Chapter 1 1. Why is the study of information systems important to you, regardless of your major? Practically every professional career in the modern business enterprise requires some knowledge of information systems. A working knowledge of the scope and role of information systems will help you succeed in whatever major you choose. Whether you are a student, IT end-user or professional, your role, skill and value to the organization will be strengthened by a study of information systems. 2. “One person’s data is another person’s information.” Explain this statement with an example. Data may be defined as raw facts, figures and details, while information is organized, meaningful, and useful interpretation of data. The user determines whether each piece of data or information describes results, conditions or an event to a sufficient level of detail such that a determination can be made about the existence of a problem, a set of alternatives or specific course of action. When distinguishing between the roles of production supervisor and managing director we can see the example of difference between applications of data and information. Production supervisors typically use figures to determine number of units required for a specific production cycle while managing directors use information to summarize total units sold in a specific geographic area during a finite period of time. 3. What does it mean that we live in an Information Age? Beginning in about 1957, the Information Age continues through the present; most of today’s workforce consists of knowledge workers, they are individuals involved in the creation, distribution and application of information. In the Information Age, the partnership is one of people working collaboratively to meet business enterprise goals, and the principle tool is information technology. 4. What are the capabilities of information systems that businesses must have to compete (and survive) in the Information Age? In order to compete and remain profitable, all businesses must have the ability to capture, process, generate, store, retrieve, and transmit data and information with optimal speed, consistency, precision and reliability. 5. Discuss the general technological trends for information technology. Change is a key to the future. Few technologies are changing as rapidly as those found in information technology. It would be unrealistic to predict in a single chapter what technologies will be important five years from now. The business application drives the technology, not the reverse. There is a clear trend toward the continuing advancement of multimedia (text, sound, still and animated images, and motion video) applications. Multimedia workstations, high-speed wire and wire-free networks with object-oriented applications combining audio, video and data into a single multimedia communications system. It will matter little where data are stored, since an even greater variety of powerful search and retrieval tools will be available. Chapter 2 1. Describe the evolution of information system architectures. How is it related computers’ cost and capabilities? Information system architectures have evolved from centralized to distributed and are now in a period ―re-centralization.‖ As indicated by the example of Chase/Chemical Bank, current architecture is constructed around the use of Internet and intranets, generally in a layered design with headquarters providing corporate-level control of technology resources. 2. Discuss the logic of building information systems in accordance with the organizational hierarchical structure. Information systems must be designed to provide a match between the needs of organizational entities and the support provided by IT. Information systems can be classified according to organizational structure. The vast majority of organizations still have a traditional hierarchical structure. Therefore, the most common arrangement of information systems is one that follows the hierarchical structure. There are information systems and applications built for headquarters, for divisions, for departments, and for specific teams. Other systems are enterprise-wide, inter- organizational, global (international). Information systems can be either stand alone or inter-connected. 3. Relate the following concepts to each other: distributed processing, client/server architecture, and enterprise-wide computing. Distributed processing divides the processing work between two or more computers. The participating computers can be all mainframe, all PCs, or as in most cases, a combination of the two. They can be in one location or in several. In the distributed environment, the computers, whatever their size are linked together in a network of some sort. Client/server architecture divides networked computing units into two major categories—clients and servers—all of which are connected by local and possibly wide-area networks. A client is a computer such as a PC attached to the network, which is used to access shared network resource. A server is a machine that is attached to the same network and provides clients with these services. In order to solve problems or exploit opportunities, many organizational users frequently need access to data, applications, services, and real-time flows of data that are in different LANs or databases. The solution is to deploy an enterprise-wide computing using client/server architecture to create a cohesive, flexible, and powerful computing environment. 4. Discuss the relationships between TPS and MIS. Functional information systems are put in place to ensure that business activities are done in an efficient manner. Typically a functional MIS provides periodic reports about such topics as operational efficiency, effectiveness, and productivity. It prepares these reports by extracting information fro the corporate database and processing it according to the needs of the user. For example, an organization’s TPS records every order as it is generated, and its marketing MIS can generate from these records weekly and monthly summaries by product, customer, or salesperson. 5. Is the Internet an infrastructure, architecture, or an application program? Why? If none of the above, then what is it? The Internet is a collage of networks that are interconnected together. Therefore it is an infrastructure with internal divisions that promote the exchange of information with other users. Internet features are based upon application programs such as FTP, Gopher, Web, WAIS and Lists. Internet architecture is based upon ways in which businesses can access Internet services. Elements of the overall architecture allow a company to purchase as much or as little Internet connectivity assistance as it deems appropriate. Chapter 3 1. What factors affect the speed of a microprocessor? The speed is commonly measured by the number of instructions the chip processes per second – machine instructions cycles per second, or MIPS. This number depends on the following four factors: The preset sped of the clock that times all chip activities, measured in megahertz (MHz). The faster the clock speed the faster the chip (a 200 MHz chip is half as slow as a 400 MHz chip). The word length, which is the number of bits (0s and 1s) that can be processed at any time. Chips are designed to handle 8-bit, 16-bit, or 32-bit word length. The larger the word length, the faster the chip. The bus width. The wider the bus (the physical avenues down which the data and information travel as electrical impulses), the more data can be moved and the faster the processing. Buses are measured in microns (millionths of a meter). The physical design of the chip. Generally, a greater number of transistors and shorter line width (distance between transistors) give faster processing speeds. 2. If you were the chief information officer (CIO) of a firm, what factors would you consider when selecting secondary storage media for your company’s records (files)? Factors a CIO might consider when selecting secondary storage media for company records: Cost per byte of storage Amount of storage capacity required Archival storage requirements Back up considerations Retrieval speed Portability and cross platform support 3. What applications can you think of for voice recognition systems? Organizations could consider integrating voice mail with the computer, so that the computer can record and make limited responses to incoming calls. VRS can translate spoken works into digital text. While this technology is still emerging there are obvious requirements for it in computer user interface design. Executive information systems and decision support systems are ideal candidates for VRS. 4. Given that Moore’s Law has proven itself over the past two decades, speculate on what chip capabilities will be in 10 years in the future. What might your desktop PC able to do? The brightest prospects for desktop computers in 10 years are in multimedia systems design. While sound, video, and animation are still most important for educational and game software, multimedia PCs has already begun to suffice business applications as well. The cost of videoconferencing has plummeted while its quality has improved. Film clips and animations are enhancing tutorials and training materials. Shared documents with voice digitized photographs, or 3-D graphics are beginning to make the rounds on the company network. The next generation Internet initiative will deliver a highly graphical Web, for good or ill, will be more commonplace as bad coffee in today’s office. 5. If you were the chief information officer (CIO) of a firm, how would you explain the workings, benefits, and limitations of network computer-based system as opposed to using networked PCs (that is, “thin” client vs. “fat” client)? CIO’s can focus on the total cost of ownership (TCO) aspect of thin client versus fat client. Thin client based systems are not only less expensive to buy than standard personal computers, but they accrue additional cost benefits over the life of the computer. Savings can be achieved with thin clients through minimizing technical support, less training for users and less frequent replacement. It is good to have a choice for client computing and it is unlikely that thin clients will make today’s fat client obsolete. There are scenarios were both client systems work best. 6. How would you justify to your employer the added cost of a multimedia system over that of a non-multimedia-capable PC? Increasingly, organizations recognize that multimedia capability is an important aspect of knowledge management and communication. When integrated with a firm’s network and/or the Internet, multimedia technology makes possible an incredibly rich communication and knowledge sharing throughout the organization, as well as the rest of the world. Multimedia presentations (via the kiosk) are now the standard for excellence in the business world, and anyone who has to sell a product, service, or idea benefits from exploiting this technology. Computer-based training for large organizations can be enhanced through multimedia authoring and the resulting courseware. Scenarios where Intranets deliver corporate training by way of multimedia systems have already saved corporations millions of dollars in travel and loss productivity costs due to time away from the workplace to attend training in formal classrooms. 7. Give some examples of how wearable computers might help your company. Suggest some examples: Computers based on global positioning systems (GPSS). Military field applications. Online Education. Distance learning systems where students and faculty can stay in close contact. Restaurant business can improve customer service through constant contact with the operations staff. 8. What types of embedded computers can you think of in your company? In your home? Embedded computers for improved healthcare. Applications based on remote diagnosis of vital health signs. Embedded computers and sensors for monitoring all aspects relating to home security, comfort and control. Embedded computers to deliver emergency signals from homes to monitoring stations. Chapter 4 1. You are the CIO of your company and have to develop an application of strategic importance to your firm. Do you buy off-the-shelf application or develop it in house? Support you answer with pros and cons of each choice. Off-the-shelf applications, custom development, or a combination of the two (known as ―buy-build‖ applications) are the choices the CIO can consider. Off- the-shelf applications often meet the cost objective and general information processing requirements but can lack the functionality and flexibility required by many organizations. Custom development provides greater flexibility but is usually the most expensive alternative. This is true because software development is slow, increasingly complex, and error-prone. In ―buy-build‖ applications off- the-shelf software becomes customizable with much of the high-level functionality customization completed by the user organization. The final choice for strategic applications should involve a rigorous needs assessment and subsequent software evaluation and acquisition process. 2. You are the CIO of you company. Which computing paradigm will you support in your strategic information technology plan: the standard desktop computing model, with all the necessary functionality on the local machine, or the network computing model, where functionality is downloaded from the network as needed? Support you answer with pros and cons of each choice. Selection of computing paradigm for a strategic information technology plan is similar to the software evaluation and selection decision. Each is a difficult one that affects many factors. Below is a list of factors and pros and cons of each: Size and location of the current and future user base. It is easier to cost justify expensive software on desktop computers for small user groups in a single location than for large numbers of geographically dispersed users. Network computing is ideal for large groups where specialized software functionality is important. System administration and control. Both computing models require system administration control. Due to the ―turn-key‖ nature of network computing, it offers greater options for control. Users of standard desktop computers often present technology control challenges because they can easily load unauthorized software on their computers. Initial and subsequent costs. The costs involved include the initial license or purchase fee for software, hardware, cost of installation, documentation, training, and any customizing or consulting, and annual maintenance. Cost data will vary widely between the two computing paradigms. In-house technical skills. An organization with limited in-house technical sills would be more suited to the network-computing model. An organization with skilled personnel can better support the standard desktop computing model. 3. You have to take a programming course in you MIS program, or maybe more than one. Which language would you choose to study? Why? Should you even have to learn a programming language? MIS stands for management information systems. The leading programming language for MIS is COBOL, so it is the language I would choose to study. Learning a programming language is key to understanding how computers perform input, processing, output routines. In a general sense, knowledge of programming is good for anyone working with information. 4. What is the relationship between network computers and Java? Java is designed to run on network servers. Companies will not need to purchase numerous copies of commercial software to run on individual computers. Instead, they can purchase one network copy of the software package, made of Java applets. Servers need only to download applets from the network to process locally, which means that companies can purchase network computers for employees rather than the more expensive desktop PCs. 5. If Java and network computing become the dominant paradigm in the industry, will there be any need for in-house information systems staff? What would the staff still have to do? Absolutely, a staff will be needed to provide centralized administration and control of the enterprise-wide network. While fewer staff is needed with network computing, there is still a requirement to provide systems management functions such as performance management, fault management, configuration management, and security management. 6. You are the CIO of your company. Explain to the board of directors your decision to purchase only two modules of SAP—finance and human resources—for your firm. My explanation would be based on a modular approach to systems implementation. Starting with two modules allows my company to examine the functions and benefits of each, as well as the underlying application-link enabling software promoted by SAP. The components or modular approach has several other benefits including the chance to build smaller, simpler, less expensive R/3 systems. Finance and human resources would be prototype departments testing the system prior to proceeding with major investment in other R/3 components. Chapter 5 Review Questions Section 5.1 1. What are the smallest and largest units of the data hierarchy? Recall from Chapter 3 that a bit represents the smallest unit that a computer can process. A database is the largest unit of the data hierarchy and is considered a logical grouping of related files. 2. What is the difference between sequential and direct file access? With sequential access data records must be retrieved in the same physical sequence in which they are stored. In direct file access users can retrieve records in any sequence, without regard to the actual physical order on the storage medium. For example, magnetic tape utilizes sequential file organization, whereas magnetic disks use direct file organization. Section 5.2 1. What other problem is often found with the problem of data redundancy? Data redundancy leads to the potential for data inconsistency. Data inconsistency means that the various copies of the data no longer agree. For example, if a student changes his or her address, the new address must be changed across all applications in the university that require the address. 2. How does data isolation prevent different departments, for example, from using the same data file? With applications uniquely designed and implemented, data files are likely to be organized differently, stored in different formats, and often physically inaccessible to other applications. Box 5.1 1. What does the example tell you about the criticality of modern data management to marketing? This example illustrates that competitive advantage requirements call for highly scalable network data storage systems that provide quick access to very large amounts of compiled data. Nielsen Media is on the cutting edge of the media industry and it is difficult to forecast the amount of storage needed by media networks and advertisers; Use of the Sun Microsystems A500 Fiber Channel storage system is a very good solution. 2. What might be some of the impacts of decreasing storage costs in your chosen industry? Decreasing storage costs would mean more delivery options for the learning technology industry. An example would be expanding the use of multimedia tools to impact the learning experience. This would demand higher capacity storage systems such as provided with the storage area network or SAN. Section 5.3 1. What are the common options for locating data in databases? Generally, database files can be centralized or distributed. In centralized databases, files are not accessible except by way of the centralized host computer. A distributed database has complete copies of a database, or portions of a database, in more than one location, which is usually close to the user. There are two types of distributed databases: replicated and partitioned. A replicated database has complete copies of the entire database in many locations, primarily to alleviate the single-point-of-failure problems common with central databases. A partitioned database is subdivided, so that each location has a portion of the entire database (usually the portion that meets users’ local needs). 2. What tools and techniques are used to produce optimal database designs? Designers must develop a conceptual design and a physical design. The conceptual database design describes how the data elements in the database are to be grouped. Entity-relationship modeling and normalization are employed to produce optimal database designs. E-R modeling involves preparing a conceptual diagram with standard symbols to identify entities, attributes and relationships. Normalization is a method for analyzing and reducing a relational database to its most streamlined form for minimum redundancy, maximum data integrity, and best processing performance. Section 5.4 1. What is the difference between the logical and physical views of the data in a database? The logical view, or user’s view, of a database program represents data in a format that is meaningful to a user and to the software programs that process that data. That is, the logical view tells the user, in user terms, what is in the database. The physical view deals with the actual, physical arrangement and location of data in the direct access storage devices (DASD). 2. What are the main components of a DBMS? The four main components in a database management system are: the data model, the data definition language, the data manipulation language, and the data dictionary. Data model – defines the way data are conceptually structured. Examples include the hierarchical, network, relational, object-oriented, object-relational, hypermedia, and multidimensional models. Data definition language (DDL) – defines what types of information are in the database and how they will be structured. Data manipulation language – is used with third-generation, fourth generation, or object-oriented languages to query the contents of he database, store or update information in the database, and develop database applications. Data dictionary – a repository of definitions of data elements and data characteristics. Box 5.2 1. Although the bank example is unusual, what other potential abuses could happen? If insurance companies gain access to personal records the might decide to raise the cost of health insurance premiums or deny applicants on the basis of medical history. Similarly, employers might restrict employee promotion opportunities or make hiring decisions on the basis of medical history. The potential for abuse is large. 2. How do you feel about your medical history being stored in a database? Do the advantages outweigh the disadvantages? I would not be comfortable with my medical history being electronically stored in a database. When private information is stored electronically the potential for abuse is large. The advantages are in having my medical history quickly recalled in case of an emergency or for trend analyses relating to treatment, or drug prescriptions. The disadvantages are greater. Electronic data can be easily shared, compromised, abused, or lost. 3. From the perspective of a bank or insurance company executive, how would you view gaining access to medical histories? I would view medical history access as high risk and would avoid acquiring, storing and using this information until the legal ramifications are known. Subsequent decisions within the judicial system could expose banks or insurance companies to fines or other unfavorable results. Box 5.3 1. What kinds of hotel and destination-specific information should be included in the database? As a customer, what type of additional information would you want? Hospitality databases could be expanded to include additional attributes of the customer profile. I am thinking of food preferences, room view, room amenities and any other personal options that would increase customer satisfaction and return rate. 2. Should Hyatt rely so completely on this system? What are some of the potential downsides of the new system? It seems reasonable for Hyatt to rely on the system as a way to book a reservation worldwide. Agents will continue to have other ways to book reservations. Since the system is a centralized database there is a single point of failure. Poor response time during peak hours could also be downside of the new system. Hopefully Hyatt will ameliorate these potential downsides through the implementation of the appropriate fault-tolerant technologies. Section 5.5 1. What are the relative advantages and disadvantages of hierarchical, network, and relational databases? The main advantage of the hierarchical and network database models is processing efficiency. Both are relatively easy for users to understand because they reflect the pattern of real-world business relationships. In addition, the hierarchical structure allows for data integrity to be easily maintained. Hierarchical and network structures have several disadvantages, though. All the access paths, directories, and indices must be specified in advance. Once specified, they are not easily changed without a major programming effort. Therefore, these designs have low flexibility. Both database models are programming intensive, time- consuming, difficult to install, and difficult to remedy if design errors occur. The two structures do no support ad hoc, English language-like inquiries for information. The advantages of relational DBMS include high flexibility in regard to ad hoc queries, power to combine information from different sources, simplicity of design and maintenance, and the ability to add new data and records without disturbing existing applications. The disadvantages of relational databases are their low processing efficiency. These systems are somewhat slower because they typically required many accesses to the data stored on disk to carry out the select, join, and project commands. Also, data redundancy is common, requiring additional maintenance. 2. How might a company use a multimedia DBMS for competitive advantage? Multimedia databases can store data on many media—sounds, video, images, graphic animation, and text. Any company interested in promoting products and services via database technology and networks could benefit from merged multimedia technology to produce highly interactive, advertising options. Box 5.4 1. As a financial analyst, what dimensions, related to your customers would you need to help your clients redefine risk? Financial analysts need detailed business information such as profitability across product lines, past product changes and their impact on revenues, and emerging market trends. 2. How can companies in your chosen field benefit from using data marts? My company could benefit from the use of departmental data mart to provide business intelligence and subsequently a better level of customer service while company-wide enterprise data warehouse is being built. The important consideration with our departmental data mart is to be sure that it provides an open link to the emerging enterprise data warehouse. Box 5.5 1. What other retail industries could benefit from using the data mart approach to supply chain management? Most fashion houses are required to mitigate risk associated with the chance of stocks of outdated fashions piling up quickly and the risk of an inadequate supply of new fashions for the next season. These two forces together can cause a chain reaction of increasing markdowns and shrinking profit margins. Such companies must manage their distribution and procurement processes efficiently. Virtually all participants in the apparel supply chain—apparel manufacturers, wholesalers, and retailers—have to particularly effective in managing variables such as inventory, production and distribution. The data mart approach to supply chain management focuses on the use of sophisticated techniques to retrieve data gathered in transaction systems and producing summarized results. The information obtained includes key performance indicators such as store and product performance, rate of sale, stock turnover, and margins. 2. What sort of unforeseen relationships do you think might be discovered among the transaction data? The data mart approach at MEXX could reveal relationships between demographic and performance criteria. For example, how promotional expenditures impact specific demographic buying patterns. Also, how increased inventory affects the level of retail transactions. Box 5.6 1. How could an industry or profession with which you are familiar benefit from text mining? Research and development activities everywhere could benefit from text mining. I can relate from the engineering profession and particularly the activity of researching information technology standards for multimedia applications. It would be beneficial to search the International Telegraph Union (ITU) database to look for parallels in standards affecting low-bandwidth transmission of audio and video signals. 2. What do you suppose Pfizer does about medical information in texts printed in other languages? What kinds of challenges arise in translation? As an international company Pfizer would need to search international markets for products that provide text-mining capability in various languages. One of the key challenges with text searching in languages other than English is that many terms are not directly translatable from English. Section 5.6 1. What are some of the advantages of data warehousing? Among the advantages of data warehousing are: Making available large amounts of data collected by transaction processing systems in various easy to read formats. Providing information availability and access to a wide range of end users. Data warehousing supports efficient and effective management decision-making. Data warehousing provides an enterprise-wide approach to information resource management. 2. How would a firm use data mining and text mining for competitive advantage? Data mining provides a means of extracting previously unknown, predictive information from the base of accessible data in data warehouses. Text mining is the application of data mining to non-structured or less structured text files. Firms engaged in direct sales of products to consumers and deploy both tools to discover hidden buyer behavior patterns, correlations, and relationships among transactions. These same tools can also support marketing research by providing analysis of organizational and market data. DISCUSSION QUESTIONS 1. You are the CIO of your company. You have just made a presentation to your CEO, proposing that the company implement a data warehouse. The CEO responds, “We already have several databases don’t we? Why do we need a data warehouse?” Prepare to justify your proposal. Educate the CEO. Try to demonstrate the functionality differences that distinguish ―traditional‖ queries and data mining queries, consider the following examples. A typical ―traditional‖ query would be: ―Is there a relationship between the amount of product X and the amount of product Y that we sold over the past quarter?‖ A typical data mining query would be: ―Discover two products most likely to sell well together on a weekend.‖ The latter query allows the software find patterns that may never be detected by observation to see if this or that pattern existed. Data mining allows us to ask what patterns exist. 2. As the CIO of a company, you want to implement a series of data marts. The CEO wants to know why you do not just implement one large data warehouse. Make a case to support data marts. The CEO should be vetted toward the subset functionality of data marts. Perhaps an effective strategy might be to show that data marts are component based approach toward implementing a data warehouse product. Such a strategy would allow the company to investigate the benefits of an enterprise data warehouse first through a departmental application. Because of its reduced scope, a data mart takes less time to build, cost less and is less complex than an enterprise data warehouse. Emphasize that this introduction of data mart technology is not indiscriminant and if deemed successful could lead to multiple data marts with linkage to each other and to an enterprise data warehouse. 3. Should your university implement a data warehouse? Data marts? What types of uses would your university have for a data warehouse? For data marts? Absolutely. Our university should implement a data warehouse! Data marts at each campus location would support the unique needs of students at their respective campuses. A data warehouse would deliver effective, local decision support on a range of issues such as university enrollment, student services, finance & accounting, academic counseling and alumni relations. Each data mart would provide management support for unique programs and requirements at more than 50 campus locations. 4. In the university question above, what might the dimensions be in the multidimensional database used in the data warehouse? Give a three dimensional example. What would each cell represent in your example? In a multidimensional database the matrix would represent U.S. regional enrollment dimensioned by degree program and degree type. 5. You are the CIO of your company. You have just made a presentation to your CEO, proposing that the company implement a data warehouse. The CEO responds, “We already have several databases don’t we? Why do we need a data warehouse?” Prepare to justify your proposal. Educate the CEO. Try to demonstrate the functionality differences that distinguish ―traditional‖ queries and data mining queries, consider the following examples. A typical ―traditional‖ query would be: ―Is there a relationship between the amount of product X and the amount of product Y that we sold over the past quarter?‖ A typical data mining query would be: ―Discover two products most likely to sell well together on a weekend.‖ The latter query allows the software find patterns that may never be detected by observation to see if this or that pattern existed. Data mining allows us to ask what patterns exist. 6. As the CIO of a company, you want to implement a series of data marts. The CEO wants to know why you do not just implement one large data warehouse. Make a case to support data marts. The CEO should be vetted toward the subset functionality of data marts. Perhaps an effective strategy might be to show that data marts are component based approach toward implementing a data warehouse product. Such a strategy would allow the company to investigate the benefits of an enterprise data warehouse first through a departmental application. Because of its reduced scope, a data mart takes less time to build, cost less and is less complex than an enterprise data warehouse. Emphasize that this introduction of data mart technology is not indiscriminant and if deemed successful could lead to multiple data marts with linkage to each other and to an enterprise data warehouse. 7. Should your university implement a data warehouse? Data marts? What types of uses would your university have for a data warehouse? For data marts? Absolutely. Our university should implement a data warehouse! Data marts at each campus location would support the unique needs of students at their respective campuses. A data warehouse would deliver effective, local decision support on a range of issues such as university enrollment, student services, finance & accounting, academic counseling and alumni relations. Each data mart would provide management support for unique programs and requirements at more than 50 campus locations. 8. In the university question above, what might the dimensions be in the multidimensional database used in the data warehouse? Give a three dimensional example. What would each cell represent in your example? In a multidimensional database the matrix would represent U.S. regional enrollment dimensioned by degree program and degree type. REAL WORLD CASE 1 Case in a Nutshell Wachovia Corporation launched a marketing strategy known as Profitable Relationship Optimization (Pro) in which database technology is used to discover a relationship between the company’s products and target markets. This strategy is innovative while it is consistent with banks wanting to leverage their customer information using database technology to market themselves more precisely. So far the results appear favorable but more information is needed to determine if there is sufficient business volume to justify the up-front investment cost in database marketing. Database Marketing at Wachovia Corporation Questions 1. How could an industry with which you are familiar use database marketing for competitive advantage? Database marketing could be useful in businesses that have an existing customer base and they are seeking ways to retain customers by considering their wishes in product development strategy. A good example would be a software company with a specialized product that performs Web trend analysis. Such a company could expand offerings to include new and different forms trend analysis. 2. How would you expand Wachovia’s system? How else would you use it within the banking industry? The system could be expanded to include provision for delivering customer surveys, and collecting and summarizing results. This would help the bank analyze and estimate the likelihood of customers using new products in profitable ways. 3. How could a nonprofit or public organization benefit from using database marketing? Nonprofit and public organizations would benefit from database marketing if results could be generated to support allocation or re-allocation of project funds. Chapter 6 Review Questions Section 6.1 1. Why is the distinction between digital and analog transmission so important in telecommunications? In IT data communications we need a line that can carry a digital signal. If the line can carry only analog signals, we must employ devices that can translate the digital signals to equivalent analog signals in their passage from the computer to the line, and then translate them back to the original digital signals just before they are transferred to the receiving computer. 2. What are the common media for telecommunications? What are their respective advantages and disadvantages? There are many different media—including twisted pair and coaxial cable, microwaves, and optical fibers—that vary in a number of ways: the amount of information they can carry, their vulnerability to interference that corrupts the data being transmitted, their cost, whether they guide the data or not, and their availability. Manager’s Checklist 6.1 provides an overview of the currently popular media and their respective advantages and disadvantages. 3. What are some of the common options in telecommunications service? Telecommunications carriers are currently providing a range of services for both personal and business use. Among the common options are: - Switched and dedicated (leased) lines - WATS or Wide-Area Telecommunications Service - Telephone and Dialing Services - Integrated Services Digital Network (ISDN) - Digital Subscriber Lines (DSL) - Virtual Private Networks (VPN) - Asynchronous Transfer Mode (ATM) Section 6.2 1. What are the main business reasons for using LANs? In an office, a LAN can give users fast and efficient access to a common repository of information while allowing the office to pool resources such as printers and facsimile machines. A well-constructed LAN can also eliminate the need to circulate paper documents by distributing electronic memos and other material to each worker’s terminal. A private branch exchange (PBX) is a type of LAN. The PBX is a special-purpose computer that controls telephone switching at a company site. PBXs can carry both voice and data and perform a wide variety of functions to make communications more convenient and effective, such as voice mail, call waiting and call forwarding. 2. What is the difference between LANs and WANs? Typically, LANs operate within 2000 feet or a single building or several adjacent buildings. WANs are long haul, networks covering wide geographic areas. Services to transmit data on WANs are provided by common carriers. 3. What are some common WAN options? Among the common WAN options are: - Value-Added Networks (VANs) are private, data-only networks that are managed by outside third parties and used by multiple organizations to provide economies in the cost of service and in network management. VANs can add message storage, tracking, and relay services as well as teleconferencing services, thus enabling their users to more closely tailor communications capabilities to specific business needs. - Virtual Private Networks (VPNs) are operated by a common carrier and allow an organization to leverage the robust, shared communications infrastructure of the Internet to hook up with remote users, branch offices, and business partners worldwide, without paying the distance-sensitive fees that carriers charge for conventional network lines. Box 6.1 1. Are there other technologies that the firm might have considered? The firm could have considered the asynchronous transfer mode (ATM). ATM LAN technology is widely available and it provides support for data, video, and voice transmissions in appropriate configured LANs. 2. What insights do you gain from this case regarding the use of “leading edge” technologies? There are always risks involved with ―leading edge‖ technologies. Among the risks are the lack of hardware and software standards, unstable products, and the lack of technical support. Box 6.2 1. What other commercial networks can you think of whose failure would cost a firm an equal or greater amount of money in such a short time? Failure of the commercial network that transmits stock market data would cost financial advisory service firms an enormous amount of money. Any commercial network providing high volume order processing would loose a great amount of money if service were disconnected for an extended period of (hours) time. Recall the infamous 26 hour AT&T frame relay outage? 2. Do you think that network management is a viable career option? Will it be in the future? Why or why not? Network management is a viable career option. Network management tools are sophisticated and versatile, and provide comprehensive management options. Skilled professionals are needed to deliver a range of services classified as systems management functions such as performance monitoring, fault, configuration, and security management. Section 6.3 1. What is the role of telecommunications protocols? The principle role of telecommunications protocols in a network is to use a set of rules and procedures to govern transmission across a network. 2. What are popular data transmission options? What are their respective advantages? The popular data transmission options include: packet-switch, frame relay, fiber distributed data interface (FDDI), asynchronous transfer mode (ATM), and switching hubs. Packet switch—breaks up blocks of text into small, fixed bundles of data called packets. The original advantage of packet switched transmission is that the subscriber pays only for data sent on the network. Other advantages are worldwide standard X.25 that permits interoperability with millions of devices and networks across the world. Frame relay—is a faster and less expensive version of packet switch. Frame relay is designed for digital circuits that are less error prone so it does not perform error correction. Because of this, higher transmission speeds are obtainable with frame relay. FDDI—passes data around a ring, with a bandwidth of 100Mbps---far faster than a standard 10-13 Mbps token ring (or bus) network. ATM—packet switch technology that divides data into uniform cells, each with groups of 53 groups of eight bytes. Advantages include elimination of need for protocol conversion and unlimited bandwidth on demand. ATM provides excellent support data, video, and voice transmissions on one communications link. Speeds are scalable to 2.5Gbps. Switched hub technology—can turn many small LANs into one big LAN. A network need not be rewired, only the switching hubs added to get this functionality. Section 6.4 1. What are the common advantages of client-server architecture for network processing? The components of an application can be distributed over the enterprise rather than being centrally controlled. The advantage is that each processing task can be programmed to accommodate end-user needs, location, and available systems resources. File integrity is much easier to maintain, because only the server actually updates the files. File security is easier to maintain with server in full control of file data. 2. What are the goals and benefits of “open” systems? Open systems can provide flexibility in implementing IT solutions, optimization of computing effectiveness, and the ability to provide new levels of integrated functionality to meet user demands. Open systems promote connectivity across the enterprise for application portability, interoperability, scalability, and lower total cost of ownership. Box 6.3 1. What can you do yourself to avoid having these problems on your computer? The best practice way to avoid these problems is to install the latest versions of application and security tools. This would improve your chance of having software with closed the security holes. Also, keep abreast of the latest announcements relating to new penetration schemes and virus programs. 2. How do you feel about the Cult of the Dead Cow? Do you legitimately want to call attention to security holes in Microsoft applications? It is always good to legitimately inform software makers about security holes in their software. Members of the Cult got the attention of Microsoft management and steps were taken to secure all its software products. 3. If you knew members of the Cult, what would you do? Members of the Cult should be contacted for their help in designing solutions to close security holes. Hacker groups are not always malicious in their intent and have historically made significant contributions to the study of data and systems security. Box 6.4 1. What other components are probably in the telecommunications systems that link meeting members from different parts of the world? There are several key technologies in the telecommunications link. Video cameras, microphones, high-speed digital links combining audio and video such as the T- carrier system, server based videoconferencing software, and a communications protocol. 2. What kind of bandwidth would be required to support telecommunications of real- time video, audio, and data for an application like this? Generally, a sufficient bandwidth would be in the range of 1.5Mbps per link. Central to efficient and effective performance would be the video portion that would need to be maintained at about thirty frames per second. Lower line speeds could be adequate but much would depend on the videoconferencing server software. Section 6.5 1. What competitive advantage can you imagine for EDI in your chosen field or industry? EDI would provide competitive advantage through better customer service, elimination of manual paper processing and associated errors, shorter ordering cycles, lower safety stocks and increasing inventory savings. 2. Would telecommuting be a more popular option in some parts of the United States than others? Why? Telecommuting is more popular in large metropolitan areas where city and county governments are encouraging it as a means to reduce traffic congestion and air pollution. (Here in Phoenix we see many indications of this trend, especially by way of announcements in the workplace and electronic displays signs on major travel routes around the city.) DISCUSSION QUESTIONS 1. Is telecommuting always beneficial for an organization? For an employee? When might telecommuting not be beneficial for an organization or an employee? Do you think you would be willing to telecommute during your career? Why or why not? Telecommuting is most beneficial to organizations with non-traditional views of attendance in the office equating to quality or amount of an employee’s work. Employee benefits vary with profession. For example, computer programmers are often more productive away from the office when they are able to work in an nvironment with reduced social interaction. Telecommuting is not beneficial to an organization or an employee if the social/political climate in the workplace is such that there is an absence of trust between employees and management. The same would apply for organizations without a management control system. I am currently a telecommuter and expect this trend to continue throughout my career. Telecommuting is good solution to the problem of traffic congestion and resource conservation. I would like to evolve to an environment of splitting my work time between home and business offices. 2. Discuss the implications of the Telecommunications Act of 1996 as it applies to you. Does the law affect you at all? Why or why not? Since the Telecommunications Act of 1996 the RBOC known as US West began offering wireless phone services. About two years ago I became a subscriber to their personal communication services (PCS) and have linked this service to traditional home telephone service. The affect on me is with respect to consolidation of billing of wireless and wire services and the use of one telephone number for all voice communications. The benefits are lower overall communications costs, higher availability, and convenience of dealing with one supplier. 3. What are the implications of having fiber optic cable going to everyone’s home? Having fiber option cable to everyone’s home would provide increased data transmission security, higher speeds, and greater overall reliability of multiple simultaneous transmissions of voice, video and data. Future applications of home automation technology for security, comfort, control and entertainment, will be compatible with fiber optic technology. 4. Do you personally think caller ID (automatic number identification) is a good idea? Would you think it is a good idea if you were a telemarketer? Caller ID opens the issue of privacy, specifically the question of whether or not telephone companies should restrict the use of the device. I don’t agree that Caller ID is a good idea because of the timing of its release to the public was not preceded by a privacy debate and answers to controversial questions. 5. Would you recommend that all organizations employ client/server architectures? Why or why not? Would you recommend that all organization employ centralized, mainframe architectures? Why or why not? Choice of information processing architecture is a decision that is best made after a careful business requirements analysis. As a general rule, the goal is to achieve transparent access of data and information from anywhere in the organization. Achieving this level of performance usually involves distributed processing. In this model, the organization’s processing demands can be distributed appropriately to different machines in different locations. Some applications are best done in central mainframe architecture. Such applications might require centralized support, security and management. Both architectures are enablers of fast and efficient processing. Final recommendation would relate to the cost, benefit, and risk analysis as well as the needs of the end user.