OMIS 2000 Study Notes

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Operations Management and Information System
OMIS 2010
Henry Kim

Chapter 1: IS in global systems today • Canadian Wheat Board uses information systems to manage products, development and pricing systems • **Supply Chain Transformation (SCT): launch by CWB in 2006 • CWB tried to use an internal system but there wasn’t enough intelligence, tried to use an external system but it was too expensive and lacked control, added an external add-in (application from the company of Numerics) • Strategic business objectives of information systems: o Operational excellence: seeking to improve efficiency of operations in order to achieve higher profitability o New products, services and business models o Customer and supplier intimacy o Improve decision making o Competitive advantage o Survival: it’s now becoming a necessity of doing businesses to use information systems • Information system: interrelated components working together to collect, process, store and disseminate information to support decision making, coordination, control, analysis, and visualization in an organization (software and programs used in business) • Three activities to produce information: o Input: to capture or collect raw data from within the organization or from an external environment o Processing: to convert the raw data into information o Output: transfers processed information to people who will use or activities for which it will be used • Information systems require feedback • Three dimensions of information systems: o Organizations: levels of a firm  Senior management: makes long range decisions about products and services and ensures financial performance  Middle management: carries out programs and plans of senior management; knowledge workers who design products and services and create new knowledge (engineers, architects and scientists)  Operational management: responsible for monitoring daily activities of business; data workers who assist with scheduling and communication of all levels of the firm (secretaries); production or service workers who produce the products or deliver services  Every organization has a unique culture and that culture can be found embedded in their information systems o Management: their job is to make sense out of many situations faced by organizations, make decisions and formulate action plans to solve organizational problems  IT can help managers design and deliver new products and services and redesign and redirect their organizations o Information technology: components of IS such as hardware and software database and telecommunications  Help managers cope with change  IT infrastructure provides the foundation or platform for which the firm can build information systems  Computer hardware: physical equipment used for input, processing and output activities in IS; includes computers, various input/output and storage devices and telecommunications devices that link the computer together  Computer software: detailed preprogrammed instructions that control and coordinate computer hardware components in IS  Data management technology: software governing organization of data on physical storage media  Networking and telecommunications technology: consists of both physical devices and software and links various pieces of hardware and transfers data from one physical location to another  Network: links two or more computers to shared resources  Internet: global network of networks that uses universal standards to connect millions of different networks  Intranet: internal corporate network based on internet technology  Extranet: private internet extended to authorized users outside of the organization  World Wide Web: services provided by the internet which stores, retrieves, formats and displays information in page format on the internet • Computers are dumb! Because they don’t know how to do something that wasn’t taught but we use them still because they’re faster at what they’re supposed to do • Data is the raw facts you collect and then process to turn it into information which is then used to make decisions etc. • Complimentary assets: assets required to derive value from primary investments o To realize the value from cars you need complimentary investments in highways, gas etc. • Firms need to support their technology investments with complimentary assets in order to receive superior returns o These may include new business models/processes, management behavior, organizational culture or training • Three approaches to information systems: o Technical approach: emphasizes mathematically based models to study IS o Behavioral approach: concerns with behavioral issues which arise in the development and maintenance of IS o Sociotechnical systems: focus on computer based IS systems (approach this class/textbook take) Chapter 2: How businesses use IS • Business process: refer to set of logically related tasks and behaviors that organizations develop over time to produce specific business results and the unique manor in which these activities are organized and coordinated o Developing new products, generating and filling an order, creating a marketing plan and hiring employees • Business in considered to be a collection of its business processes • IT apps are used by organizations to support business processes by increasing efficiency of existing processes like automating steps that were once manual and also enabling entirely new processes that are capable of transforming the business such as changing the flow of information, replacing sequential steps with parallel steps and eliminating delays in decision making • **Transaction Processing System (TPS): used at the operational level to help perform and record daily routine transactions; helps the decisions made at the operational level with predefined rules and decisions made to achieve structured goals • **Management Information System (MIS): used at middle management; support business processes that provide reports on firms current performance; reports are based on TPS data • **Decision Support Systems (DSS); Executive Support Systems (ESS): used at management levels by professional workers, analysts and managers; ESS is used by senior management so they have better user interfaces and are very customized; example of DSS in Microsoft Excel; supports business processes that involve non-routine decision making; often use external information as well as data from TPS and MIS; used for “what-if analyses” • Enterprise Systems: majority are **enterprise resources planning systems (ERPS); collect data from different firm functions and stores the data in a single, central data repository; resolves the problem of fragmented, redundant data sets and systems; enable the coordination of daily activities across different parts of the organization, efficient response to customer orders that require information from different parts of the organization and provide valuable information for improving management decision making • **Customer Relationship Management (CRM): provide information to coordinate all business processes that deal with customers in sales, marketing, and service to optimize revenue, customer satisfaction and customer retention; integrates customer related processes and customer information from multiple communication channels • **Supply Chain Management Systems (SCM): help manage firms supply chain, any business processes that involve things like relationships with suppliers and customers, warehousing, and logistics; share information about orders, production, inventory levels, delivery of products and services o Goal is to have the right amount of products at your destination in the least amount of time at the lowest cost • **Knowledge Management Systems (KMS): support processes for acquiring, creating, storing, distributing, applying and integrating knowledge; any application for collaboration is a KMS; example of KMS is CMD (course material database); collects internal knowledge and experiences and makes it available to employees • Systems aren’t mutually exclusive (a system can be a KMS and CRM) • Business Intelligence: using data and software to help managers make more informed decisions • Portal: uses web interface to present integrated personalized business content • Digital dashboard: displays on a single screen, graphs and charts of key performance indicators • Enterprise applications: systems that span functional areas and they focus on executing business processes o Enterprise systems o SCM o CRM o KMS • Electronic Business (e-business): when you use digital technology and the internet to execute major business processes • E-commerce: the part of e-business that deals with buying and selling of goods and services over the internet as well as any activities supporting those transactions including advertising, marketing, customer support, security, delivery and payment • E-government: application of internet and networking technology to enable government and public sector agencies relationships with citizens, businesses and other arms of government • Collaboration: working with others to achieve goals, benefits are productivity, quality, innovation, customer service and financial performance o Collaborative software tools include email, IM, file sharing, screen sharing, audio/video conferencing, document sharing, large audience webinars, and co-browsing • Telepresence technology: any technology that integrates audio and visual components to make it seem like a person is present when they’re not (i.e. skyping, facetime etc.) • Programmers: technical specialist who write software instructions for computers • Systems analysts: liaisons between IS groups and the rest of the organization, translate business problems into information requirements • IS managers: who lead teams of programmers and analysts and other IS groups • IS department: headed by **chief information officer (CIO) who oversees the use of IT • **Chief security officer (CSO): in charge of IS security and enforcing information security policies • **Chief privacy officer (CPO): ensure that the company complies with data privacy laws • **Chief knowledge officer (CKO): responsible for firm’s knowledge management program; help design programs and systems that find new sources of knowledge and make better use of existing knowledge • End users: people outside of IS groups for whom applications are developed for and these people are playing an increasing large role in the design and development of IS • IT governance: the strategies and policies for using IT within an organization Chapter 3: IS, organizations and strategies • Google social strategy: overall strategy of everything but they are lacking their social strategy, which was ridiculed as old fashioned (Google Buzz failed because privacy concerns and lack of competitive advantage ; Google Wave failed because no one knew how to use it) • Google+ allows categorization of people, certain people can only see certain things, • Google’s social strategy is unclear: “our social strategy is to help users connect with each other” • Social networking: from the providers perspective it’s a marketing platform because you can gather the data and sell it to third parties o Facebook’s marketing platform takes all your information and matches to advertisements that you might like • Disruptive technologies: technology that brings about sweeping change to business, industries and markets in order to be disruptive they have to overtake the preexisting technology (example is the pc and CDs and music industry) o First mover: inventor of disruptive technologies o Fast followers: firms with the size and resources to capitalize on that technology o Web browsing: Mosaic was the first mover of web browsing, then Netscape was a fast follower • Economic models used to analyze IT: o Transaction Cost Theory: when firms and individuals seek to economize transaction cost; as firms grow in size, transactions costs decrease o Agency Theory: agency costs rise while firms take on more employees, but IT enables firms to economize managers through better coordination and communication  Agency costs: costs of managing agents (employees), who without supervision would seek their own interests o Flattened Organization: information systems can reduce the number of levels in an organization by providing managers with information to supervise large number of workers and giving lower level employees more decision making authority o Metcalfe’s Law (Network Effects) (Network economics): describes how a service becomes more valuable as more people use that same service  Telephone lines: if you’re the only person using a telephone service, there’s not much value, but if more people are using telephones they can call you or you can call them which adds more value  Relates to IS and IT because they become more valuable as more people use it • IT enables execution of strategies like leveraging synergies, leveraging core competencies and establishing virtual companies and business eco systems • Synergy: output of some units are used as inputs to others or when organizations pool markets and expertise o When the bank of New York and JP Morgan Chase merged o Beneficial because they lower costs and generate profits • Core competencies: activities for which a firm is a world class leader • Virtual Company Strategy: virtual companies use networks to ally with other companies to create and distribute products without being limited by traditional organizational boundaries or physical locations • Business eco systems: loosely related but interdependent network of suppliers, distributers, outsourcing firms, transportation service firms and technology manufacturers o Keystone firms: dominate the ecosystem and create the platform used by other firms o Niche firm: rely on the platform created by keystone firms • **Social Location Mobile (SoLoMo): enables companies to better target people to specific advertisements o Facebook is lacking location but they have to Social and the Mobile and Google is lacking the Social but they have the Location and Mobile • Organizational Structures: o Entrepreneurial Structure: young, small firms in fast changing environment, simple structure and usually the owner is the CEO (any small startup business) o Machine Bureaucracy: large bureaucracies existing in a slowly changing environment and they produce standard products (any mid-size manufacturing firm) o Divisionalized bureaucracy: combination of multiple machine bureaucracy that each produce a product or service all served under one headquarters (any fortune 500 company, like GM) o Professional bureaucracy: knowledge based organization in which goods and services depend on expertise and knowledge of professionals (law firms, hospitals, universities but they can also be divisionalized) o Adhocracy: task force organizations that must respond to rapidly changing environments; consist of large groups of specialists organized into short lived multidisciplinary teams (consulting firms such as Rand Corp.) • Routines: precise rules, procedures and practices that have been developed to cope with virtual all expected situations • Porter’s competitive forces model: arguably the most widely used model for understanding competitive advantage, provides a general view of the firm, its competitors and the firms environment, 5 competitive forces that shape the fate of the firm o Traditional competitors o New market entrance o Substitute products and services o Customers whose power increases when there’s no product differentiation o Suppliers • IS strategies for dealing with competitive forces: o Low cost leadership: use IS to produce products and services at lower price than competitors while enhancing quality and level of service o Product differentiation: use IS to differentiate products and enable new services and products o Focus on market niche: use IS to enable focus strategy on single market niche, in other words to specialize o Customer and supplier intimacy: use IS to develop strong ties and loyalty with customers and suppliers • Value chain model: highlights specific activities where competitive strategies can be best applied and where IS is most likely to have strategic impact; views the firm as a chain of basic activities that add margin of value to firms products or services o Primary activities: most directly related to production and distribution, includes inbound logistics, operations, outbound logistics, sales and marketing and service o Support activities: make the delivery of primary activities possible and consist of organization infrastructure, HR, technology, and procurement (purchasing input) • Benchmarking: involves comparing efficiency and effectiveness of your business processes against strict standards and measures performance against those standards • Value Web: collection of independent firms that use IT to coordinate their value chains to produce product or service for a market collectively Chapter 4: Social, Ethical, and Legal Issues in IS • 5 moral dimensions of IS Use: o Information Rights and Obligations  Behavioral targeting; online activity is tracked and advertisements are displayed depending on your activity  Increases efficiency of online ads by using information users reveal online and consumption info from offline sources  Increased use of behavioral targeting has drawn attention of policy makers **(ex. Personal Info Protection and Electronic Documents Act PIPEDA) o Property Rights and Obligations  Case: Google in Chine; Google has “don’t be evil” motto but entered China in 2006 after promising government a ban on sensitive topics  Claimed they could do more for Internet freedom and human rights inside rather than out; critics claimed it was just selling out  In January 2010, they pulled out of China; China insisted on censorship; last straw was Chinese cyber- attacks on Google accounts of Chinese dissidents o Accountability and Control o System Quality o Quality of Life • How Google Uses Data it collects: o Google Search: Google search topics, users’ internet addresses; targeting text advertisements placed in search results o Gmail: contents of email messages; targeting text advertisements placed next to email messages o DoubleClick: Data about web sites visited on Google’s ad network; targeting banner advertisements o YouTube: Data about videos uploaded and downloaded, some profile data; targeting ads for Google display-ad network o Mobile Maps with my location: user’s actual/approximate location; targeting mobile ads based on users’ postal codes o Google Toolbar: Web browsing data and search history o Google Buzz: users’ google profile data and connections o Google Chrome: Sample of address bar entries when Google makes it the default search engine o Google Checkout: User’s name, address, transaction details o Google Analytics: Traffic data from Web sites using Google’s Analytics Service • Intellectual property: intangible property of any kind created by individuals and corporations; three main ways to protect: o Trade Secret: intellectual work/product belonging to business, not in public domain o Copyright: statutory grant protecting intellectual property from being copied for life of author, plus 70 years o Patents: grants creator of invention exclusive monopoly on ideas behind invention for 20 years • Challenge: digital media is different from physical media; creates an ease of replication, ease of transmission, difficulty in classifying software, compactness and difficulties in establishing uniqueness • **Digital Millennium Copyright Act (DMCA): makes it illegal to circumvent technology based protections of copyrighted materials, prohibits jailbreaking etc. • The 6 Ethical Principles: o Golden Rule: do unto others as you would have them do unto you o Immanuel Kant’s Categorical Imperative: if action isn’t right for everyone to take, it’s not right for anyone o Descartes’ Rule of Change: if action can’t be taken repeatedly, it’s not right to take it at all o Utilitarian Principle: take action that achieves higher/greater value o Risk Aversion Principle: take action that produces least harm/least potential cost o Ethical ‘no free lunch’ Rule: assume that virtually all tangible and intangible objects are owned by someone unless there’s specific declaration otherwise • Techno-stress: modern diseas of adaption caused by inability to cope with new computer world technologies in healthy manner Craig Brod • Ethics: refers to the principles of right and wrong that individuals, acting as free moral agents, use to make choice that guide their behaviors • Technology Trends that Raise Ethical Issues: o Computing power doubles every 18 months: more organizations depend on computer systems for critical operations o Data storage costs rapidly declining: organizations can easily maintain detailed databases on individuals o Data analysis advances: companies can analyze vast quantities of data gathered on individuals to develop detailed profiles of individual behavior o Networking advances: copying data from one location to another and accessing personal data from remote locations has become much easier • Profiling: use of computers to combine data from multiple sources and create electronic dossiers of detailed information on individuals • **Nonobvious Relationship Awareness (NORA): can take information about people from may disparate sources and correlate relationships to find obscure hidden connections that might help identify criminals/terrorists • Responsibility: key element of ethical action; you accept potential costs, duties and obligations for decisions you make • Accountability: feature of systems and social institutions; mechanisms are in place to determine who took responsible action and who is responsible • Liability: extends concept of responsibility to area of laws; feature of political systems in which body of laws are in place that permits individuals to recover damages done to them by other actors, systems/organizations • Due Process: process in which laws are known and understood and there’s an ability to appeal to higher authorities to ensure that laws are applied correctly • Privacy: claim of individuals to be left alond, free from surveillance/interference from other individuals/organizations including state • **Platform for Privacy Preferences (P3P): enables auto communication of privacy policies between e-commerce site and its visitors Chapter 5: IT Infrastructure and Emerging Technologies • ING: pursuing cloud strategy to get substantial IT cost savings and for greater control of IT infrastructure, access to newer technology with improved stability • Cloud computing offers more flexible services model for IT systems that puts business unit/customer at centre • Cloud computing: o On-Demand self service: individuals can obtain computing capabilities such as a server time/network storage on their own o Ubiquitous Network Access: individuals can use standard network and Internet devices, including mobile platforms, to access cloud resources o Location-Independent Resource Pooling: computing resources are pooled to serve multiple users with different virtual resources dynamically assigned according to user demand; user generally doesn’t know where computing resources are located o Rapid Elasticity: computing resources can be rapidly provisioned, increased or decreased to meet changing user demand o Metered Service: charges for cloud resources are based on amount of resources actually used  Data is permanently stored in remote servers, accessed and updated over Internet by users  Advantage: you get IT when you want it, however much, instead of purchasing it up front at large cost • IT Infrastructure: shared technology resources that provide platform for firm’s specific IS apps; includes investment in hardware, software and services such as consulting, education and training • Importance of Standards to Achieve Network Effects • Tech standards: specifications that establish compatibility of products and ability to communicate in network o Widespread adoption of standards leads to economies of scale as manufacturers/producers can focus on one standard and increased competition leading to lowered prices for consumers (i.e. more cost effective for movie studioes to produce content in Blu Ray than in Blu Ray and DVD) • VocaLink’s IT Infrastructure Improvements: Dutch company designs and delivers domestic and international automated payment systems and ATM switching solutions o Problem: coordinating and integrating code for VocaLink’s UK international developers & Indian partner o Solution: desktop virtualization using software from Citrix and VMWare and **Storage Area Networks (SAN) using blade servers’ reduce
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