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Information Technology Management
ITM 102
Carol Chauncey

ITM102 CHAPTER NOTES Part 1 Chapter 1- IT in Global Business Today  In 2010, $562 Billion spent by Canadians on IT  Distribution of GDP at basic prices o Computer systems design and related services-25.4% o Software Publishers- 7.5% o Telecommunications Services-38.8% o Cable/other program distribution-6.2% o ICT Manufacturing-12.3% o ICT wholesaling, rental and leasing-6.4% o Other ICT services-3.8% How are information systems transforming business, and what is their relationship to globalization?  89 million people in US have access to internet using cellphones in 2010  By June 2010 more than 99 million businesses had online websites where cfustomers could shop from. o 2009 more than 10 million Canadians shopped online spending $15 billion  Companies depended on just in time inventory to reduce over head costs and get to market faster.  Increased customer feedback, blogging which help businesses to improve depending on what their consumers want.  Businesses using social networking websites to connect employees, customers, managers worldwide Why are information systems so essential for running and managing a business today?  Just in time inventory for example. What’s New in Management Information Systems?  Technology o Cloud Computing platform emerges as area of innovation. o Mobile digital platform emerges to compete with PC as a business system  Management o Managers adapt social networking to improve coordination and knowledge sharing. o Virtual meetings  Organizations o Web 2.0 app adopted by many firms o Co-creation of business value customers help firms defines new products and services.  In 2010 more than 33% of US economy depended on foreign trade including imports/exports.  Many jobs are transferable to offshore low wage producers.  Key corporate assets- intellectual property, core competencies, financial and human assets are managed through digital means. Emerging Digital Firms  A Digital firm is one in which all of the organizations relationships with customers, employees, suppliers are done digitally.  Core Business Processes are done through digital networks  Business processes are a set of logically related tasks and behaviours that businesses develop to get results o E.g. developing new product, fulfilling orders, creating marketing plan.  Competitive Advantage is when firms achieve one or more of the business objectives. o Charging less for sales, responding to customers in real time.  Information Systems consists of all hardware and software that can be found in a typically large firm o Defined as set of interrelated components that collect process and distribute data o Help managers analyze problems and create new products.  Data is stream of raw facts representing events occurring in organizations or physical environment of firm o E.g data can create information  Input captures raw data from within the organization  Processing converts raw input into meaningful info.  Output transfers processed info to people who will use it to make decisions.  Computer Hardware consists of physical equipment used for input, processing and output  Computer software consists of detailed programmed instructions that control and coordinate computer hardware components in an IS  Networks link two or more computers  Internal corporate networks based on internet technology are intranets. Competitive advantage  Information Technology Infrastructure provides the foundation or platform on which the firm can build its specific information system.  Complementary Assets are those assets required to derive value from a primary asset. Approaches  Technical Approach- emphasizes mathematically based models to study IT  Behavioral Approach- concerned with behavioral issues that arise in the development of long term maintenance of IT. CHAPTER 2- HOW BUSINESSES USE I.T Types of information Systems Transaction Processing System (TPS)- keep track of elementary activities and transactions of the organization needed to conduct business such as sales, receipts, cash deposits, payroll, credit decisions, and flow of materials.  Managers need TPS to monitor status of internal operations and firm’s relation with external environment. Management Information Systems (MIS)- serving middle managers with report son organization’s current performance  Decision Support System (DSS) – supports non-routine decision making. Focuses on problems that are rapidly changing. Answer questions such as: o What would happen to our return investment if a factory schedule was delayed for six months. o What would happen to production schedules if we were to double sales in month of December?  Use internal information from TPS and MIS but also bring in info from external sources such as stock prices, product prices of competitors.  Business intelligence- contemporary term for data and software tools for organizing, analyzing and providing access to data to help managers and other enterprise users make decisions.  Executive Support System (ESS)- helps senior management make decisions. o Address non routine decisions requiring judgment, evaluation, and insight. o Often information is sent to executives through a portal which uses web interface to present integrated personalized business content. o Draw summarized information from DSS and MIS Systems for Linking Enterprise  Enterprise application – systems that span functional areas, focus on executing business processes across business firms and include all levels of management.  Help business coordinate their business processes more closely.  4 Major Enterprise applications o Enterprise systems o Supply chain management systems o Knowledge management systems o Customer relationship management system  Enterprise Resource Planning Systems (ERP)-integrate business processed in manufacturing and production, sales/marketing, HR, accounting etc.  Supply Chain Management System (SCM)-helps manage relationship with supplies. o Helps suppliers, purchasing firms, distributors, logistics companies share info about orders, production, inventory levels etc. o Ultimate objective is to get right amount of product from source to point of consumption in least amount of time. (Just-In-Time Inventory) o Supply Chain Management Systems are a type of interorganizational system, automating the flow of information across organizational boundaries. o Customer Relationship Management System(CRM)- Helps manage relationships with customers o Knowledge Management Systems (KMS)- enables organizations to better manage process for capturing and applying knowledge. Intranet and Extranet- increase integration and expediting the flow of information within the firm and with customers and suppliers.  Intranets only accessible by employees  Extranet only accessible to authorized vendors and suppliers and are often used to coordinate the movement of supplies to firms production facilities. E-Business – use of digital technology and internet to execute major business processes. E-commerce- part of e-business dealing with buying and selling of goods over internet E-government- application that digitally enables government and public sector agencies’ relationship with citizens businesses and other arms of government. Collaboration is working with others to achieve shared and explicit goals. Teams are part of organization’s business structure for getting things done Collaboration is important because: 1) changing nature of work 2) growth of professional work 3) changing organization of firm 4) changing scope of firm 5) emphasis on innovation. Benefits of collaboration and teamwork  Productivity- people working together complete tasks much faster. fewer errors  Quality- can communicate errors, and correct faster.  Innovation- come up with more innovative ideas.  Customer service- solves customer complaints quicker and more effectively.  Financial performance- as a result of the above, collaborative firms gain financial performance. Tools and Technologies for Collaboration and teamwork.  Email instant messaging- includes features of sharing files and transmitting messages  Social Networking- collaborating among interaction-based jobs.  Wikis – types of websites that make it easier for users to contribute and edit text content and graphics without knowledge of web page development. o Ideal tools for storing and sharing company knowledge and insights.  Virtual Worlds- environments populated by residents who build graphical representations of themselves known as avatars.  Internet Based Collaboration Environments- o Virtual Meeting Systems- business travel is expensive so meetings are set up virtually. IT Governance- strategy and policies for using IT within an organization. Software Skills- data filtering, spreadsheet date function Business Skills- analyzing supplier performance and pricing. CHAPTER 3-IT, ORGANIZATIONS AND STRATEGY An organization is a stable, formal social structure that takes resources from the environment and processes them to produce outputs. Features of Organizations Routine and business process- routines or standard operating procedures are precise rules, procedures and practices that have been developed to cope with virtually all expected situations.  Learning routines, employees become highly productive Organizational Policies Organizational Culture – encompasses the set of assumptions about how products should be made, where they are produced and for whom. Business processes are settled in organizations culture. Organization Environments organizations and environments have a reciprocal relationship.  Organizations must respond to legislative imposed by government, as well as actions of customers and competitors.  Organizations can influence their environment  Organizations reside I environments from which they draw resources and to which they supply goods and services. Organizational Structure Entrepreneurial structure- Small structure for small business managed by entrepreneur serving as main CEO Machine bureaucracy – large bureau. In slowly changing environment. Dominated by centralized management team and centralized decision making. Divisional bureaucracy-. combo of multiple machine bureacu. Each producing different product of service Professional bureaucracy - knowledge based organization in which goods /services depend on expertise of professionals. Dominated by department’s heads with weak centralized authority. Adhocracy- task force organization that must respond to rapidly changing environments. Large groups of specialists organized into short-lived multidisciplinary teams and has weak central management. Transaction cost theory- firms and individuals seek to economize on transaction costs as much as they do on production costs. Agency theory- the firm is viewed as nexus of contracts among self- interested individuals rather than profit- maximizing entity Business routines- precise rules, procedures, and practices developed to cope with virtually all expected situations Business processes- set of routines Business firm- set of business processes. Post industrial organizations- authorities rely mainly on knowledge and competence and not on formal position. Shape of organization flattens because professional workers are self- managing and decision making is more decentralized as knowledge and info become more widespread. USING IT TO ACHIEVE COMPETETIVE ADVANTAGE Michael Porter’s Competitive force model This model is all about firm’s business environment. 5 competitive forces shape fate of firm: 1) Traditional competitors-all firms share market space with competitors who come up with new ideas and products to attempt to attract customers 2) New Market Entrants- it is very tough to get into some market places such as computer chip business, but very easy to get into others such as pizza business. New companies have advantages: they have new technologies, hire young workers who are less expensive and more innovative. Disadvantages: less experienced workforce, little brand recognition. 3) Substitute Product/Service- the more products and services in you industry the less you can control pricing and lower profit margin. 4) Customers- customers have more power if they can switch over to competitors easily and and force businesses to compete with pricing. 5) Suppliers-the more different suppliers a firm has, the greater control it has over pricing , quality and delivery schedules. IT STRATEGIES DEALING WITH COMPETETIVE FORCES Low cost leadership- keeping low costs such as Wal-Mart. Also Wal-Mart has organized shelving system.  As soon as customer buys a product, replenishment system send order to suppliers for more products.  Point of sales system at cash register.  Replenishment system is example of efficient customer response system. Product Differentiation- manufacturers and retailers are using IT to create products and services that are customized and personalized to fit precise specifications of customers. (mass customization) Focus on Market Niche IT enables companies to analyze customer buying patterns and preference so that they can pitch ad campaigns and marketing schemes according to customers’ wants. Strengthening Customer and Supplier Intimacy- using IT to build trust and relationship with suppliers. Chrysler corp. allows suppliers to send out supplies whenever they want , Strong linkages with customers and suppliers increases switching costs (cost of switching from one product to a competing product) and loyalty Business Value Chain Model Highlights specific activities in the business where competitive strategies can be applied and where IT is more likely to have an impact. Value chain is series of activities (primary or support) which add a margin of value to firm’s product or service. Primary activities- related to the production and distribution of firms products or service which create value for the customer. Include: inbound logistics, operations, outbound logistics etc. Support activities- make the delivery of the primary activities possible and consist of organization infrastructure, human resources, tech, and procurement. Benchmarking involves comparing efficiency and effectiveness of business processes against strict standards and measuring performance against those standards. Best practices usually identified by consulting companies, research organizations, gov’t agencies and industry associations as the most successful solution methods. Value web- collection of independent firms that use information technology to coordinate their value chains to produce a product or service for a market collectively. CHAPTER 4- ETHICS AND SOCIAL BEHAVIOUR Ethics- the principles of right and wrong that individuals, acting as free moral agents use to make choices to guide their behaviours. IT raises more ethics questions  Ethical issues raised by IT such as establishing accountability for consequence of IT, setting standards to safeguard system quality that protects safety of individuals and society. 5 moral dimensions of information Age 1) info rights and obligations 2) Property right and obligations 3) Accountability and control 4) System quality 5) Quality of life Behavioral Targeting- increases the efficiency of online ads by using information users reveal online and consumption information from offline sources. Profiling- the use of computers to combine data from multiple sources and create electronic dossiers of detailed information on individuals. Nonobvious Relationship Awareness (NORA) - a system which takes info about people fro0m many sources and correlates the info to identify criminals or terrorists. Responsibility- key element of ethical action means that you accept potential costs, duties, and obligations for decisions you make. Accountability- mechanisms are in place to determine who took responsible actions and who is responsible. Liability- extends concept of responsibility. Body of laws is In place that permits individuals to recover damages done to them by other actors, systems or organizations. Due process- related feature of law governed societies and is a process in which laws are known and understood and there is ability to appeal to higher authority to ensure laws are applied correctly. Professional Codes of Conduct Certain groups take responsibility for their special k knowledge and take on rights because of that knowledge. CMA- Canadian medical association CBA – Canadian Bar Association CIPS- Canadian Information Processing Society ACM- Association of Computing Machinery. Codes of ethics are promises by professionals to regulate themselves in the general interest of society. Privacy is the claim of individuals to be left alone, free from surveillance. IT threatens privacy by making invasion of privacy cheap and effective. In Canada’s Parliament, PIPEDA (personal information protection and electronic documents) PIPEDA creates principles to govern collection and use of following info: accountability, identifying the purpose of collection of personal info, obtaining consent, limiting collection, limiting use, disclosure etc. Also PIPEDA provides for Privacy Commissioner to receive complaints concerning violation of principles. P3P (Platform of Privacy Preferences) enables automatic communication between visitors and e-commerce sites. Communicated privacy policies to visitors of website Property Rights: Intellectual Property- considered to be intangible property created by individuals or corps. Trade Secrets- any intellectual work (formula, device, and pattern) used for business provided that it is not based on information in the public domain. The test for whether there has been a breach of confidence consists of 1) The info conveyed must be confidential (public knowledge) 2) Info must have been communicated in confidence 3) Info must have been misused by the party to whom it was communicated to. Copyright- grant that protects creators of intellectual property from having their work stolen for period of at least 50 years. o Protects literary, musical and dramatic works. o Ensure that creative people gain credit receive financial benefits of their work. o Copyright law Canada is one of Patents- grants the owner an exclusive monopoly on the idea behind an invention for 17-20 years Key concept is originality, novelty and intention. Chapter 5- IT Infrastructure and Emerging Technologies  IT infrastructure is a set of physical devices and software applications required to operate an enterprise  Is also a set of firm wide services budgeted by management and compromising both human and technical capabilities? These services include: o Computing platforms which provide computing services that connect employees customers, and suppliers into a coherent digital environment. o Telecommunications which provide data voice and video connectivity to employees customers and suppliers. o Data Management which store/manage corporate data and provide capabilities for analyzing data. o Application software services which provide enterprise with capabilities such as resource planning, customer relationship management and supply chain management. o Physical facilities management services which develop and manage the physical installation required for computing , telecommunications and data management services o IT management services –plan and develop infrastructure , coordinate with the business units for IT services , manage accounting for IT expenditure and provide project management services o IT standard services provide the firm and its business units with policies that determine which information technology will be used when how and by whom. o IT education services provide training in system use to employees and offer managers training in how to plan for the manage IT investments Evolution of IT Infrastructure  General purpose Mainframe and minicomputer era o Mainframe computers first introduced in 1959 by IBM 1401 and 7090 transistorized machines o DEC minicomputers offered many powerful machines at low prices than IBM mainframes making decentralized computing o In recent years the minicomputer has changed into the midrange computer  Personal Computing Era o 1981 to present time IBM PC was first to be widely adopted by American businesses o First DOS operating system was popular, now the Wintel PC computer is standard desktop personal computer.  Client/Server Era o In client/server computing, the desktop or laptop computers are called clients and are networked to powerful server computers that provide client computers with variety of services and capabilities. o Client is user point and server just processes and stores data o Multitier client server architecture computers are found in big businesses where as two tiered client server architecture is found in small businesses o In multi tiered, there are levels of servers:  Web server- serve a web page to a client in response to request for service.  Application server- handles all applications operations between user and organization’s “ back-end”  Client server computing allows businesses to distribute computing work across series of small inexpensive achiness that cost less than minicomputers or centralized mainframe systems Enterprise Computing Era  Early 1990s firms turns to networking standards and software tools to integrate disparate networks and applications throughout the firm into an enterprise wide infrastructure  IT infrastructure links different pieces of computer hardware and smaller networks into enterprise wide network so info can flow freely across organization and between other organizations. Cloud and mobile computing era  Cloud computing refers to model of computing that provides access to a shared pool of computing resources over a network, often the internet.  Can be accessed as an as-needed basis from any connected device and location Moore’s Law and Micro processing power  Foundation: since the first microcomputer chip was introduced, number of components on a chip with smallest manufacturing cost per component had doubled every year.  Moore later reduced the rate of growth to a doubling of every 2 years  3 variations of moore’s law (that he never even stated) 1. Power of microprocessor doubles every 18 months 2. Computing power doubles every 18 months 3. Price of computing falls every 18 months  Nanotechnology uses individual atoms and molecules to create computer chips and other devices thousands of times smaller than current technologies permit.  Law of Mass Digital Storage: The amount of digital information is doubling every year and cost of storing that info is falling at an exponential rate of 100% a year  Matcalfe’s Law- the value or power of a network grows exponentially as function of the number of network members. While number of members grows linearly, the value of entire system grows exponentially and continues to grow as long as members continue to increase.  Technology standards- specifications that establish the compatibility of products and ability to communicate in a network.  Technology standards result in price decline as manufacturers focus on the product built into single standard Computer Hardware Platforms  Uses primarily client and server machines such as net books, laptops/  Server market uses mostly Intel of AMD processors inform of blade servers  Blade Servers- ultrathin computers consisting of circuit board with processor, memory, and network connections stored in racks. Operating Systems Platform  Manages resource and activities of computer  Microsoft Windows makes up 75% of server operating systems market, with 25% of corporate servers using some form of Unix operating systems or Linux  90% of PCs use some sort of operating system to manage the resources and activities of the computer  Google’s Chrome OS provides lightweight operating system for cloud computing using netbooks.  Operating systems for iPads and iPhones use a multi touch interface Enterprise Software Applications  Largest providers of enterprise application software are SAP and Oracle.  Middleware software supplied by BEA for achieving firm-wide integration by linking firm’s existing application systems Data Management and Storage  Responsible for organizing and managing firm’s data  Examples: IBM Oracle Microsoft (SQL server)  Storage area network- connects between multiple storage devices on separate high speed network dedicated to storage. creates large central pool of storage Networking/ Telecommunications Platform  Leading network hardware providers are Cisco, Lucent, Nortel, and Juniper  Software leaders are Microsoft, Novell, Linux, and Unix  Service vendors include Bell Canada  Growth of wireless  Web hosting service- maintain large web server, or series of servers and provides free-paying subscribers with space to maintain their Web.  Legacy systems- older transaction processing systems created for mainframe computers that are still being used to avoid high cost of replacing.  Netbooks- optimized for wireless communication and internet access along with core computing functions  Grid computing- connecting geographically remote computers into a single network to create virtual supercomputer by combining computational power of all computers onto the grid  Virtualization- process of presenting a set of computing resources so that they can all be accessed in ways not restricted by physical configuration or geographical location.  enables single physical resource to appear to user as multiple logical resources. Business benefits of virtualization: Cloud Computing On-demand self service- individuals can obtain computing capabilities such as server time or network storage on their own Ubiquitous network access- can use standard network and internet devices including mobile devices Location-independent resource pooling- computing resources are pooled to serve multiple users Rapid elasticity- computing resources can rapidly be provisioned, increased, or decreased Metered service- charges for cloud resources based on amount of resources actually used.  Cloud computing consists of 3 different types of services: 1. Cloud infrastructure as a servi
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