Components The newest extended ERP components are the ebusiness components that allow companies to establish an Internet presence and fulfill online orders.2 Customer Relationship Management and Enterprise. however. Robert Kaplan and Dr. 2. One large toy manufacturer announced less than a week before Christmas that it would be unable to fulfill any of its online orders. that a firm uses to translate business strategies into executable tasks.com/sites/0077338340/student_view.. created by Dr. Elogistics manages the transportation and storage of goods. Eprocurement is the business-to-business (B2B) online purchase and sale of supplies and services. as well as a measurement system. stages in the supply chain from the acquisition of raw materials to the receipt of finished goods by customers..23 The Four Primary Perspectives of the Balanced Scorecard 19 of 23 7/13/12 11:39 AM .

Flavors offers the following: Music center—information about all live music events occurring in the area and an open microphone two nights a week for local musicians.. however. Flavors' sales are great and profits are soaring. grinding. they don't always provide this information to the 20 of 23 7/13/12 11:39 AM . The following is a quick look at Flavors' current nonfood offerings. from the traditional press to a digital espresso machine. Also includes a trouble-shooting guide developed by brewing specialists. Community calendar—weekly meetings to help customers find ways to become more involved in their community.com/sites/0077338340/student_view.Section 8. art.mcgraw-hill. Book clubs—a way for customers to meet to discuss current and classic literature. literature. http://highered. however. Flavors does not receive any information about how many customers attend live events in the music center. and blending equipment for sale in Flavor stores. and town events. Art gallery—a space in the store filled with great pieces from local artists.. APPLY YOUR KNOWLEDGE BUSINESS DRIVEN DISCUSSION Bean Integration At Flavors. a premium coffee shop..2 Customer Relationship Management and Enterprise. customers receive more than just a great cup of coffee—they also get exposure to music. Coffee sampler—free tastings in which experts showcase coffees from around the world.. Brewing courses—lessons in the finer details of the brewing. operations need an overhaul. Musicians typically maintain a fan email list and CD sales records for the event.

Coffee sampler events are run through Flavors' primary operations. SCM. causing employees to learn and adjust to new business processes. Flavors has no input on the art displayed in the store or information about who purchases it. hardware expenses. yet most organizations today have to piece together these systems. and all customer and sales information is provided to Flavors in a Word document at the end of each year. As a manager. AND ERP Applications such as SCM. and training required with an ERP implementation. Many ERP failures occur because the business managers and MIS professionals underestimate the complexity of the planning. THE FUTURE OF ENTERPRISE SYSTEMS: INTEGRATING SCM.com/sites/0077338340/student_view.. For example. they have no way to tell which events result in higher sales. A firm might choose its CRM components from Siebel. should they have more open-microphone nights and fewer book clubs? The other way around? Currently. ERP systems contain multiple complex components that are not only expensive to purchase. which provides monthly event feedback to Flavors in a variety of formats from Word to Access files.2 Customer Relationship Management and Enterprise. The art gallery is run by several local artists who pay Flavors a small commission on each sale. A large firm can easily spend millions of dollars and many years completing an ERP implementation.. while avoiding too much change too fast. and training fees.Section 8. you must carefully assess your company's needs and choose the right ERP system and ensure proper support for all new processes. and ERP across the company. store. CRM. Create an integration strategy so Flavors can take advantage of CRM. Brewing and machine resource courses are run by the equipment manufacturers. and ERP are the backbone of ebusiness.mcgraw-hill. The biggest issue facing an ERP implementation is that it fundamentally changes the way the entire organization operates. and they have hired you as an integration expert. Flavors has no access to book club customer information or sales information. Each event is run by a separate organization. Costs can include the software itself. THE CHALLENGES OF ERP One of the biggest challenges of an ERP system is cost.. CRM.. They also want to gain a better understanding of how the different events they host affect the different areas of their business. SCM 21 of 23 7/13/12 11:39 AM . which runs a tab during the meetings and pays Flavor with a check at the end of each month. Pages Up. plus consulting charges. but also expensive to implement. Book club events are booked and run through the local bookstore. http://highered. development. Flavors' owners want to revamp the way the company operates so they can take advantage of enterprise systems. Community event information is open to all members of the community.

For example. and Figure 8. If one application performs poorly. and financial components and HR management components from Oracle. the company will lose that customer.. http://highered..25 shows where they are integrated and the underlying premise of an integrated organization. if its SCM system does not work and the customer never receives the finished product.mcgraw-hill. The world-class enterprises of tomorrow must be built on world-class applications implemented today.com/sites/0077338340/student_view. and supplier needs..24 identifies the general audience and purpose for each of these applications.Section 8. FIGURE 8. no matter how great a company is at CRM. components from i2.25 Integrations between SCM. Figure 8. Integrating all of these enterprise systems allows an organization to function as a single unit meeting customer. and ERP 22 of 23 7/13/12 11:39 AM .24 Primary Uses and Business Benefits of Strategic Initiatives FIGURE 8.. partner. CRM. the entire customer value delivery system is affected.2 Customer Relationship Management and Enterprise.

insightexec.Section 8.balancedscorecard. 6 “Integrated Solutions—The ABCs of CRM.integratedsolutionsmag. 2003. “Nice Emotions.com/smartcenter-suitexs.com/sites/0077338340/student_view. accessed October 12.mcgraw-hill.com. The Balanced Scorecard.2 Customer Relationship Management and Enterprise. Giving Voice to Customer-Centricity. accessed November 12.” http://www.com. accessed March 10. www. 10 2009 McGraw-Hill Higher Education Any use is subject to the Terms of Use and Privacy Notice.org. accessed July 15.com/media/success. accessed June 2005. 2003.peoplesoft.nice. 2010. 23 of 23 7/13/12 11:39 AM .” www. 5 “Harley-Davidson on the Path to Success.com. accessed February 2008. 7 8 9 “Barclays...” www..” crm. http://highered. McGraw-Hill Higher Education is one of the many fine businesses of The McGraw-Hill Companies. “Customer Success.” www.. 2003.rackspace.

 304         .  scheduling.  or  phone.  usually  by  email.  as  well  as  a  measurement  system.  303       Click-­‐to-­‐talk   Allows  customers  to  click  on  a  button  and  talk  with  a  representative  via  the  Internet.  segmentation.  301       Backward  integration   Takes  information  entered  into  a  given  system  and  sends  it  automatically  to  all   upstream  systems  and  processes....  chat.  using  tools  such  as  organizational  charts...  accounts  payable.  312       Analytical  CRM   Supports  back-­‐office  operations  and  strategic  analysis  and  includes  all  systems  that  do   not  deal  directly  with  the  customers.Chapter  8:  Enterprise  Applications:  Business  Communications   Key  Terms     Accounting  and  finance  ERP  component   Manages  accounting  data  and  financial  processes  within  the  enterprise  with  functions   such  as  general  ledger.  289       Balanced  scorecard   A  management  system.  314       Bullwhip  effect   Occurs  when  distorted  product-­‐demand  information  ripples  from  one  partner  to  the   next  throughout  the  supply  chain.  that  a  firm  uses  to  translate   business  strategies  into  executable  tasks.  accounts  receivable.  304       Contact  management  CRM  system   Maintains  customer  contact  information  and  identifies  prospective  customers  for   future  sales.  and  asset   management...  planning.  and  success  analysis..  305       Campaign  management  system   Guides  users  through  marketing  campaigns  by  performing  such  tasks  as  campaign   definition..  294       Call  scripting  system   Gathers  product  details  and  issue  resolution  information  that  can  be  automatically   generated  into  a  script  for  the  representative  to  read  to  the  customer.  budgeting.  and   supplemental  sales  information.  detailed  customer  notes.   305       Contact  center  or  call  center   Where  customer  service  representatives  answer  customer  inquiries  and  solve   problems.

..  methods.  so   companies  can  respond  faster  and  more  effectively  to  consumer  demands  through   supply  chain  enhancements.  298       Demand  planning  system   Generates  demand  forecasts  using  statistical  tools  and  forecasting  techniques.  311       CRM  analysis  technologies   Help  organizations  segment  their  customers  into  categories  such  as  best  and  worst   customers.  300       Cross-­‐selling   Selling  additional  products  or  services  to  an  existing  customer..  295       Electronic  data  interchange  (EDI)   A  standard  format  for  the  electronic  exchange  of  information  between  supply  chain   participants.Core  ERP  component   The  traditional  components  included  in  most  ERP  systems  and  primarily  focus  on   internal  operations.  294       Elogistics   Manages  the  transportation  and  storage  of  goods.  300       CRM  predicting  technologies   Help  organizations  predict  customer  behavior.  300       CRM  reporting  technologies   Help  organizations  identify  their  customers  across  other  applications.  308       Enterprise  application  integration  (EAI)   Connects  the  plans..   290     ..  303       Customer  relationship  management  (CRM)   A  means  of  managing  all  aspects  of  a  customer's  relationship  with  an  organization  to   increase  customer  loyalty  and  retention  and  an  organization's  profitability.  reducing  the  time  needed  to  integrate  applications  from  multiple  vendors..  and  tools  aimed  at  integrating  separate  enterprise   systems.  313       Employee  relationship  management  (ERM)   Provides  Web-­‐based  self-­‐service  tools  that  streamline  and  automate  the  human   resource  department...  290       Enterprise  application  integration  (EAI)  middleware   Takes  a  new  approach  to  middleware  by  packaging  commonly  used  applications   together.....  such  as  which  customers  are  at  risk  of   leaving.

....  benefits.....Enterprise  resource  planning  (ERP)   Integrates  all  departments  and  functions  throughout  an  organization  into  a  single  IT   system  (or  integrated  set  of  IT  systems)  so  employees  can  make  decisions  by  viewing   enterprisewide  information  about  all  business  operations.  289       Legacy  system   A  current  or  existing  system  that  will  become  the  base  for  upgrading  or  integrating   with  a  new  system..  and   performance  assessment  and  ensures  compliance  with  all  laws.  289       Human  resources  ERP  component   Tracks  employee  information  including  payroll.  290       Eprocurement   The  business-­‐to-­‐business  (B2B)  online  purchase  and  sale  of  supplies  and  services...  313       Extended  ERP  component   The  extra  components  that  meet  organizational  needs  not  covered  by  the  core   components  and  primarily  focus  on  external  operations.  290       List  generator   Compiles  customer  information  from  a  variety  of  sources  and  segments  it  for  different   marketing  campaigns.  290       Operational  CRM   Supports  traditional  transactional  processing  for  day-­‐to-­‐day  front-­‐office  operations  or   systems  that  deal  directly  with  the  customers.  311       Forward  integration   Takes  information  entered  into  a  given  system  and  sends  it  automatically  to  all   downstream  systems  and  processes.  302       Middleware   Several  different  types  of  software  that  sit  between  and  provide  connectivity  for  two  or   more  software  applications.  308       Enterprise  system   Provides  enterprisewide  support  and  data  access  for  a  firm's  operations  and  business   processes.  301           .  compensation.  eliminating  the  need   for  manual  entry  into  multiple  systems.  313       Integration   Allows  separate  systems  to  communicate  directly  with  each  other.

 308       Supply  chain   All  parties  involved.  308       Production  and  materials  management  ERP  component   Handles  production  planning  and  execution  tasks  such  as  demand  forecasting..  294       Up-­‐selling   Increasing  the  value  of  the  sale.  294       Supply  chain  management  (SCM)   The  management  of  information  flows  between  and  among  activities  in  a  supply  chain   to  maximize  total  supply  chain  effectiveness  and  corporate  profitability..   304       Partner  relationship  management  (PRM)   Discovers  optimal  sales  channels  by  selecting  the  right  partners  and  identifying   mutual  customers...  304       Supplier  relationship  management  (SRM)   Focuses  on  keeping  suppliers  satisfied  by  evaluating  and  categorizing  suppliers  for   different  projects.  303         .  294       Supply  chain  visibility   The  ability  to  view  all  areas  up  and  down  the  supply  chain  in  real  time..  directly  or  indirectly.   291       Supply  chain  execution  system   Ensures  supply  chain  cohesion  by  automating  the  different  activities  of  the  supply   chain.  in  obtaining  raw  materials  or  a  product..Opportunity  management  CRM  system   Targets  sales  opportunities  by  finding  new  customers  or  companies  for  future  sales..  304       Sales  management  CRM  system   Automates  each  phase  of  the  sales  process...  job  cost  accounting.  and  quality  control..   production  scheduling.  helping  individual  sales  representatives   coordinate  and  organize  all  their  accounts...  292       Supply  chain  planning  system   Uses  advanced  mathematical  algorithms  to  improve  the  flow  and  efficiency  of  the   supply  chain  while  reducing  inventory.  313       Sales  force  automation  (SFA)   Automatically  tracks  all  the  steps  in  the  sales  process.

.Web-­‐based  self-­‐service  system   Allows  customers  to  use  the  Web  to  find  answers  to  their  questions  or  solutions  to  their   problems.  305       ..  305       Website  personalization   Occurs  when  a  website  has  stored  enough  data  about  a  person's  likes  and  dislikes  to   fashion  offers  more  likely  to  appeal  to  that  person.

. Your location: Home Page › DUE SUNDAY.lc904175.view. Which of the statements below best describes the bullwhip effect? Student Response A. The ability to view all areas up and down the supply chain B. 2012 3:27 PM 00:14:58 Total score adjusted by 0. Predicting CRM 4. Website Personalization 2. Customer Segmentation 3. Analytical CRM 100% 5.edu/webct/urw/tp9214421899391.usg. Which of the following supports back-office operations and strategic analysis and includes all systems that do not deal directly with the customers? Student Response 1. Customers receive distorted product demand information Value Correct Answer Feedback 1 of 12 7/15/12 3:27 PM . JULY 15th › CHAPTER 8 QUIZ › Assessments › View All Submissions › View Attempt View Attempt 1 of 1 Title: Started: Submitted: Time spent: CHAPTER 8 QUIZ July 15.. 2012 3:12 PM July 15. Operational CRM Score: 1/1 Value Correct Answer Feedback 2.View Attempt https://gpc.0 Maximum possible score: 15 Total score: 12/15 = 80% Done 1.

A contact center is one of the best assets a customer driven organization can have.lc904175.. A contact center (or call center) is where customer service representatives answer customer inquiries and respond to problems through a number of different customer touch points. Contact centers can identify suppliers who are in desperate need of assistance Value Correct Answer Feedback 2 of 12 7/15/12 3:27 PM .. Why? Student Response A.View Attempt https://gpc.usg. Distorted product demand information ripples from one partner to the next throughout the supply chain D. Student Response regarding sales information C.edu/webct/urw/tp9214421899391. Organizations know about employee events triggered downstream in the supply chain Score: 1/1 Value Correct Answer Feedback 100% 3. Contact centers are the only place to find answers to questions or solutions to customer problems B.view.

What is the primary difference between contact management and opportunity management systems? Student Response A.View Attempt https://gpc. Student Response C. Contact 100% management deals with existing customers.usg.edu/webct/urw/tp9214421899391. opportunity management Value Correct Answer Feedback 3 of 12 7/15/12 3:27 PM .lc904175. Most contact centers use analytical modeling technologies that provide business intelligence Value Correct Answer Feedback D. both deal with tracking and analyzing new and existing customers B.view. Maintaining 100% a high level of customer support is critical to obtaining and retaining customers Score: 1/1 4.. Contact management and opportunity management systems are virtually the same thing..

ERP systems enable people in different business Value Correct Answer Feedback 4 of 12 7/15/12 3:27 PM .. opportunity management deals with analyzing those customers to find crossselling opportunities D.edu/webct/urw/tp9214421899391. Contact management deals with tracking new and existing customers. ERP systems provide a foundation for collaboration between departments B.View Attempt https://gpc.. Which of the following best describes an ERP system? Student Response A. Contact management deals with new customers.view. Student Response deals with new customers C.lc904175.usg. opportunity management deals with existing customers Score: 1/1 Value Correct Answer Feedback 5.

edu/webct/urw/tp9214421899391.view. A. Legacy systems B.usg. ERP systems have been widely adopted in large organizations to store critical knowledge used to make decisions that drive the organization's performance D.View Attempt https://gpc. Student Response areas to communicate C. B and C only Score: 1/1 Value Correct Answer Feedback 100% 6. Customer Relationship Management Systems E. A and B only E. Student Response A. B and C only G...lc904175. Enterprise systems C. Supply Chain Management Software D. A and C only F. Enterprise Application Integration (EAI) 100% Value Correct Answer Feedback 5 of 12 7/15/12 3:27 PM . ________________________ takes a new approach to middleware by packaging commonly used applications together. reducing the time needed to integrate applications from multiple vendors.

why are most organizations treating existing customers better than in the past? Student Response A.. and Monetary Value formula. As the business world increasingly shifts from product focus to customer focus.lc904175. Existing customers are the best source of profitable and sustainable 100% Value Correct Answer Feedback 6 of 12 7/15/12 3:27 PM . to gain insight into customer behavior or buying patterns C. Placing customers at the forefront of all thinking and decision making requires very little operational and technology changes B. Organizations cannot depend on using statistical analysis or value formulas such as the Recency Frequency.view.usg.View Attempt https://gpc. Student Response middleware Score: 1/1 Value Correct Answer Feedback 7.edu/webct/urw/tp9214421899391..

Supports traditional transaction processing Correct Answer Feedback 7 of 12 7/15/12 3:27 PM . Home Depot Score: 0/1 0% Correct Answer Feedback 9.. customer relationship management. Which of the following statements represents operational customer relationship management (CRM)? Student Value Response A. Dell 2.view. Student Response revenue growth D." Student Value Response 1. Wal-Mart 3.View Attempt https://gpc. an organization is guaranteed a favorable customer base and satisfying them is easier than ever Score: 1/1 Value Correct Answer Feedback 8. In the age of e-business.. enterprise resource planning and other creative technologies to create an EXTREMELY LOYAL customer following and outstanding employee performance? This company goes beyond providing the customer with a good product or service.edu/webct/urw/tp9214421899391. Which of the following companies has effectively used supply chain management. HarleyDavidson 4.lc904175.usg. they provide a "customer experience.

inventory. planning. B and C only 0% Value Correct Answer Feedback 8 of 12 7/15/12 3:27 PM .. and marketing campaigns B. resource and capacity constraints.view. Student Value Response B. material management. Supports operations that deal directly with the customers D.usg. sales strategies. Sales forecasts. Forecasting. and real-time scheduling C. Which of the statements below best describe the primary business benefits of an ERP system? Student Response A..View Attempt https://gpc. B and C only E. B and C 100% only Score: 1/1 Correct Answer Feedback 10. A. and distribution D.lc904175. Market demand. warehousing. purchasing.edu/webct/urw/tp9214421899391. A and B only E. Supports day-to-day front-office operations C.

Why is a customer relationship management (CRM) system one of the most valuable assets a company can acquire? Student Response 1.usg. Without CRM. it is impossible to effectively manage or cross-sell products to Value Correct Answer Feedback 9 of 12 7/15/12 3:27 PM . Score: 0/1 11.view.lc904175. they have turned their resources towards CRM 2.View Attempt https://gpc. Since organizations have not been successful in implementing SCM systems.edu/webct/urw/tp9214421899391. It is easy for a company to steal their competitors loyal and devoted customers. therefore companies need a viable process for targeting competitor's customers 4... CRM has 100% proven to increase customer loyalty and retention and an organization's profitability 3.

Sales 0% management system C.. increase switching costs to increase the threat of substitute products or services Correct Answer Feedback 10 of 12 7/15/12 3:27 PM ..usg. Contact management system B. Sales force automation system D.View Attempt https://gpc.. An effective and efficient supply chain management system enables an organization to _______________________.edu/webct/urw/tp9214421899391. Student Response customers Score: 1/1 Value Correct Answer Feedback 12.e. the overwhelming amount of customer account information they were required to maintain and track? Student Response A. i. increase the threat of new entrants B.view. Opportunity management system Score: 0/1 Value Correct Answer Feedback 13. Student Value Response A.lc904175. Which of the following was one of the first CRM components built to address the issues with which many sales representatives were struggling.

view. Student Value Response A. The bullwhip effect C. Wal-Mart and Proctor & Gamble (P&G) implemented a tremendously successful supply chain management system. distribution. stores 11 of 12 7/15/12 3:27 PM .usg.edu/webct/urw/tp9214421899391. 100% manufacturing B. increase the power of its buyers D. increase its own supplier power Score: 1/1 100% Correct Answer Feedback 14. Supply chain visibility D. Supply chain execution software B. Student Value Response C.. distribution. Student Response Value Correct Answer Feedback A.View Attempt https://gpc. The system linked Wal-Mart's __________________ centers directly to P&G's ________________ centers. Demand planning software Score: 1/1 100% Correct Answer Feedback 15.lc904175. distribution C.. manufacturing. ________________________ is the ability to view all areas up and down the supply chain in real time.

edu/webct/urw/tp9214421899391..view. Student Response D. stores.lc904175. distribution Score: 1/1 Value Correct Answer Feedback Done 12 of 12 7/15/12 3:27 PM .View Attempt https://gpc..usg.

limited liabilities. Learning Outcome 9. Business Driven Information Systems eBook 3/e Content Chapter9: Systems Development and Project Management: Corporate Responsibility Learning Outcome Review p. and other documentation. repair to brand reputation.3: Summarize the different software development methodologies. Design—involves describing the desired features and operations of the system including screen layouts.1: Explain the business benefits associated with successful software development.com/sites/0077338340/student_view.. Testing—involves bringing all the project pieces together into a special testing environment to test for errors. There are a number of different software development methodologies including: 1 of 3 7/13/12 12:19 PM . 355 356 Learning Outcome 9. corrections. Development—involves taking all of the detailed design documents from the design phase and transforming them into the actual system. additions.2: Describe the seven phases of the systems development life cycle.mcgraw-hill.. The seven phases in the SDLC are: Planning—involves establishing a high-level plan of the intended project and determining project goals. and increase in productivity Learning Outcome 9. and interoperability and verify that the system meets all of the business requirements defined in the analysis phase. bugs.Learning Outcome Review http://highered. and upgrades to ensure the system continues to meet the business goals. process diagrams. Software development uses the systems development life cycle to create software. Maintenance—involves performing changes. Implementation—involves placing the system into production so users can begin to perform actual business operations with the system. The benefits associated with successful software development include increase in revenues. business rules. Analysis—involves analyzing end-user business requirements and refining project goals into defined functions and operations of the intended system. pseudo code.

6: Describe the two primary diagrams most frequently used in project planning. or 30-day intervals. Waterfall methodology follows an activity-based process in which each phase in the SDLC is performed sequentially from planning through implementation and maintenance. skills. Learning Outcome 9. and techniques to project activities to meet project requirements. and developers cannot continue on to the next phase until the first phase is complete. A project is a temporary or short-term endeavor undertaken to create a unique product. A project manager is an individual who is an expert in project planning and management.4: Explain project management and the role the triple constraints play when managing a project.mcgraw-hill. or performing a financial analysis. Techniques for choosing strategic projects include focusing on organizational goals. Agile methodology aims for customer satisfaction through early and continuous delivery of useful software components developed by an iterative process with a design point that uses the bare minimum requirements. categorizing projects.com/sites/0077338340/student_view. resources. Learning Outcome 9. Rational unified process (RUP) provides a framework for breaking down the development of software into four gates. Project management is the application of knowledge. Extreme programming (XP) methodology breaks a project into tiny phases. or result. defines and develops the project plan.. Rapid application development methodology (RAD) emphasizes extensive user involvement in the rapid and evolutionary construction of working prototypes of a system to accelerate the systems development process. That person is the executive sponsor or the person or group who provides the financial resources for the project.. Project stakeholders are individuals and organizations actively involved in the project or whose interests might be affected as a result of project execution or project completion.5: Describe the project stakeholder's and executive sponsor's roles in choosing strategic projects. to achieve an appointed goal. and if you change one the others must change. A Gantt chart is a simple bar chart that depicts project tasks against a calendar. The triple constraints are scope. and tracks the plan to ensure the project is completed on time and on budget. tools. A dependency is a logical relationship that exists between the project tasks. In a Gantt chart. and managing resources and maintaining the project plan. The three primary activities performed by a project manager include choosing strategic projects. A PERT (Program Evaluation and Review Technique) chart is a graphical network model that depicts a project's tasks and the relationships between those tasks. such as developing a custom ecommerce site or merging databases. setting the project scope. These three components are interdependent. tasks are listed vertically and 2 of 3 7/13/12 12:19 PM . Scrum uses small teams to produce small pieces of deliverable software using sprints. Learning Outcome 9. While all stakeholders are important. and time. one stands out as having the most impact on the success or failure of a project.Learning Outcome Review http://highered. service. or between a project task and a milestone.

and risking a breach of confidential information. or function. Learning Outcome 9..com/sites/0077338340/student_view. Onshore outsourcing—engaging another company within the same country for services. the project's time frame is listed horizontally.8: Explain the three different types of outsourcing along with their benefits and challenges. A Gantt chart works well for representing the project schedule. The many benefits associated with outsourcing include increased quality and efficiency of a process.mcgraw-hill. losing competitive advantages. economies of scale. communications. Outsourcing comes with several challenges including length of contracts. best practices. and change. 3 of 3 7/13/12 12:19 PM . Offshore outsourcing—using organizations from developing countries to write code and develop systems. The three primary areas a project manager must focus on managing to ensure success are managing people. reduction of operating expenses and exposure to risks involved with large capital investments..Learning Outcome Review http://highered. service. McGraw-Hill Higher Education is one of the many fine businesses of The McGraw-Hill Companies. Nearshore outsourcing—contracting an outsourcing arrangement with a company in a nearby country. Learning Outcome 9. and advanced technologies. and access to outsourcing service provider's expertise. It also shows actual progress of tasks against the planned duration. 2009 McGraw-Hill Higher Education Any use is subject to the Terms of Use and Privacy Notice.7: Identify the three primary areas a project manager must focus on managing to ensure success.

336 342 341 340 339 338 337 p.mcgraw-hill. “This is what we get for our $400 million?” Nike partnered with benefits associated i2 to implement an SCM system that never came to fruition.2: Describe the 7/13/12 12:19 PM . 9.1: Explain the business The multimillion-dollar Nike SCM system failure is legendary as Nike CEO Philip Knight famously stated. 9. In the information age.2 Describe the seven phases of the systems development life cycle. As more and more companies rely on software to operate. The potential advantages of successful software implementations provide firms with significant incentives to manage software development risks. THE SYSTEMS DEVELOPMENT LIFE CYCLE 1 of 10 LO 9. i2 blamed the failed with implementation on the fact that Nike failed to use the vendor's implementation successful methodology and templates. It is difficult to get an organization to work if its systems do not work. will help organizations avoid potential software development pitfalls and ensure that software development efforts are successful.. software success.1 Explain the relationship between the systems development life cycle and software development along with the business benefits associated with successful software development.1 Developing Enterprise Applications p. or failure. Understanding the basics of software development. an alarmingly high number of software development projects come in late or over budget.2 software development. However. can lead directly to business success. DEVELOPING SOFTWARE LO 9. and successful projects tend to maintain fewer features and functions than originally specified. Companies rely on software to drive business operations and ensure work flows throughout the company. Nike blamed the failure on faulty software. 335 LEARNING OUTCOMES 9.3 Summarize the different software development methodologies. or the systems development life cycle. Business Driven Information Systems eBook 3/e Content Chapter9: Systems Development and Project Management: Corporate Responsibility Section 9..1 Developing Enterprise Applications http://highered.com/sites/0077338340/student_view. or failure.Section 9. so do the business-related consequences of software successes and failures.

energy.com/sites/0077338340/student_view. process diagrams. 4. testing.1 Developing Enterprise Applications http://highered. and upgrades to ensure the system continues to meet its business goals. and other documentation. determine the best logistical structure for warehouses around the world. Maintenance: Maintaining the system is the final sequential phase of any systems development effort. and ends when the benefits of the system no longer outweigh its maintenance costs. proceeds to an assessment of the functions a system must have to satisfy the need. pseudo code. Planning: The planning phase establishes a high-level plan of the intended project and determines project goals. (SDLC) The systems development life cycle (SDLC) is the overall process for developing information systems. supporting the new system with frequent minor changes (for example. The organization must spend as much time. new reports or information capturing). 6. and writing detailed user documentation. 3. from planning and analysis through implementation and maintenance. analysis. so the analysis phase is critical.mcgraw-hill. 1. and verify that the system meets all the business requirements defined in the analysis phase. Testing: The testing phase brings all the project pieces together into a special testing environment to eliminate errors and bugs. Implementation: In the implementation phase the organization places the system into production so users can begin to perform actual business operations with it. Analysis: In the analysis phase the firm analyzes its end-user business requirements and refines project goals into defined functions and operations of the intended system.1). and reviewing the system to be sure it is moving the organization toward its strategic goals. or develop a strategic information alliance with another organization. and resources as necessary to perform it accurately and in detail. Planning is the first and most critical phase of any systems development effort an organization undertakes. business rules. implementation. Design: The design phase establishes descriptions of the desired features and operations of the system including screen layouts. 2.Section 9. These activities typically include determining budgets. 2 of 10 7/13/12 12:19 PM . This is why it is referred to as a life cycle. which means conducting constant monitoring. 7. Organizations must carefully plan the activities (and determine why they are necessary) to be successful. Development: The development phase takes all the detailed design documents from the design phase and transforms them into the actual system. The SDLC is comprised of seven distinct phases: planning. regardless of whether the effort is to develop a system that allows customers to order products online. The SDLC begins with a business need. design. In the maintenance phase the organization performs changes. additions. gathering system requirements. The SDLC is the foundation for all systems development methods. development. and maintenance (see Figure 9. and hundreds of different activities are associated with each phase. 5. seven phases of the systems development life cycle. corrections. This phase continues for the life of the system because the system must change as the business evolves and its needs change. Business requirements are the specific business requests the system must meet to be successful... In this phase the project transitions from preliminary designs to actual physical implementation.

inventor of the World Wide Web. founder of Microsoft. ■ Bill Gates. entertainment. Each talk is posted to the Ted website and includes such famous speakers as: ■ Chris Anderson.3 As you brainstorm your future start-up hoping to become the next Bill Gates or Steve Jobs.. ■ Richard Branson.com.ted. chairman of the X Prize Foundation. TED gathers the world's innovative minds who are challenged to give the talk of their lives in just 18 minutes. ■ Tim Berners-Lee.1 Developing Enterprise Applications http://highered. ■ Sergey Brin and Larry Page. co-founders of Google.mcgraw-hill. author of Blink and The Tipping Point. ■ Jeff Bezos. ■ Peter Diamandis. founder of Amazon. ■ Steven Levitt. how can you use TED to generate ideas? Review the TED website and choose three talks that could help lead to the next great business idea. a marketing guru.” The company hosts a yearly conference focusing on technology. APPLY YOUR KNOWLEDGE BUSINESS DRIVEN START-UP Just Ask TED You'll remember this day because it is the day you were introduced to Ted (www.com/sites/0077338340/student_view. former president of the United States.1 The Systems Development Life Cycle 3 of 10 7/13/12 12:19 PM . ■ Bill Clinton.com). ■ Malcolm Gladwell.. TED is a nonprofit devoted to “ideas worth spreading.Section 9. ■ Seth Godin. FIGURE 9. founder of Virgin. editor of Wired and author of The Long Tail: Why the Future of Business Is Selling Less of More. and design (TED). author of Freakonomics.

testers..1 Developing Enterprise Applications http://highered. To make matters even worse. procedures. the employees that developed the new system for the state of Oklahoma were out sick during this important class. The new system mistakenly posted confidential data.3: Summarize the different software development methodologies. standards.Section 9.4 Why is it important to secure data? What can happen if someone accesses your customer database? What could happen if someone changes the information in your customer database and adds fictitious data? What phases in the systems development life cycle should have found these errors? How could these errors go unnoticed for over three years? Who should be held responsible for the system issues? TRADITIONAL SOFTWARE DEVELOPMENT METHODOLOGY: THE WATERFALL Today. due to development issues. 4 of 10 7/13/12 12:19 PM . developers. processes. tools. including Social Security numbers. developers have created a number of different systems development life cycle methodologies. APPLY YOUR KNOWLEDGE BUSINESS DRIVEN DEBATE Flawed Development Data must be secure! A computer programming course would teach you that security is a critical component that must be included in every system. A methodology is a set of policies.com/sites/0077338340/student_view.mcgraw-hill. For this reason. systems are so large and complex that teams of architects. for thousands of Oklahoma residents on the state's website. The really unfortunate part of this systems blunder is that the error went unnoticed for more than three years. practices.. and users must work together to create the millions of lines of custom-written code that drive enterprises. Apparently. LO 9. A programmer found the error when he realized that by changing his Web browser he could redirect his page to the entire database for the state of Oklahoma. analysts. a hacker could have easily changed all of the data in the database or added false data to elements such as the state's Sexual and Violent Offender Registry.

Given this drive for success. Its success rate is only about 1 in 10. In the SDLC.3 Disadvantages of the Waterfall Methodology Today's business environment is fierce. and it requires rigid adherence to the sequence of steps. code libraries. leaders push internal development teams and external vendors to deliver agreed-upon systems faster and cheaper so they can realize benefits as early as 5 of 10 7/13/12 12:19 PM . and test plans. however. Figure 9.3 explains some issues related to the waterfall methodology.mcgraw-hill. this means the steps are performed one at a time.1 Developing Enterprise Applications http://highered.5 FIGURE 9. Firms use a methodology to manage the deployment of technology with work plans. it is inflexible and expensive. A formal methodology can include coding standards. a sequence of phases in which the output of each phase becomes the input for the next (see Figure 9. in order. The oldest and the best known is the waterfall methodology. requirements documents..com/sites/0077338340/student_view. and tasks that people apply to technical and management challenges.Section 9.. for instance. development practices. The desire and need to outsmart and outplay competitors remains intense. techniques.2).2 The Traditional Waterfall Methodology FIGURE 9. The traditional waterfall method no longer serves most of today's development efforts. from planning through implementation and maintenance. and much more.

Because this development environment is the norm and not the exception anymore.4 The Iterative Approach An agile methodology aims for customer satisfaction through early and continuous delivery of useful software components developed by an iterative process using the bare minimum requirements. The traditional waterfall methodology no longer serves as an adequate systems development methodology in most cases. with lower costs and fewer features.Section 9. AGILE SOFTWARE DEVELOPMENT METHODOLOGIES It is common knowledge that the smaller the project.. reduce scope.com/sites/0077338340/student_view.4 displays an iterative approach. iterative development consists of a series of tiny projects.1 Developing Enterprise Applications http://highered. It does no good to accomplish something on time and on budget if it does not satisfy the end user. and. Rational unified process (RUP) methodology. 6 of 10 7/13/12 12:19 PM . the greater the success rate. generate enthusiasm. The primary forms of agile methodologies include: Rapid prototyping or rapid application development methodology. Using agile methodologies helps maintain accountability and helps to establish a barometer for the satisfaction of end users. FIGURE 9.. development teams use a new breed of alternative development methods to achieve their business objectives. The iterative development style is the ultimate in small projects. Developers can adjust as they move along and better clarify unclear requirements. Figure 9. Basically. systems remain large and complex. It has become the foundation of multiple agile methodologies. Agile methodology is what it sounds like: fast and efficient. possible.6 One key to delivering a successful product or system is to deliver value to users as soon as possible—give them something they want and like early to create buy-in. Extreme programming methodology. Even so.mcgraw-hill. Using agile methods helps refine feasibility and supports the process for getting rapid feedback as functionality is introduced. ultimately.

The prototype is an essential part of the analysis phase when using the RAD methodology.5 displays the fundamentals of RAD. rapid application development has become a popular route for accelerating systems development. and testing. During design. A project stays in a gate waiting for the stakeholder's analysis. designing.1 Developing Enterprise Applications http://highered. customers. the developers work together soliciting continuous feedback from users. Rapid application development (RAD) methodology (also called rapid prototyping) emphasizes extensive user involvement in the rapid and evolutionary construction of working prototypes of a system. It is important not to get hung up on the names of the methodologies—some are proprietary brand names. XP has four basic phases: planning. and developers cannot continue to the next phase until the previous phase is complete. During testing. like other agile methods.” Each gate consists of executable iterations of the software in development.7 FIGURE 9. Planning can include user interviews. Extreme programming saves time and produces successful projects by continuously reviewing and revamping needed and unneeded requirements. there are many small pieces and individually the pieces make no sense. Rational Unified Process (RUP) Methodology The rational unified process (RUP) methodology. It is more important to know how these alternative methodologies are used in today's business environment and the benefits they can deliver. eliminating the communication gap that generally exists between developers and customers. even late in the life cycle. meetings.8 Customer satisfaction is the primary reason XP finds success as developers quickly respond to changing business requirements. Rapid Application Development (RAD) Methodology In response to the faster pace of business. the test requirements are generated before any code is developed. breaks a project into four phases.com/sites/0077338340/student_view. but when they are pieced together they can create a new system.5 Fundamentals of RAD Extreme Programming Methodology Extreme programming (XP) methodology. The delivery strategy supporting XP is that the quicker the feedback the more improved the results. functionality is not added until it is required or needed.. XP is similar to a puzzle. provides a framework for breaking down the development of software into four “gates.. and then it 7 of 10 7/13/12 12:19 PM .Section 9. to accelerate the systems development process. others are generally accepted names.mcgraw-hill. A prototype is a smaller-scale representation or working model of the users' requirements or the proposed design for an information system. Figure 9. During coding. Scrum methodology. coding. and small releases. XP encourages managers. owned by IBM. and developers to work together as a team to ensure the delivery of high-quality systems.

Gate three: construction. and the more you plan for them the better prepared you'll be when developing software... This phase ensures all stakeholders have a shared understanding of the proposed system and what it will do. What can happen to a project when a key employee suddenly quits or is forced to go on short-term disability? When reviewing all the different SDLC methodologies. the user can reject the product and force the developers to go back to gate one.1 Developing Enterprise Applications http://highered. including the ability to provide an architecture to support and build it. uses small teams to produce small pieces of software using a series of “sprints. In scrum methodology. each day ends or begins with a stand-up meeting to monitor and control the development effort. Scrum Methodology Another agile methodology.com/sites/0077338340/student_view. Gate two: elaboration. RUP helps developers avoid reinventing the wheel and focuses on rapidly adding or removing reusable chunks of processes addressing common problems. scrum methodology. either moves to the next gate or is cancelled. which one offers the greatest flexibility for unplanned employee downtime? If you could choose when your employee was absent. APPLY YOUR KNOWLEDGE BUSINESS DRIVEN ETHICS AND SECURITY Planning for the Unexpected Unexpected situations happen all the time. a scrum is a team pack and everyone in the pack works together to move the ball down the field. The gates include:9 Gate one: inception. and other life issues. which phase in the SDLC would be the safest for your project to still continue and achieve success? What can you do to ensure you are preparing for unplanned absenteeism on your project plan? DEVELOPING SUCCESSFUL SOFTWARE 8 of 10 7/13/12 12:19 PM .mcgraw-hill. Primary questions answered in this phase address ownership of the system and training of key personnel. This phase expands on the agreed-upon details of the system. Gate four: transition. This phase includes building and developing the product.” or 30-day intervals. which can throw your project plan into a tailspin. In rugby. to achieve an appointed goal. contract viruses and diseases. All of these scenarios lead to unplanned absenteeism. Your employees will get into accidents.Section 9. Because RUP is an iterative methodology.

Figure 9. exactly the same error found during the testing or implementation phase is going to cost the organization an enormous amount to fix because it has to change the actual system. For example. and chances are high that the system will fail. If they are not accurate or complete.6 The Cost of Fixing Errors 9 of 10 7/13/12 12:19 PM . take years to complete. Changing technology. FIGURE 9.mcgraw-hill. Developing projects within budget and on time is challenging. technology changes at an incredibly fast pace. the project manager might decide to cut testing from six weeks to three weeks. Unclear or Missing Business Requirements The most common reason systems fail is because the business requirements are either missing or incorrectly gathered during the analysis phase. it is impossible to perform all the testing in half the time. An error found during the analysis and design phase is relatively inexpensive to fix. and cost millions of dollars. The business requirements drive the entire system.1 Developing Enterprise Applications http://highered. As Moore's Law states.. Skipping SDLC phases. All that is typically required is a change to a Word document. Failing to test the system will lead to unfound errors. However. Obviously. the system will not be successful. therefore.Section 9.6 displays how the cost to fix an error grows exponentially the later the error is found in the SDLC. Skipping Phases The first thing individuals tend to do when a project falls behind schedule is to start skipping phases in the SDLC. Changing Technology Many real-world projects have hundreds of business requirements. The cost of finding errors.com/sites/0077338340/student_view. Skipping any of the phases is sure to lead to system failure. Technology changes so fast that it is almost impossible to deliver an information system without feeling the pain of changing technology. it is possible to have to revise an entire project plan in the middle of a project as a result of a change in technology. The Cost of Finding Errors in the SDLC It is important to discuss the relationship between the SDLC and the cost for the organization to fix errors. It is critical that an organization perform all phases in the SDLC during every project.. The primary reasons for project failure include: Unclear or missing business requirements. if a project is three weeks behind in the development phase.

www. 2006.” CIO Magazine. accessed November 14.agile. “Software Costs. accessed December 5.com/sites/0077338340/student_view. 2003.. 5 CIO Magazine.com.com.1 Developing Enterprise Applications http://highered.Section 9. 2003.” www.com/software/awdtools/rup/.com. 2009 McGraw-Hill Higher Education Any use is subject to the Terms of Use and Privacy Notice.” ComputerWeekly. “Making Essential Software Work.ted.cio. http://www-01. Antony Savvas.compaq. www.com. accessed October 2005.mcgraw-hill. www.standishgroup.computerweekly. 10 of 10 7/13/12 12:19 PM . IBM Rational Unified Process. 2003. accessed January 2010. June 1. accessed June 15. http://www. 2 3 4 “Overcoming Software Development Problems. “Building Software That Works.com. Johnson.ibm. accessed November 1.com. McGraw-Hill Higher Education is one of the many fine businesses of The McGraw-Hill Companies.. April 2008.com/Articles/2008/04/18/230353/ Oklahoma-Department-of-Corrections-leaks-personal-data-from. “My Life Is Failure” and McGraw.” www.” 6 7 8 9 Agile Alliance Manifesto.htm. “Oklahoma Department of Corrections leaks personal data from website.samspublishing. 2010.com. “The Project Manager in the IT Industry” www.

or result. PMI defines a project as a temporary activity a company undertakes to create a unique product.pmi. 9. Project management is the 1 of 10 7/17/12 9:36 PM . 9.4 Explain project management. Business Driven Information Systems eBook 3/e Content Chapter9: Systems Development and Project Management: Corporate Responsibility Section 9. and damage profitability by investing in and executive nonstrategic efforts that do not contribute to the organization's bottom line.4:Explain project management.. 9.mcgraw-hill.org). 9. agreed-upon vision of the completed structure.5 Explain how project stakeholder's choose strategic projects. No one would think of building an office complex by turning loose 100 different the triple construction teams to build 100 different rooms with no single blueprint or constraint. MANAGING SOFTWARE DEVELOPMENT PROJECTS LO 9.7 Identify the three primary areas a project manager must focus on managing to ensure success. the triple constraint. strategic projects. Business sponsorʼs leaders face a rapidly moving and unforgiving global marketplace that will force them roles in to use every possible tool to sustain competitiveness.2 Project Management http://highered. project management is one of choosing those tools. service. Yet this is precisely the situation in and the which many large organizations find themselves when managing information project technology projects. and project stakeholder and executive sponsor's roles in choosing strategic projects..8 Explain the three different types of outsourcing along with their benefits and challenges. 344 350 349 348 347 345 LEARNING OUTCOMES 9. The Project Management Institute (PMI) develops procedures and concepts necessary to support the profession of project management (www.Section 9. develop redundant projects.2 Project Management p. Organizations routinely overschedule their resources (human and stakeholderʼs otherwise).com/sites/0077338340/student_view.6 Describe the two primary diagrams most frequently used in project planning.

All projects are limited in some way by these three constraints.. cost.7 Project Management Interdependent Variables 2 of 10 7/17/12 9:36 PM . and scope. Project quality is affected by the project manager's ability to balance these competing demands. result. High-quality projects deliver the agreed upon product or service on time and on budget. cost.2 Project Management http://highered. or item that is produced to complete a project or part of a project. testing scripts. Increasing a project's scope to include additional customer requests could extend the project's time to completion or increase the project's cost—or both—to accommodate the changes. then chances are the project is experiencing problems. at least one other is likely to be affected. moving up a project's finish date could mean either increasing costs to hire more staff or decreasing the scope to eliminate features or functions. and scope. skills. For example.. If a project milestone is missed. and tracks the plan to ensure the project is completed on time and on budget. completing the planning phase might be a project milestone. application of knowledge. Benjamin Franklin's timeless advice—by failing to prepare. For example.10 Project milestones represent key dates when a certain group of activities must be performed. The project manager is the person responsible for executing the entire project. tools. This group must formalize and professionalize project management expertise and leadership. tangible. A project manager is an individual who is an expert in project planning and management. FIGURE 9.7 displays the relationships between the three primary and interdependent variables in any project—time. Project management is the science of making intelligent trade-offs between time. defines and develops the project plan. and techniques to project activities to meet project requirements. you prepare to fail—applies to many of today's software development projects. Examples of project deliverables include design documents.12 The Triple Constraint Figure 9.mcgraw-hill.Section 9. The relationship between these variables is such that if any one changes. verifiable outcome. Project management terms all managers should know and understand include: Project deliverables are any measurable. and requirements documents.11 Project management office (PMO) is an internal department that oversees all organizational projects.com/sites/0077338340/student_view. The Project Management Institute calls the framework for evaluating these competing demands the triple constraint. One of the primary initiatives of the PMO is to educate the organization on techniques and procedures necessary to run successful projects.

manage their influence in relationship to the requirements to ensure a successful project. then that project surely is in trouble from the start. Understanding project planning. as shown in Figure 9. and resources. to the extent possible. determine their requirements and expectations. however. Choosing strategic projects. Therefore. such as the CFO.com/sites/0077338340/student_view.5: Explain how project stakeholderʼs choose strategic 3 of 10 7/17/12 9:36 PM .mcgraw-hill. also can exert influence over the project's objectives and outcomes. Outsourcing projects. or decreased cost. Stakeholders. While all stakeholders are important. Managing projects. Most business managers are not project managers. Another part of the equation is influence. CHOOSING STRATEGIC PROJECTS One of the most difficult decisions managers make is identifying the projects in which to invest time. one stands out as having the most impact on the success or failure of a project. all managers will be part of a project team. including project approach. In fact. and analysis of project risks. Research has shown that the leadership strength of the executive sponsor has more to do with the success or failure of a project than any other critical success factor. and the remainder of this section focuses on four: 1. it is about getting the big picture. An organization must choose what it wants to do—justifying it. 4. Stakeholders measure projects based on such factors as customer satisfaction. the executive sponsor should be accountable to the project team for much more than the financial backing..2 Project Management http://highered. 3. energy. That person is the executive sponsor. future managers need to understand how a business manages its project and how the culture supports the effort. project schedule. he or she can use that influence to gain and direct essential resources needed to accomplish the project.8. 2. The art and science of project management must coordinate numerous activities. The following are LO 9. The executive sponsor should be committed to use his or her influence to ensure the health of the project. Project managers perform many of them. It is important for all stakeholders to understand the business objective of the project—once again.. A highly connected executive sponsor could mean the difference between success and failure. The executive sponsor communicates up the chain on behalf of the project. defining it. and. PMI defines the executive sponsor as the person or group who provides the financial resources for the project. and demonstrates the commitment and accountability necessary to survive a project! If a team has a hands-off sponsor who merely reviews invoices and inquires as to the status of a project. supports the project manager by championing the project to others sharing the vision and benefit of the successfully completed project. The project management team must identify stakeholders. If the executive sponsor has influence. and listing expected results—and how to do it.Section 9. Project Participants Project stakeholders are individuals and organizations actively involved in the project or whose interests might be affected as a result of project execution or project completion. increased revenue.

techniques managers use to determine which projects to work on that best fit the goals of the business.mcgraw-hill. Harvard University. These financial analysis techniques help determine the organization's financial expectations for the project..Section 9. why would the company choose one that directly violates copyright laws? If all books were available for free on Google. and Oxford University as part of its Google Print Library Project with the intent of making all of the copyrighted material free and searchable on Google. claiming copyright infringement. and print books directly from the website and will actually generate sales by giving customers the ability to buy books online. For example. According to Google. such as return on investment. what would happen to the publishing industry? As you prioritize projects for your business.2 Project Management http://highered. Stanford University. Perform financial analysis: A number of different financial analysis techniques can be performed to help determine a project's priority. It is often easier to obtain approval for projects that address challenges because without fixing the issues the company could incur financial losses. what could you do to combat Google's book project?13 FIGURE 9. APPLY YOUR KNOWLEDGE BUSINESS DRIVEN MIS Google Books Project Google is scanning all or parts of the book collections of the University of Michigan. Categorize business priorities: There are a range of categories for grouping projects to determine priority. Do you view Google's Print Library Project as a violation of copyright laws? Of all the projects Google can afford to tackle. Of course many authors and publishers are furious with Google. projects Focus on organizational goals: Projects that address organizational goals tend to have a higher success rate since they are important across the entire organization. scanning books will help make out-of-print books accessible as customers can find.com/sites/0077338340/student_view. read.. the New York Public Library. a business could categorize its projects in terms of challenges or opportunities. what types of competitive information will you want to view before choosing projects? What do you think the future of the book publishing industry will look like based on Google's radical new website? If you owned a publishing business.8 Project Management Roles 4 of 10 7/17/12 9:36 PM .

and organizational policies. Project assumptions are factors considered to be true. or certain without proof or demonstration. A project charter is a frequently document issued by the project initiator or sponsor that formally authorizes the start of used in project a project and provides the project manager with the authority to apply organizational resources to project activities. Many project professionals believe a solid project begins with documentation that includes a project most charter. They include budget. When an organization achieves the project objectives. Project objectives must include metrics so that the project's success can be measured. it has accomplished the major goals of the project and the project scope is satisfied. requirements.. Project objectives are quantifiable criteria that must be met for the project to be considered a success. a scope statement..mcgraw-hill. assumptions. it is time to build the critical component—the project plan.14 The project objectives are among the most important areas to define because they are essentially the major elements of the project. available skilled resources. real. and it includes constraints. this means someone has stepped up to pay for planning.com/sites/0077338340/student_view. and the project management plan. schedule. delivery dates. It defines the work that must be completed to deliver the product with the specified features and functions.6: Describe the two primary Once an organization has selected strategic projects and identified its project diagrams manager.Section 9. It describes the business need (the problem the project will solve) and the justification. and support the project. The project scope statement links the project to the organization's overall business goals. The metrics can include cost. Project constraints are specific factors that can limit options. Examples include hours in a workweek or time of year the work will be performed. and current boundaries for the project. UNDERSTANDING PROJECT PLANNING LO 9. and requirements—all components necessary for developing accurate cost estimates. A project charter typically includes several elements.2 Project Management http://highered. and quality 5 of 10 7/17/12 9:36 PM . In short.

and responsibilities.com/sites/0077338340/student_view. The project plan must also include any project assumptions and be detailed enough to guide the execution of the project.2 Project Management http://highered. most project professionals also include contingency plans. Managers need to continuously monitor projects to measure their success. This often translates to greater commitment. and a kill switch—a trigger that enables a project manager to close the project before completion. Figure 9. A PERT (Program Evaluation and Review Technique) chart is a graphical network model that depicts a project's tasks and the relationships between them. By including key stakeholders in project plan development. resources. The project plan is a formal. A dependency is a logical relationship that 6 of 10 7/17/12 9:36 PM . The most important part of the plan is communication. time estimates. which in turn results in enhanced motivation and productivity. risk factors. assignments. the project manager allows them to have ownership of the plan.Section 9. the manager must cancel the project and save the company any further project costs. commitment.9 lists the SMART criteria—useful reminders about how to ensure the project has created understandable and measurable objectives. metrics. and risk of the project as it relates to the overall mission of the organization. A key to achieving project success is earning consensus and buy-in from all key stakeholders. It also informs stakeholders of the benefits of the project and justifies the investment. a schedule. The project plan should include a description of the project scope.. cost estimates. approved document that manages and controls project execution.. The project manager must communicate the plan to every member of the project team and to any key stakeholders and executives. a list of activities. Canceling a project is not necessarily a failure as much as it is successful resource management as it frees resources that can be used on other projects that are more valuable to the firm. It also should include measurement and reporting methods and details as to how top leadership will engage in the project.mcgraw-hill. FIGURE 9. The two primary diagrams most frequently used in project planning are PERT and Gantt charts.9 SMART Criteria for Successful Objective Creation A good project plan should include estimates for revenue and strategic necessities. If a project is failing. In addition to these basic components. review and communications strategies.

exists between the project tasks.mcgraw-hill. or between a project task and a milestone. and the project manager can adjust the contents of the boxes to display various project attributes such as schedule and actual start and finish times.2 Project Management http://highered. a PERT Chart Example FIGURE 9.11 Microsoft Project.10 displays the critical path for the project.10 represent project tasks.Section 9.. FIGURE 9.10).10 PERT Chart Expert.. The boxes in Figure 9. The red line in Figure 9.com/sites/0077338340/student_view. The arrows indicate that a task depends on the start or the completion of a different task. PERT charts define dependency between project tasks before those tasks are scheduled (see Figure 9. a Gantt Chart Example 7 of 10 7/17/12 9:36 PM . The critical path estimates the shortest path through the project ensuring all critical tasks are completed from start to finish.

An experienced project manager should be able to minimize scope and create a better estimate.Section 9. user community. bring enormous benefits to an organization such as three primary areas a reduced project expense.11 displays a software development project using a Gantt chart. high company morale. Because project managers are often the client's main (and sometimes sole) contact person during the project. Resolving conflicts within the team and balancing the needs of the project with the personal and professional needs of the team are two of the project manager's critical goals. Change Managing People Managing people is among the most challenging efforts a project manager undertakes.. time. And a good project manager should have learned that a happy stakeholder is one who is underpromised and overdelivered! A project manager must focus on managing three primary areas to ensure success: 1. and salesmanship are just as important to the project manager as financial and analytical acumen. Figure 9. A Gantt chart works well for representing the project schedule. MANAGING PROJECTS LO 9. of course. and cost. People 2. listed horizontally. the people management side of project management makes the difference in pulling off a successful project. communication. plans. A project competent project manager sets the correct expectations early in the project with manager must achievable milestones. When a project manager has a good grasp of the business operations.. Identifying requirements. Managing Communications 8 of 10 7/17/12 9:36 PM . He or she knows how to say no without creating controversy.com/sites/0077338340/student_view. scope.2 Project Management http://highered. he or she can improve critical communication among the designers. Many times.7: Identify the A project manager can. It also shows actual progress of tasks against the planned duration. and approach to the different concerns and expectations of the various stakeholders. negotiation. marketing. Establishing clear and achievable objectives. and quicker time to market. A Gantt chart is a simple bar chart that lists project tasks vertically against the project's time frame.mcgraw-hill. developers. and top leadership. Managing a project includes: focus on to ensure success. Adapting the specifications. Communications 3. Balancing the competing demands of quality.

Resource constraints such as budget cuts or personal cutbacks. Ideally. Managing Change Successful organizations and successful people learn to anticipate and react appropriately to change. and keeps all stakeholders informed of the project schedule.. cost. customers. Change management offers procedures and policies managers can use to help manage change during system development. APPLY YOUR KNOWLEDGE 9 of 10 7/17/12 9:36 PM . An emerging technology. users.com/sites/0077338340/student_view. including the schedule. Rather. organized manner. all agree that communication is the key to excellent project management. and meaningful information regarding project objectives. For example. accurate. A new government regulation or law that requires changes to business processes. Most change management systems require that a change request form be initiated by one or more project stakeholders (systems owners. informs others of needed corrections. This is not to say that a project manager needs to spend countless hours answering every email and responding to every question posed. A change management system includes a collection of procedures to document a change request and identifies the expected impact associated with the change. if one department wants to implement a change to the software that will increase both deployment time and cost. but not so easy to accomplish! It is extremely helpful if a project manager plans what and how he or she will communicate as a formal part of the project management plan called a communications plan. This is quite easy to state.Section 9. It is the project manager's role and responsibility to foster an environment of trust so that members feel safe to contribute their knowledge and ideas—even if it means relaying bad news or offering an opposing viewpoint. makes requests for additional resources. or new business partnerships.2 Project Management http://highered. and status of each. scope. Change comes in many forms from an environmental crisis to a labor shortage and can include: A misunderstanding or missing business requirement in the project scope. The project manager also shares small wins as the project progresses. these change requests are considered by a change control board (CCB) that is responsible for approving or rejecting all change requests. User change in business requirements for additional functionality. Mergers. then the other business owners need to agree that the change is valid and that it warrants the extended time frame and increased budget.. Team members remain closest to the project and should be encouraged to share open and honest feedback. Another important aspect of a project management communications plan is to provide a method for continually obtaining and monitoring feedback from and for all stakeholders. A project manager distributes timely. the manager should develop a method for asking for specific feedback as part of the plan and responding to it in a timely. While many companies develop unique project management frameworks based on familiar project management standards. quality.mcgraw-hill. The CCB's composition typically includes a representative from each business area that has a stake in the project. acquisitions. The CCB's decision to accept or reject each change is based on an impact analysis of the change. developers).

August 22.” New York Daily News.standishgroup. 16 CIO Magazine.html. June 1.Section 9. Johnson. Death March: The Complete Software Developer's Guide to Surviving “Mission Impossible” Projects (Pearson Education).. www.com/html/ entertainment/2003848077_webmurray22.nwsource. McGraw-Hill Higher Education is one of the many fine businesses of The McGraw-Hill Companies.com/googlebooks/library.html. 2009 McGraw-Hill Higher Education Any use is subject to the Terms of Use and Privacy Notice. “My Life Is Failure” and McGraw.mcgraw-hill.org. http://seattletimes. “Lesson In Fraud: NYU Employee Submitted $409K In Fake Expenses Using Receipts From Garbage. 2007. 10 of 10 7/17/12 9:36 PM . accessed March 15. 2010. www. 2006. “The Project Manager in the IT Industry” www.pmi.com.” 17 Karl Ritter. accessed June 2010.” The Seattle Times. The Project Management Institute. http://books.. Ibid. “Bill Murray faces DUI after golf-cart escapade in Sweden. 2009.pmi.google. “Making Essential Software Work. 12 13 14 15 Jose Martinez. accessed June 2010. December 23.org. BUSINESS DRIVEN INNOVATION 10 11 The Project Management Institute. 18 Edward Yourdon. Ibid.2 Project Management http://highered.com/sites/0077338340/student_view.

 336     Executive  sponsor     The  person  or  group  who  provides  the  financial  resources  for  the  project.  347     Design  phase     Establishes  descriptions  of  the  desired  features  and  operations  of  the  system  including  screen   layouts......  process  diagrams.  349     Critical  path     Estimates  the  shortest  path  through  the  project  ensuring  all  critical  tasks  are  completed  from   start  to  finish.  or  between  a  project  task  and  a   milestone..  business  rules.  349     Change  management     Offers  procedures  and  policies  managers  can  use  to  help  manage  change  during  system   development.  347     Dependency     A  logical  relationship  that  exists  between  the  project  tasks..  335     Business  requirement     The  specific  business  requests  the  system  must  meet  to  be  successful..  339     Analysis  phase     The  firm  analyzes  its  end-­‐user  business  requirements  and  refines  project  goals  into  defined   functions  and  operations  of  the  intended  system...  349     Change  management  system     Includes  a  collection  of  procedures  to  document  a  change  request  and  identifies  the  expected   impact  associated  with  the  change.  and  other  documentation.  335     Change  control  board  (CCB)     Responsible  for  approving  or  rejecting  all  change  requests.Chapter  9:  Systems  Development  and  Project  Management:  Corporate  Responsibility     Key  Terms     Agile  methodology     Aims  for  customer  satisfaction  through  early  and  continuous  delivery  of  useful  software   components  developed  by  an  iterative  process  using  the  bare  minimum  requirements.  344       .  pseudo  code.  336     Development  phase     Takes  all  the  detailed  design  documents  from  the  design  phase  and  transforms  them  into  the   actual  system..

.Extreme  programming  (XP)  methodology     Breaks  a  project  into  four  phases..  listed   horizontally.  tools..  procedures..  338     Kill  switch     A  trigger  that  enables  a  project  manager  to  close  the  project  before  completion.  standards..  350     PERT  (Program  Evaluation  and  Review  Technique)  chart     A  graphical  network  model  that  depicts  a  project’s  tasks  and  the  relationships  between  them.  and  tasks  that   people  apply  to  technical  and  management  challenges.  340     Gantt  chart     A  simple  bar  chart  that  lists  project  tasks  vertically  against  the  project’s  time  frame.  additions.  351     Offshore  outsourcing     Using  organizations  from  developing  countries  to  write  code  and  develop  systems.  and  upgrades  to  ensure  the  system   continues  to  meet  its  business  goals.  337     In-­‐sourcing  (in-­‐house  development)     Uses  the  professional  expertise  within  an  organization  to  develop  and  maintain  its   information  technology  systems.  351     Onshore  outsourcing     Engaging  another  company  within  the  same  country  for  services.  techniques.  348     Implementation  phase     The  organization  places  the  system  into  production  so  users  can  begin  to  perform  actual   business  operations  with  it..  351     Outsourcing     An  arrangement  by  which  one  organization  provides  a  service  or  services  for  another   organization  that  chooses  not  to  perform  them  in-­‐house..  347     Maintenance  phase     The  organization  performs  changes.   347   ..  corrections.  337     Nearshore  outsourcing     Contracting  an  outsourcing  arrangement  with  a  company  in  a  nearby  country..  processes.  350     Iterative  development     Consists  of  a  series  of  tiny  projects..  practices.  337     Methodology     A  set  of  policies...  and  developers  cannot  continue  to  the  next  phase  until  the   previous  phase  is  complete..

 real.  verifiable  outcome..  or  item  that  is  produced  to  complete  a   project  or  part  of  a  project.  and  techniques  to  project  activities  to  meet  project   requirements.  service....  skills.  346   ..  tools.   343     Project  milestones     Represent  key  dates  when  a  certain  group  of  activities  must  be  performed...  346     Project  plan     A  formal..  tangible.  result.  346     Project  charter     A  document  issued  by  the  project  initiator  or  sponsor  that  formally  authorizes  the  start  of  a   project  and  provides  the  project  manager  with  the  authority  to  apply  organizational   resources  to  project  activities.  343     Project  manager     An  individual  who  is  an  expert  in  project  planning  and  management..  343     Project  objective     Quantifiable  criteria  that  must  be  met  for  the  project  to  be  considered  a  success..  or  result..  343     Project  assumption     Factors  considered  to  be  true.  335     Project     Temporary  activity  a  company  undertakes  to  create  a  unique  product.  and  tracks  the  plan  to  ensure  the  project  is  completed  on  time  and  on  budget.  approved  document  that  manages  and  controls  project  execution.  343     Project  Management  Institute  (PMI)     Develops  procedures  and  concepts  necessary  to  support  the  profession  of  project   management.  or  certain  without  proof  or  demonstration..  346     Project  constraint     Specific  factors  that  can  limit  options.   Planning  phase     Establishes  a  high-­‐level  plan  of  the  intended  project  and  determines  project  goals.  346     Project  deliverable     Any  measurable..  defines  and  develops  the   project  plan.  343     Project  management     The  application  of  knowledge.  342     Project  management  office  (PMO)     An  internal  department  that  oversees  all  organizational  projects.

 339     Rapid  application  development  (RAD)  methodology  (also  called  rapid  prototyping)     Emphasizes  extensive  user  involvement  in  the  rapid  and  evolutionary  construction  of  working   prototypes  of  a  system.   Project  scope  statement     Links  the  project  to  the  organization’s  overall  business  goals.”  or  30-­‐day   intervals.  from  planning  and  analysis  through   implementation  and  maintenance.  346     Project  stakeholder     Individuals  and  organizations  actively  involved  in  the  project  or  whose  interests  might  be   affected  as  a  result  of  project  execution  or  project  completion...  337     ..  344     Prototype     A  smaller-­‐scale  representation  or  working  model  of  the  users’  requirements  or  the  proposed   design  for  an  information  system.”.  and  verify  that  the  system  meets  all  the  business  requirements  defined  in  the   analysis  phase.  337     Waterfall  methodology     A  sequence  of  phases  in  which  the  output  of  each  phase  becomes  the  input  for  the  next.  339     Rational  unified  process  (RUP)  methodology     Provides  a  framework  for  breaking  down  the  development  of  software  into  four  “gates.....  335     Testing  phase     Brings  all  the  project  pieces  together  into  a  special  testing  environment  to  eliminate  errors   and  bugs.  to  accelerate  the  systems  development  process..  340     Systems  development  life  cycle  (SDLC)     The  overall  process  for  developing  information  systems.  340     Scrum  methodology     Uses  small  teams  to  produce  small  pieces  of  software  using  a  series  of  “sprints.  to  achieve  an  appointed  goal.

Student Response A.dowebct?attempt=9268157608331 Page 1 of 13 Value Correct Answer Feedback 1/1 Value Correct Answer Feedback . 2012 9:09 PM July 17.edu/webct/urw/tp9214421899391.lc9041756228261/ViewStudentAttempt. JULY 23rd › CHAPTER 9 QUIZ › Assessments › View All Submissions › View Attempt View Attempt 1 of 1 Title: Started: Submitted: Time spent: CHAPTER 9 QUIZ July 17. Defining and agreeing upon the project scope D. software success or https://gpc. In the digital age. Quantifiable criteria to measure project objectives C. ________________ is the most important part of any project plan.usg.0 Maximum possible score: 15 Total score: 10/15 = 66.view.View Attempt 7/17/12 9:25 PM Your location: Home Page › DUE BY MONDAY. Communication 100% between all parties of the project committee Score: 2. Which of the following statements about developing software is FALSE? Student Response A. A Gantt and PERT Chart B. 2012 9:24 PM 00:15:09 Total score adjusted by 0.6667% Done 1.

usg.lc9041756228261/ViewStudentAttempt. Because the lucrative advantages of successful software implementations provide high rewards and lead to competitive advantage. Managing the https://gpc. D. It is estimated that $1 trillion will be spent on software development projects in the next year and that 70% of them will fail. Software development problems rarely lead to highprofile disasters and seldom make the front page of the papers. A high number of software development projects come in late or over budget.view. C.View Attempt 7/17/12 9:25 PM failure can lead directly to business success or failure. monies lost on unsuccessful projects are considered inconsequential.edu/webct/urw/tp9214421899391. B.dowebct?attempt=9268157608331 Page 2 of 13 . and the successful projects tend to maintain fewer features and functions than originally specified.

tries to stop change B.dowebct?attempt=9268157608331 Page 3 of 13 . institutes change management policies C.View Attempt 7/17/12 9:25 PM people involved and affected by a software development project is among the most challenging efforts a project manager undertakes. anticipates change Score: 1/1 Value 100% Correct Answer Feedback 1/1 Value 100% Correct Answer Feedback 0/1 https://gpc. seeks change D. Student Response A.edu/webct/urw/tp9214421899391. specifications Score: 4. Score: 3. the critical path B. Student Response A. called ________________. PERT charts typically display the path from start to finish that passes through all the tasks that are imperative to completing the project in the shortest amount of time. milestones D.usg.lc9041756228261/ViewStudentAttempt.view. dependency C. A guideline that ____________________ is not an effective guideline for dealing with change management.

usg.lc9041756228261/ViewStudentAttempt. Time B.view.dowebct?attempt=9268157608331 Page 4 of 13 . Involves analyzing enduser business requirements and refining project goals into defined functions and operations of the intended system C. Involves establishing a high-level plan of the intended project and determining project goals B. Quality D. The Project Management Institute calls the framework for evaluating these variables "the triple constraint.View Attempt 7/17/12 9:25 PM 5. All of the variables listed below are interdependent and limit a project in some way.edu/webct/urw/tp9214421899391. The overall process for developing information 100% Value Correct Answer Feedback 1/1 100% Correct Answer Feedback https://gpc. Involves describing the desired features and operations of the system D." Which of the following variables does not belong? Student Value Response A. Which of the statements below best describes the systems development life cycle? Student Response A. Cost Score: 6. Scope C.

lc9041756228261/ViewStudentAttempt. Based on the feedback. rational unified https://gpc. The next step is beta testing. The ____________________________ uses minimal planning and overlaps with the writing of software itself. agile development methodology C. These short iterations continue until the system has reached an acceptable level of functionality and quality. the programmers re-access priorities. extreme programming methodology B. and a new iteration begins. rational 0% unified process methodology D.view. Student Response A. waterfall methodology Score: 8. The ______________________ follows a series of steps that begins with prioritizing the list of requirements into "must have" and "nice to have.edu/webct/urw/tp9214421899391." Programmers then quickly develop the first item on the list and demonstrate it to the customer to receive feedback. waterfall methodology C. software is written faster and it is easier to change requirements.View Attempt 7/17/12 9:25 PM systems from planning and analysis through implementation and maintenance Score: 7. Student Response A. scrum methodology B. This methodology uses iterations and prototypes to accelerate software development.dowebct?attempt=9268157608331 Page 5 of 13 1/1 Value Correct Answer Feedback 0/1 Value Correct Answer Feedback . As a result.usg.

dowebct?attempt=9268157608331 Page 6 of 13 .edu/webct/urw/tp9214421899391. E. Which of the following statements about the waterfall methodology is FALSE? Student Response A. C.usg.lc9041756228261/ViewStudentAttempt. Output of each phase becomes the input for the next phase.view. Success rate of 100% this methodology is about 90%. The waterfall methodology is inflexible and expensive. Which of the following statements about scrum methodology is FALSE? Student Response Value Correct Answer Feedback 1/1 Value Correct Answer Feedback 1/1 A. Daily 0% meetings are https://gpc. Score: 10. B. Assumes users can specify all business requirements in advance. Oldest and best known of all software development methodologies.View Attempt 7/17/12 9:25 PM process methodology D. rapid 100% application development methodology Score: 9. D.

B.dowebct?attempt=9268157608331 Page 7 of 13 . D. The name scrum is borrowed from rugby. Scrum methodology uses short 30-day "sprints" to deliver incremental pieces of the desired system quickly. C.view." A project stays in a gate waiting for the stakeholder's analysis. Multiple "sprints" are included into four "gates. what they plan to do today.View Attempt 7/17/12 9:25 PM held with the software developers to find out what they did yesterday.usg.lc9041756228261/ViewStudentAttempt. and if there are any obstacles impeding progress. where a scrum is a team pack and everyone in the pack works together to move the ball down the field. and then it either https://gpc.edu/webct/urw/tp9214421899391.

By taking advantage of outsourcing.dowebct?attempt=9268157608331 Page 8 of 13 0/1 Value Correct Answer Feedback .lc9041756228261/ViewStudentAttempt. Which of the following statements representing common reasons why companies outsource is FALSE? Student Response A. Outsourcing has been instrumental in creating a viable supply of IT professional and in creating a better quality workforce combining both technical and business skills.usg.edu/webct/urw/tp9214421899391. an organization can acquire the resources required to speed up operations or scale to new demand levels. Score: 11. Outsourcing provides a way to acquire best https://gpc.view. B. C.View Attempt 7/17/12 9:25 PM moves to the next gate or is cancelled.

It is far 0% cheaper to hire people in China and India than pay the required salaries for similar labor in the United States. Which of the statements below describing common reasons for project failure is FALSE? Student Response A. the same error found during the testing and implementation phase is relatively inexpensive to fix.View Attempt 7/17/12 9:25 PM practices and the business process expertise of highly skilled technology resources for a low cost. Score: 12.usg. An error found during the the analysis and design phase may cost the organization an enormous amount of time and money to fix.edu/webct/urw/tp9214421899391. However.lc9041756228261/ViewStudentAttempt. B. Business requirements https://gpc.view. D.dowebct?attempt=9268157608331 Page 9 of 13 0/1 Value Correct Answer Feedback .

The design phase B. ___________ is the most critical phase of any systems development effort an organization undertakes. Failing to test 0% the system will lead to unfound errors.view. D. The analysis phase https://gpc. Business requirements drive the entire systems development process.lc9041756228261/ViewStudentAttempt.View Attempt 7/17/12 9:25 PM that are either missing or incorrectly gathered during the analysis phase are the most common reason for system failure. C. Student Response A. Technology changes at an incredibly fast pace. and chances are high the system will fail. Score: 13. therefore. it is possible to have to revise an entire project plan in the middle of a project as a result of a change in technology.dowebct?attempt=9268157608331 Page 10 of 13 0/1 Value Correct Answer Feedback .usg.edu/webct/urw/tp9214421899391.

Many companies view MIS as a competitive advantage and view outsourcing as a threat because the company to whom the project has been outsourced could share trade secrets with competitors. B. but the contracts are usually easy to https://gpc. The development phase G. The maintenance phase E. The testing phase Score: 14.dowebct?attempt=9268157608331 Page 11 of 13 Value Correct Answer Feedback .View Attempt 7/17/12 9:25 PM C. 100% 1/1 Which of the following statements below concerning the challenges of outsourcing is FALSE? Student Response A.usg. The implementation phase F.lc9041756228261/ViewStudentAttempt.view. Outsourcing 100% contracts are typically for multiple years.edu/webct/urw/tp9214421899391. The planning phase D.

Score: 15. E.lc9041756228261/ViewStudentAttempt.View Attempt 7/17/12 9:25 PM break due to the fact that forecasting business needs is difficult and the outsourced contractor may not meet the future needs. C. Outsourcing could place confidential information in the wrong hands and the company at potential risk. 1/1 https://gpc.dowebct?attempt=9268157608331 Page 12 of 13 .usg. Most companies look at outsourcing as a longterm solution and contract for multiple years of services.edu/webct/urw/tp9214421899391. D.view. Re-creating an internal MIS department is costly and challenging if the outsourced provider fails.

managing people C. budget cuts or personnel cutbacks) must be anticipated and managed. managing communications Score: 1/1 Value 100% Correct Answer Feedback Done https://gpc.edu/webct/urw/tp9214421899391. user changes in business requirements.usg. mergers. emerging technologies. Student Response A. new government regulations or laws. change management B. acquisitions or new business partnerships.View Attempt 7/17/12 9:25 PM Possible events and crises that happen during the duration of a project (such as missing or misunderstanding business requirements. These kinds of events and crises usually fall under the domain of _____________.lc9041756228261/ViewStudentAttempt. core competencies D.view.dowebct?attempt=9268157608331 Page 13 of 13 .

Multiple Choice Quiz http://highered.. pseudo code.mcgraw-hill. 1 INCORRECT Which of the following is not a phase in the SDLC? A) Design B) Development C) Analysis D) RAD Feedback: Level: Easy RAD is a methodology and is not a phase in the SDLC. business rules. process diagrams. 2 INCORRECT What is the systems development life cycle? A) Involves describing the desired features and operations of the system B) Involves analyzing end-user business requirements and refining project goals into defined functions and operations of the intended system C) Involves establishing a high-level plan of the intended project and determining project goals D) The overall process for developing information systems from planning and analysis through implementation and maintenance Feedback: Level: Easy The SDLC is the overall process for developing information systems from planning and analysis through implementation and maintenance. The correct answer for each question is indicated by a . 5 CORRECT What is the outsourcing option that includes the farthest location and the least amount of direct customer control? A) Offshore outsourcing B) Nearshore outsourcing C) Onshore outsourcing D) None of the above Feedback: Level: Medium Offshore outsourcing offers the farthest location and the least amount of direct customer control. 4 INCORRECT What is it called when you use organizations from developing countries to write code and develop systems? A) Outsourcing B) Business process outsourcing C) Insourcing D) Offshore outsourcing Feedback: Level: Easy This is the definition of offshore outsourcing. 3 CORRECT What is the design phase in the SDLC? A) Involves establishing descriptions of the desired features and operations of the system including screen layouts.com/sites/0077338359/student_view. and other documentation B) Involves placing the system into production so users can begin to perform actual business operations with it C) Involves establishing a high-level plan of the intended project and determining project goals D) Involves analyzing end-user business requirements and refining project goals into defined functions and operations of the intended system Feedback: Level: Easy This is the definition of the design phase. 1 of 2 7/11/12 12:47 PM ..

.mcgraw-hill.Multiple Choice Quiz control. 6 CORRECT Which of the following is a challenge of outsourcing? A) Length of contract B) Financial savings C) The Internet and globalization D) All of the above Feedback: Level: Medium Length of contract is a challenge of outsourcing. http://highered. 2 of 2 7/11/12 12:47 PM .com/sites/0077338359/student_view. 7 INCORRECT Which methodology aims for customer satisfaction through early and continuous delivery of useful software components developed by an iterative process using the bare minimum requirements? A) Waterfall methodology B) Iterative development C) Agile methodology D) RAD methodology Feedback: Level: Easy This is the definition of agile methodology..

CHAPTER  FIVE   INFRASTRUCTURES:  SUSTAINABLE  TECHNOLOGIES   THE  BUSINESS  BENEFITS  OF  A  SOLID  MIS  INFRASTRUCTURE   § MIS  infrastructure  –  Includes  the  plans  for  how  a  firm  will  build.  and  share  its  data.  and  MIS  assets   • Hardware   • Software   • Network   • Client   • Server     SUPPORTING  OPERATIONS:  INFORMATION  MIS  INFRASTRUCTURE   § Backup  and  recovery  plan   § Disaster  recovery  plan   § Business  continuity  plan     BACKUP  AND  RECOVERY  PLAN   § Backup  –  An  exact  copy  of  a  system’s  information   § Recovery  –  The  ability  to  get  a  system  up  and  running  in  the  event  of  a  system  crash  or  failure   • Fault  tolerance   • Failover   • Failback     § Disaster  recovery  plan  -­‐  A  detailed  process  for  recovering  information  or  an  IT  system  in  the  event  of  a   catastrophic  disaster  such  as  a  fire  or  flood   § Disaster  recovery  cost  curve  -­‐  Charts  (1)  the  cost  to  the  organization  of  the  unavailability  of   information  and  technology  and  (2)  the  cost  to  the  organization  of  recovering  from  a  disaster  over  time   § Hot  site  -­‐  A  separate  and  fully  equipped  facility  where  the  company  can  move  immediately  after  a   disaster  and  resume  business   § Cold  site  -­‐  A  separate  facility  that  does  not  have  any  computer  equipment.   processes.  deploy.  but  is  a  place  where   employees  can  move  after  a  disaster   § Warm  site  –  A  separate  facility  with  computer  equipment  that  requires  installation  and  configuration     BUSINESS  CONTINUITY  PLAN   § Business  continuity  planning  (BCP)  -­‐  A  plan  for  how  an  organization  will  recover  and  restore  partially   or  completely  interrupted  critical  function(s)  within  a  predetermined  time  after  a  disaster  or  extended   disruption   • Emergency  notification  services     SUPPORTING  CHANGE:  AGILE  MIS  INFRASTRUCTURE   § Characteristics  of  an  agile  MIS  infrastructure   • Accessibility   • Availability   • Maintainability   • Portability   • Reliability   • Scalability   • Usability   .  use.

 management.  use.  and  disposal  of   technology  in  a  way  that  minimizes  damage  to  the  environment   § Corporate  social  responsibility  -­‐  Companies’  acknowledged                          responsibility  to  society     Three  Primary  Side  Effects  Of  Businesses’  Expanded  Use  Of  Technology         SUPPORTING  THE  ENVIRONMENT:  SUSTAINABLE  MIS  INFRASTRUCTURE   § The  components  of  a  sustainable  MIS  infrastructure  include   • Grid  computing   • Cloud  computing   • Virtualized  computing     GRID  COMPUTING   § Grid  computing    -­‐  A  collection  of  computers.  or  “green.  that  are  coordinated  to   solve  a  common  problem         CLOUD  COMPUTING   § Cloud  computing    -­‐  Refers  to  the  use  of  resources  and  applications  hosted  remotely  on  the  Internet     .  often  geographically  dispersed.”  MIS  -­‐    Describes  the  production.   MIS  AND  THE  ENVIRONMENT   § Moore’s  Law  -­‐  Refers  to  the  computer  chip  performance  per  dollar  doubles  every  18  months   § Sustainable.

  such  as  telecommunications  and  storage  systems     § Sustainable  data  centers     • Reduces  carbon  emissions   • Reduces  required  floor  Space   • Chooses  Geographic  location     CHAPTER  SIX   DATA:  BUSINESS  INTELLIGENCE     INFORMATION  TYPE:  TRANSACTIONAL  AND  ANALYTICAL   • Transactional  information  –  Encompasses  all  of  the  information  contained  within  a  single  business   process  or  unit  of  work.     VIRTUALIZED  COMPUTING   § Virtualization  -­‐  Creates  multiple  “virtual”  machines  on  a  single  computing  device         VIRTUALIZED  COMPUTING   § Data  center  –  A  facility  used  to  house  management  information  systems  and  associated  components.  and  its  primary  purpose  is  to  support  the  performing  of  daily  operational  tasks   • Analytical  information  –  Encompasses  all  organizational  information.  and  its  primary  purpose  is  to   support  the  performing  of  managerial  analysis  tasks     Information  Quality   § Characteristics  of  High-­‐quality  Information   • Accurate   • Complete   • Consistent   • Unique   • Timely   .

 place.  people  (employees).  column)  –  The  data  elements  associated  with  an  entity   • The  columns  in  each  table  contain  the  attributes   § Record  –  A  collection  of  related  data  elements     CREATING  RELATIONSHIPS  THROUGH  KEYS   § Primary  keys  and  foreign  keys  identify  the  various  entities  (tables)  in  the  database   • Primary  key  –  A  field  (or  group  of  fields)  that  uniquely  identifies  a  given  entity  in  a  table   • Foreign  key  –  A  primary  key  of  one  table  that  appears  an  attribute  in  another  table  and  acts  to   provide  a  logical  relationship  among  the  two  tables     DRIVING  WEBSITES  WITH  DATA   § Data-­‐driven  websites  –  An  interactive  website  kept  constantly  updated  and  relevant  to  the  needs  of  its   customers  using  a  database     THE  BUSINESS  BENEFITS  OF  DATA  WAREHOUSING   § Data  warehouse  –  A  logical  collection  of  information  –  gathered  from  many  different  operational   databases  –  that  supports  business  analysis  activities  and  decision-­‐making  tasks   § The  primary  purpose  of  a  data  warehouse  is  to  aggregate  information  throughout  an  organization  into   a  single  repository  for  decision-­‐making  purposes     MULTIDIMENSIONAL  ANALYSIS   § Databases  contain  information  in  a  series  of  two-­‐dimensional  tables   § In  a  data  warehouse  and  data  mart.   Understanding  the  Costs  of  Using  Low-­‐Quality  Information   § Potential  business  effects  resulting  from  low  quality  information  include   • Inability  to  accurately  track  customers   • Difficulty  identifying  valuable  customers   • Inability  to  identify  selling  opportunities   • Marketing  to  nonexistent  customers   • Difficulty  tracking  revenue   • Inability  to  build  strong  customer  relationships     STORING  INFORMATION  IN  A  RELATIONAL  DATABASE   § Information  is  everywhere  in  an  organization   § Information  is  stored  in  databases   • Database  –  maintains  information  about  various  types  of  objects  (inventory).  events   (transactions).  information  is  multidimensional.  it  contains  layers  of  columns  and   rows   • Dimension  –  A  particular  attribute  of  information   • Cube  –  Common  term  for  the  representation  of  multidimensional  information     INFORMATION  CLEANSING  OR  SCRUBBING   § An  organization  must  maintain  high-­‐quality  data  in  the  data  warehouse   .  and  places  (warehouses)     STORING  DATA  ELEMENTS  IN  ENTITIES  AND  ATTRIBUTES   § Entity  –  A  person.  thing.  or  event  about  which  information  is  stored   • The  rows  in  a  table  contain  entities   § Attribute  (field.  transaction.

 Computer  communication  across  the   Internet.  this  process  almost  always  involves  the  sending  of  electromagnetic   waves  by  electronic  transmitters  but  in  earlier  years  it  may  have  involved  the  use  of  smoke  signals.     • Today.  INFORMATION  POOR   § Businesses  face  a  data  explosion  as  digital  images.     • There  is  also  a  vast  array  of  networks  that  connect  these  devices.  In  modern  times.     OVERVIEW  OF  A  CONNECTED  WORLD   Networking  Elements  Creating  a  Connected  World   .  radio  and  telephone  are  common  in  many  parts  of  the  world.  and  broadband  connections  doubles   by  2010   § The  amount  of  data  generated  is  doubling  every  year   § Some  believe  it  will  soon  double  monthly     THE  SOLUTION:  BUSINESS  INTELLIGENCE   § Improving  the  quality  of  business  decisions  has  a  direct  impact  on  costs  and  revenue   § BI  enables  business  users  to  receive  data  for  analysis  that  is:   • Reliable   • Consistent   • Understandable   • Easily  manipulated       Information  cleansing  or  scrubbing  –  A  process  that  weeds  out  and  fixes  or  discards  inconsistent.  or  incomplete  information   CHAPTER  SEVEN   NETWORKS:  MOBILE  BUSINESS   • Networks  and  telecommunications  are  the  transmission  of  signals  over  a  distance  for  the  purpose  of   communication.  including  computer  networks.   incorrect.  email  in-­‐boxes.   drums  or  semaphore.  is  just  one  of  many  examples  of  telecommunication.  network  and  telecommunication  is  widespread  and  devices  that  assist  the  process  such  as  the   television.  radio  networks  and  television  networks.  such  as  email  and  instant  messaging.  public   telephone  networks.§   UNCOVERING  TRENDS  AND  PATTERNS  WITH  DATA  MINING   § Data  mining  –  The  process  of  analyzing  data  to  extract  information  not  offered  by  the  raw  data  alone   § Data-­‐mining  tools  –  use  a  variety  of  techniques  to  find  patterns  and  relationships  in  large  volumes  of   information       • Classification     • Estimation     • Affinity  grouping     • Clustering       UNCOVERING  TRENDS  AND  PATTERNS  WITH  DATA  MINING   § Common  forms  of  data-­‐mining  analysis  capabilities  include   • Cluster  analysis   • Association  detection   • Statistical  analysis     THE  PROBLEM:  DATA  RICH.

    • Accountants  at  corporate  headquarters  need  to  be  able  to  retrieve  summary  data  on  sales  and   expenses  from  each  of  the  company's  divisional  computer  centers.  using  an  executive  information  system."  a  computer  that  sits  between  an  internal  network  and  the  Internet.     • The  chief  executive  officer.  video).  and  a  cable  network  to  watch  TV  or  listen  to  the  radio.  flight  operations  and  crew  scheduling.  such  as  in  an  office   building.  A  good  password  has  both  letters  and  numbers  along  with  a  few   punctuation  marks  for  added  security.  up-­‐to-­‐date  data  on  inventory   levels  and  locations.     Networks  enable  telecommunications  or  the  exchange  of  information  (voice.     • In  addition.  not  only  did  SABRE  help  invent  e-­‐commerce  (now  referred  to  as  ebusiness)  for  the  travel   industry.  a  phone  network  to   communicate  with  friends.  Most  corporate  security  goes  far  beyond  passwords  such  as   using  a  "firewall.  or  home   § Wide  area  network  (WAN)    -­‐  Spans  a  large  geographic  area  such  as  a  state.   • An  organization  has  to  be  concerned  about  proper  identification  of  users  and  authorization  of  network   access.  Many  people  are  casual  with  their  passwords.  for  managers  to  be  able  to  retrieve  overall  corporate  sales  forecasts   from  corporate  databases  to  use  in  developing  spreadsheets  (or  any  other  program  used  for  business   analysis)  to  project  future  activity.  needs  to  be  able  to  access  up-­‐to-­‐ the-­‐minute  data  on  business  trends  from  the  corporate  network.  the  control  of  access.   making  them  easy  to  guess.     You  are  probably  using  several  different  networks  right  now  without  even  realizing  it.  flight  scheduling.  pricing.  data.   • • • • •   Computer  networks  are  continuously  operating  all  over  the  globe  supporting  our  24/7/365  always  on   and  always  connected  lifestyles.  text.     • Managers  at  various  points  in  a  supply  chain  need  to  have  accurate.       •  SABRE  Airline  Solutions  pioneered  technological  advances  for  the  industry  in  areas  such  as  revenue   management.  the  company  holds  claim  to  progressive  solutions  that  defined  —  and  continue  to   revolutionize  —  the  travel  and  transportation  marketplace.     The  telecommunication  industry  has  morphed  from  a  government-­‐regulated  monopoly  to  a   deregulated  market  where  many  suppliers  ferociously  compete.  province.  The  firewall   .     You  might  be  using  a  school’s  network  to  communicate  with  teachers.  Almost  all  networks  require  some   kind  of  logon.     • It  is  very  important.  for  example.  cargo.     NETWORK  CATEGORIES   § Local  area  network  (LAN)    -­‐  Connects  a  group  of  computers  in  close  proximity.  school.  audio.  or  country   § Metropolitan  area  network  (MAN)  -­‐  A  large  computer  network  usually  spanning  a  city     • The  SABRE  airline  reservation  system  is  a  classic  example  of  a  strategic  information  system  that   depends  upon  communication  provided  through  a  network.  including  user  name  and  password.  and  the  protection  of  data  integrity.     • In  order  to  satisfy  customers.  automobile  dealers  need  to  be  able  to  locate  particular  vehicle  models   and  colors  with  specific  equipment  installed.

    • Modem    A  device  that  enables  a  computer  to  transmit  and  receive  data.     • T1  line    A  type  of  data  connection  able  to  transmit  a  digital  signal  at  1.  bulky  items  such  as  TVs  and  appliances).     • To  transmit  one  page  of  text  over  a  128.       NETWORK  PROTOCOLS   § Protocol    -­‐  A  standard  that  specifies  the  format  of  data  as  well  as  the  rules  to  be  followed  during   transmission     § Transmission  control  protocol/Internet  protocol  (TCP/IP)  -­‐  Provides  the  technical  foundation  for  the   public  Internet  as  well  as  for  large  numbers  of  private  networks   § Domain  name  system  –  Converts  IP  addresses  into  domains     allows  access  to  internal  data  from  specified  incoming  sites  but  tries  to  detect  unauthorized  access   attempts  and  prevent  them  from  occurring.  such  as  Best  Buy.  but  they  also  can   connect  directly  to  each  other   • Some  companies.   and  because  long  before  the  web  they  had  systems  and  processes  in  place  that  facilitated  the  transfer   of  a  sale  from  one  store  to  another.     § Broadband  –  A  high-­‐speed  Internet  connection  that  is  always  connected   • Digital  subscriber  line   • Internet  cable  connection   • T1  lines   • Digital  subscriber  line  (DSL)    Allows  high-­‐speed  digital  data  transmission  over  standard  telephone  lines.544  Mpbs   • Bit  Rate  The  number  of  bits  transferred  or  received  per  unit  of  time.  full-­‐motion  video  —  can  reasonably  be  transmitted  over  a  particular  medium.  already  have  their  physical   and  online  stores  integrated.  Graphics  require  approximately  one  million  bits  for  one  page.  and  thus  data  compression  techniques  must  be  employed  to  be  able  to  send  video  over   the  existing  telephone  network.  and  Sears.   data.  an  organization  needs  a  secure  and  reliable  network   for  mission-­‐critical  systems.  These  companies  have  been  the  fast  movers  because  they  already  had  an   area  in  their  stores  for  merchandise  pickup  (usually  for  big.  This  would  require  about  8   seconds  over  a  128  kbps  DSL  line.  graphics.   NETWORK  PROVIDERS   § National  service  providers  (NSPs)    -­‐  Private  companies  that  own  and  maintain  the  worldwide   backbone  that  supports  the  Internet   § Network  access  points  (NAPs)  -­‐  Traffic  exchange  points  in  the  routing  hierarchy  of  the  Internet  that   connects  NSPs   § Regional  service  providers  (RSPs)  -­‐  Offer  Internet  service  by  connecting  to  NSPs.000  bps  (128  kbps)  DSL  line  would  take  only  four-­‐tenths  of  a   second.     • To  take  on  the  challenge  of  business  integration.  Office  Depot.  The  bandwidth  determines  what  types  of  communication  —  voice.  Full-­‐motion  video  transmission  requires  the  enormous  bandwidth  of   12  million  bps.544  Mpbs.     NETWORK  ACCESS  TECHNOLOGIES   § Bandwidth    -­‐  The  maximum  amount  of  data  that  can  pass  from  one  point  to  another  in  a  unit  of  time   • Bit   • Bit  rate   • Modem   • T1  line    -­‐  A  type  of  data  connection  able  to  transmit  a  digital  signal  at  1.   .     • Internet  cable  connection  Provides  Internet  access  using  a  cable  television  company’s  infrastructure   and  a  special  cable  modem.  Circuit  City.

 companies.  and  data  communication  within   a  single  network.com/watch?v=bH2-­‐eqFK-­‐8s     Great  Animation  of  How  Internet  Traffic  Works  (Warriors  of  the  Net)  Part  II  (5:33)   http://www.   • People  had  to  physically  copy  data  from  machine  to  machine  using  a  disk.     What  is  Google  TV  –  Video  (2:21)   http://www.youtube.  educational  institutions.  Web  surfing.com/watch?v=x2apGdpIGQI&feature=related     NETWORK  CONVERGENCE   § Network  convergence  -­‐  The  efficient  coexistence  of  telephone.youtube.  applications.   • Networks  offer  many  advantages  for  a  business  including:   § Sharing  resources   § Providing  opportunities   § Reducing  travel   • There  have  been  many  network  security  problems  -­‐  networks  are  a  tempting  target  for  mischief  and   fraud   • An  organization  has  to  be  concerned  about…   .  video.youtube.  videoconference  applications.   Consumers.   One  of  the  primary  reasons  for  developing  TCP/IP  was  to  allow  diverse  or  differing  networks  to  connect   and  communicate  with  each  other.  scalability.  providing  accessibility.  Quick  Overview  of  How  the  Internet  Works  (1:34)   http://www.  there  is  a  convergence  of   network  devices.  WANs.  and  government  agencies  extensively  engage  in   texting.  offering  convenience  and  flexibility  not  possible  with  separate  infrastructures     Computers  using  the  same  protocol  can  communicate  easily.  transferring  data  between  computers  was  time-­‐consuming  and  labor  intensive.  online  gaming.  and  services.  and  MANs  to  grow  with  each  new   connection.  and  ebusiness.com/watch?v=vS0la9SmqWA   BENEFITS  OF  A  CONNECTED  WORLD   § Networks  offer  many  advantages  for  a  business  including   • Sharing  resources   • Providing  opportunities   • Reducing  travel   • Before  networks.com/watch?v=Jj6EHgSsx_U     Great  Animation  of  How  Internet  Traffic  Works  (Warriors  of  the  Net)  Part  I  (7:26)   http://www.§ §   Internet  is  the  largest  network  in  the  world.  essentially  allowing  LANs.  and   connectability  between  networks.youtube.     • •   In  part  due  to  the  explosive  use  of  the  Internet  and  connectivity  of  TCP/IP.

    Why  would  a  VPN  be  important  to  a  business?   § With  security  on  the  rise.  and  the  support  of  business  process.  in  effect  a  “private  tunnel”  within  the  Internet.  collaboration.   partners.  and  the  protection  of  data  integrity     •   Intranet    A  restricted  network  that  relies  on  Internet  technologies  to  provide  an  Internet-­‐like   environment  within  the  company  for  information  sharing.   networks  make  it  possible  to  communicate  in  ways  not  previously  imaginable   § Even  though  networks  provide  many  business  advantages.  web   publishing.  they  also  create  increased  challenges  in   • Security   • Social.2  MOBILITY   WIRELESS  NETWORK  CATEGORIES       .  yet  globally  connected  world  by  eliminating  time  and  distance.  and  political  issues     SECTION  7.  keeping  electronic  records  safe  is  an  area  of  concern  for  many   businesses   • • •   CHALLENGES  OF  A  CONNECTED  WORLD   § Networks  have  created  a  diverse.  such  as  customers.  communications.§ §   SHARING  RESOURCES   § The  primary  resources  for  sharing  include   • Intranet       • Extranet   • Virtual  private  network     Proper  identification  of  users  and  authorization  of  network  access   The  control  of  access.  secure  Internet  access.  ethical.  and  suppliers.     Virtual  private  network  (VPN)    Companies  can  establish  direct  private  network  links  among   themselves  or  create  private.     Extranet    An  extension  of  an  intranet  that  is  only  available  to  authorized  outsiders.

 Harold  Bluetooth.         Wireless  MAN  (WMAN)    A  metropolitan  area  network  that  uses  radio  signals  to  transmit  and  receive   data.  who  is  credited  with  uniting   Denmark  and  bringing  order  to  the  country     WIRELESS  LAN   § Wireless  LAN  (WLAN)  -­‐    A  local  area  network  that  uses  radio  signals  to  transmit  and  receive  data  over   distances  of  a  few  hundred  feet   § Wireless  fidelity  (Wi-­‐Fi)  -­‐  A  means  by  which  portable  devices  can  connect  wirelessly  to  a  local  area   network.  anywhere.  using  access  points  that  send  and  receive  data  via  radio  waves     Personal  area  networks  (PAN)    Provide  communication  over  a  short  distance  that  is  intended  for  use   with  devices  that  are  owned  and  operated  by  a  single  user.  has  fueled  a  major  market  and  technology  disruption.  but  actually  denote  two  different   technologies   .     The  terms  mobile  and  wireless  are  often  used  synonymously.11  A  set  of  standards  carrying  out  wireless  local  area  network  communication.   computers.  and   reduce  operating  costs   Wireless  transmissions  rely  on  radio  waves.     Wireless  LAN  (WLAN)    A  local  area  network  that  uses  radio  signals  to  transmit  and  receive  data  over   distances  of  a  few  hundred  feet.   which  has  permeated  almost  every  consumer  market  worldwide.  speed  delivery  to  market.     Companies  worldwide  are  going  wireless  to  increase  productivity.800  companies  worldwide  have  signed  on  to  build  products  to  the  wireless  specifications     • Bluetooth  is  named  to  honor  a  10th  century  Viking  Kind.     802.  The  domino  effect  of  the  success  of   wireless  technology  has  resulted  in  a  unique  opportunity  for  innovation  and  creativity  in  technology.   marketing.     Wireless  LAN  (WLAN)    A  local  area  network  that  uses  radio  signals  to  transmit  and  receive  data  over   distances  of  a  few  hundred  feet.  and  other  devices   • Since  Bluetooth’s  development  in  1994  by  the  Swedish  telecommunications  company  Ericsson.  and  business  strategy.  anytime.  more   than  1.           Wireless  WAN  (WWAN)    A  wide  area  network  that  uses  radio  signals  to  transmit  and  receive  data.  and  satellites  to  send  data  across  high   frequency  radio  ranges  that  later  connect  to  wired  media   Untethered  connectivity.   • • • • • • •   PERSONAL  AREA  NETWORK   § Personal  area  networks  (PAN)    -­‐  Provide  communication  over  a  short  distance  that  is  intended  for  use   with  devices  that  are  owned  and  operated  by  a  single  user   § Bluetooth    -­‐  Wireless  PAN  technology  that  transmits  signals  over  short  distances  between  cell  phones.  microwaves.     • • • •   Wireless  fidelity  (Wi-­‐Fi)  A  means  by  which  portable  devices  can  connect  wirelessly  to  a  local  area   network.  using  access  points  that  send  and  receive  data  via  radio  waves.

 cell  phones  are  center-­‐stage  in  the  evolving  trend  of   mobile  infotainment   A  WiMAX  tower  station  can  connect  directly  to  the  Internet  using  a  high-­‐bandwidth.  along  with  the  ability  of  a   single  tower  to  cover  up  to  3.  and  play   Handheld  devices  are  continuing  to  offer  additional  functionality.     The  latest  trends  in  cell  phones  reflect  a  convergence  of  voice.       WIRELESS  WAN  –  CELLULAR   § Wireless  WAN  (WWAN)  -­‐    A  wide  area  network  that  uses  radio  signals  to  transmit  and  receive  data     .  is  what  allows  WiMAX  to  provide  coverage  to  remote   rural  areas.  video  and  data  communications   By  blending  information  with  entertainment.     Worldwide  Interoperability  for  Microwave  Access  (WiMAX)  A  communications  technology  aimed  at   providing  high-­‐speed  wireless  data  over  metropolitan  area  networks.  This  connection  to  a  second  tower  (often  referred  to  as  a  backhaul).• • •   WIRELESS  MAN   § Worldwide  Interoperability  for  Microwave  Access  (WiMAX)  -­‐  A  communications  technology  aimed  at   providing  high-­‐speed  wireless  data  over  metropolitan  area  networks     § Mobile  means  the  technology  can  travel  with  the  user.  but  it  is  not  necessarily  in  real-­‐time   § Wireless  gives  users  a  live  (Internet)  connection  via  satellite  or  radio  transmitters   Wireless  technologies  are  transforming  how  we  live.  and  cellular  networks  are  advancing   rapidly  in  their  increased  speed  and  throughput  abilities   These  enabling  technologies  are  fueling  widespread  adoption  and  creation  of  new  and  innovative  ways   to  perform  business     • • • • •   Wireless  MAN  (WMAN)    A  metropolitan  area  network  that  uses  radio  signals  to  transmit  and  receive   data.  work.  wired  connection   (for  example.  microwave   link.000  square  miles.  It  can  also  connect  to  another  WiMAX  tower  using  a  line-­‐of-­‐sight.  a  T3  line).

 or  cell  to  cell   In  less  than  twenty  years.  at  164%.  and  the  amount  of  nameplates  that  offer  standard  XM   is  growing  all  the  time.  The  move   enlarges  XM's  customer  base  while  also  giving  new-­‐car  drivers  a  chance  to  test  the  technology  for   three  months  free  of  charge.  and  now  the  subscription   radio  service  will  also  be  available  for  all  new  Buick.  low-­‐cost  personal  item.   The  availability  of  prepaid  or  'pay-­‐as-­‐you-­‐go'  services.  and  Saab  models  as  well.  Several  countries.   • • •   Cellular  telephones  (cell  phones)  work  by  using  radio  waves  to  communicate  with  radio  antennas  (or   towers)  placed  within  adjacent  geographic  areas  called  cells   A  telephone  message  is  transmitted  to  the  local  cell  by  the  cellular  telephone  and  then  is  passed  from   antenna  to  antenna.  its  markets  expanding  nearly  twice  as  fast  as  Asian  markets.  GM  made  XM  standard  on  all  Cadillac’s.  where  the  subscriber  is  not  committed  to  a  long-­‐ term  contract.  thus   reaching  an  equivalent  of  over  half  the  planet's  population.  Africa  has  the  largest  growth   rate  of  cellular  subscribers  in  the  world.  Luxembourg  has  the  highest  mobile  phone  penetration  rate  in  the  world.  The  total   number  of  mobile  phone  subscribers  in  the  world  was  estimated  at  3.     BUSINESS  APPLICATIONS  OF  WIRELESS  NETWORKS   § Areas  experiencing  tremendous  growth  using  wireless  technologies  include   • Radio-­‐frequency  identification  (RFID)   .  HUMMER.  now  have   more  mobile  phones  than  people.  There  are  over  five  hundred  million  active  mobile  phone  accounts  in   China.  has  helped  fuel  this  growth  in  Africa  as  well  as  in  other  continents.  including  the  UK.  At  present.3  billion  at  the  end  of  2007.  expensive  equipment  of  the   business  elite  to  a  pervasive.       WIRELESS  WAN  –  SATELLITE   § Satellite  -­‐  A  space  station  that  orbits  the  Earth  receiving  and  transmitting  signals  from  Earth-­‐based   stations  over  a  wide  area       •   General  Motors  is  serious  about  satellite  radio.  Previously.  the  mobile  telephone  has  gone  from  being  rare.

 Department  of  Defense  but  is  available  for  general  use   around  the  world.  ordering.  to  augmenting  Sarbanes-­‐Oxley  initiatives   RFID  tag  -­‐  contains  a  microchip  and  an  antenna.youtube.  The  service.  which  confirms  the  identity  of  a  person  or  object  bearing  the  tag   Walk  through  each  of  the  three  components  to  an  RFID  system   RFID   § find  examples  of  RFID  tags  on  the  Internet     § How  big  are  the  tags?   § How  are  the  tags  being  used?   § What  are  the  business  ramifications  of  plastic  RFID  tags?   o Washable   o Weather  resistant  (can  be  used  outside)   RFID  tags  will  be  added  to  every  product  and  shipping  box   At  every  step  of  an  item’s  journey.     The  most  popular  location  based  service  used  today  is  Global  Positioning  System  (GPS)   The  GPS  is  owned  and  operated  by  the  U.  location-­‐based  search  and  directory  service.• • •   RADIO  FREQUENCY  IDENTIFICATION  (RFID)   § Radio  frequency  identification  (RFID)    -­‐  Uses  electronic  tags  and  labels  to  identify  objects  wirelessly   over  short  distances     • Global  positioning  system   • Geographic  information  system   • Location-­‐based  services   MasterCard  now  provides  cardholders  with  a  mobile.       •   Describe  RFID  and  how  it  can  be  used  to  help  make  a  supply  chain  more  effective?   § Integrating  RFID  in  the  supply  chain  will  change  the  way  a  companies  operate  from  managing   maintenance.  combating  theft.  which  works  with  all  major  mobile  operators  in  the   United  States.  is  provided  by  MasterCard  to  cardholders  free  of  charge  (although  operator  text   message  rates  may  apply).  and  pricing   • • • • • •   What  is  RFID  &  How  RFID  Works  (5:03)   http://www.  and  typically  work  by  transmitting  a  serial  number  via   radio  waves  to  an  electronic  reader.com/watch?v=MAA9JpGraoU     .  In  1993.  a  reader  scans  one  of  the  tags  and  updates  the  information  on  the   server   Manufacturers  and  retailers  can  observe  sales  patterns  in  real-­‐time  and  make  swift  decisions  about   production.  GPS  devices  have  special  microprocessors  that   analyze  satellite  signals.  so   they  can  request  the  location  of  the  nearest  ATM  be  sent  to  their  mobile  phone  via  SMS  (Short   Message  Service.S.  the  Defense  Department  made  this  global  positioning  technology  available   for  commercial  use  to  anyone  who  has  a  GPS  device.  aka  “text  message”).

GLOBAL  POSITIONING  SYSTEM   § Global  positioning  system  (GPS)  -­‐    A  satellite-­‐based  navigation  system  providing  extremely  accurate   position.  and  OnStar  systems  —  in  GM  vehicles.  spatial  location  to   gather.  which  sends  a  continuous  stream  of   information  to  the  OnStar  center  about  the  car’s  exact  location.  most  with  digital  cameras   built  in.  Unlike  a  paper  map.  software.       Launchpad:  How  GPS  Works  (4:11)   http://www.com/watch?v=EOwMkFsJXRI&feature=related     GEOGRAPHIC  INFORMATION  SYSTEMS  (GIS)   § Geographic  information  system  (GIS)  -­‐      Consists  of  hardware.  remaining  engine  oil  life.  These  consumer  applications  are  just  simple  examples  of  mobility  being  built  into   .  air  bags.   and  other  relevant  ownership  information.com/watch?v=DsmvTzw3GP4     How  Global  Positioning  Systems  (GPS)  Work–Gravity  affects  time  and  space  so  military  operations  are   needed  to  keep  GPS  in  check.    (9:26)   http://video.  The  unique  email  report  also   provides  maintenance  reminders  based  on  the  current  odometer  reading.  antilock  brakes.  and  formulate  their  queries  based  on  their  personal  criteria.  and  bundled  with  an  e-­‐mail  service  specifically  designed  for  sending  those  captured  moments   to  friends  and  family.com/blog/kit-­‐eaton/technomix/nokia-­‐wants-­‐track-­‐your-­‐location-­‐everywhere     BENEFITS  OF  BUSINESS  MOBILITY   § Enhance  mobility   § Provides  immediate  data  access   § Increases  location  and  monitoring  capability   § Improves  work  flow   § Provides  mobile  business  opportunities   § Provides  alternative  to  wiring   • THE  POWER  OF  MOBILITY.  and  data  that  provide  location   information  for  display  on  a  multidimensional  map   • Automobiles  have  GPSs  linked  to  maps  that  display  in  a  screen  on  the  dashboard  driving  directions  and   exact  location  of  the  vehicle.nationalgeographic.  GM  offers  the  OnStar  system.com/video/science/technology-­‐sci/gis_journey/     Location  Based  Services—   Nokia  Wants  to  Track  Your  Location  (1:32)   http://www.  using  a  GIS.  The  vehicle  is   programmed  to  send  the  results  via  email  to  the  owner  each  month.  (5:11)   http://www.  For  example.  by  Russell  McGuire   • Over  eighty  percent  of  Americans  above  the  age  of  five  own  a  cell  phone.  a  GIS  allows   for  in-­‐depth  analysis  and  problem  solving  that  can  make  marketing.  analyze  and  visualize  vast  amounts  of  information.  and  planning  much  more   successful.youtube.       A  GIS  Journey  from  National  Geographic—GIS  software  uses  the  power  of  geography.  sales.youtube.fastcompany.  and  speed  information   § Some  cell  phone  providers  equip  their  phones  with  GPS  chips  that  enable  users  to  be  located  to  within   a  geographical  location  about  the  size  of  a  tennis  court   • A  GIS  is  useful  for  mobile  applications.  time.  users  can  decide  what  information  is  and  is  not  relevant   to  them.  but  it  offers  benefits  that  go  well  beyond  what  is  required  in  a   mobile  environment.  The  OnStar  Vehicle  Diagnostics   automatically  performs  hundreds  of  diagnostic  checks  on  four  key  operating  systems  —  the   engine/transmission.

 Stories  of  businesses   that  have  been  crushed  by  the  competition  because  they  have  denied  the  changes  brought  by   technologies  in  the  past  will  likely  be  repeated.  Uldrich.       .  General  Electric  and  DaimlerChrysler  as  entities  that  could  all  learn  something  from   Lewis  and  Clark.  Evaluate.• •   TED  Talks—Iqbal  Quadir  Says  Mobile  Phones  Fight  Poverty  (15:55)   http://www.  He  presents  a  powerful  framework  for   capturing  the  Power  of  Mobility:  the  Seven  Steps.  find  a  way  to  balance  the  task  at  hand  with  the  overall   future  vision.  Spotlighting  the  pair's  many  strong  points.  and  the  reasons  why  customers  buy  the  product.  and  your   processes.  Uldrich  makes  the   case  that  the  past  is  not  so  different  from  the  present—or  from  the  future  –  especially  when   concerning  new  technologies.  Position.   The  Mobility  Age  represents  a  great  opportunity  for  businesses  large  and  small  to  capture  the  Power  of   Mobility  in  order  to  create  competitive  differentiation  and  to  take  market  share.  and  Learn.  Or  you  can  lead  and  set  the  rules  —  if  you   capture  The  Power  of  Mobility  now.  You  can  wait  for  a  competitor  to   lead  and  define  the  rules  to  his  benefit  and  your  demise.ted.     everyday  products  to  create  tremendous  new  value.  envision  the  Power  of  Mobility  in  your  business.  How  will   it  impact  you  and  your  business  in  the  months  and  years  to  come?   The  Power  of  Mobility  shows  you  how  to  look  forward.  from  people  skills  and   future-­‐thinking  capabilities  to  optimism  and  an  ability  to  see  the  forest  as  well  as  the  trees.  You  have  a  choice.  For  corporate  types  looking  for  tips.  Uldrich   (drawing  on  what  has  obviously  been  years  of  extensive  research)  points  to  modern-­‐day  companies   like  Coca-­‐Cola.   Protect.  one  of  the  telecom   industry's  leading  strategists.  The  parallels  between  these  men  and  today's  leaders  are  intriguing  and   well  thought  out.  puts  forth  Lewis  and  Clark  as  two  shining  examples  of  all  that  is  right   with  leadership  and  management.   and  implement  the  steps  required  to  turn  vision  into  reality.  your  services.  you  will  capture  the  Power  of  Mobility  in  your  products.  The  overriding   messages  are  clear:  mentor  and  be  mentored.  maintain  a  confident  and  optimistic  approach  from  the  beginning.  the  rules  of  competition  change.  He  further  clarifies  the  power  of  the  Seven  Steps  with  illustrative  case  studies  of  seven   companies  that  have  successfully  implemented  this  framework  and  redefined  the  rules  of  competition   in  their  industries.  If  you  can  Digitize.  details  the  specific  actions  you  must  take  to  deliver  the  tremendous  value   that  mobility  adds—and  win  customers'  hearts  and  wallets.  From  a  business  perspective.  there  is  certainly  plenty  to  digest.?Russell  McGuire.  Connect.  by  Jack  Uldrich     • Latching  onto  the  idea  that  everything  old  is  new  again.  When  this   happens.  a  new  technology   can  introduce  radical  changes—changes  so  dramatic  that  they  fundamentally  change  the  nature  of  the   business.  Limit.html     CHALLENGES  OF  BUSINESS  MOBILITY   § Protecting  against  theft   § Protecting  wireless  connections   § Preventing  viruses  on  a  mobile  device   § Addressing  privacy  concerns  with  RFID  and  LBS     INTO  THE  UNKNOWN.     • Whether  the  "project"  is  a  westward  expedition  or  a  hostile  corporate  takeover.com/talks/iqbal_quadir_says_mobiles_fight_poverty.  a  former  naval  officer  and  author  of   The  Next  Big  Thing  Is  Really  Small.  It  is  happening  now:  the  Age  of  Mobility  is  upon  us.  the  nature  of  the  product.

 they  are  trying   to  sell  one  customer  as  many  products  as  possible.  HOG  worked.   • The  development  of  the  Harley  Owners  Group  (HOG)  is  viewed  by  some  as  one  of  the  greatest  business   decisions  of  all  time.  After  struggling  against  Japanese  competition  throughout  the  1960s  and  1970s.  celebrated  with  a  victory  ride  from  the  company’s  factory  in  York.  a  little  over  10  years  after  the  start  of  HOG.   § Building  strong  loyal  customer  relationships  is  a  key  competitive  advantage.   Pennsylvania.     Companies  are  no  longer  trying  to  sell  one  product  to  as  many  customers  as  possible.  Can  you  think  of  any  other   company  that  commands  this  kind  of  loyalty?     CUSTOMER  RELATIONSHIP  MANAGEMENT   § Intense  competition  is  forcing  firms  to  switch  from  sales-­‐focused  business  strategies  to  customer-­‐ focused  business  strategies.”  Harley  people  use  the  phrases   “super  loyalty”  and  “ultra  engagement”  to  explain  their  success.G.     OPERATIONAL  AND  ANALYTICAL  CRM     .   • Vaughn  Beals.000  Harley-­‐Davidson  machines.  instead.O.     Harley  Davidson  Barcelona.  HOG  opened  a  dialog  outside  the  company  with  its  loyal  customer  base  and  inside  the   company  with  its  workforce.)  to  get  customers  more  involved  with  the  product.2   CUSTOMER  RELATIONSHIP  MANAGEMENT  AND  ENTERPRISE  RESOURCE  PLANNING     HARLEY  DAVIDSON   • One  of  the  biggest  assets  for  Milwaukee-­‐based  Harley-­‐Davidson  Motorcycle  Company  is  the  intensely   loyal  customers.  the  company  celebrated  its  90th  anniversary  with   more  than  100.  Harley  Davidson  created  a  “customer  experience.youtube.com/watch?v=KmbcCh4rFgk     • This  truly  shows  the  enthusiasm  and  loyalty  of  Harley  Davidson  customers.  Spain  (8:00)   http://www.  The  new  owners  decided  to  begin  the  Harley  Owners   Group  (H.000  HOG  members  converging  on  Milwaukee  for  a  drive-­‐through  parade  featuring   60.  the   company  was  able  to  key  into  its  greatest  asset—the  people  who  care  about  the  Harley-­‐Davidson   company.   • In  1993.  to  its  headquarters  in  Milwaukee.  the   company  turned  a  corner  in  1981  when  a  group  of  13  senior  Harley-­‐Davidson  executives  purchased  the   company.CHAPTER  EIGHT   SECTION  8.  With  HOG.  the  leader.

  however.  the  CRM  system  is  the  integrator.   •   Why  would  an  organization  have  a  separate  system  for  each  front-­‐office  system  and  each  back-­‐office   system?   § Most  organizations  operate  functional  “silos”.youtube.    Most  organizations  require   anywhere  from  10  to  100  to  1.com/watch?v=_r1H7OK8lzY&feature=relmfu     Service  Cloud:  Call  Center  Demo  (2:13)  http://www.com/watch?v=KcOm0TNvKBA&feature=relmfu     Marketing  &  Lead  Management  (3:13)  http://www.youtube.  this  doesn’t  happen  very  often  in  the  real  world.000  different  systems  to  run  their  business   § Finding  one  system  that  could  meet  all  the  needs  of  an  entire  organization  from  billing  to  sales   is  almost  impossible   § For  this  reason.  and  each  department  typically  has  its  own   systems   § A  company  might  purchase  an  ERP  and  then  all  of  the  functional  silos  would  be  on  one  system.com:  CRM  Overview  Demo  (3:32)   http://www.youtube.youtube.com/watch?NR=1&v=OI1cxXNoy4s     ENTERPRISE  RESOURCE  PLANNING   § Enterprise  resource  planning  –  Integrates  all  departments  and  functions  throughout  an  organization   into  a  single  IT  system  (or  integrated  set  of  IT  systems)  so  that  employees  can  make  enterprisewide   decisions  by  viewing  enterprisewide  information  on  all  business  operations   • This  section  covers:   § Core  ERP  components   § Extended  ERP  components   § ERP  benefits     § ERP  risks   .com/watch?v=YpfbY1WUyYM&feature=relmfu     What  is  Social  CRM?  (2:51)  http://www.com/watch?v=2X60otMAtyc&feature=relmfu     Service  Cloud  –  Knowledge  Demo  (3:10)  http://www.youtube.  gathering  all  of  the  customer  information   from  the  many  different  system  to  obtain  a  single  view  of  the  customer     CRM  DEMOS   Salesforce.

§ Future  of  ERP     The  Organization  Before  ERP    

  •

  In  most  organizations,  information  has  traditionally  been  isolated  within  specific  departments,  whether   on  an  individual  database,  in  a  file  cabinet,  or  on  an  employee’s  PC.  ERP  enables  employees  across  the   organization  to  share  information  across  a  single,  centralized  database.  With  extended  portal   capabilities,  an  organization  can  also  involve  its  suppliers  and  customers  to  participate  in  the  workflow   process,  allowing  ERP  to  penetrate  the  entire  value  chain,  and  help  the  organization  achieve  greater   operational  efficiency   When  reviewing  this  diagram  demonstrate  to  the  students  how  each  department  has  its  own  database   separate  from  all  other  organizational  departments   Ask  your  student  what  types  of  problems  could  occur  if  all  departments  maintain  their  own  database   and  systems?   § Update  issues   § Redundancy   § Inaccurate  information  across  databases   § Different  formats  of  information  in  the  different  databases   § Inability  to  access  other  department  information  and  not  being  provided  with  a  360  degree   view  of  the  organization   § Different  customer  information  in  different  databases   § Customer  contact  from  multiple  departments  with  different  messages    

• •

   

ERP  Bringing  The  Organization  Together    

• •

  In  most  organizations,  information  has  traditionally  been  isolated  within  specific  departments,  whether   on  an  individual  database,  in  a  file  cabinet,  or  on  an  employee’s  PC.  ERP  enables  employees  across  the   organization  to  share  information  across  a  single,  centralized  database.  With  extended  portal   capabilities,  an  organization  can  also  involve  its  suppliers  and  customers  to  participate  in  the  workflow   process,  allowing  ERP  to  penetrate  the  entire  value  chain,  and  help  the  organization  achieve  greater   operational  efficiency   one  database  that  supports  the  entire  organization  could  eliminate  many  of  the  issues  discussed  on  the   previous  slide   what  issues  could  be  caused  by  having  one  database  that  supports  the  entire  organization?   § Not  as  flexible  and  far  more  difficult  to  change   § Might  not  meet  all  department  needs  as  well  as  an  individual  specific  system   § Multiple  access  levels  increases  security  issues   § Ethical  dilemmas  from  accessing  different  department  information  –  such  as  payroll  

  THE  BENEFITS  OF  ERP    

  •

  Core  ERP  components  –  traditional  components  included  in  most  ERP  systems  and  they  primarily  focus   on  internal  operations  

  THE  FUTURE  OF  ENTERPRISE  SYSTEMS:  INTEGRATING  SCM,  CRM,  AND  ERP      SCM,  CRM,  and  ERP  Integration    

Extended  ERP  components  –  extra  components  that  meet  the  organizational  needs  not  covered  by  the   core  components  and  primarily  focus  on  external  operations  

  • • •

  Companies  run  on  interdependent  applications   If  one  application  of  the  company  does  not  function  well,  the  entire  customer  value  delivery  system  is   affected   The  world-­‐class  enterprises  of  tomorrow  must  be  built  on  the  function  of  world-­‐class  applications   implemented  today  

  ERP  DEMOS   Salesforce.com:  What  is  Force.com?  (2:26)  http://www.youtube.com/watch?v=EzE6haADxRc&feature=relmfu     Salesforce.com:  Chatter  Overview  Demo  (4:07)  http://www.youtube.com/watch?NR=1&v=puydh-­‐ey_2k     Force.com:  Workflow  and  Approvals  Demo  (2:02)  http://www.youtube.com/watch?NR=1&v=fM3xHN8M9-­‐8     • Salesforce.com:  What  is  Force.com?  (2:26)     • Building  and  running  applications  and  web  sites  with  products  like  WebLogic,  WebSphere  and   Microsoft  .Net  is  way  too  slow,  complicated  and  expensive.  A  new  generation  of  cloud  platforms  are   now  available.  Force.com  is  the  leading  cloud  platform  for  business  applications  and  Web  sites.  You   can  build  and  run  your  apps  on  it  5x  faster,  at  about  1/2  the  cost  of  traditional  software  platforms.       • Salesforce.com:  Chatter  Overview  Demo  (4:07)   •  Salesforce  Chatter  will  transform  the  way  you  collaborate  with  people  in  your  company.  As  both  a   collaboration  application  and  a  platform  for  building  collaborative  cloud-­‐computing  apps,  Chatter  helps   you  connect  and  share  information  securely  like  never  before—all  in  real  time.  Welcome  to  the  new   world  of  work  collaboration,  where  everyone  is  more  productive  and  makes  smarter  business   decisions.       • Force.com:  Workflow  and  Approvals  Demo  (2:02)      

•   • •

This  demo  shows  how  you  can  use  the  Force.com  Workflow  and  Approval  engine  to  add  business  logic   to  your  cloud  application.  In  this  example  we  show  how  to  add  an  approval  process  for  new  job   openings  in  our  sample  recruiting  app.   Hitler  and  Cloud  Computing  Security  (4:28)   http://www.youtube.com/watch?v=VjfaCoA2sQk&feature=related  

  SECTION  8.1   ENTERPRISE  SYSTEMS  AND  SUPPLY  CHAIN  MANAGEMENT     • This  chapter  takes  a  look  at  extending  an  organization  through  SCM  and  discusses:   § The  reasons  for  SCM’s  explosive  growth   § Using  SCM  to  enhance  decision  making   § SCM  success  factors   § Traditional  SCM  thinking  involved  “I  buy  from  my  suppliers,  I  sell  to  my  customers.”       • Today,  organizations  are  quickly  realizing  the  tremendous  value  they  can  gain  from  having  visibility   throughout  their  supply  chain   • Knowing  immediately  what  is  transacting  at  the  customer  end  of  the  supply  chain,  instead  of  waiting   days  or  weeks  for  this  information  to  flow  upstream,  allows  the  organization  to  react  immediately   § Best  Buy  checks  inventory  levels  at  each  of  its  750  stores  across  North  America  as  often  as   every  half-­‐hour     SUPPLY  CHAIN  MANAGEMENT   § Five  basic  supply  chain  activities    

  • • •

  Best  Buy  checks  inventory  levels  at  each  of  its  750  stores  in  North  America  as  often  as  every  half-­‐hour   with  its  SCM  system,  taking  much  of  the  guesswork  out  of  inventory  replenishment   Supply  chain  management  improves  ways  for  companies  to  find  the  raw  components  they  need  to   make  a  product  or  service,  manufacture  that  product  or  service,  and  deliver  it  to  customers   Plan  –  This  is  the  strategic  portion  of  supply  chain  management.  A  company  must  have  a  plan  for   managing  all  the  resources  that  go  toward  meeting  customer  demand  for  products  or  services.  A  big   piece  of  planning  is  developing  a  set  of  metrics  to  monitor  the  supply  chain  so  that  it  is  efficient,  costs   less,  and  delivers  high  quality  and  value  to  customers.  

•   §  

Source  –  Companies  must  carefully  choose  reliable  suppliers  that  will  deliver  goods  and  services   required  for  making  products.  Companies  must  also  develop  a  set  of  pricing,  delivery,  and  payment   processes  with  suppliers  and  create  metrics  for  monitoring  and  improving  the  relationships.   Make  –  This  is  the  step  where  companies  manufacture  their  products  or  services.  This  can  include   scheduling  the  activities  necessary  for  production,  testing,  packaging,  and  preparing  for  delivery.  This  is   by  far  the  most  metric-­‐intensive  portion  of  the  supply  chain,  measuring  quality  levels,  production   output,  and  worker  productivity.   Deliver  –  This  step  is  commonly  referred  to  as  logistics.  Logistics  is  the  set  of  processes  that  plans  for   and  controls  the  efficient  and  effective  transportation  and  storage  of  supplies  from  suppliers  to   customers.  During  this  step,  companies  must  be  able  to  receive  orders  from  customers,  fulfill  the   orders  via  a  network  of  warehouses,  pick  transportation  companies  to  deliver  the  products,  and   implement  a  billing  and  invoicing  system  to  facilitate  payments.   Return  –  This  is  typically  the  most  problematic  step  in  the  supply  chain.  Companies  must  create  a   network  for  receiving  defective  and  excess  products  and  support  customers  who  have  problems  with   delivered  products.   Supply  Chain  Management  (SCM)  –  The  management  of  information  flows  between  and  among   activities  in  a  supply  chain  to  maximize  total  supply  chain  effectiveness  and  profitability  

    i2  Supply  Chain  Management  for  a  Better  World   Supply  chain  management  helps  businesses  create  a  more  efficient  world.   http://www.youtube.com/watch?v=6rmV__Yrk7Q     SUPPLY  CHAIN  MANAGEMENT   Walmart  and  Procter  &  Gamble  SCM  Example    

 

 

• • • •

  Walmart  secrets  –  barcodes  and  information  (2:33)   Walmart  is  often  credited  with  creating  the  supply  chain.   http://www.youtube.com/watch?v=C6-­‐eoiHvSfc     SUPPLY  CHAIN  MANAGEMENT   Supply    Chain  Example    

Wal-­‐Mart  and  P&G  implemented  a  tremendously  successful  SCM   System  links  Wal-­‐Mart’s  distribution  centers  directly  to  P&G’s  manufacturing  centers   Each  time  a  Wal-­‐Mart  customers  purchases  a  P&G  product,  the  system  sends  a  message  directly  to   P&G’s  factory  for  a  reorder   Explain  how  Wal-­‐Mart’s  and  P&G’s  relationship  would  be  affected  if  a  catastrophic  incident  destroyed   the  SCM  system?   § How  would  Wal-­‐Mart  reorder  products?   § How  would  Wal-­‐Mart  send  payments?   § How  would  P&G  know  which  products  to  send  to  Wal-­‐Mart?  

  •

  To  help  your  students  understand  a  supply  chain,  ask  them  to  discuss  and  determine  the  steps  typically   taken  when  a  customer  buys  a  bike  from  Trek   1. Customer  places  an  order  for  a  Trek  bike  with  a  store   2. Store  (such  as  Gart  Sports,  local  bike  shop,  or  local  sporting  goods  store)  receives  the  order   3. Store  receives  the  payment  from  the  customer   4. Store  orders  the  bike  from  Trek   5. Store  sends  payment  to  Trek   6. Trek  orders  materials  from  its  suppliers,  such  as  packaging  material,  metal,  and  accessories   7. Trek  sends  payments  to  suppliers   8. Trek  receives  materials  from  suppliers   9. Trek  assembles  the  bike   10. Trek  ships  the  bike  to  the  store   11. Customer  picks  up  the  Trek  bike  from  the  store   Dozens  of  steps  are  required  to  achieve  and  carry  out  each  of  the  supply  chain  components   The  above  figure  diagrams  the  typical  manufacturing  supply  chain   SCM  software  can  enable  an  organization  to  generate  efficiencies  within  these  steps  by  automating   and  improving  the  information  flows  throughout  and  among  the  different  supply  chain  components.    

• • .   •  

Ford  Manufacturing  Supply  Chain  (4:58)   http://www.youtube.com/watch?v=qyO9QSo0FjU       § The  supply  chain  has  three  main  links   1. Materials  flow  from  suppliers  and  their  “upstream”  suppliers  at  all  levels   2. Transformation  of  materials  into  semifinished  and  finished  products  through  the  organization’s   own  production  process   3. Distribution  of  products  to  customers  and  their  “downstream”  customers  at  all  levels     • Collecting,  analyzing,  and  distributing  transactional  information  to  all  relevant  parties,  SCM  systems   help  all  the  different  entities  in  the  supply  chain  work  together  more  effectively   • SCM  has  significantly  improved  companies’  forecasting  abilities  over  the  last  few  years   • Businesses  today  have  access  to  modeling  and  simulation  tools,  algorithms,  and  applications  that  can   combine  information  from  multiple  sources  to  build  forecasts  for  days,  weeks,  and  months  in  advance     Kiva  Warehouse  Robotics  (History  Channel)  (4:00)   New  ways  to  pack  and  transport  products  from  the  warehouse  to  the  customer.   http://www.youtube.com/watch?v=gvQKGev56qU     KIVA  robotic  truck  loading  system  by  Precision  Warehouse  Design  (1:39)   http://www.youtube.com/watch?v=1uTvMfSBl44&feature=related     • These  videos  focus  on  the  distribution  of  products  for  transport  to  the  customers.     SUPPLY  CHAIN  MANAGEMENT   § Effective  and  efficient  SCM  systems  can  enable  an  organization  to   • Decrease  the  power  of  its  buyers   • Increase  its  own  supplier  power   • Increase  switching  costs  to  reduce  the  threat  of  substitute  products  or  services   • Create  entry  barriers  thereby  reducing  the  threat  of  new  entrants   • Increase  efficiencies  while  seeking  a  competitive  advantage  through  cost  leadership   • Considerable  evidence  shows  that  this  type  of  supply  chain  integration  results  in  superior  supply  chain   capabilities  and  profits.       Effective  and  Efficient  SCM  Systems  Effect  on  Porter’s  Five  Forces    

  • •

  Is  it  a  good  idea  to  try  to  influence  buyer  power  and  supplier  power?   Why  would  a  company  wants  to  decrease  its  buyer  power  and  increase  its  supply  power?  

•   THE  BENEFITS  OF  SCM:     IMPROVED  VISIBILITY   § Supply  chain  visibility  –  The  ability  to  view  all  areas  up  and  down  the  supply  chain  in  real  time   § Supply  chain  planning  system  –  Uses  advanced  mathematical  algorithms  to  improve  the  flow  and   efficiency  of  the  supply  chain  while  reducing  inventory   § Supply  chain  execution  system  –  Automates  the  different  activities  of  the  supply  chain   § Bullwhip  effect  –  Occurs  when  distorted  product  demand  information  ripples  from  one  partner  to  the   next  throughout  the  supply  chain   • Visibility  –  more  visible  models  of  different  ways  to  do  things  in  the  supply  chain  have  emerged.    High   visibility  in  the  supply  chain  is  changing  industries,  as  Wal-­‐Mart  demonstrated   • Supply  chain  visibility  allows  organizations  to  eliminate  the  bullwhip  effect   § To  explain  the  bullwhip  effect  to  your  students  discuss  a  product  that  demand  does  not  change,   such  as  diapers.    The  need  for  diapers  is  constant,  it  does  not  increase  at  Christmas  or  in  the   summer,  diapers  are  in  demand  all  year  long.    The  number  of  newborn  babies  determines   diaper  demand,  and  that  number  is  constant.   § Retailers  order  diapers  from  distributors  when  their  inventory  level  falls  below  a  certain  level,   they  might  order  a  few  extra  just  to  be  safe   § Distributors  order  diapers  from  manufacturers  when  their  inventory  level  falls  below  a  certain   level,  they  might  order  a  few  extra  just  to  be  safe   § Manufacturers  order  diapers  from  suppliers  when  their  inventory  level  falls  below  a  certain   level,  they  might  order  a  few  extra  just  to  be  safe   § Eventually  the  one  or  two  extra  boxes  ordered  from  a  few  retailers  becomes  several  thousand   boxes  for  the  manufacturer.    This  is  the  bullwhip  effect,  a  small  ripple  at  one  end  makes  a  large   wave  at  the  other  end  of  the  whip.     • This  is  a  supply  chain  game  that  is  modeled  after  the  original  Beer  Game  invented  at  MIT  about  50   years  ago.  It  is  still  in  use  today  and  every  MIT  MBA  student  is  required  to  play  the  game  to  learn  about   supply  chain  management  and  the  effect  of  delays  in  supply  chains.   • Click  on  the  link  above  and  see  if  you  master  the  Near  Beer  Game  simulation.     http://forio.com/simulate/mbean/near-­‐beer-­‐game/run/     THE  BENEFITS  OF  SCM:     IMPROVED  PROFITABILITY   § Companies  can  respond  faster  and  more  effectively  to  consumer  demands  through  supply  chain   enhances     § Demand  planning  system  –  Generates  demand  forecasts  using  statistical  tools  and  forecasting   techniques,  so  companies  can  respond  faster  and  more  effectively  to  consumer  demands  through   supply  chain  enhancements   • Once  an  organization  understands  customer  demand  and  its  effect  on  the  supply  chain  it  can  begin  to   estimate  the  impact  that  its  supply  chain  will  have  on  its  customers  and  ultimately  the  organizations   performance      

Decreasing  buyer  power  gives  a  company  a  competitive  advantage  as  Apple  discovered  with   the  introduction  of  its  iPod.  Being  the  first  to  market  and  the  only  supplier  of  a  product  puts  the   company  in  the  coveted  position  of  being  able  to  set  prices  and  control  the  market.   Discuss  how  SCM  systems  can  drive  buyer  power  and  supplier  power   §

§

• •

  THE  CHALLENGES  OF  SCM   § Primary  challenges  include   • Cost  –  An  SCM  system  can  cost  millions  of  dollars  for  the  software  and  millions  more  for  help   implementing  the  system   • Complexity  -­‐  The  move  towards  globalization  is  increasing  complexity  in  the  supply  chain     Future  Supply  Chain  2016  (6:06)   There  are  many  challenges  in  the  future  to  deliver  products  to  consumers  and  retail  companies.  Video  shows   the  extensive  collaboration  and  innovation  that  will  be  needed  to  meet  these  challenges.   http://www.youtube.com/watch?v=US5lO1HfmEo&feature=related      

Common  supply  chain  metrics  include:   • Back  order   • Inventory  cycle  time   • Customer  order  cycle  time   • Inventory  turnover   Supply  chain  management  metrics  can  help  an  organization  understand  how  it’s  operating  over  a  given   time  period.  Supply  chain  measurements  can  cover  many  areas  including  procurement,  production,   distribution,  warehousing,  inventory,   transportation,  and  customer  service.  However,  a  good  performance  in  one  part  of  the  supply  chain  is   not  sufficient.  A  supply  chain  is  only  as  strong  as  its  weakest  link.   The  solution  is  to  measure  all  key  areas  of  the  supply  chain.    

CHAPTER  NINE  

SYSTEMS  DEVELOPMENT  AND  PROJECT  MANAGEMENT:  CORPORATE  RESPONSIBILITY     • Death  March:  The  Complete  Software  Developer’s  Guide  to  Surviving  “Mission  Impossible”  Projects,   by  Edward  Yourdon   • Today,  IT  projects  are  expected  to  achieve  the  impossible,  overcome  numerous  constraints,  deal  with   elevated  stress  levels  and  imperfect  working  conditions.   • Yourdon  takes  direct  aim  at  the  projects  that  are  “doomed  to  fail”  presenting  specific  techniques  for:   • Managing  people  and  teams.   • Choosing  the  right  processes.   • Making  decisions  about  tools  and  technologies.   • Getting  the  flexibility  you  need  to  succeed.       Systems  Development  Life  Cycle  Cartoon  (1:27)   This  is  a  humorous  cartoon  depicting  the  lack  of  communication  as  a  major  reason  for  systems  development   failure.   http://www.youtube.com/watch?annotation_id=annotation_589336&src_vid=OfgfnZZdMlI&feature=iv&v=xt pyjPrpyX8     If  Programmers  Made  Planes  (1:00)   This  is  a  video  that  compares  programming  to  trying  to  build  a  plane  while  it  is  flying.     http://www.clipupload.com/clip/showphoto.php/photo/3478/cat/     DEVELOPING  SOFTWARE  

 So  do  software   developers.  so  do  the  business-­‐related  consequences  of  software   successes  and  failures  including:   • Increase  or  decrease  revenue   • Repair  or  damage  to  brand  reputation   • Prevent  or  incur  liabilities   • Increase  or  decrease  productivity   Increase  or  decrease  revenue  –  Discuss  Nike’s  poorly  designed  SCM  software  that  delayed  orders.       Imagine  trying  to  build  a  house  if  you  do  not  have  a  blue  print  of  what  the  customer  wants.  businesses  $100  billion  in  2003     THE  SYSTEMS  DEVELOPMENT  LIFE  CYCLE  (SDLC)   § Systems  development  life  cycle  (SDLC)  –  The  overall  process  for  developing  information  systems  from   planning  and  analysis  through  implementation  and  maintenance       • •   Correlate  the  SDLC  to  building  a  house.   increased  excess  inventories.S.§   • • • • As  organizations’  reliance  on  software  grows.    This  activity  helps  students  understand  the  different  types  of  activities  that  occur  during  each  phase  of   the  systems  development  life  cycle   •   SOFTWARE  DEVELOPMENT  METHODOLOGIES   § There  are  a  number  of  different  software  development  methodologies  including   • Waterfall   • Agile   • Rapid  application  development  (RAD)   • Extreme  programming   • Rational  unified  process  (RUP)   • Scrum     .  Builders   and  contractors  have  a  certain  methodology  they  follow  to  construct  a  building.  and  caused  third  quarter  earnings  to  fall  24%  below  expectations   Repair  or  damage  to  brand  reputation  –  H&R  Block  customers  were  furious  when  the  company   accidentally  posted  passwords  and  social  security  numbers  to  its  Web  site   Prevent  or  incur  liabilities  –  FoxMeyer  sued  SAP  for  $500  million  for  an  ERP  failure   Increase  or  decrease  productivity  –  Defective  software  accounts  for  45%  of  computer  downtime  and   cost  U.

 activity-­‐based  process  in  which  each  phase  in  the  SDLC  is   performed  sequentially  from  planning  through  implementation  and  maintenance   Rapid  application  development  methodology  (RAD)  –  emphasizes  extensive  user  involvement  in  the   rapid  and  evolutionary  construction  of  working  prototypes  of  a  system  to  accelerate  the  systems   development  process   Extreme  programming  (XP)  methodology  –  breaks  a  project  into  tiny  phases.• • • •   WATERFALL  METHODOLOGY   § Waterfall  methodology  –  A  sequence  of  phases  in  which  the  output  of  each  phase  becomes  the  input   for  the  next     Waterfall  methodology  –  a  sequential.  and  developers  cannot   continue  on  to  the  next  phase  until  the  first  phase  is  complete   Agile  methodology  –  a  form  of  XP.  even  late  in  development   § Business  people  and  developers  must  work  together  daily  throughout  the  project   § Build  projects  around  motivated  individuals   .  aims  for  customer  satisfaction  through  early  and  continuous   delivery  of  useful  software  components       •   The  waterfall  methodology  is  one  of  the  oldest  software  development  methods  and  has  been  around   for  over  30  years   • The  success  rate  for  software  development  projects  that  follow  this  approach  is  only  about  10  percent.   or  1  in  10   • The  biggest  problem  with  the  waterfall  methodology  is  that  it  assumes  users  can  specify  all  business   requirements  in  advance   It  also  assumes  that  business  requirements  do  not  change  over  time   • Stress  to  your  students  that  if  they  ever  find  themselves  on  a  software  development  project  that  is   using  the  waterfall  methodology  they  should  do  everything  they  can  to  change  the  methodology     AGILE  METHODOLOGY   § Iterative  development  –  Consists  of  a  series  of  tiny  projects   § Agile  methodology  –  Aims  for  customer  satisfaction  through  early  and  continuous  delivery  of  useful   software  components  developed  by  an  iterative  process  using  the  bare  minimum  requirements     • The  Aglie  Alliance  is  a  group  of  software  developers  whose  mission  is  to  improve  software   development  processes  and  whose  manifesto  includes  the  following:   § Satisfy  the  customer  through  early  and  continuous  delivery  of  valuable  software   § Welcome  changing  requirements.

com/watch?v=gPgsKLtwJ68       EXTREME  PROGRAMMING  METHODOLOGY   § Extreme  programming  (XP)  methodology  –  Breaks  a  project  into  tiny  phases.§ §   FS  Agile  Development  Methodology  (2:59)   http://www.  then  tunes  and  adjusts   its  behavior  accordingly     •   The  primary  difference  between  the  waterfall  and  XP  methodologies  is  that  XP  divides  its  phases  into   iterations  with  user  feedback       RATIONAL  UNIFIED  PROCESS  (RUP)  METHODOLOGY   .  Waterfall:  A  Tale  of  Two  Teams  (8:20)   http://www.  and  development  phases   § Accelerate  collecting  the  business  requirements  through  an  interactive  and  iterative   construction  approach     Short  Tutorial  –  Rapid  Application  Development  (RAD)  –  Overview  (1:53)   http://www.com/watch?v=Ovwfh8yRFRs       Agile  vs.youtube.youtube.  and  developers  cannot   continue  on  to  the  next  phase  until  the  first  phase  is  complete     The  best  architectures.  requirements.com/watch?v=gDDO3ob-­‐4ZY&feature=related       RAPID  APPLICATION  DEVELOPMENT  METHODOLOGY  (RAD)   § Rapid  application  development  methodology–  Emphasizes  extensive  user  involvement  in  the  rapid   and  evolutionary  construction  of  working  prototypes  of  a  system  to  accelerate  the  systems   development  process   § Prototype  –  A  smaller-­‐scale  representation  or  working  model  of  the  users’  requirements  or  a   proposed  design  for  an  information  system   § The  prototype  is  an  essential  part  of  the  analysis  phase  when  using  a  RAD  methodology   • RAD  is  a  more  popular  route  for  system  development  projects   • The  fundamentals  of  RAD  include:   § Focus  initially  on  creating  a  prototype  that  looks  and  acts  like  the  desired  system   § Actively  involve  system  users  in  the  analysis.  and  designs  emerge  from  self-­‐organizing  teams   At  regular  intervals.youtube.  the  team  reflects  on  how  to  become  more  effective.  design.

    • It  is  a  different  feel  to  the  way  programming  happens.  “Agile  programming  is  very  different  and  new.  RUP  helps  developers  avoid  reinventing  the   wheel  and  focuses  on  rapidly  adding  or  removing  reusable  chunks  of  processes  addressing  common   problems.  each  day  ends  or  begins  with  a  stand-­‐up  meeting  to  monitor  and  control  the   development  effort   • Primavera  Systems.  said.  energetic  development   environment.  negotiation  around   priorities  and  time  and  talents.  CTO  of  Primavera.     • Maybe  it  is  just  one  specific  piece  of  functionality  but  it’s  the  real  thing.  tested  software.  Approximately  500.§ •   SCRUM  METHODOLOGY   § SCRUM  –  Uses  small  teams  to  produce  small  pieces  of  deliverable  software  using  sprints.000  developers  have  used  RUP  in  software  projects  of  varying   sizes  in  the  20  years  it’s  been  available.  a  software  solutions  company  was  finding  it  increasingly  difficult  to  use  the   traditional  waterfall  methodology  for  development  so  it  moved  to  an  agile  methodology..  or  30-­‐day   intervals.     • Scrum’s  insistence  on  delivering  complete  increments  of  business  value  in  30-­‐day  learning  cycles   helped  the  teams  learn  rapidly.     • Instead  of  mindlessly  cranking  out  code.   .com/watch?v=OJflDE6OaSc&feature=related       DEVELOPING  SUCCESSFUL  SOFTWARE   § Primary  reasons  for  project  failure   • Unclear  or  missing  business  requirements   • Skipping  SDLC  phases   • Failure  to  manage  project  scope     v Scope  creep   v Feature  creep     • Failure  to  manage  project  plan   • Changing  technology     Scope  creep  –  occurs  when  the  scope  increases   Feature  creep  –  occurs  when  extra  features  are  added   • example  of  scope  creep   Rational  Unified  Process  (RUP)  –  Provides  a  framework  for  breaking  down  the  development  of   software  into  four  gates   • Gate  One:  Inception   • Gate  Two:  Elaboration   • Gate  Three:  Construction   • Gate  Four:  Transition   Because  RUP  is  an  iterative  methodology.  including  delivery  and  client   review  against  needs  and  requirements.”     Agile:  An  Introduction—Scrum  Teams  (8:35)   http://www.youtube.  to  achieve  an  appointed  goal   § Under  this  methodology.  the  process  is  one  of  team  dialogue.  the  user  can  reject  the  product  and  force  the  developers  to   go  back  to  gate  one.     • The  entire  company  commits  to  a  30-­‐day  sprint  and  delivery  of  finished.  by  the  way.     • It  forced  teams  to  test  and  integrate  experiments  and  encouraged  them  to  release  them  into   production.  according  to  IBM.  Those  needs  and  requirements.  change.     • Dick  Faris.   • Primavera’s  shift  resulted  in  highly  satisfied  customers  and  a  highly  motivated.  Inc.  That  is   the  strength  we  saw  in  the  Scrum  process.

 within  budget.•   DEVELOPING  SUCCESSFUL  SOFTWARE   § The  later  in  the  SDLC  an  error  is  found  the  more  expensive  it  is  to  fix!     § We  added  a  new  type  of  discount  to  our  marketing  plan   example  of  feature  creep   § We  would  like  a  new  logo  placed  on  the  top  corner  of  every  screen  and  it  should  play  a  song   when  clicked     • • • • •   the  cost  of  finding  errors  grows  exponentially  the  later  the  error  is  found  in  the  systems  development   life  cycle   An  error  found  during  the  analysis  and  design  phase  is  relatively  inexpensive  to  fix   All  that  is  typically  required  is  a  change  to  a  Word  document   However.   and  with  features  and  functions  originally  specified  by  the  customer  to  deliver  business  value.  how  can  this   happen?     .  and  the  effects  of  low  morale.  lost  goodwill.  exactly  the  same  error  found  during  the  testing  or  implementation  phase  is  going  to  cost  the   organization  an  enormous  amount  to  fix  because  it  has  to  change  the  actual  system   Find  errors  early:  the  later  in  the  SDLC  an  error  is  found  -­‐  the  more  expensive  it  is  to  fix     MANAGING  SOFTWARE  DEVELOPMENT  PROJECTS   § Analysts  predict  investment  in  MIS  projects  worldwide  is  over  $1  trillion   § 70  percent  will  be  lost  due  to  failed  projects   § The  consequences  of  failed  projects  include   • Damaged  brand   • Lost  goodwill   • Dissolution  of  partnerships   • Lost  investment  opportunities   • Low  morale     • Analysts  predict  investment  in  IT  projects  worldwide  through  2010  will  be  over  $1  trillion.     • With  so  many  skilled  and  knowledgeable  IT  professionals  at  the  helm  of  IT  projects.  the  dissolution  of  partnerships.   • According  to  the  Standish  Group.  and  even  more  staggering  is  that  nearly  70  percent  of  it  will  be  merely  washed   down  the  drain  as  a  result  of  failed  projects!   • In  addition  to  lost  earnings.  just  29  percent  of  IT  projects  were  completed  on  time.  companies  from  Nestlé  to  Nike  have  experienced  additional  consequences   of  failed  projects—a  damaged  brand.  lost  investment   opportunities.  This  is  a   staggering  amount.

 all  of  them  agree  that  communication  is  the  key  to  excellent  project   management.  whether  it  comes  in  the  form  of  a  crisis.  they  sign  off  on  low-­‐value  projects  that  consume  valuable   and  scarce  resources.     TIME.25)   http://www. Change     • Managing  People   • Managing  people  is  one  of  the  hardest  and  most  critical  efforts  a  project  manager  undertakes.   http://www.•   MANAGING  PROJECTS   § A  project  manager  must  focus  on  managing  three  primary  areas  to  ensure  success   1.  This  is  quite  easy  to  state.   Resolving  conflicts  within  the  team  and  balancing  the  needs  of  the  project  with  the  personal  and   professional  needs  of  the  team  are  two  of  the  challenges  facing  project  managers.com/watch?v=bG5na7JD7rE     The  Story  of  the  Eagle  (4:29)   This  video  is  an  allegory  that  depicts  what  many  businesses  face  today—the  need  to  change  or  die.  they   overcommit  financial  and  human  capital.  organizations  adopt  projects  that  do  not  align  with  mission-­‐critical  initiatives.  and  they  agree  to  support  projects  that  are  poorly  defined  from  requirements  to   planning.  is   challenging  for  all  organizations. People   2.  Successful  organizations  and  successful  people  learn  to  anticipate  and   react  appropriately  to  change. Communications   3.  a  market  shift.  composition.  but  not  so  easy  to  accomplish!   • Managing  Change   • Change.youtube.youtube.       • Change  management  –  A  set  of  techniques  that  aid  in  evolution.  COST.  and  policy  management   of  the  design  and  implementation  of  a  system     Cisco  –  Change  Management  Training  Video  (6.  or  a  technological  development.   • Managing  Communications   • While  many  companies  develop  unique  project  management  frameworks  based  on  familiar  project   management  standards.com/watch?v=xUO7TV3dqzE&feature=related       THE  TRIPLE  CONSTRAINT        Project  Management  Interdependent  Variables     Every  day.  SCOPE       .

 and  scope   Benjamin  Franklin’s  timeless  advice  -­‐  by  failing  to  prepare.  you  prepare  to  fail  -­‐  applies  to  software   development  projects     • • •   Project  managers  must  take  all  of  the  activities  above  and  ensure  they  flow  smoothly  to  develop  and   deliver  a  successful  project   Which  activity  listed  above  is  the  most  important?   Which  activity  listed  above  is  the  least  important?     UNDERSTANDING  PROJECT  PLANNING   § Two  primary  diagrams  used  in  project  planning  include  PERT  and  Gantt  charts   • PERT  chart   v Dependency   v Critical  path   • Gantt  chart       • Dependency  –  a  logical  relationship  between  the  project  tasks.• • • •   PROJECT  PARTICIPANTS   Project  Management  Role     These  three  variables  are  interdependent   You  cannot  change  one  without  changing  the  others   § For  example.  decreasing  a  project’s  timeframe  means  either  increasing  the  cost  of  the  project   or  decreasing  the  scope  of  the  project  to  meet  the  new  deadline   § Increasing  a  project’s  scope  means  either  increasing  the  project’s  timeframe  or  increasing  the   project’s  cost  –  or  both  –  to  meet  the  increased  scope  changes   Project  management  is  the  science  of  making  intelligent  trade-­‐offs  among  time.  or  between  a  project  task  and  a   milestone   • Critical  path  –  a  path  from  the  start  to  the  finish  that  passes  through  all  the  tasks  that  are  critical  to   completing  the  project  in  the  shortest  amount  of  time   • why  do  you  need  to  create  dependencies?   § Dependencies  inform  the  project  manager  of  tasks  associated  with  or  affected  by  another  task   PERT  (Program  Evaluation  and  Review  Technique)  chart  –  is  a  graphical  network  model  that  depicts  a   project’s  tasks  and  the  relationships  between  those  tasks    (Dependencies  and  Critical  paths  are  found  in  PERT   charts)   Gantt  chart  –  a  simple  bar  chart  that  depicts  project  tasks  against  a  calendar   .  cost.

 Budget.UNDERSTANDING  PROJECT  PLANNING          PERT  Chart  EXPERT  –  PERT  Chart  Example       • •   The  red  boxes  denote  the  critical  path   Why  is  the  critical  path  important?   § It  informs  a  project  manager  of  the  shortest  timeframe  the  project  could  possibly  be  completed   in  the  project     UNDERSTANDING  PROJECT  PLANNING          MS  Project  –  Gantt  Chart  Example       • • • •   This  Gantt  chart  displays  simple  start  and  finish  dates  and  resource  names   A  Gantt  chart  is  one  of  the  most  common  tools  used  by  project  managers   MS  Project  offers  many  additional  tracking  components  such  as  Actual  Start  date.  and  Percent   Complete   When  reviewing  the  Gantt  chart  can  you  point  out  the  three  interdependent  project  management   tasks?   § Resources   § Timeframe   § Scope  –  tasks     .

OUTSOURCING  PROJECTS   § In-­‐sourcing  (in-­‐house-­‐development)  –Uses  the  professional  expertise  within  an  organization  to   develop  and  maintain  its  information  technology  systems     § Outsourcing  –  An  arrangement  by  which  one  organization  provides  a  service  or  services  for  another   organization  that  chooses  not  to  perform  them  in-­‐house     • Insourcing  has  been  instrumental  in  creating  a  viable  supply  of  IT  professionals  and  in  fact  in  creating  a   better  quality  workforce  combining  both  technical  and  business  skills       OUTSOURCING  PROJECTS   § Big  selling  point  for  offshore  outsourcing  “inexpensive  good  work”       .