Computer Informa.on Systems

Managing Informa.on and Technology: Finding New Ways to Learn and Link Chapter 16 of BUSN9 – Introduc.on to Business

Informa.on Technology: Explosive Change

•  Over the past few decades, computer hardware and soMware have evolved drama.cally. This is best explained by Moore’s Law: •  In 1965 co-founder of Intel, Gordon Moore no.ced that the number of transistors per

square inch on integrated circuits had doubled every year since their inven.on and predicted this trend will con.nue in the foreseeable future.

•  Moore’s law suggests exponen.al growth, so it unlikely to con.nue at this rate indefinitely. Experts suggest the law will hold for another two decades before the pace slows.

•  More info: hVp://www.investopedia.com/terms/m/mooreslaw.asp

• More important than this development in increased power and smaller size, is the degree to which technology is linked by networks. •  Networks allows businesses to coordinate their internal func.ons, reach their

customers, and collaborate with their suppliers and partners in ways that cold not have been envisioned a quarter of a century ago.

Hardware and SoMware

• Hardware – physical components used to collect, input, store, and process data, and to display and distribute informa.on. •  This includes the various components of a computer system as well as

communica.ons and network equipment.

•  SoMware – programs that provide instruc.ons to a computer so that it can perform a desired task; two broad categories exist: system soMware and applica.on soMware •  System soMware – soMware that performs the cri.cal func.ons necessary to

operate the computers at the most basic level. •  Ex. MicrosoM Windows, IOS, etc.

•  Applica.ons soMware – soMware that helps users perform a desired task. •  Ex. Word processing, spreadsheets, PowerPoint presenta.ons, etc.

Networks & The Internet

• Most firms and householders use networks that allow users to communicate with each other and share both files and hardware resources. •  A network links computer resources using either a wired or wireless connec.on.

•  The most prevalent type of network is the Internet. It is the world’s largest computer network, comprised of networks of computer networks all opera.ng under a common set of rules that allows the computers to communicate with one another. •  The most common way to experience the Internet is through the World Wide Web.

Although, only about 13% of web traffic involves the Web. •  Other traffic includes online video streaming, video and audio communica.on, file

sharing, etc.

Growth of Internet & Shape of Things to Come •  Over the past decade, access to high speed Internet connec.on has grown

rapidly. From a business perspec.ve, this growth allows firms to offer richer, more interac.ve experiences to customers who visit their websites or use their other electronic services, like apps for example. •  Even today’s fast connec.ons are slow and inefficient for many business and

scien.fic applica.ons. Beginning in 1996, several leading research universi.es, corpora.ons, and other organiza.ons have formed a coali.on to create a new genera.on of Internet technology based on fiber-op.c cables. This resul.ng network has become known as Internet2, or “I2”. •  Access to I2 was ini.ally limited to the coali.on members, but has slowly began to

expand to other research and educa.onal organiza.ons. •  Eventually the benefits of I2 will become as commonplace and readily available as the

current Internet we all know and love today.

Intranets and Extranets

• An intranet is a private network that has the same look and feel as the Web and uses the same web browser soMware to display documents, but limits access to the employees or members of a firm or organiza.on. •  Intranets enhance communica.on and collabora.on in organiza.ons and

provide effec.ve ways to distribute informa.on and applica.ons throughout the organiza.on.

• An extranet is created by firms to allow for limited access to a selected group of stakeholders, such as suppliers or customers. •  For example, companies use extranets with their suppliers to allow for ‘just in

.me’ inventory shipments.

The Role of the IT Department

• Many business organiza.ons have informa.on technology (IT) departments to manage their informa.on resources. •  The role of this department varies

significantly from one company to another. •  Increasingly, the IT department plays a

strategic role in making and implemen.ng key decisions about the technologies the firms will use, as well as suppor.ng and facilita.ng day-to-day business opera.ons.

Video URL: hVps://www.youtube.com/watch?v=3iAp9me4P1c

Cloud Compu.ng: The Sky’s the Limit!

•  Cloud compu.ng is the use of Internet-based storage capacity, processing power, and computer applica.ons to supplement or replace internally owned informa.on technology resources. •  One of the most aVrac.ve selling

points of cloud compu.ng for businesses is its cost. Businesses only pay for what they need or use, and most providers allow for scaling. If web traffic is high for one period, the business only has to pay for increased usage for that period.

Video URL: hVps://www.youtube.com/watch?v=ae_DKNwK_ms

Informa.on Technology and Decision Making: A Crucial Aid •  One of the vital func.ons of IT in business is its ability to transform data into

useful informa.on for decision makers. •  Data are the facts and figures a firms collect in their raw form. In this form they have

limited usefulness because they lack the context needed to show rela.onships and meaning.

•  Informa.on is the output of processing, organizing and presen.ng data in a way that makes it useful for decision makers.

•  Every department of an organiza.on generates data that must be kept track of. For example, every sale is recorded in the firm’s accoun.ng system, every new employee hire generates employee data in the Human Resources Department, etc. •  Firms need ways to store this mountain of data and convert it into useful

informa.on.

Data Storage & Database Queries

• Most businesses use databases to store their data. Databases are files of related data organized in a logical system and stored on hard drives or some other computer-accessible storage media. •  It’s not unusual for firms to have many different databases, each

maintained by the specific department the data relates to. • Once this data is stored, the goal is to convert data into informa.on.

•  One such way is to query a database. This sends out a request to the soMware to search the database for data that matches the query’s criteria. For example, a marke.ng manager may query a database for email addresses of customers who have purchase a par.cular product in the past year in order to send a targeted message about product upgrade to those most likely to make the purchase.

Characteris.cs of Good Informa.on

• High quality informa.on is: •  Accurate – free of errors and biases •  Relevant – focuses on issues important to decision makers •  Timely – available in .me to make a difference in decision-making •  Understandable – helps the user grasp what the data actually means •  Secure – is kept confiden.al from hackers, compe.tors, or other en..es that

should not possess the informa.on

Using Informa.on Technology to Improve Decision Making

• Many companies use decision support systems (DSS) to give managers access to large amounts of data. •  Business intelligence systems are one

such type of DSS that helps decision makers discover informa.on that was previously hidden.

•  Data mining is one such way DSS systems provide informa.on. Data mining uses sophis.cated sta.s.cal techniques to analyze vast amounts of data to discover hidden paVerns, thus crea.ng valuable informa.on.

Video URL: hVps://www.youtube.com/watch?v=z04WiXI1ARY

Expert Systems

• Managers who use decision support systems usually already know about the problem they are trying to solve and how they want to solve it. They just need access to the right informa.on for their decision-making. But what if the problem is beyond the scope of the exper.se of the manager?

•  Expert Systems (ES) guide managers through the decision making process. •  These systems are created by asking experts in the relevant area how they solve

problems in order to create a program that mimics the expert’s approach. The finished ES system will ask the user a series of ques.ons un.l it has enough informa.on to reach a decision and recommenda.on.

•  ES systems rou.nely solve problems in areas such as medical diagnosis, fraud detec.on, and consumer credit evalua.on.

Informa.on Technology and the World of E-Commerce •  E-commerce refers to marke.ng, buying, selling and servicing products

over a network. •  The most common type being business-to-consumer (B2C), which focuses on

e-commerce to the final end user of a product or service. •  Another type is business-to-business (B2B), which consists of markets where

businesses sell supplies, components, machinery, equipment, or other services to other businesses. •  While not as common as B2C, it consists of a much larger volume of total e-commerce

sales.

• B2C and B2B are not the only types of e-commerce. Consumer-to-consumer (C2C) plavorms exist, such as eBay or Craigslist. There are also business-to-government (B2G) e-commerce transac.ons.

Using Informa.on Technology in the B2C Market • One major goal for many firms today is to develop stronger

rela.onships with their customers. •  Web 2.0 refers to websites that incorporate interac.ve and collabora.ve

features to create a richer, more interes.ng, and more useful experience for their users.

• Many B2C companies use adver.sing as an important part of their marke.ng strategy. The prevalence of Internet adver.sing has exceeded other forms of adver.sing like cable TV, newspapers, etc. •  Virtual Marke.ng refers to an Internet marke.ng strategy that tries to involve

customers and others not employed by the seller in ac.vi.es that help promote the product.

Handling Payments Electronically

• B2C commerce normally requires customers to pay at the .me the purchase is made, however in B2C e-commerce, most payments are made by credit cards. •  Most websites transmit payment informa.on using a secure socket layer (SSL)

protocol that provides protec.on for transac.on data. Websites using SSL will begin with hVps:// instead of simply hVp://

•  Electronic bill presentment and payment is a method of bill payment that makes it easy for the customer to make a payment, oMen by simply clicking on a payment op.on, and is used prevalent in B2C e-commerce.

Using Informa.on Technology in the B2B Market •  B2B e-commerce requires a very different approach than B2C because B2B

transac.ons involve larger sums of money, require more nego.a.on, and oMen result in long-term close supply-chain rela.onships. •  A supply chain is a network of organiza.ons and ac.vi.es needed to obtain materials

and other resources, produce final products, and get those products to their final users.

•  An effec.ve supply chain requires close coordina.on between a company and its suppliers and IT provides the tools that foster this close collabora.on among companies. •  IT facilitates supply chains by providing suppliers real .me informa.on on their

customers’ inventories so they know when to make shipments, for example.

E-Marketplaces & RFID Technology

• Many B2B firms use specialized internet websites called e-marketplaces, which provide a plavorm where buyers and sellers can communicate and conduct their business. E-marketplaces provide many benefits, such as: •  Reduced .me, effort and cost of doing business; smaller firms can afford to

par.cipate; connects buyers and sellers from around the world; etc.

•  Another B2B technology becoming more prevalent is the use of radio frequency iden.fica.on (RFID) to improve efficiency of supply chains. RFID does this by storing informa.on on microchips that transmits to an RFID reader when in range. •  RFID is most commonly used to transmit serial numbers of the product, product type,

etc. This allows for deliveries to be recorded automa.cally without the need for manual records. As well as allowing inventory to able to be shown in real .me. These are just some examples of how RFID can lower supply chain costs.

Challenges and Concerns Arising From New Technologies • Rapid technological advances also pose challenges- from spam,

security concerns from hackers, legal and ethical issues, etc. • Computer viruses are programs that install themselves on computers

without the user’s knowledge or permission and spread by aVaching themselves to other files that are transferred from computer to computer. •  Computer viruses are a form of malware, which is a general term for malicious

soMware.

•  In this kind of environment, businesses have to be able to protect their customers and their data from security concerns.

Spam, Phishing and Pharming

•  Spam refers to unsolicited adver.sements. While annoying, there can be an even more malicious intent behind the email: •  Phishing is a type of scam using email

in an aVempt to get individuals to divulge private informa.on, typically by pretending to be a trusted sender.

•  Pharming is an iden.ty theM scam that tricks people to divulge private informa.on by using fake websites that appear to be legi.mate.

Video URL: hVps://www.youtube.com/watch?v=_3hK0PuSkhw

Hackers: Break-Ins in Cyberspace

•  Hackers are skilled computer users who have the exper.se to gain unauthorized access to other people’s computers. •  Protec.ng against hackers requires

individuals and businesses to be security conscious. •  Firewalls are one tool used to

protect against hackers- it is a type of soMware that creates a barrier against unwanted messages or malware from entering a computer system.

Video URL: hVps://www.youtube.com/watch?v=SHrfDp0sJsg

Ethical and Legal Issues

•  IT also raises a number of legal and ethical challenges, such as the need to deal with privacy issues and protect intellectual property rights. • Because firms have the ability to track customer behavior in ways that

were never possible using IT, there are ethical concerns associated with this encroaching breach on personal privacy. •  Intellectual property refers to the products that are the result of a

crea.ve or intellectual effort, such as movies, books, music, etc. •  Online piracy posses a threat to intellectual property rights because of the

ease and ability of unauthorized file sharing. This bypasses paying the copyright holder and was responsible for over $63 billion in revenue loss to soMware companies in 2013.

The Big Picture

•  IT plays a vital role in every facet of daily life- including all aspects of business. • While the rapid growth of technology has provided new and innova.ve

ways to reach customers, control supply chains, and otherwise beVer manage business, it also poses some security, ethical and legal concerns. •  The big picture- businesses that find ways to leverage IT while

minimizing risks will be able to beVer compete in the ever changing global world of business.