Study for MIS

7/29/2019 Study for MIS

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The .com [dot com] Bubble

ADM 3713


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Intel Stock Price


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Bubbles in the past

Tulip Bubble1637

South Sea Bubble1720

Railway Bubble1840s

dot Com Bubble ~ 2000

U.S. Housing Bubble2008


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Nortel10 years


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Intel10 years


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CISCO10 years


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Qualcomm10 years


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JDS Uniphase10 years


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Sun10 years


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The South Sea Bubble (1720)


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By the way

I can calculate the motion of heavenly

bodies, but not the madness of people.

Isaac Newtonafter he lost 20,000 in the

South Sea Bubble


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IBM10 years


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Microsoft10 years


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What the bubble means

Capital is easy to get (tooeasy)

A market for new issues (equity financing)

Large number of IPOs (1999457)

Stock prices increase

PE ratio increases dramatically

Prices return to normal suddenly

(200176 IPOs)


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The Bubble

Lasted from the IPO for Netscape (Aug. 1995)

Until after Y2K(year 2000)

Say, mid 1998 until mid 2000, about 24 months

Nasdaq

DOW

S&P 500

All hit highs they have not reached since


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Consequences of the Bubble

for IT Many internet firms (.coms) disappeared,

but

Innovation didnt slow down

Capital investment continued

But entrepreneurship did drop

Venture capital was more difficult to get Investment in technology became subject to more scrutiny

Outsourcingbecame more popularthought torequire less capital to keep up with technology


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Consequences of the Bubble

for IT Some companies

ENRON

WorldCom

Adelphi

Went too far trying to exploit the bubble

Executives are serving time


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Look out for

When you are doing research:

Reading books, magazines, cases, other

references

Always note whether or not it was written

before, during, or after the bubbleBeforeusually optimistic

Aftermore realistic (not necessarily more accurate)


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Paradigm Shifts and Bubbles

Paradigm Shifts

technology discontinuity

customer need

time

Bubble morelikely here


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Nortel (2000) vs.

The South Sea Bubble (1720)


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Guess


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Same company - later

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Remember

What is a Bubble?

The Dot. Com bubble

Its consequences Recent adjustments

Nortelbankrupt

Sun Microsystemsbought by Oracle

EDS bought by HP GoogleAndroid, Chromenew software player??

RIM ???HP ???


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Remember

IPO (Initial Public Offering)

Venture capital

PE Ratio


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End


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Big Iron, Hardware, Moores Law

ADM 3713


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The Five IT costs or

components

Where is the network?


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In the Beginning

Computers to 1945

Analog vs. digital .. Digital won

Computers 1945-1964

IAS, Urbana and the Illiac

Tubes to transistors

Computers 1965-1982

Dominance of IBMBig Iron


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More Recently

1982 to 1995

LSI - Large Scale Integrationchips

Made things smaller - microscopic

The Internete-mail, file transfer Application Providersservices

1996 to Present

The Web, search engines

Outsourcing

Applications over the Internet (cloud computing)

Social computing, cell phones, etc.


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Also

Transition of the dominant player

IBMMicrosoft GoogleRoom DesktopMobileCentralized Distributed Ubiquitous


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IBM 7094


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S/360 40


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S/360 50


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A note about Mainframes Big Iron

Often called Legacy Systems

Still important in some applications

Banks Insurance companies

Credit card processing

Governments

Moving from legacy systems to modern

systems is expensive and difficult


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A system

Feedback!


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A ComputerSystem


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Simpler version of a System


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Memory, storage, bytes

CPUs only process data expressed as a

series of 0s and 1s bits

Digital computer systems use bits Analog computer systems use continuous signals (usually voltages)

8 bits 1 byte


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Bytes

It turns out

A byte is pretty smallneed to consider

many of themKilo (1000s)

Mega (millions) 1 MB 1 million bytes

Giga (billions) 1GB 1 billion bytesTera (trillions)


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Bytes


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ASCII Codes


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ASCII Codes

(Being replaced by Unicode)


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Bytes

A single byte mayrepresent an ASCII character

E.g., an A a 1a $

ASCII is a standard set of 256 codes used torepresent numbers letters and a few other

characters

Unicodeis a newer standard using 2 bytesimportant for multilingual data - 65,000 codes


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Bytes

One typewritten page is two KB (double

spaced)

If, each character (and space) is representedby an ASCII code, each takes one byte, 8

bits

500 pages are (about) one MB 500,000 pages are about one GB


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Note

Bcapital B means bytes

bsmall b, means bits

KB a kilobyte, 1000 bytes 8000 bits

Kb a kilobit, 1000 bits 125 bytes


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End

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Moores Law

ADM 3713


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Some Players in

Information TechnologyEconomists:

David Hume

Alfred Marshal

Ronald Coase

Brian Arthur

John Nash

CharlesVickery

Scientists:

ClaudeShannon

Paul Baran

GordonMoore

Bob Metcalf

HerbGrosch

EricSchmidt

Entrepreneurs:

Bill Gates

Andy Grove

Michael Dell

(Amazon)

(E-Bay)

(Google)

Don Tapscott

George Gilder

Charles Handy

Chris Anderson


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The Players who have Laws

named after them Herbert (Herb) Grosch

Gordon Moore

Robert (Bob) Metcalf

Paul Baran

Claude Shannon

Ronald H. Coase

Eric Schmidt


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A few people have made a lot of money

from information technology

Who hasgiven away the most??


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The CPU and microprocessors

Industry built onMoores Law

Dominant manufacturerINTEL

Others: IBM, AMD, Motorola. TexasInstruments

Microprocessors are everything (e.g., cell phones,

MP3 players, video cards, routers) CPUs are microprocessors in computers


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Moores Law

Gordon Moore predicted in 1965 that the:

price/performance of microprocessors willdouble every 18 months

What works now for $10

will cost $5 in 18 months

$2.50 in 36 months

$1.25 in 54 months

In 10 years it will cost 8 cents!


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Moores Law

Firms, companies, industries that

recognized Moores law have prospered.

Those that ignored it have disappeared!!

A few, that try to provide a distinctive product

at a premium price (Apple) have survived


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For example, Intel (INTC)(prospered)

Designed a CPU architecture or family for PCs

e.g., Apple and SUN are other architectures

The Intel family 8088, 80286, 80386, 80486,Pentium, Pentium II, Pentium III, Pentium

IV, etc. (Core Duo, Quad)

Appear 18 to 24 months apart.

A very deliberate, successful, design and

marketing strategy. Intel manages innovation


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Intel Processors


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Intel Stock Price


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Suppose. . .

Your business was manufacturingand

marketing a product (or service) that

decreased in cost by half every 18 months:How could you possibly stay in business?

- suppose you were selling hamburgers?

E.g., PC manufacturers

Long distance telephone providers (service)

Disk drive manufacturers


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Suppose. . .

Your business was buying a componentthat was decreasing in cost this way

How would you price your product?How would you keep your margins?

How could you leverage this price change to:

increase your market? develop new uses (innovation)?


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Suppose. . .

Your business was buying equipment or aservice that was decreasing in cost this way

How can you exploit this to lower your costsand increase your profits?

What do you have to do to say competitive?


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Some Strategies

Industries go through commoditizationInnovative products that commanded high

prices at the beginning eventually becomecommodities

Need to change strategiesmove to Low cost, high volumecreate a demand

Move to standardsConsolidate (merge) with competitors

Form alliances to keep costs down


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Examples

What have you bought

When it was new, innovative

That is now a lot less expensive, a lot morecommon?


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Some Strategiesfor Competitive Advantage

1. Low(production, operating)cost(within yourindustry)(notnecessarily low prices)

2. Differentiate (from your competitors) (better service)

3. Focus (niche market, be best in a smaller market)

4. Innovation (new features)

5. Growth (increase market share)

6. Alliances (concentrate on your core)


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Examples

Moores Law works for: PCs

Storage

Cell Phone devices Printers

Screens, monitors

Long distance telephone service

Does Moores law work for? IPhone

IPod

Cell phone services

Software, consulting services


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Other ICT devices(Information, Communication Technologies)

Moores Law applies to:

Disk drives

PrintersTelecommunication devices

Other accessories

Because they are based on microprocessorsand the manufacturing technology that hasspun off from them


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But

Moores Law doesnt seem to apply to

software products

Why?What might change this?

Moores law doesnt seem apply to services consultants, integrators, web designers, etc.


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TopPhilanthropists

9. Michael and Susan Dell $993 million

2. Bill and Melinda Gates (Foundation)$5,458 million

1. Gordon and Betty Moore (Foundation)$7,046million

Source: Business Week, November 28, 2005 (from 2001 to 2005)


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Remember

What Moores Law says:prices drop byhalf every 18 months (or performancedoubles)

In stories, cases, and examples ask:

Does Moores Law affect the business? If so, how (e.g., strategy, profits, competition)?

Where? ( e.g., Operations, products)

What does the firm use that Moores Lawdoesnt apply to?


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An Example

Here is an early computer

What might it be used for?

Why was it never popular?

Why are Honeywell, Xerox, General Electric,

Ford, RCA -- no longer in the computer business?


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End


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Hardware

ADM 3713


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The Five IT costs or

componentsp.6

Where is the network?


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In the Beginning

Computers to 1945

Analog vs. digital .. Digital won

Computers 1945-1964IAS, Urbana and the Illiac

Tubes to transistors

Computers 1965-1982Dominance of IBMBig Iron


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More Recently

1982 to 1995

LSI - Large Scale Integrationchips

The Internete-mail, file transfer

Application Providers

1996 to Present

The Web, search engines

Outsourcing Applications over the Internet (cloud computing)

Social computing, cell phones, etc.


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Also

Transition of the dominant player

IBMMicrosoft GoogleRoom DesktopMobileCentralized Distributed Ubiquitous


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IBM 7094


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S/360 40


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S/360 50


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A note about Mainframes Big Iron

Often called Legacy Systems

Still important in some applications

Banks Insurance companies

Credit card processing

Governments

Moving from legacy systems to modernsystems is expensive and difficult


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A system

Feedback!


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A ComputerSystem p. 91

Si l i


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Simpler version p. 89


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Memory, storage, bytes

CPUs only process data expressed as a

series of 0s and 1s bits

Digital computer systems use bits Analog computer systems use continuous signals (usually voltages)

8 bits 1 byte


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Bytes

It turns out

A byte is pretty smallneed to consider

many of themKilo (1000s)

Mega (millions) 1 MB 1 million bytes

Giga (billions) 1GB 1 billion bytesTera (trillions)


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Bytes

ASCII Codes

(Being replaced by Unicode)


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( g p y )


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Bytes

A single byte mayrepresent an ASCIIcharacter

E.g., an A a 1a $ ASCII is a standard set of 256 codes usedto represent numbers letters and a few othercharacters

Unicodeis a newer standard using 2 bytesimportant for multilingual data


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Bytes

One typewritten page is two KB (double

spaced)

If, each character (and space) is representedby an ASCII code, each takes one byte, 8

bits

500 pages are (about) one MB 500,000 pages are about one GB


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Note

Bcapital B means bytes

bsmall b, means bits

KB a kilobyte, 1000 bytes 8000 bits

Kb a kilobit, 1000 bits 125 bytes


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About Time

It turns out, a second is a long time

Need to talk about fractions of seconds

Millisecond1 thousandthMicrosecond1 millionth

Nanosecond1 billionth

Light travels about 30 cm in 1 nanosecond


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Rates

Together, size and time measure rates

E.g., Megabytes per secondMB/sec

Also as frequencies times per second

E.g., 3 MegaHertz3 million times per second

Other terms:

Baudbit per second

Bandwidthnumber of bits per second (through agiven channel), e.g., from the Internet to your computer

CPUs perform operations in


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CPUs perform operations in

clock cycles 1 hertz is one (clock) cycle per second E.g., the sequence of operations to add two numbers

might be:

1. retrieve the instruction2. Decode the instruction

Execute the instruction:3. get first number

4. get second number

5. add the two numbers

6. Store the result

This is six clock cycles


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CPU Speeds

Measured in Megahertz (and Gigahertz)

Millions (billions) of (clock) cycles per

second A single arithmetic operation may take

several cycles

Advanced CPUs can overlap operations E.g., dual core, quad core


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Three ways to make a CPU faster

1. Speed up the clock (more steps per

second)

2. Do some steps in parallel Do next step 1 while steps 4, 5 and 6 are

happening

3. Use a larger word size (internally in theCPUthe bus)


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All these things depend on more transistors

in a CPU

Moores Law talked about: Cramming more components onto

integrated circuits


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CPU Speeds

Newer CPUs have special instructions

E.g., Pentium III had special instructions forhelping graphics and sounds.

Pentium IV does more steps in parallel

Current CPUs have a 32 bit internal wordsize (orbus)

Newer CPUs have a 64 bit internal busIt is the backplaneof Schmidts Law

Why more RAM memory is a


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Why more RAM memory is aGOOD THING

Run larger programs (a biggerdesk)

More simultaneous users

More simultaneous programs Often faster (larger cache for disks)

May make peripherals run faster

Why more RAM memory is a


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Why more RAM memory is aGOOD THING

Relatively cheap, (compared the CPU)

Easy to install

Doesnt (normally) require reconfiguring

Note:

Cache memoryusually is right on the CPUchip

So you cant change it, and it is more expensive


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Types of Memory

Current PCs 1000 MB to 4000 MB of memory

Original PC had 64 KB

How many times larger is 1000 MB?

Cache Memoryon the CPU chip

Very fast, expensive

Video Memoryon the video adapter


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Typical test questions

6. If a CD holds 640 MB of data and your

computer reads it a 2 MB per second

How long will it take to read the whole CD?7. If a DVD holds 4.7 GB of data how long

will it take to read it?


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A typical test question

8. A SD card holds 2 GB, how many pages

of typed text can be written on one?

2 GB = 2,000,000 KB 1 page is 2 KB

This SD card can hold 2,000,000/2 = 1

million pages

Analog to Digital


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Analog to Digitalreality is analog

Bitsno size, colour or weight and can travel at

the speed of light.

Digitizingtaking samples of an analog signal

CDs take 44.1K per second. But each sample is

16 bits.

Bandwidthnumber of bits per second (through

a given channel). the channels capacity A CD needs 44.1 x 16 x 2 (stereo) =1.4 Mbps

Buses and Connectors


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Buses and Connectorshave different bandwidths

Internal bus

USB 1.1, 2.0

Wireless 802.11 Digital monitors

Older

Serial Port

Parallel Port

Infrared

ISA

PCI

SCSI


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USB 2 0


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USB 2.0(USB 3.0 now the current version)

Announced April 2000an example of a Standard

Controlled by the USB Implementers Forum

This is an organization of manufacturers USB has a bandwidth of 480 Mb/sec

It can provide power for low power devices

How many bytes per second?How long does it take to transfer a 6 GB DVD?

A l d Di i l


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Analog and Digital

Analog signals are continuous

E.g., sound, light, radio waves, etc.

Digital signals are a stream of bits, on andoff, 1s and 0s.

Analog signals usually get distorted when

they are transmitted or stored. Digital signals can be reproduced perfectly

A l d Di i l


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Analog and Digital

Analog signals are hard to mix,

E.g., radio and television use different parts of

the spectrum, TV signals use different channels

Cable is a different wire from telephone

It is possible to mix digital signals

E.g., you computer receives pictures,

documents (e-mail and web pages), sounds,

video, all on the same network.

Di i l Si l B d id h


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Digital Signals Bandwidth

64,000 bits per secondvoice

1.4 million bpshigh fidelity music

45 million bpsvideo

P bl


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Problem

A CD can hold about 72 minutes of music.

How many bytes is this?

A


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Answer

72 min. x 60 = 4,320 seconds

4,320 x 1.4 = 6,048 Mb

6,048 / 8 = 756 MB


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End


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Software(Chapter 3 pp. 102-108, TB pp.463)

ADM 3713

S ft


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Software

The set ofinstructionsthat tell a computersCPU what to do

E.g.

Read a number from memory

Read another number

Add the two numbers together

Store the result in memory

The instructions are sometimes called computercode

S ft


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Software

Writing instructions is calledprogramming

orcoding

The code is in a language all imperativeverbs

There are many different languages and

dialects It is slow, tedious and expensive


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T


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Types pp.105-107

Systemssoftwareoperating systems (O/S)

Windows, Unix, MacOS, Linux, Android

telecommunications software andservices

Database Management Systems (DBMS)

Application software

word processing vs. more specific applications Project Management

running an ATM

Third Part s OEM


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Third Party vs. OEM

OEMOriginal Equipment Manufacturer

E.g., Dell, Microsoft, Intel, IBM, Apple

Buying accessories, software, services etc.not from the OEMyou are said to be

dealing with a third party First partyyou

Second partyOEM, your primary vendor

Third partyanother vendor

Operating Systems (O/S)


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Operating Systems (O/S)

Computer Operating Systems

MS Windows

UnixOthers have fallen by the wayside

Special Purpose O/S

In ATMsOther devices, Cell Phones, etc. - Android

Windows vs Unix


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Windows vs. Unix

Windows is owned and marketed byMicrosoft -proprietary

Many versions over time: Win 95, Win 98, Win2000, Win XP, Vista, etc.

Succeeded in the market by

incorporating many good ideas

Increasingeconomies of scale

Bloodthirsty competitiveness

Windows vs Unix


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Windows vs. Unix

Unix Core(kernel) is open available to anyoneopen source software

Each manufacturer tailors it to their products

Sun SunOS, HP HP/UX IBM AIX

Linux is a generic type that most manufacturersnow usebut sold by several different vendors

and still tailored Android isproprietary,but freely available

What does the O/S do?


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What does the O/S do?

O/S, generally,specific to hardware

Shields the applications from hardwaredependence

For example, to an application program MSExcel a spreadsheetall disks look alike big,small, floppy, CDs, DVDs, flash drives, etc.

Definition: O/S a program that manages theresourcesof a computer, e.g., memory,CPU, printers, disk drives, network, etc.

What else does the O/S do?


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What else does the O/S do?

Manages the user interfacehow you seethecomputerthe windows, the file folders, etc.

Includes utilities such assearch (or find)

Some devices have special characteristics E.g., Printer

Cant be shared so the O/S spools or queues the output todisk for later printing.

E.g., Mouse Needs to react immediately, O/S, gives this a high priority,ability to interrupt other functions

Why the O/S is so Important


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Why the O/S is so Important

Because it shields the applications from hardware

dependence

It enables developers (3rd parties) to create an

application that will run on different platforms

cell phones, tabletsfrom various manufacturers

(2nd

party) So, over the last 25 years or so, apps are a huge

industry!Feb-13 ADM 3713 139

Developing Software Products is


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1. Slow (takes years)

2. Error Prone (lots of post sale adjustments)

3. Expensive4. Also - risky

5. Requires talent. Some people are better

than others. A few people are very good.6. Moores Law doesnt seem to apply

Software Products


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Software Products

7. Very difficult to specify the design,

difficult to control the development.

Software Products


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Software Products

8. Market may be difficult to define, can

vary from very narrow and specific to

very broad. Sometimes, vertically

integrated, sometimes wide (horizontal).

E.g., a Word Processor or a WP for

lawyers

a spreadsheet, an accounting package, an

accounting package fordentists

Horizontal vs Vertical


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Horizontal vs. Vertical

This concept is important

Some firms target a horizontal market

They sell their products to a wide range of companies,

e.g., Office Depot, utilities, transportation, banks,insurance, etc.

Some firms target or are embedded in a specific

industry, e.g., manufacturers of printing presses,

aircraft, specialty services

This is called a vertical market

Off-the-Shelf vs. Custom


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pp. 366-367

Customizedtailored (created) to meet the

specifications of an organization

Off-the-Shelfsupports common business

processes

Tailor off-the-shelfmodify to your needs


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Horizontal vs Vertical Software


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Horizontal vs. Vertical Software

Software Issues


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Software Issues

Costs Software is Expensive!

ERP software starts at $100,000

may cost $50 or $100 million to implement in a large firm

Cost CICS $20,000 per month, on one machine in one room used bydedicated terminals (IBM had 20,000 customers)

Upgrades to Windows $50 x 2,000 $100,000

every couple of yearsbut more difficult to

deploy

Difficult to control costs, difficult to allocate costs

Programming Languages pp 459 466


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Programming Languages pp.459-466

HTML and tags


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HTML and tags

Another approach to programming acomputerthat also has a long history

More capable hardware has made itimportant

E.g., HTML (for Web pages) uses tagsaround the text

Describes the structure: text, headings, listsAnd Links


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Tags (or codes)


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Tags (or codes)

Content Management Software (CMS)

Now important for firms to keep their webpages up-to-date

Especially, when the web pages are designedand hosted by an outside organization(outsourced)

CMS allows you to enter unformatted data

(e.g., text) and edits it for the corporate webpages

Other Software Problems


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Other Software Problems

One approach, is central distribution from aserviceprovider (ASP).

Training, old and new employees, required before

hiring or is it the responsibility of HR? Ownership, e.g., by you, or your employees who

write software?, or by the provider?

Standardizatione.g., one word processor, one

spreadsheet across the whole company? Problems with a mobile workforce, or people

working from home, on their own laptop?

Today


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Feb-13 ADM 3713 153

Today

Very few companies write computer programs fortheir own use.

Usually they buy programs (applications) from

specialized vendors Database companies e.g., Oracle

Application companies E.g., PeopleSoft, J.D. Edwards (now both part of Oracle)

Enterprise companies e.g., SAP (SystemAnalyse undProgrammentwicklung), IBM

$500,000 and up ($50,000,000 or so)

Application Service Providers ASPs


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Feb-13 ADM 3713 154

the Cloud cloud computing

Not entirely a new idea

Result of:

Modern high speed networksHigh cost of maintaining software

Accounting and financial considerations

Corporate focus Also called SaaS (Software as a Service)

ASPs value


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Feb-13 ADM 3713 155

ASPs value

You rent the use of software, as you

need it, this may give you:

1. Predictable pricing

2. No up-front capital expenditure

3. Rapid deployment


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Feb-13 ADM 3713 156

Most of these issues will come up again

They are fundamental management

problems Software and hardware for an enterprise are

the means of production

In a bitbusiness they are vitalManagers must make good choices

Note


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Feb-13 ADM 3713 157

Note

Keep Your Software

up-to-date

Learn how to use itUseyour word processorits not just a

typewriter

Useyour spreadsheetits not just a pocketcalculator

Usetheir help


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End


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A Note about Software

economics

ADM 3713

A Note about

S ft E i


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Feb-13 ADM 3713 161

Software Economics

Software exhibitsIncreasing Economies of

Scale

Under the right circumstances software is

immensely profitable

Normally, production, eventually, results in

decreasing economies of scale


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But,Software


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Feb-13 ADM 3713 163

u ,So w e

1. Doesnt cost anything or take any time toreplicateit doesnt weigh anything

2. Has the property (Metcalfs Law) that the

larger the market the more the marketgrows

I.E., you prefer to use the same software that

your supplier and your customers use One software product, e.g., MS Windows, can

become ubiquitous

Increasing Economies of Scale


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Feb-13 ADM 3713 164

g


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Free?


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Feb-13 ADM 3713 166

Open-source software

Publicly available and free

Source code may be available

Sometimes distributed as freeware or shareware

With an optional fee

Sometimes a complete version has a fee

Dont confuse with limited time free trials


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End


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Feb-13 ADM 3713 168


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Network Basics

What is the Internet?Chapter 3 pp.109-118

TB pp. 467- 487

ADM 3713

Internet


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Feb-13 ADM 3713 170

Some material here

More material later focusing on the web

and e-commerce

Five Significant Technologies


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Feb-13 ADM 3713 171

g g

1. Microprocessors, LSI circuits, chips

2. Software

3. Databases

4. Packet switched networksThe Internet5. Search Engines


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Feb-13 ADM 3713 172

Thomas Watson

saidThe world

will need about five

computers

He was out byhow

many!


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Definitions


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Feb-13 ADM 3713 176

Switched circuits

A networking technique that sets up a physical

connection between two parties, for the duration of

the session. (This is the phone system).Packet switching

Technology that breaks blocks of data into small,

fixed bundles and routes them through the available

communications channels. (This is the Internet).

The Internet:


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Feb-13 ADM 3713 177

Combines

Computers

Telecommunications

Is a redesign of

How signals can move

How people can connect to one another

The value (or cost) of communicating


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Formal definition


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Feb-13 ADM 3713 179

A global information system that: Is logically linked together by a globally unique address

space based on the Internet Protocol (IP) or itssubsequent extensions/follow-ons;

Is able to support communications using theTransmission Control Protocol/Internet Protocol(TCP/IP)

Provides, uses or makes accessible, either publicly or

privately, high-level services layeredon thecommunications and related infrastructure described . ..

Open Architecture


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Feb-13 ADM 3713 180

Each distinct network would stand on its own and

no internal changes would be required to connect

it to the Internet

Communications would be on a best effort basis

Networks would be connected by routers(blackboxes)no information would be retained about

individual packets No global operations control

Whats Important


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Feb-13 ADM 3713 181

1. Globally unique address space

2. Based on the Internet protocol (IP)

3. Able to supportTCP/IP

4. Provides services layeredon the

communications infrastructure


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Feb-13 ADM 3713 182

. . . Every public and private network that

has agreed to exchange communication

using TCP/IPit is a standard

This includes big, backbone networks,

local campus LANs, and your house or

apartment

Circuit Switched NetworksNot the Internet


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Feb-13 ADM 3713 183

Not the Internet

Technology that sets up a fixed circuit

between two points for the duration of a

connection and takes down the circuit when

the message is finished.

Conventional telephones

Circuits are switched to make a pipe

Circuit switching andPacket switching


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Feb-13 ADM 3713 184

Packet switching Circuit switching is

like a railway

Directedness (tracks)

Control Central command

Needs a central office


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Packet Switching p. 113


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Feb-13 ADM 3713 186

Technology that breaks blocks of data into

small fixed, bundles and routes them

through any available communications

channel

The Internet is based on packet switching

Using TCP/IP packets and protocols


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TCP/IP Protocol(s) p. 114


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Feb-13 ADM 3713 188

IP defines a 128 bit address

Handles addressing and forwarding of packets

Extended to 128 bits (called IPv6) from 32 bits (IPv4)

TCP defines handling, segmentation,reassembly, concatenation, separation and

recovery of packets

The Routers give direction


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Feb-13 ADM 3713 189

Routers are like

highway signs

Routers are (black)boxesreally a specialpurpose computer

Routers and Signs


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Feb-13 ADM 3713 190

Routers allow

different paths to get

to the same destination

Routers


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Feb-13 ADM 3713 191

Routers can route

packets around a

blockage

Packets for onemessage may:

Go along different

routes

Arrive out of order


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Feb-13 ADM 3713 192


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So


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Feb-13 ADM 3713 194

Packets are sent to

their destination with

the assistance of

routers (This is the IP part)

At the receiving end:


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Feb-13 ADM 3713 195

Each packet ischecked to ensure themessage is complete

They are assembledinto their original form

(This is the TCP parton your desktop)

Textbook


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Feb-13 ADM 3713 196

Has a simplified diagrams

pp. 483

p. 114


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Feb-13 ADM 3713 197

Global Address Space


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Feb-13 ADM 3713 198

Every computer has an IP numberp. 114, p.483

Every one is different

128 bits (was 32 bits) Domain namese.g. unb.ca

Name servers

Match names and IP numbers Managed by the Domain Name Server (DNS)


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Feb-13 ADM 3713 199

Stupid vs. Intelligent


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Feb-13 ADM 3713 200

In the (new Internet)

stupidnetwork, thedata tells the network

where it wants to go

The (old telephone)

intelligentnetwork,tells the data which

path to follow

Packet switched


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Feb-13 ADM 3713 201

Always on

No call

Time not a factor Customers are not distinguishable

purpose of data is not known

For the Internet


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Feb-13 ADM 3713 202

Overhead is very low, there is no permanent

circuit

Connection is not reliable best effort

Intelligenceis at the edge, the PC is smart,routers are dumb

Services are at the edge, there is no central

officethis is where business is conductedThe Internet is like the oceanno one owns it

Telecos


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Feb-13 ADM 3713 203

Dont like the Internet, want to control it like a

telephone system

Intelligence in a central officethe handset is

dumb Services in the central office, e.g., call waiting, 911,

the central office is owned by the service provider

Control the services,

prevent Skype force users to their brand,

charge for different services and volume of use

Client/server Networks pp. 112, 472


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Feb-13 ADM 3713 204

A network in which one or more computersare servers and provide services to othercomputers, called clients.

Services might be:E-mail

Web pages

DatabasesBusiness rule processing

Client or Server


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Feb-13 ADM 3713 205

People use the machines on their desks (or

in their hands). These are normally the

clientmachines.

Services are provided by (usually) larger

machines on the network that run

unattended (in the backroom or anywhere on the

Internet). These are the server machines.

Client/Server


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Feb-13 ADM 3713 206

Shares processing between the desktop and

the backroom

Allows the firm to centralize control of

information, the database(s)on the server

Allows employeescustomers, suppliers

local use and analysisat the desktop

Anywhere..

Examples ofServices


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Feb-13 ADM 3713 207

E-mailreceiving, sending (use the SMTPprotocol)

Web servers (use the HTTP protocol)

Database serversfor the firms data (use theSQL language)

File systems (use the FTP protocol)

Authentication (use the SSL protocol)

Examples of IP ServicesAs compared to applications


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Feb-13 ADM 3713 208

TCP/IP services:

E-mailreceiving,

sending

Web servers Authentication

Security and

encryption

File systems Database servers

Applications:

You Tube

Facebook

Amazon E-Bay

SaaS (cloud

computing)


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The Commercial Network


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Feb-13 ADM 3713 210

Yourmachine

Ethernet over copper to your router or Wi-fi

Your router (to a modem) to

To your ISPs router (Rogers, Aliant)

The ISPs Router

To the long haul internet provider (Sprint,

etc.) (Reversed at the other end)

The Commercial Network


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Feb-13 ADM 3713 211

IP Names and Addresses pp.115


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Feb-13 ADM 3713 212

Each network has an address

UNB Fredericton 131.202.xxx.xxx

The lower numbers are assigned to campusnetworks and machines

Networks also use namessomething.unb.ca p. 183

.203

unicorn

Internet

www.

amazon com

R


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Feb-13 ADM 3713 213

.7

jupiter.49

mars

Faculty of Admin 131.202.8

Library 131.202.45

Router

web mail

dns

amazon.com


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Feb-13 ADM 3713 214

Neotrace

16 hops

197 ms return

131.202.53.114

204.146.80.99

CA*Net design

Fiber


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Feb-13 ADM 3713 215

Good points

Cheap

Dielectric

High capacity (fast) (incredibly high)

Hard to install in built up areas

(One way is to thread it through gas pipes)

Twisted Pair(Copper)UTP, Cat-5. Cat-6, RJ45 Carries Ethernet


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Twisted Pair to Router


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Fiber(glass)


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Feb-13 ADM 3713 220

Fiber (Fibre)


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Feb-13 ADM 3713 221

Many orders of magnitude faster than

copper and wireless

Cheaper

WDMallows the capacity to increase

Adds lambdas

Aliant and FiberOP


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Feb-13 ADM 3713 222

BellAliantFibreOP25/5

~$88.00 per month 20 Mbpsdownload

5 Mbpsupload RogersExtreme Plus

~$70.00 per month 25 Mbpsdownload

1 Mbpsupload 125 GB per month

Aliant and FiberOP


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Feb-13 ADM 3713 223

The artificial scarcity is created two ways:

The download speed100 Mbps might be

reasonable

Making the upload speed slower than the

download speedno technical reason for

thisit probably takes extra equipment to

throttle it

Free?


224/485

Feb-13 ADM 3713 224

Book:Free: The Future of a Radical Price

By Chris Anderson

In order to stay in their traditional businesses

Firms create artificial scarcity Treat an abundant (cheap) thinghard drive capacity,bandwidth, peripheral services (e-mail ids, security,some software) as if they were scarce and charge forthem

This treats a scarce thingyour timeas if it wereabundant

Speed Dating - Aliant and Rogers


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Feb-13 ADM 3713 225

Paradigm Shift?


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Feb-13 ADM 3713 226

Paradigm Shifts

technology discontinuitycustomer need

function

time

Circuit switching

Packet switching

Why in the Internet intelligence is at

the edge


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Feb-13 ADM 3713 227

Packet switching as used by the Internet

Services are at the edge

a service provider (the one who makes money) can be

anywhere The network provider

doesnt need to provide added services, just a reliable access.

Doesnt need to know about or charge for the type of use

only the time or volume (- has a fixed cost)

Moores Law the capital cost is dropping

A disruptive technology

What is the next . . .?


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Feb-13 ADM 3713 228

IP telephony (VOIP (voice over IP)) Skype

Wireless IP telephony

Convergence

Cell phones and the wireless InternetFixed wireless to the home?

Fibre to the home?

TV Who wins? Who loses?


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Firewalls, encryption, VPNspp. 425, 426, 424


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Feb-13 ADM 3713 230

Important

Talk about later

IP utilities on your PC(Laptop, Tablet?, Smartphone?)


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Feb-13 ADM 3713 231

Ipconfig /all Tells you your IP address (and MAC address)

ping Tells you whether an address is active (and whether or

not your machine is working) tracert

lists the nodes to a destination

arp Most recently accessed IPs

nslookup Resolves IP numbers and names


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End


233/485

Feb-13 ADM 3713 233


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The Properties of the Internet

ADM 3713

1. Mediating Technology


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Feb-13 MBA 6106 235

Connects people

B2B, B2C, etc,

Facilitates exchange (cf. a bank)

Two-way (not one way, like TV or radio) This gives the customerspower

2. Universality


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Feb-13 MBA 6106 236

Can enlarge the world

Market anywhere

Can shrink the world

Work anywhere

3. Network Externalities


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Feb-13 MBA 6106 237

The more users the better: increases value

Metcalfs Law: value of something isnumber of users N N2

N = 10 then value = 100 N = 20 then value = 400

N = 1000 then value = 1,000,000

The reverse is trueif a new technology

(say, a new cell phone technology) doesn't take off,it has low value (and profit).

4. Distribution Channel


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Feb-13 MBA 6106 238

bit Products digital productsmusic, life

insurance, stock trades

Information

Replacement Disintermediation (e.g., travel agency, stock broker)

Extension

Price drops may be enough to increase market

(also a mediating technology)

5. Time Moderator


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Feb-13 MBA 6106 239

Shrink time

Information and bit products are available

immediately

Enlarge time

24 x 7 availability

E-mail delivered when read

6. Information Asymmetry


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Feb-13 MBA 6106 240

When one party in a transaction knows

more than another.

E.g., real estate brokers know more about the

housing market than the typical seller or buyer

E.g., a car dealer knows more about his costs

than a car buyer

This term also comes from Economics

The Internet can


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Feb-13 MBA 6106 241

Shrink Information Asymmetry

Reduces the disparity of access to information

between parties in a transaction

A buyer can search for information and know(almost) as much as the seller

E.g, car dealer cost

Examples


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Feb-13 MBA 6106 242

Term Life Insurance

The term life premiums have dropped $1 billion

in USA

Vendors had an information monopoly, theInternet reduced this

Coffins?

7. Infinite Virtual Capacity


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Feb-13 MBA 6106 243

Access to information, response time and

storage of data and information is notconstrained by technology

Because of Moores Law

No shortages

8. Low Cost Standard


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Feb-13 MBA 6106 244

Internet technology is open

Available to anyone at one of the profit sites

Costs are far lower than any competing

technologies

(for a variety of reasons)

9. Creative Destroyer


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Feb-13 MBA 6106 245

Barriers to entry are low, substitute

products and services are available1. Brand-new industrieshave been created

2. Transforms the structure, conduct, performance ofexisting industries

3. Competitive advantagein existing industries (andnew ones) can be enhanced

10. Transaction-Cost Reducer


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Feb-13 MBA 6106 246

Reduces the cost of doing business

Searching

Communicating

Negotiating

Reduces information asymmetry

Both Transaction costs andAgency costs

Remember

T i


247/485

Feb-13 MBA 6106 247

Transaction costsare incurred during the processof buying or selling, on top of the PRICE of

whatever is changing hands. If these costs can be

reduced, the PRICE MECHANISM will operate moreefficiently.

Agency coststhe costs of managing the business

E.g., Rent for facilities, accounting and legal costs

Limitations of the Internet

K l d


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Feb-13 MBA 6106 248

Knowledgeneed this

Tacit knowledge Non verbal, acquired by experience

Explicit knowledge Coded, verbalized, specified

Peopleneed to recognize

Bounded rationalitysome things can be so

new and different, they are indistinguishablefrom magic


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End


250/485

Feb-13 ADM 3713 250


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Eric SchmidtSchmidts Law

ADM 3713


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Feb-13 ADM 3713 252

Eric Schmidt

Wh th t k


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Feb-13 ADM 3713 253

When the network

becomes as fast as the

backplane, the

computer hollows out

Fast means bandwidth


254/485

Feb-13 ADM 3713 254

Remember

M L S h idt L


255/485

Feb-13 ADM 3713 255

Moores Law

And its consequences

CPU architecture

family Commodity,

commoditization

Schmidts Law

Backplane

Bandwidth

Strategies forcompetitive advantage


256/485

End


257/485

Feb-13 ADM 3713 257


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The Internet Layerspp. 479-481

ADM 3713

Layers of the Internet

The open architectureof the Internet is designed


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Feb-13 MBA 6106 259

The open architectureof the Internet is designedin layers

These can be thought of as separate pieces of

software or different collections ofprotocols They allow free development of products that can

interact with one another (are compatible)

To us, they are rather abstract

To internet engineers they are real

Layers

1 A li ti


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Feb-13 MBA 6106 260

1. Application (+ Presentation + Session)

2. Transport

3. Network

4. Data Link

5. Physical

Curiously

This is an abstract model to enable


261/485

Feb-13 MBA 6106 261

This is an abstract model to enable

engineers to build the Internet, but

Each layer has turned out to be a businessopportunity!!


262/485


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The Internet Value Sites

ADM 3713

Who provides your layers?Who do you do business with?

Application


264/485

Feb-13 MBA 6106 264

Application

Transport

Network

Data Link

Physical

Value

Value Network


265/485

Feb-13 MBA 6106 265

Value Network

The various firms using the Internet to create

value for the customers

Profit Sites

Specific types (or places where) of value is

created and examples of firms that operate atthat spot

I Users

1 E Commerce


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Feb-13 MBA 6106 266

1. E-Commerce Real money for real products and services

2. Content aggregators

Collect and distribute information3. Brokers/Agents and 4. Market Makers

Act as an intermediary

5. Service Providers outsourcers

II Communications Services

6 Backbone Operators


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Feb-13 MBA 6106 267

6. Backbone Operators

Control the Internet

7. ISPs/OSPs

Provide access to the web

8. Last Mile

Provide Internet connections to consumers

Wired and wireless

III Suppliers

9 Content Creators


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Feb-13 MBA 6106 268

9. Content Creators

Developers and owners of intellectual capital

10. Software suppliers

Provide application and system software

11. Hardware suppliers

Provide communication and computer

hardware and accessories

Examples

BrunNet Oracle/PeopleSoft


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Feb-13 MBA 6106 269

BrunNet

Aliant

Sprint

Microsoft Cisco

Dell

SAP

Oracle/PeopleSoft

LearnStream

L.L. Bean

Google Yahoo

Amazon

E-Bay

Examples

Ditech com


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Feb-13 MBA 6106 270

Ditech.com

mortgages

In cases

What properties of the Internet are


271/485

What properties of the Internet areimportant?

What layers are important and

What value sites show up?


272/485

End


273/485

Feb-13 ADM 3713 273


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Managing in the Digital WorldChapter 1

ADM 3713

Note: Definitions on Tests

1 What is it? (the definition)


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Feb-13 ADM 3713 275

1. What is it? (the definition)

2. Why is it important?

3. Give an example

Chapter 1 pp. 2-51

Chapter 1


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Feb-13 ADM 3713 276

Chapter 1

1. Information Systems Today

2. Globalization (part 1)

3. Information Systems

4. ISgood and bad

------------------------------------------

1. ISvs. privacy


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In the Information Society

Computers are:


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Computers are:Powerful, inexpensive easy to use

Telecommunication is:

Global, inexpensive, accessible In much of the world the population is:

Computerliterate(know how to use a computer)

Have computerfluency(know how to learn andapply new technologies)

But

Some parts of the world are not in the


279/485

Some parts of the world are not in theInformation Society

Not just because of where they live, but

also:How they live (attitudes)

Their government (politics)

Globalization pp. 10-20


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Globalization: Economic Changes1-281


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Economic Changes

Increases in international trade, development of global

financial systems and currency, and outsourcing of

labor

Globalization: Cultural Changes1-282


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Cultural Changes

Increased multiculturalism through TV and movies;

international travel and immigration; ethnic foods;

Facebook, FarmVille, Twitter, and YouTube

Globalization: Technological Changes1-283


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Technological Changes

Low-cost computing platforms and communicationtechnologies; e-mail, Skype, and instant messaging; low-cost global telecommunications infrastructure; global

patent and copyright enforcement

Globalization: 1.0, 2.0, 3.01-284


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Opportunities p. 18

Due to:


285/485

Due to:Falling transportation costs

Falling telecommunication costs

Leads to:

Reaching new markets

Managing a global workforce

Challenges p. 19

Governments


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GovernmentsPolitical system

E.g., Autarky (the opposite of Globalization)

GeoeconomicTime zones, infrastructure reliability, expertise

Cultural

Social organizations, advertising


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What is an Information System?

A set of interrelated components that


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Feb-13 ADM 3713 288

set o te e ated co po e ts t atCollect (or retrieve) data

Process,

Store,Analyze, and

Distribute information

to support decision-makingand controlinan organization leads to knowledge


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What an information system does:

Input data Process Data Output Data


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Feb-13 ADM 3713 290

p p

Stores Data

Controlby software, by people, by

procedures

Feedbackto correct data, software,

improve the process

Systems also have

A programcontrols the process


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Feb-13 ADM 3713 291

p og a pA sequence of rules or instructions

Written instructions

Computer program Mechanical devices (e.g., clock)

A political program

The feedback can change this program

What is a system?

A group ofcomponentsthat interact to


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Feb-13 ADM 3713 292

g p pachieve some purpose

With these characteristics1. Input

2. Processing

3. Output

4. Feedback

5. Control

a System


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Feb-13 ADM 3713 293

Input Process Output

Feedback/

Control

An Information System

network


294/485

Feb-13 ADM 3713 294

Input Process Output

Feedback/

Control

Store Data Store Data

Store Data


295/485

Feb-13 ADM 3713 295

Components of Business

Processes

- a network of activities, resources, facilities andi f ti t hi b i f ti


296/485

Feb-13 ADM 3713 296

information to achieve a business function

1. Activities

2. Resources

3. Facilities

Components of Business

Processes

4. Information


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Feb-13 ADM 3713 297

Data

Information

Knowledge

Wisdom


298/485

Feb-13 ADM 3713 298

DATA vs. INFORMATION


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Feb-13 ADM 3713 299

Raw factsRepresent events

E.g. sales from a cash

register

Organized dataMeaningful to people

E.g. sales trends,

comparison of sales

by brand

Data vs. Information vs. Knowledge

Data (Item). Elementary description of things,events activities and transactions that are


300/485

Feb-13 ADM 3713 300

events, activities and transactions that arerecorded, classified and stored but are notorganized to convey any specific meaning.

Information. Data organized so that they havemeaning and value to the recipient.

Knowledge. Data and/or information organizedand processed to convey understanding,experience, accumulated learning and expertise as

they apply to a current problem or activity. Wisdom. ----


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Development and Use of

Information Systems

You need to:


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Feb-13 ADM 3713 302

Take an active role in order to ensure thatsystem will meet your needs

Understand how they are constructed

Consider the users needs during development

Learn how to employ the system

Take into account ancillary functions

Security Backup

Recovery

What Is MIS?

Management Information Systems


303/485

Feb-13 ADM 3713 303

MIS is the development and use of

information systems that help businesses

achieve their goals and objectives Key elements:

Development and use

Information systems

Business goals and objectives

Ask Questions

How can I apply information technologies


304/485

Feb-13 ADM 3713 304

in a business environment to help my

organization focus on top-line competitive

advantage? How can I apply information technologies

in a business environment to help my

organization focus on bottom-linecompetitive advantage?

Ask Questions

What will a system do for you?


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Feb-13 ADM 3713 305

1. What is the purpose?

2. What will using it enable us to do?

3. What goal can we accomplish through its

use?

4. Will it aid us in reaching our objectives?

Ask Questions

These are the questions you should ask asd b i


306/485

you read business cases

For example in 7-11

Moores Law predicted that the number ofi hi ld d bl

What Is the Shape of Things to

Come?


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Feb-13 ADM 3713 307

transistors on a computer chip would double

every two years (18 to 24 months)

This prediction has been generally accuratefor more than 40 years

Moores Law is one of the few predictions

in area of IT that has really stood the test oftime

Within the next decade?1. Unlimited storagewill be almost free

2. Analytical softwarewill reveal hidden treasures


308/485

Feb-13 ADM 3713 308

3. The real and virtual world will collide as wide-areanetworksbecome cheap, reliable, and widely available

4. These technology trends will enable deep, powerful,

performance-enhancinginnovations that will be felt inalmost every industry

5. Many of these will combine existing things, e.g., a

GPS, a cell phone, Googleto find the nearest Pizza,

or ATM or Manicurist

Business of IT and IS

Business is changing because of advances in IS

and ITMobilitydeviceswill change what it means to go to work


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Mobility deviceswill change what it means to go to work

Industriesare undergoing significant change because of theshifts in technology

Can IS provide Competitive

Advantage?

Does IT/IS Matter?


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Maybe (probably)

Does IT Destroy Jobs?

Maybe

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However


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d


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End


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Ch 2


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Chapter 2

In Chapter 2

ENABLING ORGANIZATIONAL STRATEGY THROUGHINFORMATION SYSTEMS


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Decisions

Organizational Decision-Making Levels

Organizational Functional Areas

Sources of Competitive Advantage

Identifying Where to Compete: Analyzing Competitive Forces

Identifying How to Compete: Analyzing the Value Chain

INTERNATIONAL BUSINESS STRATEGIES IN THE DIGITAL

WORLD

Four Behavioral Topics

1. Decision Making


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2. Estimating (later)

3. Resistance to Change (later)

4. Assessing Risk (later)

Making Decisions

In IT/IS decisions must be made all the timeWhat technology to acquire?


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What technology to acquire?

What technology to get rid of?

Who to choose as a supplier?How much to pay?

The IT/IS part of the firm makes these typesof decisions all the time and participates in

larger decisions

Managers Roles(all very important to IT managers)

Interpersonal RolesFi h d l d li i


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Figurehead, leader, liaison

Informational Roles

Monitor, disseminator, spokesperson, analyzer

Decisional roles

Entrepreneur, disturbance handler, resource

allocator, negotiator

Why decision making is difficult

1. Number of alternatives (large andgrowing)


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growing)

2. Under time pressure

3. Necessity to conduct a sophisticatedanalysis (simulation, modeling)

4. Necessity to involve (consult) experts

Making Estimatesan important part of the decision process

Long term estimates:H l ill th t h l l t?


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How long will the technology last?

How much will it cost to run?

Short term estimates:How much will it cost to acquire?

How long will it take to install?

IT management needs to know the strategicdirection of the firm:


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direction of the firm: IT decisions are medium to long term, 5 to 10 years.

IT decisions are expensive and returns may notshow up for a couple of years.

IT decisions require specialized personnel, these

need to be hired, trained and retained.

Only in the past few years have the IT part ofthe firm been given a role in strategy

Examples of IT Decisions

Major Initiatives (big Systems)S l Ch i M t (SCM)


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Supply Chain Management (SCM) Automates tracking inventory and information among

business processes and across companies Three flows in the supply chain

Information

Goods

Financial

IT Decisions

From the IT point of view, strategicdirection of the firm includes (for example):


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direction of the firm includes (for example):

To what degree is the firm going to participate

in e-commerce? What is the firms policy about outsourcing?

Is the firms strategy to grow its market?

Is the firms strategy to be a low costproducer?Is the firm moving to global operations?

These lead to

Decisions such as choosing:Appropriate database design and products


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Appropriate database design and products

Network design and suppliers

Software productsERP, CRM, SCM systems

Decisions

Decision Structure: Structured


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Structured

We know what information we need

That information is accessible

Decision rules are clear

Semi-structured One or more of the three previous characteristics are

not met to some degree

Unstructured All three characteristics are not met to a large degree

Problem Structure

Usually we assume:People knowwhat they need and want


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People knowwhat they need and want

People can tell us what they need and want

What they want doesnt change

This may be true in structuredsituations

Problem Structure

But:People may notknow exactly what they want


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People may notknow exactly what they want

These are un-structured situations

People may know morethan they can say

Then these are semi-structuredsituations

Problem Structure

Learning takes placewants needs change


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wants, needs change

(looks like people are changing their minds)

This also creates semi-structuredsituations

Example


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Decision-Making Levels of anOrganization

2-330


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Operational Level2-331

Day-to-day business processes

Interactions with customers


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Decisions:

structured,

recurring, and

can often be automated using IS.

IS used to:

optimize processes, and

understand causes of performance problems.

Operational Level (contd)2-332


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Managerial Level2-333

Functional managers

Monitor and control operational-level activities Focus: effectively utilizing and deploying resources


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Goal: achieving strategic objectives

Managers decisionsSemistructured

Moderately complex

Time horizon of few days to few months

IS can help with:performance analytics (dashboards),

predictive analysis, and

Managerial Level (contd)2-334


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Executive Level2-335

The president, CEO, vice presidents, board of

directors

D i i


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Decisions

Unstructured

Long-term strategic issues

Complex and nonroutine problems with long-term

ramifications

IS is used to:obtain aggregate summaries of trends and projections,

and

rovide KPIs across the or anization.

Executive Level (contd)2-336


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Organizational Functional Areas2-337


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Business Process Supported byFunctional Area IS

2-338


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Kinds of Information Systemsin the firm


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Examples


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Three ways to make decisions

1. Rational Model2 Garbage Can Model


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2. Garbage Can Model

3. Scoring Method

All three are used all the time!!

1. The Rational Model

(also called the SimonsModel after HerbSimon) has four phases:


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1. Intelligenceproblem identification or

opportunity seeking

2. Designenumeration of alternatives plus

advantages/disadvantages

3. Choicemake selections

4. Implementationdo, control


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Stages of Decision-Making(Simon)

INTELLIGENCE:Collectinformation; identify problem


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DESIGN:Conceive alternatives;select criteria

CHOICE:Use criteria to evaluatealternatives; select

IMPLEMENTATION:Putdecision into effect; allocate

resources; control

RationalModel

Can be used to analyze structured, semi-structured and unstructured situations


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Note the similarity to a system

Input, output, feedback and control Also called systems approach to decision

making

2. Garbage Can Modeland the skonkworks

Garbage Can Model: In this model decision-makers have a large number of

bl d i i h i I


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problems and opportunities at the same time. In

addition, they have a large number of solutions

available to them. Solutions are such things as money,personnel, information, systems, knowledge etc. The

problems and solutions float around in a garbage can.

When an appropriate solution and problem find each

other, the problem is solved.

The skonkworks

Popular in firms that depend on innovation tosustain competitive advantage:


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Small groups working on unofficial projects are

tolerated (sometimes encouraged)

These groups are called skonkworks E.g., IBMs PC

Texas Instruments

Lockheed aircraft

Develop an idea then go around and try to sell it withinthe firm

3. Weighted Characteristics Method

of Decision Making (orScoring)

a common method of decision making when youare faced with several alternatives. It has the

f ll i


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following steps.1. Select characteristics.

2. Give characteristics a weight. (This is an arbitrary scalemay be 1 to 5, 1 to 100, etc).

3. Evaluate alternatives on each characteristic and assign a

score.

4. Multiply scores by weights and add.

Select (consider) the alternative with the highest score.

Scoring Method of Decision Making

Characteristics Supplier 1 Supplier 2 Supplier 3

Weight Score Weight x

Score

Score Weight x

Score

Score Weight x

Score


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Total

Scoring Method - Problem

This a widely used method of makingdecisions, but:


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May lead you to believe that an unstructured

decision is semi-structured or that a semi-structured decision is structured.

Sometimes masks real problems

More subjective than most people think

Summary

Types of decisionsStructured


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Semi-structured

Unstructured

Repetitive

Simons Model (rational model)

Garbage Can

Weighted Characteristics (Scoring)

Decisions in Cases

What types of decisions are being made? Structured, unstructured, semi-structured


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What types of decisions do the players think they

are making?

What mechanism was used to make the decision? Rational, Garbage can, Scoring, Other

Did the decision makers consider the strategicdirection of the firm?

Selecting a PC

Choose the characteristics How important is each characteristic?


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p

Weight them (1 to 5)

Choose possible brands (or models) How closely does each brand match the

characteristics?

Assign a %

Selecting a PC

ScoreMultiply the weight by the % and add


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Debate, reflect

How do you get information?

1. RFIRequest for informationWidely used for new, innovative, non-standard,


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one-off projects, or projects that are new to you

2. RFPRequest for proposalSent to a select group

More formal

Generally, you know what you want

How do you get information?

3. RFQRequest for quoteOften binding (must take lowest)

d f i h


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Used for routine purchases

How much do you tell the prospectivevendor about your process?

The characteristics? The Weights?

Non-disclosure agreements

In a case

Give examples ofData, information


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Types of decision making, decision levels

Decision making steps

Competitive Advantage

(N.B.dont confuse with comparative advantage)

C titi Ad t idi d


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Competitive Advantageproviding a product orservice in a way that customers valuemore thanwhat your competition is able to do.

How can IT help?

Kinds of Information Systemsin the firm


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IS from aFunctionalPerspective

Sales & Marketing Business Processes Manufacturing & Production Business


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Processes

Finance & Accounting Business P

Study for MIS

Documents

Transcript of Study for MIS