Why are information systems essential in business today? Describe four trends in the global business environment that have made information systems so important.

The emergence of a global economy, transformation of industrial economies, transformation of the business enterprise, and the emergence of the digital firm make information systems essential in business today. These trends present the business firm and its management with several new challenges. Table 1-1 summarizes these challenges.

As a growing percentage of the advanced industrial economies in the United States, Europe, and Asia depends on imports and exports, information systems supply both communications and analytic instruments for engaging in trade and for managing businesses that are spread throughout the world.

The major industrial powers in the United States, Europe, and Asia are being transformed from industrial economies to knowledge- and information-based service economies. In these economies, information systems and technology have become critical to these economies, and in this day and age, they have become essential to economies that remain reliant upon manufacturing.

Development of the power and capabilities of information systems has transformed the possibilities for organizing and managing business enterprises. Businesses of this style are less hierarchical (flatter) and are more decentralized, allowing them to rely more on informal commitments and temporary task forces. Many managers have become more reliant upon individuals who report to them for decision making as these subordinates have more learning and current knowledge. Also, more and more under this transformation, companies are becoming more customer-oriented.

The emerging technology and the organizational redesign that has accompanied it have created the condition for the emergence of the digital firm. While truly digital firms are still few and far between, they are growing in number. Perhaps more important right now, almost all larger firms and even many smaller ones have become reliant upon digital firm technology for much of their activity, including relations with customers and suppliers.

Describe the capabilities of a digital firm. Why are digital firms so powerful? What are the four principal systems driving the movement toward digital firms?

Digital firms extensively use Internet technology for electronic commerce and electronic business to manage their internal processes and relationships with customers, suppliers, and other external entities. Core business processes, key corporate assets, and environmental responses are digitally managed. Because a digital firm relies heavily on information technology to enable, mediate, and streamline its internal and external operations, the firm is more flexible, profitable, competitive, and efficient than a traditional firm.

Supply chain management systems, customer relationship management systems, enterprise systems, and knowledge management systems are the four principal systems driving the movement toward digital firms. As the textbook suggests, these

four systems are where corporations are digitally integrating information flows and making significant information systems investments.

What is an information system? Distinguish between a computer, a computer program, and an information system. What is the difference between data and information?

An information system consists of interrelated components that work together to collect, process, store, and disseminate information to support decision making, coordination, control, analysis, and visualization in an organization. A computer system is the physical equipment used for input, processing, and output activities in an information system. Computer programs provide the computer with necessary instructions on how to process the data into information. Data are raw facts; these raw facts, in their current form, are not in a useful format. Information is data that have been processed into a useful, meaningful form.

It is important for students to recognize that computers and information systems are not equivalent. It is important to stress that information systems have management, organization, and technology dimensions. Computers and programs are technology components of an information system. Without addressing the organization and management dimensions, the technology components are relatively useless. For instance, you can purchase a computer and software, but unless you have determined how the technology will be used to help manage and organize your work, you essentially have a decorative box for your desk.

What activities convert raw data to usable information in information systems? What is their relationship to feedback?

Input captures raw data, processing converts the data into a more meaningful form, and output transfers the processed information to people or activities where it will be used. Some of the output will be used to correct any problems found and also to provide feedback that will then be used to evaluate the data.

What are the functions of an information system from a business perspective? What role do they play in the business information value chain?

Information systems facilitate the acquisition, transformation, and distribution of information. Information systems can improve decision making, enhance organizational performance, and help increase firm profitability, thus contributing to corporate value.

What is information systems literacy? How does it differ from computer literacy?

Information systems literacy is a broad-based understanding of information systems. In contrast, computer literacy is limited to understanding computers. Information systems literacy includes the behavioural understanding of the organization and management dimensions of information systems as well as the technological dimensions.

What are the organization, management, and technology dimensions of information systems?

Organization: Information systems are part of organizations, and in some cases (such as credit card companies and financial information services), they are the organization. Information systems will have the SOPs and the culture of an organization embedded within them.

Management: Information systems supply tools and information needed by managers to allocate, coordinate and monitor their work, make decisions, create new products and services, and make long-range strategic decisions.

Technology: Management uses technology (hardware, software, storage, and telecommunications) to carry out their functions. It is one of the many tools managers use to cope with change.

Distinguish between a behavioural and a technical approach to information systems in terms of the questions asked and the answers provided. What major disciplines contribute to an understanding of information systems?

A behavioural approach to information systems focuses on questions such as strategic business integration, behavioural problems of systems utilization, system design and implementation, social and organizational impacts of information systems, political impacts of information systems, and individual responses to information systems. Solutions to problems created by information technology are primarily changes in attitudes, management, organizational policy, and behaviour.

A technical approach to information systems emphasizes mathematically-based models to study information systems and the physical technology and formal capabilities of information systems. Students should know the differences between computer science (theories of computability, computation methods, and data storage and access methods), management science (development of models for decision making and managerial practice), and operations research (mathematical techniques for optimizing organizational parameters such as transportation, inventory control and transaction costs).

What is the relationship between an organization and its information systems? How has this relationship changed over time?

Notable changes occurring over time include a growing interdependence between the organization and its information systems and a movement from primarily technical changes to include both managerial and institutional changes. There is a growing interdependence between the organization and its information systems. Often, a change in the business's strategy, rules, or procedures requires changes in the information systems software, hardware, databases, and telecommunications. An organization’s present and future accomplishments depend in many respects on what its systems will permit it to do now and later.

Also, system projects are increasing in reach and scope. Whereas early information systems addressed primarily technical or operational issues, contemporary information systems are integral to the management and strategic goals of the firm. Today information systems affect a much larger part of the organization itself, such as organizational products, objectives, and structure. More and more business activities at all levels involve the use of information systems.

What are the Internet and World Wide Web? How have they changed the role played by information systems in organizations?

The Internet is an international network of hundreds of thousands of public and private networks with over 500 million people connected in over 200 countries working in science, education, government, and business. Individuals and organizations use the Internet to exchange information and perform business transactions with other individuals and organizations around the globe. It should be noted that the digital firm uses the Internet as its primary technology platform.

The World Wide Web is a system with universally accepted standards for storing, retrieving, formatting, and displaying information in a networked environment. The Web is a part of the Internet and provides a graphically-based system of pages for storing information on the Internet.

The Internet and the World Wide Web have had a tremendous impact on the role information systems play in organizations. The Internet and the World Wide Web are responsible for increased connectivity and collaboration within and outside the organization. The Internet, the World Wide Web, and other technologies have led to the redesign and reshaping of organizations. The Internet and the World Wide Web have helped transform the organization's structure, scope of operations, reporting and control mechanisms, work practices, work flows, and products and services.

Describe some of the major changes that information systems are bringing to organizations.

Information systems are driving both daily operations and organizational strategy. Powerful computers, software, and networks, including the Internet, have helped organizations become more flexible, eliminate layers of management, separate work from location, and restructure work flows, giving new powers to both line workers and management. The flattening of organizations is probably one change that students are likely to cite, particularly with the concern over downsizing. The parallel increase in information and in the decision power of line workers (empowerment) has also increased the workers’ corresponding work satisfaction as management span of control is broadened. The empowering of the line worker means managers can spend more time thinking more strategically.

How are information systems changing the management process?

Contemporary information systems are providing managers with powerful new tools for more precise planning, forecasting, and monitoring, allowing them to respond more quickly to changes in the market for a product or in production conditions. Systems also give managers new tools for communicating with their subordinates so that they can manage larger numbers of people across greater distances than in the past.

What is the relationship between the network revolution, the digital firm, electronic commerce, and electronic business?

The Internet and other networks have made it possible for the firm to replace manual and paper-based processes with the electronic flow of information. This change can enable many companies ultimately to become digital firms. The digital firm uses the Internet and digital technology to expedite the exchange of information and facilitates communication and coordination both inside the organization and between the organization and its partners. Without this linkage of buyers and sellers through networks and the Internet, there would be no way to transmit the many transactions of the electronic market, which would leave buyers and sellers to depend on paper transactions with their time delays, inaccuracies, and expenses. E-business, the use of Internet technologies to facilitate an organization’s internal processes, also facilitates e-commerce, the external transactions facilitated by Internet technologies. Together, e-business and e-commerce move firms closer to being truly digital.

What are interorganizational systems? Why are they becoming more important? How have the Internet and Web technology affected these systems?

Interorganizational systems automate the flow of information across organizational boundaries, linking a company to its customers, distributors, or suppliers, and sometimes even their competitors.

Interorganizational systems allow companies to electronically conduct transactions with different companies. This enables companies to respond more quickly to market demands and to lower transaction costs. Moreover, companies can work jointly and more quickly and fully with partners to design, produce, and sell products. This method can result in higher levels of efficiency and value to customers and even result in a significant competitive advantage.

The Web and the Internet can lower cost for all those involved, even making it possible for small companies to participate where they might not if costs were higher.

What do we mean by information architecture and information technology infrastructure? Why are they important concerns for managers?

The information architecture of the organization is the particular form or design that information technology assumes in a specific organization to achieve selected goals or functions. It is a design for the business application systems that serve each functional specialty and level of the organization and the specific ways that they are used by each organization. Contemporary information architectures are increasingly designed around business processes and clusters of system applications spanning multiple functions and organizational levels.

The firm’s information technology (IT) infrastructure provides the technology platform for this architecture and consists of computer hardware, software, data and storage technology, and networks along with the human resources required to operate the technology. Because managers and employees directly interact with these systems, it is important for the company now and in the future that the information architecture and IT infrastructure meet the business requirements of the company and that the systems can work together where needed.

What are the key management challenges involved in building, operating, and maintaining information systems today?

The textbook identifies five key management challenges, including the strategic business challenge, globalization challenge, information architecture and infrastructure challenge, information systems investment challenge, and the responsibility and control challenge. The strategic business challenge encourages students to realize that they must be able to use information technology to design organizations so that they are competitive, effective, and digitally-enabled. The globalization challenge facing students is that they know how firms can understand the systems requirements of a global environment. The information architecture and infrastructure challenge is that students must be able to help their organizations develop an information architecture that is able to support the company goals when both the business conditions and the technologies are changing so rapidly. The information systems investment challenge is for students to know how their organization can determine the business value of systems. Finally, the responsibility and control challenge is for students to understand how organizations can ensure that their information systems are used in an ethically and socially responsible way.

What is an organization? Compare the technical definition of organizations with the behavioural definition.

The technical definition for an organization defines an organization as a stable, formal social structure that takes resources from the environment and processes them to produce outputs. The technical definition of an organization focuses on three elements: capital and labor, production, and products for consumption. The technical definition also implies that organizations are more stable than an informal group, are formal legal entities, and are social structures.

The behavioural definition states that an organization is a collection of rights, privileges, obligations, and responsibilities that are delicately balanced over a period of time through conflict and conflict resolution. This definition highlights the people within the organization, their ways of working, and their relationships.

The technical definition shows us how a firm combines capital, labor, and information technology. The behavioural definition examines how information technology impacts the inner workings of the organization. The behavioural definition is the more realistic of the two.

What features do all organizations have in common? In what ways can organizations differ?

Table 3-3 summarizes the common and unique features of organizations. Common features for organizations include formal structure, standard operating procedures, politics, and culture. Organizations can differ in their organizational type, environments, goals, power, constituencies, function, leadership, tasks, technology, and business processes.

How are information technology services delivered in organizations? Describe the role played by programmers, systems analysts, information systems managers, and the chief information officer (CIO).

Information services are usually designed, developed, and operated through information systems departments which are assigned the responsibilities of maintaining the hardware, software, data storage, and networks that comprise the firm’s information technology infrastructure. Depending on the size of the organization, and thus its information systems department, the department includes programmers, systems analysts, telecommunications and network specialists, and operations staff.

Programmers are the people who actually write or create the computer instructions. Systems analysts are the liaison between the users of an information system and the people who create it. The information systems managers are the leaders of various specialists in the information systems department. The chief information officer (CIO) is the overall manager of the information systems department who sets policies and the direction for the information systems department. The CIO is at the same level as the chief operating officer (COO) and the chief financial officer (CFO) in the organization. Each of these officers is responsible for part of the organization's operation. The CEO, CFO, and CIO help to set policy for the firm.

Describe the major economic theories that help explain how information systems affect organizations.

The two economic theories discussed in the book are transaction cost theory and agency theory. Transaction cost theory is based on the notion that a firm incurs transaction costs when it buys on the marketplace rather than making products for itself. Traditionally, firms sought to reduce transaction costs by getting bigger, hiring more employees, vertical and horizontal integration, and small-company takeovers. Information technology helps firms lower the cost of market participation (transaction costs) and helps firms shrink in size while producing the same or greater amount of output.

Agency theory views the firm as a nexus of contracts among interested individuals. The owner employs agents (employees) to perform work on his or her behalf and delegates some decision-making authority to the agents. Agents need constant supervision and management, which introduces management costs. As firms grow, management costs rise. Information technology reduces agency costs by providing information more easily so that managers can supervise a larger number of people with fewer resources.

Describe the major behavioural theories that help explain how information systems affect organizations.

Behavioural theories, from sociology, psychology, and political science are useful for describing the behaviour of individual firms. Behavioural researchers theorize that information technology could change the decision-making hierarchy by lowering the costs of information acquisition and distribution. IT could eliminate middle managers and their clerical support by sending information from operating units directly to senior management and by enabling information to be sent directly to lower-level operating

units. It even enables some organizations to act as virtual organizations because they are no longer limited by geographic locations.

One behavioural approach views information systems as the outcome of political competition between organizational subgroups. IT becomes very involved with this competition because it controls who has access to what information, and information systems can control who does what, when, where, and how.

Why is there considerable organizational resistance to the introduction of information systems?

There is considerable organizational resistance to new information systems because they change many important organizational dimensions, such as culture, structure, politics, and work. Leavitt put forth a model that says that changes in technology are absorbed, deflected, and defeated by organizational task arrangements, structures, and people. In this model the only way to bring about change is to change the technology, tasks, structure, and people simultaneously. In a second model, the authors speak of the need to "unfreeze" organizations before introducing an innovation, quickly implementing the new system, and then "refreezing" or institutionalizing the change.

Compare the descriptions of managerial behaviour in the classical and behavioural models.

The classical model suggests that managers perform five classical functions. These functions are planning, organizing, coordinating, deciding, and controlling. Although the classical model describes formal managerial functions, it does not provide a description of what managers actually do. The behavioural models suggest that managerial behaviour is less systematic, more informal, less reflective, more reactive, less well-organized, and somewhat frivolous. The behavioural models differ from the classical model in that managers perform a great deal of work at an unrelenting pace, managerial activities are fragmented, managers prefer speculation, managers prefer oral forms of communication, and managers give the highest priority to maintaining a diverse and complex web of contacts.

What specific managerial roles can information systems support? Where are information systems particularly strong in supporting managers, and where are they weak?

Table 3-4 compares managerial roles with the support systems. Information systems support the liaison, nerve center, disseminator, spokesperson, and resource allocator roles. Currently information systems do not support the figurehead, leader, entrepreneur, disturbance handler, and negotiator roles. Information systems are the strongest at the informational role and the weakest at the interpersonal and decisional roles.

What are the four stages of decision making described by Simon?

Simon's four stages of decision making include intelligence, design, choice, and implementation. During the intelligence stage, organizational problems are identified and understood. During the design stage, possible alternative solutions to the problem

are conceived. During the choice stage, a choice is made from the possible alternatives. During the implementation stage, the decision is put into effect, and the solution's progress is reported.

Compare individual and organizational models of decision making.

Individual models of decision making assume that human beings are in some sense rational although there are a number of individual models. The rational model assumes that individuals can identify goals, rank all possible alternatives, and then select the alternative that contributes the most. However, some research finds that this process is too complex, that individuals cannot possibly specify all alternatives, much less select the best. Research suggests that systematic decision makers structure the decision based on some formal method. On the other hand, intuitive decision makers use many different approaches and use trial and error to find a solution.

Organizational decision making considers the structural and political characteristics of an organization. Organizational models suggest that decisions are not made individually, but are made by groups or the organization. The bureaucratic model of decision making suggests that decisions are shaped by the organization's standard operating procedures. The political models of decision making suggest that decisions result from competition and bargaining among the organization's interest groups and key leaders. The "garbage can" model suggests that organizations are not rational and that decisions are solutions that become attached to problems for accidental reasons.

What is the impact of the Internet on organizations and the process of management?

The Internet increases the accessibility, storage, and distribution of information and knowledge for organizations; nearly any information can be available anywhere at any time. The Internet increases the scope, depth, and range of information and knowledge storage. It lowers the cost and raises the quality of information and knowledge distribution; that is, it lowers transaction and information acquisition costs. By using the Internet, organizations may reduce several levels of management, enabling closer and quicker communication between upper levels of management and the lower levels. The Internet also lowers agency costs.

What is a strategic information system? What is the difference between a strategic information system and a strategic-level system?

A strategic information system is a computer system at any organizational level that fundamentally changes the goals, operations, products, services, or environmental relationships of organizations, in effect changing the very nature of the firm’s business. In contrast, strategic-level systems provide long-term planning information to senior executives. Strategic information systems are more far-reaching and deeply rooted and fundamentally transform the organization itself.

Describe appropriate models for analyzing strategy at the business level and the types of strategies and information systems that can be used to compete at this level.

Low-cost producer, product differentiation, and focused differentiation are three generic strategies available at the business level. If a business pursues the low-cost producer strategy, it can evaluate its value chain to identify primary and secondary activities where information technology can effectively help the business obtain a competitive advantage. Strategic information systems help a company offer its products and services at a lower cost than its competitors, or strategic information systems enable the company to provide more value at the same cost as its competitors. Strategic information systems enable the company to improve its internal value chain, as well as establish tight, efficient linkages with its suppliers, customers, and business partners. Additionally, a company can participate in a value web.

Firms pursuing a product differentiation strategy use information systems to create new products and services. These products and services are not easily duplicated by competitors, and therefore, the company does not need to compete on the basis of cost.

A company pursuing a focused differentiation strategy develops new market niches for its specialized products and services. The company competes in this target market by offering its products and services in a superior manner. A company can use strategic information systems to "mine" for information about a particular market or group of customers. The strategic information systems enable the company to analyze customer buying patterns, tastes, and preferences.

Companies can use their strategic information systems to establish tight linkages to customers and suppliers. Companies can use their strategic information systems to create efficient customer response systems, switching costs, and in some instances, stockless inventories.

Describe appropriate models for analyzing strategy at the firm level and the types of strategies and information systems that can be used to compete at this level.

A firm is typically a collection of businesses which are organized financially as a collection of strategic business units. Information systems can enhance the integration of separate units into a whole (synergy). Also, information systems can allow different business units to share information in the organization’s core competencies.

How can the competitive forces model, information partnerships, and network economics be used to identify strategies at the industry level?

These industry-level models help a company answer the key strategic question of “How and when should we compete with as opposed to cooperate with others in the industry?”

Firms can form information partnerships and even link their information systems to achieve unique synergies. An information partnership enables companies to join forces without actually merging by sharing information. For example, these partnerships can help firms gain access to new customers as can be seen in the partnership between Air Canada and CIBC.

The competitive forces model explains the interaction of external influences (threats and opportunities) that affect an organization's strategy and ability to compete. The threats include new entrants into the market, pressure from substitute products and services, bargaining power of customers and suppliers, and positioning of traditional industry competitors. Information systems are used at this level to develop industry-wide standards for exchanging information or business transactions, create value webs, and create industry-wide, IT-supported consortia, symposia, and communications networks for coordinating activities.

Traditionally, the more any given resource is applied to production, the lower the marginal gain, until additional inputs do not produce additional outputs (the law of diminishing returns). However, some situations exist where adding additional participants adds almost nothing to costs. One common example is when the telephone company adds another person to its network. The company has almost no additional continuing costs. Finding such opportunities will benefit a company. For example, Microsoft Corporation supports a community of software developers around the world who support local companies in making better use of Microsoft products. Adding an additional developer, or many new developers, costs Microsoft almost nothing.

The network economics model suggests that in a network the addition of another participant entails zero marginal costs but can create much larger marginal gain. For instance, the Internet can be used to build "communities of users."

How have the value chain and competitive forces models changed as a result of the Internet and the emergence of digital firms?

Internet technology has enabled a firm to extend the concept of its value chain to include all of the firm’s suppliers and business partners into a single web. The main reason for this is that the Internet greatly reduces the cost of connecting online with partners. This enables companies to work directly with companies around the world and with companies too small to build their own international network. The same is true with digital firms because they essentially exist mainly because they can operate over the Internet.

Similarly, because of the Internet and digital firms, corporations find it cheaper and easier to relate to suppliers and customers, enabling the company to meet a competitive problem identified using the competitive forces model. The competitive forces model has also changed in the Internet era because firms do not just compete with each other within the same industry; they compete as part of industry sets.

Why are strategic information systems difficult to develop? Why are competitive advantages so hard to maintain?

Strategic information systems are difficult to develop because they can entail massive sociotechnical changes within the organization. Organizational boundaries between the firm and its customers and suppliers and between departments within the organization usually must be broken down. New relationships among parts of the company and with customers and suppliers must be redefined. Sometimes entirely new organizational structures may need to be developed. Also, resistance to such changes may exist because these changes impact responsibilities and jobs.

Competitive advantages are hard to maintain because first-mover advantages are easily eroded by the competition, who can come to the market at a lower cost with approximately the same product or service as the first-mover company. Even companies that have a competitive advantage must continually seek more competitive advantages; this process is known as strategic intent.

Identify and describe the four levels of the organizational hierarchy. What types of information systems serve each level?

From lowest to highest, the four levels of the organizational hierarchy are operational, knowledge, management, and strategic. Types of information systems include transaction processing systems, office systems, knowledge work systems, decision-support systems, management information systems, and executive support systems.

Transaction processing systems, such as order tracking, payroll, machine control, and compensation, serve the operational level. Engineering workstations, word processing, graphics workstations, managerial workstations, document imaging, and electronic calendars are examples of knowledge work systems and office systems that serve the knowledge level. Sales region analysis, cost analysis, annual budgeting, and relocation analysis are examples of decision-support systems and management information systems. Many of these systems are programs that students learn in their management science or quantitative methods courses. Some are based on database management systems. Examples of executive support systems that serve the strategic level are sales trend forecasting, operating plan development, budget forecasting, profit planning, and manpower planning.

List and briefly describe the major types of systems in organizations.

Transaction processing systems, office systems, knowledge work systems, decision-support systems, management information systems, and executive support systems are the major types of systems in organizations. Transaction processing systems function at the operational level of the organization. Examples of transaction processing systems include order tracking, order processing, machine control, plant scheduling, compensation, and securities trading.

Knowledge work systems help create and integrate new knowledge within the organization. Examples of knowledge work systems include engineering workstations, managerial workstations, and graphics workstations. Office systems help increase data worker productivity and include word processing, document imaging, and electronic calendars.

Management information systems provide managers with reports based primarily on data pulled from transaction processing systems, have an internal orientation, and have limited flexibility. Examples of management information systems include sales management, inventory control, and capital investment analysis. Decision-support systems function at the management level and provide analytical models and data analysis tools to provide support for semistructured and unstructured decision-making activities. Examples of decision-support systems include sales region analysis, cost analysis, and contract cost analysis.

Executive support systems function at the strategic level, support unstructured decision making, and use advanced graphics and communications. Examples of executive support systems include sales trend forecasting, budget forecasting, and personnel planning.

The systems form a hierarchy of systems, with all types either formatting, filtering, or processing the information from a lower level. For instance, the office systems provide reports or presentations based on the information or data in transaction processing systems. Decision-support and executive support systems often use office systems in presenting information extracted from transaction processing systems and management information system. Management information systems depend on data from transaction processing systems. Some systems, including knowledge work systems, decision-support systems, and executive support systems may use external information, such as stock market information and design information from suppliers.

What are the five types of TPS in business organizations? What functions do they perform? Give examples of each.

The five types of transaction processing systems include sales/marketing systems, manufacturing/production systems, finance/accounting systems, human resources systems, and other types. Figure 2-4 identifies and provides examples for each type of transaction processing system. Sales/marketing systems provide sales management, market research, promotion, pricing, and new product functions. Examples include sales order information systems, market research systems, and sales commission systems. Manufacturing/production systems provide scheduling, purchasing, shipping/receiving, engineering, and operations functions. Examples of manufacturing systems include machine control systems, purchase order systems, and quality control systems. Finance/accounting systems provide budgeting, general ledger, billing, and cost accounting functions. Examples of finance/accounting systems include general ledger, accounts receivable/payable, and funds management systems. Human resource systems provide personnel records, benefits, compensation, labor relations, training, and payroll functions. Examples include employee records, benefit systems, and career path systems. Other types include admissions, grade records, course records, and alumni for a university. Examples of transaction processing systems for a university include a registration system, student transcript system, and an alumni benefactor system.

Describe the functions performed by knowledge work systems and office systems and some typical applications of each.

Knowledge work systems (KWS) aid knowledge work professionals to create new information and knowledge, and ensure that new knowledge and technical expertise are properly used in their corporations. Examples of knowledge workers (and some of their software) include engineers (graphics workstations), stock traders, analysts and arbitrageurs (financial and stock market workstations), research scientists, doctors, and designers (CAD systems).

Office systems provide support for data workers, including secretaries, accountants, filing clerks, and some managers. Software examples include word processing, desktop publishing, presentation programs, electronic calendars, and document imaging.

What are the characteristics of MIS? How do MIS differ from TPS? From DSS?

MIS support the management level by providing routine summary reports and exception reports for various purposes, including planning, controlling, and decision making. Examples include sales and profit per customer and per region, relocation summary and analysis, inventory control, capital investment analysis, and even a report on students who were enrolled in the autumn but did not return in the spring. MIS differs from TPS in that MIS deals with summarized and compressed data from the TPS and usually routine analysis of that summarized data.

Decision-support systems provide material for analysis for the solution of semi-structured problems, which often are unique or rapidly changing. Typically, they provide the ability to do “what if” analysis. While MIS have an internal orientation, DSS will often use data from external sources, as well as data from TPS and MIS. DSS support “right now” analysis rather than the long-term structured analysis of MIS. MIS are generally not flexible and provide little analytical capabilities. In contrast, DSS are designed for analytical purposes and are flexible.

What are the characteristics of DSS? How do they differ from those of ESS?

DSS provide sophisticated analytical models and data analysis tools to support semistructured and unstructured decision-making activities. DSS use data from TPS, MIS, and external sources, provide more analytical power than other systems, combine data, and are interactive. ESS support senior managers with unstructured strategic-level decision making. They may be less analytical than DSS with less use of models such as linear programming or forecasting. However, they often rely on external data and rely heavily on graphics.

Describe the relationship between TPS, office systems, KWS, MIS, DSS, and ESS.

The various types of systems in the organization exchange data with one another. TPS are a major source of data for other systems, especially MIS and DSS. TPS are operational-level systems that collect transaction data. Examples of these are payroll or order processing that track the flow of the daily routine transactions that are necessary to conduct business. TPS provide data that are required by office systems, KWS, MIS and DSS, although these systems may also use other data. KWS and office systems not only use data from TPS but also from MIS. DSS not only use data from TPS but also from KWS, office systems, and MIS. MIS rely heavily on data from TPS but also use data from KWS and office systems. ESS obtain most of their internal data from MIS and DSS.

What is a business process? Give two examples of processes for functional areas of the business and one example of a cross-functional process.

Business processes are the ways in which organizations coordinate and organize work activities, information, and knowledge to produce their valuable products or services. Business processes for the manufacturing and production area include product assembly, quality checking, and producing bills of materials. For the sales and

marketing area, business processes include identifying customers, making customers aware of the product, and selling the product. For finance and accounting, business processes includes paying creditors, creating financial statements, and managing cash accounts. For human resources, business processes include hiring employees, evaluating job performance of employees, and enrolling employees in benefits plans.

The order fulfillment process is an example of a cross-functional process. As Figure 2-10 illustrates, the order fulfillment process involves activities performed by sales, accounting, and manufacturing functions.

Why are organizations trying to integrate their business processes? What are the four key enterprise applications for organization-wide process integration?

An organization operates in an ever-increasingly competitive global environment. Operating in a global environment requires an organization to focus on the efficient execution of its processes, customer service, and speed to market. To accomplish these goals, the organization must exchange valuable information across different functions, levels, and business units. By integrating its processes, the organization can more efficiently exchange information among its functional areas, business units, suppliers, and customers. The four key enterprise applications are enterprise systems, supply chain management systems, customer relationship management systems, and knowledge management systems.

What are enterprise systems? How do they change the way an organization works?

Enterprise systems integrate the key business processes of an organization into a single software system. Data from various functional areas are maintained centrally where they can be accessed and used by other functions and cross-functional processes. This changes the work flow of an organization. Now information can seamlessly flow throughout the organization, improving coordination, efficiency, and decision making.

What are the benefits and challenges of implementing enterprise systems?

Enterprise systems are firm-wide information systems that integrate key business processes so that information can flow freely between different parts of the firm. Enterprise systems help create a more uniform organization in which everyone uses similar processes and innovation and measures their work in terms of organization-wide performance standards. Enterprise systems are very difficult to successfully implement and once implemented, are very difficult to change. Enterprise systems require extensive organizational change, use complicated technologies, and require large up-front costs for long-term benefits that are difficult to quantify.

What is supply chain management? What activities does it comprise? Why is it so important to businesses? How do information systems facilitate supply chain management?

Supply chain management is the close linkage of activities involved in the processes of buying, making, and moving a product. Supply chain management is important to a business because through its efficiency it can coordinate, schedule, and control the delivery of products and services to customers.

Supply chain management closely links and coordinates activities in buying, making, and moving a product. The system should lower costs and streamline the user’s business. Information systems make supply chain management more efficient by helping companies coordinate, schedule, and control procurement, production, inventory management, and delivery of products and services to customers. Information systems help organizations achieve great efficiencies by automating parts of these processes or by helping organizations rethink and streamline these processes.

What is collaborative commerce? How can organizations benefit from it?

For supply chain management to work, an atmosphere of trust must exist among supply chain members. Members need to work together on a common goal, and they must redesign appropriate business processes so they can more easily coordinate their activities. Collaborative commerce uses digital technologies to enable the members of the supply chain to collaboratively design, develop, build, and manage products through their lifecycles. It helps the various partners to integrate their systems with each other. Aside from gaining benefits from having a successful supply chain, they also benefit by achieving new levels of efficiency in reducing product design cycles, minimizing excess inventory, forecasting demand, and keeping all partners informed.

How can organizations benefit from participating in private industrial networks?

Private industrial networks are Web-enabled networks that permit firms and their business partners to share such activities as product design and development, marketing, inventory, production scheduling, and communications, including graphics, CAD drawings, and e-mail. Benefits include the ability to reduce inventory, product cycle time, inventory costs, and system costs. Private industrial networks also improve the coordination and sharing of information and provide the ability to track a product from raw materials to the customer, track demand, adjust production, and adjust the timing and size of deliveries, as well as monitor product availability, production capacity, and inventory levels.

What is customer relationship management? Why is it so important to businesses? How do information systems facilitate customer relationship management?

Customer relationship management is a business and technology discipline to coordinate all of the business processes for dealing with existing and potential customers. With the growth of the Web, potential customers can easily comparison shop for retail and wholesale goods and even raw materials, so better treatment of

customers has become very important. Good CRM systems consolidate customer data from multiple sources and provide analytical tools for answering questions such as: What is the value of a particular customer to the firm over his or her lifetime? CRM tools integrate the firm’s customer-related processes and consolidate customer information from multiple communication channels, so that the firm can put one coherent face to the customer. 

What is the role of knowledge management systems in the enterprise? What organizational processes are supported by knowledge management applications?

Knowledge management systems codify knowledge and experience, make the collected knowledge and experience available when and where it is needed, and provide links to external sources of knowledge. Organizational processes include creating knowledge, discovering and codifying knowledge, sharing knowledge, and distributing knowledge. Knowledge work systems support knowledge creation; artificial intelligence systems support knowledge discovery and codification; group collaboration systems support knowledge sharing, and office and communication tools support knowledge distribution.

What are the advantages of using the Internet as the infrastructure for electronic commerce and electronic business?

The Internet is an international network of networks connecting many millions of people from well over 100 countries. It is the largest information superhighway in the world. The Internet provides a universal and easy-to-use set of technologies and standards that can be adopted by all organizations, no matter what computer system or information technology platform they are using; provides a much lower cost and easier-to-use alternative for coordination activities than proprietary networks; reduces organizational transaction and agency costs; increases communication, including electronic mail, online forums, and chatting; provides access to increased information and information retrieval from many thousands of online databases around the world; and increases market potential with online offerings of information and products through the easy-to-use World Wide Web.

How is the Internet changing the economics of information and business models?

The Internet radically reduces the cost of creating, sending, and storing information while making that information more widely available. The Internet reduces search costs, allowing customers to locate products, suppliers, prices, and delivery terms. The Internet enables companies to collect and analyze more detailed and accurate information about their customers, allowing these companies to better target market their products and services. The Internet shrinks information asymmetry and has transformed the richness and reach of information. It can help companies create and capture profits in new ways by adding extra value to existing products and services. It also provides the foundation for new products and services.

Name and describe six Internet business models for electronic commerce. Distinguish between a pure-play Internet business model and a clicks-and-mortar business model.

Table 4-2 identifies eight Internet business models. These models are virtual storefront, information broker, transaction broker, online marketplace, content provider, online service provider, virtual community, and portal. Virtual storefronts sell physical products directly to consumers or individual businesses. Information brokers provide product, pricing, and availability information to individuals and businesses; they generate revenue from advertising or from directing buyers to sellers. The transaction broker saves users money and time by processing online sale transactions and generates a fee each time. The online marketplace provides a digital environment where buyers and sellers meet, search for and display products, and establish prices for those products; it can provide online auctions and reverse auctions. A content provider creates revenue by providing digital content, such as digital news, music, photos, or video over the Web. The online service provider provides online services for individuals and businesses and generates revenue from subscription or transaction fees and from advertising. The virtual community provides an online meeting place where people with similar interests can communicate and find useful information. The portal provides an initial point of entry to the Web along with specialized content and other services.

A pure-play business model is based purely on the Internet. A clicks-and-mortar business model has a Web site that is an extension of a traditional bricks-and-mortar business.

Name and describe the various categories of electronic commerce.

The three major types of electronic commerce are business-to-consumer (B2C), business-to-business (B2B), and consumer-to-consumer (C2C). Business-to-consumer involves retailing products and services to individual shoppers. BarnesandNoble.com is an example of business-to-consumer electronic commerce.

Business-to-business involves the sale of goods and services among businesses. Millpro.com provides business-to-business electronic commerce. Consumer-to-consumer involves consumers selling directly to consumers. An example of consumer-to-consumer electronic commerce is eBay.com.

Electronic commerce transactions can also be classified based on the participants’ physical connections to the Web. Participants can use wired networks or mobile commerce.

How can the Internet facilitate sales and marketing to individual customers? Describe the role played by Web personalization.

The Internet enables a company to create closer, cost-effective relationships with its customers. The company can use the Internet to provide information, service, support, and in many instances, the product over the Web. The Internet facilitates direct sales over the Web, interactive marketing and personalization, and customer self-service.

The Internet digitally enables the firm. The firm can link to customers and suppliers so that electronic commerce, automating business-to-business transactions such as invoices, purchase orders, and sometimes payments (digital cash and electronic funds transfer), is economically and technically feasible.

In many instances, the customer can purchase a product or service from a company's Web site. A Web site also allows potential customers to obtain information about the products, distributors, and service centres. The information about distributors allows a company to use the Web site to market, while avoiding channel conflict. A FAQ (frequently asked questions) list can allow support for the product without tying up phone lines with common, easily answered questions. FAQs can raise customer comfort with the product and the company.

Web personalization directly tailors the Web content to the specific user and at a low cost. Personalization helps firms form a lasting relationship with an individual customer.

How can the Internet help provide customer service?

Customer service starts with the ease customers have in researching products themselves and then the ease of purchasing. Then, when the product has arrived (whether it is a digital product delivered over the Internet or a physical product delivered by mail or express delivery), the customer can obtain help on its usage over the Internet, often very easily. As was noted in question 5, FAQs provide support for easy questions, such as instructions for assembly or use of products or services. Answers to questions can be e-mailed from the Web site without making customers wait for telephone support. Many customers are happy with an answer even if it takes eight hours to receive as long as they know they are going to get it. Further, with chat or Internet telephony linked to the site, customers can talk to representatives. Many vendors, such as Dell, have people assigned to answer the questions or complaints of users. The Internet is also an easy, fast way to place orders because it reduces conversation, misunderstanding, errors, and time.

How can Internet technology support business-to-business electronic commerce?

Business-to-business transactions can occur via a company's Web site, net marketplace, or private exchange. Web sites make it easy to sell and buy over the Internet, compare suppliers, products, and prices, and even find out how others feel about the product. Further, supply chain linkages through intranets and extranets can support JIT, reduce cycle times, and support other practices of continuous improvement. Because of the ease and efficiencies brought by the Internet, business-to-business participants can save a significant amount of money and time.

What are Net marketplaces? Why do they represent an important business model for B2B e-commerce? How do they differ from private industrial networks?

A net marketplace is a single digital marketplace based on Internet technology linking many buyers to many sellers. The net marketplace is an important business model for B2B e-commerce because some net marketplaces serve vertical markets for specific industries and other net marketplaces serve horizontal markets, selling goods that are available in many different industries. Also, net marketplaces can sell either direct goods or indirect goods. Net marketplaces are more transaction-oriented and less relationship-oriented than private industrial networks.

Name and describe the principal electronic payment systems used on the Internet.

Table 4-3 summarizes the electronic payment systems. The electronic payment systems discussed in the chapter include digital credit card payment, digital wallet, accumulated balance payment, stored value payment systems, digital cash, peer-to-peer payment systems, digital checking, and electronic billing presentment and payment.

Digital credit card payment systems provide secure services for credit card payments on the Internet and protect information transmitted among users, merchant sites, and processing banks. Digital wallets store credit card and owner identification information and provide these data automatically during electronic commerce purchase transactions. Accumulated balance payment systems accumulate micropayment purchases as a debit balance that must be paid periodically on credit card or telephone bills. Stored value payment systems enable customers to make instant online payments from a value stored in a digital account. A smart card is a credit-card-size plastic card that stores digital information and can be used for electronic payments. Digital cash is an electronic form of currency, moves outside the normal network of money, and is used for micropayments or larger purchases. A peer-to-peer payment system is an electronic payment system for people who want to send money to vendors or individuals who are not set up to accept credit card payments. A digital check is an electronic check with a secure digital signature. An electronic billing presentment and payment system is used to pay routine monthly bills; it allows users to view their bills electronically and pay them through electronic funds transfers from bank or credit card accounts.

Why are intranets so useful for electronic business?

Table 4-4 summarizes the organizational benefits of intranets. Intranet benefits include connectivity from most computing platforms, and they can be tied to internal corporate systems and core transaction databases. Intranets can create interactive applications with text, audio, and video, are scalable to larger or smaller computing platforms as requirements change, are easy-to-use, provide a universal Web interface, have low start-up costs, are richer and provide a more responsive information environment, and reduce information distribution costs.

How can intranets support organizational collaboration?

Organizations are using intranets to create enterprise collaboration environments. Regardless of location, intranets allow organizational members to exchange ideas, share information, and work together on common projects and assignments.

Describe the uses of intranets for e-business in sales and marketing, human resources, finance and accounting, and manufacturing.

Tables 4-5 to 4-8 provide examples of how intranets are used in the functional areas. In sales and marketing, intranets help oversee and coordinate the activities of the sales force. The sales force can obtain updates on pricing, promotions, rebates, customers, and competitors. The sales force can also access presentation and sales documents, which they can customize for specific customers. In the human resources area, intranets keep employees informed of company issues and policies, allow employees to access and update their personnel records, and take online competency tests. Further, job postings and internal job information can be made available to employees. Employees can enroll in health care, benefit plans, or company training seminars. In finance and accounting, intranets provide an online, integrated view of financial and accounting information in an easy-to-use format. In the manufacturing area, intranets integrate complex information across plant floors or many plants, particularly in managing work flow and process control.

How can companies use Internet technology for supply chain management?

Companies can use Internet technology for supply chain management to simplify, integrate, and electronically coordinate business processes that span more than one functional area or span the business processes of other companies; integrate procurement, production and logistics processes to supply goods and services from their source through to delivery to the customer; improve the coordination among their internal supply chain processes, as well as coordinate the shared supply chain processes of business partners; support the instant communication between all members of the supply chain; provide online collaboration; provide a quicker, more accurate response to customer demand; tap into suppliers’ systems to see inventory and production capabilities; monitor customers’ order status; share production, scheduling, inventory, forecasting and logistics information; communicate up-to-date manufacturing information to suppliers; and obtain customer feedback.

Describe the management challenges posed by electronic commerce and electronic business on the Internet.

Electronic commerce and electronic business pose several management challenges, including inadequate security, given the sensitive and proprietary nature of information that people might want to communicate through the Net; e-commerce and e-business require careful orchestration of the firm’s divisions, production sites, and sales offices, as well as closer relationships with customers, suppliers, and other business partners in its network of value creation; technology problems, including the lack of standards, the growing need of bandwidth, inadequate telecommunications facilities in many less developed countries, and the abundance of data without the technical ability yet to search for and locate it quickly and easily; lack of clarity on many critical legal questions that affect the transmission of data nationally and internationally; unproven

business models; and control and coordination problems, particularly in extranets and business-to-business sites.

What is channel conflict? Why is it becoming a growing problem in electronic commerce?

Channel conflict is competition between two or more different distribution chains used to sell the products or services of the same company. For example, channel conflict occurs when a company with an established sales force begins to sell over the Internet. Needless to say, the sales staff will be loath to sell or support the products of a company that directly competes with them. More and more organizations are feeling pressure to offer direct sales over the Internet by the purchasers of their products and by competitive pressure.

Students may see that this will not be limited to for-profit firms alone but may be a problem for not-for-profit organizations also. The local Habitat for Humanity or Red Cross chapter may not be happy or even able to function if local donors are giving to the national Habitat for Humanity or Red Cross instead of the local charities.

What are the features of the new information technology infrastructure?

Figure 9-1 demonstrates the new information technology infrastructure. The information technology infrastructure consists of a mixture of computer hardware supplied by different vendors, including mainframes, PCs, and servers which are networked to each other. The infrastructure also gives more processing power to the desktop through client-server computing and mobile personal information devices that provide remote access to the desktop from outside the organization. The new IT infrastructure is highly networked and promotes the flow of information across the enterprise. It also incorporates public infrastructures, such as telephone systems, the Internet, and public network services. The Internet plays a critical role in the new infrastructure, serving as the principal communication channel with customers, employees, vendors, and distributors.

Why is connectivity so important for the digital firm? List and describe the major connectivity standards for networking and the Internet.

Connectivity is a measure of how well computers and computer-based devices can communicate with one another and share information in a meaningful way without human intervention. It is essential in enterprise networking in the new information technology infrastructure, where different hardware, software, and network components must work together to transfer information seamlessly from one part of the organization to another.

Chapter 9 discusses open systems, Transmission Control Protocol/Internet Protocol (TCP/IP), Open Systems Interconnect (OSI), Wireless Application Protocol (WAP), and Wireless Markup Language (WML). Open systems are built on public, nonproprietary operating systems, user interfaces, application standards, and networking protocols. The TCP/IP model is based on a five-layer reference model, and is used by the Internet. The OSI model is an alternative, seven-layer model developed by the International Standards Organization for linking different types of computers and networks and is designed to support global networks with large volumes of transaction

processing. WAP is a system of protocols and technologies that lets cell phones and other wireless devices with tiny displays, low-bandwidth connections, and minimal memory access Web-based information services. WML is a markup language for wireless Web sites; it is based on XML and optimized for tiny displays.

What is the Internet? List and describe alternative ways of accessing the Internet.

The Internet is an international network of networks connecting hundreds of millions of people. The Internet is the primary infrastructure for e-commerce, e-business, and the digital firm. Individuals access the Internet through Internet service providers, popular online services or through their company's network. An individual cannot access the Internet directly. Instead an individual with a computer equipped with a modem pays a small fee to an Internet Service Provider to access the Internet. People can also subscribe to popular online services, such as America Online and Microsoft Network. Alternatively, people who are part of an organization with its own network that is connected to the Internet can access the Internet through the organization's network.

It is also important to point out that individuals use a variety of client platforms to retrieve information from the Internet. Table 9-1 summarizes these platforms; these platforms include a PC, Net PC, smart phone, video game console, PDA, wireless e-mail handheld, and a TV Internet receiver.

List and describe the principal Internet capabilities.

Table 9-2 identifies the major Internet services. These services include e-mail, Usenet newsgroups, LISTSERVs, chatting, Telnet, FTP, and the World Wide Web. E-mail supports person-to-person messaging and document sharing. Usenet groups are forums in which people share information and ideas on a defined topic through large electronic bulletin boards where anyone can post messages on the topic for others to see and to which others can respond.

LISTSERVs conduct online discussions by using e-mail broadcast from mailing list servers. Chatting refers to live, interactive conversations that are conducted over a public network. Telnet is a network tool that allows someone to log on to one computer system while doing work on another. FTP is a tool for retrieving and transferring files from a remote computer. The World Wide Web is a system of universally accepted standards for retrieving, formatting, and displaying information.

Describe the capabilities of next generation networks, including Ca*Net 3? How do they differ from those of the existing public Internet? What benefits can they provide?

Ca*net 3 is based on dense wave division multiplexing (DWDM) technology, which expands the information carrying capacity of individual optical fibres by multiplexing a number of wavelengths of laser light. Ca*Net 3 makes it easier to deliver high-bandwidth applications, such as videoconferencing, video on demand, and multimedia.

The Internet was not designed to handle the huge quantities of data that are flowing through its interconnected networks. Experimental national research networks attempt to address this problem by providing test beds for leading-edge technology for

research institutions, universities, and corporations. The technologies enable companies to distribute video, audio, three-dimensional simulations, and life-size video teleconferencing without performance degradation. Table 9-3 describes 6NET, Welsh Video Network, Asia Pacific Advanced Network, and CANARIE.

Why is the World Wide Web so useful for individuals and businesses?

The Web is central to the rapid growth of the Internet because of its universally accepted standards for storing, retrieving, formatting and displaying information using client/server architecture. It can handle all types of digital communication anywhere in the world. It is now critical to people who want to retrieve information and communicate with others wherever they are. Since it no longer matters where documents are stored, people can easily switch from document to document and site to site.

Define and describe the following: home page, uniform resource locator (URL), Internet telephony, virtual private network (VPN), and voice portal.

A home page is the first page that a visitor reaches when he visits an organization's Web site. The home page is a World Wide Web text and graphical screen display that welcomes the user and explains the organization that has established the page. A URL is the address of a specific resource on the Internet. Internet telephony refers to technologies that use the Internet Protocol's packet-switched connections for voice service. A virtual private network is a secure connection between two points across the Internet to transmit corporate data. A voice portal is a portal that can accept voice commands for accessing information from the Web.

List and describe alternative ways of locating information on the Web.

Web site directories, search engines, and "push" technology are the principle methods for locating information. With Web site directories, individuals and organizations submit sites of interest; these sites of interest are then preclassified. To locate a site of interest, a keyword(s) is used to locate all preclassified pages and categories that have the keyword(s) appearing in their titles. A search engine does not require Web site preclassification. The search engine automatically searches Web pages on its own. The Web pages are usually displayed based on a ranking method. Push technology broadcasts information directly to the user based on prespecified interests. Shopping bots should also be mentioned since they can help people interested in making a purchase filter and retrieve information about products of interest, evaluate competing products according to criteria they have established, and negotiate with vendors for price and delivery terms.

What are intranets and extranets? How do they differ from the Web?

Intranets are internal Web sites for a company or organization; they are protected from public visits by a firewall. They use the same HTML and TCP/IP technology and standards as the World Wide Web. Intranets are used to communicate within the organization and to share information. Extranets are private intranets that are outside the main firewall set up for the benefit of the organization and authorized external users, such as suppliers.

What is the Wireless Web? How does it differ from the conventional Web?

The Wireless Web enables users to access digital information from the Internet and be connected anywhere, any time, and any place using wireless mobile computing devices. Specialized portals steer users of Web-enabled wireless devices to the information they are most likely to need. The Wireless Web is an entirely new medium, allowing new content and services to be delivered to the individual. Ontario Patient Transfer is an example of how one company uses the Wireless Web to better coordinate its logistics and fleet of patient transport vehicles. Perhaps one of the most exciting capabilities of the Wireless Web is its ability to provide location-based services.

List and describe the types of m-commerce services and applications supported by the Wireless Web.

Table 9-5 summarizes popular m-commerce services and applications, including information-based services, transaction-based services, and personalized services. Information-based services include instant messaging, e-mail, and searching for a movie or restaurant by using a cell phone or handheld PDA. Transaction-based services include purchasing stocks, concert tickets, music, or games; searching for the best price of an item using a cell phone, and then buying the item in a physical store or on the Web. Personalized services are services that anticipate what you want based on your location or data profile, such as updated airline flight information or beaming coupons for nearby restaurants.

Compare the WAP and I-mode Wireless Web standards.

WAP and I-mode are two competing standards for accessing information from the Wireless Web. Wireless Application Protocol (WAP) is a system of protocols that lets cell phones and other wireless devices with tiny displays, low bandwidth connections, and minimal memory access Web-based information and services. WAP uses WML, which is based on XML and optimized for tiny displays. WAP uses a dial-up connection.

mode was developed by Japan’s NTT DoCoMo mobile phone network. It uses compact HTML to deliver content, making it easier for businesses to convert their HTML Web sites to mobile service. I-mode uses packet switching, allowing users to be constantly connected to the network and content providers to broadcast relevant information to users. I-mode can handle colour graphic displays.

List and describe the principal technologies for supporting electronic commerce and electronic business.

The principal technologies for supporting electronic commerce and electronic business are Web server and electronic software, customer tracking and personalization tools, Web content management tools, and Web site performance monitoring tools. Web servers are the software necessary to run Web sites, intranets, and extranets. Web servers locate and manage stored Web pages. E-commerce server software provides functions essential for running e-commerce Web sites. These functions include setting up electronic storefronts and electronic catalogues to display product and pricing information; designing electronic shopping carts so customers can collect the items they wish to purchase; making shipping arrangements; linking to electronic payment processing systems; displaying product availability and tracking shipments; and connecting to back-office systems where necessary.

Customer tracking and personalization tools collect and store data on the behaviour of online customers and combine that data with data already stored in the company's back-office systems, analyze the data in order to better understand the behaviour of online customers, and identify customer preferences and trends. Web content management tools are software to facilitate the collection, assembly, and management of content on a Web site, intranet, or extranet. Web performance monitoring tools monitor the time to download Web pages and perform Web transactions, identify broken links between Web pages, and pinpoint other Web site problems and bottlenecks.

Under what conditions should firms consider Web hosting services?

Companies that lack the financial or technical resources to operate their own Web sites or electronic commerce services can use Web hosting services. Web hosting services offer solutions to small companies that do not have the resources to operate their own Web sites or companies that are still experimenting with e-commerce. Large companies that want 24 hour global availability and sophisticated Web sites might also choose a hosting service.

Describe five problems posed by the new IT infrastructure.

Loss of management control over information systems, connectivity and application integration challenges, the need for organizational change, the hidden costs of enterprise computing, and the difficulty of ensuring infrastructure scalability, reliability, and security are five problems posed by the new IT infrastructure.

Data and software are no longer confined to the mainframe environment and under the management of the traditional information systems department. Instead data and software may reside on many different computing platforms, leading to the loss of management control. Incompatible networks and standards, as well as connectivity problems with wireless networks, can lead to connectivity and application integration problems. Therefore, application integration is difficult to achieve for many firms. The movement to enterprise-wide computing requires organizational changes in the organizational culture and structure. These changes can be difficult and time

consuming to make. Enterprise computing can result in higher, unexpected costs. Often more time for network maintenance, data backup, technical problem solving, and updates of hardware and software are often needed. Enterprise computing requires an infrastructure that can rapidly scale to meet future demands, provides high levels of performance for mission-critical applications, and offers secure access to authorized individuals both inside and outside the company.

Describe some solutions to the problems posed by the new IT infrastructure.

Possible solutions include planning for and managing business and organizational changes; increasing end-user training; asserting data administration disciplines; and considering connectivity, application integration, bandwidth, and cost controls in technology planning.

In what ways are ethical, social, and political issues connected? Give some examples.

Ethics refers to principles of right and wrong which individuals use to guide their behaviour. Individuals act within a social environment that, in turn, exists within a political environment. Ethical dilemmas are problems that affect society and that often are addressed in the political arena. For example, new computer technology makes it easier to gain private information about individuals, creating an ethical dilemma for the potential user of that information (whether or not to invade the privacy of the individual). Society will respond by demanding new laws to regulate the use of data. Students will be able to give a range of examples of this connection.

What are the key technological trends that heighten ethical concerns?

Table 5-1 identifies the four key technology trends. These trends include computer power doubling every 18 months, the rapid decline in data storage costs, data analysis advances, and networking advances and the Internet.

The doubling of computing power every 18 months is creating a growing dependence on systems and a consequent vulnerability to system errors, poor data quality, and failure of critical systems. Advances in data storage techniques and rapidly declining storage costs provide for massive data storage capabilities on individual systems and enable the routine violation of individual privacy. Advances in datamining techniques for large databases allow those who are able to dominate supercomputing capacity (large businesses and governments) to increase their power over individuals through the analysis of massive amounts of data about individuals. Advances in telecommunications infrastructure allow the movement of massive amounts of data at greatly reduced cost, permitting the duplication and use of data and, as a result, the invasion of privacy on a scale and precision unimaginable to us now.

What are the differences between responsibility, accountability, and liability?

Responsibility means that you accept the potential costs, duties, and obligations for the decisions you make. Accountability is a feature of systems and social institutions that allows the determination of who is responsible. Liability is a feature of political systems that permits individuals to recover damages done to them by responsible individuals or organizations.

What are the five steps in an ethical analysis?

The five steps in an ethical analysis are outlined in the Manager's Toolkit. The five steps include (1) identify and describe clearly the facts; (2) define the conflict or dilemma and identify the higher order values involved; (3) identify the stakeholders; (4) identify the options you can reasonably take, and (5) identify the potential consequences of your options.

Identify and describe six ethical principles.

The six ethical principles include the golden rule, Immanuel Kant's Categorical Imperative, Descartes' rule of change, the Utilitarian Principle, the Risk Aversion Principle, and the ethical "no free lunch" rule. The Golden Rule suggests doing unto others as you would have them do unto you. Kant's Categorical Imperative suggests that if an action is not right for everyone to take, then it is not right for anyone. Descartes' rule of change, also known as the “slippery slope rule”, suggests that if an action cannot be taken repeatedly, then it is not right to be taken at any time. The Utilitarian Principle suggests taking the action that achieves the higher or greater value. The Risk Aversion Principle suggests taking the action that produces the least harm or the least potential cost. The ethical "no free lunch" rule says that virtually all tangible and intangible objects are owned by someone unless there is a specific declaration otherwise.

What is a professional code of conduct?

When groups of people claim to be professionals, they subscribe to special rights and obligations. As professionals, they enter into even more constraining relationships with employers, customers, and society because of their special claims to knowledge, wisdom, and respect. Professional codes of conduct are promulgated by associations of professionals in order to regulate entrance qualifications and competencies and to establish codes of ethics and practice.

What are meant by "privacy" and "fair information practices”?

Privacy is the claim that individuals have the right to be left alone, free from surveillance or interference from other individuals or organizations, including the state. Claims to privacy involve the workplace as well as the home. Information technology threatens individual claims to privacy by making the invasion of privacy cheap, profitable, and effective.

Fair information practices (FIP) is a set of principles governing the collection and use of information about individuals. The five FIP principles are: (1) notice/awareness; (2) choice/consent; (3) access/participation; (4) security; and (5) enforcement.

How is the Internet challenging the protection of individual privacy?

Cookies, Web bugs, and other means of collecting information about Internet users can be used or shared without the Internet user's consent. This allows information that a user may have given voluntarily for a good purpose, say logging into the Winnipeg

Free Press site, to be shared with some other site. Spamming or e-mail that spoofs a user’s e-mail address is another invasion of privacy.

What role can informed consent, legislation, industry self-regulation, and technology tools play in protecting individual privacy of Internet users?

Informed consent means that the Web site visitor knowingly permits the collection of data about his or her and his or her visit to the company's Web site. Federal privacy laws help regulate the collection, usage, and disclosure of information in Canada. Table 5-3 lists several of the federal privacy laws in the United States. Businesses have taken some steps, including publishing statements about how their information will be used and sometimes offering an opt-out right. However, few businesses offer an opt-in approach. Several technology tools are available to combat privacy invasion. Technical solutions enable e-mail encryption, anonymous e-mailing and surfing, and cookie rejection. Table 5-4 lists several privacy tools. Of particular interest is the P3P standard that allows the user to have more control over personal information that is gathered on the Web sites that he or she visits.

What are the three different regimes that protect intellectual property rights? What challenges to intellectual property rights are posed by the Internet?

Three different legal traditions that protect property rights are trade secret, copyright, and patent. A trade secret is any intellectual work product used for a business purpose that can be classified as belonging to that business, provided it is not based on information in the public domain. The drawback to trade secret protection is that once an idea falls into the public domain, it can no longer be protected as a trade secret. A copyright is a statutory grant that protects creators of intellectual property against copying by others for any purpose for a period of 20 years. The drawback of this protection is that underlying ideas are not protected, only their manifestations in a work. A patent grants the owner a monopoly on the ideas behind an invention for 20 years. While patent protection does grant a monopoly on the underlying concepts and ideas, the difficulty is passing stringent criteria of non-obviousness, originality, and novelty. The Internet makes it very easy to widely distribute and reproduce intellectual property.

Why is it so difficult to hold software services liable for failure or injury?

It is very difficult, if not impossible, to hold software producers liable for their software products because it is only when software acts as a part of a defective product that strict liability pertains. If the software is strictly a service (not part of a product), these laws do not apply. As part of a product, software is still considered to be like books, which historically are protected from liability claims by the First Amendment guaranteeing freedom of expression.

What is the most common cause of system quality problems?

The three principal sources of system quality problems are hardware and facility failures, software bugs and errors, and data quality. However, the most common cause of system quality problems is data quality. According to the 1998 Redman study cited in the textbook, individual organizations report data error rates ranging from 0.5 to 30 percent.

Name and describe four "quality of life" impacts of computers and information systems.

The textbook describes eight "quality of life" impacts of computers and information systems. These include balancing power, rapidity of change, maintaining boundaries, dependency and vulnerability, computer crime and abuse, employment, equity and access, and health risks.

Balancing power describes the shift toward highly decentralized computing, coupled with an ideology of "empowerment" of thousands of workers and decentralization of decision making to lower organizational levels. The problem is that the lower-level worker involvement in decision making tends to be trivial. Key policy decisions are as centralized as in the past.

The rapidity of change impact suggests that information systems have increased the efficiency of the global marketplace. As a result, businesses no longer have many years to adjust to competition. Businesses can now be wiped out very rapidly, and along with them, jobs.

The maintaining boundaries impact suggests that portable computers and telecommuting have created the condition where people can take their work anywhere with them and do it at any time. As a result, workers find that their work is cutting into family time, vacations, and leisure, weakening the traditional institutions of family and friends and blurring the line between public and private life.

The dependency and vulnerability impact suggests that businesses, governments, schools, and private associations are becoming more and more dependent on information systems, and so they are highly vulnerable to the failure of those systems.

The computer crime and abuse impact suggests that computers have created new opportunities for committing crimes and have themselves become the target of crimes.

The employment impact suggests that redesigning business processes could potentially cause millions of middle-level managers and clerical workers to lose their jobs. Worse, if reengineering actually works as claimed, these workers will not find similar employment because the demand for their skills will decline.

The equity and access impact suggests that access to computer and information resources is not equitably distributed throughout society. Access is distributed inequitably along racial, economic, and social class lines (as are many other information resources). Poor children attending poor school districts are less likely to use computers at school. Children from wealthy homes are five times more likely to use PCs for schoolwork than poor children. White children are more likely to use computers at home for schoolwork than Native children. Potentially, we could create a society of information haves and have-nots, further increasing the social cleavages in our society.

Health risks have been attributed to computers and information technologies. For instance, business now spends $20 billion a year to compensate and treat victims of

computer-related occupational diseases. Those illnesses include RSI (repetitive stress injury), CVS (computer vision syndrome), and technostress.

What is technostress, and how would you identify it?

Technostress is defined as stress induced by computer-use. Its symptoms are aggravation, hostility towards humans, impatience, and enervation.

Name three management actions that could reduce RSI.

Management can reduce RSI (repetitive stress injury) by using workstations (mainly keyboards) designed for a neutral wrist position (using a wrist rest to support the wrist). Use of proper monitor stands and footrests will contribute to proper posture and so reduce RSI, as will allowing (or requiring) employees to take frequent breaks from their work to walk around. Finally, use of new, ergonomically designed keyboards will also help.

What are the components of a contemporary computer system?

The major components of a contemporary computer system are the central processing unit (CPU), primary storage, secondary storage, input devices, output devices, and communication devices. Figure 6-1 shows the hardware components of a computer system.

Name the major components of the CPU and the function of each.

The control unit and the arithmetic-logic unit are the major CPU components. The control unit of the CPU coordinates and controls the other parts of the computer system. It reads a stored program and directs other components of the computer system to perform the tasks required by the program. The arithmetic-logic unit performs the principal logical and arithmetic operations of the computer. It can add, subtract, and determine when one quantity is greater or lesser than another quantity, or when they are equal.

Distinguish between serial, parallel, and massively parallel processing.

Serial processing processes one instruction at a time, using one processing unit (CPU). Parallel processing processes a number of instructions simultaneously by the use of multiple processing units (CPUs). The problem to be processed is broken down into smaller parts and various CPUs each work on one part.

Parallel processing uses a small number of powerful, expensive, and specialized chips. With massively parallel processing, huge networks of hundreds or thousands of inexpensive, commonly used processor chips are interwoven in complex and flexible ways to work on a computing problem.

List the most important secondary storage media. What are the strengths and limitations of each?

The most important secondary storage media are magnetic disk, optical disk, and magnetic tape. Magnetic disks are the most widely used secondary storage medium

and include floppy and hard disks. Magnetic disks are convenient to use, permit direct access to individual records, are reasonably priced, and provide fast access speeds. Floppy disks are removable and portable, yet are limited in their storage capacities. Hard drives provide fast access to data and larger storage capacities. RAID technology packages more than 100 smaller disk drives with a controller chip and specialized software in a single larger unit to deliver data over multiple paths simultaneously.

Optical disks store data at far greater densities than conventional magnetic disks, making them valuable for storing vast quantities of data such as reference materials or documents. There are several types of optical disk systems. CD-ROM is read-only storage, WORM allows users to record data only once, CD-RW allows users to rewrite data to the disk, and DVD is a high-capacity optical storage medium, capable of storing a minimum of 4.7 gigabytes of data.

Information stored on magnetic tape is more time consuming to access than information stored on a magnetic disk. Magnetic tape sequentially stores and accesses information, and each reel of tape must be individually mounted and dismounted. Tape storage is cheaper than disk, useful for batch applications (such as payroll), and for archiving large quantities of data that do not require immediate usage. Tape storage is also more stable than disk storage. (Disk packs can crash and disks must be backed up to record the transactions that have occurred.) Disk technology is most useful for online applications where direct access is required and for databases where interrelationships among records exist.

List and describe the major computer input and output devices and the types of ports.

Table 6-2 lists the major input and output devices. Input devices include the keyboard, computer mouse, touch screen, optical character recognition, magnetic ink character recognition, pen-based input, digital scanner, audio input, sensors, and radio frequency identification. Output devices include display screen monitors, printers, and audio output.

The keyboard is the principal method of data entry. The computer mouse is a handheld device with point-and-click capabilities. By moving the mouse around on the desktop, the user can position the cursor. Once positioned, the user can press one of the mouse buttons to communicate a command to the system. Touch screens allow the user to touch the surface of a sensitized video display monitor with a finger or a pointer to make a selection. Optical character recognition (OCR) devices translate specially designed marks, characters, and codes into digital form. Magnetic ink character recognition (MICR) readers read magnetic characters on documents such as bank checks. Pen-based input devices are mainly handwriting recognition devices used on touch-sensitive screens and are often seen with package delivery people. Digital scanners translate images such as pictures or documents into digital form. Audio input devices compare the electrical patterns produced by the speaker's voice to a set of prerecorded patterns and accept the sounds when a pattern is recognized. Sensors are devices that collect data directly from the environment for input into a computer system. Radio frequency identification use tags that incorporate microchips to transmit information about items and their location to special RFID readers.

A display screen monitor or CRT displays the output on a screen much like a television set. Printers produce printed copy of information output by the computer. There are impact printers (dot matrix) and non-impact printers (laser, inkjet, or thermal transfer). Audio output devices are voice output devices that convert digitally stored words into intelligent speech.

Ports provide connections to the central computer unit for peripheral devices, such as printers, modems, flash card readers, digital cameras, and synchronizing devices for PDAs. Serial ports send signals along the serial cable one bit at a time while parallel ports send their signals along parallel cables multiple bits at a time, much faster than serial connections. USB and Firewire ports are much faster than serial and parallel ports. USB technology permits the “daisy-chaining” of up to 127 devices through the use of USB hubs.

What is the difference between batch and online processing? Diagram the difference.

Batch processing involves grouping transactions together and then processing these transactions at some later point to update a master file. Online processing involves entering a transaction directly into the computer and processing it immediately. With online processing, information in the system is always up-to-date and current. Figure 6-6 compares and contrasts batch and online processing.

What is multimedia? What technologies are involved in multimedia?

Multimedia integrates two or more types of media, such as graphics, sound, voice, full motion video, still video, or animation into a computer-based application. Current technologies include computer, high-resolution monitors, audio, video, graphics, and streaming technologies. CD-ROM and DVD are important storage technologies for multimedia.

What is the difference between a mainframe, a minicomputer, a server, and a PC? Between a PC and a workstation?

The difference between these machines depends, to some degree, on size. The mainframe is bigger and faster, has more storage, and can allow more users than a PC. Big AS/400s are really mainframes. A big, fast PC with superior graphics capability is not much, if any, different from a workstation. Midrange computers are middle-sized and have larger memory, storage, and are multi-user. PCs are for single users, as are workstations. A server can be a mainframe or desktop computer, but specialized server computers are often used in the role. Servers store and process shared data. They also perform back-end functions not visible to users. An example is managing network activities. Workstations have faster speeds, better graphics capability, and bigger monitors than PCs. As the text explains, the lines between the types of computers are blurring.

Compare the client-server, network computer, and peer-to-peer models of computing.

The term client-server refers to a model for computing that splits processing between "clients" and "servers" on a network, assigning functions to the machine most able to

perform the function. Figure 6-7 shows how client-server works. A network computer is a thin client with minimal memory, storage, and processor power. A network computer does not store software or data. The peer-to-peer computing model is a form of distributed processing that links computers via the Internet or private networks so that they can share processing tasks. Each computer, or peer, is considered equal in terms of responsibilities, and each acts as a server to the others in the network. Unlike the client-server model, a dedicated file server is not required. However, network performance is generally not as good as with the client-server, especially under heavy loads.

What are the major types of software? How do they differ in terms of users and uses?

The major types of software are system software and application software. System software is concerned with the operating system, a special set of computer programs to manage and control the central processing unit and its peripheral equipment. System software acts as an intermediary between other software and the physical computer. Application software is a set of programs for accomplishing specific tasks or business functions required by end users. End users use application software to perform activities such as word processing, Web page development, and data management.

What is the operating system of a computer? What does it do? What roles do multiprogramming, virtual storage, time sharing, and multiprocessing play in the operation of an information system?

The operating system manages and controls the general computing environment and the activities of the computer system. It allocates and assigns computer resources (such as primary memory, input and output devices, and telecommunications links), schedules computer resources and jobs, and monitors computer system activities.

Multiprogramming is an operating system capability that permits multiple programs to share a computer system's resources at the same time. Only one program is actually using the CPU at any moment, but the computer's input and output facilities and portions of primary memory can be allocated to other programs. Although only one program is using the CPU at any one moment, multiple programs can be executing concurrently.

Virtual storage is a way of maximizing primary memory capacity for storing software programs or for primary storage to deal with programs that require more memory than is available. In virtual storage, a single program is broken down into a number of sections called pages, each of which has a relatively small size. Since only a section of a program is resident in primary memory, many more programs can be processed with limited primary memory, since the programs can be broken down into pages.

Time sharing is an operating system capability that enables many users to share computer resources at the same time. Each user uses the CPU for a tiny slice of time (approximately 2 milliseconds), but many users can be simultaneously connected to a CPU. Multiprocessing links together two or more CPUs to work in parallel in a single computer system.

List and describe the major PC operating systems.

Table 6-4 lists and describes the major PC operating systems. The table provides information about Windows XP, Windows 98/Me, Windows 2000, Windows CE, UNIX, Linux, OS/2, Palm OS, Mac OS, and DOS. You should focus student understanding on the facilities and powers of the different operating systems, the age of the systems, and the fact that Mac OS is an operating system for a different machine.

List and describe the major application programming languages for business. How do they differ from fourth-generation languages?

Table 6-5 summarizes the major application programming languages, including COBOL, C, C++, FORTRAN, BASIC, Pascal, and assembly language.

COBOL (COmmon Business Oriented Language) was developed in the early 1960s. It was designed with business in mind. It is used for processing large data files with alphanumeric characters and for performing repetitive tasks such as payroll. It is poor at complex, mathematical calculations. C and C++ are powerful and efficient languages developed at AT&T’s Bell Labs. They combine machine portability with tight control and efficient use of computer resources. C++ is object-oriented. FORTRAN (FORmula translator) is useful in processing numeric data and is used primarily for scientific and engineering applications. BASIC and Pascal are used primarily in the teaching of programming. Assembly language resembles machine language, but it substitutes mnemonics for 1s and 0s, making it easier to program (although it is perhaps the most difficult language). Assembly language is designed for a specific machine and specific microprocessors.

Fourth-generation languages are sophisticated languages that enable end users to perform programming tasks with little or no professional programmer assistance. They also enhance the productivity of professional programmers. For example, very high-level programming languages, query languages, or application generators have features that can be employed by end users or less skilled programmers and can dramatically increase application development productivity.

The seven categories of fourth-generation tools are PC software tools, query languages, report generators, graphics languages, application generators, application software packages, and very high-level programming languages. Table 6-6 provides a brief description of these categories.

The main differences between fourth-generation tools and conventional programming languages are the degree of user-friendliness and the ability to perform the same functions with fewer lines of program instructions. Many fourth-generation languages are nonprocedural or less procedural than conventional languages.

What is object-oriented programming? How does it differ from conventional software development?

Object-oriented programming combines data and specific procedures that operate on that data into an object. Instead of passing data to procedures, programs send a message for an object to perform a procedure that is already embedded in it. Programmers can focus on what they want an object to do, and the object decides

how to do it. Each object is an independent software building block that can be used in many different systems without changing the program code.

In traditional programming, data and procedures are treated as independent components and are not combined as in object-oriented programming. A separate programming procedure must be written every time someone wants to take an action on a particular piece of data. Procedures act on data the program passes to them.

What are Java, HTML, XBRL, and XML? Compare their capabilities. Why are they important?

Java is a programming language that delivers only the software functionality needed for a particular task. With Java, the programmer writes small programs called applets that can run on another machine on a network. With Java, programmers write programs that can execute on a variety of operating systems and environments. Further, any program could be a series of applets which are distributed over networks as they are needed and as they are upgraded.

HTML (Hypertext Markup Language) is the language of the Web. It is the language that is used to write Web pages, or as the text says, the page description language for Web pages. It is based on SGML, standard generalized markup language, which was originally a mainframe-based page markup language. The hypertext part of the language is in the links to other Web pages or sites. It has become significant because of the importance of the World Wide Web. Most documents on the World Wide Web are written in HTML.

XML, eXtensible Markup Language, is another standard which is an extension of HTML that allows content which is live and more structured, thereby allowing manipulation of data. XBRL (eXtensible Business Reporting Language) is a variant on XML, with tags defined to permit analysis of business reports. Other such markup languages are being developed, too.

They are important because the Web is important, and because they provide a standard format for data exchange and for Web page descriptions.

Name and describe the most important PC productivity software tools.

The most important and widely used PC productivity software includes word processing, spreadsheet, data management, presentation graphics, integrated software packages, e-mail, Web browsers, and groupware.

Word processing software allows users to make changes in documents electronically in memory, eliminating the need to retype entire pages to make corrections. It often includes advanced features such as spelling checkers and thesaurus programs. Spreadsheets provide computerized versions of traditional financial modeling tools such as the accountant's columnar pad. Spreadsheets are composed of a grid of columns and rows and are good at performing calculations on interrelated pieces of data. Data management software is used for creating and manipulating lists and for combining information from different fields. Data management software typically has facilities for creating files and databases to store, modify, and manipulate data for reports and queries. Presentation graphics software allows users to create

professional quality graphics presentations. Integrated software packages combine the functions of the most important microcomputer software packages, such as spreadsheets, word processing, graphics, and data management. E-mail software is used for computer-to-computer exchange of messages. It is an important tool for communication and collaborative work. Web browsers are easy-to-use software tools for accessing the Web and the Internet. Groupware provides functions and services that support the collaborative activities of work groups.

Name and describe the kinds of software that can be used for enterprise integration.

Enterprise software, middleware, and enterprise application integration software are kinds of software that can be used for enterprise integration. Enterprise software consists of a set of interdependent modules for applications such as sales and distribution, financial accounting, investment management, materials management, production planning, plant maintenance, and human resources that allow data to be used by multiple functions and business processes for more precise organizational coordination and control. The modules can communicate with each other directly or by sharing a common repository of data. Contemporary enterprise systems use a client-server computing architecture. Major enterprise software vendors include SAP, Oracle, PeopleSoft, and Baan. These vendors are now enhancing their products to provide more capabilities for supply chain management and exchange of data with other enterprises. Middleware connects two disparate applications, allowing them to communicate with each other and to exchange data. Enterprise application integration software ties together multiple applications to support enterprise integration. Enterprise application integration software allows system developers to graphically model systems and define rules that the applications should follow to make the processes work. Then the software will generate the underlying program instructions to link the existing applications to each other.

List and describe the principal issues in managing hardware and software assets.

Understanding the new technology requirements for electronic commerce and the digital firm, determining the total cost of ownership of technology assets, and determining whether to own and maintain technology assets or use external technology service providers for the firm's IT infrastructure are the principal issues in managing hardware and software assets.

Electronic commerce and the digital firm place new technology requirements on the organization. Heavy demands are being made on both hardware and software because organizations are replacing many manual and paper-based processes with electronic ones. For example, the flood of digital transactions is making heavy demands on the firm. Two areas that IS must pay attention to are capacity planning and scalability.

When selecting and managing an organization's hardware and software assets, management must consider both direct and indirect costs. To determine the total costs of ownership, an organization must consider the costs associated with hardware acquisition, software acquisition, installation, training, support, maintenance, infrastructure, downtime, and space and energy.

Once you know the total cost of ownership, you can then find out what the cost would be to have external service providers own and maintain the hardware and software for you. If you find it is cheaper to turn to external IT providers, you then will need to look to SSPs, ASPs, and other types of external providers. However, you must also determine whether the function is so strategic that it must be maintained internally.Why is file management important for overall system performance?

Information cannot be used effectively if it is stored in a disorganized, inflexible manner. Without proper file management, it may be difficult and even impossible to extract information from an automated system. Retrieving a simple report can be timely and costly if the information is not properly managed. File management must also be flexible enough to accommodate new pieces of information or to combine different pieces of information in changing ways. When computer files are poorly managed, poor performance, high costs, and minimal flexibility will result.

List and describe each of the components in the data hierarchy.

Figure 7-1 shows the data hierarchy. The data hierarchy includes bits, bytes, fields, records, files, and databases. Data are organized in a hierarchy that starts with the bit, which is represented by either a 0 (off) or a 1 (on). Bits can be grouped to form a byte to represent one character, number, or symbol. Bytes can be grouped to form a field, such as a name or date, and related fields can be grouped to form a record. Related records can be collected to form files, and related files can be organized into a database.

Define and explain the significance of entities, attributes, and key fields.

An entity is a person, place, thing, or event on which information can be obtained. An attribute is a piece of information describing a particular entity. A key field is a field in a record that uniquely identifies instances of that unique record so that it can be retrieved, updated, or sorted. For example, a person’s name cannot be a key because there can be another person with the same name whereas a social insurance number is unique. Also a product name may not be unique, but a product number can be designed to be unique.

List and describe some of the problems of the traditional file environment.

Problems with the traditional file environment include data redundancy and confusion, program-data dependence, lack of flexibility, poor security, and lack of data sharing and availability. Data redundancy is the presence of duplicate data in multiple data files. In this situation, confusion results because the data can have different meanings in different files. Program-data dependence is the tight relationship between data stored in files and the specific programs required to update and maintain those files. This dependency is very inefficient, resulting in the need to make changes in many programs when a common piece of data, such as the postal codeformat, changes. Lack of flexibility refers to the fact that it is very difficult to create new reports from data when needed. Ad hoc reports are impossible to generate; a new report could require several weeks of work by more than one programmer and the creation of intermediate files to combine data from disparate files. Poor security results from the lack of control over the data because the data are so widespread. Data sharing is virtually impossible because it is distributed in so many different files around the organization.

Define the terms database and database management system.

A database is a collection of data organized to service many applications efficiently by storing and managing data so that they appear to be in one location. It also minimizes redundant data. A database management system (DBMS) is special software that permits an organization to centralize data, manage them efficiently, and provide access to the stored data by application programs.

Name and briefly describe the three components of a DBMS.

Data definition language, data manipulation language, and data dictionary are the three components of a database management system. The data definition language is the formal language used by programmers to specify the content and structure of the database. The data manipulation language is the language used to manipulate data in the database. It contains commands that permit end users and programming specialists to extract data from the database to satisfy information requests and develop applications. The data dictionary is an automated or manual file that stores definitions of data elements and data characteristics such as usage, physical representation, ownership, authorization, and security.

What is the difference between logical and physical views of data?

A logical view of data is the way data are perceived by end users or business specialists. A physical view of data is the way the data are actually organized and structured on physical storage media.

List some benefits of a DBMS.

A DBMS can reduce the complexity of the information systems environment, reduce data redundancy and inconsistency, eliminate data confusion, create program-data independence, reduce program development and maintenance costs, enhance flexibility, enable the ad hoc retrieval of information, improve access and availability of information, and allow for the centralized management of data, their use, and security.

Describe the principal types of databases and the advantages and disadvantages of each.

The principal types of databases discussed in the textbook include relational, hierarchical, network, and object-oriented. The relational database model organizes data into two dimensional tables. The relational model can relate any piece of information in one table to any piece of information in another table as long as the two tables share a common data element (such as an employee number). Because relational DBMS can easily combine information from different sources, they are more flexible than the other DBMS structures. Access paths to data are not pre-specified, so they can easily respond to ad-hoc inquiries with less extensive programming. The main problem with relational DBMS is poor processing efficiency. Response time can be very slow if large numbers of accesses to data are required to select, join, and extract data from tables. Developments in relational technology, such as indexing, are starting to overcome this problem.

The hierarchical database model stores data logically in a vertical hierarchy resembling a tree-like structure. An upper record is connected logically to a lower record in a parent-child relationship. A parent segment can have more than one child, but a child can only have one parent. Hierarchical DBMS are good for treating one-to-many relationships. They can store large numbers of segments and process information efficiently, but they can only deliver information if a request follows the linkages of the hierarchy. Their disadvantages are their low user-friendliness, inflexibility, and programming complexity. They are good for high-volume, rapid response systems, such as airline reservation systems.

The network model stores data logically in a structure that permits many-to-many relationships. Through extensive use of pointers, a child segment can have more than one parent. Network DBMS reduce redundancy and, like hierarchical databases, they process information efficiently. However, they are inflexible and are very complex to maintain and program.

The object-oriented DBMS stores data and the procedures acting on the data as objects that can be automatically retrieved and shared. Object-oriented databases can store complex types of information, but are slower at processing larger numbers of transactions when compared to relational DBMS. Object-relational databases combine the capabilities of the relational database with the storage capabilities of an object-oriented database.

Name and describe the three most important SQL commands.

The three most important SQL commands are SELECT, FROM, and WHERE. The SELECT statement lists the columns from tables that will appear in the result table. The FROM statement identifies the tables or views from which the columns will be selected. The WHERE statement specifies the conditions for selecting specific rows within a single table and conditions for joining multiple tables.

What is normalization? How is it related to the features of a well-designed relational database?

Normalization is the process of creating small stable data structures from complex groups of data when designing a relational database. Normalization streamlines relational database design by removing redundant data such as repeating groups. A well-designed relational database will be organized around the information needs of the business and will probably be in some normalized form. A database that is not normalized will have problems with insertion, deletion, and modification.

What is a distributed database, and what are the two main ways of distributing data?

A distributed database is one that is stored in more than one physical location. A distributed database can be partitioned or replicated. When partitioned, the database is divided into partitions, so that each remote processor has access to the data that it needs to serve its local area. These databases can be updated locally and later justified with the central database. With replication, the database is duplicated at various remote locations. Figure 7-15 shows how a database is distributed.

What are the four key organizational elements of a database environment? Describe each briefly.

The four key organizational elements of a database environment are data administration, data planning and modelling methodology, database technology and management, and users. Data administration is the organizational function for managing the organization's data resources and is concerned with information policy, data planning, maintenance of data dictionaries, and data quality standards.

A data planning and modelling methodology focuses on enterprise-wide planning and analysis of data. The database technology and management element is responsible for defining and organizing the structure and content of the database as well as maintaining the database. The user element references the fact that end users have a wider role with DBMS than in traditional systems and must be trained.

Describe the capabilities of online analytical processing (OLAP) and datamining.

Online analytical processing and datamining enable the manipulation and analysis of large volumes of data from many perspectives, for example, sales by item, by department, by store, by region, in order to find patterns in the data. Such patterns are difficult to find with normal database methods, which is why a data warehouse and datamining are usually parts of OLAP.

Datamining uses a variety of techniques to find hidden patterns and relationships in large pools of data and to infer rules from them that can be used to predict future behavior and guide decision making. For example, Hudson’s Bay Company uses datamining to analyze data generated by visitors to its Web site. It uses the results to customize advertising and content to individual customers and to improve online customer service.

What is a data warehouse? How can it benefit organizations?

A data warehouse is a database with archival, querying, and data exploration tools (i.e., statistical tools) and is used for storing historical and current data of potential interest to managers throughout the organization and from external sources (e.g. competitor sales or market share). The data originate in many of the operational areas and are copied into the data warehouse as often as needed. The data in the warehouse are organized according to company-wide standards so that they can be used for management reporting and analysis. Data warehouses support looking at the data of the organization through many views or directions. A data warehouse allows managers to look at products by customer, by year, by salesperson, essentially different slices of the data. Normal operational databases do not permit these different views.

What is a hypermedia database? How does it differ from a traditional database? How is it used for the Web?

Traditional databases store only homogeneous data that can be easily structured into predefined data fields and records. They are not well suited for handling other types of data such as procedures or graphics. Hypermedia databases store chunks of information in linked nodes. These nodes can contain text, graphics, sound, full-motion video, or executable computer programs. These databases are less structured than traditional DBMS and contain a wider array of data. The nodes of a hypermedia database can be linked in any kind of relationship established by the database creator. The hypermedia database approach enables users to access topics on a Web site in whatever order they wish. Web sites store information as interconnected pages containing text, sound, video, and graphics using a hypermedia database.

How can users access information from a company’s internal databases via the Web?

The user uses Web browser software on his or her client PC to access a corporate Web site over the Internet. The Web browser software requests data from the organization’s database, using HTML commands to communicate with the Web server. Because many back-end databases cannot interpret commands written in HTML, the Web server passes these requests for data to special middleware software that then translates HTML commands into SQL so that they can be processed by the DBMS working with the database. The DBMS receives the SQL requests and provides the required data. The middleware transfers information from the organization’s internal database back to the Web server for delivery in the form of a Web page to the user. The software working between the Web server and the DBMS can be an application server, a custom program, or a series of software scripts.

Why has telecommunications technology become such an important issue for managers and organizations?

Telecommunications technology serves as the foundation for a digital business environment, enabling electronic commerce and the digital economy. Businesses are using telecommunications to coordinate business processes, communicate more effectively, and facilitate relationships with suppliers, customers, and business partners.

What is a telecommunications system? What are the principal functions of all telecommunications systems?

A telecommunications system is a collection of compatible hardware and software arranged to communicate information, such as text, graphic images, voice, or video, from one location to another. The principal functions of all telecommunications systems include the transmission of information, establishing an interface between sender and receiver, routing messages along the most efficient path, performing elementary information processing to get the right message to the right receiver, checking and editing transmitted information for errors and formats, converting messages from the speeds of one device to those of another, controlling the flow of information, routing messages, and maintaining overall network structure.

Name and briefly describe each of the components of a telecommunications system.

Figure 8-1 identifies the components of a telecommunications system. The components of a telecommunications system include computers to process information; terminals and other input/output devices to send or receive data; communications channels to link sending and receiving devices in networks; communications processors to provide support functions for data transmission; and communications software to control input and output activities and to manage other functions of the communications network.

Distinguish between analog and digital signals.

An analog signal is represented by a continuous wave that passes through a communications medium and is used primarily for voice communication. A digital signal consists of separate discrete waves and is used for data and voice communication.

Name the different types of telecommunications transmission media and compare them in terms of speed and cost.

Table 8-1 summarizes typical speeds and costs for telecommunications transmission media. Typical speeds and costs for several of the transmission media are provided below.

Medium Speed Cost

Twisted wire up to 100 Mbps LowMicrowave up to 200+

MbpsSatellite up to 200+

MbpsCoaxial cable up to 200 MbpsFibre optic cable

up to 6+ Tbps High

Name and describe the technologies used for wireless transmission.

Common technologies for wireless transmission include microwave transmission, communication satellites, pagers, cellular telephones, personal communication

services, smart phones, personal digital assistants, and mobile data networks. A microwave system is a high-volume, long-distance, point-to-point transmission in which high-frequency radio signals are transmitted through the atmosphere from one terrestrial transmission station to another.

A communications satellite system transmits data using orbiting satellites that serve as relay stations for transmitting microwave signals over very long distances. A paging system is a wireless transmission technology in which the pager beeps when the user receives a message; it is used to transmit short alphanumeric messages.

Cellular phones are devices that transmit voice or data using radio waves to communicate with the radio antennas placed within adjacent geographic areas called cells. Personal communication services are a wireless cellular technology that uses lower power, higher frequency radio waves than cellular technology and can be used with smaller size telephones.

A smart phone is a wireless phone with voice, text, and Internet capabilities. Personal digital assistants are small, pen-based, handheld computers with built-in wireless telecommunications capable of entirely digital communications transmission. Mobile data networks are wireless networks that enable two-way transmission of data files cheaply and efficiently.

What are optical networks? Why are they becoming important?

Optical networks are networking technologies for high-speed transmission of data in the form of light pulses. They are becoming important because they can transmit all types of traffic (voice, data, and video) over fibre cables and provide the massive bandwidth for new types of services and software. There is no degradation in quality with optical networks.

What is the relationship between bandwidth and a channel’s transmission capacity?

Bandwidth is the range of frequencies that can be accommodated on a particular telecommunications medium. The greater the range of frequencies that the telecommunications transmission medium can accommodate, the greater the medium's telecommunications transmission capacity.

Name and briefly describe the different kinds of communications processors.

A front-end processor is a small computer (or programmable minicomputer) dedicated to communications management. It is attached to the main or host computer in a computer system. It performs such special communications processing as error control, formatting, editing, controlling and routing, and speed and signal conversion. A concentrator is a programmable telecommunications computer that collects and temporarily stores messages from terminals to send in economical batches. A controller (often a specialized minicomputer) supervises communications traffic between the CPU and peripheral devices such as terminals and printers, managing messages from these devices and communicating them to the CPU, and routing output from the CPU to the appropriate peripheral device.

A multiplexer enables a single communications channel to carry data transmissions from multiple sources simultaneously. It divides up the telecommunications channel into multiple channels so that multiple transmission devices can share the channel. A modem translates a computer's digital signal into analog for transmission over ordinary telephone lines and translates the analog signal back into digital form for reception by a computer at the other end.

Name and briefly describe the three principal network topologies.

The three principal network topologies are star, bus, and ring. A star network consists of a central host computer connected to a number of smaller computers or terminals. All communication between points in the network must pass through the host computer. A bus network links a number of computers by a single circuit made of twisted wire, cable, or optical fibre. All messages are transmitted to the entire network and can travel in both directions along the cable. There is no need to have a host computer controlling the network. The ring network is similar to a bus network except that the connecting wire, cable, or optical fibre forms a ring. Data are passed along the ring from one computer to another, flowing in a single direction, and the network does not rely on a central host computer.

Distinguish between a PBX and a LAN.

A PBX utilizes the firm's own telephone system, is based on the firm's internal telephone network and requires no special wiring. A LAN is more general-purpose and is not tied to a telephone network, but requires special wiring installed by the organization. A LAN usually has a higher transmission capacity and is more expensive to install than a PBX.

What are the components of a typical LAN? What are the functions of each component? Describe the technologies for wireless LANs.

LAN technology consists of cabling (twisted wire, coaxial, or fibre-optic cable) or wireless technology that links individual computer devices, network interface cards, and software to control LAN activities. The LAN network interface card specifies the data transmission rate, the size of message units, the addressing information attached to each message, and network topology. Network operating systems route and manage communications on the network and coordinate network resources.

Wi-Fi and Bluetooth are two technologies for establishing wireless LANs. Wi-Fi (also known as 802.11b, the number of the standard is meets) is a standard for high-speed wireless LANs that can transmit up to 11 Mbps within a 100-metre area and provides a low-cost flexible technology for connecting work groups and providing mobile Internet access. Bluetooth is a standard for wireless personal area networks that can transmit up to 720 Kbps within a 10-metre area.

List and describe various network services.

Value-added networks, packet switching, frame relay, asynchronous transfer mode (ATM), Integrated Services Digital Network (ISDN), digital subscriber line (DSL), cable modem, and T1 are major network services. Table 8-2 summarizes these services.

A value-added network is a private, multipath, data-only, third-party-managed network that multiple organizations use on a subscription basis. Packet switching maximizes utilization of telecommunications lines by dividing up lengthy blocks of data into bundles (of approximately 128 bytes each) called packets. Control information is attached to each packet rather than to each bit, increasing speed and efficiency of transmission.

Frame relay is a shared network service that is faster but less reliable than packet switching. Data are chopped into frames which are similar to packets but without the error checking. Frame relay is for organizations with reliable telecommunication lines that would not require retransmission for errors.

ATM technology parcels information into uniform cells, eliminating the need for protocol conversion and enabling the user to switch seamlessly between voice, data, images, and video; it also ties LANs and WANs together more easily. Integrated Services Digital Network is an international standard for putting voice, data, and video on a single link using existing telephone lines.

The digital subscriber line technologies provide high-capacity transmission over existing copper telephone lines. There are two varieties—asynchronous digital subscriber line (ADSL) and symmetric digital subscriber line (SDSL). ADSL receives at a very fast speed, up to 9 megabits per second, and sends at up to 64O kilobits per second. The symmetric digital subscriber line service sends and receives at up to 3 megabits per second. Cable modems use cable TV lines to transmit data. A T1 line is a high-capacity telephone line that transmits at 1.544 megabits per second.

Distinguish between a WAN and a VAN.

A WAN is a private wide area telecommunications network, spanning a large geographical distance. WANs may use a variety of media and a combination of switched and dedicated lines. With a WAN, the user is responsible for establishing the most efficient routing of messages, error checking, editing, developing protocols, and managing telecommunications. A VAN is a value-added network. This is a private but shared multipath, data-only, third-party-managed network that multiple organizations use on a subscription basis.

Define the following: modem, baud, protocol, converged network, and broadband.

A modem translates digital signals into analog signals and back again so that they can be transmitted through telecommunications media that handle only analog signals. Baud is a change in signal from positive to negative or vice versa that is used as a measure of transmission speed. A protocol is a set of rules and procedures that governs transmission between the components in a network. A converged network is a network with technology to enable voice and data to run over a single network. Broadband is a high-speed transmission technology and designates a communications mechanism that can transmit multiple channels of data simultaneously.

Name and describe the telecommunications applications that can support electronic commerce and electronic business.

Telecommunications applications that support electronic commerce and business include electronic mail, groupware, voicemail, facsimile machines, digital information services, teleconferencing, videoconferencing, and electronic data interchange.

Electronic mail is the computer-to-computer exchange of messages. Groupware is a specialized form of teleconferencing and dataconferencing that allows individuals working in different locations to work together on common documents and projects. Voicemail is a system that digitizes spoken messages, transmits them over a network, and stores the message for later retrieval. The system includes a range of capabilities including saving messages and routing them to other parties. Facsimile machines transmit documents containing both text and graphics over ordinary telephone lines using a scanner to digitize the document.

Teleconferencing refers to the ability to confer with a group of people simultaneously using the telephone or electronic mail group communication software. Dataconferencing refers to teleconferencing in which two or more users are able to edit and modify data files simultaneously. Videoconferencing is teleconferencing that includes a video portion so that the individuals can actually see each other despite their distance.

Digital information services enable users to retrieve information, such as stock market data, periodicals, competitor data, legal research, and news articles, from outside the firm. Distance learning refers to education or training delivered over a distance to individuals in one or more locations. E-learning refers to instruction delivered online using the Internet or private networks. Electronic data interchange is the direct computer-to-computer exchange between two organizations of standard business transaction documents such as invoices or purchase orders.

Why can an information system be considered a planned organizational change?

An information system is a sociotechnical entity, an arrangement of both technical and social elements. Information systems change involves hardware and software, but in addition, it involves changes in jobs, skills, management, and organization. When we design a new information system, we are redesigning the organization, reordering its technical and social elements. This must be well thought out and planned in accordance with an appropriate methodology.

What are the major categories of an information systems plan?

The major categories of an information systems plan can be found in the MIS in Action, Manager’s Toolkit box. The major categories include Purpose of the Plan, Strategic Business Plan, Current Systems, New Developments, Management Strategy, Implementation Plan, and Budget Requirements.

How can enterprise analysis and critical success factors be used to establish organization-wide information system requirements?

Both approaches attempt to gain a clear understanding of the organization's long- and short-term information requirements. Both use interviews of managers to gain the information needed. And both rest ultimately on the strategy of the company.

Enterprise analysis approaches the problem by looking at the entire organization in terms of organizational units, functions, processes, and data elements. This approach takes a large sample of managers and asks them how they use information, where they get the information, what their environment is like, what their objectives are, how they make decisions, and what their data needs are. The data are aggregated into subunits, functions, processes, and data matrices. From this information, conclusions are drawn about the organization-wide information systems requirements.

The CSF approach interviews a smaller number of top managers who are asked to identify their goals and the objectives essential to those goals. These critical success factors (CSFs) are aggregated to develop a picture of the overall organization's CSFs. Systems that are needed to deliver these critical success factors are then developed.

Describe each of the four kinds of organizational change that can be promoted with information technology.

Information technology enables automation, rationalization, reengineering, and paradigm shifts. Automation uses the computer to speed up the performance of existing tasks. This approach to organizational change changes the organization less than the other three. It may release staff to other jobs, reduce the number of employees needed, or enable the organization to process more transactions. Rationalization of procedures refers to the streamlining of standard operating procedures, eliminating obvious bottlenecks, so that automation makes operating procedures more efficient. By making such changes, rationalization can eliminate some tasks and enable the organization to make more changes than automation, but the organization still has not made changes in the goals or strategy of the company.

Business process reengineering refers to the radical redesign of business processes, combining steps to cut waste and eliminating repetitive, paper-intensive tasks in order to improve cost, quality, and services, and to maximize the benefits of information technology. This is a more powerful type of organizational change because an organization can use it to rethink and streamline its business processes and to improve speed, service, and quality. A paradigm shift is a radical reconceptualization of the nature of the business and the nature of the organization. The strategy of the business can be changed, and sometimes even the business the company is in.

What is business process reengineering? What steps are required to make it effective?

The textbook defines business process reengineering as the radical redesign of business processes, combining steps to cut waste and eliminate repetitive, paper-intensive tasks in order to improve cost, quality, and service, and to maximize the benefits of technology. Business process reengineering can be used to reshape how the organization carries out its business, even the nature of the business itself. The steps include developing the broad business vision and process objectives, identifying the processes to be redesigned, understanding and measuring the performance of existing processes, understanding the opportunities for applying information technology, and developing a prototype of the new process. Examine Figure 10-3 with the students to help them understand both the approach and the impact of business process reengineering.

What is the difference between systems analysis and systems design? What activities are involved in each?

Systems analysis is the analysis of the problem that the organization is trying to solve with an information system. It consists of defining the problem, identifying its causes, specifying solutions, and identifying the information requirements that must be met by a system solution. Systems design shows how the system will fulfill the information requirements specified in system analysis.

What are information requirements? Why are they difficult to determine correctly?

Information requirements involve identifying who needs what information, where, when, and how. They define the objectives of the new or modified system and contain a detailed description of the functions the new system must perform. Gathering information requirements is perhaps the most difficult task of the systems analyst, and faulty requirements analysis is a leading cause of systems failure and high systems development costs.

Information requirements are difficult to determine because business functions can be very complex and poorly defined. A manual system or a routine set of inputs and outputs may not exist. Procedures may vary from individual to individual, and users may disagree on how things are or should be done. Defining information requirements is a laborious process, requiring a great deal of research and often several reworks by the analyst.

Why is the testing stage of systems development so important? Name and describe the three stages of testing for an information system.

Testing is critical to the success of a system because it is the only way to ascertain whether the system will produce the right results. Three stages of information system testing are unit testing, system testing, and acceptance testing. Unit testing refers to separately testing or checking the individual programs. With system testing, the entire system as a whole is tested to determine whether program modules are interacting as planned. With acceptance testing, the system undergoes final certification by end users to ensure that it is ready for installation.

What role do programming, conversion, production, and maintenance play in systems development?

Programming translates the design specification into software, thus providing the actual instructions for the computer. Programming constitutes a smaller portion of the systems development cycle than design and perhaps even testing activities. Conversion is the process of changing from the old system to the new system. Production is the operation of the system once it has been installed and conversion is complete. The system will be reviewed during production by both users and technical specialists to determine how well it has met its original objectives and to decide whether any revisions or modifications are needed. Maintenance is modifications to hardware, software, documentation, or procedures to a production system to correct errors, meet new requirements, and improve processing efficiency.

What is the traditional systems development lifecycle? Describe each of its steps and its advantages and disadvantages for systems developing.

The traditional systems lifecycle is a formal methodology for managing the development of systems and is still the principal methodology for medium and large projects. The overall development process is partitioned into distinct stages, each of which consists of activities that must be performed to fashion and implement an information system. The stages are usually gone through sequentially with formal “sign-off” agreements among end users and data processing specialists to validate that each stage has been completed. Users, managers, and data processing staff have specified responsibilities in each stage. The approach is slow, expensive, inflexible, and is not appropriate for many small desktop systems.

The systems development lifecycle consists of systems analysis, systems design, programming, testing, conversion, and production and maintenance. Systems analysis is the phase where the problem that the organization is trying to solve is analyzed. Technical specialists identify the problem, gather information requirements, develop alternative solutions, and establish a project management plan. Business users provide information requirements, establish financial or operational constraints, and select the solution. During systems design, technical specialists model and document design specifications and select the hardware and software technologies for the solution. Business users approve the specifications.During the programming phase, technical specialists translate the design specifications into software for the computer. During the testing phase, technical specialists develop test plans and conduct unit, system, and acceptance tests. Business users provide test data and scenarios and validate test results.During the conversion phase, technical specialists prepare a conversion plan and supervise conversion. Business users evaluate the new system and decide when the new system can be put into production. During the production and maintenance phase, technical specialists evaluate the technical performance and perform maintenance. Business users use the system and evaluate its functional performance.

The advantages of using this method for developing information systems include it is highly structured; it has a rigorous and formal approach to requirements and specifications and tight controls over the system development process; it is appropriate for developing large transaction processing and management information systems and for developing complex technical systems. The disadvantages include it is very costly and time-consuming; it is inflexible and discourages change even though requirements will change during the project due to the long time this method requires; it is ill-suited to decision-oriented applications which can be rather unstructured and for which requirements may be difficult to define.

What do we mean by information system prototyping? What are its benefits and limitations? List and describe the steps in the prototyping process.

Information system prototyping is an explicitly interactive system design methodology that develops an experimental model of a system as a means of determining information requirements. Prototyping develops an experimental system quickly and inexpensively for demonstration and evaluation so that users can better determine information requirements. Preliminary models of a system or important parts of the

system are developed rapidly for users to experiment with. The prototype is modified and refined until it conforms precisely to what users want. Information requirements and design are determined dynamically as users interact with and evaluate the prototype.

Prototyping is most valuable when requirements are uncertain and cannot be entirely prespecified or when the appropriate design solution is unclear. Prototyping is especially helpful for designing end-user interfaces (screens and reports) and for determining elusive requirements of decision-support type applications. Prototyping can help reduce implementation costs by capturing requirements more accurately at an earlier point in the implementation process. It is not so useful for a very structured, well-understood, or routine problem.

It is best suited for smaller applications oriented toward simple data manipulation. Large systems with complex processing may only be able to have limited features prototyped. A prototype may be developed so rapidly that design is not well thought out or must be reworked for a production environment. The problem arises when the prototype is adopted as the production version of the system without careful analysis and validation. Prototypes are developed so rapidly that documentation and testing are glossed over. The system is so easily changed that documentation may not be kept up-to-date.

The steps in prototyping include identifying the user's basic requirements; developing a working prototype of the system outlined in the basic requirements, using the prototype, and revising and enhancing the prototype based on the users' reaction. The third and fourth steps are repeated until users are satisfied with the prototype.

What is an application software package? What are the advantages and disadvantages of developing information systems based on software packages?

An application software package is a set of prewritten, precoded application software programs that are commercially available for sale or lease. Packages range from very simple programs to very large and complex systems, encompassing hundreds of programs. Packages are normally used when functions are common to many companies, data processing resources, for in-house development, are in short supply, or when desktop microcomputer applications are being developed for end users.

Software packages provide several advantages: (1) the vendor has already established most of the design that may easily consume up to 50 percent of development time; (2) programs are pre-tested, cutting down testing time and technical problems; (3) the vendor often installs or assists in the installation of the package; (4) periodic enhancement or updates are supplied by the vendor; (5) vendors also maintain a permanent support staff well-versed in the package, reducing the need for individual organizations to maintain such expertise in-house, and (6) the vendor supplies documentation.

The usage of software packages has several disadvantages: (1) there are high conversion costs for systems that are sophisticated and already automated; (2) packages may require extensive customization or reprogramming if they cannot easily meet unique requirements, and (3) a system may not be able to perform many functions well in one package alone.

What do we mean by end-user development? What are its advantages and disadvantages? Name some policies and procedures for managing end-user development.

End-user development refers to the development of information systems by end users with minimal or no assistance from professional systems analysts or programmers. This is accomplished through sophisticated "user-friendly" software tools and gives end users direct control over their own computing.

Advantages include improved requirements determination, realizing large productivity gains when developing certain types of applications, enabling end users to take a more active role in the systems development process, many end-user systems can be used for prototyping, and some have new functions such as graphics, modelling, and ad hoc information retrieval.

Disadvantages include not being suited for large transaction-oriented applications or applications with complex updating requirements, standards for testing and quality assurance may not be applied, and proliferation of uncontrolled data and private information systems.

End-user development is suited to solving some of the backlog problem because the end users can develop their needed applications themselves. It is suited to developing low-transaction volume systems. End-user development is valuable for creating systems that access data for such purposes as analysis (including the use of graphics in that analysis) and reporting. It can also be used for developing simple data-entry applications.

Policies and procedures to manage end-user development include the following:

The organization must establish sufficient support facilities for end-user computing: information centers or distributed end-user computing centers.

Training and support should be targeted to the specific needs of those being trained.

End-user application development should not be allowed to be undertaken randomly but should be incorporated into the organization's strategic plan.

Management should develop controls over end-user computing in the following areas:

Cost justification of end-user information system project.

Hardware and software standards for user-developed applications.

Company-wide standards for microcomputers, word processing software, database management systems, graphics software, and query and reporting tools.

Quality assurance reviews that specify whether the end-user systems must be reviewed by information systems and internal audit specialists.

Control for end-user developed applications covering testing, documentation, accuracy, and completeness of input and update, backup, recovery and supervision.

Critical applications that supply data to other important systems should be flagged and subjected to more rigorous standards.

What is outsourcing? Under what circumstances should it be used for developing information systems?

Outsourcing is the process of turning over an organization's computer centre operations, telecommunications networks, or applications development to external vendors who provide these services. Outsourcing is an option often considered when the cost of information systems technology has risen too high. Outsourcing is seen as a way to control costs or to develop applications when the firm lacks its own technology resources to do this on its own. It is seldom used for a system that is strategically important.

What is the difference between object-oriented software development and traditional systems development? What are the advantages of using object-oriented software development in developing systems?

The traditional structured methodology focuses on what the new system is intended to do and then develops the procedures and data to do it. Object-oriented development de-emphasizes system procedures and instead creates a model of a system composed of individual objects that combine data and procedures. The objects are independent of any specific system. These objects can then be placed into any system being developed that needs to make use of the data and functions. In addition, in traditional structured methodologies all work is done serially, with work on each phase begun only when the previous phase is completed. Object-oriented development theoretically allows simultaneous work on design and programming. These systems usually are easier to develop and more flexible. Moreover, any objects created this way are reusable for other programs.

What is rapid application development (RAD)? How can it help system developers?

RAD is a process for developing systems in a very short time period by using prototyping, fourth-generation tools, and close teamwork among users and systems specialists. RAD allows the creation of working software in a very short time through objects and automation of much of the code generation. Usually they depend on interfaces to databases.

What are Web services? How can they help firms develop and enhance their information systems?

Web services are software components that are deliverable over the Internet. They enable one application to communicate with another with no translation required. They allow this communication and sharing of data regardless of operating system, programming language, or client device. The benefit is the ease of enabling the exchange of data and the major savings that result when the traditional translations no longer have to be created or maintained.

Why are computer systems more vulnerable than manual systems to destruction, fraud, error, and misuse? Name some of the key areas where systems are most vulnerable.

Computer systems tend to be more vulnerable to destruction, error, and fraud than manual systems for the following reasons:

Data is stored electronically, where it is not immediately visible or easily audited.

Data is concentrated in electronic files. Effects of a disaster such as a hardware malfunction, power outage, or fire can be more extensive. An organization's entire record-keeping system could be destroyed.

There may not be a visible trail to indicate what occurred for every computer process.

Operation of automated systems requires specialized technical expertise. Unless the systems are properly protected, it may be easy for programmers and computer operators to make unauthorized changes.

Data files can be accessed and manipulated directly in online systems.

Data can be stolen, corrupted, or destroyed by hackers and computer viruses.

Errors in data can be entered.

Errors can be accidentally inserted when desired updates are installed.

Today many programs can be accessed through telecommunications, and telecommunications can produce errors in data transmission.

Hardware and software can fail.

Purposeful and accidental problems, such as programming and data errors, can occur by personnel.

Individuals (or groups) can steal data, services, and equipment.

Key areas where systems are most vulnerable include: hardware or software failure and errors; personnel actions; terminal access; fire or electrical hazards; user errors; theft of services, data, and equipment; program changes; and telecommunications problems.

Name some features of online information systems that make them difficult to control.

Several features of online information systems that make them difficult to control include the following:

There is a greater chance of unauthorized access or manipulation of data directly.

Telecommunications links magnify the opportunities for unauthorized access and penetration from anywhere in the world, and there are many points at which data can be intercepted.

Hardware, software, and organizational arrangements are more complex for such systems.

How can poor software and data quality affect system performance and reliability? Describe two software quality problems.

Software can fail to perform, perform erratically, or give erroneous results because of undetected bugs. A control system that fails to perform can mean medical equipment that fails or telephones that do not carry messages or allow access to the Internet. A business system that fails means customers are under- or over-billed. Or, it could

mean that the business orders more inventory than it needs, or an automobile’s braking system may fail.

Major quality problems are the bugs or defects caused by incorrect design. The other problem is maintenance of old programs caused by organizational changes, system design flaws, and software complexity. Bugs in even mildly complex programs can be impossible to find in testing, making them hidden bombs. See Table 11-3 for examples of data quality problems.

What are controls? Distinguish between general controls and application controls.

Controls are the methods, policies, and procedures that ensure protection of the organization's assets, the accuracy and reliability of its records, and operational adherence to management standards. General controls establish a framework for controlling the design, security, and use of computer programs throughout an organization. Application controls are specific controls unique to each computerized application. Both general and application controls consist of manual and automated procedures.

Name and describe the principal general and application controls for computerized systems.

Six principal general controls are mentioned in the chapter, including software controls, hardware controls, computer operations controls, data security controls, controls over the system implementation process, and administrative controls. Table 14-4 summarizes these principal general controls. Software controls monitor the use of system software and prevent unauthorized access of software programs, system software, and computer programs. Hardware controls ensure computer physical security. Computer operation controls oversee the work of the computer department, ensuring that programmed procedures are consistently and correctly applied to the storage and processing of data. Computer operations controls include the setup of computer processing jobs, computer operations, and computer backup and recovery procedures. Data security controls prevent unauthorized changes, destruction, or access to data. System implementation controls ensure that the entire systems development process is properly managed. Administrative controls are formalized standards, rules, procedures, and control disciplines.

The chapter mentions three principal application controls, including input controls, processing controls, and output controls. Input controls are procedures to check data for accuracy and completeness when they enter the system. They often include control totals, edit checks, and computer matching. Processing controls are the routines for establishing that data are complete and accurate during updating. Common ones include control totals, computer matching, and run control totals. Output controls are measures that ensure that the results of computer processes are accurate, complete, and properly distributed. They often include run control totals and report distribution logs. Table 14-5 provides examples of these controls.

What is security? List and describe controls that promote security for computer hardware, computer networks, computer software, and computerized data.

Security refers to the policies, procedures, and technical measures that can be applied to prevent unauthorized access, alteration, theft, or physical damage to information systems.

Computer hardware security can be promoted by storing hardware in restricted rooms where only authorized individuals can access it. Special safeguards against fire, extreme temperature and humidity fluctuations, and electric power disruptions can be installed.

Computer networks must be safeguarded against unauthorized use. Terminals should be physically restricted to authorized individuals. Telecommunications lines and control units should also be physically restricted and frequently checked for malfunctions. Authorized users of online systems should be assigned secret passwords that are changed often. However, these safeguards may not be sufficient to prevent authorized users from propagating computer viruses.

Computer software security can be promoted by program security controls to prevent unauthorized changes to programs in production systems. Software security is also promoted by system software controls that prevent unauthorized access to system software and log all system activities.

Computerized data can be subject to data security controls. Passwords can be assigned for specific applications. Data security software can establish security patterns to restrict access to individual files, data fields, or groups of records. Online systems can establish access patterns restricting users to inquiries only or granting them full or limited update capabilities. Data security software often features logs that record users of online or batch files. Also, data files can be physically secured in locked rooms where they are released only for authorized processing. Data can also be secured by allowing access only through copies such as data marts.

What special security measures must be taken by organizations linking to the Internet?

Special measures must be taken because the purpose of the original design of the Internet was to allow easy access and to make sure the Internet is safe from any attempt to disrupt or destroy it. The organizations or individuals connected to the Internet must take action to protect their own data and computers. For example, they must take action to block viruses from disrupting their systems or destroying their data. The networking protocol that forms the foundation of the Internet, TCP/IP, is insecure. If systems are not specially protected against the openness of TCP/IP, and often the openness of UNIX, systems connected to the Internet are vulnerable to hackers and computer viruses.

Firewalls and intrusion detection systems should be installed to protect networks including the Internet. Encryption can help protect sensitive information. Newer technology has also become available, including authentication, message integrity, digital signatures, digital certificates, and secure electronic transaction (SET) systems can also add security for certain types of communication.

Distinguish between fault-tolerant and high-availability computing.

Fault tolerance should be distinguished from high-availability computing. Fault-tolerant computer systems contain redundant hardware, software, and power supply components that can back the system up and keep it running to prevent system failure. Some systems simply cannot be allowed to stop, such as stock market systems or some systems in hospitals. Fault-tolerant computers contain extra memory chips, processors, and disk storage devices. They also can use special software routings or self-checking logic built into their circuitry to detect hardware failures and automatically switch to a backup device.

High-availability computing, though also designed to maximize application and system availability, helps firms recover quickly from a crash. Fault tolerance promises continuous availability and the elimination of recovery time altogether. High-availability computing environments are a minimum requirement for firms with heavy electronic commerce requirements.

Describe the role of firewalls, intrusion detection systems, and encryption systems in promoting security.

Firewalls prevent unauthorized users from accessing internal networks. They protect internal systems by monitoring packets for the wrong source or destination, or by offering a proxy server with no access to the internal documents and systems, or by restricting the types of messages that get through, for example, e-mail. Further, many authentication controls have been added for Web pages as part of firewalls.

Intrusion detection systems monitor the most vulnerable points in a network to detect and deter unauthorized intruders. These systems often also monitor events as they happen to look for security attacks in progress. Sometimes they even can be programmed to shut down a particularly sensitive part of a network if it receives unauthorized traffic.

Encryption offers protection by keeping messages or packets hidden from the view of unauthorized readers. Encryption is crucial for ensuring the success of electronic commerce between the organization and its customers, and between the organization and its vendors.

Why are digital signatures and digital certificates important for electronic commerce?

Digital signatures are digital codes that are attached to an electronically transmitted message. A digital signature provides a way to associate a message with the sender. For it to be legally binding in a court, someone must be able to verify that the signature actually belongs to whoever sent the data and that the data were not altered after being “signed.” Digital certificates are data fields used to establish the identity of the sender and to provide the receiver with the means to encode a reply. These use a trusted third party known as a certificate authority to validate a user’s identity. Both digital signatures and digital certificates play a role in authentication. Authentication refers to the ability of each party to know that the other parties are who they claim to be. In the past, this was often done by manual signatures.

What is the function of risk assessment?

Risk assessment determines the potential frequency of the occurrence of a problem and the potential damage if the problem were to occur. Controls can be adjusted or added to focus on the areas of greatest risk. An organization does not want to over-control areas where risk is low and under-control areas where risk is high.

How does MIS auditing enhance the control process?

MIS auditing evaluates all of the controls for an information system and assesses their effectiveness. Control weaknesses and their probability of occurrence will be noted. The results of the audit can be used as guidelines for strengthening controls, if required. Auditing the system also ensures that inputs result in predicted outputs.

Name and describe four software quality assurance techniques.

Four software quality assurance techniques are systems development methodology, proper resource allocation during systems development, software metrics, and testing. An appropriate structured systems development methodology provides a framework for rigourous discipline in building a system. Resource allocation means that more of the budget should be spent on systems analysis and specification than on testing and implementation. Software metrics use objective quantitative measures to assess the system’s performance and to identify problems. Some metrics are used in the system analysis and design phases. Testing should be conducted at every stage, including the design phase for reliability and bugs.

What is structured analysis? What is the role of the data flow diagram in structured analysis?

Structured analysis is a method of defining system inputs, processes, and outputs. It offers a logical, graphic model of information flow, partitioning a system into modules that show manageable levels of detail. The data flow diagram is the primary tool of structured analysis. It is a graphic representation of a system’s component processes and the interfaces between them.

How is structured design related to structured programming? How can both promote software quality?

Structured design is related to structured programming through its set of design rules and techniques for programmers to follow. These are used to promote program clarity and simplicity, thereby reducing the time and effort required for coding, debugging, and maintenance. The main principle of structured design is that a system should be designed from the top down in hierarchical fashion and refined to greater levels of detail. The design should first consider the main function of a program or system, then break this function into subfunctions and decompose each subfunction until the lowest level of detail has been reached. The lowest level modules describe the actual processing that will occur. If structured analysis has been performed, the structured specification document can serve as input to the design process. 

How does Unified Modeling Language (UML) support object-oriented analysis and design?

The Unified Modeling Language (UML) is the industry-standard language for specifying, visualizing, constructing, and documenting the artifacts of software systems. It simplifies the complex process of software design. UML helps develop models of software systems, including their structure and design, in a way that meets all of these requirements. UML is a natural fit for object-oriented languages and environments such as C++, Java, and the recent C#.

Why are data quality audits and data cleansing essential?

Data quality audits are one means of determining whether information systems contain inaccurate, incomplete, or ambiguous data. Since much of the data in automated systems are invisible, it may not be possible to audit all records in a system. However, auditing a sample of such records can help determine the overall data quality of the system. Data cleansing should also be performed to correct errors, thereby creating consistent and accurate data for company-wide use in electronic commerce and electronic business as well as data warehousing.

Name and describe the components involved in information resource management.

The components involved in IRM are:

The IS department where much of IRM takes placeManaging planning, strategy, and external relations (vendors, etc.)Managing systems developmentManaging personnelManaging budgets and justifying investment in systems

All of these “managing” components are similar to the same functions performed in other departments or functions.

Compare the role of the CIO with that of the MIS Steering Committee.

The CIO is a senior manager responsible for strategic-level management planning and decision making regarding the information function of an organization.The MIS Steering Committee sets policies and priorities for the IS department, including approving budgets for major projects and hearing progress reports on those major projects.

Name and describe the types or levels of IS planning.

The three levels of IS planning are:

Strategic: These plans describe in a broad perspective the major strategic information systems that support or will support the organization’s strategy. Tactical: These plans have a shorter focus and concentrate on breaking down the strategic IS plan into more detailed plans that middle-level managers can focus on im-plementing. Operational: These plans detail how the strategic and tactical IS plans will be imple-mented during the coming short term, usually one year.

Name and describe the various roles IS personnel have in the IS department.

The various roles IS personnel have in the IS department include:

Systems operators: IS personnel who run the hardware, including loading tape and disk drives, starting and stopping computer jobs, and ensuring that backups are car-ried out as dictated by policy. Data entry operators: IS personnel who enter data in computer-readable format and are managed by database managers. Network managers: IS personnel who supervise the operations on an organization’s networks. Webmasters: IS personnel who supervise an organization’s Web-based presence. Programmers: IS personnel who perform the actual software coding. Analysts (Business and Systems): IS personnel who serve as the interface between the users (and their managers and user department) and the programmersProject managers: IS personnel who are professional project managers and manage systems development projects

Name and describe the principal capital budgeting methods used to evaluate information systems projects.

The principal capital budgeting methods used to evaluate information systems projects are:

Payback method: Measures time required to pay back the initial investment in the project. This method is good for high-risk projects where useful life is difficult to know. However, it ignores the time value of money, cash flow after the payback period, and the disposal value and profitability of the investment.

Accounting rate of return on investment (ROI): Calculates the return from an investment by adjusting the project inflows produced by the investment for depreciation. The rate of return must equal or exceed the cost of capital in the marketplace, or no one will lend the firm money. This model approximates the accounting income that would be earned by the project.

Cost-benefit ratio: This simple method divides total benefits by total costs giving a ratio of benefits to costs. Any value above 1.0 is a positive ratio. The method can be used to rank several projects for comparison. The ratio can be calculated using present values to account for the time value of money.

Net present value: Money received in the future must be discounted to be able to compare it with current money. The net present value is the amount of money an investment is worth, taking into account its cost, earnings and the time value of money. By subtracting the cost of the project from the net present value of its benefits, one can determine one measure of profitability.

Profitability index: This index is calculated by dividing the present value of the total cash inflow by the initial cost of the investment. The result is a profitability measure that, unlike the net present value, can be used to compare to alternative investments.

Internal rate of return (IRR): This variation of net present value is defined as the rate of return that an investment is expected to return.

What are the limitations of financial models for establishing the value of information systems?

Financial models assume all relevant alternatives have been examined, that all costs and benefits are known, and that these costs and benefits can be expressed in terms of money. These assumptions are rarely met in the real world. Only tangible benefits can be quantified and assigned a monetary value. Intangible benefits cannot be immediately quantified but may lead to quantifiable gains in the long run. These models can be selectively used to support political decisions made for organizational reasons having nothing to do with the cost and benefits of a system. Financial models do not always express the risks and uncertainty of their own cost and benefit estimates. They also fail to consider the fact that costs are usually up front, while benefits tend to be back-loaded. No financial model can adjust for the fact that information technology can easily change during the course of the project.

In addition, firms can invest in capital projects for many non-economic reasons that are not captured by financial models. Projects may be undertaken to support strategic considerations, to meet government requirements, or to satisfy some non-market public demand.

Describe how portfolio analysis and scoring models can be used to establish the worth of systems.

These two approaches can be used to select and evaluate information systems investments using non-financial and strategic considerations. Portfolio analysis compares a portfolio of potential projects based upon the projects' expected risks and benefits. Projects are categorized as high or low risk and high or low benefits (benefits are not necessarily financial). Thus, four ratings are achieved: high risk-high benefits, high risk-low benefits, low risk-high benefits, and low risk-low benefits. High benefit-low risk projects are generally preferred while low benefit-high risk projects are to be avoided.

Use of a scoring model results in a single score for a project that can then be used to compare against other projects scored the same way. Criteria are listed and weighted, and then alternative projects are rated by the criteria. Scoring models are meant to be relatively "objective" techniques but involve many qualitative judgments. They are used most commonly to confirm, rationalize, and support decisions rather than make decisions. Often their greatest value is the agreement on criteria to judge the system.

How can real options pricing models be used to help evaluate information technology investments?

Appropriate strategies, such as real options pricing models (ROPM), can be applied to evaluate and value the information system when the benefits cannot be established in advance. Real options pricing models apply the same techniques for valuing financial options to systems investments and can be useful to help managers think about the potential value of highly uncertain IT investments. ROPM allows managers to systematically take into account the volatility in the value of IT projects over time, the optimal timing of the investment, and the changing cost of implementation as technology prices fall over time. The disadvantages of this model are primarily in estimating all the key variables, especially the expected cash flows from the underlying asset, and changes in the cost of implementation.

Have information systems enhanced productivity in businesses? Explain your answer.

Productivity is a measure of the firm’s efficiency in converting inputs to outputs. More than a decade of studies has not been conclusive about the productivity of information systems, and the term “productivity paradox” was coined to describe such findings. However, systems often do seem to greatly increase productivity observed by researchers.

Why do developers of new information systems need to address change management?

An information system is a sociotechnical entity, an arrangement of both technical and social elements. Information systems change involves hardware and software, but in addition, it involves changes in jobs, skills, management, and organization. When we design a new information system, we are redesigning the organization, reordering its technical and social elements. Change management addresses these types of changes, or more directly, the effects of the changes on the people whose jobs will change. The system not only changes the technology and the organization, it also changes people, and the project must also address this aspect if it is to succeed.

What kinds of problems provide evidence of IS failure?

An information system failure may mean that a system falls apart, but it usually means that the system does not perform as expected, is not operational at a specified time, or cannot be used in the way it was intended. It often is under-utilized or not used at all. Users may have to develop parallel manual procedures to make the system work properly or rely on manual procedures entirely. The major problem areas are design, data, cost, and operations.

Why is it necessary to understand the concept of implementation when managing the organizational change surrounding a new information system?

Implementation refers to all of the organizational activities involved in the adoption, management, and routinization of an innovation. For IS, implementation is the entire process of introducing, building, and installing the system, and can be considered a complex process of deliberate organizational change.

There are three major approaches to implementation in scholarly literature: (1) a focus on actors and roles, suggesting that organizations should promote actors with innovative characteristics and develop organizational roles championing innovation; (2) a focus on strategies of innovation, believing that successful innovations must have support from top-down and/or bottom-up; and (3) a focus on general organizational change factors supportive of long-term routinization of innovations.

One of the most important determinants in system success and failure is the pattern of the implementation process. Especially critical facets of the implementation process are:

Conflicts between the technical or machine orientation of information systems specialists and the organizational or business orientation of users.The impact of information systems on organizational structures, work groups, and behaviour.The planning and management of systems development activities.The degree of user participation in the design and development process.

What are the major causes of implementation success or failure?

System failure can be due to external or internal factors. An organization may be faced with external, environmental pressures that it cannot meet because to do so would run counter to its inherent characteristics. However, many instances of system failure and negative implementation outcome are caused by factors within the organization. These factors include the role of users in the implementation process, the degree of management support for the implementation process, the level of complexity and risk of the implementation project, and the quality of management of the implementation process itself.

What is the user-designer communications gap? What kinds of implementation problems can it create?

The user-designer communications gap refers to the difference in backgrounds, interests, and priorities that impede communication and problem solving among end users and information systems specialists. Often the objectives, priorities, and language of communication between these groups are so different that they have entirely divergent goals. If serious, the user-designer communications gap prolongs

implementation time. Users and IS specialists must spend additional time and effort trying to mutually understand one another. Users often forfeit their control over implementation to technical specialists. The result is an information system that makes sense to the technicians but does not meet users' business requirements.

Why is there such a high failure rate among enterprise resource planning (ERP) and business process re-engineering (BPR) projects? Why are customer relationship management and supply chain management systems often difficult to implement?

These projects are very challenging, partly because they usually require extensive organizational change. They also often replace deeply entrenched old technologies and legacy systems. Many are undermined by poor implementation and change management practices. The project must address employee concerns about the change, their fears and anxieties, resistance by key managers, changes in job functions, career paths, and recruitment practices. CRM implementation must be accompanied by a transformation of the company’s focus from a product-centric view to a customer-centric view, which means organizational culture changes. The project must cooperate closely with sales and marketing groups. Supply chain management systems require more cross-functional coordination, and also coordination with the business processes of other organizations.

What role do information systems play in the success or failure of mergers and acquisitions?

A major reason for merger and acquisition failures is the difficulty in integrating the information systems of the different companies. Combining the different systems usually requires considerable organizational change and complex system projects to manage the change. Unless the integration of the systems is successful, the expected benefits of the merger or acquisition will not be achieved.

What dimensions influence the level of risk in each systems development project?

Project size, project structure, and experience with technology are three dimensions influencing the level of risk in a systems development project. The larger the project (dollars spent, the size of the implementation staff, the time allocated, and the number of organizational units affected), the greater the risk. The larger the project, the higher the failure rate. Highly-structured projects usually have clear and straightforward requirements, and users know exactly what is needed. The less experience the project team has with the hardware and/or software, the higher the risk of project failure.

What project management techniques can be used to control project risk?

External integration tools, internal integration tools, and formal planning and control tools are three project management techniques that can be used to control project risk.

External integration tools help to solidify the relationship between implementation activities and end users at all organizational levels. These tools are most useful for projects that are not well-structured and which require heavy user involvement and commitment. Internal integration tools promote cohesion and unity within the implementation team. They are most useful for projects with high technical complexity. Formal planning and control tools help structure and sequence tasks and monitor progress towards goals. They are most valuable for managing projects that are large and/or well-structured.

What strategies can be used to overcome user resistance to systems development projects?

End-user resistance to IS projects can be overcome by the following strategies:

A "people-oriented" strategy to focus on ways of overcoming resistance stemming from factors inherent to individuals or groups. It can consist of education, coercion through edicts or policies, persuasion, or building commitment through user participation.A "system-oriented" strategy to focus on overcoming resistance stemming from factors inherent in system design. This strategy might include user participation in system design, a design that is highly sensitive to human factors, package modifications to conform to organizational procedures, and user education.A strategy to counter the conflict of people and system factors that consists of restructuring the user-designer relationship, encouraging user participation, and attempting to fix organizational problems before introducing new systems.

What organizational considerations should be addressed by information system design?

Information system design must consider careful planning and orchestration of organi-zational change. Changes in job functions, organizational structure, power relation-ships, procedures, and behaviour will have to be addressed. Technical solutions must be developed around an appropriate "social design" for an information system. All in-formation systems should support the organization’s strategy and mission.

What is a decision-support system (DSS)? How does it differ from a management information system (MIS)?

A DSS assists management decision making by combining data, sophisticated analytical models, and user-friendly software into a single, powerful system that can support semistructured or unstructured decision making. These systems help end users utilize data and models to discuss and decide semistructured and unstructured problems, but they do not solve the problems for the user. Generally speaking, MIS provide routine, prespecified, and formatted reports based on data extracted and summarized from the firm's TPS. These reports provide information on the firm's performance and are used to help monitor and control the business. In contrast, DSS provide capabilities for addressing nonroutine decisions and user control. DSS emphasize change, flexibility, and rapid response and place a greater emphasis on models, assumptions, ad hoc queries, and display graphics. Additionally, MIS primarily address structured problems, while DSS focus more on supporting semistructured and unstructured problems.

How can a DSS support unstructured or semistructured decision making?

Unstructured problems are novel and non-routine and have no predefined algorithms or solutions. DSS help design and evaluate alternatives and monitor the adoption or implementation process. DSS combine data with models to produce various alternative scenarios for making choices. In large organizations, decision making is inherently a group process, and DSS can be designed to facilitate group decision making by providing tools, procedures, and technologies to help people working on decisions as a group.

What is the difference between a data-driven DSS and a model-driven DSS? Give examples.

A data-driven DSS is a system that supports decision making by allowing users to extract and analyze useful information that was previously buried in large databases. Often TPS data are collected in data warehouses. Multidimensional analysis and datamining tools can then analyze the data. WH Smith PLC is an example of a data-driven DSS.

A model-driven DSS is primarily a stand-alone system that has a model at its heart, perhaps a mathematical or spreadsheet representation of such a model. The emphasis is on the model, scenarios, and what-if sensitivity, such as linear programming. This chapter provides several examples of model-driven DSS, including systems used by HBC and Continental Airlines.

What are the three basic components of a DSS? Briefly describe each.

The three basic components of a DSS include a DSS database, DSS software system, and DSS user interface. The DSS database is a collection of current or historical data from a number of applications or groups, organized for easy access by a range of applications. The DSS database may be a small database residing on a PC or it may be a massive data warehouse that is continuously updated by major organizational TPS. The DSS software system is a collection of software tools used for data analysis, including a collection of mathematical and analytical models, OLAP tools, and datamining tools. Various kinds of models may be in the model base, including libraries of statistical, optimization, sensitivity analysis, and forecasting models. The DSS user interface permits easy interaction between users and the DSS software tools.

How can DSS help firms with supply chain management and customer relationship management?

Supply chain decisions involve determining “who, what, when, and where” from purchasing and transporting materials and parts through manufacturing products and distributing and delivering those products to customers. DSS can help managers examine this complex chain comprehensively and search among a huge number of alternatives for the combinations that are most efficient and cost-effective. The prime management goal might be to reduce overall costs while increasing the speed and accuracy of filling customer orders. 

DSS for customer relationship management use datamining to guide decisions about pricing, customer retention, market share, and new revenue streams. These systems typically consolidate customer information from a variety of systems into massive data warehouses and use various analytical tools to slice the data into tiny segments for one-to-one marketing.

What is a geographic information system (GIS)? How does it use data visualization technology? How can it support decision making?

Geographic information systems (GIS) are a special category of DSS that use data visualization technology to analyze and display data for planning and decision making in the form of digitized maps. The software can assemble, store, manipulate, and display geographically referenced information, tying data to points, lines, and areas on a map. GIS can thus be used to support decisions that require knowledge about the geographic distribution of people or other resources in scientific research, resource management, and development planning. For example, GIS might be used to help state and local governments calculate emergency response times to natural disasters or to help banks identify the best locations for installing new branches or ATM terminals. GIS tools have become affordable even for small businesses and some can be used on the Web.

What is a customer decision-support system? How can the Internet be used for this purpose?

A customer decision-support system (CDSS) supports the decision-making process of the organization’s existing and potential customers. The data can come from both internal and external sources, including enterprise systems and the Web. The Web and Internet can provide online access to various database and information pools along with software for data analysis.

What is a group decision-support system (GDSS)? How does it differ from a DSS?

A GDSS is an interactive computer-based system that facilitates the solution of unstructured problems by a set of decision makers working together as a group. GDSS have been developed in response to the growing concern over the quality and effectiveness of meetings. In general, DSS focus on individual decision making while GDSS support decision making by a group.

What underlying problems in group decision making have led to the development of GDSS?

The underlying problems of group decision making that have led to the development of GDSS are the explosion of decision-maker meetings, the growing length of these meetings, and the increased number of attendees at these meetings.

Describe the three elements of a GDSS.

Hardware, software tools, and people are the three GDSS elements. Hardware includes the conference facility itself (room, tables, chairs) that is laid out to support group collaboration. It also includes electronic hardware such as electronic display

boards as well as audiovisual, computer, and networking equipment. Software tools include electronic questionnaires, electronic brainstorming tools, idea organizers, questionnaire tools, tools for voting or setting priorities, stakeholder identification and analysis tools, policy formation tools, and group dictionaries. People include the participants, a trained facilitator, and the staff to support the hardware and software.

Name five GDSS software tools.

Although many tools exist, the list provided in the textbook includes electronic questionnaires, electronic brainstorming tools, idea organizers, questionnaire tools, tools for voting or setting priorities, stakeholder identification and analysis tools, policy formation tools, and group dictionaries.

How can GDSS facilitate group decision making?

GDSS enable more people to attend and participate in a meeting, and at the same time the GDSS can increase meeting productivity. This increase in productivity is realized because the attendees can contribute simultaneously. A GDSS can guarantee anonymity, follow structured methods for organizing and evaluating ideas, preserve the results of meetings, and can increase the number of ideas generated and the quality of decisions while producing the desired results in fewer meetings. A GDSS can support idea generation, complex problem analysis, and large groups.

Define and describe the capabilities of an executive support system (ESS).

Executive support systems (ESS) help managers make unstructured and semistructured decisions. ESS focus on the information needs of senior management and combine data from both internal and external sources. The ESS creates a generalized computing and communications environment that can be focused on and applied to a changing array of problems. The ESS can help senior executives monitor organizational performance, track activities of competitors, spot problems, identify opportunities, and forecast trends.

How can the Internet and enterprise systems provide capabilities for executive support systems?

There are several ways that the Internet and Web technology can enhance such a system. First, the Web interface is a well-known and understood interface, making it easier to learn and use and less costly to create. Secondly, the Web is an important source of external data and information. Enterprise systems eliminate the problem of data being unavailable or available in different formats, or having to access hundreds or even thousands of incompatible systems. Enterprise systems allow data to be gathered from a company-wide perspective so that it can be more easily analyzed by senior management.

What are the benefits of ESS? How do these systems enhance managerial decision making?

Although ESS benefits are not easily measured, several benefits are mentioned in the chapter. ESS increase flexibility, provide the ability to analyze, compare and highlight trends, monitor performance, improve management performance, and increase

management's span of control. ESS flexibility allows executives to shape the problems, using the system as an extension of their own thinking. ESS offer executives the ability to analyze quickly and to compare and highlight trends, freeing up executives and their staff for more creative analysis and decision making. ESS can, and do, change the workings of organizations. Executives are better able to monitor activities below them, allowing them to push decision making further down in the organization while expanding the executive’s span of control.

What is knowledge management? List and briefly describe the information systems that support it and the kind of information technology (IT) infrastructure it requires.

Knowledge management is the set of processes developed in an organization to create, gather, store, maintain, and disseminate the firm's knowledge. The major information systems that support knowledge management are office systems, knowledge work systems, group collaboration systems, and artificial intelligence systems. Office systems are systems designed to increase the productivity of information workers in the office. Examples of office systems include word processing, desktop publishing, imaging and Web publishing, electronic calendars, and desktop database.

Knowledge work systems are information systems that aid knowledge workers in the creation and integration of new knowledge in the organization. Examples of knowledge work systems include CAD, virtual reality, and investment workstations. Group collaboration systems facilitate communication, collaboration, and coordination. Examples of group collaboration systems include groupware, teamware, and intranets. Artificial intelligence is the development of systems that behave as humans. Examples of artificial intelligence systems include expert systems, neural nets, fuzzy logic, genetic algorithms, and intelligent agents. Natural language, robotics, perceptive systems, expert systems, and intelligent machines are artificial intelligence initiatives.

How does knowledge management promote organizational learning? How do knowledge management systems support knowledge networks, knowledge repositories, and communities of practice?

Knowledge management promotes organizational learning as it defines and codifies the organization’s knowledge base. Knowledge management enables the organization to learn from its environment and incorporate this new knowledge into its business processes. New SOPs can be created that reflect recent experiences within the organization. Knowledge management systems enable the creation and support of knowledge networks, knowledge repositories, and communities of practice. Knowledge networks enable people to be linked, so that experts in a given area can be easily identified and share tacit knowledge. Knowledge management streamlines the workflow and provides tools for creating a knowledge repository. A knowledge repository is a collection of internal and external knowledge stored in a single location for more efficient management and utilization by the organization. A community of practice is an informal group of people who may live or work in many different locations but who share a common professional interest.

Describe the roles of the office in organizations. What are the major activities that take place in offices?

Offices are where data reside and where most knowledge work takes place. Offices coordinate the flow of information throughout the entire organization. Offices coordinate the work of local professionals and information workers, coordinate work in the organization across levels and functions, and couple the organization to the external environment. The major activities of an office are managing documents, scheduling for individuals and groups, communicating with individuals and groups, and managing data about individuals and groups.

What are the principal types of information systems that support information worker activities in the office?

Group collaboration systems, office systems, artificial intelligence systems, and knowledge work systems are types of information systems that support information worker activities in the office. For this question, students should also mention that a variety of office systems are available to support office activity. Table 14-1 identifies several types of office systems.

What are the generic requirements of knowledge work systems? Why?

Knowledge work systems provide knowledge workers with the specialized tools they need. They must have adequate computing power to handle the specialized tasks and complex calculations, provide easy access to external databases to support research, and present a user-friendly interface.

These systems reflect the special needs of knowledge workers. In this day and age, knowledge work is critical to most organizations, and in some organizations knowledge work systems produce strategic advantage or the knowledge that enables their company to keep up with others who are trying for strategic advantages.

Describe how the following systems support knowledge work: computer-aided design (CAD), virtual reality, and investment workstations.

CAD systems automate the creation and revision of designs using computers and sophisticated graphics software. By using CAD, a business benefits in many ways, including the production of more sophisticated and functional designs, reducing the time required to produce designs, reducing expensive engineering changes, preparing fewer prototypes, and facilitating the tooling and manufacturing process.

Virtual reality systems have visualization, rendering, and simulation capabilities. Virtual reality systems use interactive graphics software to create computer-generated simulations that are so close to reality that users believe they are participating in a "real" world. The users actually feel immersed in the computer-generated world. Virtual reality is providing educational, scientific, and business benefits.

Investment workstations are computer systems that access and manipulate massive amounts of financial data to manage financial trades and portfolio management. In addition to massive amounts of data, financial data are produced so quickly that specialized, very powerful systems are necessary to keep up with the rapid speed of finance and financial changes today.

How does groupware support information work? Describe its capabilities and Internet and intranet capabilities for collaborative work.

Groupware supports the electronic communication, collaboration, and coordination of group work. Groupware enables group members to electronically schedule meetings, hold meetings, communicate, collaborate, share document preparation, and share knowledge and work information. Internet tools are available to support e-mail, newsgroup discussions, group scheduling, Web publishing, and point-to-point conferencing. Web conferencing tools are available to facilitate online meetings, conferences, and presentations. Groups can use teamware to support group communication, collaboration, and coordination via an intranet. Teamware is similar to groupware but does not provide as powerful application development capabilities. Additionally, intranets provide the foundation for enterprise knowledge environments; these knowledge environments can then serve as knowledge maps. To facilitate the navigation of its knowledge resources, a company can use an enterprise information portal.

What is artificial intelligence? Why is it of interest to business?

Artificial intelligence is commonly defined as the effort to develop computer-based systems (hardware and software) that behave as humans. These systems would be able to learn natural languages, accomplish coordinated physical tasks (robotics), and develop and utilize a perceptual apparatus that informs their physical behaviour and language (visual and oral perception systems), and emulate human expertise and decision making (expert systems). These systems would also exhibit logic, reasoning, intuition, and common sense. Artificial intelligence can help businesses store information in an active form as organizational memory, create a mechanism that is not subject to human feelings, eliminate routine and unsatisfying jobs held by people, and enhance the organization's knowledge base by generating solutions to specific, massive, complex problems.

What is the difference between artificial intelligence and natural or human intelligence?

Artificial intelligence is an effort to fashion computer systems that behave like human beings. AI systems would have the ability to learn natural languages, accomplish coordinated physical tasks, utilize complex visual and oral perceptual systems, and use complex logic, reasoning, and intuition. To date, the AI systems that have been developed do not exhibit all of the qualities of human intelligence, and in no way can be considered very intelligent. AI systems are based on human expertise, but they can use only very limited reasoning patterns and perform very limited tasks. AI systems also cannot learn on their own and must be programmed by a human to follow certain rules or produce certain solutions. Nonetheless, useful, even valuable AI systems have been developed. Human intelligence is definitely complex and broader than computer intelligence. Human beings can develop associations, use metaphors and analogies, and impose a conceptual apparatus on the surrounding world all on their own.

Define an expert system and describe how it can help organizations use their knowledge assets.

An expert system is a knowledge-intensive computer program that captures the expertise of a human in limited domains of knowledge. Expert systems can capture the knowledge of skilled workers and in the form of a set of rules, adding to an organization's knowledge. An expert system assists in decision making, can explain the reasoning behind a recommended answer, and makes an expert's knowledge more readily available to more employees within the organization.

Define and describe the role of the following in expert systems: rule base, AI shell, and inference engine.

A rule base is the collection of knowledge in an AI system that is represented in the form of IF-THEN rules. An inference engine will either search the rule base to arrive at a conclusion or will start with a hypothesis and work backwards. An AI shell is a user-friendly programming environment that is used to develop expert systems. AI shells can quickly generate user-interface screens, capture the knowledge base, and manage the strategies for searching the rule base. The inference engine is the software that embodies the strategy used to search through the rule base; the inference engine can be forward or backward chaining.

What is case-based reasoning? How does it differ from an expert system?

Case-based reasoning (CBR) uses descriptions of past experiences of human specialists, representing them as “cases” and storing them in a database for later retrieval when the user encounters a new case with similar parameters. The system searches for stored cases similar to the new one, locates the closest fit, and offers the solution to the old case for use with the new case. If the new case fits the solution, it is added to the case database. If not, the case will be added with a new solution or explanations as to why the solution did not work. CBR differs from expert systems in that it captures the knowledge of the organization rather than a single expert, and the knowledge is captured as cases rather than if-then rules. Also, expert systems work by applying IF-THEN-ELSE rules against a knowledge base whereas CBR represents knowledge as a series of cases. With case-based reasoning, the knowledge base is continuously updated by users.

Describe three problems of expert systems.

Expert systems are limited to certain problems, working successfully only with problems of classification that have few alternative outcomes. In addition, the outcomes must be known in advance. Since some expert systems are complex, their maintenance costs can equal their development costs in a few years. The knowledge base is fragile and brittle because these systems rely upon IF-THEN representation. Such representation exists primarily in textbooks and cannot be used for deep causal models or temporal trends. Expert systems cannot represent knowledge that is essentially intuitive. Expert systems have no ability to learn over time. Therefore, keeping the expert systems up-to-date in fast-moving fields such as medicine and computer sciences is a critical problem.

Describe a neural network. For what kinds of tasks would a neural networkbe appropriate?

Neural networks are usually physical devices (although they can be simulated with software) that emulate the physiology of animal brains. The resistors in the circuits are variable and can be used to "teach" the network. When the network makes a mistake, i.e., chooses the wrong pathway through the network and arrives at a false conclusion, resistance can be raised on some circuits, forcing other neurons to fire. Used after a false conclusion, intervention teaches the machine the correct response. If this learning process continues for thousands of cycles, the machine "learns" the correct response. The simple neurons or switches are highly interconnected and operate in parallel so they can all work simultaneously on parts of a problem. Neural networks are very different from expert systems where human expertise has to be modelled with rules and frames. In neural networks, the physical machine emulates a human brain and can be taught from experience.

An expert system is highly specific to a given problem and cannot be retrained. Neural networks do not model human intelligence or aim to solve specific problems. Instead of putting human expertise into programs, neural network designers put intelligence into the hardware in the form of a generalized capacity to learn. Neural networks can solve entire classes of problems. The neural network can be easily modified. Neural networks, therefore, promise a substantial savings in development cost and time. They allow much greater generality and more closely approximate what we consider intelligence. They have proven especially useful for visual pattern recognition problems. The students should be able to relate to Papnet and the system used by VISA.

Define and describe fuzzy logic. For what kinds of applications is it suited?

Fuzzy logic is a rule-based AI technology that tolerates imprecision, even using that imprecision to solve problems we could not solve before. Fuzzy logic creates rules that use approximate or subjective values and incomplete or ambiguous data. Fuzzy logic represents more closely the way people actually think than traditional IF-THEN rules. For example, if we all agree that 120 degrees is hot and -40 degrees is cold, then is 75 degrees hot, warm, comfortable, or cool? The answer is fuzzy at best and cannot be programmed in an IF-THEN manner. Also, discuss with the students the fuzzy logic system used by Sendai to control acceleration so it will operate more smoothly and save the subway company expenses.

What are genetic algorithms? How can they help organizations solve problems? For what kinds of problems are they suited?

Genetic algorithms (adaptive computation) are a variety of problem-solving methods that are conceptually based on the method that living organisms use to adapt to their environment – the process of evolution. Genetic algorithms control the generation, variation, adaptation, and selection of possible problem solutions using genetically based processes. As solutions alter and combine, the worst ones are discarded, and the better ones survive to go on and produce even better solutions.

Genetic algorithms are particularly suited to the areas of optimization, product design, and the monitoring of industrial systems. Organizations can use genetic algorithms to

minimize costs and maximize profits and schedule and use resources efficiently. Genetic algorithms are ideal when problems are dynamic and complex and involve hundreds of variables or formulas. For example, General Electric used a genetic algorithm to help them design a jet turbine aircraft engine that required the use of about 100 variables and 50 constraint equations. The text provides other examples.

What are intelligent agents? How can they be used to benefit businesses?

Intelligent agents are software programs that use a built-in or learned knowledge base to carry out specific, repetitive tasks for an individual user, business process, or software application. By watching the user of a program or system, an intelligent agent may customize the software system to meet the user’s needs, reducing software support costs. Intelligent agents can be used as wizards to help users do or learn how to perform a given task. Intelligent agents can be used to carry out “smart” searches of the database, data warehouse, or the Internet, reducing search costs and avoiding the problems of misdirected searches.

What are the five major factors to consider when building an international information systems portfolio?

The five major factors are the need to:

Understand the global business environment in which your firm is operating.

Consider a corporate strategy for competing in that environment.

Consider how to structure your organization to pursue the strategy.

Consider management and business processes in implementing the strategy.

Develop an appropriate technology platform.

Describe the five general cultural factors leading toward growth in global business and the four specific business factors. Describe the interconnection among these factors.

The five general cultural factors are global communication and transportation technologies, development of global culture, emergence of global social norms, political stability, and global knowledge base. Global communication and transportation technologies reference the fact that a global village has been created in which global communications of all kinds are no more difficult and not much more expensive than domestic communications. The development of a global culture has created shared values and beliefs around the world. The emergence of global social norms references the fact that proper attire, proper consumption, good and bad government, and other norms are more and more shared. In reference to political stability, the world is living through the longest period of world political stability in the modern age. In reference to the global knowledge base, educational, scientific, and industrial knowledge and skills are no longer centered in North America, Europe, and Japan, but have spread to Latin American, China, Southern Asia, and Eastern Europe.

The specific business factors are global markets, global production and operations, global coordination, global workforce, and global economies of scale. Global markets reference the fact that patterns of consumption of goods are becoming similar around the world. Global production and operations refer to the fact that far-flung production

facilities can now be coordinated at central headquarters thousands of miles away. Global coordination means the coordination of business factors has expanded beyond production to include all major business functions, such as accounting, marketing, sales, and human resources systems development. Global workforce means that we can locate our business activities based on workforce availability. Global economies of scale means that production can now be concentrated where it can be best accomplished; lower cost factors of production can be exploited wherever they emerge.

These factors are interrelated. The spread of global communications has led to the emergence of a global culture and global social norms. This, in turn, has led to the development of global markets. Emerging global technologies make possible the transportation of raw materials and finished products throughout the world and have given businesses the ability to act globally. Global production and coordination and the ability of businesses to make use of global economies of scale all depend upon the emergence of sophisticated global communications. The existence of global markets has been one of the factors making global production and operations attractive.

What is meant by a global culture?

A global culture is a shared culture in which people around the world share such cultural artifacts as news programs and movies. These, in turn, result in the emergence of shared social norms in such areas as proper attire, proper consumption, and values concerning good and bad government.

What are the major challenges to the development of global systems?

The general challenges are cultural particularism, social expectations, and political laws. Specific challenges include standards, reliability, speed, and personnel. Table 15-2 provides examples of each challenge.

Why have firms not planned for the development of international systems?

For some companies, the competition has not been powerful enough yet to drive them to plan for the development of international systems. Other companies lack the global strategy needed for such development, or they have inherited a patchwork of international systems built with outdated technologies and standards.

Describe the four main strategies for global business and organizational structure.

The four main strategies for global business and organizational structure are domestic exporter, multinational, franchiser, and transnational. The domestic exporter is characterized by heavy centralization of corporate activities in the home country of origin. Production, sales, marketing, finance, and other such functions are set up to optimize resources in the home country. Foreign marketing is totally reliant on the domestic home base. A multinational company concentrates financial management and control in a central home base but decentralizes production, sales, and marketing to suit local market conditions. Franchisers create, design, and finance the product in the home country, but rely on foreign personnel for further production, marketing, and human resources. Often, the product must be produced locally because it is perishable. The transnational organization is a stateless, truly globally managed firm. It has no single national headquarters but instead has many regional headquarters and perhaps a world headquarters. Nearly all of the value-added activities are managed from a global perspective without reference to national borders.

Describe the four different system configurations that can be used to support different global strategies.

The four different system configurations are centralized, duplicated, decentralized, and networked. Centralized systems reference systems development and operations that occur totally at the domestic home base. With duplicated systems, systems development occurs totally at the home base, but operations are handed over to autonomous units in foreign locations. With decentralized systems, each foreign unit designs its own, totally unique solutions and systems. With networked systems, systems development and operations occur in an integrated and coordinated fashion across all units.

What are the major management issues in developing international systems?

The major management issues in developing international systems are listed in Table 15-4. These issues include agreeing on common user requirements, introducing changes in business processes, coordinating applications development, coordinating software releases, and encouraging local users to support global systems.

What are the three principles to follow when organizing the firm for global business?

Three principles to follow when organizing the firm for global business are: 1) organize value-adding activities along lines of comparative advantage; 2) develop and operate systems units at each level of corporate activity; and 3) and establish at world headquarters a single office responsible for development of international systems, a global chief information officer (CIO) position.

What are the three steps of a management strategy for developing and implementing global systems?

The three steps are divide, conquer, and appease. First, define the core business process and then identify the core systems to coordinate centrally. Second, choose an approach. Third, make the benefits clear.

What is meant by cooptation, and how can it be used in building global systems?

Cooptation is defined as bringing the opposition into the process of designing and implementing the solution without giving up control over the direction and nature of the change. The idea is to find a way whereby local units in transnational companies are brought into the process of building transnational core systems by becoming part of the process rather than by being brought in through raw power. One cooptation approach is to permit each country unit to develop one transnational application first in its home territory, and then throughout the world. Another approach is to develop systems based upon existing centers of excellence. The centers of excellence perform the initial identification and specification of the business process, define the information requirements, perform the business and systems analysis, and accomplish all design and testing. This approach uses a phased rollout strategy.

Describe the main technical issues facing global systems.

Hardware, global software, and telecommunications are the main technical issues. Hardware issues arise because the firm needs to standardize the computer hardware platform when there is so much variation from operating unit to operating unit and country to country. Finding applications that are user friendly in an international environment and that truly enhance productivity is a critical software challenge. Making data flow seamlessly across networks shaped by disparate national standards is a major telecommunications challenge.

Describe three new technologies that can help firms develop global systems.

DSL, satellite systems, digital cell phones, personal communication services, VPNS, and the Internet are several technologies. Students will identify others.