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introduction - what is ICT?

You see the letters ICT everywhere - particularly in education. But what does it mean? Read our brief introduction to this important and fast-changing subject. ICT is an acronym that stands for Information Communications Technology However, apart from explaining an acronym, there is not a universally accepted defininition of ICT? Why? Because the concepts, methods and applications involved in ICT are constantly evolving on an almost daily basis. Its difficult to keep up with the changes - they happen so fast. Lets focus on the three words behind ICT: - INFORMATION - COMMUNICATIONS - TECHNOLOGY A good way to think about ICT is to consider all the uses of digital technology that already exist to help individuals, businesses and organisations use information. ICT covers any product that will store, retrieve, manipulate, transmit or receive information electronically in a digital form. For example, personal computers, digital television, email, robots. So ICT is concerned with the storage, retrieval, manipulation, transmission or receipt of digital data. Importantly, it is also concerned with the way these different uses can work with each other. In business, ICT is often categorised into two broad types of product: (1) The traditional computer-based technologies (things you can typically do on a personal computer or using computers at home or at work); and (2) The more recent, and fast-growing range of digital communication technologies (which allow people and organisations to communicate and share information digitally) Let's take a brief look at these two categories to demonstrate the kinds of products and ideas that are covered by ICT: Traditional Computer Based Technologies These types of ICT include: Application Use Standard Office Applications - Main Examples Word processing E.g. Microsoft Word: Write letters, reports etc Spreadsheets E.g. Microsoft Excel; Analyse financial information; calculations; create forecasting models etc Database software E.g. Oracle, Microsoft SQL Server, Access; Managing data in many forms, from basic lists (e.g. customer contacts through to complex material (e.g. catalogue) Presentation E.g. Microsoft PowerPoint; make presentations, either directly using a computer software screen or data projector. Publish in digital format via email or over the Internet

Desktop publishing E.g. Adobe Indesign, Quark Express, Microsoft Publisher; produce newsletters, magazines and other complex documents. Graphics software E.g Adobe Photoshop and Illustrator; Macromedia Freehand and Fireworks; create and edit images such as logos, drawings or pictures for use in DTP, web sites or other publications Specialist Applications - Examples (there are many!) Accounting E.g. Sage, Oracle; Manage an organisation's accounts including revenues/sales, package purchases, bank accounts etc. A wide range of systems is available ranging from basic packages suitable for small businesses through to sophisticated ones aimed at multinational companies. Computer Aided Computer Aided Design (CAD) is the use of computers to assist the design Design process. Specialised CAD programs exist for many types of design: architectural, engineering, electronics, roadways Customer Relations Software that allows businesses to better understand their customers by Management (CRM) collecting and analysing data on them such as their product preferences, buying habits etc. Often linked to software applications that run call centres and loyalty cards for example. Traditional Computer Based Technologies The C part of ICT refers to the communication of data by electronic means, usually over some distance. This is often achieved via networks of sending and receiving equipment, wires and satellite links. The technologies involved in communication tend to be complex. You certainly don't need to understand them for your ICT course. However, there are aspects of digital communications that you needs to be aware of. These relate primarily to the types of network and the ways of connecting to the Internet. Let's look at these two briefly (further revision notes provide much more detail to support your study). Internal networks Usually referred to as a local area network (LAN), this involves linking a number of hardware items (input and output devices plus computer processing) together within an office or building. The aim of a LAN is to be able to share hardware facilities such as printers or scanners, software applications and data. This type of network is invaluable in the office environment where colleagues need to have access to common data or programmes. External networks Often you need to communicate with someone outside your internal network, in this case you will need to be part of a Wide Area Network (WAN). The Internet is the ultimate WAN - it is a vast network of networks. ICT in a Broader Context

Your ICT course will almost certainly cover the above examples of ICT in action, perhaps focusing on the use of key applications such as spreadsheets, databases, presentation, graphics and web design software. It will also consider the following important topics that deal with the way ICT is used and managed in an organisation: - The nature of information (the "I" in ICT); this covers topics such as the meaning and value of information; how information is controlled; the limitations of ICT; legal considerations - Management of information - this covers how data is captured, verified and stored for effective use; the manipulation, processing and distribution of information; keeping information secure; designing networks to share information - Information systems strategy - this considers how ICT can be used within a business or organisation as part of achieving goals and objectives As you can see, ICT is a broad and fast-changing subject. We hope our free study materials (revision notes, quizzes, presentations etc) will help you master IT!

introduction - what information does a business need?


We talk often about Information - the "I" in ICT. But what is information? How does it differ from "data"? And what kind of information does a business require? The difference between Data and Information? It is important that you understand the difference between "data" and "information" Data Think of data as a "raw material" - it needs to be processed before it can be turned into something useful. Hence the need for "data processing". Data comes in many forms - numbers, words, symbols. Data relates to transactions, events and facts. On its own - it is not very useful. Think of the data that is created when you buy a product from a retailer. This includes: - Time and date of transaction (e.g. 10:05 Tuesday 23 December 2003) - Transaction value (e.g. 55.00) - Facts about what was bought (e.g. hairdryer, cosmetics pack, shaving foam) and how much was bought (quantities) - How payment was made (e.g. credit card, credit card number and code) - Which employee recorded the sale - Whether any promotional discount applied At its simplest, this data needs processing at the point of sale in order for the customer to receive a valid receipt. So the data about the transaction is processed to create "information" - in this case a receipt. You can imagine that the same data would also be useful to the manager of the retail store. For example, a report showing total sales in the day, or which are the best-selling products. So the data concerning all shop transactions in the day needs to be captured, and then processed into a management report.

Information The above example demonstrates what information is. Information is data that has been processed in such a way as to be meaningful to the person who receives it. Note the two words highlighted in red - "processed" and "meaningful". It is not enough for data simply to be processed it has to be of use to someone - otherwise why bother?! Uses of Information in a Business Businesses and other organisations need information for many purposes: we have summarised the five main uses in the table below. Use Planning Description To plan properly, a business needs to know what resources it has (e.g. cash, people, machinery and equipment, property, customers). It also needs information about the markets in which it operates and the actions of competitors. At the planning stage, information is important as a key ingredient in decision-making.

Recording

Information about each transaction or event is needed. Much of this is required to be collected by law - e.g. details of financial transactions. Just as importantly, information needs to be recorded so that the business can be properly managed. Controlling Once a business has produced its plan it needs to monitor progress against the plan - and control resources to do so. So information is needed to help identify whether things are going better or worse than expected, and to spot ways in which corrective action can be taken Measuring Performance must be measured for a business to be successful. Information is used as the main way of measuring performance. For example, this can be done by collecting and analysing information on sales, costs and profits Decision-making Information used for decision-making is often categorised into three types: (1) Strategic information: used to help plan the objectives of the business as a whole and to measure how well those objectives are being achieved. Examples of stategic information include: - Profitability of each part of the business - Size, growth and competitive structure of the markets in which a business operates - Investments made by the business and the returns (e.g. profits, cash inflows) from those investments (2) Tactical Information: this is used to decide how the resources of the business should be employed. Examples include: - Information about business productivity (e.g. units produced per employee; staff turnover) - Profit and cash flow forecasts in the short term - Pricing information from the market

(3) Operational Information: this information is used to make sure that specific operational tasks are carried out as planned/intended (i.e. things are done properly). For example, a production manager will want information about the extent and results of quality control checks that are being carried out in the manufacturing process. Summary This revision note has outlined the main kinds of information. It is important that you understand the difference between data and information, explain the role that information plays in a business, and distinguish between the main kinds of information.

sources of data and information


Data and information come from many sources - both internal (inside the business) and external. This revision note summarises the main sources: Business data and information comes from multiple sources. The challenge for a business is to capture and use information that is relevant and reliable. The main sources are: Internal Information Accounting records are a prime source of internal information. They detail the transactions of the business in the past - which may be used as the basis for planning for the future (e.g. preparing a financial budget or forecast). The accounting records are primarily used to record what happens to the financial resources of a business. For example, how cash is obtained and spent; what assets are acquired; what profits or losses are made on the activities of the business. However, accounting records can provide much more than financial information. For example, details of the products manufactured and delivered from a factory can provide useful information about whether quality standards are being met. Data analysed from customer sales invoices provides a profile of what and to whom products are being sold. A lot of internal information is connected to accounting systems - but is not directly part of them. for example: Records of the people employed by the business (personal details; what they get paid; skills and experience; training records) Data on the costs associated with business processes (e.g. costings for contracts entered into by the business) Data from the production department (e.g. number of machines; capacity; repair record) Data from activities in direct contact with the customer (e.g. analysis of calls received and missed in a call centre)

A lot of internal information is also provided informally. For example, regular meetings of staff and management will result in the communication of relevant information. External Information

As the term implies, this is information that is obtained from outside the business. There are several categories of external information: - Information relating to way a business should undertake its activities E.g. businesses need to keep records so that they can collect taxes on behalf of the government. So a business needs to obtain regular information about the taxation system (e.g. PAYE, VAT, Corporation Tax) and what actions it needs to take. Increasingly this kind of information (and the return forms a business needs to send) is provided in digital format. Similarly, a business needs to be aware of key legal areas (e.g. environmental legislation; health & safety regulation; employment law). There is a whole publishing industry devoted to selling this kind of information to businesses. - Information about the markets in which a business operates This kind of external information is critically important to a business. It is often referred to as "market" or "competitive intelligence". Most of the external information that a business needs can be obtained from marketing research. Marketing research can help a business do one or more of the following: 1. Gain a more detailed understanding of consumers needs marketing research can help firms to discover consumers opinions on a huge range of issues, e.g., views on products prices, packaging, recent advertising campaigns 2. Reduce the risk of product/business failure there is no guarantee that any new idea will be a commercial success, but accurate and up-to-date information on the market can help a business make informed decisions, hopefully leading to products that consumers want in sufficient numbers to achieve commercial success. 3. Forecast future trends marketing research can not only provide information regarding the current state of the market but it can also be used to anticipate customer needs future customer needs. Firms can then make the necessary adjustments to their product portfolios and levels of output in order to remain successful. The information for marketing research tends to come from three main sources: Internal Company Information e.g. sales, orders, customer profiles, stocks, customer service reports Marketing intelligence this is a catch-all term to include all the everyday information about developments in the market that helps a business prepare and adjust its marketing plans. It can be obtained from many sources, including suppliers, customers and distributors. It is also possible to buy intelligence information from outside suppliers (e.g. Mintel, Dun and Bradstreet) who will produce commercial intelligence reports that can be sold profitably to any interested organisation. Market Research existing data from internal sources may not provide sufficient detail. Similarly, published reports from market intelligence organisations cannot always be relied upon to provide the

up-to-date, relevant information required. In these circumstances, a business may need to commission specific studies in order to acquire the data required to support their marketing strategy.

types of information system


For most businesses, there are a variety of requirements for information. Senior managers need information to help with their business planning. Middle management need more detailed information to help them monitor and control business activities. Employees with operational roles need information to help them carry out their duties. As a result, businesses tend to have several "information systems" operating at the same time. This revision note highlights the main categories of information system and provides some examples to help you distinguish between them. The main kinds of information systems in business are described briefly below: Information System Executive Support Systems Description An Executive Support System ("ESS") is designed to help senior management make strategic decisions. It gathers, analyses and summarises the key internal and external information used in the business. A good way to think about an ESS is to imagine the senior management team in an aircraft cockpit - with the instrument panel showing them the status of all the key business activities. ESS typically involve lots of data analysis and modelling tools such as "what-if" analysis to help strategic decision-making. Management Information Systems A management information system ("MIS") is mainly concerned with internal sources of information. MIS usually take data from the transaction processing systems (see below) and summarise it into a series of management reports. MIS reports tend to be used by middle management and operational supervisors. Decision-Support Decision-support systems ("DSS") are specifically designed to help management Systems make decisions in situations where there is uncertainty about the possible outcomes of those decisions. DSS comprise tools and techniques to help gather relevant information and analyse the options and alternatives. DSS often involves use of complex spreadsheet and databases to create "what-if" models.

Knowledge Management Systems

Knowledge Management Systems ("KMS") exist to help businesses create and share information. These are typically used in a business where employees create new knowledge and expertise - which can then be shared by other people in the organisation to create further commercial opportunities. Good examples include firms of lawyers, accountants and management consultants. KMS are built around systems which allow efficient categorisation and distribution of knowledge. For example, the knowledge itself might be contained in word processing documents, spreadsheets, PowerPoint presentations. internet pages or whatever. To share the knowledge, a KMS would use group collaboration systems such as an intranet.

Transaction Processing Systems

As the name implies, Transaction Processing Systems ("TPS") are designed to process routine transactions efficiently and accurately. A business will have several (sometimes many) TPS; for example: - Billing systems to send invoices to customers - Systems to calculate the weekly and monthly payroll and tax payments - Production and purchasing systems to calculate raw material requirements - Stock control systems to process all movements into, within and out of the business

Office Automation Systems

Office Automation Systems are systems that try to improve the productivity of employees who need to process data and information. Perhaps the best example is the wide range of software systems that exist to improve the productivity of employees working in an office (e.g. Microsoft Office XP) or systems that allow employees to work from home or whilst on the move.

methods of data storage


Data storage is the holding of data in an electromagnetic form for access by a computer processor. There are two main kinds of storage: Primary storage is data that is held in in random access memory (RAM) and other memory devices that are built into computers. Secondary storage is data that is stored on external storage devices such as hard disks, tapes, CD's. The table below summarises the main methods of data storage Method Hard disks Commentary Often called a disk drive, hard drive or hard disk drive, this method of data storage stores and provides relatively quick access to large amounts of data. The information is stored on electromagnetically charged surfaces called 'platters'.

Floppy disks

Tape storage

A floppy disk is a type of magnetic disk memory which consists of a flexible disk with a magnetic coating. Almost all floppy disks for personal computers now have a capacity of 1.44 megabytes. Floppy disks are readily portable, and are very popular for transferring software from one PC to another. They are, however, very slow compared to hard disks and lack storage capacity. Increasingly, therefore, computer manufacturers are not including floppy disk drives in the products as a built-in storage option. Tape is used as an external storage medium. It consists of a loop of flexible celluloid-like material that can store data in the form of electromagnetic charges. A tape drive is the device that positions, writes from, and reads to the tape. A tape cartridge is a protectively-encased tape that is portable. An optical disc is a storage medium that can be written to and read using a lowpowered laser beam. A laser reads these dots, and the data is converted to an electrical signal, finally converted into the original data. Compact Disc-Recordable ("CD-R") discs have become a universal data storage medium worldwide. CD-Rs are becoming increasingly popular for music recording and for file storage or transfer between personal conmputers. CDR discs are write-once media. This means that - once used -they cannot be erased or rerecorded upon. CD-R discs can be played back in any audio CD player or CD-ROM drive, as well as many DVD players and drives. Compact Disc-Rewritable (CD-RW) disks are rewritable and can be erased and rerecorded upon over and over again. CD-RW discs can only be used on CD players, CD-ROM drives, and DVD players and drives that are CD-RW playbackcompatible. A DVD (Digital Versatile Disc or Digital Video Disc) is a high density optical disc with large capacity for storage of data, pictures and sound. The capacity capacity is 4.7 GB for single sided, singe layer DVD disc - which is approximately 7 times larger than that of a compact disc.

Optical disks

CD-R

CD-RW

DVD

-business technology - connectivity


The rapid increase in speeds and availability of Internet connectivity is creating new co-ordination and communication mechanisms across and within organisations, and with customers. There is a clear analogy with traditional retail sales in which shops require a location that is convenient to its target customers with suitable opening hours, parking, proximity to public transport links and so on. EBusinesses have to offer a slick service to its customers, otherwise they will rapidly go to another site if they find themselves getting bogged down with slow or difficult website access. The right connectivity The connectivity is right if the speed, functionality and cost are appropriate and available to the target market segments. Connectivity is as varied as the devices that use it. Early EDI (Electronic Data Interchange) systems used private leased lines or networks, and these are still in use between major trading partners and within corporate and industry networks.

The Internet itself is somewhat amorphous and may be accessed through; o o o o o o o Dial-up modem using a standard telephone line ADSL, cable modem or similar broadband dedicated digital subscriber service ISDN, a Leased line, Wireless services via mobile telephones and palmtops, including 3G and WAP LAN or WAN (Local or Wide Area Network) Local wireless networks such as Bluetooth

These connection options offer different capacity, performance and costs for the user or supplier. The reach and availability also varies; at the moment, no individual service offers the best of everything. For example, most consumers would probably find the fastest download speeds from broadband, whereas wireless offers better portability. The greater the degree of portability or reach then, typically, the lower will be the performance and reliability. Just as selection of the appropriate devices is vital then so it is with the connectivity methods. Fortunately, for many suppliers, a small degree of adaptation is often all that is required to offer a level of service through a new form of connectivity or a new device. Unless the website relies on extensive graphics, animation and so on, then it is often a good rule of thumb to plan for the slowest access that customers are likely to use.

e-business strategy - virtual value chain


Historical context Over the years, some businesses have controlled almost all factors of production and distribution (Ford in its early days) whereas others have outsourced almost everything (Dell). In the early days of industry, large enterprises controlled and owned most factors of production and businesses like Ford Motor Company in the USA had their own foundries, railroad, forestry and electricity generating plants, In the UK, Cadburys and Lever Brothers went so far as to build villages and amenities for their workers. The motivation for this vertical integration was varied but included cost and quality control, worker loyalty and protection of proprietary processes. As well as control of production, resources and employees, businesses like Ford also controlled the retail sales and service network. Ford Motor Company developed its structure over many decades of steady growth but, even prior to the advent of eBusiness, this kind of structure was being broken down, as a monolithic type of organisation like this is less able to respond to changing market requirements. Furthermore, external specialized organisations may be able to offer ancillary services such as transport and power more cheaply than a business like Ford Motor Company could do it for itself. Ford was an extreme case of internal control of all factors of production and distribution, whereas most other businesses had long maintained a mixture of some in-house capabilities together with services sourced from other businesses. Porters Value Chain One model to help understand this network of processes and services is what Michael Porter (1985) calls the Value Chain. Porters work on competitive strategy suggests that organisations should reevaluate their value chain and concentrate on the operations that they can do best. Other processes should out-sourced to specialists. EBusiness has facilitated this by providing a set of standards for participants to work with.

Evans & Wurster (2000) outline the progress of Dell from a business that in 1984 offered a simplified product offering with orders taken by fax/telephone a simplified service with wide reach. In moving to Internet delivery, Dell then offered individualized configurations, price combinations and technical support. These enhancements could only previously have been obtained from specialized dealers or direct agents at a premium price and Dell now offers these to a wide audience at a very competitive price. The customer wins as their needs are at the centre of the process. Porter distinguishes between primary activities and support activities. Primary activities are directly concerned with the creation or delivery of a product or service. They can be grouped into five main areas: inbound logistics, operations, outbound logistics, marketing and sales, and service. Each of these primary activities is linked to support activities, which help to improve their effectiveness or efficiency. There are four main areas of support activities: procurement, technology development (including R&D), human resource management, and infrastructure (systems for planning, finance, quality, information management etc.). The chain consists of a series of activities that create and build value. They culminate in the total value delivered by an organisation. The margin depicted in the diagram is the same as added value which expresses the way a business differentiates itself through configuration of its value chain.

Porter & Millar (1985) p. 151 The drivers for product differentiation and value creation are policy choices (what activities to perform and how), linkages (within the value chain or with suppliers and channels), timing (of activities), location, sharing of activities amongst business units learning, integration, scale and institutional factors. Porter and Millar (1985) argue that information technology creates value by supporting differentiation strategies.

The Virtual Value Chain Businesses that are evaluating the value chain have been observed to go through three phases (Rayport & Sviokla, 1995). The first, Visibility, is where businesses co-ordinate, measure and sometimes control business processes. Over the last 30 years, information systems have become powerful tools in management of the physical value chain. The authors claim that this phase is a necessary precursor to moving towards what they term a virtual value chain. The second phase is Mirroring capability in which physical steps in the value chain may be substituted with virtual ones to create a parallel value chain in the marketplace, with steps that are faster, better, more flexible or lower cost. The third stage occurs when companies use the flow of information in their virtual value chain to create new customer relationships by delivering value to customers in new ways. The Value chain has also become increasing transparent (Riddestrale & Nordstrom 2002) and this has a tendency to reveal and expose those who are not really adding any value. Intermediaries are being replaced with Infomediaries who are people and firms who eliminate unnecessary actors in the value chain by simultaneously acting as purchase agents for customers and sales departments for sellers, so complacent or entrenched organisations could find eBusiness to be a threat if they do not embrace it. Evans and Wurster (2000) argue that the shifting trade-off between reach and richness of information has led to the deconstruction of previously integrated value chains and supply chains. Banking and Newspapers are examples of businesses that are both horizontally and vertically integrated. Some commentators had expected the newspaper itself to go electronic with content delivered to an electronic tablet. Whilst this has not happened, elements of the value chain have changed. In newspapers, the quality press has developed the appointments advertisements service into an interactive service for candidates with daily email alerts. In banking, whereas banks offered a limited portfolio of services of variable quality and profitability, personal finance packages such as Quicken, and account aggregators and personal finance portals offer access to hundreds of competitive offerings. This means that critical pieces of a business are definitely vulnerable to new entrants or to the supply of key elements by a monopoly. Intermediation One thing that does become clear in looking at different cases in eBusiness is that there are different approaches to changing the value chain, and it does not always become shorter. In some cases, it has been desirable to remove one or more links in the value chain. To take a simple example, a business that had previously sold to retailers via distributors could take a decision to sell direct electronically, an approach known as Disintermediation. Part of the rationale is that by shortening the Value Chain, there may be benefits in reduced costs or a more responsive and efficient service. Seemingly paradoxically, eBusiness has also allowed the apparent opposite of Disintermediation in which a new step or steps are introduced to the value chain as new players find fresh ways to add value to the process. This is known as Reintermediation and examples here include shopping portals and electronic insurance brokers. Cybermediation (Giaglis et al, 2002) refers to the creation of new kinds of intermediaries that simply could not have existed prior to the advent of eBusiness and the Internet, in categories including Searching, Price Discovery, Logistics, Settlement and Trust. Obvious examples include comparisonshopping sites such as Kelkoo and bank account aggregation services like Citibank. Some on-line businesses find they need to control much of the value chain in order for their proposition to function correctly. In on-line clothing retail, customers can order bespoke outfits

based on their exact measurements and preferences, choosing from a range of over 100 colours. Businesses such as Beyond Fleece and French Rags have seen astonishing growth around 500% customer growth in 2002 based on this model (Rogers 2003). These businesses control all manufacture including the yarns, so that customers can order other items in future in exactly matching colours. Interestingly, sales consultation is done by agents personally, but once on board, the personal nature of the relationship can be exploited efficiently through direct control of the design, marketing and manufacture This mass customization has proved profitable because every item is made to order, contrasting with the existing model in which styles are ordered a year in advance and stockpiled, which often sees product being marked down and sold off at the end of the season. In another example, Amazon decided at the outset to build its own warehouses in order to increase the speed and reliability of its delivery of online orders. Amazon has sought to add value in the sales and fulfillment activities, seeing this as a core competency (Amit & Zott 2001). However, the investment in new facilities required to serve new markets or to offer a step change in capacity have carried a crippling cost, and indeed Amazon has closed several facilities where capacity has been under-utilised. More recently, Amazon has adopted a more flexible approach and also acts as a marketplace for other sellers that supply other goods and services alongside its own, even offering lower prices from other suppliers on goods it sells itself. Of course, with greater analysis and experience of these markets, it has been found that to serve markets in volume, whilst there may have been disintermediation, there has also been reintermediation. Businesses like Amazon have had to build new distribution capabilities that have been by no means cheaper than traditional methods.