COMPUTERS IN MANAGEMENT MIDTERM STUDY
WHY IS INFORMATION IMPORTANT?
• As a consumer, vendor, commentator, producer, and collaborator
• Affects individuals as a consumer because of the idea of the Long Tail. Products
are becoming more available online, and less available in stores. Awhile back, it
was the opposite and now, when looking at a graph, the long tail displays the shift
in online purchasing
• Long tailthe idea that there is an untapped market for goods that are usually
considered undesirable to the general public. Goods that are deemed in the long
tail are goods that are not popular enough that a store would carry it; however,
there are some people that still desire the product. This is where the internet
comes in because the internet has a virtually infinite amount of selling space they
can afford to use their websites advertise goods that are not exactly popular. i.e.
Amazon, eBay, Itunes. Also, AdSense and similar online networks provide
advertisers with access to the long tail of niche Web sites by offering both
increased opportunities for ad exposure as well as morerefined targeting
opportunities. This power of the “tail: helps search advertising market increase.
Two critical facts: 1selection attracts customers. Customers are attracted to
Netflix because of the firm’s collection of DVDs. 2Internet allows largeselection
inventory efficiencies that offline firms can’t match. Success of many stores. No
need to worry about inventory.
• Individual transformation affects the vendor because of the idea of things like
eBay. eBay is a site where customers can purchase and sell at all times of the day.
The idea of selling in stores has shifted to selling on various sites. eBay is the
fastest growing company in history. eBay contains rare goods and great prices and
most of the time, these goods cannot be purchased in stores.
• As a commentator because of things like Amazon. The individual is purchasing
an item from a site that just contains the products picture. Most of the time, the
Amazon store never sees the products. Basically, Amazon is acting as a mediator
between the consumer and the original place that produces the product. We are
relying on the Internet for everything.
• We are even getting things produced using this method. There are plenty of sites
where anyone can place a small job to do online and say that whoever completes
this task will earn “x” amount of money and people will produce this answer to
the task. Anyone can produce anything using these sites.
• The biggest collaborator is Wikipedia. It excels because anyone can change or
add an article. The employees of Wikipedia pay a few experts to check every
article to make sure the information is factual. As a result, Wikipedia is usually extremely dependable. Another example is the tshirt website where the site takes
feedback from the customers and people post different designs on tshirts and if
enough people want the shirt, they will make it available to purchase. There are
many more sites where the consumer can post information or ideas to stir up the
new design that is a form of collaboration.
• eBay strives of the idea of the Network Effect, which is when a product or
service becomes more valuable the more people that use them. Additionally,
another effect is related to Metcalfe’s Law, which is when the value of a network
is equal to the square of the number of users.
• All of this creates virtuous cycles. For example, eBay’s success attracts more
success, the idea of Netflix using the method of the Long Tail, eBay’s way to
reach sellers, and the idea of placing more emphasis on the item.
• The crowds just want innovation although; sometimes it is not always good. But it
is known that a crowd of people will make a better decision than one expert due to
the different perspectives of each person. The wisdom of the crowds is most of
the time better than a few experts because independence, decentralization (on
leader), and aggregation. However, people do not use group decisionmaking
more often because of the coordination costs.
• Transaction costs is the costs associated with making an economic transaction in
a market. The coordination costs is the costs associated with getting a team of
people to work together. If the transactions costs are high, create a firm, if low
create a market.
• When transaction costs become very low, firms can turn to Crowdsourcing,
which is using markets to conduct what used to be done in the house. 5
characteristics of crowdsourcing: 1. Dispersed crowd 2. Low attention span 3.
Full of specialists 4. They produce mostly junk 5. They find the best stuff!
• The opposite of the wisdom of the crowds can occur when there is the following:
directive leadership, homogeneity of members’ social background and ideology,
or insulation of the group from outside sources of info and analysis. The
symptoms of this are excessive optimism that encourages risk taking, warnings
that might challenge assumptions, an unquestioned belief in a group’s morality,
and pressure to conform. Examples are the Bay of Pigs, Iraq, Challenge Disaster,
and the Subprime Lending.
• Wikis are websites anyone can edit. You can have different privacy settings for
different purposes. The most famous wiki is Wikipedia. Wikis work best with
small groups (less than 150), common language (formal and informal), non
controversial subjects, semiformal setting, dynamic environment, and en
environment of trust and respect.
• The difference between Web 2.0 versus Web 1.0 is that Web 2.0 focuses on peer
production. This allows their users to work collaboratively to create content. This
method is better than those of Web. 1.0 because they used to pay many experts to
do the jobs of finding facts on articles. This causes sites to lose a lot of money
because all of the articles that people did not search for were still paid for. Web
2.0 focuses on a few experts and allowing the content to be changed easily which
helps Web 2.0 floursish. • A social network is an online community that allows users to establish a personal
profile and communicate with others. Features of the social network are detailed
personal profiles, affiliation with groups, affiliation with individuals, private
messaging and public discussion, media sharing, feeds, and apps. Social networks
help advertising as well. Network effects and cultural differences result in one
social network being favored over others in a particular region. The information
spreads virally via news feeds. The use of public social networks within private
organizations is growing. Myspace focuses on talent and music. Facebook
focuses on reconnecting with past friends and Linkedin focuses on job
opportunities. Organizations use social networks to get direct feedback of
products and services, and sometimes help innovation. Individuals must be careful
about what they post on such network because of company’s ability to view them
and make executive decisions. Many people suggest that one keeps their
information private and within a group of trustworthy friends because these type
of things can ruin a person’s reputation. Twitter focuses on microblogging, which
is a type of shortmessage blogging, often made via mobile device. Twitter’s
success is due to it’s innovative manner in tweets, microblogging, and hast tags
used connect similar tweets.
• The long memory of the Internet is referring to the fact that whatever you put on
the Internet usually stays there. Some reputations can be destroyed by your
content, especially if you are a relative of someone important or famous. People
connect the type of person you are with your family, your words, your history, and
your beliefs. Many employers look at Facebook to get a better idea of whom you
really are and in many cases, workers failed to get jobs because of this.
• Companies like Gap had many competitive advantages. They use thoughts and
feelings and incorporate them. Additionally, they advertise heavily using
celebrities like Madonna to wear their clothes in commercials. They also give
away ITunes songs if people try on jeans. The size gives customers a lot of power
and they have a lot of workers to interact with customers. They make their clothes
offshore to save money due to cheaper labor. Gap produces a lot of clothes per
season and they wait a few months to receive their products so many times, they
must guess what the customer will like and if they mess up, they lose a lot of
money. However, Inditex Zara is their biggest competitor. Inditex stock price
tripled over 96’ and 00’. But what makes Zara different is that the clothes are not
mutually exclusive because each store varies in clothes due to the regions. The
fashion is similar to Banana Republic but the prices are cheaper. The difference is
Gap relies heavily on inventory and Zara does not. The customers know what is
best. Zara asks the customers what they like and they mark it down and order the
clothes. They use the Point of Scale System to mark down what people look at
and PDA’s, which are personal digital assistants used to figure out what the
customer is looking for. It is very cheap and there is a lot of Return On Investment
in Zara. Zara uses IT to help beat out the competition. Zara produces 60% of its
products in house, which saves a ton of money on outsourcing. Production and speed is a critical asset in Zara. 15 days to turn ideas to clothes on shelves. Second
is H&M, which takes 23 months.
• Harrah’s CEO is a former operations professor who has leveraged information
technology to create what may be the most effective marketing organization in the
service industry. Harrah gets information from its customers with the Total
Reward Card. These cards are linked to their loyalty system. People are always
using these reward cards to win free stuff. They treat the richer customers with
better service then normal customers. Customers actively work to improve their
reward card so that they can get the good treatment. You get 1 point for every 10
dollars spent. Grandmothers are the biggest gamblers and so they extend their
services to nursing homes so that the women can gamble. The total rewards data
helped the bottom line by lowering costs, reducing ads, marketing to customers
more likely to respond, and arrange facilities in ways that generate the highest
revenues. Total rewards allow them to collect data and turn it into profit, instead
of guess like Gap.
• Zara masters IT Competency. They spend 510 times less than rivals on
technology and they get a lot of money on their return of investment. These
technologies are not fancy and can easily be implemented. They use IT in a very
smart way and it is linked with strategies and processes, which results in a very
effective way of making money. They rely on JIT (Just In Time)
Manufacturing. They have one of the most responsive supply chains. Using JIT,
PDA, and POS, they are quick with acquiring data and using it as well. They
schedule when materials will arrive just in time for the production process.
• Vertical Integration is when a single firm owns several layers in its value chain.
A value chain (Porter) is a set of interrelated activities that bring a product or
service to market. For example, infrastructure, general management, planning,
finance, IS, hiring, recruiting, training, developing, technology, and Procurement.
• Complimentarity is what Harrah uses. It is when a company uses IT to better
leverage existing organizational advantages. Harrah has also helped its customers
with having little to no switching costs. Customers are allowed to use their Total
Reward Cards across nations thanks to the technology. Harrah has patented the
technology allowing the sharing of data across properties. You cannot use your
rewards with another casino but you can with the same casino in a different
• We use IT to Automate, Informate, and Transform. Using IT to conduct routine
tasks is an example of automation. The Dell order system is a good example.
Using IT to make data/information/knowledge available at multiple levels of the
organization is an example of Informate. You use all this IT information and then
you transform it to conduct business in entirely different ways.
HOW CAN TECHNOLOGY CREATE (OR DESTROY) VALUE?
• Moore’s Law states that chip performances will double every 18 months and so
far, he has been correct.
• According to the Production Possibilities Curve, IT affects nonIT products. • IT goods are very different compared to others. IT products have very large fixed
costs and very low variable costs. The first copy is expensive; and every other
copy after that is cheap/free. This leads to large economies of scare and
• Moore’s Law might meet Moore’s Wall. There will be a point in time where the
chip will contain too much power, heat, or space to conduct something even more
reliable than the previous chip so what happens then? Computers in the average
corporate data center consumer energy equivalent to 80 barrels of oil each day. To
prevent this, engineers have made many conductors do a little bit and waste a
little energy but still get the same job done.
• eWaste is what happens after the computer is ruined. The cathode ray tube and
solder contains lead, the older cathode ray tube contains arsenic, circuit boards
contains selenium, plastic castings, cables and circuit boards contain
Polybrominated Flame retardants. There are more elements in computers such as
Antimony trioxide, Cadmium, Chromium, Cobalt, and Mercury that add up to
waste. What do we do with this waste? We ship it to third world countries. This is
known as electronic discarded waste.
• The idea of parallel processing is the attempt to use multiple chips instead of
making one faster. Incorporate the skills of multicore, grid computing, cloud
computing, and virtualization. Obviously there are limitations but if you set up a
number of chips that can do something small, the task will get done quicker.
• Grid Computing is when your computer is idle and is still working effectively.
This tends to be loosely coupled, heterogeneous, and geographically dispersed. It
is often at a low cost and is commodity hardware. Examples are BC Linux Cluster
and [email protected]
• The Computing Waves began slowly. The first wave was in the 60s and it was
dealing with Mainframes. The second wave, in the 70s, was dealing with
minicomputers. The third, the 80s, was an important wave that evolved into
personal computers. In the 90s, the fourth wave came about which drastically
changed the world with Internet computing. We can possible be in our fifth wave
where there is computers everywhere and this is called the Ubiquitous
Computing. This means that there are computers in everyday things such as
umbrellas, doorknobs, light bulbs, etc.
• The idea that you cannot always add people and have something take less time is
called the Mythical Man Month. This concept is referring to the idea of having 9
women work on birth. It does not take one month each; it will take 81 months
INFRASTRUCTURE, ARCHITECTURE AND STANDARDS:
• But there are many issues with current infrastructure such as congestion,
address space limitation, net neutrality, security, protocols, and reliability. We are
getting congested because so many people are joining the web. Then, as more
people get computers, we have to adjust the address space, which will probably
change everyone’s computer because we are shifting to IP6. The neutrality of the net might get dispersed. Also, we must improve our security to avoid spoofing,
violation of privacy, loss or denial of service. Lastly, we must stay reliable and
avoid unintentional and intentional disruption.
• The standards, interfaces, and encapsulation will be altered every time there is
something new. So, a better alternative way is to connect all different wires to one
central wire that connects to another central wire.
SYSTEMS: SOURCING, BUILDING, IMPLEMENTING:
• There are two types of business software: application software and system
software. There are subtopics in the application software, which are general
purpose application programs and application specific programs. Same for the
system software and there is system management programs and system
• The major business software applications are Enterprise Resource Planning
(ERP), Supply Chain Management (SCM), and Customer Relationship
Management (CRM). ERP is a software package that integrates many functions
of a business such as accounting, finance, inventory management, and human
resources. SCM is a system that can help a firm manage aspects of its value chain,
from the flow of raw materials into the firm through delivery of finished products
at the point of consumption. CRM are systems used to support the customer
related sales and marketing activities.
• The sources of business software are Commercial OffTheShelf (COTS), Open
Source Software (OSS), Customer Software, which is internally and externally
produced, and Application Service Providers. CCOTS refers to programs such as
Microsoft Word and OSS refers to programs such as Open Office.
• Workers who want a product for free develop open source software and they
have a little time to spare. Usually, it is for fame or for other reasons to change
into money. What motivates an open source contributor? There are many
advantages for this software. It is free, it has a large developer and tester base,
the peer reviews equals reliability, there is a customer support community, and the
quality is good. The disadvantages are version proliferation due to the idea of
changing the source code, it does not appeal to the highend user which can be a
reason for server side acceptance, marketing, and the foundering of less
interesting aspects in favor of fun features.
• Firms make money from OS by compliments, packaging, services, training, and
support. You can rely on the public and common goods, the zero price, the
externalities (network effects), lockin, cooperation and compatibility, standards,
and incentives. There are a lot of interesting underlying concepts.
• The total cost of ownership can be deceiving. There is more software than the
upfront cost. The service, maintenance, training, customization and
implementation must be taken into account.
• MySql was part of LAMP in that is was a Database Management System that was
easily available, affordable, and easytouse. It was an alternative that contained
small to medium enterprises and nonconsumption. It was Open Source Software that became viral using basic DBMS systems. It had a vision to be the best and
most widely used database in the world. It continuously improved while
remaining fast and safe. It was free software that took over in its field. Therefore,
Sun Microsystems acquired it for $1 billion/revenue. By this time of acquisition
MySql contained 11 billion customers and it was making $100 million/year
revenue. Sun acquired all of its customers. Sun hoped the cheap database software
could make the firm’s hardware offerings seem more attractive. And Sun was
good for MySql with the product’s revenues growing 55 percent.
• The Systems Development Lifecycle has five parts. Feasibilitydetermine how
to address business opportunities and priorities, conduct a feasible study to
determine whether a new or improved business system is a feasible solution, and
then you develop a project management plan and obtain management approval.
To be feasible, it deals with hardware, software, network, and human factors,
economic, operational, and legal. Analysisanalyze the information needs of
employees, customers and other business stakeholders; develop the functional
requirements of a system that can meet business priorities and the needs of all
stakeholders; develop logical models of current systems. This requires an indepth
study of end user information needs to produce the functional requirement needed
for design. It typically involves a detailed study of the information needs of a
company, activities, resources, and products of one or more of the IS being used,
and IS compatibilities. Design is to develop specifications for the hardware,
software, people, network, and data resources, and to develop logical models of
new systems. Systems designs focus on three areas: user interface design, data
design, and process design. Implementationacquire or develop hardware and
software, test the system and train people to use it, convert to the new business
system, and manage the effects of system changes on users. Maintenance
corrective, adaptive, perfective, and preventive.
• Prototyping is the rapid development and testing of working models. It is an
interactive, iterative process used during the design phase. Also, it makes
development faster and easier, especially when end user requirements re hard to
define. Lastly, it has an enlarged the role of business stakeholders.
• Conversion Strategies: Directsimplest, most disruptive to the organization,
dunk strategy, maybe the only viable solution in cases of emergency
implementation, highest risk of failure, and involves turning off the old system
and turning on the new one. Parallelold and new systems are run simultaneously
until everyone feels that the new system functions correctly and the old system is
no longer needed. Conversion can be single cutover or phased cutover. This has
the lowest risk but the highest cost. It is the best choice where an automated
system is replacing a manual one. Pilotscenarios best suited to a pilot conversion,
multiple business locations, and geographical diverse locations. It is less risky in
terms of loss of time. Phaseda phased or gradual conversion. This takes
advantage of both the direct and parallel approaches, and minimizes the risks
involved. But, it takes the most time.
• Software as a Service(SaaS) there are advantages to this which is, an initial cost
that contains a total cost of ownership. It is scalable, vested vendor interest, and economies of sale. The disadvantages are trust, control, connectivity, user
interfaces and features, and customizat