Why are information systems essential in business today? Describe four trends in the global business environment that have made information systems so important. 2. Describe the capabilities of a digital firm. Why are digital firms so powerful? 3. What is an information system? Distinguish between a computer, a computer program, and an information system. What is the difference between data and information? 4. What activities convert raw data to usable information in information systems? What is their relationship to feedback? 5. What is information systems literacy? How does it differ from computer literacy? 6. What are the organization, management, and technology dimensions of information systems? 7. Distinguish between a behavioral and a technical approach to information systems in terms of the questions asked and the answers provided. 8. What major disciplines contribute to an understanding of information systems? 9. What is the relationship between an organization and its information systems? How is this relationship changing over time? 10. What are the Internet and the World Wide Web? How have they changed the role played by information systems in organizations? 11. Describe some of the major changes that information systems are bringing to organizations. 12. How are information systems changing the management process? 13. What is the relationship between the network revolution, the digital firm, electronic commerce, and electronic business? 14. What do we mean by information architecture and information technology infrastructure? Why are they important concerns for managers? 15. What are the key management challenges involved in building, operating, and maintaining information systems today? TVA Nuclear Designs a New Maintenance Work System For most companies, improper machine maintenance might mean a little downtime on the factory floors or a few missed orders. For the Tennessee Valley Authority (TVA) nuclear division, the stakes are much higher. In the heavily regulated and safetyconscious energy industry, machine maintenance can spell the difference between life and death. Located in the seven-state Tennessee Valley region of the United States, the TVA supplies energy to nearly eight million customers from fossil, hydroelectric, and nuclear power sources. The three TVA Nuclear facilities provide about 20 percent of TVA’s generating capacity. The safety and health of the public and TVA employees receive top priority in the operation and maintenance of TVA nuclear plants.
After analyzing TVA Nuclear’s major business processes, senior management determined that the machine maintenance process required major improvement. It was using outdated software and maintenance work was heavily paper based. Whatever systems did exist to support this process did not “speak to” each other or share a common interface. Maintenance workers had to rely on documents, such as vendor manuals, drawings, and formal work instructions, to perform their jobs. More than 14,000 work orders are written each year at the Browns Ferry nuclear plant alone. For all of its nuclear plants, TVA Nuclear estimated it spent nearly $49 million annually generating, planning, and performing maintenance work orders.
TVA executives assembled a project team from various groups at the Browns Ferry nuclear plant, with input from the two other nuclear plants in the TVA network. The team started by analyzing TVA’s existing systems and business processes, looking for places to consolidate work and identifying performance metrics they most wanted to improve. They then charted the existing work order and procedures-management processes, spending more than 350 hours interviewing plant employees. To find models of good practices that they could use as guidelines, the team benchmarked the maintenance processes of 15 utilities and 6 other companies. The team found that the planning and execution of maintenance work orders was closely linked to procedures management and document workflow. For instance, a typical work order was handwritten and came attached to various paper copies of machine diagrams, documentation, and instruction procedures. Although most of TVA Nuclear’s work is planned two months to a year in advance, it constantly receives new procedural updates. The handwritten work orders could not keep up with the procedural revisions. After six months of full-time work, the project team had designed a new work process that combined maintenance-order workflow with procedural document management. TVA Nuclear then built two integrated systems that would support the new process by linking procedural documents electronically to the work management system.
TVA Nuclear outsourced the systems-building effort to a vendor called System Works, who then used the software it created for TVA to develop a commercial software package it could sell to other organizations. The new system took 28 months to complete and cost $5.1 million. TVA workers can use it to access assets, records, equipment, and parts information directly from their desktops. The system generates work orders electronically, routes them automatically to various individuals for approval, and attaches them electronically to the appropriate drawings and documentation. All three TVA nuclear plants are standardized on the system. TVA Nuclear’s management confesses to a few mistakes along the way. It grossly overestimated the computer literacy of its workforce. Many employees had never used a computer. Management had to provide more employee training than it had originally anticipated, and it also had to sell the new system in terms of how it would improve the organization as a whole. Thanks to the new system, TVA Nuclear estimates savings of $8.4 million each year. The time to process a work order has dropped from 39.8 to 23.3 person-hours per order. Even more important, the system helps maintenance workers learn from the data captured by the system. Maintenance groups can draw on a repository of previously completed work orders to analyze and manage their future work more effectively.
Sources: Carol Hildebrand, “Knowledge Fusion,” CIO Magazine, June 1, 2000; and “Nuclear Energy,” www.tva.gov/power/nuclear.htm.
The TVA system illustrates the many factors at work in the development of a new information system. Building the new system entailed analyzing the company’s problems with existing information systems, assessing people’s information needs, selecting appropriate technology, and redesigning business processes and jobs. Management had to monitor the system-building effort and to evaluate its benefits and costs. The new information system represented a process of planned organizational change. However, building information systems, especially those on a large scale, presents many challenges. Here are several challenges to consider: 1. Major risks and uncertainties in systems development. Information systems development has major risks and uncertainties that make it difficult for systems to achieve their goals. One problem is the difficulty of establishing information requirements, both for individual end users and for the organization as a whole. The requirements may be too complex or subject to change. Another problem is that the time and cost factors to develop an information system are very difficult to analyze, especially in large projects. A third problem is the difficulty of managing the organizational change associated with a new system. Although building a new information system is a process of planned organizational change, this does not mean that change can always be planned or controlled. Individuals and groups in organizations have varying interests, and they may resist changes in procedures, job relationships, and
technologies. Although this chapter describes some ways of dealing with these risks and uncertainties, the issues remain major management challenges. 2. Controlling information systems development outside the information systems department. There may not be a way to establish standards and controls for systems development that is not managed by the information systems department, such as end-user development or outsourcing. Standards and controls that are too restrictive may not only generate user resistance but also may stifle end-user innovation. If controls are too weak, the firm may encounter serious problems with data integrity and connectivity. It is not always possible to find the right balance. Omni Hotels New Customer System Fizzles Out In the mid-1990s, Omni Hotels struggled with lackluster performance. The Hampton, New Hampshire, hotel chain’s executive team pinned the company’s financial future on a new guest recognition system that was supposed to boost customer loyalty and drive repeat sales. The system would enable the hotel to reward repeat guests with gifts or room upgrades as they checked in and note guest preferences for future visits and promotions. The marketing department enthusiastically promoted the system to customers and hotel managers. Thomas Murphy, CIO of Royal Caribbean Cruises in Miami, was Omni’s vice president of information technology at that time. He tried to get Omni’s vice presidents together in one room to define the system requirements. The executives couldn’t be bothered with such details and sent their underlings to take their place. When the information systems department presented a prototyped demonstration of the system, managers from marketing, sales, and operations began fighting over what capabilities the system should have. No one could agree on when and how guests should receive gifts. The system had been designed without any input from Omni’s business units, and had no rules for granting the rewards. The marketing department had not informed Omni’s CEO about what it was doing, and his expectations were wildly different from what was being developed. The CEO envisioned a grandiose system that could never be built in the allotted time frame. Communication had been poor between Omni’s middle managers and its executive team, because the turnover rate in Omni’s executive team had been high for a number of years.
Serious technical problems emerged. The software had initially been developed on a Microsoft Access database, which could not be scaled to service Omni’s 40 hotels. It took an hour each morning to update the database using a PC at the front desk. Users had to access the system through sluggish dial-up networking. Murphy’s team spent a month trying to redesign the system to satisfy all the warring interest groups as well as the CEO. The system was supposed to be rapid and easy to use, with improved reporting and interfaces to other legacy systems. When the system went live a month behind schedule, the hotels hated it. Hotel managers had never been consulted about the project, and they resented having to use their budgets for bottles of wine and other expensive gifts to guests. The system was slow, difficult to use, and had little business value. The hotels received no training or documentation to show them how to use the system. Six months later, the system was scrapped and Omni Hotels had lost $250,000. Omni Hotels is not alone. At least half of all information system projects are failures. Companies could be wasting as much as 50% of their information systems resources on projects that have to be abandoned.
Sources: Polly Schneider, “Another Trip to Hell,” CIO Magazine, February 15, 2000; and Barbara Ponolski, “Stop Wasting Your Workers,” Computerworld, June 26, 2000.
MIS Questions 1. An information system:
A) Is an organized combination of people, hardware, software, communications networks, and database resources.
B) Is a system that collects, transforms, and disseminates information in an organization. C) Is always computer-based. D) Both A and B are correct.
2. Within the context of an information system, which one of the following would be considered a typical managerial end user?
A) Any manager who personally uses information systems. B) Entrepreneurs and managerial level professionals. C) Senior management only. D) All of the above.
3. Internetworking of computers is one of the most important trends in information technology. Computers are being networked, or interconnected by:
A) The Internet, intranets and extranets. B) Client/server networks. C) Local area and wide area networks. D) All of the above.
4. Electronic commerce:
A) Involves the buying, selling, marketing and servicing of products, services, and information over a variety of computer networks. B) Uses the Internet, intranets, and extranets, and other networks to support every step of the commercial process like multimedia advertising, product information, and customer support on the Web. C) Involves Internet security and payment mechanisms that ensure completion of delivery and payment processes. D) All of the above.
5. Which one of the following statements does NOT apply to the systems concept?
A) Feedback consists of data or information concerning the performance of a system. B) The control component of a system makes any necessary adjustments to the input and processing components of the system to
ensure that proper output is produced. C) The feedback component of a system monitors and evaluates information provided by the control component to determine whether the system is moving toward its goal. D) Input involves capturing and assembling elements that enter the system so that they can be processed.
6. System software:
A) Controls and supports the operations of a computer. B) Consists of programs that direct the processing activities of a particular use of computers by end users. C) Are operating instructions for the people who will use an information system. D) All of the above.
7. In an information system, the concept of information relates best to which one of the following statements?
A) Data that has been transformed into a meaningful and useful context for specific end users. B) Raw facts or observations. C) Objective measurements of the attributes of entities or objects. D) The raw material resources which are processed into data.
8. The expanding roles of information systems from the early 1950s to the present in sequential order are:
A) Management reporting, decision support, enterprise internetworking, data processing, strategic and end user support. B) Data processing, management reporting, strategic and end user support, enterprise internetworking, decision support. C) Data processing, management reporting, decision support, strategic and end user support, enterprise internetworking. D) Enterprise internetworking, management reporting, data processing, strategic and end user support, decision support.
9. The type of information system that provides interactive and ad hoc support for decision making for end user managers is referred to as a(n):
A) Decision support system. B) Information reporting system. C) Transaction processing system. D) Executive information system.
10. The major thrust of strategic information systems is to:
A) Develop computer systems that support or shape the competitive position and strategies of an enterprise. B) Develop computer systems in order to help knowledge workers create, organize, and share important business knowledge wherever and whenever needed. C) Develop computer systems with capabilities normally associated with human intelligence, such as reasoning, learning, and problem solving. D) Develop computer systems that provide a variety of composite or cross-functional capabilities.
11. Which one of the following statements would best describe the circuitry of the first generation of computers?
A) Vacuum tubes for their processing and memory circuitry. B) Transistors which were wired to circuit boards. C) Integrated circuits with thousands of transistors etched on tiny chips. D) LSI and VLSI technologies.
12. Conceptually, the circuitry of a central processing unit (CPU) can be subdivided into two major subunits that are called the:
A) Arithmetic-logic unit and control unit. B) Control unit and RAID unit. C) RAID unit and CD-RW unit. D) Fuzzy logic unit and neural net unit.
13. A computer's primary storage unit is commonly referred to as the:
A) Main memory. B) Control memory. C) RAID memory. D) None of the above.
14. Which one of the following would NOT fit the typical classification of a computer peripheral?
A) Monitors and printers. B) Scanners and hard disk drives. C) CD-ROM drives and backup systems. D) Central processing unit
15. A kilobyte (KB) is used to express which one of the following approximate measures?
A) 1,000 bytes of storage. B) 1,000,000 bytes of storage. C) 1,000,000,000 bytes of storage. D) 1,000,000,000,000 bytes of storage.
16. When discussing secondary storage of random access files, which of the following would be considered the most likely utilized?
A) Semiconductor RAM. B) Magnetic tape. C) CD-ROM. D) Magnetic disk.
17. Which one of the following statements concerning the concept of computer applications would be considered the most applicable?
A) A computer application is the use of a computer to solve a specific problem or accomplish a particular job for a computer user. B) Scientific applications involve the processing of business and administrative data. C) Computer applications are frequently subdivided into systems
packages and other support categories. D) Application programs include control, processing, and service programs for a wide variety of computer systems.
18. Electronic spreadsheets allow you to enter data and to perform calculations and then to manipulate the data to:
A) Control the data communications of the operating system. B) Control the data management of the operating system. C) Use it as a decision making tool to answer what-if questions. D) Merge text, data, and graphics to produce professional-looking documents.
19. One of the tasks that most DBMS packages can perform is database maintenance. Database maintenance is the process of:
A) Defining and organizing the content, relationships, and structures of the data needed to build a database, including any hyperlinks to data on web pages. B) Accessing the data in a database to display information in a variety of formats. C) Adding, deleting, updating, and correcting the data in a database, including hyperlinked data on web pages. D) Developing prototypes of web pages, queries, forms, reports, and labels for a proposed business application.
20. Personal information managers (PIMs) are being used to help end users:
A) Schedule and manage appointments, meetings, and tasks. B) Organize data and retrieve information in a variety of forms. C) Access the World Wide Web and provide E-mail capability. D) All of the above.
21. Which one of the following statements is NOT applicable to the HTML programming language?
A) It is a page description language that creates hypertext or hypermedia documents. B) It inserts control codes within a document at points you can
specify that create links to other parts of the document or to other documents anywhere on the World Wide Web. C) It embeds control codes in the ASCII text of a document, which designates titles, headings, graphics, and multimedia components, as well as hyperlinks within the document. D) Consists of small application programs called applets that can be executed by any computer and any operating system anywhere in a network.
22. Using the Internet to give customers access to multimedia product catalogs on the World Wide Web would be a typical example of an:
A) Enterprise collaboration system. B) Electronic commerce system. C) Internal business system. D) All of the above.
23. Which one of the following would be considered a benefit of interorganizational networks?
A) Building new strategic business relationships and alliances with stakeholders. B) Reducing transaction processing costs and increasing quality service. C) Providing better information for management decision-making. D) All of the above.
24. The Internet's protocol suite is known as:
A) TCP/IP. B) ISO. C) OSI. D) None of the above.
25. A field represents:
A) One character of data. B) An attribute of an entity.
C) An entity. D) A set of entities.
26. Which one of the following describes a unit of data that would be designated as a file?
A) A student's social security number. B) A student's name, social security number, and information about his or her academic performance last semester. C) Names, social security numbers and housing assignments for all students living in dormitories. D) Academic performance, personal history, housing, and automobile registration information for all students previously and currently enrolled.
27. In the database management approach:
A) All of an organization's data are consolidated into a single common database. B) Data integration is strictly controlled and limited. C) Definitions and descriptions of the data are contained in the application programs using that data. D) The data needed by many different applications in an organization are consolidated and integrated into one or more common user databases.
28. A DBMS query language is designed to:
A) Support information systems professionals in the development of complex application software. B) Support end users who wish to interrogate the database using English-like or natural language commands. C) Provide efficient processing of the database in the batch mode. D) Specify the content, relationships, and structure of a database.
29. Which statement most accurately describes a data warehouse database?
A) Stores detailed data needed to support the operations of the entire organization.
B) Stores data and information extracted from selected external databases. C) Stores data from current and previous years that has been extracted from the various operational and management databases of an organization. D) Is a database for local workgroups and departments.
30. An intranet is defined as:
A) An Internet-like network within an organization with web browser software providing easy access to internal web sites established by business units, teams, and individuals, and other network resources and applications. B) A rapidly growing network of thousands of business, educational, and research networks connecting millions of computers and their users in over 100 countries. C) A network that links selected resources of the intranet of a company with its customers, suppliers, and other business partners, using the Internet or private networks to link the organization's intranets. D) All of the above.
31. Which one of the following components would not be considered information technology that makes the Internet possible?
A) TCP/IP client/server networks and related software and hardware. B) Web browsers and server suites. C) HTML web publishing software, and network management and security programs. D) Spreadsheet programs.
32. Decisions made at the operational management level tend to be more:
A) Structured. B) Semistructured. C) Unstructured. D) Self-structured.
33. Unstructured decisions involve situations where:
A) The procedures to follow can be specified in advance. B) The procedures cannot be specified in advance. C) Some decision procedures can be prespecified, but not enough to lead to a definite recommended decision. D) None of the above.
34. Sales managers rely heavily on sales analysis reports to evaluate differences in performance among salespeople who sell the same types of products to the same types of customers. They have a pretty good idea of the kinds of information about sales results they need to manage sales performance effectively. This type of decision making would be considered as:
A) Structured. B) Unstructured. C) Semistructured. D) Self-structured.
35. Which one of the following statements would be considered a benefit of expert systems?
A) Learn from experience. B) Solve problems requiring a broad knowledge and subjective problem solving abilities. C) Capture the expertise of an expert or group of experts in a computer-based information system. D) Make subjective managerial decisions effectively.
36. Citibank's development and use of automated teller machines is an example of a strategic information system whose primary strategic role is:
A) Establishing cost leadership. B) Improving operational efficiency. C) Promoting business innovation. D) Building strategic information resources.
37. The concept of "leveraging investment in information systems technology" is associated with information systems whose strategic role is:
A) Improving operational efficiency. B) Establishing product differentiation and cost leadership. C) Promoting business innovation. D) Building strategic information resources.
38. Strategic information systems:
A) Are easier to develop and implement than more traditional systems. B) Usually produce permanent competitive advantages. C) Usually have very little effect on a firm's relationships with its customers, suppliers, and competitors. D) May require major changes in the way a business operates.
39. Which one of the following is not one of the steps in the systems approach to problem solving?
A) Define the problem and develop alternative solutions. B) Select the solution. C) Formulate a hypothesis about the causes or effects of the phenomena. D) Design and implement the solution.
40. A feasibility study would not answer which of the following questions?
A) Does the technology exist that is necessary to implement the proposed system? B) Is the proposed system technologically, economically and operationally feasible? C) Which type and model of computer will be used by the proposed system? D) What impact will the proposed system have on current employees?
41. Determining whether expected cost savings, increased profits, and other benefits exceed the cost of developing and operating a system is related to:
A) Economic feasibility. B) Functional feasibility.
C) Operational feasibility. D) System feasibility.
42. Determining whether reliable hardware and software required by a proposed system is available or can be acquired by the computer using organization is called:
A) Cost/benefit analysis. B) Economic feasibility. C) Operational feasibility. D) Technical feasibility.
43. Which one of the following is a function of the systems analysis stage?
A) Develop the functional requirements of the system. B) Conducting a feasibility study. C) Hardware acquisition. D) Personnel training.
44. Prototyping involves:
A) The execution of the standard systems development cycle using CASE tools. B) Rapid generation of systems by information systems professionals without the need for user input. C) Use of a fail-safe development process designed to ensure that an information system meets all user requirements without revision. D) An iterative and interactive development process with extensive end user involvement.
45. CASE stands for:
A) Computer analysis standards engineering. B) Computer-aided standards engineering. C) Computer application standards enforcement. D) Computer-aided software engineering.
46. Which one of the following statements does not apply to end user development?
A) IS professionals play a consulting role, while end users do their own application development. B) User service groups or information centers may provide assistance for both mainframe and microcomputer applications development. C) Electronic spreadsheet packages cannot be used by end users as a tool to develop ways to analyze information. D) Database management packages can be used to design data-entry displays to help sales clerks enter sales data.
47. Computer-based information systems:
A) Have had more impact on the number of supervisory personnel in organizations than was originally predicted. B) Have caused significant reductions in the number of people required to perform manual tasks in many organizations. C) Have caused reductions in the number of knowledge workers required in organizations. D) Have caused dramatic decreases in middle managers as businesses have decreased the depth and scope of their operations.
48. The information resource management (IRM) function of distributed management deals with:
A) Data and information issues. B) Hardware and software issues. C) Telecommunications networks. D) IS resources in business units or workgroups.
49. A chief information officer (CIO):
A) Does not have responsibility for a firm's office information systems. B) Has major responsibility for long-term planning and strategy. C) Is expected to closely supervise the internal operations of the information services department, but has limited responsibility for interfacing with other departments. D) Develops and administers training programs for information services personal and computer users.
50. Providing Internet access to employees raises several challenging managerial issues that include:
A) Network capacity and to ensure legitimate worktime use of the Internet by employees. B) Liability for the contents of employee E-mail on the Net. C) Developing company standards for Internet use.