Information Technology

1
Chapter 1

• Information Technology
• in the Digital Age

2
Learning Objectives

• Describe the characteristics of the digital
  economy.
• Recognize the relationships between business
  pressures, organizational responses, and
  information systems.
• Identify the major pressures in the business
  environment describe the major organizational
  responses to them.
• Describe the role of I.T. in organizational
  activities.
• Define computer-based information systems I.T.
• List the essentials of networked computing
  Web-based systems.

3
Case BMS enters the Digital Economy

• Problem
• Bristol-Myers Squibb (BMS) is a leading
  manufacture of pharmaceutical drugs, beauty and
  infant-food products.
• They were struggling to stay ahead in the new
  digital economy.
• Solution
• BMS initiated multiple Web-based projects,
  overhauled its management structure, revamped its
  procurement and supply chain processes, and
  expanded its myriad of Web sites.
• Results
• BMS experienced over 100 million in annual
  savings just from e-procurement.

4
Lessons from the Case

• Global competition drives even large corporations
  to find ways to reduce costs, increase
  productivity and improve customer service.
• These efforts are best achieved by using
  Web-based systems.
• The major initiatives that BMS embarked upon
  were
• Reduce costs by introducing an e-procurement
  system.
• Increase sales by utilizing the Web.
• Improve relationships with employees customers.

5
EC Networked Computing

• Electronic commerce (EC) is the use of Web-based
  systems to support buying, selling, and customer
  service.
• Click-and-mortar companies add some EC activities
  to their regular business.
• Networked computing connects several computers
  and other electronic devices via
  telecommunication networks.
• Information technology (IT) refers to the
  collection of computer systems used by an
  organization.

6
The Digital Economy

• The digital economy refers to an economy that is
  based on digital technologies, including digital
  communication networks, computers, and software.
• The digital economy is also sometimes called the
  Internet economy, the New economy, or the Web
  economy.

7
Old vs. New Economy Photography

• Old Economy
• You buy film at the store, insert it into your
  camera take pictures.
• Once you complete the film, sometimes weeks or
  months after you began the roll, you take it to
  the store for processing.
• Go back to the store and pay for enlargements and
  duplications.
• Send photos to family and friends.

• New Economy
• Use a digital camera that can also take videos.
  No film is needed, and no processing required.
  You can see the results immediately enlarge
  print photos quickly.
• If your digital camera is connected to a wireless
  device (such as a palmtop computer or a cell
  phone) take pictures and see them within a few
  seconds.

8
Digital Economy Business Models

• Name-Your-Own-Price. Pioneered by Priceline.com,
  this model allows customers to state a price they
  are willing to pay for a product or service.
• Dynamic Brokering. In the digital age customers
  can specify requirements for a service or a
  product. These specifications are broadcast over
  the Internet (Webcasted) to service providers
  in an automatic invitation to submit bids.
• Reverse Auctions. Electronic reverse auctions are
  fast, they reduce administrative costs by as much
  as 85 , products prices can be 5 - 20
  lower.

9
Digital Economy Business Models (cont.)

• Affiliate marketing is an arrangement in which
  marketing partners place a banner of a company,
  such as Amazon.com, on their Web site.
• Group Purchasing. Anyone can pay less per unit
  when buying more units. Discounts are usually
  available for quantity purchases.
• E-marketplaces and Exchanges. Since 1999,
  thousands of electronic marketplaces, of
  different varieties, have sprung up.

10
Major Business Pressures
11
Market Pressures

• Global Economy Strong Competition. 
• Global competition is intensified as governments
  become involved through the use of subsidies, tax
  policies, import/export regulations
  incentives.

• Rapid and inexpensive communication and
  transportation modes increase the magnitude of
  international trade even further.

12
Market Pressures (cont.)

• Changing Nature of the Workforce. 
• The workforce is becoming more diversified, with
  more females, single parents, minorities, and
  handicapped persons working in all types of
  positions.

• Powerful Customers. 
• Consumer sophistication expectations increase
  as customers become more knowledgeable about the
  availability and quality of products and
  services.

13
Technology Pressures

• Technological Innovation Obsolescence. 
• Some of todays state-of-the-art products may be
  obsolete tomorrow.
• Thus, technology accelerates the competitive
  forces.

• Information Overload. 
• The amount of information available on the
  Internet more than doubles every year.
• The management of information is critical.

14
Societal Pressures (cont.)

• Social Responsibility. 
• Issues range from the environment to education.
• Government Regulations.
• Regulation issues involve health, safety,
  environmental control, and equal opportunity.

• Government Deregulation. Deregulation can be a
  blessing to one company but a curse to another
  company.
• Ethical Issues. 
• Business ethics relates to standards of right
  and wrong in business practices.

15
Organizational Framework
16
Organizational Responses

• Organizations need to respond to business,
  societal and technical pressures with critical
  response activities.
• A typical industry-level response to the digital
  economy is disintermediation, or the elimination
  of intermediary organizations.
• Organizations can also take proactive measures,
  to create a change in the market place.
• e.g., exploiting opportunities created by
  external pressures.

17
Organizations Major Responses

• Strategic systems for competitive advantage
• Continuous improvement efforts
• Business process reengineering (BPR)
• Business alliances
• Electronic commerce

18
Organizations Major Responses

• Strategic Systems provide organizations with
  strategies to increase their market share, better
  negotiate with suppliers, or stop competitors.
• Continuous Improvement Efforts aim to improve a
  companys productivity and quality. Examples
  include
• Improved productivity ? Managing enterprise
  data
• Just-in-time (JIT) ? Innovation and creativity
• Total quality management ? Change management
• Knowledge management ? Customer service

19
Organizations Major Responses

• Business Process Reengineering refers to the
  introduction of a major innovation in an
  organizations structure the way it conducts
  business.
• The major areas in which IT supports BPR are the
  following
• Reducing cycle time and time to market.
• Empowerment of employees and collaborative work. 
• Customer-focused approach and CRM.
• Restructuring and team-based structure.

20
Organizations Major Responses

• Business Alliances.  Many companies realize that
  alliances with other companies, even competitors,
  can be very beneficial.
• Temporary joint venture companies form a
  special company for a specific, limited-time
  mission.
• Electronic Commerce. Doing business
  electronically is the newest and perhaps most
  promising strategy that many companies can
  pursue.

21
Case IT Shortens Time to Market

• Problem
• In order to assure quality, and minimize risk,
  the FDA requires companies to conduct extensive
  research testing, which can take up to 10
  years.
• Solution
• Several software companies enable document
  scanning into databases that saves hours in
  research time.
• The database is indexed and includes
  full-text-search and retrieval programs.
• Results
• The time to market of a new drug has been reduced
  by up to a year, saving hundreds of lives.

22
Information Systems

• Information systems (IS) collect, process, store,
  analyze, and disseminate information for a
  specific purpose.
• Information Systems are comprised of
• inputs (data, instructions)
• outputs (reports, calculations)
• feedback mechanisms that controls the operation
• an environment that it works within

23
Computer-Based Information System

• A computer-based information system (CBIS) is an
  information system that uses computer technology
  to perform some or all of its intended tasks.

24
Components of Information Systems

• Hardware is a set of devices such as processor,
  monitor, keyboard, and printer.
• Software is a set of programs that enable the
  hardware to process data.
• Database is a collection of related files,
  tables, relations, and so on, that stores data.

• Network is a connecting system that permits the
  sharing of resources between computers.
• Procedures are the set of instructions about how
  to combine the above components.
• People are those individuals who work with the
  system or use its output.

25
Case Managing Accounting Across Asia

• Problem
• Le Saunda Holding Company (Hong Kong) is a shoe
  manufacturer that manages 32 subsidiaries in four
  Asian countries.
• Their financing and cash flow is a very complex
  process.
• Solution
• To cope with the rapid growth of the company, a
  sophisticated accounting software package was
  installed.
• Results
• The system is much more reliable internal/
  external auditing is easier.
• All these improvements have led to a substantial
  growth in revenue and profits for the firm.

26
Case the US Presidential Election 2000

• In addition to the various success stories, IT
  involves a number of failures, with the most
  famous being the Presidential Election of 2000.
• 20-to-30 year old machines were used to count
  votes and generated the greatest election
  confusion ever encountered.
• How can such election confusion be avoided in the
  future?
• Perhaps the solution lies in digital-age voting
  machines, which displays a persons vote on a
  computer screen and asks them to verify their
  choice.

27
General Technological Trends

• General trends within computing systems include
  the following

• Cost Performance Ratio
• Object-Oriented Environment Document
  Management. 
• Networked Computing
• Mobile Commerce
• Integrated Home Computing. 
• The Internet

• Intranets and Extranets
• Corporate Portals
• The Networked Enterprise
• Optical Networks

28
Cost Performance Ratio

• Cost Performance Ratio Improvement by a Factor
  of at Least 100.
• In about 10 years, a computer will cost the same
  as its costs today but will be about 50 times
  more powerful.
• Moores Law
• Gordon Moore, the co-founder of Intel, predicted
  in 1965 that the processing power of silicon
  chips would double every 18 months.

29
Object-Oriented Environments

• An object-oriented environment is an innovative
  way of programming and using computers that is
  expected to significantly reduce the cost of both
  building and maintaining information systems.
• Object technology enables the development of
  self-contained units of software that can be
  shared, purchased, and/or reused.
• The increased use of multimedia and
  object-oriented systems makes electronic document
  management one of the most important topics of
  IT.

30
Network Computing

• Network technology enables users to reach other
  users and access databases anywhere in the
  organization.
• Metcalfes Law Robert Metcalfe, a pioneer of
  computer networks, claims that the value of a
  network grows roughly in line with the square of
  the number of its users.
• Kellys Extension The value of the Internet is
  much larger, according to Kelly (1999). On the
  Internet we can make multiple simultaneous
  connections between groups of people.

31
Mobile-Commerce

• ? M-commerce (mobile commerce) refers to the
  conduct of e-Commerce via wireless devices. It is
  the commercial application of mobile computing
  which is based on wireless networks.
• There is an increased interest in m-commerce
  because the number of mobile devices is projected
  to top 1 billion by 2004.
• ? Location-based commerce (L-commerce) is an
  application of m-commerce that offers customers
  the location information of anything they want to
  purchase.

32
Network Computers Home Computing

• The Network Computer, first introduced in 1997,
  does not have a hard drive. Instead, it is served
  by a central computing station, and temporarily
  receives and can use applications and data stored
  elsewhere on the network.
• Integrated Home Computing. Soon, home computing,
  television, telephone, home security systems, and
  other devices will be integrated and managed in
  one unit.
• Smart appliances refer to home appliances that
  are connected to the Internet.

33
The Internet, Intranets Extranets

• The Internet. From about 50 million Internet
  users in 1997, there could be as many as 750
  million by 2007.
• Intranets utilize information technology to
  provide organizations with internal
  communication systems.
• Extranets combine intranets with the Internet to
  create a powerful interorganizational systems for
  collaboration.

34
Corporate Portals, Networked Enterprises
Optical Networks

• A corporate portal refers to a companys Web site
  that is used as a gateway to the corporate data,
  information, and knowledge.
• The Networked Enterprise. The various components
  just described can be integrated together into an
  enterprise wide network extended to all business
  partners.
• Optical Networks are high capacity
  telecommunication networks that convert signals
  in the network and transmit these over fiber
  optic filaments.

35
Why Learn about IT?

• Being IT Literate On the Job Off
• Finding Employment Opportunities in IT
• Future Organizational Leadership
• Using IT to Become a Millionaire

36
Plan of the Book

• Part I IT in the Organization
• Part II The Web Revolution
• Part III Organizational Applications
• Part IV Managerial and Decision Support Systems
• Part V Implementing and Managing IT

37
Managerial Issues

• How can we recognize the opportunities for using
  IT and Web-based systems?
• How important is IT? In some cases, IT is the
  only approach that can help organizations.
• Who is going to build, operate, and maintain the
  information systems?

• How much IT? IT does not come free, but not
  having it may be much costlier.

38
Managerial Issues (cont.)

• What about Globalization? Globalization opens
  many opportunities, ranging from selling products
  and services online, to conducting joint ventures
  or investing in them.
• How can an organization transform itself to the
  digital economy?

• Is the situation going to change? Yes, the
  pressures will be stronger as time passes the
  IT role will be even more important.
• What about ethics and social issues? The
  implementation of IT involves many ethical and
  social issues.