MIS Khoa All Final

1
Chapter
Managing in the Digital World
“You can’t just ask people what they want and then try
to give it to them. By the time you get it built, they’ll
want something else”
Steve Jobs, Apple Computer (on pleasing customers)
1-1
Learning Objectives
1-2
Learning Objectives
1-3
Characteristics of the Digital World
• The Knowledge Worker
o Term coined by Peter Drucker in 1959
o An individual who is relatively well educated
and who creates, modifies and/or
synthesizes knowledge as a fundamental
part of a job
• Knowledge Society
o New Economy/Digital World
Information Systems Today: Managing in the Digital World 1-4

The Knowledge Society
Information
is now as
important as
land, labor
and capital.

Globalization
• Globalization is the integration of economies throughout
the world, enabled by technological progress.
• Globalization manifests itself through changes in

economy, cultures and technology.
Globalization: Economic Changes
• Economic Changes
o Increase in international trade of goods and
services
Globalization: Cultural Changes
• Cultural Changes
o Increased access to other cultures (through
TV, Internet, etc.)
Globalization: Technological Changes
• Technological Changes
o Availability of low cost communication
systems
Worldwide Internet Usage
• In 2006 about 20% of active Internet users were located
in the US
• The Internet usage
o Highest - North America: 70% of population
o Lowest – Africa: 2.6% penetration of use

Information Systems: Definition
• Combination of five
key elements:
o People
o Hardware
o Software
o Data
o Telecommunications
networks

Information Systems: Definition
• Information System is a
combination of software,
hardware, and
telecommunications
networks that people build
and use to collect, create,
and distribute data.
• The goal of information

system is to provide useful
data to people

Data: The Root and Purpose of
Information Systems (I)
• Distinction between:
o Data – raw, unformatted information
• E.g.: 5433333353
o Information – data that is transformed to
have a meaning
• E.g.: (543) 333-3353
o Knowledge – body of governing procedures
used to organize or manipulate data
o Wisdom – accumulated knowledge
Data: The Root and Purpose of
Information Systems (II)

IT: The Components of Information Systems
• Relationship of
computer-based
information
systems to
information
technology and
technology

IT: The Components of Information
Systems - Technology
• Any machine that

can supplement
or replace human
manual work
o E.g.:
• Heating system
• Surgical laser

Systems – Information Technology
• A type of technology
that is controlled by
or uses information
o E.g., manufacturing
robot

Systems – Computer-based IS
• Systems using
computers to provide
useful data to people
o E.g., specific software
used to analyze data

Learning Objectives

People: The Builders and Managers of IS
• Career opportunities are strong and
expected to grow
o Computer/IT analyst and Computer & IS
Manager both in the top 10 best jobs for the
next decade
• Median earnings for managers $102,360 (May
2005)

Best Jobs for the Next Decade
3rd in job growth

and average
pay

Careers and Salaries in the IS Field
(National Average)

Careers in IS: Evolution of the CIO
• Chief Information
Officer (CIO) – job
title became
popular in 1980s
• Early 1990s –
people joked that
CIO stands for
“Career Is Over”

The CIO Today
• Most large and
midsize
organizations
have a CIO
• Rob Carter of
FedEx – CIO
of the year
(2006)

IS Personnel
• Changing trends
o Higher prestige
o More women
PAST PRESENT

Steve Jobs, Cofounder and
CEO of Apple Computers
• “I want to put a ding in
the universe.”
• “You can’t just ask
people what they want
and then try to give it to
them. By the time you
get it built, they’ll want
something else.”

What Makes IS Personnel Valuable?
• Integrated knowledge and skills in three
areas:
o Technical Competency - skills in hardware,
software, networking and security
o Business Competency – understanding of the
nature of the business; this is key in addition to the
technical competency
o System Competency – understanding of how
to build and integrate large scale systems

Business Career Outlook
• Globalization trend is increasing the need for
“Global Skills” – What can you do?
o Gain international experience
o Learn more than one language
o Sensitize yourself to global cultural and political
issues
• In Addition – Immerse yourself into the culture:
o Learn about local food
o Watch locally produced television
o Read books and newspapers
Organizations: The Context of IS
• Many different types of systems are used
in organizations
o E.g.: transaction processing systems,
decision support systems, intelligent
systems, etc.
• These systems used to be cleanly
categorized – now the boundaries are
fading due to:
o Internetworking
o Systems integration
Organizing the IS Function
• Early History: Poor Service and Worse Attitudes
o Early systems were cumbersome to use, over budget
and late
• The Rise and Fall of End-User Development
o Users developing their own applications or improve
existing systems
o Today’s complex systems designed by professionals
• The Modern Information Systems Organization
o Attitudes changed and service mentality emerged

End User Development
• The advent of
the IBM PC
and early
applications
packages led
to end-user
development

Types of Information Systems used in
organizations
• Transaction processing system
• Management information system
• Executive information system
• Decision support system
• Data mining and visualization
• Office automation system
• Customer relationship management (CRM) system
• Enterprise resource planning (ERP) system
• Supply chain management (SCM) system
• Electronic commerce system
Differences in management information
Detail Degree of
Time span Source Purpose
level structure
Information
Strategies Long Summarized Internal/external Unstructured Decision making
Tactical (middle)
Management
Operational management Short Detailed/specific Internal Structured Daily operation

Other Issues Facing the IS
Function
• The spread of technology in
organizations
• Downsizing (rightsizing) and Outsourcing
• Career prospects and opportunities
o Need for people within organizations with
analyst skills

Learning Objectives

The Dual Nature of IS
• IS can make you or break you
• U.S. Navy – The failure
o $ 1 billion wasted on 4 different ERP
applications
• FedEx – The success
o $ 32 billion family of companies – largest
express transportation company
o “Information hub for business where
managing information is the business”

IS for Competitive Advantage
• Both FedEx and the U.S. Navy were

developing strategic information
systems
• Only strategic information systems can
help sustain competitive advantage

Why Information Systems Matter
• Nicholas Carr article – “IT Doesn’t Matter”
o IT no longer a source of advantage on the firm level
o Companies should focus IT on cost reduction and
risk mitigation
• Many experts disagreed with his arguments
o Abbie Lundberg – Interview with Carr
o Don Tapscott – “The Engine That Drives Success: The
Best Companies Have the Best Business Models
Because They Have the Best IT Strategies”
• Many successful companies use IT to support a unique
business strategy
End of Chapter Content
2
Chapter
Valuing Information Systems
Investments
“The most important discoveries of the next 50

years are likely to be ones of which we cannot
now even conceive.”
Sir John Maddox, 1999
3-40
3-40
Learning Objectives
1. Discuss the roles and importance of MIS in an organization.
2. Issues concerning with MIS investment decision making.
3. MIS investment decision making
3-41
3-41
Learning Objectives
3-42
3-42
Information is critical
• The information we have is not what we
want.
• The information we want is not what we
need
• The information we need is not available.
3-43
Information is a resource
• It is scare
• It has a cost
• It has alternative uses
• There is an opportunity cost factor
involved if one does not process
information.
3-44
Why need information?
• Information ensures
effective and efficient
decision making
leading to prosperity
of the organization
3-45
Valuing Information Systems
• Information systems can be used in three

ways to add value to an organization:
1. Automating
2. Informating
3. Strategizing
3-46
3-46
IS for Automating: Doing Things Faster
• With automation,
tasks can be
completed:
o Faster
o Cheaper
o More accurately
o With greater
consistency
3-47
3-47
Automating: Example
• Loan processing comparison for 3 methods
(from the moment the customer takes the
application until the applicant is notified of
decision)
o Manual loan process – 25 to 40 days
o Technology-supported process – 5 to 20 days
o Fully automated process – 1 hour to 15 days
3-48
3-48
IS for Organizational Learning:
Doing Things Better
• Information
systems can also
be used to:
o Learn about
processes
o Improve
processes
o Support
organizational
learning
3-49
3-49
Informating: Example
• Computer-
based loan
system
identifies peak
times during
the year when
specific loans
are processed
3-50
3-50
IS for Supporting Strategy: Doing
Things Smarter
• IS used to gain
or sustain
competitive
advantage
o Turning benefits
of automating
and informating
into strategic
advantage
3-51
3-51
Strategizing: Five Types of Organizational
Strategies
• Organizational
strategies
define the way
in which a
company
plans to
gain/sustain
competitive
advantage
3-52
3-52
What is MIS for managers?
• MIS refers broadly to a computer based
system that provides managers with tools
for organizing, evaluating and efficiently
running their departments.
3-53
What is MIS for managers?
MIS provides:
o Right information
o To the right person
o At the right place
o At the right time
o In the right form
o At the right cost
3-54
MIS roles in an organization
MIS is:
•The core internal communications (among
functions/structural levels)
•The core external communications
(Stakeholders, suppliers, customers)
 MIS improves customers service
 MIS creates competitive advantage
 MIS seizes business opportunities over the
competitors.
3-55
Characteristics of MIS
3-56
Value Chain Analysis
• Tool used by managers to identify
opportunities for gaining competitive advantage
3-57
3-57
IS and Value Chain Analysis
• Information systems use in adding value:
o Use of Internet
o Use of Extranet/Intranet
3-58
3-58
Sources of Competitive Advantage
MIS can
1. Best-made product on the market offer these
2. Superior customer service
3. Achieving lower costs than rivals MIS can
offer this
4. Having proprietary manufacturing technology
5. Having shorter lead times in research and
development projects
6. Having a well-known brand name and
reputation
7. Giving customers more value for their money
3-59
3-59
Learning Objectives
2. Issues concerning with MIS investment

3-60
Factors in MIS Investment Decisions
3-61
3-61
MIS hierarchical planning stages
3-62
Detailed MIS hierachical planning
3-63
• Strategic level:
o Developing corporation strategy
o Developing a specific system to implement
corporation wide strategy
Outcomes: Goals, objectives, priority for
longer term time table
 MIS function strategy to support corporation
strategy
3-64
• Tactical level:
o Middle managers implement the goals,
objectives (how to implement?)
o Allocating resources to achieve the goals,
objectives.
o Focusing on all employees of each function.
o Shorter term time table to implement.
o MIS investment decisions are made at this
stage.
3-65
• Operational level:
o More detailed, day to day works scheduled.
o Focusing on each individual with required
skills, knowledge to perform the works.
3-66
Step 1:
• External environment analysis:
o Technological factors (speed of changes)
o Political factors (competitors’ advantages)
o Economic factors (competitors’ spending on MIS)
o Physical factors (Space/capability to invest on MIS)
o Social factors (competitors’ skilled employees)
o Customer expectation
o Suppliers’ investment on MIS
Opportunities/threats to our organization
3-67
Step 2:
• Internal environment analysis:
o Culture to support high level service for
stakeholders
o Organizational structure to support flexibility and
innovation
o Financial resources
o Human resource
o Technical resources
o Physical resources
3-68
Step 3:
• Corporation wide policy consistent with
organizational goals, objectives.
Step 4:
• Individualize organizational
goals/objectives into more narrow
aspects concerning with MIS function
3-69
Step 5:
• Development and determination of inputs,
outputs, processes of the firm’s system.
• Determination of changes and their
complexities brought by MIS changes.
Step 6:
• Analysis of alternative configurations of MIS
3-70
Step 7:
• Choosing the right MIS configuration to support the
organizations’ activities
Step 8:
• Acquisition and procurement
• Operational planning
• Implementation and installation
• Integration
Step 9:
• Analysis of the whole system to assure it meets goals,
strategy requirements of the organization
3-71
Organizational systems and MIS
3-72
MIS Structural concept
3-73
Files dedicated to application programs
3-74
Interacting with a database
3-75
Data sharing in a database environment
3-76
MIS investment
MIS investment includes expenses for
acquiring:
•Computers and communications
•Softwares
•Networks
•Personnel to manage/operate the system
3-77
Problems facing managers in MIS
investment decision making
• Intra-firm adaptability: MIS must be integrated in the
whole system of the organization.
• Inter-firm adaptability: MIS must work well with the
systems of suppliers, customers via internets or
mainframes.
• Platform neutrality:
• Inter-operabilities
• Scalability
• Security
• System reliabilities.
• Ease of use
• Customer support
• Perceived VALUE to the firm 3-78
Time Lags
• Benefits do not
always occur at the
same time MIS is
implemented
o Some MIS
implementation
requires people to
gain experience
o System must be
integrated with
existing systems
3-79
3-79
Mismanagement
• Bad business
model can not be
overcome by
good MIS
o MIS
implementation as
temporary fix
o Creation of
unanticipated
bottlenecks
3-80
3-80
Risks in MIS investment decision
• Physical risks:
o Vulnerability of hardware, software
o Data to theft, sabotage
o Software vulnerability to piracy and deletion
o Data securities laps
• Managerial risks:
o Failure to achieve anticipated benefits or cost reduction.
o Implementation failure to achieve the desired time frame
o End user resistance
o Inability of the system to support organization or its growth
over time
o Incompatibility issues that later develop.
3-81
MIS failures
Poorly investment in MIS can cause:
• The investment becomes a competitive
disadvantage.
• Needlessly increasing capital costs, interest
costs
• Delaying customer orders
• Disrupting the communications within the
organization and with other stakeholders
• Decreasing employee morale
3-82
Learning Objectives
3-83
3-83
Decision making principle
• Balancing Benefits vs. Cost
• More values
(tangible/intangible) received.
3-84
Base for decision making
• Consequence is seen as an event that arises from
the introduction of the MIS starting with the
decision to go ahead with the investment
• The consequences (values) of MIS investment can
be measured in terms of
o Financial measures
o Non financial measures
Benefits of MIS = Positive consequences – negative consequences
3-85
Financial measures
• Pay back period:
o The period between the moment that MIS
invesment is made and the moment that the total
sum of investment is recovered through the
incoming cash flow
• Internal rate of return (IRR):
o The threshold at which after discounting the
incoming and outgoing cash flows, the net present
value equals zero.
• Net present value (NPV):
3-86
Non financial measures
• Customer satisfaction
• Good supplier coordination
• Improved employee motivation.
• Competitive advantage
3-87
Multi criteria approach
3-88
Multi criteria approach
• Enhanced ROI (Information economics):
o Value linking: Additional cash flows that accrue to
other departments.
o Value acceleration: Additional cash flows due to
reduced time scale for operations
o Value restructuring: Additional cash flows through
restructuring work and improved job productivity.
o Innovation valuation: Additional cash flows arising
from the innovating aspects of the investment (e.g.
competitive advantage)
3-89
Strategic investment evaluation model -
SIESTA
3-90
Return on management (ROM)
3-91
End of Chapter contents
3-92
Michael Dell, Founder and
Chairman, Dell, Inc.
• High school teacher said
Dell would “probably never
go anywhere in life”
• In 1990s – Dell was the
youngest CEO to head a
Fortune 500 company
• Twelfth richest man in
2006

3-93
3
Chapter
Managing the Information System

Infrastructure
Based on results of survey data from 2004, 70%

of respondents had stolen key information from
an employer
Ibas - Data forensics firm, UK
4-94
Learning Objectives
4-95
Learning Objectives
4-96
Infrastructure
• Interconnection
of basic
facilities and
services
enabling the
area to
function
properly
4-97
The MIS Infrastructure
• Google’s newest data center – The Dalles, OR
• Why there?
o Fiber-optic network
connectivity
o Access to water for
cooling needs
o Cheap, uninterrupted
power from a nearby
hydroelectric dam
4-98
The Need for an MIS Infrastructure
• Businesses rely on MIS infrastructure to support
business processes, decision making and competitive
strategy
• Business Processes
o Activities that
organizations
perform to achieve
business goals
•Core Processes
•Supporting
Processes
4-99
MIS Infrastructure
• MIS infrastructure
components
include:
1. Hardware
2. Software
3. Networks
4. Data
5. Facilities
6. Human resources
7. Services
4-100
MIS Infrastructure: Hardware
• Integral part of the
infrastructure:
o Computers
o Networking
hardware
4-101
MIS Infrastructure: Hardware (II)
• Issues:
o What technologies to
choose
o When to replace
equipment
o How to secure
infrastructure
o How to assure
reliability
o Etc.
4-102
MIS Infrastructure: Software
• Software enables
companies to
utilize their MIS
hardware
• Issues:
o Updates
o Fixing bugs
o Software licenses
o Etc.
4-103
MIS Infrastructure: Communication
and Collaboration
• Help
organizations to
become powerful
• Enabled by
networking hard-
and software
• Also
o Email servers
o Communication
software
o Etc.
4-104
MIS Infrastructure: Communication
and Collaboration (II)
• Key issue
o What types of
communication
technologies
support the
organization’s
goals?
4-105
MIS Infrastructure: Facilities
• Need for
specialized
facilities, including:
o Electricity
o Cooling
o Etc.
4-106
Potential Threats to MIS Facilities
• Key issues:
o Where to
house data
centers, etc.
o Threats to MIS
facilities
• Outside
intruders
• Environmental
elements
4-107
MIS Infrastructure: Human
Resources
• Need for trained
workforce
o Influences
location
decision
4-108
MIS Infrastructure: Services
• Processes which are
not core competencies
are often delegated to
companies with more
experience
4-109
Learning Objectives
4-110
Managing the Hardware Infrastructure
• Issues to consider:
o Fluctuating computing demand
o Large-scale problems
o System complexity
4-111
Fluctuating Computing Demand
• On-demand computing
o Available resources allocated based on user needs
o Utility computing
• On-demand computing
rented from external
provider
• Paid on as-needed
basis
4-112
Solving Large-Scale Problems
• Grid Computing
o Combines computing power of a large number of
smaller, independent, networked computers
• Tasks broken down
into smaller chunks
o Dedicated vs.
heterogeneous grids
• Acquisition vs.
management costs
o Edge computing
• Save bandwidth
• Improved Response time
4-113
Managing System Complexity
• Autonomic
computing
o Self-managing
systems requiring
minimal human
intervention to
operate
4-114
Managing the Software Infrastructure
• Primary issues to
consider:
o Cost of software
o Integration
o Managing bugs
and licenses
o Fluctuating
computing needs
4-115
Open-Source Software
• Open-source movement aided by the advent of
the Internet
• Source code is freely available for use and/or
modification
o Open-source operating
system
• Linux
o Used in everything from
fridges to personal
computers to
supercomputers
4-116
Open-Source Application Software
• Open-source application software
o Apache Web server
o Firefox Web browser
o OpenOffice
• Drawback:
o Finding customer
support may be
difficult
4-117
Web Services
• Web-based
software systems
allowing for an
interaction of
different programs
and databases
over a network
• Service-oriented
architecture
4-118
Managing Software Assets
• Managing software bugs
o Increased complexity of applications prevents error-
free development
o Patch management system
• Managing software licensing

o Hot topic due to problems with piracy
o Shrink-wrap license
o Enterprise license
o Software asset management
4-119
Application Service Providers
• ASP: Application Service Providers
• ASPs provide on-demand software access
over the Web
o Specific software located on the ASP’s server
o Accessed using Web-enabled interfaces
• Benefits:
o Reduced need to maintain or upgrade software
o Fixed monthly fee for services
o Reliability
• Example: Google Calendar
4-120
Application Service Providers (II)
• Types of ASPs:
o Specialist or functional ASP
o Vertical market ASP
o Enterprise ASP
o Local ASP
4-121
Managing the Communication and
Collaboration Infrastructure
• Diverse
communication
needs
• Solution:
o Convergence
o Increasing mobility
4-122
Convergence of Computing and
Telecommunication
• Convergence of
functionality of devices
o Cell phone and PDA
• Convergence within
underlying
infrastructures
o IP convergence
• Voice over IP
• Videoconferencing over IP
4-123
IP Convergence: VoIP
• Use of Internet
technologies for
placing telephone calls
o High quality of
transmission possible
o Ability to call from any
place with Internet
connection
4-124
IP Convergence:
Videoconferencing over IP
• IP used to transmit video data
o Desktop video conferencing
o HP Halo meeting room: $400,000
4-125
Increasing Mobility
• Knowledge workers require access to
information from anywhere
o Communication devices
o Wireless devices capable of connecting to
organization’s internal network
• Wireless security
concerns
4-126
Managing the Data and Knowledge
Infrastructure
• Organizations
need to find new
ways to manage:
o Data from different
sources
• Data mining
o Internal knowledge
• Knowledge
management tools
4-127
Data Mining
• Online transaction
processing (OLTP)
o Immediate response to user
requests
• Online analytical
processing (OLAP)
o Quickly conducting complex
analyses on data stored in a
database
4-128
Data Mining
• Enhancing business intelligence by combining data
from various sources
4-129
Operational vs. Informational
Systems
4-130
Data Warehouses and Data Marts
• Data Warehouse
o Integration of multiple large databases and other
information sources into a single repository
o Pull together, integrate, and share critical corporate
data throughout the firm
• Data Mart
o Data warehouse that is limited in scope
o Customized for the decision support applications of
a particular end-user group
4-131
Increasing Business Intelligence
with Knowledge Management
• Knowledge management
o The process used to get the greatest value
from knowledge assets
• Knowledge management system

o Collection of tools to generate, store, share,
and manage tacit knowledge assets
4-132
Knowledge Assets
• Knowledge assets:
skills, routines,
practices, principles,
formulas, methods,
heuristics, and
intuitions
o Explicit knowledge
assets
o Tacit knowledge
assets
4-133
Managing the Facilities Infrastructure
• Ensuring availability
o High availability
facilities
o Collocation facilities
• Securing the facilities

o Physical safeguards
4-134
Ensuring Availability
High-availability facilities
Collocation facilities
4-135
Managing Human Resource
Infrastructure
• Need for highly
trained workforce may
be managed by:
o Facility location
o Educational grants
o Human resource
policies
o Outsourcing of human
resource services
4-136
Managing Human Resource
Infrastructure
• Locating facilities in areas with high
concentration of people with a certain skill
• Silicon Valley, CA or Seattle, WA
• Providing education opportunities for existing
employees
• Educational grants
• Human resource policies
• Flextime, telecommuting
• Outsourcing of human resource services
• Bangalore, India
4-137
Managing the Service Infrastructure
• Increased
complexity of MIS
o Services providers
address
infrastructure needs
o Outsourcing
4-138
Services Providers Addressing
Infrastructure Needs
4-139
Outsourcing
• Partial or entire responsibility for MIS
development and/or management given
to an outside organization
o Enables focus on core competencies
• Outsourced functions
o Non-core functions
o E.g., accounting, human resources
• Some business functions traditionally kept within
the organization
o Information systems security
4-140
Learning Objectives
4-141
Ensuring a Reliable and Secure
Infrastructure
• Variety of threats to MIS

infrastructure
• Infrastructure reliability may

be the most important
concern
o Disaster planning
o Designing the recovery plan
o IS controls, auditing and the
Sarbanes-Oxley Act
4-142
Disaster Planning
• Disaster recovery plan
o Detailed list of procedures to follow when recovering
from a systems-related disaster
• Backup Sites
o Cold backup site – an empty warehouse with all necessary
connections for power and communication
o Hot backup site – a fully equipped backup facility
o Choosing a backup site location
• different geographic location to minimize the risk of a disaster
happening to both systems
4-143
Designing the Recovery Plan
• Recovery time objectives
o Specify the maximum time allowed to
recover from a catastrophic event
• Recovery point objectives

o Specify how current the backup data should
be
4-144
IS Controls, Auditing and
Sarbanes-Oxley Act
• IS controls
o Specific IT processes designed to ensure
reliability of information
o Controls should be a combination of three
types of controls:
• Preventive controls
• Detective controls
• Corrective controls
4-145
Hierarchy of IS Controls
4-146
IS Auditing
• IS audit
o Performed by external auditors to help organizations assess
the state of their IS controls
• To determine necessary changes
• To assure the IS availability, confidentiality, and integrity
• Risk assessment
o Determine what type of risks the IS infrastructure faces
• Computer Assisted Auditing Tools (CAAT)

o Specific software to test applications and data, test data, or
simulations.
4-147
The Sarbanes-Oxley Act
• Formed as a reaction to large-scale accounting
scandals
o WorldCom, Enron
• Primarily addresses the accounting side of

organizations
• COBIT (Control Objectives for Information and Related

Technology)
o Set of best practices
• Help organizations to maximize the benefits from their IS
infrastructure
• Establish appropriate controls
4-148
Opening Case: Managing in the
Digital World: “I Googled You!”
• January 1996 – Brin and Page create BackRub
• September 1998 - Google Inc. began operations
o PC Magazine named it best search engine of 1998
• 1999 - Google has 9 employees
o more than 500,000 searches a day
• 2000 – world’s largest search engine
o 18 million queries a day
• April 2004 – Google’s first IPO
o April 2004 - $85
o December 2006 - $466
Who Owns Company Data?
• Stealing information from a company is
worse than stealing hardware
o 2004 survey – 70% of respondents had
stolen key information from an employer
• 72% reported they had no ethical problems with
stealing the information
• 30% had stolen customer contact information
• 80% justified their actions by saying they built the
database in the first place

Broadband Access Increases
• In 2006, nearly 70% of Internet users in the
U.S. had access to broadband connections

Cognitive Radio
• Wireless transmission very popular
• Overcrowding of airways a concern

o Dropped calls
• Wireless frequencies are full
• Too few wireless towers
• Environmental interference
• Solution - “Cognitive radio”
o Detects unused portions of signal spectrum
o Designed for emergency situations
o Intel the leader in commercialization of the technology

Larry Page and Sergey Brin,
Cofounders of Google
• 1st quarter results as a public company: $805.9 million
• Brin and Page are worth $12.8 billion each
• Google.org – addresses world’s most pressing problems

• Developed innovative
ways to increase
employee morale
o Roller-hockey games
o On-site workout and
massage rooms
o One day a week spent
on innovation projects

Toyota’s Savvy CIO
• Problem:
o IT failures due to misalignment between business and IT
departments
• Solution:
o Creation of cooperative planning process
o Input from corporate headquarters
o Changes in the IT department
• Results:
o Deadlines met
o 16% project cost reduction – saving millions of dollars
BlackBerry
• Research in Motion (RIM) introduced
BlackBerry in 1999
o More than 3 million users in March 2006
• NTP Inc. sued RIM claiming patent

infringement
o NTP sent notice of their wireless communications
patents to wireless companies (including RIM)
o RIM agreed to pay NTP $612.5 million

Radio
• Satellite radio
o Referred to as “jukebox on steroids”
o Operates via signal received from low-
orbiting satellites
o Prominent players: XM Radio, Sirius,
WorldSpace
o Market share of traditional radio stations is
decreasing

4
Chapter
Enhancing Business Intelligence Using

Management Information Systems
Use of outdated information systems can be costly.

A software glitch at the Tokyo Stock Exchange cost
Misuho Securities Co. U.S.$350 million.
7-158
Learning Objectives
7-159
Learning Objectives
7-160
Decision-Making Levels of an
Organization
7-161
Summary of Characteristics:
Operational Level
7-162
Comparison of Decision-Making
Levels
Operational Managerial Executive
Level Level Level
Who Foreman or supervisor Midlevel managers and Executive-level
functional managers managers
What Automate routine and Automate the monitoring Aggregate summaries

repetitive activities and controlling of of past organizational
operational activities data and projections of
the future
Why Improve organizational Improve organizational Improve organizational
efficiency effectiveness strategy and planning
IS Transaction Management Information Executive Information

Processing Systems Systems (MIS) Systems (EIS)
(TPS)
7-163
Learning Objectives
7-164
General Types of Information Systems
• Input-process-output model
o Basic systems model
o Payroll system example
7-165
Transaction Processing System
• Operational level
• Purpose:
o Processing of business events and transactions
o Increase efficiency
• Automation
• Lower costs
• Increased speed and accuracy
• Examples
o Payroll processing
o Sales and order processing
o Inventory management
o Etc.
7-166
Architecture of a TPS
7-167
Architecture of a TPS: Inputs
• Source Documents
o Different data entry methods
7-168
Architecture of a TPS: Processing
• Online processing
o Immediate results
• Batch processing
o Transactions collected and later processed together
o Used when immediate notification not necessary
7-169
Architecture of a TPS: Outputs
• Counts, summary reports
• Inputs to other systems
• Feedback to systems operator
7-170
Summary of TPS Characteristics
7-171
Management Information Systems
• Managerial level
• Purpose:
o Produce reports
o Support of midlevel managers’ decisions
• Examples
o Sales forecasting
o Financial management and forecasting
o Manufacturing, planning and scheduling
o Inventory management and planning
o Etc.
7-172
Architecture of an MIS
7-173
Architecture of an MIS: Inputs
• TPS data
• Internal data
• Requests for reports
7-174
Architecture of an MIS: Processing
• Aggregation
• Summary
7-175
Architecture of an MIS: Outputs
7-176
Summary of MIS Characteristics
7-177
Executive Information Systems
• Executive level
• Purpose
o Aid in executive decision-making
o Provide information in highly aggregated form
• Examples
o Monitoring of internal and external events and
resources
o Crisis management
o Etc.
7-178
Architecture of an EIS
7-179
Architecture of an EIS: Inputs
• Hard data
o Facts and numbers
o Generated by TPS & MIS
• Soft data
o Nonanalytical information
o Web-based news portals
• Customizable
• Delivery to different media
7-180
Use of Web-based Portals for
Gathering Soft Data

Architecture of an EIS: Processing
• Summarizing
• Graphical interpreting
7-182
Architecture of an EIS: Outputs
• Summary reports
• Trends
• Simulations
7-183
EIS Output: Digital Dashboards
• Digital dashboard
o Presentation of
summary
information
o Information from
multiple sources
o Ability to drill
down if necessary
7-184
EIS Output: Digital Dashboard (II)
• Total employee absenteeism
a) line chart b) drill-down numbers
7-185
Summary of EIS Characteristics
7-186
Learning Objectives
7-187
7 Information Systems that Span
Organizational Boundaries

1. Decision Support Systems
• Decision making support for recurring
problems
• Used mostly by managerial level
employees (can be used at any level)
• Interactive decision aid
• What-if analyses
o Analyze results for hypothetical changes
o E.g., Microsoft Excel
7-189
Architecture of a DSS
7-190
Common DSS Models

Summary of DSS Characteristics
7-192
Using DSS to Buy a Car
• Selling price – $22,500
• Down payment – $2,500
• Monthly payment – about $400
• Interest rate information from the bank
7-193
Microsoft Excel: Loan Analysis
Template
• Calculate
o Monthly payment
o Total amount paid
o Total interest paid
• What-if analysis
o Change inputs
o See the results
7-194
Loan Analysis Summary
• Examine results
• Choose best solution for given situation
o E.g., based on monthly payment or total
interest
7-195
2. Intelligent Systems
• Artificial intelligence
o Simulation of human intelligence
o Reasoning, learning, sensing, hearing,
walking, talking, etc.
7-196
Example: Artificial Intelligence
7-197
Intelligent Systems
• Intelligent system
o Sensors, software and computers
o Emulate and enhance human capabilities
• Three types
o Expert systems
o Neural networks
o Intelligent agents
7-198
Expert Systems
• Use reasoning methods
• Manipulate knowledge rather than information
• System asks series of questions
• Inferencing/pattern matching
o Matching user responses with predefined rules
o If-then format
• Fuzzy logic
o Represent rules using approximations
7-199
Example: Expert System
Expert system to
make a medical
recommendation

Architecture of an Expert System
7-201
Summary of ES Characteristics
7-202
Neural Network System
• Approximation of human brain
functioning
• Training to establish common patterns
o Past information
• New data compared to patterns
• E.g., loan processing
7-203
Example: Neural Network System
Loan
processing
system
relying on a
neural
network
7-204
Intelligent Agent Systems
• Program working in the background
• Bot (software robot)
• Provides service when a specific
event occurs
7-205
Intelligent Agent Types
1. Buyer agents (shopping bots) – search for best
price
2. User agents – perform a task for the user
3. Monitoring and sensing agents – keep track of
key information
4. Data-mining agents – analyze large amounts of
data
5. Web crawlers (web spiders) – browse the Web
for specific information
6. Destructive agents – malicious agents designed
by spammers
7-206
3. Data Mining and Visualization
Systems
• Application of
sophisticated
statistical
techniques
o What-if analyses to
support decision
making
• Capabilities can be
embedded into a
large range of
systems
7-207
Visualization
• Display of complex data relationships using
graphical methods
Visualization of a
weather system
7-208
Text Mining
• Extraction of
information from
textual
documents
• Web crawlers
used to extract
information from
Internet
7-209
4. Office Automation Systems
• Developing documents, scheduling
resources, communicating
• Examples
o Word processing
o Desktop publishing
o Electronic calendars
o E-mail
7-210
Architecture of an Office
Automation System
7-211
Summary of OAS Characteristics
7-212
5. Collaboration Technologies
• Increased need for flexible teams
• Virtual teams – dynamic task forces
o Forming and disbanding as needed
o Fluctuating team size
o Easy, flexible access to other team
members
• Need for new collaboration technologies
7-213
Video Conferencing
• Costs – few thousand dollars to $500,000
• Dedicated videoconferencing systems

o Located within organizational conference rooms
o Highly realistic
7-214
Desktop Videoconferencing
• Low-cost alternative to
dedicated
videoconferencing
• Enablers
o Increase in processing
power
o Internet connection
speed
7-215
Future of Desktop Videoconferencing
• Notebook computers with

built in video cameras
• Microsoft Office
RoundTable 2007
o 360-degree camera
o Unified communications
software
o Built in microphone
o Meeting content can be
recorded, indexed and stored
7-216
Groupware
• Enables more
effective team
work
o Distinguished
along two
dimensions
7-217
Benefits of Groupware

Asynchronous Groupware
• 1989 – Lotus
Development
released Notes
• Lotus Notes still an
industry leader
• Other tools
o E-mail, newsgroups,
mailing lists, group
calendars,
collaborative writing
tools, etc.
7-219
Synchronous Groupware
• Electronic meeting systems
o Help groups have better meetings
• Uses of EMS
o Strategic planning sessions
o Marketing focus groups
o Brainstorming sessions
o Business process management
o Quality improvement
• Web-based implementations
7-220
Example: Electronic Meeting System
7-221
6. Knowledge Management
Systems
• Generating value from knowledge assets
• Collection of technology-based systems
• Knowledge assets
o Skills, routines, practices, principles, formulas,
methods, heuristics and intuition
o Used to improve efficiency, effectiveness and
profitability
o Documents storing both facts and procedures
o Examples
• Databases, manuals, diagrams, books, etc.
7-222
Benefits and Challenges of
Knowledge Based Systems
7-223
How Organizations Utilize KMS
Successful KMS
facilitate the
exchange of
knowledge
7-224
Web-Based Knowledge Portals
Knowledge
repository
7-225
7. Functional Area Information
Systems
• Cross-organizational-level IS
• Support specific functional area
• Focus on specific set of activities

Business Processes Supported by
Functional Area Information Systems

Organizational Functions and
Representative Information Systems

Geographic Information System
• Use of geographically
referenced information
o Finding optimal location
for a new store
o Identification of areas
too wet to fertilize (see
figure)
o Locating target
customers
o Infrastructure design

The Growing Blogosphere
• One of the fastest growing phenomena in the digital
world

5
Chapter
Building Organizational Partnerships

Using Enterprise Information Systems
“If the Internet turns out not to be the future of

computing, we’re toast.”
Larry Ellison, Founder and CEO, Oracle Corporation
232
Learning Objectives
233
Learning Objectives
234
Enterprise Systems
• Problem:
o Information systems growing over time
o Lack of integration
• Different computing platforms
• Difficult to integrate
• Data must be reentered from one system to
another
• Same pieces of data stored in several versions
235
Legacy System Approach
236
Enterprise System Approach
237
Supporting Business Activities
• Internally focused systems
o Support functional areas, business processes and decision-
making within an organization
o New information (value) is added at every step
Information Systems Today: Managing in the Digital World 238

Externally Focused Systems
• Coordinate business activities with customers,
suppliers, business partners and others who operate
outside the organization
• Interorganizational
systems
o Streamline the flow
of information
between companies
239
Internally Focused Systems: Value Chain
• Flow of information through a set of business activities
o Core activities – functional areas that process inputs and
produce outputs
o Support activities – enable core activities to take place

Core Activities
• Inbound logistics activities
• Receiving and stocking raw materials, parts and products
• Cisco – delivery of electronic components from suppliers
• Operations and manufacturing activities
• Order processing and/or manufacturing of end products
• Dell – component parts assembled to make products
• Outbound logistics activities
• Distribution of end products
• Amazon.com – delivery of books to customers
241
Core Activities (II)
• Marketing and Sales activities
• Presale marketing activities (e.g., creating
marketing brochures)
• Amtrak – use of IS to update prices and
schedules
• Customer service activities
• Postsale activities
• HP – downloads related to purchased products
242
Support Activities
• Administrative activities
• Support of day-to-day operations (for all functional
areas)
• Infrastructure activities
• Implement hardware and software needed
• Human resource activities
• Employee management
243
Support Activities
• Technology development activities
• Design and development of applications to support
the primary activities
• Procurement activities
• Purchasing of goods and services (inputs into the
primary activities)
244
Externally Focused Applications –
Value System
• Coordination of multiple value chains
245
Externally Focused Applications –
Value System
• Information Flows in a Value System
o Upstream information flow – information received from another
company
o Downstream information flow – information produced by a company
and sent to another organization
246
The Rise of Enterprise Systems
• Packaged applications
o Written by third-party vendors
o Used by many different organizations
o Useful for standardized, repetitive tasks
o Cost effective
o E.g., Microsoft Money and Quicken
247
The Rise of Enterprise Systems
• Custom applications
o Developed exclusively for a specific
organization
o Designed for particular business needs
o Higher development costs
248
Evolution of Enterprise Systems
• Enterprise
systems
o Organizations
start with stand-
alone
applications
o Legacy systems
249
Legacy Systems
• Each department has its own system
o Infrastructure specific
o Inefficient processes
o Potential for inaccuracies

The Need for Integrated Enterprise
Systems
• Advantages of integrated systems
o Centralized point of access
• Conversion needed
• Enterprise Resource Planning (ERP) vendors
offer different modules
o Components that can be selectively implemented
o E.g., modules of mySAP business suite
251
Vanilla Versus Customized Software
• Vanilla version
o Modules the version comes with out of the
box
o Certain processes might not be supported
• Customization
o Additional software or changes to vanilla
version
o Always needs to be updated with new
versions of vanilla
252
Best Practices-Based Software
• Most ERP vendors build best practices into
their ERP systems
o Identify business processes in need of change
o Future updates are smoother if businesses change
their business processes to fit with ERP systems
• Is following the best practices always the best
strategy?
o If companies have competitive advantage from
unique business processes
253
Learning Objectives
254
Business Process Management
• Systematic and structured improvement approach
o All or part of organization is involved
o Rethinking and redesign of business processes
• Became popular in 1990s
• IS seen as key enabler for radical change
• Process intended to be cross-functional
255
BPM Steps
1. Develop a vision for the organization (specify
business objectives)
2. Identify critical processes that are to be
redesigned
3. Understand and measure existing processes
as a baseline
4. Identify ways IS can be used for improvement
5. Design and implement a prototype of the new
processes
256
Conditions Leading to a Successful
BPM
• Support by senior management
• Shared vision by all organizational members
• Realistic expectations
• Participants empowered to make changes
• The right people participating
• Sound management practices
• Appropriate funding
257
Enterprise Resource Planning
• Data warehouse
o Large,
centralized data
repository
o Single place for
data storage and
access
258
Choosing an ERP System
• Control
o Centralized control vs. control within specific
business units
o Level of detail provided to management
o Consistency of policies and procedures
• Business requirements
o Selection of modules
• Core and extended components
259
Core and Extended ERP Components
• Core components – support primary internal activities
• Extended components – support primary external
activities
260
ERP Limitations
• ERP falls short in communicating across
organizational boundaries
• Not well suited for managing value
system activities
o Other systems can work with ERP to provide
these capabilities
261
Learning Objectives
262
Customer Relationship Management
263
Customer Relationship Management
• Web has changed the business
o Customers have the power
o Transactions vs. relationships
o Keeping customers satisfied is key
• CRM
o Corporate-level strategy
o Concentrates on the downstream information flow
• To attract potential customers
• Creation of customer loyalty
o Managers need to be able to monitor and analyze
factors driving customer satisfaction
264
Key Benefits of CRM
1. Enables 24/7/365 operations
2. Individualized service
3. Improved information
4. Speeds up problem identification/resolution
5. Speeds up processes
6. Improved integration
7. Improved product development
8. Improved planning
265
Developing a CRM Strategy
• More than just
software
purchase and
installation
• Enterprise-wide
changes
266
Policy and Business Process
Changes
• Policies and
procedures need
to reflect
customer-
focused culture
267
Customer Service Changes
• Customer-focused
measures of
quality
• Process changes
to enhance
customer
experience
268
Employee Training Changes
• Employees from
all business
areas must
value customer
service and
satisfaction
269
Data Collection, Analysis and
Sharing Changes
• All aspects of
customer
experience must
be tracked,
analyzed and
shared
• Consider ethical
concerns
270
Architecture of a CRM
271
Operational CRM
• Systems for customer
interaction and
service
o Personalized and
efficient customer
service
o Access to complete
information about
customer
272
Sales Force Automation
• Component of operational CRM
• Primary goals
o Identification of potential customers
o Streamlining of selling processes
o Improvement of managerial information
273
Sales Force Automation
• Supports day-to-day sales activities
o Order processing and tracking
o Contact development, assignment and
management
o Customer history preferences
o Sales forecasting and performance analysis
o Sales administration
274
Advantages of Sales Force Management
Systems for Sales Personnel

Advantages of Sales Force Management
Systems for Sales Managers

Examples of Sales Measures
Tracked by SFA
1. Revenue per sales person, per territory, or as
a percentage of sales quota
2. Margins by product category, customer
segment, or customer
3. Number of calls per day, time spent per
contract, revenue per call, cost per call, ratio
of orders to calls
4. Number of lost customers per period or cost of
customer acquisition
SFA Provides Improved Understanding
of Market Conditions
1. Improved understanding of markets, segments
and customers
2. Improved understanding of competitors
3. Enhanced understanding of organization’s
strengths and weaknesses
4. Better understanding of economic structure of the
industry
5. Enhanced product development
6. Improved strategy development and coordination
with the sales function
Customer Service and Support
• Second component of
operational CRM
• Automation of traditional
“help desk” services
• Customer interaction center
(CIC)
o Multiple communication
channels
o Customer service anytime,
anywhere through any
communication channel
o Low support cost
Enterprise Marketing Automation
• Third component of an operational CRM
• Comprehensive view of the competitive
environment
• Common factors tracked by EMS
o Economic
o Governmental and public policy
o Technology and infrastructure
o Ecology
o Cultural
o Suppliers

Analytical CRM
• Analysis of customer behavior and perceptions
• Customized marketing
o Up-selling
o Retaining customers
• Key technologies used to create predictive
models
o Data mining
o Decision support systems
• Continuous data collection and analysis is
necessary
Customer Focused Business Processes
Addressed by Analytical CRM
1. Marketing campaign management and
analysis
2. Customer campaign customization
3. Customer communication optimization
4. Customer segmentation and sales
coverage optimization
5. Pricing optimization and risk assessment
and management
Customer Focused Business Processes
Addressed by Analytical CRM
6. Price, quality and satisfaction analysis of
competitors
7. Customer acquisition and retention analysis
8. Customer satisfaction and management
9. Product usage, life cycle analysis, and product
development
10. Product and service quality tracking and
management

Collaborative CRM
• Effective communication with the customer
from the entire organization
o CIC is the key
• Collaborative CRM enhances communication
o Greater customer focus
• Understanding of historical and current needs
o Lower communication barriers
• Communication preferences of the customer considered
o Increased information integration
• Customer information shared across the organization
Ethical Concerns with CRM
Can personalization get too personal?

Learning Objectives

Supply Chain Management
• Upstream activities
• Improvement of business processes spanning
organizational boundaries
• Adopted by large organizations
• Collaboration with suppliers (supply network)
o Ability to compete more effectively in the market place
o Cost reduction
o Increased responsiveness to market demands
• Focus on upstream information flows
o Acceleration of product development
o Reduction of costs of raw materials procurement

Supply Network

Functions That Optimize the
Supply Network (SCM Modules)
1. Supply chain collaboration
2. Collaborative design
3. Collaborative fulfillment
4. Collaborative demand and supply planning
5. Collaborative procurement
6. Production planning
7. Supply chain event management
8. Supply chain exchange
9. Supply chain performance management
SCM architecture
• SCM modules support two functions
o Supply chain planning - development of resource plans to support
production
o Supply chain execution - execution of supply chain planning

Supply Chain Planning
• Four types of plans are developed
1. Demand planning and forecasting
o Examination of historic data
2. Distribution planning
o Delivering products to consumers
o Warehousing, delivering, invoicing and payment collection
3. Production scheduling
o Coordination of activities needed to create the
product/service
o Optimization of the use of materials, equipment and labor
4. Procurement planning
o Development of inventory estimates

Supply Chain Execution
• Management of three key elements
1. Product flow
o Flow of product from supplier to consumer
o Automation of product returns
2. Information flow
o Complete removal of paper documents
o Access to current information at all times
3. Financial flow
o Automatic flow of payments
Developing an SCM Strategy
• SCM efficiency and effectiveness need to be
balanced
o Efficiency – cost minimization
o Effectiveness – customer service maximization

Emerging SCM Trends
• Enterprise portals – B2B marketplace
o Access point to proprietary information
o Productivity gains and cost savings
• Distribution portals
o Products from single
supplier to many
buyers
• Procurement portals
o Procurement of
products between
single buyer and
multiple suppliers
Example: Distribution Portal
• Automation of business
processes between
supplier and multiple
customers
o Before transaction
o During transaction
o After transaction
• Trading exchanges
o Equilibrium between
buyers and sellers
o Vertical markets

Example: Procurement Portal
• Automation of business processes between a buyer
and multiple suppliers

Trading Exchanges
• Small companies don’t have funds for SCM
• Trading exchanges provide a solution
o Operated by third-party vendors
o Revenue model
• Commission for each transaction
• Usage and association fees
• Advertising
o Many buyers and many sellers can come together
o Popular trading exchanges
• www.scrapsite.com (steel)
• www.paperspace.com (paper)
• www.sciquest.com (medical equipment)
Key Technologies for Enhancing SCM
• Extensible Markup Language (XML)
o Specifies rules for tagging elements
o Specifies how information should be
interpreted and used
o Customizable
o XML variations
• Extensible Business Reporting Language (XBRL)
o Publishing of financial information

Radio Frequency Identification
• Replacement for standard bar codes
• Transceiver and antenna
• Diverse usage opportunities
• Line-of-sight reading not necessary
• RFID tags can contain more
information than bar codes
• Scanning can be done from greater
distance
o Passive tags – range of few feet
o Active tags – hundreds of feet
Use of RFID in Supply Chain
Management
Pallet of inventory processed through an RFID gate

Learning Objectives

The Formula for Enterprise System
Success
1. Secure executive sponsorship
o Most failures due to lack of top-level management support
2. Get help from outside experts
o Consultants are specifically trained
o Implementation tends to happen faster
3. Thoroughly train users
o Most overlooked, underestimated and poorly budgeted
expense
o Training can prevent dissatisfaction
4. Take a multidisciplinary approach to implementations
o Include end users from all functional areas in the
implementation
Opening Case: CRM and Major
League Baseball
• Major League Baseball Advanced Media (MLBAM)
o Services MLB.com (since 2001)
o Focus on the customer
o Services
• Team merchandise
• Live audio and video
o 1 million subscribers
o $12-16 million revenue/year
• Fantasy baseball
• Mobile content for cell phones
• Game tickets for all 30 MLB teams
o All services very successful
Outsourcing Your
McDonald’s Order
• McDonald’s – One of America’s success stories
o Founded in 1948 in San Bernardino, California
o $20 billion business
o 31,000 locations
• Outsourcing the drive-through
o All stores already had an
Internet connection
o Orders processed overseas
o Entered into the queuing system
o Food quality remains the same

Larry Ellison, Founder and CEO,
Oracle Corporation
• Referred to as “the other
software billionaire”
o Oracle second to Microsoft in
software sales
• “If the Internet turns out not
to be the future of
computing, we’re toast,”
Ellison said early in his
career
Misusing CRM Data
• 2000
o 10,000 pounds of meat potentially infected with mad
cow disease distributed in Washington State
o QFC grocery chain sued for not informing
customers of a recall
• 2004
o Albertsons’ misused CRM data
o Pharmaceutical companies paid Albertson’s to ask
their customers to switch to more expensive drugs
o Privacy Rights Clearinghouse sued Albertsons
Targeting or Discriminating?
Ethical Pitfalls of CRM
• CRM can be called a marketer’s dream
o Getting to know customers
o Maximizing the benefits gained from customers
o Customer segmentation
o Target marketing
• Companies need to develop ethical principles
of CRM use
o Establish how data will be used
o Inform customers about the use of data
o Refrain from stepping over the ethical/unethical line
Three-Dimensional Fabrication
• Fabbing – three-dimensional (3D) printing
o 2 printer heads
• First lays down a fine powder
• Second head is a gluing agent
• With each pass of the heads one layer of the model is done
• Prototype made in hours vs. days
• Fast production of prototypes that are
o 3-D
o Usable
o With moving parts
• Hewlett-Packard (HP) – leader
o 3-D HP printers now available for $1,000
RFID on the Rise
• Market for RFID is exploding
o Expected growth from $2.7 billion (2006) to $12.3
billion (2010)
o Supply chain elements will account for majority of
the growth

The Comics Industry: Digital
Distribution to the Rescue
• 1998 – Marvel Comics goes bankrupt
o The largest player in the industry
o Creator of 5,000 comic book characters
o Other smaller companies were no longer in business
• Transition to big screen and
digital media saved the comics
o Marvel.com
• 30 older comics online
• 82% of users also buy in the stores
o Japanese companies deliver comics
to cell phones
• $400 million yearly revenues
Chapter
6 Developing Information
Systems
“All I have to do is want to do it and I do it”

Jesse Sullivan (on how to move his computerized
artificial arms responding to his brain waves)

Learning Objectives

Learning Objectives

Information Systems Development
• Systems analysis and design
o Process of designing, building, and
maintaining information systems
o Systems analyst
• Early IS development
o Very unstructured
o Programmer skills varied

Information Systems Development
• 1990s
o Evolution from IS development as “art” to IS
development as “discipline”
• Software engineering
o Benefits
• Easier to train systems analysts
• Systems would be easier to maintain

Options for Obtaining Information
Systems

IS Development in Action
• Structured
process
moving
through steps
• Problem
decomposition
o Problems
broken up into
simpler,
smaller pieces

The Role of Users in Systems
Development Process
• Systems users are involved in all phases
of system’s development process
• Mutually respectful relationship
necessary
• Organizational members need to
understand the development activities
well

Learning Objectives

Steps in the Systems Development
Process
• Systems development life cycle (SDLC)
o Arrows flowing down represent flow of information
o Arrows flowing up represent the possibility of returning to a prior
phase

Phase 1: Systems Identification,
Selection and Planning

Phase 1
• Identify and select potential projects
o Projects critical to mission, goals, and objectives
o Selection process varies among organizations
• Formal information systems planning process
• Ad hoc process
o Differential focus of projects based on selection
source

Evaluation Criteria for Systems Projects
• Different criteria may be used to evaluate
projects
o Usually multiple criteria examined for each project

Phase 2: Systems Analysis
• Designers gain understanding of current processes

Key Elements to Development of a
System 3
2
4

Collecting System Requirements
• Arguably the most important activity
• Requirements collected from
o Users
o Managers
o Business processes
o Documents
• System requirements collection techniques
o Interviews
o Questionnaires
o Observations
o Document analysis

Critical Success Factors Methodology
• Critical success
factor (CSF)
o Something that
must go well to
ensure success
• Systems analyst
interviews
individuals to
identify their CSFs
• Organization-wide
CSFs are
identified

Critical Success Factors Methodology (II)
• Strengths and weaknesses of the CSF approach

Joint Application Design
• Special type of group meeting
• Reduced time for requirements collection

Strengths and Weaknesses of the
JAD Approach

Modeling Organizational Data
• Systems analysts
need to
understand what
data will be
collected
o Data modeling
tools
• Entity-relationship
diagram

Modeling Organizational Processes
and Logic
• Data flows
o Movement of
data through an
organization

Processing Logic
• The way in which data are transformed

Phase 3: System Design

Designing Forms
• Forms are
business
documents
o Contain
some data
o Collect
additional
data

Designing Reports
• Reports are business documents that contain
predefined data

Designing Interfaces and Dialogues
• Users interact with IS through various interfaces
o E.g., text-based,
menu-driven
o User interface
standards
• Mac and Windows
operating systems
o Graphical user
interface (GUI)

Designing Databases and Files
• Data modeling
tools used for
gaining
understanding
o Conceptual
model – ERD
o Physical data
model – more
detailed

Designing Processing and Logic
• Steps and procedures that transform raw data
inputs into new or modified information
o Pseudocode
• Textual notation for describing programming code
• Similar to actual programming code
o Structure charts
o Decision trees
o Actual program code

Phase 4: System Implementation
• Transformation of design into a working
information system

Software Programming and Testing
• Programming
o Transforming the system design into a working
computer system
o Processing and testing should occur in parallel
• Tests conducted before system completion

System Conversion
• Installation of the new system

Documentation
• Information system documentation
o Details of the inner workings of the system
o Written by programmers
• User-related documentation
o Written by professional technical writers
o User and reference guides
o User training and tutorials
o Installation procedures and troubleshooting
suggestions

User Training and Support
• Self-paced training and tutorials the least expensive
• One-on-one training the most costly
• Ongoing education may be necessary

System Maintenance
• Typically starts after software is installed
• The largest part of system development effort occurs at
this stage

Types of Software Maintenance
• Corrective maintenance given higher priority
• Corrective maintenance most likely to occur after initial
system installation

Learning Objectives

Prototyping
• Used for development of
less structured
information systems
o Hard to specify
o Constantly changing
• Trial-and-error approach

Rapid Application Development
• A methodology composed of:
o Prototyping
o Computer based development
tools.
o Special management practices
o Close user involvement
• Four-phase system development
methodology
o Requirements planning
o User design
o Construction
o Move to the new system
• RAD becomes radical in phase
2; intensive user involvement
• System builders cycle between
phases 2 and 3 until system is
built

Object-Oriented Analysis and Design
• OOA&D approach done in terms of common
modules (objects).
Combines:
o the “what” (data) with
o the “how” (operations to be performed)
• Different methods used to better integrate
various aspects of the system
• Preexisting objects can be used or adapted

Example: OOA&D Tools

Strengths and Weaknesses of
Prototyping, RAD and OOA&D
• Approaches try to overcome the limitations of a
traditional SDLC

Learning Objectives

Need for Alternatives to Building
Systems Yourself
• Building systems in-house is always an
option, unless you are faced with:
o Situation 1: limited IS staff
• Staff may be too small
• Staff may be occupied in other ways
• Staff not capable of developing the system without
additional hiring
o Situation 2: IS staff has limited skill set
• Many organizations have outside groups manage their
Web sites
o Take advantage of specialized skills
Information Systems Today: Managing in the Digital World
Situations When In-House Systems
Development Does Not Work
o Situation 3: IS staff is overworked
• Staff does not have time to work on all required
systems
o Situation 4: problems with performance of IS
staff
• Derailed IS departments
o Staff turnover
o Changing requirements
o Shifts in technology
o Budget constraints
Learning Objectives

1. External Acquisition
• Purchasing an
existing system is
similar to the
process of
deciding which
car best meets
your needs

Steps in External Acquisition
• Competitive bid process (find the best
system for lowest possible price)
1. System identification, selection and
planning
2. Systems analysis
3. Development of a request for proposal
4. Proposal evaluation
5. Vendor selection
Development of a Request for
Proposal
• A report
detailing system
requirements
sent to
prospective
vendors
Areas
covered in
an RFP

Proposal Evaluation
• An assessment of proposals received from
vendors
o May include system demonstrations
o System benchmarking
• Standardized tests to compare different proposed
systems
• Common system benchmarks
o Response time given a specified number of users
o Time to sort records
o Time to retrieve a set of records
o Time to produce a given record
o Time to read in a set of data
Commonly Used Evaluation Criteria

Vendor Selection
• Usually more than one system will meet the
criteria
• Need to prioritize/rank the proposed systems
o Best ranking system is chosen

2. Outsourcing
• Turning over responsibility for some or all of an
organization’s IS development and operations
to an outside firm
o Your IS solutions may be housed in their
organization
o Your applications may be run on their computers
o They may develop systems to run on your existing
computers (within your organization)

Why Outsourcing? (I)
• Cost and quality concerns – higher quality or
lower cost systems may be available though outsourcing
• Problems in IS performance – IS departments
might have problems meeting acceptable standards
• Supplier pressure – aggressive sales force
convinces senior management to outsource IS functions
• Simplifying, downsizing and reengineering –
focusing on core competencies

Why Outsourcing? (II)
• Financial factors – liquidation of IT assets
• Organizational culture – external IS groups
devoid of political ties
• Internal irritants – external IS group may be better

accepted by other organizational users

Managing the IS Outsourcing
Relationship
• Ongoing management of an outsourcing
alliance needed
1. Strong, active CIO and staff
2. Clear, realistic performance measurements of the
system
3. Multiple levels of interface between customer and
outsourcer
• Full-time relationship managers should be
assigned

Not All Outsourcing Relationships
Are the Same
• Outsourcing relationships
o No longer just a legal contract
o Different types of outsourcing relationships
• Basic relationship – “Cash & Carry”
• Preferred relationship – Set preferential pricing
• Strategic relationship – Share risks/rewards

3. End-User Development
• Growing sophistication of users
• Actual future users of the system are the
system’s developers
• Application development may be faster
o No need to rely on external entities

Benefits of End-User Development
• Cost of labor
o Cost can be reduced by just giving the required
tools to the users to develop their own applications

Benefits of End-User Development (II)
• Development time
o User needs may change between the
request for proposals and implementation of
system
• System becomes obsolete before
implementation
o End-user development may “skip” the queue
• Provide more timely systems

Benefits of End-User Development (III)
• Modifications
and updates
o End-user
system
development
may be better at
responding to
changing needs
o No need to wait
for IS staff to
make updates

Benefits of End-User Development (IV)
• Reduce work overload
o Increase “development staff” by shifting work load to
end users

Encouraging End-User Development
• Fourth-generation development (4GL) tools have made
end-user development easier
• Categories of 4GLs
1. Personal computer tools
• E.g., spreadsheets, DBMS
2. Query language/reporting generators
• Improved searching
3. Graphics generators
• Extracting information and presenting it in graphical format
4. Decision support or modeling tools
• Support for analysis of more complex, multidimensional problems
5. Application generators
• Analysis specifications given in user-friendly language
End-User Development Pitfalls
• Users may not be
aware of important
standards
o Need for adequate
documentation
o Built-in error checking
o Testing
• Potential lack of
continuity


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1

Information Systems Today: Managing in the Digital World 1-4

Information Systems Today: Managing in the Digital World 1-5

• Globalization manifests itself through changes in

Information Systems Today: Managing in the Digital World 1-10

Information Systems Today: Managing in the Digital World 1-11

• The goal of information

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Information Systems Today: Managing in the Digital World 1-14

Information Systems Today: Managing in the Digital World 1-15

• Any machine that

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Information Systems Today: Managing in the Digital World 1-17

Information Systems Today: Managing in the Digital World 1-18

Information Systems Today: Managing in the Digital World 1-19

Information Systems Today: Managing in the Digital World 1-20

3rd in job growth

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Information Systems Today: Managing in the Digital World 1-22

Information Systems Today: Managing in the Digital World 1-23

Information Systems Today: Managing in the Digital World 1-24

Information Systems Today: Managing in the Digital World 1-25

Information Systems Today: Managing in the Digital World 1-26

Information Systems Today: Managing in the Digital World 1-27

Information Systems Today: Managing in the Digital World 1-30

Information Systems Today: Managing in the Digital World 1-31

Operational management Short Detailed/specific Internal Structured Daily operation

Information Systems Today: Managing in the Digital World 1-34

Information Systems Today: Managing in the Digital World 1-35

Information Systems Today: Managing in the Digital World 1-36

• Both FedEx and the U.S. Navy were

Information Systems Today: Managing in the Digital World 1-37

“The most important discoveries of the next 50

1. Discuss the roles and importance of MIS in an organization.

2. Issues concerning with MIS investment decision making.

3. MIS investment decision making

1. Discuss the roles and importance of MIS in an organization.

2. Issues concerning with MIS investment decision making.

3. MIS investment decision making

• Information systems can be used in three

1. Discuss the roles and importance of MIS in an organization.

2. Issues concerning with MIS investment

3. MIS investment decision making

Information Systems Today: Managing in the Digital World 3-60

1. Discuss the roles and importance of MIS in an organization.

2. Issues concerning with MIS investment decision making.

3. MIS investment decision making

Benefits of MIS = Positive consequences – negative consequences

Information Systems Today: Managing in the Digital World 3-93

Managing the Information System

Based on results of survey data from 2004, 70%

• Managing software licensing

• Knowledge management system

• Securing the facilities

• Variety of threats to MIS

• Infrastructure reliability may

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• Computer Assisted Auditing Tools (CAAT)

• Primarily addresses the accounting side of

• COBIT (Control Objectives for Information and Related

Information Systems Today: Managing in the Digital World 4-151

Information Systems Today: Managing in the Digital World 4-152

• Overcrowding of airways a concern