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Business Information Technology

International Business Administration- 2013


A set of people, procedures and resources that collects data and develop a set of operations to transform it into
IT: set of infrastructures that support the flow of information that takes place within a company. It is
composed by:
Hardware: technology for processing and storing data and for gathering and delivering it as an
output. It consist of primary storage devices ( the computer itself) and secondary devices (CD
Software: set of instructions that controls the operation of the computer. It involves both system
software ( windows) and application software (word)
Databases: group of files that are related each other.
Networks: group of computers connected each other. They enable data in digital form to pass
between users that are geographically distant. They combine both software and hardware.

PEOPLE : Individuals in charge of running the components of the IS infrastructure

ORGANIZATION :procedures, organization structure, processes.


DATA: Collection of nonrandom symbols, numbers, words, images and sounds. They

Represent facts
Recorded by observation or research
Not organized to convey specific meaning
#Example: 0209130900

INFORMATION : Sub- set of data that means something to the person or system receiving it

Contextually relevant
Meaningful and useful to human recipients.

#Example: the previous number is associated with the location of an information post in a free way

KNOWLEDGE Property of people that encourages them to act in a particular way. It is the addition of the
skills + experience + accumulated learning + judgment that an individual develops over time and changes
as people receive new information. Knowledge is needed for:
- Understanding information
- Use insights to make decisions that allow to make better use of resources

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Use information system improves companys performance. An empirical study carried out by Marchand ( 2006)
showed that an efficient use of IS systems increases business performance up to 52%

Companies need to coordinate people and resources in order to satisfy customer needs. IS deal with isolated
aspects of these process ( ex: online payments) improving efficiency and thereby increasing organizations
There is an increasing amount of information being stored everywhere( information age). As a result
companies have to deal with an overwhelming amount of information. IS sort this problem by
Reducing need for information processing
o Create buffers. A buffer contains data that is stored for a short amount of time, typically in the
computer's memory (RAM). The purpose of a buffer is to hold data right before it is used thereby
improving data access

Increase capacity for information processing

However, to have an efficient IS it should be properly managed. Companies must keep in mind that IS consists
of IT, people and organization. If those elements are not integrated IS would not work. An example of a failure
in IS is the terrorist attach of 11s.
Economic importance

Worldwide IT investments 2013: $ 2.1 trillion (Forrester 2013)

Huge impact on industry development
Rising job demand

Business Information Technology

International Business Administration- 2013

Boing case
Boeing Chicago-based aerospace company, has been a major player in the global economy for almost a century.
But now the company is undertaking a far-reaching transformation as it uses cutting-edge materials and
electronics and high-level technology for the design and assembly process of its new passenger plane the
Boeing 787. The new plane, nicknamed the Dreamliner, is Boeings bid for market leadership in competition
with Airbus. The new midsize passenger jet will have an outer shell and about half of its parts made of carbonfiber-reinforced plastic, which will make it lighter and give it better fuel economy.
The previous state of the art in aviation manufacturing was to have global partners work from a common
blueprint to produce parts-actually, whole sections of the airplane-that were then physically shipped to a Boeing
assembly plant near Seattle to see if they fit together. Prior to the 787, wood mock-ups of planes would be
constructed to see if parts built by partners around the world would really fit together. When the process failed,
the cost in time and production was extreme.
To overcome those problems, Boing formulated a completely new business strategy. The new business model
takes Boeing from manufacturing to a high-end technology systems integrator. The company established a
closer relationship with fewer suppliers through the creation of a virtual integrated network. Now parts are
designed from concept to production concurrently by partners (including companies in Japan, Russia, and Italy)
and assembled in a computer model maintained by Boeing outside its corporate firewall (CAD/CAM). These
changes in business model allowed Boing

Outsource part of the manufacturing and engineer processes, now carried out by suppliers. It implied a
reduction in costs and a transfer of business and financial risk
Achieve a substantial breakthrough innovation in manufacturing and SCM processes

Key idea: Boing case is a clear example of how IS can help a company to reach competitive advantage.
Porters five forces model enable us to access the impact of IS on competitiveness, as firms can use it to
strengthen one or more of this forces. Conversely, it may represent a competitive threat if other organization use
IS more effectively.

IS raise barriers to entry: good IS make business process more efficient and improves customer
relationships. Smaller companies or potential entrants are deterred by the relatively high costs of
implementing those systems.
Is offers the possibility to enter markets that were not previously accessible. #Example: internet


IS can be used to differentiate companys products and services. #Example: Harley Davidson creates
online communities in order to improve communication with customers and create products adapted to
their requirements

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International Business Administration- 2013


Suppliers can increase their power by using IS to track more closely the cost of providing services to
customers. #Example: CRM systems enable companies to track customers requirements accurately
Customers can also use IS to strengthen their power at expense of suppliers. #Example: Covsint
system ( page 113)


#Example: wall- mart : use modern technologies to make electronic links with their suppliers. Thus, a
supplier that is unwilling or unable to joint into that system is likely to lose business


It decreases competitive rivalry by

Decreasing costs:
- Inventory systems and e-procurement
- Transfer operations to web site, which in turn, makes easier for new suppliers to bid for
a share, make costs more transparent and improves the administrative efficiency of the
supply process
Make management more effective

Likewise, the strategic value given to IS would depend on the strategy a company chooses to apply. In that
sense, Teracy and Wiersma offers a framework that distinguishes between the following three strategic focus:

reliable and fluent
operational processes





Van Lanchot



offering the best product in

their class and use new
technologies to improve

Focusing on customer and

providing unique service
for each one.


Entreprise resource
processes (ERP)
Supply chain
management (SCM)
E commerce
management (KM)
SCM collaboration
Business analytics

Business Information Technology

International Business Administration- 2013

Inside a company we can differentiate between two strategies:

Corporate strategy : overall purpose and scope of

the business ( concreted in mission statement)
Business strategy: concerned more with how a
business competes successfully in a particular
market. It concerns strategic decisions about choice
of products, meeting needs of customers, gaining
advantage over competitors, exploiting or creating
new opportunities etc.
An IS strategy is Business (unit) level strategy . It could be
defined as a portfolio of IS to be implemented, which is
both highly aligned with business strategy and may have
the ability to create an advantage over competitors.
Concerning style, IS strategy tend to be more emergent due
to the uncertainty faced in its development.
Additionally, distinction shall be made between IS and IT
strategies. Whereas IS strategies involves information
needs an IT strategy is focused on designing technological
solutions aimed at satisfying those needs.

Strategic alignment



IS strategy
IS alignment





Structural alignment

Alignment between plans and current structures is crucial to ensure success. We can differentiate between four
different kinds of alignments:

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Strategic alignment: between business and IS strategies

Structural alignment: between information systems and business structure
Business alignment : between business strategy and business structure.
IS alignment: between IS strategy and IS

In relation with IS strategy formulation strategic alignment is a crucial issue to address. It has been shown that
organizations are more effective when there is a match between information processing requirements (business
strategy) and capacity (IS strategy).

Mutual understanding between managers and IS

Alignment approach: that is, the direction of alignment between IS and strategies.

When formulating IS strategy managers can choose between the following three approaches:

Business alignment approach: managers shape the strategy of the firm and then ensure that investment
in information system support that strategy. #Example: A supermarket to reduce its inventory costs and
implement IS systems.
Business impact approach: IS systems can offer a company new strategic possibilities. #Example: a
company sells its product through a website
Interaction model: companies look for ways in which they can use IS to support their strategies. In
doing so, they develop their ability to manage IS and can then use this expertise to reach a new set of
customers. That has changed their context and is the starting point for a new strategy

2.3.1 STEPS
1. Determine approach: ( alligment, impact, interaction)
2. Determine scope:
Corporate IS strategy?
IS strategy for parts of the organization?
3. Determine objectives. There are two main kinds of objectives

General : involve the organization as a whole. Example: improve organizations business in general
Specific : turn general goals into different functional areas. Example: develop new policies in the IS

4. Analysis of internal and external environment:

Business environment

IS/IT environment
5. Strategic definition
6. Strategic implementation

Business Information Technology

International Business Administration- 2013



Analyzing the internal IT environment of a company requires the study of

Information resources & flows
Technological infrastructure

To do that, the two following tools are available

Information flows modeling
Organizations information flows are the mirror of the activities in organization. Information flows support the
activities that directly build the main products/services of organization and are the connector between material
flows and decision makers.
The information flow model analysis consists of the following steps
1. Identify the key information flows within an organization.
2. Analyze potential improvements in their
Speed and timeliness
3. Assess whether the undertaking of those potential improvements is beneficial for the organization.
( see example slides)

Business Information Technology

International Business Administration- 2013

McFarlans strategic grid

The strategic grid model can be used to assess the nature of the IS that a company has in its portfolio with the
aim of seeing how well that portfolio supports the operational and strategic interests of the firm.
The MCS plots projects and systems from the IT organizations portfolio on a two dimensional graph.

The X axis represents impact of the project on achieving future strategic objectives
The Y axis represents the impact of the project on operational performance. Projects that are high on
this axis have a great impact in the efficiency or quality of our existing systems and business processes.

According to these two dimensions, IS can be classified as

In developing a strategic grid analysis outcomes shall not been generalized. That is because

companies face different environments, employ different strategies and have different management
styles. Thus, the fact that IS play a particular role in one company does not mean that it can be
transferred to another different company
situation in time x may not be the same as situation in time y

Analyzing the external IT environment involves paying attention to:

Technological trends
Business opportunities
Used by other comparable organizations
Used by competitors

The MC strategic grid can also be used for studying the external IT environment although companies must take
into account their limitations (do not generalize)

Business Information Technology

International Business Administration- 2013

Layered approach:

Computer Hardware consists of physical parts within a computer aimed at accomplishing the following
Collection of information: it filters and cleans up information
coming from external sources
Store and retrieve(obtain): hardware technology stores and
retrieves information for further processing
Process data by combining, calculating and extracting files
when needed
Disseminate (propagar) information to an output source
Before describing hardware parts, distinction shall be made between the different kinds of computers

mobile devices
Personal computer (PC)
Workstation :appropriate for advanced design or engineering works requiring powerful graphics
Server: optimized to support a network of computers
Mainframe: large capacity, high performance computer than can process large amount of data rapidly
Supercomputer: used for tasks requiring extremely rapid and complex calculations.
Grid computing: involves connecting geographically remote computers into a single network to create a
virtual supercomputer by combining the computational power of all computers on the grid

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Computer Hardware has the following complements:

Central Processing Unit (CPU): is the hardware within a computer that carries out the instructions of
a computer program by performing the basic arithmetical, logical, and input/output operations of the

Primary storage: is a storage location that holds memory for short periods of times while the computer is
running. For example, computer Random acces memory (RAM) and cache are both examples of a primary
storage device.. Example: when you open a program data is moved from the secondary storage (hard drive)
into the primary storage

Secondary storage: does not have access to computers CPU. It consists of a set of devices coming from
outside the computer that allows to transfer and store a limited capacity of data. The principal storage
technologies are:

Magnetic discs
o Hard drives:
o Floppy disks
Optical discs:
o Compact disc read only (CD-ROOM)
o Digital video discs (DVD)
o Blue ray discs
magnetic tape (disco antiguo)
Networking : modem, network card,wirless transiver, optical interface
Input devices : gather data and convert them into electronic form for use by the computer.
KB, mouse tablet, touch screen, audio in
Output devices: display data after they have been processed
Monitor, printer
Numerical control machines, robots
METRICS TODAY (faltan diapos 13,15)
In relation with metrics evolution, attention shall be given to Moores law. Gordon Moore, co-founder of Intel,
observed that the number of transistors per square inch on integrated circuits had doubled every year since the
integrated circuit was invented.
Moore predicted that this trend would continue for the foreseeable future. In subsequent years, the pace slowed
down a bit, but data density has doubled approximately every 18 months (Moores law)
Additionally, another potential trend in computer technology is quantum computing. Quantum computing is a
new computing technology based on the laws of quantum physics. Its application would enormously raise
processing power through the ability to be in multiple states, and to perform tasks using all possible
permutations simultaneously. Technically it implies:
- Change from bit to Qubit
- Use of atoms, ions, photons, electrons ( quantum physics measures)


Business Information Technology

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Data storage has become a major management issue. The amount of data to be stored within the world double
every 12 to 18 months and the average growth rates are about 50-70 % per year.To manage these Big data
organizations may choose between different options:
Local storage: Hard drives are directly connected within the server or as direct-attached storage (DAS),
which are disk arrays directly attached to the server.
Centralized storage: Storage is external from the server.
Additionally, a company may choose to create a storage networking system. A SAN connects multiple storage
devices on a separate high speed network dedicated to storage. The result is the creation of a pool of storage that
can be rapidly accessed and share by multiple servers.

Layout of main units:

The layout showed before is the result of an historical evolution in hardware and data representation
At the beginning, hardware was mainly constituted by big electronic machines that worked based on electrical
and current voltage. The language used to proceed data was the binary digit (BIT). A BIT can have only one of
two values (commonly 0 or 1), and may therefore be physically implemented with a two-state device or
represent two opposite values such as:

Positive negative
Present/ absent current (on/off)
North/south magnetic polarization
Reflective/ absorptive surface

This initial unit of information limited the processing of information to a world with only two states. An
extension was needed in order to proceed more state such as images, color, sounds, alphabet text. Then complex


Business Information Technology

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units for processing information started to come up with propose of struggling with the
increasing information needs.
Therefore, Hardware technology has evolved from a room of equipment that could do
simple calculations to the last developments that include:

Massive use of personal and portable devices

Increase in processing capacity (processors, quantum computing)
Raise in store capacity
Decrease in size. In relation with this trend attention shall be given to the emerging nanotechnology.
Nanotechnology uses individual atoms and molecules to create computer chips and other devices that
are thousands of time smaller than the current technology permits
o Increasingly distributed and modularized. In that sense, we must emphasize
- Visualization: is the process of presenting a set of computing resources so that they can
be all accessed in ways that are not restricted by physical configuration or geographic
location ( Example: a server can be configured to run many instances of an operating
system so it acts as different machines)
- Cloud computing
DEFINITION A network is system to connect two or more devices.
Networks can be classified according to the following criteria:
TOPOLOGY : how various components are set up into a network
Bus :. Each computer or server is connected to the single bus cable. A signal from
the source travels in both directions to all machines connected on the bus cable
until it finds the intended recipient.


Star : each individual piece of a network is attached to a central hub. All traffic that
traverses the network passes through the central hub. The hub acts as a signal
repeater that sends information to the intended recipient
o An extended star has one or more repeaters between the central node (the
'hub' of the star) and the peripheral or 'spoke' nodes

Ring: is set up in a circular fashion in which each device incorporates a receiver

for the incoming signal and a transmitter to send the data on to the next device in
the ring.. When a device sends data, it must travel through each device on the ring
until it reaches its destination

Tree/hierarchical: This particular type of network topology is based on a hierarchy of nodes. The
highest level of any tree network consists of a single, 'root' node, this node connected either a
single (or, more commonly, multiple) node(s) in the level below by (a) point-to-point link(s).
These lower level nodes are also connected to a single or multiple nodes in the next level down.


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o Full mesh: all devices are connected each other

o Partial mesh: some of the nodes of the network are
connected to more than one other node in the network with
a point-to-point link this makes it possible to take
advantage of some of the redundancy that is provided by a
physical fully connected mesh

Local area networks (LAN): designed to connect personal computers and other digital devices
within 500 meter radius.
Wide area networks (WAN) : it involves a transcontinental or global area (example internet)
Metropolitan area network (MAN): network that spans a metropolitan area, usually a city or
Campus area network (CAN): connect devices up to 10.000 meters such as college campus or
corporate facility
Home area network (HAN): network to connect digital devices present inside or within the close
vicinity of a home
Personal area network (PAN): is a computer network organized around an individual person.
Personal area networks typically involve a mobile computer, a cell phone and/or a handheld
computing device such as a PDA.


Wired: this media consist of cables that are tangible and are limited by the physical geography.
There are different types of wired connectivity media, among which we find:

o Twisted wire
o Coaxial cable:
Wireless: based on radio signals of various frequencies.
Centralized : uses a dedicated server to manage all computers in the network
Distributed : uses many servers to manage many different clients within a network
Peer-to peer : treats all processors equally and is used primarily in small networks with 10 or
fewer computers.


There are two ways to communicate a message through the network:


Analog signal: continuous wave form that passes through a communication network( voice
Digital signal is a discrete, binary waveform which communicates information as strings of two
different states: one bit and zero bits which are represented as an on-off electrical pulses. Computers
use digital signals and require a Modem to convert these digital signals into analog signals that can be
sent over (or received from) telephone lines, cable lines or wireless media that use analog signals.
Electromagnetic impulses:

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-EM waves


Guided: a physical path is used in communication
o Wires:
- Unshielded twisted pair : : strands(hilo) of copper wire twisted in pairs. It is an old type
of transmission media
- Coaxial cable: thickly (denso) insulated (aislante) copper wire that can transmit larger
volume of data that the twister wire.
o Optical fiber: consists of bound strands of clear glass fiber, each the thickness of a human
hair. Data are transformed into pulses of light, which are sent through the fiber optic cable
by a laser device in rates varying from 500 kilobits to several of trillion bits per second.
- Single mode is a single stand of glass fiber that has one mode of transmission. . Carries
higher bandwidth than multimode fiber, but requires a light source with a narrow
spectral width
- Multi-mode: has a large diametric core that allows multiple modes of light to
propagate. It increases the ability of data to pass through at a given time. This
application is typically used for short distance.
Unguided: no physical path is used in communication
o Microwave systems: transmit high-frequency radio signals thorough the athmosphere
o Cellular : use radio waves and a variety of different protocols to communicate with radio
antennas (towers) placed within adjacent geographic areas called cells
o WIFI : communicates throughout a wireless local area network (LAN) protocol based on
the 802.11 IEEE network standard.
o Infrared



Network interface card (NIC) (wired or wireless): is a computer hardware component that
connects a computer to a computer network. Every device on a network that needs to transmit
and receive data must have a network interface card (NIC) installed. They are usually installed
into one of the computer's expansion slots. The NIC includes a transceiver that allows a device
to transmit and receive data via the transmission medium.

Access point (AP): is a device that allows wireless devices to connect to a wired network
using Wi-Fi, or related standards. The AP usually connects to a router (via a wired network) as a
standalone device, but it can also be an integral component of the router itself.
Modem : device used to convert digital signals into analog signals that can be sent over (or
received from) telephone lines, cable lines or wireless media that use analog signals ( ADSL,


Hub : very simple devices that connect network components sending packed data to all other
connected services

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Bridge : can be used to connect two or more LAN segments of the same type (e.g. Ethernet to
Ethernet). Bridges reduce the amount of traffic on individual segments by acting as a filter,
isolating intra-segment traffic
Switch has more intelligence than a hub and can filter and forward data to a specified
destination in the network
*remark: bridges are used to extend the distance capabilities of the network while minimizing
overall traffic, and switches are used to primarily for their filtering capabilities to create
multiple, smaller virtual LAN's out of one large LAN for easier management/administration.
Router communication processor used to route packets of data thorough different networks,
ensuring that the data sent gets to the correct address
Gateway : provides communication to a remote network or an autonomous system that is out of
bounds for the host network nodes. Gateways serve as the entry and exit point of a network; all
data routed inward or outward must first pass through and communicate with the gateway in
order to use routing paths.
*remark: router is used to connect similar network ( ex: two networks using TCP protocol)
whilst gateway is used to link dissimilar services.

Protocols and standards are common languages used for communicate different networks. Worlwide internet
policies are defined by a number of professional organizations and government bodies among which we find
o International Organization for Standardization (ISO): is the worlds largest developer of voluntary
International Standards. International Standards give state of the art specifications for products, services
and good practice, helping to make industry more efficient and effective
o Institute of Electrical and Electronics Engineers (IEEE): is a professional association that is dedicated to
advancetechnological innovation and excellence. The IEEE fosters the development of standards that
often become national and international standards
o International Telecommunication Union (ITU): is a specialized agency of the United Nations that is
responsible for issues that concern information and communication technologies. The ITU coordinates
the shared global use of the radio spectrum, promotes international cooperation in assigning satellite
orbits, works to improve telecommunication infrastructure in the developing world, and assists in the
development and coordination of worldwide technical standards.
o Internet Engineering Task Force (IETF): develops and promotes Internet standards, cooperating closely
with the W3C and ISO/IEC standards bodies and dealing in particular with standards of the Internet
protocol suite (TCP/IP) It is an open standards organization, with no formal membership or membership
o World Wide Web Consortium (W3C): is the main international standards organization for the World
Wide Web. It is made up of member organizations which maintain full-time staff for the purpose of
working together in the development of standards for the World Wide Web
A protocol is defined as a set of rules and procedures governing transmission of information between two points
in a network. Among different types of protocols and standards we must emphasize the following:


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TCP/IP : internet
It uses a suit of protocols, the main ones being:
Transmission control protocol(TCP): establishes a connection between computers, sequences
the transfer of packets, and acknowledges the packets sent.
Internet protocol (IP): is responsible for the delivery of packets and include disassembling and
reassembling packets during transmission
Ethernet is a family of computer networking technologies for local area networks (LANs). Ethernet was
commercially introduced in 1980 and standardized in 1985 as IEEE 802.3. The Ethernet standards
comprise several wiring and signaling variants of the OSI physical layer. The original Ethernet used
coaxial cable as a shared medium. Later the coaxial cables were replaced with twisted pair and fiber
optic links in conjunction with hubs or switches. Data rates were periodically increased from the
original 10 megabits per second to 100 gigabits per second.

WIFI- WIRLESS INTERNET :WIFI is the 802.11 set of standards for wirless LANs and wirless
internet acess. There are different versions ranging from leter a,b,g,n to other letters in the alphabet.
Speeds range from a minimum of 1.5 Mbps to a maximum of 600 Mbps.7
BLUETOOTH : it is the popular name for 802.15 wirless networking standard useful for creating small
personal area networks(PANs). It links up to 8 devices within a 10 meter area using lower- power, radiobased communication.
3G: speeds up to 7.2 MBs
o It is currently being rolled out
o It may reach a mobile transmission speed of 100 MBps, which can reach 1GB in optimal
o Seamless roaming(itinerancia) worldwide
o all IP packet switched network

RFID: Radio frequency identification (RFID) uses tiny microchips containing data about an item plus
other information associated with it such as its location, where and when it was made or its status in the
production. It is commonly used to track goods within a supply chain. Following parts and process of RFID are

1) Tag : a microchip that holds data including an identification number. The rest of the tag is an
antenna that transmits data to the reader using radio waves. There are two main kinds of tags
Active: are powered by internal battery and typically enable data to be rewritten and modify.


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Passive: do not have their own power source. They obtain their power from the radio
frequency emitted by the RFID reader.
2) RFID reader: Has an antenna that constantly transmits data. When it senses a tag, it wakes it up,
interrogates it and decodes the data. Then it transmits the data to a host system over wireless or
wired connection.
3) Host computer: process the data from the tag that has been transmitted to the reader
METRICS. In measuring network performance the following variables are taken into account
Transmission speed: bits per second, kilo, mega
Latency (delay) : it is usually miliseconds
From the providers point of view , it also has to be taken into account

Utilization, load= number of users


Currently, we are moving from standalone information devices to mobile multimedia information and
communication devices. Widely speaking, the main developments are:
Increase incapacity (transfer speed)
o Infrastructure (from copper to fibre)
o Protocols (smarter)
Raise in interconnectedness : Examples: Internetworking, standardization
Increase in mobility
Increase in diversity and complexity
Higher Combination of multiple networks and devices


Computer software includes:

System software: controls the computer system as it performs tasks for the end user by acting as a
bridge between the hardware and application software. We can differentiate three main types of systems
Operating systems: manages and controls computers activities such as providing location in
primary memory for data programs, controlling input and output devices or coordinating the
schedule of work in various areas of the computer. Examples of operating systems are windows,
google chorme, android, linux..


Development software: may include research, new development, prototyping, modification,

reuse, re-engineering, maintenance, or any other activities that result in software products
Database software: is a software system designed to allow the definition, creation, querying,
update, and administration of databases. Well-known DBMSs include MySQL, PostgreSQL,
SQLite, Microsoft SQL Server,Oracle, SAP

Application software: software programs used by business users to support their work. There three
main kinds of application software:

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Enterprise systems: provide support across the organization for key processes such as sales
finance, logistics, for both events/ transactions and record or document management. Examples:
ERP systems, Document/record management
Departmental applications: support specialist applications within an organization such as data
analysis or modeling within finance or marketing department. Examples: business conos
(analytical tools, sap) and cognos
Personal productivity and group working: used to support individuals when performing a tasks
or working as a team.

When choosing a software solution the following consideration shall be taken into account:

Type of software that the corporation/individual needs

Functionality, performance, ease of use, interoperability
Decide whether to make (develop) , rent or buy
Another alternative is use an open source system. It is a software which provides all computer users to
free access to its program code, so they can modify the code to fix errors or to make improvements
(example : LINUX)

It is free to use, distribute, and modify

Open-source software is more secured: is continuously analyzed by a large community produces

secure and stable code.

Open source is not dependent on the company or author that originally created it. Even if the
company fails, the code continues to exist. Also, it does not have the problem of incompatible
formats that exist in proprietary software.

Companies using open-source software do not have to think about complex licensing models and do
not need anti-piracy measures like product activation or serial number.

Their understanding requires effort and training

There is a shortage of applications that run both on open source and proprietary software; therefore,
switching to an open-source platform involves a compatibility analysis of all the other software used
that run on proprietary platforms. In addition, there are many ongoing parallel developments on open
source software. This creates confusion on what functionalities are present in which versions.

many of the latest hardware are incompatible to the open-source platform

Multimedia : From text / numbers to audio / video
Integration of functions :From separate programs to integrated suites Groupware, intranet, ERP, CRM,
SCM, GDSS, etc.
Mobile (apps), networked (communication)
Increasingly distributed
o Apps, mashups


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o Cloud, SaaS, SOA, webservices

o Outsourcing
Flexibility and fragmentation

There are many different ways to classify an IS. The following criteria are considered the most important ones:

FUNCTION : according to the purpose of IS

Operational: IS are introduced to process routine transactions in an uniform, efficient and reliable way.
Examples: payroll, order entry, administrative systems (university)
Monitoring: check the performance of activities, functions or people at a regular intervals. It allows
business to forecast changes and act promptly to change a plan to suit new conditions. Example:
university in Netherlands use student trail system to advise the government when the grades of a
particular student fall below the minimum required to obtain a scholarship
Decision support: help managers to value different alternatives and make a decision. Example: Business
use DSS to calculate the financial consequences of investments
Communication: make easier to pass information around and between organizations. Examples: E-mail,
im, groupware workflow, SCM

REACH: Geographic reach of IS.



Individual systems aimed at managing individual professional work. Example: word processing ,
Local or departmental: support people within the same unit or department that perform different tasks
Companywide systems/ enterprise: integrate departments and people throughout the organization.
Example: hospital
Inter-organizational systems (IOS): enable firms to incorporate buyers, suppliers and partners in their
businesses processes in the hope of enhancing productivity, quality, speed and flexibility.
Community systems: blogs or Myspace. Although they are not related to the organization they are
significant for managers as customers may use them to exchange information about the company

Operational : people to perform standalone tasks more efficiently. Example: CAD (computer aided
design for architects)
Tactical :

The most relevant IS applied in organizations are :


Management information systems (MIS)

Knowledge management systems (KM)
Enterprise resource planning (ERP)

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Customer relationship management (CRM)

Inter-organizational system


Those systems get data from different sources and combine it in order to help management and executive layers
to make decisions. Examples:
Business Intelligence (BI) systems
Executive Information Systems
Decision Support Systems

They refer to attempts to improve the way organizations create, acquire, capture, store, share and use
knowledge. This will usually relate to customers, markets, products, services and internal processes but may
also refer to knowledge about relevant information in the external environment. In the following table the
knowledge management process and the potential role of IS are shown:
Data mining


new sources
of knowledge
Just in time


Electronic bulletin
Support of individual
and organizational
Inter-group knowledge



More extensive
internal network
Faster access to

Groupware and communication technologies

Intranets and sometimes extranets


can be applied
in many
More rapid
application of

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It is a representation of facts (data) and activities (processes) and their relationships
Modeling techniques are used as part of building and/or changing an IS , concretely in the analysis and design
of those systems
to stimulate the creative process
for building the software itself (using tools)
to improve communication between domain experts and technicians (graphical notation)
to evaluate completeness and consistency
to provide basis for planning and control (complexity)
There are three main types of modeling techniques:

information flow modeling ( lecture 2)

Process modeling : activity diagram
Data modeling: entity- relationship diagrams


Business Process Model and Notatiocn (BPMN) is a graphical representation for specifying business
processes in a business process model. Its objective is to simplify understanding business activities' flow and

FLOW OBJECTS: Event, activity and gateway

Event: An event is represented with a circle and denotes something that happens (compared with an
activity, which is something that is done). Examples:

- End
- Error
- Cancel
Activity: An activity is represented with a rounded-corner rectangle and describes the kind of work
which must be done. Examples are :



Tasks: unit of work that must be done

Multiple instances : the same activity is started in parallel or subsequently
Loop: an activity that activates if a particular condition takes place

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Gateway: A gateway is represented with a diamond shape and determines forking and merging of paths,
depending on the conditions expressed. It represent points of making decisions.

CONNECTING OBJECTS: Flow objects are connected with each other by the connecting objects.
Connecting object types:

Sequence flow shows the order in which activities will be performed;

Message flow shows what messages are delivered by the participants in different pools. A message
flow can never be used to connect activities or events within the same pool;
Association shows association of an artifact or text annotations to flow objects;

ARTIFACTS: They help include additional information to the diagram and make it more informative and
understandable.Artifact types are:

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Data objects show what data is required by the activity and what data is produced by the
Group includes various objects but doesnt influence diagram flow;
Text Annotations used to detail elements meaning and increase information value of the

SWIMLANES: Used to organize and categorize activities within a pool according to function or role, and
depicted as a rectangle stretching the width or height of the pool. They contain the flow objects, connecting
objects and artifacts.

Additionally, we must differentiate between the following logical relationships

BRANCH AND MERGE: It correspond to making decision of which path to choose among several control
Branch- may have one incoming control flow and two or more outgoing control flows. When the
condition is fulfilled, a branch activates exactly only one of the outgoing control flows and deactivates
the others
Merge- may have two or more incoming flows and one outgoing control flow. A merge synchronizes an
activated and the deactivated alternatives. The control will then be passed to the next element after the
JOINT AND FORK: correspond to activating all paths in the control flow concurrently.
Joint- may have two or more incoming control flows and one outgoing control flow. A join
synchronizes all activated incoming control flows.
Fork- may have one incoming control flow and two or more outgoing control flows. When the
condition is fulfilled, a fork activates all of the outgoing control flows in parallel.


Traditional file processing
Traditionally, companies worked with different data files across different functional areas ( financial,
management sales). This disintegration led to the following problems:


Data redundancy and inconsistency

- Data redundancy: Presence of duplicate data in multiple files
- Data inconsistency: Same attribute has different values

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Programdata dependence: When changes in program require changes to data accessed by program
Lack of flexibility since updates require changing data in many places
Poor security due to the lack standard access procedures
Lack of data sharing and availability

Solution: database
A database is a collection of data organized to serve many applications by centralizing data and controlling
redundant data.
A Database management system (DBMS) is software for creating, storing, organizing and accessing data from a
database. ( examples: Microsoft Access, Microsoft SQL). Those systems have the following capabilities:
Data definition capability- Specifies structure of database content, used to create tables and define
characteristics of fields.
Data dictionary- Automated or manual file storing definitions of data elements and their characteristics
Data manipulation language Used to add, change, delete, retrieve data from database
Interrelate applications and physical data files
Relives the end user or programmer from the task of understanding where and how the data are actually
store by separating logical and physical views of data.
Logical view: presents data as end users or specialists would perceive them. Example: payroll
Physical view: shows how data are actually organized and structured on physical storage media.
Example: hardisc

Solve problems of traditional file environment as it:

Controls redundancy
Eliminates inconsistency
Uncouples programs and data
Enables central management of data and its security

Relational database
In a relational database, data is displayed as twodimensional tables called relations or files. Each table contains
data on:
Entity: generalized categories representing a person, place or thing on which we store and maintain
information. Example: Student
Attributes: specific characteristics of the entity: Studnr, Address, Courses, And Grades.
Within a table we can differentiate the following elements:
Rows- Records or tuples for different instances of an entity: Each student is a record
Fields (columns) -Represents attribute for entity
Primary key -Field that uniquely identifies each record in a table.
Foreign key- Field that is a primary key in another table, used for looking up records from that table and
links records together
#Example: suppliers and parts page 356. Remarks
The primary key cannot be duplicated (dont use name as primary key)
Split the data into the smallest elements as possible in order to make access easier


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All the attributes of a particular entity must be related with that entity.


Tables can still have problems- a flat file may lead to redundancy, inconsistency and loss of information. To
sort out those problems and clarify relationships in a data table, entity relationship diagrams (ERP) are used.
An ERP contains the following elements
Entity : represented at the top of the box
Primary key: underlined
Likewise, it can plot the following types of relationships:
One to one Could be modeled as one joined table, or with a foreign key from either table. Examples:
each lecturer has his own office/
One to many :Foreign key is entered into table on the many side from the table on the one side
(primary key) Examples: Lecturer teaches many courses but a course is taught only by one lecturer
Many to many A third intermediary table is modeled with foreign keys from both tables on the many
sides. The resulting table has 1tomany relationships with both of the original tables. Example: Student
follows many courses and course has many students.
A correct data model is essential for an IS to function correctly and efficiently. Managing an IS requires some
understanding of data model. In practice often thousands of entities (tables) related to each other so we need to
normalize and integrate them
Normalization : streamlining complex groups of data in order to minimize redundancy and manyto
many relationships
Referential integrity consist of a set of rules to ensure that relationships between coupled of tables
remain consistent.


A Data warehouse is a database that stores current and historical data from many core operational transaction
systems. A data warehouse system
Consolidates and standardizes information for use across enterprise, but data cannot be altered
provide query, analysis, and reporting tools
process (ETL)
- extracts current and historical data from multiple operational systems within the organization
- These data are combined with data from external sources and reorganized into a central database
designed for management reporting and analysis. (transform)
- The information directory provides users with information available in the warehouse(loading)
Data marts (Subset of data warehouse) a summarized or highly focused portion of firms data for use by
specific population of users. It typically focuses on single subject or line of business
Business intelligence tools allow users to analyze data to see new patterns, relationships and insights that are
useful for guiding decision making.
Principal tools for business intelligence include software for database querying and reporting, tools for
multidimensional analysis ( online analytical processing OLAP) and data mining.


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Data mining
Data mining finds hidden patterns and relationships in large databases and infers them to predict future
behaviors. Examples
Associations- occurrences linked to a single event: when chips are purchased cola is purchased 65%
of the times
Sequences- events linked over time: if a house is purchased a new fridge will be bought in 8 weeks
Classification- recognition of patterns that describe a group to which an item belongs: find
customers that are likely to live a company
Clustering: finding groups (customers)
Definition: A packaged business software system that lets an organization automate and integrate
the majority of its business processes, share common data and practices across the enterprise and produce
and access information in a realtime environment.
Main features
Defines / automates business processes
Implementation often involves business process redesign as well as data modeling
So ERP central database
Consistent, accurate, integrated data
Streamlined processes reduced cycletime and costs
Improved Maintenance, adaptability and scability

High initial costs and risks

Lack of featurefunction fit o Best practices > Business process redesign
Tension with existing organizational structure and culture.
Lack of flexibility for changing organization
Vendor dependency

The scope of ERP has increased over the years:
Now they often include CRM, SCM and other IOS.
Referred to as Enterprise Systems or ERPII
Implementation still have to be improved:
Many horror stories about failed implementations
Too rigid, imposing best practices
Lack of fit with business processes o BPR or customize?
Recent developments:
more flexibility
Serviceoriented architecture, SaaS, BPM
More modular, adaptable, less rigid system


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Beginning The history of the internet began in 1969 as a US Department of Defense network,
ARPANET, to link scientists and university professors around the world. Despite initial costs, the
number of connections soon mushroomed.

1982: Introduction TCP/IP & Internet concept: With so many different network methods,
something was needed to unify them. The Defense Advanced Research Projects Agency (DARPA) in
collaboration with some US universities started to work on the development of a new protocol in the
70s. The result was the creation of the TCP/IP protocol that became only approved protocol on the
ARPANET in 1982.

1989: Global implementation of TCP/IP: Between 1984 and 1988 The European Organization for
Nuclear Research (CERN) began the installation and operation of TCP/IP to interconnect its major
internal systems. In 1989 CERN opened its first external TCP/IP connections expanded the European
portion of the Internet across the existing UUCP networks,. Similarly, in 1989 Australia and Japan also
adopted the TCP/IP protocol.

1990: ARPANET decommissioned:. In 1975, ARPANET was turned over to the Defense
Communications Agency ( also part of the Department of Defense) in order to run a communications
Likewise, several other branches of the U.S. government, the National Aeronautics and Space
Administration (NASA), the National Science Foundation (NSF), and the Department of Energy (DOE)
became heavily involved in Internet research and started development of a successor to ARPANET
.NSF created NSFNET, to supported the NSF sponsored supercomputing centers. The NSFNET Project
also provided support for the creation of regional research and education networks in the United States
and for the connection of university and college campus networks to the regional networks. The
existence of NSFNET and the creation of Federal Internet Exchanges (FIXes) allowed the ARPANET to
be decommissioned in 1990.

Mid 1990's and onward: major impact on culture and commerce: In 1992, the U.S. Congress
passed the Scientific and Advanced-Technology Act which permited NSFNET to interconnect with
commercial networks.In 1995, was decommissioned and replaced by backbones operated by several
commercial Internet Service Providers which started to offer network access to commercial customers.


Important terms related with internet functioning are:
Packet switching: Digital data is sent in small packages called packets
Packets: Contain data, address information, errorcontrol information and sequencing information
Transmission Control Protocol (TCP) : Ensures that messages are properly routed from sender to receiver
and that those messages arrive intact
Internetworking Protocol (IP): Enables the intercommunication of inter and intraorganizational
networks. That is, it is responsible for the delivery of packets and include disassembling and reassembling
packets during transmission


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Bandwidth :The information carrying capacity of communication lines


It uses a suit of protocols, the main ones being TCP and IP. General idea: TCP/IP model must be understood as
set of layers interconnected. Data is transferred from one computer to another using all this layers. When there
is a response or error the information flows in the other direction
1. Application layer: enables client application programs to access the other layers and defines the protocols
that applications use to exchange data ( Example: HTPP to transfer webpage files)
2. Transport layer: provides the application layer with communication and packet services (includes TCP)
3. Internet layer: addresses, routes and designees data through IP diagrams
4. network interface: places packets on and receive them from the network medium which could be any
networking technology
OSI is a prescription of characterizing and standardizing the functions of a communications system in terms of
abstraction layers. Similar communication functions are grouped into logical layers. A layer serves the layer
above it and is served by the layer below it.
7. Application layer : This layer interacts with software applications that implement a communicating
component ( transfer files, read messages)
6. Presentation layer : takes the data provided by the Application layer and converts it into a standard
format that the other layers can understand
5. The session layer establishes, maintains and ends communication with the receiving device
4. Transport layer maintains flow control of data and provides for error checking and recovery of data
between the devices. Flow control means that the Transport layer looks to see if data is coming from
more than one application and integrates each application's data into a single stream for the physical
3. The network layer transfers data from a source host on one network to a destination host on a different
2. The data transfers data between network entities and detects & corrects errors that may occur in the
physical layer. In this layer, the appropriate physical protocol , type of network and the packet
sequencing is defined.
1.The physical layer this is the level of the actual hardware. It defines the physical characteristics of the
network such as connections, voltage levels and timing.


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You type an URL into address bar in your browser.

The browser parses the URL to find the protocol, host, port, and path.
It forms a HTTP request
To reach the host, it first needs to translate the human readable host into an IP number, and it does
this by doing a domain name server (DNS) lookup on the host
5. Then a socket( corriente) needs to be opened from the users computer to that IP number, on the port
6. When a connection is open, the HTTP request is sent to the host
7. The host forwards the request to the server software (most often Apache) configured to listen on the
specified port
8. The server inspects the request , and launches the server plugin needed to handle the request
9. The plugin gets access to the full request, and starts to prepare a HTTP response.
10. To construct the response a database is accessed. Data from the database, together with other
information the plugin decides to add, is combined into a long string of text (probably HTML).
11. The plugin combines that data with some meta data (in the form of HTTP headers), and sends the
HTTP response back to the browser.
12. The browser receives the response, and parses the HTML in the response to the client user.
The web is the most popular internet service. It is a system with universally accepted standards for storing,
retrieving, formatting and displaying information using a client/server architecture.
Webpages are formatted using HTML lenguage with embedded links that connect documents one to another
and that also link pages to other objects, such as sound video or animation files. Those links are called
hyperlinks. They enable:
Locate and view multimediabased documents on almost any subject
Makes information instantly and conveniently accessible worldwide
Increased publishing and learning opportunities
Individuals and SMEs can get worldwide exposure
Changing the way business is done


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The World Wide Web protocol is composed by:
Hypertext Transfer Protocol (HTTP): used to transfer pages on the web.

Uniform Resource Locator (URL) ( the whole wepage address)

Domain Name Server (DNS) translates the domain name space in an IP adress, that specifies the
organizations servers computer that is storing the document . (i.e130.37.52.20
Path : in the example conetent features is the directory path that identifies where on the domain web
server the page is stored
Filename: in the example 08216.html is the document name and the name of the format it is in.

ClientSide: HTML, JavaScript, Flash

- Displays content, adds interactivity
ServerSide: .NET, ASP, Java
- Used to communicate with webserver to get/receive data
Database: SQL, db_app software
- Communication between database server and webserver

Hypertext markup language (HTML): it is a W3C standard used for creating web pages and other
information that can be displayed in a web browser.
The main advantage is that is easy to use. However, there is not a full separation of contents and layout
and is hard to interpret by non-humans.
Extensive markup language( XML):

W3C standard as well

It uses document type definition (DTD) and extensive stylesheet reference (XSL) as a rules for
verification and convertion the XML data into a readable Internet file.
Follows a selfcreated but defined (tree) structure
Divides content and form
Makes content reusable
Sometimes hard to interpret for humans

In the following picture, the different web protocols are shown according
to the layer in which they are actually used.


Society is moving towards a wirless/mobile way of connection
Smartphones have increased their presence allowing people to be always on
Mobile commerce (M-Comerce) is becoming one of the most important industries within IT sector
Example: whats app


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5.2.1 WEB 1.O
It was centered around a top-down approach to the use of the web and its user interface. Content was managed
by the owner. Users could only view webpages but not contribute to the content of the webpage
5.2.2 WEB 2.0
WEB 2.0 stands for a second generation of website .It is based on the following principles

Decentralization of content creation

Interactivity and social participation( network effect): users are allowed to collaborate, share and
create new services and content online which leads to the creation of a Network effect. That is,
service gets automatically better the more people use it. This network effect is possible thanks to an
architecture of participation. Examples of this architecture are:
Expansion of Bittorrent over traditional server based distribution. Bitorrent is
a protocol supporting the practice of peer-to-peer file sharing
Tagging of photos
Crowdsourcing: is the practice of obtaining needed services, ideas, or content by soliciting
contributions from a large group of people, and especially from an online community, rather than from
traditional employees or suppliers. Main technologies behind crowdsourcing are:
Blogs: personal website that contains a set of chronological entries written by a particular
actor and in which users can leave comments
RSS feeds (rich site summary) : pulls specified content from websites and feeds it
automatically to users computers.
Wikis: collaborative sites where visitors can add, delete, or modify content on the site
including the work of previous actors ( Example: Wikipedia)

The web 2.0 presents the following challenges:

There is a massive amount of data available in internet. These data need to be managed, understood and
responded by humans.
As content is user created and not controlled by anyone, reliability of information cannot be ensured
5.2.3 THE FUTURE WEB 3.0
WEB 3.0 ( semantic web) is a collaborative effort led by the world web consortium to add a layer of meaning to
the existing web in order to reduce the amount of human involvement in searching and processing of web
information. Some of the characteristics that the future web may adopt are the following
Allow computers to analyze and manipulate information in order to reduce human effort involved
3D environment
Persuasive web that controls everything in humans live
More widespread use of cloud and SaaS business models
Transformation of the web from a network of separate applications into a more seamless and
interoperable media


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Whereas E-commerce is defined as the practice of selling a product/service to the customer over the internet Ebusiness constitutes the integration, through the internet, of all an organizations processes, from its suppliers
through to its consumers .The main characteristics of E-business are
Increased used of internet technology and IP:
- E- businesses makes uses of XML protocol to exchange data instead of EDI. EDI stands for
Electronic data interchange (EDI) . It is a document standard which when implemented acts as
common interface between two or more computer applications in terms of understanding the
document transmitted. It is commonly used by big companies for e-commerce purposes, such as
sending orders to warehouses or tracking their order
E-Businessess are increasing customer interaction within value chain: examples are customer
innovation, crowdsourcing and use of customer communities.
They are raising new business models namely
- Disintermediation: business model based on the removal of intermediaries in a supply chain .
- Reinter mediation: business model based on the addition of intermediaries in a supply chain .
Example: paypal or price comparison webpages.

Content (information)
- Communication (exchange)
- Collaboration (transactions, workflow, document
sharing,application sharing)
- All of the above but together with partner access

Boundaries are disappearing: all based on same technology (internet)

A Customer Relationship Management system (CRM) is a software solution aimed at aligning business
processes with customer strategies to recruit, satisfy and retain profitable customers.
Therefore, CRM system consolidate customer data form many sources in order to answer the following
Customer acquisition: how can we acquire the customer in the most effective and efficient way?
Customer retention: how can we keep this customer as long as possible
Customer selection: what criteria determine who will be our most profitable customers?
Customer extension: how can we increase the loyalty and the profitability of customer? That implies
making a decision between
- Cross selling: selling and additional product to the current customer
- Up selling: inducing the customer to purchase more expensive items, upgrades, or other add-ons in
an attempt to make a more profitable sales.


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Implementing a successful CRM depends more on the strategy than on technology. It requires:
A clear customer strategy ; without it a CRM may lack of direction and disrupt relationships with
important customers
Integration of difference business processes and company departments in order to make them customer
Good management practices that makes easier to move from conventional ( finanal focused) to a
customer strategy
Real time communication (Lyinc or spread Point)
Updated customer profile
Business intelligence tools
Reduction branch service times
Decrease customer churn
Reduce time to introduce new products
A value chain is a coordinated sequence of functional
activities to transform inputs into goods and service that
customer values and wants to buy. Porter differentiates
between two main kinds of activities within a value chain
Primary activities: the ones directly
involved in the production of goods
Support activities :support the
development of primary activities
Supply chains are becoming larger and more complex. SCM enables the company
Increased efficiency
Reduced complexity
Improved data integration (less mistakes)
o VMI: vendor managed inventory. If stock sinks to a certain level, supplier can decide to refill it
o CPFR: collaborative planning forecasting replenishment. Fill in the process together.
Reduced cost through outsourcing
THE BULLWHIP EFFECT: Makes reference to the effects of changing demand in a supply chain that is not
properly managed ( bad forecast, lack of coordination within agents). Demand variability increases as one
moves up in the supply chain. Small variation in customer demand originate large variations in the orders
placed in the upstream. Eventually, the network can oscilate in very large swings as each organization in the
supply chain try to solve the problem from its own perspective ( bullwhip effect).


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E-Business and Supply chain management can allivate this problem to a large degree but requires from trust and
cooperation of different agents involved
IOS coordinate processes across organizations and between organizations and customers
An IOS can be B2B, B2C, C2C or link an entire chain
Supply Chain Management (SCM) systems are just one type of IOS
Nowadays, many IOS are webenabled, using IP technology eBusiness
Rise of wireless tracking: RFID
IOS STAGES Interorganizational systems can have the following five stages:
1. Information : provide information ( EX: company website)
2. Interaction: customer or suppliers entering information about offers
and prices
3. Transaction: a customer actually buys a good or service through
suppliers website
4. Integration: a company links its own information systems and in
turn links them to customers and suppliers (example: as customer
place an order, this information moves to systems that control
sellers internal process and those of suppliers)
5. Transformation: a company uses IOS to transform its internal
operation as well as internal value chain. Example: creation of an Ebusiness


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Cloud computing refers to both the applications delivered as services over the Internet and the hardware and
systems software in the data centers that provide those services. Examples: Dropbox, NeTlix, Google Apps,
Amazon Web Services, Animoto, SkyDrive
Cloud computing is the convergence of three major trends
Separations of applications and infrastructure. For example, Animoto is the app and Amazon
constitutes the infrastructure. In relation with such separation importance shall be given to the concept of
multi- tenancy. It refers to a principle in software architecture where a single instance of
the software runs on a server, serving multiple client-organizations .Multi- tenancy reduces costs of both
providing and maintaining the service while optimizing resource allocation.
Utility computing:
Lower costs of information flows and communication.
Therefore cloud computing is the sum of SaaS and of what we called utility computing
The application delivered as a service are called Software as a Service (SaaS). Example: Facebook,
skydrive, Spotify, sales force, sales camp.
The data hardware and software (what we call cloud). Broadly speaking two main kinds of clouds
are identified:
Public cloud: a cloud is made available in a pay-as-you go to the general public. The service
being sold is called utility computing
Private cloud: internal data centers of a business or other organization that are large enough to
benefit from the advantages of cloud computing.
Additionally distinction is sometimes made between:
PaaS: Plataform as a service- used to run an as SaaS. Examples : windows azure,
IaaS: infrastructure as a service- used to host a PaaS . Examples: Gogrid, IBM, (think you
can touch)
*especial case: Amazon. It can be either Paas or Iaas


Different users and roles are
Users of SaaS: business individual that uses sales
Provider of SaaS /Users of utility computing
:company Salesforce itslef
Providers of utility computing : amazon
*Remark: the same actor can play multiple roles. For
instance, a cloud provider may also host in its own
customer-facing services on cloud infrastructure.


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Utility computing is the ability of companies to access computing services, business process and applications
from an utility-like service over a network ( comparable with electricity or water).
Utility computing is useful and preferable over traditional databases in the following cases
Demand is unknown in advance (Animoto case)
Organization that perform batch analytics: they can use the cost associativity of cloud computing to
finish computation faster: using 1000 machines for one hour costs the same as using one for one hour.
Demand of services varies with time: even if cloud pay-as-you-go pricing was more expensive than
buying and depreciating a service over the same period, it would still worth choosing the cloud due to the
benefits of elasticity and transference of risk
Elasticity: cloud computing can add or remove resources with a lead time of minutes rather than
weeks( as traditional service). That matches resources to workload much more closely.
Transference of risks. Especially :
o Overprovisioning: underutilization
o Underprovisioning: saturation
Hours purchased by cloud computing can be distributed non-uniformly on time, which prevents
the company for wasting capacity . There examples of those risks are following explained
Provisioning for peak per load
For many services the peak load exceeds the average usage by
factors of 2 to 10. Because capacity cannot be adapted to usage,
users provision capacity to cover the expected peak which
results in waste of resources when the demand is at nonpeak
It occurs when the company underestimates the capacity needed
More realistic underprovisioning
A company starts to grow in users until it reaches and excess of
demand or saturation or capacity. Then, users start to desert until
the peak user per load equals the data centers usable capacity,
at which point users again receive acceptable service. ( case of
*Underprovisioning costs are more difficult to measure since
company can lose as a consequence loyal customers that never
come back


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Positive implications:
Decrease total cost of ownership. The company avoids maintenance costs of an internal server, as it is
paying only for the service it actually uses

No startup costs: companies avoid the initial cost of purchasing and running an internal server. With
cloud computing, they can start using small capacity and increase hardware resources only when there is
an increase in their needs

More scalability: cloud computing can add or remove resources with a lead time of minutes, thereby
eliminating the need for cloud computing users to plan far ahead for provisioning.

Support of a virtual company

Negative implications
Uncertainty concerning business continuity and service availability: organizations worry whether
utility computing services will have adequate availability. Although existing SaaS products have set a
high standard on this regard, a cloud provider could also suffer outages for reasons beyond its control,
such as non-technical reasons like being out of business or being target of regulatory action. Solution:
use multiple cloud computing providers.

Performance unpredictably : there are several issues related with performance unpredictability


Virtual machines can share CPUs and main memory surprisingly well in cloud computing but
network and disk input/output sharing is more problematic.
Data transfer bottlenecks: pulling apart applications from the cloud boundaries may generate
problems in data transport. One way of overcome high costs of internet transport is placing ship
Scalable storage
Bugs(insect) in large scale distribution systems that cannot be offset without affection the whole
system. A solution may be use virtual machines
Scaling quickly?
Reputation fate sharing: one consumer bad behavior can affect others using the cloud. Solutions
are blacklisting IP address or make consumers liable and not service providers
Bad adaptability of software license to cloud computing

Data confidentiality/ privacy . With cloud computing information is:

No longer in your direct custody or control
Handed over to a third party to manage
May not be portable. Possible solution is to standardize the apps in such a way that SaaS
developer could deploy services and data across multiple cloud computers providers so that the
failure of a single company would not take copies of all customer data with it.
Resident in a different or multiple jurisdictions : in that sense a huge difference exists between
European and American law. In relation with privacy the US Patriot Act makes a difference. It is law
passed shortly after the September 11, 2001, terrorist attacks in the United States giving law
enforcement agencies increased, and broad powers to bring terrorists to justice. This law allow

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national agencies to access private data in case of suspected terrorist attacks. US patriot law has
implications for organizations namely :
o National security letters involving a gag order. That means that governments can ask companies for
information about customers without allowing them to know that. This law contradicts the EU data
protection directive which require organizations to inform users when personal information is
Additionally, in mass market cloud services are subject to take it or leave it service agreements.
Further possible solutions to solve price problems are:
Cloud broker- any entity that manages the use, performance and delivery of cloud services, and
negotiate relationships between cloud providers and cloud consumers
Use a private cloud either on premise (installed and run on company premises (building)) or off
Auditability could be added as an additional layer beyond the reach of the virtualized guest OS,
providing facilities arguably more secure than those built into the applications themselves and
centralizing the software responsibilities related to confidentiality and auditability into a single
logical layer.
Big data is a collection of data set so large and complex that it becomes difficult to process using on-hand
database management tools. Examples: Facebook handles more than 40 billions of photos from its user
Currently, we live in a data-driven world. We can find examples of big data everywhere; from science and
medicine to commerce and entertainment. The reasons that explains the existence of such a big amount of data
is because we are able to get it thanks to automation processes and internet, we can kept it using a wide range of
devices and technology available and finally we can use it for specific purposes ( scientific breakthroughs,
business process efficiencies, realistic special effect, better health care..)
The amount of data in enterprises is doubling approximately every three years. As a consequence, organizations
are getting overwhelmed since they have to handle with a huge amount data in a lower time spam. Additionally,
the separation between all digital data available and sensemaking algorirthms is also increasing which makes
the understanding of information even more difficult.
Business analytics is aimed at solving this problem. Concretely, it refers to the set of practices, skills,
techniques and technologies that are employed by organizations to access report and analyze data, in order to
understand business performance and support decisions making processes.
A difference shall be made between reporting and analytics. Reporting is about providing information whilst
analytics is about using this information to forecast future trends. Additionally,we can find three main kinds of
business analytics:
Descriptive : analysis of past trends and outcomes. It helps company to understand the past in order to
gain better understanding of which approach to take in the future
Predictive: It provides an estimation regarding the likelihood of a future outcome. In order to do this, a
variety of techniques are used, such as machine learning, data mining, modelling and game theory.
Prescriptive: set of techniques aimed at forecasting what will happen and providing recommendations
how to act upon it in order to take advantage of the prediction. Examples are mathematical sciences,
business rule algorithms, machine learning and computational modelling.


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The following graph relates different

reporting and analytical tools according to
the degree of intelligence and their ability to
reach competitive advantage. Although both
kinds of techniques are needed,
organizations should focus on predictive and
prescriptive analytics in order to reach a
higher degree of intelligence and thereby
competitive advantage.

Enhanced insights
improved quality of information
Increased managerial productivity
improved efficiency and effectiveness
Provides support for achieving competitive advantage

Organizations have to adapt. It requires:
Hiring the right people
Using the right techonolgy
Establish an analytical culture. Analytics need to be embedded into the machinery of organizational
action. Needs to change the way of working.
Operational decision making: instead of intuition you need to base thoughts on data
Business processes: business processes need to be adjusted to it
Manager and employee behavior: managers & employees need other kind of skills, more
Customer expectations: what can/cant you do for your customer
Privacy concerns


Hardware problems: breakdowns, configuration errors, damage from improper use or crime
Disasters: power failures, flood, fires
Use networks and computers outside firms control
Internet vulnerabilities:
Computers that are connected to the Internet by cable modems or Digtial line subscriber (DSL)
are more open to penetration of outsiders since they use fix internet addresses
Telephone service based on internet technology is more vulnerable than the switched voice
network if it does not run over a secure private network
E-mail messages and P2P networks may containing malicious software or access to corporate
internal information
Popular Instant message app dont use secure layer so messages are easy to be intercepted


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Wireless security challenges: wireless networks often do not have basic protections against war driving
in which eavesdroppers intercept wireless network traffic. An intruder that associated with an access
point with the correct service set identifier (SSID) is capable of accessing other resources in the network
Malicious software
Viruses: software program that attaches itself to other software programs or data files in order to
be executed without user knowledge or permission.
Worms: independent computer programs that copy themselves from one computer to another
over a network. Unlike viruses, worms can operate on their own without attaching to other
computer program files and relay less on human behavior in order to spread.
Trojan horse: software program that does not replicate itself but that offers a way for viruses and
other malicious code to be introduced into a computer system
SQL injection attacks: take advantage of vulnerabilities in a poorly coded web application
software to introduce malicious program code into a companys system and networks
Spyware: small programs that install themselves on computers to monitor user web surfing and
serve up advertising
Keyloggers: record every keystroke made on a computer to steal serial numbers for software to
lunch internet attacks, gain access to e-mail accounts, obtain personal information or passwords
Computer crime: it is defined by US law as any violations of criminal law that involve knowledge of
computer technology for their penetration, investigation or prosecution. Widely speaking, it includes
activities developed by a hacker (an individual who intends to gain unauthorized access to a computer
network). The most common are:
Spoofing: it may include a hacker attempting to hide their true identities by using fake e-mails
addresses or masquerading someone else, or, it also may involve redirecting a web link to an
address different from the intended one. A particular form of spoofing is phishing.
o Phishing consists of setting up fake webs or sending e-mail messages that look those of legitimate
businesses to ask users for confidential personal data (identity theft). Two phishing techniques
hard to detect are
Evil twins: wireless networks that pretend to offer trustworthy WIFI connections to Internet
with the intention of capturing password or credit card numbers of users who log on the network
Pharming: redirects users to a bogus webpage even when the individual types the correct Web
page into his or her browser
Sniffer: is a type of eavesdropping program that monitors information travelling over a network.
Distributed denial service attacks uses numerous computers to inundate and overwhelm the
network for numerous lunch points
Click fraud: occurs when an individual or computer program fraudulent clicks on an online ad
without any intention of learning more about the advertiser or making a sale ( competidores
clickan mucho en un anuncio para hacer aumentar costs)
Cyberterrorism and cyberwarafare :is a state sponsored activity designed to cripple and defeat
another state or nation by penetrating its computer or networks for the purposes of causing
damage and disruption
Internal threats: employees
Inside knowledge ; an employee can transfer companys confidential information to outside
Sloppy security procedures
User lack of knowledge ; they may introduce errors by entering faulty data or not following
proper instructions to proceed data and use computer equipment
Social engineering: tricking employees into revealing their passwords by pretending to be
legitimate members of the company that need information
Software vulnerabilities : programming and installing errors; unauthorized changes . A major problem
is the presence of hidden bugs or program code defects. The main source of these problems is the


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complexity of decision making code. The most common way of solving these errors is installing
patches. However, zero defects are not possible to achive in large systems
Failed computer can lead to significant or total loss of business function
A security breach may cut into firms market value almost inmediatly
Inadequate security and controls may also lead forth issues of liability. ( information of customers and
partners disclosed)
They are three main actions :
Regulations: different legal obligations exist to protect personal information. Examples
o USA:
HIPPA (medical)
Gramm-leach Billey act ( financial insitiutions)
Sabanes oxley act (financial info into organizations)
o EU Data protection directive requires organizations to inform users when personal information is
Information system controls there can be
o General controls: govern the design, security and use of computer programs and data throughout
the organizations information technology infrastructure
o Application controls: specific controls to unique to each computerized application (input ,
processing and output)
Security policy : it consists of statements ranking information risks, identifying acceptable security
goals and identifying mechanisms for achieving these goals. It drives other policies mainly
o Acceptable use policy: defines acceptable uses of firm information resources and computing
o Identity management: business processes and software tools for identifying the valid users of a
system and controlling their access to system resources (password, token(ID card), smart card,
biometric identification)

Technology and tools to protect information:

o Intrusion detection systems: monitoring tools placed at the most vulnerable points of a network to
detect and deter intruders. (by generating an alarm)
o Antivirus antispyware software
o Securing wireless networks: the initial security standard ( wired equivalent privacy WEP) was
more easy to crack. The new standard (WAP2) replaces WEP and uses longer keys that continually
o Firewalls: combination of hardware and software that controls the flow of incoming and outgoing
network traffic.
o Encryption: is the process of transforming plain text or data into chipper text that cannot be read
by anyone other than the sender and the intender receiver. Different protocols are used:
Secure sockets layer (SSL) and transport layer security (TSL) enable client and server computer
to manage encryption and decryption as they communicate with each other using during a secure
web session
Secure hypertext transfer protocol(S-HTTP) is another protocol using for encrypting data
flowing over internet but is limited to individual messages.
There are two alternative methods for encryption:


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Symmetric key encryption: the sender and the reciver establish a secure Internet session by
creating a single encryption key (both share the same key)
Public key encryption: uses two keys: one shared and another private. The sender locates the
recipients public key in a directory and uses it to encrypt a message. The message is sent in
encrypted from over internet or a private network. When the encrypted message arrives , the
recipient uses his or her private key to decrypt data and read the message
o Digital certificates: uses a trusted third party, known as a certificate authority to
validate users identity. Information is put into a CA server which generates encrypted
digital certificate containing owner identification information and a copy of the
owners public key. The certificate authenticates that the public key belongs to the
designated owner.

Risk assessment: determines the level of risk to a firm if a specific activity or process is not properly
controlled. It determines
o Types of threat
o Probability of occurrence during the year
o Potential losses ( value of threat)
o Expected annual loss
Once the company know those figures, system builders will concentrate on the control points with the
greatest vulnerability and potential for loss.
Auditing: an audit develops the following functions
o Examines firms overall security environment
o controls governing individual information systems
o Reviews technologies, procedures, documentation training and personnel
o May even stimulate disaster to test response of technology IS staff or other employees
o Lists and ranks all control weakness and estimates probability of their occurrence
o Assesses financial and organizational impact of each threat
Disaster recovering planning: devises plan for restoration of computing and communication services
after they have been disrupted ( Example backup)
Business continuity planning: focuses on how the company can restore business operation after a
disaster strikes ( example elaborating plans)


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Characteristics of organization structure:
Division of labor: task units, degree of specialization
Line vs. staff positions: staff directly involved in production process vs. service staff (finance, IT)
Span of control: supervision levels & numbers
Coordination & Control: vertical control vs. horizontal coordination. Vertical control gives less degree
of autonomy to employees than horizontal
Central vs. decentral decision making: central (top) vs. local (bottom) decision making
IS changes decision making and coordination:
Easier decision making and coordination across time and distance due to
o Increased speed of information exchange (time)
o Increased availability of information (distance)
o Reduction of costs
IS change decision making and coordination:
o IS create more centralization / control
o IS create less centralization / control
7.2.1 MALONE
In his article, Thomas W. Malone analyzes the effect of the reduction in communication costs in decision
making structures. According to the author, there are three types of decision making structures
1. Cowboys: independent and decentralized decision makers. Cowboys make decisions based on local information
and, thus, have low needs for communication. Example: Local store owner
2. Commanders: centralized decision makers. Decisions are made based on information coming from different
resources and locations. As a result, they have higher communication needs. Example: Top Management of a
multinational or a national army
3. Cyber-cowboys: connected decentralized decision makers. These decision makers make autonomous decisions
based on vast amount of remote information and thus have high communication needs Examples: Sales represent
ants, consultants entrepreneurs
According to Malone, the preference for one structure depend on three main factors:
Decision Information: extent to which decisions require remote information
Trust : extent to which parties trust others to act on their behalf
Motivation: extent to which energy and creativity is desired in employees tasks.
The following table summarized when decentralized or centralized structures are preferred according to these


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Of all three factors, decision information has the

clearest implication for costs and benefits since
trust and motivation are more situationdependent.
Hence, the author plots the three different types
of decision making structures into a graph
according to
1) Value of remote information: benefits of
considering remote decision information
2) Costs of communicating remote decision
3) Other costs Trust, motivation and all
other costs ( costs of salaries of decision makers)
are considered uncertain. The following table
and graph describe the costs of different decision
making structures.

Effect of is on decision making structures: IS lowers the costs of flows and communication of remote
information. It will trigger the following process
1) Independent decentralized structures (Cowboys) are common when communications costs are high. As they
2) Centralized decision making (commander) becomes more desirable as they can integrate different kinds of
remote information efficiently. However, as information costs decrease even further
3) Companies would move from centralized decision making ( commanders) to decentralize connected
decentralized structure (cyber cowboys). The reasons are that thanks to these structures (1) Local decisions can
be improved by considering local information that is sticky or hard to communicate (2) Local decision makers
are more enthusiastic and creative when they have more autonomy in their work


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Will IS lead to more control or empowerment?

According to Malone; the general trend would be a higher degree of empowerment

o However, as stated by the author, such trend is difficult to generalize, as best decision making
structure depends on particularities of an organization. Thus, progression described by Malone will
not always occur
In situations in which remote information is only of moderate value( and other costs of
centralized control are high) we might see a direct transition from the cowboy to the cyber
Situations when remote information has a low value, the cowboy structure may be the most
desirable even if information costs become cero
If other costs (trust, motivation).. are higher than commanders there may not be a transition.
Sometimes technology leads to centralization :ERP systems

IS architecture is the way in which IS assets ( hardware, software and infrastructure) are deployed and
connected in ways that they interact each other. Two remarks shall be made:

There is not a best way to organize IS architecture

Positioning IS architecture in ways that do not fit with the culture or structure will cause tensions.


IS activities in one user department normally the one that makes most use of them (traditionally
finance and accounting).
o + : if users are concentrated in the same area they can build experience and expertise
o -: problems arise when other departments start to use IS
Decentralize IS architecture : the organizational units become responsible for their systems
o +: - emphasis on user needs
Flexibility to adapt changes
o -:
Lack of standardization and control over data system
Lack coordination between users to learn from experience or transfer technology
Duplication of technical staff
*only possible when units/departments are independent with little communication between them
Centralize IS architecture into a unit responsible of most of the computing activities.
o +: system integration, accessibility and concentrated expertise
o -: - inflexible
Remote to business departments that may have different information needs
*fits best with centralized organizations operating in an stable environment


Federalized or distributed architecture departments have some interdependence in developing and

using IS without losing the benefits of centralized control over data and communications. This model
fits best in organizations with high interdependence, a high need to share data and turbulent environment

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IS supply as a resource pool: they concentrate expertise while business units decide whether or not to
use them. This resource pools can be developed through either of the following processes
In house: as a part of the corporation
Outsourcing is the transfer of the management and/or the day to day execution of a business to
an external service providers
Offshoring is the transfer of IS to another country, regardless of whether the work is outsource
or remains within the same corporation
Multisourcing refers to large outsourcing agreements in which different parts of the client IS
will be outsourced from different suppliers
Advantages and disadvantages of outsourcing are:

o +: - allows management to concentrate on the core activities of business

Allows companies with fluctuating IS needs to pay for what they use
Keep up with technological changes
Overcome the costs of hiring and training IS staff
o -: - loss of control and greater dependency on the service company
Loss of experience workers
Higher costs
Much of the complexity of the IS management stems from managing the conflicting cultures of three gropusmanagers users and IT staff. There is a cultural gap develop between these those players as they have different
expectations, tasks and responsibilities in relation with IS.
o The IS staff has to respond to needs and requirements of users within management guidelines
and limited resources
o Users expect a high level of IS support to do what management expects from them
o Management has to decide about IS strategy in coordination with other parties
This all takes place in a dynamic environment, causing tensions and problems IS staff do not understand what
users and managers do and need users and managers do not understand what IS staff do and need. Therefore,
the challenge for manager is to deal with these potential problems and develop more productive organizational
arrangement by
o Improving communication between parties
o Improving understanding in IS matters
o Positioning IS function in an appropriate place in the organization
IS enables new organization structures that makes easier to coordinate activities in physically separate locations.
Examples of Virtual organizations are E- business, IOS, and communities of practice. These new structures
gives companies more freedom in deciding
o How they interact with customers ( face to face or remotely)
o whether owning the resources they use
o How to manage knowledge (using their own expertise and the one coming from other organization)


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In turn, they are supported by

o Concurrent engineering (CAD/CAM groupware)
o Virtual teams
o Social media and web 2.0
Virtualiness is a characteristic of each organization. It can be quantified as the combination of three dimensions.
In turn, each stage has three evolutory stages that describe the level of virtualness. The combination of stages
and dimensions measure the whole level of virtualness.

interaction (
encounter): new
challenges and
opportunities for
sourcing): how a
firm coordinates
resources and
activities within
a network

Stage 1: task units

Stage 2: organization

Remote experience of
products and services:
creation of a website

Dynamic customization: based

on modularity (organizing
complex task and processes for
small systems) and intelligence
(continuous information
exchange with customers).
Example: creation of a website
to allow customers customize
Process interdependence
focuses on the interdependence
of business processes
across organizational boundaries

Sourcing model IS and

internet allows access to a
wider range of possible
suppliers and customers.
Also allows closer
relationship with them

Knowledge Work- unit experience

Corporate asset
Focuses on harnessing the
leverage (virtual designing the
collective expertise across
expertise) technological
possibilities and platform to support group work units. The main focus is
mechanisms for work (e.g. groupware,
tacit knowledge
the leverage of videoconferencing and
expertise at Intranet) and design the
many levels organization structure and
(internal and processes

Stage 3:Inerorganizational
Information gathering
and spreading customer
communities. Example:
Dell ideastrom allows
customers to with the
company and other users
to solve technical
problems and propose
new ideas
Resource coalitions
companies are not a
collection of physical
assets but a coalition of
resources (example: Sun
microsystems have a
corporate arrangement
with three transport
companies to manage its
Professional community
Recent advances in
IT (COPs, NOps)
fundamentally enable
multiple experts from
different locations to
interpret simultaneously
the meaning of indistinct

According to this view, managers should think about their relationships with other organization when it comes
to virtualize the organization. Three possibilities are offered


Disintermediation: Use IS to eliminate intermediaries (easyjet)

Reintermediation: Use IS to work closely with intermediaries in long-term relationships that add value
Network- based intermediation: Use IS to build a network of alliances and partnerships (Android)

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In the 20th century culture was defined as:
1. The evolved human capacity to classify and represent experiences with symbols, and to act
imaginatively and creatively;
2. The distinct ways that people living in different parts of the world classified and represented their
experiences, and acted creatively
Currently, culture consists of:

Beliefs and values learned unconsciously. In turn values are defined as a set of social norms that identify
what is important to a group and how they interact each other
Practices,that is how we do things, knowledge than is learnt consciously.

Another important concept is organizational culture. Organizational culture defines how or what an
organization is. There is a wide range of definitions about organization culture. Two important are:

Schein (1985) used three levels to explain organizational culture, namely :

o Artifacts include any tangible or identifiable elements in an organization( furniture)
o Values are the organization's stated values and rules of behavior.
o Shared Basic Assumptions are the deeply embedded, taken-for-granted behaviors usually
Hofstede (1991) highlighted that cultures differ based on five dimensions, namely power distance,
individualism/collectivism, uncertainty avoidance, masculinity/femininity and confusion dynamism


Before implementing a new IS, implementers must take a look at companys culture. It implies looking at

How people in a culture see information

How managers and staff are influenced by different dimensions of culture:

In determining different cultural types the competing values model is used. This model proposes that
organizations have inherent tensions along two dimensions: between flexibility and control and between the
internal and the external focus. Plotting these two tensions in a graph four different cultures appear


Open systems (external,flexibility): people focus on the external environment seeing it as a vital
source of ideas, energy and resources that requires entrepreneurial, visionary leadership and responsive
behavior. Example: start ups
Rational goal (external, control): focused on efficiency in terms of production or economic goals that
meet familiar and stable external requirements. Example: large production or service activities in
established organization
Internal process (internal, control) : focused on internal efficiency. Goals are known, tasks are
repetitive and methods stress specialization, rules and procedures. Leaders tend to be conservative and
cautious. Examples: internal administrative departments.
Human relations (internal ,flexibility): emphasize the value of informal, interpersonal relations rather
than formal structures. They place high value on maintaining organization and the well- being of its

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members and define effectiveness in terms of developing people and their commitment. Example:
internal support functions/ professional service firms
Defining which kind of culture has the company or department in which a new IS is to be implemented is an
issue of major importance. That would help to determine whether the IS is consistent with company culture and
which approach shall be taken in its formulation ( whether adapt the system to the culture or vice- versa)
Power is the capacity to exert influence over others. Main sources of power are

Coercive : authority to give instructions with the threat of punishment or sanctions to back them up
Reward: ability to use financial and other organizational resources to bestow (otorgar) rewards or status
on others in return of their support.
Administrative expertise: power that the holder of a position has to create organizational policies that
bolster (reforzar) their influence. Example: decide IS team.
Technical expertise: power can arise if a person holds a position that gives access to information. They
can use their position, information and contacts that go with it to build the image as a competent person
and influence the direction of an IS project.
Referent: situations where managers can use their position to influence others by showing that what
they purpose is consistent with accepted values and culture of the organization

Within an organization

People compete for access and control over information, as it is a an important source of power
When stuff/employees are concerned with power, they will use the effect of IS on their power as an
evaluation criteria. Thus, resistance is more likely to arise.


Culture influence IS/ IS influence culture

This influence is based on a complex interaction with many variables
For a new IS fit must be consider between
o IS and current organization culture
o IS and current power players


Generally IS view is influenced by:

Rational approach: benefits it will add to the organization

Magic bullet theory: this theory states that IS changes people and organizations by empowering them to
do things they couldnt do before and by preventing them from working in old, unproductive ways.
According to this theory when IS are introduced desirable organizational changes result by itself.



People can affect performance, as an IS can add or dismiss their contribution to the attainment of
organizational goals
System usually fail because managers ignored human aspects

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It tries to understand both the human user and computer system. It aims to understand how users function, the
tasks they perform and how best to create computer-based system that supports them. This consist of two
Task analysis: understand the task an IS will support
What does the performer of the task do?
What information is needed?
What affects task performance?
What are good / bad features of current systems

Design of the interface: it will affect how users react to an IS. An interface should be
Visually pleasant layout
Enhance user friendless
Meet five criteria
o Naturalness: should seem a natural way to perform the task and reflect natural language
o Consistency : same mechanisms and procedures
o Relevance : avoid redundant material and information
o Supportiveness : adequate information that allow the user to perform the task
o Acceptable degree of flexibility

USABILITY Jakob Nielsen defines usability as a quality attribute that assesses how easy user interfaces are to
use. Ten usability heuristics (indicators) are:

Visibility of system status

Match between system and the real world
User control and freedom
Consistency and standards
Error prevention
Recognition rather than recall
Flexibility and efficiency of use
Aesthetic and minimalist design
Help users recognize, diagnose, and recover from errors
Help and documentation

A user involvement example is prototyping. Different forms are ( by demonstration, by testing, cooperative,
This theory predicts that the acceptance of an IS depends on two variables


Perceived usefulness (PU): degree to which a person believes that using an IS would increase his/her job

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Perceived ease of use (PEU): degree to which a person believes that using a system would be free of

The initial research founded carried out by David founded that PU was considered more important that PEU.
Later, this general model was enlarged including more variables leading to the Unified theory of Acceptance
and use of technology (UTAUT). The main variables defined in this model are :

Performance expectancy
Effort expectancy
Social influence: the degree to which individuals perceive that important others believe he or she should
use the model
o These three variables shape behavioral intentions: an individual positive/negative attitude towards
using the system

Behavioral intention would not ensure

by themselves that people use the
system. It also depends on the quality of
facilitating conditions. Facilitating
conditions are defined as the
arrangements set by the company to
support the system (training).
Additionally, all these variables are
affected to some extent by gender, age ,
experience and voluntariness of use of
the individual.
Relevance of this model : they assist
the company in identifying relevant
variables for

System design: in this step ease

of use is especially important
System implementation: relevant variables
o Perceived usefulness
o Social influence
o Context:
Facilitating condition
User characteristics ( experience)


Motivation of managers and staff plays a key role in the success of an IS. It is defined as a decision process
through which an individual chooses desired outcomes, and sets in motion behavior that will help to achieve
those outcomes. It is influenced by :

Extrinsic rewards: those outside the job and separate from performance ( salary)
Intrinsic values: those that the people receive from performing the task itself (sense of achievement)

According to the work design model five core job dimension that contribute to job motivational potential are:


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Skill variety
Task identity : whether a job involves a relatively complete and whole operation
Task significance (society)

This theory argues that managers/staff can change increase motivation by changing identifiable elements of a
job so that they meet human needs more closely- especially intrinsic rewards. The following table summarized
measure that can be taken in relation to IS design.


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Implementing concept

Possible us in IS

Combining tasks

Use IS to combine different processes into a single task

so that staff can use more skills and complete more of
the whole tasks.
Give a team the responsibility to perform part of the
tasks, and ensure that IS provide information they need.
Use IS to provide stuff more or better information about
customers they are dealing with. Link staff to customers,
raising awareness with customer needs.
As the system takes over routine tasks, give staff more
responsibility, supported by the IS for planning,
Use IS to pass feedback from customers
Ensure positive and negative messages
Encourage more internal review and
performance evaluation

Form natural work groups

Establish customer relationships

Vertical loading

Opening feedback channels


The productivity paradox was analyzed by Erik Brynjolfsson, which noted the apparent contradiction between
the remarkable advances in computer power and the relatively slow growth of productivity at the level of the
whole economy, individual firms and many specific applications.
According to the author the main causes are:
Time lags: benefits in productivity take long time to appear. The reason is that the implementation of
IT is in an early stage and require from organizational changes to influence companys productivity
Mis- management: difficulties in managing IT and integrate it into companies
Mis-measurement: gains are real , but current measures dont incorporate them
Redistribution: there are private gains, but they come at the expense of other firms and individuals,
leaving little net gain.
But also:
Formalization of communication
High IT costs
Information overload: organization are receiving more information than they can handle (IS strongly
contributes to offset this problem because of ease of storage and integration of data.
Developments in technology make work less dependent on time and space. Examples of technologies
supporting distributed work are groupware, IM, e-mail, sharepoint and wikis. Two main forms of distributed
work are Telecomuniting and virtual teams
Refers to practices in which companies provide facilities that allow employees to work with more independence
in time and space. The following framework provides a useful indications of practices that help to achieve
positive outcomes.


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Individual characteristics important for distributed work:

Objectives: useful for people that want to reduce cost and increase their control over work schedule
Skills: people with computer skills that are self-sufficient, self-disciplined and good in communications
Work characteristics: it depends on interdependence. Tasks can be
Pooled: each worker contributes to a part of the product (little communication)
Sequential: one-way flow between workers (assembly line)
Reciprocal: informational flows are needed between staff involved into the tasks
Team: similar to reciprocal but with quicker information flows.
Distributed work is suitable for pooled and
sequential tasks
Organizational characteristics: three
organizational aspects affecting distributed
Goals : companies that hope to reduce
building and staff cost although they
incur in higher start up costs
Culture: staff working at distance
may not develop values and beleiefs
held by the company
Control: behavioural and social
control may be problematic.

Managers should create a context to support

remote working by ensuring that control and incentive structures encourage collaboration. Likewise, regular
face-to-face contact is needed for cohesion and collaboration. A well-managed distributed work:
Increases productivity
Leads to a better balance between life and work
Reduce employee stress
Teams whose members use technology to varying degrees in working across locational, temporal, and relational
boundaries to accomplish an interdependent task.
Better performance
Access to a wide range of knowledge resources
Diverse skills and resources
Culturally diverse
Cost advantages
Follow the sun working: reduction in project duration and increase in responsiveness
Cultural difference
Language difference
Common ground more difficult to establish
More difficult to reach a good team group


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However, advantages/ disadvantages of virtual teams depend on:

Team; staff selected to work
Technology employed
Characteristics of the project that is to be developed
Training of different members
Widely speaking good practices related with virtual teams are:
Kickoff meeting: first meeting aimed at setting goals and distribute roles and activities
Keep anonymous or keep social
Good leadership: social and task
Regular social meetings (facetoface)
Dont underestimate small distances
Global corporate culture
Manage knowledge & information sharing
Using multiple IS (fit to different tasks)
Use of technology fit to the task
Choice for communication technology shall be based on information characteristics. An appropriate choice
leads to effective exchange.
Media richness is defined as the capability of a media technology to transfer complex information. It is based on
four criteria:

Ability to handle multiple information cues simultaneously

Ability to facilitate rapid feedback
Ability to establish a personal focus
Ability to utilize natural language


The socio-technical approach states that systems design should take account of interdependencies between
different elements of the system. Concretely, it should reconcile needs of both technological and social system
In relation with individual interaction there are three possibilities:


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The leadership, organizational structures and processes that ensure that the organizations IT sustains and
extends the organizations strategies and objectives. The IT/IS governance makes decisions about:
IT principles
IT architecture
IT infrastructure
Business application needs
Prioritization and investment decisions
IT/IS governance can use the following mechanisms:
Decision making structures :Committees, roles, decision making responsibilities
Alignment processes: Management techniques for widespread and effective involvement in decisions
and implementation
o Investment proposals and reviews, Service Level Agreements (SLAs) , monitoring of business
Formal communications: Create understanding about decisions, processes and outcomes
o Announcements, intranet, committees, oneonone, etc.
It has been demonstrated that an effective governance leads to a better performance. There are three main kinds
of governance approaches:
Centralized approach: focused on reaching a high profitability
Characteristics: Efficiency, standardization, low costs, enterprise wide systems, integration.
Decentralized approach: focused on promoting innovation and growth
Characteristics: Local accountability, maximize responsiveness, business unit autonomy, few
enterprise wide systems or standards.
Hybrid approach: it is focused on asset utilization; that is in making a more efficient use of the existing
Characteristics: Shared services, sharing and reuse of systems, processes and data, tension
between enterprisewide and local control
COBIT (Control Objectives for Information and Related technology) is a system that provides managers,
auditors and users with a set of measures, indicators and best practices to assist them in using IT in the most
optimal way. However, those standards depend on the specific context of the company such as size, relative
importance of IT and complexity of IT systems. COBIT cover four domains:


Plan and organize : determines

IS strategy: How information and technology can be used to achieve companys goals and
Organizational strategy: organizational and infrastructural form IT is going to take in order to
achieve optimal results and to generate the most benefits from the use of IT

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Acquire and implement: it covers

Is portfolio: identifying IT requirements and acquiring the proper technology to achieve them
IS implementation: implement selected system within the company current business processes
IS maintenance : develop a maintenance plan that the company should adopt in order to prolong
the life of an IT system and its components
Deliver and support: it covers areas within the IT organization such as
Execution of applications within the IT systems and their results
Support processes that enable the efficient and effective execution of those systems (including
security issues and training)
Monitor and evaluate:
Deals with a companys strategy in assessing the needs of the company and whether or not the
current IT system still meets the objectives for which it was designed (FIT).
It also defines the controls necessary to comply with regulatory requirements

*Remember: such strict systems may lead to an excess of inflexibility and bureaucracy within the company
Typically an internal IS department has four responsibilities (departments) as stated in the following figure.
IS strategy and management:
Operations: running and
maintenance of information
systems and computer facilities
in order to ensure they are
available and reliable
Acquisition development:
development and acquisition of
Support: assist users by advising and training them when new systems are implemented. They also
operate help desks to receive calls for help or service, which sometimes pass to stuff in operations or
development department.
In IS governance the Chief Information Officer (CIO) is responsible for Information Management and IT
governance in an organization. CIOs role has shifted from a technology function to a strategic function. The
main roles of the CIO are


Strategic function : the CIO is part of the broad of directors being in charge of leading the creation of
IS strategy, and implementing in a way in which alignment between IS and Business startegy is ensured
Structural function (IT leader) : managing IT organization
IT function: managing software, hardware and infrastructure
Acting as a broker: there is usually a conflicting of interests between theree main interests groups
dealing with IS namely the general management, users and IS management. CIO has the role of
reconciling those conflicting interests in order to ensure an efficient use of IS.

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IS portfolio management involves managing IS as a portfolio of
assets in order to maximize business value and reduce risks. IS
portfolio management is accomplished through the creation of
three portfolios:

Application Portfolio .
Infrastructure Portfolio
Project Portfolio.

In relation with portfolio management is increasingly important

to raise investments in IS and increasing the strategic
importance of those systems.. In relation with these issues two
theoretical frameworks are identified:
Rose and Beath (2002) suggest four categories of IS
investments that make up the framework for IT
investments. By balancing short and long term projects on
the strategy scale and infrastructural and business solutions
on the scope scale organization can achieve an effective mix
of IS investments
MacFarlan strategic grid ( lecture 2)
IS portfolio management faces different challenges, the main ones being
Complexity: there is an increasingly complex IS landscape with a large number of interdependent
systems. Causes that explain complexity are:
Incomplete business case financial analysis: Insufficient attention is paid to the reuse,
maintenance, integration of IS
Lack of integral architecture governance: IT department are too much focused on technology
No asset lifecycle view of IS: tradeoffs between individual projects and organizational
Funding requests hardly include decommissioning costs for legacy systems
Lack of IT (financial) skills and resources
Lack of alignment CIO / business executives
Difficulty of identifying costs and benefits: Often IS projects cannot be justified on formal-rational
basis in isolation, but must be viewed in the context of other IS investment taking place at that time.
Additonally, some IS projects must be justified on the basis of benefits received from other projects
that they enable
Traditional methods of project evaluation express the idea that the cost of an investment needs to be related to
the benefits the investment brings. Thus, in evaluating a project identification of costs, benefits and risks (based
on the time in which benefits are revieved) is provided. Three most common methods to identify those variables


Payback period: Number of years before cumulative results equal investment

Return on investment: Annual benefits to be achieved over life of the project, divided by amount
Discounted cash flow: Costs and returns calculated over expected whole life of project, adjusted for
distant returns being worth less than immediate ones

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10.3.1 COSTS
Costs of purchase
software (development)
Customer and staff communication and training
business process reengineering
decommissioning and disposing of existing systems
costs of parallel running during the roll out period
error correction and compensation for quality dip during the initial use
Disaster recovery
Staff: recruiting and developing staff, training developers maintainers and users
Change: such costs depend on how able is the IS department to adapt to changing conditions. In turn,
that depends on:
interoperability : extent to which the proposed hardware platform can operate with other platforms,
operating systems, networks and peripheral equipment
openness: extent to which software can be easily and cheaply modified or linked to other systems
Tangible benefits
Cost savings: More accurate and timely distribution of work can decrease operator working time and
lead to efficiency increases
Quality improvements: reduce errors as it replaces a manual system
Avoiding cost increases: ie: as companies replace old PCs they avoid maintenance and repair costs
Revenue increases: new services, delivery channels, market penetration (difficutl to validate)
Staying in business: in a highly regulated environment new IS maybe necessary to continue in the
Intangible benefits
Improved information flows staff , suppliers, customer , investors,
Motivation- improvements in individual work
Customer satisfaction
Reputation- positive signals to the market about commitment to innovation
Flexibility- react more quickly and easier to change in the environment
Product differentiation
Innovation / Knowledge /
Learning- lessons about current practices can be spread more widely; learning about external events; be
better placed to take benefit of new developments
Formal rational techniques are based on the assumption that costs incurred in purchasing the system, and the
benefits obtained from it can be accurately estimated. However, in today fast-changing world it is difficult to
identify and value all costs and benefits of IS.


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Some reasons for failures in evaluating IS projects are:

Overemphasis on purchase costs, ignorance of other costs

Underestimation of implementation time and costs
Poor communication with users and customers which lead to misunderstandings about the functions and
uses of the new system. Forcing staff to use a system may make them reluctant to do that. Additionally,
customers that have not been informed properly may face problems when using the new system for the
first time.
Overambitious rates of return, unrealistic benefit predictions
Unexpected demand levels
Not learning from past experiences : formal post implementation reviews are needed

Additionally, formal rationale techniques consider the size and the timing of costs and benefits but provide
insufficient fit with IS projects. That is because
IS are deeply integrated in organization
IS requires organizational change
IS involve wide range of factors; they not just affect the process to which they are applied but a wide
range of activities and stakeholders.
Focusing only on the financial perspective may lead to a dangerous short term perspective. Balance scorecard
seeks to solve the problems of the formal rationale techniques by developing an organization wide view of
performance based on an appropriate balance of four measures:

Financial perspective: determine amount and timing of costs and benefits

Customer measures: will drive the organization towards the way it wishes to be perceived by
Goals: time taken to fulfill orders, customer satisfaction level, market share
Internal business measures: define what the organization must do internally to compete effectively
Goals: productivity level, error rates, safety records and staff skills
Innovation learning measures: intended to drive the organization towards continuous improvement
and the creation of an even greater value to customers and shareholders
Goals: percentage of revenue form new products/markets, research and development
achievements and improving in operating efficiencies

IS implementation is both a technological and organization process. It consists of internal strategy formation,
project definition and activities aimed at introducing an IS to the users in an organization, with the aim of
removing resistance and stimulating optimal use of the IS.
In the implementation process companies sometimes face the following challenges:
IS systems are often too technologically advanced to be easily understood and implemented within
employees with regular IT knowledge
When they are introduced into a firm with a strong culture resistance are likely to arise
External condition likely to change during project ( new technology developments)
May involve links with other firms
Magic bullet expectations
IS implementation = organizational change


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The following chart summarizes the differences between the traditional and the new way of IS implementation


Planning: reflects the assumption that planned change in organization unfolds in a logical sequence, that
people work to the plan and that they notice and correct deviations from the plan. It is technical focused and
easy to understand
Emergent: people taking this approach make plans but see them as a temporary and provisional , being
ready and able to adapt them as circumstances change and people learn more about the task
Participative: this approach emphasizes the benefits of establishing a sense of ownership of the change by
those whose support it will need or who will have to live with the change when it is implemented.
Political: this approach assumes that IS project inevitably affect people with different interest. Thus, power
is essential to get things done.

The following table summarized when each approach is likely to be appropriated.


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Empirical/rational strategy: people act rationally and make their decisions on the basis of rational
considerations, taking their own interests into account. Methods:
User education and training
Communication between developers and users
Selection and deployment of suitable personnel for IS implementation ( external consultants)
Create realistic, optimistic expectations regarding the value of the application

Normative/re-educative: people are primarily geared towards satisfying needs and these needs are
dependent on the social and professional context within which people find themselves. Measures:
Facilitate and promote participation by establishing dialoging relationships
Influence attitudes (find opinion leaders) re-educate users with the intention of motivating them to a
favorable implementation
Create climate that is positive towards implementation
Give users opportunity to get acquainted with system (activate learning process ) installing a model
prototype in a given part of the organization
Creating an IS team or department with an organic structure that can easily cope with changing
affairs and conditions
Power/coercive strategy: Peoples behavior is affected by political o economic sanctions (positive or
negative). Methods:
Project leader with sufficient authority and resources
Identifying resistance and coopting users or groups resisting implementation
Reorganization of related reward systems
Experts or consultants
Establishing explicit IS objectives and elaborating a formal agreement process between departments
relating to IS implementation to prevent any arbitrary alteration of them.


There is not an absolute strategy for IS implementation. There must be a fit between IS strategies and main
contingency factors affecting the company. Empirical findings of Kin and Lee :

System innovativeness: innovative is related to how profound and far reaching is a system in the
organization. The more innovative, the more changes are needed and thus the higher resistance may arise.
o Highly innovative = power/coercive or normative/re-educative

Top management support high: mobilization of resources required for IS implementation is facilitated
and attitude towards implementation tend to be positive. Implementers must take advantage of it and adapt
organizational structure, task procedures and reward system to make them more suitable for IS
o power/coercive or normative/re-educative

Decentralized IS department: the more decentralized IS-related functions are the more necessary is to
coordinate the tasks of the department related to IS implementation and promote mutual understanding
o Empirical/rational, power/coercive

Task unstructureness and User competence:

o Three structures


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Other logical relationships:


Organizational structure centralized vs. decentralized:

o power/coercive vs. empirical/rational
Culture formal vs. informal
o Power/coercive vs. normative/reeducative
Users motivated / resisting
o Empirical/rational vs. power/coercive

International Business Administration- 2013