Midterm 1 Notes - Lecture Notes on Digital Revolution

Lecture 1: Digital Revolution What's new in management information systems - Continuous changes in technology, management, & business processes 1. IT innovations: Cloud computing, mobile digital platforms, big data, AI, IoT. 2. New business models: Viewers are unplugging from...

Lecture 1: Digital Revolution What's new in management information systems - Continuous changes in technology, management, & business processes 1. IT innovations: Cloud computing, mobile digital platforms, big data, AI, IoT. 2. New business models: Viewers are unplugging from cable & using only the internet for entertainment (Netflix). 3. E-commerce expanding: Selling services, not only goods. 4. Management changes: Online collaboration, business intelligence, virtual meetings. 5. Changes in firms & organizations: Managers on the move are in direct, continuous contact with their employees. More collaborative, social media to listen to consumers, & more aware technologies. Globalization challenges & opportunities: A flattened world - Globalization: Internet & global communications have greatly changed how & where business is done. - The internet has drastically reduced the costs of operating on a global scale. - Increases in foreign trade, outsourcing, - Competition for jobs, markets, resources - In a fully digital firm - Significant business relationships are digitally enabled & mediated - Core business processes are accomplished through digital networks. - Key corporate assets are managed digitally - Digital firms offer greater flexibility in organization & management (Time shifting, Space Shifting). Strategic business objectives of information systems - Growing independence between: - Ability to use information technology. - Ability to implement corporate strategies & achieve corporate goals. - Firms invest heavily in information systems to achieve 6 strategic business achievements - Operational excellence: Improvement in efficiency to attain higher profitability. - Information systems and technologies: The most important tools in achieving greater productivity. - Retail link system: Links suppliers to stores for a superior replenishment system. Ex: Walmart - New products, services, & business models - Business model: How a company produces, delivers, & sells products or services to create wealth - Information systems are major enabling tools to create new products, new services, and entirely new business models. Ex: Apple - Customer & supplier intimacy - Serving customers well leads to customers returning & raises revenues & profits. Ex: Mandarin Oriental hotel - Intimacy with suppliers results in lower costs - It allows them to provide vital inputs. Ex: JCPenny's - Improved decision making - Managers don't have the right info at the right time - Without accurate info, they rely on forecasts, best guesses & luck. Results in misallocation of resources; poor response times. - Poor outcomes raise costs, lose customers - Real-time data improves the ability to make decisions. (Customer complaints, network performance, etc.) - Competitive advantage - Delivering better performance. - Charging less for superior products. - Responding to customers & suppliers in real-time. - Competitive advantage often results from achieving previous business objectives. - Survival - Information technologies are a necessity for business. - Keeping up with competitors (industry-level changes). - Governmental regulations requiring record-keeping - Toxic Substances Control Act: Protects us from harmful chemicals. - Sarbanes-Oxley Act: Ensures companies are honest about their finances. - Dodd-Frank Act: Makes the financial system safer for everyone. What is an information system? - Information system: Set of interrelated components: - Collect, process, store, & distribute information. - Support decision-making, coordination, & control. - Information technology: The hardware & software that a firm needs to achieve business objectives. - Hardware & software are technical foundations & tools, similar to the materials & tools used to build a house. Functions of an Information system - Input: Raw data or info from organization, external environment or other IS. - Output: Info to be supplied to people, activities (or other IS) that use it. - Processing: Converts raw data (or one form of info) into more meaningful info. - Feedback: Output returned to members of the organization to help them evaluate or correct the input &/or processing. Dimensions of IS - 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 & services, occasionally re-creating the organization. - Technology: Hardware/software, infrastructure, data management. It isn't just technology: A business perspective on information systems - Information System: An instrument for creating value. - Investments in info tech will result in superior returns. - Business info value chain - Raw data is acquired & transformed through stages that add value to that information. - The value of info systems is determined in part by the extent to which it leads to better decisions, greater efficiency & higher profits. - Business perspective: Calls attention to the organizational & managerial nature of IS. - Examples of Complementary assets: Assets required to derive value from a primary investment. - Organizational assets - Supportive organizational culture that values efficiency & effectiveness - Appropriate business model - Efficient business process - Decentralized authority - Distributed decision-making rights - Strong IS development team - Managerial Assets - Strong senior management support for technology investment & charge. - Incentives for management innovation - Teamwork & collaborative work environments - Training programs to enhance management decision skills - Management culture that values flexibility & knowledge-based decision-making. - Social Assets - The Internet & telecommunication infrastructure - IT enriched educational programs raising labour force computer literacy. - Standards (both government & private sector) - Laws and regulations creating far, stable market environments - Technology & service firms in adjacent markets to assist implementation. Contemporary approaches to IS - Technical Approach - Emphasizes mathematically based methods - The disciples are computer science, management science, & operations research. - Behavioural Approach - Behavioural issues (strategic business integration, implementation, etc.) - The disciples are Psychology, economics, & sociology. - Approach of our Book/Class: Sociotechnical - Optimal organizational performance is achieved by jointly optimizing both social and technical systems used in production. - Helps avoid a purely technological approach. Lecture 2: Global E-Business & Collaboration Business processes: Business processes are the collection of activities required to produce a product or service. - Flows of material, information, knowledge - Sets of activities, steps - May be tied to a functional area or be cross-functional - Sales & Marketing - Businesses: A collection of business processes. - Business processes may be assets or liabilities. - Examples of functional business processes: Major Business Functions - Manufacturing & Production: Assembling the product. Checking for quality. Producing bill of materials. - Sales & Marketing: Identifying customers. Make them aware of the product. Sell. - Finance & Accounting: Paying creditors. Creating financial statements. Managing cash accounts. - Human Resources: Hire new employees. Evaluate their job performance. Enroll them in benefits plans. - Examples of a cross-functional business process: The order fulfilment process: - Functional business processes operate independently & can't easily share info to support cross-functional processes. Large-scale cross-functional business processes integrate the activities of related business processes & organizational units. How information technology improves business processes - By increasing the efficiency of existing processes through automating manual steps. Ex.: Checking clients' credit, Generating an invoice. - By enabling entirely new processes by: - Changing the flow of information. - Replacing sequential steps with parallel steps. - Eliminating delays in decision-making. - Supporting new business models. Types of information systems - Transaction processing systems (TPS): Computerized systems that... - Serve operational managers & staff. - Perform & record daily routine transactions necessary to conduct business. Ex.: Sales order pantry, payroll, shipping. - Allow managers to monitor the status of operations & relations with the external environment. - Serve predefined, structured goals & decision-making. - A payroll transaction processing system: - An employee timesheet with the employee's name, social security \#, & hours worked per week represents a single transaction for this system. Systems for business intelligence - Business Intelligence (BI): A technology-driven process for analyzing data & presenting actionable information to help executives make informed decisions. Ex.: Management info. systems, Decision support systems, & Executive support systems. Management information systems (MIS) (systems for BI -1) - Serve middle management. - Provide reports on the firm's current performance, based on data from. - Provide answers to routine questions with predefined procedures for answering them. (summaries & comparisons) - Typically have little analytic capability. Decision support systems (DSS) (systems for BI -2) It focuses on unique, rapidly changing problems for which solutions are not predefined in advance. - Improved decision-making. - Serve middle management. - Support non-routine decision-making. Ex.: What is the impact on the production schedule if December sales doubled? - May use external information as well as TPS / MIS data. - Types of DSS: - Data-driven DSS: Ex. Target Marketing. (Internal & external data for decisions). - Model-driven DSS: Ex. Voyage-estimating systems. (Calculates financial & technical voyage details such as ship/time cost, fuel, labour, and freight rates.) Executive support systems (ESS) (systems for BI -3) - Support senior management. - Address non-routine decisions (Requiring judgment, evaluation, and insight). - Incorporate data about external events (ex. new tax laws or competitors) as well as summarized information from internal MIS & DSS. Ex.: Digital dashboard with a real-time view of the firm's financial performance. 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↓ 1: Enterprise resource planning (ERP) systems (Enterprise systems) - Collect data from different firm functions & store data in a single central data repository. - Resolve problems of fragmented data. - Enables: - Coordination of daily activities: - Efficient response to customer orders (production, inventory). - Decision-making by managers about daily operations and longer-term planning. 2: Supply chain management (SCM) systems - Manage a firm's relationships with suppliers. - A type of Inter-organizational systems: The flow of information across organizational boundaries. - Share information about: - Orders, production, inventory levels, delivery of products & services. - The goal is to get the right amount of products to the destination with the least amount of time and lowest cost. 3: Customer relationship management (CRM) systems - Provide information to coordinate all of the business processes that deal with customers - Sales - Marketing - Customer service - Helps firms identify, attract, and retain the most profitable customers. 4: Knowledge management systems (KMS) - Support processes for capturing & applying knowledge & expertise: - How to create, produce, & deliver products & services - Collect internal knowledge & experience & make it available to employees. - Link to external sources of knowledge. - Include enterprise-wide systems for: - Managing documents, graphics & other digital knowledge objects. - Directories of employees with expertise Intranets & extranets - Used to increase integration & expedite the flow of information. - Intranets: Internal company websites accessible only by employees - Extranets: Company websites accessible externally only to vendors and suppliers. Often used to coordinate the supply chain. E-business, e-commerce, & e-government - E-business: Use of digital technology & the Internet to drive major business processes. - E-commerce: Subset of e-business. Buying & selling goods & services through the internet. - E-government: Using Internet technology to deliver information & services to citizens, employees & businesses. What's collaboration? - Working with others to achieve shared & explicit goals. - Teams: Focus on task or mission accomplishment within or across organizations. - Collaboration types: - Short-lived or long-term - Informal or formal (teams) - Why collaboration is important: - Changing nature of work: It has changed from factory manufacturing & pre-computer office work where each stage in the production process occurred independently of one another and was coordinated by supervisors. - Growth of professional work: Professional jobs require substantial education & the sharing of information and opinions to get work done. Each person brings their specialty to the job & takes one another into account to accomplish the job. - Changing the organization of the firm: Work has shifted from a hierarchical structure with top-down orders to teams where members develop their methods for accomplishing tasks. Senior managers observe results instead of giving detailed instructions, as expertise and decision-making are decentralized. - Changing the scope of the firm: The work of the firm has changed from a single location to multiple locations, even around the globe. This increases the need for coordinated design, production, & marketing efforts. - Emphasis on innovation: Innovations are derived from close collaboration with colleagues & partners rather than individual efforts. Collaborative practices & technologies increase the rate & quality of innovation. - Changing the culture of work & business: Diverse teams produce better outputs faster than individuals working on their own. (Innovation & problem-solving.) What's social business? - Social business: Use of social networking platforms (internal & external) to engage employees, customers, & suppliers. - Aims to deepen interactions and expedite information sharing. - "Conversations" to strengthen bonds with customers. - Requires information transparency: Driving the exchange of information without intervention from executives or others. - Seen as a way to drive operational efficiency, spur innovation, & accelerate decision-making. Enterprise social networking software capabilities: Benefits of collaboration on social business - Productivity: Sharing knowledge & resolving problems. There will be fewer errors. - Quality: Faster resolution of quality issues. Collaborative & social technologies help reduce time delays in design & production. - Innovation: More ideas for products & services. There are advantages to diversity & the "wisdom of crowds". - Customer service: Complaints are handled more rapidly. - Financial performance (profitability, sales, & sales growth): Generated by improvements in the factors above, collaborative firms have superior sales, sales growth, & financial performance. Applications of social business - Social networks: Connect personal & business profiles. - Crowdsourcing: Harness collective knowledge to generate new ideas & solutions. - Shared workspaces: Coordinate projects & tasks; concrete content. - Blogs & wikis: Publish & rapidly access knowledge; discuss opinions & experiences. - Social commerce: Share opinions about purchasing on social platforms. - File sharing: Upload, share, & comment on photos, videos, audio, & text documents. - Social marketing: Use social media to interact with customers; & derive customer insights. - Communities: Discuss topics in open forums; share expertise. Requirements for collaboration - Collaboration capability: Open culture, decentralized structure, & breadth of collaboration. - Collaboration technology: Use of collaboration & social technology for implementation & operations & strategic planning. - These two improve collaboration quality and firm performance. Building a collaborative culture & business processes - Command & control organizations - No value is placed on teamwork or lower-level participation in decisions. - Collaborative business culture - Senior managers rely on teams of employees. - Policies, products, designs, processes, & systems rely on teams. - Teams are rewarded for their performance in a team. - The middle managers\' purpose is to build teams, coordinate their work, & monitor their performance. Tools & technologies for collaboration & social business - Email & instant messaging: On mobiles, tablets, & laptops for sharing files & messages. Nowadays social media has become the preferred channel of communication. - Wikis: Website that allows users to contribute & edit text content & graphics w/o knowledge of web page development & programming techniques. Ex. Wikipedia - Virtual worlds: 3D online environments populated by avatars that interact & exchange ideas. Used for meetings, interviews, guest speaker events, & employee training. - Collaboration & social business platforms - Virtual meeting systems (Videoconferencing- telepresence technology). - Cloud collaboration service (Google Drive, Google Docs, etc.) - Microsoft SharePoint & IBM Notes (document management platforms installed on corporate servers where employees share their documents to collaborate on projects. It is a central workspace that implements workflow). IBM Notes shares calendars, emails, messaging, online meetings, etc.) - Enterprise social networking tools: Create business value by connecting the members of an organization through profiles, updates & notifications. It's social media for corporates. Checklist for managers: Evaluating & selecting collaboration & social software tools - The time/space collaboration & social tool matrix - Six steps in evaluating software tools - Identify your firm's collaboration challenges - Identify what kinds of solutions are available - Analyze available products' costs & benefits - Evaluate security risks - Consult users for implementation & training issues - Evaluate product vendors Lecture 3: IT Infrastructure - IT infrastructure: A set of physical devices, software, data, storage, & technology required to operate an enterprise. Critical to every business & organization. The hardware, software & network components that enable the delivery of IT services & support the organization's goals & objectives. - Set of firm-wide services including - Computing platforms providing computing services (Connect employees, customers, & suppliers digitally) - Telecommunications services (Provide data, voice & video connectivity). - Data management services (Store & manage corporate data & help analyze). - Application software services (ERM, CRM, SCM, KMS shared by all business units.) - Physical facilities management services (Develop & manage physical installations for commuting, telecommunications & data management services). - IT management, standards, education, and other service. - "Service Platform" perspective: A more accurate view of the value of investments.  Evaluation of IT Infrastructure 1. Mainframe computers: (1959 -- present) - Highly centralized computing - Controlled by professional programmers & operators. - Infrastructure was typically provided by a single vendor. Transition to minicomputers (nowadays known as servers): - Decentralized computing customized for [departmental needs]. - Offered at a lower cost. - Evolved into midrange computers & become a part of broader networks. 2. Emergence of personal computers: (1981 -- present) - IBM PC: the start of the personal computer era. - Introduction of Microsoft DOS & the Windows operating system on Intel-based computers (Wintel PCs) - Transitioned from [stand-alone systems] to performing on networks. - Rise of desktop productivity software, like word processors. Current landscape: - Approximately 88% of desktop PCs run Windows, & 8% run MacOS. - Wintel dominance is decreasing with increasing iPhone & Android device sales. 3. Client/Server computing: (1983 -- present) (two-tiered client/server architecture) - Processing work is split between clients & servers. - Client: Initiates communication, typically for data entry or retrieval. - Servers: Manage tasks like storing shared data, serving web pages, & running [network] activities. (Respond to client request or give an error) - Modern servers use multiple processors in server racks or standalone boxes. Multi-tiered (N-tier) client/server network: The work of the entire network is balanced over several different levels of servers. 4. Enterprise computing: (1992 -- present) - Connect disparate networks into an enterprise-wide infrastructure. [(Multiple networks], outside your company[)] - Through Transmission Control Protocol/Internet Protocols (TCP/IP). - [Needs software] to link disparate applications. - Allows seamless information flow within organizations & with [external partners]. 5. Cloud & mobile computing: (2000 -- present) - Access to shared computing resources (computers, storage, applications, services) over a network, often the Internet, on an as-needed basis. - Global public cloud spending of \$350 billion in 2022. - Major providers: Amazon, Google, IBM, Oracle, &Microsoft - Allows the offering of [Software as a Service] (SaaS) applications over the Internet. (Use the software as long as you need, by paid subscription) - Mobile connectivity is different; you no longer need cables. Technology drivers of infrastructure evolution - Moore's law & micro-processing power: Computing power doubles every 2 years. Nanotechnology (Technology that builds structure & process based on manipulating individual atoms & molecules). - Law of mass digital storage: The amount of data being stored each year doubles - Metcalfe's law & network economies: The value or power of a network grows exceptionally as a function of the number of network members. - Declining communication costs & the internet: Exceptional growth in the size of the internet. - Standards & network effects: Compatibility of products & the ability to communicate in a network. Components of IT Infrastructure Computer hardware platforms (Component IT inf. 1) - Client Machines - Desktop PCs, laptops, mobile computing (smartphones, tablets), desktop chips vs. mobile chips. - Servers - Mainframes - IBM mainframe. Digital workhorse for banking & telecommunications networks. Operating system platforms (Component IT inf. 2) - Corporate servers: Microsoft Windows server, Unix, Linux. - Client level: Microsoft Windows, Android, iOS, Windows 10 (mobile/multitouch), Google's Chrome OS (cloud computing- programs are used over the internet & accessed through Chrome web browser). - Roles of an OS: (The mind behind computer hardware, & software platforms) - Manages computer resources, such as memory & input/output devices. - Provides an interface through which a human can interact w the computer. - Allows an application program to interact w these other system resources. Enterprise software applications (Component IT inf. 3) - In 2020, firms are expected to spend over \$500 billion on software for enterprise applications - Largest providers: SAP & Oracle - Middleware providers: IBM, Oracle Data management & storage (Component IT inf. 4) - Data management technology: Software governing the organization of data on physical storage media. - Database software providers: Designed for data to be stored in a specific way that you could utilize & understand it. - IBM(DB2) - Oracle - Microsoft (SQL Server) - SAP Sybase (Adaptive Server Enterprise) - MySQL (Oracle)- Before was a Linux open-source relational database product. - Apache Hadoop- Open-source software framework for managing large data sets. Networking/telecommunications platforms (Component IT inf. 5) - Networking & telecommunications technology: Physical devices & software that link various computer hardware components & transfer data from one physical location to another. - Networking operating systems: Windows Server, Linux, Unix. - Network hardware providers: Cisco, Juniper networks. - Telecommunication services: Telecommunications, cable, telephone company charges for voice lines & internet access. AT&T, Verizon. Internet platforms (Component IT inf. 6) - Internet: Global network of networks using universal standards to connect millions of different networks. - Hardware, software, & management services to support [company websites], & intrants. - Web-hosting services: A company with large web server computers to maintain the websites of fee-paying subscribers. - Routers - Cabling or wireless equipment - Internet hardware server market: IBM, Dell, Oracle, HP. - Web development tools/suites: Microsoft (Visual Studio & NET), Oracle-Sun (Java), Adobe. - World Wide Web: A system with universally accepted standards for storing retrieving, formatting, & displaying information in a networked environment. Consulting system integration services (Component IT inf. 7) - Even large firms do not have the resources for a full range of support for new, complex infrastructure. - Leading consulting firms: Accenture, IBM Global Services, H.P, Infosys, Wipro Technologies - Software integration: Ensuring new infrastructure works w legacy systems. - Legacy systems: Older Transaction processing systems (TPS) created for mainframes that would be too costly to replace or redesign. Dealing with platform & infrastructure change - As firms shrink or grow, IT needs to be flexible & scalable - Scalability: Ability of a computer, product or service to expand to serve a larger number of users without breaking down. - For mobile computing & cloud computing: - New policies and procedures for managing these new platforms - Contractual agreements with firms running clouds and distributing software required. - Mobile device management (MDM): Software that monitors, manages, & secures mobile devices that are deployed across multiple mobile service providers & multiple mobile operating systems used in the organization. Management & Governance - Centralized: The central IT department makes decisions - Decentralized: Business unit IT departments make their own decisions. (You need to look at the costs allocated between divisions and departments and decide based on your budget). Making wise infrastructure investments - Under-investment & over-investment can hamper firm performance. - Rent vs. buy (recourses, based on needs). - Cloud computing: Low-cost way to increase scalability and flexibility. - Security requirements - Impact on business process & workflow - Outsourcing: Hiring external organizations. Total cost of ownership (TCO) model (To manage IT Infrastructure) - Analyzes direct & indirect costs - Hardware and software account for only about 20% of TCO - Other costs: Installation, training, support, maintenance, infrastructure, downtime, space, & energy. - TCO can be reduced through the use of cloud services, greater centralization & standardization of hardware & software resources. (Check how long you need to know if you should rent the cloud or buy) - The components of TCO: - Hardware acquisition: Purchase price of computer hardware equipment, including computers, terminals, storage & printers. - Software acquisition: Purchase or license of software for each user. - Installation: Cost to install computers & software. - Training: Cost to provide training for information systems specialists & end users. - Support: Cost to provide ongoing technical support, help, desks, & so forth. - Maintenance: Cost to upgrade the hardware & software. - Infrastructure: Cost to acquire, maintain, and support related infrastructure, such as networks and specialized equipment (including storage backup units). - Downtime: Cost of lost productivity if hardware or software failure causes the system to be unavailable for processing & user tasks. - Space & energy: Real estate & utility costs for housing & providing power for the technology.  Competitive forces model for IT Infrastructure investment Lecture 4: Achieving Operational Excellence & Customer Intimacy: Enterprise Applications What are enterprise systems - Enterprise resource planning (ERP) systems: Based on a suite of integrated software modules & a common central database. Collects data from many firm divisions for use in nearly all of the firm's internal business activities. (A famous ERP system is SAP) - Information entered in one process is immediately available for other processes. Enterprise software - Built around thousands of predefined business processes that reflect best practices: - Finance & Accounting - Human Resources - Manufacturing & Production - Sales & Marketing - To implement, firms: - Select functions of the system they wish to use. - Map business processes to software processes. - Use software's [configuration tables] for customizing. Business value of enterprise systems: - Increases operational efficiency. - Provides firm-wide information to support decision-making. - Enables rapid responses to customer requests. (info. can be accessed by anyone) - Includes analytical tools to evaluate overall organizational performance. The supply chain - The supply chain: Network of organizations & processes for ^1^Procuring materials, ^2^Transforming materials into products, & ^3^ Disturbing the products. - Upstream: The process of getting materials to the manufacturer. - Downstream: The process of getting products from the manufacturer to the end consumer. - Internal: The chain of activities or functions within a company that results in providing a product to the customer. Supply chain management - Inefficiencies cut into a company's operating costs. (Can waste abt 25% of OE). - Just-in-time strategy: Components arrive as needed. Finished goods shipped after leaving the assembly line. - Safety stock: Buffer for lack of flexibility in the supply chain. (Extra supplies just in case). - bullwhip effect: Information about product demand gets distorted as it passes from one entity to the next across the supply chain. Supply chain management software - Supply chain planning systems: Systems that forecast demand to develop plans. - 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 centres & warehouses to ensure that products are delivered to the right locations most efficiently. (Ex. WMS) Global supply chains & the internet - Global supply chain issues: - Greater geographical distances, time differences - Participants from different countries - Different performance standards - Different legal requirements - Internet helps manage global complexities - Warehouse management (Tracking inventory levels in real-time). - Transportation management (Real-time shipment tracking, managing schedules). - Logistics (The internet connects the supply chain & improves communication). - Outsourcing (Connection with global partners & service providers, helps find best outsourcing options based on cost & quality). Demand-driven supply chains - Push-based model (build-to-stock): Earlier SCM systems, Schedules based on best guesses of demand. - Pull-based model (demand-driven): Web-based, Customer orders trigger events in the supply chain. (Make what we sell, not sell what we make) - The internet enables the move from sequential supply chains to concurrent supply chains. - Complex networks of suppliers can adjust immediately to changes in schedules or orders. 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 the operating budget. - Increases sales: When products aren't available, customers go to someone else, & control of the supply chain ensures the products are available for the clients at the right time. Customer relationship management - Knowing the customer. (Especially your good customers.) - In large businesses, too many customers & too many ways customers interact with the firm. - CRM systems: Capture & integrate customer data from all over the organization. - Consolidate & analyze customer data. - Distribute customer information to various systems & customer touch points across the enterprise. - Touch point (Contact point): A method of firm interaction with a customer, such as telephone, email, customer service desk, conventional mail, or point-of-purchase. - [Provide a single enterprise view of customers.] Customer relationship management software - 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, & availability. Tools to assess partners' performances. - Employee relationship management (ERM): Software dealing with employee issues that are closely related to CRM, such as setting objectives, employee performance management, performance-based compensation, & employee training. - CRM packages typically include tools for: - Sales force automation (SFA): Software to automate the business tasks of sales, including lead management, information sharing, order management, sales forecast analysis, & employee performance evaluation. (Help make personalized recommendations to customers.) - Sales prospect & contact information (Potential customers, & their contact details). - Sales quote generation capabilities (Accurate customized pricing quotes). - Customer service: Provide information & tools to increase the efficiency of call centers, help desks, and customer support staff. - Assigning & managing customer service requests - Web-based self-service capabilities: The company website is set up to provide customers with personalized support information & customer service staff contact information. - Marketing - Capturing prospect & customer data, scheduling & tracking direct-marketing mailings or e-mails. - Cross-selling: Marketing complementary products to customers. (What goes well with your purchase).  Operational & Analytical CRM - Operational CRM: Customer-facing applications, Sales force automation call centre & customer service support, Marketing automation. - Analytical CRM: Based on data warehouses populated by operational CRM systems & customer touchpoints. - Analyzes customer data (OLAP, data mining, etc.) & Customer lifetime value (CLTV). (... from operational CRM to provide information for improving business performance.) - CLTV: Difference between revenues produced by a specific customer & the expenses for acquiring & servicing that customer minus the cost of promotional marketing over the lifetime of the customer relationship, expressed in today's dollars. Business value of CRM systems - Increased customer satisfaction - Reduced direct-marketing costs - More effective marketing - Lower costs for customer acquisition/retention - Increased sales revenue: By identifying the most profitable customers & segments for focused marketing & cross-selling. - b rate (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. Enterprise application challenges - Expensive to purchase & 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 Next-generation enterprise applications - Enterprise solutions/suites: Make applications more flexible, web-enabled, & integrated with other systems. - Cloud-based versions - Functionality for mobile platform - Versions are also available for small & medium-sized businesses. - Social CRM: Tools enabling a business to link customer conversations, data & relationships from social networking sites to CRM processes. - Incorporating social networking technologies. - Monitor social media activity; social media analytics. - Manage social and web-based campaigns. - Business intelligence - Inclusion of BI with enterprise applications. - Flexible reporting, ad hoc analysis, "what-if" scenarios, digital dashboards, data visualization, AI machine learning. Lecture 5: Foundations of Business Intelligence: Databases & Info Mgmt The data hierarchy: A way to organize related data in a way where you can easily access it. File organization terms & concepts Bit = 0 or 1, the smallest unit of data in a computer system. Byte = 8 Bits - Database: Group of related files (collecting & storing large amounts of info.) - File (Table): Group of records of the same type - Record: Group of related fields - Field: Group of characters as word(s) or number(s) - Entity: Person, place, or thing on which we store information - Attribute: Each characteristic, or quality, describing entity Problems with the traditional file environment - Files maintained separately by different departments: - Data redundancy: When the same data is duplicated in multiple database files. - Data inconsistency: When the same data is stored separately there may be different interpretations/values of that same data/attribute. - Program-data dependence: Trouble of compatibility of different systems, OS, no unity. Any change in data organization or format requires a change in all the programs associated with those files. (Ex. different zip codes in two programs.) - Lack of flexibility: Traditional files cannot respond to ad hoc (unanticipated) requests on time as the information is somewhere in the system but may be too expensive to retrieve. Programmers need weeks to put together the required data. - Poor security: If there's an error in one system other systems might not be informed, and the same error might happen to another system. Plus, management doesn't know who has access to the data. - Lack of data sharing & availability: Information cannot flow freely across different functional areas or different parts of the organization. If an info has different values in two systems, users can't trust its accuracy.  Traditional file processing - Each application, of course, required its own files & its own computer program to operate. - As this process goes on for 5 or 10 years, the organization is saddled with hundreds of programs and applications that are very difficult to maintain and manage. Database management systems - Database: Serves many applications by centralizing data & controlling redundant data. - Database management system (DBMS): Software to create & maintain a database & enable individual business applications to extract the data they need without having to create separate files or data definitions in their computer programs. - Interfaces between applications and physical data files - Separates logical and physical views of data. - Logical view: What the end user views. - Physical view: How the data is organized on physical storage media. Ex. the coding, etc. - Solves problems of traditional file environment - Benefits: - Controls redundancy - Eliminates inconsistency - Uncouples programs & data - Enables managing data & data security centrally Human resources database with multiple views Relational DBMS - Relational DBMS: Represent data as 2D tables, each table contains data on an entity & attributes. - Table structure: - Rows (tuples): Records for different entities - Fields (columns): Represents attribute for entity - Key field: Field used to identify each record uniquely - Primary key: Field in a table used for key fields - Foreign key: The primary key used in the second table as a look-up field to identify records from the original table Operations of a relational DBMS - 3 basic operations are used to develop useful sets of data: - Select: Creates a subset of data to all records that meet stated criteria. - Join: Combines relational tables to provide more information. - Project: Creates a subset of columns in the table containing only the information specified. Capabilities of database management systems - Data definition: DBMS capability that specifies the structure & content of the database. - Data dictionary: Automated or manual tool for storing & organizing (the definitions) information about the data maintained in a database. (Metadata: data about data). - Querying & reporting: Data manipulation language (DBMS language used to manipulate data in a database), Structured Query Language (SQL) (The standard data manipulation language for relational DBMS). - Many DBMS have report generation capabilities for creating polished reports (Microsoft Access) Designing databases - Conceptual design (logical, design of a database is an abstract model of the database from a business perspective) vs. physical design (shows how the database is arranged on direct-access storage devices.) - Normalization: Streamlining complex groupings of data to minimize redundant data elements & awkward many-to-many relationships. - Referential integrity: Rules used by RDBMS to ensure relationships between coupled database tables remain consistent. - Entity-relationship diagram: Illustrates the relationship between entities in the database. - A correct data model is essential for a system serving the business well. Non-relational databases, cloud databases & blockchain - Non-relational databases: "No SQL" (Web, social media, graphics, & other forms of data difficult to analyze with traditional SQL-based tools). - More flexible data model - Data sets stored across distributed machines - Easier to scale - Handle large volumes of unstructured & structured data - Cloud databases: - Appeal to start-ups, smaller businesses - Amazon Rational Database Service, Microsoft SQL Azure - Private clouds - Distributed databases: Stored in multiple physical locations. (Synchronized at all the locations). Ex. Google Spanner - Blockchain: - Distributed ledgers in a peer-to-peer distributed database - Maintains a growing list of records & transactions shared by all - Encryption is used to identify participants & transactions - Because of safety & security it's used for financial transactions, supply chain, & medical records - Foundation technology for Bitcoin, Ethereum & other cryptocurrencies. - Smart contracts: Computer programs that implement the rules governing transactions between firms. (Ex. what's the price, how's it shipped, when's the transaction complete). The challenge of big data - Big data: Massive sets of unstructured/semi-structured data from web traffic, social media, sensors, etc., characterized by the 3V's: Volume(large), Variety (data types & sources), & Velocity (at which data must be processed). - Big data characteristics: - Too large for typical DMBS - Requires new tools & technologies to manage & analyze - It can reveal more patterns, relationships, & anomalies Business Intelligence infrastructure - BI infrastructure: An array of tools for obtaining information from separate systems & big data. - Data warehouse: The data cannot be altered. - Data mart: Portion of organization data for specified functions or users. - Hadoop: Breaks a big data problem into subproblems, distributes it to computer processing nodes, & then combines the results into a smaller data set that is easier to analyze. - Distributed parallel processing of big data across inexpensive computers. - Key services - Hadoop Distributed File System: Data storage - MapReduce: Breaks data into clusters for work - Hbase: No SQL database - Used by Yahoo, NextBio - In-memory computing - Used in big data analysis - Uses [computer 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 - Analytical platforms: High-speed platforms using both relational & non-relational tools optimized for large datasets. They are used for data analysis, reporting, & visualization, helping businesses make informed decisions based on data insights. - Includes in-memory & NoSQL nonrelational database management systems & are now available as cloud services.  Contemporary Business Intelligence infrastructure Analytical tools: Relationships, patterns, trends - Analytical tools: Tools for consolidating, analyzing, & providing access to vast amounts of data to make better business decisions: 1. Multidimensional data analysis (OLAP) - Online Analytical Processing (OLAP): Supports multidimensional data analysis. Viewing data using multiple dimensions, each aspect of info (product, pricing, region, time) is a different dimension. Enables rapid, online answers to ad hoc queries. 2. Data mining: Finds hidden patterns & relationships in datasets (Ex. Customer buying patterns). - Types of Info obtainable from data mining: Associations, Sequences, Classification, Clustering, Forecasting. 3. Text mining: Extracts key elements from large unstructured text data sets. Sentiment analysis software (Find the meaning behind a text). 4. Web mining - Discovery & analysis of useful patterns & information from web - Web content mining: Process of extracting knowledge from the content of web pages which include text, image, audio, & video data. - Web structure mining: Examines data related to the structure of a particular website. - Web usage mining: Examines user interaction data recorded by a web server whenever requests for a website's resources are received. Databases & the web - Many companies use the web to make some internal databases available to customers or partners. - Typical configuration includes: - Web server - Application server/middleware/scripts: Handles all application operations. (takes requests). - Database server (hosting DBMS): A computer in a client/server environment that is responsible for running a DBMS to process SQL statements & perform database management tasks. - Advantages of using the web for database access: - Ease of use browser software - Web interface requires few or no changes to database - Inexpensive to add a web interface to the system  Linking internal databases to the web Data governance - Policies & procedures to manage data as an organizational resource. - Establishes rules for sharing, disseminating, acquiring, standardizing, classifying & inventorying information. - Ex. Firm info policy that specifies that only selected members of a particular department can view certain info. Data quality assurance - Before a new database is in place, a firm must: - Identify and correct faulty data - Establish better routines for editing data once the database is in operation - Data quality audit (To check if the data is clean, of good quality, and is used for the right purposes). - Data cleansing (Detecting and correcting (or removing) corrupt or inaccurate records from a record set, table, or database). Lecture 6: Enhancing Decision Making Types of decisions 1. Unstructured: The decision maker must provide judgment, evaluation, & insight to solve a problem. 2. Structured: Repetitive & routine; involve definite procedure for handling so they do not have to be treated each time as new. 3. Semi-structured: Only part of the problem has a clear-cut answer provided by the accepted procedure. How does the decision-making process work? - Senior managers: Make many unstructured decisions. - Makes long-range strategic decisions about products and services as well as ensures the financial performance of the firm - Middle managers: Make more structured decisions but these may include unstructured components. - Carries out the programs and plans of senior management - Operational managers & rank-and-file employees: Make more structured decisions. - Monitors the daily activities of the business. Info. Requirements of key decision-making groups in a firm The decision-making process/ the stages - Intelligence: Discovering, identifying, & understanding the problems occurring in the organization. - Design: Identifying & exploring solutions to the problem. - Choice: Choosing among solution alternatives. - Implementation: Making chosen alternative work & continuing to monitor how well the solution is working. Managerial roles - Classical model of management (Henri Fayol): Planning, organizing, coordinating, deciding, & controlling. - Contemporary behavioural models: Actual behaviour of managers appears to be less systematic, more informal, less reflective, more reactive, & less well organized. 1. Managers perform a great deal of work at an unrelenting pace. 2. Managerial activities are fragmented (ex. last less than 9 mins each). 3. Managers prefer current, specific, & ad hoc information. 4. They prefer oral forms of communication to writing, less effort, faster, & flexible. 5. Managers like having a large web of contacts as informal info. system to help them achieve short & long-term goals. (Networks). Mintzberg's 10 managerial roles: Expectations of the activities that managers should perform in an organization. - Interpersonal roles: - Figurehead (Represents the organization, as well as motivates the team) - Leader (Leads a team, a department, or an entire organization) - Liaison (Develops & maintains internal & external relationships) - Informational roles: - Nerve centre (Identifies problems & opportunities for growth) - Disseminator (Shares data & communicates it effectively) - Spokesperson (Speaks for the organization, defending its interests) - Decisional roles: - Entrepreneur (Suggest making new products, innovative approaches for the business, runs business processes) - Disturbance handler (Maintains productivity during a problem ex. pandemic) - Resource allocator (Determines how & where to apply organizational resources) - Negotiator (Tries to reach the company negotiation goals) Real-world decision making Three main reasons why investments in IT do not always produce positive results: 1. Information quality: High-quality decisions require high-quality information. 2. Management filters: Managers have selective attention & have variety of biases that reject info. that doesn't conform to prior conceptions. 3. Organizational inertia & politics: Strong forces within organizations resist making decisions calling for major change. (ppl with set heads resist to change with society). - High-Velocity Automated Decision-Making: Made possible through [computer algorithms] precisely defining steps for a highly structured decision. (Ex. High-speed computer trading programs). - Humans are taken out of decision. - Require safeguards to ensure proper operation & regulation. - Algorithmic Decision-Making: Algorithms perform step-by-step calculations according to the formula & model to get certain outcomes. They can lead to dangerous, unintended, racist or biased outcomes since HUMANS are making the codes. Therefore, there must be a lot of testing and careful decision-making for what to teach the AI & get the best outcomes/recommendations. (Ex. ChatGPT) What is business intelligence? - Business intelligence: Infrastructure for collecting, storing, analyzing data produced by business. Databases, data warehouses, data marts, Hadoop, analytic platforms. - Business analytics: Tools & techniques for analyzing data OLAP, statistics, models, data mining. - Business intelligence vendors: Create business intelligence & analytics purchased by firms. The business intelligence environment /& analytics for decision support - Six elements in the business intelligence environment: - Data from the business environment - Business intelligence infrastructure - Business analytics toolset - Managerial users & methods - Delivery platform -- MIS, DSS, ESS - User interface - Data visualization tools Business intelligence & analytics capabilities - Production reports: Clear, detailed information about a manufacturing company\'s production data. - Parameterized reports: Reports that allow you to change the structure & present differently. - Dashboards/scorecards: A visual overview of the most important KPIs & metrics in a company. - Ad hoc query/search/report creation: Users create their own reports as-needed basis. One-time use for a specific answer. - Drill down: Breaking down summarized information into finer levels of detail to gain deeper insights - Forecasts, scenarios, models: Predictions based on past data, What-if situations, & Representations of real-world situations using standard statistical tools. Predictive analytics - Uses a variety of data & techniques to predict future trends & behaviour patterns. - Statistical analysis - Data mining - Historical data - Assumptions - Incorporated into numerous BI applications. - Credit scoring: Determine the creditworthiness of a person or a small, owner-operated business. - Predicting responses to direct marketing campaigns Big data analytics - Big data: Massive datasets collected from social media, online & in-store customer data, & so on. - Big data analytics: Big data help create real-time, personalized shopping experiences for major online retailers. Ex. Smart cities (Public records, Sensors, location data from smartphones, Evaluating the effect of one service change on the system). Operational intelligence & analytics - Operational intelligence: Business activity monitoring. - Collection & use of data generated by sensors - Internet of Things (IoT): Creating huge streams of data from web activities, sensors, & other monitoring devices. - Software for operational intelligence & analytics enables companies to analyze their big data. Location analytics & geographic information systems - Location analytics: Ability to gain business insight from the location (geographic) component of data. - Mobile phones - Sensors, scanning devices - Map data - Geographic information systems (GIS): Ties location-related data to maps. Ex. For helping local governments calculate response times to disasters. Business intelligence users Decisional support for operational & middle management - Charged with monitoring key aspects of business Most decisions fairly structured Middle managers typically use MIS (Increasingly online; can be queried interactively, Exception reports). Support for semi-structured decisions - Decision-support systems: Support for semi-structured decisions - Use mathematical or analytical models - Allow varied types of analytics - "What-if" analysis: Try out different values (ex. on Excel) to see outcomes with formulas. - Sensitivity analysis: how different values of an independent variable affect a dependent variable. - Backward sensitivity analysis: How changes in input affect the output. - Multidimensional analysis/OLAP: Users view and interpret data from various perspectives. - (Ex. Pivot tables) that examines customer regional distribution & advertising source Decision support for senior management - Executive Support Systems (ESS): Help executives focus on important performance information. - Data for ESS: - Internal data from enterprise applications - External data such as financial market databases - Balanced Scorecard Method: Measures outcomes on four dimensions: A methodology used to understand business performance info. needed for executives. - Financial - Business process - Customer - Learning & growth - Key performance indicators (KPLs): Measure each dimension Balanced scorecard framework  Strategy Map Template Decision support for senior management: Business performance management - Business performance management (BPM): Translates the firm's strategies (Ex. differentiation, low-cost producer) into operational targets. - KPIs are developed to measure progress toward targets.