Chapter 2Information Technologies

Concepts and Management

Case: Building an e-Business at Fed ExProblem

FedEx has kept looking ahead at every stage for opportunities to meet customers’ needs for fast, reliable, and affordable overnight deliveries.

Solution In addition to e-Shipping Tools, FedEx is now providing

integrated solutions to address the selling & supply chain needs of its customers.

Results FedEx’s e-business model facilitates better communication and

collaboration between the various parties along the supply chains. It promotes efficiency gains by reducing costs & speeding up the

order cycle. It transforms organizations into high performance e-businesses.

Characteristics of Information Systems

Several different information systems can exist in one

organization. A particular information system may be composed of several

separate information systems.

Information systems are connected by means of electronic networks.

Interorganizational information systems involve information flow in two or more organizations.

An enterprisewide system or interorganizational information system is composed of large & small computers & hardware connected by different types of networks.

IS: Concepts &Definitions

Source:Steven Alter, Information Systems: A Management Perspective, 3rd, Addison- Wesley

Data, Information & Knowledge

One of the primary goals of Information Systems is to economically process data into information or knowledge. Data

elementary description of things, events, activities, and transactions that are recorded, classified, and stored, but not organized to convey any specific meaning.

Information data that have been organized so that they have meaning and

value to the recipient.

Knowledge information that have been organized and processed to convey

understanding, experience, accumulated learning, and expertise

Classification of IS

Organizational structure

Functional area

Support provided

System architecture Information Architecture & Information

Infrastructure

Activity supported

Organizational StructureDepartment information systemsEnterprise information systems

While a departmental IS is usually related to a functional area, the collection of all departmental applications when combined with other functions’ applications comprises the enterprisewide information system

Inter-organizational systems (IOS)Benefits

結合採購商、供應商、合作夥伴，並重新設計主要商業流程，以提高生產力、品質、速度、彈性之功效

創新新的配銷管道，提供新的以資訊為基礎的產品和服務 提高進出市場的障礙，移轉了產業內的競爭勢態

Types 連接購買和供應商的行銷 IOS或後勤 IOS 產業內的平台 (industry platform) 虛擬系統 (virtual systems) 電子市場 (electronic market)

IS - Classification By Function (Department)

OperationsAccountingFinanceMarketingHuman resources

An information system (IS) support each department in a corporation.

Transaction Processing Systems (TPS): Automates routine and repetitive tasks that are critical to the operation of the organization

Point-of-Sale (POS)

IS - Classification By Function (Department)

An information system (IS) support each department in a corporation.

Business processes and functional areas of business

[Source:Steven Alter, Information Systems: A Management Perspective, 3rd, Addison- Wesley ]

Evolution of Support Systems

Early 1950s Transaction processing system (TPS)

1960s Management information systems (MISs)

Late 1960s Office automation system (OAS)

Early 1970s Decision support system (DSS)

Early 1980s Executive information systems

Enterprise information systems (EISs)

Group support systems (GSSs)

Mid- 1980s Expert systems (ES)

Knowledge management systems (KMS)

1990s Artificial neural networks (ANNs)

IS - Classification By Support Function

Operational Managers

Data Workers

Middle Managers

Senior MgrExecutive Support SystemExecutive Support System

Management Information SystemManagement Information System

Decision Support SystemDecision Support System

Intelligent Support SystemsIntelligent Support Systems

Knowledge Management SystemKnowledge Management System

Office Automation SystemOffice Automation System

Transaction Processing SystemTransaction Processing System

•5-year sales trend•Profit Planning•5-year budget forecasting•Product development

•Sales Management•Inventory Control•Annual budget•Production Scheduling•Cost Analysis•Pricing Analysis

•Simulation•Pgm coding•System support•Word Processing•Desktop Publishing

•Order Processing•Fulfillment•Material Movement•A/R, A/P, GL•Payroll•POS

Main types of IT supported systems (Table 2.1)

Knowledge workers, professionalsNeural Networks, case-based reasoning

Knowledge workers, nonexpertsES

Executives, top managersEIS

Decision makers, managersDSS, Business Intelligence(BI)

People working in groupsGSS

All employeesTPS, MIS, Communication & collaboration systems

Engineers, draftsmen CAD/CAM

Officer workersOAS, Word processing system, DMS, Desktop publishing system

Employees supportedSystem

Knowledge workers, managersData Warehouse

Mobile employeesMobile computing systems

Transaction Processing System (TPS)

Supports the monitoring, collection, storage, processing, and dissemination of the organization’s basic business transactions

Automates routine and repetitive tasks that are critical to the operation of the organization, such as preparing a payroll, billing customers, POS and Warehouse operations

Data collected from this operation supports the MIS and DSS systems employed by Middle Management

Computerizes the primary and most of the secondary activities on the Value Chain.

Primary purpose to perform transactions and collect data.

TPS (transaction processing system)

[Source:Steven Alter, Information Systems: A Management Perspective, 3rd, Addison- Wesley ]

Management Information Systems (MIS)

Purposes access, organize, summarize, and displayed information for

supporting routine decision making in the functional areas Decisions supported are more structured

Primary purpose - process data into information characterized mainly by their ability to produce periodic reports

range from the repetitive to ad hocTopics: operational efficiency, effectiveness, and productivity Examples: a daily list of employees and the hours they work, or a monthly

report of expenses as compared to a budget

OthersUsed for planning, monitoring, and control in Replenishment, Pricing Analysis (Markdowns) and Sales

Management constructed in whole or in part by end-users geared toward middle managers

Functional MISs Sales forecast by region generated by marketing MIS.

DSS & ISS

Decision Support Systems (DSS) - support complex non-routine decisions Typically employed by tactical level management whose decisions and

what-if analysis are less structured present the results + expand the information with alternatives Some DSS methodologies

Mathematical Modeling, Simulation, Queries, What-If (OLAP-Cubes) & Data mining

Intelligent Support Systems (ISS) Artificial intelligence (AI) these systems perform intelligent problem solving Expert systems (ESs) - One application of AI

provide the stored knowledge of experts to nonexperts, so the latter can solve difficult or time-consuming problems

The difference DSS => users make their decisions according to the information generated

from the systems ES => the system makes recommended decisions for the users based on the

built-in expertise and knowledge

Executive Support Systems (ESS)

ESS systems or Enterprise Information Systems (EIS) originally implemented to support Senior management These systems have been expanded to support other managers within

the enterprise. At the senior management level they support Strategic activities

which deal with situations that significantly may change the manner in which business is done.

Office Automation Systems (OAS)

OASTwo aspects

Electronic communication word processing systems, document management systems and

desktop publishing systems.

predominantly used by clerical workers who support managers at all levels

data workers

Among clerical workers, those who use, manipulate, or disseminate information

Knowledge Management Systems (KMS)

KMSupported for professional people

An additional level of staff support now exists between top and middle management

Example: financial and marketing analysts act as advisors and assistants to both top and middle managementresponsible for finding or developing new knowledge (External

Content) for the organization and integrating it with existing knowledge (Internal Content)

support these knowledge workers range from Internet search engines and expert systems, to Web-based computer-aided design and sophisticated data management systems

Interrelated supported systems

Operational, Managerial & Strategic Systems

Classification by the activity supportedOperational systems - Day-to-day operations of an organization

Managerial(tactical) systems - Middle-management activities such as short-term planning, organizing, and control

Statistical summaries Exception reports Periodic and ad hoc reports Comparative analysis Projections Early detection of problem Routine decisions Connections

Strategic systems - Decisions that significantly change the manner in which business is being done

Long-range planning Strategic response systems & Innovative strategic systems

New Strategic Systems

Electronic commerce (EC) has become a new way of conducting business in the last decade or so.

In this new model, business transactions take place via telecommunications networks, primarily the Internet.

e-Commerce provides organizations with innovative and strategic advantages, such as; Increased market share

Better ability to negotiate with suppliers

Better ability to prevent competitors from entering into their territory

Relationship Between People & IS

Knowledge workers- Create information and knowledge Data workers - Use, manipulate, or disseminate information

IS related to Mintzberg’s management roles

[Source:Steven Alter, Information Systems: A Management Perspective, 3rd, Addison- Wesley ]

Supply Chain

A supply chain is a concept describing the flow of materials, information, money, and services from raw material suppliers through factories and warehouses to the end customers

Components of the Supply ChainComponents of the Supply ChainUpstream supply chain

includes the organization’s first-tier suppliers and their suppliers Internal supply chain

includes all the processes used by an organization in transforming the inputs of the suppliers to outputs

Downstream supply chain includes all the processes involved in delivering the products to

final customers

A supply chain for a manufactureC

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Inter-Organizational Systems (IOS)

IOS - systems that connect two or more organizations

These systems are common among business partners and

play a major role in EC, as well as in SCM support

EDI (electronic data interchange) developed in the 1980s

Web-based systems (many using XML) deliver business applications via the Internet

Using browsers and the Internet, people in different organizations

communicate, collaborate, access vast amounts of information,

and run most of the organization’s tasks and processes

Electronic Data Interchange (EDI)

Overview to improve communications with business partners involved computer-to-computer direct communication of

standard business documents (ex. purchase orders, bills, and order confirmations) between business partners

In the past run on expensive value-added networks (VANs)

These are private, data-only wide area networks used by multiple organization to provide high capacity, security, and economies in the cost of network service.

The cost of VANS limited EDI to large business partners

Now - the emergence of Internet-based EDI

Information Infrastructure & Information Architecture

Infrastructure consists of the physical facilities, services, and

management that support all computing resources in an organization.

IT Architecture is a high-level map or plan of the information

requirements of the organization in an organizationNew architectures

Client/serverEnterprisewide computing Intranets InternetExtranets

Information Infrastructure

Information Systems

Function

Architecture of an online travel agency

Two or more organizations

Information architecture model

Information Architecturea conceptual framework for the organizational IT infrastructure It is a plan for the structure and integration of the information resources in the organization.

Information Architecture – Classified by HW

Classified by computing paradigms, which are the core of the architectureMainframe Environment - Centralized computing environment

Powerful storage and computational capabilities NC (Network computers)

PC Environment PC-LAN Environment Standalone PC =>Small- to medium-size (SME) organizations

Distributed computing - Distributed processing divides the processing work between two or more computers Cooperative processing Client/server architecture Enterprisewide computing

Legacy systems Peer-to-peer (P2P) architecture – file sharing

Client/Server Architecture

A client/server architecture divides networked computing units into 2 major categoriesA client is a computer such as a PC or a workstation attached to

a network, which is used to access shared network resources.

A server is a machine that is attached to this same network and

provides clients with these services.

The purpose of client/server architecture is to maximize the use of computer resources.

Client/server architecture gives a company as many access points to data as there are PCs on the network.

Web-based Systems

Web-based systems refer to those applications or services that are resident on a

server that is accessible from anywhere via the WWW.The only client-side software needed to access and execute

Web-based applications is a Web browser environment. 2 important features of Web-based functionality

The generated content/ data is updated in real time. They are universally accessible via the Web to users (dependent on

defined user-access rights).The InternetIntranetsExtranetsCorporate PortalsE-commerce Systems

Electronic StorefrontsElectronic MarketsElectronic ExchangesM-CommerceEnterprise Web

The Internet & Intranet

The Internet - Sometimes called simply “the Net,” A worldwide system of computer networks—a network of networks The Internet uses a portion of the total resources of the currently

existing public telecommunication networks its use of a set of protocols called TCP/IP

Intranet - typically a complete LAN, or several intra-connected LANs the use of Web technologies to create a private network, usually within

one enterprise used for

work-group activities the distributed sharing of projects within the enterprise Controlled access to company financial documents use of knowledge management, research materials, online training, and

other information that requires distribution within the enterprise

Extranets & Corporate Portals Extranets

Connect several intranets via the Internet, by adding a security mechanism and some additional functionalities

form a larger virtual network that allows remote users (such as business partners or mobile employees) to securely connect over the Internet to the enterprise’s main intranet

also employed by two or more enterprises (suppliers & buyers) to share information in a controlled fashion

=> play a major role in the development of B2B EC and Supply Chain systems

Corporate portals Web sites that provide the gateway to corporate information from a

single point of access also used to personalize information for individual customers and for

employees Intranets and Extranets are usually combined with and accessed via a

corporate portal

EC Systems

Web-based systems that enable business transactions to be conducted seamlessly 24 hours a day, 7 days a week

Some classifications of EC systems B2C (Business to Consumer) B2B (Business to Business) B2E (Business to Employee)

The major components of Web-based EC Electronic storefronts - Web-equivalents of a physical store

Common features and functions an E-catalog a shopping cart a checkout mechanism a payment processing feature a back office order fulfillment system

Electronic markets Mobile commerce

Electronic Markets

Electronic markets a web-based network of interactions and relationships

over which information, products, services, and payments are exchanged

The principal participants in marketplaces transaction handlers, buyers, brokers, and sellers

Private marketplacesmarkets can reside in one company, where there is

either one seller and many buyers, or one buyer and many sellers

Electronic Exchanges

Electronic exchanges - A special form of electronic markets Web-based public marketplaces where many buyers and

many sellers interact dynamicallyOriginally set as trading places for commodities, electronic

exchanges have emerged for all kinds of products and services

The classification Vertical exchanges

position themselves as the hub for all buying, selling, and related services in a single market category

Horizontal exchangesfocus on a specific function or need applicable to many different

industries

Mobile-Commerce

Mobile commerce or M-commerce the buying and selling of goods and services through wireless

handheld devices such as cellular telephone and personal digital assistants

Known as “next-generation EC,” m-commerce enables users to access the Internet without a place to plug in to

Wireless Application Protocol (WAP) is the emerging technology behind m-commerceUsing Bluetooth technology, WAP-enabled smart phones offer

fax, e-mail, and phone capabilities all in one.

As this wireless environment expands, a pervasive computing environment will develop, employed by mobile employees and others, will change the way business is transacted.

Enterprise Web

Is an open environment for managing and delivering Web applications. It combines services from different vendors in a technology layer that spans rival platforms and business systems, creating a foundation for building applications at a lower cost.

Applications, including business integration, collaboration, content management, identity management, and search, which work together via integrating technologies.

The result is an environment that spans the entire enterprise.

Emerging Computing Environments(I)

Utility Computing computing that is as available, reliable, and secure as electricity,

water services, and telephony to have computing resources flow like electricity on demand from

virtual utilities around the globe—always on and highly available, secure, efficiently metered, priced on a pay-as-you-use basis, dynamically scaled, self-healing, and easy to manage

Subscription Computing - a form of utility computing that puts the pieces of a computing platform together as services,

rather than as a collection of separately purchased components

Pervasive Computing a future in which computation becomes part of the environment.

Computation will be embedded in things, not in computers

Emerging Computing Environments(II)

Grid Computing employs networked systems to harness the unused processing

cycles of all computers in that given network thus creating powerful computing capabilities

already in limited use Example: project SETI (Search for Extraterrestrial Intelligence)

@Home project PC users worldwide donate unused processor cycles to help the

search for signs of extraterrestrial life by analyzing signals coming from outer space

Web services self-contained, self-describing business and consumer modular

applications, delivered via the Internet, that users can select and combine through almost any device, ranging from PC to mobile phones

Managing Information ResourcesThe responsibility for the management of information

resources is divided between two organizational entities The information systems department (ISD) - a corporate entity. The end-users - who are scattered throughout the organization.

This division of responsibility raises important questions: Which resources are managed by whom?

HW/SW, Databases, Networks, Procedures, Security, Physical buildings the size/ nature of the organization, the amount/ type of IT resources The ISD is responsible for corporate-level and shared resources, while the

end users are responsible for departmental resources. What is the role of the Information Systems Department (ISD)? Managing relationships with end users Managerial issues

Transition to networked computing, From legacy systems to client/server systems, How much infrastructure?

Role of the IS Department

What is the Role of the ISD?

The role of the ISD is changing from purely technical to more managerial and strategic.

As a result, the position of the ISD within the organization tends to be elevated from a unit reporting to a functional department, to a unit reporting to a senior vice president of administration or to the CEO.

The role of the director of the ISD is changing from a technical manager to a senior executive.

The ISD can be centralized or decentralized or a combination of the two.

The ISD must work closely with external organizations such as vendors, business partners, etc.