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Chapter 1. IS Management Overview
The Internet Economy

From APARTNET to today’s Internet

WWW has evolved from a graphical layer of the
Internet to a cyberspace for business


eRetailers, eMarkets, eAggregators, Informediaries,
Exchanges, Portals
Dot-com crash

Pure Internet economy VS. the hybrid model
Business Ecosystems

An ecosystem is a web of relationships
surrounding one or a few companies


They appear to follow biological rules
Various players in one's business ecosystem

Suppliers, distributors, retailers, competitors, banks,
advertising agencies etc.
From Supply-Push to Demand-Pull

Supply-push



Companies did their best to figure out what customers
wanted
Organized to build a supply of products or services
and then ‘push’ them out to end customers on stores
shelves, in catalogs etc.
Demand-pull


Allows much closer and ‘one-to-one’ contact between
customer and seller
Offer customers the components of a product/service
then the customer creates their own version by ‘pulling’
what they want
Outsourcing and Strategic Alliances

To become more competitive, organizations
are examining types of work that should be
done internally or externally by others


The thinking is: We should focus on what we do
best and outsource the other functions to people
who specialize in them
Ranges from a simple contract for services to a
long-term strategic alliance
Demise of Hierarchy

Hierarchical structures cannot cope with rapid
change


Communications up and down the chain of
command takes too much time for today’s
environment
Self-managed groups produce higher
performance

IT enables team-based organizational structures
by facilitating rapid and far-flung communication
The Mission of Information Systems

Early days: "paperwork factories" to pay
employees, bill customers, ship products etc.

MIS era: producing reports all levels of
management


“Get the right information to the right person at the
right time.”
Today: Improve the performance of people in
organizations through the use of information
technology.
A Framework for IS Management
Chapter 2. The Top IS Job
Waves of Innovation
Source: Kenneth Primozic, Edward Primozic, and Joe Leben, Strategic Choices: supremacy, Survival, or
Sayonara (New York: McGraw-Hill, 1991)
Traditional Functions Are Being Nibbled
Away (1)

The traditional set of responsibilities for IS :





Managing operations of data centers, remote
systems, and networks
Managing corporate data
Performing systems analysis and design, and
constructing new systems
Systems planning
Identifying opportunities for new systems
Traditional Functions Are Being Nibbled
Away (2)
Distributed systems
Ever more
knowledgeable users
Better application
packages
Outsourcing
New Roles Are Emerging
---The Squeeze on Traditional IS Activities
New Roles Are Emerging
---Roles for IS
Toward IS Lite
Major IT Eras
Four Aspects of the CIO Role

Leading


Governing


Establishing an IS Governance structure
Investing


Creating a vision by understanding the business
Shaping the IT portfolio
Managing

Establishing credibility and fostering change
Leading: Creating a Vision by Understanding
the Business

Seven approaches to understanding the
business and its environment:





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Encourage project teams to study the marketplace
Concentrate on lines of business
Sponsor weekly briefings
Attend industry meetings with line executives
Read industry publications
Hold informal listening sessions
Partner with a line executive
Investing: Shaping the IT Portfolio

IT investments has gained increased attention


Two key IT investment topics



CIOs were usually falsely blamed for making poor IT
investment
What to invest in (strategic)
How to make investment decision (tactical)
IT portfolio management

Systematic management of large classes of planned
IT initiatives, projects, and ongoing IT services etc.
Chapter 3. Strategic Use of IT
Strategic Use of Information Systems

"Working inward"


"Working outward"


Improving a firm's internal processes and structure
Improving the firm's products and relationships with customers
"Working across"

Improving its processes and relationships with its business
partners
Whither the Internet Revolution?

British Railway Revolution – the mania started in
1830s and experienced a crash in 1845

10 fold increase in 1910, 65 years after the crash




During boom, great excitement and small companies
flourished
After crash, glamour gone, business became serious and full
of hard work
Industry became orderly and profits began to reflect real
returns
Investment frenzy for connection technology: "race for
space"
Does IT Still Matter?

"IT Doesn't Matter" – article by Nicholas Carr in
Harvard Business Review May 2003

What makes a resource truly strategic is not
ubiquity but scarcity


As information technology's power and ubiquity have
grown, its strategic importance has diminished.
Being now available and affordable to all, IT has
evolved from potentially strategic resources into
commodity factors of production.
Jumping to a New Experience Curve (1)

Strategically using IT to work outward is
highly competitive and innovative



Technology updates occur frequently, forming a
set of connected experience curves
Each curve represents a new technology or
combination thereof in a product or service as well
as in its manufacture and/or support
Moving to a new curve requires substantial
investment in a new technology
Establishing Close and Tight Relationships (2)

3 level of systems integration between
companies

Loose: provide ad hoc access to internal information


Close: two parties exchange information in a formal
manner


Business processes remain distinct
Processes are distinct, but some tasks are handled jointly
Tight: two parties share at least one business process

High volumes of possibly confidential data are exchanged
Chapter 4. IS Planning
Tradition Strategy Making
Step 1
Business Strategy
Where is the
•Business decision
business
•Objectives and direction
going and
•Change
why?
Supports
business
Step 2
What is
required?
Direction
For IS
System Strategy
•Business-based
•Demand-oriented
•Application-focused
Infrastructure
and services

Assumptions:




Needs and
priorities
IT Strategy
Step 3
How can it
•Activity-based
be delivered? •Supply-oriented
•Technology-focused

The future can be
predicted
Time is available to
do these 3 parts
IS supports and
follows the business
Top management
knows best (broadest
view of firm)
Company: like an
"Army"
Today's Sense-and-Response Approach (1)

Let strategies unfold
rather than plan them:

A sense-and-respond
approach when
predictions are risky


Sense a new opportunity
and immediately respond
by testing it
Myriad of small
experiments
Old-era strategy
One big choice, long commitment
Time
New-era strategy
Many small choices, short commitments
Time
Strategic
envelop
Stages of Growth

Richard Nolan et al observed four stages in the
introduction and assimilations of a new
technology

Early Successes


Contagion


Interest grows rapidly; growth is uncontrolled; learning period
for the field
Control


Increased interest and experimentation
Efforts begun toward cost reduction and standardization
Integration

Dominant design mastered; setting the stage for newer
technology
Five Forces Analysis of the Internet

The Internet tends to dampen the profitability of
industries




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
Increases the bargaining power of buyers
Decreases barriers to entry
Increases the bargaining power of suppliers
Increases the threat of substitute products and
services
Intensifies rivalry among competitors
Success depends on offering distinct value

Firms should focus on their strategic position in an
industry and how they will maintain profitability
Chapter 5. Distributed Systems
Definition:
IT Architecture VS. IT Infrastructure

An IT architecture is a blueprint showing how the
parts will interact and interrelate.



System, information, departments...
Multiplicity of structures and views
An IT infrastructure is the implementation of an
architecture.


processors, software, databases, electronic links, data
centers, standards, skills, electronic processes...
We now tend to divide computing into applications and
infrastructures
Open Standards

Open standards provide foundations for



Interconnectivity
Interoperability
Open standards after 1990s


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OSI Reference Model
SQL
API: standardized interface
TCP/IP
Internet---Topology and Reliability

Internet is a scale-free network


A small number of nodes have a large number of
links while the majority of nodes only have a small
number of links
Internet is robust to random failures, but
vulnerable to targeted attacks
Client-Server Systems (2)
---Distribution of Processing
Distributed
Presentation
Remote
Presentation
Distributed
Function
Remote Data
Management
Distributed
Database
Data
Management
Data
Management
Data
Management
Data
Management
Data
Management
Application
Function
Application
Function
Application
Function
Presentation
Server
Client
Presentation
Data
Management
Presentation
Application
Function
Application
Function
Application
Function
Presentation
Presentation
Presentation
Client-Server Systems (7)
---Three-tier Client-Server Style
Server (usually DB server) connected to
the network via one or more servers, and
sometimes directly as well
Multiple specialized servers, some
possibly dedicated to middleware
(application servers)
Internet or LANs
Clients, some of which may be portable
Peer-to-Peer Computing


Concept
How does P2P computing adapt to Internet
computing environment, especially in content
distributation
Web Services


Concept
Foundations for Web Services
Service directory:
UDDI
Service description:
WSDL
Service interaction:
SOAP
Format description: XML Schema
Data format:
XML
Communication Protocol: HTTP
Communication Network: Internet
Service-Oriented Architecture


Concept, model
Features: loosely-coupled, coarse-grained
and standards-based
Registry
②
Discover
Service
Client
Grid Computing

A computational grid is a hardware and software
infrastructure that provides dependable,
consistent, pervasive, and inexpensive access to
high-end computational capabilities

Grid is a generalized network computing system
that is supposed to scale to Internet levels and
handle data and computation seamlessly
Chapter 6. Managing Telecomms
Transformation of Telecom Industry

AT&T deregulation in 1984

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The last mile problem for RBOCs in 1990s

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
Divest it LECs (RBOCs) in return for a chance in Internet
services industry
A Fire-hose-to-straw gap
tbps (1012) in backbones VS. 56k or 1.2m in the last mile
RBOCs then became ILECs, and there came new
competitors CLECs (competitive LECS)


ILECs bundled local phone access with Internet access
CLECs came up with new connection options

Cable modems, optical fiber, wireless, satellite…
Telecom Technologies and Their Speeds
Bits Per Second
Technologies
1011-1012
Optical fiber
1010
Optical wireless local loop(20G), WMAN (100G)
109
Microwave LANs (1.5G-2.0G), Gigabit Ethernet
(1G), WMAN (24g)
108
ATM (155-622M), Faster Ethernet (100M)
107
Frame relay (10M), Ethernet (10M), WLANs(10M),
cable modem (10M), Wi-Fi (11-54M)
106
Stationary 3G (2M), DSL(1.5-7M), WiMax (1.5-10M)
105
Mobile 3G (384k), ISDN (128k)
104
Modems (56k), 2.5G(57k)
103
2G (9.6-14.4k)
The Internet is the Network of Choice (4)

Intranet

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Internet technology
used inside an
enterprise
Extranet

Internet technology
used to connect
trading partners,
customers, suppliers
etc.
Public Website
Extranet
E
Intranet
OSI Reference Model
Important protocols
7
Application Layer
HTTP
6
Presentation Layer
NetBIOS
5
Session Layer
SSL
4
Transport Layer
TCP
3
Network Layer
IP, X.25
2
Data Link Layer
Ethernet, Token ring, FDDI,
ISDN, ATM, Frame relay
Physical Layer
10BaseT, twisted pair, fiberoptic cable
1
Wireless Networks
Licensed VS. Unlicensed Frequencies

Some frequencies of the radio spectrum are
licensed by governments for specific
purposes; others are not

Devices that tap unlicensed frequencies are
cheaper


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No big licensing fees
Greater competition, more innovation and faster
changes
Possibility of collision between signals
"Telecoms Crash"

Auctions of the 3g radio spectrum in Germany and Britain at the
beginning of 2000.

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The nature of the auctions, was to offer a limited number of
licenses


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Although one similar auction in the USA had failed disastrously the year
before.
3G also requires an infrastructure development measured in billions of
dollars
This put the telephone operators in a difficult position, as diabetics being
forced to bid for insulin.
The stock market lost confidence (dot-com crash), influencing the
credit rating of the operators
Within a year 100,000 jobs were lost in telecoms in Europe
(30,000 in UK)
Subsequent government auctions of the 3g spectrum were met
with low bids
The Role of the IS Department

Three roles of IS department

Create the telecom architecture

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Connectivity
Interoperability
Operate the network
Stay current with the technology