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I S 300

What is IT?
it is concerned with technology and other aspects of managing and processing information.
What kind of resources does IT utilize?
IT uses computers and computer software to convert, store, protect, process, transmit, and retrieve information
computer professionals in a company are called
IT specialists
the division of a company that often deals with software technology is the
IT department
what is MIS (IS)
a systems that collects and processes data for managers who use it for decision making, planning, program implementation, and control
an information system is comprised of…
all the components that collect, manipulate, disseminate data or information, usually including hardware, software, people, and communication systems
the four roles of IS
1. the functional support role
2. the decision support role
3. the strategic support role
4. the performance monitoring role
Evolutionary View of IT
Connection View: 1970 – 1995 IT as a tool
Immersion View: 1991-2011 – IT as environment
Fusion View: 2011-? – IT as Fabric
ubiquitous computing
information processing has been fully incorporated into activities that a person may not even notice that they are using several different types of technology at once
using speech recognition software for customers
there is speech recognition software used by businesses to better help and direct customers in the questions and transactions. Replaces some customer service costs. Companies make these computers look lifelike so that people feel more comfortable talking with them.
how many internet users in the US
245 million (78%)
(-) How many emails sent in 2010
107 trillion
(-) how many Facebook users
800 million
(-) how many websites as on 2010
255 million
(-) most tweeted event was…
osamas death
(-) most followed tweeters
lady gaga, justin bieber, katy perry
the graph of total investment to IT investment ****
shows that firms are giving priority investment to IT. As total investment is increasing, IT investment is increasing but and increasing in purportion of total capital investment (31% in 1980 and 52% in 2008)
information systems are more than just computers…**
you need to understand the organization, management and technology shaping the systems.
the organizational dimension of IS consists of… (5) **
1. People
2. Structure
3. business processes
4. culture
5. politicis
the management dimension of IS – managers are…(5) **
1. sense makers
2. decision makers
3. planners
4. innovators of new processes
5. leaders: set agendas
the technology dimension of IS – components that help managers cope with change.. (5) **
1. hardware
2. software
3. storage
4. communications technology
5. networks
business and IT interdependence:
limitations of IT often limit the business capabilities of a firm
6 different strategic business objectives of IT **
1. operations excellence (walmart)
2. new products and services (netflix)
3. customer and supplier intimacy (JCPenny)
4. improved decision making (verizon)
5. competitive advantage (dell)
6. survival (citibank & ATMs)
What is the slope of Productivity v. IT scatter plot
positive – higher IT capital stock yields more productivity
(complimentary) organizational assets (4) **
1. culture
2. business model
3. processes
4. IS development
(complimentary) managerial assets (4) **
1. management support
2. innovation
3. teamwork
4. training
(complimentary) social assets (5) **
1. society’s investment
2. laws and regulations
3. internet
4. education
5. IT services
Types of Business IS from different perspectives
Functional Perspective:
1. Sales and marketing
2. Manufacturing and Production
3. Finance and Accounting
4. Human resources
Constituency Perspective:
1. Transaction Processing (TPS)
2. Management Information (MIS)
3. Decision Support (DSS)
4. Executive Support (ESS)
old chinese idiom
to be good at everything is to be good at nothing
IT connects… (5)
1. factories
2. remote offices
3. business partners
4. suppliers
5. customers

a internal computer network that brings together information from planning and scheduling, suppliers, procurement, logistics services, production, distributors, inventory, retailers, shipping, customers, order processing
IT is allowing companies to…
outsource to other countries due to more linked information with IT
review boeing case
factors of Leavitt diamond
“1. technology
2. people
3. task
4. structure

meaning of leavitt diamond
you change one aspect of the organization, then you are going to change the way everything else operates. the four will adjust
enterprise applications (4)
“1. Enterprise resource planning
2. supply chain management
3. customer relationship management
4. knowledge management systems

enterprise resource planning
it is a cross functional system that helps the basic internal processes of a company
the traditional view of systems says that…
the different business functions only communicate with their respective information systems
the new enterprise system architecture says that…
the different business functions (accounting, marketing, manufacturing, and human resources) all communicate with each other in a centralized database
value of the enterprise system (3)
“1. unifies the firms structure and organization
2. sharing of knowledge for management processes
3. more efficient operations

benefits of ERP (4)
“1. quality and efficiency (customer service, production, and distribution
2. decrease costs (transaction costs, physical hardware costs)
3. decision support (cross functional information quickly to managers)
4. enterprise agility (breaks down departmental and functional walls to business

challenges of ERP (3)
“1. difficult to build
2. technology
3. centralized organziational coordination and decision making

cost of ERP
reengineering is the largest cost with equal amounts of hardware, software, training and change management, and data conversions
supply chain management (SCM)
an enterprise application that helps a business maintain relationships with its suppliers
supply chain
the movement of materials, goods, and money to and from suppliers to retailers. coordination speeds up this process.
upstream supply chain
to the firm
downstream supply chain
from the firm
key supply chain management processes (5)
“1. plan
2. source
3. make
4. deliver
5. return

functions of SCM systems (8)
“1. decide when to produce, store
2. communicate orders
3. track status of orders
4. check inventory availability
5. reduce inventory cost
6. track shipments
7. plan production based on demand
8. communicate changes in product design

push based model for supply chains
“production based on forecasts and products are pushed to customers
-customers buy what is on the shelves

pull based model for supply chains
“driven by actual orders from customers
-customers order the product

supply chain management systems (different than supply chain management)
automate flow of information between company and suppliers
supply chain planning systems
generate demand forecasts for a product, and help develop sourcing and manufacturing plans for product
supply chain execution systems
manage flow of products through distribution centers and warehouses
measurements for supply chain management
“1. fill rate (the ability to fulfill the orders by the due date)
2. avg time from order to delivery
3. the number of days of supply in inventory
4. forecast accuracy
5. the cycle time for sourcing and making a product

benefits of SCM system
“1. close linkage
2. integrate linkage time
3. helps in procurement of materials,
4. helps in distribution of product
5. reversed logistics

2 challenges and opportunities with IT and customers
“1. more empowered customers (consumer vigilantes)
2. more involved customers (starbucks customer buzz)

Customer Relationship Management (CRM) System
helps a firm manage relationships with their customers
in regards to customers, it is much cheaper to…
retain customers than to find new customers
sales and customer relations is the responsibility of…
the entire company
company’s need to shift from a transaction based business model to a…
service based business model
customer centricity
maximize value of every customer interaction
CRM Tasks
“1. manages methods for dealing with new and old customers
2. end to end customer care
3. unified view of customer care
4. consolidates customer data
5. distribute results to various systems
6. decide touch points

touch points
how are you going to reach your customer? telephone, email, desk, mail, website, store
good touch points
“1. new products found for consumers
2. customized website
3. promotions to right customers

bad touch points
“1. junk email
2. spam
3. telemarketers

the ways the crm supports marketing
most is by telephone and direct mail. followed by web and email. and last cell phone and text message.
CRM is concerned with these three departments…
“1. Marketing
2. Sales
3. Service

Partner Relationship Management (PRM)
automation of the firms relationship with selling partners using customer data and analytical tools to improve coordination and customer sales
Operations CRM
customer facing applications, such as sales force automation, call center and customer care support, and marketing automation
analytical CRM
applications that analyze customer data generated by operational CRM applications to provide information for improving business performance
benefits of CRM (6)
“1. increased customer satisfaction
2. more effective marketing and reduced direct marketing costs
3. lower cost for customer retention and acquisition
4. increased revenue for recognizing most profitable customers and segments for marketing, up selling, cross selling
5. Reduce churn rate
6. realizing customer lifetime value

CRM measurement of performance
“1. cost per lead
2. cost per sale
3. number of repeat customers
4. churn rate
5. sales closing rate

review MLB example
ecommerce has been (growing or decreasing)
growing since 1995 at an exponential rate
ubiquity and ecommerce
you can now buy from anywhere
global reach and ecommerce
you can now reach customers from all over the world
universal standards and ecommerce
can now communicate across the world
increases richness and ecommerce
depth of information is increased by the internet
interactivity and ecommerce
you can interact more with your customers
information density and ecommerce
reduces the cost of information
peronsalization and ecommerce
can personalize information to your consumer
social technology
user generated content
study digital market vs traditional market chart
profits =
revenues – fixed costs – variable costs
4 revenue options
“1. commerce (product sales, commissions)
2. content (subscriptions, document fees, registration fees)
3. community (advertising fees, referral fees, membership fees)
4. infrastructure (software sales/licence, hosting/access fees)

8 internet business models
“1. virtual storefront (amazon)
2. information broker (edmunds)
3. transaction broker (etrade, expedia)
4. online marketplace (eBay, craigslist)
5. content provider (wsj, espn.com)
6. online service provider (google, paypal)
7. social network (myspace, Facebook)
8. portal (yahoo, msn)

practice the different types of internet business models
6 electronic payment systems
“1. credit cards
2. digital wallets (google wallet)
3. accumulated balance (telephone bills
4. stored value (husky cards)
5. digital checking (electronic checks with digital signatures)
6. electronic billing presentment and payment (paying bills online)

virtual storefront
sells goods or services online
information broker
provides information on products or services
transaction broker
provides online transaction facility
online marketplace
provides a trading platform for individuals and firms
content provider
creates revenue by providing content
online search provider
provides online services, including search service
social network
provides an online community to focused groups
provides initial point of entry to web, specialized content, services
digital wallets
electronic storage of ID and digital cash
accumulated cash
used for micro payments
stored value
prepayment of funds, debited for use
digital checking
electronic checks with digital signatures
electronic billing presentment and payment
used by consumers to pay bills online
properties of information (digital) goods (4)
“1. information based
2. big fixed costs
3. small variable cost
4. easy versioning and pricing

comparison of digital vs. traditional goods review
what is versioning
many variations of essentially the same good
the purpose of versioning
capture the most consumer surplus as possible. discriminate on price
versioning is easier among (traditional or information)
information goods
extreme aversion
in a two version scenario, consumers are more afraid to by extreme versions of a product. if they buy the low end one, then they are afraid that they won’t get enough, and if they buy the high end one, then they are afraid they are spending too much. consumers typically buy in the middle
value subtracted version
some businesses first build the full product and the it costs more money to make a worse version
prices online are less than or greater than a conventional store?
less than
menu cost online is less than or greater than a conventional store
less than
price dispersion is less than or greater than a conventional store?
greater than
advantages of regular shopping
“1. affective processing vs. cognitive faculties
2. transaction costs: visible vs. invisible
3. delayed gratification: high and low

visible vs. invisible transaction costs
review cost transparency
with the internet, consumers are able to find information about how much it costs to produce products and use that to make smart purchases
zara business model
sell up to date fashion clothing. right off the run way within six weeks for super cheap. high turnover rate of product so that they are always up to date
merchandise in each sara store is decided by
the managers of each store, they know the trends in their areas and what will and won’t sell
zara and advertising
almost zero advertising
design of sara stores were decided by
sara prices were set by
product managers
ordering in zara is done by
manually looking to see how much merchandise there is an placing orders twice a week
zara typically came out with 11,000 new items in a year vs traditional store with…
the IT for Zara was…
behind the times
VLCT definition
a plane with over 400 seats or 80 tons of freight
the first VLCT was the
boeing 747
boeing believed that the VLCT would be used for…
point to point flights
airbus believed that the VLCT would be used for…
major hub to hub flights
boeing small plane
boeing medium planes
757, 767
boeing big plane
boeing’s high technology international plane
which countries are involved with Airbus
Geremany, France, Spain, Britain,
airbus’ first plane
airbus’ small planes
A320, A321
Airbus’ longer range planes
A330, A340
boeing and airbus were upset with each other because
they accused the other for getting subsidies from their respective governments (cheating)
mystarbucks idea
a way for consumers to influence how starbucks (and other businesses) operate
starbucks is telling its employees to…
slow down
consumer vigilantes
consumers using technology to take matters into their own hands
amazon’s new store: utility computing
selling server space based on usage
transaction processing system (TPS)
performs and records the daily routine transactions necessary to conduct business
1. Order Processing System (order file)
2. Materials resource Planning System (production master file)
3. General Ledger (accounting file)
management information systems (MIS)
provides reports on the organizations current performance
1. order -> sales data
2. production -> Unit product cost data & product change data
3. accounting -> expense data
decision support systems (DSS)
support nonroutine decision making for middle management (includes costs, history, restrictions, speed, etc.)
executive support system (ESS)
help senior management make these decisions. includes internal and external data focused at workstations or portals
bullwhip effect in supply chain management
information about the demand for a product gets distorted as it passes from one entity to the next across the supply chain
refers to the use of digital technology and the internet to execute the major business processes in the enterprise
deals with the buying and selling got goods and services over the internet
just in time strategy in supply chain management
components would arrive exactly at the moment they were needed and finished goods would be shipped as they left the assembly line
the marketing of complementary products to customers
customer lifetime value (CLTV)
based on the relationship between the revenue produced by a specific customer, the expenses incurred in acquiring and servicing that customer, and the expected life of the relationship between the customer and the company
churn rate
measures the number of customers who stop using or purchasing products or services from a company
transaction costs
the costs of participation in a market: on the internet you don’t need to spend time or money traveling to a market and much less mental effort is required to make a purchase
market entry costs
the cost merchants must pay simply to bring their goods to market
search costs
the effort required to find suitable products
information density and ecommerce
the total amount and quality of information available to all market participants, consumers, and merchants alike
price transparency
refers to the ease with which consumers can find out the variety of prices in a market
cost transparency
refers to the ability of consumer to discover the actual costs merchants pay for products
price discrimination
selling the same goods, or nearly the same goods, to different targeted groups at different prices
information asymmetry
exists when one party in a transaction has more information that is important for the transition than the other party
Major Types of Information Systems and their placement in the pyramid **
Sales and Marketing
1. TPS – Operational Level = Order Processing
2. DSS & MIS – Management Level = Sales Management & Sales Region Analysis
3. ESS – Strategic Level = 5-Year Sales Trend

Manufacturing and Production
1. TPS – Operational Level = Material Movement Control
2. DSS & MIS – Management Level = Inventory Control and Production Scheduling
3. ESS – Strategic Level = 5-Year Operating Plan

Finance and Accounting
1. TPS – Operational Level =Payroll, Accounts Payable
2. DSS & MIS – Management Level =Annual Budgeting & Profit Analysis
3. ESS – Strategic Level =Profit Planning

Human Resources
1. TPS – Operational Level = Employee Record keeping
2. DSS & MIS – Management Level = Relocation Cost Control & Contract Cost Analysis
3. ESS – Strategic Level = Personal Planning

Four Major Business Functions/Systems **
1. Sales and Marketing (system)
2. Manufacturing and Production (System)
3. Finance and Accounting (system)
4. Human Resources (system)
Order Tracking System
keeps track of orders
Order Fulfillment System
allows a process of going from sales to accounting to manufacturing and production
Timing System Terminal
i dunno
Order Processing Systems
Constituency Perspective of IS Categories **
1. Operational Level – support operational managers, keeping track of elementary activities and transactions
2. Management Level – serve the monitoring, controlling, decision-making and administrative activities
3. Strategic Level – help senior management tackle and address strategic issues
Self-order processing
Self check-in Kiosks
Competitive advantage
Order Fulfillment Process
Sales: Generate order -> order submit ->
Accounting: check credit -> approve credit ->*generate invoice
Manufacturing and Production: *Assemble Product -> Ship product

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