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Chapter 01 - Foundations of Information Systems in Business 1 Foundations of Information Systems in Business CHAPTER OVERVIEW Chapter 1: Foundations of Information Systems in Business presents an overview of the five basic areas of information systems knowledge needed by business professionals, including the conceptual system components and major types of information systems. In addition, trends in information systems and an overview of the managerial challenges associated with information systems are presented. LEARNING OBJECTIVES After reading and studying this chapter, you should be able to: 1. Understand the concept of a system and how it relates to information systems. 2. Explain why knowledge of information systems is important for business professionals, and identify five areas of information systems knowledge that they need. 3. Give examples to illustrate how the business applications of information systems can support a firm’s business processes, managerial decision making, and strategies for competitive advantage. 4. Provide examples of several major types of information systems from your experiences with business organizations in the real world. 5. Identify several challenges that a business manager might face in managing the successful and ethical development and use of information technology in a business. 6. Provide examples of the components of real world information systems. Illustrate that in an information system, people use hardware, software, data, and networks as resources to perform input, processing, output, storage, and control activities that transform data resources into information products. 7. Demonstrate familiarity with the myriad of career opportunities in information systems. 1-1 © 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Chapter 01 - Foundations of Information Systems in Business SUMMARY • IS Framework for Business Professionals. The IS knowledge that a business manager or professional needs to know is illustrated in Figure 1.2 and covered in this chapter and text. This knowledge includes (1) foundation concepts: fundamental behavioral, technical, business, and managerial concepts like system components and functions, or competitive strategies; (2) information technologies: concepts, developments, or management issues regarding hardware, software, data management, networks, and other technologies; (3) business applications: major uses of IT for business processes, operations, decision making, and strategic/ competitive advantage; (4) development processes: how end users and IS specialists develop and implement business/IT solutions to problems and opportunities arising in business; and (5) management challenges: how to manage the IS function and IT resources effectively and ethically to achieve top performance and business value in support of the business strategies of the enterprise. • Business Roles of Information Systems. Information systems perform three vital roles in business firms. Business applications of IS support an organization’s business processes and operations, business decision making, and strategic competitive advantage. Major application categories of information systems include operations support systems, such as transaction processing systems, process control systems, and enterprise collaboration systems; and management support systems, such as management information systems, decision support systems, and executive information systems. Other major categories are expert systems, knowledge management systems, strategic information systems, and functional business systems. However, in the real world, most application categories are combined into cross-functional information systems that provide information and support for decision making and also performing operational information processing activities. Refer to Figures 1.7 , 1.9 , and 1.11 for summaries of the major application categories of information systems. • System Concepts. A system is a group of interrelated components, with a clearly defined boundary, working toward the attainment of a common goal by accepting inputs and producing outputs in an organized transformation process. Feedback is data about the performance of a system. Control is the component that monitors and evaluates feedback and makes any necessary adjustments to the input and processing components to ensure that proper output is produced. • Information System Model. An information system uses the resources of people, hardware, software, data, and networks to perform input, processing, output, storage, and control activities that convert data resources into information products. Data are first collected and converted to a form that is suitable for processing (input). Then the data are manipulated and converted into information (processing), stored for future use (storage), or communicated to their ultimate user (output) according to correct processing procedures (control). • IS Resources and Products. Hardware resources include machines and media used in information processing. Software resources include computerized instructions (programs) and instructions for people (procedures). People resources include information systems specialists and users. Data resources include alphanumeric, text, image, video, audio, and other forms of data. Network resources include communications media and network support. Information products produced by an information system can take a variety of forms, including paper reports, visual displays, multimedia documents, e-messages, graphics images, and audio responses. 1-2 © 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Chapter 01 - Foundations of Information Systems in Business KEY TERMS AND CONCEPTS 1. Computer-Based Information System (): An information system that uses computer hardware and software to perform its information processing activities. 2. Control (): The systems component that evaluates feedback to determine whether the system is moving toward the achievement of its goal and then makes any necessary adjustments to the input and processing components of the system to ensure that proper output is produced. 3. Data (): Facts or observations about physical phenomena or business transactions. More specifically, data are objective measurements of the attributes (characteristics) of entities, such as people, places, things, and events. 4. Data or Information Processing (): The act of converting data into information. This includes both input and processing activities. Processing includes calculating, comparing, sorting, classifying, and summarizing. 5. Data Resources (): Data is now thought of as a valuable raw material that should be used, maintained, and secured as such. Data resources include not only structured information typically found in databases, but also the unstructured information found in e-mail or other collaborative systems, audio, and video. 6. Developing successful information system solutions (): Business professionals are responsible for proposing new or improved systems to support their business activities as well as managing their development. Using a systematic development process increases the likelihood of a successful project. 7. E-business (): The use of Internet technologies to support business processes, electronic commerce, and collaboration within a company and with its customers, suppliers, and other business stakeholders. 8. E-business applications (): Businesses today are using the Internet, corporate intranets, and inter-organizational extranets to support business activities with suppliers, partners, customers, accounting, finance, research and development, manufacturing, marketing, sales, and customer service. 9. E-commerce (): The buying and selling, marketing and servicing, and delivery and payment of products, services, and information over the Internet, intranets, extranets, and other networks, between an inter-networked enterprise and its prospects, customers, suppliers, and other business partners. 10. Enterprise Collaboration Systems: The use of groupware tools and the Internet, intranets, extranets, and other computer networks to support and enhance communication, coordination, collaboration, and resource sharing among teams and workgroups. These systems allow the creation of "virtual" teams of people who may work together without ever meeting in person. 1-3 © 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Chapter 01 - Foundations of Information Systems in Business 11. Extranet (): A network that links selected resources of a company with its customers, suppliers, and other business partners using internet technologies. 12. Feedback (): Data or information concerning an information system's performance. 13. Hardware Resources (): All physical devices and materials used in information processing. This includes not only machines, but storage media such as disks, tape, and paper. a. Machines (); Consist of all input, processing, output, networking, and storage devices including computers, keyboards, printers, monitors, and pointing devices. b. Media (): Hardware designed to hold data such as paper forms, magnetic disks, optical disks, magnetic tape, magnetic strips, and memory "sticks". 14. Information (): Data that have been converted into a meaningful and useful context for specific end users. a. Information products (): The degree to which information is packaged into an easy to use form. Information products include messages, reports, forms, and graphic images. 15. Information System (): The arrangement of all the components and resources necessary to deliver information and functions to the organization. These resources include hardware, software, and people to perform input, processing, output, storage, and control activities that transform data resources into information products. 16. Information system activities (): All information systems (manual or automated) share the same characteristics. a. Input (): Data entry. b. Processing (): Data transformation including calculating, comparing, sorting, classifying, and tabulating. c. Output (): Information made available to end uses. This may take the form of messages, reports, forms, images, sound, and video. d. Storage (): The retention of information such that it can be later retrieved. e. Control (): Control includes feedback regarding input, processing, output, and storage activities as well as actions performed in response to this information. 17. Information System Model (): The conceptual view of an information system. 18. Intranet (): Internet-like networks and websites developed for use within an organization. 1-4 © 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Chapter 01 - Foundations of Information Systems in Business 19. Knowledge Workers (): People whose primary work activities include creating, using, and distributing information. 20. Management information systems (): These systems provide information to managers and business professionals. 21. Network resources (): Network resources include communications media, switches, routers, transmitters, software, and other network infrastructure. 22. People Resources (): People are an essential component of an information system. Broadly, this resource includes IS specialists and end users. a. IS specialists (): Are people who develop and operate information systems. b. End users (): Are people who use an information system or the output it produces. 23. Roles of IS in Business (): Information systems perform three vital roles in any type of organization. a. Support of business processes and operations (): Examples of supported business processes include activities such as sales transactions, inventory ordering, and payroll processing. b. Support of business decision making (): Systems can support less structured business activities such as deciding which product lines to add or discontinue. While these types of decisions require human creativity, information systems can support managers in this process by providing them with useful information on demand. c. Support of strategies for competitive advantage (): Information systems can make available new types of products and services through which an organization might gain a competitive advantage. 24. Software Resources (): Software resources comprise all sets of information processing instructions. This includes not only software but the human procedures associated with managing information systems as well. a. Programs (): A set of instructions that cause a computer to perform a particular task. These tasks may include managing the operational components of the information system, or they may directly support business operations. b. Procedures (): Set of instructions used by people to complete a task. 25. System (): A system is a group of interrelated components working together toward a common goal by accepting inputs and producing outputs in an organized transformation process. 26. Types of Information Systems (): Information systems are classified in order to spotlight the major roles each plays in the operations and management of a business. a. Cross-functional information systems (): Information systems that cross the boundaries of functional business areas and management levels in order to support business processes throughout the organization. 1-5 © 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Chapter 01 - Foundations of Information Systems in Business b. Management support systems (): Information systems that provide information and support for effective decision making by managers. These types of systems include executive information systems, decision support systems, and management information systems. c. Operations support systems (): These systems help enable the day to day operations of an organization. They include office automation systems, transaction processing systems, and process control systems. d. Functional business systems (): Systems that focus on basic business functions such as accounting, marketing, sales, finance, and human resource management. e. Transaction processing systems (): Transaction processing systems (or TPS) are a type of operations support system. A TPS processes routine business transactions such as sales or purchases. f. Process control systems (): These systems monitor and control physical processes such as production lines, package routing, and heating and cooling systems. g. Enterprise collaboration systems (): Enterprise collaborative systems facilitate team or workgroup communications and productivity. These include e-mail, instant messaging, message boards, digital whiteboards, wikis, and videoconferencing. ANSWERS TO REVIEW QUIZ Q. A. Key Term Q. A. Key Term 1 Knowledge workers 25 People resources 2 Roles of IS in business 26 Input 3 Support of business processes and operations 27 Processing 4 Support of business decision making 28 Output 5 Support of strategies for competitive advantage 29 Storage 6 Information system 30 Control 7 Computer-based information system 31 Types of information systems 8 End users 32 Operations support systems 9 E-business applications 33 10 Electronic commerce 34 Management support systems Cross-functional informational systems 11 Enterprise collaboration systems 35 Intranet 12 System 36 Extranet 13 Feedback 37 E-business 14 Control 38 Functional business systems 1-6 © 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Chapter 01 - Foundations of Information Systems in Business 15 Data 39 16 17 18 19 20 21 Information Information system activities Information system model Hardware resources Machines Media 40 41 42 43 44 45 Data resources Developing successful information system solutions Information products Network resources IS specialists Data or information processing Process control systems 22 Software resources 46 Management information systems 23 Programs 47 Transaction processing systems 24 Procedures 48 Enterprise collaborative systems ANSWERS TO DISCUSSION QUESTIONS 1. How can information technology support a company’s business processes and decision making and give it a competitive advantage? Give examples to illustrate your answer. Support: Information technology can automate manual process such as document transmission. Instead of writing memos or letters, employees can compose and send e-mails electronically. Information technology can also facilitate the reengineering of entire business processes. For example, the airlines industry relies heavily on online ticket booking. Not only does this facilitate filling seats, but it also provides them with a valuable information about passengers which they can repackage for sale to business partners in the form of "frequent flier" programs. Competitive advantage: product innovations or cost savings program can provide a product or price advantage over competitors that lasts until competitors catch up. Though the advantage may be fleeting, the boost to an organization's image may be longer lasting. 2. How does the use of the Internet, intranets, and extranets by companies today support their business processes and activities? Internet: organization can connect directly with the general public. Opportunities range from giving away basic product information to automatically updating or patching retail software. Many businesses also conduct retail operations online. Intranets: organizations often use internet technologies to facilitate operations within the organization. Such systems might include product support knowledge bases, training systems, and access to the organisation's benefits system. Extranet: organizations may use these same internet technologies to connect with their business partners to facilitate supply chain management, help manage projects, manage accounts, or provide advanced technical support. Organizations use internet technologies to connect with both customers and suppliers. These technologies allow customers to generate and track their own orders as well as manager their accounts. They also enable significant supply chain automation 1-7 © 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Chapter 01 - Foundations of Information Systems in Business 3. One major issue in the Real World Challenge outlined in the chapter was the lack of upgrades and new applications undertaken ever since the company was founded and the original IT infrastructure put in place. How does a company ever get to the place where Crescent is in the opening to this chapter? What do you think prevented them from taking action earlier? A. There could easily be any number of reasons for a failure to upgrade a system, or a combination of several reasons. One could be a failure if IT management to stay on top of the current state of IT, or a lack of funds to accomplish necessary upgrades. One major reason could easily be a lack of senior management commitment to keeping IT current with technology in the industry, again for lack of funding, or perhaps just short-sightedness on their part. In the early days of information systems departments, the connection to senior management was through the head of whatever department to which IT reported. In the last 20 years the position of CIO has developed, but many firms are still getting used to the idea of having a systems person at the “C” level, and company-wide decision regarding IT are still made around that person rather than with his/her input. It is also quite possible that the firm saw its requirements as well-fulfilled with the current system and felt no need to upgrade until suddenly they were years out of date with everyone asking the same question – when are we going to become current with the rest of the industry? This shows a lack of for sight on the part of IS/IT management. B. Several things may have prevented them from taking action earlier. One of course would be funding (or rather, lack thereof). Many firms do not realize the value of their investment in IT until they are woefully out of date, then suddenly they need to re-invest massively in IT to get back to where they should be as opposed to their competition. Other firms invest all the time, continually updating to stay at the forefront of technology in their industry – an expensive proposition. Most firms seem to work somewhere between these two extremes, investing when necessary, but carefully and not extravagantly. The case as written does not give any indications of what may have prevented C.H. from upgrading over the years, but it is evident they did not do so, arriving at their current plight when Michalak took over IT. End-user complacency could also have contributed – if the users were content with the way things worked and did not see any need for upgrades, then they never brought any concerns for upgrades to management who probably thought everything was ok the way it was, so why invest money where it was not needed? Overall, the general reason would probably be some combination of lack of senior management commitment, lack of funds, and failure of IT management. 4. Why do big companies still fail in their use of information technology? What should they be doing differently? Top Five Reasons for Success User involvement Top Five Reasons for Failure Lack of user input Executive management support Incomplete requirements and specifications Clear statement of requirements Changing requirements and specifications Proper planning Lack of executive support Realistic expectations Technological incompetence Certainly the reasons listed in the table above could explain some of the major causes of why companies fail in their use of information technology. However, it is important to note that the field of technology is changing at such a rapid pace that many large and successful companies are having difficulty keeping up with it. Other ideas may include such things as a shortage of skilled employees, the major expense involved in managing and developing systems, and a rapidly changing business regulatory environment. Another item that can cause problems is the firm’s behavioural culture. Cultures are notoriously difficult to change and usually do not have any logical origin, they simply have come into existence over a period of time and are accepted because “everyone does it that way” or “that’s the way we do things here”. The only person who can insist on organizational culture change is the top person in the firm (president/CEO/etc.) and this person must adopt the new behaviour or nobody else will (He/She does not follow the new rules, so why should I?). 1-8 © 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Chapter 01 - Foundations of Information Systems in Business 5. How can a manager demonstrate that he or she is a responsible end user of information systems? Give several examples. There are two sides to this answer. First, managers must make good use of information resources placed at their disposal. Second, managers must not use their information systems irresponsibly. Student's answers may vary depending on how they interpret this question. Responsible use: Managers should demonstrate that they are using their information systems as intended. In the case of e-mail, calendar, scheduling, and collaborative systems, other users would notice a manager's lack of participation. They would find it difficult to communicate or schedule meetings with non-participating managers. These managers would increasingly find themselves "out of the loop". Instead, managers should incorporate these tools into their daily habits. To demonstrate appropriate use of other information systems, managers should ensure they receive the appropriate training for these various applications. This would include using data and analysis tools in order to make more informed business decisions. High quality decisions based upon the information these systems provide would demonstrate that these assets are not being wasted. Inappropriate use: As a manager or other end user of information, we must insure that we always consider the ethical responsibilities of the use of information. Irresponsible uses: accessing and/or selling data for personal gain failing to protect data from loss or theft violating privacy laws or abusing community privacy expectations 6. Refer to the Real World Solution in the chapter. Has Crescent Healthcare applied the “three steps for the upgrading of legacy systems” outlined in the chapter? Which of those have been done in more or less detail? Can you fill in the blanks for any that you see lacking? The Crescent Healthcare case, as written, would seem to be a rather textbook case of doing everything correctly for an upgrade to legacy systems. They thoroughly investigated the current system, focusing on What it should be doing rather than How, gaining a thorough understanding of the current system. Next they went after technologies that would provide everything the users needed while utilizing current technologies that would provide for the technological upgrades that were needed within the system. A number of items were discovered along the way that were not as straight-forward as had been hoped (whatever those “specific adjustments” were). And “at the end of the day … functionality” won out, as demonstrated by the pharmacy system that was not migrated to the cloud. 7. What are some of the toughest management challenges in developing IT solutions to solve business problems and meet new business opportunities? Challenges: Increased competitive pressures resulting from a rapidly changing business environment. Developing large systems has been often likened to "hitting a moving target." Projects that take a year or more to implement may well satisfy last year's needs, but may do little to address current challenges. Lack of familiarity with information systems development methodologies. As a result, they may make poor decisions that have far-reaching effects. Ever increasing customer expectations. Napster set the expectation that music should be easy to find, easy to acquire, and free. FedEx set the expectation that a customer will know what day a package will arrive. Wikipedia set the expectation that users can add to or correct information in articles themselves. People with Internet access now get many services free: e-mail, calendaring, scheduling, instant messaging, news, information, software, entertainment, and even free web space. All these experiences play into users' expectations. 1-9 © 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Chapter 01 - Foundations of Information Systems in Business 8. Managers must overcome resistance to change within their own organization. Employees quickly become comfortable with their work, and they find changing processes stressful. Managers need to foster a work environment where employees see change as a routine part of their job. New IT projects must be properly aligned to solve specific, existing business problems. Failure to properly align IT with actual business problems has been an ongoing problem in the technological world. It is always a temptation to adopt new technologies and spend large sums of money on new technology that is sleek and “cool” and makes the firm look as though it is on the forefront of “new tech”. But the real question is, do these technologies actually solve any existing business problems, and do they address anything that benefits the firm’s bottom line? To be really effective for a firm, IT must be carefully and strategically aligned with the needs of the firm; i.e., it should solve business problems. Why are there so many conceptual classifications of information systems? Why are they typically integrated in the information systems found in the real world? Conceptual classifications of information systems are designed to emphasize the many different roles of information systems. This can be done from various points of view, such as the level of management that the information systems serve, or the business functions they support. In practice, these roles are not always clearly divided, and in any case, information produced by one business activity may serve as input data to another activity. Thus it makes sense to integrate various roles into one information system. 9. In what major ways have information systems in business changed during the last 40 years? What is one major change you think will happen in the next 10 years? Refer to Figure 1.4 to help you answer. History: Tabulation (pre 1950s) Data processing (1950s-1960s) Management reporting (1960s-1970s) Decision support (1970s-1980s) Strategic end user support (1980s-1990s) Enterprise and global internetworking (1990s-2000s) eBusiness (2000s-2010s) Social networking (2010s-current) Future: User authentication Virtual machines Cloud computing Solid state drives Overhaul of computing legislation Integration of video, audio, images, GPS, networks into entirely new products and services. Biometric computing Monitoring and control systems embedded into the human body (for example, insulin injectors, ID chips) Global Collaboration Mobile Computing, moving out of the office and working from wherever the employee is at the moment Personal Computing devices – smaller, more powerful, portable (all-in-one phones/computers/network access) 1-10 © 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Chapter 01 - Foundations of Information Systems in Business 10. Refer to the real world example about responsibility and accountability for project failures in the chapter. Are these IT projects, or business projects with a significant IT component? Who should be responsible for ensuring their success? Explain. (the work below has some application to the answer: re-work) IT Projects A few projects might be considered solely IT projects. For example, a server upgrade involves only IT people. Any resulting failure will almost always trace back to IT. Here's another way of looking at this – if I take my car in to a garage for repairs, is it my fault if the mechanic reassembles the transmission incorrectly? My involvement is limited only to ensuring labor hours and work time do not significantly exceed estimates. Business Projects In general, IT departments undertake work at the behest of business managers. Such projects require their participation to succeed. For example, IT people aren't as likely to understand the intricacies of various office operations and rely almost entirely on feedback from the organization's managers. Compare this with buying a new car. It is not sufficient for a new car buyer to establish color and price requirements. For a car buyer to be satisfied with their purchase, they must participate in product research, visit some showrooms, and test drive a few models. Failure: Failure is never an orphan. Failure can come from many sources. Managers do not fully understand their own business processes overestimate the quality of legacy data overestimate employee's willingness to change accept vendor's time & cost estimates without sufficient skepticism fail to appreciate the risks associated with customization disrupt regular business with too many changes at once Technology: oversold implemented by inexperienced technologists Responsibility At best, IT managers can only facilitate projects. In most cases, they do not have the all around expertise necessary to manage a project entirely on their own. As a result, it's important for IT managers to establish roles and responsibilities across the entire project and ensure each team member satisfactorily completes their tasks in a timely manner. The project manager should also set checkpoints to assess progress and communicate with key stakeholders. Ultimately, the project's sponsor must have the authority to provide the required resources and be held accountable for a project's final outcome. IT managers and even CIO's rarely have this level of authority. 1-11 © 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Chapter 01 - Foundations of Information Systems in Business ANSWERS TO ANALYSIS EXERCISES 1. Understanding the Information System Solutions: Students will more easily grasp advanced concepts once they learn to think in terms of the basic information systems structures. This exercise takes a familiar system and breaks it down into an information system's components. This exercise makes an excellent in-class discussion topic where students can expand each other's ideas. Consider substituting any common information system in place of a library. Alternative examples might include video rental stores, class registrations systems, and voter registration systems. The Library of Congress is one place to start a search for a great many topics. This question will introduce the student to some of the information available online at this institution. A. A library is an information system. a) Input A library's inputs consist of the items it receives for its collection. These items may consist of books, periodicals, maps, microfiche, DVDs, CDs, and many others. b) Processing A library's main processes revolve around checking out and checking in items from its collection. Additional processes include adding new items into the collection, purging dated, duplicate, or damaged items from the collection, photocopying or reproducing materials, facilitating inter-library loans, sending overdue notices, assisting patrons, and repairing damaged items. c) Output A library's outputs consist of any information that leaves the library. This may take the form of item loans, photocopies, and even hand-written notes. d) Storage A library's storage systems include shelves for books, stacks for periodicals, file drawers for microfiche, and racks for CD's and DVD's. e) Control A library's control systems include periodic inventories, anti-theft devices, and security cameras. f) Feedback A library's feedback systems include circulation, patronage, and loss statistics. Librarians use this information to help identify popular items, plan staffing levels, and develop strategies to reduce loss. In short, librarians use this information to help the library run more effectively and efficiently. B. The URL for the Library of Congress is http://www.loc.gov and the home page shows nine types of data (the various collections) that can be accessed from that homepage. 1-12 © 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Chapter 01 - Foundations of Information Systems in Business 2. IT Careers Solutions: What skills are required to be successful in the field of Information Systems? These skills change over time as new technologies appear, and as mature technologies become mainstream. Over time, many of these skills are learned and mastered earlier in life as society in general accepts these skills as general knowledge. Are You Ready? If you are looking for a job in information technology, it helps to know what's hot. Read the CIO article IT Graduates Not 'Well-Trained, Ready-to-Go' (http://bit.ly/h9GAw7), and answer the questions below. Questions: a) What are the four skills from higher-education institutions in demand? b) For each skill above, list the associated course numbers and names offered by your college or university. Use bold italics to denote courses required for all business majors; use bold to denote courses required for all information technology majors. c) Are the required courses sufficient to give you the competitive edge you need (given your major)? Explain. d) List three required general education or "core curriculum" courses you believe provide you with the least value in the job market. Justify your answers. Answers: a) Programming, database, analysis & architecture, technical problem solving b) Answers will vary per college/university. Analysis, IT architecture, and database skills are often each served by only a single, three-hour course. Problem solving and technical skills classes might be represented by a cap-stone, real-world project-oriented class. c) The answer should be: "probably not", though student's perceptions may vary. Most students are simply not aware of how much information will flow through their hands and how valuable this information can be if they know how to manipulate it properly. d) This list should not contain, English, communications, math, or foreign language courses. 3. Skydive Chicago: Efficiency and Feedback a) How can this information system benefit the skydiving student? Benefits: Faster learning – students see what they are doing right and wrong Improved safety – fewer mistakes results in greater safety "Free" video souvenir – students can make and keep copies of their videos b) How can this information system benefit Skydive Chicago? Benefits: Marketing – student videos make great promotional tools Safety – students learn faster and make fewer mistakes Reduced labor – instructors don't have to spend as much time with students Instructor feedback – instructors can see the results of their training efforts 1-13 © 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Chapter 01 - Foundations of Information Systems in Business c) 4. Draw the information systems model (Figure 1.19, the information system model). Fill in your diagram with people, hardware, software, etc. information from this exercise. Diagram Element Detail People resources Student / jumpmaster Software resources Record, play, and copy video. Hardware resources Video camera, VCR, DVD, VHS tape Network resources VCR and camera cables Data resources Video Input Video of jump Process View, copy video Output Copy to student, copy to library Storage DVD/VHS tape video library Control Management policy, training room library access Are Textbooks History? Solutions: Many students are familiar with both Google and Wikipedia. This exercise will help bring the remaining students up to speed and enable thoughtful classroom discussion. It will also increase student's exposure to this chapter's vocabulary. a) Go to http://www.google.com and use the search box to look up "End-user." Were any of Google's first five search results useful with respect to this course? At the time of this writing, Google returned articles featuring the words "end user." However, only the tenth article listed contained a useful definition or description of an "end user." b) Go to http://www.wikipedia.com/ and use the search box to look up "Knowledge worker." Compare Wikipedia's article to the information provided within this textbook. Which source did you find easiest to use? What advantages did Wikipedia provide? What advantages did this textbook provide? Textbooks can be used anywhere and do not require additional hardware, a network connection, or keyboarding skills. On the other hand, a single computer could store or access any textbooks, thereby eliminating heavy book bags. At the time of this writing, Wikipedia's end-user article wasn't informationsystems specific. However, it included a link to an information systems-specific article. This article presented the end-user topic from a computer science rather than business context. c) Between Google, Wikipedia, and this textbook, which source provides the most useful information about "Intranets"? Why? Google users must first sift through topic-related articles to find information they need. Considering the overall size of the Internet, Google does an excellent job presenting high-quality information. However, users frequently find themselves wading through numerous irrelevant links. Wikipedia, too, rates highly in the quality of its content and possesses the added benefit of maintaining information in an encyclopedic manner. However, neither Google nor Wikipedia typically present information in a context appropriate for university students majoring in a business discipline. 1-14 © 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Chapter 01 - Foundations of Information Systems in Business 5. Disaster Recovery Note: the answers to these questions require a fair amount of commons sense. This exercise may make an excellent in-class discussion topic. Consider asking students if they have ever "lost" important work. Ask them to elaborate on the circumstances. Stories of lost files abound. Students should get into good data management practices early and maintain them throughout their careers. This exercise stimulates thinking and may result in improved practices. It also supports a "no excuses" policy toward future class work. "My computer crashed" is not a valid excuse for failing to turn in work. 1) Failing to frequently save work in progress 2) Failing to make a backup-copy 3) Storing original and backup copies in the same location a) How might this mistake result in data loss? b) What procedures could you follow to minimize this risk? Answers: 1 a. The user might forget to save his or her work before exiting the application. Power might go out. 1 b. Make a habit of frequently saving work. Enable each application's auto-save feature. Learn the "shortcut" keystrokes that cause an application to save your work. When using a desktop machine, install an uninterrupted power supply that provides at least five minutes worth of power in the event of a power outage. Laptop computers have this capability built in. 2 a. The storage media might become lost or damaged. The user may accidentally overwrite or delete their work file. 2 b. Make a habit of frequently backing up work. Always start new edits using a copy of the original file instead of directly onto the original file. Use backup scheduling software included with most operating systems to automate daily backups. 3 a. Backpacks and briefcases may become lost or stolen. Work areas may be destroyed or rendered inaccessible by fire, flood, or other calamity. 3 b. Make a habit of storing backups separately. For example use a key-ring thumb drive to store backups and keep the key ring apart from the computer containing the original copy. Use a storage device on a computer network in combination with removable media. Use a file server if available or even e-mail the file to yourself. E-mailing will place a copy of your work on your e-mail server until you retrieve it. 1-15 © 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Chapter 01 - Foundations of Information Systems in Business ANSWERS TO REAL WORLD CHALLENGE/SOLUTION Real World Challenge 1. Why does Crescent Healthcare need to replace its current technologies? The company has very likely invested huge sums in its core applications over time, they seem to work as expected, and people know how to use them, even if they have some quirks. Is it worth starting all over again? If Crescent Healthcare’s systems are about 20 years old and have barely been touched in that time, then those systems are hopelessly out of date, even if they are doing what they were originally intended to do. One thing we know about the business environment: it is always changing! Computer technology is also changing at an extremely fast pace. C.H needs to be kept up to date on what is happening with its customers faster than the current system can update those files. The C.H. employees, caregivers, and partners need to be kept up to date by the minute on changes that may affect the patients. There are also changing legal and political ramifications to be considered. The laws concerning healthcare have changed significantly over the last 20 years, and healthcare law is constantly evolving today. The current systems likely have not been updated to keep abreast those legal structures. Customer expectations should also be taken into account – what do customers expect when dealing with a healthcare provider? What information should be available to the caregivers and to the patients, and how fast should it be available? “Perception” is extremely important when dealing with customers, and their perception of the product has a lot to do with how current the C.H. technology is. Why replace current technologies? its current technologies are 20 years old and out of date C.H. employees, caregivers, and partners need fast access to all patient data the legal environment has changed significantly to meet customer expectations Where is the value of their systems? None of this can happen with the current systems and technologies at C.H. If C.H. wants to provide first class customer care and be at the forefront of the industry, then it needs to update its systems. 2. What are some of the alternatives that Michalak has for achieving these objectives? That is, in which ways could the revamping of existing applications be accomplished? What are the advantages and disadvantages of each? Alternatives in-house custom programming Advantages o the work can be accomplished by in-house systems staff o they can customize everything to their own specifications Disadvantages o cost to hiring, training, and paying for staff o maintenance and support costs o lengthy development time purchase a pre-built/pre-packaged system Advantages o faster to acquire and implement o lower cost Disadvantages o may require customization that takes time and money and adds to long term maintenance complexity 1-16 © 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Chapter 01 - Foundations of Information Systems in Business SaaS / Cloud Advantages o fastest to implement (no hardware to install and configure) o typically less expensive than implementing in-house solutions o the Cloud could provide for their requirements at a cost- and infrastructure-efficient basis. This would allow C.H. to utilize providers who specialize in the specific areas where their needs exist and allow competition to dictate pricing. A Cloud-based solution would also allow C.H. to do as much in-house as they wish, and outsource the rest. Programming, for instance, could be accomplished in-house, and then the infrastructure could be outsourced to the cloud. Outsourcing: The entire work could be contracted to an outside provider. Advantages o hiring a contractor who specializes in this area saves time, and places success of and the responsibility for the system upon the outsourcing agent o responsibility for hiring, training, and success of the new systems entirely upon the contractor Disadvantages o this may be very expensive – C.H. needs to compare the financial costs in-house development against the costs of outsourcing o there is also the ongoing relationship with the provider to be considered and managed o over the next few years the provider may increase costs significantly or provide less than optimal service o the costs of switching to another provider or moving development in-house must be considered. 3. Beyond replacing the current systems with more modern ones, what other functionality would you add to Crescent’s IT infrastructure? In what ways would you make the new systems different from the current ones? A thorough needs assessment should be undertaken at Crescent Healthcare. What are the actual needs and desires of the workers and caregivers to do their jobs, or to do them better? What are the costs of these improvements? Once the necessary improvements are adopted, then the hardware and infrastructure to support these changes can be addressed. Simply moving to graphical user interfaces will make access easier for the users and provide a considerable increase in customer perception/satisfaction as they will see a modern system, not one that appears to be 20 years old. At a minimum, C.H. should move to a networked enterprise system where all the necessary customer information is available both at the C.H. offices, in the field (to the caregivers), and to the patients as they access the system. This system should also update patient files from the field in a timely manner. The new system also should have access to the latest information regarding medical treatments, pharmaceuticals, and legal structures regarding these issues. Real World Solution 1. Brett Michalak sees the efforts undertaken by Crescent Healthcare as providing the company with a competitive advantage over others in its industry. Can you provide three examples of how these technologies may provide them with a competitive advantage? There can be many different ways to create competitive advantage with the efforts at C.H., such as: A. Engaging and Retaining employees 1-17 © 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Chapter 01 - Foundations of Information Systems in Business 1. Engaged employees deliver outstanding patient experience. Customers/patients talk about their experiences to other patents and people in general. This creates a competitive advantage in gaining new patients. 2. And engaging employees creates a hiring competitive advantage. Employees want to work for a firm that is known for engaging and retaining their talent. And retaining the best employees in the field provides a great competitive advantage over the competition. B. Immediate feedback – By providing direct, immediate, onsite access to diagnostic, treatment, and pharmaceutical information C.H. provides patients with services that may not be offered by their competition. This is an outstanding way to create competitive advantage: give the patients what they want – immediate feedback to their questions and concerns about their health. C. These updated systems should provide a mechanism to better organize the massive amounts of customer data inherent in this industry. Organizing so that the important data is readily available, particularly onsite with the patient, will provide a competitive advantage over other firms that do not have this ability readily available. D. Security of patient data is a very important issue from both a patient’s own perspective and from a political/legal perspective. The new systems should be much more up to date with respect to security which would also offer a competitive advantage over rival firms that had not yet addressed the issue to the level that C.H. could with the new technology. 2. Based on your experience with the healthcare industry, what other projects do you see a company like Crescent Healthcare undertaking in the future? Does their new infrastructure position them well for those future initiatives? Why or why not? Given that Crescent Healthcare is upgrading its technology and infrastructure to current industry standards, and that through the cloud it should stay abreast changes as they appear, C.H. should be positioned to pursue any new technology that appears in the field of healthcare. New imaging technologies, new diagnostic technologies, customer service, in-home or in-office procedures, all these should be available with the new technologies and infrastructure adopted by Crescent Healthcare. Utilizing the cloud to provide infrastructure should allow C.H. to stay abreast of any new technologies that appear almost as fast as they become available. The cloud provides an advantage for service users (such as C.H.) because of the numbers of providers making their series available through the cloud. Utilizing these services should enable Crescent Healthcare to stay on top of their market by providing world-class products, services, and customer service to their patients, caregivers, and business partners. ANSWERS TO REAL WORLD CASES RWC 1: eCourier, Cablecom, and Bryan Cave Case Study Questions 1. How do information technologies contribute to the business success of the companies depicted in the case? Provide an example from each company explaining how the technology implemented led to improved performance. These technologies enable fact based decision making. eCourier: uses GPS enabled hand-held devices, online booking, and customer data analysis to increase efficiency, enable scalability, and improve customer service. Cablecom: uses custom data mining tools and surveys to improve customer service and retention. 1-18 © 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Chapter 01 - Foundations of Information Systems in Business Bryan Cave: uses analysis tools to evaluate their fees. These tools enable flexible fee structures, equal opportunity compliance, and staffing optimization. 2. In the case of law firm Bryan Cave discussed above, the use of BI technology to improve the availability, access, and presentation of existing information allowed them to provide tailored and innovative services to their customers. What other professions could benefit from a similar use of these technologies, and how? Develop two different possibilities. Students should consider other hourly billing based professional services industries. Examples include: consulting firms engineering firms architecture firms software development companies Student's examples might include scheduling an optimal mix of personnel to provide the appropriate level of supervision, client interaction, expertise, and inexpensive labor. Emergency room staffing would make an excellent example where the chief resident supervises all services while residents, interns, and nurses at various levels provide the majority of the labor. Students might also suggest using the tools described in the Bryan Cave section to estimate project costs given the work currently in the "pipeline". This would enable firms to reject work which might disrupt the current work schedule or make more appropriate bids on more suitable projects. 3. Cablecom developed a prediction model to better identify those customers at risk of switching to other company in the near future. In addition to those noted in the case, what other actions could be taken if that information were available? Give some examples of these. Would you consider letting some customers leave anyway? Why? In addition to identifying at-risk customers, these tools might also help identify problem products, services, personnel, and processes. Once identified, Cablecom could make the appropriate adjustments and thereby reduce the number of complaints. For example, if customers on a particular service route are more prone to complain, managers may wish to review, retrain, or terminate employees responsible for that route. BI systems identify chronic complainers. These customers serve not only as a material financial drain, but they also sap the energy of valuable employees. So yes, an organization could benefit from identifying these trouble customers and let them go. On the other hand, managers must be careful not to shift blame onto customers when the fault really lies elsewhere. Doing so not only alienates valuable customers, but it also delays identifying and correcting the true problem. Real World Activities 1. Use the Internet to research the latest offerings in business intelligence technologies and their uses by companies. What differences can you find with those reviewed in the case? Prepare a report to summarize your findings and highlight new and innovative uses of these technologies. Students should search on "Business Intelligence Software" and "business intelligence case studies". 2. Why do some companies in a given industry, like eCourier above, adopt and deploy innovative technologies while others in the same line of business do not? Break into small groups with your classmates to discuss what characteristics of companies could influence their decision to innovate with the use of information technologies. Characteristics: Technical resources Human resources 1-19 © 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Chapter 01 - Foundations of Information Systems in Business Capital resources Risk tolerance Reward structures Organizational culture Litigation risk Competitive threats Customer demands RWC 2: The New York Times and Boston Scientific Case Study Questions 1. As stated in the case, the New York Times chose to deploy their innovation support group as a shared service across business units. What do you think this means? What are the advantages of choosing this approach? Are there any disadvantages? Shared service A shared service means that it's a resource available to all the organization's business units. Typically, shared services operate as a "profit center". This means they generate internal charges (bills) for their work. The charge-back system helps IT to quantitatively justify its existence to the organization. Advantages Pooled expertise Shared overhead costs Easier to enforce software, hardware, technology, process, and policy standards across an organization Easier to share best practices across an organization Disadvantages Creates an extra layer of management between IT and end-users which may result in some loss of responsiveness or accountability to individual business units Reduced flexibility 2. Boston Scientific faced the challenge of balancing openness and sharing with security and the need for restricting access to information. How did the use of technology allow the company to achieve both objectives at the same time? What kind of cultural changes were required for this to be possible? Are these more important than the technology-related issues? Develop a few examples to justify your answer. Technology Boston Scientific accomplished its objective by implementing an automated workflow application to help them manage information access. Cultural changes Boston Scientific's managers had to eliminate their "information silo" mentality and perceive the value in sharing their information in a controlled and accountable fashion. Its managers also had to learn the new technology and incorporate it into their daily processes. Importance Since a project will fail without both cultural and technology changes, neither one is more important. Sample examples Some cultures operate under a strict social hierarchy. Enabling workers to participate in quality improvement initiatives by providing them with production data and analysis tools would run counter to this culture. Unless the implementation team manages to overcome this cultural barrier, managers would resist sharing information or simply deny their employees access to the system. 1-20 © 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Chapter 01 - Foundations of Information Systems in Business 3. The video rental map developed by the New York Times and Netflix graphically displays movie popularity across neighborhoods from major US cities. How would Netflix use this information to improve their business? Could other companies also take advantage of these data? How? Provide some examples. Possible business improvements Netflix could use this data to identify affinities between movies and ensure that its regional distribution centers are appropriately stocked to meet anticipated demand. External use Netflix might consider selling its data to consumer trend-tracking organizations. Netflix need not divulge individual customer data but instead group movie rental data by postal code. Postal codes would give marketers the ability to tie Netflix' data in with data from other marketing systems to help create more useful regional, demographic profiles. Real World Activities 1. The newspaper industry has been facing serious challenges to its viability ever since the Internet made news available online. In addition to those initiatives described in the case, how are the New York Times and other leading newspapers coping with these challenges? What do you think the industry will look like 5 or 10 years from now? Go online to research these issues and prepare a report to share your findings. Note 1: does the current generation even read traditional newspapers? 1 Note 2: early science fiction writers anticipated newspaper facsimiles printing out in each subscriber's home. Current state Traditional newspapers have expanded to the Internet. The Wall Street Journal, USA Today, and The Economist, among others, employ a subscription model for their online services. Others, like The New York Times, rely on revenue generated through online advertising. News aggregators such as news.google.com do a good job organizing news stories by subject and region, though not by date or political inclination. Search terms "future of newspapers" Future Users will be able to indicate their current "state" or "mode" or "status" and receive news appropriate for the moment. For example, the "newspaper" software would present top local, regional, national, and international headlines before work. During working hours, the user might see only new stories in various industry or technical journals. After hours, weekends, and holidays, the news stories would focus on leisure activities. The software will base its decision on explicit instructions (show me…, don't show me…), past browsing habits, and the browsing habits of various affinity groups related to the individual and their current "state". The software will adapt over time and adjust to changing preferences. It will also accept user input regarding an article's quality. This will further "instruct" the software as well as provide the newspaper with real-time feedback. The software will also likely consider the user's physical location and connection device when making story recommendations. Newspapers will not charge for these features – they'll provide them simply increase readerships. Some newspapers may experiment with a "commercial free" version for a fee. However, if commercials become too intrusive, news providers would run the risk that users would switch to another service. 1 http://www.arcamax.com/doonesbury/s-746877-698187 1-21 © 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Chapter 01 - Foundations of Information Systems in Business It's distinctly possible that services providers will have so much information about a user – including real-time physical location and purchasing desires, that advertising revenue will increase. For example, how much would a local restaurant pay to reach a user located a block away who has expressed interest in finding a nice place to eat within the next hour? The user gets a list, perhaps a discount offer, reservations, and GPS directions only to those places within his or her vicinity that match his or her dining preferences. Just click here… 2. Go online and search the Internet for other examples of companies using technology to help them innovate and develop new products or services. Break into small groups with your classmates to share your findings and discuss any trends or patterns you see in current uses of technology in this regard. Examples abound within this text and online. One example worth following closely is Google's Android operating system and its application in smart phones and other devices. This product is a relatively new and direct challenge to Windows CE, iOS, Unix, and others. 1-22 © 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.