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Intelligence

Techniques

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Intelligent Techniques – Expert Systems
Expert systems are based on principles of artificial intelligence research.
Capture knowledge of skilled employees as set of rules in software system that can be used
by others in organization
Typically perform limited tasks that may take a few minutes or hours, for example:
Diagnosing malfunctioning machine or Determining whether to grant credit for loan
Used for discrete, highly structured decision making
These systems use human knowledge captured in a computer to solve
problems that ordinarily need human expertise.
Mimicking human expertise and intelligence requires that the computer
recognize, formulate and solve a problem; explain solutions and learn from
experience.
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They use flexible thinking processes and can accommodate
new knowledge.

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Components of Expert Systems

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Components of Expert Systems
Knowledge base
Consists of a number of interconnected and nested rules and the number of
outcomes is known in advance and is limited;
There are multiple paths to the same outcome; and the system can consider
multiple rules at a single time
Inference engine: Strategy used to search knowledge base
Forward chaining: Inference engine begins with information entered by user
and searches knowledge base to arrive at conclusion when less clear
hypotheses is available
The strategy is to fire, or carry out, the action of the rule when a condition is true.
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Backward chaining: Begins with clearly available
hypothesis and asks user questions until hypothesis is confirmed or disproved

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Rules in an Expert Systems

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The rules illustrated
are for simple credit-
granting expert
systems.

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Inference Engine in an Expert Systems

An inference engine works by searching through the rules and “firing” those
rules that are triggered by facts gathered and entered by the user. Basically, a
collection of rules is similar to a series of nested IF statements in a traditional
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software program; however, the magnitude of the statements
and degree of nesting are much greater in an expert system
How Expert Systems Works
E.g. Here are two rules:
1. If corn is grown on poor soil, then it will get blackfly.
2. If soil hasn't enough nitrogen, then it is poor soil.
Forward chaining: This soil is low in nitrogen; therefore this is poor soil;
therefore corn grown on it will get blackfly.
Forward-chaining systems are commonly used to solve more open-ended problems of a
design or planning nature, such as, for example, establishing the configuration of a
complex product. Data  Decision. Data-Driven Approach

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Backward chaining: This corn has blackfly; therefore it must
have been grown on poor soil; therefore the soil must be low in nitrogen.
Backward chaining is best suited for applications in which the possible conclusions are
limited in number and well defined. Classification or diagnosis type systems like medical
expert systems, in which each of several possible conclusions can be checked to see if it is
supported by the data, are typical applications. Decision  Data. Goal-Driven Approach

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Learning Objectives
How does building new systems produce organizational change?
What are the core activities in the systems development process?
What are the principal methodologies for modeling and designing systems?
What are alternative methods for building information systems?
What are new approaches for system building in the digital firm era?

 What types of organizational changes does new information systems will


bring

Building Information Systems


Digitization Vs Digitalization Vs Digital Transformation

3 Steps to Market-Driven
Digital Transformation:
Stairway to Digitalization

Digitization is creating a digital (bits and bytes) version of analog/physical things such as
paper documents, microfilm images, photographs, sounds and more.
Digitalization is the use of digital technologies to change a business model and provide new
revenue and value-producing opportunities
Digital Transformation is customer-driven strategic business
transformation that requires cross-cutting organizational change as well as the
implementation of digital technologies.
Three Dimensions of Digital Transformation
Market-Driven DT – Case Pointers
Need for digital transformation is largely being driven by customers and the market
Resistance to acceptance - Executives see the advantages of digital technologies for relating to
customers and competing more effectively in rapidly evolving markets
Need guidance on creating a cohesive digital strategy and identifying best practices
Identify the stage of digital transformation in an organization and help to progress
Market-Driven DT – Case Pointers

STEP 1- Interpret Market Forces


Changing customer habits - root of digital transformation. E.g. Travel & bookings
Market-Driven DT – Case Pointers
Not much appreciation of changes due to lack of executives and board members
with deep knowledge and expertise of digitalization
Need not only the inside-out market perspective, but the outside-in market
perspective as well
Non-customers gives additional market information while current customer base
could be feeding with self-reinforcing ideas
Managers must be aware of their competitors, collaborators and context.
Competition : The board and the top management team should judge market forces
in terms of competitive threats and opportunities, as well as predict the expected
speed of market change
Market-Driven DT – Case Pointers
In the travel sector incumbents have a
pretty good idea of where the changes are
occurring and at what speed. In other
sectors, the changes are relatively slow,
making it harder to anticipate market
trends
Digitalization in education sector is still
in its infancy compared to travel sector
Companies fail to scale up as they are
unable to predict the speed of change
efficiently
Market-Driven DT – Case Pointers
No executive should be complacent, thinking that his or her business model will
escape unscathed
Collaborators : Many firms will recognize having to depend on companies that are
playing much bigger roles in new and unexpected ways .
E.g Booking.com need to collaborate with metasearch engines like Tripadvisor and add
transparency to market
Manufacturers of any device susceptible to being connected to the internet will
invariably find themselves interacting with new market collaborators and, by
extension, new sources of competition.
Nest from Google manufacturing digital thermostats vs traditional biler manufacturer
Market-Driven DT – Case Pointers
Social media sites and online influencers are increasingly strategic partners for
building brand awareness and liking
Context : Business operating in an industry where strict protections may keep digital
disruptors from growing too fast, then use that competitive advantage to move up the
Stairway, as you closely monitor the evolution of the market context.
STEP 2: ENSURE DIGITAL COMMITMENT
Leadership : CEOs, with the support of their boards of directors, must be capable of
communicating their digital vision to their companies
A good leader who understands market trends and can imagine the future will be able to set
the direction and speed of transformation.
Market-Driven DT – Case Pointers
Strategy : Meeting the needs and demands of customers will involve some degree of
redesigning existing strategies
Innovation Mindset : In sectors where stability is the norm, innovating fast will be hard
DT will involve innovation in products and services, pricing models, distribution channels,
communication strategies, processes and/or the supply chain
Design Thinking - it is a form of creative problem-solving that, instead of using
observable facts to postulate a solution, starts with needs and works backwards in an
iterative process to arrive at various possible solutions
Recognizing the need for speed, responsiveness, adaptability and delivering on
multiple fronts at once , follow “ambidexterity” or “multimodal” approaches
Market-Driven DT – Case Pointers
Being capable of managing legacy systems while at the same time innovating and being
ready to pivot or scale up at a moment’s notice
Investment : Many companies have executives who are capable of understanding
market trends and are good at designing a roadmap to digital transformation, but then
invest timidly, perhaps because their boards are too cautious and reactive.
Small and medium-sized enterprises, the necessary investment cannot be justified so easily
STEP 3: EXECUTE AT THE RIGHT SPEED
Culture & Talent : Cultural change begins with getting key people in the organization
to become agents of change.
Constant desire to innovate – to experiment and adapt to new realities, as the business
is exposed to an exponential series of changes.
Market-Driven DT – Case Pointers
People must be allowed to make mistakes and be given opportunities to make amends
Getting the right talent with the digital skills and mindset is the key and more so many
companies are at risk of losing what talent they have.
Lot of talent can be nurtured by focusing on competency development inside the firm, it
says, rather than always recruiting technical specialists from outside
Companies need to be innovative and creative in their training methods
Processes : A growing number of companies are using IBM’s artificial intelligence
application, Watson, to crunch data and even substitute for many human decisions,
helping to increase the efficiency of their existing processes.
Any organization , even a dailry farm can refine their processes through digitilization
like optimal route for product delivery etc..
Market-Driven DT – Case Pointers
Digital Assets : Tools to change processes and improve customer relationships
customer-facing or not directly observable (algorithms).
Data & Analytics : Companies find talent at the analytical and business level who
know how to live with this abundance of information and who are able to integrate its
use into the corporate strategy.
IT/Business Alignment :It is impossible to achieve digitalization in due time and form
if there is no alignment between IT and those responsible for strategic business
objectives
Technological infrastructure that supports the current business has to be aligned with a
new, more dynamic and flexible IT structure that conforms to the new business
requirements.
Combining steps 1,2&3 leads to a new buiness proposition
Market-Driven DT – Case Pointers
Keep monitoring progress, re- viewing market opportunities/threats and the speed of
change in a continuous feedback loop that yields fresh insights
Market-Driven DT – Case Pointers
IT Enabled Organizational Transformation
Automation - Increases efficiency and replaces manual tasks
Rationalization of procedures - Streamlines SOPs
Often found in programs for making continuous quality improvements products, services,
and operations - TQM, Six Sigma
Total Quality Management (TQM) - makes achieving quality an end in itself and the
responsibility of all people and functions within an organization
Six Sigma is a specific measure of quality, representing 3.4 defects per million
opportunities.
Business process reengineering (BPR) - analyze, simplify, and redesign business processes
Reorganize workflow, combine steps to cut waste, eliminate repetitive and paper-intensive
tasks
Paradigm shifts - rethink nature of business and organization.
Define new business model
So difficult to orchestrate but provides
equally high rewards
IT Enabled Organizational
Transformation
The most common forms of
organizational change are
automation and rationalization.
These relatively slow-moving and slow-changing
strategies present modest returns but little risk.
Faster and more comprehensive change—such as redesign and
paradigm shifts carries high rewards but offers substantial chances of
failure.
Business Process Management (BPM)
Management discipline that evolved from TQM, BPR that views business processes
as assets that can be designed, re-used and exploited in order to improve business
agility and operational performance
Includes - •Process monitoring and analytics to verify improvement
in process performance and
measure the impact of
process changes on key
business performance
Size of
indicators (KPIs).
the business process
management (BPM)
market worldwide,
from 2016 to 2021 (in
billion U.S. dollars)
Steps in BPM
Identify processes for change - Important to identify what business processes needs
improvement thereby enhance their performance and NOT to identify which business
processes IS can change
Managers need to determine what business processes are the most important and how
improving these processes will help business performance.
Analyze existing processes - identifies redundant steps, paper-intensive tasks, bottlenecks,
and other inefficiencies.
Design the new process - The new process design needs to be justified by showing how much
it reduces time and cost or enhances customer service and value.
Implement the new process – Once the new process has been thoroughly modeled and
analyzed, it must be translated into a new set of procedures and work rules.
New information systems or enhancements to existing systems may
have to be implemented to support the redesigned process
Continuous measurement - Processes may deteriorate over time as employees fall back on old
methods, or they may lose their effectiveness if the business experiences other changes.
Benefits of BPM
Tools for BPM
Major BPM tools help businesses identify and document processes requiring improvement,
create models of improved processes, capture and enforce business rules for performing
processes, and integrate existing systems to support new or redesigned processes.
BPM software tools also provide analytics for verifying that process performance has
been improved and for measuring the impact of process changes on key business
performance indicators.
Some BPM tools document and monitor business processes to help firms identify
inefficiencies, using software to connect with each of the systems a company uses for a
particular process to identify trouble spots.
Another category of tools automate some parts of a business process and enforce business
rules so that employees perform that process more consistently and efficiently.
A third category of tools helps businesses integrate their existing
systems to support process improvements. They automatically manage processes across the
business, extract data from various sources and databases, and generate transactions in
multiple related systems
Types of BPM
System Development Process
Core Activities of Systems Development
Core Activities of Systems Development
Initiation - Identify and validate an opportunity to improve business accomplishments
of the organization or a deficiency related to a business need and document them as
concept proposal
System Concept Development Phase
Once a business need is approved, the approaches for accomplishing the concept
are reviewed for feasibility and appropriateness.
The Systems Boundary Document identifies the scope of the system and requires
approval from stakeholders and funding before beginning the Planning Phase.
Planning - The concept is further developed to describe
How the business will operate once the approved system is implemented
Assess how the system will impact employee and customer privacy.
Core Activities of Systems Development
To ensure the products and /or services provide the required capability on-time
and within budget, project resources, activities, schedules, tools, and reviews are
defined.
Design the Application –
Define System
characteristics, data
storage and access for the
database layer, user
interface at the desktop
layer, business rules layer
Core Activities of Systems Development
or the application logic, A top-level architecture of the system identifying items of hardware, software,
and manualoperations
Development - The detailed specifications produced during the design phase are translated
into hardware, communications, and executable software.
Code and Unit test Software, Integrate the software units, components and modules, Conduct
software and systems qualification testing and document software acceptance support.
Integration and Testing - Various components of the system are integrated and systematically
tested.
Establish the test environment, conduct Integration, Subsystem/System, security and acceptance testing
 Conversion - process of changing from the old system to the new system.
Parallel strategy - both the old system and its potential replacement are run together for a time until
everyone is assured that the new one functions correctly.
Direct cutover strategy replaces the old system entirely with the new system on an appointed day.
Core Activities of Systems Development
Pilot study strategy introduces the new system
to only a limited area of the organization, such
as a single department or operating unit
Phased approach strategy introduces the new
system in stages, either by functions or by
organizational units
Production & Maintenance - After the
new system is installed and conversion
is complete, the system is said to be in
production.
During this stage, the system will be
reviewed by both users and technical
Core Activities of Systems Development
specialists to determine how well it has met its original objectives and to decide whether
any revisions or modifications are in order.
The operational system is periodically assessed through In-Process Reviews to determine
how the system can be made more efficient and effective.
Methodologies for Modeling and Designing Systems
Structured Methodologies
Structured: Techniques are step-by-step and top-down progressing from
the highest, most abstract level to the lowest level of detail—from the
general to the specific
Process-oriented: Focusing on modeling processes or actions that that
capture, store, manipulate, and distribute data as the data flow through a
system.
Separate data from processes
A separate programming procedure must be written
every time someone wants to take an action on a particular piece of
data.
The procedures act on data that the program passes to them.
Data Flow Diagram (DFD)
The primary tool for representing a system’s component processes and the flow
of data between them
Offers a logical graphic model of information flow, partitioning a system into modules that
show manageable levels of detail.
Rigorously specifies the processes or transformations that occur within each module and
the interfaces that exist between them.
Through leveled data flow diagrams, a complex process can
be broken down into successive levels of detail.
An entire system can be divided into subsystems with a high-level data flow diagram.
Each subsystem, in turn, can be divided into additional subsystems with second-level data
flow diagrams,
The lower-level subsystems can be broken down again until the lowest level of detail has
been reached.
Components of DFD
External entity: an outside system that sends or receives data, communicating
with the system being diagrammed.
They are the sources and destinations of information entering or leaving the system
They might be an outside organization or person, a computer system or a business system.
They are also known as terminators, sources and sinks or actors.
Process: any process that changes the data, producing an output. It might
perform computations, or sort data based on logic, or direct the data flow based
on business rules.
Data store: files or repositories that hold information for later use, such as a
database table or a membership form.
Data flow: the route that data takes between the external entities, processes and
data stores. It portrays the interface between the other components
Data Flow Diagram – Context Level
Data Flow Diagram – Level 1
Data Flow Diagram – Level 2
Methodologies for Modeling and Designing Systems
Data dictionary
Contains information about individual pieces of data and data groupings within a system
Defines contents of data flows and data stores
Process specifications - Describe transformation occurring within lowest
level of data flow diagrams. They express the logic for each process Structure
chart
Top-down chart, showing each level of design, relationship to other levels,
and place in overall design structure
The design first considers the main function of a program or
system, then breaks this function into sub-functions, and decomposes each sub-function
until the lowest level of detail has been reached
A structure chart may document one program, one system (a set of
programs), or part of one program.
Methodologies for Modeling and Designing Systems –
Object Oriented Development
Object is basic unit of systems analysis and design
Combines data and the processes that operate on those data
Data encapsulated in object can be accessed and modified only by operations, or
methods, associated with that object
Programs send a message for an object to perform an
operation that is already embedded in it.
The system is modeled as a collection of objects and the relationships among them.
Because processing logic resides within objects rather than in separate software
programs, objects must collaborate with each other to make the system work.
Object-oriented modeling based on concepts of class and inheritance
Objects belong to a certain class and have features of that class
May inherit structures and behaviors of a more general, ancestor class
Object Oriented Development
Employee is the common ancestor, or superclass
Salaried, Hourly, and Temporary are subclasses
The class name is in the top compartment
The attributes for each class are in the middle
List of operations is in the bottom portion
The features that are shared by all employees
(ID, name, address, date hired, position, and pay)
are stored in the Employee superclass, whereas
each subclass stores features that are specific to
that particular type of employee.
A solid line from the subclass to the superclass is a generalization path
showing that the subclasses Salaried, Hourly, and Temporary have common features that can
be generalized into the superclass Employee.
Object Oriented Development
Object-oriented development is more iterative and incremental than traditional
structured development.
In the functional requirements of the system, Interactions between the system and its
users are analyzed to identify objects, which include both data and processes.
The object-oriented design phase describes how the objects will behave and how they will
interact with one another.
Similar objects are grouped together to form a class, and classes are grouped into
hierarchies in which a subclass inherits the attributes and methods from its superclass.
During software implementation the classes that are already
available in a library of reusable software objects are used along with the new
ones created during the object oriented design phase
Because objects are reusable, object-oriented development could potentially reduce the
time and cost of writing software
Methodologies for Modeling and Designing Systems – CASE
CASE – Computer-aided Software/Systems Engineering
Software tools to automate development activities and reduce repetitive work, including
graphics facilities for producing charts and diagrams, screen and report generators, reporting
facilities, analysis and checking tools, data dictionaries, code and documentation generators
CASE tools try to increase productivity and quality by
Enforcing a standard development methodology and design discipline
Improving communication between users and technical specialists
Organizing and correlating design components and providing rapid access to them using a
design repository
Automating tedious and error-prone portions of analysis and design
Automating code generation and testing and control rollout
CASE tools support iterative design by automating revisions and changes and providing
prototyping facilities.
Alternate Systems
Building Methods
Incremental Model
Construct a partial implementation of a total
system
Then slowly add increased functionality
The incremental model prioritizes
requirements of the system and then
implements them in groups.
Each subsequent release of the system adds function to the
previous release, until all designed
functionality has been implemented.
Structured Evolutionary
Prototyping
Developers build a prototype during the
requirements phase
Prototype is evaluated by end users
Users give corrective feedback
Developers further refine the prototype
When the user is satisfied, the prototype code is brought up
to the standards needed for a final product.
This loop continues until the user is satisfied
Prototyping Strengths
Comparatively, this model can pave the way for better systems through a series
of iterations
Possess ability to address risk early in the project and determine the
acceptability of final product
Customers can “see” the system requirements as they are being gathered
Developers learn from customers
A more accurate end product
Unexpected requirements accommodated
Allows for flexible design and development
Steady, visible signs of progress produced
Interaction with the prototype stimulates awareness of additional needed
functionality
Prototyping Issues
Tendency to abandon structured program development for “code-and-fix”
development
Bad reputation for “quick-and-dirty” methods
Overall maintainability may be overlooked
Unrealistic system performance expectations
Poor design aspects
Process may continue forever (scope creep) and may be very difficult to forecast
the completion date of the project
Considered to be more costlier to use than other methods
High-risk type of model because as it ventures into the unknown.
Misunderstanding between stakeholders on the expectations and business needs.
End User Development
Allows end users to develop simple information systems with little or no help from technical
specialists
Reduces time and steps required to produce finished application
Tools - User friendly query languages and reporting, PC software tools
Advantages:
More rapid completion of projects and high level of user
involvement and satisfaction Disadvantages:
Not designed for processing-intensive applications
Inadequate management and control, testing, documentation
Loss of control over data
Managing end-user development successfully requires
Cost-justification of end-user system projects
Establishment of hardware, software, and quality standards
Application Software Packages
If a software package can fulfill most of an organization’s requirements, the company does not
have to write its own software.
The company can save time and money by using the prewritten,
predesigned, pretested software programs from the package.
E,g. - payroll, accounts receivable, general ledger, or inventory control
Many software packages offer customization features-
Software can be modified to meet unique requirements without destroying integrity of
package software
Evaluation criteria for systems analysis include:
Functions provided by the package, flexibility, user friendliness, hardware and software
resources, database requirements, installation and maintenance efforts, documentation,
vendor quality, and cost
RFP (Request for Proposal) - Package evaluation process which is a detailed list of
questions submitted to packaged-software vendors.
Outsourcing
Cloud computing and software as a service (SaaS) providers
Subscribing companies use the software and computer hardware provided by
the service as the technical platform for their systems.
Hire an external vendor
Design and create the software for its system
Company would operate the system on its own computers and the outsourcing vendor
might be domestic or in another country.
Domestic outsourcing
Driven primarily by the fact that outsourcing firms possess skills, resources, and assets that
their clients do not have.
Outsourcing
Rather than hire permanent new employees, who need to be trained in a software package,
and released post implementation, it is less expensive, to outsource this work for a certain
period
Offshore outsourcing
The decision tends to be much more cost-driven.
Offshore outsourcing firms offer world-class technology assets and skills.
Wage inflation outside the United States has recently eroded some of these advantages, and
some jobs have moved back to the United States.
Advantages of outsourcing - Allows organization flexibility in IT needs
Outsourcing
Disadvantages - Hidden costs, E.g.: Identifying and selecting vendor, transitioning to
vendor, monitoring vendors to make sure they are fulfilling their contractual
obligations.
Incurs additional costs for coping with cultural differences that drain productivity
and dealing with human resources issues, such as terminating or relocating domestic
employees.
Opening up proprietary business processes to third party
Outsourcing

If a firm spends $10 million on offshore outsourcing contracts, that company will actually
spend 15.2 percent in extra costs even under the best-case scenario. In the worst-case scenario,
where there is a dramatic drop in productivity along with exceptionally high transition and
Outsourcing
layoff costs, a firm can expect to pay up to 57 percent in extra costs on top of the $10 million
outlay for an offshore contract.
RAD and JAD
New Systems Building Approaches
Rapid application development (RAD) refers to the process of creating
workable systems in a very short period of time with some flexibility to adapt as
a project evolves.
RAD includes the use of visual programming and other tools for building
graphical user interfaces, iterative prototyping of key system elements,
automation of program code generation, and close teamwork among end users
and information systems specialists.
Joint application design (JAD) - Used to accelerate generation of information
requirements and to develop initial systems design
Brings end users and information systems specialists
together in interactive session to discuss system’s design
Can significantly speed up design phase and involve users at intense level
New Approaches – Agile Methodologies
We are uncovering better ways of developing software by doing it and helping others
do it. Through this work we have come to value:
Individuals and interactions over processes and tools
Working software over comprehensive documentation
Customer collaboration over contract negotiation
Responding to change over following a plan
That is, while there is value in the items on the right, we value the
items on the left more.
Improved Agile
Team vision and discipline over individuals and interactions
Validated learning over working software
Customer discovery over customer collaboration
Initiating change over responding to change
Agile Development
Focuses on rapid delivery of working software by breaking a large project
into a series of small subprojects that are completed in short periods of time
using iteration, continuous feedback, and continual user
involvement.
Each mini-project is worked on by a team as if it were a complete project
and regularly released to the client.
Improvement or addition of new functionality takes place within the next
iteration as developers clarify requirements.
Testing occurs early and often throughout the entire development process.
Agile methods emphasize face-to-face communication, encouraging
people to collaborate and make decisions quickly and
Agile Principles
Agile Development Lifecycle
New Approaches - DevOps
DevOps stands for “development and operations” and emphasizes close
collaboration between the software developers who create applications and the
IT operational staff who run and maintain the applications.
Development team is often unaware of operational issues that prevent the
software from working as expected, requiring additional time and rework to fix
the software
DevOps promotes better and more frequent communication and collaboration
between systems development and operations groups and a fast and stable workflow
throughout the entire application development life cycle.
With this type of organizational change along with agile
techniques, standardized processes, and more powerful automated software
creation and testing tools, it is possible to build, test, and release applications
more rapidly and more frequently.
Component-Based Development and Web Services

Groups of objects that provide software for common functions (e.g.,


online ordering) and can be combined to create large-scale business
applications Increasingly, these components are coming from cloud
services Web services
Reusable software components that use XML and open Internet standards
(platform independent)
Enable applications to communicate with no custom
programming required to share data and services
Can engage other Web services for more complex transactions
Using platform and device-independent standards can result in significant
cost-savings and opportunities for collaboration with other companies
Mobile Application Development
A mobile Web site is a version of a regular Web site that is scaled down in content and
navigation for easy access and search on a small mobile screen.
A mobile Web app is an Internet-enabled app with specific functionality for mobiles
A native app is a standalone application designed to run on a specific platform and device and
installed directly on a mobile device.
Native mobile apps provide fast performance and a high degree of
reliability but expensive for development
Special requirements for mobile applications - Smaller screens, keyboards, Multitouch
gestures, Saving resources (memory, processing)
Responsive Web design
Web sites programmed so that layouts change automatically according to user’s computing device
Uses tools such as flexible grid-based layouts, flexible images, and media queries, to
optimize the design for different viewing contexts.
HTML5 - used for mobile application development

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