ITM 100 Midterm Review PDF

adapted from Kenneth C. Laudon, Jane P. Laudon. Management Information Systems: Managing the Digital Firm, 17 Ed. Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 2  Globalization Challenges and Opportunities: A Flattened...

adapted from Kenneth C. Laudon, Jane P. Laudon. Management Information Systems: Managing the Digital Firm, 17 Ed. Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 2  Globalization Challenges and Opportunities: A Flattened World  Globalization: Internet and global communications have greatly changed how and where business is done Internet has drastically reduced costs of operating on global scale Increases in foreign trade, outsourcing Competition for jobs, markets, resources, ideas Growing interdependence of global economies Requires new understandings of markets and opportunities Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 3  The Emerging Digital Firm  In a fully digital firm Significant business relationships are digitally enabled and mediated Core business processes are accomplished through digital networks Key corporate assets are managed digitally  Digital firms offer greater flexibility in organization and management Time shifting, space shifting  Many firms are close to becoming digital firms Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 4  Strategic Business Objectives of Information Systems  Growing interdependence between: Ability to use information technology and Ability to implement corporate strategies and achieve corporate goals Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems  The Interdependence Between Organizations and Information Systems Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 6  Strategic Business Objectives of Information Systems  Firms invest heavily in information systems to achieve six strategic business objectives: 1. Operational excellence 2. New products, services, and business models 3. Customer and supplier intimacy 4. Improved decision making 5. Competitive advantage 6. Survival Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems  Data and Information  Information vs. data Data are streams of raw facts Information is data shaped into meaningful form Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 8  Functions of an Information System Input Processing Raw data or information from Converts raw data (or one form of organization, external environment information) into more meaningful or other IS information Output Feedback Information to be supplied to people, Output returned to members of the activities (or other IS) that use it organization to help them evaluate or correct the input and/or processing Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 9  Dimensions of Information Systems  Organization: Hierarchy of authority, responsibility; Separation of business functions; Unique business processes; Unique business culture; Organizational politics  Management: Managers set organizational strategy Managers must act creatively:  Creation of new products and services  Occasionally re-creating the organization  Technology: Hardware/software Infrastructure Data management Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 10  It Isn’t Just Technology: A Business Perspective on Information Systems  Information system is instrument for creating value  Investments in information technology will result in superior returns  Business information value chain Raw data acquired and transformed through stages that add value to that information Value of information system determined in part by extent to which it leads to better decisions, greater efficiency, and higher profits  Business perspective Calls attention to organizational and managerial nature of information systems Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems  A Business Perspective on Information Systems (Cont.)  Investing in information technology does not guarantee good returns There is considerable variation in the returns firms receive from systems investments  Factors Adopting the right business model Investing in complementary assets  Assets required to derive value from a primary investment – Organizational assets (e.g., efficient business processes) – Managerial assets (e.g., incentives for management innovation) – Social assets (e.g., Internet and telecommunications infrastructure) Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems  Examples of Complementary Assets Firms supporting technology investments with investment in complementary assets receive superior returns Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 13 Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 14  How Information Technology Improves Business Processes  Increasing efficiency of existing processes Automating steps that were manual  Checking client’s credit, generating an invoice  Enabling entirely new processes Example: Changing flow of information Replacing sequential steps with parallel steps Eliminating delays in decision making Supporting new business models Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 15  Business Processes  Business processes Flows of material, information, knowledge Sets of activities, steps May be tied to functional area or be cross-functional  Sales and marketing  Businesses Can be seen as collection of business processes  Business processes may be assets or liabilities Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 16  Business Processes (Cont.)  Examples of functional business processes Manufacturing and production  Assembling the product Sales and marketing  Identifying customers Finance and accounting  Creating financial statements Human resources  Hiring employees Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 17  The Order Fulfillment Process Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 18  Types of Information Systems  Transaction processing systems Serve operational managers and staff Perform and record daily routine transactions necessary to conduct business  E.g., sales order entry, payroll, shipping Allow managers to monitor status of operations and relations with external environment Serve predefined, structured goals and decision making  Imagine UPS without its package tracking system! Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 19  Management Information Systems (MIS)  Serve middle management  Provide reports on firm’s current performance, based on data from TPS  Provide answers to routine questions with predefined procedure for answering them  Typically have little analytic capability Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 20  Decision Support Systems (DSS)  Improved decision making  Serve middle management  Support non-routine decision making  Example What is the impact on production schedule if December sales doubled?  May use external information as well TPS / MIS data Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 21  Executive Support Systems (ESS)  Improved decision making  Support senior management  Address non-routine decisions Requiring judgment, evaluation, and insight  Incorporate data about external events (e.g., new tax laws or competitors) as well as summarized information from internal MIS and DSS Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 22  Enterprise Applications  Systems for linking the enterprise  Span functional areas  Execute business processes across the firm  Include all levels of management  Four major enterprise applications Enterprise Resource Planning (ERP) Supply Chain Management (SCM) Customer Relationship Management (CRM) Knowledge Management System (KMS) Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 23  What Is Collaboration?  Working with others to achieve shared and explicit goals  Focus on task or mission accomplishment within or across organizations  Teams have a specific mission that someone in the business assigned to them.  Collaboration Short lived or long term Informal or formal (teams) Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 24  What Is Social Business?  Social business Use of social networking platforms (internal and external) to engage employees, customers, and suppliers  Aims to deepen interactions and expedite information sharing  Conversations  Requires information transparency Driving the exchange of information without intervention from executives or others Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 25  The Time/Space Collaboration and Social Tool Matrix Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 26  Checklist for Managers: Evaluating and Selecting Collaboration and Social Software Tools Six steps in evaluating software tools 1. Identify your firm’s collaboration challenges 2. Identify what kinds of solutions are available 3. Analyze available products’ cost and benefits 4. Evaluate security risks 5. Consult users for implementation and training issues 6. Evaluate product vendors Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 27 Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 28  IT Infrastructure  Set of physical devices and software required to operate an enterprise  Set of firm-wide services including: Computing platforms providing computing services Physical facilities management services IT management, education, and other services  Service platform perspective More accurate view of value of investments Internet value? Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 29  Connection Between the Firm, IT Infrastructure, and Business Capabilities Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 30  Evolution of IT Infrastructure 2000 to present 1992 to present 1983 to present Cloud and mobile Enterprise computing 1981 to computing present Client/server 1959 to Personal present computer General-purpose mainframe and minicomputer Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 31  Technology Drivers of Infrastructure Evolution  Moore’s law and microprocessing power Computing power doubles every 2 years (~18 months)  Law of Mass Digital Storage The amount of data being stored each year doubles  Metcalfe’s Law and network economics Why people want more computing and storage power? Value or power of a network grows exponentially as a function of the number of network members. Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 32  Technology Drivers of Infrastructure Evolution (Cont.)  Declining communication costs and the Internet Exponential growth in size of the Internet https://www.youtube.com/watch?v=gsNaR6FRuO0  Standards and network effects Technology standards  Specifications that establish the compatibility of products and the ability to communicate in a network  Unleash powerful economies of scale and result in price declines Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 33  The IT Infrastructure Ecosystem Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 34  Computer Components What does all this jargon mean?  Intel® Core™ 2 Duo (2.66GHz/1066Mhz FSB/6MB cache)  4GB Shared Dual Channel DDR2 at 800 MHz  500 GB SATA Hard Drive at 5400RPM  15.6 High Definition (1080p) LED Backlit LCD Display (1366 x 768) Be patient!  8X Slot Load DL DVD+/- RW Drive If you don't  14.8 W X 1.2 H X10.1 D, 5.6 lbs. know now, you should know shortly Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 35  Computer Components (continued)  512 MB ATI Mobility Radeon Graphics  85 WHr Lithium Ion Battery  (2) USB 2.0, HDMI, 15-Pin VGA, Ethernet 10/100/1000 IEEE 1394 Firewire, Express Card, Audio line-in, line-out, mic-in  Microsoft® Windows 7® Professional  Microsoft® Office Home and Student 2007  36-Month subscription to McAfee Security Center Anti-virus Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 36  Sizes in Perspective Powers of 10 for time, powers of 2 for storage What is a Hertz? Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 37  Software Categories System software Software that manages a computer system at a fundamental level Application software Software written to address specific needs—to solve problems in the real world Can you name examples of each? Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 38  Roles of an Operating System  Operating system  System software that manages computer resources, such as memory and input/output devices provides an interface through which a human can interact with the computer allows an application program to interact with these other system resources Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems  Enterprise Software Applications  In 2020, firms are expected to spend over $500 billion on software for enterprise applications  Largest providers SAP Oracle  Middleware providers IBM Oracle Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 40  Data Management and Storage  Database software providers IBM (DB2) Oracle Microsoft (SQL Server) Sybase (Adaptive Server Enterprise) MySQL Apache Hadoop  Physical data storage for large-scale systems Dell EMC Hewlett Packard Enterprise (H3C) Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 41  Networking/Telecommunications Platforms  Network operating systems Windows Server, Linux, Unix  Network hardware providers Cisco, Juniper Networks  Telecommunication services Telecommunications, cable, telephone company charges for voice lines and Internet access AT&T, Verizon Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 42  Internet Platforms  Hardware, software, management services to support company websites, intranets Web-hosting services Routers Cabling or wireless equipment  Internet hardware server market IBM, Dell, Oracle, HP  Web development tools/suites Microsoft (Visual Studio and.NET), Oracle-Sun (Java), Adobe Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 43  Consulting and System Integration Services  Even large firms do not have resources for full range of support for new, complex infrastructure  Leading consulting firms Accenture, IBM Global Services, HP, Infosys, Wipro Technologies  Software integration Ensuring new infrastructure works with legacy systems  Legacy systems Older TPS created for mainframes that would be too costly to replace or redesign  https://www.payscale.com/gigzig.aspx Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 44  Management Issues Dealing with platform and infrastructure change Management and governance Making wise infrastructure investments Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 45  Dealing with Platform and Infrastructure Change  As firms shrink or grow, IT needs to be flexible and scalable  Scalability Ability to expand to serve larger number of users  For mobile computing and cloud computing New policies and procedures for managing these new platforms Contractual agreements with firms running clouds and distributing software required Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 46  Management and Governance  Who controls IT infrastructure?  How should IT department be organized? Centralized  Central IT department makes decisions Decentralized  Business unit IT departments make own decisions  How are costs allocated between divisions, departments? Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 47  Making Wise Infrastructure Investments  Under-investment and over-investment can hamper firm performance  Rent-versus-buy  Cloud computing Security requirements Impact on business processes and workflow  Outsourcing Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 48  Total Cost of Ownership (TCO) Model  Analyzes direct and indirect costs  Hardware, software account for only about 20% of TCO  Other costs Installation, training, support, maintenance, infrastructure, downtime, space, and energy  TCO can be reduced Use of cloud services, greater centralization and standardization of hardware and software resources Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 49  Competitive Forces Model for IT Infrastructure Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 50 Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 51  What Are Enterprise Systems  Also known as enterprise resource planning (ERP) systems  Based on a suite of integrated software modules and a common central database  Collects data from many divisions of firm for use in nearly all of firm’s internal business activities  Information entered in one process is immediately available for other processes Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems  Enterprise Software  Built around thousands of predefined business processes that reflect best practices Finance and accounting Human resources Manufacturing and production Sales and marketing  To implement, firms: Select functions of system they wish to use Map business processes to software processes  Use software’s configuration tables for customizing Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems  Business Value of Enterprise Systems  Increase operational efficiency  Provide firm-wide information to support decision making  Enable rapid responses to customer requests for information or products  Include analytical tools to evaluate overall organizational performance and improve decision-making Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems  The Supply Chain  Network of organizations and processes for: Procuring materials Transforming materials into products Distributing the products  Upstream supply chain  Downstream supply chain  Internal supply chain Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems  Figure 9.2 Nike’s Supply Chain Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems  Supply Chain Management  Inefficiencies cut into a company’s operating costs Can waste up to 25 percent of operating expenses  Just-in-time strategy Components arrive as they are needed Finished goods shipped after leaving assembly line  Safety stock: buffer for lack of flexibility in supply chain  Bullwhip effect Information about product demand gets distorted as it passes from one entity to next across supply chain Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems  Supply Chain Management Software  Supply chain planning systems Model existing supply chain Enable demand planning Optimize sourcing, manufacturing plans Establish inventory levels Identify transportation modes  Supply chain execution systems Manage flow of products through distribution centers and warehouses Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems  Demand-Driven Supply Chains: From Push to Pull Manufacturing and Efficient Customer Response  Push-based model (build-to-stock) Earlier SCMsystems Schedules based on best guesses of demand  Pull-based model (demand-driven) Web-based Customer orders trigger events in supply chain  Internet enables move from sequential supply chains to concurrent supply chains Complex networks of suppliers can adjust immediately Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems  Business Value of Supply Chain Management Systems  Match supply to demand  Reduce inventory levels  Improve delivery service  Speed product time to market  Use assets more effectively Total supply chain costs can be 75 percent of operating budget  Increase sales Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems  Customer Relationship Management  Knowing the customer  In large businesses, too many customers and too many ways customers interact with firm  CRMsystems Capture and integrate customer data from all over the organization Consolidate and analyze customer data Distribute customer information to various systems and customer touch points across enterprise Provide single enterprise view of customers Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems  Customer Relationship Management Software (1 of 2)  Packages range from niche tools to large-scale enterprise applications  More comprehensive packages have modules for: Partner relationship management (PRM)  Integrating lead generation, pricing, promotions, order configurations, and availability  Tools to assess partners’ performances Employee relationship management (ERM)  Setting objectives, employee performance management, performance-based compensation, employee training Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems  Customer Relationship Management Software (2 of 2)  CRMpackages typically include tools for: Sales force automation (SFA)  Sales prospect and contact information  Sales quote generation capabilities Customer service  Assigning and managing customer service requests  Web-based self-service capabilities Marketing  Capturing prospect and customer data, scheduling and tracking direct-marketing mailings or e-mail  Cross-selling Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems  Operational and Analytical CRM  Operational CRM Customer-facing applications Sales force automation call center and customer service support Marketing automation  Analytical CRM Based on data warehouses populated by operational CRMsystems and customer touch points Analyzes customer data (OLAP, data mining, etc.)  Customer lifetime value (CLTV) Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems  Business Value of Customer Relationship Management Systems  Business value of CRMsystems Increased customer satisfaction Reduced direct-marketing costs More effective marketing Lower costs for customer acquisition/retention Increased sales revenue  Churn rate Number of customers who stop using or purchasing products or services from a company Indicator of growth or decline of firm’s customer base Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems  Enterprise Application Challenges  Expensive to purchase and implement Many projects experience cost overruns Long development times  Technology changes  Business process changes  Organizational learning changes  Switching costs, dependence on software vendors  Data standardization, management, cleansing Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems  Next-Generation Enterprise Applications (1 of 2)  Enterprise solutions/suites Make applications more flexible, web-enabled, integrated with other systems  Cloud-based versions  Functionality for mobile platform  Versions also available for small and medium-sized businesses Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems  Next-Generation Enterprise Applications (2 of 2)  Social CRM Incorporating social networking technologies Company social networks Monitor social media activity; social media analytics Manage social and web-based campaigns  Business intelligence Inclusion of BIwith enterprise applications Flexible reporting, ad hoc analysis, “what-if” scenarios, digital dashboards, data visualization, AI machine learning Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 69  A Database  An organized collection of data stored centrally to serve various information system applications  Why collect and store data? Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 70  Basic Concepts  Entity Person, place, thing, event about which information is maintained  Attribute Description of a particular entity  Key field Identifier field used to retrieve, update, sort a record Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 71  File Organization Terms and Concepts  Database: Group of related files  File: Group of records of same type  Record: Group of related fields  Field: Group of characters as word(s) or number(s)  Byte: Group of bits that represents a single character (e.g. the letter “A” or the number “5“)  Bit: Smallest unit of data; binary digit (0,1) Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 72  Problems with the Traditional File Environment  Files maintained separately by different departments Data redundancy:  Presence of duplicate data in multiple files Data inconsistency:  Same attribute has different values Program-data dependence:  When changes in program requires changes to data accessed by program Lack of flexibility Poor security Lack of data sharing and availability Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 73  Database Management Systems  Database Serves many applications by centralizing data and controlling redundant data  Database management system (DBMS) Interfaces between applications and physical data files Separates logical and physical views of data Solves problems of traditional file environment  Controls redundancy  Eliminates inconsistency  Uncouples programs and data  Enables organization to centrally manage data and data security Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 74  Relational DBMS  Represent data as two-dimensional tables  Each table contains data on entity and attributes  Table: grid of columns and rows Rows (tuples): Records for different entities Fields (columns): Represents attribute for entity Key field: Field used to uniquely identify each record Primary key: Field in table used for key fields Foreign key: Primary key used in second table as look-up field to identify records from original table Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 75  Capabilities of Database Management Systems  Data definition capability Specifies structure of the database  Data dictionary Stores definition of data elements and their characteristics  Querying and reporting Data manipulation language Structured Query Language (SQL)  Many DBMS have report generation capabilities for creating polished reports (Microsoft Access) Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 76  Designing Databases  Conceptual design Abstract model of database from a business perspective  Entity-relationship diagram Methodology for documenting databases illustrating relationships between database entities  Normalization Process of creating small stable data structures from complex groups of data  Physical design Detailed description of how the data will actually be arranged and stored on physical devices Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 77  Non-relational Databases and Databases in the Cloud  Non-relational databases: NoSQL More flexible data model Data sets stored across distributed machines Easier to scale Handle large volumes of unstructured and structured data  Databases in the cloud Appeal to start-ups, smaller businesses Amazon Relational Database Service, Microsoft SQL Azure Private clouds Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 78  Blockchain  Distributed ledgers in a peer-to-peer distributed database  Maintains a growing list of records and transactions shared by all  Encryption used to identify participants and transactions  Used for financial transactions, supply chain, and medical records  Foundation of Bitcoin, and other crypto currencies Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems  Figure 6.12 How Blockchain Works Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems  Business Intelligence Infrastructure  Array of tools for obtaining information from separate systems and from big data  Data warehouse Stores current and historical data from many core operational transaction systems Consolidates and standardizes information for use across enterprise, but data cannot be altered Provides analysis and reporting tools Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 81  Business Intelligence Infrastructure  Data marts Subset of data warehouses Summarized or highly focused portion of firm’s data for use by specific population of users Typically focuses on single subject or line of business Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 82  Business Intelligence Infrastructure  Hadoop Enables distributed parallel processing of big data across inexpensive computers Key services  Hadoop Distributed File System (HDFS): data storage  MapReduce: breaks data into clusters for work  Hbase: NoSQL database Used Yahoo, NextBio Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 83  Business Intelligence Infrastructure  In-memory computing Used in big data analysis Uses computers main memory (RAM) for data storage to avoid delays in retrieving data from disk storage Can reduce hours/days of processing to seconds Requires optimized hardware  Analytic platforms High-speed platforms using both relational and non-relational tools optimized for large datasets Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 84  Online Analytical Processing (OLAP)  Supports multidimensional data analysis Viewing data using multiple dimensions Each aspect of information (product, pricing, cost, region, time period) is different dimension  OLAP enables rapid, online answers to ad hoc queries Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 85  Data Mining  Finds hidden patterns, relationships in datasets Example: customer buying patterns  Infers rules to predict future behavior  Types of information obtainable from data mining: Associations Sequences Classification Clustering Forecasting Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 86  Databases and the Web  Many companies use the web to make some internal databases available to customers or partners  Advantages of using the web for database access Ease of use of browser software Web interface requires few or no changes to database Inexpensive to add web interface to system Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 87  Establishing an Information Policy  Firm’s rules, procedures, roles for sharing, managing, standardizing data  Data administration Establishes policies and procedures to manage data  Data governance Deals with policies and processes for managing availability, usability, integrity, and security of data, especially regarding government regulations  Database administration Creating and maintaining database Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 88  Ensuring Data Quality  More than 25 percent of critical data in Fortune 1000 company databases are inaccurate or incomplete  Data quality audit Structured survey of the accuracy and completeness of data in an information system  Data cleansing Consists of activities for detecting and correcting data in an information system Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 89 Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 90  Types of Decisions  Unstructured Decision maker must provide judgment, evaluation, and insight to solve problem  Structured Repetitive and routine; involve definite procedure for handling so they do not have to be treated each time as new  Semistructured Only part of problem has clear-cut answer provided by accepted procedure Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 91  Information Requirements of Key Decision-Making Groups in a Firm Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 92  The Decision Making Process Discovering, identifying, and understanding the Intelligence problems occurring in the organization Identifying and exploring solutions to the problem Design Choosing among solution alternatives Choice Making chosen alternative work and continuing to Implementation monitor how well solution is working Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 93  Real-World Decision Making  Do investments in IT always produce positive results? Information quality  High-quality decisions require high-quality information Management filters  Managers have selective attention and have variety of biases that reject information that does not conform to prior conceptions Organizational inertia and politics  Strong forces within organizations resist making decisions calling for major change Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 94  Support for Structured and Semi-structured Decisions Support for Structured Decisions Management Information Systems (MIS) Exception Reports Interactive Queries through a Portal  Support for Semi-structured Decisions Decision-support systems  Support for semistructured decisions Allow varied types of analysis  Sensitivity analysis, What-if analysis Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 95  High-Velocity Automated Decision Making  Made possible through computer algorithms precisely defining steps for a highly structured decision Humans taken out of decision  For example High-speed computer trading programs  Trades executed in 30 milliseconds Google’s search engine  Require safeguards to ensure proper operation and regulation Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 96  Business Intelligence  Business intelligence Infrastructure for collecting, storing, analyzing data produced by business Databases, data warehouses, data marts  Business analytics Tools and techniques for analyzing data OLAP, statistics, models, data mining  Business intelligence vendors Create business intelligence and analytics purchased by firms Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 97  Business Intelligence and Analytics for Decision Support Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 98  Business Intelligence Users Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 99  Predictive Analytics  Uses variety of data, techniques to predict future trends and behavior patterns Statistical analysis Data mining Historical data Assumptions  Incorporated into numerous BI applications for sales, marketing, finance, fraud detection, health care Credit scoring Predicting responses to direct marketing campaigns Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 100  Big Data Analytics  Big data: Massive datasets collected from social media, online and in- store customer data, and so on  Help create real-time, personalized shopping experiences for major online retailers  Smart cities Public records Sensors, location data from smartphones Ability to evaluate effect of one service change on system Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 101  Decision Support for Senior Management  Balanced scorecard method Measures outcomes on four dimensions  Financial, Business process, Customer, Learning and growth Key performance indicators (KPIs) measure each dimension  Business performance management (BPM) Translates firm’s strategies (e.g., differentiation, low-cost producer, scope of operation) into operational targets KPIs developed to measure progress toward targets Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 102  Balanced Scorecard - Dimensions  Financial What must we do to create sustainable economic value?  Internal Business Process To satisfy our stakeholders, what must be our levels of productivity, efficiency, and quality?  Learning and Growth How does our employee performance management system, including feedback to employees, support high performance?  Customer What do our customers require from us and how are we doing according to those requirements? Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 103  Group Decision-Support Systems (GDSS)  Interactive system to facilitate the solving of unstructured problems by a group  Specialized tools Virtual collaboration rooms Software to collect, rank, edit participant ideas and responses  Promotes collaborative atmosphere, anonymity  Cisco’s Collaboration Meeting Rooms Hybrid (CMR)  Skype for Business Copyright © 2018, 2017, 2016 Pearson Education, Inc. ITM 100 – Foundations of Management Information Systems 104