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Managing Information CHAPTER FIVE Prepared by Deborah Baker Texas Christian University Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Management 3rd Edition Chuck Williams 1 CHAPTER FIVE What Would You Do? You are the new CIO of the University of Illinois Medical Center in Chicago… You’ve encountered problems with inefficient and error-filled records The problems can be solved using electronic medical records and CPOE, but doctors are resistant to change And, a federal act requires electronic data exchange of financial and administrative information How can you make sure the new system will work for the hospital? What would you do? Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved 2 CHAPTER FIVE Why Information Matters After reading the next two sections, you should be able to: 1. explain the strategic importance of information. 2. describe the characteristics of useful information (i.e., its value and costs). Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved 3 CHAPTER FIVE Strategic Importance of Information First-Mover Advantage Sustaining a Competitive Advantage 1 Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved 4 CHAPTER FIVE First-Mover Advantage First-Mover Advantage The strategic advantage that companies earn by being the first to use new information technology to lower costs or to differentiate a product 1.1 Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved 5 CHAPTER FIVE Sustaining a Competitive Advantage NO Does the information technology (IT) create YES value? Competitive Advantage NO Is the IT different across competing YES firms? Competitive Advantage NO 1.2 Adapted from Exhibit 5.2 Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Is it difficult for another firm to create or buy the IT? Temporary Competitive Advantage YES Sustained Competitive Advantage 6 CHAPTER FIVE Characteristics of Useful Information Accurate Complete Relevant Timely 2 Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved 7 CHAPTER FIVE Costs of Useful Information Acquisition Processing Storage Retrieval Communication Costs 2 Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved 8 CHAPTER FIVE Blast From The Past The History of Managing Information Cro-Magnons create a lunar calendar Travelers and town criers spread news Paper and printing press revolutionize information management Typewriters and copy machines make information more “routine” Cash registers and time clocks help with employee management Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved 9 CHAPTER FIVE Getting and Sharing Information After reading the next two sections, you should be able to: 3. explain the basics of capturing, processing, and protecting information. 4. describe how companies can share and access information and knowledge. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved 10 CHAPTER FIVE Capturing Information Manual Methods of Capturing Information Bar Codes Electronic Radio Frequency Identification Tags Electronic Scanners Optical Character Recognition 3.1 Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved 11 CHAPTER FIVE Processing Information: Data Mining Supervised Data Warehouse Unsupervised Affinity Patterns Sequence Patterns Predictive Patterns 3.2 Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved Data Clusters 12 CHAPTER FIVE Unsupervised Data Mining Affinity Patterns Two or more database elements occur together significantly Sequence Patterns One of the elements precedes the other Predictive Patterns Helps identify database elements that are different Data Clusters Three or more database elements occur together 3.2 Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved 13 CHAPTER FIVE Protecting Information Authentication and authorization Firewalls Antivirus software Data encryption Virtual private networks 3.2 Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved 14 CHAPTER FIVE Password Dos and Don’ts 1. Don’t use any public information 2. Don’t use complete words 3. Use eight or more characters 4. Use longer, unique passwords 5. Don’t write your password 6. Change it every six weeks 7. Don’t reuse old passwords 3.2 Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved 15 CHAPTER FIVE Accessing and Sharing Information and Knowledge Internal Access and Information Sharing External Access and Information Sharing Sharing of Knowledge and Expertise 4 Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved 16 CHAPTER FIVE Executive Information System (EIS) Uses internal & external data Used to monitor and analyze organizational performance Must provide accurate, complete, relevant, and timely information to managers 4.1 Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved 17 CHAPTER FIVE Characteristics of Best-Selling EIS Ease of Use Analysis of Information Identification of Problems and Exceptions 4.1 Few commands to learn Important views saved 3-D charts Geographic dimensions Sales tracking Easy-to-understand displays Time periods Compare to standards Trigger exceptions Drill down Detect & alert newspaper Detect & alert robots Adapted from Exhibit 5.4 Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved 18 CHAPTER FIVE Intranets Private company networks Allow employees to access, share, and publish information More than 80 percent of companies have their own intranets 4.1 Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved 19 CHAPTER FIVE Why 80% of Companies Use Intranets Inexpensive Increase efficiencies and reduce costs Intuitive and easy to use Work across all computer systems Can be built on top of existing network Work with software programs that convert to HTML Software is available at no cost or is less expensive Adapted from Exhibit 5.5 4.1 Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved 20 CHAPTER FIVE Corporate Portals Hybrid of executive information systems and intranets Allow access to customized information Allow the completion of specialized transactions 4.1 Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved 21 CHAPTER FIVE External Access and Sharing Electronic Data Interchange Extranets Web Services Internet 4.2 Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved More 22 CHAPTER FIVE External Access and Sharing Reduced costs Increased productivity Reduced data entry errors Benefits of External Access and Sharing Improved customer service Faster communications 4.2 Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved 23 CHAPTER FIVE Electronic Data Interchange (EDI) Electronic Data Interchange When two companies convert their purchase and ordering information to a standardized format to enable the direct electronic transmission of that information from one computer system to the other. 4.2 Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved 24 CHAPTER FIVE Web Services Web Services Using standardized protocols to describe data from one company in such a way that those data can automatically be read, understood, transcribed, and processed by different computer systems in another company 4.2 Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved 25 CHAPTER FIVE Extranet Extranet Allows companies to exchange information and conduct transactions with outsiders by providing them direct, Web-based access to authorized parts of a company’s intranet or information system 4.2 Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved 26 CHAPTER FIVE Been There Done That Business-to-Business Information Mark Hoffman, CEO of Commerce One… Companies can save money by automating their supply chain The Internet can make purchasing more efficient Reducing the transaction costs of business can lower infrastructure costs by a huge amount Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved 27 CHAPTER FIVE Sharing Knowledge and Expertise Decision Support System Helps managers to understand specific kinds of problems and potential solutions, and to analyze the impact of different decision options using” what if” scenarios Expert System An information system that contains the specialized knowledge and decision rules used by experts so that nonexperts can draw on this knowledge base to make decisions 4.3 Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved 28 CHAPTER FIVE What Would You Do—II? Callaway Golf Company is entering the $1.5 billion golf ball market, starting from “scratch”… A team of experts is being assembled Proprietary information must not leak to rival Taylor Made How can you ensure that team members have access to information, and protect it from the competition? How can you get competitive advantage in the ball industry? What would you do? Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved 29 CHAPTER FIVE