Summary with Information technology for management by Turban

Chapter 1 – IT Supports Organizational Performance in Turbulent Business Environments

The focus of the chapter is on the environmental business pressures that are impacting organizational performance, and on the role of Information Technology (IT) as support for organizational activities that counter the environmental pressures. A major role of IT is being an enabler and facilitator of organizational activities, processes, and change for increased performance and competitiveness.

1. Doing Business in the Digital Economy

Digital enterprise refers to an organization that uses computers and information systems (ISs) to perform or support its activities. The digital enterprise uses IT to accomplish one or more of its basic objectives:

• Research and engage customers more effectively

• Boost employee productivity

• Improve operating efficiency

Digital economy refers to an economy based on digital technologies and whose members are better informed and able to communicate because of IT. Refer to Table 1.1 on page 5 for the Major IT Characteristics in the Digital Economy.

Electronic commerce (e-commerce) is the process of buying, selling, transferring, or exchanging products, services, or information via the Internet or other networks.

The underlying infrastructure for digital organizations in and e-commerce is networked commuting, which enables computers and other electronic devices to be connected via telecommunication networks. Examples of Digital Networked Enterprises are available on page 7.

Business Model is a method of doing business by which a company can generate revenue to sustain itself. The model spells out how the company creates or adds value in terms of the goods or services the company produces in the course of its operations. A business model is composed of the following six elements:

• A description of all products and services the business will offer

• A description of the business process required to make and deliver the products and services

• A description of the customers to be served and the company’s relationships with these customers, including what constitutes value from the perspective of the customers

• A list of the resources required and the identification of which ones are available, which will be developed in-house, and which will need to be acquired

• A description of the organization’s supply chain

• A description of the revenues expected and profitability expected

  2. Information Systems and Information Technology

Information System (IS) collects, processes, stores, analyzes, and disseminates information for a specific purpose. It includes inputs, processing, output and control.

Computer-based information system (CBIS) uses computer technology to perform some or all of its intended tasks. The basic components of an IS are hardware, software, data, network, procedures (the set of instructions about how to combine the above components in order to process information and generate the desired output), people.

IT has become the major facilitator of business activities due to its vast capabilities (shown in table 1.2, p. 13). These capabilities support six business objectives: improving productivity, reducing costs, improving decision making, facilitating collaboration, enhancing customer relationships and developing new strategic applications.

3. Business Performance Management, Business Pressures, Organizational Responses, and IT Support

Organizations have to manage their performance and this is usually done in 4 steps which are illustrated in the Business Performance Management Cycle and IT below. The four steps in their totality are called Business Performance Management (BPM).

The performance of a company does not always depend only on it but also on the external environment and therefore companies must not only take traditional actions, such as lowering costs, but also undertake innovative activities, such as changing organization structure or business process, or devise a competitive strategy. These could be referred as critical response activities. Innovative Organizations’ responses to pressure and opportunities are summarized in table 1.3 on page 17.

Green software refers to software products that help companies save energy or comply with Environmental Protection Agency (EPA) requirements.

Ethical issues create pressures or constraints on business operations. Ethics relates to standards of right and wrong, and information ethics relates to standards of right and wrong in information management practices.

4. Strategy for Competitive Advantage and IT Support

Strategy is the component that defines how to attain our mission, goals, and objectives. It specifies the necessary plans, budgets, and resources. Strategy addresses fundamental issues such as the company’s position in its industry, its available resources and options, and future directions

Porter’s competitive forces model has been used to develop strategies for companies to increase their competitive edge. The model recognizes five major forces that could endanger a company’s position in a given industry. Porter’s five forces are:

• Threat of entry of new competitors

• Bargaining power of suppliers

• Bargaining power of customers or buyers

• Threat of substitute products or services

• Rivalry among existing firms in the industry

According to Porter’s value chain model, the activities conducted in any manufacturing organization can be divided in primary and support activities. The former are inbound logistics, operations, outbound logistics, marketing and sales, services. The latter are the firm’s infrastructure, human resource management, technology development, procurement.

A firm’s value chain is part of a large stream of activities, which Porter calls a value system. A value system includes the suppliers that provide the inputs necessary to the firm and their value chains. A value network is a complex set of social and technical resources.

An adaptive enterprise is one that can respond in a timely manner to environmental changes. To become adaptive an organization should:

• Recognize environmental and organizational changes as quickly as they occur, or even before they occur

• Deal with changes properly and correctly

• Not wait for competitors to introduce change

• Have a scalable and appropriate IT architecture

• Develop an innovative culture

Business processes are a collection of activities performed to accomplish a clearly defined goal, with starting and ending points.

A real-time system is an information system that provides fast enough access to information or data so that an appropriate decision can be made, usually before data or situation changes.

Organizational responses are usually taken in reaction to change in the business environment or to competitors’ actions. Sometimes it is better to act proactively and grasp the first-mover advantage. Examples of successful first-movers are eBay, Blogger, Apple Computer.

5. Social Computing and Networking and Virtual Worlds

Social computing is a general term for computing that is concerned with the intersection of social behavior and ISs. Social computing has to do with supporting any social behavior in or through ISs. Blogs, mashups, instant messaging, social network services, wikis, social bookmarking, and other social software and marketplaces are types of social computing. Social computing concentrates on improving collaboration and interaction among people.

Social network is a Web site where people create their own space, or home page, on which they write blogs and wikis, and post pictures, videos, or music, share ideas, and link to other Web locations they find interesting. Social Network Services (SNSs), such as MySpace, allow people to build their home pages for free, and provide basic communication and other support tools to conduct different activities in the social network. These activities are referred as social networking. Enterprise social networks are networks whose primary objective is to facilitate business.

A virtual world is a computer based simulated environment intended for its users to inhibit, and virtual spaces interact via avatars. These avatars are usually depicted as textual, two-dimensional, or three-dimensional graphical representations, although other forms are possible. Using virtual worlds gives companies the opportunity to gauge customer reaction and receive feedback about new products or services.

Social computing is an integration of Web 2.0 technologies. The strategic implementation of Web 2.0 technologies into enterprise’ intranet, extranet, and business processes results in what we call Enterprise 2.0. Enterprise 2.0 includes activities in enterprise social networking and virtual worlds, and is growing exponentially.

Chapter 2 – Information Technologies: Concepts, Types, and IT Support

IT-Performance Model: Information Technology is interrelated to all the following factors which follow up on one another: mission, goals and objectives -> strategy and plans -> monitoring, performance and comparing -> solutions and critical responses

Ways to build upon these factors

Mission goals and objectives: create IT support systems and automate business processes

Strategy and plans: How does IT support people, supply chains and how do we plan for e-commerce?

Monitoring, performance, and comparing: Metrics, dashboards and scorecards and data mining analysis

Solutions and critical responses: use emerging systems, use RFID, use social networking, m-commerce and innovative analysis

Information System(IS): one that collects, processes, stores, analyzes and disseminates data and information for a specific purpose

Application Program: A computer program designed to support a specific task or a business process (such as executing the payroll) or, in some cases, to support another application program.

Departmental Information System: Collection of application programs in a single department (e.g., collection of application programs in the HR area is called the Human Resources Information System)

Information Systems are usually connected by means of electronic networks. These can be wire line or wireless. These systems can connect an entire organization or even multiple organizations.

One of the primary goals of IS’s is to economically process data into information or knowledge.

Data Items: An elementary description of things, events, activities and transactions that are recorded, classified and stored, but not organized to convey any specific meaning. Can be numeric, alphanumeric, figures, sounds or images.

Database: Consists of stored data items organized for retrieval

Information: Data has been organized so that they have meaning and value to the recipient

Knowledge: Consists of data and/or information that have been organized and processed to convey understanding, experience, accumulated learning and expertise as they apply to a current problem or activity.

Organizational Knowledge: Data that is processed to extract critical implications and to reflect past experiences. Has a very high potential value.

Data, information and knowledge can be inputs to an IS and they can also be outputs.

Raw data is processed to information and/or to knowledge. IS’s can be processed to knowledge, but it may generate data as well.

IS’s are made of components that can be assembled in many different configurations resulting in a variety of IS’s and applications. IS can be classified into groups that share similar characteristics.

IS’s are classified by organization levels and by the type of support needed in this section. This represents diversity of systems as well.

The vast majority of organizations still have a traditions hierarchical structure. Thus, IS’s are built according to this hierarchy. Such systems can stand alone, bust they are usually interconnected.

Levels Starting from the Bottom Up

1. Personal and Productivity Systems (Personal Information Management): Small systems built to support many individuals. Popular tools used here are PDA’s, and Excel. These systems are designed to increase our productivity and satisfaction and are abundant in organizations, are inexpensive and have fairly standard capabilities.

2. Transaction Processing Systems: Supports the monitoring, collection, storage, processing and dissemination of the organization’s basic business transactions. It also provides the input data for other IS’s. (e.g. Performance of periodic financial, accounting and other routine business activities facing repetitive information processing tasks.) The IS that supports such processes is called the transaction processing system. The TPS is critical to the success of any organization since it supports core operations. It collects data continuously, frequently on a daily basis or even in real time.

3. Functional and Management Information Systems: A functional system provides periodic reports about operational efficiency, effectiveness and productivity by extracting information from databases and processing it according to the needs of the user. There are 2 types: those that support managers (management information systems) and those that support other employees in the functional areas. MIS is also used for planning, monitoring and control. (4 Examples of Functional/Enterprise Systems p. 45-47 but I didn’t find it to be fundamental)

4. Enterprise Information Systems: Support business processes that are performed by two or more departments. The activities are frequently done in sequence, but some can be conducted simultaneously. Enterprise resource planning enables companies to plan and manage the resources of an entire enterprise.

5. Interorganizational Systems: Connecting 2 or more organizations. Most common are those that connect sellers and buyers. IOS’s enable computers to process large amounts of information that flows between organizations.

6. Global Information Systems: IOS’s that connect companies located in 2 or more countries.

7. Very Large & Special Systems: Large systems often global in nature and include subsystems of the previous levels.

Another way to classify IS’s is according to the type of support they provide, regardless of the functional area.

How do different IS’s relate to each other? Each support system has sufficiently unique characteristics so that it can be classified as a special entity. Moreover, there is information flow among these entities and systems. In many cases, 2 or more support systems can be integrated to form a hybrid system. As the technologies change, the interrelationships and coordination among the different types of systems continue to evolve.

Integrated support systems can provide solutions to complex problems. This integration provides extended functionalities, making these systems more useful.

How does IT support people?

1. Operational Activities: This deals with the day-to-day operations of an organization. They are short-term in nature. These systems are used mostly by supervisors, operators, clerical employees, field employees, etc.

2. Managerial Activities: These are also called tactical activities or decisions. They generally deal with middle-management activities such as short-term planning, organizing and control. They mainly use internal sources of data.

3. Strategic Activities: Deal with situations that may significantly change the manner in which business is done. (e.g. mergers & acquisitions) Made by top management and require elaborate research as well as extensive internal and external communications and collaboration.

The above activities are supported by the people listed below:

1. Executives and Managers: At the top of the triangle. They are few in number and responsible for strategic decisions. Middle managers make tactical decisions and are supported mainly by functional IS’s and MIS in the areas where they work.

2. Knowledge Workers, Clerical Staff and Data Workers: Staff support between top and middle management are called knowledge workers. They create information and knowledge as part of their work and integrate it into the business. Clerical workers support managers at all levels. Among those there are data workers who use, manipulate, or disseminate information. (e.g. bookkeepers and secretaries)

IT is helping find and analyze information, evaluate decision alternatives, communicate and collaborate with employees and business partners and much more. This is done rapidly and inexpensively from anywhere at any time. The specific help that is need and the specific IT support depend on many factors ranging from the managerial level and industry to the country where business is done and the size of the organization as well as the type of situation and the decisions involved.

How does IT support supply chains and business processes?

There are 3 segments inside a company (internal), with suppliers (upstream) and with customers (downstream).

Support of the Internal Supply Chain: Covers all of the functional IS’s. Special software called supply chain management software is available to support segments’ of the chain.

Support of the Upstream Supply Chain: Improving procurement activities and relationship with vendors.

Support of the Downstream Supply Chain: First IT supports customer relationship management activities and secondly IT also supports order taking and shipment to customers.

Managing Supply Chains: Enterprise resource planning software helps in managing both the internal and the external relationships with the business partners. Second is SCM software which helps in decision making related both to internal segments and to their relationship with external segments.

Radio frequency identification (RFID): A technology that uses electronic tags instead of bad codes to identify objects or items. The tags can be attached to or embedded in objects, animal or humans. RFID readers use radio waves to interact with the tags. The radio waves enable the unique identification of the objects, transmission of data and or storage of information about the object.

IT Support of Other Systems

1. Industry-Specific Systems: Systems designed to serve an industry such as banking, retail, transportation, oil, utilities or universities. They can be specific for one or two applications or they can be suits that cover multiple needs.

2. Supporting E-Commerce Business Models: E-auctions, exchanges, e-procurement, or the use of electronic meetings.

3. Supporting Online Search: Searching the internet or even files of one company and to do it in seconds, requires the support of IT hardware, analytical programs and other IT tools.

4. Supporting Social Networking: To accommodate traffic on networking sites such as Facebook and MySpace, an extensive network of services and security protections is needed to accommodate such traffic.

Information Systems Infrastructure, Architecture, and Emerging Computing Environments

Information Infrastructure: Consists of the physical facilities, services and management that supports all shared computing resources in an organization. 5 major components: 1.) computer hardware, 2.) software, 3.) networks and communication facilities, 4.) databases and data workers, 5.) information management personnel

Information Technology Architecture: A plan of the information assets in an organization including the physical design of the building that holds the hardware. It is a guide for current operations and a blueprint for future directions.

Business Architecture: Describes organizational plans, visions, objectives and problems and the information requires to support them.

Web-based Systems: Applications or services that are resident on a server that is accessible using a Web browser and is therefore accessible from anywhere in the world via the Web.

Electronic Markets: A network of interactions and relationships over which information, products, services and payments are exchanged. Where there is one company and either one seller and many buyers or one buyer and many sellers this is a private marketplace. Public marketplaces or exchanges have multiple buyers and sellers.

Web 2.0: A second generation of Internet-based services that let people collaborate and share information online in perceived new ways. It is considered a revolution in the computer industry caused by the move to the Internet and the Web as a platform.

Service-Oriented Architecture (SOA): An architectural concept that defines the use of services to support a variety of business needs. The idea is to reuse and reconnect existing IT assets rather than more time-consuming and costly development of new systems. SOA can lead to many significant benefits:

• reduced integration cost

• improved business/IT alignment

• extension and leveraging of existing IT investments

• faster time to assemble new applications

• lower IT maintenance cost

Web Services: Software systems designed to support machine-to-machine interactions over a network. They are self-contained, self-describing business and consumer modular applications that uses can select and combine through almost any device ranging from computers to mobile phones.

Software-as-a Service (SaaS) Model: Instead of buying and installing expensive packaged enterprise applications, users can access applications over a network with an Internet browser being the only absolute necessity. There is usually no hardware and software to buy since the applications are used over the Internet and paid for through a fixe subscription fee or payable per an actual usage fee.

Utility Computing: Computing that is as available, reliable and secure as electricity. The visions is to have computing resources available on demand from providers around the glove, always on and highly available, secure, efficiently metered, priced on a pay-as-you-use basis, dynamically scaled, self-healing and easy to manage.

Grid Computing: Unused processing capabilities of all computers in a given network can be utilized to create powerful computing capabilities.

Cloud Computing: Internet (Cloud) – based development and use of computer technology. The cloud is a metaphor for the Internet and is an abstraction for the complex infrastructure it conceals. Style of computing where IT-related capabilities are provided as a service allowing users to access technology-enabled services from the Internet without knowledge of, expertise with or control over the technology infrastructure that support them. Everything you do is now web-based instead of being desk top-based and you can access all your programs and documents from any computer that’s connected to the Internet.

Mobile Computing: A computing paradigm designed for mobile employees and others who wish to have a real-time connection from anywhere between a mobile device and other computing environments.

Mobile Commerce (M-Commerce): Commerce such as through wireless devices like mobile phones or PDA’s

Pervasive Computing: A situation in which the computation becomes part of the environment. Computation is embedded in things, not in computers. It improves efficiency in work and living tasks but also enriches the quality of life through art, design and entertainment.

Open Source: Allows easy flow of information and integration in different computing systems.

Virtualization: Separates business applications and data from hardware resources

-Storage Virtualization: Pooling of physical storage from multiple network storage devices into what appears to be a single storage device that is managed from a central console.

-Network Virtualization: Combines the available resources in a network by splitting the network load into manageable parts each of which can be assigned to a particular server on the network

-Hardware Virtualization: Use of software to emulate hardware or a total computer environment other than the one the software is actually running in. A virtual machine allows hardware to run multiple operating system images at once.

Virtualization can increase the flexibility of IT assets while helping to bring new products and services to the market quicker and enabling business continuity in the event of a system failure.

Predictive Analysis Tools: Help determine the probable future outcome for an event or the likelihood of a situation occurring. Also identify relationships and patterns. It uses sophisticated algorithms designed to sift through a data warehouse and identify patterns of behavior.

Innovative Health Care Wireless Predictive System: A remote medical monitoring system can help with early diagnosis of heart failures.

One of the most difficult tasks that enterprise managers need to address is to figure out how IT will look in the future. The Nomura Research Institute (NRI) in Japan shows that sensors will collect vast amounts of information from the Internet and other networks. Intelligent systems will then process the information in complex models though several iterations of improvements. This will provide the best organization strategy for responses to environmental pressures.

Chapter 3 – Managing Data to Improve Business Performance

3.1 Data, Master Data and Document Management

Modern companies possess vast quantities of data that need to be stored, processed and evaluatd. Investing in these activities can lead to higher productivity and cost-effectiveness. Typically, companies either create opportunities to earn more (e.g. through customer relationship management systems) or cut expenses (e.g. inventory management).

A data warehouse is a specialized type of database that aggregates data from various other databases so that they can be scrutinized. Data management is a structured approach for capturing, storing, processing, integrating, distributing, securing and archiving data effectively. There are three principles that illustrate the life cycle of data:

1. The more recent the data, the more valuable they are.

2. 90 percent of the data is not accessed anymore after 90 days.

3. Data needs to be displayed in a meaningful format and context. Data visualization is very important.

Master Data Management (MDM) organizes all data in an organization at the highest level, internally as well as externally. It consolidates data from various sources and thus creates an accurate and consistent stream of data through the whole organization.

Data quality is the measure of the data’s usefulness. It has five dimensions: accuracy, accessability, relevance, timeliness and completeness. In order to make effective and right decisions, managers need all of the five dimensions fulfilled.

Document Management Systems (DMS) consist of hardware and software that manage and archive electronic documents. They help a business to become more efficient and productive in a number of ways. First, they enable the company to access and use a vast amount of information. Second, they can cut labour costs by automating processes. Third, they reduce the time and effort to locate information. Fourth, they minimize the costs of printing, storing and searching for content.

3.2 File Management Systems

A file management system is a method of storing and organizing computer files and the data they contain to make it easy to find and access them. In other words, it is a specialized database for the storage, organization, manipulation, and retrieval of data.

Each record in a database is an entity, which in turn is comprised of certain characterisitcs called attributes. The unique identifier that is linked to each record is called a primary key. There are several ways in which data can be stored in a storage medium (CD, hard drive, usb stick):

1. Sequential (data is stored in order of storage – like on VHS)

2. Random file organization (data is randomly place – like on DVD)

Files systems try to mitigate a number of issues such as

1. Data redundancy (data is duplicated)

2. Data inconsistency (data is asynchronous across departmens)

3. Data isolation

4. Data security

5. Lack of data integrity (invalid data input)

6. Data concurrency (several applications altering the same data at the same time)

3.3 Database Management Systems

There are several kinds of databases. Centralized databases store all files in one physical location. This has been the traditional method of data storage. Recently, however, distributed databases have come in fashion. They distribute the data among several severs. There are two types of distributed databases. First, replicated databases backup the entirety of a database. Second, partitioned databases manage data in a way that each location has a portion of the data.

3.4 Data Warehouses, Data Marts and Data Centers

The main difference between a database and a data warehouse is that databases are designed to store data whereas data warehouses are designed to respond to analysis questions that are critical for a business. The latter are built as online analytical processing systems (OLAP). There are several benefits to that:

1. Maximizing decision-making time

2. Data delivery is more effective and efficient

3. Access to better information

There are several major characteristics of a Data Warehouse:

1. Data are organized by subject.

2. Data are coded in a consistent manner

3. Data are kept for a long time

4. Data are nonvolatile, meaning they are not updated. New data is always just amended.

5. Data are usually set in relation to each other.

6. Warehouse uses a Client/server architecture

7. It is often web-based

8. All departments are integrated.

9. Data are processed in real-time.

Data marts are lower cost data warehouses for a limited number of departments. They usually integrate only on strategic business unit. Data centers are huge physical facilities that combine all servers under one roof and provide an excellent working environment for those computers.

Enterprise content management includes electronic document management, web content management, digital asset management and electronics records management. It helps tp reduce costs, foster collaboration, minimize risk and automate complex processes.

Chapter 6 – E-Business and E-Commerce

Topic: Show how e-business and e-commerce help organizations to sell, buy, collaborate and communicate in order to increase productivity and competitive advantage.

6.1 Overview of E-Business and E-Commerce:

Electronic commerce (EC or e-commerce): The process of buying selling, transferring, serving, or exchanging products, services, or information via computer networks, including internet.

E-business: broader definition of EC, not just buying and selling of goods but also servicing customers, collaborating, conducting e-learning, and conduction electronic transactions within an organization.

Degree of digitalization: The product sold, the process or the delivery agent can be digital (use of electronic) or physical (Traditional commerce)

Brick-and-mortar organizations: are pure physical organizations

Virtual organizations: Pure EC: all dimensions are digital – ie. E-books (Delivery, payment, and transfer are all done online)

Click-and-mortar organization: Partial EC: All other combinations, if there is at least one digital component – Ie. Dell (Order, payment are done online but delivery is physical)

Types of E-commerce transactions:

Business-to-business

Collaborative commerce (c-commerce)

Business-to-consumers (B2C)

Consumer-to-consumer (C2C)

Business-to-Business-to-Consumer (B2B2C)

Consumer-to-Businesses (C2B)

Intrabusiness commerce – business-to-employees

Government-to-citizens, Government-to-government, government-to business

Social Commerce: bringing social elements to e-business site - a trend brought on by Web 2.0 – where companies must be proactive by finding ways to engage customers, build relationships and create communities. Selling and waiting for customers to arrive is not enough.

5 support areas to EC:

People – sellers, buyers, intermediaries, information system specialists, employees, external participants

Public Policy – regulating issues such as privacy protection, taxation

Marketing and Advertising

Support services – content creation and services for payment to order fulfillment

Business partnerships – joint ventures, e-marketplaces, and business partnerships are common in e-commerce specifically within the supply chain

6.2 Major EC Mechanisms:

E-market: virtual marketplace in which sellers and buyers meet and conduct different types of transactions, more efficient than a physical market as it provides more up to date information due to the enhanced technology.

Auctions: electronic auctions generally increase revenues as it broadens the customer base and shortens the time cycle of the auction compared to the traditional auction. The internet provides an efficient infrastructure as It lowers administration costs and involves more parties.

Forward Auctions: Auctions that sellers use as a selling channel to many potential buyers where buyers continuously bid (ie. E-bay). Either customers seek the lowest price (known as liquidate inventory) or seek unique products or services (known as Increasing marketing outreach and efficiency)

Reverse Auctions: There is one buyer, usually an organization, they place a request for quote and suppliers submit their bids electronically and the lowest price wins after being inspected by the engineering and finance departments.

Electronic Bartering: electronically supported exchange of goods and services without monetary transactions

6.3 Business-to-Consumer Applications

Electronic Storefront: extensions of physical stores or new business started to target a niche

Electronic Mall: collection of individual shops under one internet address – provide a one stop shopping place that offers many products and services.

Referral malls: they transfer you to a storefront

Leading online service industries:

Cyberbanking: online banking – inexpensive alternative to branch banking and the opportunity to reach remote customers

Online Securities Trading: faster, cheaper, and the risk on error is small because it eliminates oral communication through telephones with a broker.

The Online Job Market, Travel Services, Real Estate, E-entertainment, and Customization

Phases in the Customer Service Life Cycle:

Phase 1: Requirement – Assist the Customer in determining their needs (By providing information)

Phase 2: Acquisition – Help the customer acquire the product or service (Online order entry, delivery

Phase 3: Ownership – Support the customer on an ongoing basis (FAQs, online technical support)

Phase 4: Retirement – help the client dispose of a service or product (online resale, classified ads)

Issues around e-tailing:

Channel conflict: if it sells directly online a company may have issues with its regular distributors

Conflicts within click-mortar organization: create a conflict within its offline operations (pricing, allocation of resources etc)

Organizing order fulfillment and logistics: shipping small orders to many different buyers

Determining viability and risk of online e-tailers

6.4 Business-to-Business Applications

Sell-side marketplace: Businesses sell their products to other organizations electronically form their own private e-marketplace and/or from a third party site allowing them to increase sales, reduce selling/advertising expenses, increase delivery speed, and reduce administration costs. Suitable for customization

Buy-side marketplace: reverse auction

Group Purchasing: order of many purchasers are aggregated so that they total a larger volume in order to merit sellers attention and more discount

Desktop Purchasing: suppliers catalogs are on buyers servers – mainly non manufacturing items (Indirect)

Public Exchanges:

Vertical exchanges for direct materials: direct materials (Manufacturing inputs) are traded in large quantities in an environment of long-term relations (systematic resourcing)

Vertical exchanges for indirect materials: indirect materials in one industry are purchased on an as-needed basis (called spot sourcing)

Horizontal exchanges: many-to-many e-marketplaces for indirect materials such as office suppliers used by any industry. Prices are fixed or negotiated and quantities are not very large (systematic resources)

Functional exchanges: services such as temporary help or extra space are traded on an as-needed basis (Spot sourcing)

For the vertical exchanges: are usually owned and managed by a group of big players in an industry (consortium). They offer services specifically for their direct community.

6.5 Major Models of E-Business: From E-Government to C2C

Business-to-employees: finding ways to do business with their employees and build a relationship with them and among them. They disseminate information to employees over an intranet.

E-commerce between departments: buying and selling products from one another, company owned dealerships, this allows improvement of the internal supply chain operations

Collaborative commerce (c-commerce): refers to the use of digital technologies that enable companies to collaboratively plan, design, develop, manage, and research products, services and innovative EC applications. These activities differ from selling and buying. Collaborating with a vendor to design a product; communication, information sharing, and collaborative planning done electronically. The benefits are: customer retention, increased revenues, and cost reduction. Conducted between and among supply chain partners

E-government: the use of internet technology and e-commerce to deliver information and public services to citizens, business partners and suppliers of government entities, and people who work in the public sector.

Consumer-to-Consumer (C2C): both buyer and seller are individuals.

6.6 E-Commerce Support Services: Payment and Order Fulfillment:

The four services underlined are support services to E-commerce

Market Research for EC: finding the relationship among consumers, products, marketing methods, and marketers through the increasing use of the internet.

The internet introduced the concept of interactive marketing: this has allowed marketers and advertisers to interact directly with customers. – one-on-one advertising.

Advertising Strategies online:

Affiliate Marketing and Advertising: the revenue model by which an organization refers consumers to the selling company’s website. Increased logo distribution

Search Engine Advertising: free

Ads as a commodity: people are paid for time spent viewing an ad.

Viral Marketing: word of mouth through the internet (email, blogs, ect)

Customizing Ads: Using a database to select your target groups

Online Events, promotions, Attractions: contents, coupons, quizzes

Live Web Events: concerts, interviews, debates, sport

Advertising in Newsletters: abundant amount of free newsletters in e-commerce

Posting Press Releases Online: These should be posted through portals such as Yahoo, Google etc.

Advergaming: The practice of using games, particularly computer games to advertise a company, product or service.

Electronic Payments: paying through cyberspace

Electronic Credit Cards: charging online payments to one’s credit card account.

Electronic Bill Payments: there are three main ways

Online Banking, Biller Direct (this is directly through billers website), Bill consolidator (paying bills through a third party)

Security in Electronic Payments: The requirements necessary to make it safe:

Authentication, Integrity, Repudiation, Privacy, Safety

Order Fulfillment: This support service includes providing customers with what they ordered on time while also providing all related customer service, for instance the instructions manual, possibility to exchange, inventory control, shipment, and billing. The activities what is called Back-Office Operations.

Warehousing and Inventory Management Improvements (WMS): refers to software systems that helps managing warehousing – it is a solution to inventory management

6.7 Ethical and Legal Issues in E Business:

Ethical standards and laws frequently lag behind technological innovation; e-commerce is taking on new forms and new business practices that may bring extra risks, particularly to individual consumers.

Ethical and implementation issues:

Privacy: This is the issue of carefully debating whether monitoring people is permitted when obligated by company or is it a invasion of privacy.

Web Tracking: by using tracking software a person’s movement on the internet can be monitored

Loss of Jobs: using EC may result in a lot of job loss due to redundancy specifically brokers and agents.

Disintermediation and Reintermediation: Intermediation is related to job loss. Those who conduct the service of matching and providing information are jobs that can easily be done through portals electronically, thus these intermediaries will get eliminated (disintermediation). Those who provide value-added services and consultancy will most likely prosper, this is called reintermediation.

Legal issues Specific to E-commerce:

When buyers and sellers do not know each other there is a likely chance of fraud and crime over the internet.

Buyers Protection: your shoppers right to truthful, reliable brands and information. Sellers Protection: Some examples are; protect against consumers who refuse to pay, faulty claims that their order never arrived, protect the use of their brand name, protect against copyright and illegal downloading.

Chapter 9 – Transaction Processing, Functional Applications, and Integration

The Major objectives of information systems are to monitor performance, assess it, compare it to established targets, and, ultimately, improve it. In this way the systems contribute to all steps in the performance management cycle: Table 9

9.1 Functional Information Systems and Transaction Processing Systems

Traditionally information systems are designed within each functional area to support the area by increasing its internal effectiveness and efficiency. However this does not suit many business structures as activities are performed across several functional areas.

One possible approach is integrated approach that keeps the functional departments as they are but creates an integrated supportive information system to facilitate communication, coordination, and control.

Functional information systems share the following characteristics:

• Composed of smaller systems (often several activity specific ones)

• Integrated or independent (the specific applications can either be integrated to form a coherent departmental (or interdepartmental) functional system or they can be completely independent)

• Interfacing (functional information systems may interface each other to for an organization-wide or ERP system)

• Supportive of different levels (Info Systems applications support three levels of an organisation’s activities: operational, managerial, and strategic)

Transaction Processing information Systems (TPS):

1. Monitor

2. Collect

3. Store

4. Processes

5. Disseminates information for all routine core business transactions

The primary goal of a TPS is to provide all of the information needed by law and/or by organizational policies to keep the business running properly and efficiently. (examples of TPSs: Payroll preparation, Traffic control at airports, Registration at Facebook)

The major characteristics of a TPS:

1. Typically, large amounts of data are processed

2. The sources of data are mostly internal and the output is intended mainly for an internal audience. This characteristic is changing somewhat, since trading partners may contribute data and may be permitted to use TPS output directly.

3. The TPS processes information on a regular basis: daily, weekly, biweekly and so on.

4. High processing speed is needed due to high volume.

5. The TPS basically monitors and collects current or past data.

6. Input and output data are structured. Since processed data are fairly stable, they are formatted in a standard fashion.

7. A high level of detail (raw data, not summarized) is usually observable, especially in input data but often in output as well.

8. Low computation complexity is usually evident in a TPS

9. A high level of accuracy, data integrity, and security is needed. Sensitive issues such as privacy of personal data are strongly related to TPS

10. High reliability is required. The TPS can be viewed as the lifeblood of the organization. Interruptions in the flow of TPS data can be fatal to the organization.

11. Inquiry processing capacity is a must. The TPS enables users to query files and databases

Activities and methods of TPS:

Regardless of the specific data processed by a TPS, a fairly standard process occurs whether in a manufacturing or a service firm. First the raw data is collected, then entered through an input device. Next the system processes the data in one of the two basic ways:

1. Batch processing: firm collects data from transactions as they occur and stores them. The system then prepares and processes the collected data periodically.

2. Online processing: data are processed as soon as a transaction occurs, possibly even in real time.

To implement online transaction processing, master transaction files containing key information about important business entities are placed on hard drives as an operational database where they are directly accessible.

Web Analytics= the analysis of data to understand visitor behaviour on a Web site. It begins by identifying data that can assess the effectiveness of the site’s goals. Next the analytics data are collected, such as where site visitors are coming from, what pages they look at and for how long while visiting the site, and how they interact with the site’s information.

Typical TPS Activities:

• The Ledger

• Accounts payable and receivable

• Receiving and shipping records

• Inventory-on-hand records

• Fixed-assets management

• Payroll

• Personnel files and skills inventory

• Reports to government

• Other periodic reports and statements (eg.tax, production, sales)

9.2 Managing Production/Operations and Logistics

POM=Production and Operations Management

IN HOUSE LOGISTICS AND MATERIALS MANAGEMENT

1. Inventory Management: determines how much inventory to keep. Through dozens different inventory models and integration with suppliers (Vendor Managed Inventory VMI)

2. Quality Control: TQM (total quality management) through information systems which monitor both incoming and outcoming materials/parts. See metrics such as the SIX SIGMA. Quality control data may be controlled by Web-based sensors and interpreted instantly

PLANNING PRODUCTION/OPERATIONS

1. Just-in-Time Systems: and lean manufacturing information systems

2. Project Management: IS tools such as the program evaluation and review technique (PERT) and the critical path method (CPM)

3. Other areas: Web-based production planning optimization tool, product routing, tracking systems, order management, factory layout planning and design etc

4. Intelligent Factories for Mass Customisation.

COMPUTER-INTEGRATED MANUFACTURING

CIM goals:

• The simplification of all manufacturing technologies and techniques

• Automation of as many of the manufacturing processes as possible

• Integration and coordination of all aspects of design, manufacturing , and related functions via computer hardware and software. Typical technologies to be integrated are flexible manufacturing systems (FMSs) JIT, MRP, CAD, CAE and group technology (GT)

Major CIM advantages are comprehensiveness and flexibility

9.3 Managing Marketing and Sales Systems

Channel systems = all of the involved systems in the process of getting a product or service to customers and dealing with all customer’s needs.

Channel-driven advantages are:

1. Transaction speed (real time response)

2. Global reach

3. Reduced costs

4. Add multimedia content

5. Add strategic elements

6. Reliability

THE CUSTOMER IS KING/QUEEN

Activities related to customer centric organisations.

Customer Profiles and Preference Analysis:

Information about existing and potential customers is critical for success. Sophisticated information systems have been developed to collect data on customers, their demographics and their preferences. Analysis of shopping habits can help in organizing layouts of stores.

Prospective customer lists and Marketing Databases:

All firms need to know who their customers are and IT provides that through both existing and potential customers. It is now possible to integrate and purchase lists from several sources and merge them electronically.

MARKETING MANAGEMENT

Pricing of Products or Services:

Nowadays there are a number of business analytical processing systems to support pricing decisions. Web-based comparison engines enable customers to select a vendor at the price they want.

Salesperson Productivity:

Salesperson productivity tracking can analyse performance and which areas need further human development. These systems can also be used to assign the sale-force to different regions and to set standards.

Productivity Software: Sales automation software is helpful to small businesses enabling them to rapidly increase sales and growth. Web-based software’s can manage the flow of messages, assist writing contracts, scheduling and making appointments.

Profitability Analysis

Profitability information for products can be deducted from the cost-accounting system.

New Products, Services, and Market Planning.

These can be best executed with the aid of IT because of the large number in determining factors and the uncertainties that may be involved . Market research can also be conducted on the internet. Speed with which the product is brought to the market is also very important.

Web-Based Systems in Marketing

Web-marketing refers to marketing done over the internet…it is basically a new marketing channel that is growing rapidly and it is a major part of e-commerce. It uses new techniques which significantly increase sales.

9.4 Managing Accounting and Finance Systems

FINANCIAL PLANNING AND BUDGETING

Financial and economic analysis can be facilitated by intelligent systems such as data mining. For example, many software packages are available for conducting economic and financial forecasting, which are frequently available over the internet for free or a fee.

IT enables the introduction of financial logic and efficiency into the budgeting process:

Software support: several software packages, many of which Web-based, are available to support budget preparation and control (eg. Prophix Express from PROPHIX Software and budgeting modules from Oracle and Capterra.com) and facilitate communication among all the participants in the budget preparations.

Major benefits of using budgeting software are:

1. It reduces time and effort involved in the budget process

2. It facilitates the integration of the corporate strategic objectives with operational plans

3. It makes planning an ongoing continuous process

4. Automatically monitors exceptions for patterns and trends

Capital Budgeting (the financing of asset acquisitions and disposal) models used: Net Present Value, Internal Rate of Return and Payback period

MANAGING FINANCIAL TRANSACTIONS

XBRL: Extensible Business Reporting Language

Is a programming language and an international standard for electronic transmission of business and financial information. As of September 2005 it can be used to file financial reports electronically with the SEC and FDIC. With XBRL, all of the company’s financial data are collected, consolidated, published and consumed without the need of Excel spreadsheets. The U.S government agencies plan to mandate the use of XBRL.

According to the Federal Financial Institutions Examination Council found that XBRL helps financial institutes:

• Generate cleaner data, including written explanations and supporting notes

• Produce more accurate data with fewer errors that require follow-up by regulators (better quality)

• Transmit data faster to regulators and meet deadlines

• Increase the number of cases and amount of information that staffers can handle

• Make information available faster to regulators and the public

• Address issues and concerns in their filings rather than after the fact

• Reduce report cycle time

• Lead to more efficient capital market

INVESTMENT MANAGEMENT

Financial Analysis:

Can be executed with a spreadsheet program or with a commercially available ready-made decision support software. Or it can be more sophisticated, involving complex algorithms and intelligent systems. Eg. Morgan Stanley and Company uses virtual reality on its internet to display the results of risk analysis in three dimensions.

One area of analysis that is becoming popular is referred to as financial value chain management (FVCM). According to this approach, financial analysis is combined with operations analysis.

CONTROL AND AUDITING

Risk Analysis

Companies need to analyse the risk of doing business with partners and other countries. Giving credit to customers can be risky, so one can use products such as FICO (fairsaac.com) for calculating risk.

Budgetary Control

Simple reporting systems summarise the expenditures and provide exception reports by flagging any expenditure that exceeds the budget by a certain percent or falls significantly below the budget. More sophisticated software attempts to tie expenditures to program accomplishment. Numerous software programs can be used to support budgetary control; most of them are combined with budget preparation packages form vendors such as claritysystems.com and capterra.com

Auditing

Intelligent systems can uncover fraud by finding financial transactions that significantly deviate form previous payment profiles. Also, IT provides real-time data whenever needed.

Financial Ratio Analysis

The collection of data for the ratio analysis is done by the transaction processing system, and computation of the ratios is done by financial analysis models. The interpretation of the ratios, and especially the prediction of their future behavior, requires expertise and is sometimes supported by intelligent system.

Profitability Analysis and Cost Control

Profitability analysis DSS software allows accurate computation of profitability and allocation of overhead costs. One way to control cost is by properly estimating it. This is done by using special software. Profitability Management from Hyperion (oracle) provides potent multidimensional and predictive analysis, and proven query, reporting, and dashboard functionality with the ease of use and deployment. The solution delivers powerful insightful activity-based cost analysis and what-if modeling capabilities to help create and test new business strategies. Sophisticated business rules are stored in one place, enabling analyses and strategies to be shared easily across an entire enterprise.

Expense Management Automation (EMA)

Refers to the system that automate data entry and processing of travel and entertaining expenses. These expenses cab account for 20% of the operating expenses of large corporations. EMA systems and Necho are Web-based applications that replace the paper forms and rudimentary spreadsheets. These systems let companies quickly and consistently collect expense information, enforce company policies and contracts and reduce unplanned purchases of airline and hotel services. The software forces travelers to be organized before the trip starts.

9.5 Managing Human Resources Systems

The biggest benefit to companies of human relations IT services is the release of HR staff from intermediary roles so that they can focus on strategic planning and human resource organization and development.

RECRUITMENT

Using the Web for Recruitment

The Web in this case is generally used as a tool to find appropriate candidates through specialized search engines and also to advertise job positions online.

Many matching services exist. Online recruiting is able to “cast a wide net” to reach more candidates faster, which may bring better applicants. In addition, the costs of online recruitment are lower.

Recruitment online is beneficial for candidates as well. They are exposed to a larger number of job offerings, can get details of the positions quickly, and can begin to evaluate the prospective employer. They can also check competitiveness of salaries and how much they could make abroad at sites like monster.com

Using Social Networks and Intelligent software (linked in, myspace, facebook, craiglist and second life)

HRM Portals and Salary Surveys

One advantage of the Web is the large amount of information related to job matching. There are also many private and public HR related portals. For example, several large companies created jointly with 120 companies a career portal called DirectEMployer.com.

Commercial, public online recruiters, such as monster.com help corporate recruiters find candidates for difficult to fill positions.

Another area for HR portals is salary surveys. Salary surveys help companies determine how much to pay their employees. (Salary Wizard Pro)

HUMAN RESOURCES MAINTAINANCE AND DEVELOPMENT

Performance Evaluation

Evaluations are usually recorded on paper or electronic forms. Using such information manually is a tedious and error-prone job. Once digitized, evaluations can be used to support many decisions, ranging from rewards to transfers to layoffs. For example , Cisco Systems is known for developing an IT-based human capital strategy. Many universities evaluate professors online. Results can be tabulated in minutes. Corporate managers can analyse employees’ performances with the help of intelligent systems, which provide systematic interpretation of performance over time.

Wage review is related to performance evaluation. For Example HP Atlanta U.S Field service Operations (USFO) group has developed a paperless wage review (PWR) system.

Training and Human Resources Development

Sophisticated human resources departments build career development plans for each employee. IT can support the planning, monitoring, and control of these activities by using workflow applications.

IT also plays an important role in training. Some of the most innovative developments are in the areas of intelligent computer-aided instruction (ICAI) and application of media support for instructional activities.

Training can be improved using Web-Based video clips.

Mobile devices are increasingly being used for training as well as performance improvement. Training can also be enhanced by virtual reality. Intel, Motorola, Samsung and IBM are using virtual reality and virtual worlds to stimulate different scenarios and configurations.

Most promising Web-based training tools are those that are based on interactive simulation and virtual environments where the user learns by operating or playing in a simulated environment ( SIM City or Second life)

HUMAN RESOURCES PLANNING AND MANAGEMENT

Personnel Planning and HR Strategies

Large companies develop qualitative and quantitative workforce planning models. Such models can be enhanced if IT is used to collect, update, and process information. Radio Shack uses special software to develop HR strategies

Benefits Administration

Managing the benefits system can be a complex task, due to its many components and the tendency of organisations to allow employees to choose and trade off benefits.

In large companies, using computers for self-benefits selection can save a tremendous amount of labour and time for HR staff.

Providing flexibility in selecting benefits is viewed as a competitive advantage in large organisations. Some companies have even automated benefits enrollments. Employees can self register for specific benefits using the corporate portal or voice technology. Employees self-select desired benefits from a menu. Payroll pay cards are now in use in numerous companies.

Employee Relationship Management

In their effort to better manage employees, companies are developing human capital management (HCM), facilitated by the Web, to streamline the HR process. These Web applications are more commonly referred to as employee relationship management (ERM).

ERM technologies and applications are very similar to those of customer relationship management (CRM)

9.6 Integrating Functional Information Systems

REASONS FOR INTEGRATION

For many years most IT applications were developed in the functional areas, independent of each other. This created potential problems with information sharing, especially when business processes were done in several departments, such as order fulfillment or preparing a payroll.

Therefore IT companies developed commercial off the shelf applications to lease. There are additional development tools and services for custom made applications and there is a growing specialized industry in this sector.

Another option is the using of existing ERP with some custom modifications.

INTEGRATION OF FRONT-OFFICE WITH BACK OFFICE OPERATIONS

Front office refers to customer facing systems, mostly marketing, advertising, and order taking. Back-office refers to activities related to order fulfillment, accounting, finance, production, and shipments. This is a difficult task. It is easier to integrate the front-office operations among themselves..

USING ENTERPRISE 2.0 AND VIRTUAL WORLDS

Integrating functional areas can be facilitated by Web 2.0 tools (blogging, wikis) to enhance interdepartmental collaboration. Companies can open pages on social networks that may involve several departments. There is an increasing presence in social networks.

Chapter 10 – Enterprise systems: Supply Chains, ERP, CRM and KM

Enterprise systems (also called enterprisewide systems) are systems or processes that involve the entire enterprise or two or more departments of it. This is in contrast to functional systems, which are confined to one department each.

ERP: enterprise resource planning

CRM: customer relationship management

KM: knowledge management: systems whose objective is to support knowledge, creation, storage, maintenance, and distribution throughout the enterprise.

PRM: partner relationship management

BPM: business process management

MRP: materials requirement planning

Supply chains

Supply chain management (SCM): is the efficient management of the supply chain end-to-end processes that start with the design of the product or service and end when it is sold, consumer, or used by the end consumer

The main goal of modern SCM is to reduce uncertainty, variability, and risks, and increase control in the supply chain, thereby positively affecting inventory levels, cycle time, business processes and customer service

Supply chains are composed of three major components:

• Upstream: the flows and activities conducted between a company and its suppliers and their sub-suppliers, all the way to the origin of the materials

• Internal: the flows and activities conducted within a company among its own departments. It includes the processing of the materials

• Downstream: the flow of materials, products, and activities from the manufacturing company to its distributors, marketing channels, and so forth, all the way to the end consumer

A common way to solve supply chain problems and especially to improve demand forecasts, is sharing information along the supply chain. Such information sharing is frequently referred to as the collaborative supply chain.

Collaborative planning, forecasting, and replenishment (CPFR): is a business practice in which suppliers and retailers collaborate in planning and demand forecasting in order to ensure that members of the supply chain will have the right amount of raw materials and finished goods when they need them. The goal of CPFR, is to streamline product flow from manufacturing plants all the way to customers’ homes.

Vendor-managed inventory (VMI) indicates that the vendor, usually a distributor, manages the inventories for the manufacturer or buyer

The increase in e-commerce has resulted in new opportunities to improve the performance of the supply chain. The following are examples of e-business activities that can improve supply chain management:

• Collaborative fulfillment networks (CFNs): enable coordination among multiple participating firms at different stages of the supply chain

• Electronic marketplaces: allows organizations, even competitors in the supply chain, to identify upstream suppliers.

• Electronic data interchange (EDI): Is a communication standard that enables the electronic transfer of routine documents, such as purchase orders, between business partners

• Electronic ordering and funds transfer (EOFT): is an important component in e-business transactions.

E-procurement: is the use of Internet technologies to purchase or provide goods and services. E-procurement systems require the use of integrated database systems, WAN communication systems, Web-based systems, inventory systems and interaction with accounting systems.

Supply-chain team: is a group of tightly coordinated employees who work together to serve the customer.

In a virtual factory, proposed designs can be tested, relationships with suppliers can be simulated and manufacturing processes and how they are connected can be modeled

Internal integration: refers to integration within a company between (or among) applications, and/or between applications and databases

External integration: refers to integration of applications and/or databases among business partners – for example, the suppliers’ catalogs with the buyers’ e-procurement system

Enterprise Resource Planning (ERP) Systems

This software integrates the planning, management, and use of all of the resources in the entire enterprise

ERP’s major objective is to integrate all departments and functional information flows across a company onto a single computer system that can serve all of the enterprise’s needs.

The leading ERP software is SAP/R3 (from SAP AG Corp.)

The system can be bought or leased through Application Service Providers (ASP)

Customer Relationship Management (CRM)

Customer relationship management: is an enterprisewide effort to acquire and retain profitable customers.

CRM is a business strategy to select and manage customers to optimize long-term value

Basic idea: treat different customers differently, because their needs differ and their value to the company may be different

Three categories of CRM applications (plus one added by the authors):

1. Customer-facing applications: include all of the areas where customers interact with the company: call centers including help desks; sales force automation; etc.

2. Customer-touching applications: in this category, customers interact directly with the applications

3. Customer-centric intelligence applications: applications that are intended to analyze the results of operational processing and use the results of the analysis to improve CRM applications

4. Online networking applications: online networking refers to methods that provide the opportunity to build personal relationships with a wide range of people in business

Levels and types of E-CRM:

1. Foundational service: includes minimum necessary services such as website responsiveness

2. Customer centered services: include order tracking, product configuration and customization

3. Value-added services: include online auctions and online training and education

Loyalty programs: are programs that recognize customers who repeatedly use the services offered by a company

p. 387 for number of tools for customer service: including FAQs, personalized web pages, Call centers etc.

There are three areas of CRM that should be given priority to realize the total business value of CRM:

1. Marketing

2. Sales

3. Service

CRM can be delivered in two ways: on-premise and on-demand. The traditional way to deliver such systems was on-premise – meaning users purchased the system and installed it on site.

On-demand CRM is basically CRM hosted by an ASP or other vendor on the vendor’s premise, in contrast to the traditional practice of buying the software and using it on site

Knowledge management and IT

Knowledge management (KM): is a process that helps organizations identify, select, organize, disseminate, and transfer important information and expertise that are part of the organization’s memory and that typically reside within the organization in an unstructured manner

Knowledge: is information that is contextual, relevant and actionable

Intellectual capital: is another term often used for knowledge, and it implies that there is a financial value to knowledge.

Explicit knowledge: deals with more objective, rational, and technical knowledge.

Tacit knowledge: is usually in the domain of subjective, cognitive, and experiential learning; it is highly personal and difficult to formalize

Knowledge management systems (KMSs) refer to the use of modern information technologies to systematize, enhance, and expedite intra- and inter-firm knowledge management

A functioning knowledge management system follows sixe steps in a cycle:

1. Create knowledge

2. Capture knowledge

3. Refine knowledge

4. Store knowledge

5. Manage knowledge

6. Disseminate knowledge: knowledge must be made available in a useful format to anyone in the organization who needs it, anywhere and any time

Communication and collaboration technologies allow users to access needed knowledge, and to communicate with each other and with experts.

Expert (or expertise) location systems (ELSs): are interactive computerized systems that help employees find and connect with colleagues who possess the expertise required for specific problems

Enterprise knowledge portals (EKPs) are the doorways into many knowledge management systems.

Chapter 11 – Interorganizational, Large-scale, and Global information systems

11.1 Interorganizational Activities and Order Fulfillment

On-demand enterprise (build-to-order, mass customization) – manufacturing (or service fulfillment) starts only after an order is received

On-demand and real-time – the entire fulfillment cycle is primed to respond to real-time conditions, no backorders, safety stock, lag time, or excess inventory

Interorganizational activities

• Joint venture

• Collaboration

• Buying and selling

• Others: research, appeal to the government …

Order fulfillment – providing customers with what they have ordered and doing so on time, and providing all related customer services

The order fulfillment process –

Step 1 – Make sure the customer will pay

Step 2 – Check for in-stock availability

Step 3 – Arrange Shipment (when product is available, if not go to step 5)

Step 4 – Insurance (of shipment content)

Step 5 – Replenishment – customized and standardized items out of stock

Step 6 – In-house production

and/or

Step 7 – Use suppliers

(step 3)

Step 8 – Contacts with customers (notification of order received/shipment/delay)

Step 9 – Returns/reverse logistics

The most successful and promising approach to solve problems within the order fulfillment process is to automate as many of the activities as possible. Automation is done my using IT, and due to the capabilities of IT, it is possible to increase speed, reduce (eliminate) errors, reduce costs of administering the process, minimize delays, reduce inventories ….

11.2 Interorganizational Information Systems and Large-Scale Information Systems

Interorganizational information system (IOS) – involves information flow among two or more organizations, can be local or global, dedicated to only one activity or intended to support several activities.

Major objectives – efficient processing of transactions and the support of collaboration and communication

IOSs enable both partners to reduce the costs of routine business transactions, improve the quality of the information flow by reducing or eliminating errors, compress cycle time in the fulfillment of business transactions, eliminate paper processing and its associated inefficiencies and costs, and make the transfer and processing of information easy for users.

Major characteristic – the customer–supplier relationship is determined in advance with the expectation that it will be ongoing

Types of IOSs

• B2B trading systems

• B2B support systems (shipment hubs, directories)

• Global systems

• Electronic fund transfer (EFT)

• Groupware (transmission systems used to deliver e-mail and fax documents)

• Shared databases

Examples of large-scale Information Systems

• Government systems

• Military systems

• Large corporations’ systems

• Educational systems

• Large not-for-profit organization (churches)

• Health care systems

• Airline reservation systems

• Financial institutions and banking systems

• Search engine-based systems (Google)

• Special systems (2008 Beijing Olympic system)

IOS infrastructure technologies:

Electronic data interchange (EDI) – electronic movement of business documents between business partners

Extranets – Internet based, secure systems that link the business partners via their intranets

XML – emerging B2B standard, companion or replacement of EDI

Web services – emerging technology for integrating B2B and intrabusiness applications

Enterprise application integration – integrate systems internally before they are connected to business partners

Extended ERP – enterprise resource planning systems extended to suppliers, customers, and other business partners

11.3 Global Information Systems

Global information systems – interorganizational systems that connect companies (or part of companies) located in two or more countries

Multinational companies, international companies, and virtual global companies (joint ventures whose business partners are located in different countries) typically need global information for their B2B operations. Companies that have global B2C operations usually use the Internet.

Benefits of Global Information Systems:

• Effective communication at a reasonable cost (e-mail, EDI, Web services, extranets, automatic language and web page translation)

• Standardize procedures and common languages

• Effective collaboration to overcome differences in distance, time, language, and culture (groupware software (ch. 4), group decision support systems (ch. 12), extranets, teleconferencing devices (ch. 4), ERP software)

• Access to databases of business partners and ability to work on the same projects while their members are in different locations (teleconferencing, screen sharing)

Issues in global IS design and implementation

• Cultural differences

• Localization

• Economic and political differences

• Legal issues

  • Copyrights, patents, computer crimes, file sharing, privacy

  • Cross-border data transfer

• Designing websites for a global audience

• Globalization and offshoring of software and other IT activities

• Globalization and personnel issues

Issues along global supply chains

• Legal issues

• Custom fees and taxes

• Language and cultural differences

• Fast changes in currency exchange rates

• Political instabilities

IT provides not only EDI and other communication infrastructure options, but also online expertise in sometimes difficult and fast-changing regulations. IT also can be instrumental in helping businesses find trading partners (electronic directories and search engines). In addition, IT can help solve language problems through use of automatic Web page translations.

11.4 Facilitating IOS and Global Systems: From Demand-Driven Networks to RFID

Demand-driven supply networks (DDSNs) – products are pulled to market by customers

Capabilities:

• Agility: the ability to respond quickly to short-term changes in the demand and supply equation and to manage external disruptions more effectively

• Adaptability: the ability to modify supply network strategies, products, and technologies, and to adjust the design of the supply chain to meet structural shifts in markets

• Alignment: the ability to create shared incentives that align the interests of businesses across the supply chain

Using RFID (radio frequency ID tags) to improve supply chains

The RFID transmits real-time information about the location of the merchandise. The tag includes an antenna and a chip that contains an electronic product code (EPC). The EPC stores much more information than a barcode, e.g. when and where it was made, when it might expire… The RFID tag also acts as passive tracking devices, signaling their presence over a radio frequency device when they pass within yards of a special scanner.

Limitations of RFID:

• For small companies the costs of the RFID system may be to high

• May be atmospheric interference

• Limited range

• Fair of violating customers’ privacy

• Agreeing on universal standard, as well as connecting the RFIDs with existing IT systems, are technical issues to be solved

Electronic hubs

A hub is used to facilitate communication and coordination among business partners, frequently along the supply chain. They are structured in a way that each partner can access a Web site, usually a portal, which is used for an exchange of information. Each partner can deposit new information, make changes, and receive or leave messages.

11.5 Interorganizational Information Integration and Connectivity

Integrating the ISs of merging companies

• Establish an IT leadership team to direct the integration

• For customer-facing application, select the option with the lowest business integration risk

• Ensure that customer-facing applications have priority over back-office applications

• Offer generous retention packages for top-talent IT personnel to ensure they do not leave

• Maintain high moral among IT personnel

• Increase the company’s normal level of project risk to achieve aggressive integration goals

• Use rich communication media to read emotions and recognize successes, because a merger is an emotional event

Facilitating integration

1. Check the business processes, understand them, and make improvements if necessary

2. The necessary IT infrastructure needs to be planned for, once processes are improved

11.6 Partner Relationship Management and Collaborative Commerce

Partner relationship management (PRM) – a business strategy and practice that recognizes the need to develop long-term relationships with business partners by providing each partner with the services that are most beneficial to that partner

PRM solutions connect companies with their business partners using Web technology to securely distribute and manage information.

Supplier relationship management (SRM) – category of PRM, where the partners are the suppliers

Collaborative commerce (c-commerce) – non-selling/buying electronic transactions within, between, and among organizations

Major types of c-commerce:

• Retailer – supplier (production and inventory planning and forecast of demand)

• Product design (screen sharing)

• Collaboration along a global supply chain

• Service desk

Chapter 13 – IT Strategy and Planning

13.1 Strategic Resources and Capabilities

IT can add value to a firm in one of two general ways:

1. Directly by reducing the costs associated with a given activity or subset of activities,

2. Indirectly by increasing revenues.

The resource-based view (RBV) of a firm refers to a competitive advantage paradigm that maintains that firms possess resources, some of which enable firms to gain competitive advantage and some of which enable firms to achieve superior long term performance.

Three characteristics of resources give them the potential of creating a strategic advantage:

• Value: the degree to which a resource can help a firm improve efficiency or effectiveness,

• Rarity: the degree to which a resource is non-heterogeneously distributed across firms in an industry,

• Appropriability: the degree to which a firm can make use of a resource without incurring expense that exceeds the value of the resource.

In order to sustain the competitive advantage, the resources must have the following characteristics:

• Imitability: the degree to which a resource can be easily emulated,

• Mobility: the degree to which a resource is easy to transport,

• Sustainability: the degree to which another resource can be used in lieu of the original resource to achieve value.

Information systems can contribute three types of resources to a firm:

• Technology resources:

  • Includes: infrastructure, proprietary technology, hardware, and software.

  • Relationship to resource attributes:

    • Not necessarily rare or valuable,

    • Difficult to appropriate and imitate,

    • Low mobility,

    • A fair degree of sustainability.

• Technical capabilities/ skills:

  • Includes: technical knowledge, development knowledge, and operational skills.

  • Relationship to resource attributes:

• Highly mobile,

• Less limitable or substitutable,

• Not necessarily rare,

• Highly valuable.

• Managerial IT resources:

  • Includes: vendor and outsourcer relationship skills, market responsiveness, IS-business partnerships, IS planning and management skills.

  • Relationship to resource attributes:

• Higher value,

• Somewhat more rare than the technology and IT skill resources

• High mobility,

• Non-substitutable.

IT planning

IT planning is the organized planning of IT infrastructure and applications portfolios done at various levels of an organization.

Levels of the planning process include:

• The long range or strategic IT plan: sets the overall direction in terms of infrastructure and resource requirements for IT activities for five to ten years in the future.

• The medium term IT plan: identifies the applications portfolio, a list of major, approved IS projects that are consistent with the long-range plan, and extend over several years.

• A tactical plan: includes budgets and schedules for current year projects and activities.

IT planning can help organizations meet the challenges of a rapidly changing business and competitive environment. IT planning methods have evolved over time. Today they’re centred around e-planning. Aligning IT plans with business plans makes it possible to prioritise IS projects on the basis of contribution to organizational goals and strategies.

IT planning approaches include:

• Business-led approach: emphasizes that business strategy should lead IT strategy.

• Method-driven approach: the IS needs are identified with the use of techniques and tools.

• Technological approach: analytical modelling and other tools are used to execute the IT plans.

• Administrative approach: The IT plan is established by the steering committee or management to implement an approved IS initiative.

• Organizational approach: The IT plan is derived from a business-consensus view of all stakeholders in the organization of how IT/ IS fits the organization’s overall business objectives.

IS planning requires analysis of the information needed by the organization. Several methods exist for doing it. Also, implementing the IT planning requires planning: resource allocation, cost-benefit analysis, and project management (using software).

13.4 Strategic IT planning (SITP)

Strategic IT planning (SITP) establishes the relationship between the overall organizational plan and the IT plan. It refers to identifying the applications portfolio through which an organization will conduct its business. SITP also refers to a process of searching for strategic information systems (SIS) applications that enable an organization to establish a competitive advantage, rather than just maintaining it.

The output from a SITP process should include:

1. A new or revised charter and assessment of the state of the IS department,

2. An accurate evaluation of the strategic goals and directions of the organization,

3. A statement of the objectives, strategies, and policies for the IT effort.

STIP involves the following tools and methodologies:

• The business systems planning (BSP) model: an IBM methodology in which planning concentrates on identifying problems and related decisions, based on business processes and data classes.

• Nolan’s six stages of IT growth:

  • Initiation,

  • Expansion,

  • Control,

  • Integration,

  • Data administration,

  • Maturity.

    • Critical success factors (CSFs): those few things that must go right in order to ensure the organization’s survival and success. Sample questions asked in the CSF approach include:

      • What objectives are central to the organization?

    • What are the critical factors that are essential to meeting those objectives?

    • What decisions or actions are key to those critical factors?

    • What variables underlie these decisions, and how are they measured?

    • What information systems can supply these measures?

    • Scenario planning: a methodology of dealing with an uncertain environment by examining different scenarios; a what-if analysis.

2). Information requirements analysis

Information requirements analysis identifies broad, organizational information requirements to establish a strategic information architecture that can be employed to direct specific application development The goal of this second stage of the model is to ensure that the various information systems, databases, and networks can be integrated to support the requirements of the first stage of the model to enable decision making.

The results of the information requirements analysis are:

• It identifies high-payoff information categories,

• It provides a basis for the architecture of IT,

• It guides in resource allocation.

3). Resource allocation

Resource allocation allocates IT application development resources and operational resources. This third stage of the model consists of developing the hardware, software, data communications and networks, facilities, personnel and financial plans needed to execute the master development plan as defined in the second stage. This stage provides the framework for technology and labour procurement, and it identifies the financial resources needed to provide appropriate service levels to users.

4). Project planning

Project planning develops a plan that outlines schedules and resource requirements for specific information systems projects. It provides an overall framework within which specific applications can be planned, scheduled, and controlled. This stage depends on the outsourcing strategy.

IT planning can be very time-consuming and costly. Another disadvantage is that resources can be easily wasted if IT planning is not understood. Ignoring major environmental changes when the IS plan has to be revised leads to failure of implementing IT.

Another necessary condition for IT to work is that the CIO and the CEO have a strong relationship. Only then will IT be utilized effectively. The CIO’s role is also changing.

• Technology and its management are changing

• Executives’ attitudes are changing

• ­­ Interactions with vendors are increasing

IT infrastructure

IT architecture refers to the overall (high-level) structure of all information systems in an organization. An IT architecture consists of a description of the combination of hardware, software, data, personnel, and telecommunications elements within an organization, along with procedures that employ them. Organizations can use enterprise architecture principles to develop an IT architecture. An IT architecture for an organization should guide the long-range development as well as allow for responsiveness to diverse, short-range information system demands.

Information architecture is a conceptualisation of the manner in which information requirements are met by the information system. There are three types of technology architectures:

1. Centralized,

2. Non-centralized,

3. Client-server.

There are four infrastructure relationships:

1. Industry: Manufacturing firms use fewer IT infrastructure services than retail or financial firms.

2. Market volatility: Firms that need to change products quickly use more IT infrastructure services.

3. Business unit synergy: Firms that emphasize synergies use more IT infrastructure services.

4. Strategy and planning: Firms that integrate IT and organizational planning, and track and monitor the achievement of strategic goals, use more IT infrastructure services.

There are two general factors that influence infrastructure levels:

• Information intensity: the extent to which products or processes incorporate information,

• Strategic focus: the level of emphasis on strategy and planning.

Firms with higher levels of these two factors use more IT infrastructure services, and they have greater reach and range in their use of services.

Information technology architecture can be centralized, distributed, or a combination of both. Centralized computing refers to IS architecture that puts all processing and control authority at a single computer site to which all other computing devices respond. Distributed computing refers to information systems architecture that gives users direct control over their own computing; they can easily contact each other or databases and communicate with external entities. When computing is distributed, it often follows the client/ architecture model.

There are five basic configurations of PCs for end users:

1. Centralized computing with the PC functioning as a “dumb terminal”- the thin PCs.

2. A single-user PC that is not connected to any other device.

3. A single-user PC that is connected to other PCs or systems, using ad hoc telecommunications.

4. Workgroup PCs connected to each other in a small peer-to-peer network.

5. Distributed computing with many PCs fully connected by LANs via wireline or Wi-Fi.

Legacy systems are older systems that have become central to business operations and may be still capable of meeting these business needs, they may not require any immediate changes, or they may be in need of reengineering to meet new business needs. Reverse engineering is the process of converting the code, files, and databases of legacy systems into components that can be used to create new (usually client/ server) applications.

The major IS planning issues are:

• Strategic alignment,

• Architecture,

• Resource allocation,

• Time and budget considerations.

13.5 Outsourcing

Outsourcing means acquiring IS services from an external organization rather than through internal employees. Offshore outsourcing refers to the use of vendors in other countries, usually where labour is inexpensive, to do programming or other system development tasks.

A form of outsourcing is an application service provider (ASP), a company that provides business applications (standard or customized) over the Internet for a per-use or fixed monthly fee. A management service provider (MSP) is a vendor that, for a subscription fee, remotely manages and monitors enterprise applications (for example, ERP, CRM, proprietary e-business applications).

Outsourcing benefits include:

1. Concentration on developing and running core business activity,

2. Delegation of IT development and operational responsibility to supplier,

3. Elimination of need to recruit and retain competent IT staff,

4. Avoidance of heavy capital investment, thereby releasing funds for other uses,

5. Improved cash flow and cost accountability,

6. Cost benefits from both economy of scale and from sharing computer housing, hardware, software, and personnel,

7. Less need for expensive office space,

8. Greater freedom to choose software due to a wider range of hardware,

9. Ability to achieve technological improvements more easily,

10. Greater access to technical skills,

11. Opportunity to draw on specialist skills, available from a pool of expertise, when needed,

12. Enriched career development and opportunities for staff,

13. Clearly defined service levels,

14. Improved performance accountability,

15. Quality accreditation,

16. Quick response to business demands,

17. Ability to handle IT peaks and valleys more effectively.

As you can see, the benefits for outsourcing are abundant. However, there are also some outsourcing risks. They include:

• Reduction of the company’s flexibility to find the best IT fit for the business,

• Security risks,

• Shirking: occurs when a vendor deliberately under-performs and still charges full payment,

• Poaching: occurs when a vendor develops a strategic application for a client and then uses it for other clients,

• Opportunistic re-pricing: occurs when a client enters a long-term contract with a vendor and the vendor changes financial terms at some point or overcharges for unanticipated enhancements and contract extensions.

• Failure to consider all the costs; hidden costs include:

  • Vendor searching and contracting,

  • Transitioning from in-house IT to a vendor,

  • Cost of managing the effort,

  • Transitioning back to in-house IT after outsourcing.

Strategies for outsourcing include the following:

1. Understand the project,

2. Divide and conquer,

3. Align incentives,

4. Write short-period contracts,

5. Control subcontracting,

6. Do selective outsourcing.

Chapter 14 – Managing IT Projects, Process Improvement, and Organizational Change

The adaptation and implementation of IT should closely align with all business goals, not just those focused on core competencies. Since, non-core business functions are not the only areas in which IT can be applied to achieve huge gains by an organization.

14.1 Adopting IT Projects

Information systems are typically adopted to create value by enabling or improving one or more business processes or to contribute positively to faster and more effective decision making. Consequently, their planning must be aligned with the organization’s overall business strategy and specific processes involved.

Technology adaptation lifecycle, later adjusted by Rogers to the innovation diffusion process, explains the adaptation of emerging technologies. Four elements of adaptation of any technology:

1. The technology itself

2. The communication channels through which information is exchanged between potential adopters

3. The speed at which the emerging technology is being adopted

4. The social system into which the innovation is introduced that can be influenced by internal opinion leaders and external change agents

The adoption process occurs over time and passes through five stages: (1) acquire knowledge, (2) persuade, (3) decide, (4) implement, and (5) confirm. Accordingly, the innovation diffusion process is the process through which an individual or other decision-making unit passes:

1. Knowing of an innovation

2. Forming an attitude toward the innovation

3. Making a decision to adopt or reject

4. Implementation and initial use of the new technology

5. Confirming the decision through continued use or disconfirming it through discontinuance

The adaptation process isn’t linear, but cyclical in nature.

By nature, technology, tasks, individuals, organizations, and environments will differ depending on their characteristics, and have the potential to significantly affect the adaptation process.

Technology Differences

Measuring the new system along the following characteristics is useful in assessing the suitability of a new system early in de adaptation process and projecting how easy it will be to get users to accept it after implementation.

1. Compatibility: is the degree to which the new system is perceived to fit with the existing values, past experiences, and needs of potential adopters.

2. Complexity: is the degree to which the new system is perceived to be difficult to understand and use.

3. Reliability: is the extent to which the new system is robust and dependable.

4. Relative Advantage: is the degree to which the new system is perceived as better than the system it replaces. It is important to assess both the business value added and the consequences of not adopting the system.

Task Differences

Task-technology dependency is the ability of a technology to efficiently and effectively execute a task. It is important to assess the purpose of the new system; the chosen technology must have the characteristics that lend themselves best to the task at hand.

Individual Differences

People fall into five different adopter categories – innovators, early adopters, early majority, late majority, and laggards (please refer to table 14.1, page 526, for the exact characteristics per adopter category).

Those who have a more positive attitude toward change are more likely to adopt earlier and adapt to the new system more easily than those who prefer to stay with the status quo.

The adopter categories tell us that people are social creatures. They like to fit in. A lot of people like to follow the lead of others. People learn and emulate the behavior of those they trust and respect. However, inherent in each individual are certain characteristics that make up who they are. It is this combination of social comparison and individual characteristics that determine whether a person fits on the adaptation/innovation curve. Once an organization understands the social system in which it is operating, it needs to assess how new or established technologies are already being used. To do this, organizations scan the environment.

Age, gender, and education are also important individual differences affecting when certain individuals will adopt new technology and how easily they will accept the associated change.

Organizational Differences

Planning for the changes that will be introduced into an organization by the adaptation of a new system includes a number of factors:

1. A supportive IT infrastructure: refers to the physical equipment and personnel to fulfill all of the roles necessary to ensure successful adaptation of a new system.

2. Management support: is critical to the successful introduction of a new system because of the potentially extensive business changes that will be associated with its introduction.

3. Presence of a champion: A champion is the person who will promote the benefits of the new system across different levels of the organization on an ongoing basis. Often, a champion will naturally emerge to sponsor a new system; other times, it will be necessary to appoint and cultivate a champion to fight for the new system.

Environmental Differences

The environment into which the system will be introduced can differ, examples:

• Difference in vendor support and training

• Difference in customer skill levels with technology

• Difference in accessibility to online services

-> Close vendor-champion alliances is a very beneficial tactic to take in adopting new technology.

Please refer to table 14.2, on page 528, for an overview of the factors that influence IT adaptation.

The first step in adopting a new IT-based system is to identify technologies that may be useful in improving or enabling business processes and assess how well they fit the organizational culture. Useful tools for identifying IT-based systems are:

• The Hype Cycle: is a useful tool used widely by organizations to identify and assess emerging technologies and decide when to adopt. The annual hype cycles provide a snapshot of the relative maturity of different categories of technologies, IT methodologies, and management disciplines. They highlight overhyped areas vs. those technologies that are high impact, and provide estimates of how long technologies and trends will take to reach maturity. Each hyoe cycle has five stages:

  • Technology Trigger.

  • Peak of Inflated Expectations. A phase of over enthusiasm and unrealistic projections during which a flurry of publicized activity by technology leaders results in some successes but more failures as the technology is pushed to its limits.

  • Trough of disillusionment. The pint at which the technology becomes unfashionable and the media abandons the topic, because the technology did not live up to its inflated expectations.

  • Slope of enlightenment. Focused experimentation and solid hard work by an increasingly diverse range of organizations lead to a true understanding of the technology’s applicability, risks, and benefits.

  • Plateau of productivity. The real-world benefits of the technology are demonstrated and accepted.

• Priority Matrix: is a simple diagramming technique that assesses a technology’s potential impact – from transformational to low – against the number of years it will take before it reaches mainstream adaptation (a new additional feature in Gartner’s 2006 hype cycle) (please refer to figure 14.4, on page 531, for an example of the matrix). Technologies that rate high on impact and low in number of years reflect adoption priorities.

• The Forrester Wave: a series of annual reports that classify technologies into categories – leaders, strong performers, contenders, and risky bets.

In addition to these “tools”, research organizations also produce numerous reports that are useful in assessing suitable technologies for IT-based systems.

Once appropriate information technology has been identified, the next step is to acquire it. When an acquisition approach has been chosen and the IT project has been developed, attention turns to the issues of implementing the system.

14.2 Implementing IT Projects

Implementation is defined as all organizational activities involved in the introduction, management, and acceptance of technology to support one or more organizational processes.

In general, organizations implement two broad categories of information systems: applications with very specific objectives that are implemented over a relatively short time period, and infrastructure needs that are generally implemented over longer periods of time.

IT infrastructure provides the foundation for IT applications in the enterprise.

IT applications are specific systems and programs for achieving certain objectives.

There are four approaches used to implement IT-based system; the four P’s of implementation:

• Plunge approach: the old system is turned off at the end of business day 0 and the new system is put into operation at the beginning of day 1. Transitions costs are low, risks are high.

• Parallel approach: both new and old systems operate concurrently for designated period of time. During this time period, major problems can be identified and solved before the old system is abandoned. Risk is lower, however, running two systems results in higher costs than operating only one system.

• Pilot approach: is used when a system is intended for adaptation and implementation in more than one business unit or geographic location. The system can be pilot tested at one site first using either the plunge of parallel approach. The first site is referred to as the beta site.

• Phased approach: is based on the module or version concept. Each module or version of the system is implemented as it is developed and tested. This approach can be used with the plunge or parallel approaches.

Those implementations that are enterprise wide, such as ERP and CRM, are particularly prone to failure because they affect major changes across the organization. The systems analyst may restructure processes that can significantly impact job tasks and interactions between individuals and groups/departments. To lessen the potential negative effects of these changes, the systems analyst must establish clear and open lines of communication to keep stakeholders fully informed.

Implementation success and failure have been influenced by a number of important factors, the major factors are:

• Top management support: First, the necessary resources (money, people, time) will be easier to obtain. Second, the system is more likely to be perceived positively by both business and IT personnel who may align themselves with the attitudes of top management for political reasons.

• Level of Risk: Risk associated with IT projects vary greatly depending on three variables: project size, project structure, and complexity of the implementation effort. Success is also highly dependent on company environment and its culture.

• Training of users: Many companies make the serious mistake of not insisting on a comprehensive training program to maximize employees’ knowledge and confidence levels in adapting to and using the new systems. To provide a basis for training efforts, systems developers need to provide comprehensive system documentation to IT personnel and easy-to-read and understand use documentation for the users to guide them. Method of training should be participative and interactive. The timing of training should be just-in-time delivery of training, that is, users are trained close to the time of implementation of the new system. In this way, the hands-on portion of the training is essentially carried over into initial and continued use of the system and the training concepts are reinforced on the job. Quality and reputation should also be taken into consideration.

• User acceptance of the IT projects: User acceptance is the extent to which a new system is perceived as being useful and easy to use by the systems users. Acceptance of a system will be higher if users are involved in systems design.

• Management of the implementation process: The four above mentioned factors need to be managed. Typical consequences of bad project management include: cost overruns, failure to meet deadlines, system performance that fails to meet user expectations, and missing functionality. Project managers need to have strong technical and business knowledge and the ability to put the right people on the team. A critical challenge of managing the implementation process is meeting user needs head-on addressing them in a satisfactory manner through planning, training, understanding, and obtaining “buy-in” to the implementation effort. An important step in wrapping up management of any implementation process is taking the time to capture lessons learned from the current project to help guide the next project.

14.3 Business Process Management

A business process is a collection of related activities that produce something of value to the organization, its stakeholders, or its customers. A process has inputs and outputs, with activities and tasks that can be measured.

Business Process Management (BPM) is a popular management technique that includes methods and tools to support the design, analysis, implementation, management, and optimization of operational business processes. It can be viewed as an extension of workflow management (WFM), where documents, information, and activities flow between participants according to existing process models and rules.

In the short term, BPM helps companies improve the profitability by decreasing costs and increasing revenues. In the long run, BPM helps create competitive advantage by improving organizational agility.

The BPM approach has its roots in business process reengineering. Business process reengineering is the radical redesign of an organization’s business. Reengineering takes a current process and simplifies to increase its efficiency and create new processes.

A well implemented BPM strategy enables a company to:

1. Gain greater visibility into processes

2. Identify root causes of bottlenecks within processes

3. Pinpoint hand-offs in processes

BPM will help a company to cut costs, improve services, achieve growth, or comply with regulations.

Steps to creating a BPM strategy:

1. Align customer-focused, financial, and operational goals with expectations of shareholders or owners.

2. Conduct assessment of core strategic and operational processes

3. Link strategic and operational processes with organizational objectives

4. Develop a process performance plan

5. Prioritize processes based on potential impact on strategic objectives

To put an effective BPM strategy into place, stress the need to focus strongly on desired outcomes – not on the people who carry out the operations or how they carry out the operations – activities and capabilities. Therefore the few basic rules to follow in creating a BPM strategy are:

• Describe operations in terms of desired outcomes

• Identify activities that support the desired outcomes

• Identify capabilities needed to support each of these activities

• Identify activities most critical to organizational success

• Design a more efficient way of operating

Most successful BPM solutions incorporate the following components: business process mapping, business rules engine, workflow automation, application integration, knowledge base, and business activity monitoring. (For explanations of the different terms, please refer to page 542)

Business Process Modeling (business process mapping) includes techniques and activities used as part of the larger business process management discipline. The purpose of modeling business processes is to create a blueprint of how the company works.

Before PBM initiatives can proceed and designers can identify those processes that are effective and those which are inefficient, they must be measured. Qualitative techniques are used to measure and improve the processes. Qualitative techniques are:

• Six Sigma: is a methodology to manage process variations that cause defects, defined as unacceptable deviation from the mean or target, and to systematically work toward managing variation to prevent those defects. It has 5 phases:

  • Define

  • Measure

  • Analyze

  • Design

  • Verify

• Total Quality Management (TQM): is a management strategy aimed at embedding awareness of quality in all organizational processes. Plan, Do, Check, and Act (PDCA) cycle is developed to achieve continuous improvement.

• ISO 9000: was developed as a standard for business quality systems by the International Organization for Standardization (ISO). To be certified, business must document their quality system and verify compliance through reviews and audits.

The predominant goal of process improvement teams is to eliminate the non-value-adding steps and to resolve quality problems by adding new processes or deleting, splitting, combining, expanding, or reducing existing processes.

BPM software helps organizations automate workflows and processes. BPM software:

5. Word Processors: one of the simplest ways to document a process is to use a text-based document processor.

6. Drawing Tools: flowcharts, data flow diagrams, integrated case tools etc. To show the big picture.

7. “Pure Play” BPM Tools: combine text and graphics and offer more advanced features such as a repository that allows reuse of resources and simulations.

8. Business Process Management Suites (BPMS): in which a business analyst could graphically compose a process model, optimize it through simulations and analysis, and execute it on a built in process engine.

9. BPMS-BI Bundle: including business analytics to enhance the features of their offerings.

Business value of BPM

Just gaining a better understanding of the current state of organizational processes is valuable in itself. However, eliminating non-valued-added processes or outsourcing non-core processes can have major positive effects one performance.

14.4 Change Management and Organizational Transformation

The ability to successfully introduce change to individuals and organizational units is critical to successfully implementing a new system.

Change Management is a structured approach to transition individuals, teams, and organizations from a current state to a desired state.

When changes in a system cause people to relate to others and work in ways that conflict with their basic values (corporate, cultural, and personal), a project’s success can be put at risk, despite the absence of any substantial technical issues. Faced with potential shifts in power, key stakeholders may consciously or unconsciously resist by delaying, sabotaging, or insisting on the modification of system development.

At the corporate level, it is important to keep in mind that no two organizations are exactly alike.

For these reasons, it is important to fit the change management plan and the process used to facilitate change management to the individual organization under review.

The change process is a structured technique to effectively transition groups or organizations through change.

Process models facilitate organizational change at an individual and corporate level. Most models are based on the simple three-stage model theorized by Kurt Lewin.

Lewin’s three-stage change process consists of three stages of change; unfreezing, change, and (re) freezing.

1. Unfreezing: people seek for a situation in which they feel relatively safe and have a sense of control. Talking about benefits of moving to what could be is seldom enough to move them from this frozen state, and significant efforts are often necessary to unfreeze people.

2. Change: referred to as transition. This stage often requires people to go through several stages of apprehension before they are prepared to move forward. It requires time.

3. Refreezing: the process of moving to a new place of stability.

Organizational Transformation is a major change in the way that an organization does business.

Kotter’s organizational transformation model consists of an eight-step change process that organizations should follow in order to successfully transform an organization. The eight steps are:

1. Establish a sense of urgency

2. Form a powerful guiding coalition

3. Create a vision

4. Communicate the vision

5. Empower others to act on the vision

6. Plan for and create short-term wins

7. Consolidate improvements and produce more change

8. Institutionalize the new approaches

Ten useful principles to assist in guiding successful change management:

1. Address the “human side” of change systematically

2. Start at the top

3. Involve every layer

4. Make the formal case

5. Create ownership

6. Communicate the message

7. Assess the cultural landscape

8. Address culture explicitly

9. Prepare for the unexpected

10. Speak to the individual

14.5 Managerial Issues

• Global and cultural issues

• Ethical and legal issues

• User involvement

• Change management

• Risk management

Chapter 16 – Acquiring and Developing Business

16.1. The Framework of IT Application Acquisition

The IT Acquisition Process

Step 1 – Planning, identifying, and Justifying IT-Based Systems

Step 2 – Creating an IT Architecture – it includes…

-Data required to fulfill the business goals and vision

-Application modules that will deliver and manage the information and data

-Specific hardware and software on which the application modules will run

-Security, scalability, and reliability required by the applications

-Human resources and procedures for implementing the IT project

Step 3 – Selecting an Acquisition Option…options include

-Build the system in-house

-have a vendor build a custom-made system

-buy an existing application and install it, with or without modifications, in-house or through a vendor

-Lease standard software from an ASP, or lease through utility computing or a software-as-a-service (SaaS) arrangement

-Enter into a partnership or alliance that will enable the company to use someone else’s application

-Use a combination of these approaches

Step 4 – Testing, installing, integrating, and deploying IT applications…tests involve

-Unit testing: testing units one at a time

-Integration testing: testing the combination of modules interacting with other applications

-Usability testing: testing the quality of the user’s experience when interacting with the portal or the web site

-Acceptance testing: determining whether the application meets the original business objectives and vision

Step 5 – Operations, Maintenance, and Updating

16.2. Identifying, Justifying, and Planning IT Systems Applications (Step 1)

IT Project Justification …evaluation thereof

• Explore the need for each system – find information needs of users and how the application will meet those needs

• Justify it from a cost-benefit perspective

Planning for the Specific IT Application

The initial scope of the project is defined in terms of cost, effort, schedule, and deliverables, and functional specifications are generated.

Runaway project – seem to have no end and usually fail eventually

…assessment of the risk of failure and how to manage that risk

…milestones signify key events in the completion of the project

16.3. Acquiring IT Applications: Available Options (Part 3)

Buy the applications (off-the-shelf approach)

Turkey approach – buying an existing commercial package

PROS buy option

-many off-the-shelf options available

-time savings

-you know what you get

-proven performance of package

-no hiring of specialists necessary to manage a project

-vendor updates software frequently

-price comparably low

CONS buy option

-may not exactly suit company’s needs

-difficult to modify

-company does not have control over software improvements

-difficult to integrate with existing systems

-vendors may drop a product or go out of business

Lease the applications

-high degree of maintenance/high purchasing cost  leasing especially beneficial – in general more beneficial for small-to-medium enterprises

Ways of leasing:

-Lease IT application from an outsourcer, which installs the app. and generally contracts the operation and maintenance

-Lease IT application from application service provider (ASP), which hosts app. at its data center and assembles the software needed by enterprises and packages them usually with outsourced development, operations, maintenance etc. (Oracle, Microsoft, IBM) – close to “software-as-a-service”

Software as a service (SaaS)

-rented software – all updates are provided during term of subscription – mostly web-based – cheaper than store-bought – merely requires web browser

Factors driving the switch to SaaS

-reducing risks of acquiring new software

-influencing product and service quality via an ongoing relationship with vendors

-changing usage commitments as business circumstances change

-preparing financially justifiable business cases

-predicting ongoing expenses more accurately

In-house development: Insourcing

-develop or build applications in-house  costly, but better suitable for organization’s needs, and differentiable from competitors

Development options for in-house development

Build from scratch: for specialized IT applications only – expensive – slow – best fit for organization needs

Build from components: constructed from standard components – commercially packaged and homegrown components must integrate tightly for component-based development to meet its requirements

Integrating applications: similar to build from components – entire applications are used – attractive for integration of applications from different business partners

Insourcing is challenging  most organizations rely on packaged applications or outsource application development/maintenance

Methods used in In-House development

Systems development life cycle (SDLC): Large IT projects involving infrastructure

Prototyping methodology: initial list of basic system requirements , used to build a prototype – further developed to together with user’s feedback – risk of endless loop of prototyping revisions

Web 2.0 or application 2.0 methodology: quick, incremental updates with close user involvement

END-USER DEVELOPMENT

End user development aka end user computing – development and use of ISs by people outside the IS department.

Reasons for end user development: Users without specific IT expertise can now develop their own IT applications with necessary tools  wikis, content management

Risks of end user management: end users may not be skilled enough  quality and cost may be jeopardized unless proper controls are installed – lack of documentation or consideration of security measures.

Three categories of potential quality risk:

-inappropriate tools used in IT application development

-risks associated with development process

-data management risks

OTHER ACQUISITION OPTIONS

Join an E-Marketplace or an E-Exchange: company “plugs” itself into a marketplace

Join a third-party auction or reverse auction: company “plugs” itself into a third-party auction

Engage in joint ventures: partnership for facilitating EC application development

Join a public exchange or a consortium (vertical exchange owned by a group of big players in the industry) – these may have applications developed to fit needs of companies in this industry

Hybrid approach: combination of what company does internally with an outsourced strategy – works well if outsourced partner offers higher security levels, faster time-to-market and superb service-level agreements

16.4. Selecting an Acquisition approach and other implementation issues

Criteria for selecting an IT acquisition approach

TABLE 16.2 – Criteria for determining which acquisition approach to use

-functionality and flexibility of packages

-information requirements

-user friendliness

-hardware and software resources

-installation difficulties; integration

-maintenance services requirements

-vendor quality and track record

-estimated total costs of ownership

-ability to measure tangible benefits

-personnel needed for development

-forecasting and planning for technological evolution

-scaling (ease, cost, limits)

-sizing requirements

-performance requirements

-reliability requirements

-security requirements

TABLE 16.3. – The rent vs. buy vs. build consideration

Consider software as a service (rent) if your company…needs to free IT resources to focus on critical business operations…has limited IT support…has rapidly changing computing needs and requirements

Consider a traditional license (buy) if…the application requires a lot of customization or integration…you have an available team of experienced IT personnel….your needs for computing resources are relatively stable…

Consider an in-house development (build) if…the application is unique…you have very expensive investment in legacy systems…you need a fixed amount of computing resources

VENDOR AND SOFTWARE SELECTION

Externally acquired IT applications should have following advantages:

-on time – completion and implementation of the system by the scheduled target date

-on budget – system cost is within the budget

-full functionality – system has all features in the original specifications

Six steps in selecting a vendor and software package

-determine evaluation criteria and weigh importance of each

-identify potential vendors

-evaluate vendors and packages and interview current users

-choose the vendor and package based on criteria, weights, and feedback

-negotiate a contract and get legal advice

-establish a service-level agreement (SLA)

16.5. Connecting to databases, enterprise systems, and business partners (STEP 4)

Connecting to databases

Most IT applications need to be connected to a database. – e.g. customers with a web browser can access catalogs in the seller’s database

Connecting to back-end systems

Enterprise Application Integration (EAI) – integrate large systems – common integration results from the need to integrate an ordering system with the back office

Connecting to business partners

Important especially for B2B e-commerce – done via EDI, EDI/internet, XML, and extranets – involves connecting a company’s front- and back-office e-commerce applications

WEB SERVICES AND SERVICE-ORIENT

ED ARCHITECTURE (SOA) FOR INTEGRATION

Web services. Self-contained, self-describing business and consumer applications delivered over the internet that users can select and combine through almost any device

16.6. Business process redesign

…related to business process reengineering

DRIVERS OF PROCESS REDESIGN

Business process – collection of activities that convert inputs into outputs

Reasons for redesign…

-adding commercial software

-restructuring or eliminating old processes prior to automation

-need for information integration

-reducing cycle time

-need for customization

-streamlining the supply chain

-improving customer service and implementing CRM

-participating in private or public e-marketplaces

-conducting e-procurement

-enabling direct online marketing

-transforming to e-business

METHODOLOGIES FOR RESTRUCTURING

Business process reengineering (BPR) – fundamentally and radically changing a business process to achieve dramatic improvement  today refined to business process redesign – either individual processes or a group of processes or redesign of the entire enterprise – further extension is business process management

Business Process Management (BPM) – new method for restructuring that combines workflow systems and redesign methods – three process categories: people-to-people, systems-to-systems, systems-to-people interactions – blending of workflow, process management, and applications integration

THE ROLE OF IT BUSINESS PROCESS REDESIGN

Productivity and quality by automating existing processes – new approach: first recognize powerful solutions that make redesign and BPR possible, and then seek processes that can be helped by such solutions

BPR AND INFORMATION INTEGRATION

Integration should work along the extended supply chain –

BPR FAILURES – high risk, inappropriate change management, failure to plan, internal politics, lack of participation and leadership, insufficient stakeholder involvement, poor analysis of business processes, inflexible software, lack of motivation, and lack of top management support

BPR SUCCESSES – many cases of success especially when less than the entire organization is restructured

Chapter 17 – Information Technology Economics

17.1 Technology and economic trends and the productivity paradox

Technological and financial trends:

Expanding power and declining costs enable new and more extensive applications of information technology.

Hardware: capabilities are growing at an exponential rate

• Moore’s law: assumed that the number of transistors, and thus the power of a computer chip would double every year, while the cost remained the same

  • Later revised to a doubling every 18 – 24 months

What does this growth in computer power mean in economic terms?

• Decreasing costs over time and thus more efficient

• New uses for information technology and thus become more effective

• Increase in attractiveness of automating more manual jobs

Productivity paradox – the difference between measures of investment in information technology and measures of output at the national level

Economists define productivity as outputs divided by inputs. Outputs = units produced * their average value.

Possible explanations of the productivity paradox

• Problems with data or analyses hide productivity gains from IT

• Gains from IT are offset by losses in other areas

• IT productivity gains are offset by IT costs or losses

The productivity offsetting factors largely reflect problems with the administration of IT, rather than with the technologies themselves  solution: better planning or more effective management techniques

The critical issue is not whether and how IT increases productivity in the economy as a whole, but how it improves the organizations’ own productivity.

17.2 Evaluating IT investments: Needs, Benefits, Issues and Traditional Methods

Why justify IT investments?

• Increased pressure for financial justification

  • “Back-to-basics” movement (positive result of the crash) – return to carefully checking and scrutinizing any request for any technology funding

• Pressure from top management

• Internal competition for funding

• Large amount of money involved

• Week business conditions

• Forces IT into better alignment with the corporate business strategy

• Increases the credibility of IT projects

Issues in IT justification

• What needs to be justified? When should justification take place?

  • Formal justification may not be needed when:

    • Investment relatively small

    • Relevant data not available

    • The IT project is mandated

• IT investment categories:

• Investment in infrastructure

  • E.g. data center, networks, data warehouse, IT security system

  • Exist for a long time; is shared by many applications

• Investment in specific applications

• Specific systems and programs for achieving certain objectives

The IT justification process

5 areas must be considered: strategic consideration, tactical consideration, operational consideration, intangibles, and tangibles

Major steps:

• Lay an appropriate foundation for analysis, and then conduct your ROI.

• Conduct a good research on metrics (including internal and external metrics) and validate them.

• Justify, clarify, and document the costs and benefits assumptions.

• Document and verify all figures used in the calculation.

• Make figures as realistic as possible and include risk analysis.

• Do not leave out strategic benefits, including long-term ones. Is the project really bolstering the company's competitive and strategic advantage?

• Be careful not to underestimate costs and overestimate benefits (a tendency of many technology lovers).

• Commit all partners, including vendors and top management.

Difficulties in measuring productivity and performance gains:

• Incorrectly defining what is measured

  • Can be overcome by using appropriate metrics and key performance indicators

• Time lags may throw off productivity measurements

• Relating IT expenditure to organizational performance

The problem of intangible benefits

Intangible benefits e.g.: faster time to market; employee, user, and customer satisfaction; easier distribution; greater organizational agility; improved control

Common when knowledge workers are involved; especially common in service and government applications

Difficult to place an accurate monetary value on them. An analyst could ignore intangible benefits, but doing so implies their value is zero, and this may lead the organization to reject IT investments that could substantially increase revenue and profitability.

Handling intangible benefits

• Rough estimates of monetary value for all intangible benefits, and then conduct a financial analysis  assumptions used in these estimates are debatable

• Think broadly and softly - measures such as customer and partner satisfaction, customer loyalty, improved responsiveness  subjective measures can be objective if used consistently over time

• Pay your freight first – think about the short-term benefits that can “pay the freight”

• Follow the unanticipated – follow opportunities that present themselves

Revenue models – examine potential additional revenues

• Sales

• Transaction fees

• Subscription fees

• Advertising fees

• Affiliate fees (referring customers to other websites)

• Increased revenues via products or services from a larger global market because of more effective product marketing on the Web

• Increased margins attained by using processes with lower internal cost (e.g., using lower-cost computers) and from higher prices because of value-added services to the customer (e.g., information attached to product)

• Increased revenues as a consequence of becoming an online portal

• Value-added content sold from selling searches, access to data, and electronic documents

The impact of risk

Another potential benefit is that IT can be used to decrease risk to companies by providing them with timely information. The risk to customer may also be reduced; online tracking, product comparison engine, picture of product availability, linking the transaction to third-party security providers

Evaluating IT investment by traditional cost-benefit analysis or ROI

ROI – measures effectiveness of management generating profits with its available

assets

• Calculated by: dividing net annual income attributable to a project by the cost of the assets invested in the project

NPV – converts future values of benefits to their present-value equivalent

IRR – the discount rate that makes the NPV of those cash flows equal to zero

Payback period – the point in which the yearly benefits of a project equal the costs

17.3 Advances methods for justifying IT investment and using IT metrics

Justification methods are generally categorized in to 4 types:

1. Financial approach

2. Multicriteria approach (financial impact and non-financial impacts)

3. Ratio approach

4. Portfolio approach (grids)

Advanced methods for evaluating IT investments:

Business case: This is a process of creating a document for justifying an IT investment, including funding an entire IT company. It provides the bridge between an initial IT plan and its execution. Its purpose is not only to get approval and funding, but also to provide the foundation for tactical decision-making and technology risk management.

Total cost (and benefits) of ownership: This approach calculates the total cost over the lifetime of a specific IT system, hardware, or project. The cost includes acquisition cost, operations cost, and control cost.

A concept similar to TCO is total benefit of ownership (TBO). These benefits cover both tangible and intangible benefits. By calculating and comparing both TCO and TBO, one can compute the payoff of an IT investment  Payoff = TBO - TCO

Benchmarks: This method is appropriate for evaluating EC infrastructure. Benchmarks may be industry metrics or best practices recommended by professional associations or consultants, and are often available from trade associations within an industry or from consulting firms.

Value analysis: With the value analysis method, the organization evaluates intangible benefits using a low-cost, trial EC system before deciding whether to commit to a larger investment in a complete system.

Information economics: Using the idea of critical success factors, this method focuses on key organizational objectives and potential impacts of the proposed EC project on those objectives.

Scoring methodology: This method assigns weights and scores to various aspects of the evaluated project and then calculates a total score. Information economics methods are used to determine the aspects to be included in the scoring.

Management by maxim: An organization may use this method to determine how much it should invest in large EC (and IT) infrastructures. It is basically a combination of brainstorming and consensus-reaching methodologies.

Real-options valuation: This is a fairly complex assessment method, and used only infrequently. It can be fairly accurate in certain situations. The idea behind this method is to look at future opportunities that may result from the EC investment and then place monetary values on them.

Balanced scorecard: This method evaluates the health or performance of the organization by looking at a broad set of factors; customer metrics, financial metrics, internal business processes metrics, and learning and growth metrics.

Performance dashboard: This is a variant of the balanced scorecard that is widely used in e-business situations. A dashboard is a single view that provides the status of multiple metrics (see Chapter 13).

Activity-based costing: This managerial accounting concept was adapted for assessing EC investments in recent years and has been proven to be fairly successful.

IT Metrics

A metric is a specific, measurable standard against which actual performance is compared. Often expressed in terms of ratios.

Benefits:

• Communicate the strategy to the workforce through performance targets

• Increase accountability when metrics are linked to performance-appraisal programs

• Align the objectives of individuals, departments, and divisions to the enterprise's strategic objectives

• Evaluate the performance of IT systems, including Web-based systems

• Assess the health of companies

• Define the value proposition of business models

A metric need to be defined properly with a clear way to measure them, otherwise, what the metrics actually measure may be open to interpretation.

17.5 Economic aspects of IT and web-based systems

Cost reduction and productivity increase

For regular physical products, the average per-unit cost declines up to a certain quantity, but then, due to increased overhead (e.g., adding a manager) and marketing costs, the cost will start to increase. For digital products, the cost will continue to decline with increased quantity. The variable cost in the case of digital products is very little, so once the fixed cost is covered, an increase in quantity produces a continuous decrease in average cost

However, even for non-digital products, IT and e-commerce can shift economic curves. The production function will decline since you can get the same quantity with less labor and IT cost. Also, the transaction cost for the same quantity (size) will be lower due to computerization. And finally, the administrative cost for the same quantity will also be lower.

Chargeback – all costs of IT are allocated to users as accurately as possible, based on actual costs and usage levels

Behavior-oriented chargeback – sets IT service costs in a way that meets organizational objectives, even though the charges may not correspond to actual costs

Because of the complexity and associated risks of developing computer systems, some IT managers refuse to develop systems in-house beyond a certain size. The “one, one, ten rule” says not to develop a system if it will take longer than one year, has a budget over one million dollars, and will require more than ten people. Following this strategy, an organization will need to buy rather than develop large systems, or do without them. On the other hand, some organizations believe that if you are large enough, you should not outsource your IT.

Major reasons why IT projects fail:

• The business needs have been changed

• The project does not deliver what it is supposed to

• The problem addressed with IT is not a priority anymore

• The cost exceeds the budget

• The project does not support the business strategy

Part Q: Technology guide 1: Hardware

Computer hardware is composed of the following components:

• Central processing unit (CPU) manipulates the data and controls the tasks done by the other components.

• Input devices accept data and instructions and convert them to a form that the computer can understand.

• Output devices present data in a form people can understand. The CPU manipulates.

• Primary storage (internal storage) temporarily stores data and program instructions during processing.

• Secondary storage (external) stores data and programs for future use.

• Communication devices provide for the flow of data from external computer networks to the CPU and from the CPU to computer networks.

Today’s computers are based on integrated circuits (chips), which include millions of subminiature transistors that are all interconnected. Each transistor can be in either an “on” or “off” position. These “on-off” states are used to establish a binary 1 or 0 for storing one binary digit, or bit. 8 bits is known as a byte.

The two most commonly used coding schemes are ASCII (American National Standard Code for Information Interchange) and EBCDIC (Extended Binary Coded Decimal Interchange Code).

Unicode is a 16-bit code that has the capacity to represent more than 65,000 characters and symbols.

The unit measurement of the color of each cell of a grid when representing pictures is called a pixel.

Time is represented in fractions of a second. The following are common measures of time:

• Millisecond = 1/1000 second

• Microsecond = 1/1,000,000 second

• Nanosecond = 1/1,000,000,000 second

• Picosecond = 1/1,000,000,000,000 second

Size is measured by the number of bytes. Common measures of size are:

1. Kilobyte = 1,000 bytes (actually 1,024)

2. Megabyte = 1,000 kilobytes = 10⁶ bytes

3. Gigabyte = 10⁹ bytes

4. Terabyte = 10¹² bytes

Computer hardware has evolved through several stages or generations of technology:

• The first generation of computers used vacuum tubes to store and process information.

• The second generation computers used transistors for storing and processing information.

• The third-generation computers used integrated circuits for storing and processing information

• The fourth generation computers used very large scale-integrated (VLSI) circuits to store and process information. With ultra-large-scale integration (ULSI), 100 million transistors could be placed on a chip. Late fourth generation computers use grand-scale integrated (GSI) circuits.

• The fifth generation of computers uses massively parallel processing to process.

Computers are distinguished on the basis of their processing capabilities.

Supercomputers are the computers with the most processing power. They use the technology of parallel processing.

Mainframes are not as powerful and generally not as expensive as supercomputers. Many large corporations, where data processing is centralized and large databases are maintained, use mainframe computers.

Midrange computers include minicomputers and servers.

Minicomputers are smaller and less expensive than mainframe computers and are usually designed to accomplish specific tasks such as process control, scientific research, and engineering applications.

Servers typically support computer networks, enabling users to share files, software, and other network resources. It has large amounts of primary and secondary storage and a powerful CPU.

Workstations are typically based on RISC (reduced instruction set computing) architecture and provide both very-high-speed calculations and high-resolution graphic displays.

Microcomputers, also called personal computers (PCs) are the smallest and least expensive category of general-purpose computers.

Notebook computers are small, easily transportable, lightweight microcomputers that fit easily into a briefcase.

Platforms for computing and communications include such mobile devices such as personal digital assistants (PDAs) or handheld personal computers. Another platform is mobile phone handsets with wireless and Internet access capabilities. A PDA is a palmtop computer that combines a processor with a multitasking operating system using a pen (stylus) for handwriting recognition rather than keyboard input.

Global positioning systems (used by sailors, hikers, soldiers etc.) are making their way into PDAs.

Wi-Fi, wireless fidelity, has had a huge impact on the ability to connect to the internet via one’s laptop or other mobile computing device.

Tablet PC technology runs touch-sensitive displays that you can tap with a pan, forgoing a mouse or touch pad.

Web pads (Web tablets) are the second generation of tablet PCs. It is a easy-to-use machine that is always at hand and at the ready.

Embedded computers are placed inside other products to add features and capabilities.

Active badges can be worn as ID cards by employees who wish to stay in touch at all times while moving around the corporate premises.

Memory buttons are nickel-sized devices that store a small database relating to whatever it is attached to. These devices are analogous to a bar code, but with far greater informational content and a content that is subject to change.

A smart card is an even smaller form of mobile computer, which has resulted from the continuing shrinkage of integrated circuits. Smart cards contain a small CPU, memory and an input/output device that allow these “computers” to be used in everyday activities such as person identification and banking.

The computers described so far are considered “smart” computers, which have intelligence coming from their built-in microprocessor and memory. However, mainframe and midrange computers also can use dumb terminals, which are basically input/output devices, without processing capabilities. These terminals are also called X terminals. Two extensions of these terminals are discussed here:

• A network computer (NC), also called a thin computer, is a desktop terminal that does not store software programs or data permanently.

• Windows-based terminals (WBTs) are a subset of the NC. Although they offer less functionality than PCs, WBTs reduce maintenance and support costs and maintain compatibility with Windows operating systems.

The central processing unit (CPU) is the center of all computer-processing activities, where all processing is controlled, data are manipulated, arithmetic computations are performed, and logical comparisons are made. The CPU consists of the control unit, the arithmetic-logic unit (ALU), and the primary storage (or main memory). The CPU is also referred to as a microprocessor, because of its small size.

A computer system with two or more processors is referred to as a parallel processing system. Systems with large numbers of processors are called massively parallel processor (MPP) systems.

The arrangement of components and their interactions is called computer architecture, which includes the instruction set and the number of processors, the structure of the internal buses, the use of caches, and the type and arrangements of input/output (I/O) device interfaces. Every processor comes with a unique set of operational codes or commands that represent the computer’s instruction set. An instruction set is the set of machine instructions that a processor recognizes and can execute. Today, two instruction set strategies dominate the processor instruction sets of computer architecture: complex instruction set computer (CISC) and reduced instruction set computer (RISC).

The arithmetic-logic unit performs required arithmetic and comparisons, or logic, operations. It adds, subtracts, multiplies, divides, compares and determines whether a number is positive, negative or zero.

Primary storage or main memory has four basic purposes:

• To store data that have been input until they are transferred to the ALU for processing.

• To store data and results during intermediate stages of processing.

• To hold data after processing until they are transferred to an output device.

• To hold program statements or instructions received from input devices and from secondary storage.

Primary storage utilizes integrated circuits, which are interconnected layers of etched semiconductor materials forming electrical transistor memory units.

A bus is a channel through which data are passed in electronic form. Three types of buses link the CPU, primary storage, and other devices in the computer system. The data bus moves data to and from primary storage. The address bus transmits signals for locating a given address in primary storage.

The control bus transmits signals specifying whether to “read” or “write” data to or from a given primary storage address, input or output device.

The capacity of a bus, called bus width, is defined by the number of bits they carry at one time.

The control unit reads instructions and directs the other components of the computer system to perform the functions required by the program.

The series of operations required to process a single machine instruction is called a machine cycle, which consist of the instruction cycle (sets up circuitry to perform a required operation) and the execution cycle.

There are two categories of memory: the register (part of the CPU that is very fast) and the internal memory chips, which reside outside the CPU and are slower. The internal memory is used to store data just before they are processed by the CPU. Immediately after processing it comprises two types of storage space: RAM and ROM.

Data and instructions are entered into the computer though input devices and processing results are provided through output devices.

Secondary storage is separate from primary storage and the CPU, but directly connected to it. Magnetic tape is kept on a large open reel or in a small cartridge or cassette. Today, cartridges and cassettes are replacing reels because they are easier to use and access. The main advantages of magnetic tape are that it is inexpensive, relatively stable, and long lasting, and that it can store very large volumes of data. The main disadvantage is that it must be searched from the beginning to find the desired data, which is called sequential access.

Magnetic disks (or hard disks) assign specific address locations for data, so that users can go directly to the address without having to go through intervening locations looking for the right data to retrieve.

Optical storage devices have very high storage density. Examples are compact disk read-only memory (CD-ROM), digital video task (DVD), and fluorescent multilayer disk (FMD-ROM).
 

Variants of the mouse (device to point a cursor at a desired place on the screen) are the trackball, optical mouse and the pen mouse. An alternative to the mouse is a touch screen.

A stylus is a pen-style device that allows the user either to touch parts of a predetermined menu of options or to handwrite information into the computer.

Joysticks are used primarily at workstations that can display dynamic graphics (also used in video games).

Electronic forms provide a standardized format whose headings serve as prompts for the input. In form interaction, the user enters data or commands into predesignated spaces in a form. A whiteboard is an area on a display screen that multiple users can write or draw on.

Many retail organizations utilize point of sale (POS) terminals, which have a specialized keyboard.

Barcode scanners scan the black-and-white bars written in the Universal Product Code (UPC). The wand reader is a special handheld barcode reader that can read codes that are also readable by people.

An optimal mark reader is a special scanner for detecting the presence of pencil marks on a predetermined grid (e.g. mc test answer sheets).

Magnetic ink character readers (MICRs) are used chiefly in the banking industry. Information is printed on checks in magnetic link that can be read by the MICR technology.

With an optical character reader (OCR), source documents such as reports, typed manuscripts, and books can be entered directly into a computer without the need for keying.

Voice recognition devices convert spoken words into digital form. The process of communicating with voice recognizers is called natural language processing.

Digitizers are devices that convert drawings made with a pen on a sensitized surface to machine-readable input.

Sensors are extremely common technologies embedded in other technologies. They collect data directly from the environment and input them into a computer system.

The data entered into a computer can be visible on the computer monitor, which is basically a video screen that displays both input and output.

Impact printers use some form of striking action to press a carbon or fabric ribbon against paper to create a character, while nonimpact printers overcome the deficiencies of impact printers (e.g. laser, thermal, ink-jet printers).

Plotters are printing devices using computer-driven pens for creating high-quality black-and-white or color graphic images, charts, graphs and drawings.

Synthesized voice refers to the technology by which computers “speak”.

Multimedia refers to a group of human-machine communication media. The construction of a multimedia application is called authoring. Multimedia merges the capabilities of computers with television sets, VCRs, CD players, DVD players, video and audio recording equipment, and music and gaming technologies.

Part R: Technology Guide 2: Software

Software contains several computer programs, which are sequences of instructions. Today’s software uses the stored-program concept, which means that stored software programs are used on the CPU. These programs also consist of documentations which are descriptions of the functions of these programs to help people use the program.

There are two types of software:

Application software: a, written in programming language, set of instructions to use the hardware to perform some data or information processing e.g. a word processing program. In other words, application software primarily provides information.

System software: acts as an intermediary between the hardware and application programs on a computer. With system software, a computer system can “regulate” itself and it provides commonly used sets of instructions for the applications in use.

Custom application software: application software developed for a specific task in a company. These can be developed in-house or by an outside vendor which is then called a contract software.

Off-the-shell application software: software developed, by a vendor, which is sold, leased or renter to companies. When several programs are grouped together, they are called packages. These packages can contain general-purpose application programs, which support general types of information processing, or development tools which are designed to let the user construct their own application.

Spreadsheets: User can enter data or numbers into a grid of rows and columns. Functions can be added and simple constructions can be made within the spreadsheet. (Office Excel)

Data management: A program to store, manage and retrieve data when necessary. There are two types of data management software: Filing programs and Database management systems (DBMs). The former one is based on traditional, manual data filing processes whereas the latter one uses the computer for accurate and quick storage en retrieval of data. (Office Access)

Word processing: This allows the user to manipulate text and contains many features such as a thesaurus, grammar checking, a formatting program and so forth. (Office Word)

Graphics software: allows user to create, store and display charts, drawings. The three basic programs are:
- Presentation graphics: to create graphs, images and charts.

- Analysis graphics: to present analyzed data such as statistical data in graphical forms such as pie and line charts.
- Engineering graphics: to shorten development time of application and to increase productivity of draftsmen. (CAM,CAD)

Communication software: to exchange information. See for more information: Tech. Guide 4

Speed recognition software: to receive and recognize voice and translate it into an instruction. The Discrete speech recognition can only interpret one word at a time, so is only useful, for example, to control a computer. Continuous speech recognition can interpret a continuing stream of words, for instance, dictating a memo.

Text-to-Speech: software to convert computer text into voice. This is commonly used by blind people and voice portals.

Software suites: a bundle of application software packages e.g. Microsoft Office.

Groupware: To help groups of people or a team to work together by sharing information and by controlling the workflow. Scheduling, project management and using shared databases are the common workgroup software related tasks.

Middleware: communication between a variety of hardware and software is complex with their different computer language. Middleware are used to keep track of the locations of the software modules that needs to be link together and manages the actual exchange of information.

Enterprise software: to manage the whole enterprise: supply-chain management, inventory replenishment, logistics and so forth.

Systems software controls and supports the computer hardware and its information processing activities. Systems software also facilitates the programming, testing, and debugging of computer programs. There are three major functions of systems software: controlling, supporting and developing.

Operating system is an example of the controlling function. Communications between its screens, storage devices are controlled. It also receives and directs inputs from keyboards. An example of an OS is Windows Vista. If an operating system is portable, it can be run on different computers.

Operating System Functions. The operating system performs four major functions

in the operation of a computer system: job management, resource management,

server consolidation, and data management.

1. Job management is the preparing, scheduling, and monitoring of jobs for continuous

processing by the computer system. A job control language (JCL) is a special

computer language found in the mainframe-computing environment that

allows a programmer to communicate with the operating system.

2. Resource management is controlling the use of computer system resources

employed by the other systems software and application software programs

being executed on the computer. These resources include primary storage, secondary

storage, CPU processing time, and input/output devices.

3. Server consolidation is all about creating a simpler, more rational and manageable

infrastructure. There are four possible consolidation strategies: logical consolidation,

physical consolidation, workload consolidation, and application consolidation.

Consolidation also leads to much more flexible, consistent, and

efficient use of resources than distributed servers by allowing customers to strike

the right balance within each server.

4. Data management is the controlling of the input and output of data as well as their

location, storage, and retrieval. Data management programs control the allocation

of secondary storage devices, the physical format and cataloging of data storage,

and the movement of data between primary storage and secondary storage devices.

Graphical user interface (GUI): a system which uses visible objects in which users have direct control over. Complex commands are “hided” from the user. (Windows)

The difference between multiprogramming and multiprocessing is that the former is entirely based on software whereas the latter one is primarily a hardware implementation.

Time-sharing: is sharing a CPU among a number of users operating online, each using different input/output terminals.

Computer Languages
1^st Machine Language: O–1 Long, difficult programming
2^nd Assembly Language: Assemble repetitive instructions, shorter code

3^rd Procedural Languages: Include commands, shorter code

4^th Nonprocedural Languages: Application generators, commands specify results

5^th Intelligent Languages: Natural language processing

Object-Oriented programming language: models a system as a set of objects. OOP tries to manage the behavioral complexity of a system. An object is a specific instant of a class. Objects have data associated with them, attributes. Objects exhibit behaviors, which are things that they do. Methods are the procedures or behaviors performed by an object. Objects interact with each other with messages. There are requests to exhibit the desired behavior. If data is inaccessible, information is hiding, encapsulation. With inheritance, a class of objects can be defined as a special case of a more general class.

The Unified Modeling Language (UML). Developing a model for complex software systems is as essential as having a blueprint for a large building.The UML is a language for specifying, visualizing, constructing, and documenting the artifacts (such as classes, objects, etc.) in object-oriented software systems.

Visual programming language: Visual programming allows developers to create applications by manipulating graphical images directly, instead of specifying the visual features in code. These languages use a mouse, icons, symbols on the screen, or pull-down menus to make programming

easier and more intuitive. (Visual Basic)

The standard language the Web uses for creating and recognizing hypermedia documents is the Hypertext Markup Language (HTML). Documents containing the same information can be presented in a number of different ways when written in HTML. The World Wide Web uses Uniform Resource Locators (URLs) to represent hypermedia links and links to network services within HTML documents.

Java is an object-oriented programming language which gives programmers the ability to develop applications

that work across the Internet. JavaScript is an object-oriented scripting language developed for client/server applications. It allows users to add some interactivity to their Web pages. Many people confuse JavaScript with Java.There is

no relationship between these two programming languages. JavaScript is a very basic programming language and bears no relationship to the sophisticated and complex language of Java.

The major software tool for accessing and working with the Web is the Web browser. It includes a point-and-click GUI that is controlled via a mouse or some keyboard keys. Browsers can display various media and they are used also to activate the hyperlinks. Microsoft’s Explorer is the major browser.

CASE TOOLS

Computer-aided software engineering (CASE) is a tool for programmers, systems analysts, business analysts, and systems developers to help automate software development and at the same time improve software quality. CASE is a combination of software tools and structured software development methods.The tools automate the software development process, while the methodologies help identify those processes to be automated with the tools.

CASE tools often use graphics or diagrams to help describe and document systems and to clarify the interfaces or interconnections among the components. They are generally integrated, allowing data to be passed from tool to tool.

CASE tools may be broken down into two subcategories: toolkits and workbenches. A toolkit is a collection of software tools that automates one type of software task or one phase of the software development process. A CASE workbench is a collection of software tools that are interrelated based on common assumptions about the development methodology being employed.

CASE tools have several advantages:

• CASE improves productivity by helping the analyst understand the problem and how to solve it in an organized manner.

• CASE facilitates joint application and design (JAD) sessions, resulting in better interaction among users and information systems professionals.

• CASE makes it easier to create prototypes, so that users can see what they are going to get at an early stage in the development process.

• CASE makes it easier to make system design changes as circumstances change.

CASE tools also have disadvantages. A lack of management support for CASE within organizations can be a problem. CASE is very expensive to install, train developers on, and use properly. Many firms do not know how to measure quality or productivity in software development and therefore find it difficult to justify the expense of implementing CASE. In addition, the receptivity of professional programmers can greatly influence the effectiveness of CASE. Many programmers who have mastered one approach to development are hesitant to shift to a new method.

The importance of software in computer systems has brought new issues and trends to the forefront for organizational managers. These issues and trends include:

5. Software evaluation and selection: Understanding the organization’s software needs and identifying the criteria that will be used in making the decision. Once the software requirements are established, specific software should be evaluated by an evaluation team, which will study the proposed alternatives and find the software that promises the best match between the organization’s needs and the software capabilities.

6. Software licensing: To protect their investment, vendors must protect their software from being copied and distributed by individuals and other software companies. A company can copyright its software. This mean that the U.S. Copyright Office grants the company the exclusive legal right to reproduce, publish, and sell that software. The Software and Information Industry Association (SIIA) enforces software copyright laws. When IS managers find proof of purchase for software, they should get rid of the software or purchase new licenses for its use. A license is permission granted under the law to engage in an activity otherwise unlawful.

7. Software upgrades: This is also known as software maintenance. Software vendors revise their programs and sell new versions often.

8. Software defects: Too often, computer program code is inefficient, poorly designed and riddled with errors. Good software should be usable, reliable, defect free, cost effective, and maintainable.

9. Malware and Pestware: On many computers one can find software that is running without the knowledge of the computers’ owners. Such types of software are known as malware. It is installed by vendors who want to find information about you. A well-known type of such software is spyware.

10. Open systems: This concept refers to a model of computing products that work together. This is done by using the same operating system with compatible software on all the different computers that would interact with one another in an organization.

11. Open source software: This kind of software is software made available in source code form at no cost to developers. This software is in many cases more reliable than proprietary software. Because the code is available to many developers, more bugs are discovered and fixed early and quickly.

12. Shareware and freeware: Software where the user is expected to pay the author a modest amount for the privilege of using it. Freeware is software that is free. Both help to keep software costs down.

13. Software privacy: This issue this critical to the advancement of software and the ability to innovate and improve software.

14. Service-oriented architecture (SOA): a framework for constructing and interlinking a company’s back-end systems in order to make the computing systems more flexible and cost-effective.

15. Autonomic computing: this refers to computing systems that can manage themselves given high-level objectives from administrators.

16. Virtualization: computers no longer have to be dedicated to a particular task. Applications and users can share computing resources, remaining unaware that they are doing so.

Part S: Technology Guide 3: Data and Databases

There are three basic models for logically structuring databases: hierarchical, network, and relational. Four additional models are emerging: multidimensional, object-oriented, small-footprint, and hypermedia. Using these various models, database designers can build logical or conceptual views of data that can then be physically implemented into virtually any database with any DBMS.

The hierarchical database model relates data by structuring data into an inverted “tree” in which records contain two elements:

1. A single root or master field, often called a key, which identifies the type, location, or ordering of the records.

2. A variable number of subordinate fields that defines the rest of the data within a record.

The network database model creates relationships among data through a linked-list structure in which subordinated records (members) can be linked to more than one parent (owner). Many-to-many relationships are possible with this model, as it places no restrictions on the number of relationships or sets in which a field can be involved. However, network databases are very complex. It is by far the most complicated type of database to design and implement.

The relational database model is based on the simple concept of tables in order to capitalize on characteristics of rows and columns of data. In a relational database, the tables are called relations, and the model is based on the mathematical theory of sets and relations. Each row of data is equivalent to a record, and each column of data is equivalent to a field. In the relational model terminology, a row is called a tuple, and a column is called an attribute.

In a relational database, three basic operations are used to develop useful sets of data:

• The select operation creates a subset consisting of all records in the file that meet stated criteria.

• The join operation combines relational tables to provide the user with more information than is available in individual tables.

• The project operation creates a subset consisting of columns in a table, permitting the user to create new tables that contain only information required.

Extensible Markup Language (XML) databases can store whole documents in their native XML format. This makes it easier to search by title, author or keywords etc.

Query languages are computer languages used to make queries into databases and information systems. They can be classified according to whether they are database query languages or information retrieval query languages.

SQL (Structured Query Language) is the most popular computer language used to create, modify, retrieve and manipulate data from relational database management systems.

In relational databases, normalization is the restructuring of database fields and tables. It eliminates redundancy, organizes data efficiently, reduces the potential for anomalies during data operations, and improves data consistency.

A nonnormalized database can suffer from data anomalies:

• A nonnormalized database may store data representing a particular referent in multiple locations, called an update anomaly, yielding inconsistent data.

• A nonnormalized database may have inappropriate dependencies. Adding data to such a database may require first adding the unrelated dependency, called insertion anomalies.

• Similarly, such dependencies can hinder deletion, called deletion anomalies.

• A nonnormalized database can suffer from inferential integrity problems where data cannot be added into multiple tables simultaneously.

The four special data models which are currently emerging are described below:

• Multidimensional database: enables end users to quickly retrieve and present complex data that involve many dimensions.

• Deductive databases

• Multimedia and hypermedia databases

• Small-footprint databases: enable organizations to put certain types of data in the field where the workers are located.

• Object-oriented databases

Database administrators are IT specialists responsible for the data as well as for ensuring that the database fulfils the users’ business needs, in terms of functionality:

1. They play a significant role in training users about what data are available and how to access them.

2. They must balance the business advantages of widespread access with the threat of corporate espionage, sabotage by disgruntled employees, and database damage.

3. They need to ensure the reliability of databases under their case by managing daily operations.

4. They are responsible for ensuring that the data contained in the database are accurate, reliable, verifiable, complete, timely and relevant.

IP storage enables servers to connect to SCSI (small computer system interface) storage devices and treat them as if they were directly attached to the server, regardless of the location. Traditionally, data management tasks are handled by tape and disk devices directly attached to each server in the network, called direct attached storage (DAS). Network attached storage (NAS) is an IP-based and Ethernet-based network storage architecture replacing the general-purpose file server with a server running a custom operating system that is optimized for data processing and management. A storage area network (SAN) can solve problems associated with sending storage data over networks by building a separate high-speed network just for storage devices, servers and backup systems.

Part T: Technology Guide 4: Telecommunications

Telecommunications refer to different types of geographically spread out communication through means of common carriers, including telephone, television, and radio. Data communication is the electronic collection, exchange, and processing of data or information, including text, pictures, and voice, that is digitally coded and intelligible to a variety of electronic devices. \

In contemporary organizations, communications technologies are incorporated. Businesses consider electronic communications extremely significant for reducing time and distance limitations. Telecommunications plays a special role when organization environment is based on international relations with customers, suppliers, vendors, and regulators in a world that is continuously awake and doing business.

A telecommunications system is a collection of compatible hardware and software arranged to communicate information from one location to another by transmitting text, data, graphics, voice, documents, or full-motion video information.

The major components are:

1. Hardware: all types of computers (e.g., desktop, server, and mainframe) and communications processors (such as a modems or small computers dedicated solely to communications).

2. Communications media: the physical media through which electronic signals are transferred; includes both wire line and wireless media.

3. Communications networks; the linkages among computers and communications devices.

4. Communications processors: devices that perform specialized data communication functions; includes front-end processors, controllers, multiplexers, and modems.

5. Communications software: software that controls the telecommunications system and the entire transmission process.

6. Data communications providers: regulated utilities or private firms that provide data communications services.

7. Communications protocols: the rules for transferring information across the system.

8. Communications applications: electronic data interchange (EDI), teleconferencing, videoconferencing, e-mail, facsimile, electronic funds transfer, and others.

In order to transmit and receive information, a telecommunications system must do the following separate functions:

• Transmit information.

• Establish the interface between the sender and the receiver.

• Direct messages along the most efficient paths.

• Process the information to ensure that the right message gets to the right receiver.

• Check the message for errors and rearrange the format if necessary.

• Convert messages from one speed to that of another communications line or

• from one format to another.

• Control the flow of information by routing messages, polling receivers, and maintaining information about the network.

• Secure the information at all times.

Analog signals are continuous waves that “carry” information by altering the amplitude and frequency of the waves., the louder the sound; the more closely packed the

waves (higher frequency), the higher the pitch. (Radio, telephones).

Digital signals are distinct on-off pulses that express information in terms of 1’s and 0’s, like the central processing unit in computers.

Advantages over analog signals:

5. Digital signals are less affected by interference that might seriously change the information-carrying features of analog signals, whereas in digital systems it is easier to distinguish between an “on” and an “off.”

6. All computer-based systems process digitally, thus no need for additional conversion from analog to digital.(demodulation - modulation)

Communications processors are hardware devices that support data transmission

and reception across a telecommunications system..

MODEM, is a communications device that performs demodulation and modulation practices.

There are various types of modems, as described below:

• External modem

• Internal modem

• Digital modem

• Cable modem

Digital subscriber line (DSL) service allows high volume data transmission, through the installed base of twisted-pair wiring in the telecommunications system.

Asymmetric DSL (ADSL) is a variety of DSL that enables a person connecting from home to upload data at speeds from 16 to 640 Kbps and download data at 1.5 to 8 Mbps. Clearly, this is many times faster than an analog modem.

Voice-over-DSL (VoDSL) is a kind of telecommunication service replacing the traditional telephone system. It provides voice phone functions using DSL services.

A multiplexer is an electronic device that enables a single communications channel (e.g., a telephone circuit) to transfer data simultaneously from many sources. The objective of a multiplexer by sharing the circuit to reduce communication costs.

Front-end processor is a specialized computer that manages all routing communications with peripheral devices, in order not to waste precious CPU time. The functions of a front-end processor include coding, decoding data, error detection, recovery, recording, interpreting, and processing the control information that is transmitted.

Channels of communication

Communications media (channels) are means of data communication form one location to another. For the cable media (physical transmission) wire, cable, and other tangible materials are used; for wireless transmission media the communications signals are sent through the air or space.

Twisted-pair wire is the most common wiring, used for almost all business telephone wiring.

Twisted-pair wire is relatively inexpensive, widely available, easy to work with, and can be made relatively unnoticeable by running it inside walls, floors, and ceilings, but it is relatively slow for transmitting data and can be easily “tapped” to gain unauthorized access to data.

Unshielded twisted pair (UTP)

Shielded twisted pair

Coaxial cable is much less vulnerable to electrical interference and can carry much more data than twisted-pair wire. It is commonly used to carry high-speed data traffic as well as television signals, but it is 10 to 20 times more expensive, more difficult to work with, and relatively

Data transmission over coaxial cable is divided into two basic types:

Baseband. Transmission is analog, and each wire carries only one signal at a

time.

Broadband. Transmission is digital, and each wire can carry multiple signals simultaneously. Thus it is faster and better for high-volume use. Therefore, it is the most popular internet access method.

Fiber-optic technology, transmits information through clear glass fibers in the form of light waves, instead of electric current. Fiber-optic cables contain a core of dozen or thin strands of glass or plastic, that are as thin as hair and can conduct light pulses generated by lasers at transmission frequencies that approach the speed of light. Advantages are: able to carry significantly more signals than wire, faster data transmission, less susceptible to noise from other devices, better security for signals during transmission, smaller size. Disadvantages are: costs more than wire, can be difficult to install and modify.

A metropolitan area network (MAN) is a data network designed usually for a town or a city. The fiber optic and associated equipment that make up the MAN can be connected to the national communications backbone.

Wireless communication

Microwave systems are widely used for high-volume, long-distance, point-to-point communication. These systems were first used extensively to transmit very-high-frequency (up to 500 GHz) radio signals at the speed of light in a line-of-sight path between relay stations spaced approximately 30 miles apart (due to the earth’s curvature).

A satellite is a space station that receives microwave signals from an earth-based station, amplifies the signals, and broadcasts the signals back over a wide area to any number of earth-based stations. The advantages of satellites include the following: cost of transmission is the same regardless of the distance between the sending and receiving stations, regardless of the number of stations receiving that transmission (simultaneous reception), ability to carry very large amounts of data, users can be highly mobile while sending and receiving signals. The disadvantages of satellites include the following: delay (approximately

one-quarter of a second), weak signals at the receiving earth station, not secure because they are available to all receivers.

Types of Orbits. Currently, there are three types of orbits in which satellites are placed:

1. Geostationary earth orbit (GEO)

2. Medium earth orbit (MEO),

3. Low earth orbit (LEO)

A global positioning system (GPS) is a wireless system that uses satellites to enable users to determine their position anywhere on the earth. GPS is supported by 24 U.S. government satellites that are shared worldwide.

Radio distribution of radio signals through the air over both long distances and short distances. Radio is popular to connect computers and peripheral equipment or computers and local area networks. The major advantages are that no wires required to create communication, the devices are fairly inexpensive and allows for high data transmission speeds.

Infrared (IR) light is invisible to human eyes light that can be modulated or pulsed for transmission of information. It specifies a way to transfer data wirelessly via infrared radiation. Most commonly used with television or videocassette recorder remote control units. Factors that can destroy the transmission are vulnerability to fog, smog, smoke, dust, rain, and air temperature fluctuations.

Cellular radio technology is a form of broadcast radio that is widely used for mobile communications.

First-generation (1G) and second-generation (2G) cellular data transmission.

( bulky handsets and adjustable antennas, was based on analog technology and allowed only limited roaming)

Second-generation (2G) cellular data transmission. (digital wireless transmission, voice capacity of earlier analog systems, and provides greater security, voice clarity, and global roaming)

2.5-generation (2.5G) cellular data transmission. (GPRS).

Third-generation (3G) technologies. ( efficiency and capacity; new services, such as wide-area networks for PCs and multimedia; seamless roaming across dissimilar networks; integration of satellite and fixed wireless access services into cellular networks; and greater bandwidth.

Mobile computing refers to the use of portable computer devices in multiple locations, connected through wired units or wireless connections.

Personal communication service (PCS) uses lower-power, higher-frequency radio waves than does cellular technology. The cellular devices have wireless modems, allowing Internet access and e-mail capabilities. They also operate at higher, less-crowded frequencies than cellular telephones, meaning that they will have the bandwidth necessary to provide video and multimedia communications.

Personal digital assistants (PDAs) are relatively small, handheld computers capable of entirely digital communications transmission, also have Internet access, e-mail, fax, electronic scheduler, calendar, and notepad software.

Wireless Application Protocol (WAP) is a technology that allows wireless transmissions. A wireless portal that enables users to connect to the Internet accessible via color-screen handsets with polyphonic sound. It is charged at actual usage instead of on a pre-paid basis

Newer wireless technologies

Bluetooth is the term used for the protocol of a short-range (10m), frequency-hopping radio link between devices. Bluetooth enables wireless communication between mobile phones, laptops, and other portable devices. Bluetooth technology is currently being built into mobile PCs, mobile telephones, and PDAs.

Fiber optics without the fiber is the technology that through means of laser beams are transmitted through the air between two buildings or other points. The advantages of this technology is that there is no need to gain rights of way to lay cabling, but it can have a negative impact on transmission quality.

Ultra wideband (UWB) is a super fast, short distance wireless technology, 10 times faster than Wi-Fi. It works by means of transmitting its signal over a wide swath of frequencies at a low power that does not interfere with the other occupants of the spectrum.

Software-defined radio is a concept of a reconfigurable device that can automatically recognize and communicate with other devices. The benefits are: enhanced system performance, cheaper service cost, seamless roaming.

A mesh network is created by a device that can transform any wireless device into a router, creating an ad hoc network. Advantages are cheaper service, wider coverage areas, and speed. The disadvantage is hidden in the security problem because of numerous passers by .

Wireless personal area networks (WPANs) could get rid of cable and wire networks. Computing devices within a WPAN create a flow of machine-to-machine communication that personalizes services spontaneously. Possible problems are managing device interoperability, maintaining always-on connectivity between devices, and leakage of privacy information.

Adaptive radio is a technology that lets wireless devices scout out the spectrum wherever they are, avoiding interference by tuning their transmissions to the available gaps. The primary benefit of this technology is it enables wireless devices to modify their power, frequencies, or timing to suit the environment they find themselves in, making such adjustments at occasional intervals or constantly checking and changing as airwave traffic shifts around them.

TRANSMISSION SPEED

Bandwidth is a range of frequencies that can be sent over a communications channel.

A baud is a detectable difference in a signal (i.e., a change from a positive to a negative voltage in a wire), through which the data can be transmitted.

Channel capacity diverse into three bandwidths:

• Narrowband e.g. (telegraph lines)

• Voice band (telephone)

• Broadband channels (microwave, cable, and fiber-optic media)

OPTICAL NETWORKING.

Wave division multiplexing (WDM) is a method whereby diverse colors of light are transmitted on an optical fiber so that messages can be sent simultaneously.

There are two types of optical switches to increase the network’s flexibility and efficiency:

• Opticalelectrical-optical (OEO) switches, through means of light pulses from the incoming optical fiber, transfer them to electrical signals, redirect or process them electronically, and use lasers to convert them back into light for transmission over the outgoing fiber.

• All-optical switch, that accepts a stream of light pulses from an incoming optical fiber and simply forwards it to an output port via small movable mirrors, without ever transferring the optical signals into electronic ones.

Simplex data transmission uses one circuit that goes in one direction only (doorbell, a public announcement system, broadcast television). Simple and relatively inexpensive to use

but very problematic, since communication is one way only.

Half-duplex data transmission uses only one circuit, but it is used in both directions at a time. (intercom)

Full-duplex data transmission uses 2 circuits for communications one for each direction at the same time (e.g. common telephone). It’s easier to use , but the costs are higher, especially over long distances. Most data devices can operate in both half- and full-duplex directions.

In asynchronous transmission, only one character is transmitted or received at a time. It is naturally inefficient due to the additional overhead required for start and stop bits, and the idle time

between transmissions.

With synchronous transmission, a group of characters is sent over a communications link in a unbroken bit stream while data transfer is controlled by a timing signal initiated by the sending device.

PROTOCOL, NETWORK SYSTMES, STANDARDS.

Protocol is a set of rules and procedures governing transmission across a network, in order for the sending device to gain access to the network. Polling is the simplest protocol, when the master device polls, or contacts, each node.

The Transmission Control Protocol/Internet Protocol (TCP/IP) is a protocol for sending information that insures to be received in uncorrupted form, also allows efficient and reasonably error-free transmission between various systems and is the standard protocol of the Internet and intranets.

Generally there are multiple protocols existing at different levels. The OSI model has seven layers, each having its own well-defined function:

• Physical layer. - transmits; provides and creates the means by which to activate and deactivate a physical connection.

• Data link layer - provides a reliable tool of transmitting data and processes the acknowledgment frames sent back by the receiver.

• Network layer - routes information; accepts messages from source host and sees to it they are directed toward the destination.

• Transport layer - provides a network-independent transport service to the session layer; accepts data from session layer, splits it up into smaller units, passes these to the network layer, and ensures all pieces arrive correctly at the other end.

• Session layer - user’s interface into network; where user must negotiate to establish connection with process on another machine; once connection is established the session layer can manage the dialogue in an orderly manner.

• Presentation layer - messages are translated from and to the format used in the network to and from a format used at the application layer.

• Application layer - Includes activities related to users, such as supporting file transfer, handling messages, and providing security.

Transmission standards. There was established a need for greater bandwidth on networks for advanced computing applications. These transmission technologies are listed below:

1. Fiber distributed data interface(FDDI)

2. Asynchronous transfer mode (ATM)

3. Switched hub technologies

4. Synchronous optical network (SONET)

5. T-carrier system.

6. Integrated services digital network (ISDN)

7. Digital Subscriber Line (DSL

8. Infinite Bandwidth (InfiniBand)

9. Circuit Switching.

Software standards. SO that computers and computing devices from different vendors started to understand each other, they need an open system. Three types of software standards are necessary for an open system:

10. A network operating system (NOS) is the system software that takes care of hardware devices, software, and communications media and channels across a network, and enables It to interact with each other.

11. Graphical User Interface standard.

12. Software application standards.

The topology of a network is its physical layout and the way it connects. There are several basic network topologies:

STAR. A star network connects to each other by nodes wit one central one. Every single communication passes through the central node. Numerous amount of devices can result in overloading the central computer and causing bad performance.

BUS. In a bus topology, nodes are located at the side along a single length of twisted pair wire, coaxial cable, or fiber-optic cable. It is easy and inexpensive to add a node to the network, and cut away a node will not cause the network to fail.

RING. In a ring topology, nodes are arranged along the transmission path so that a signal passes through each station one at a time before returning to its originating node.

MESH. A mesh network design is one in which each device is connected to every other device located on the network, like a spider web. The advantage to this design is the redundancy of the connected devices. The disadvantages of this design are the cost of all the required medium and limited scalability

HIERARCHICAL. In a hierarchical topology, nodes are arranged like reversed tree with the root as the highest level and the leaves as the lowest level. It is very cheap, but may have possible traffic jams at the top level.

HYBRID. In a hybrid topology, nodes are arranged in different topologies including star, ring, and hierarchical. A hybrid network will allow companies to pick the advantages from several different topologies.

ARCHITECTURE

Point-to-point connection is when two devices on a network are directly connected. The basic structure of client/server architecture is a client device(s) and a server device(s) that are distinguishable, but interact with each other.

Peer-to-peer connection is when two devices have the same relative standing, as with two PCs.

This s kind of architecture allows two or more computers to pool their resources together. Individual resources become accessible by every computer.

Open systems are the systems that allow any computing device to be flawlessly connected to and to interrelate with other computing device, regardless of size, operating system, or application..

Connectivity allows different computer resources to converse with each other through network devices without human interference, also allows portability, interoperability, and scalability.

Portability is capability to move applications, data, and even people from one system to another with minimal adjustments.

Interoperability is the ability of systems to work together by sharing applications, data, and computer resources.

Scalability allows to run the application without changing it on any open system.

Part U: Technology Guide 5: The Internet and the Web

In 1969, an experimental project by US Department of Defence, has resulted in major creation of the 20^th century- the Internet was created. The internet is the network that connects hundreds of thousands of internal organizational computer networks worldwide. Internet connects 200 countries allowing people from all over the world to collaborate interactively.

Its connected by nodes, which are different types and made. These are connected to each other by data communication lines of different speeds. The main network that connects the nodes is the backbone, a fiber-optic network currently operated mainly by telecommunications

companies such as MCI.

Internet2 is a mutual effort by a huge number of scientists, from more then 200 universities to develop advanced Internet technologies and applications able to support the research and education goals of higher education.

Goals of Internet2 are:

1. To create a leading edge network capability;

2. To enable revolutionary Internet applications;

3. To ensure the rapid transfer of new network services

The Next-Generation Internet (NGI) is initiated by different organizations (NSF, NIE, etc.) to develop even more advanced networking technologies and revolutionary applications that require advanced networking. The goals of the NGI initiative are to create an Internet that is fast, always on, everywhere, natural, intelligent, easy, and trusted.

Very-high-speed Backbone Network Service (vBNS) is a high-speed network especially designed to support the academic Internet2 and the government sponsored

Next-Generation Internet (NGI) initiative.

Interactive GOVERNANCE.

The following organizations administrate the various operations of the

Internet:

1. Internet Society: Enables global cooperation regarding the Internet.

2. World Wide Web Consortium (W3C): Develops standards for the Web and promotes new Web technologies.

3. Internet Engineering Task Force (IETF): Develops technical Internet standards and protocols.

4. Internet Architecture Board (IAB): Oversees the Internet standards process.

5. Internet Engineering Steering Group (IESG). Approves technical Internet standards.

CONNECTING VIA …

• LAN server. This approach engages specialized software called a communications stack, which consists of a set of communications protocols that perform the complete functions of the seven layers of the OSI communications model. This type of connection is expensive, but the cost can be distributed over multiple LAN users.

• SERIAL LINE INTERNET PROTOCOL/POINT-TO-POINT PROTOCOL (SLIP/PPP). This approach requires a modem and specialized software that allows them to dial into a SLIP/PPP server through a service provider at a cost of approximately $30 per month or less.

• ONLINE SERVICE. This approach needs to be equipped by a modem, standard communications software, and an online information service account with an Internet service provider.

• BROADBAND . This way refers to telecommunication that provides multiple channels of data over a single communications medium, mostly using frequency/wave division multiplexing. There are several broadband technologies including: GSM, HSCSD, POTS, frame relay, GPRS, ISDN etc.

• DSL provides a very fast connection that uses the same wires as a regular telephone line. There are advantages and disadvantages of using DSL connection method.

Advantages are:

• Internet connection can be established, without the phone to be switched off.

• Its much faster than a regular dial-up modem

• DSL does not require new wiring, since it can use the phone line

• DSL Provider Company usually provide the modem as part of the installation.

• .You can use a Wi-Fi with the DSL.

Disadvantages and limitations of DSL are:

• A DSL connection works better when closer to the provider’s office.

• The downstream is faster than upstream.

• The service is not available everywhere.

STANDARDS AND PROTOCOLS.

• IPv4 is the first version of the Internet Protocol to be widely used and it forms the basis for most of the current Internet. For 20 years it has been it has been a solution, though now experiencing problems, such as shortage of IPv4 addresses, which are needed by all new machines added to the Internet.

• IPv6 is the next-generation protocol designed by to replace the current version (IPv4). IPv6 can manage the limited number of addresses as well as improve routing (hierarchical routing, mobility) and network auto configuration to increase the security during the data transfer

WORLD WIDE WEB

Domain name system (DNS) is a system that provides Internet names (domains) instead of IP addresses.

Domain names consist of several parts, separated by dots, and translated from right to left. (e.g. www.google.com) The last part of the domain, in this case “com,” is its top-level specification, or the zone.

ZONE USED FOR

1. Com : commercial sites aero air-transport industry

2. Edu: educational sites biz businesses

3. Mil: military sites coop cooperatives

4. Gov: government sites museum museums

5. Net: networking organizations name registration by individuals

6. Org: organizations pro accountants, lawyers,

7. Store: businesses offering physicians (professionals)

URLs. A uniform resource locator (URL) indicates the location (or address) of a Web site you want to visit. The address consists of several parts. http(hypertext transfer protocol) ://www(accessing world wide web).yahoo(the name of the company).com(domain name referring to commercial organization)

INTERNET GRROWTH

As a result of massive boost of Internet traffic a lot of problems incurred in the process, such as improperly configured networks, overloaded servers, rapidly changing Internet usage patterns, and too much traffic for available bandwidth. In order to solve these problems a number of actions should be taken including installing high-speed transmission media to accommodate large amounts of data; bigger, faster routers and more sophisticated load balancing and management software to handle peak traffic periods; local caching (storing) of frequently requested Web pages to improve response times; and more reliable tiers of service for those willing to pay for

them.

PRIVACY.

Web sites collect information on consumers through means of :

• Registration, when visitors enter data about themselves

• Click stream” data—that is, information about where people go within a Web site and the content they see. Clickstream data are most commonly collected by cookies- small data files placed on users’ hard drives when they first visit a site. This software can be used to exchange information automatically between a server and a browser without a user seeing what is being transmitted. Cookies are useful in tracking users’ actions and preferences.

Privacy is extremely important in the world of the Internet that it should be constantly considered in designing and using information systems.

BROWSING

The Web is a system with universally accepted standards for storing, retrieving, formatting, and displaying information (text, pictures, video, etc.) via a point to point architecture. All documents on the Web are linked to each other by hyperlinks (links). The home page is the starting point for your search. All the pages of a particular company or individual are known as a Web site.

The person taking care of organization’s Web site is its Webmaster.

METABROWSERS.

Metabrowsers automate the tasks of creating metadata, letting users concentrate on the task of cataloguing Web resources (e.g. Octopus portal personalization by giving consumers control over what they view)

NEW BROWSERS.

• Opera is considered to be the fastest, smallest and yet very efficient web browser.

• NeoPlanet offers skins, that represent the collection of graphics and sounds. It also utilizes personalization tools, allowing you to control your view of the online world.

WHAT IS….

1. Offline browsers allow users to recover pages automatically from Web sites at predetermined times, often during the night. (bluesquirrel.com)

2. A Web server, also called an HTTP server, is a computer (usually dedicated) storing all Web pages and/or Web content. Users can access the Web server using a Web browser with a unique URL or IP address .

3. Hypertext Mark-up Language (HTML) is a tool of witting document on intranet, which formats documents and incorporates dynamic hypertext links to other documents stored on the same or different computers. HTML was derived from the more complex Standard Generalized Markup Language (SGML).

4. Java is another tool for creating Web documents , offering applications to become plug-and-play objects that operate on any operating system. Java applets are small applications designed to expand the capabilities of the Web browser.

5. A search engine is a tool that makes browser more effective and enables to locate information by using key words in the same way that you would search online library resources ( Google, Yahoo, Lycos, HotBot, WebCrawler, Alta Vista, and Excite )

6. Web crawlers traverse the Web automatically, collecting index data on one of two search principles: depth first, or breadth first.

7. Gopher, is a “burrowing tool” that allows access to a range of textual information available on the Internet. It is a delivery system for recovering documents from the Internet, based on a set of menus, submenus, and sub-submenus (down to many levels).

8. Veronica (Very Easy Rodent-Oriented Netwide Index to Computer Archives) provides the capability of searching for text that appears in gopher menus.

9. Archie is a tool that enables users to search the files at FTP sites. It frequently observes hundreds of FTP sites and updates a database (Archie server) on software, documents, and data files available for downloading.

COMMUNICATION TOOLS

Several communication tools are available on the Internet. The most noteworthy are discussed below.

• Electronic mail (e-mail) allows multiple-access communication delivered exclusively on a computer network. With e-mail, an individual can send letters to anyone connected to the system. When a message is sent, it arrives at receiver’s “mailbox.”

• Internet Relay Chat (IRC) is an email based program. A business can use IRC to interrelate with customers, provide online experts’ answers to questions, and so on.

• Instant messaging (IM) refers to a type of communications service that enables you to create a private chat room with another individual in order to communicate in real time over the Internet. (ICQ,MSN)

• Peer-to-peer (P2P) is an electronic file-swapping system that allows users to share files, computing capabilities, network bandwidth, and storage. (KaZaa, WinMX)

• Electronic bulletin boards (EBBs) are mailing lists on which users can leave messages for other people and receive massive amounts of information (including free software).

OTHER INTERNET TOOLS

1. Streaming enables Internet users to observe data as it is transmitted from the host server instead of waiting until the entire file is downloaded.

2. Streaming audio enables the broadcast of radio programs, music, press conferences, speeches, and news programs over the Internet. In the future, streaming audio and Internet telephony use will overlap and complement one another.

3. Streaming video has other business applications, including training, entertainment, communications, advertising, and marketing.

Part V: Technology Guide 6: A Technical View of System Analysis and Design

An IT architecture is a conceptual framework for the organization of the IT infrastructure and applications. It is a plan for the structure and integration of IT resources and applications in the organization.

The six-step process for developing an IT architecture of Koontz (2000) are descried below:

• Business goals and vision: also referred to as “business architecture”.

• Information architecture: a company analyst defines the information necessary to fulfil the objectives of step 1.

• Data architecture: this is exactly what data you have and what you want to get from customers.

• Application architecture: in this step you will build the conceptual framework of an application, but not the infrastructure that will support it. Scalability, security, the number and size of servers and the networks must all be considered. The major output of this step is to define the software components that meet the data requirements.

• Technical architecture: in this step, the designers must formally examine the specific hardware and software required to support the analysis in the previous steps.

• Organizational architecture: at this point, the legal, administrative and financial constraints should be examined. Partial outsourcing may be a useful way to deal with skill deficiencies.

Creating IT architecture may be a lengthy process, but it is necessary to go through it. Once the IT architecture has been decided on, a development strategy can be formulated.

The system development life cycle (SDLC) is the traditional systems development method used by organizations for large IT projects such as IT infrastructure. It is a structured framework that consists of sequential processes by which information systems are developed.

In the past, developers used the waterfall approach to the SDLC, in which tasks in one stage were completed before the work proceeded to the next stage. Within this approach, there is an iterative feature, which refers to the revising of the results of any development process when new information makes this revision desirable.

System analysts are information systems professionals who specialize in analyzing and designing information systems. Programmers are information systems professionals who modify existing computer programs or write new computer programs to satisfy user requirements. Technical specialists are experts on a certain type of technology, such as databases or telecommunications. All people who are affected by changes in information systems are known as system stakeholders, and are typically involved by varying degrees and at various times in the system development.

Problems and opportunities often require not only understanding them from the internal point of view, but also seeing them as organizational partners (suppliers or customers) would see them.

The feasibility study determines the probability of success of the proposed project and provides a rough assessment of the projects technical, economic, organizational and behavioural feasibility. It is critically important to the systems development process because, done properly, the study can prevent organizations from making costly mistakes.

Various feasibility analyses also give the stakeholders an opportunity to decide what metrics to use to measure how a proposed system meets their various objectives:

• Technical feasibility: determines if the hardware, software and communications components can be developed and/or acquired to solve the business problem.

• Economic feasibility: determines if the project is an acceptable financial risk and if the organization canafford the expense and time needed to complete the project.

Three commonly used methods to determine economic feasibility are return on investment (ROI), net present value (NPV, and breakeven analysis.

Return on investment is the ratio of the net income attributable to a project divided by the average assets invested in the project. The net present value is the net amount by which project benefits exceed project costs, after allowing for the cost of capital and the time value of money. Breakeven analysis determines the point at which the cumulative cash flow from a project equals the investment made in the project.

Another potential difficulty is that the proposed system or technology may be “cutting edge,” and there may be no revious evidence of what sort of financial payback is to be expected.

• Behavioral feasibility: addresses the human issues of the project.

After the feasibility analysis, a “Go/No-Go” decision is reached.

Systems analysis is the examination of the business problem that the organization plans to solve with an information system. Understanding the business problem requires understanding the various processes involved.

Organizations have three basic solutions to any business problem relating to an information system:

1. Do nothing and continue to use the existing system unchanged.

2. Modify or enhance the existing system.

3. Develop a new system.

The main purpose of the systems analysis stage is to gather information about the existing system, in order to determine which of the three basic solutions to pursue and to determine the requirements for an enhanced new system.

There are problems associated with eliciting information requirements, regardless of the method used by the analyst:

• The business problem may be poorly defined.

• The users may not know exactly what the problem is, what they want, or what they need.

• Users may disagree with each other about business procedures or even about the business problem.

• The problem may not be information related, but may require other solutions such as a change in management or additional training.

The system analysis stage produces the following information:

• Strengths and weaknesses of the existing system.

• Functions that the new system must have to solve the business problem.

• User information requirements for the new system.

Systems analysis describes what a system must do to solve the business problem, and systems design describes how the system will accomplish this task. The deliverable of the systems design phase is the technical design that specifies the following:

• System, outputs, inputs, and user interfaces

• Hardware, software, databases, telecommunications, personnel, and procedures

• How these components are integrated.

This output represents the set of system specifications.

System design encompasses two major aspects of the new system:

• Logical system design: states what the system will do, using abstract specifications.

• Physical system design: states how the system will perform its functions, with actual physical specifications.

When both these aspects of system specifications are approved by all participants, they are “frozen”, which means that once the specifications agreed upon, they should not be changed.

However, users typically ask for added functionality in the system (scope creep).

Runaway projects are systems development projects that are so far over budget and past deadline that they must be abandoned, typically with large monetary loss.

Programming involves the translation of the design specifications into computer code.

Testing checks to see if the computer code will produce the expected and desired results under certain conditions. Testing is designed to detect errors (bugs) in the computer code, which are of two types:

• Syntax errors (e.g. misspelled words or a misplaced comma).

• Logic errors (permit the program to run but result in incorrect output).

There are several types of testing:

• Unit testing (each module is tested alone in an attempt to discover any errors in its code)

• String testing (puts together several modules to check the logical connection among them)

• Integration testing (brings together various programs for testing purposes)

• System testing (brings together all of the programs that comprise the system)

Implementation (or deployment) is the process of converting from the old system to the new system. Organizations use four major conversion strategies:

• Parallel conversion: the old system and the new system operate simultaneously for a period of time.

• Direct conversion: the old system is cut off and the new system is turned on at a certain point in time.

• Pilot conversion: introduces the new system in one part of the organization, such as in one plant or in one functional area.

• Phased conversion: introduces components of the new system, such as individual modules, in stages.

Once the new system’s operations are stabilized, audits are performed during operation to asses the system’s capabilities and determine if it is being used correctly.

Systems need several types of maintenance:

Debugging the program

Updating the system to accommodate changes in business conditions

Adding new functionality or new features to the system

Organizations use the traditional systems development life cycle because it has three major advantages: control, accountability, and error detection.

However, the SDLC does have disadvantages. By its structured nature, it is relatively inflexible. It is also time-consuming, expensive and discourages changes to user requirements once they have been established.

The prototyping approach defines an initial list of user requirements, builds a prototype system, and then improves the system in several iterations based on users’ feedback. Users make suggestions for improving the prototype, based on their experiences with it.

If the system is viable, the developers can use the prototype on which to build to full system.

The main advantage of prototyping is that it speeds up the development process and it gives users the opportunity to clarify their information requirements as they review iterations of the new system. On the other hand, a disadvantage of prototyping is that systems analysts may not produce adequate documentation for the programmers.

The prototype is a model of a system that can be used to communicate the requirements and design of that part of the system between developers and their clients.

Joint application design (JAD) is a group-based tool for collecting user requirements and creating system designs. JAD has a group meeting in which all users meet simultaneously with analysts. It is basically a group decision-making process and can be computerized or done manually. The main advantage of JAD is that the group process involves many users in the development process while still saving time. However, the disadvantages of JAD consist of the difficulty to get all users to the JAD meeting and all the problems caused by any group process (e.g. one person can dominate the meeting, some participants may not contribute in a group setting).

Rapid application development (RAD) is a systems development method that can combine JAD, prototyping, and integrated CASE tools to rapidly produce a high-quality system. The development process in RAD is iterative, similar to prototyping. However, RAD and prototyping use different tools. RAD improves the speed of developing systems and the process of rewriting legacy applications.

Extreme programming (XP) is an attempt to combat the chaotic tendencies of RAD while still maintaining the flexibility to respond to changing business needs. It advocates rigorous and automated testing and simplicity of code. The goal of XP is to release software as often as possible in order to test it with real users.

Agile software development is a conceptual framework for undertaking software projects. There are many agile software development and most of them attempt to minimize risk by developing software in short timeboxes, called iterations, which typically last one to four weeks.

Computer-aided software engineering (CASE) is a development approach that users specialized tools to automate many of the tasks in the SDLC. CASE tools that provide links between upper CASE and lower CASE tools are called integrated CASE (ICASE) tools.

CASE tools provide advantages for system developers. These tools can produce systems with a longer effective operational life that more closely meet use requirements. CASE tools can speed up the development process and result in systems that are more flexible and adaptable to changing business conditions. Finally, systems produced using CASE tools typically have excellent documentation.

On the other hand, CASE tools can be expensive and require more extensive and accurate definition of user needs and requirements. Moreover, they are difficult to customize and may be difficult to use with existing systems.

Object-oriented development is based on a fundamentally different view of computer systems than that found in traditional SDLC development approaches.

An object-oriented (OO) system begins not with the task to be performed, but with the aspects of the real world that must be modelled to perform that task.

The service-oriented analysis refers to a predesign effort centered around the definition of conceptual services or a conceptual service-oriented architecture.

An information systems development methodology (ISDM) can be defines as a collection of procedures, techniques, tools and documentation aids that help systems developers in their efforts to implement a new information system. A methodology is a set of practices and procedures, with supporting templates and knowledge bases, that systematically organizes the development process. The objectives of using a methodology are: (1) a better end product, (2) a better development process, and (3) a standardized process.

A technique is a way of doing a particular activity in the information systems development process and any particular methodology may recommend techniques to carry out many of these activities.

Information Technology Infrastructure Library (ITIL) is a framework of best practice approaches intended to facilitate the delivery of high-quality information technology (IT) services. It outlines an extensive set of management procedures that are intended to support businesses in achieving both quality and value for money in IT operations.

Its BIP 0056: ITIL-Application Management set encompasses a set of best practices proposed to improve the overall quality of IT software development and support through the life cycle of software development projects, with particular attention to gathering and defining requirements that meet business objectives.

Component-based development (CBD) is the upcoming evolutionary step beyond object-oriented development. A component is a unit of composition with contractually specified interfaces and explicit context dependencies.

In a tightly coupled integration, a component needs to know the name of the service it wants to call. In a loosely coupled integration with a message broker, an application makes its request by sending a message, in proper standard format, to the message broker.

The original term for Web Services was “application services”. They are services that are made available from a business’s server for Web users. Because of their great interoperability and extensibility (due to XML), Web Services can be combined in a loosely coupled way in order to achieve complex operations.

Service-oriented architecture (SOA) is a good companion to Web Services, as it has the benefit of its capacity for rapid modification.

The basic concept of Web Services is that web services are self-contained, self-describing business and consumer modular applications, delivered over the Internet, that users can select and combine through almost any device. Web services are based on a family of key protocols such as XML, SGML, SOAP, WSDL, UDDI and security protocols.

Web services enable the Web to become a platform for applying business services as components in IT applications.

Part W: Exercises

Questions

Strategic impact of ICT/ IS

In order to determine the strategic position of an organization with respect to ICT/ IS it is important to identify the impact of the application of information and communication technology respectively, information systems (IS) on the long-term (sustainable) competitive position and profitability of an organization.

Please decide whether the following statements are true or false.

1). Information communication technology (ICT) has a strategic impact if there are ways an organization can use ICT to create defensible barriers (for example, economies of scale that small competitors cannot match).

2). ICT has a strategic impact if an organization does have the opportunity to induce switching cost, in other words, increase customer reliance on our system (for example, airline frequent flyer programs).

3). ICT has a strategic impact if there are opportunities for an organization to change the ground rules of competitors.

4). ICT has a strategic impact if an organization can use ICT to change the competition from cost-based to competition based on sustainable product.

5). ICT has a strategic impact if an organization can use IT to build links to their customers (for example, Ford and GM require customers to submit orders electronically (EDI)).

6). ICT has a strategic impact if there are ways for an organization to use ICT as a product (for example, repackaging and sale of data files, data models or design repositories).

7). Successful managers and their decision-making behaviour show the following characteristics:

• Objective perceptions,

• Rationality of judgement,

• More information results in better decisions,

• Managers do not know their information requirements as well,

• Managers want aggregated data from their formal MIS,

• Good managers are reflective and systematic planners.

8). Information technology can be used to break traditional barriers to strategic success. Video conferencing is an example of how businesses are using technology in order to break time barriers.

9). Information systems allow a firm to develop a strategic formation base that can provide information to support the firm’s competitive strategies. For example, a firm’s corporate database can be used to support strategic planning, marketing, and other strategic initiatives.

Data warehouses and data marts

Please decide whether the following statements are true or false.

10). Types of challenges to implementing the data warehouse are:

1. Data quality,

2. Managing management expectations, business rules analysis, managing meta data,

3. Cost,

4. Database performance tuning/ scaling, ROI justification,

5. Time to load/ refresh data,

6. Security, maintenance.

11). Data marts are small-scale data warehouses that do not aim to hold information across an entire company, but rather focus on one market segment.

Enterprise Resource Planning (ERP)

Please decide whether the following statements are true or false.

12). Benefits of ERP systems are said to be:

18. Integration of all internal and external value-chain processes, resulting in increased customer value,

19. Better sharing of information within the organization since all modules of the system are compatible,

20. Reduced cost of buying software from a single supplier,

21. Simplified support and maintenance through a single supplier,

22. Use of ‘best-of-breed’ solution applied by other companies.

13). The current dominant seven problems with ERP are:

• Traditional ERP problems:

  1. Internal integration,

  2. Customisation,

  3. Complexity,

  4. Migration,

1. ERP + E-business problems:

2. Multi-channeling,

3. External integration,

4. Performance and security.

The value chain

Please decide whether the following statements are true or false.

14). The value chain concept views the firm as a series, or chain, of business activities that add value to its products and services and thus add a margin of value to the firm. When using the value chain concept, managers should use seek to develop strategic information systems for those activities, which are the ‘weakest link’ in the value chain.

15). The value chain concept enables managers to identify opportunities for strategic information systems. An automated warehouse system is an example of a strategic information system for the operations component of the value chain.

Decision support systems (DSS)

The term ‘decision support system’ (DSS) refers to a class of (information) systems which support the process of making decisions. The emphasis is on ‘support’ then on automation of decisions. Decision support systems should allow the decision maker(s) to retrieve data.

Please decide whether the following statements are true or false.

16). The following characteristics are typical for a DSS:

2. DSS provide support for decision making but do not replace his/her judgement,

3. The main payoff from a DSS can he expected for semi-structured problems, i.e. where parts can be systemized for the DSS, but where human insight and judgement are needed to control the process,

4. The interactive problem solving respectively decision-making process is enhanced by a dialogue between user and the decision support system.

17). 'Goal seeking' is next to the sensitivity analysis, part of the general functionality of a DSS program/system. For 'goal-seeking' the decision-maker (user of the OSS) specifies the necessary input for the model and the DSS calculates desired output (goal).

18). The main functions and objectives for a DSS are:

• The DSS should provide support for decision-making, but in particular semi-structured and unstructured problems.

• The DSS should not focus on a single level of management decision-making, such as tactical. Rather, it should integrate across all levels in recognition of the overlap between operational, tactical, and strategic decisions.

• The DSS should support all phases of the decision-making process.

• The DSS should be easy to use.

19). The three main components of a DSS are:

1. Dialogue (user interface),

2. Data,

3. Model.

Expert systems

Please decide whether the following statements are true or false.

20). Expert Systems are automated decision-making programs, which try to imitate the reasoning process and to support decision-makers in solving special types of problems. An expert system typically contains of the following parts:

• Knowledge base (production rules),

• User interface,

• Knowledge acquisition mechanism,

• Reasoning mechanism,

• Explanation mechanism.

21). Success factors for the development and implementation of an expert system are among others:

• Certainty and stability of the available knowledge,

• Focusing on a limited knowledge domain.

Information quality and BPR

Please decide whether the following statement is true or false.

22). Information can be evaluated using the following characteristics:

23). Business process reengineering (BPR) combines a strategy of promoting business innovation with a strategy of making major improvements to business operations so that a company can become a much stronger and more successful competitor in the marketplace.

Database management systems

Please decide whether the following statements are true or false.

24). One of the main advantages of database management systems is redundancy of data.

25). A functional dependency is a relation between entities.

Open questions

26). Name five advantages that a database management system has in comparison with a traditional file system. (5 points)

27). What are some disadvantages of computer-based Business Information Systems? (5 points)

28). Explain briefly how computer-based information systems can help an organization achieve a strategic advantage over its competitors. (5 points)

29). Strategies for mobile commerce:

Different types of strategies can be identified for two main types of organizations, i.e.:

1). Portal and media owners on one hand, and

2). Destination sites such as banks and retailers on the other.

Please explain briefly what strategic options (types of strategies) can be identified for these two main types of organizations. (5 points)

30). Electronic Data Interchange (EDI):

Clark (1998) defines EDI as 'the exchange of documents in standardized electronic form, between organizations, in an automated manner, directly from a computer application in one organization to an application in another.' lt is apparent from this definition that EDI is one form, or a subset, of electronic commerce.

Please name three benefits of EDI (3 points).

31). Executive Information Systems:

Please explain briefly what the seven main characteristics respectively important features of Executive Information Systems (EIS) are. (7 points)

32). Please state briefly 5 (out of 6) ways in which traditional structured system development methodologies typically fail, i.e. deliver systems too late and not meeting the (original) requirements. (5 points)

Answers

1. T

2. T

3. T

4. T

5. T

6. T

7. F

8. F

9. T

10. F

11. F

12. T

13. T

14. T

15. F

16. T

17. T

18. T

19. T

20. T

21. T

22. F

23. T

24. F

25. T

26. Advantages of database management systems are:

27. Minimal redundancy,

28. Data reliability,

29. Shared use,

30. Security possibilities,

31. Hardware independence.

27. Disadvantages to computer-based Business Information Systems include:

28. Judgement/ experience (you still need a human being for judgement),

29. Improvisation/ flexibility (cannot react to new situations),

30. Lack of innovation/ creativity,

31. Intuition,

32. Inability to act on qualitative information.

28. A computer-based information system can help an organization achieve a strategic advantage over its competitors by :

29. Improving operational efficiency,

30. Raising entry barriers,

31. Locking in customers and suppliers,

32. Promoting business innovation,

33. Increasing switching casts,

34. Leverage (packaging and selling company's information resources as a product).

29. For portal and media owners the options are to:

30. Migrate their own portal to WAP or SMS, or to

31. Partner with other WAP portals and provide content for these.

Explanations:

Revenue models may include sponsorship or subscription for individual content items or on a subscription basis. Options for advertising are also being explored – 24/7 Real Media ( http://www.247europe.com ) is one of the first companies to offer WAP-based advertisements.

For destination sites such as banks and retailers, the options available include:

• Marketing communication (to support purchase and support),

• E-commerce (sales of products on site),

• Brand building - improve brand image by being one of the first suppliers to offer an innovative service.

30. Three benefits of EDI are:

31. More rapid fulfilment of orders, i.e. reduced lead time s are achieved through reduced times in placing and receiving order, reduced times of information in transit and integration with other processes;

32. Fewer errors in data entry and less time spent by the buyer and supplier on exception handling;

33. Reduced costs resulting from reduced staff time, material savings such as paper and forms and improved inventory control.

31. Executive Information Systems (EIS) are said to provide senior managers with a system to assist them in taking strategic and tactical decisions. Their purpose is to analyse, compare, and highlight trends to help govern the strategic direction of a company. They are commonly integrated with operational systems, giving managers the facility to ‘drill down’ to find out further information on a problem. Some important features of EIS are:

    1. They provide summary information to enable monitoring of business performance. This is often achieved through measures known as critical success factors or key performance indicators (KPIs). These will be displayed in an easy-to-interpret form such as a graph showing their variation through time. If a KPI falls below a critical present value, the system will notify the manager through a visible (colour coding) or audible warning.

32. They are used mainly for strategic decision-making, but may also provide features that relate to tactical decision-making.

    33. They provide a drill-down feature that gives a manager the opportunity to find out more information necessary to take a decision or discover the source of a problem.

    34. They provide analysis tooIs.

    35. They must be integrated with other facilities to help manage the solving of problems and the daily running of the business. These include e-mail and scheduling and calendar facilities.

    36. They integrate data from a wide variety of information sources, including company and external sources such as market and competitor information.

    37. They have to be designed according to the needs of managers who do not use computers frequently. Their interface should be intuitive and their functions (functionality) easy to learn.

38. Six ways in which traditional structured system development methodologies typically fail include:

    1. Gap of understanding between users and developers,

    2. Tendency of developers to isolate themselves from users,

    3. Quality measured by closeness of product to specification,

    4. Long development time,

    5. Business change during the development process,

    6. What users get is not what they want.