Document Sample
					                            INFORMATION SYSTEMS
                               FINAL EXAM OVERVIEW



Information Systems and Organizations
The interaction between IS and organizations is influenced by many “mediating” factors.
Mediating Factors
   1) Environment
   2) Culture
   3) Structure
   4) Standard Procedures
   5) Business Processes
   6) Politics
   7) Management Decisions
   8) Chance

   - A stable, formal and social structure
   - Takes resources from environment, processes them and produces output

-Formal Structure
-SOPs (Standard Operation Procedures)

-Organizational Type

Formal Structure
   -   Clear division of labor
   -   Hierarchy
   -   Explicit rules and Procedures (SOP‟s)
   -   Impartial Judgment (decisions made based on facts and established rules)
   -   Technical Qualifications for positions (workers only qualify for jobs if they have
       the right skills and experience)
   -   Maximum organizational efficiency (the organization is set up to be efficient,
       organizations always trying to become more efficient)

Standard Operating Procedures
   - standard routines used within the organization to deal with expected situations
   - some formal, some rules of thumb
   - process an order, deal with a customer complaint
   - assist with efficiency – why?

   - Politics exist in all organizations
   - Different interests and viewpoints – disagreements, conflicts, struggles = politics
   - Political resistance

   - Fundamental beliefs in an organization about the „reason for being‟ for an
      organization (products and way people should be treated)
   - Culture can constrain politics (make sure people understand acceptable behavior)
   - All organizations have culture….

Organizational Types
   - Bureaucracies
   - Entrepreneurial
   - Other

   - Environment: organization draws resources from and supplies products/supplies
   - Organizations environment includes: Government, Unions, Competitors,
   - Each organizations relationship with its environment is unique
   - Organization and environment can influence each other

Programmers – write software
System Analysts – translate business problems into solutions
Project Managers – make sure solutions get delivered on time and on budget
Architects – design technical solutions
IS Managers – department & team leaders
Chief Information Officer (CIO) – senior manager of IS department

What the IS Department does-
IS Professionals :
-Interface – with the business to understand what needs to be done with a computer
Manage – the process of developing technical solutions
Design – computer systems that meet the needs of the business
Develop – (program) the computer system or choose a system to buy

- Economic theories are useful for describing the impact of information technology on
large numbers of organizations in the marketplace. Economic theories include
microeconomic theory, transaction cost theory, agency theory.

Microeconomic Theory
   - the microeconomic model of the firm views information technology as a factor of
      production that can be freely substituted for capital and labor.
   - As information systems automate the production process, less capital and labor
      are required to produce a specified output.
   - EX – manual vs. automated insurance application process

Transaction Cost Theory
   - IT should reduce transaction costs (interacting with other organizations)
   - IT should help firm‟s constrict in size to deliver a given output.
   - EX – buying from supplies using internet

Agency Theory
   - IT can reduce costs of acquiring and disseminating information
   - Managers can oversee more employees, reduce management costs.
   - EX – Dull computers – price changes

Information systems inevitably become political because they influence access to a key
resource – namely, information.

Information systems can affect who does what to whom, when, where and how in an
organization. Because information systems potentially change an organizations structure,
culture, politics, and work, there is often considerable resistance to them when they are

Behavioral theory states that the best way to bring about change is to change the
technology, tasks, structure, and people simultaneously.

Internet provides many opportunities, but also challenges such as:
    - electronic commerce & electronic business require a new way of thinking
    - finding a successful internet business model
    - the .com bubble burst
    - most eCommerce efforts have not returned significant profits –
    - internet flops

Customer Service Meltdown- one internet research firm that measured customer service
at 79 online sites found 30% of customer service e-ails went unanswered

Doing the Same Thing – Companies that do not make fundamental changes to their
corporate goal, and objectives and simply operate according to business as usual are
going to put themselves in a bad situation when they changes that e-commerce creates
begin to effect the company.

Inadequate Order Fulfillment – too many companies still don‟t have stock on hand or
readily available to meet customer orders Use of primitive search and transaction tools:
Many websites make consumers wait to long or take too many steps to find what they are
looking for.

Building Community, no Clientele – too many dot-coms have emphasized building a
community instead of clientele.

Insufficient Budgets – deploying a website is just the beginning of a company‟s e-
commerce expenditures. Many companies under-budget their needs in website
maintenance and marketing.

Channel Conflict – many companies leap into internet sales without considering the
impact on their channel partners, such as dealers or retailers. The resulting chill has set
back many e-commerce initiatives.

Innovation – the intensity of the competitive environment and the continued
developments in the technological environment require that a company constantly search
for innovative ways to produce and dispense the product and deal with customers.

Customers to Ambassadors – mass advertising turns people off – if they like your
product, they will tell other people – this is desirable. If you can use internet structures
and great customer service to turn customers into ambassadors of your product, you will
be, in effect, increasing your sales.
Before the Internet
   - organizations attempted to integrate information systems with those of supplier
       and customers
   - organizations have been trying become digital for a long time
   - used proprietary technology (non-standard)
   - difficult, time consuming and expensive

The internet is: a universal, inexpensive and easy to use set of technologies and
technology standards.

Internet Technology affects Relationships
Information flows seamlessly
    - throughout the organization
    - with trading partners, suppliers and distributors
    - to and from customers
    - information flows 24 hours per day and 7 days a week

Internet Technology affects the Organization
    - internet technology allows organizations to communicate directly with their
        constituents at a very low cost
    - removes layers between the organization and its partners (disintermediation)
    - reduces transaction costs

Business Model
   - defines an enterprise
   - describes how the enterprise delivers a product or service
   - shows how the enterprise creates wealth and value

NEW Business Models
  - The internet changes economics related to access to information
  - The internet reduces information asymmetry and search costs:
  - -       one party involved in a transaction has more information that then the
  - -       costs other much more to search for information
  - -       example – buying a car
  - The internet eliminates the tradeoff between richness and reach of information.

-Prior to the internet – firms had to trade off information richness and information reach-
   -   Richness – the amount and quality of information that can be exchanged with a
   - Reach – the number of constituents that can be contacted.
-The internet eliminates the trade off.

Virtual Storefront          Marketplace Concentrator           Online Exchange
- Sells goods and or                                           - Bid-ask system, multiple
services online                                                buyers and sellers

Information Broker          Transaction Broker                 Auction
- provides information      -aggregate information or          - Dynamic pricing
about products              applications from several                sources, sell to other companies           

Reverse Auction             Aggregator                         Digital Product Delivery
-Consumers submit a bid                                        - sell and deliver software,
to multiple sellers                                            music, etc.                                       

Portal                      On-line Service Provider           Virtual Community
initial point of entry to   - provides service & support for   -provides an online meeting
web, specialized content,   hardware, software products        place for people with
services                        -                common interests                      -     
Content Provider            Syndicator                         Virtual Desktop

   - very significant source of revenue
   - banner
   - popup
   - Google


Customer-Centric Retailing
Internet allows firms to get closer to customers, cheaply:
    - direct sales over the Web
    - interactive marketing and personalization
    - M-Commerce and next generation marketing
   -   Customer self service

Direct Sales over the Web
   - sells directly to consumers
   - eliminate the „middleman‟
   - disintermediation
   - example of disintermediation: selling a sweater

Direct Sales to Consumers over Web
Selling from a Manufacturer - Distributor - Retailer - Customer = $48.50
Manufacturer – Customer = $20.45

Reintermediation – The shifting of the intermediary role in a value chain to a new
source (information brokers) – there would be an info broker between an auto dealer and
the consumer

Interactive Marketing / Personalization
Internet: Understand users tastes
    - based on what they have viewed (or not viewed)
    - how they behave on the site ( e.g abandoned shopping cart analysis)
    - based on what they have bought
    - pages then can be tailored and personalized to user interests

   - based on your portfolio and recent market trends, here are some recommendations
   - welcome back, Steve P. Munson

  - A cookie is a tiny file deposited on the users computer hard drive when an
    individual visits certain web sites; used to identify the visitor and track visits to
    the web sites.

   - E-commerce websites have tools to track a shoppers every step through an online
     store. Close examination of customer behavior at a web site selling women‟s
     clothing shows what the store might learn at each step and what actions it would
     take to increase sales.

- M stands for Mobile
- Internet is moving into the wireless world on private and public networks (cell phones a
good example)
- Firms can and will communicate with customers through
  (cell phones, PDA‟s, Interactive TV, Cars, Virtually anywhere)

Self Service
-Big use of the web- answer customer‟s questions let them help themselves
-Substitute the web for human contact
-Needs to be combined with human contact to be effective

B2B – Business to Business
  - Automation of transactions between businesses
  - Fastest growing eCommerce
  - Current estimate: 80% of all eCommerce transactions are B2B
  - 2004: revenue estimated to be 2.8 trillion World Wide
  - Providers purchaser with : (more information on products and pricing, more
      options in terms of suppliers, convenience, reduced transaction costs)

Electronic Marketplaces
   - Companies can use their own web sites for B2B commerce or use electronic hubs
   - Electronic hubs
       (online marketplaces with many buyers and many sellers, avoid point to point
       connections, integrated information – one stop shopping for supplier and supplier
       product information)

Some E-Commerce Payment Systems
Digital Wallet
   - stores your financial information securely on your computer
   - used instead of cash, cheque or credit card
    - stored value card
Person-to-Person Payments
   - to pay sellers not set up to process credit cards
Credit Cards
   - Verified by Visa
Electronic Bill Payment
   - pay your bills for you using your credit card or your bank account
   - all major banks

   - private, secure network based on internet technology
   - using internet technology to support internal organizational needs
     (Email, document sharing, online repositories of information, remote access to
     resources, group collaboration)
   -   Extranet – intranet that is available to authorized outsiders

Organizational Benefits
   - Cross platform availability
   - Can be tied to internal & transaction processing systems
   - Interactive applications with text, audio, video
   - Scalable as required
   - Easy to use Web interface
   - Low startup costs
   - Improved information sharing
   - Reduced cost of distributing information
   - Reduced cost for distributing software

Challenges & Opportunities
   - Unproven business models
   - Business processes require change (channel conflicts)
   - Security and Privacy
   - BUT – The internet provides firms with extraordinary opportunities to develop
       new products and services, new distribution channels, new avenues for marketing
       and sales, and even entirely new business models

Three Main Classes of Enterprise Systems
Customer Relationship Management – manage the organizations interactions with
customers „front office‟
Enterprise Resource Planning – manage the majority of an organizations core internal
processes „back office‟
Supply Chain Management – manage the movement of materials from suppliers and the
movement of finished products through the distribution channel

All 3 classes of enterprise applications are „process oriented‟ vs „functionally oriented‟
    - manner in which work is organized, coordinated, and focused to produce a
        valuable product or service
    - unique ways to coordinate work, information, and knowledge
    - way in which management chooses to coordinate work

   - an area of specialization within an organization
   - „departments‟
Problems with Functional Systems
   - data integrity
   - data redundancy and confusion
   - lack of data sharing and availability
   - disparate processes
   - inability to deploy best practices
   - lots of hands off – paper, phone calls
   - lack of consistency

  - interdependent software modules with a common central database
  - support basic internal business processes for finance and accounting, human
      resources, manufacturing and production and sales and marketing
  - enables data to be used by multiple functions and business processes for precise
      organizational coordination and control
  - software is developed around predefined business processes
  - firms select functions needed, then map to the predefined processes in the
  - best practices are the most successful solutions or problem solving methods for
      consistently achieving an objective

  - 60% of large corporations use it
  - Changes behavior of competitors and partners
  - It enforces best practices and aids reengineering
  - Changes the nature of consulting firms and IS

How does ERP create value?
  - it enforces best practices
  - provides foundation for e-commerce
  - simultaneous access to real-time data
  - integrates a broad range of business functions

  - better organizational planning
  - better communication
  - more collaboration
CRM – Customer Relationship Management Systems
  - customer relationship is a holistic process by which an organization is driven by
     the wants and needs of its customers
  - primary goal: customer experience is consistent and satisfying across all touch
  - manages all of the ways used by firms to deal with existing and potential new
  - CRM uses information systems to integrate entire business processes of a firms
     interaction with its customers
  - Provides a unified view of customer across the company

CRM systems help define who the best customers are – most loyal customers – what
customers are the most profitable and what do they buy.

Three Dimensions of CRM

      provides support to „front office‟ business processes, including sales, marketing
      and service. Each interaction with a customer is generally added to a customers
      contact history and staff can retrieve information on customers from the database
      as necessary.

  - applications that analyze customer data generated by operational CRM
      applications (and many other sources) to provide information about customers
      that can be used to build profitable relationships

   - is used where customers „self serve‟. This can include a variety of channels, such
      as internet, email, automated phone.
   - A good example is web page personalized

Supply Chain
   - a network of activities, such as manufacturing plants, distribution centers, retail
      outlets, people, and information, which are linked together into processes
      supplying goods/services from source through consumption.

Supply Chain Management
   - the integration of suppliers, distributors, and customer logistics requirements into
      one cohesive process
   - close linkage and coordination of activities involved in buying, making and
      moving product
   -   reduces times, redundant effort, and inventory
   -   helps in distribution of the finished products to customers

  - recurring problem of SCM
  - information about the demand for a product gets distorted as it passes from one
    entity to the next across the supply chain
  - as a result, a slight rise in demand might cause different members in the suppy
    chain – distributors, manufacturers, suppliers, secondary supplier, and tertiary
  - these changes ripple throughout the supply chain, creating excess inventory,
    production, warehousing and shipping cost

Business Value of SCM
   - management decides when, what to produce, store move
   - rapidly communicate orders
   - track the status of orders
   - reduce paper work
   - check inventory availability

Management Challenges
  - understanding the moral risks of new technology
  - establishing corporate ethics policies that include information systems

Social and Ethical Issues
   - in the past, so called „white-collar‟ crimes were treated with a slap on the wrist
       and fines to restore any damage done
   - industrial societies have become much less tolerant of financial, accounting and
       computer crimes
   - managers and employees must make judgment about what constitutes legal and
       ethical conduct
   - information systems becoming more important and pervasive in society

  - principals of right and wrong that can be used by individuals acting as free moral
     agents to make their choices to guide their behavior

TEHNOLOGY – ripple in the pond
Society – develops norms, rules to guide how society operates
Individuals know how to behave – society has balance
New technology can upset balance – takes time for society to react
Technology Trends Raise Ethical Issues
   - computing power doubles every 18 months
   - declining costs of data storage
   - data mining advances
   - networking advances and the internet

Ethical decisions draw on the concepts of:
Responsibility - accepting costs, duties, obligations for decisions
Accountability – mechanisms to assess responsibilities for decisions and actions
Liability – laws permit recovery of damages
Due Process – ability to ensure that laws are applied correctly

Step 1: Ethical Analysis
   - identify and describe facts clearly
   - define the conflict and identify higher order values
   - identify stakeholders
   - identify options
   - identify potential consequences for each option
   - choose best option

Step 2: Apply Standard Ethical Principals
Golden Rule – treat others as you want to be treated
Kant’s Categorical Imperative – if action is not right everyone, it is not right for
Descartes Rule of Change – if action cannot be repeated, it is not right at any time
(slippery slope rule)
Utilitarian Principal – put values in rank order and understand consequences of various
Risk Aversion Principal – take actions that produced least harm or cost
No Free Lunch – all tangible and intangible objects are owned by somebody

1. Information Rights
Privacy – the claim of individuals to be left alone, free from surveillance or interference
from other individuals, organizations, or government
    - data transmission
    - cookies
    - spamming
    - popups
2. Intellectual Property Rights
Intellectual Property – intangible property created by individuals or organizations,
protected under trade secret, copyright and patent law
    - ideas
    - music
    - movies

Trade Secret
   - intellectual work or product used for a business purpose, not based on information
       in public domain
   - employees asked to sign nondisclosure agreements
   - statutory great that protects creators of intellectual property against copying by
       others for at least 50 years
   - copyright office registers and enforces law
   - a legal document that grants the owner an exclusive monopoly on ideas behind an
       invention for 17-20 years.

Digital Media
Establish uniqueness

3. Accountability, Liability and Control
Ethical Issues
    - who is morally responsible for consequences of the use of IS
    - what liability should be assumed by user? Provider?
Social Issues
    - what should society expect and allow?
Political Issues
    - to what extent should government intervene, protect?

EX – What is an acceptable, technologically feasible level of system quality?
ETHICAL – when is software or service ready for release?
SOCIAL – can people trust quality of software, services, data?
POLITICAL – should industry associations develop standards for software, hardware,
data quality?
Quality of Life with IS
Social consequences of Information Systems
   - balancing power centre vs. periphery
   - rapidity of change
   - maintaining boundaries – family, work, leisure
   - dependence and vulnerability
   - computer crime and abuse

  - crime – illegal acts through use of computers
  - abuse – involving a computer that may not be illegal but unethical
  - hackers/crackers
  - jamming, sniffing, spoofing
  - malicious software

A CORPORATE CODE OF ETHICS – 5 moral dimensions
1) Information rights
2) Property rights
3) Accountability
4) Systems Quality
5) Quality of Life