ITM 102 MIDTERM NOTES
The Role of Information Systems in Businesses
• Information systems are everywhere in business.
• Organizations typically operate by functional areas or functional silos.
• Functional areas are independent.
The Challenge: Bringing Separate Functions Together
• Human resources, sales, marketing, accounting etc…
The Solution: Management Information Systems
• Using cross functionality, integrating the operations of all departments
• Information systems are the primary enabler for cross functionality
Information Systems (IS): any computer based tool that people use to work with information and
that supports the information and information processing needs of organization
Management Information Systems (MIS): the function that plans for, develops, implements, and
maintains IS hardware, software, and applications that people use to support the goals of an
organization. (MIS is a function similar to accounting or human resources)
Data - Raw facts.
Information – Data converted into meaningful and useful context.
Knowledge – Information that can be enacted upon.
People use Information Systems to transform data into information than information into knowledge.
Information System Cultures
• Information-Functional Culture
• Information-Sharing Culture
• Information-Inquiring Culture
• Information-Discovery Culture
Information Systems Roles and Responsibilities
Chief Information Officer (CIO): oversees all use of IT, and ensures that strategic alignment with IT
meets the businesses goals and objectives
Chief Knowledge Officer (CNO): responsible for collecting, maintaining, and distributing the
Chief Privacy Officer (CPO): responsible for insuring the ethical and legal use of information
Chief Security Officer (CSO): responsible for ensuring the safety of IT resources including data,
software, and people
Chief Technology Officer (CTO): responsible for ensuring the speed, accuracy, availability and
reliability of IT
The Gap Between Business Personnel and IS Personnel • Business personnel are specialized with knowledge in areas such as marketing, accounting
etc… (Have their own vocabulary based on their experience and expertise).
• IS personnel of technological expertise and knowledge (Vocabulary consists of acronyms and
• Therefore there is a communication gap between Business and IS personnel.
CASE STUDY – Information Technology Helps LCBO Transform Itself:
o This case is talking about how LCBO became more information system based, and more
o LCBO is starting to make it convenient for their customers by making an online system that
brings the liquor to your doorstep
o LCBO.com, Vinteges.com
o Robocom Systems International maintains a real-time inventory: (ex. if the store has 10
bottles in stock and someone orders 2, the online website will automatically change the
amount that is left.)
o Customers can search for specific products and which locations have the product
o Warehouse management system: always knows how many bottles are in the warehouse
o Reduce paper based memos
o App LCBO on the go to find the closest store, and to browse new products
Identifying Competitive Advantage
• Organizations must create competitive advantages.
• Competitive Advantage: A product or service that costumers place a greater value on than
similar offerings from different companies.
• First Move Advantage: When an organization impacts the market share by being first to
market with an competitive advantage.
• Environmental Scanning: Events and trends in the environment external from a specific
• Three tools to develop competitive advantage: 1) Porter’s Five Forces Model 2) Porter’s
Three Generic Strategies 3) Value Chains
Porter’s Five Forces Model
• High when buyers have many choices of whom to buy from and low when their choices are
• Switching Cost - Give a cost to switch another product
• Loyalty Program- rewards makes you stay with the company
• High when buyers have few choices of whom to buy from and low when their choices are
• Business to Business Marketplace- Internet based service that brings many buyers and
• Creates a competitive advantage
• Decreases supplier power
• Private Exchange - Buyer posts its needs, and opens bidding to any supplier who would care to bid
• Reverse Auction - When the bids become lower and lower, the suppliers back out, because it
is not worth it for them
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.
Three Generic Strategies
• Business Process – A set of activities that accomplish a specific task.
• Value Chain Analysis – Views a firm as a series of business processes that add value to the
product or service.
• All factors that contribute to a product or service that add value to it. CHAPTER TWO
CASE STUDY – Information Systems Improve Business Processes AT Grocery Gateway:
• Grocery Gateway is all about the service that brings groceries to your house, Canada’s leader in
the online retailing of home and office delivered goods.
• What is attractive to customers is that it is an online grocery shop open 24 hours 7 days a week
• Price is not the value proposition however, it is a time saver for consumers and beneficial for
people who are physically challenged and those people who do not own a car.
• Technology used for Grocery’s Gateway processes such as, supporting online merchandising,
single item picking, home delivery operations, and customer service.
• Turned to Descartes Systems Group (An on-demand logistics management solutions provider)
to optimize Grocery Gateway’s selection of delivery routes.
o Has improved its on-time delivery performance by 14% and it is exceeding its yearly
stops per paid hour by 12.4%.
Making Good Business Decisions:
1. People must analyze great amounts of information.
2. People must make decisions quickly.
3. People must apply analysis techniques, to make good decisions.
4. People must protect the corporate asset of organizational information.
* In decision-making there is different levels to solve the problems, there is STRATEGIC,
MANAGERIAL, and OPERATIONAL.
Operational Decision Making
• Operational Decision Making – employees develop, control and main core business
activities required to run the day to day operations • Structured Decisions – situations where established processes offer potential solutions
Managerial Decision Making
• Managerial Decision Making - Employees evaluate company operations to identify to
• Semi Structured Decisions - Happens when there are a few processes that help evaluate
possible solutions, but not strong enough for a definite solution
Strategic Decision Making
• Strategic Decision Making – Managers develop overall strategies, goals and objectives
• Unstructured Decisions – Occurs in situations in which no procedures or rules exist to guide
Transactional Data and Analytical Information
• Transactional Data – Encompasses all the raw facts contained within a single business
process or unit of work, and their primary purpose is to support performing daily operational
• Analytical Information – Encompasses all summarized and aggregated transactional data,
and its primary purpose is to support performing analysis tasks.
• Online Transaction Processing- capturing of transaction and event formation using
1.Process the data according to defined business rules.
2.Store the data.
3. Update the existing data to reflect the new data entered.
• Online Analytical Processing (OLAP) – Analysis of summarized or aggregated information
sourced from transaction processing systems data, and sometimes external information from
outside industry sources, to create business intelligence in support of analytical and strategic
(non-operational) decision making.
Key Performance Indicators
• The number of metrics a company uses to evaluate progress toward critical success factors
• Efficiency - Measures the performance of IS
• Effectiveness – Measures the impact IS has on the business
• A process of continuously measuring system results, comparing those results to optimal system
performance (benchmark values), and identifying steps and procedures to improve system
• Benchmark – Baseline values the system seeks to attain.
Transaction Processing System (TPS)
• Transaction Processing Systems- Basic business system that serves the operational level and
assists in making structured decisions
• Source Document- The original transaction record
Decision Support Systems (DSS)
• Analytical Information - Encompasses all organizational information, and its primary
purpose is to support the performing of managerial analysis or semi structured decisions • Decision Support System (DSS) – Models information to support managers and business
professionals during the decision-making process
• Online Analytical Processing (OLAP) –Manipulation of information to create business
intelligence in support of strategic decision-making.
Artificial Intelligence (AI)
• Artificial Intelligence – Stimulates human intelligence
• Intelligent System – Various commercial applications of artificial intelligence
• Artificial Neural Network – Category ofAI that attempts to emulate the way the human brain
• Fuzzy Logic – Mathematical method of handling imprecise or subjective information.
• Artificial intelligence systems that mimic the evolutionary, survival-of-the-fittest process to
generate increasingly better solutions.
• Special-purpose knowledge-based information system that accomplishes specific tasks on
behalf of its users.
Business Process Re-engineering
• Business Process – A standardized set of activities that accomplish a specific task, such as
processing a customer’s order.
• Customer-Facing Process – Result in a product or service that is received by an
• Business-Facing Process -- Invisible to the external customer but essential to the effective
management of the business and include goal setting, day-to-day planning, performance
feedback, rewards, and resource allocation.
• Business Process Improvement – Attempts to understand and measure current processes and
• Business Process Re-Engineering (BPR) – The analysis and redesign of workflow.
Business Process Modeling
• Business Process Modeling (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
• Business Process Model - A graphic description of a process, showing the sequence of process
tasks, which is developed for a specific. CHAPTER 3
• Where celebrities go, fans will always follow
• Celebrities are used to market products. If one of your idols are using a product advertised, you
the buyer is going to want to buy that same product to be like their idol
• Facebook, twitter, and other social networks are used to keep the celebrities happy and coming
• Sites create updates to up and coming/important information
• Celebrities represent potential revenue for young startups
• Sites are charging per month from its users
• Digital Darwinism- implies that organizations, which cannot adapt to the new demands placed
on them for surviving in the information age, are doomed to extinction.
• Disruptive technology- a new way of doing things that opens new markets and destroys old
• Sustaining technology- produces improvements to products that customers are eager to buy
• Organizations must be able to transform as markets, economic environments, and technology
• Internet- computer networks that pass information form one to another using common
• Protocol- standards that specify the format of data as well as the rules to be followed during
• World Wide Web (WWW) – a global hypertext system that uses the internet as a transport
• Hypertext Transport Protocol (HTTP) – the internet standard that supports exchange of information
Evolution Of The Internet
• Digital Divide – when those with technology have a greater advantage than those that do not
• Web 2.0 - a set of economic, social, and technology trends that collectively form the basis for
the next generation of the Internet.
• Website or web application that uses content from more than one source to create a new
product or service
• is based on the “intelligent” Web applications using natural language processing, machine-
based learning and reasoning, and intelligence applications
• Semantic Web - structuring data so web pages describe things in a way that computers can
“understand” and, thus, find, share and integrate ideas more effectively for people
Accessing Internet Information
1.Intranet- internalized portion of the internet, protected from outside access, for employees
2.Extranet- an intranet that is available to strategic allies
3.Portal- web site that offers a broad array of resources and services
4.Kiosk- publicly accessible computer system that allows interactive information browsing
Providing Internet Information
1. Internet service provider (ISP) –provides individuals and other companies access to the Internet
2. Online service provider (OSP) – offers an extensive array of unique Web services
3. Application service provider (ASP) – offers access over the Internet to systems and related
services that would otherwise have to be located in organizational computers
• 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
Opening New Markets
• Mass customization-The ability of an organization to tailor its products or services to the
• 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.
• Intermediary-Agents, software, or businesses that provide a trading infrastructure to bring
buyers and sellers together
- Re- intermediation
Advantages Of E-Business
• Reducing Costs- Business processes that take less time and human effort
• Improving Operations- Communications customized to meet customer needs and available 24/7
• Improving Effectiveness- Web sites must increase revenue and new customers and reduce
• 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—A single request made by a visitor to view a web page
• Types of Business:
o Brick and mortar- Physical store, no web site
o Pure-play (virtual) business- web site only
o Click and mortar- physical store and website
• E- Auctions are a successful E-Business Model
• Forward Auction- seller offers to many buyers who bid and the highest bid wins
• Reverse auction-buyer specifies product or services and lowest seller bid wins contract.
• Protecting consumers—Against unsolicited, illegal or harmful goods, invasion of privacy,
• Leveraging existing systems—Effectively integrating innovative systems with existing
• Increasing liability--Identity theft, privacy, and the Internet’s global reach means dealing with
laws of many countries.
• Providing security—Protection of consumer and business information and data assets.
• Taxation Rules—Adhering to often new rules
• Highly accessible
• Increased customer loyalty
• Improved information content
• Increased convenience
• Increased global reach
• Decreased cost
• Mobile Commerce –purchasing goods and services through a wireless internet enabled device
Closing Case: • Canadian tire- rise and fall
• Canadian tire-real time inventory management, that allows shoppers to tract their orders
• Costumers were not purchasing enough from the web
• Made it for just searching the prices, and then go to the store to buy the product
• Social responsibility - implies that an organization has a responsibility to society
• Corporate Policy - reflects the position a company takes on social and political issues
• Sustainable or “Green” - describes systems that minimize damage to the environment
• E-waste - Refers to discarded, obsolete or broken electronic devices
• Sustainable IT disposal - refers to the safe disposal of MIS assets at the end of their life cycle.
• Electronic Product Stewardship Canada - an industry association that educated and
encourages e-waste control
Organization Social Networking
• Passive Search- Finding people for new jobs who are happy and productive where they
through business networking sites
• Boomerangs- Former employees returning to old jobs • Marketing Networks- Using business networks for marketing and events
• Virtual world -An internet resource which represents a 3D virtual community
• Virtual Organizations- Interactive web presence for business and their customers
• Virtual Workforce- working from home...or anywhere via the internet
Tools For the Virtual Workforce
• Mobile commerce (m-commerce)- ability to purchase goods and services through a mobile
• Telematics- The blending of wired and wireless technologies for efficient electronic
• Electronic tagging- the use of RFID (radio frequency identification) and other systems to
identify and tracking digital assets
Enterprise Resource Planning
• Integrates all depratments and functions throughout the organization into a single IT system
• Solution to incompatible applications
• Addresses the need for global information sharing