ITM102 CHAPTER NOTES
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
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
Increased customer feedback, blogging which help businesses to improve depending on
what their consumers want.
Businesses using social networking websites to connect employees, customers,
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?
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
o Virtual meetings
o Web 2.0 app adopted by many firms
o Co-creation of business value customers help firms defines new products and
In 2010 more than 33% of US economy depended on foreign trade including
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
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
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
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.
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
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
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
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
Tools and Technologies for Collaboration and teamwork.
Email instant messaging- includes features of sharing files and transmitting
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
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
Learning routines, employees become highly productive
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
Adhocracy- task force organization that must respond to rapidly changing environments.
Large groups of specialists organized into short-lived multidisciplinary teams and has weak
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
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
As soon as customer buys a product, replenishment system send order to suppliers for
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.
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
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
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
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
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
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
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
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
o First DOS operating system was popular, now the Wintel PC computer is
standard desktop personal computer.
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
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
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
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
Google’s Chrome OS provides lightweight operating system for cloud computing using
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
Grid computing- connecting geographically remote computers into a single network to
create virtual supercomputer by combining computational power of all computers onto
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:
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
Location-independent resource pooling- computing resources are pooled to serve
Rapid elasticity- computing resources can rapidly be provisioned, increased, or
Metered service- charges for cloud resources based on amount of resources actually
Cloud computing consists of 3 different types of services:
1. Cloud infrastructure as a servi