Information Systems: the short story

ILTM PresentationILTM Presentation

July 16, 2002July 16, 2002

Eric SantanenEric Santanen

Overview for Today

Information Systems BackgroundInformation Systems Background The origins & uses of “Data”The origins & uses of “Data” Data sharing & the InternetData sharing & the Internet Electronic CommerceElectronic Commerce Supply ChainSupply Chain Ethical ProblemsEthical Problems

Let’s Start from the Beginning… What do you think most organizational What do you think most organizational

information systems are used for?information systems are used for? What do they do? Why is it important?What do they do? Why is it important?

Information System:Information System: Collects, processes, stores, analyzes, & Collects, processes, stores, analyzes, &

disseminates informationdisseminates information So what is “information” ?So what is “information” ?

The Building Blocks…

Data: Raw factsData: Raw facts 12:00pm Tuesday, July 16, temperature was 83 12:00pm Tuesday, July 16, temperature was 83

degreesdegrees Information: Data in contextInformation: Data in context

Today’s temperature is 4 degrees above the Today’s temperature is 4 degrees above the average temperature for this time of yearaverage temperature for this time of year

Knowledge: Using information to make a decisionKnowledge: Using information to make a decision Temperature control for a set of buildingsTemperature control for a set of buildings

The Origins of “Data”

So where does the data and information that So where does the data and information that an organization uses come from?an organization uses come from? There are two primary sources…There are two primary sources…

Transaction Processing Systems (TPS)

Primary interaction with suppliers, customers, Primary interaction with suppliers, customers, employees, etc. employees, etc. Comprises 90% of core, routine tasksComprises 90% of core, routine tasks Respond to business transactionsRespond to business transactions Initiate transactionsInitiate transactions Allow data maintenanceAllow data maintenance

Follow the IPO modelFollow the IPO model Primary focus concerns Primary focus concerns datadata

What are TPS examples?What are TPS examples?

A Day in the Life of Data

What are examples of transactions that are What are examples of transactions that are recorded?recorded?

Where is this data stored?Where is this data stored? What is this data used for?What is this data used for?

We’ll see more on this shortly…We’ll see more on this shortly…

Enter the Internet

Data sharing is the backbone of buisnessData sharing is the backbone of buisness What are some examples of data sharing?What are some examples of data sharing? Who is the primary beneficiary of data Who is the primary beneficiary of data

sharing?sharing?

Impacts of Information Systems Information Systems are Information Systems are SocialSocial SystemsSystems

They don’t just make business processes They don’t just make business processes cheaper and fastercheaper and faster

IS change the way people & organizations IS change the way people & organizations interact with one another:interact with one another: On-line communitiesOn-line communities E-mail, the InternetE-mail, the Internet Electronic commerceElectronic commerce

Some Internet Statistics

What is the percentage of countries What is the percentage of countries connected to the Internet?connected to the Internet?

1997: 50% US households have a computer1997: 50% US households have a computer Today: statistics are closer to 75-80%Today: statistics are closer to 75-80%

December 1999: 205 million web usersDecember 1999: 205 million web users Growth rates of up to 20% every monthGrowth rates of up to 20% every month

In 2000, 30 million people use online In 2000, 30 million people use online tradingtrading

Internet Marketing Unprecedented opportunity for individual Unprecedented opportunity for individual

marketing & salesmarketing & sales Know customers & treat each one differentlyKnow customers & treat each one differently What is an example of doing this?What is an example of doing this?

Detailed product information available “24/7”Detailed product information available “24/7” Computers, books, music, video, clothesComputers, books, music, video, clothes

Cost effective, custom tailored advertisingCost effective, custom tailored advertising What are some new advertising methods?What are some new advertising methods? Customize ads to individuals (BroadVision.com)Customize ads to individuals (BroadVision.com)

Overview of E-Commerce Business transactions take place via the Internet:Business transactions take place via the Internet:

What are some examples?What are some examples? Benefits of e-commerce include:Benefits of e-commerce include:

Shorter cycle times, reduced cost, eliminate Shorter cycle times, reduced cost, eliminate paper, reduced errors, globalization, enhance paper, reduced errors, globalization, enhance productivity, increasing customer base, sharing productivity, increasing customer base, sharing knowledge, many more! knowledge, many more!

What are specific benefits for: consumer, seller, What are specific benefits for: consumer, seller, society?society?

E-Commerce Benefits

Benefits for Organizations:Benefits for Organizations: Can reach larger, world wide marketCan reach larger, world wide market Lower capital outlay and operating costsLower capital outlay and operating costs Remove intermediaries allowing 1-to-1 marketing Remove intermediaries allowing 1-to-1 marketing Decreases paper costs by up to 90%Decreases paper costs by up to 90% Lowers costs with JIT inventory Lowers costs with JIT inventory Produce materials and services at 5-20% savingsProduce materials and services at 5-20% savings

E-Commerce Benefits, 2

Benefits for Consumers:Benefits for Consumers: Greater number of choices at less Greater number of choices at less

expenseexpense Able to find detailed information 24/7Able to find detailed information 24/7 Increased availability of customize Increased availability of customize

productsproducts Interact with other customersInteract with other customers

E-Commerce Benefits, 3

Benefits for Society:Benefits for Society: Can work from home, less travel & Can work from home, less travel &

pollutionpollutionA small warning is needed here…A small warning is needed here…

Increase the standard of living for someIncrease the standard of living for some Consumers in rural areas can purchase Consumers in rural areas can purchase

products and services not normally products and services not normally available to themavailable to them

Electronic Commerce Growth Two primary models: B2B & B2CTwo primary models: B2B & B2C

What are they? What are they? What are examples of each?What are examples of each?

Total dollars spent: Total dollars spent: YearYear B2CB2C B2BB2B 19951995 $10B$10B 19961996 $518M$518M 19991999 $100B$100B 20002000 $15B$15B 20032003 $2-3T in total$2-3T in total

$50B lost in world-wide shipping fraud each year$50B lost in world-wide shipping fraud each year

Societal Benefits of IT Quality of Life ImprovementsQuality of Life Improvements

Speech & vision recognition, AI are creating new Speech & vision recognition, AI are creating new employment opportunities (ADA of 1994)employment opportunities (ADA of 1994)

Use of robotics in dangerous environments: Use of robotics in dangerous environments: inspecting bridges, cleaning subways, welding, inspecting bridges, cleaning subways, welding, more leisure time…more leisure time…

Health Care ImprovementsHealth Care Improvements Expert systems aid diagnosis, planning and Expert systems aid diagnosis, planning and

assisting during surgery, pill sized camerasassisting during surgery, pill sized cameras Crime FightingCrime Fighting

Tracking gang members, visualizing patterns, Tracking gang members, visualizing patterns, locating missing childrenlocating missing children

A Brief Pause…

We’ve looked atWe’ve looked at Information SystemsInformation Systems The InternetThe Internet Electronic CommerceElectronic Commerce

Any questions so far??Any questions so far??

Supply Chain Management The flow of materials, information, and services The flow of materials, information, and services

from raw suppliers, through the factory, to the end from raw suppliers, through the factory, to the end customer. Includes:customer. Includes: reduce uncertainty & risks, inventory, cycle reduce uncertainty & risks, inventory, cycle

timetime Improve business processes, customer serviceImprove business processes, customer service Increased profits & competitivenessIncreased profits & competitiveness May not include physical products at all!May not include physical products at all!

Problems in the Supply Chain

Occur within complex or long supply chainsOccur within complex or long supply chains Common sources of problems: Common sources of problems:

Unable to meet demandUnable to meet demand Holding large or expensive inventoryHolding large or expensive inventory Coordination of several activities, partnersCoordination of several activities, partners Quality issues with materials, production (ISO)Quality issues with materials, production (ISO) What are some examples? Why do they happen?What are some examples? Why do they happen?

How do you recognize supply chain problems?How do you recognize supply chain problems?

E-Commerce & Supply Chain

How can E-Commerce improve SCM?How can E-Commerce improve SCM? Green Mountain Coffee RoastersGreen Mountain Coffee Roasters

www.gmcr.comwww.gmcr.com

Hospitals Cut Costs

15,000 purchase orders generated 1 yr15,000 purchase orders generated 1 yr Average cost of $70 per POAverage cost of $70 per PO

E-commerce reduced cost to $4 per POE-commerce reduced cost to $4 per PO Savings of $840,000 per hospital per Savings of $840,000 per hospital per

year!year! Investment required for E-CommerceInvestment required for E-Commerce

Approximately $8k to $15kApproximately $8k to $15k

Another Pause to Reflect…

Is everyone OK with Supply Chain Is everyone OK with Supply Chain Management concepts?Management concepts?

Was anything unclear?Was anything unclear?

The Dark Side…

Higher chance of fraud & crimeHigher chance of fraud & crime Buyers and sellers never meet face to Buyers and sellers never meet face to

faceface Internet stock fraud, recent casesInternet stock fraud, recent cases Investment firms selling non-existent Investment firms selling non-existent

fundsfunds 65% of all FTC complaints derive from 65% of all FTC complaints derive from

on-line auctionson-line auctions

Remember all of that data?

Information Systems, the Internet, and E-Information Systems, the Internet, and E-commerce each contribute to the creation of commerce each contribute to the creation of extremely large databasesextremely large databases Often called “Data Warehousing”Often called “Data Warehousing” Examples include major credit cards, Examples include major credit cards,

insurance carriers, credit reporting insurance carriers, credit reporting agenciesagencies

So, Now the Data is Protected…

““Unauthorized” people cannot gain access Unauthorized” people cannot gain access to corporate databasesto corporate databases Everyone feel good about this?Everyone feel good about this?

What are the uses for this “protected data”?What are the uses for this “protected data”? How should this data be used?How should this data be used? For what purposes should it not be used?For what purposes should it not be used? How do you answer these questions?How do you answer these questions?

A Framework of Ethical Issues Privacy: Privacy: personal information that you are required to personal information that you are required to

reveal, employer surveillance, information that you keep to reveal, employer surveillance, information that you keep to yourselfyourself

Accuracy: Accuracy: who is responsible, how can we be sure, who is responsible, how can we be sure, accidental vs. intentional errors, who is responsible for accidental vs. intentional errors, who is responsible for errorserrors

Property: Property: information ownership, appropriate prices for information ownership, appropriate prices for exchange, use of proprietary databases, should experts be exchange, use of proprietary databases, should experts be compensated for expert systemscompensated for expert systems

Accessibility: Accessibility: who is allowed, provisions for persons who is allowed, provisions for persons with disabilities, what information are you privileged to with disabilities, what information are you privileged to obtainobtain

Privacy Privacy is not absolute!Privacy is not absolute!

Must be balanced with needs of society, Must be balanced with needs of society, ex: public right to knowex: public right to know

In the Past: In the Past: privacy was almost guaranteed! privacy was almost guaranteed! How? How?

Today: Today: IS can quickly correlate data in multiple IS can quickly correlate data in multiple databasesdatabases

Computer Aided Record MatchingComputer Aided Record Matching: can catch : can catch tax cheaters, fraud, “deadbeat dads” but can also tax cheaters, fraud, “deadbeat dads” but can also be used for other purposes: blacklistingbe used for other purposes: blacklisting

Personal Data Wealth of Available Information: TRW, Wealth of Available Information: TRW,

Cable TV, Telephone, Credit Cards, Cable TV, Telephone, Credit Cards, Warrantee Cards, Lease AgreementsWarrantee Cards, Lease Agreements

Ask a new set of Questions:Ask a new set of Questions: Where is info stored? Who controls Where is info stored? Who controls

access? Are records accurate? How do access? Are records accurate? How do you fix them? How long does it take?you fix them? How long does it take?

““But the computer says...”But the computer says...”

Other Sensitive Information Who is responsible for offensive material on Who is responsible for offensive material on

Internet news groups?Internet news groups? What do you do about it?What do you do about it?

International flow of dataInternational flow of data Some countries closely regulate data flow Some countries closely regulate data flow

across their boarders, but this is difficultacross their boarders, but this is difficult Who owns the data and whose laws apply?Who owns the data and whose laws apply? Data transmitted by Polish company on a US Data transmitted by Polish company on a US

satellite to a British companysatellite to a British company

Privacy Policies (!) Data CollectionData Collection: : should be done only for legitimate should be done only for legitimate

business need, should be adequate, relevant and not business need, should be adequate, relevant and not excessive, individuals should give consent, consent can be excessive, individuals should give consent, consent can be impliedimplied

Data AccuracyData Accuracy: sensitive data should be verified before : sensitive data should be verified before it is entered into a database, should be accurate & kept it is entered into a database, should be accurate & kept current, data should be made available to the individual for current, data should be made available to the individual for correctioncorrection

Data ConfidentialityData Confidentiality: security should be implemented, : security should be implemented, 3rd party access should be restricted - except as required 3rd party access should be restricted - except as required by law, should not be disclosed for purposes other than it by law, should not be disclosed for purposes other than it was collectedwas collected

Wrapping it all up

Information systems bestow many benefits Information systems bestow many benefits to individuals, organizations, and societyto individuals, organizations, and society

However, there are many opportunities for However, there are many opportunities for abuse!abuse!

Always be watchful of how data will be Always be watchful of how data will be used…used…

Questions?