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ITM 100 midterm notes.docx

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Ryerson University
Information Technology Management
ITM 100
Ron Babin

Chapter One - Information Systems and Business Strategy 1.1 : Information Systems in Business Information Systems (IS)- - Computer based tool that people use to work with information - Supports information and information processing needs of an organization - It does not represent a business’s success and innovation** Information Technology (IT)- - Acquisition (Gaining), processing, storage, and dissemination (distributing) of vocal, pictorial, textual, and numerical information by a microeconomics based combination of computing and telecommunications. - Deals with the use of computers and telecommunications to retrieve, store and transmit information Management Information Systems (MIS)- - Another business function similar to marketing, finance, operations and human resources management - MIS plans for, develops, implements, and maintains the hard/software and applications in IT - In order to perform MIS effectively, most organizations have an internal IS department which is the IS, IT,AND MIS Data- Ex: date, item number, item description, customer name, shipping details Information- - Data that is converted into a useful and meaningful context Ex: best/worst selling items, best/worst customers Knowledge- - When information can be acted upon it becomes knowledge *People use information systems to transform data into information and information into knowledge *People, information, and information systems (in that order of priority) are inseparably linked What is one of the most important assets in an organization?  Information is one of the most important assets in an organization, and the primary way that people get information is through information technology Without databases and spreadsheets how would managers gather, correlate, and analyze information?  Manually  Performing these tasks manually, or by hand, is extremely time consuming Functional Organization (6) - Each functional area has its own systems and communicates with every other functional area - Functional organizations are interdependent Ex: Marketing can be linked with:  Sales and Marketing – forecasting, segmentation, advertising, promotions  Operations and Logistics – purchasing, supplying, receiving, transportation  Accounting and finance – accounting, planning, budgeting, tax, costs  Human resources – hiring, training, benefits, and payroll Why are functional areas interdependent?  Departments cannot operate in isolation; they require information from around the organization to operate Why must sales and marketing work with operations?  To know what is available for sale including overstocked items and under stocked items Different information cultures found in organizations Information-Functional Culture - When employee use information as a means of exercising influence or power over others. Ex: Sales manager refuses to share information with marketing - Will cause marketing to need the sales manager’s input each time a new sales strategy is developed Information- Sharing Culture - When employees across all departments trust each other to use information to improve performances Information- Inquiring Culture - When employees across all departments search of information that will help them understand the future and allow themselves to be up to date with the current trends. Information- Discovery Culture ` - When employees are open to information about crisis and radical changes - They are able to seek ways to create competitive advantages Some of the positions in IS are: (An individual can have more than one position) CEO – Chief executive officer CIO- Chief information officer CFO – Chief financial officer CTO- Chief technology officer COO- Chief Operations officer CSO- Chief security officer CPO- Chief privacy officer CKO- Chief Knowledge Officer Chief Information Officer - Has an executive-level position, - CIO reports to the CEO - Must have strong business and IT skills - Responsible for overseeing all uses of information systems and ensuring the strategic alignment of IS with business goals and objectives - Must have a deep understanding of both information systems and business - Enhancing customer satisfaction is the number one concern for many CIOs - CIO’s play a key role in the executive suite: • Manager – ensure that delivery of all IS products are done on time and within budget • Leader – ensure that the strategic vision of IS is in line with the strategic vision of the organization • Communicator – they have to advocate and communicate the IS strategy in order to maintain and build a strong executive relationship Chief Technology Officer - Responsible for ensuring throughput, speed, accuracy, availability and reliability of IT Chief Security Officer - Is responsible for ensuring that the information systems, developing strategies and technical safe guards are safe from hackers and viruses Chief Privacy Officer - Is responsible for ensuring the ethical and legal use of information in an organization - Many CPO’s are lawyers Chief Knowledge Officer - Is responsible for collecting, maintaining, and distributing an organization’s knowledge Business personnel & IS Personnel - Business personnel possess expertise in functional areas such as marketing, accounting, and sales. - IS personnel have the technological expertise. - This typically causes a communications gap between the business personnel and IS personnel. - For both sides to have effective communications, the business personnel must seek to achieve an increased level of understanding of IS, and the IS personnel must seek to achieve an increased level of understanding of the business (**They must be able to understand each other completely for effective communication) Common departments in an organization  Accounting provides quantitative information about the finances of the business including recording, measuring, and describing financial information  Finance deals with the strategic financial issues associated with increasing the value of the business, while observing applicable laws and social responsibilities  Human resources includes the policies, plans, and procedures for the effective management of employees (human resources)  Sales is the function of selling a good or service and focuses on increasing customer sales, which increases company revenues  Marketing is the process associated with promoting the sale of goods or services. The marketing department supports the sales department by creating promotions that help sell the company’s products  Operations management (aka production management ) includes the methods, tasks, and techniques organizations use to produce goods and services. Transportation (also called logistics) is part of operations management.  Management information systems (MIS) is the function that plans for, develops, implements, and maintains IS hardware, software, and the portfolio of applications that people use to support the goals of an organization Skills required by IT executives & meanings Communications – be able to communicate and influence at all levels Business Knowledge – be able to understand, focus, and help a business grow instead of only cutting costs and helping an organization into being more efficient Innovation/ Creativity- The vision that differentiates a CIO from a more traditional IT director – innovation, creativity, flair, and an entrepreneurial spirit. * da fukk ? Leadership- Good leaders will inspire and motivate teams and help achieve things Domain Knowledge- practical understanding of technology fundamentals in order to make the right strategic calls about the deployment and exploitation of IT. 1.2 :Business Strategy CompetitiveAdvantage - Aproduct or service that an organizations customers place a greater value on that similar offerings from a competitor - These are temporary because competitors are quick to copy competitive advantages First-mover advantage - occurs when an organization can significantly impact its market share by being first to market with a competitive advantage Environmental Scanning - the acquisition (gaining) and analysis of events and trends in the environment external to an organization Three common tools for analyzing/developing competitive advantage: Organizations use three common tools to analyze and develop competitive advantages: 1. Porters Five Forces Model 2. Porters Three generic strategies 3. Value ChainAnalysis Porters fives forces model – (Evaluating business segments) - Michael Porter’s created the five forces model - Useful tool to aid organizations facing the challenge of entering a new industry or industry segment - Helps determine the relative attractiveness of an industry and includes:  Buyer power – high when buyers have many choices of whom to buy from and low when their choices are few  Supplier power – high when buyers have few choices of whom to buy from and low when their choices are many  Threat of substitute products or services – high when there are many alternatives to a product or service and low when there are few alternatives from which to choose  Threat of new entrants – high when it is easy for new competitors to enter a market and low when there are significant entry barriers to entering a market  Rivalry among existing competitors – high when competition is fierce in a market and low when competition is more complacent 1. Buyer power (aka customer power) - The ability of buyers to affect the price of an item - Organizers need to be concerned about buyer power when: I. In their relationships with customers II. In their relationships with suppliers Relationship with customers - Organizations function as suppliers and prefer to reduce the buyer power of customers (to create a competitive advantage) - An organization must make its products more attractive for customers to buy from it instead of its competitions Relationship with suppliers - Organizations function as buyers and prefer to increase their own buyer power with suppliers (and create competitive advantage) - Organizers want to work with a large pool of suppliers to potentially supply the desired good or service. Loyalty Programs - Reward customers based on the amount of business they do with a particular organization - Loyalty programs can use IS to reduce buyer power; customers are more loyal to or give most of their business to a single organization Switching cost - Manipulating costs that make customers reluctant to switch to another product 2. Supplier power - Low when buyers have few choices to buy from and low when they have many choices - It is the converse of buyer power - Two situations in the supply chain when organizations need to be concerned: I. In their relationship with customers o Organizations function as suppliers and want supplier power to be high II. In their relationship with suppliers o Organizations function as buyers and therefore want supplier power to be low Business to Business marketplace (B2B) - an Internet-based service that brings together many buyers and sellers - Organizations can create a competitive advantage by locating alternative supply sources (decreasing supplier power) through B2B marketplaces Two types of business-to-business (B2B) marketplaces: I. Private exchange - a single buyer posts its needs and then opens the bidding to any supplier who would care to bid II. Reverse auction - an auction format in which increasingly lower bids are solicited (asked) from organizations willing to supply the desired product or service at an increasingly lower price. Internet based What effect does this have on supplier power? - It reduces supplier power and creates a competitive advantage for the buyer organization since it is paying the lowest possible price for its goods and services 3. Threat to substitute products or services - High when there are alternatives to a product or service and low when there are a few alternatives from which to choose - an organization wants to be in a market in which there are few substitutes for its products or service - difficult to achieve, and most organizations create a competitive advantage through switching costs - the more painful it is for a customer to switch suppliers, the less likely they are to switch - threat can be reduced if switching cost is HIGH Switching costs - are costs that can be make customers reluctant to switch to another product or service Organization within the Supply Chain Supply chain - consists of all parties involved in the finding of a product or raw material 4. Threat of New Entrants - High when it is easy for new competitors to enter a market and low when there are significant entry barriers Entry Barrier - Afeature of a product or service that customers have come to expect and entering competitors must offer the same for survival What is an industry that has a high entry barrier? - Energy – the organization has to have the infrastructure to support energy - Telecommunications – the organization has to invest in a telecommunications infrastructure prior to offering services - Banking – the bank must offer its customers an array of IT-enabled services includingATMs and online account services What is an industry that has a low entry barrier? - Restaurants – simply lease a space, obtain a license, and you can sell food - Catering – simply offer food and deliver - Movie rental – simply buy the movies, pay the licensing fee, and offer the movies for rental 5. Rivalry Among Existing Competitors - High when competition is fierce in a market and low when competitors are more self-satisfied Product differentiation - Occurs when a company develops unique differences in its products or services with the intent to influence demand What are a few industries where competition is high? - Restaurants, products, telecommunications, banking What are a few industries where competition is low? - This is typically highly regulated industries such as energy markets and stock exchanges Three generic strategies – creating a business focus Organizations typically follow one of Porter’s three generic strategies when entering a new market  Broad cost leadership  Broad differentiation  Focused strategy Value Chain Analysis- targeting business processes - Views a firm as a series of business processes that each add value to the product or service Value Chain - views an organization as a series of processes, each of which adds value to the product or service for each customer Value Chain Groups - Within a company separate the company’s activities into two categories: 1) primary value activities 2) support value activities Business process - Astandardized set of activities that accomplish a specific task Ex: processing a customer’s orders The competitive advantage is to:  Target high value-adding activities to further enhance their value  Target low value-adding activities to increase their value  Perform some combination of the two Value Chain and Porter’s Five Forces Business Driven information system & Business strategy - Systems that are implemented to support a company’s competitive business strategy - The Five Forces Model, Three Generic Strategies and Value Chain allow business to assess competitive advantage. - Information Systems collect the data from the business process activities and provide analysis to give organizations insight into ways to behave more competitively. - Information Systems are not used on their own. They are driven by the need of business for fast, accurate and insightful information. Chapter Two – Decision Making and Business Processes 2.1 : Decision making and information systems Reasons for growth of decision-making information systems 1 People need to analyze large amounts of information 2 People must make decisions quickly 3 People must apply sophisticated analy`sis techniques, such as modeling and forecasting, to make good decisions Managerial Decision making challenges are: - Analyze large amounts of information - Apply sophisticated analysis techniques - Make decisions quickly Common Company Structure:  Operational decision-making - Employees develop, control, and maintain core business activities required to run the day-to-day operations (DCM) Structured decisions - Operational decisions are considered structured decisions - Situations where established processes offer potential solutions  Managerial decision making - Employees evaluate company operations to identify, adapt to, and leverage change (IAL) Semi-structured decisions - Occur in situations in which a few established processes help to evaluate potential solutions, but not enough to lead to a definite recommended decision  Strategic decision making - Managers develop overall strategies, goals, and objectives (SGO) Unstructured decisions - Occurs in situations in which no procedures or rules exist to guide decision makers toward the correct choice Transactional Data - Encompasses all raw facts contained within a single business process or unit of work - Primary purpose is to support performing daily operational tasks Analytical Data - Encompasses all summarized transactional data - Primary purpose is to support performing analysis tasks - Also include external information such as info obtained from outside market and industry sources. * Moving up through the organizational pyramid, users move from requiring transactional information to analytical information Metrics - Measurements that evaluate results to determine whether a project is meeting its goals Common types of metrics are: - KPIs – Key Performance Indicators - Efficiency and Effectiveness Key Performance Indicators - Measures that are tied to business drivers Efficiency IS metrics - Measures the performance of the information system itself such as speed and availability Effectiveness IS metrics - Focuses on how well a firm is achieving its goals and objectives - Doing the right things – setting the right goals and objectives and ensuring they are accomplished Benchmarks - Baseline values the system seeks to attain Benchmarking - Process of continuously measuring system results, comparing those results to benchmark values, and identifying steps and procedures to improve system performance Common types of Efficiency IS metrics: • Throughput Amount of information that can travel through a system at any point in time • Transactional Speed Amount of time a system takes to perform a transaction • System Availability Number of hours a system is available to users • Web Traffic Includes a host of benchmarks such as the number of page views. Number of unique visitors etc. • Response Time Time it takes to respond to user interactions such as mouse clicks Common types of Effectiveness IS metrics: • Usability • Customer satisfaction • Conversation rates • Financial *Information to make decisions and measure performances come from:  Transaction Processing System (TPS) - Basic business system that serves the operational level and assists in making structured decisions  Online transaction processing (OLTP) - capturing of transaction and event information using technology to process, store, and update.  Source Documents - Using systems thinking, the inputs for a TPS or the original transaction record.  Decision Support System (DSS) - Models information to support managers and business professionals during the decision-making process Three quantitative models used by DSS include: 1. What-if analysis – the study of the impact of a change in an assumption on the proposed solution 2. Sensitivity analysis – the study of the impact that changes in one (or more) parts of the model have on other parts of the model 3. Goal-seeking analysis – finds the inputs necessary to achieve a goal such as a desired level of output Online analytical processing (OLAP) - Manipulation of information to create business intelligence in support of strategic decision making Interaction between TPS & DSS (pg.36) - The TPS supplies transaction-based data to the DSS - The DSS summarizes and aggregates the information from the many different TPS systems, which assists managers in making informed decisions. Executive Information System - Aspecialized DSS that supports senior level executives within the organization - Contains information from external sources as well as information from internal data sources Why would you need interaction between a TPS and EIS? (pg.37-chart)  The EIS needs information from the TPS to help executives make decisions  Without knowing order information, inventory information, and shipping information from the TPSs, it would be very difficult for the CEO to make strategic decisions for the organization Artificial Intelligence (AI) - Stimulates human intelligence, such as the ability to reason and learn Intelligent Systems - Various commercial applications of artificial intelligence 2.2 :Business Processes Business Process - Astandardized set of activities that accomplish a specific task Ex: processing a customer’s order Customer facing processes - Results in a product or service that is received by an organization’s external customer’s Business-facing Processes - Is essential to the effective management of the business and includes goal setting, day to day planning, performance feedback, and rewards The order to delivery process Business process improvement - Attempts to understand and measure the current process and make performance improvements accordingly - Acyclical activity Business Process Re-engineering (BPR) - The analysis and redesign of workflow within and between enterprises Business Process Modelling (or mapping) - The activity of creating a detailed flow chart or process map of a work process showing its inputs, tasks, and activities in a structured sequences - Process of how the work was done Business Process Model - Agraphic description of a process, showing the sequences of tasks that complete the process from a selected viewpoint Why is it important to diagram theAs-Is process prior to diagramming the To-Be process?  It is important to understand the entire process from end-to-end before determining how to fix the process What is the difference between theAs-Is and To-Be process (pg.49-50 diagram as example)  As-Is process model - represents the current state of the operation that has been mapped, without any specific improvements or changes to existing processes  To-Be process model - shows the results of applying change improvement opportunities to the current (As-Is) process model Business Process Management (BPM) - Integrates all of the organizations business processes to make individual processes more efficient LOOKAT BUSINESS PROCESSING MODELING EXAMPLES – pg. 53&54 Chapter Three – The Internet and E-Business 3.1 : Business and the Internet E-business - The conducting of business on the internet - Not only buying and selling but also serving customers and collaborating with business partners Digital Darwinism Implies that organizations that cannot adapt to the new demands placed on them for surviving in the information age are doomed to extinction - Those who are no able to adapt to the new demands for survival will not succeed in the future Disruptive Technology - Anew way of doing things that open new markets and destroys the old ones - Anew way of doing things that does not meet the needs of existing customers Sustaining Technology - Produces improvements to products that customers are eager to buy The internet – Business disruption - One of the biggest forces changing business is the internet - Organizations must be able to transform as markets, economic environment and technology changes - Focusing on the unexpected allows an organization to capitalize on the opportunity for new business growth from a disruptive technology Evolution of the Internet - Began as an emergency military communication system - Operated by the U.S department of defence - Gradually moved from a military pipeline to a communication tool for scientists to businesses Internet - Is a global public network for computer networks that pass information from one to another using common computer protocols Protocols - Are standards that specify the format of data as well as the rules to be followed during transmission World Wide Web (WWW) - Aglobal hypertext system that uses the internet as its transport mechanism Hypertext transport protocol (HTTP) - The internet standard that supports the exchange of information on the WWW. Are the Internet and the WWW synonymous?  People often interchange the terms Internet and the World Wide Web, but these terms are not synonymous  The Internet is a global public network of computer networks that pass information from one to another using common computer protocols  The World Wide Web is a global hypertext system that uses the Internet as its transport mechanism  The World Wide Web operates on the Internet Reasons for WWW growth What are the two primary reasons for growth of the WWW? • Two events changed the history of the Internet 1. On August 6, 1991 Tim Berners-Lee built the first Web site 2. MarcAndreesen built and distributed Mosaic The internets impact on information Easy to compile - Searching for information on products, prices, customers, suppliers, and partners is Increased richness - refers to the depth and of information transferred between customers and business. - Businesses and customers can collect and track more detailed information when using the Internet. Increased reach - refers to the number of people a business can communicate with, on a global basis. - Businesses can share information with numerous customers all over the world. Improved content - Akey element of the Internet is its ability to provide dynamic relevant content. - Buyers need good content descriptions to make informed purchases, and sellers use content to properly market and differentiate themselves from the competition. - Content and product description establish the common understanding between both parties to the transaction. As a result, the reach and richness of that content directly affects the transaction. What is the difference between information richness and information reach?  Information richness refers to the depth and breadth of information transferred between customers and business Ex: Instead of a company catalogue with a simple text box and perhaps a small photo, the Web allows companies to post 3-dimensional photos, video, customer reviews, newspaper and magazine articles, product comparisons including price, etc.  Information reach refers to the number of people a business can communicate with, on a global basis Ex: Companies can now reach customers around the world, not just customers who can physically travel to their store Digital Divide - Occurs when those with access to technology have great advantages over those who without access to technology Web 2.0 - Aset of economic, social, and technology trends that collectively form the basis for the next generation of the internet Web Mash-up - Awebsite or web application that uses content from more than one source to create a completely new product or service Application programming interface (API) - Aset of routines, protocols, and tools for building software applications. Mashup editor - WYSIWYGs or What You See Is What You Get tools - They provide a visual interface to build a mashup, often allowing the user to drag and drop data points into a Web application Web 3.0 - Aterm that has been coined in different meanings to describe the evolution of web usage and interaction among several separate paths - Transforming the Web into a database. - Making content accessible by multiple non-browser applications. - Leveraging AI (artificial intelligence0 technologies. - The semantic Web and service-oriented architecture. - Evolution to 3D. Semantic Web - Structuring data so web pages describe things in a way that computers can understand and find, share and integrate ideas more effectively to people Four common tools used for accessing internet information: Intranet - Internalized portion of the internet, protected from outside access - Allows an organization to provide access to information and application software to only its employees - student or faculty and staff sites such as Blackboard or WebCT Extranet - An intranet that is available to strategic allies Ex: customers, suppliers, partners - for potential students and partners Portal - Awebsite that offers a broad array of resources and services Ex: Email, online discussion groups, search engines, online shopping malls - a place where students or faculty and staff can access all of their applications such as registration, billing, grades, Blackboard or WebCT, and e-mail Kiosk - Publicly accessible computer system that has been set up to allow interactive information browsing - places around the campus where students can logon to the Internet Three common forms of service providers: Internet service provider (ISP) - provides individuals and other companies access to the Internet Online service provider (OSP) - offers an extensive array of unique Web services Application service provider (ASP) - offers access over the Internet to systems and related services that would otherwise have to be located in organizational computers Service Level agreements (SLAs) - defines the specific responsibilities of the service provider and sets the customer expectations 3.2 :E-Business E-commerce - the buying and selling of goods and services over the Internet E-business - the conducting of business on the Internet including not only buying and selling, but also serving customers and collaborating with business partners - Because E-businesses are not limited by shelf space, they can offer a far wider selection of products that may suit only a few customers Mass customization - The ability of an organization to tailor its products or services to the customers’specifications Personalization - Occurs when a company knows enough about a customer’s likes and dislikes that it can fashion offers more likely to appeal to that person The Long Tail - Refers to the tail of a typically sales curve Intermediary - Agents, software, or businesses that provide a trading infrastructure to bring buyers and sellers together Disintermediation - Occurs when a business sells directly to the customer online and cuts out the intermediary Ex: Buying a computer from Dell’s website cuts out the electronics retailer. Reintermediation - Steps are added to the value chain as new players find ways to add value to the business process. Cybermediation - Refers to the creation of new kinds of intermediaries that simply could not have existed before the advent of ebusiness. Ex: Netflix is an example. Reducing Costs - Business processes that take less time and human effort. Improving Operations - Communications customized to meet consumer needs and available 24/7. Improving Effectiveness - Web sites must increase revenue and new customers and reduce service calls Interactivity metrics - measure E-business success: number of repeat visits, times spent on site and number of pages viewed among other activities. Measuring Website success: Stickiness—visit duration time. Raw Visit Depth—total Web page exposures per session. Unidentified visitor—no information about visitor is available. Unique visitor—recognized and counted once in a period of time. Identified visitor—can be tracked across multiple web visits. Hits—Asingle request made by a visitor to view a web page. E-Business Models: B2B (Business to business) - Applies to businesses buying from and selling to each other over the Internet. B2C (Business to customer) - Applies to any business that sells its products or services to consumers over the Internet. C2B (Customer to business) - Applies to any consumer that sells a product or service to a business over the Internet Ex: eBay, Kijiji C2C (Customer to customer) - applies to any consumer that sells a product or service to other consumers, eBay, Kijiji One of the most successful C2C business model is C2C Communities which are sometimes used for consumer to consumer financial transactions. Types of C2C Communities: Communities of interest - People interact with each other on specific topics, such as golfing and stamp collecting Communities of relations - People come together to share certain life exp
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