INTRODUCTION TO INFORMATION SYSTEM

INTRODUCTION TO INFORMATION SYSTEM SESSION 1 Meaning: SYSTEM INFORMATION CONCEPT System: a group/ components ( >1 ) that work together to achieve goals. Information: raw data. The Reason WHY We Should Study IS: As Homo conexus, since 20 years ago, information technologies deeply embedded in daily lives that unrecognizable to college student. Informed user: someone who have knowledge about IS and IT. Chief Information Officer IS Director Information Center Manager Applications Development Manager Project Manager System Manager Operations Manager Programming Manager System Analyst Business Analyst Systems Programmer Applications Programmer Emerging Technology Manager Network Manager Database Administrator Auditing or Computer Security Manager Webmaster Web Designer Computer-Based IS A Computer-based IS: an information system that uses computer technology to perform some/all of its intended tasks. The components: People/human: that makes the system work Hardware: Computer Software: Microsoft Office, iOS, etc. Database: MySQL Network: LAN, Wi-Fi, Fiber Optic, Satellite, etc. Procedures Application program: a computer program designed to support a specific task, a business process, or another application program. IT Platform Formed by IT components IT Services Develop information systems, oversee security and risk, and manage data IT Infrastructure IT components + IT services Capabilities of IS: Perform high-speed, high-volume numerical computations Provide fast, accurate communication and collaboration within and among organizations Store huge amounts of information in an easy-to-access, yet small space Allow quick and inexpensive access to vast amounts of information, worldwide Interpret vast amounts of data quickly and efficiently Automate both semiautomatic business processes and manual tasks Types of Organizational IS Type of IS IS Inside an Organization IS among Organization IT Impact on Organization Potential IT Impact on Managers: Reduce the numbers of middle managers Provide manager with real-time or near-real-time information, means that manager will have less time to make decision IT will increase the like hood that managers will have to supervise geographically dispersed employees and teams Potential IT Impact on non-Managerial Workers: IT will eliminate jobs IT may cause employees to experience a loss of identity IT cause job stress and physical problems, such as repetitive stress injury Positive societal effects: Provide opportunities for people with disabilities Provide flexibility in their work (example: work anywhere, anytime) Robots will take over mundane chores Enable improvements in healthcare Negative societal effects: IT can cause health problems for individuals IT can place employees on constant calls IT can potentially misinform patients about their health problems ORGANIZATIONAL STRATEGY, COMPETITIVE ADVANTAGE AND INFORMATION SYSTEMS SESSION 2 BUSINESS PROCESSES A business process is a collection of related activities that produce a product or a service of value to the organization, its business partners, and/or its customers. A cross-functional business process is one in which no single functional area is responsible for its execution. Figure SEQ Figure \* ARABIC 1. Examples of Business Processes  BUSINESS PROCESS IMPROVEMENT, BUSINESS PROCESS REENGINEERING, AND BUSINESS PROCESS MANAGEMENT Excellence in executing business processes is widely recognized as the underlying basis for all significant measures of competitive performance in an organization. Consider these measures, for example: Customer satisfaction: The result of optimizing and aligning business processes to fulfill customers’ needs, wants, and desires. Cost reduction : The result of optimizing operations and supplier processes. Cycle and fulfillment time reduction: The result of optimizing the manufacturing and logistics processes. Quality: The result of optimizing the design, development, and production processes. Differentiation: The result of optimizing the marketing and innovation processes. Productivity: The result of optimizing each individual’s work processes. Business Process Reengineering is a radical redesign of an organization’s business process that is intended to improve the efficiency and effectiveness of these processes. The key to BPR is for enterprises to examine their business processes from a “clean sheet” perspective and then determine how they could best reconstruct those processes to improve their business functions. Because BPR proved difficult to implement, organizations have turned to business process improvement. Business Process Improvement is an incremental approach to enhancing the efficiency and effectiveness of a process that is less risky and less costly than BPR. BPI relies on an structured approach (define, measure, analyze, improve, and control, or DMAIC), and many methodologies, such as Six Sigma, can be used to support these required steps. Business Process Management is a management technique that includes methods and tools to support the documentation, design, analysis, implementation, management, and optimization of business processes. BPM coordinates individual BPI activities and creates a central repository of a company’s processes, generally by utilizing software such as BPMS. Important components of BPM: Process modeling Web-enabled technologies Business Activity Monitoring (BAM) Business Process Management Suite (BPMS) An integrated set of applications used for BPM Emerging Trend of Social BPM Technologies enabling employees to collaborate across functions internally and externally using social media tools BUSINESS PRESSURES, ORGANIZATIONAL RESPONSES, AND IT SUPPORT Business Pressures: Market Pressures (Economic) Global economy and strong competition (Globalization) Need for real-time operations The Changing Nature of the Workforce Powerful customers Technology Pressures Technological innovations and obsolescence Information overload Societal / Political / Legal Pressures Social responsibility Compliance with government regulations and deregulations Protection against Terrorist Attacks Ethical Issues Organizational Responses A Strategic Systems provide advantages that enable organizations to increase market share and/or profits, to better negotiate with suppliers, or prevent competitors from entering their markets. Customer Focus is the difference between attracting and keeping customers by providing superb customer service to losing them to competitors. Make-to-Order is a strategy of producing customized products and services. Mass Customization is producing a large quantity of items, but customizing them to fit the desire of each customer. Reebok and Bodymetrics provide excellent examples of mass customization. E-business and E-commerce: Buying and selling products and services electronically. E-business is a broader concept than e-commerce. COMPETITIVE ADVANTAGE AND STRATEGIC IS Competitive Advantage: An advantage over competitors in some measure such as cost, quality, or speed, leads to control of a market and to larger- than average profits. Strategic Information Systems (SIS) provide a competitive advantage by helping an organization to implement its strategic goals and to increase its performance and productivity. Figure SEQ Figure \* ARABIC 2. Porter’s Competitive Forces Model Porter’s Competitive Forces Model: Threat of entry of new competitors is high when it is easy to enter a market and low when significant barriers to entry exist. A barrier to entry is a product or service feature that customers expect from organizations in a certain industry. For most organizations, the Internet increases the threat that new competitors will enter a market. The bargaining power of suppliers is high when buyers have few choices and low when buyers have many choices. Internet impact is mixed. Buyers can find alternative suppliers and compare prices more easily, reducing power of suppliers. On the other hand, as companies use the Internet to integrate their supply chains, suppliers can lock in customers. The bargaining power of buyers is high when buyers have many choices and low when buyers have few choices. Internet increases buyers’ access to information, increasing buyer power. Internet reduces switching costs, which are the costs, in money and time, to buy elsewhere. This also increases buyer power. The threat of substitute products or services is high when there are many substitutes for an organization’s products or services and low where there are few substitutes. Information-based industries are in the greatest danger from this threat (e.g., music, books, software). The Internet can convey digital information quickly and efficiently. The rivalry among firms in an industry is high when there is fierce competition and low when there is not. Porter’s Value Chain Model Primary activities are those business activities that relate to the production and distribution of the firm’s products and services, thus creating value for which customers are willing to pay. Support activities do not add value directly to a firm’s products and services, but support the primary activities. Figure SEQ Figure \* ARABIC 3. Porter’s Value Chain Model (Open your book, Page:49) Strategies for Competitive Advantage: Cost Leadership. Produce products and/or services at the lowest cost in the industry. Differentiation. Offer different products, services or product features. Innovation. Introduce new products and services, add new features to existing products and services or develop new ways to produce them. Operational Effectiveness. Improve the manner in which internal business processes are executed so that a firm performs similar activities better than its rivals. Customer-orientation. Concentrate on making customers happy. BUSINESS – INFORMATION TECHNOLOGY ALIGNMENT Define Business-Information Technology Alignment: Business-IT alignment is the tight integration of the IT function with the strategy, mission and goals of the organization. There are six characteristics of effective alignment: Organizations view IT as an engine of innovation that continually transforms the business. Organizations view customers and customer service as supremely important. Organizations rotate business and IT professionals across departments and job functions. Organizations provide clear, overarching goals for all employees. Organizations ensure that IT employees understand how the company makes (or loses) money. Organizations create a vibrant and inclusive company culture. DATA AND KNOWLEDGE MANAGEMENT SESSION 3 Managing Data Difficulties : Data increases exponentially with time Multiple sources of data Data rot/ data degradation Data security, quality, and integrity Government Regulation Clickstream data: provide a trail of the users’ activities in the website, including user (visitors/customers) behavior and browsing patterns. Sources: Internal Sources: Corporate databases, company documents Personal Sources: Personal thoughts, opinions, experiences External Sources: Commercial databases, government reports, and corporate Web sites. Data Governance: an approach to managing information across an entire organization. Master data management: a process that spans all of an organization’s business processes and applications. Master data: a set of core data that span all of an enterprise’s information systems. Transaction data: which are generated and captured by operational systems, describe the activities, or transactions, of the business. In contrast, master data involve multiple transactions and are used to categorize, aggregate, and evaluate the transaction data. Big Data Descriptions of Big Data: From Gartner Research (www.gartner.com) Diverse, high-volume, high-velocity information assets that require new forms of processing to enable enhanced decision making, insight discovery, and process optimization. From the Bid Data Institute (www.the-bigdatainstitute.com) Exhibit variety Includes structured, unstructured, and semi-structured data Are generated at high velocity with an uncertain pattern Do not fit neatly into traditional, structured, relational databases Can be captured, processed, transformed, and analyzed in a reasonable amount of time only by sophisticated information systems Big Data consist of: Traditional enterprise data Machine-generated/sensor data Social Data Images captured by billions of devices located around the world Characteristic: Volume, Velocity, Variety Managing Big Data: When properly analyzed big data can reveal valuable patterns and information. Database environment Traditional relational databases versus NoSQL databases Open source solutions Leveraging Big Data Creating transparency Enabling experimentation Segmenting population to customize actions Replacing/Supporting human decision making with Automated Algorithms Innovating new business models, products, and services Organizations can analyze more data The Database Approach Database management system (DBMS) minimize the following problems: Data redundancy: same data are stored in many places. Data isolation: Applications cannot access data associated with other applications. Data inconsistency: Various versions of the data do not agree. DBMS maximize the following strengths: Data security: Because data are “put in one place” in databases, there is a potential for losing a lot of data at once. Therefore, databases have extremely high security measures in place to deter mistakes and attacks. Data Integrity: Data meet certain constraints, such as no alphabetic characters in a Social Security number field. Data independence: Application and data are not linked to each other, so that all applications are able to access the same data. PICTURE: DBMS Data Hierarchy: A bit is a binary digit, or a “0” or a “1”. A byte is eight bits and represents a single character (e.g., a letter, number or symbol). A field is a group of logically related characters (e.g., a word, small group of words, or identification number). A record is a group of logically related fields (e.g., student in a university database). A file is a group of logically related records. A database is a group of logically related. 4) Designing the Database The Data model: a diagram that represents the entities in the database and their relationships. An entity: a person, place, thing, or event about which information is maintained. A record generally describes an entity. An attribute: a particular characteristic or quality of a particular entity. The primary key: a field that uniquely identifies a record. Secondary keys: other field that have some identifying information but typically do not identify the file with complete accuracy. 5) Database Management Systems A database management system: a set of programs that provide users with tools to add, delete, access, and analyze data stored in one location. The relational database model is based on the concept of two-dimensional tables. Structured query language allows users to perform complicated searches by using relatively simple statements or keywords. Query by example allows users to fill out a grid or template to construct a sample or description of the data he or she wants. 6) Data Warehouses and Data Marts A data warehouse: a repository of historical data organized by subject to support decision makers in the organization. Historical data in data warehouses can be used for identifying trends, forecasting, and making comparisons over time. Online analytical processing (OLAP) involves the analysis of accumulated data by end users (usually in a data warehouse). In contrast to OLAP, online transaction processing (OLTP) typically involves a database, where data from business transactions are processed online as soon as they occur. A data mart: a low-cost, scaled-down version of a data warehouse that is designed for the end-user needs in a small organization or a strategic business unit (SBU) or a department in a large organization. The 6 basic characteristics of data warehouses: Data are organized by business dimension or subject Use online analytical processing. Time variant Nonvolatile Multidimensional Benefits of Data Warehousing End users can access data quickly and easily via Web browsers because they are located in one place, can conduct extensive analysis with data in ways that may not have been possible before, and have a consolidated view of organizational data. 7) Knowledge Management Knowledge management: a process that helps organizations manipulate important knowledge that is part of the organization’s memory, usually in an unstructured format. Knowledge that is contextual, relevant, and actionable. Intellectual capital: another term often used for knowledge. Explicit knowledge: objective, rational, technical knowledge that has been documented. Examples: policies, procedural guides, reports, products, strategies, goals, core competencies Tacit knowledge: cumulative store of subjective or experiential learning. Examples: experiences, insights, expertise, know-how, trade secrets, understanding, skill sets, and learning Knowledge management systems refer to the use of information technologies to systematize, enhance, and expedite intrafirm and interfirm knowledge management. Knowledge Management System Cycle Create knowledge Knowledge is created as people determine new ways of doing things or develop know-how. Sometimes external knowledge is brought in. Capture knowledge New knowledge must be identified as valuable and be represented in a reasonable way. Refine knowledge New knowledge must be placed in context so that it is actionable. This is where tacit qualities (human insights) must be captured along with explicit facts. Store knowledge Useful knowledge must the be stored in a reasonable format in a knowledge repository so that other members of the organization can access it. E – BUSINESS AND E – COMMERCE SESSION 4 Manage knowledge Like a library, the knowledge must be kept current. To accomplish this objective, knowledge must be reviewed regularly to verify that it is relevant and accurate. Disseminate knowledge Knowledge must be made available in a useful format to anyone in the organization who needs it, anywhere and anytime. Definition E – Commerce Describe the buying, selling, transferring or exchanging of product, services, or information via computer networks. E – Business Broader definition of E-Commerce { E- Commerce + Serving customers + collaborating with partners + conducting E-learning + conducting electronic transaction within an organization } Intinya E-Business itu punya artian yang lebih luas dari pada E-Commerce, karena E-Commerce sendiri ada didalam E-Business, E-Business gak cuman mentingin jual-beli tapi juga memerhatikan aspek lain. E – Commerce  Dibagi menjadi dua, ada yang Partial dan Pure (Physical). Pengelompokan Partial atau Pure berdasarkan: The product physical or digital The process physical or digital The delivery agent physical or digital Example : Pure Brick-and-mortar , Virtual Organization (perusahaan yang hanya bergerak di E-commerce). Partial Click- and- mortar ( bisnis e-commerce tapi sebenernya bisnisnya itu dilakukan di physical world). Mekanisme E-Commerce : Auction lelang Forward Acution Yang memenangkan lelang yang harga paling tinggi. Reverse Auction Yang memenangkan lelang yang harga paling rendah. E-Commerce Business Model  Business Model : is the method by which a company generates revenue to sustain itself. Bagaimana sebuah perusahaan mendapatkan laba sendiri. Gimana sih cara biar dia di notice sama customers biar dapet duit? Online direct marketing: manufacturers or retailers sell directly to customers. Electronic tendering system: businesses (or governments) request quotes from suppliers; uses B2B (or G2B) with reverse auctions Name-your-own-price: customers decide how much they want to pay. Find-the-best-price. customers specify a need and an intermediary compares providers and shows the lowest price. Affiliate marketing: Vendors ask partners to place logos or banners on partner’s site. If customers click on logo, go to vendor’s site, and buy, then vendor pays commission to partners. Viral marketing: receivers send information about your product to their friends. Group purchasing: small buyers aggregate demand to get a large volume; then the group conducts tendering or negotiates a lower price. Online auctions: companies run auctions of various types on the Internet. Product customization: customers use the Internet to self-configure products or services. Sellers then price them and fulfill them quickly. Deep discounters: company offers deep price discounts. Membership: only members can use the services provided. Electronic Payment E-payment systems enable you to pay for goods and services electronically. Electronic checks (e-checks) are similar to paper checks and are used mostly in B2B. Electronic credit cards allow customers to charge online payments to their credit card account. Purchasing cards are the B2B equivalent of electronic credit cards and are typically used for unplanned B2B purchases. Electronic credit cards Electronic credit cards Step 1: When you buy a book from Amazon, for example, your credit card information and purchase amount are encrypted in your browser. This way the information is safe while it is “traveling” on the Internet to Amazon. Step 2: When your information arrives at Amazon, it is not opened. Rather, it is transferred automatically (in encrypted form) to a clearinghouse, where it is decrypted for verification and authorization. Step 3: The clearinghouse asks the bank that issued you your credit card (the card issuer bank) to verify your credit card information. Step 4: Your card issuer bank verifies your credit card information and reports this to the clearinghouse. Step 5: The clearinghouse reports the results of the verification of your credit card to Amazon. Step 6: Amazon reports a successful purchase and amount to you. Step 7: Your card issuer bank sends funds in the amount of the purchase to Amazon’s bank. Step 8: Your card issuer bank notifies you (either electronically or in your monthly statement) of the debit on your credit card. Step 9: Amazon’s bank notifies Amazon of the funds credited to its account. Electronic cash Stored-value money cards allow you to store a fixed amount of prepaid money and then spend it as necessary. Smart cards contain a chip called a microprocessor that can store a considerable amount of information. Smart cards can be used as a debit card, credit card or a stored-value money card. Person-to-person payments are a form of e-cash that enables an individual and a business to transfer funds without using a credit card. Overview E-business and E-commerce Benefits of E-Commerce : Benefits to organizations Makes national and international markets more accessible Lowering costs of processing, distributing, and retrieving information Benefits to customers Access a vast number of products and services around the clock (24/7/365) Benefits to Society Ability to easily and conveniently deliver information, services and products to people in cities, rural areas and developing countries. Limitations of E-Commerce : Technological Limitations Lack of universally accepted security standards Insufficient telecommunications bandwidth Expensive accessibility Non-technological Limitations Perception that EC is unsecure Unresolved legal issues Lacks a critical mass of sellers and buyers Business-to-Consumer (B2C) in Electronic Commerce An electronic storefront a Web site that represents a single store. Electronic malls collections of individual shops under a single Internet address. Electronic retailing (e-tailing) the direct sale of products and services through electronic malls, usually designed around electronic catalog format and auction. Online Service Industries : Cyber banking Online securities trading Online job market Travel services Online advertising Disintermediation Online service involves customers accessing services via the Web. Intermediaries or provide information and provide value-added services. Disintermediation is when the function(s) of these intermediaries can be automated or eliminated. Online Advertising Advertising is an attempt to distribute information in order to influence a buyer-seller transaction. Online Advertising methods : Banner : simply electronic billboards. Pop-up ad : appears in front of the current browser window. Pop-under ad : appears underneath the active window. Permission marketing : asks consumers to give their permission to voluntarily accept online advertising and e-mail. Viral marketing : refers to online “word-of-mouth” marketing. Issues in E-Tailing Channel conflict When manufacturers disintermediate their channel partners, such as distributors, retailers, dealers, and sales representatives, by selling their products directly to consumers, usually over the Internet through electronic commerce. Multichanneling a process in which a company integrates its offline and online channels. Order fulfillment involves finding the product to be shipped; packaging the product; arrange for speedy delivery to the customer; and handle the return of defective products. Drivers of today’s online advertising : The emergence of “communitainment.” The increasing popularity of Usites. Mainstreaming of the Internet. Declining usage of traditional media. Fragmentation of content consumption. Consumers are multitasking and they do not like ads. Business-to-Business (B2B) in Electronic Commerce In B2B e-commerce, the buyers and sellers are organizations. B2B Sell-Side Marketplace Organizations sell their products or services to other organizations Electronically from their own Web site and from a third-party Web site. This model is similar to the B2C model in which the buyer comes to the seller’s site, views catalogs, and places an order. In the B2B sell-side marketplace, the buyers are organizations. Key mechanisms: electronic catalogs and forward auctions B2B Buy-Side Marketplace Key mechanism: reverse auctions Electronic Exchanges Vertical exchanges: connect buyers and sellers in a given industry. Horizontal exchanges: connect buyers and sellers across many industries and are used mainly for MRO materials. In functional exchanges, needed services such as temporary help or extra office space are traded on an “as-needed” basis. Ethical and Legal Issues Ethical Issues Privacy: E-commerce provides opportunities for businesses and employers to track individual activities on the WWW using cookies or special spyware. This allows private/personal information to be tracked, compiled, and stored as an individual profile. This profile can be used or sold to other businesses for target marketing or by employees to aide in personnel management decisions (i.e., promotions, raises, layoffs). Job Loss Legal Issues Specific to E-Commerce Fraud on the Internet: i.e. stocks, investments, business opportunities, auctions. Domain Names: problems with competition. Cybersquatting: refers to the practice of registering domain names solely for the purpose of selling them later at a higher price. Domain Tasting: a practice of registrants using the five-day "grace period" at the beginning of a domain registration to profit from pay-per-click advertising. Taxes and other Fees: when and where electronic sellers should pay business license taxes, franchise fees, gross-receipts taxes, excise taxes, etc. Copyright: protecting intellectual property in e-commerce and enforcing copyright laws is extremely difficult.