ITM100

Chapter One
Information Systems in Business Today

What’s New in Management Information Systems

- There are continuous changes in technology, management, and business processes:
- IT innovations:
- Cloud computing, mobile digital platforms, big data, AI, the internet of things (IoT)
- New business models:
- Viewers are unplugging from cable and using only the internet for entertainment
- E-Commerce expanding:
- Selling services, not only goods
- Management changes:
- Online collaboration, business intelligence, virtual meetings
- Changes in firms and organizations:
- More collaborative, social media to listen to consumers, more aware of technologies
Globalization Challenges & Opportunities
- Globalization: Internet and global communications have greatly changed how and where
business is done
- Internet has drastically reduced costs of operating on a global scale
- Increases foreign trade, outsourcing
- Competition for jobs, markets, resources, ideas
- Growing interdependence of global economies
- Requires new understandings of markets and opportunities
The Emerging Digital Firm
- Digital firm: a firm in which nearly all of the organization’s significant business relationships
with customers, suppliers, and employees are digitally enabled and mediated
- In a fully digital firm:
- Significant business relationships are digitally enabled and mediated
- Core business processes are accomplished through digital networks
- Key corporate assets are managed digitally
- Digital firms offer greater flexibility in organization and management, examples include time
shifting and space shifting
- Business processes: the set of logically related tasks and behaviours that organizations
develop overtime to produce specific business results and the unique manner in which these
activities are organized and coordinated
- Developing a new product, generating and fulfilling an order, creating a marketing plan,
and hiring employee are examples of business processes
- The way organizations accomplish their business processes can be a source of
competitive strength
- Key corporate assets-intellectual property, core competencies, and financial and human
assets-are managed through digital means

Strategic Business Objectives of Information

Systems
- There is a growing interdependence between
the ability to use informational technology and
the ability to implement corporate strategies and
achieve corporate goals
- Firms invest heavily in information systems to
 achieve six strategic business objectives:
- Operational excellence
- New products, services, and business models
- Customer and supplier intimacy
- Improved decision making
- Competitive advantage
- Survival

The Role of Information Systems in Business Today

- Operational excellence improves efficiency to attain higher profitability
- Information systems and technologies are the most important tools to achieve greater
productivity
- Information systems are a major enabling tool to create new products, new services, and
entirely new business models
- Business model: how a company produces, delivers, and sells a product or service to
create wealth
- Serving customers well leads to customers returning, raising revenues and profits, building
customer intimacy
- Intimacy with suppliers results in lower costs and allows them to provide vital inputs
- When managers do not have the right information at the right time, they make decisions
relying on forecasts, best guesses, and luck
- This results in misallocation of resources and poor response time
- Competitive advantage includes:
- Delivering better performance
- Charging less for superior products
- Responding to customers and suppliers in real time
- Competitive advantage often results from achieving previous business objectives
- Business firms also invest in information systems and technologies because they are
necessities of doing business
- Sometimes these necessities are driven by industry level changes
- Most nations have statutes and regulations that create a legal duty for companies

What is an Information System?

- Information technology: consists of all of the hardware and software that a firm needs to use
in order to achieve its business objectives
- Information system: a set of interrelated components that collect, process, store, and
distribute information to support decision making and control in an organization
- Information systems may also help managers and workers analyze problems, visualize
complex subjects, and create new products
- Information: data that have been shared into a form that is meaningful and useful to human
beings
- Data: streams of raw facts representing events occurring in organizations or the physical
environment before they have been organized and arranged into a form that people can
understand and use

Functions of an Information System

Dimensions of Information Systems
- Information systems literacy: a broader understanding of the management and organizational
dimensions of systems as well as the technical dimensions of systems
- Computer literacy: the knowledge of information
technology
- Management information systems: MIS deals with
behavioural issues as well as technical issues
surrounding the development, use, and impact of
information systems used by managers and
employees in the firm
- Organization:
- Hierarchy of authority, responsibility; separation
of business functions; unique business
processes; unique business culture;
organizational politics
- Senior management makes long-range
strategic decisions about products and
services as well as ensures financial
performance of the firm
- Middle management carries out the programs
and plans of senior management
- Operational management is responsible for
monitoring the daily activities of the business
- Knowledge workers design products or services and create new knowledge for the firm
- Data workers assist with scheduling and communications at all levels of the firm
- Production or service workers actually produce the product and deliver the service
- The major business functions consist of sales and marketing, manufacturing and
production, finance and accounting, and human resources
- Management:
- Managers set organizational strategy and must act creatively
- Creation of new products and services
- Occasionally re-creating the organization
- Technology:
- Information technology infrastructure: provides the foundation on which the firm can build
its specific information systems
- Data management technology: consists of the software governing the organization of data
on physical storage media
- Networking and telecommunications technology: consists of the software governing the
organization of data on physical storage media
- Computer hardware: the physical equipment used for input, processing, and output
activities in an information system
- Computer software: consists of the detailed, preprogrammed instructions that control and
coordinate the computer hardware components in an information system

A Business Perspective on Information Systems

- Investments in information technology will result in superior returns
- Managers and business firms invest in information technology and systems because they
provide real economic value to the business
- The decision to build or maintain an information system assumes that the returns on this
investment will be superior to the other investments in buildings, machines, or other assets
 - These superior returns will be expressed as increases in productivity, as increases in
revenue, or perhaps as superior long-
term strategic positioning of the firm in
certain markets
- information systems enable the firm to
increase its revenue or decrease its costs
by providing information that helps
managers make better decisions or that
improves the execution of business
processes
- Business information value chain:
- Raw data acquired and transformed
through stages that add value to that
information
- Value of information system
determine in part by extent to
which it leads to better
decisions, greater efficiency,
and higher profits
- The business perspective calls
attention to organization and
managerial nature of information
systems
- Investing in information
technology does not guarantee
good returns
- There is considerable variation
in the returns firms receive
from systems investment
- Complimentary assets: assets
required to derive value from a
primary investment
- Organizational assets
- Managerial assets
- Social assets

Contemporary Approaches to Information Systems

- Technical approach:
- Emphasizes mathematically based models
- Disciplines include computer science,
management science, operations
research
- Behavioural approach:
- Behavioural issues (strategic business
integration, implementation, etc.)
- Disciplines include psychology,
economics, sociology
- Socio-technical approach:
- Optimal organizational performance
achieved by jointly optimizing both social
and technical systems used in product
- Helps avoid purely technological
approach
ITM100
Chapter Two
Global E-business & Collaboration

Business Processes
- Business processes: the manner in which work is organized, coordinated, and focused to
produce a valuable product or service; the collection of activities required to produce a
product or service
- Business processes include flows of material, information, and knowledge
- Business processes also refer to the unique ways in which organizations coordinate work,
information, and knowledge, and the ways in which management chooses to coordinate
work
- May be tied to functional area or be cross-functional
- Sales and marketing
- Businesses can be seen as
collection of business processes
- Business processes may be
assets or liabilities
- Examples of functional business
processes
- Manufacturing and production
- Assembling the product
- Sales and marketing
- Identifying customers
- Finance and accounting
- Creating financial
statements
- Human resources
- Hiring employees
How Information Technology Improves Business Processes
- Increases efficiency of existing processes
- Automates steps that were manual
- Examples include checking a client’s credit, generating an invoice
- Enabling new processes
- Changing flow of information
- Replacing sequential steps with parallel steps
- Eliminating delays in decision making
- Supporting new business models
Types of Information Systems
- Transaction processing systems (TPS):
- Serve operational managers and staff
- Perform and record daily routine
transactions necessary to conduct
business
- Examples include sales order entry,
payroll, shipping
- Allow managers to monitor status of
operations and relations with external
environment
- Serve predefined, structured goals
and decision making
Systems for Business Intelligence
- Business Intelligence (BI)
- A technology-driven process for analyzing data and presenting actionable information to
help executives to make informed decisions
- Examples include management information systems, decision support systems, and
executive support systems

Management Information Systems (MIS)

- Serve middle management
- Provide reports on firm’s current performance, based on data from TPS
- Provide answers to routine questions with predefined procedure for answering them
- Typically have little analytic capability

Decisions Support Systems (DSS)

- Improved decision making
- Serve middle management
- Support non-routine decision making
- May use external information as well TPS/MIS data
- Types:
- Model driven DSS; voyage-estimating systems
- Data driven DSS; target marketing

Executive Support Systems (ESS)

- Support senior management
- Address non-routine decisions
- Requiring judgement, evaluation, and insight
- Incorporate data about external events as well as summarized information from internal MIS
and DSS

Enterprise Applications
- Systems for linking the enterprise
- Span functional areas
- Execute business processes across the firm
- Include all levels of management
- Four major enterprise applications
- Enterprise Resource Planning (ERP)
- Supply Chain Management
- Customer Relationship Management (CRM)
- Knowledge Management Systems (KMS)
Enterprise Systems
- Also known as enterprise resource planning (ERP) systems
- Collect data from different firm functions and store data in single central data repository
- Resolve problems of fragmented data
- Enable:
- Coordination of daily activities
- Efficient response to customer orders (production, inventory)
- Decision making by managers about daily operations and longer-term planning
Supply Chain Management (SCM) Systems
- Manager firm’s relationships with suppliers
- Inter-organizational systems
- Automate the flows of information across organizational boundaries
- Share information about:
- Orders, production, inventory levels, delivery of products and services
- Goal
- Right amount of products to destination with least amount of time and lowest cost

Customer Relationship Management (CRM) Systems

- Provide information to coordinate all of the business processes that deal with customers
- This includes sales, marketing, and customer service
- Helps forms identify, attract, and retain most profitable customers

Knowledge Management Systems (KMS)

- Support processes for capturing and applying knowledge and expertise
- How to create, produce, and deliver products and services
- Collect internal knowledge and experience within firm and make it available to employees
- Link to external sources of knowledge
- Include enterprise-wide systems for:
- Managing documents, graphics, and other digital knowledge objects
- Directories of employees with expertise
Intranets & Extranets
- Also used to increase integration and expedite the flow of information
- Intranets are internal company websites accessible only by employees
- Extranets are company websites accessible externally only to vendors and suppliers and are
often used to coordinate supply chain

E-business, E-commerce, and E-government

- E-business is the use of digital technology and internet to drive major business processes
- E-commerce is a subset of e-commerce, it is the buying and selling of good and services
through the internet
- E-government is the use of technology to deliver information and services to citizens,
employees, and businesses

What is Collaboration?
- Collaboration consists of working with others to achieve shared and explicit goals
- There is a focus on a task or mission accomplishment within or across organizations
- Teams have a specific mission that someone in the business assigned to them
- Employees may collaborate in informal groups that are not a formal part of the business
firm’s organizational structure, or they may be organized into formal teams
- Collaboration and teamwork are more important today than ever for a variety of reasons:
- Changing the nature of work
- Growth of professional work
- Changing organization of the firm
- Changing scope of the firm
- Emphasis on innovation
- Changing culture of work and business
What is Social Business?
- Social business is the use of social
networking platforms to engage
customers, employees, and suppliers
- Social business aims to deepen
interactions and expedite information
 sharing
- Supporters of social business argue
that if firms could tune in to these
conversations, they would
strengthen their bonds with
consumers, suppliers, and
employees, increasing their
emotional involvement in the firm
- All of this requires a great deal of
information transparency in order
to drive the exchange of
information without intervention
from executives or others

Business benefits of Collaboration & Teamwork

- The more a business is collaborative, the
more successful it will be
- Benefits include: productivity, quality,
innovation, customer service, and financial
performance (profitability, sales, sales growth)

Tools & Technologies for Collaboration &

Social Business
- Email and instant messaging (IM)
- Wikis
- Virtual worlds
- Collaboration and social business platforms
- Virtual meeting systems
- Cloud collaboration services
- Microsoft SharePoint and IBM notes
- Enterprise social networking tools
- PCs, smartphones and other smart devices

Checklist for Managers: Evaluating & Selecting Collaboration & Social Software Tools
- There are six steps in evaluating software tools:
- Identifying your firm’s collaboration challenges
- Identify what kinds of solutions are available
- Analyze available products’ cost and benefits
- Evaluate security risks
- Consult users for implementation and training issues
- Evaluate product vendors

Building a Collaborative Culture & Business Processes

- Command and control organizations: where the top leaders thought up all the really
important matters and then ordered lower-level employees to execute senior management
plans
- Senior managers are responsible fro achieving results but rely on teams of employees to
achieve and implement the results
- Policies, products, designs, processes, and systems rely on teams
- The function of middle managers is to build the teams, coordinate their work, and monitor
their performance
ITM100
Chapter Five
IT Infrastructure

IT Infrastructure
- An IT Infrastructure consists of a set
of physical devices and software
applications that are required to
operate the entire enterprise
- IT Infrastructure also includes a set of
firm-wide services budgeted by
management and composed of both
human and technical capabilities ,
these services include the following:
- Computing platforms used to
provide computing services that
connect employees, customers ,
and suppliers into a coherent digital
environment
- Telecommunications services that provide
data , voice , and video connectivity to
employees , customers , and suppliers
- Data management services that store and
manage corporate data and provide
capabilities for analyzing the data
- Application software services , including
online software services , that provide
enterprise-wide capabilities
- Physical facilities management services that
develop and manage the physical
installations required for computing ,
telecommunications , and data
communication services
- IT management services that plan and
develop the infrastructure , coordinate with
the business units for IT services , manage
accounting for the IT expenditure , and provide
project management services
- IT standards services that provide the firm and
its business units with policies that determine
which Information technology will be used,
when, and how
- IT education services that provide training in
system use to employees and offer managers
training in how to plan for and manage IT
investments
- IT research and developmental services that
provide the firm with research on potential
future IT projects and investments that could
melts the firm differentiate itself in the marketplace
- The "service platform” perspective makes it easier to understand the business value
provided by infrastructure investments
Technology Drivers of infrastructure Evolution
- Moore’s Law & Microprocessing Power
- There are three variations to Moore’s Law:
- 1. The power of microprocessors doubles every 2 years
- 2.Computing power doubles every 2 years
- 3. The price of computing falls by half every 2 years
- Law of Mass Digital Storage
- The amount of data being stored each year doubles
- Metcalfe’s Law & Network Economics
- The value or power of a network grows exponentially as a function of the number of
network members
- As the number of members in a network grows linearly, the value of entire system grows
exponentially and continues to grow as members increase
- Demand for information technology has been driven by the social and business value of
digital networks, which rapidly multiply the number of actual and potential links among
network members
- A fourth technology driver transforming IT infrastructure is the rapid decline in the costs of
communication and the exponential growth in the size of the internet
- As communication costs fall toward a very small number and approach zero, utilization of
communication and computing facilities explode
- To take advantage of the business value associated with the internet, firms must greatly
expand their internet connections, including
wireless connectivity, and greatly expand the
power of their client/server networks, desktop
clients, and mobile computing devices

Standards & Network Effects

- Technology standards: specifications that establish
the compatibility of products and the ability to
communicate in a network
- Technology standards unleash powerful
economies of scale and result in price declines and
manufacturers focus on the products built to a
single standard

Components of IT Infrastructure
1. Computer hardware platforms
- Computer hardware includes mainframes, servers, PCs, tablets, and smartphones
- Most business computing has taken place using microprocessor chips manufactures or
designedly intel corporation and, to a lesser extent, AMD corporation
- Mainframes act as the digital workhorse for banking and telecommunications networks
2. Operating system platforms
- System software: software that manages a computer system at a fundamental level
- Application software: software written to address specific needs-to solve problems in the
real world
- Corporate servers:
- Windows
- Unix
- Linux
- Client level:
- Microsoft Windows
- Android, iOS, Windows 10
- Google’s Chrome OS
- An operating system is a system software that:
- Manages computer resources, such as memory and input/output devices
- Provides an interface through which a human can interact with the computer
- Allows an application program to interact with these other system resources
- The various roles of an operating system generally revolve around the idea of “sharing
nicely”
- An operating system manages resources, and these resources are often shared in one
way or another among programs that want to use them

3. Enterprise software applications

- In 2020, firms are expected to spend over $500 billion on software for enterprise applications
- Largest providers include:
- SAP
- Oracle
- Middleware providers:
- IBM
- Oracle
4. Data management and storage
- Database software providers:
- IBM (DB2)
- Oracle
- Microsoft (SQL Server)
- Sybase (Adaptive Server Enterprise)
- MySQL
- Apache Hadoop
- Physical data storage for large-scale systems
- Dell EMC
- Hewlett Packard Enterprise (H3C)
5. Networking/telecommunications platforms
- Network operating systems:
- Windows server, Linux, Unix
- Network hardware providers:
- Cisco, Juniper Networks
- Telecommunication services:
 - Telecommunications, cable, telephone company charges for voice lines and internet
access
- AT&T, Verizon
6. Internet platforms
- Hardware, software, and management services to support company websites, intranets
- Web-hosting services
- Routers
- Cabling or wireless equipment
- Internet hardware server market
- IBM, Dell, Oracle, HP
- Web development tools/suites
- Microsoft (Visual Studio and .NET), Oracle-Sun (Java), Adobe
7. Consulting system integration services
- Even large firms do not have resources for full range of support for new, complex
infrastructure
- Leading consulting firms:
- Accenture, IBM Global Services, HP, Infosys, Wipro Technologies
- Software integration:
- Ensuring new infrastructure works with legacy systems
- Legacy systems:
- Older TPS created for mainframes that would be too costly to replace or redesign
Dealing with Platform & Infrastructure Change
- As firms grow, they often quickly outgrow their infrastructure and as firms shrink, they can
get stuck with excessive infrastructure purchased in better times
- Scalability: the ability of a computer, product, or system to expand to serve a large number
of users without breaking down
- New applications, mergers, and acquisitions, and changes in business volume all affect
computer workload and must be considered when planning hardware capacity
- Firms often turn to mobile device management (MDM) software, which monitors, manages,
and serves mobile devices that are deployed across multiple mobile service providers and
across multiple mobile operating systems being used in the organization
- MDM tools enable the IT department to monitor mobile usage, install or updale mobile
software, back up and restore mobile devices, and remove software and data from
devices that are stolen or lost
- Firms using cloud computing and says will need to fashion new contractual arrangements
with remote vendors to make sure that the hardware and software for critical applications are
always available when needed and that they meet corporate standards for information
security

Management & Governance

- A long-standing issue among information system managers and ceos has been the question
of who will control and manage the firm's IT infrastructure
- Should departments and divisions have the responsibility of making their own information
technology decisions, or should it infrastructure be centrally controlled and managed?
- What is the relationship between central information systems management and business cult
information systems management?
- How will infrastructure costs be allocated among business units?
Making Wise Infrastructure Investments
- If too much is spent on infrastructure, It lies idle and constitutes a drag on the firm's financial
performance
- If too little is spent, important business services cannot be delivered and the firm's
competitors will outperform the underinvesting firm
- Rent vs Buy: the decision either to purchase your own it assets or to rent them from external
providers
- cloud computing is a low cost-way to increase scalability and flexibility
- In some instances, the cost of renting software adds up to more than purchasing and
maintaining an application in-house, or firms can overspend on cloud services

Total Cost of Ownership (TCO) Model

- The actual cost of owning technology resources includes the original cost of acquiring and
installing hardware and software as well as ongoing administration costs for hardware and
software upgrades, maintenance, technical support, training, and even utility and real estate
costs for running and housing the technology
- The total cost of ownership (TCO) model can be used to analyze these direct and indirect
costs to help firms determine the actual cost of specific technology Implementations
- Hardware and software acquisition costs account for only about 20% of TCO
- In addition to switching to cloud services, these firms could reduce their TCO through
greater centralization and standardization of their hardware and software resources
ITM100
Chapter Nine
Achieving Operational Excellence & Customer Intimacy: Enterprise Applications

What Are Enterprise Systems?

- Enterprise systems are based on a suite of
integrated software modules and a common
central database
- They collect data from many sections of the
firm for use in nearly all of the firm’s internal
business activities
- Information entered in one process is
immediately available for other processes

Enterprise Software
- Enterprise software is built around business
processes that reflect best practices, this
includes: Finance & accounting, HR,
manufacturing & production, and sales &
marketing
- Firms implement enterprise software by
selecting the functions of the system they wish to use and map business processes to
software processes
- They also use the software’s configuration tables for customizing
Business Value of Enterprise Systems
- Enterprise systems:
- Increase operational efficiency
- Provide firm-wide information to support decision making
- Enable rapid response to customer requests for information or products
- Include analytical tools to evaluate overall organizational performance and improve
decision-making

The Supply Chain

- The supply chain is a network of organizations and processes for procuring materials,
transforming materials into products, and distributing the products
- The upstream portion of the supply chain includes the company’s suppliers, the suppliers’s
suppliers, and the processes for managing relationships with them
- The downstream portion consists of the organizations and processes for distributing and
delivering products to the final customers

Supply Chain Management

- Inefficiencies can cut into a company’s operating costs and waste up to 25% of operating
expenses
- The just in time strategy is when components arrive as they are needed and finished goods
are shipped after leaving the assembly line
- Safety stock is the buffer for lack of flexibility in supply chain
- The bullwhip effect is when information about product demand gets distorted as it passes
from one entity to the next across the supply chain

Supply Chain Management Software

- Supply chain planning systems:
- Model existing supply chain
 - Enable demand planning, which determines how much product a business needs to make
to satisfy all its customer’s demands
- Optimize sourcing and manufacturing plans
- Establish inventory levels
- Identify transportation modes
- Supply chain execution systems manage flow of products through distribution centres and
warehouses

Global Supply Chains & the Internet

- Some issues of global supply chain include:
- Greater geographical distances and time
differences
- Countries have different performance
standards and legal requirements
- Internet helps manage global complexities in
warehouse management, transportation
management, logistic, and outsourcing

Demand-Driven Supply Chains

- A push-based model (build to stock) includes
earlier SCM systems and schedules based on best
guesses of demand
- A pull-based model (demand-driven) is web based
and customer orders trigger events in supply chain
- Internet enables move fro sequential supply chains
to concurrent supply chains, allowing complex
networks of suppliers to adjust immediately

Business Value of Supply Chain Management

Systems
- Supply chain management systems:
- Match supply to demand
- Reduce inventory levels
- Improve delivery service
- Speed product time to market
- Use assets more effectively as costs can be 75% of operating budget
- Increase sales
Customer Relationship Management
- In a small business, it is possible for the business to know
customers on a personal, face-to-face basis
- In a large business, it is impossible to know your customers
in an intimate way
- CRM systems:
- Capture and integrate data from all over the organization
- Consolidate and analyze customer data
- Distribute customer information to various systems and
customer touch points across enterprise
- Provide single enterprise view of customers
Customer Relationship Management Software
- Packages range from niche tools to large-scale enterprise
applications
- More comprehensive packages have modules for:
- Partner relationship management (PRM)
- Integrating lead generation, pricing, promotions,
order configurations, and availability
- Tools to asses partners’ performant
- Employee relationship management
- Setting objectives, employee performance
management, performance-based compensation,
employee training
- CRM packages typically include tools for:
- Sales force automation (SFA)
- Sales prospect and contact information
- Sales quote and contact information
- Customer service
- Assigning and managing customer service
requests
- Web-based self-service capabilities
- Marketing
- Capturing prospect and customer data, scheduling
and tracking direct-marketing mailings or e-mail
- Cross-selling

Operational & Analytical CRM

- Operational CRM:
- Customer-facing applications
- Sales force automation call centre and customer service support
- Marketing automation
- Analytical CRM:
- Based on data warehouses populated by operational CRM systems and customer touch
points
- Analyzes customer data (OLAP, data mining, etc)
- Customer lifetime value (CLTV) is based on the relationship between the revenue
produced by a specific customer, the expenses incurred in acquiring and servicing that
customer, and the expected life of the relationship between the customer and the
company

Business Value of Customer Relationship Management Systems

- Values of CRM systems include:
- Increased customer satisfaction
- Reduced direct-marketing costs
- More effective marketing
- Lower costs for customer acquisition/retention
- The churn rate is the number of customers who stop using or purchasing products or
services from a company
- This is an indicator of the growth or decline of a firm’s customer base
Enterprise Application Challenges
- Enterprise applications are expensive to purchase and implement, and many projects
experience cost overruns and long development times
- Other challenges include:
- Technology changes
- Require multiple organizations to share information and business processes
- Organizational learning changes
- Switching costs, dependence on software vendors
- Data standardization, management, cleansing
Next-Generation Enterprise Applications
- Enterprise solutions make applications more flexible and web-enabled when integrated with
other systems
- Next generation enterprise applications include cloud solutions and mobile platforms
- Versions also are available for small and medium-sized businesses
- Social CRM tools help businesses better engage with their customers from social
networking sites
- They manage social and web-based campaigns, monitor social media active and social
media analytics
- The inclusion of business intelligence help managers obtain more meaningful information
- Included are tools for flexible reporting; ad hoc analysis; interactive dashboards; what-if
scenario analysis; data visualization; and AI machine learning to analyze large bodies of
data, make connections, make predictions, and provide more accurate recommendations
for customer purchases and operations optimization
ITM100
Chapter Six
Foundation of BI: Databases & Information Management

Key Terms
Bit: the smallest unit of data a computer can handle
Byte: a group of bits representing a single character
Field: a grouping of characters into a word, a group of words, or
a complete number
Record: a group of related fields
File: a group of records
Database: an organized collection of data stored centrally to
serve various
Entity: a person, place, thing, event about which information is
maintained
Attribute: description of a particular entity
Key Field: identifier field used to retrieve, update, and sort a
record

Problems with the Traditional File Environment

- Files are maintained separately by different
departments
- Data redundancy: the presence of duplicate data in
multiple files
- Data inconsistency: when the same attribute has
different values
- Program-data dependence: When changes in
program requires changes to data accessed by
program
- Lack of flexibility: When a file system cannot
deliver ad-hoc reports or respond to unanticipated
information requirements in timely fashion
- Poor security
- Management may have no knowledge of who is accessing or making changes to the
organization’s data
- Lack of data sharing and availability
- Information cannot flow freely across different functional areas or different parts of the
organization

Database Management Systems

- Databases serve many applications by centralizing
data and controlling redundant data
- Database management systems (DBMS) allows for
interfaces between applications and physical data files
and separates logical and physical views of data
- DMBS solves problems of the traditional file
environment
- Controls redundancy
- Eliminates inconsistency
- Uncouples programs and data
- Enables organization to centrally manage data
and data security
Relational DBMS
- Represent data as two-dimensional tables
- Each table contains data on entity and attributes
- Table: grid of columns and rows
- Rows: records for different entities
- Fields: represents attribute for entity
- Key field: field used to uniquely identify each
record
- Primary key: field in table used for key fields
- Foreign key: primary key used in second table as
look-up field to identify records from original table

Capabilities of Database Management Systems

- A DBMS includes capabilities and tools for
organizing, managing, and accessing the data in the
database
- The most important are its data definition language, data dictionary, and data
manipulation language
- Data definition capability specifies the structure of the database
- Used to create database tables and to define the characteristics of the fields in each table
- A data dictionary is an automated or manual file that stores definitions of data elements and
their characteristics
- Most DBMS have a specialized language called a data manipulation language that is used to
add, change, delete, and retrieve the data in the database
- The most prominent data manipulation language today is Structured Query Language or
SQL
- A query is a request for data from a database
Operations of a Relational DBMS
- SELECT: creates a subset of data of all records that meet stated criteria
- JOIN: combines relational tables to provide user with more information than available in
individual tables
- PROJECT: creates a subset of columns in table, creating tables with only the information
specified

Designing Databases
- Conceptual design: abstract model of database from a business perspective
- Entity-relationship diagram: methodology for documenting databases illustrating
relationships between database entities
- Normalization: process of creating small stable data structures from complex groups of data
- Physical design: detailed description of how the data will actually be arranged and stores on
physical devices

Non-relational Databases, Cloud Databases, & Blockchain

- Non-relational databases:
- Allow for a more flexible data model
- Data sets are stored across distributed machines
- Are easier to scale
- Handle large volumes of unstructured and structured data
- NoSQL
- Databases in the cloud:
- Appeal to start-ups, smaller businesses
- Allow for private clouds
- Distributed database: one that is stored in multiple physical locations
- Amazon Relational Database Service, Microsoft SQL Azure
- Blockchain:
- A distributed database technology that
enables firms and organizations to create and
verify transactions on a network nearly
instantaneously without a central authority
- The systems stores transactions as a
distributed ledger among a network of
computers
- Maintains growing list of records and
transactions shared by all
- Encryption used to identify participants and
transactions
- Used for financial transactions, supply
chain, and medical records
- Foundation of Bitcoin and other crypto
currencies

Business Intelligence Infrastructure

- Business intelligence infrastructure includes an array
of tools for obtaining information from separate
systems and from big data
- Data warehouses store current and historical data
from many core operational transaction systems
- They consolidate and standardize information for
use across enterprise, but the data cannot be
altered
- Data warehouses provide analysis and reporting
tools
- Data marts are subsets of data warehouses; they are a
summarized or highly focused portion of the firm’s data for use by a specific population of
users
- They typically focus on a single subject or a line of business
- Hadoop is a framework that enables distributed parallel processing of big data across
inexpensive computers
 - Hadoop breaks down a big data
problem down into sub-problems,
distributes them among up to
thousands of inexpensive computer
processing nodes, and then combines
the result into a smaller data set that is
easier to analyze
- Hadoop consists of several key
services, including the Hadoop
Distributed File System (HDFS) for data
storage and MapReduce for high-
performance parallel data processing
- In-memory computing relies primarily
on a computer’s main memory (RAM)
for data storage
- Users access data stored in system
primary memory, thereby eliminating bottlenecks from retrieving and reading data in a
traditional, disk-based database and dramatically shortening query response times
- Analytical platforms use both relational and non relational technology that are optimized for
analyzing large data sets
- Analytical platforms feature pre-configured hardware-software systems that are
specifically designed for query processing and analytics
- Data lake: a repository for raw unstructured data or structured data that for the most part has
not yet been analyzed, and the data can be accessed in many ways

Analytical Tools: Relationships, Patterns, Trends

- Online Analytical Processing (OLAP) supports
multidimensional data analysis, enabling users to view the
same data in different ways using multiple dimensions
- Each aspect of information, product, pricing, cost,
region, or time period, represents a different dimension
- OLAP enables rapid, online answers to ad hoc queries
- Data mining provides insights into corporate data that
cannot be obtained with OLAP by finding hidden patterns
and relationships in large databases and inferring rules
from them to predict future behaviour
- The types of information obtainable from data mining
include associations, sequences, classifications,
clusters, and forecasts
- Associations: occurrences linked to a single event
- Sequences: events linked over time
- Classification: recognizes patterns that describe the group to which an item belongs to
by examining existing items that have been classified and by inferring a set of rules
- Clustering: can discover different groupings within data
- Forecasting: uses a series of existing values to forecast what other values will be
- Forecasting might find patterns in data to help managers estimate the future value of
continuous variables
- Text mining extracts key elements from large unstructured data sets
- Sentiment analysis software is able to mine text comments in an email message, blog, social
media conversation, or survey forms to detect favourable and unfavourable opinions about
specific subjects
- Web mining is the discovery and analysis of useful patterns and information from the web to
understand customer behaviour, evaluate the effectiveness of the website, or quantify the
success of a marketing campaign
- Web mining looks for patterns in data through content mining, structure mining, and
usage mining

Databases & The Web

- Many companies use the web to make some internal databases available to customers or
partners
- Some advantages of using the web for database access include:
- Ease of use of browser software
- Web interface requires few or no changes to database
- Inexpensive to add web interface to system
- In a client/server environment, the DBMS resides on a dedicated computer called a
database server
- The DMBS receives the SQL requests and provides the required data

Establishing an Information Policy

- Information policy is a firm’s rules, procedures, roles for sharing, managing, and standardizing
data
- Data governance encompasses policies and procedures through which data can be
managed as an organizational resource
- It establishes the organization’s rules for sharing, disseminating, acquiring, standardizing,
classifying, and inventory-ing information
- These include identifying which users and organizational units can share information,
where information can be distributed, who is responsible for updating and maintaining
the information, and how data resources should be secured
- More than 25% of critical data in Fortune 1000 company databases are inaccurate or
incomplete

Ensuring Data Quality

- Data administration establishes policies and procedures to manage data
- Database administration is the creation and maintenance of a database
- Analysis of data quality often begins with a data quality audit, which is a structured survey of
the accuracy and level of completeness of the data in an information system
- Data cleansing (data scrubbing) consists of activities for detecting and correcting data in a
database that are incorrect, incomplete, improperly formatted, or redundant
ITM100
Chapter Twelve
Enhancing Decision Making

Types of Decisions
- Unstructured decisions are those in which
the decision maker must provide judgement,
evaluation, and insight to solve the problem
- Structured decisions are repetitive and
routine, and they involve a definite procedure
for handling them so that they do not have
to be treated each time as if they were new
- Semistructured decisions are decisions
where only part of the problem has a clear-
cut answer provided by an accepted
procedure

The Decision Making Process

- Intelligence consists of discovering, identifying, and
understand the problems occurring in the
organization-why a problem exists, where, and what
effects it is having on the firm
- Design involves identifying and exploring various
solutions to the problem
- Choice consists of choosing among solution
alternatives
- Implementation involves making the chosen
alternative work and continuing to monitor how well
the solution is working

Managerial Roles
- The classical model of management describes formal
managerial functions but does not address exactly
what managers do when they plan,
decide things, and control the work of
others
- Behavioural models argue that the
actual behaviour of managers appears
to be less systematic, more informal,
less reflective, more reactive, and less
organized
- Managerial roles are expectations of
the activities that managers should
perform in an organization
- These managerial roles fell into
three categories: interpersonal,
informational, and decisional
- Interpersonal roles are when managers
act as leaders, attempting to motivate,
counsel, and support subordinates
- Informational roles are when managers act as the nerve centres of their organizations,
receiving the most concrete, up-to-date information and redistributing it to those who need
to be aware of it
- Decisional roles are when managers act as entrepreneurs by initiating new kinds of activities,
they handle disturbances arising in the organization, they allocate resources to staff
members who need them, and they negotiate conflicts and mediate between conflicting
groups

Real-World Decision Making

- High quality decisions require high-quality information
- Managers absorb information through a series of filters to make sense of the world around
them
- Managers have selective attention and have a variety of biases that reject information that
does not conform to prior conceptions
- When environments change and businesses need to adopt new business models to survive,
strong forces within the organizations resist making decisions calling for major change
- Decisions taken by a firm often represent a balancing of the firm’s various interest groups
rather than the best solution to the problem
- Firms tend to ignore poor performance until threatened by outside takeovers, and they
systematically blame poor performance on external forces beyond their control-such as
economic conditions, foreign competition, and rising prices-rather than blaming senior or
middle management for poor business judgement

Support for Structured and Semi-structured Decisions

- Structured:
- Management Information Systems (MIS)
- Exception Reports
- Interactive Queries through a portal
- Semi-structured Decisions:
- Decision-support systems (DSS) are the BI delivery platform for analysts who want to
create their own reports and use morse sophisticated analytics and models to find
patterns in data
- Sensitivity analysis models ask “what-if” questions to predict a range of outcomes when
one or more variables are changed multiple times

High-Velocity Automated Decision Making

- This type of decision making is made possible through computer algorithms precisely
defining steps for a highly structured decision
- This process removes humans from the decision making process
- Examples include Google and high-speed computer trading programs
- These decisions require safeguards to ensure proper operation and regulation
Business Intelligence
- Business Intelligence is a term used by
hardware and software vendors and
information technology consultants to
describe the infrastructure for warehousing,
integrating, reporting, and analyzing data
that come from the business environment,
including big data
- The foundation infrastructure collects,
stores, cleans, and makes relevant
information available to managers
 - Databases, data warehouses, data marts, Hadoop, analytic platforms
- Business analytics is a vendor-defined term that focuses more on tools and techniques for
analyzing and understanding data
- OLAP, statistics, models, and data mining
- Business intelligence and analytics are essentially about integrating all the information
streams produced by a firm into a single, coherent, enterprise-wide set of data and then
using modelling, statistical analysis tools, and data mining tools to make better decisions
and plans
- Business intelligence vendors create business intelligence and analytics purchased by firms
Business Intelligence Environment
- The business intelligence environment highlights the kinds of hardware, software, and
management capabilities that the major vendors offer and that firms develop over time
- There are six elements in the business intelligence environment:
- Data from the business environment
- Businesses must deal with both structured and unstructured data from many different
sources, including big data
- The data needs to be integrated and organized so that it can be analyzed and used by
human decision makers
- Business intelligence infrastructure
- The foundation of business intelligence is a powerful database system that captures the
relevant data to operate the business
- The data may be stored in transactional databases or combined and integrated into
an enterprise data warehouse or series of interrelated data marts
- Business analytics toolset
- A set of software tools used to analyze data and produce reports, respond to questions
posed by managers, and track the progress of the business by using key indicators of
performance
- Managerial users and methods
- Managers impose order on the analysis of data using a variety of managerial methods
that define strategic business goals and specify how progress will be measured
- These include business performance management and balanced scorecard
approaches focusing on key performance indicators and industry strategic analyses
focusing on changes in the general business environment, with special attention to
competitors
- Without strong senior management oversight, business analytics can produce a great
deal of information, reports, and online screens that focus on the wrong matters and
divert attention from the real issues
- Delivery platform-MIS, DSS, ESS
- MIS, DSS, and ESS deliver information and knowledge to different people and levels in
the firm-operational employees, middle managers, and senior executives
- User Interface
- Data visualization tools include rich graphs, charts, dashboards, and maps
Business Intelligence and Analytics
Capabilities
- Business intelligence and analytics
promise to deliver correct, nearly real-time
information to decision makers
- There are six analytic functionalities that BI
systems deliver:
- Production reports
 - Predefined reports based on industry-specific requirements
- Parameterized reports
- Users enter several parameters as in a pivot table to filter data and isolate impacts of
parameters
- Dashboards/scorecards
- Visual tools for presenting performance data defined by users
- Ad hoc query/search/report creation
- These allow users to create their own reports based on queries and searches
- Drill down
- The ability to move from a high-level summary to a more detailed view
- Forecasts, scenarios, models
- The ability to perform linear forecasting and what-if scenario analysis and analyze data
using standard statistical tools
- Operational Intelligence: the decisions on how to run the business on a day-to-day basis
- Location Analytics: the ability to gain business insight from the location component of data,
including location data from mobile phones, output from sensors or scanning devices, and
data from maps

Predictive Analytics
- Predictive analytics uses a variety of data and techniques to predict future trends and
behaviour patterns; including: statistical analysis, data mining, historical data, and
assumptions
- Predictive analytics are incorporated into numerous BI applications for sales, marketing,
finance, fraud detection, and health care
- Examples include credit scoring and predicting responses to direct marketing campaigns

Big Data Analytics

- Big data consists of massive data sets collected from social media, online and in-store
customer data, and so on
- This helps create real-time, personalized shopping experiences for major online retailers
- Smart cities make intensive use of digital technology to make better decisions about running
cities and serving their residents
- Examples include the use of public records, sensors, location data from phones, and the
ability to evaluate effect of one service change on system

Decision Support for Senior Management

- The balanced scorecard method measures
outcomes on four dimensions: financial, business
process, customer, and learning and growth
- Financial: What must we do to create
sustainable economic value?
- Internal Business Process: To satisfy our
stakeholders, what must be our levels of
productivity, efficiency, and quality?
- Learning and growth: How does our employee
performance management system, including
feedback to employees, support high
performance?
- Customer: What do our customers require
from us and how are we doing according to
those requirements?
- Performance on each dimension is measured using key performance indicators (KPIs)
 - KPIs are the measures proposed by senior management for understanding how well the
firm is performing along any given dimension
- Business performance management (BPM) attempts to translate a firm’s strategies (e.g.,
differentiation, low-cost producer, scope of operation) into operational targets
- Once the strategies and targets are identified, a set of KPIs are developed that measure
progress toward the targets

Group Decision-Support Systems (GDSS)

- Group decision-support systems are an interactive system that facilitates the solving of
unstructured problems by group
- GDDS’ require specialized tools, including virtual collaboration rooms and software to
collect, rank, and edit participant ideas and responses
- These systems promote collaborative atmosphere and anonymity
ITM100
Chapter Seven
Telecommunications, the Internet, & Wireless Technologies

Networks & Communication Trends

- Telecommunications: the transmission of information, as words, sounds, or images, usually
over great distances, in the form of electromagnetic signals
- Firms in the past used two fundamentally different types of networks: telephone networks
and computer networks
- Telephone networks historically handled voice communication, and computer networks
handled data traffic
- Telephone companies built telephone networks (hardware and software), and these
companies usually always operated as regulated monopolies throughout the world
- Computer companies originally built computer networks to transmit data between
computers in different locations
- Telephone and computer networks are converging into a single digital networks using shared
Internet-based standards and technology
- Both voice and data communication networks have also become more powerful, more
portable, and less expensive
- The majority of U.S. households have high-speed broadband connections provided by
telephone and cable TV companies running from 5 to over 900 megabits per second
- The cost for this service has fallen exponentially, from 50 cents per kilobit in 2000 to a tiny
fraction of a cent today
- There are almost 3.5 billion worldwide mobile Internet users, over 45% of the world’s
population

What is a Computer Network?

- Computer network: consists of two or more
connected computers
- Each computer on the network contains a network
interface device to link the computer to the
network
- The connection medium for linking network
components can be a telephone wire, coaxial
cable, or radio signal in the case of cell phone and
wireless local area networks
- Network operating system (NOS): routes and
manages communications on the network and
coordinates network resources
- It can reside on every computer in the network or primarily on a dedicated sever computer
for all the applications in the system
- Server: a computer on a network that performs important network functions for client
computers, such as displaying web pages, storing data, and storing the network operating
system
- Microsoft Windows Server and linux are the most widely used network operating
systems
- Most networks also contain a switch or a hub acting as a connection point between the
computers
- Hubs: simple devices that connect network components, sending a packet of data to all
other connected devices
- Switch: has more intelligence than a hub and can filter and forward data to a specified
destination on the network
- Router: a communications processor that routes packets of data through different networks,
ensuring that the data sent gets to the correct address
- Network switches and routers have proprietary software built into their hardware for
directions the movement of data on the network
- This can create network bottlenecks and makes the process of configuring a network
more complicated and time consuming
- Software-defined networking (SDN): a networking approach in which many of these control
functions are managed by one central program, which can run on inexpensive commodity
servers that are separate from the network devices themselves

Networks in Large Companies

- As a firm grows, its small networks can be tied
together into a corporate-wide networking
infrastructure
- The network infrastructure for a large corporation
consists of a large number of these small local area
networks linked to other local area networks and to
firmware corporate networks
- A number of powerful servers support a corporate
website, a corporate intranet, and perhaps and
extranet
- Some of these servers link to other large
computers supporting band-end systems
- One of the major problems facing corporations
today is how to integrate all the different
communication networks and channels into a
coherent system that enables information to flow from one part of the corporation to another
and from one system to another

Client/Server Computing
- Client/server computing: a distributed computing model in which some of the processing
power is located within small, inexpensive client computers and resides literally on desktops
or laptops or in handheld devices
- The server sets rules of communication for network and provides every client with an
address so others can find it on the network
- These clients are linked to one another through a network that is controlled by a network
that is controlled by a network server computer
- Client/server computing has largely replaced centralized mainframe computing
- The internet is the largest implementation of client/server computing
Packet Switching
- Packet switching: a method of slicing digital messages into parcels called packets, sending
the packets along different communication paths as they become available, and then
reassembling the packets once they arrive at their destinations
- Packets include data for checking transmission errors
- Prior to the development of packet switching, computer networks used leased, dedicated
telephone circuits to communicate with other computers in remote locations
- In circuit-switched networks (older), such as the telephone system, a complete point-to-
point circuit is assembled, and then communication can proceed

TCP/IP & Connectivity

- In a typical telecommunications network, diverse hardware and software components need
to work together to transmit information
 - Different components in a network communicate with each other by adhering to a
common set of rules called protocols
- Protocols: a set of rules and procedures governing
transmission of information between two points in a
network
- Transmission control protocol/Internet protocol (TCP/IP):
a worldwide standard developed during the early 1970s
to support DARPA efforts to help scientists transmit data
among different types of computers over long distances
- TCP/IP uses a suite of protocols, the main ones being
TCP and IP
- TCP refers to the Transmission Control Protocol,
which handles the movement of data between
computers
- TCP establishes a connection between the
computers, sequences the transfer of packets,
and acknowledges the packets sent
- IP refers to the Internet Protocol (IP), which is
responsible for the delivery of packets and includes
the disassembling and reassembling of packets
during transmission
- Application: enables client application programs to
access the other layers and defines the protocols that
applications use to exchange data
- One of these application protocols is the Hypertext Transfer Protocol (HTTP), which is
used to transfer web page files
- Transport: responsible for providing the application layer with communication and packet
services
- This layer includes TCP and other protocols
- Internet: responsible for addressing, routing, and packaging data packets called IP
datagrams
- This layer includes IP
- Network: responsible for placing packets on and receiving them from the network medium,
which could be any network technology

Communications Networks
- There are two ways to communicate a message in a network: an analog signal or a digital
signal
- An analog signal is represented by a continuous waveform that passes through a
communications medium and has been used for audio communication
- Common devices are the telephone handset, a computer speaker, or an iPhone speaker
- A digital signal is a discrete, binary waveform rather than a continuous waveform
- Digital signals communicate information as strings of two discrete states: 1 bits and 0 bits,
which are represented as on-off electrical pulses
- Computers use digital signals and require a modem to convert these digital signals into
analog signals that can be sent over cable lines or wireless media
- Modem: stands for modulator-demodulator
 - Cable modems connect your computer to the Internet by using a cable network
- DSL modems connect your computer to the Internet using a telephone company’s
landline network
- Wireless modems perform the same function as traditional modems, connecting your
computer to a wireless network

Types of Networks
- Local area network (LAN): designed to connect personal computers and other digital devices
within a half-mile or 500-meter radius
- LANs typically connect a few computers in a small office or all the computers in one building
- LANs are also used to link to long-distance wide area networks (WANS)
- Ethernet is the dominant LAN standard at the physical network level, specify- ing the
physical medium to carry signals between computers, access control rules, and a
standardized set of bits that carry data over the system
- Alternatively, LANs may use a peer-to-peer architecture
- A peer to peer network treats all processors equally and is used primarily in small
networks with ten or fewer users
- Wide area networks (WANs): span broad geographical distances-regions, states, continents,
or an entire globe
- The most universal and powerful WAN is the Internet
- Metropolitan area network (MAN): a network that spans a metropolitan area, usually a city
and its major suburbs
- Its geographic scope falls between a WAN and a LAN

Transmission Media & Transmission Speed

- Networks use different kinds of physical transmission media, including twisted pair wire,
coaxial cable, fibre-optic cable, and media for wireless transmission
- The total amount of digital information that can be transmitted through any
telecommunications medium is measured in bits per second (bps)
 - One signal change, or cycle, is required to transmit one or several bits; therefore, the
transmission capacity of each type of telecommunications medium is a function of its
frequency
- The number of cycles per second that can be sent through that medium is measured in
hertz, one hertz is equal to one cycle of the medium
- The range of frequencies that can be accommodated on a particular telecommunications
channel is called its bandwidth
- The bandwidth is the difference between the highest and lowest frequencies that can be
accommodated on a single channel

What is the Internet?

- Internet: the world’s largest most extensive public communication system
- Largest implementation of client/server computing and internetworking, linking millions of
individual networks all over the world
- Internet service provider (ISP): a commercial organization with a permanent connection to
the Internet that sells temporary connections to retail subscribers
- This is how most homes and small
businesses connect to the Internet
- Digital subscriber line (DSL): technologies that
operate over existing telephone lines to carry
voice, data, and video at transmission rates
ranging from 385 Kbps to over 100 Mbps,
depending on usage patterns and distance
- Cable internet connections provided by cable
television vendors use digital cable coaxial lines
to deliver high-speed internet access to homes
and businesses
- They provide high-speed access to the
internet between 20 and 100 mbps
- T1 and t3 are international telephone standards
for digital communication
- T1 lines offer guaranteed delivery at 1.54 mbps
- T3 lines offer delivery at 45 mbps
Internet Addressing & Architecture
- Each device on the internet is assigned an
internet protocol (IP) address, which is a 32 bit
number
- The domain name system (DNS) converts IP
addresses to domain names and puts them on a
hierarchical structure

Internet Architecture & Governance

- Network service providers own trunk lines (high-
speed backbone networks)
- Regional telephone and cable TV companies
provide regional and local access
- Professional organizations and government
bodies establish internet standards
- IAB
- ICANN
- W3C
The Web
- Hypertext:
- Hypertext Markup Language (HTML)
- Hypertext Transfer Protocol (HTTP)
- Uniform resource locator (URL)
- Web servers: software for locating and managing web pages
- Mobile search accounts for 50% of all searches in 2016
- Search engine marketing is a major source of internet advertising revenue
- Search engine optimization: adjusts web sites and traffic to improve rankings in search
engine results

Internet Services & Communication Tools

- Email
- Chatting and instant messaging
- Newsgroups
- Telnet
- File Transfer Protocol (FTP)
- World Wide Web
- Voice over IP (VoIP): digital voice
communication using IP
- Unified communications:
communications systems that
integrate voice, data, e-mail,
conferencing
- Virtual private network (VPN): secure,
encrypted, private network run over
internet

Web 2.0 & Web 3.0

- Web 2.0:
- Enables collaboration, sharing information,
and creating new services online
- Features include: interactivity; real-time
user control; social participation; user-
generated content
- Web 3.0:
- More tools to make sense of trillions of
pages on the internet
- Persuasive web
- Internet of things
- Internet of people
Principle Technologies & Standards for
Wireless Networking
- Wireless devices
- Cellular systems
- Cellular network standards and generations
- Mobile wireless standards for Web access
- Wireless computer networks and internet access
- Bluetooth
- Useful for creating small personal area networks (PANs)
- Can link up to eight devices within a 10-meter area
- Wi-fi and wireless internet access:
- Hotspots
- WiMax
Wireless Sensor Networks (WSNs)
- WSNs: networks of hundreds or thousands of
interconnected wireless devices
- Used to monitor building security, detect hazardous
substances in air, monitor environmental changes,
traffic, or military activity
- Devices have built-in processing, storage, and radio
frequency sensors and antennas
- Require low power, long-lasting batteries and ability
to endure in the field without maintenance
- Major sources of “big data” and fueling “internet of
things”

Radio Frequency Identification (RFID)

- RFID uses tiny tags with microchips containing data about an item and location
- Tag antennas transmit radio signals over short distances to special RFID reader
- Common uses include automated toll-collection and tracking goods in a supply chain
- Reduction in the cost of tags make RFID viable for many firms
ITM100
Chapter Ten
E-commerce, Digital Markets, & Digital Goods

E-commerce Today
- E-commerce: refers to the use of the
internet and the web to transact business
- E-commerce is about digitally enabled
commercial transactions between and
among organizations and individuals
- E-commerce began in 1995 and grew
exponentially
- E-commerce stays stable even in a
recession
- New e-commerce includes social, mobile,
and local changes
- E-commerce has transferred from
desktop to smartphone

The Growth of E-Commerce

- E-commerce revenues grew 15% to 25% a
year until the recession of 2008-2009, when
they slowed measurably to around 3% in
2009
- E-commerce began growing again after 2009
at more than 10%
- In 2016, e-commerce revenues grew at an
estimated 15% annually

Challenged for E-Commerce

- Three challenged for the e-commerce
business model includes:
- 1. Diminishing returns of the “network
effects” model
- 2. Low barriers to entry
- 3. Dependence on someone else’s platform
Unique Features of E-Commerce
- Ubiquity: e-commerce is available
everywhere all the time
- Marketspace: a marketplace
extended beyond traditional
boundaries and removed from a
temporal and geographic location
- Transaction costs: the costs of
participating in a market
- Global reach: the technology reaches
national boundaries around the earth
- Universal standards: there is one set
of technology standards, namely
internet standards
- Richness: video, audio, and text
 messages are possible
- Interactivity: the technology works through interaction with its user
- Information Density: the technology reduces information costs and raises quality
- Personalization: personalization of marketing messages and customization of products and
services are based on individual characteristics
- Social technology: the technology supports content generation and social networking
Key Concepts in E-Commerce
- Information asymmetry: when one party in a
transaction has more information that is
important for the transaction than the other
party
- The internet reduces information asymmetry
- Costs reduced include:
- Menu costs: merchants’ cost of chaining
prices
- Search costs: the effort to find suitable
products
- Transaction costs: the cost of participating
in a market
- The internet results in greater price discrimination and the ability to change prices
dynamically based on marketing conditions
- Dynamic pricing: when the price of a product varies depending on the demand
characteristics of the customer or the supply situation of the seller
- Disintermediation: the removal of organizations or business process layers responsible for
intermediary steps in a value chain
- Enabled by the internet
Digital Goods
- Digital goods: goods that can be delivered over a digital network
- In general, for digital goods, the marginal cost of producing another unit Is about zero
- The cost of producing the original first unit is nearly the total cost of the product because
there are few other costs off inventory and distribution
- Costs of delivery over the Internet are low, marketing costs often remain the same, and
pricing can be highly variable

Types of E-Commerce
- Business to consumer (B2C): retailing of products and services directly to individual
customers
- Business to business (B2B): sales of goods and services to other businesses
- Consumer to consumer (C2C): consumers selling directly to consumers
- Mobile commerce: the use of handheld wireless devices for purchasing goods and services
from any location

E-Commerce Business Models

- Business model: describes the method of doing business by which a company generates
revenue
- E-tailer: sells physical products directly to consumers or to individual businesses
- Transaction broker: saves users money and time by processing only sales transactions and
generating a fee each time a transaction occurs
- Market creator: provides a digital environment where buyers and sellers can meet, search for
products, display products, and establish prices for those products; can serve consumers or
 B2B e-commerce, generating revenue
from transaction fees
- Content provider: creates revenue by
providing digital content, such as news,
music, photos, or video over the web
- Community provider: provides an online
meeting place where people with similar
interests can communicate and find
useful information
- Portal: provides initial point of entry to
the web along with specialized content
and other services
- Service provider: provides applications
such as photo sharing, video sharing,
and user-generated content as services;
provides other services such as online data storage and backup

E-Commerce Revenue Models

- Advertising: fees from advertisers in
exchange for advertisements
- Subscription: fees from subscribers in
exchange to access to content or
services
- Freemium: firms offer basic services or
content for free and charge a premium
for advanced or special features
- Transaction Fee: fees for enabling or
executing a transaction
- Sales: sales of goods, information, or
services
- Affiliate: fees for business referrals
How Has E-Commerce Transformed
Marketing?
- Internet provides new ways to identify
and communicate with customers
- Long-tail marketing: where marketers
find potential customers inexpensively
for products where the demand is low
- Behavioural targeting: tracking online
behaviour of individuals through clicking
behaviour
- Programmatic advertising: use of
software to purchase digital networking
- Native advertising: involves placing ads
in social network newsfeeds or within
traditional editorial content, such as a
newspaper article
Online Marketing & Advertising Formats Website Personalization

Social E-Commerce & Social Media

Networking
- Social graphs: a mapping of all significant
online social relationships
- Social network marketing:
- Seeks to leverage individuals’ influence over
others
- Targeting a social network of people sharing
interests and advice
- Social shopping sites allow for shopping ideas
to be swapped with friends
- Wisdom or crowds/crowdsourcing: large
numbers of people can make better decisions
about topics and products than a single person

How Has E-Commerce Affected B2B Transactions?

- U.S. B2B trade in 2020 estimated at
about $14.5 trillion
- There are a variety of internet-enabled
technologies used in B2B:
- Electronic data interchange (EDI): a
computer to computer exchange of
standard transactions such as invoices
and purchase orders
- Major industries have EDI standards
that define structure and information
fields of electronic documents
- More companies are moving toward
web-enabled private networks which allow them to link to a wider variety of firms than
EDI allows
- Private industrial networks
- Net marketplaces
- Exchanges
New Ways of B2B Buying & Selling
- Private industrial networks: consist of a large firm using
a secure website to link to its suppliers and other key
business partners
- The buy owns the network, and it permits the firm
and designated suppliers, distributors, and other
business partners to share product design and
development, marketing, production scheduling,
inventory management, and unstructured
communication, including graphics and email
- Another term for a private industrial network is a
private exchange
- Net marketplaces: provide a single, digital marketplace
based on Internet technology for many buyers and
sellers
- These are industry owned or operate as independent
intermediaries between buyers and sellers
- Net marketplaces generate revenue from purchase
and sale transactions and other services provided to
clients
- Participants in net marketplaces can establish prices
through online negotiations, auctions, or requests
for quotations, or they can use fixed prices
- Net marketplaces may focus on direct or indirect
goods
- Direct goods: goods used in a production process
- Indirect goods: all other goods not directly
involved in the production process
- Net marketplaces may be vertical or horizontal
marketplaces
- Exchanges: independently owned third-party net
marketplaces that connect thousands of suppliers and
buyers for spot purchasing

The Importance of M-Commerce

- In 2020, m-commerce compose 45% of all e-commerce
- M-commerce is the fastest growing form of e-commerce
- The main areas of growth include:
- Mass market retailing
- Sales of digital content
- In-app sales to mobile devices
Services & Applications
- Location-based services: include geosocial,
geoadvertising, and geoinformation services
- 74% of smartphone owners use location-based
services
- Geosocial service: a service that tells you where
your friends are meeting
- Geoadvertising service: can tell you where to find
the nearest restaurant or shop
- Geoinformation service: can tell you the price of a
house you are looking at
Issues That Must be Addressed when Building an
E-Commerce Presence
- The most important management challenges
include developing a clear understanding of
business objectives and knowing how to choose
the right technology to achieve those objectives
- Developing an e-commerce presence map in order
to consider the platforms and activities associated
with each presence
- Developing a timeline and setting milestones by
breaking the project in discrete phases
ITM100
Chapter Eight
Securing Information Systems

System Security
- Security: refers to the policies, procedures, and technical measures used to prevent
unauthorized access, alteration, theft, or physical damage to information systems
- Controls: methods, policies, and organizational procedures that ensure the safety of the
organization’s assets, the accuracy and reliability of its records, and operational adherence
to management standards
- Information systems are mission critical for many organizations
- Failed computer systems can led to significant or total loss of business function
- Information systems are very vulnerable, they contain confidential personal and financial
data, trade secrets, new products, and strategies
- Without proper security measures, these systems would be next to impossible to use and
benefit from
- A security breach may cut into a firm’s market value almost immediately
- Inadequate security also brings forth issues of liability

Why Systems are Vulnerable

- Hardware problems:
- Breakdowns, configuration errors, damage from improper use or crime
- Software problems:
- Programming errors, installation errors, unauthorized changes
- Physical damage to infrastructure:
- Use of networks/computers outside of firm’s control

Software Vulnerability
- Software can contain flaws that
create security vulnerabilities,
these can include:
- Bugs (program code defects)
- Zero defects cannot be
achieved because complete
testing is not possible with
large programs
- Flaws can open networks to
intruders, e.g. buffer overflow
defect that could cause a
system to crash and leave the
user with heightened privileges
- Zero-day vulnerabilities: holes in the software unknown to the creator
Computer Crime
- Computer crime: violation of criminal law that involves a knowledge of technology for
perpetration, investigation, or prosecution
- Computer as a target of crime:
- Breaching confidentiality of protected computerized data
- Accessing a computer sustem without authority
- Computer as an instrument of crime:
- Theft of trade secrets
- Using e-mail for threats or harassment
Internet Vulnerabilities
- Large public networks, such as the internet, are more vulnerable than internal networks
because they are virtually open to anyone
- Local area networks can be easily penetrated by outsiders armed with laptops, wireless
cards, external antennae, and hacking software
- Network communication is intercepted in an attempt to obtain key data
- Size of internet means abuses can have wide impact
- Use of fixed internet addresses creates a fixed target for hackers
- Unencrypted VOIP

Wireless Security Challenges

- Radio frequency bands are easy to scan
- SSIDS (service set identifiers)
- Identify access points, broadcast multiple times, can be identified by sniffer programs
- War driving: when eavesdroppers drive by buildings or park outside and try to intercept
wireless network traffic
- Once the access point is breached, intruder can gain access to networked drives and files

Malicious Software
- Malicious software is commonly known as malware, which is a software that brings harm to
a computer
- Computer viruses:
- Rogue software programs that attempt to bypass appropriate authorization and/or
perform unauthorized functions
- Attach to other programs in order to be executed ,usually without user knowledge or
permission
- Copy themselves from one computer to another sometimes through email attachments,
stealing data or files, permitting eavesdropping access, or destroying data
- Worms:
- Worms: programs that copy themselves from one computer to another over networks
- Trojan horse:
- Trojan horse: a software program that appears to be benign, but then does something
unexpected
- Often transports a virus into a computer system
- SQL injection attacks
- Hackers submit data to web forms that sends rogue SQL query to database to perform
malicious acts
- Spyware
- Key loggers
- Can redirect search request and slow computer performance by taking up memory

Computer Crime
- Hackers: individuals who attempt to gain unauthorized access to a computer system
- Cracker: a hacker with criminal intent
- Click fraud: occurs when an individual or computer program fraudulently clicks an online ad
without any intention of learning more about the advertiser or making a purchase
- Identity theft: a crime in which the imposter obtains key pieces of personal information
- Phishing: setting up fake web sites or sending email messages that look legitimate, and
using them to ask for confidential data
- Pharming: redirecting users to a bogus web site
- Back door: unauthorized access to anyone who knows it exists
- Cyberterrorism and cyberwarfare: exploitation of systems by terrorists
- Spoofing: masquerading as someone else, or redirecting a web link to an unintended
address
- Sniffing: an eavesdropping program that monitors information travelling over a network
- Enables hackers to steal proprietary information such as e-mail, company files, etc
- DoS: hackers flood a server with false communications in order to crash the system
- Distributed DoS: uses numerous computers to launch a DoS
- Botnets: deliver 90% of work spam and 80% of world malware
Internal Threats: Employees
- Security threats often originate inside an organization
- Social engineering: tricking employees into revealing their passwords by pretending to be
legitimate members of the company in need of information
- Both end users and information systems specialists are sources of risk
Security & Controls
- Security: policies, procedures, and technical measures used to prevent unauthorized access,
alteration, theft, or physical damage to information systems
- Security measures: methods, policies, and organizational procedures that ensure safety of
organization’s assets; accuracy and reliability of its
accounting records; and operational adherence to
management standards

Information Systems Controls

- General controls:
- Govern design, security, and use of computer
programs and security of data files in general
throughout organization
- Software controls, hardware controls, computer
operations controls, data security controls, system
development controls, administrative controls
- Application controls:
- Controls unique to each computerized application
- Input controls, processing controls, output
controls

Tools & Technologies for Safeguarding

Information Systems
- Software patches: small pieces of software to
repair flaws
- Exploits often created faster than patches
can be released and implemented
- Identity management software: automates
keeping track of all users and privileges
- Authenticates users, protecting identities,
controlling access
- Authentication: password systems, tones,
smart cards, biometric authentication, two-
factor authentication
- Smart cards: a card with an embedded
memory chip used for identification
- Bioemetric authentication: human
 characteristics such as fingerprints, retina, or voice patterns
- Firewall: combination of hardware and software that prevents unauthorized users from
accessing private networks
- Intrusion detection system: monitors hot spots on corporate networks to detect and deter
intruders
- Antivirus and anti spyware software: checks computers for presence of malware and can
often eliminate it as well
- Requires continual updating
Cryptography
- Cryptography: the field of study related to encoded information
- Encryption: the process of converting plaintext into cipher text
- Decryption: the process of converting cipher text to plaintext
- Cipher: an algorithm used to encrypt and decrypt text
- Key: the set of parameters that guide a cipher
- Public-key cryptography: an approach in which each user has two related keys, one public
and one private
- One’s public key is distributed freely
- A person encrypts an outgoing message, using the receiver’s public key
- Only the receiver’s private key can decrypt the message
Securing Wireless Networks
- WEP Security
- Static encryption keys are relatively easy to crack
- Improved if used in conjunction with VPN
- WPA2 specification
- Replaces WEP with stronger standards
- Continually changing, longer encryption keys
Security in the Cloud
- Responsibility for security resides with company owning the data
- Firms must ensure providers provide adequate protectionL
- Where data are stored
- Meeting corporate requirements, legal privacy laws
- Segregation of data from other clients
- Audits and security certifications
- Service level agreements (SLAs)
Risk Assessment
- Determines the level of risk to firm if specific activity or process is not properly controlled
- Types of threat
- Probability of occurrence during year
- Potential losses, value of threat
- Expected annual loss
- Goal is to minimize vulnerability to threats that put a system at the most risk

Security Policy
- Ranks information risks, identifies acceptable security goals, and identifies mechanisms for
achieving these goals
- Drives other policies, including the AUP (acceptable use policy)
- AUP: defines acceptable uses of firm’s information resources and computing equipment
- Identify management, including valid users and controlling the access they have
Disaster Recovery Planning & Business Continuity Planning
- Disaster recovery planning: devises plans for restoration of disrupted services
- Business continuity planning: focuses on restoring business operations after disaster
- Both types of plans are needed to identify the firm’s most critical systems
- Business impact analysis to determine impact of an outage
- Management must determine which
systems should be restored first

The Role of Auditing

- Information systems audit: examines firm’s
overall security environment as well as
controls governing individual information
systems
- Security audits: review technologies,
procedures, documentation, training, and
personnel
- May even simulate disaster to test
responses
- List and rank control weaknesses and the
probability of occurrence
- Assess financial and organizational impact of
each threat
ITM100
Chapter Eleven
Emerging Technologies & AI

Hardware Platform Trends

- The mobile digital platform
- Consumerization of IT and BYOD
- Virtualization
- Cloud computing
- Green computing
- Quantum computing
The Mobile Digital Platform
- The mobile digital platform includes:
- Smartphones
- Netbooks
- Tablet computers
- E-book readers
- Wearable devices
- Include fitness, wellness, and healthcare
- Fashion & military
Consumerization of IT and BYOD
- Consumerization: technology emerges in the consumer market and then spreads into
business organizations
- BYOD: forces businesses and IT department to rethink how IT equipment and services are
acquired and managed

Virtualization
- Virtualization presents computing resources so that
they can be accessed in ways that are not restricted
by configuration
- Allows single physical resource to act as multiple
resources
- Reduces hardware and power expenditures
- Facilitates hardware centralization
- Software-defined storage (SDS)
Cloud Computing
- Off-load peak demand for computing power to
remote, large-scale data processing centres
- Pay only for the computing power they use, as with an electrical utility
- Excellent for firms with spiked demand curves caused by seasonal variations in consumer
demand
- Saves firms from purchasing excessive levels of infrastructure
- Data permanently stored in remote servers, accessed and updated over the Internet by
users
- A cloud can be public or private
- A public cloud is owned and maintained by a service provider
- A private cloud is operated only for an organization
- Concerns with cloud computing include:
- Security
- Availability
 - Users become dependant on the cloud provider
Cloud Computing Services
- Infrastructure as a service (IaaS)
- Customers use processing, storage, and networking
resources to run their information systems
- They pay for only the computing capacity they use
- Platform as a service (PaaS)
- Customers use infrastructure and programming tools
to develop their own applications
- Software as a service (SaaS)
- Customers use software hosted on a vendor’s cloud
Green Computing
- Practices and technologies for manufacturing, using, and disposing of computing and
networking hardware
- Reducing power consumption is a high priority
- Data centres use as much energy as the output of 30 nuclear power plants
Quantum Computing
- Uses quantum physics to represent and operate on data
- This results in dramatic increases in computing speed
- While conventional computers handle bits of data either a 0 or 1 but not both, quantum
computing can process bits as 0,1, or both simultaneously
- This allows for business and scientific problems to be solved millions of times faster
Software Platform Trends
- Open source software
- Software for the web: Java, HTML, HTML5
- Web services and service-oriented architecture
- Software outsourcing and cloud services
Open-Source Software
- Open source software: software that is free and can be modified by users
- Developed and maintained by a worldwide network of programmers and designers under the
management of user communities
- Examples include Linux, OpenOffice, Firefox, and Apache web server
Software for the Web
- Java: one of the most prominent OO languages, both for PC and mobile environments
- Java Virtual Machine: used to convert Java code to the native language of a computer
- Python: used for building cloud computing applications
- Objective-C: predecessor to Swift
- Swift: one of the most popular mobile app languages for iOS
- HTML: the language used to create or build a web page
- Markup Language: a language that uses tags to annotate the information in a document
- Tag: the syntactic element in a markup language that annotate the information in a document
Apps & Mashups
- Apps: small pieces of software that run on the internet, your computer, or on your smart
phone
- Generally delivered over the internet
- Mashups: combinations of two or more online applications, such as combining mapping
software with local content

Web Services & Service-Oriented Architecture

- Service-Oriented Architecture (SOA): set of self-contained services that communicate with
each other to create a working software application
- Software developers reuse these services in other combinations to assemble other
applications as needed
- Web services: software components that exchange information using web standards and
languages
- Extensive Markup Language (XML): a language that allows the user to describe the
content of a document
- Tagging allows computers to process data automatically
Software Outsourcing & Cloud Services
- There are thee external sources for software:
- 1. Software packages and enterprise software
- Prewritten commercially available set of software
- 2. Software outsourcing
- 3. Cloud-based software services and tools
- salesforce.com
- Service Level Agreements (SLAs): formal agreement with service providers
Artificial Intelligence
- Grand vision: computer hardware and software systems that are as “smart” as humans
- Realistic vision: systems that take data inputs, process them, produce outputs, and that can
perform many complex tasks that would be difficult or impossible for humans to perform
- Examples include:
- Recognizing millions of faces in seconds
- Interpret millions of CT scans in minutes
- Analyze millions of financial records
- Detect patterns in very large Big Data databases
- Improve their performance over time (“learn”)
- Navigate a car in certain limited conditions
- Respond to questions from humans (natural language); speech activated assistants like
Siri, Alexa, and Cortana
- Major types of AI include:
- Expert systems
- Machine learning
- Neural networks and deep learning networks
- Computer vision
- Robotics
Intelligent Systems
- Expert systems: a software system based on the knowledge
of human experts; it is a:
- Rule based system: a software system based on a set of if-
then rules
- Inference engine: the software that processes rules to draw
conclusions
- an intelligence technique for capturing tacit knowledge in a
very specific and limited domain of human expertise
- Intelligent systems capture the knowledge
of skilled employees in the form of a set of
rules in a software system that can be
used by others in the organization
- Enterprise-wide knowledge management
systems: general-purpose firmware efforts
to collect, store, distribute, and apply
digital content and knowledge
- Knowledge based system: software that
uses a specific set of information, from
which it extracts and processes particular
pieces
- Knowledge work systems (KWS):
specialized systems built for engineers, scientists, and other knowledge workers charged
with discovering and creating new knowledge for a company

Machine Learning
- Machine learning: how computer programs improve performance without explicit
programming, it is accomplished by neural networks, deep learning networks, and genetic
algorithms, with the main focus on finding patterns in data, and classifying data inputs into
known and unknown outputs
- Recognizing patterns
- Experience
- Prior learnings (database)
- Supervised vs unsupervised learning
- Supervised learning: in which the system is trained by providing specific examples of
desired inputs and outputs identified by humans in advance
- Unsupervised learning: the same procedures are followed as in supervised learning but
humans do not feed the system samples
- The system is asked to process the development database and report whatever
patterns it finds
- Contemporary examples of machine learning include google searches, and recommender
systems on Netflix and Amazon

Neural Networks
- Neural networks: find patterns and
relationships in massive amounts of
data too complicated for humans to
analyze
- Neural networks learn patterns by
searching for relationships, building
models, and correcting over and
over again
- Humans train the network by
feeding it data inputs for which outputs
are known, to help the neural network
learn solutions by example from human
experts
- Neural networks are used in medicine,
science, and businesses for problems
in pattern classification, prediction,
financial analysis, and control and
optimization
Artificial Neural Networks
- The effective weight of the element is the sum of the weights multiplied by their respective
input values
v1 * w1 + v2 * w2 + v3 * w3
- Each element has a numeric threshold value
- If the effective weight exceeds the threshold, the unit produces an output value of 1, if it
does not exceed the threshold, it produces an output value of 0

Natural Language Processing

- Natural language processing makes it possible for a computer to understand and analyze
natural language-language that humans beings instinctively use, not language specially
formatted to be understood by computers
- NLP algorithms are typically based on machine learning, including deep learning, which
can learn how to identify a speakers’ intent from many examples
- Examples include google translate, call centre interactions, digital assistances, and spam
filtering systems

Computer Vision Systems

- Computer vision systems: deal with how computers can emulate the human visual system to
view and extract information from real-world images
- Such systems incorporate image processing, pattern recognition, and image
understanding

Robotics
- Robotics: deals with the design, construction, operation, and use of movable machines that
can substitute for humans along with computer systems for their control, sensory feedback,
and information processing
- Robots cannot substitute entirely for people but are programmed to perform a specific series
of actions automatically
- They are often used in dangerous environments, manufacturing processes, military
operations, and medical procedures

Intelligent Agents
- Intelligent agents are software programs that work in the background without direct human
intervention to carry out specific tasks for an individual user, business process, or software
application
- The agent uses limited built-in or learned knowledge base to accomplish tasks or make
decisions on the user’s behalf such as deleting junk mail, scheduling appointments, etc
- Chatbots: software agents designed to simulate a conversation with one or more human
users via textual or auditory methods
- Agent based modelling applications include:
- Model behaviour of consumers, stock markets, supply chains
ITM100
Chapter Three
Information Systems, Organizations, & Strategy

Porter’s Competitive Forces Model

- Michael Porter’s model provides a general view
of the firm, its competitors, and environment
- Traditional competitors:
- All firms share market space with
competitors who are continuously devising
new products, services, efficiencies, and
switching costs
- New market entrants:
- Some industries have high barriers to entry,
for example, the computer chip business
- New companies have new equipment,
younger workers, but little brand
recognition
- Substitute products and services:
- Customers might switch to substitutes if your prices become too high
- Customers:
- A profitable company depends in large measure on its ability to attract and retain
customers and charge high prices
- The power of customers grows if they can easily switch to a competitor’s products and
services or if they can force a business and its competitors to compete on price alone
in a transparent marketplace where there is little product differentiation
- Suppliers:
- Market power of suppliers when firm cannot raise prices as fast as suppliers
Information System Strategies for Dealing with Competitive Forces
- Low-cost leadership:
- Produce products and services at a lower price than competitors
- Product differentiation:
- Enable new products or services, greatly change customer convenience and experience
- Focus on market niche:
- Use information systems to enable a
focused strategy on a single market
niche; specialize
- Strengthen customer and supplier
intimacy:
- Use information systems to develop
strong ties and loyalty with
customers and suppliers
- Increase switching costs
The Internet’s Impact on Competitive
Advantage
- Transformation or threat to some industries
- Competitive forces still at work, but rivalry more intense
- Universal standards allow new rivals, entrants to market
- New opportunities for building brands and loyal customer bases
Smart Products and the Internet of Things
- Internet of Things (IoT): the growing use of sensors in industrial and consumer products
- Smart products offer new functionality, greater reliability, and more intense use of products
while providing detailed information that can be used to improve both the products and the
customer experience
- They expand opportunities for product and service differentiation
- Smart products increase rivalry among firms that will either innovate or lose customers to
competitors
- Smart products generally raise switching costs and inhibit new entrants to a market because
existing customers are trapped in the dominant firm’s software environment

The Business Value Chain Model

- The value chain model highlights specific activities in the
business where competitive strategies can be best applied
and where information systems are most likely to have a
strategic impact
- This model identifies specific, critical leverage points where
a firm can use information technology most effectively to
enhance its competitive position
- The value chain model views the firm as a series or chain of
basic activities that add a margin or value to a firm’s
products or services
- Primary activities: most directly related to the production and
distribution of the firm’s products and services, which create
value for the customer
- Primary activities include inbound logistics, operations,
outbound logistics, sales and marketing, and service
- Inbound logistics include receiving and storing materials
for distribution to production
- Operations transforms inputs into finished products
- Outbound logistics entails storing and distributing finished products
- Sales and marketing includes promotion and selling the firm’s products
- The service activity include maintenance and repair of the firm’s goods and services
- Support activities: make the delivery of the primary activities possible and consist of
organization infrastructure, human resources, technology, and procurement
- Benchmarking: involves comparing the efficiency and effectiveness of your business
processes against strict standards and then measuring performance against those
standards
- Industry best practices are usually identified by consulting companies, research
organizations, government agencies, and industry associations
as the most successful solutions or problem-solving method for
consistently and effectively achieving a business objective

The Value Web

- The value web is a networked system that can synchronize the
value chains of business partners within an industry to respond
rapidly to changes in supply an demand
- Looking at the industry value chain encourages you to think
about how to use information systems to link up more efficiently
with your suppliers, strategic partners, and customers
- Strategic advantage derives from your ability to relate your value
chain to the value chains of other partners in the process
- A value web is a collection of independent firms that use
 information technology to coordinate their value chains to produce a product or service for a
market collectively
- It is more customer driven and operates in a less linear fashion than the traditional value
chain

Synergies
- The idea of synergies is that when the output of some units can be used as inputs to other
units or two organizations pool markets and expertise, these relationships lower costs and
generate profits
- Examples include the merge of Bank of NY and JP Morgan Chase
Enhancing Core Competencies
- Core competency: an activity for which a firm is a world-class leader
- Any information system that encourages the sharing of knowledge across business units
enhances competency
- Such systems might encourage or enhance existing competencies and help employees
become aware of new external knowledge; such systems might also help a business
leverage existing competencies to existing markets

Network-Based Strategies
- Take advantage of the firm’s abilities to network with one another
- Include the use of:
- Network economics
- Virtual company model
- Business ecosystems
Network Economics
- Marginal cost of adding new participant almost zero, with much greater marginal gain
- Value of community grows with size
- Value of software grows as installed customer use grows
- Compare to traditional economics and law of diminishing returns
Virtual Company Model
- A virtual company uses networks to ally with other companies
- Creates and distributes products without being limited by traditional organizational
boundaries or physical locations

Business Ecosystems & Platforms

- Business ecosystem: firms that participate in industry
sets-collections of industries that provide related
service and products that deliver value to the
customer
- In the ecosystem model, multiple industries work
together to deliver value to the customer
- Platforms include Microsoft and Facebook
- Individual firms can consider how IT will help them
become profitable niche players in larger ecosystems

Challenges Posed by Strategic Information Systems

- Sustaining competitive advantage:
- Competitors can retaliate and copy strategic systems
- Systems may become tools for survival
- Aligning IT with business objectives
ITM 100
Chapter Four
Ethical & Social Issues in Information Systems

The Dark Side of Big Data

- Technology can function as a double-edged
sword, acting as a source of many benefits and
as the source of new opportunities for invading
privacy and causing harm
- Solutions include:
- Developing big data strategies
- Developing privacy policies
- Developing big data predictive models
- Developing big data mining technology
- Developing big data analytics tools and
predictive modelling systems

Ethics & Information Systems

- Ethics: principles of right and wrong that
individuals, acting as free moral agents, use
to make choices to guide their behaviours
- Information systems raise new ethical
questions because they create opportunities
for:
- Intense social change, threatening existing
distributions of power, money, rights, and
obligations
- New kinds of crime
Technology Trends that Raise Ethical Issues
- Computing power doubles every 18 months
- Critical operations are done using
computer systems
- Data storage costs rapidly decline
- Detailed databases on individuals are
easily maintained
- Data analysis advances
- Develop detailed profiles of individual
behaviour
- Networking advances
- Access personal data remotely
- Mobile device growth impact
- Tracking individual cell phones without user
consent

Internet Challenges to Privacy

- Cookies
- Identify browser and track visits to site
- Super cookies (Flash cookies)
- Web beacons (web bugs)
- Tiny graphics embedded in e-mails and web
pages
 - Monitor who is reading e-mail message or visiting site
- Spyware
- Surreptitiously installed on user’s computer
- May transmit user’s keystrokes or display unwanted ads
- Google services and behavioural targeting
- The United States allows businesses to gather transaction information and use this for other
marketing purposes
- Opt-out vs. Opt-in model
- Opt-out: allows collection of personal information unless the consumer requests otherwise
- Opt-in: the consumer must take action to approve collection and use of personal
information

Technical Solutions
- Solutions include:
- E-mail encryption
- Anonymity tools
- Anti-spyware tools
- Overall, technical solutions have failed to protect users from being tracked from one site to
another
- Browser features, including private browsing and do not track options

Other Real-World Ethical Dilemmas

- Using technology to reduce workforce
- Computerized work and questions
- Selling subscriber information to advertisers
- Facebook monitors users and sells information to advertisers and app developers
- Employees using corporate iT for personal use
- Using IT to monitor employees
Advances in Data Analysis Techniques
- Profiling
- Combining sata from multiple sources to create
dossiers of detailed information on individuals
- Nonobvious relationship awareness (NORA)
- Combining data from multiple sources to find
obscure hidden connections that might help
identify criminals or terrorists

Ethics in an Information Society: Basic Concepts

- Responsibility
- Accepting the potential costs, duties, and
obligations for decisions
- Accountability
- Mechanisms for identifying responsible parties
- Liability
- Perits individuals (and firms) to recover damages done to them
- Due process
- Laws are well-known and understood, with an ability to appeal to higher authorities

Ethical Analysis
- Five-step process for ethical analysis:
- 1. Identify and clearly describe the facts
 - 2. Define the conflict or dilemma and identify the higher-order values involved
- 3. Identify the stakeholders
- 4. Identify the options that you can reasonably take
- 5. Identify the potential consequences of your options

Candidate Ethical Principles

- Golden Rule
- Do unto others as you would have them do unto you
- Emanuel Kant’s Categorical Imperative
- If an action is not right for everyone to take, it is not right for anyone
- Descartes’ Rule of Change
- If an action cannot be taken repeatedly, it is not right to take at all
- Utilitarian Principle
- Take the action that achieves the higher or greater value
- Risk Aversion Principle
- Take the action that produces the least harm or potential cost
- Ethical “No Free Lunch” Rule
- Assume that virtually all tangible and intangible objects are owned by someone unless
there is a specific declaration otherwise

Examples Applying Ethical Principles

- “I’m against high level officials being able to park in no-parking zones. Why can’t I do it and
they can?”
- Kant’s Categorical Imperative: (not right for me, not right for them)
- “I am careful when extending the deadlines of assignments. Someone can rightfully ask,
‘ you di dit for this assignment, why not do it for that?’ The problem is that I can’t extend the
last assignment; the final exam.”
- Descartes’ rule-of-change
- “Allowing one group to present for more than 10 minutes even if something goes wrong is
tricky. If you do it for one group, you have to do it for all.”
- Kant’s Categorical Imperative
- “To get the same grade as your group for group assignments, you must contribute to group
work.”
- No-free lunch
Information Rights: Privacy & Freedom in the Internet Age
- Privacy
- Claim of individuals to be left alone, free from surveillance or interference from other
individuals, organizations, or state;
- Claim to be able to control information about yourself
- Fair Information Practices
- Set of principles governing the collection and use of information
- Basis of most U.S. and European privacy laws
- Used to drive changes in privacy legislation
- COPPA
- Parental permission before collecting children information
- Do-Not-Track Online Act of 2011
- To have an opt-in capability
- FTC FIP principles
- Notice/awareness (core principle): web sites must disclose practices before collecting
data
 - Choice/consent (core principle): consumers must be able to choose how information is
used for secondary purposes
- Access/participation: consumers must be able to review and contest accuracy of personal
data
- Security: data collectors must take steps to ensure accuracy, security of personal data
- Enforcement: must be mechanism to enforce FIP principles
European Directive on Data Protection
- Use of data requires informed consent of customer
- Informed consent: consent given with knowledge of all the facts needed to make a
rational decision
- EU member nations cannot transfer personal data to countries without similar privacy
protection
- Stricter enforcements under consideration:
- Right of access
- Right to be forgotten
- Safe harbour framework
- Edward Snowden
Safe Harbour
- A private, self-regulating policy and enforcement mechanism that meets the objectives of
government regulators and legislation but does not involve government regulation or
enforcement
- Businesses would be allowed to use personal data from EU countries if they develop privacy
protection policies that meet EU standards
- Enforcement would occur in the United States (or Canada) using self-policing, regulation,
and government enforcement of fair trade statues

Property Rights: Intellectual Property

- Intellectual property: intangible/tangible property of any kind created by individuals or
corporations
- Three main ways that intellectual property is protected:
- Trade secret: intellectual work or product belonging to business, not in the public domain
- Copyright: statutory grant protecting intellectual property from being copied for the life of
the author, plus 70 years
- Patents: grants creator of invention an exclusive monopoly on ideas behind invention for
20 years
- Patent law grants a monopoly on underlying concepts and ideas of software
- Originality, novelty, invention are key concepts
Challenges to Intellectual Property Rights
- Digital media different from physical media
- Ease of replication
- Ease of transmission (networks, internet)
- Ease of alteration
- Difficulties in establishing uniqueness
- Digital Millennium Copyright Act (DMCA)
- Makes it illegal to circumvent technology-based protections of copyrighted materials
Computer-Related Liability Problems
- If software fails, who is responsible?
 - If seen as part of a machine that injures or harms, software producer and operator may be
liable
- If seen as similar to a book, difficult to hold author/publisher responsible
- If seen as a service, would this be similar to telephone systems not being liable for
transmitted messages?

System Quality: Data Quality & System Errors

- What is an acceptable, technologically feasible level of system quality?
- Flawless software is an economically unfeasible
- Three principle sources of poor system performance:
- Software bugs, errors
- Hardware or facility failures
- Poor input data quality (most common source of business system failure)
Quality of Life: Equity, Access, Boundaries
- Negative social consequences of systems
- Balancing power: center versus periphery
- Rapidity of change: reduced response time to competition
- Maintaining boundaries: family, work, and leisure
- Dependence and vulnerability
- Computer crime and abuse
- Computer crime
- Computer abuse
- Spam
- CAN-SPAM Act of 2003
- Employment
- Trickle-down technology
- Reengineering job loss
- Health risks
- Repetitive stress injury (RSI)
- Carpal tunnel syndrome (CTS)
- Computer vision syndrome (CVS)
- Technostress