SOLUTIONS MANUAL for Experiencing MIS Third Canadian Edition. David M. Kroenke Andrew Gemino Peter T

Contents Introduction: Organizing the Course

1

Chapter 1:

Information Systems and You

5

Chapter 2:

Business Processes, Management, and Decision Making

15

Chapter 3:

Productivity, Innovation and Strategy

27

Chapter 4:

Hardware and Software

41

Chapter 5:

Database and Content Management

53

Chapter 6:

Networks and Collaboration

68

Chapter 7:

Competitive Advantage and Business Processes

82

Chapter 8:

Decision Making and Business Intelligence

94

Chapter 9:

E-Commerce, Social Networking, and Web 2.0

108

Chapter 10:

Acquiring Information Systems through Projects

119

Chapter 11:

Structure, Governance, and Ethics

129

Chapter 12:

Managing Information Security and Privacy

141

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CHAPTER 1 INFORMATION SYSTEMS AND YOU TEACHING OVERVIEW We like to begin the first lecture with an introduction to the course, the instructor, and the grading scheme. We follow this with questions and a short break before starting in on the material for the course. Handling the administration early in the session lets students get the questions that are bugging them out of their heads so we can get on with the learning.

For this reason, we also take questions for the first 5 minutes or so at the start of every class. We find that we can learn quite a bit about how the course is going by asking for questions.

The most important topic for the first lecture is to drive home the idea that systems are larger than just machines and software. Systems involve people and procedures too. The Social Media case provides some Canadian examples of how social media can change an organization’s relationship with its customers. This is particularly true with small and medium sized businesses The Google Knows Best case also provides some examples of how valuable information resources can be. The Running Room example at the end of the chapter also shows how information systems extend the services of traditional business.

It is an example of how the system serves to connect people and offer services that were not available without the system.

Students will also be interested in the data from the Information and Communication Technology (ICT) industry. The website (http://strategis.ic.gc.ca/epic/site/ict-tic.nsf/en/ h_it07229e.html.) provides a great summary of the industry. These numbers surprise most people. Perhaps most important is to bring student’s attention to the wages and the difference between the average wage across all industries and those in the ICT industry.

Ask students why people in the ICT industry get paid more? Also note that the Services sector is the fastest growing part of the industry. ICT services mean interacting with clients to analyze and implement information systems. That is exactly what MIS skills are focused on. Part of increasing engagement is giving students a reason to consider more MIS training. Talking about innovation, and wages, is a good way to do that.

CHAPTER OBJECTIVES 1.

2.

3.

4.

Understand what is meant by an information system.

Know what is meant by MIS. Understand how information systems (IS) differ from information technology (IT).

Understand the role that information and communication technologies have in our economy.

5. Understand how successful business professionals use IS. 6. What is the shape of things to come?

7. Understand the goals of this class.

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CHAPTER OUTLINE Q1 Q2 Q3 Q4 Q5 Q6 Q7

What is an information?

What is MIS? How does IS differ from IT? How important are information systems to our economy?

How do successful business professionals use information systems?

What is the shape of things to come?

What is this class about?

ANSWERS TO USING YOUR KNOWLEDGE QUESTIONS 1. “Outlook on Human Resources in the ICT Labour Market: 2008–2015” suggests that ICT workers need to have several core skills. a. What are these key skills?  Technical skills  Specific technology and industry experience  Satisfactory communications and other business skills b. Identify ways that a student could best obtain these skills.  Technical Skills: in this class  Specific technology and industry experience: co-op  Satisfactory communications and other business skills: business classes c. Do you believe a business student can work effectively in the ICT industry? Would a business student have a competitive advantage over a computing science student? Why or why not?

Yes, because as the ICTC report displays, there are three different occupations that are all very business-centric. A business student can have an advantage based on their communication and business skills, which are unlikely to be taught in a specific engineering or computer science courses.

2. The interview with Hal Varian, chief economist at Google, focuses on six themes: 1) flexible corporations, 2) corporations and work, 3) free goods and value, 4) workers and managers, 5) computer monitoring and risks, and 6) changes in industries.

Choose one of these themes and discuss in more detail the implications of the change for you personally. Provide specific examples where possible. You can find the article at www.mckinseyquarterly.com/Strategy/Innovation/Hal_Varian_on_how_the_Web_ challenges_managers_2286.

Note: There will be a number of answers to this question. More successful answers will be able to show how these themes might affect their own personal lives. Encourage students to use examples in their own experiences.

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3. Consider costs of a system in light of the five components: costs to buy and maintain the hardware; costs to develop or acquire licenses to the software programs and costs to maintain them; costs to design databases and fill them with data; costs of developing procedures and keeping them current; and finally, human costs both to develop and use the system. a. Over the lifetime of a system, many experts believe that the single most expensive component is people. Does this belief seem logical to you? Explain why you agree or disagree.

It is likely that this belief is true. An information system is only as good as the people who have developed it and who make use of it to perform their business functions more effectively and efficiently. It is very costly to hire and retain qualified, creative, and motivated people. Without those people, however, even the most technically sophisticated system will be of little value to the organization. b. Consider a poorly developed system that does not meet its defined requirements.

The needs of the business do not go away, but they do not conform themselves to the characteristics of the poorly built system. Therefore, something must give. Which component picks up the slack when the hardware and software programs do not work correctly? What does this say about the cost of a poorly designed system? Consider both direct money costs as well as intangible personnel costs.

If a system does not meet its requirements, the people and procedures will have to adjust and “pick up the slack.” People will have to change their behaviors to work with the system. This may result in reduced productivity at a minimum. In addition, annoyance and frustration may build to the point where people actually avoid the system in some fashion…they may find a way not to use the system at all (thus defeating its purpose); they may avoid using it by increasing absenteeism; or they may find another job. c. What implications do you, as a future business manager, take from questions (a) and (b)? What does this say about the need for your involvement in requirements and other aspects of systems development? Who eventually will pay the costs of a poorly developed system? Against which budget will those costs accrue?

It is hoped that students will appreciate how important it is that the business professionals play an active role in systems development. Requirements not only must be delineated for the system, but business managers (who are paying the bills) must ensure that the requirements are being fulfilled in the new system. If they are not fulfilled, the business unit not only will have wasted the development costs; it will experience ongoing costs of decreased productivity and possibly higher staff turnover.

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ANSWERS TO COLLABORATIVE EXERCISES 1. Watch the video “Did You Know 3.0” (www.youtube.com/watch?v=jpEnFwiqdx8) or “Did you Know 4.0?” (http://www.youtube.com/watch?v=6ILQrUrEWe8) Discuss this video with your group and identify three specific impacts that you think the information in this video will have on your business career. Be as specific as possible, and link the ideas to your intended major, interests, and career aspirations.

There is no single answer to this question. This is a common theme in collaborative exercises. The answer is not as important as the process that the students go through in developing their answers to the questions. The question is intended to get students thinking about changes in technology and linking these changes to the business environment around them. It is important for students to be as specific as possible, since they learn more when they tie these ideas to things happening in their own lives.

2. Watch the video “A Vision of Students Today” (www.youtube.com/watch?v= dGCJ46vyR9o). Discuss this video with your group and identify three ways that courses could be designed to improve the way students engage in the course. Be as specific as possible and be prepared to share your ideas with the class.

Again, no simple answers. Encourage the students to Google “A Vision of Students Today” and the read through blogs about it. Ask them to form their own opinions This can be done as an in class exercise. We suggest a three step process: 1) Show the movie 2) Have students form small groups of 3 or 4 to talk about it for a few minutes 3) Elicit some opinions from the class This is a good way to start the class, as it is likely to intrigue students and start them thinking about the class in a different way.

ANSWERS TO CASE STUDIES MIS In Use 1a– Social Media: Changing the Relationship between Customers and Business 1. Are the social media sites that Mabel’s Labels uses Information Systems?

Yes, these are systems. Information is collected, processed, and distributed. They may not be thought of as traditional applications but information is the key resource in these systems and they support the company’s processes.

2. What do you think are the benefits to Mabel’s Labels of joining and participating in their various social media sites? What are the costs?

The benefits are access to a wider audience and hence a wider customer base than using traditional marketing (newspapers, flyers in the mail, etc. What is remarkable is that many of these systems do not have an obvious application cost. They are largely Copyright © 2014 Pearson Canada Inc. 8

Chapter 1: Information Systems and You

free to participate it. However, the cost of maintaining the web presence on these applications can be quite onerous. The major cost is the time that has to be spent monitoring and replying. This time should be factored in when considering whether to invest in these technologies.

3. Can larger companies do the same social media marketing and promotion that Mabel’s Labels can? Do you think small businesses have an advantage in social media promotion over larger organizations? Justify your answers.

Small businesses may have an advantage over larger businesses in that small businesses can more effectively use free sites such as Twitter, Facebook, and MySpace. Larger companies can use these spaces, but it is often awkward for them to do so for two reasons. One reason is the sheer size of the company and its customer base makes it difficult to effectively interact with customers using this media. Second, it is difficult for a large company to personalize their services and at the same time maintain a consistent brand. Small businesses have fewer customers and more readily adapt to changes in customer opinion. While small businesses may be more effective in the short run, in the long run, larger companies have access to resources that will help them monitor and reply to the media attention. Small businesses can be overwhelmed due to a lack of resources.

4. What risks does Mabel’s Labels face in their social networking strategy; that is, what are the downsides to using social media for small businesses?

Some examples include:  Increased time and effort required to support social media efforts  Privacy and security risks due to profile on sites  Lack of control over features and advertising on social media sites  Customers can more easily organize themselves and develop material damaging to the company  Competitors can view and comment on your site 5. Some people have suggested, based on the fact that social networking sites do not make money, that social networking sites are a temporary fad that will eventually be absorbed by other more profitable companies. Do you think social networking is something that will last? Justify your answer.

This question has no definitive answer and we should not suggest there is one to be found. It is important to encourage the students to form their own opinions about topics such as these and to continue to shape that opinion as they move through the semester.

MIS in Use 1b – Google Knows Best 1. Do people who use free email systems understand the implications of the tradeoffs that they have made? (Hint: Do you?)

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Some people will understand and some people will not. A majority of the people signing up for Gmail are not aware of the details of the site’s user agreement.

Some people are quite surprised to learn that Google can scan through the email and use some of the information from the mail system for the purpose of advertising.

2. Is email different from postal or telephone services? Is it more like a postcard, where privacy should not be assumed?

This is a matter of opinion. Some students will suggest the former and others the latter. Using the analogy of the telephone system is a good argument to make. If someone is talking on their cell phone in a public place and you overhear the conversation, is that any different than reading emails on the Internet? Again, the point of this question is to encourage discussion and to have students view their use of Gmail from a different standpoint.

3. How complete a profile can Google assemble of a typical user? (Hint: what Google services—Calendar, Google Maps, etc.—do you use?).

This is an interesting class exercise. Once students begin to think of all the different applications they use (Google Doc, Gmail, Google search engine, Google Earth, it will be come clear just how much information a company like Google could have on each individual.

4. Is there a way you could use free email systems yet still prevent your messages from being contextually scanned?

Some students might think about encryption and using encrypted attachments or other ideas to get around contextual scanning. Others might get more interested and look for other ways. The important point is that there are ways around contextual scanning and some research in this area will show students some of the latest examples.

5. Should these forms of communication service be regulated? If so, how and by whom?

A discussion of completely free access versus controlled access is another good example of a class discussion question. Most students start out arguing for free access, but when you note that organized crime and other related groups use these communication channels as well, the idea of limits and controls begins to become more appealing. Keeping students sensitive to the pros and cons of limiting access is the important point to make here.

6. Is there a difference between what Google is doing and how spam filters work?

Spam filters read through email looking for “inappropriate” content or indications that the message has been sent by spammers. Over 90% of all mail sent on the net is spam. So spam filters are reading email content but they are generally recognized as good things. So can Google’s reading of email be viewed for this perspective? The Copyright © 2014 Pearson Canada Inc. 10

Chapter 1: Information Systems and You

difference is that Google uses the information for marketing whereas spam filters use it to limit email coming to email users and does not use the information for marketing.

7. What are your privacy rights and expectations while using the Internet?

This is a question students need to consider and research. Much of this is a matter of ethical behaviours, but it is important to note that there are no ethical standards applied on the Internet.

Case Study 1: Running at the Speed of the Web: The Running Room The Running Room (www.runningroom.com) is North America’s largest specialty retailer of sporting goods, apparel, and footwear for runners and walkers. The company operates over 90 corporately owned stores in Canada and the United States. The Running Room website was created in early 2000.

QUESTIONS 1. Do you think The Running Room would be as successful as it is if it didn’t have a website? In other words, is the company’s website a critical component for success, or simply a nice ”extra” for its customers?

The website has clearly become a critical component for the Running Room. It supports the expansion of the firm and helps to connect the stores with customers in a meaningful way. Customers are using the website to organize their own events so it is much more than just an extra “nice to have.”

2. Could the Running Room provide the same customer experience without using its website? For example, could the company use more mailings and telephone calls to stay in touch with its customers?

Perhaps. Many of the services could be replicated with mailings and telephone calls.

However, scheduling events and other more sophisticated services would be difficult to match using telephone and mail. What should be very obvious are that the costs of providing these services goes way up when you rely on telephone and mail. So while it might be possible to accomplish, it will certainly cost more to use mail and telephone.

3. Do you think the Running Room’s website creates a barrier to entry for its potential competitors? Explain your answer.

Other competitors could develop a similar website. But the competitors would have to develop it and integrate it with their stores and people. This will take time and money.

Also the competitors would not have a large user base to start so could not offer the full range of services. Therefore the site creates a competitive advantage for the Running Room.

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4. Check out The Running Room’s mission statement. Does the website help the company meet these goals? Discuss why or why not.

The Running Rooms’ mission is: “The Running Room will always be driven by its emphasis on continuous improvement, customer service, and community involvement.

We are not just selling shoes and equipment, we are selling a commitment to active living.” See http://www.runningroom.com/hm/inside.php?id=3036 The website clearly supports this by limiting the active community, supporting events and charitable causes and developing strong ties to customers and support their lifestyles through events hosted on their site.

DULLER THAN DIRT Goals  Share our excitement about MIS with our students  Establish the fact that this class is work. Some topics take time and effort to learn.

That’s OK.  Discuss strategies for making the subject interesting.  Introduce students to the idea of “waking up to your life” Background and Presentation Strategies See the annotation for the start of this chapter. You might choose to use some of that material with this Exercise at the end of your presentation. I use the “waking up to your life” theme as a wrap up for this lecture. See the Wrap Up. I take the students’ goal of being a business professional very seriously—occasionally more seriously than some of them do. Given that goal, I’m here to help those who want to learn how to use IS and related topics to help them strengthen their personal competitiveness.

I love this field, and you probably do too. Tell the students why! They will be very interested to know why you picked this discipline, what you like about it, what the challenges are, what you find interesting. Few students will want to be professors, but they will want to know what aspects of your interests will apply to them.

This class can be fun and incredibly interesting. Especially if students learn to personalize the topics; that is, to constantly to ask themselves, how can I use this knowledge to get a job? To get a better job? To gain a competitive advantage? To be a better professional?

Examples:  How will I, as a future public relations agent, use this material? What do I need to know to get a public relations job in technology? How can I use data communications technology to make me more productive?

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Chapter 1: Information Systems and You





What do I, as a future general manager, need to know about this subject? What do I need to know about developing information systems? What do I need to know about using IT to advance corporate strategy?

Should I think about an IS career? Although hardware and software jobs exist, not every IS professional writes computer programs or installs network gear. It’s all about the innovative application of IT and IS for the solution of business problems. That could be interesting!

Having said all of that, at times this topic is duller than dirt. No getting around it. So, sometimes a person just has to buckle down and do the work. Ignorance is curable, but it doesn’t cure itself. Not every topic will be exciting and interesting to every student all the time. That doesn’t mean the topics aren’t important.

Depending on the students’ age and maturity, sometimes I leave it at that. But, if they are young and need coaching, I’ll continue with some of the following points:  Like any challenging course, you cannot succeed by channel surfing. You can’t switch channels when the going gets hard. You have to stay with it.  If you’re a CFO and the financial statements have to be filed, they have to be filed, and you make that happen. It’s all part of being a business professional.  If you’re a manager, and the computer budget needs to be submitted, you do what you have to do. If you don’t know what something is or does, you find out. It doesn’t matter how tired you are, how many other things you have to do, you just keep working; it must be done. At least, you do that if you’re a professional.  So, learn not to quit when the going gets rough. Learn that behavior now, before you start your career!

Students are students, and undergraduates are undergraduates. Many are young. They get busy with other classes; they get distracted with their friends; they get involved in campus activities that consume their study time. As the class proceeds, I have to keep stoking the fires of their interest by showing them my excitement about the material.

Ultimately, however, it’s not my excitement about the class that motivates them; it’s their excitement. Mine just get them going.

Every lecture, I need to do something to build that excitement. If I can do that, this class is a joy to teach. When I don’t do that, it’s like dragging a 500-pound sack of potatoes across campus. Again, it’s the excitement of the students that moves the class along.

Suggested Responses for Discussion Questions 1. You might ask the class the following questions:  Do you think about your goals? About how well you’re accomplishing your goals? Do you think about what you want to accomplish in “this awkward time between birth and death”?  Write a note to remind yourself that you cannot avoid responsibility for your life.

Make goals; see how you’re doing. Once a week may be too often. How about once a month?

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2. The purpose of this question is to ask the students to ask themselves whether they’re living their lives by someone else’s criteria. I think that’s such an important task for undergraduates—especially for the traditional 20-year-old. Why do they attend college or university? Why are they business majors? What do they want to do? Are these their goals or their parents’ goals? Are they an interpretation of what it means to be successful?

If the answers to these questions indicate they chose these goals for themselves, then the students can rededicate themselves to the goals. But if not, now’s the time to find out. If you’d rather be a painter, an engineer, or a biochemist, now’s the time to figure that out.

3. Because it will help you learn to use IS to solve problems, make better decisions, and become a more complete business professional.

4. The text suggests personalizing it – making the material relevant to the students’ goals.

Wrap Up Sometimes David Kroenke wraps up the first lecture with the following:  You and I, all of us, have just invested 3,600 heartbeats in the last 50 minutes. That’s 3,600 heartbeats we’ll never have again. Was it worth it? If not, what can we (that is all of us—you and me) do to make it worth it next time?  Over the years, I’ve come to view a class like a woven tapestry. Each of us contributes one string of yarn, one string of the warp or one of the weft. We weave this experience together. I bring my excitement for the topic, my knowledge, my experiences, and I frame the experience. What happens, next, however, is up to you.

Did you do the homework? Did you read the assignment? Are you surfing the Web or sending emails or are you listening? Are you relating this material to your goals?  We make this experience together. I hope we will weave a beautiful tapestry, and to that end, I will do all I can. I hope you will, too. See you next time!

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CHAPTER 2 BUSINESS PROCESSES, MANAGEMENT, AND DECISION MAKING CHAPTER OVERVIEW In the first lecture we worked to convince students that information systems are more than just machines and software. These systems have a large impact on the economy we live in and the career that students will eventually find themselves in. Our next step is to introduce them to business and how information systems support how businesses get things done. As a starter, ask your students about the kind of information they place on their their Facebook page. Having this discussion is a good way to get interaction and discussion about information systems started.

The primary issue to be considered this week is “What is a Business process?” It may be useful to start with a simple example to explain business processes. Our first question “How did this stuff get here” provides an example of how you might bring the subject of business processes to life. You might think about walking through the course registration process as an example of how business processes operate, or filling up the gas tank, or taking money out of an ATM. Another good example is to use the MIS in Use case as an example of a business process. Using examples helps to make the discussion richer. We would suggest spending some time interacting with students and asking them about a process they are familiar with. It is a good use of time when introducing the notion of business process.

We also believe that the Q6 as covered is an important opportunity to quickly reinforce the model of information systems that was introduced in the first week. Students should not be able to escape the class without understanding Figure 2-3.

Another important issue is to recognize that a byproduct of every business process is information about how the process can be improved (Box, 1957)1. The subject of what information is and how information can influence decision making is the second large issue to address this week. We believe it is important to emphasize the importance of decision making and information early in the course as any business major can relate to using information to make improved decisions.

As a note for instructors working to develop student’s opinions about the importance of information technology, the “What do YOU think?” exercise titled “Your Personal Competitive Advantage” provides a good exercise that can be used effectively in a class discussion about why taking this course might be useful for any business major.

1

Box, George E. P. (1957). Evolutionary operation: A method for increasing industrial productivity.

Applied Statistics, 6(2), 81-101.

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An Example to Use in Class: The MIS in Use case “EDoc: Software making waves” is an effective case for illustrating business process and how technology supports the process. The most effective thing about this mini-case is that it is simple. The answers to the case are provided at the end of this chapter. Most people think of tugboats as a sunset industry; however, the case shows that a little system can go a long way in making an industry that is over 100 years old more efficient.

CHAPTER OBJECTIVES 1.

2.

3.

4.

5.

6.

Get students to think about “how stuff gets here.”

Understand elements of a business process.

Understand what is meant by information.

Understand the role information plays in business processes.

Understand how information systems support decision making.

Help student to consider their role as part of an information system.

CHAPTER OUTLINE Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8

“How did this stuff get here?”

What is a business process?

What are the components of a business process?

What is information?

What is the role of information in business processes?

How do information systems support business processes?

How do information systems support decision making?

What is your role?

ANSWERS TO USING YOUR KNOWLEDGE QUESTIONS 1. Consider the four definitions of information presented in this chapter. The problem with the first definition, “knowledge derived from data,” is that it merely substitutes one word we don't know the meaning of (information) for a second word we don't know the meaning of (knowledge). The problem with the second definition, “data presented in a meaningful context,” is that it is too subjective. Whose context? What makes a context meaningful? The third definition, “data processed by summing, ordering, averaging, etc.,” is too mechanical. It tells us what to do, but it doesn't tell us what information is.

The fourth definition, “a difference that makes a difference,” is vague and unhelpful.

As well, none of these definitions helps us to quantify the amount of information we receive. What is the information content of the statement that every human being has a navel? Zero—you already know that. On the other hand, the statement that someone has just deposited $50,000 into your chequing account is chock-full of information. So, good information has an element of surprise.

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Considering all of these points, answer the following questions: a. What is information made of?

Information is made of data that has been processed in some way to be meaningful to the recipient. b. If you have more information, do you physically weigh your decisions more? Why or why not?

If you are carrying around a 1,000-page report that contains information, then you might say information causes you to physically weigh more. In most situations, however, having more information does not result in a weight gain. It results in a change in your brain. c. If you give a copy of your transcript to a prospective employer, is that information? If you show that same transcript to your dog, is it still information?

Where is the information?

A transcript from a prospective employee is meaningful to an employer trying to fill a position. The content of the transcript (courses taken, grades earned) has value in the hiring context. A dog has no use for the content of the transcript and so it has no value to him. If the piece of paper the transcript is printed on is crumpled up, then it might have value to the dog as an item to chase or tear up (depending on the dog). d. Give your own best definition of information.

Student answers will vary. Despite its subjectivity, I still like “information is data that is meaningful within a context.” Also, look for the fact that data usually must be transformed in some way to be meaningful; and to provide value, the information must make a difference to the recipient. e. Explain how you think it is possible that we have an industry called the information technology industry, but we have great difficulty defining the word information.

We have many everyday terms that are difficult to define. We speak of the health care industry, but we typically only define “health” in the negative (the absence of disease). This is just another example of a term that is broadly understood but difficult to define precisely.

2. Re-read the “MIS in Use” case to refresh your memory of the Edoc HELM system. a. Using Figure 2.1 as a guide, draw the paper-based process described in the case.

The actual picture is not important. This is something that students will learn more formally in a systems analysis and design class. What is important is the notion that information is flowing between the various entities in the process.

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Figure 1: The Process before Helm

b. Now draw the process after HELM was introduced. c. What are the major differences between the two processes?

The major differences are the fact that information about a job is recorded once by the dispatcher in HELM. From that point forward, all of the information about the job and its completion is handled through the system. This reduces the amount of manual work to be completed by dispatcher, accountant, and tugboat captain.

Figure 2: The Process after HELM

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d. What are the improvements that have been made through the introduction of HELM? (Hint: Consider tangible and intangible benefits.)

Tangible: 1) reduced costs, 2) reduced errors, 3) reduced data entry time Intangible: 1) more accurate information, 2) more timely information, 3) reduced frustration, 4) improved ability to train new dispatchers 3. The text states that information should be worth its cost. Both cost and value can be broken into tangible and intangible factors. Tangible factors can be directly measured; intangible ones arise indirectly and are difficult to measure. For example, a tangible cost is the cost of a computer monitor; an intangible cost is the lost productivity of a poorly trained employee.

Give five important tangible and five important intangible costs of an information system. Give five important tangible and five important intangible measures of the value of an information system. If it helps to focus your thinking, use the example of the class scheduling system at your university or some other university information system. When determining whether an information system is worth its cost, how do you think the tangible and intangible factors should be considered?

Tangible Costs:  Cost of hardware components  Cost of software components  Cost of database components  Cost of training users  Cost of hiring users and/or developers Intangible Costs:  Cost of searching for information that is difficult to find  Cost of making a decision when information arrives after the fact  Cost of frustration when system does not work as expected  Cost of decision errors when information is inaccurate  Cost of employees trying to work around or avoid a problematic system Tangible Value:  Increased sales to new customers  Increased sales due to more repeat customers  Increased employee productivity  Decreased hiring costs due to lower employee turnover  Increased quality resulting in fewer defects in output Intangible Value:  Increased employee satisfaction  Increased customer satisfaction Copyright © 2014 Pearson Canada Inc. 19

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  

Improved management decision making Decreased employee absenteeism Decreased employee turnover

To determine if an information system is worth its cost, the values of all relevant tangible costs and benefits should be estimated as accurately as possible (easier said than done, of course). In addition, the values of intangible costs and benefits can sometimes be estimated with a little effort. If the intangibles cannot be quantified, they should at least be described so that their existence is recognized and appreciated.

4. Singing Valley Resort is a top-end (rooms cost from $400 to $2500 per night), 50-unit resort located high in the mountains of Colorado. Singing Valley prides itself on its beautiful location, its relaxing setting, and its superb service. The resort’s restaurant is highly rated and has an extensive list of exceptional wines. The well-heeled clients are accustomed to the highest levels of service. a. Give an example of three different operational decisions that Singing Valley personnel make each day. Describe an information system that could be used to facilitate those decisions.

Note that a discussion of the systems will vary depending on the perspective of the person answering the question.

Operational Decisions (system to support decision)  How much food to buy for restaurant (food service inventory system)  How much wine to stock this week (food service inventory system)  How many towels to purchase this month (inventory management system) b. Give an example of three different managerial decisions that Singing Valley managers make each week. Describe an information system that could be used to facilitate those decisions.

How many servers should be available for dinner? (human resource scheduling system) What price should we set for our rooms this week? (guest scheduling system that considers time of year and current levels of unused capacity) How can we incent our guests to spend either more time or more money at the resort? (a system that gathers all of a guest’s activities during a stay for analysis) c. Give an example of three different strategic decisions that Singing Valley’s owners might make in a year. Describe an information system for each.

Should we expand the number of rooms we have? (this would rely on accurate information from the guest registration system) Should we offer discounted rates for our guest and at what times for the year?

Should we consider opening a different restaurant that caters more to a family experience?

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d. Which of the decisions in your answers to questions a, b, and c are structured?

Which, if any, are unstructured?

The decisions in part (a) are primarily structured. The decisions in part (b) are less structured and the decisions in part (c) are largely unstructured.

ANSWERS TO COLLABORATIVE EXERCISES 1. This chapter introduced the concept of Business Process Management (BPM). In the discussion, three methods for improving business processes were listed: Total Quality Management (TQM), Six Sigma, and Lean Production. Do the following with your team: a. Choose one of the methods listed above. Create a definition of the method, elaborate on how it works, and indicate where and when it was developed.

Discuss how this method differs from other BPM methods.

Again, there is no single answer to this question. The question is intended to get students thinking about how an organization might think about how it can change its processes. It is important for students to try to get specific about a particular process so that is why we ask them to choose one and research it. b. Using the Internet, find an example of at least one company that has used this method.

Examples: TQM: Ford, Phillips Six Sigma: Motorola, GE Lean Production: Toyota c. Combine what you have discovered in parts a and b and create a two-page (maximum) description of the method, aimed at an audience that has never heard of BPM or your method. Focus on what a manager should know about this method and provide a list of useful web resources where people can go to find out more. Be prepared to present your findings to the class.

Again, there is no single answer to this question. This exercise will work for a smaller class but can become repetitive for a larger class.

2.

Business Process Simulation is a method used to simulate a process so that you can explore different ways of managing the business process. IBM’s INNOV8 software provides a “serious game” environment where you can explore Business Process Simulation. Complete the following with your team: a. Run through the demonstration for INNOV8 2.0. (You can find it at www-01.ibm.com/software/solutions/soa/innov8/innov8game.jsp)

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b. Try at least one of the simulations (supply chain, customer service, or traffic).

Record your best score. c. Describe what your group learned from the simulation. Did you have enough information to make the necessary decisions? What data would you like to have had, to help you get better scores?

Some students find the simulation engaging, while others do not. The idea behind the simulation—that there are different process choices that managers face in developing effective and efficient business processes—is excellent. If you can get students engaged in the exercise it can be rewarding. But many students are used to video games that offer far more interactive environments. Some students might therefore be frustrated The purpose of making it a group exercise is to allow students to talk about business processes and have them start thinking about the value of information in these processes.

ANSWERS TO CASE STUDIES MIS in Use: Edoc: Software Making Waves 1. What are the primary benefits realized by Edoc’s use of HELM software?

The primary benefits are: Saves Time in Data Entry Reduces Errors Reduces time to process customer orders (improves timeliness of information) 2. Could HELM also result in increased revenue? Explain your answer.

Yes. If the Helm software saves enough time for the people running the tugboat then it may be possible to make additional trips during the day. This would increase revenue. In addition, if more tug boats could be dispatched by the same number of dispatchers then this would allow for the potential for increasing the fleet (therefore increasing revenue).

3. Can you think of other benefits that might arise from the use of the software? For example, experienced dispatchers in the industry are difficult to find. Could the system help with this challenge?

Yes. The HELM system provides relief for the dispatcher job. The paperwork surrounding the job is reduced so that more attention can be placed on optimizing the jobs being allocated. This should make it easier for a company to maintain and train dispatchers. Since experienced dispatchers are difficult to find, this may be a source of advantage for the firm adopting this software.

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Case Study 2: High Touch—High Tech 1. What challenges are created when providing anywhere, anytime services? (Hint: How and when did you conduct your last banking transaction?)

A primary challenge with both new and existing customers is the lack of face-to-face contact. Transactional services (deposits and withdrawals) require less personal interaction but more complex or sophisticated services, such as loans or investments and mutual funds, can be difficult to explain and sold if customers do not visit a branch. The Internet and automated banking machines can be viable alternatives for marketing many new products and services but many consumers are also adopting other technologies such as cell phones. These have increased risks and can be both expensive and complex to develop.

2. What business and technology issues would be faced by an organization that wants to have a complete view of its customers? (Hint: What are the benefits and costs of cooperation, and are there any privacy issues?)

Privacy and security are important technological issues to consider. If personal information is being collected, how can this information be secured. Do customers want to have this information available to everyone they deal with at the bank?

(In many cases there are legal limitations on who can have access.) Another consideration is what legal rights the company has to use this information. The additional information will mean additional storage and additional training for CSR’s as they work to sell services. Are the unknown benefits worth the costs?

3. Can you think of any examples where a lack of information or failure to consider the information could affect the profitability of a business?

There are many examples. Financial services are particularly dependent upon information because if credit customers default on loans, the bank loses both the interest (profit) on the transaction, as well as the full loan amount. Conversely, a customer may seem to have little income and not be eligible for a loan, but at the same time could have large amounts of money on deposit. To make the best decisions the bank needs access to the relevant and complete information usually contained in a customer’s full credit report. In retail businesses, a similar example occurs if they do not check the legitimacy of credit card or chequing transactions.

4. If a customer has more than one account at a particular organization, should he or she receive separate mailings or all documentation in the same envelope?

This can be a complex question. From the company’s perspective, if the systems allow this or can be set up this way it may be less expensive (for example in postage) and more convenient. However, not all customers may want to receive their information in a single mailing or at the same location. As a result, understanding what particular customers want or giving them a choice rather than treating them all the same may be the best approach.

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5. Does being a credit union rather than a share corporation affect Vancity’s structure?

Yes. In a Credit Union, the customers own shares in the institution. That means clients are not only customers but also owners. Vancity therefore must be especially careful to balance customers’ needs together with the desire to maximize profits.

YOUR PERSONAL COMPETITIVE ADVANTAGE Goals   

Raise students’ awareness that they should be engaged in job planning/searching right now.

Show the application of the principles of competitive advantage to career planning.

Suggest innovative tasks for job searching.

Background and Presentation Strategies Students seldom understand how their status as students gives them access to business people that they will lose after they graduate. Ask the students if they understand the difference in the response they will receive to the following two statements: 



Hi, my name is XXX, and I’m a student at YYY University. We’re studying information systems and competitive advantage. I see that your company, ZZZ, is using a CRM applications. I’m wondering if you would have a few minutes to talk with me about how your CRM system gives ZZZ a competitive advantage.

Hi, my name is XXX, and I’m looking for a job. I see that your company, ZZZ, is using a CRM application. I’m wondering if you would have a few minutes to talk with me about how your CRM system gives you a competitive advantage.

What will be the difference in response? Huge. In the first, the person will feel like they’re helping along some bright, ambitious person. Most will say, sure, and maybe offer to buy the student a cup of coffee. In the second, the person will feel like they’re being manipulated to find a job. Most will say, “Contact our HR department.”

Why should students talk with business people, and do it right now? To build their networks. 

Have the conversation. Make a list of great questions to ask; be appreciative that the business person took the time. Then, toward the end of the interview, ask if the person has any advice for finding a job in that industry. Not, do they have a job, but rather, do they have any advice for finding a job. If they have a job, they’ll tell you. If not, they may give you some good advice. Even if you get no good advice, you have another point in your network. Take Figure 2-1 along and ask the person how you can use it to gain a competitive advantage.

See question 3.

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Why do students not use their special student status in this way? I don’t know, but I try to ensure that they at least know about these strategies. Some students may be too shy. If this is the case, sometimes I make it an assignment, possibly an extra credit assignment.

Similarly, students should be availing themselves of every resource the university provides for outreach to business people. 

If there is a mentor program, get a mentor. If there is a chance to visit a business, go visit the business. If someone from industry speaks on a topic of interest, by all means go. Talk to the speaker afterwards, make one or two positive comments, and ask a good question. Ask for the person’s business card. In a day or two, send them an email thanking them. See if you can get an interview to discuss some topic of mutual interest.

Sometimes I lead them carefully through the disaster scenario. I tell them I had this horrible dream last night. And my dream was that they graduated, couldn’t get a job, took a dead-end job for 2 years, and then couldn’t get out of that track. To avoid this nightmare, they have to start thinking about their jobs, now! (I’m assuming mostly thirdyear students.)

Suggested Responses for Discussion Questions 1. Answer depends on the student. Sometimes I say, “If your list is short, tell me what you plan to do in the next quarter.”

2. Again, the answer depends on the student. I also encourage them to realize that they aren’t competing just with the students they see on our campus. They’re competing with students all over the world. (More on this topic in Chapter 3.)

3. There are many ways to build networks. Here are two types of answers: 



Read trade magazines, relevant Web sites (e.g., www.cio.com), and other sources.

Find an article on a topic of interest and think of ways the ideas in that article apply to you and one or more items in the list in Figure 2-1. Contact the author of the article.

Make a few complimentary comments; ask questions that pertain to the article, you, and the list.

Approach business people working in your major field of study and ask them how you can use knowledge of information systems to gain a competitive advantage in that field. Tell them of your interest in both your major and in IS. Use this situation to generate further introductions, perhaps to specialists in your field.

4. Get active. Join clubs. Meet with lots of students. Participate in campus life both in and beyond the business school. You add more connections to your network by meeting students that are outside of your major or even outside of the business school. As you meet people, tell them of your career interests. Ask if they know anyone working in that field. Ask if they know someone you could meet with, as Copyright © 2014 Pearson Canada Inc. 25

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described in question 3. Join a business-specific club, for example, the Accounting Club or the Marketing Club. Get involved, especially with activities that engage local business people. Arrange for speakers and host speakers on campus. As you meet business people on campus, query them about their careers. How did they get where they are?

Use an IS to keep track of the people whom you’ve met. Put contacts in a spreadsheet or database. Keep track of contacts you’ve had, emails you’ve sent, meetings you’ve attended. At an interview, when appropriate, show off your database. Use the Web and email to contact people who are doing interesting things.

Wrap Up 





You don’t want to find just any job. You want to find a great job! You want to find one with appropriate responsibilities, with a growing company, with job growth potential, and where you work with interesting people. You also want one that pays well.

Finding that great job may not be easy. Start now! Start thinking about what kind of job you want, and start preparing yourself to find that job. The last semester of your senior year will be too late.

If you’re not an IS major, combining IS knowledge with your major can make for a great combination. Think about taking some more IS classes.

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CHAPTER 3 PRODUCTIVITY, INNOVATION AND STRATEGY CHAPTER OVERVIEW In the second lecture we emphasized the concept of business processes and how they generate information. We also talked about how we might use the information generated to improve decision making. In this lecture the primary objective is to challenge students to understand how information systems can be used to gain competitive advantage.

We take a somewhat unconventional approach to discussing organizational strategy by beginning with the productivity paradox. Many people may believe that the paradox does not (and perhaps never did) exist. Others argue that the productivity paradox is an old issue with little relevance to current issues. Arguments can be made on both sides, but of more importance is allowing students to begin questioning the value that information technologies (and information systems) bring to organizations. Students likely take for granted that computers and associated systems are good for companies. But people who have worked in companies understand that systems can be as constraining as they are liberating. Although our economy has invested heavily in information technology and systems, it is not clear that organizations clearly understand how to realize the full value of these investments. We have much to learn about how to use systems and this chapter provides a starting point for the discussion.

The chapter has several good issues for discussion. The first has to do with the general notion of productivity. A suggested exercise to start a discussion about this is provided below. The notion of effectiveness (doing the right things) and efficiency (doing things right) are important in many IS issues. Students should recognize that there are often tradeoffs between these two objectives in any process. We believe it is important to tie the notion of business processes to the concept of a value chain. The example process of tire manufacturing (Figure 3-1) is a good one to bring to class. Though value chains and business processes are separate ideas, it is important to get students thinking of processes that cut across functional areas that are supported by information systems. The notion of primary and support activities is also critical for understanding the discussion of competitive advantage.

Another item for discussion is whether information systems can cause changes in industry structure. Here we introduce the notion of sustaining and disruptive technologies introduced by Clayton Christensen. We have argued that while many information systems sustain innovation, a small number of systems can cause significant change in industry structure.

Nicholas Carr’s “IT Doesn’t Matter” provides a final discussion topic. We take the view that Carr is largely correct when he suggest that information technology (hardware and software) are increasingly commoditized. However, information systems that contain Copyright © 2014 Pearson Canada Inc. 27

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people and procedures are not easy to commoditize. For this reason, the same software in one company will not necessarily have the same effect in another company. So sustained competitive advantage comes not from hardware and software, but rather how organizations integrate this information technology into the way the company works. We think this is a critical message—that information systems are not equal to information technology.

An Exercise to Start the Class A useful initial 5-minute exercise in class is to ask the students “Does your computer make you more productive?” It seems like a silly question at first glance, but as you talk with students you will find that it is a question that is not easily answered. For example, you might ask students what portion of the day they use their computer for work, and how much they use it for entertainment. You might ask “How do you measure the impact that the computer would have on your grade?” Would they be able to do assignments without a computer? These types of questions will lead to a discussion of what we mean by productivity. Issues of effectiveness and efficiency and how they can be measured can usually be raised. A short discussion about how students use systems is a good way to get students thinking about their own use of information systems.

CHAPTER OBJECTIVES 1.

2.

3.

4.

5.

6.

Understand how information systems impact productivity.

Know the relationship between business processes and value chains Understand how organzations develop competitive strategy.

Understand sustaining and disruptive technologies.

Understand how information systems provide competitive advantages.

Understand how information systems create sustainable advantages.

CHAPTER OUTLINE Q1 Why should I care about productivity and innovation?

Q2 What is business technology management (BTM), and how is it related to productivity and innovation?

Q3 How do information systems improve productivity?

Q4 How are organizational strategy and industry structure related?

Q5 What is the relationship between innovation and information technology?

Q6 How do information systems provide competitive advantage?

Q7 Can competitive advantage through information systems be sustained?

ANSWERS TO USING YOUR KNOWLEDGE QUESTIONS 1. Apply the value chain model to a video game developer, such as Electronic Arts (www.EA.com). What is its competitive strategy? Describe the tasks Electronic Arts must accomplish for each of the primary value chain activities. How do EA’s Copyright © 2014 Pearson Canada Inc. 28

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competitive strategy and the nature of its business influence the general characteristics of EA’s information systems?

EA’s competitive strategy is to maintain leadership in the sports video game genre and to focus on developing a small number of new games that provide solid returns over several versions. EA therefore takes on a differentiation role—the video game industry does not normally compete through price. As such, EA spends a large amount of advertising to promote sales. EA must produce efficiently, but visual quality and game play are of primary focus. EA therefore searches the world to find the best environment for producing visually sophisticated games at a reasonable price.

EA maintains central control of game quality to make sure that all games are produced at a high standard. Since EA provides video game products, outbound logistics are an important component of the business, particularly when EA is launching a global release of an important game. EA works with logistic firms to coordinate this effort, as their main business is video game licensing and development. Finally, EA places heavy emphasis on design so that there is little or no reason for customers to make use of post-sale services. The goal is for the games simply to work on every platform the game is supposed to work on. .

2. Apply the value chain model to a video game retail company, such as EB Games (www.EBGames.com). What is its competitive strategy? Describe the tasks EB Games must accomplish for each of the primary value chain activities. How does EB Games’ competitive strategy and the nature of its business influence the general characteristics of its information systems?

EB Games competitive strategy is to provide a one-stop shop for multiplatform video game users. They compete with larger retailers for their share of product launches.

Their specialization in video games enables them to provide more service expertise to experienced multiplatform video game users. EB Games are small footprint stores often found in malls and hence inbound logistics and efficient operations are keys to maximizing inventory turnover. EB Games has to be excellent at offering and moving the most popular games at the same time or earlier than other stores. In addition, they must have the various titles that will lead experienced users to seek out their stores, rather than the big box stores. Since the video game industry does not focus on post sales services, EB games does not provide a high level of service after the product is sold. The primary advantage is the convenience of location and knowing that the most popular products will be available in the store.

3. Suppose you decide to start a business that recruits students for summer jobs. You will match available students with available jobs. You need to learn what positions are available and what students are available for filling those positions. In starting your business, you know you will be competing with local newspapers, Craig’s List, and with your college. You will probably have other, local competitors as well.

Analyze the structure of this industry according to Porter’s five forces model.

In this situation, the bargaining power of customers may be relatively strong. The customers (students) have other options to use to find summer jobs. The threat of Copyright © 2014 Pearson Canada Inc. 29

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substitution is probably pretty low because there will always be a strong demand by students for summer work. The bargaining power of suppliers (businesses that have a need for summer workers) is relatively strong, since these employers have a variety of ways to reach the pool of students looking for summer work. The threat of new entrants is somewhat strong, since other similar agencies, job boards, etc., can be easily established. Finally, rivalry among existing firms is probably fairly strong since there is a brief period of time during which this market segment is active (several weeks and months prior to the start of the summer break). a. Given your analysis in part a, recommend a competitive strategy.

The analysis in part (a) suggests that it will be difficult to be profitable in this industry. Competing on the basis of cost alone seems problematic since some of the options available are free (or nearly free). To achieve success, a differentiation strategy within the segment of students seeking summer work seems advisable. b. Describe the primary value chain activities as they apply to this business.

Inbound logistics refers to acquiring our raw materials (jobs) and organizing them into some way that makes it easier to match student skills and interests with job opportunities and requirements. We need to make it easy for employers to contact us and provide information about job opportunities. Operations involves matching students and jobs so that the most successful placements can be made. Outbound logistics involves notifying the student of a job match and getting the student’s job acceptance. Marketing and Sales involves building awareness of our service to the population of students who are our customers. Service involves providing information and support to students who have agreed to a job placement we have arranged for them. c. Describe a business process for recruiting students.

As a marketing and sales technique, we utilize a skills and interest survey that determines the type of summer jobs a student is qualified for and capable of performing. Because of the quality and detail of our survey, we are able to achieve highly successful placements. Therefore, students are attracted to our service. d. Describe information systems that could be used to support the business process in d.

A Web-based system could be used to administer the skills and interests survey to students in a convenient way. e. Explain how the process you describe in part d and the system you describe in part e reflect your competitive strategy.

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industry have such a comprehensive understanding of a student’s skills and interests; therefore, we are better able to make successful placements that satisfy the employer and the student.

4. Samantha Green owns and operates Twigs Tree Trimming Service. Samantha graduated from the forestry program of a nearby university and worked for a large landscape design firm, performing tree trimming and removal. After several years of experience, she bought her own truck, stump grinder, and other equipment and opened her own business in Winnipeg.

Although many of her jobs are one-time operations to remove a tree or stump, others are recurring, such as trimming a tree or groups of trees every year or every other year. When business is slow, she calls former clients to remind them of her services and of the need to trim their trees on a regular basis.

Samantha has never heard of Michael Porter or any of his theories. She operates her business “by the seat of her pants.” a. Explain how an analysis of the five competitive forces could help Samantha.

By looking at the five competitive forces, Samantha can better understand how to achieve a profitable performance in her industry. In this situation, the bargaining power of customers may be relatively strong with the ability to select another tree service based on price and responsiveness. Customers will not perceive differences in quality when removing a tree, other than judging response time and the thoroughness of cleanup. With tree trimming for tree maintenance, quality work will be harder for customers to appreciate. Samantha will have to sell her training and experience. The threat of substitution is a fairly weak force with few alternatives available to customers who have a dead or damaged tree that needs removing. There is, however, the option of doing nothing in terms of tree maintenance. Samantha needs to emphasize the benefits of performing regular tree trimming for long-term tree health. The bargaining power of suppliers of equipment is a weak force with many options available for machinery and equipment. The threat of new entrants is somewhat strong since anyone with a ladder, saw, and no fear of heights could sell him/herself as a tree trimmer.

Samantha will have to sell her training and expertise. Finally, rivalry among existing firms is probably strong. Samantha will have to work to make her company’s name well known, sell her professional knowledge and training, be responsive, and keep her prices competitive. b. Do you think Samantha has a competitive strategy? What competitive strategy would seem to make sense for her?

Samantha probably has not thought about a competitive strategy. Many small business owners have not stepped back from the hectic pace of just keeping the business going to consider this issue. For Samantha, given her forestry education, a differentiation strategy with a focus on the tree health and maintenance industry Copyright © 2014 Pearson Canada Inc. 31

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segment may make sense. Her education will clearly distinguish her from many others in the field, and she should be able to capitalize on that with residential and commercial properties requiring regular tree maintenance. c. How would knowledge of her competitive strategy help her sales and marketing efforts?

Samantha should not try to be all things to all parts of her market. She should focus her efforts on making her company’s name well-known, selling her professional knowledge and training, being responsive to customer calls; and keeping her prices competitive but not necessarily rock-bottom. d. Describe, in general terms, the kind of information system that she needs to support sales and marketing efforts.

Samantha needs several things from an information system. She needs to be responsive to customer calls, so she needs a system to help her track and respond to calls in a timely way. This system should also build her database of customer prospects so that she can target her follow-up and ongoing tree maintenance sales efforts. The system should allow her to keep good notes about each customer’s trees so she can provide helpful information and services as needed to combat diseases that might threaten tree health.

5. FiredUp, Inc., is a small business owned by Curt and Julie Robards. Based in Brisbane, Australia, FiredUp manufacturers and sells a lightweight camping stove called the FiredNow. Curt, who previously worked as an aerospace engineer, invented and patented a burning nozzle that enables the stove to stay lit in very high winds---up to 90 miles per hour. Julie, an industrial designer by training, developed an elegant folding design that is small, lightweight, easy to set up, and very stable.

Curt and Julie manufacture the stove in their garage and they sell it directly to their customers over the Internet and via phone. a. Explain how an analysis of the five competitive forces could help FiredUp. By looking at the five competitive forces, FiredUp can better understand how to achieve a profitable performance in their industry. In this situation, the bargaining power of customers may be relatively strong with the ability to select other camp stoves based on price and performance. FiredUp will have to sell its stoves’ unique performance capability. The threat of substitution is a fairly weak force, as campers have few alternative camp stoves for cooking on camping trips. The bargaining power of suppliers of raw materials is a strong force since FiredUp relies on quality components for its stoves. The threat of new entrants is weak since FiredUp has a unique product with some patent protection. It would be difficult to develop a comparable stove without considerable engineering knowledge and skill. Finally, rivalry among existing firms is probably strong.

There are many sellers of outdoor/camping equipment.

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b. What does FiredUp’s competitive strategy seem to be?

FiredUp’s strategy seems to be differentiation/focus. Their product is unique and is distinct from other camp stoves due to its ability to function in high wind conditions. They will appeal to campers who plan to camp in extreme environments. c. Briefly summarize how the primary value chain activities pertain to FiredUp. How should the company design these value chains to conform to their competitive strategy?

Inbound logistics refers to receiving and handling raw materials and organizing them so that stoves can be produced promptly and efficiently. Operations involves transforming the raw materials into finished stoves. Outbound logistics involves shipping the finished stove to the buyer. Marketing and Sales involves building awareness of the product’s unique attributes among potential customers. Service involves providing information and support to buyers of the stoves. These value chains should be designed to support the differentiation/focus strategy, stressing the product’s unique performance capability to the target market of people who plan to camp in harsh weather conditions. d. Describe business processes that FiredUp needs to implement its marketing and sales and its service value chain activities.

FiredUp needs to focus its sales and marketing efforts so that its target customers are aware of its products and their unique performance capabilities. For after-sale service, customers need easy ways to obtain information and get maintenance on their camp stoves. e. Describe, in general terms, information systems to support your answer to question d.

Partnerships with outdoor gear sellers could include a link on their websites to the FiredUp’s website, and vice versa. Customers could be contacted by an e-mail system that offers maintenance service and makes it easy by prearranging pick-up and shipping by a shipping company (new product/service).

ANSWERS TO COLLABORATIVE EXERCISES The High-Value Bike Rental Company rents bikes to business executives at conference resorts. A well-dressed rental agent greets each potential customer and has a discussion to determine his or her biking needs. When the customer is ready to rent a bike, the agent enters his or her information into the customer database and checks to see if a bike is available in the bike inventory database. When the customer returns the bike, he or she pays for the rental by providing their hotel room number. The bike is then cleaned and put back into the bike inventory database. This triggers an update to the database, which then bills the customer for the rental. A charge is sent from the database to the hotel Copyright © 2014 Pearson Canada Inc. 33

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billing system. Figure 3.8 shows the business process and related information systems for the High-Value Bike Rental Company. Using this information, collaborate with your team to answer the following questions: 1. Explain the relationship of value and cost according to the Porter model. When does it make sense to add cost to a business process?

It makes sense to add cost to a business process when you are able to extract more total value from the process than the additional cost. The increase in total cost needs to be enough to also cover the cost in making the changes to the process.

2. Suppose you are told that the business process in Figure 1 in MIS in Use has a negative margin. Explain what that means. Suppose the margin of some business process is a negative $1 million. If costs are reduced by $1.2 million, will the margin necessarily be positive? Explain why or why not.

A negative margin means that the process, overall, costs more than it produces in terms of revenue. Reducing costs may not improve margin because with reduced costs may come reduced services which makes the service less attractive. To increase margin the revenue would have to stay the same as it did prior to cutting the costs.

3. Consider the alternative of replacing the rental agent from the business process in Figure 1. a. Describe changes that will need to be made to the process documented in Figure 1.

There will be a need to collect customer information, likely this would be selfserve, so customer would be required to enter his or her information online. The customers will have to pick up his or her rental bike. When returning the bike, the customer will be required to let the company know the bike is returned. b. Would eliminating the rental agent change the competitive strategy of this company? Is it possible to be a high-value company with no rental personnel?

Explain why or why not.

Yes it would be a change in strategy as the company would focus on competing on cost as opposed to a high service (high margin) strategy. It would be difficult to provide high value without a rental agent. The alternative would be a very customized information system that could anticipate customer requests. This might improve convenience but it is not likely to improve the perception of service. c. Would eliminating the rental agent necessarily reduce costs? What costs would increase as a result of this change?

Not necessarily. Without a rental agent, someone will have to service the bikes or provide emergency services when a bike breaks down for one of the customers.

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to answer questions about where to go and how to drop off the bike and this would likely fall to the resort staff and over time the company would have to pay for this service that the resort staff is providing.

4. Consider the alternative of increasing the value delivered by the existing rental agent—for example, renting more kinds of equipment or selling items of use to guests who are renting bicycles. Consider other options as well.

There is no single answer to the questions below. The questions below are intended to get students thinking about a business process and to consider the costs and benefits of innovations on this process. As an instructor you should encourage students to think systematically about the changes and to consider the pros and cons of changes.

This question makes students think about an entire business process. a. Describe four ways that you think the existing personnel could increase the value of this business process. b. For the four alternatives you developed in part (a), name and describe criteria for selecting among them. c. Using the criteria developed in part (b), evaluate the alternative you identified in part (a) and select the best one. Explain your selection. d. Redraw Figure 3.8 using the alternative you selected in part (c).

ANSWERS TO CASE STUDIES MIS in Use 3: Winterborne Bikes 1. Identify the value chain involved in a obtaining a new bicycle from Winterborne Custom Bicycles. Can you identify the primary activities that create value for the customer when purchasing a new bike?

Inbound logistics are provided by Winterborne sourcing the various parts from a variety of high quality suppliers and manufactures. The contacts that Winterborne Copyright © 2014 Pearson Canada Inc. 35

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have developed adds value, as does custom selection, assembly, and final customer fitting. These activities could be considered operations and outbound logistics. The knowledgeable staff adds value during the sale of the bike and frequent maintenance workshops and clinics provide marketing and sales support. Ongoing tuning, repairs, and customizations provide further customer service.

2. What information systems do you think could be used to support these primary activities?

There are several examples. Winterbourne’s website can be used to provide a variety of information to customers. Aside from the obvious bicycle information, the website could also be used as a meeting place for Winterbourne’s customers to connect with each other to share product information or to arrange trips and other activities.

Internally, the website could be linked to the company’s inventory tracking system or to house education materials such as online manuals.

3. Check out the company’s website (www.winterbornebikes.com). Does the website fill the role of a primary activity or is it more appropriately considered a support activity? Justify your answer.?

Winterborne’s site is primarily used for customer information about the types of parts and services they provide. In its current form the site does support marketing and sales efforts but is not designed to sell bicycles directly because Winterbourne instead focuses on a custom experience. As a result, the site primarily provides secondary support for the operation.

Case Study 3: ICS Courier: Keeping Up with the Joneses 1. ICS Courier focused on business-to-business customers, servicing law firms, insurance companies, and accounting and medical offices. How did the fact that drivers arrived consistently at the same place and time support the strategy of specialization?

The type of professional firms being serviced by ICS would have regular business on a daily basis. Arriving at the same place and same time at each day would help ICS integrate closely with customer’s daily business cycle. The larger this integration, and the longer it could be carried on, the more difficult it is for other courier firms to get a foothold with ICS customers. ICS couriers also got to know the clients extremely well and the regular visits provided the customer with an impression of reliable service.

And if the service is reliable, then why do you need to track packages?

2. Why would offering package through its website support the specialization strategy for ICS? Given the companies that ICS serves, do you think the company could survive long term without making this technology investment?

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companies are providing this service, and customers have enjoyed the service, ICS would not be able to survive in the long term without offering the same type of service.

3. Do you think package tracking through the web is a disruptive technology? Justify your answer.

Yes it is a disruptive technology because it requires significant information technology investment. Since many smaller firms were unable to offer this service, the change in technology created a consolidation in the industry and hence changed industry structure. The change in industry structure suggests that the change was disruptive.

4. Can you think of another disruptive technology for the courier industry?

This is difficult to answer, because if it was easy and obvious it would already exist.

Students might suggest something like GPS tracking. However you might suggest that this just sustains the innovation originally created with the ability to track the package and hence is better thought of a sustaining technology.

Certainly the airplane was a disruptive technology for the industry in the past. The point that can be made to students is that these disruptive technologies appear relatively infrequently.

THE DIGITAL DIVIDE Goals   

Teach students that knowledge grows exponentially—just like capital.

Sensitize students to the social problem of the digital divide Explore the responsibilities for business and government with respect to the digital divide.

Background and Presentation Strategies The more money you have, the easier it is to make more money. And the more knowledge you have, the easier it is to acquire more knowledge. Knowledge and capital both grow exponentially. Thus, learning strategies for learning is critical. Learning how to learn efficiently using the Web and other contemporary resources should be one of the students’ primary goals while in college.

Being connected, by the way, means being able to send emails, use ftp, engage in instant messaging and texting, etc. All of these are also important ways of learning. (IM as a tool for learning? It could be.) But what about those who are on the unconnected side of the digital divide? What happens to them? They fall further and further behind. Actually, they stay right where they are, and the rest of the world moves farther and farther ahead, accelerating. The gap grows exponentially.

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The Gates Foundation donated over $262 million for U.S. libraries to buy computers to provide Internet access for the public. See www.gatesfoundation.org/libraries for more information about the Foundation’s library program, including a state map that describes library donations. To the surprise of many (including, I believe, the Gates Foundation), the most popular activity on those library computers was finding a job!

The Gates’ donation was a generous and appropriate action for the world’s richest couple.

But what about business? What about government? 

   

today, in Canada, what groups of people are not connected to the Internet? (Examples include those living in poverty, the elderly, the poorly educated, and those who’ve stuck their heads in the sand.) does it make sense for benefactors or government agencies to provide access to those in poverty?

What keeps the elderly from accessing the Internet?

Should the government help the elderly?

What could be done to provide Internet access for the poorly educated? Does government have a role?

Most MIS classes have a number of foreign students. If yours does, you might want to consider this Exercise from a world perspective.    

Some of you are from outside Canada. What is the connectivity situation in your country of origin?

Is there a digital divide?

Are some countries more behind the connectivity trend than others?

What does this mean for those countries’ ability to compete? For the citizens of those countries?

Today, two trends are underway that complicate the situation: ubiquitous high-speed data communications and the merger of computers and entertainment devices. 

How do these changes alter the situation for the unconnected?

I think these questions lead to an optimistic note. Once televisions are merged with Internet access devices, then anyone who can afford and operate a TV will have some kind of computer. And, with cheaper and cheaper data communications, they will have at least some access to the Internet.

Suggested Responses for Discussion Questions 1. Answers will depend on students’ experiences. Are there students on campus who are disadvantaged by a lack of computer equipment? How do they cope? Do they have access at home or through relatives? What about foreign students? Is their situation different from students in Canada? See comments in the Background section above about bringing in the perspective of different countries.

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2. No, there is no law that requires organizations to provide equal access to the unconnected. Should there be? Laws imply enforcement, and enforcement implies lawsuits. This all gets very expensive for society. Some would say it would be better to focus resources on programs like the Gates’ library donation in the United States.

Another argument uses the Charter of Rights and Freedoms. Citizens have equal rights and protection against discrimination and if being unconnected threatens any of these, then laws should be passed to protect the disconnected. But, is going to a movie one aspect of our rights and freedoms? Is so, then if movie theatres have websites, do they have a responsibility to provide access for the unconnected? This seems silly.

3. Whether organizations have an ethical obligation to provide equal access depends on the organization. A religious organization would seem to have an ethical responsibility to ensure equal access to information for its members. What about a yacht club? What about an athletic league?

4. I think most would agree that government agencies have greater responsibilities than do commercial entities. Public health information, for example, should be equally available to the connected and the unconnected. But, how is this possible? With instantaneous 24/7 connectivity, there is no way that a unconnected person can have the same access to late-breaking disease information as the connected person.

However, what government will buy computers for its citizens just for that reason?

5. What groups are unconnected? Would those groups be helped by subsidies or tax incentives? Is the answer in education? Or, is the problem of Internet access so low on the list of priorities of these groups that any available tax dollars should be spent on other programs? Obviously, there is no clear answer.

6. The following are several questions to explore this:    

is the gap between the connected and the unconnected the same gap as that between the educated and the noneducated?

In the future, will there be just three kinds of employees: techies, flunkies, and managers?

What sort of world will that be? Will it be stable?

Those of us on an academic campus will have opportunities that those on the wrong side of the digital divide will not have. What responsibilities do we have to help those unconnected people?

Wrap Up 



knowledge grows exponentially. Those with more knowledge will be able to obtain new knowledge at a faster rate. Not being connected reduces the rate at which people can obtain knowledge.

In school, it is important to focus on ways to use the Web and other resources to learn, and to do so efficiently.

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



People who are not connected are at a serious disadvantage. It’s not an easy disadvantage to fix. Equal access through traditional means is impossible. A brochure cannot provide the latest information, 24/7.

Possibly the best hope, the great equalizer, will be the blending of televisions and Internet devices. Then, everyone with a TV (almost every person) can have Internet access. Cheap data communications will make it easy to connect as well.

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CHAPTER 4 HARDWARE AND SOFTWARE CHAPTER OVERVIEW In the first three chapters we emphasized the relationship between information systems, the student, and his or her career in business. We showed how information systems support business processes, which have effects on productivity and competitive advantage.

In Chapters 4, 5, and 6 we focus on the technology underlying these systems, specifically, hardware and software, databases, and networks. You can put this in perspective for the students by referring back to Figure 1-1.

Chapter 4 will cover hardware and software, Chapter 5 will cover data and databases, and Chapter 6 will cover networks which are what connects all of the boxes in Figure 1 together.

We think it is important for students to understand why they are learning something about the technological foundations for information systems. We therefore spend time at the start of the hardware and software lecture discussing why the technical material is an important component of the course. An example exercise to support this discussion is provided below Three issues normally emerge from this discussion. The first is that a percentage of students believe that it is not necessary to understand the technology to be a good user of the technology. If it is designed well then it should be easy and useful and that is all a student needs to know. Students might say, “I don’t know how my car works, but I don’t need to in order to drive it.” On the face of it, that statement has appeal. But there is more to consider. First, almost everyone gets some training to drive a car and it takes time to become a good driver. And for an average driver this might be enough… until the car breaks down, or until the driver wants to become a really good driver. Then you need more.

To be an excellent driver (for example a top NASCAR driver), technical knowledge is essential. This knowledge helps with designing better cars and running faster on the track. Most business majors are not going to be satisfied with being an average user of technology. So understanding how information technology works will give them an edge over others who do not have the knowledge. This knowledge will improve his or her ability to use the technology more effectively.

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A second issue is that another percentage of students are intimidated by or disinterested in information technology. They feel overwhelmed by the detail and find the information too complex, and therefore far too boring. When students are overwhelmed it becomes easy to lose engagement with the material and just simply tune it out. I have heard some students say that they do not feel capable of learning technology. This is the attitude that “Technology doesn’t like me.”

Of course, this is not true. Technology does not have friends or enemies. It works or doesn’t work for reasons. So our job in chapters 4, 5 and 6 is to engage these students with examples that they can relate to. To explain technology in a way that makes sense to them. We have to be very careful about getting geeked up and jumping right into technology and using acronyms. When this happens, a percentage of students tune out and we lose opportunities for learning. What we are looking for is an appreciation for the complexity and formalism underlying information technology. What we are trying to show is that there is good reason why people in this industry get paid well. The area is complex and requires skills that are refined through time. A business manager who understands this will be a more effective partner for any technology expert in the company and will ultimately be a better manager.

The third issue is that students often think “I’m an HR major (or accounting major, or finance major, etc.) why do I have to know about information technology? That’s for MIS people”. The “I’ll pay someone to figure that out” is a quote that emerges. Again, this statement seems to have face value, but it is important to push students past this attitude.

The use of an analogy can help. Ask students who they go to for advice when they are sick. Students will usually say a doctor. Then ask them, do you blindly follow all the advice the doctor gives (without question)? Ask them, do you see any doctor or do you choose between different professionals? How do you know what doctor to see? Then keep pushing. Ask if the student had a serious health issue, would they go to see two doctors to get a second opinion? What if the two doctors give two sets of advice? What do you do?

How can you make a decision? What students will begin to discover is that in any situation where you ask for expert advice, it is always beneficial to have some background knowledge about the area you are getting advice it. This is true for accounting, financial advice, and lawyers. Not surprisingly, the same is true for IT experts. Experts are not always right. You need foundational knowledge to know when you might be making a bad decision. This course provides that background foundation for IS knowledge.

However you handle it, we think it is important for instructors to address the issue up front and to try to get students to question their own attitudes about technology. The “What do YOU think” exercise at the end of the chapter entitled “Keeping up to Speed” provides another mechanism for getting students to consider their attitude towards technology.

An Exercise to start the class A good way to start the class is to begin with the first question raised in chapter 4. Ask your students what is was like to be a student 100 years ago (before cars, highways, Copyright © 2014 Pearson Canada Inc. 42

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electricity, computers and telephones). What did people do? You’ll be surprised what they say. It is usually a fun few minutes.

Next ask, “What if a student from 100 years ago was transported into this room, knowing nothing about cars, computers, or telephones. How much of a disadvantage would that student have in our class? Could the student even compete? What would the student have to learn to finish even the first assignment?

CHAPTER OBJECTIVES 1. Understand why it is important for a business manager to know about information technology.

2. Understand what a manager needs to know about computer hardware.

3. Understand what a manager needs to know about software.

4. Understand the difference between a client and a server.

5. Understand about computer buying decision.

6. Be aware of viruses, worms, and zombies.

CHAPTER OUTLINE Q1 Q2 Q3 Q4 Q5 Q6 Q7

Why do you need to know about information technology?

Where did all this information technology stuff come from?

What does a manager need to know about computer hardware?

What is the difference between a client and a server, and what is cloud computing?

What does a manager need to know about software?

What buying decisions does the manager need to make?

What are viruses, worms, and zombies?

ANSWERS TO USING YOUR KNOWLEDGE QUESTIONS 1. Assume that you have been asked to prepare a computer hardware budget. Your company has identified three classes of computer user. Class A employees use the computer for email, Web browsing, Internet connectivity, and limited document writing. Class B employees use the computer for all of the activities of Class A, and they need to be able to read and create complicated documents. They also need to be able to create and process large spreadsheets and process small graphics files. Class C employees are data analysts who perform all of the tasks that Class A and Class B employees do; they also analyze data using programs that make extensive computations and produce large and complicated graphics. a. Using the Internet, determine two appropriate alternatives for each class of employee. Search dell.com, lenovo.com, hewlett-packard.com, and any other sites you think appropriate.

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who might be also be termed basic, average, and power users. These items were assessed in August 2012 I assume we are focusing on desktop systems and that our users have space limitations requiring flat panel displays for their work areas.

Also, since each of these systems will be implemented in a business environment, all systems have built-in Ethernet cards.

Class-A Users

Class-B Users

Class-C Users

Dell Inspiron 660

Dell Inspiron One 2230

Dell XPS 8500

CPU

Intel® Pentium® G630 processor (2.60GHz, 3MB Cache)

2nd generation Intel® Core™ i3-2120 processor (3.10GHz, 3MB Cache)

3rd generation Intel® Core™ i7-3770 processor (3.40 GHz with Turbo Boost 2.0 up to 3.90 GHz

Memory

4GB4 DDR3 SDRAM 6GB Dual Channel 32 GB at 1600Mhz - 4 at 1600Mhz - 2 DDR3 SDRAM at DIMMS DIMMS 1600MHz – 2 DIMMS

Hard drive

1000 GB4 SATA hard 1TB - 7200RPM, 2000GB7 SATA hard drive (7200RPM)) SATA 3.0Gb/s, 16MB drive (7200RPM) Cache

Optical disk

8X DVD+/-RW Drive

16X DVD+/-RW Drive

Blu-ray Combo Drive (BD-R, DVD+/-RW), Write to CD/DV

Monitor

19 inch Widescreen Flat Panel Monitor

23" Full High Definition (1080p) LED Display /

Dell ST2320L 23-inch Full HD Widescreen Monitor

Price

$429

$699

$999

b. Justify each of the selections in your answer to part a.

The class-A system is more than adequate for the needs of the user class. The processor is fast and the memory is sufficient for the potentially memory-hungry Microsoft Vista.

The class-B system provides a faster processor and more memory that will be suitable for this group of users. The hard drive is probably too large, but was part of the package offered at this time and could not be modified. The larger monitor compared to the class-A systems is suitable for users who may have multiple windows open at a time and also probably spend more time each day using the computer.

The class-C system is near the leading edge of the technology curve, offering the latest in processor technology and faster memory compared to the class-B system.

It should provide excellent performance for the purposes of these users. The upgraded monitor will provide these power users with an excellent visual display.

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c. Specify the cost of each of the selections in part a.

See table above.

2. Search the Internet for the term OpenOffice. Explain what OpenOffice is. How do users obtain it? How much does it cost? Given this information, why do you think companies use Microsoft Office rather than OpenOffice? Why do you?

OpenOffice is an office suite that is open-source software and is completely free.

Version 2 includes a word processor, a spreadsheet, a database, and presentation and drawing tools. OpenOffice can be downloaded from the OpenOffice.org Web site.

Many people use Microsoft Office rather than OpenOffice because they do not know about OpenOffice, are fearful of using a product that is not the market leader, or feel that there is something inherently superior in commercial software.

3. Describe the three categories of applications software. Give an example of each.

Horizontal-market software is software designed for generic tasks that cut across many different business functions. These applications are usually not easy to customize and are sold right off the store shelf ready to use. Applications such as spreadsheets, word processing and email systems are examples of these products. The most used horizontal market software is Microsoft Office.

Vertical Market software is software that is specifically designed to fit the needs of a particular industry. For example, several software development firms serve the auto repair industry including AllData (http://www.alldata.com/) and Auto Repair Boss (http://www.autorepairboss.com). This software is tailored to work for firms within a specific industry. The software can often be modified (at least slightly) to fit the business.

One-of-a-kind application software is software that is developed for a particular firm within a particular industry. The software is custom designed to fit the firm’s special needs. Many of the applications written for Cirque de Soleil such as their castings page (http://www.cirquedusoleil.com/Cirquedusoleil/en/casting/default.htm ) would be examples of one-of-a-kind application software. This is true for many web pages that are designed to be unique.

4. Explain Figure 4-14. Search the Internet for an example of horizontal and vertical market software (other than those mentioned in this chapter). Search as well for the product QuickBooks. Briefly describe the functions of that product. What operating system(s) does it require? Suppose you wish to install and use QuickBooks, but you need some functions to be altered. Search the internet for vendors or consultants who could help you. List two or three vendors or consultants.

Quickbooks (http://quickbooks.intuit.com/) is accounting software targeted at small businesses. It is an example of horizontal market software that can be used across a variety of industries.

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Quickbooks runs on Windows (XP and Vista. There is also a Quickbooks Pro for Mac (OSX Leopard) There are many potential answers. The Quickbooks website has a community where you can locate individuals for help with installing and setting up Quickbooks: http://www.quickbooksgroup.com/.

ANSWERS TO COLLABORATIVE EXERCISES Note: This is an exercise we use as a group assignment in our course every semester. We call these our Tech Talk assignments. You can also combine this exercise with the collaborative exercise in Chapter 6 for additional topics. We usually hold this exercise until the last two weeks of class and we get students to present in their tutorials (24 students per tutorial). We use groups of 3 or 4 students. In some years we have had students post their two-page summaries on the web. It has turned into an excellent exercise to show the importance of understanding the business impacts of technology Have your team choose one of the hardware or software topics in the list provided in Question 3. Use the Internet and other resources to research the topic and develop the following: 1. Create a maximum two-page information sheet that summarizes the topic. The summary should include the following: a. An introduction to the topic (in English, not “technobabble”). b. The relevance of the topic to business managers (e.g., advantages, and benefits vs. costs, if they are known). c. Examples of products, vendors, or companies that use the particular technology topic. d. Links to sites where you can find more information. e. A statement about the future use of technology. Are there any barriers to adoption? How prevalent will the technology become?

2. Now create a presentation (using PowerPoint, Keynote, or another presentation software) that can be used to present the topic to other students in the class. Be sure to include a title page and be prepared to present what you have found about your topic to the class.

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3. Choose from one of the following topics (or check with your instructor to see if you can create your own) a. Is open source software here to stay? b. Who builds the best processor, AMD or Intel, in your opinion? c. What is cloud computing and why should you care about it? d. What is Green IT and does it really matter to you? e. What is the best for computer for business applications, Macintosh or PC? f. Who will win the browser wars? Why should you care? g. What is the next important technology? h. What is the future for operating systems such as Windows, Linux, and OS X? i. Are e-books really the future of reading? j. What is Google Chrome best described as—a browser or an operating system?

There is of course no single answer to these questions. The topics we provide are just a beginning and we would encourage instructors to stray beyond the list (or allow students to stray where they are interested in going).

ANSWERS TO CASE STUDIES MIS IN USE: What Are You Looking At? Eye Tracking Hardware and Software 1. Where are the main markets for Locarna’s systems?

The main markets seem to be web advertising and other areas of design where attracting attention from individuals is of great importance. Understanding what people are actually looking at is very important from an advertiser’s perspective and Locarno’s system can provide more accurate data about this.

2. What problem does Locarna solve?

The problem Locarno solves is how to know what people are actually looking at.

Without some form of eye-tracking, it is almost impossible to see what is drawing people’s attention. Understanding more precisely what people focus on can make advertising and other information presentation more effective.

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3. How important are systems such as Locarna’s?

In some industries the software or hardware would have little importance. In an industry like web advertising—where even small percentage changes in the amount of attention drawn by a portion of a website or mobile device can mean drastic increases in drawing attention (and advertising revenue)—the Locarno system would be very important.

4. How have recent technological changes affected or enabled Locarna’s business?

The price of the technology has fallen. Recent advances have allowed Locarno the freedom to not have to stabilize the participants’ heads while taking measurement.

The devices are also smaller and faster so that they record more data and are less intrusive to the participant. These changes mean that Locarno can offer a more flexible recording system at a more reasonable price which should increase the market size for Locarna’s products.

5. Are there groups or environments that would resist the type of analysis that Locarna provides? (hint, who might be threatened by Locarna?)

The Locarna devices would likely be viewed as intrusive in many work environments. Although there would be an ability to track what people were focusing on during working hours, this type of monitoring might be considered an invasion of privacy.

6. What do you think the future holds for Locarna?

Smaller, faster and cheaper is where this type of innovation usually goes. It might be possible that Locarna produces devices that can provide wireless access and the potential for realtime feedback for any type of shopping or advertisement experience.

Case Study 4: Network Effects, Increasing Returns, and Lock In 1. How do the challenges faced by Stantec differ from those faced by other industries?

(Hint: Think about sharing files among students for group projects.)

The standardization issues faced by Stantec are more complicated because the architectural industry tended to involve a lot of partners that need to share files. Even within Stantec for example, work on an individual project could involve several areas from all across Canada. If one of the parties could not open the files the effects could range from increased costs right through to safety risks because the drawings and specifications could be misinterpreted. Since Stantec’s involvement could range from major project lead to sub contractor in other projects, being able to communicate and share files easily and quickly was central to their operation.

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2. What are the implications of this case for companies that develop new software tools?

How could adoption barriers be reduced? (Hint: Think of “disruptive” technologies.)

The technological implication is that new software must be compatible with the existing technologies or ways that people work. While the new software for example was “backwardly” compatible in that it could open files created by other software systems, the output was not “forwardly” compatible to allow other systems to use the files. This is similar to the initial way that Microsoft delivered Office 2007. Without a specific fix, files created by Office 2007 cannot be used by earlier versions of the Office system unless they were created in that format. This makes development very difficult and can stifle innovation.

3. Are there any examples of “inferior” technologies that have achieved “lock in” or would be hard to improve? (Hint: You have probably used one already today.)

One of the most famous examples is the modern keyboard, which was originally designed to slow down typing to a rate that would not jam the keys. Although claims about the Dvorak keyboard in many cases have not been validated, there are no doubts that other typing layouts could be designed to speed up information entry.

Another example that some students may enjoy discussing is the potential switch to driving on the right side of the road for the Unitied Kingdom and other countries.

This would make the market easier to sell North American cars, but has significant conversion effort and risks.

4. How do the ideas of “switching costs” and “networks effects” relate to high technology, or do they exist in other industries? (Hint: Consider the railway industry, for example.)

Switching costs and the tendency for some technologies to benefit from mass adoption (imagine for example how hard it was to sell the first fax machine—which was most likely sold in a pair—and how much easier it was to sell the millionth) are most common in high technology markets but also exist in traditional industries.

Once a gauge (or width of track) has become even remotely standardized for a railway, it is very difficult to change it because it would mean having to change every single piece of existing technology and to run new rails. It is possible in some cases, for example High Speed Trains have dedicated tracks.

5. How should new software be evaluated? How important is market share? Are these factors more or less important to smaller firms?

Consideration of new software must include the effect and impact of the existing infrastructure and the extent to which the benefits outweigh the total cost of conversion. Market share is important because as the number of organizations using a new product increase, it becomes easier to get others to also use it. Smaller firms that do not have a lot of external interaction may find it easier to adopt new disruptive Copyright © 2014 Pearson Canada Inc. 49

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technology and in doing so may gain an advantage over their large rivals.

Alternatively, their lack of power in industries where they have lots of connections to other firms may make the problem worse and more difficult to switch.

What happened: Stantec did try the software in a limited experiment but ultimately the company was bought by Autodesk. They later integrated the new features into their existing product line.

KEEPING UP TO SPEED Goals    

Raise students’ awareness of the unrelenting change of technology.

Encourage students to take a stand about how they will react to technological change—in the words of the exercise, to “choose a posture.”

Emphasize that this issue is inescapable in modern business. If students ignore it, they are unknowingly and by default choosing a personal competitive disadvantage.

Teach the students the benefits of this class and of IS education, in general.

Background and Discussion Strategies Technological change is a factor in every business person’s life. Many of the hardware facts described in this chapter are susceptible to change. It’s perishable content: just like produce at the market, it has a short shelf life. So what’s a professional to do? One response is to recognize the problem and to choose a response. Business professionals must decide how to respond. They may choose to stick their heads in the sand, but if so, they’d better find other ways to gain a competitive advantage over their peers.

I ask my students, after taking the MIS class, to not don’t let random happenstance determine their technology posture. Instead, consciously choose a posture.

Students who don’t want to stick their heads in the sand and ignore technology need to learn coping strategies. First, they need to learn how to learn about technology, and they need to learn how to learn it efficiently. The best strategy, I think, is to combine learning about technology with some other activity. This essay recommends volunteering to sit on technology review committees, volunteering to work with systems development professionals as user representatives, going to conferences, and sitting in on at least one or two technology sessions.

The advantage of such a strategy is that it’s a “three-fer”: 1. As a business professional, you are serving the business, while at the same time making a deposit in your knowledge bank.

2. You also are networking, so the next time you need an answer to a difficult technology question, you’ll know whom to ask. It’s also a way of being noticed in a positive way while learning and extending – a great way to obtain a competitive advantage.

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Encourage students who are currently employed to volunteer for projects now, even as interns. I had a student who, as an intern, volunteered to sit on a CRM review committee to provide end-user feedback. He made his section of the report, and the manager of the review committee was impressed and asked him why he volunteered for the committee. He said he learned about it in his MIS class. The manager said, “Be sure our company picks up the cost of that class.”

All of this is just creating strategies to turn a problem—the rapid change of technology— into a competitive advantage. If you are comfortable confronting your class, ask them to look around and see who is bored and not paying attention and who isn’t. those who are actively participating are creating a competitive advantage. I ask my students just to think about it. This is also a good time to promote additional IS classes—maybe a database class or a systems development class—for the non-IS major.

Another perspective concerns the off-shore outsourcing of jobs (discussed in detail in chapter 10, pp. 321–322). According to a recent RAND study, jobs that are unlikely to be off-shored are those that involve creative ways of applying new technology to solve business problems in innovative ways. Example: In spite of Walmart’s pronouncement that every vendor must supply RFID tags on their goods, nobody (not even Walmart) has quite figured out how best to use RFID in retailing. But you can bet that the person who does won’t find his or her job off-shored to Asia.

Taken to the next step, rapidly changing technology creates opportunities for entrepreneurship. When technology stagnates, products become commodities, and opportunities for new products are rare. With rapidly changing technology, opportunities for new products and companies abound.

Suggested Responses for Discussion Questions 1. Technology change is a good news/bad news situation.  How does technology change impact you in positive ways?

- It continuously creates new opportunities - You’ll never get bored; there will always be something new to learn and do - Technology change will relevel the playing field frequently. People who have dominant expertise in some technology domain will lose that expertise— creating an opportunity for you. 

How does technology change impact you in negative ways?

- You constantly need to learn - Your expertise is perishable. Without renewal or without knowledge of new technology, you’ll fall behind



How does technology change impact organizations in positive ways?

- It continuously creates new opportunities for competitive advantage.

- It will relevel the playing field frequently. Organizations that have dominant expertise in some technology domain will lose that expertise—creating an opportunity for your organization.

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

How does technology change impact organizations in negative ways?

- The cost of adapting to new technology can be high.

- Competitive advantages may not be sustainable.

2. The three choices are: head-in-the-sand technophile technology-informed professional Ask sample students: Which posture do you choose? Why? If students choose headin-the-sand, they’d better develop a competitive advantage in another field or discipline.

Does choosing technophile or technology-informed mean writing computer programs or designing electronic circuits? No, definitely not! It means knowing about technology and how to use it to solve business problems in innovative ways.

3. The purpose of this question is to compel the students to choose a posture. They must not kid themselves—which posture will they choose and why? You might ask the students to read their memos to the class.

4. This is another question to compel the students to choose a posture. There can be good reasons for the head-in-the-sand posture, but again, does the student truly want to choose that posture? But rather than focus on the posture, I like to ask:  For those of you who have chosen to be IS technology-informed professionals, how do you respond?

Then I help them hone and improve their answers. I know, all of this discussion is advertising for IS education, but, hey, this is an IS class!

Wrap Up   



Wake up to the opportunities that the conveyor belt of technology change offers.

Because you cannot ignore this issue, choose a strategy. Otherwise, fate will choose a strategy for you.

Learning about IS does not mean, necessarily, becoming a computer programmer or a communications technician. It means helping businesses to use information technology and information systems to accomplish their goals and objectives. (This is the definition of MIS given in Chapter 1.)

If you want to know about other IS classes we offer that you should be taking, drop me an email or come by my office.

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CHAPTER 5 DATABASE AND CONTENT MANAGEMENT CHAPTER OVERVIEW Chapter 4 introduced students to the wide world of hardware and software. These are the first two pieces of the model of IS presented in Figure 1-1. In Chapter 5 we introduce the third piece of the IS model: data. We have widened our discussion of data to include not only traditional forms of data but also other content (hence the title for this chapter). The reason we begin with content is to open student’s eyes to the wide variety of content that organizations work to manage. The web has driven the adoption of new forms of content so business managers today need not only understand relational database technology, but also how to collect, organize, and present less traditional forms of content such as web pages, audio, and video. A suggestion for an exercise to start the class thinking about content and how we manage it is provided below. Databases are not just about transaction based data anymore.

Though many things in information systems have changed, databases continue to form the backbone for any consideration of content. For this reason we have developed a significant amount of material around databases. The strength of this chapter is based on the expertise of David Kroenke’s Database Processing: Fundamentals, Design, and Implementation which is in its 10th edition. The material in this chapter is focused on an introductory level. To provide flexibility for instructors, we provide not only a chapter on this topic but also two chapter extensions. The chapter introduces content, data management, and database management systems. Chapter Extension 5a introduces database design, entity relationship modeling, and normalization. This is followed by Chapter Extension 5b, which includes an introduction to Microsoft Access (with screen shots) and covers forming relationships, creating a data entry form, assembling queries, and developing reports.

For those instructors who are interested in pursuing the ethical side of data management, the “What do YOU think” Exercise entitled “Nobody Said I Shouldn’t” provides a case for the discussion of the ethical use of data. This can also be combined with the Exercise from Chapter 2 “Ethics of Misdirected Information Use” for a larger ethical component.

We believe that database design and management is core knowledge for any business major. We hope the chapter and two extensions allow flexibility for the instructor to cover what he or she feels is the appropriate amount of database material.

An Exercise to Start the Class Databases can be intimidating for the uninitiated. We suggest that a good way to engage students in thinking about databases is to focus on something that they know—content.

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managed. You can start this discussion by asking “Did anyone read that box in Chapter 5 about the Canadian company called “Opentext” who sell a CMS? Ask the students “What is a CMS and what does it do?” This will lead to a discussion of what content is and why organizations have a hard time managing the content they have.

You can then continue by asking people how hard they think it is to get something listed on the main university website. Ask them about the steps that they think are necessary.

You can talk about content policy, about branding policy, about content editors and layout editors, and other steps you might have to go through. Ask students if they think the university should create a “branded” image. What are the benefits and what are the costs?

This discussion will show that the content management issues are much larger than likely many of the students understand them to be. You can then state that at the heart of the content management challenge are databases and database management. Knowledge about these technologies is essential to understand content issues. Some knowledge of relational databases has therefore become an absolute necessity for many managers.

Though it takes a few minutes for this discussion, you have an opportunity to get students engaged in the material.

CHAPTER OBJECTIVES 1.

2.

3.

4.

5.

6.

Understanding what is content and why can it be challenging to manage Understand the purpose of a database.

Understand what a database contains.

Understand what a DBMS is and what one does.

Understand what a database application is.

Understand the difference between an enterprise and a personal DBMS.

CHAPTER OUTLINE Q1 Q2 Q3 Q4 Q5 Q6 Q7

What is content?

How can content be organized?

What is the purpose of a database?

What does a database contain?

What is a DBMS, and what does it do?

What is a database application?

What is the difference between an enterprise DBMS and a personal DBMS?

ANSWERS TO USING YOUR KNOWLEDGE QUESTIONS 1. Suppose you are a marketing assistant for a consumer electronics company and are in charge of setting up your company’s booth at tradeshows. Weeks before the shows, you meet with the marketing managers and determine what equipment they want to display. Then, you identify each of the components that need to be shipped and schedule a shipper to deliver them to the trade-show site. You then supervise Copyright © 2014 Pearson Canada Inc. 54

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convention personnel as they set up the booths and equipment. Once the show is over, you supervise the packing of the booth and all equipment, and schedule its shipment back to your home office. Once the equipment arrives, you check it into your warehouse to ensure that all pieces of the booth and all equipment are returned. If there are problems because of shipping damage or loss, you handle those problems.

Your job is important; at a typical show you are responsible for more than a $250,000 worth of equipment. a. You will need to track data about booth components, equipment, shippers, and shipments. List typical fields for each type of data.

BoothComponent

Shipment

Component Number

Shipment Number

Component Type Description Value

Origin Location Destination Location Planned Ship Date Required Arrival Date Tracking Number Shipper ID Component Number Equipment Number

Equipment Equipment Number Equipment Type Description Value

Shipper Shipper ID Contact Phone Email URL Notes

b. Could you use a spreadsheet to keep track of this data? What would be the advantages and disadvantages of doing so?

A spreadsheet might be usable for this application. Spreadsheets are simple to set up and understand. However, a database is preferable here because it is easier to enter, edit, and view the data and to make corrections and updates. In this example, we are keeping track of four things—equipment, booth components, shipments, and shippers; and databases are better when the data involves more than one topic or theme. Spreadsheets work best when the data involves just one topic or theme. c. Using your answer to question a, give an example of two relationships that you need to track. Show the keys and foreign keys for each.

Several relationships, primary keys, and foreign keys are shown in the answer to part a. d. Which of the following components of a database application are you likely to need: data entry forms, reports, queries, or application program? Explain one use for each that you will need.

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could be used to find out the shipper used for particular shipments. An application program might be needed to handle shipments that are damaged in some way during the shipping process. e. Will your application be single-user or multi-user? Will you need a personal DBMS or an enterprise DBMS? If a personal DBMS, which product will you use?

In this case, the application is probably single-user, serving the needs of the marketing assistant. A personal DBMS such as Access would be suitable for this situation.

2. Samantha Green owns and operates Twigs Tree Trimming Service. Recall from Chapter 3 that Samantha has a degree from a forestry program, and recently opened her business in Winnipeg. Her business consists of many one-time operations (e.g., removing a tree or stump), as well as recurring services (e.g., trimming customers’ trees every year or two). When business is slow, Samantha calls former clients to remind them of her services and of the need to trim their trees on a regular basis. a. Name and describe the tables of data that Samantha will need in order to run her business. Indicate possible fields for each table.

Client

Service Call

Client ID

Service Call ID Client ID

Name Address City State Zip Phone Notes

Date Requested Date Performed Service ID Notes

Service Service ID Service Type Description Fee

b. Could Samantha use a spreadsheet to keep track of this data? What would be the advantages and disadvantages of doing so?

A spreadsheet might be usable for this application. Spreadsheets are simple to set up and understand. However, a database is preferable here because it is easier to enter, edit, and view the data and to make corrections and updates. In this example, we are keeping track of four things – clients, service calls, shipments, and services; and databases are better when the data involves more than one topic or theme. Spreadsheets work best when the data involves just one topic or theme. c. Using your answer to question a, give an example of two relationships that Samantha needs to track. Show the keys and foreign keys for each.

Several relationships, primary keys, and foreign keys are shown in the answer to part a.

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d. Which of the following components of a database application is Samantha likely to need: data entry forms, reports, queries, or application program? Explain one use for each that she needs.

All components of a database application could be used here. For example, a form could be used for the entry of a new service call. A report could be created that lists all services performed for clients during a certain time period. Queries would be very useful for finding clients who are due to have a recurring service performed so that follow-up calls can be made. An application program might be needed to handle clients with complex needs, such as orchards or tree farms. e. Will this application be single-user or multi-user? Will she need a personal DBMS or an enterprise DBMS? If she needs a personal DBMS, which product will she use?

In this case, the application is probably single-user, serving Samantha’s needs. A personal DBMS such as Access would be suitable for this situation.

3. FiredUp, Inc., is a small business owned by Curt and Julie Robards. Based in Brisbane, Australia, FiredUp manufacturers and sells FiredNow, a lightweight camping stove the. Recall from Chapter 3 that Curt used his previous experience as an aerospace engineer to invent a burning nozzle that enables the stove to stay lit in very high winds. Using her industrial-design training, Julie designed the stove so that it is small, lightweight, easy to set up, and very stable. Curt and Julie sell the stove directly to their customers over the Internet and via phone. The warranty on the stove covers five year’s of cost-free repair for stoves used for recreational purposes.

FiredUp wants to track every stove and the customer who purchased it. They want to know which customers own which stoves, in case they need to notify customers of safety problems or need to order a stove recall. Curt and Julie also want to keep track of any repairs they have performed. a. Name and describe tables of data that FiredUp will need. Indicate possible fields for each table.

Repair Repair ID Customer

Purchased Stove

Customer ID

Purchased Stove ID

Name Address City State Zip Phone Email Notes

Customer ID Stove ID Purchase Date Purchae Cost

Repair Date Problem Repair Description Purchased Stove ID Stove Stove ID Stove Name Stove Type Description

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b. Could FiredUp use a spreadsheet to keep track of this data? What would be the advantages and disadvantages of doing so?

A spreadsheet might be usable for this application. Spreadsheets are simple to set up and understand. However, a database is preferable here because it is easier to enter, edit, and view the data and to make corrections and updates. In this example, we are keeping track of four things – customers, purchased stoves, stoves, and repairs; and databases are better when the data involves more than one topic or theme. Spreadsheets work best when the data involves just one topic or theme. c. Using your answer to question a, give an example of two relationships that FiredUp needs to track. Show the keys and foreign keys for each.

Several relationships, primary keys, and foreign keys are shown in the answer to part a. d. Which of the following components of a database application is FiredUp likely to need: data entry forms, reports, queries, or application program? Explain one use for each needed component.

All components of a database application could be used here. For example, a form could be used for the entry of a new stove purchase. A report could be created that lists all stoves sold during a given time period. Queries would be very useful for finding clients who have purchased a certain stove. An application program might be needed to handle complex situations, such as when a stove model needs to be recalled. e. Will this application be single-user or multi-user? Will FiredUp need a personal DBMS or an enterprise DBMS? If they need a personal DBMS, which product will it use? If they need an enterprise DBMS, which product can they obtain license-free?

This application might be multi-user, if FiredUp has sufficient business volume.

A product such as MySQL would be suitable and could be obtained license-free.

ANSWERS TO COLLABORATIVE EXERCISES Database for Sheet Music 1. Analyze the spreadsheet shown in Figure 5-15 and list all of the problems that occur when trying to track the assignment of sheet music using this spreadsheet.

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Chapter 5: Database and Content Management

    

Columns contain a mix of data (e.g., first name; name of work) Inconsistent data Redundant data Cannot tell when a copy was assigned to an individual Cannot tell if or when a copy was returned by an individual

2. The following two tables could be used to store the data in Figure 5-15 in a database.

ChoirMember (LastName, FirstName, Email, Phone, Part) MusicalWork (NameOfWork, Composer, Part, CopyNumber) Note: This notation means there are two tables, one named ChoirMember and a second named MusicalWork. The ChoirMember table has five columns: LastName, FirstName, Email, Phone, and Part; MusicalWork has four columns: NameOfWork, Composer, Part, and CopyNumber. a. Redraw the data in Figure 5-15 into this two-table format.

ChoirMember LastName

FirstName

Email

Phone

Part

Ashley

Jane

JA@somewhere.com

703.555.1234

Soprano

Davidson

Kaye

KD@somewhere.com

703.555.2236

Soprano

Ching

Kam Hoong

KHC@overhere.com

703.555.2236

Soprano

Menstell

Lori Lee

LLM@somewhere.com

703.555.1237

Soprano

Corning

Sandra

SC2@overhere.com

703.555.1234

Soprano

Wei

Guang

GW1@somewhere.com 703.555.9936

Soprano

Dixon

Eleanor

ED@thisplace.com

703.555.12379

Soprano

Doung

Linda

LD2@overhere.com

703.555.8736

Soprano

Lunden

Haley

HL@somewhere.com

703.555.0836

Soprano

Utran

Diem Thi

DTU@somewhere.com

703.555.1089

Soprano

MusicalWork NameofWork

Composer

Part

CopyNumber

B-minor mass

J.S. Bach

Soprano

7

Requiem

Mozart

Soprano

17

9 Symphony Chorus

Beethoven

Soprano

9

B-minor mass

J.S. Bach

Soprano

11

B-minor mass

J.S. Bach

Soprano

7

Requiem

J.S. Bach

Soprano

19

th

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b. Select primary keys for the ChoirMember and MusicalWork tables.

ChoirMember (LastName, FirstName, Email, Phone, Part) MusicalWork (NameofWork, Composer, Part, CopyNumber) It is assumed that there will not be two members of the choir with the exact same first and last names. Also, the name of work is assumed to be unique; no two composers will have the same name of work. Instructors may want to discuss the realism of this assumption. c. The two tables are not integrated; they do not show who has checked out which music. Add foreign key columns to one of the tables to integrate the data.

ChoirMember (LastName, FirstName, Email, Phone, Part) MusicalWork (NameOfWork, Composer, Part, CopyNumber, LastName, FirstName) d. This two-table design does not eliminate the potential for data integrity problems that occur in the spreadsheet. Explain why not.

The problems of knowing when a copy was checked out to a singer and when it was returned are not captured.

3. A three-table database design for the data in the spreadsheet in Figure 5-15 is as follows: ChoirMember (LastName, FirstName, Email, Phone, Part) MusicalWork (NameOfWork, Composer) CheckOut (LastName, FirstName, NameofWork, Part, CopyNumber, DateIn, DateOut) a. Redraw the data in Figure 5-15 into this three-table format.

LastName

FirstName

ChoirMember Email

Ashley

Jane

JA@somewhere.com

703.555.1234

Soprano

Davidson

Kaye

KD@somewhere.com

703.555.2236

Soprano

Ching

Kam Hoong

KHC@overhere.com

703.555.2236

Soprano

Menstell

Lori Lee

LLM@somewhere.com

703.555.1237

Soprano

Corning

Sandra

SC2@overhere.com

703.555.1234

Soprano

Wei

Guang

GW1@somewhere.com 703.555.9936

Soprano

Dixon

Eleanor

ED@thisplace.com

703.555.12379

Soprano

Doung

Linda

LD2@overhere.com

703.555.8736

Soprano

Lunden

Haley

HL@somewhere.com

703.555.0836

Soprano

Utran

Diem Thi

DTU@somewhere.com

703.555.1089

Soprano

Phone

Part

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MusicalWork NameofWork Composer B-minor mass Requiem 9th Symphony Chorus B-minor mass B-minor mass Requiem

J.S. Bach Mozart Beethoven J.S. Bach J.S. Bach J.S. Bach CheckOut Part

LastName

FirstName

NameOfWork

Corning Corning Corning Dixon Duong Duong

Sandra Sandra Sandra Eleanor Linda Linda

B-minor mass Requiem 9th Symphony Chorus B-minor mass B-minor mass Requiem

Soprano Soprano Soprano Soprano Soprano Soprano

CopyNumber

DateOut

7 17 9 11 7 19

b. Identify which columns are primary keys for each of these tables.

ChoirMember (LastName, FirstName, Email, Phone, Part) MusicalWork (NameofWork, Composer) CheckOut (LastName, FirstName, NameofWork, Part, CopyNumber, DateOut, DateIn) It is assumed that there will not be two members of the choir with the exact same first and last names. Also, the name of work is assumed to be unique. This may not be a realistic assumption, particularly for classical musical works. The instructor may want to point this out to students and discuss how to handle the issue. Composer could be added to CheckOut, for example, as one way to resolve the potential problem. c. The foreign keys are already in place; identify which columns are foreign keys and which relationships they represent.

ChoirMember (LastName, FirstName, Email, Phone, Part) ChoirMember participates in CheckOuts

CheckOut (LastName, FirstName, NameofWork, Part, CopyNumber, DateOut, DateIn) MusicalWork participates in CheckOuts

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d. Does this design eliminate the potential for data integrity problems that occur in the spreadsheet? Why or why not.

This design is an improvement, but still has the challenge of the primary key selected for MusicalWork potentially not being unique. Also, if the user wants to find all copies of a particular work, the entire CheckOut table will have to be searched. The CheckOut table will contain entries for copies that have been checked out and returned, plus there is no record of any copies that are not currently checked out.

4. Assume you manage the choir and you foresee two possibilities:  Keep the spreadsheet, but create procedures to reduce the likelihood of data integrity problems  Create an Access database and database application for the three-table design Describe the advantages and disadvantages of each of these possibilities.

Recommend one these two possibilities and justify your recommendation.

Keeping the spreadsheet has the advantage of being simple and familiar to the choir manager. There is one procedural change that could improve the use of the spreadsheets. If we had a Master Musical Work Spreadsheet that listed every musical work, part, and copy number, then the manager could cut out a row and paste that row under the right choir member name when a copy is checked out. When the copy is returned, that row could be cut out from under the choir member’s name and pasted back in the Master Musical Work Spreadsheet. This procedure helps ensure that we have an accurate list of checked out and available sheet music copies. However, even the best procedures may not make it the right tool for this purpose, because there is still a lot of information that is not maintained, such as when the music was checked out.

Plus, it will still be hard to quickly determine who has the various copies of a specific musical work, and we are continuing to mix data within the columns of the spreadsheet.

The database approach will improve the tracking of the sheet music. We are clearly tracking data with multiple themes in this scenario, so a database approach is more appropriate than a spreadsheet. The three-table design proposed in question 3 is not perfect, but will enable more accurate tracking of the sheet music for the choir. The choir manager may need training to make full use of the database application that can be developed for him.

ANSWERS TO CASE STUDIES MIS in Use 5: The Many Names of One Customer 1.

How serious a problem is duplicate information to the financial services industry?

Is it more serious for some industries than others? (Hint: How much of an issue is it for the health industry?)

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This issue can be quite serious for the financial services and health industries. In financial services, for example, not having a complete record of a customer’s activities would result in under or over reporting of their financial position and could lead to poor decisions about funding and even legal consequences (for example in divorce or bankruptcy situations). Similarly, incomplete health records or missing information such as a recent drug allergies or confusing two patients could result in the wrong diagnosis with traumatic results.

2.

Are there any other costs to Vancity when duplicate information is sent to customers? (Hint: What impression would you have if you received duplicate marketing information from various organizations?)

Aside from the operational expenses duplicate mailings affect Vancity’s reputation because customers may believe that they reflect the overall competency to manage their affairs. This could result in loss of business for the company.

3.

What are the various challenges in cleaning and grooming data? (Hint: Are there reasons why customers may have separate or changing information?)

There are numerous challenges to cleaning and maintaining good information. Not only is accuracy important and hard to verify but it can also change. Customers may change the spelling or use of their name and street numbers and names are also often altered. In many cities, there are streets that have common names or there are examples with only minor variances. Furthermore, customers may not want all of their information consolidated and may keep some accounts separated. For example, many customers use one credit card for business and another for personal use.

4.

Would the problem be solved by identifying customers numerically? How would customers perceive this? Are there legal issues?

This may seem like a simple solution but there are technical as well as marketing reasons why this is not done. Simply using numbers for example would not solve the problem of changes and can complicate routine activities. Few customers for example ever forget their names but many do not remember their account numbers and many customers prefer personal recognition rather than being considered a number.

There can also be legal issues with using certain numbers. Organizations for example are generally restricted from using Social Insurance Numbers to identify individuals

Case Study 5: Behind the Race 1.

What problem does active.com solve for event organizers?

Active.com provides a one-stop shop for athletic events that provides organizers with high quality infrastructure such as registration and payment. Because the infrastructure costs are spread over a large number of events organizers are able to offer improved Copyright © 2014 Pearson Canada Inc. 63

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customer service capabilities while reducing the cost and complexity of managing and marketing activities and events. This allows event organizers to focus on the core aspects of the event.

2.

Does active.com have any other advantages other than economies of scale?

By being able to support thousands of events using common services, active.com is able to exploit economies of scale. However, because active.com has developed networks with suppliers and has learned from hosting various events, it is also able to develop economies of scope (see below) where organizers can take advantage of complementary activities.

3.

Are there are any network effects for active.com? (Hint: What are the benefits to having a large number of events in one place?)

Having a large number of events in one place allows active.com to benefit from shared services. It is likely for example that athletes registering for one event may find out about other events and then register. As a result, services for both the organizers and the end customer are improved.

5.

What kind of information would Active.com have about its members? How would this be useful and to whom? What is the value of this information?

Over time, active.com would build up a significant database of event participants.

Because athletes of this type tend to be frequent shoppers of high-end equipment, this information would be of great value to companies that operate in this market. Aside from developing mailing lists or advertising other events, this information could be used to survey consumers, and more directly target market goods and services. The exact value would depend upon the nature of the goods and services but would very likely be high quality and high value, because event participants tend to be serious competitors. Active.com would know, for example, which participants are frequent or repeat participants and, if completion results are also available, how serious they are.

This information would also be useful to hotel, travel, and tourism operators.

NOBODY SAID I SHOULDN’T Goals   

Illustrate the utility of metadata and SQL, even for unauthorized purposes.

Discuss the ethics of unauthorized data access Consider the need for organizational data policies

Background and Presentation Strategies SQL was designed to be powerful and easy to use. Here’s a SQL statement Kelly used to display the average order total and average discount for each combination of company and salesperson: Copyright © 2014 Pearson Canada Inc. 64

Chapter 5: Database and Content Management

SELECT FROM GROUP BY

AVG(Total), AVG(Discount), CompanyName, SPName SALES_ORDER CompanyName, SPName;

That’s all Kelly needed! No programs, no special interfaces, just those few lines of SQL entered into the DBMS. It could be done in 5 minutes or less. 

As a future business manager or owner, what does the ease with which this can be done tell you?

In order for Kelly to write the SQL statement above, he needed to know the names of the tables and columns to query. The names were easy for him to obtain because every database contains metadata that describes its content. Kelly used the DBMS to query the metadata to learn there was a table named Sales_Order that contained the columns Total, Discount, CompanyName, and SPName.

Nothing that Kelly did was illegal; it’s even questionable that what he did was unethical.

Suppose he stumbled upon an internal criminal conspiracy, one unknown to the company’s management or ownership. By discovering it, he would be a hero, if the discovery was reported to someone not involved in the conspiracy.

If the company has a policy that no employee is to remove company data from the company premises, then he violated that policy. Can any company enforce such a policy today? If a sales manager sends an email with proprietary company product information to a salesperson working at a customer site, that action would be a violation the policy not to remove data from company premises. But if the salesperson needs the data to support a crucial sale, who would want to prohibit that data access? Still, removing an entire database is on a different scale from sending an attachment in an email. Data is an asset. Data is just as much an asset as buildings, trucks, and equipment. It has value and needs to be protected. 

What is a reasonable policy for an organization to have regarding employees taking data home?

This question is not easy to answer. The policy needs to be loose enough to allow employees to do their work, while providing appropriate protection to data assets. Most employment contracts use statements like “protect the company’s data assets as directed by management” or other general language.

Bottom line: companies need to have policies with regard to the data asset. We’ll discuss this further when we discuss security management in Chapter 11. We could view Kelly as the victim of bad luck: His curiosity, knowledge of database technology, ambition, and friendships caused him to lose his job. Kelly probably should hire an attorney who might advise him to contact law enforcement as well. He may not get his job back, he may not want his job back, but he’s probably entitled to some compensation. He also deserves a decent job referral – assuming he was otherwise a desirable employee.

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Suggested Responses for Discussion Questions 1. Kelly went wrong by taking the data home. Had he processed the data at work, it would be hard to fault him.  was he in error about mentioning to his friend what he’d found?  Once he saw the odd pattern, what should he have done?

This is a tough one. Either forget about it or do a careful analysis and then take the results to the most senior manager he can meet. But what if this is an innocuous coincidence? Then he’ll look like he betrayed his friend. Maybe Kelly hasn’t done anything wrong, yet. Maybe the story isn’t over. One possible continuation of the story is that he goes to an attorney who advises him to contact senior management and law enforcement.

2. It was not illegal. Taking the data home may have been against corporate policy. He may have been overly curious, but is that unethical? I think taking the data home might be construed as poor judgment on the part of a smart and ambitious employee, but I wouldn’t say it was unethical. Recall Encarta’s definition of ethical: “Consistent with agreed principles of correct moral conduct.”  do his intentions matter? If he had gone home with the intention of using the customer data to sell his own home-care products, would your answer be different?  If he had gone home with the hope of gathering dirt on fellow employees, would your answer be different?  Why should his intentions matter?

It goes back to “agreed principles.” Most would find it hard to fault improving one’s job skills, even if there is an element of unbridled curiosity.

3. Culpability for what? For allowing him to take home the data? If there is no clear company policy, if he had not been instructed not to remove data, then the company probably does share culpability. If he violated a clearly stated company policy of which he had been made aware, then probably not. Culpability for firing him? It depends on how high up the organization the conspiracy reaches. If it goes all the way to the top, then they do. If not, then firing him was the protective action of guilty employees. Company culpability depends on what happens next.

4. First, I ask the class to vote: How many of you think that Kelly should:  Ignore the whole thing?  Confirm his analysis, gather even stronger evidence, if possible, and then take the information he has to the CFO?  Never have learned SQL? (This is a joke!)  Done what he did, and now go see an attorney?

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Now ask the students why they voted the way they did. My vote: probably go to the CFO. If he then is fired, definitely go to the attorney.

5. If there is no criminal conspiracy, then I believe the company’s actions were precipitous. He ought not to be fired for his ambition and knowledge, even if he did show poor judgment in taking the data home. First, the company should determine if the information he has uncovers employee wrongdoing. If not, then he should be instructed not to take data home, or maybe put on probation, but firing him seems overly harsh. This also depends on whether he violated a clear corporate policy on which he had been trained.

If there is a criminal conspiracy, then the company has major problems. They need to consult their attorneys and law enforcement. They also possibly should hire investigators to identify members of the conspiracy and then clean up the organization.

6. I think there’s little doubt that someone else is involved. Jason is not in a position to force Kelly’s firing. In that case, he should have not spoken with Jason. He should have gone as high in the organization as he could. But, see question 4.

7. Say nothing to anyone. Hire an attorney with expertise in labor law. Do you think he should “sue the pants off” this company.

8. Understand their vulnerability. Treat organizational data as an important asset.

Establish data policies and train employees on those policies. (More on this in the next chapter and in Chapter 11.)

Wrap Up 



 

This is a rather weird case. Should we conclude: - a little knowledge is a dangerous thing?

- curiosity got the cat?

- don’t stick your nose in other people’s business?

- don’t socialize with fellow employees after work?

Two sure conclusions: - data is an important asset that needs to be protected - metadata and SQL are powerful We’re in the middle of the story. What happened next? Did he hire an attorney?

Or, did he slink off and take an entry-level job in another industry?

Assume he hired an attorney, and you finish the story. Think about it tonight and next class, after which two or three of you can tell us how the story ends.

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CHAPTER 6 NETWORKS AND COLLABORATION CHAPTER OVERVIEW Chapter 5 and Chapter Extensions 5a and 5b introduced students to the formal world of content and database management and design. In Chapter 6 we introduce the final technical piece of the IS model: networks. One way to start the network discussion is to bring back Figure 1-1 and ask students “Where are the networks?”

The answer, of course, is that the networks are the glue that holds all of these five components together. There are social networks that hold people together that are featured in the “What do YOU think?” exercise entitled “Human Networks Matter More.” These social networks are not the ones featured in the main body of the chapter.

Instead, our focus is placed on the communication networks that facilitate person-toperson, computer-to-person or computer-to-computer interaction.

Students often find the discussion of networks, protocols, open standards, and related material quite dry. So instructors should recognize that they need to work hard to engage students with the material. The point of this chapter is not to make students experts in communications technology. Rather it is to improve their understanding of the foundations for networks. Our opening vignette hopefully shows that students and business professionals are surrounded by networks. The availability of networks changes products, services, and in some cases even industries. It is clear that business professionals should not ignore the networks that surround them. Instead, business professionals should understand the networks and their capabilities and limitations, and look for opportunities to make their company more efficient or effective. We provide two suggestions for improving student engagement with the material below.

Before ending this summary, we wanted to draw attention to the items in Question 7 and 8: “Why is my phone getting smarter?” and “How does a search engine work?” We have found that the discussion of webcrawlers—the frontier—and search engines really help to engage students in wanting to understand more about networks. Knowing that the first search engine (Archie) was developed at McGill by a Canadian student usually gets some interest started. These are just two examples of the many examples of interesting applications of network technology. We think business students can be intrigued about the uses of networks more than they can be intrigued about the internal workings of networks.

So it is important we cover applications of networks and not just focus on the technology that makes them happen.

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Examples to Use in Class.

The opening vignette in Q1 (where we count the number of networks that a business professional bumps into when he or she goes out for dinner and a show in St. John’s) is a good example to bring to student’s attention. To support the vignette, ask the students the following question: “What would be different about your life if you didn’t have the Internet? What would you be missing? What couldn’t you do?”

You may have to prompt them a bit. But ask them to think about a world with no Google, no webCT or Blackboard, no air travel websites. No ebay, Facebook, Twitter, MySpace, iTunes, YouTube, or dating connection services. What about a world with no email? How would we survive? What would students do? You will hear gasps as students think about how much of their lives depend on the Internet. Then ask students if they think that knowing something about how a network works might benefit them. It is one thing to be a user of networks, but business people need to understand how networks can be used to make money. This is a great exercise to get people going.

Another illustrative exercise was created by Kamal Masri, an instructor and PhD student at Simon Fraser University. We use this exercise to explain how packet switching works and we call it the “You as a Router” exercise. This exercise works best after the break.

The first step in the exercise is to prepare a set of “packets” for use in the class. You will need the 5 packets that are supplied below. We photocopy these before the class. Note that all five of the packets will share the same destination address (which will be one of your student’s first and last names in the class). We do not fill this name in before class as the student may not be in attendance. Instead we quietly choose a student once we get to the class. We find it is best to ask a student before class who is sitting near the back of the classroom to provide their last and first name for an example in class. We then write the name into the destination address. If the students know each other well, you might consider using a student number and not a name.

Each “packet” has a header (indicating the number of packets and when sent), the packet ID (which indicates the order of the packet), and the message text (one word for each packet). The message spells out (when put in correct order) “Good Luck on the Midterm” After the break, or as you are explaining how packet switching works, is the best time to run this exercise. Take the five “packets” that you have created with the “destination address” and distribute them randomly to five different people at the front of the room.

The wider the distribution the better. Now ask each person to act like a “Router”. To be a router, you have to look at the destination address. If the address does not have your name there, you must “bounce” the packet to a router (person) sitting near to you. The class is to keep quietly “bouncing” the packets until all 5 packets arrive at their destination address. Make sure to announce that this is a quiet exercise and that no one is allowed to announce the destination address as that destroys the effect of the exercise.

Note, make sure that once the “bouncing” has started that you get back to the job of lecturing. It is fascinating to watch how the packets move through the class, but the exercise can take a good 10 minutes to complete (depending on the size of the class and Copyright © 2014 Pearson Canada Inc. 69

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how quickly the person is located). We find the class is pretty engaged watching the messages bounce around. It is an exercise that get’s a large percentage of the people in the room personally involved in. It works well. And it is a great way to end the lecture when you ask the person to read out the message.

“YOU” as a Router Exercise Destination Address Header:

Message has 5 Packets sent during class today

Packet ID

Packet 1 of 5

Message text

Good

“YOU” as a Router Exercise Destination Address Header:

Message has 5 Packets sent during class today

Packet ID

Packet 2 of 5

Message text

Luck

“YOU” as a Router Exercise Destination Address Header:

Message has 5 Packets sent during class today

Packet ID

Packet 3 of 5

Message text

On

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“YOU” as a Router Exercise Destination Address Header:

Message has 5 Packets sent during class today

Packet ID

Packet 4 of 5

Message text

The

“YOU” as a Router Exercise Destination Address Header:

Message has 5 Packets sent during class today

Packet ID

Packet 5 of 5

Message text

Midterm

CHAPTER OBJECTIVES 1.

2.

3.

4.

5.

6.

7.

Understand the impact that knowledge of networks can have on a business career.

Understand what a computer network is.

Understand what the components of a network are.

Understand what the alternatives for a WAN are.

Understand the purpose of a firewall.

Understand what a VPN is, and why one is important.

Understand how a search engine works?

CHAPTER OUTLINE Q1 Q2 Q3 Q4 Q5 Q6

Why should I care about networks?

What is a computer network?

What are the components of a LAN? Why is mobile computing important?

What do I need to know about connecting to the Internet?

How does email actually work?

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Q7 What are firewalls, encryption, and VPNs? Q8 How does a search engine work?

ANSWERS TO USING YOUR KNOWLEDGE QUESTIONS 1. Suppose you manage a group of seven employees in a small business. Each of your employees wants to be connected to the Internet. Consider two alternatives:  

Alternative A: Each employee has his or her own modem and connects individually to the Internet Alternative B: The employees’ computers are connected using a LAN and the network uses a single modem to connect.

a. Sketch the equipment and lines required for each alternative.

Alternative A: Computer 1

Computer 2

Computer 3

Computer 4

Computer 5

Computer 6

Computer 7

Modem 1

Modem 2

Modem 3

Modem 4

Modem 5

Modem 6

Modem 7

ISP

Internet

Alternative B: Computer 3

Computer 4

Computer 2

Computer 5 Computer 6 Computer 7

Computer 1

Switch

Router

Modem

ISP

Internet

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b. Explain the actions you need to take to create each alternative.

To create alternative A, you would arrange for and obtain seven modems from your Internet Service Provider. Since this is a business setting, you are likely to want DSL modems so that regular voice communication will not be interrupted on the phone lines to each of your employees. Connect each computer to its DSL modem and connect the modem to the phone line. Pay your ISP for seven Internet connections.

To create alternative B, install network interface cards on each computer. Connect each NIC to a switch using unshielded twisted pair wire. Connect the switch to a router, enabling the computers to share a single Internet connection. Connect the router to the correct modem (DSL or cable), and pay your ISP for one Internet connection. c. Compare the alternatives using the criteria in Figure 6-13.

Alternative A would require the initial cost of seven DSL modems. Each modem would have to be attached to each computer using existing phone lines. Ongoing costs include the seven Internet connections provided by the ISP. This configuration would provide excellent Internet access speed to each computer, but would not be very flexible.

Alternative B would require more extensive initial set up costs. The NICs would have to be installed on each computer. Cables would have to be run to connect each NIC with the switch. The switch would have to be installed and configured and connected to the router. The router would have to be installed, configured, and connected to the modem. Ongoing costs would include one Internet connection provided by the ISP and costs associated with maintaining and repairing the switch and router. Performance in this configuration could decline if each user accesses the Internet extensively. This configuration is more flexible than the other since it is relatively easy to add more users to the network. d. Which of these two alternatives do you recommend?

Unless each user is constantly uploading and downloading huge files, alternative B would provide the most effective and flexible plan for Internet access for the business.

2. You have decided to start up a web-based business. You are considering what you need to make it happen. a. Explain the steps you would take in assigning a domain name for your website.

You first visit www.icann.org and find the list of accredited registrars which is located at: http://www.icann.org/registrars/accredited-list.html. You then determine what top level domain you want to be placed under. For example if Copyright © 2014 Pearson Canada Inc. 73

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you want the top level domain “.com” you visit the Verisign Global Registry Services at http://www.verisign.com You then use this site to find a company who is a certified registrar for “.com” names. This list is located at http://www.verisign.com/information-services/naming-services/com-net-registry/ page_002166.html. Some examples include NickName (http://www.nic-name.ca/) or (http://www.registermydomains.ca/). You can then visit that company’s website and work through the process of registering a name. b. Use the web to find the options available for ISPs to host your website. Find at least three different options and explore the differences between them. Explain why choosing a reliable ISP is important to your site.

There are many different hosting solutions. Some examples along with prices are detailed below. Since your site is the interface with the customer and potentially the only mechanism for revenue, the reliability of ISP is important to the success of a web based business. http://www.nic-name.ca/

Basic

Gold

Premium

Domain Name

Yes

Yes

Yes

E-mail addresses (Mailboxes)

10

40

300

Storage

100 MB

250 MB

1,000 MB

Transfer Limit

12 GB

40 GB

160 GB

Scripting

Yes

Yes

Yes

Credit Card Processing

No

Yes

Yes

Cost per Month

$12.95

$44.95

$119..45

c. You have also decided to set up a small office network for your company. Provide an example setup for your company that includes everything you need to connect to the Internet.

This is covered well in Chapter Extension 6a. Please refer to the material there for a more detailed description of the setup. d. Create an estimate for how much it would cost you to start up your business (including computer equipment, domain registration, ISP charges, software). Did you consider web designer charges? Explain why or why not?

The answer to this question will change from semester to semester. We have found that a search through domain registration sites (such as GoDaddy.com) is often eye opening for some students. One of the important parts of the exercise is to step students through the various costs that students often do not figure in when thinking about setting up a site. In reality, this is quite a complicated question and could provide a useful (but unfortunately quickly changing) exercise Copyright © 2014 Pearson Canada Inc. 74

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3.

You have decided to set up a web-based business. You have investigated the costs, chosen an ISP, and are ready to get working on your site. You’ve heard that a quick way to get your site up and running is to use a website template. Some examples are provided at www.templatemonster.com or www.websitetemplates.com . a. Choose an example web business and look for a template that you think fits your business.

There are a large number of templates that are available for a reasonable price. It is important that students look not only for sites that are flashy, but also fit the business model they are looking for. Templates are a quick way of getting a site developed, but they rarely fit perfectly. b. Describe the changes you would have to make to the template to fit your business.

Again, this is not a question we can really answer as it depends on the student and the business. What is important is to open students’ eyes to the possibility provided by templates. c. Determine the cost of the template and estimate the cost for the work needed to modify the template to fit your business.

Most template users do not pay for exclusive rights, but rather the right to use the template and modify the code. Before entering into exclusive rights it is important to make sure that the code supporting the template is well organized. Templates are usually made to look good, but do not necessarily function that well. You will need to know some programming in order to maintain the site. So setting up the site so it can be maintained will require some costs. d. Discuss the advantages and disadvantages of using a template for your website.

The advantages of using the template are that a relatively inexperienced person can quickly get a professional looking site fairly and at a low cost.

The disadvantages are than the template will rarely fit perfectly and, unless you pay more money and select an exclusive design, other people can copy and use the template. You will also likely have to modify the template, which will require an investment in programming.

ANSWERS TO COLLABORATIVE EXERCISES Note: This exercise can be combined with a collaborative exercise in Chapter 4 as a semesterending group assignment. As noted in Chapter 4, we usually hold this exercise until the last two weeks of class and we get students to present in their tutorials (24 students). We use groups of 3 or 4 students. In some years we have had students post their two-page Copyright © 2014 Pearson Canada Inc. 75

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summaries on the web. It has turned into an excellent exercise to show the importance of understanding the business impacts of technology.

1. Create a maximum two-page information sheet that summarizes the topic. The summary should include: a. An introduction to the topic (in English, not “technobabble”). b. The relevance of the topic to business managers (for example, advantages and benefits vs. costs, if they are known) c. Examples of products, vendors, or companies that use the particular technology. d. Links to sites that contain further information. e. A statement about the future use of the technology. Are there any barriers to adoption? How prevalent will the technology become?

2. Now create a presentation (using PowerPoint, Keynote or other presentation software) that could be used to present the topic to other students in the class. Make sure to include a title page and be prepared to present what you have found about your topic to the class. Choose one of the following topics (or ask if you can create your own): a. How do global positioning systems work and what is the value of having GPS? b. What benefits will Google’s Android bring to the smart phone industry? c. Which phone works best for business—iPhone or Blackberry Bold? d. What is WiMax and what advantages does it have over WiFI? e. What is Google Wave and how does it support collaboration? f. What is Voice Over Internet Protocol (VOIP) and how is it related Skype? g. What is packet switching and how has it changed the use of networks? h. Who will win the smart phone operating systems war? What will this mean to the mobile phone industry?

ANSWERS TO CASE STUDIES MIS in Use 6: Never Miss Your Bus 1. What problem does MyBus solve?

MyBus reduces the amount of time waiting at a bus stop. Imagine, for example, being at a Tim Horton’s and needing to walk to the bus stop. Ideally the bus would either be waiting for you there or arrive shortly thereafter. Because few people carry the bus Copyright © 2014 Pearson Canada Inc. 76

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schedules with them, even though they may often use the same bus stop, MyBus allows them to reduce waiting time and to take more control of their lives.

2. How important was access to the TransLink website and the text messaging API? Access to the TransLink website was critical for MyBus to have easy access to the schedules. Without this information, MyBus would have had to capture all of the information manually and would need to constantly ensure that their systems we accurate and up to date.

Access to the text messaging Application Programming Interface allowed MyBus to develop the system at low cost and to reuse a standardized and robust service. This accelerated development.

3. Does this system cooperate or compete with Translink?

MyBus does both. By reducing time spent non-productively waiting at bus stops, MyBus complements TransLink and may increase ridership. At the same time, by connecting to an external provider, TransLink loses an opportunity to connect directly with its customers and may lose other advertising or partner opportunities.

Also, by failing to develop and deliver the service on its own, TransLink appears less innovative and in contact with its customers.

4. What technological changes could affect John and Igor’s efforts to commercialize MyBus? Global Positioning Systems, which provide real time location information on cell phones and buses, would increase the precision of the system and be a dramatic improvement over use of static schedules. Because TransLink may not make this information publicly available (or in a standardized format), MyBus may become locked out of the value chain and unable to participate.

5. What advice would you give John and Igor?

MyBus started as a free experiment, but to proceed needs to develop some form of revenue, likely advertising. This service could also be used in other cities or sold to transit companies.

Update: John and Igor’s company, Handi Mobility, continues to do well and has extended into new products and markets all of which are based around the mobile industry. They licensed the rights to MyBus in Vancouver to TransLink and are currently talking to other cities and transportation systems.

Case Study 6: Keeping up with Wireless 1. What implications WiMax have for existing established traditional telephone companies (Hint: 20% of North American households use mobile phones in place of fixed wire [wireline] telephones).

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Similar to the way cellular technology has been disruptive in the communications sector, this change could cause further disruption to cable companies because the format could possibly offer the Internet, telephone (VOIP), and television. Such a change could remove older standing companies in the market and bring in new ones.

2. Beyond television, what other new capabilities could be enabled by this technological innovation?  Communication (telephones, videophones, etc.)  Internet (ability to connect anywhere) 3. What are the differences, if any, between the implications of this technology for Canada versus other industrialized countries? (Hint: Canada’s population tends to be less evenly distributed and is generally located within 250 kilometres of the US– Canadian border).

Canada’s geography would be a challenge for sharing of regional/national information.

One challenge is to provide access to remote communities in an efficient an effective way and though this extends the reach and bandwidth of mobile devices, it does not solve that issue. It does mean that in smaller towns, even a mobile device could connect to other devices within the city. In large cities, the issue of personal privacy would have to be addressed, as sharing with people a kilometer away would require higher levels of security.

4. How much more would you be willing to pay for the capabilities enabled by this technology?

There is no single answer to the question, but clearly people would be willing to pay for more access but it is not clear what the extra access would buy them. .

HUMAN NETWORKS MATTER MORE Goals  

Teach students the importance of networking Emphasize that business social functions are always business functions

Background and Presentation Strategies Successful business people are always networking. They constantly add to their set of acquaintances. This is true even at the highest levels: Every summer Microsoft has a meeting of the CEOs of the world’s 100 largest corporations. Almost all attend, not so much because of the presentations, but because they have so few opportunities to meet each other informally. When the CEO of 3M bumps into the CEO of Citibank at the coffee pot, who knows what transpires? The start of a new board seat for someone?

Business is nothing but relationships. People do business with people. Meeting the right people in an informal context makes it possible to better accomplish work in formal contexts. At the weekly softball game, when Brenda makes (or doesn’t make) a double Copyright © 2014 Pearson Canada Inc. 78

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play with Don and Bill, a bond is formed that makes it more likely that Brenda and Bill will come to Don’s network requirements meeting. It may not make sense, but that’s just the way people are. In business, relationships are everything.

So, even though it may seem contrived and awkward, students should learn to attend business social events and to use those events for network building. Sometimes people go to events because they want to meet someone in particular, and sometimes they go just to expand their networks. 

Go to business social events and don’t spend all your time talking to people you already know. Make a point of meeting new people who work in other departments.

Warning: Business and social events are business events. There is a difference between a softball game with your friends and one at work. There is a difference between a holiday party with your friends and one at work. The goal of all business social events is to expand networks and to enable people to relate to one another informally. A holiday party is not an opportunity for the company to reward its employees with unlimited free alcohol. 

Party with your friends, but network at business social functions

I once managed an exceedingly capable C++ developer who got drunk at the holiday party and made a fool of himself. The next Monday, our business unit manager wanted me to fire him. He was critical to our project, and I was able to help him keep his job. Our relationship, however, was never the same, and his standing at the company fell dramatically. 

Business social functions are business events

It is important, too, for students to use social organizations outside of their company for network building. The local chapter of professional accountants or marketers or software entrepreneurs or financial executives is an important source of professional relationships.

The best way to build a network is not just to go to a meeting; rather, get involved with the group. Help run a meeting, become an officer, work on the membership committee. 

As the Exercise points out, there is someone out there who knows someone or something that you need to know. Because you don’t and can’t know who that person is, your only alternative is to meet as many interesting people as you can.

Suggested Responses for Discussion Questions 1. The answer depends on the student and your local situation.

2. Use a fraternity or sorority, a student club, a church community, a dorm, a professional group, a job.

3. It’s easier to meet Linda because she’s in your group. You and she have many acquaintances in common. You also have your department’s business in common, so you’ll likely have much to say. It’s more awkward to meet Eileen. You have no Copyright © 2014 Pearson Canada Inc. 79

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acquaintances in common; you may not know what group she works in or what she does. You may have little to say to one another.  It may be awkward to meet strangers, but it is important. Try it. Practice while you’re in school. Get used to meeting people and talking with them. Learn to be better at it. If you’re shy, force yourself to do it.

4. Business social events are business events. Period.  You wouldn’t go into an important meeting without having an agenda of what you want to accomplish. So, too, don’t go to a business social function without having an objective; for example, “Today I’m going to meet two people from manufacturing and ask about the new MRP system.” Having an idea about what you want to know will make it easier to meet people. Just don’t turn in informal event into a formal meeting.  You probably don’t want to treat parties with your friends this way, but a business social function is not a party. It’s a business function.

5. First, regarding the phrase, professionals need to know their profession. Accountants need to know accounting, financial analysts need to know finance, and network administrators need to know TCP/IP-OSI. That said, however, what differentiates two people with about the same level of knowledge? Their relationships!

When you’re designing a computer network, knowledge of data communications technology is critical: but when you’re an Accounts Payable manager who’s been asked to prepare a high-level management statement of networking alternatives, then knowing who to call for help is more important than your particular knowledge of data communications.  Knowledge of data communications at the basic level of this chapter will help you better talk with experts in the field. It will help you build your network.

6. Get out and meet people. Go to every possible business speaker event. Talk with the speaker afterward. Ask interesting questions about his or her talk. Get that person’s business card. Follow up with an email thanking them and asking another pertinent question or two. Join relevant business clubs on campus. Get involved. When business people come to campus, volunteer to greet them and buy them a cup of coffee before or afterward. Do everything you can to expand your network. All of these actions increase the likelihood that you’ll meet that person who knows about the job that would be ideal for you. And, by the way, your life on campus will be more enjoyable and interesting, too.

Wrap Up One way to wrap up is to challenge the students to keep thinking about it: 

Networking is important—very important. In some ways, for the purposes of getting a job, developing a good network is more important than your GPA. Look how much time you put into your GPA. Just put some of that time into building your network.

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

Network building is, by the way, a lifelong activity. It may be that some relationships you build here on campus will pay dividends many years down the road Think seriously about these ideas. Discuss them with your friends. Determine what you believe about the relative importance of knowledge and networks.

When is one more important than the other?

Again, it’s your life, your career. I’m just trying to coach you into behaviours that will help you become a successful business professional. Give it some thought!

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CHAPTER 7 COMPETITIVE ADVANTAGE AND BUSINESS PROCESSES CHAPTER OVERVIEW In Part 2 of this book, we walked through Chapters 4, 5, and 6 for a technical tour of information systems. We change focus in Part 3 to look at the business aspect of information systems, specifically achieving competitive advantage. Each chapter in Part 3 considers a different aspect of competitive advantage. Chapter 7 focuses on how organizations use information systems to develop competitive advantage through various systems. Chapter 8 considers how the information collected in these information systems can be used to improve business decision making. Chapter 9 then considered the use of social media and e-commerce in achieving competitive advantage. Each of these aspects of competitive advantage is important to understanding why competitive advantage through IS is difficult to develop and maintain. While it may be difficult, it is also very rewarding for those companies that are able to achieve sustained advantage.

Before we begin, a short note on cross-functional and interorganizational systems is required. We have labeled ERP and CRM as cross-functional and have labeled e-commerce and SCM as interorganizational. We recognize that these categories are really a matter of degree and depend on the specific implementation of the software in an organization.

We have labeled e-commerce and SCM as interorganizational because the direction of the software is clearly to link more directly with customers and suppliers processes that are outside of the firm. We found that this distinction allowed us to provide a more coherent description, but we understand that this can be somewhat of a misleading categorization.

Chapter 7 covers a wide amount of information from functional systems through crossfunctional systems and finally to inter-organizational systems. Because there is a large amount of material, it is important to focus on a few key themes that are important to you as an instructor. We believe there are three key themes in this chapter: 1. The challenges of using functional systems 2. The marriage between cross-functional systems, industry standard business practices and competitive advantage 3. The rise of interorganizational systems What makes the material in this chapter difficult to teach is that many students do not have the breadth of experience working with information systems within an organization.

Without this experience, the students have difficulty envisioning the constraints placed on systems by functional areas. We have a suggestion for a discussion that can occur near the end of the lecture to help students summarize the material being presented to them.

It is focused on competitive advantage and is described later in this section.

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In regards to the first issue, it is important to talk about why functional systems are important. We believe it is more important, however, to talk about why there are challenges with organizing data and applications in this way. It seems as though every Introduction to MIS textbook includes a chapter about the various functional systems in a business. We have found that this type of lecture—one that lists different applications— provides very little to the student. We have therefore tried to limit this discussion.

Instead, we have placed more emphasis on question Q4, which we believe is central to the learning in the chapter. Students need to realize that locking data within business functions may limit the effectiveness of the firm.

In regard to the second issue, the marriage between cross-functional systems and industry standard best practices is a relatively easy one to make. We’ve tried to emphasize that the cross-functional systems that we consider (CRM and ERP and also SCM if used exclusively within an organization) are really a collection of best practices. People have adopted this software because they are looking for the efficiencies that these standard processes embedded in software can bring. This is the happy side of the marriage. But there are two costs to consider.

The first cost is that there is the likelihood that the company adopting the software may have to significantly change their business process. When an organization adopts the software, they are really saying that “We will have our people and procedures adapt to conform to the software.” This can be an uneasy transition, as change is often not greeted favourably within an organization. The second cost is a consideration of competitive advantage. If other firms adopt the same software (and same business practices) then where is the competitive advantage of adopting the system? Won’t installing these crossfunctional systems lead to a reduction in competitive advantage? We leave this discussion to the exercise described below.

In regard to the third issue, the growth of interorganizational systems is an important phenomenon. Interorganizational systems take cross functional systems one step further, by integrating processes across firms. It is important for students to understand why firms want to do this. In the case of supply chain, firms integrate information to improve coordination and reduce costs. In e-commerce, firms integrate processes to reach a larger market and/or to be more efficient in performing transactions. The challenges across organizational boundaries are significant and students should recognize that while there may be an ability to operate across organizational boundaries, there will be a significant reluctance to this among many firms.

Exercises to Use Near the End of the Class This exercise uses the “What do YOU think?” exercise provided at the end of Chapter 7: “Available Only in Vanilla?” Implementations of ERP that do little or no customization are often referred to as vanilla implementations. The exercise outlines why companies choose to do this but asks some interesting questions for discussion. We suggest that near the end of the lecture, you bring up the discussion questions from this exercise. Ask students what they think and try to get some discussion between students.

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One of the best ways of getting discussion is to provide a question and then ask students to first discuss the questions in groups of three or four. Give them a short time (for example 2–4 minutes) to discuss the item and then ask for people to talk for the group.

Using small groups first reduces the student’s risk of asking a bad question and also gets more people talking and thinking about the question. There will always be some students who do not engage, but this is not a reason to exclude the majority of students who will learn something from the discussion. These discussions also help to break up a long lecture and keep the students focused on the material.

The important questions to consider are questions 2, 3 and 4. The important job of the instructor in this exercise is to get students to think critically about cross-functional systems. Rather than sitting in a set in the lecture hall absorbing information about the various functional systems in a business, we should be working to engage students in thinking about the benefits and costs of running industry standard best practices.

Another exercise we can suggest is in returning to cases that were provided previously in the book to help provide examples. The HELM software in the MIS in Use 2 is a good example of an industry standard practice. The ICS courier case can also be used to show the impact of industry standard practices and how they can affect small firms. Ask students to indicate if these systems are functional or cross-functional and whether the software developed provided sustained competitive advantage for the companies using the software.

CHAPTER OBJECTIVES 1.

2.

3.

4.

5.

6.

7.

Understand how organizations gain a competitive advantage using IS. Know the three fundamental types of information systems within organizations.

Understand how functional systems relate to the value chain.

Know the basic types of functional systems.

Know the problems of functional systems.

Understand how industry standard best practices support cross-functional systems Understand cross-functional systems (ERP and CRM) and how they relate to business process.

8. Understand interorganizational systems including e-commerce and supply chain management.

CHAPTER OUTLINE Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8

What are the fundamental ways of achieving competitive advantage?

What are business functions and functional systems?

How can business processes be improved?

What are the challenges of implementing business process changes?

What is the importance of industry standard processes?

What are ERP systems?

What are CRM systems?

What are SCM systems?

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ANSWERS TO USING YOUR KNOWLEDGE QUESTIONS 1. Choose one of the following basic business processes: inventory management, operations, manufacturing, HR management, or accounting/financial management.

Use the Internet to identify three vendors that license a product to support that process. Compare offerings from the three vendors as follows. a. Determine differences in terminology, especially differences in the ways that the vendors use the same terms.

The following three software products were identified through a Google search for “manufacturing software”:  Alliance/MFG® by Exact Software: Alliance/MFG manages material and labor through the manufacturing process, helping you control inventory, plan purchases, and schedule work.  Batchmaster by Best Software: Process manufacturers work from recipes and formulas, mixing and blending raw materials in batches. This type of manufacturing is qualitatively different from a discrete manufacturer’s operation.  IndustriOS by Industrios Software: IndustriOS is an operations software solution that is fully functional and designed with applications that are focused on managing your business processes. These include customer and vendor management, order fulfillment, materials planning and procurement, production control and scheduling, and inventory control.

As the above brief descriptions demonstrate, these products are quite different from each other. Alliance/MFG is definitely focused on the manufacturing process. Batchmaster is focused on a specific type of manufacturing—process manufacturing. IndustriOS seems to have the broadest definition, extending out to include vendors and customers as well as outbound logistics. b. Compare features and functions of each of the product offerings.

See answer to part a above. c. For each vendor, specify the characteristics of a company for which that vendor's offering would be ideal.

Alliance/MFG would appeal to any manufacturing business needing an easy-touse, quick-to-deploy manufacturing system. Batchmaster targets businesses having formulation, laboratory, and batch production processes. Batchmaster’s product is clearly focused in those areas, but has been extended to be an end-toend ERP system for process-centric manufacturing businesses. IndustriOS seems to best fit small to midsize companies seeking a comprehensive operations software solution.

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2. Consider Carrie’s Custom Clothing company described at the start of this chapter.

Assume that Carrie uses one system to collect information about her customers, another spreadsheet to collect information about her suppliers, a Word document to create her invoices, and some accounting software to record her revenues and expenses. a. Give an example of some of the problems that Carrie faces by having these systems act as functional silos. 









Data duplication, data inconsistency: information maintained about a customer prospect when project estimates and bids are developed would be duplicated in the system that tracks a project in process, and would also be duplicated in the system and records of completed project. The duplicated customer information in at least three systems could easily become inconsistent.

Disjointed processes: as projects are bid and (hopefully) accepted by the customers, it is necessary to know the status of current projects in progress and the backlog of accepted projects waiting to be scheduled into the production process. If our systems are not integrated, this information may be hard to acquire.

Limited information and lack of integrated information: when an accepted project is begun, it is necessary to have all the required raw materials available at the appropriate time during the projection process. If the production system is not integrated with the inventory system, it will be difficult to have the correct raw materials available at the required time so that the production process is not delayed due to material shortages.

Isolated decisions lead to inefficient overall activities: the existence and size of the production process backlog will be important to the sales force. If the sales force is unaware of the production queue status, customers may be promised a production schedule that will be difficult to achieve.

Increased expense: not have the correct raw materials needed at the appropriate time will cause delays in the production process, which increases the overall expense of the project.

b. Then, provide some suggestions for how these systems could be combined to add value to her company.

There is no single answer to these questions. The main point of this exercise is to see how flexible the students are in addressing the various issues.

3.

Distance learning is an application of interorganizational information systems.

Although it may seem odd to label students as organizations, they are customers, in the same sense that consumers are customers in B2C e-commerce systems. a. Draw a process diagram of a regular, non-distance learning class. Label the activities and the flows among the activities.

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Student

Query

Response Service & Support

Solicitation Course Grade

Admission Application Course Enrollment

Recruiting & Admissions

Admitted Status

Registration

e urs Co lment l o Enr

Course Delivery

Request Class Offerings

Class Scheduling

b. Draw a second process diagram of a distance-learning class. In what ways are the two diagrams similar? In what ways are they different?

Student

Query

Response Service & Support

Solicitation Course Grade

Admission Application Course Enrollment

Recruiting & Admissions

Admitted Status

Registration

e urs Co lment l o Enr

Request

Class Scheduling

Class Offerings

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As the diagrams in part a and part b show, the processes required with nondistance learning courses and distance learning courses are similar, but the way the processes are performed is different. When courses are distance learning courses, the various processes associated with this environment need to be primarily Webbased and basically self-service for the students. In addition, in some settings, distance learning courses are not offered on a regular semester/quarter-based schedule, but are delivered whenever the student enrolls and last as long as it takes for the student to complete the course requirements. c. What is the competitive strategy of your university? How do distance-learning classes contribute to that competitive strategy?

Student answers will vary depending upon their university affiliation. Universities will vary in terms of the role that distance learning plays in their strategy, ranging from an essential core element of the strategy (à la University of Pheonix or Athabasca University) to a minor or even nonexistent element. d. Assuming that no face-to-face meeting is required to successfully teach a distance learning class, neither students nor professors need live near campus. In fact, they need not even reside on the same continent. What opportunities does that fact present to your university? What new educational products might your university develop?

With distance learning classes, it is possible to draw students from anywhere, and to have courses delivered by faculty from anywhere. This fact enables universities to create any number of strong niche programs that can attract students without requiring them to relocate. Similarly, faculty can be attracted to deliver these programs without the necessity of relocating, or, for that matter, even giving up their current faculty or professional position.

ANSWERS TO COLLABORATIVE EXERCISES Note: This is not an easy exercise. It requires the students to do some research, to consider a company’s business model and then think about what information systems will provide the company with the best business value. Since this is an introductory class this is a lot to ask for. But the exercise will make the point of linking business strategy with information technology strategy and focusing on business value.

As for answers, there are a wide number of possible solutions and the instructor should not focus necessarily on the one “best” strategy, but rather on making sure that the students provide justification for their choices and see both the costs and benefits of using the technology.

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1. Create a maximum two-page information sheet that summarizes the company, the idea, and the system it uses. The summary should include: a. An introduction to the company (example companies are listed below, but you are welcome to use another company). b. Outline the basis of the idea. c. Identify, as best you can, the strategy of the company (Note: you can use Porter’s five forces to understand the company’s industry.) d. Identify the information systems you think will be most critical to support the strategy. e. Provide suggestions on how the company should consider investing in information systems to support its business. Justify your suggestions.

2. Choose one of the following companies (or ask your professor if you can choose a different company): a. Zipcar b. Avelle (www.bagborrowandsteal.com) c. Grand & Toy d. Dell e. My Virtual Model (www.MVM.com). f. The Running Room g. Ritchie Bros. Auctioneers 3. Now create a presentation (using PowerPoint, Keynote, or another presentation software) and present the topic to other students in your class. Be sure to include a title page.

ANSWERS TO CASE STUDIES MIS in Use 7: Yes We Can: Lesson Learned in ERP Implementation at DPT 1. Consider the 5 components of an information system provided in Figure 1-1 in Chapter 1. Which of these components was the reason for the lack of success in the first round of ERP implementation at DPT?

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Originally, the company thought the software was the problem but later the company recognized it was the data, procedures, and people that were the real issues.

2. What do you think is the most important component in the success of DPT’s ERP in the second implementation?

The most important factor was the experience and knowledge provided by Eric. This was the catalyst for understanding more deeply the data and procedures the company would have to adopt to effectively use the system.

3. What role does Eric Dang play in the ERP implementation? What skills do you think are most important for Eric’s success?

Eric Dan played the role of business analyst, as well as some elements of project manager for the project. (Students will learn more about these roles in chapter 10 and 11). The most important skills were the analytical ones that focused attention on the business processes and documented the various processes the company would use with the new ERP system. Also important were the technical skills that helped Eric understand the database and other technical details in the application. But the business analysis skills were the most critical.

4. Do you think that DPT had to fail in its initial ERP implementation before it succeeded? That is, do you think it is necessary for companies to understand clearly what can go wrong before they fully commit to the project? Justify your answer.

I would argue that yes, the first system had to fail before the company was willing to take the project seriously. Since the company had little experience with ERP, it was likely impossible for people in the company to estimate the real effort needed to successfully implement the ERP. The company might also have been able to acquire the necessary knowledge by hiring consultants who had experience with ERP implementation, but again the need to document business processes and make implementation decisions unique to the company would have required significant effort from internal employees.

Case Study 7: Moving Like a Deere 1. What are the advantages of this technology?

There are numerous advantages to this technology. Aside from the obvious reduction in labour costs the system allows continuous harvesting of cotton, which can be critical given short harvesting windows. More importantly, the newest technology marries location-based services in at least two ways. For example, during harvesting, the picker calculates the yield from the land. This information allows for a calculation of the right amount of fertilizer or pesticide, rather than guessing.

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Knowing where the cotton came from and what pesticides or fertilizers were used could allow farmers to charge higher prices for certain types of organic cotton. This information could also be used to track back to other problems or opportunities for suppliers.

2. How does this technology allow John Deere to compete against lower-cost manufacturers and producers?

This technology allows John Deere to compete by changing the dimensions from simply costs to information. The advanced technology would also allow the machines to diagnose problems and to schedule service or maintenance before failure. Since machine failure is one of the largest risks (next to crop failure and market risk) that a farmer faces, all activities that can reduce this risk are worth considering.

3. Are there any other advantages to using this technology? What adaptation and extensions would increase the advantage? (Hint: Radio-frequency tags can be inserted into each bundle to track harvesting information and pinpoint where the cotton came from, identifying, for example, if the cotton qualifies as organic.)

RFID and yield information could be used by farmers when conducting experiments using new forms or strains of cotton. For example, a farmer could allocate a new variety of cotton to a few selected sections of the farm and then evaluate objectively the results rather than accept manufacturer or supplier claims. The farmer could also have contingent or partnership arrangements. If a form of cotton did not provide a certain yield, a farmer could receive a rebate, or if it produced a higher yield, the supplier could share in the increase through a performance-linked bonus.

AVAILABLE ONLY IN VANILLA Goals   

Reinforce the importance of inherent processes in ERP and other licensed software and the expense and challenges of variances from those processes Introduce possible longer-range consequences of adapting to vendors’ inherent processes Demonstrate an example of long-range thinking

Background and Presentation Strategies Warning: Before using this exercise, ensure the students understand what an ERP system is and how much it integrates the organization’s activities. It may be a good idea to start with a review of ERP systems.

Are organizations that enforce the standard ERP blueprint for their industry condemning themselves to industry-wide uniformity? I don’t know if this problem is real or not. But, in theory, as ERP packages become commodities (and we do know that a competitive Copyright © 2014 Pearson Canada Inc. 91

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software product always becomes a commodity), then every business will be run just like every other business. If that is the case, then how will one business gain a competitive advantage? Possibly, the company that executes the ERP processes most efficiently becomes the leader, but that is a difference in scale more than a difference in kind.

Even more worrisome, once ERP systems are solidly integrated into the organization, will they stifle creativity? Employees already complain that they are forced to do silly things because the “software requires them to.” Will the software mean that it is a waste of time to develop improved ways of doing business, because the improved way is incompatible with the “always-enforced” ERP way?

I posed this question to a PeopleSoft salesperson who said the answer lay with business intelligence applications of the data generated by the ERP system. “Organizations can gain a competitive advantage,” he said, “by reporting and mining the data that we generate in their databases.” Is that answer credible? If the information created by the business intelligence system can be applied in the context of the existing ERP or other system, then his answer may have merit. But what if the information created indicates the need for a change to a system that cannot be changed because of the structure of an existing ERP system?

Side effect: When an organization requests a feature change in the ERP system, that action may mean that every other customer of that vendor, and ultimately the entire industry, will have that change. Thus, the competitive advantage will be unsustainable.

What to do? No organization today that can benefit from ERP would choose not to implement it. But, having done so, has the organization entered a conformity trap?

Suggested Responses for Discussion Questions 1. The vendors would say that customers should adapt because the standard blueprint, the inherent processes, are the “best-of-class solutions.” They also know that variances are expensive and difficult to maintain. Life for the vendor and for the IS department is a lot easier if the company converts to the standard process.  What does the organization lose by converting to the standard blueprint?  What are the costs of that conversion (also consider non-monetary costs)?

2. Ask the marketing students what causes products to become commodities. Software is no different. (This point, by the way, opens the door to talk about careers in software sales, marketing, and support. These are great, high-paying jobs, and this class is the first step toward one.) The process: no vendor can allow another vendor to have a competitive advantage, so they all copy the features and functions from one another.

Ultimately, like cans of tomatoes on the grocery shelf, they all look the same.

3. This is the key question, and I don’t know a definite answer. The answer may come down to the issue of whether they can be better in the execution of the inherent processes in the software.

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  

If a company executes the standard blueprint better than its competitors, will that give it a competitive advantage?

Is it possible for a company to engage in a differentiation strategy if all companies use the same inherent processes?

Consider Lowe’s and Home Depot. They have the same business processes. What will make one better than the other? If they’re both using the same ERP package, the differentiation won’t be in IS innovation.

There is no obvious nor easy answer.

4. Such transfer of innovation happens when a company has an exception to the ERP system for which it asks the ERP vendor to program supporting software. If the exception represents an improved process, the ERP vendor can put it into its new software versions. Voila! The ERP vendor has been a conduit of innovation from one company to an industry.

Ultimately, this phenomenon is beneficial to the industry and the economy. That may be small consolation to the company that cannot maintain its competitive advantage.

Then again, innovation should be a continuous process. As Rudyard Kipling wrote, “They copied all they could follow, but they couldn’t copy my mind, and I left ‘em sweating and stealing a year and a half behind.” (The Mary Gloster, 1894) 5. It is probably not possible for two companies ever to be completely alike, but they may be close enough to make sustainable competitive advantages difficult, if not impossible. Example: Lowe’s versus Home Depot. One way to teach this is to play devil’s advocate (or, depending on your views, an honest critic). Say something like:  This essay is much ado about nothing. It has no real issue; the points it makes are hair-splitting, unrealistic, theoretical, and vapid. We’re wasting our time.

See how the students respond. If they take an opposing position, continue in this vein.

If they don’t, ask them if they think they’ve wasted their time by considering this essay. To me, thinking about something that might be important and concluding that it is not important is hardly a waste of time.

Wrap Up 



From time to time, it’s worth thinking about the long-range consequences of technology trends. In this case, we find that adapting to industry-wide inherent processes may create competitive advantages but—at least for interdepartmental processes—those advantages may not be sustainable.

By the way, most medium to large-scale companies have a person called the CTO, or chief technology officer. You’ll learn more about that person in Chapter 10. One of the key roles of that person is to think about the longer-range consequences of technology use. The job of CTO is fascinating, and it is one that some of you might want to consider Copyright © 2014 Pearson Canada Inc. 93

CHAPTER 8 DECISION MAKING AND BUSINESS INTELLIGENCE CHAPTER OVERVIEW We like to start this lecture with a discussion exercise that is created from a series of simple questions: “Who thinks data is a ‘competitive weapon’ for an organization?” Most students put up their hands. Next question.

“Who thinks data is an important organizational asset that can be used to create value for organizations?” More hands again. Next question.

“Who knows the title of a manager whose job it is to take care of the data in an organization and extract value from this asset?” Not many hands. Next question.

“Who knows where the value of data is represented on a company’s balance sheet?”

No hands. Sometimes someone says in “Goodwill.” Next question.

“DOES ANYONE SEE A PROBLEM HERE?” How many times have we heard that information is a “competitive weapon” and a critical organizational asset? Data can be an asset like money, land, office buildings and other capital. But is data treated with the same care and attention that financial resources are?

What VP is in charge of extracting value from data? How do we account for data? What processes do we use to extract value from data? While some companies can answer these questions, a majority of companies cannot. These questions are at the center of the data resource challenge noted in question Q3 in this chapter.

In the last chapter, we introduced the systems that provide competitive advantage for organizations. These systems (functional, cross-functional and interorganizational) focus on collecting, storing, and accessing important organizational information. Chapter 7 focused on how organizations use the information collected in these systems to improve decision making and develop further competitive advantage. Chapter 8 allows us to make a deep contrast between the traditional investment that has been made in IS by organizations (in OLTP and functional systems) to the new type of investment being made in OLAP and business intelligence systems. An example exercise to help make this contrast is provided at the end of this section. We have therefore focused on understanding the challenges of managerial decision making and then introduced OLAP systems, data warehousing and data mining as potential resources for addressing these decision making challenges.

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that effectively using business intelligence systems will become a core skill for many business managers in the future.

What about DSS and Expert Systems?

Note that by taking this view, we have bypassed some traditionally important material that is included in an introductory text around decision support systems and expert systems. These topics receive only a passing discussion in the main body of this book.

Not because don’t we believe these topics are important. Instead, we believe that in an introductory course, students must first be convinced of the potential value of using data for improving decision making. For those instructors looking for more in depth discussions of DSS, KM and expert systems, there are several chapter extensions that are available as part of MyMISLab that can be used to augment the material in the chapter.

A Discussion Exercise You Can Use in Class.

This exercise works best after you have discussed OLTP and OLAP. The idea behind the exercise is to summarize the differences between OLAP and OLTP so that students recognize the fundamental differences between the two approaches. This discussion exercise is very similar to the exercise provided in Question 2 in the “Using Your Knowledge” section of Chapter 8.

The idea is to build a contrast between OLTP and OLAP by considering what is most important. We suggest you can make contrasts like the ones provided in the first column in the first table below.

OLTP design principles

Contrasts

OLAP design principles

Focus on Data in or Data Our? Focus on Efficiency or Effectiveness?

Focus on a single transaction or many summarized transactions Focus on Reliability or Data Quality Focus on the Importance of the Interface Next step is to ask students to indicate which of the contrasting items would be most appropriately placed under the OLTP design principles and which under the OLAP principles. We suggest that you let students work in small groups of about 4 students.

Given them a specific time limit and hold to that time.

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Next ask for their opinion and fill in the table. An example is provided below. What is important in this exercise is to demonstrate to students that OLAP is something very different from OLTP. This will help in the discussion of data warehousing and data mining that follow.

OLTP design principles

Contrasts

OLAP design principles

Focus on Data in or Data Our?

Focus on getting Data into system

Focus on getting Data out of system

Focus on Efficiency or Effectiveness?

Efficiency (speed)

Effectiveness

Focus on a single transaction or many summarized transactions

One transaction at a time

Summarized, Many transactions at a time

Focus on Reliability or Data Quality

Reliability

Data Quality

Focus on the Importance of the Interface

Interface not important

Interface very important

CHAPTER OBJECTIVES 1.

2.

3.

4.

Understand the challenges that business managers face in making decisions.

Understand the difference between OLTP and OLAP. Understand what is meant by the data resource challenge.

Understand business intelligence systems and how they provide competitive advantage.

5. Understand the purpose and components of a data warehouse.

6. Know what a data mart is and how it differs from a data warehouse.

7. Know the different types of data-mining applications.

CHAPTER OUTLINE Q1 Q2 Q3 Q4 Q5 Q6 Q7

What are the challenges managers face in making decisions?

What is OLTP, and how does it support decision making?

What are OLAP and the data resource challenge?

What are BI systems, and how do they provide competitive advantage?

What are the purposes and components of a data warehouse?

What is a data mart, and how does it differ from a data warehouse?

What are typical data-mining applications?

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ANSWERS TO USING YOUR KNOWLEDGE QUESTIONS 1. How does the data storage trend affect your university? What types of data are growing the fastest? Of these, what amount is generated by students? By classroom activities? By administration? By research?

Universities are certainly affected by this trend. Much of the data associated with the university are electronic in nature, plus there is much more communication that occurs electronically (e.g., email). Entire courses are delivered electronically, plus course materials are distributed electronically. The distribution of video course materials electronically involves huge storage requirements. Most university documents have been converted to electronic form and are available on the Internet.

I’d say much of the fast-growing data at the university is generated by students and classroom activities.

2. OLTP systems are focused on providing three things: (1) efficient data input, 2) reliability, and 3) effective processing of a single transaction at a time. Use the knowledge you have gained to contrast these OLTP design principles with the design of OLAP systems. Do you see why the two types of systems require different designs?

OLTP design principles

OLAP design principles

Focus on getting data into system

Focus on getting data out of system

Efficiency (speed)

Effectiveness

One transaction at a time

Summarized, many transactions at a time

Reliability

Data quality

Interface not important

Interface very important

OLTP and OLAP have very different design principles. The focus in OLAP is on using collected data to improve decision making. The focus in OLTP systems is efficient reliable collection of data. These are fundamentally different approaches to how to handle data and therefore it is easy to see why OLAP and OLTP systems would be designed differently.

3. Suppose you work for the university and have access to student, class, professor, department, and grade data. Suppose you want to determine whether grade inflation exists, and, if so, where it seems to be the greatest. Describe a reporting system that would produce evidence of grade inflation. How would you structure the reports to determine where it is the greatest?

The reporting system should include historical grade information by professor, course section, department, and college. The reporting system could produce reports that compute and display GPA trends. Summaries could be produced by professor, course, program, department, college, etc. Statistics could be calculated for the growth rate (if any) in GPA over time. Instances where the GPA growth rate is significantly Copyright © 2014 Pearson Canada Inc. 97

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higher than the norm at the institution could be highlighted by the reporting system for additional investigation.

4. Suppose you work for the university and have access to student, class, professor, department, and grade data. Assume the student data includes students’ home address, high school, and prior post-secondary performance (if any). Describe an unsupervised data-mining technique that could be used to predict college applicants who are likely to succeed academically. Is it responsible or irresponsible to use an unsupervised technique for such a problem?

Cluster analysis could be performed on existing student data to identify characteristics that appear to be in common for students who have performed well in their first year at the university. This technique can be useful, but the results do need to be carefully interpreted by someone who understands the situation. For example, the analysis could discover that students who have grown up with golden retrievers in their households do significantly better than the average new freshman. Interpretation of this result needs to be done with care.

5. Explain how a set of If/Then rules could be used to select a supplier. Give an example of five rules that would be pertinent to this problem. Given the nature of a dive shop’s product, and the size and culture of the organization, do you think it’s likely that the shop would embrace an expert system? What about Carrie’s Custom Clothing business? Why or why not?

This question can have many answers. One example follows.

If Quality of Part is high and number of late shipments for a Supplier is <3, then include Supplier in List of Suppliers.

Given that DSI is relatively small and the IT team is small, it is NOT likely that the company would embrace an expert system. Another factor that reduces the likelihood of acceptance is the fact that DSI is quite a unique company and would require custom development of the expert system.

6. Do you think a data warehouse is appropriate for DSI? Why or why not? Figure 8-9 implies that data marts require the existence of a data warehouse, but this is not always the case. DSI could construct a data mart containing in-bound logistic and manufacturing data without a data warehouse. In this case, the data mart would need to clean and prep its own operational data. Given DSI’s product and the nature of its business, what value might such a data mart provide? List seven decisions that such a data mart might support. Describe the BI system that would support each decision.

Explain how such BI systems contribute to DSI’s competitive strategy.

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construct a data mart containing inbound logistic and manufacturing data without a data warehouse. In this case, the data mart would need to clean and prep its own operational data. List seven decisions that such a data mart might support, and describe the BI system that would support each decision. Explain how such BI systems contribute to competitive strategy.

There is no simple answer to this question, but generally any set of information that goes beyond the capability of a single person to understand could be large enough for a data mart. One person might be expected to know details for 50/60 customers (for example) but you could not reasonably expect a single person to accurately recall details for 1000 clients.

Seven examples of decisions for an inbound logistics and manufacturing data mart might include:    

  

What suppliers should we use? Who is most reliable (provide inputs on time and not damaged)?

How much should we order? What items do we run out of most frequently?

Can we be more efficient with our inventory? What is the flow of items through our inventory.

Can we increase our manufacturing productivity? What processes take the longest to complete. Are there better ways to design the manufacturing to create more efficiency?

Should we invest in new machinery or fix what we currently have. What is the Net Present Value of adding new machinery to our production processes?

Do we effectively schedule our production? Are jobs scheduled so that we are operating efficiently?

Are we making our customers happy? Do we complete our manufacturing on time? What is our average wait time? What is our average cycle time?

7. The list below shows a set of customers that a company has and their RFM scores.

Answer the following questions using information from the list.

Customer Ajax Bistro Carpenter Dog Walker Elephant Trainer

RFM Score 115 333 254 151 425

a. Which of the customers should the company focus their marketing efforts on?

Justify your answer.

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none of those. A short discussion about recency, frequency and monetary value will allow students to make their choices.

While there is no single “best” answer there are customers who are clearly wanted more than others on any scale. For instance the Elephant Trainer (4 2 5) should get attention, as should the Carpenter (who may have left you for another business). The Dog Walker (1 5 1) should be low on almost everyone’s list. b. Which of the customers brings the most money to the organization? How can you tell?

It is not easy to tell without some assumptions, but the Carpenter and Elephant Trainer likely bring in the most money due the frequency and monetary value columns. . c. If the organization had to drop one of the customers from the list, which customer would you choose to drop? Justify your answer.

Likely the Dog Walker would be the first customer to drop from the list as it provides a low monetary value though the frequency is high).

ANSWERS TO COLLABORATIVE EXERCISES Many grocery stores sponsor “card” programs, in which customers use special cards to receive purchase discounts. Shoppers Drug Mart, for example, sponsors the Optimum Card. The customer provides personal data, including his or her name, phone number, and address, and in return receives an identification card with a magnetic strip. When checking out, the customer gives the card to the cashier and receives discounts on purchase prices. The discount encourages people to use the card.

There is more to this story, however. Unlike many frequent-buyer programs, the Shopper's discount is not related to the number or size of previous purchases or to the total amount spent over time. Card programs are popular; many grocery and retail chains have them, so they must provide value. The question is, What is that value?

1. Consider this question from a business intelligence perspective. a. What might Shoppers Drug Mart or a grocery chain do with data that correlates a particular customer to that customer’s purchases over time?

Having data through time can show what purchases a customer might make that are associated with other purchases. For example, does a person come a buy other things when they come in for prescriptions. If so, what type of things do they buy? Do customers generally buy when things are on sale or any time they are in the store? This could be very valuable information when considering how to set up a store and where and when to offer specials.

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b. What information can such data provide? Assume that the data include not only the customer’s identity, purchases, and purchase items, but the store location and the date and time of sale. The cards are valid at any store in the chain, so purchases at different stores can be associated with the same customer at a centralized data warehouse.

Students should be able to get creative here. You could see if customers tend to shop at one store or many stores; if certain items are often purchased together; if there is a popular time for shopping for categories of products (morning, afternoon, or evening. There are many different types of analysis that can be done.

2. Describe market-basket analysis and explain how a grocery store could perform such an analysis using its club card data. Suppose the lift of high-quality dog food and premium cheese is 3.4. Explain what this means. Describe four possible ways that Shoppers could use this information. As a team, rank the four possibilities from best to worst. Justify your ranking.

The lift of 3.4 means the likelihood that people buy high-quality dog food when they buy premium cheese more than triples. So some alternatives might be: 1) Put the cheese and dog food near each other on the shelves 2) Put the dog food on special price and make sure the cheese is highly visible 3) Offer tastes of cheese near the dog food section.

And several others. Which one is best depends on what the students think will have the most affect on purchase decisions.

3. Mary Keeling owns and operates Carbon Creek Gardens, a retailer of trees, garden plants, perennials, annual flowers, and bulbs. “The Gardens,” as her customers call it, also sells bags of soil, fertilizer, small garden tools, and garden sculptures. Mary started the business 14 years ago and it has grown steadily.

“The problem is, however,” Mary says, “I have grown so large I’ve lost track of my customers. The other day I ran into Tootsie Swan at the grocery store and I realized I had not seen her in ages. I said hello and asked how she was doing and that statement unleashed an angry torrent from her. It turns out she wanted to return a plant and one of my part-time employees apparently insulted her, and she has not been back since. She was one of my best customers and I didn’t even know she had decided not to shop at the Gardens.”

Given this information, answer the following questions: a. Describe the best possible application of an OLAP tool for Carbon Creek Gardens. Can it be used to solve the lost-customer problem? Why or why not?

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choice is justified. AN RFM analysis will tell you something about recency but you cannot guarantee yourself of finding lost customers quickly. a. Describe the best possible application of market-basket analysis that could occur at Carbon Creek Gardens. Can it be used to solve the lost-customer problem?

Why or why not?

You could look at the relationship between purchases of plants and purchases of gardening tools and supplies. You might therefore be able to put gardening supplies at high discounts knowing many people will also buy plants with those tools (if the lift was significant). b. Which BI application would provide Mary with the best value? If you owned Carbon Creek Gardens, which application would you choose?

Again, the answer will depend on what the group of students believe is the most important. There are many possible answers and so the important point is to focus closely on how the groups justify their choice.

ANSWERS TO CASE STUDIES MIS in Use 8: Sports Decisions Go High Tech 1. What process would you use to identify your choice of a first round athletic draft?

Depending on the sport, when it comes to first round draft picks teams use a variety of data and numbers. Specifically teams would use the actual “stats” obtained during their junior or college careers. They would then probably follow the information provided by their scouts based on other criteria important to the team. Finally the only other issue is what type of first round player a team is looking for. Does your team need a new goalie? Offensive Player? Defensive? All these factors will affect the actual decision on who is selected in the first round draft.

2. Is choosing athletes any different from hiring any other kind of employee?

Depending on the job its all about money. A professional athlete has no guarantee on making it to the major leagues. The cost of taking a first round pick who does not make it to the major leagues would cost much more than hiring someone for a general business entry level position.

3. Why do you think these techniques first appeared in baseball, rather than hockey or basketball?

Baseball is a sport that is heavy on numbers, (RBI, batting averages, etc) it outstrips other sports and provides more numbers to be provided for analysis.

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4. Why would teams be reluctant to discuss how they use technology?

Teams would be reluctant to discuss technology as it is competitive advantage. If a team was using technology that helped them increase their percentages in regards to picking players in later rounds of a draft, it would prove to be worth a lot to other teams they are competing against.

5. Is this increased decision making sophistication inevitable? How do you make decisions and how has it changed over time?

Yes, decision making will change over time, likely becoming more sophisticated the longer we do it. When I was younger the choices I made were perhaps made more on short term benefits, but with some maturity comes recognition of the importance of benefits in the long run Case Study 8: Building Data for Decision Making at Home Depot 1. Explain how reporting systems could be helpful to you.

Reporting systems are helpful in integrating data and sorting, grouping, and summing the data to produce relevant, accurate, and timely information. In this situation, a reporting system would be very useful in organizing the sale information that is available in ways that will focus attention on poorly-performing models (and brands), and grouping that data in meaningful ways (such as by region).

2. Show the structure of one or two reports that you could use to identify poorly selling models. How would you structure the reports to identify different sales trends in different regions?

One possibility would be to prepare a listing of the following information with a line item in the report for the total unit sales for each make and model. By listing the actual unit sales for each month of the current quarter and also listing comparative sales figures for the same quarter last year and the current year previous quarter, trends can be spotted. To highlight regional differences, a similar report could be produced with regional totals displayed for each make and model.

Make

Model

Current Quarter Average Monthly Sales Last Year

Previous Quarter Average Monthly Sales

Current Quarter Actual Sales M1

M2

M3

3. For one of your reports, write a description of your requirements that is suitable for giving to an IT professional. Be as complete and thorough as you can in describing your needs.

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should be last year’s average monthly sales for the current quarter, average monthly sales for the previous quarter of this year, and the actual monthly sales for the three months of the current quarter. Calculate and display a subtotal for each make, and calculate and display a grand total for all makes and models.

4. Explain how data-mining systems could be helpful to you.

Data-mining systems can be used to discover patterns and relationships among data and to classify and predict. Using our knowledge of the distinctive characteristics of our products, we might be able to find previously unrecognized relationships between our customer characteristics and our product characteristics. This information could be useful in preparing plans for sales and promotions that are effective in reaching our target audience.

5. How could cluster analysis help you identify poorly-selling brands? How could cluster analysis help you determine differences in sales for different geographic regions? Is the unsupervised nature of cluster analysis an advantage or disadvantage for you?

Cluster analysis could help us identify common characteristics among poorly-selling products. For example, we might discover that dryers that dry only by time are not selling well, suggesting a customer preference for dryers that use a dryness sensor to determine drying time. For regional sales differences, cluster analysis could identify the product characteristics that are selling well in each region. Given that cluster analysis is unsupervised, we would have to investigate why, for example, frontloading washers don’t sell in the Southwest but are very popular in the Northwest.

6. Do you believe there is an application for a KM system for identifying poorly selling brands? Why or why not?

A knowledge management system in this setting makes human knowledge of product sales trends available to others. In this setting, a knowledge management system that collects the local store managers’ knowledge of local sales trends and conditions, and pools that insight for the state, regional, and national sales managers could be very useful. Local store managers are often the first to become aware of a sales trend in the making. A knowledge management system could help collect and distribute this knowledge to the other product managers so that they are informed as rapidly as possible.

7. Do you believe there is an application for an expert system for identifying poorly selling brands? Why or why not?

Expert systems are good at diagnostic types of problem domains. Expert systems would probably not be particularly adept at this problem situation. Statistical systems or reporting systems would be superior.

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DATA MINING IN THE REAL WORLD Goal 

Teach real-world issues and limitations for data mining

Background and Presentation Strategies The contrarian I interviewed for this exercise had 15 years’ experience as a data miner, most of that in the automotive industry. He’d come back to the university because he was having a career crisis. He wasn’t sure that data mining was worth it. He’d begun to question the validity of many data-mining techniques. His concerns and misgivings are summarized here.

Judging by his experience, especially his last comment about luck, we can conclude that data mining shares risk characteristics with other forms of mining. Sometimes you find the gold or the oil, and sometimes you do not. A difficult ethical dilemma is buried in this exercise—one that I softened in writing the text. At the end of 6 months, this person had determined that the model that he had developed was, in fact, useless. They had overfit the data, and he believed the predictive power of the model was nil. He did not believe that the model should be implemented. But he was a junior member of the team, and his boss did not want to admit the model they had developed would be a bad predictor. His response was to leave that company within a few months. He still feels guilty about it— guilty that he didn’t get a better result and guilty that he wasn’t more honest and forthcoming. See question 3.

Suggested Responses for Discussion Questions 1. The problems he identifies are:  dirty data  lack of knowledge at start of project  missing values  probabilistic  good model may have unlucky first uses  overfitting  high risk—cannot know outcome  seasonality The students may not understand overfitting. It’s not discussed in the main part of the text. Overfitting occurs when you create a model that is too complicated.

Basically, your model captures not only the essence of the underlying phenomena, but also the random error that happened to be present in the data you used. When you try to use that model to predict, it predicts both the phenomena and the error; but the error, because it’s random, will be different than it was for the sample study data.

Thus, the model is terrific for explaining the sample data, but horrible as a predictor.

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Overfitting is a huge problem in data mining, especially when using neural nets.

They can produce such a complicated set of equations that they can predict any sample, including all of the sample’s error.

2. Like gold mining, data mining is fraught with risk.  Have a clear business objective in mind. Don’t just “see what the data show.”  Understand how the results of data mining can lead to action—not just insight.  If possible, run a pilot study with a limited amount of data and determine the utility of the analysis.

(A pilot study may not be possible. If the only difference between the pilot and the full analysis is the amount of data processed, then the complete study infrastructure may need to be finished just to do the pilot).  

Be aware of the problem of overfitting – one can create a model that will fit the sample data perfectly, but that will have no utility for prediction.

Keep in mind the risky nature of data mining.

3. In considering this question, ask the class these two “what would you do” questions:  If you, as a junior employee, were in his circumstances and had developed a model that you didn’t believe was useful, what would you do?

Some possible responses: First would be to discuss your misgivings with your boss. Maybe you are wrong about the quality of the model. Maybe there are other factors in the background that make your fears ungrounded. Maybe your boss agrees and wants to strategize with you about what to do. 

If your boss disagrees, would you go higher in the organization?

Maybe. But only after very careful questioning of my situation and motives. I’d ask myself whether the problems and risks of going higher are worth the gain.

Risks:

   

Gain:

 It will save the organization time and money  If the data-mining project involves people, it will save the harm that will be done by miscategorizing people.  It will preserve the reputation of data mining within the organization.

It will end my relationship with my boss.

My boss will become my enemy within the company.

I may expose both of us to the risk of being fired.

My boss’s boss may not want to know.

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Other courses of action are to quit the company, to transfer to another group, or to not do anything at all. All in all, this is a very difficult situation with no clear and obvious solution.

Wrap Up 



This case has two major themes: realistic problems in data mining and an ethical dilemma—when you know something that it will be possibly self-defeating to reveal.

Both are important.

You may not become a data miner, but you will most likely encounter a situation during your career when you may have to take self-defeating actions in order to act ethically. You need to keep thinking about such situations and what YOU would do, so that you are prepared.

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CHAPTER 9 E-COMMERCE, SOCIAL NETWORKING, AND WEB 2.0 CHAPTER OVERVIEW This chapter introduces the context of e-commerce and interorganizational systems. The primary goal is to widen student’s perspective on the use of the Web by organizations.

Most students will be very comfortable with the Web as a tool for individuals to use.

They will have experience with a wide variety of applications that they use on a daily basis. What the students may not be familiar with is how organizations use the Web to deliver services and how these services lead to further opportunities.

The growth of e-commerce, social networking, and Web 2.0 is based on expanding relationships with organizations and individuals (clients and customers). The growth in relationships has fostered the expansion of interorganizational (and interpersonal) systems. Interorganizational systems take cross-functional systems one step further, by integrating processes across firms.

It is important for students to understand why firms want to do this. In the case of supply chain, firms integrate information to improve coordination and reduce costs. In e-commerce, firms integrate processes to reach a larger market and/or to be more efficient in performing transactions. The challenges across organizational boundaries are significant and students should recognize that while there may be an ability to operate across organizational boundaries, there is a significant reluctance to this among many firms. The important question to address is whether there is any value in the relationship.

People spend many hours on Facebook and Twitter. There is clearly value in sharing information. Understanding this value and where the value is generated is the critical question in understanding this chapter.

LEARNING OBJECTIVES 1.

2.

3.

4.

5.

Describe the types of interorganizational systems that exist.

Explain how companies use e-commerce.

Explain why Web 2.0 is important to business.

Explain how social capital benefits you and organizations.

Describe how social CRM empower customers.

CHAPTER OUTLINE Q1 Q2 Q3 Q4

What is e-commerce, and how is it used?

What is social networking, and how is it enabled and affected by IS/IT? What is Web 2.0?

Is there a Web 3.0?

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ANSWERS TO USING YOUR KNOWLEDGE QUESTIONS 1. Choose one of the following basic business processes: inventory management, operations, manufacturing, HR management, or accounting/financial management.

Use the Internet to identify three vendors that license a product to support that process. Compare offerings from the three vendors as follows. a. Determine differences in terminology, especially differences in the ways that the vendors use the same terms.

The following three software products were identified through a Google search for “manufacturing software”:  Alliance/MFG® by Exact Software: Alliance/MFG manages material and labor through the manufacturing process, helping you control inventory, plan purchases and schedule work.  Batchmaster by Best Software: Process manufacturers work from recipes and formulas, mixing and blending raw materials in batches. This type of manufacturing is qualitatively different from a discrete manufacturer’s operation.  IndustriOS by Industrios Software: IndustriOS is an operations software solution that is fully functional and designed with applications that are focused on managing your business processes. These include customer and vendor management, order fulfillment, materials planning and procurement, production control and scheduling, and inventory control.

As the above brief descriptions demonstrate, these products are quite different from each other. Alliance/MFG is definitely focused on the manufacturing process. Batchmaster is focused on a specific type of manufacturing—process manufacturing. IndustriOS seems to have the broadest definition, extending out to include vendors and customers as well as outbound logistics. b. Compare features and functions of each of the product offerings.

See answer to part a above. c. For each vendor, specify the characteristics of a company for which that vendor's offering would be ideal.

Alliance/MFG would appeal to any manufacturing business needing an easy-touse, quick-to-deploy manufacturing system. Batchmaster targets businesses having formulation, laboratory, and batch production processes. Batchmaster’s product is clearly focused in those areas, but has been extended to be an end-toend ERP system for process-centric manufacturing businesses. IndustriOS seem to best fit small to midsize companies seeking a comprehensive operations software solution.

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4. Distance learning is an application of interorganizational information systems.

Although it may seem odd to label students as organizations, they are customers, in the same sense that consumers are customers in B2C e-commerce systems. a. Draw a process diagram of a regular, non-distance learning class. Label the activities and the flows among the activities.

Query

Student

Response Service & Support

Solicitation Course Grade

Admission Application Course Enrollment

Recruiting & Admissions

Admitted Status

Registration

e urs Co lment l o r En

Course Delivery

Request Class Offerings

Class Scheduling

b. Draw a second process diagram of a distance-learning class. In what ways are the two diagrams similar? In what ways are they different?

Query

Student

Response Service & Support

Solicitation Course Grade

Admission Application Course Enrollment

Recruiting & Admissions

Admitted Status

Registration

e urs Co lment l o Enr

Course Delivery

Request

Class Scheduling

Class Offerings

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As the diagrams in part a and part b show, the processes required with nondistance learning courses and distance learning courses are similar, but the way the processes are performed is different. When courses are distance learning courses, the various processes associated with this environment need to be primarily Webbased and basically self-service for the students. In addition, in some settings, distance learning courses are not offered on a regular semester/quarter-based schedule, but are delivered whenever the student enrolls and last as long as it takes for the student to complete the course requirements. c. What is the competitive strategy of your university? How do distance-learning classes contribute to that competitive strategy?

Student answers will vary depending upon their university affiliation. Universities will vary in terms of the role that distance learning plays in their strategy, ranging from an essential core element of the strategy (à la University of Pheonix or Athabasca University) to a minor or even nonexistent element. d. Assuming that no face-to-face meeting is required to successfully teach a distance-learning class, neither students nor professors need live near campus. In fact, they need not even reside on the same continent. What opportunities does that fact present to your university? What new educational products might your university develop?

With distance learning classes, it is possible to draw students from anywhere, and to have courses delivered by faculty from anywhere. This fact enables universities to create any number of strong niche programs that can attract students without requiring them to relocate. Similarly, faculty can be attracted to deliver these programs without the necessity of relocating, or, for that matter, even giving up their current faculty or professional position. e. Considering your answer to question (d), what opportunities does distance learning provide your professor? Is there any reason a professor should not teach for more than one university? Do you think there is a realistic opportunity for a group of professors from different universities to band together to form a virtual college? What competitive advantage might they accrue by doing so?

Professors can teach in distance learning courses and may have students enrolled from any location. Professors could offer distance learning classes for any institution wanting to offer that class, not just their home institution.

Professors certainly could join together to form a virtual college, as long as issues such as program accreditation were considered. Although it is unlikely that most professors will be this entrepreneurial, if they were, they could develop programs comprised of expert faculty and attract students from anywhere.

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ANSWERS TO COLLABORATIVE EXERCISES Note: This is not an easy exercise. It requires the students to do some research, to consider a company’s business model and then think about what information systems will provide the company with the best business value. Since this is an introductory class this is a lot to ask for. But the exercise will make the point of linking business strategy with information technology strategy and focusing on business value.

As for answers, there are a wide number of possible solutions and the instructor should not focus necessarily on the one “best” strategy, but rather on making sure that the students provide justification for their choices and see both the costs and benefits of using the technology.

1. Create a maximum two-page information sheet that summarizes the company, the idea, and the system it uses. The summary should include: a. An introduction to the company (example companies are listed below, but you are welcome to use another company). b. Outline the basis of the idea. c. Identify, as best you can, the strategy of the company (Note: you can use Porter’s five forces to understand the company’s industry.) d. Identify the information systems you think will be most critical to support the strategy. e. Provide suggestions on how the company should consider investing in information systems to support its business. Justify your suggestions.

2. Choose one of the following companies (or ask your professor if you can choose a different company): a. Zipcar b. Avelle (www.bagborrowandsteal.com) c. Grand & Toy d. Dell e. My Virtual Model (www.MVM.com). f. The Running Room g. Ritchie Bros. Auctioneers Copyright © 2014 Pearson Canada Inc. 112

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3. Now create a presentation (using PowerPoint, Keynote, or another presentation software) and present the topic to other students in your class. Be sure to include a title page.

ANSWERS TO CASE STUDIES MIS In Use: Computing Your Social Capital 1. Define capital, human capital, and social capital. Explain how these terms differ.

Capital—the investment of resources for future profit.

Human capital—the investment in human knowledge and skills for future profit.

Social capital—the investment in social relations with the expectation of returns in the marketplace.

All three terms refer to investments made with the expectation of a future return, but differ in the type of resource in which the investment is made.

2. How does the expression “It’s not what you know, but who you know that matters” pertain to the terms you defined in step 1.

The concept of human capital deals with “what you know.” This expression means that investment in your own human capital (e.g., through education and training) is not sufficient, that you should also invest in your social capital, or “who you know,” to make the most difference for your future.

3. Do you, personally, agree with the statement in item 2? Form your own opinion before discussing it with your fellow group members.

Student responses will vary, but in general most students today will readily accept the importance of social capital. However, many may not have considered the concept of social capital in business terms, thinking only of social relationships’ value for fun and friendship.

4. As a group, discuss the relative value of human and social capital. In what ways is social capital more valuable than human capital? Formulate a group consensus view on the validity of the statement in item 2.

Student responses will vary. Because we are dealing with students who are actively investing their time and financial resources into education, we would expect that they would place a high value on human capital at this point in their lives. They may think that social capital will be of increasing value to them in the future as they enter the working world with full-time professional jobs.

5. Visit the Facebook, LinkedIn, Twitter, or other social networking presence site of each group member.

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a. Using the definition of social capital value in this chapter, assess the value of each group member’s social networking presence.

No specific answer given—a task to be performed by the students. b. Recommend at least one way to add value to each group members’ social capital at each site.

No specific answer given—a task to be performed by the students.

6. Suppose you each decide to feature your Facebook or other social networking page on your professional resumé. a. How would you change your presence that you evaluated in Question 5 to make it more appropriate for that purpose?

No specific answer given—a task to be performed by the students. b. Describe three or four types of professionals that you could add to your social network that would facilitate your job search.

No specific answer given—a task to be performed by the students.

7. Imagine that you are the CEO of a company that has just one product to sell: You! a. Explain how you could use your social networking presence to facilitate social CRM selling of your product.

Students’ social networking is typically going to focus on fun and friendship.

However, with some work, it can be used to build relationships with potential employers. These relationships will emerge over time. Students can develop a professional social networking presence that will highlight their specific interests and skills. Student can also use social networks to interact with companies that interest them—to find out more about the business, post comments, or ask questions about the company, etc., and perhaps a relationship leading to employment will emerge. b. Devise a creative and interesting way to use this exercise as part of your social CRM offering.

Student answers will vary. Students might suggest ways that they could get the attention of a prospective employer by using the employers social network to provide product reviews, marketing campaign questions, suggestions for business process improvement, etc.

8. Present your answers to Questions 4 and 7 to the rest of the class.

No specific answer given—a task to be performed by the students.

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Case Study 9: Let Me Get That: BuyATab and Where Good Ideas Come from.

1. How hard would it be for BuyATab to sign its first customer?

BuyaTab would have to hold, for some time, monies that would have to be forwarded to the organization they were providing gift cards for. Developing the agreements to do this as a small company would be very difficult. It is a significant issue of trust and this would have to be established with the client organizations. The first customer would likely be the most difficult customer to attain.

2. Many others might have had this same problem, but why didn’t they think of developing a solution?

Mattias was used to working with technology like his smart phone to solve his problems. It was natural for him to think of the “gift card” as a process that could occur through the Internet. Others were used to buying physical cards and giving them as presents. The fact that others did not see the benefit of the electronic gift card was likely because they did not perceive the size of the potential market and or they did not use smart phone technology.

3. Why wouldn’t the credit card companies have solved this problem?

The credit card companies are focused on increasing transactions and reducing the time necessary to process these transactions. Though these credit card companies have the capability to do this processing, their business model is not set up to take advantage of these opportunities quickly. Mattius was able to move quickly and establish relationships with major clients. If the credit card company wants the business, they could now purchase it from Mattias and his shareholders.

4. Could BuyATab have been formed in the 1980s? (Hint: What enabling technologies were required to form such a company?)

No. The electronic gift cards required the commercial Internet, widespread microcomputers and mobile network technology. None of these technologies were available in the 1980’s. This is a good example of where changes in technology create the potential for innovation in business processes HIDING THE TRUTH? Goal Develop awareness of ethical issues and consider ethical principles for organizations using social media and user-generated content.

Background and Presentation Strategies This section presents a number of ethical quandaries. With a larger class, the best way to work through these is to assign particular quandaries to separate groups for discussion.

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underlying principles across the various situations while they listen to the other groups.

This discussion will be rich, but it takes time. You need to have 45 minutes to 1 hour for the different items to be discussed.

Discussion Items 1. Read the situations in items (a) through (g), and answer the questions contained in each. a) Graham is pretending to be someone who he is not. His actions are deceptive in that he has created an inaccurate portrayal of himself. For this reasons his actions are unethical. If the company promised that all passengers on the rafting trip were thoroughly prescreened, then the company might be liable for the deception. If the company did not send such a signal, then the company would not be responsible for Graham’s actions and would not have to refund the fees. b) It would be unethical for the company to ask employees to write good reviews about the rafting company. It is unethical because the company is acting to deceive potential clients by having employees act as clients. The biased information may sway some clients to participate in a trip and that would be unethical. An employee should identify themselves as an employee when providing feedback. c) Encouraging employees to find clients is not unethical. Inviting friends to a party to show rafting pictures is not unethical. When the friend dies on the way to the party, the company has no responsibility for the accident. The person could have been driving anywhere and was coming to the party of their own free will. The accident is extremely unfortunate, but accidents can happen anywhere at any time.

This accident cannot be attributed to the company. It would not matter if you had encouraged the employees or not. d) The website is owned by the company, so it is not obliged to place negative feedback on the website. There is nothing unethical about removing the review from your website if the site is yours. In practical terms, however, the client who wrote the review can place that review on other sites that you do not control. You owe a responsibility to your future clients to make sure that you work as hard as you can to eliminate the risk of contaminated food. You could respond to the customer review and indicate what steps you have taken to address this issue. This would allow the original client to express their views, while you modify the risk for new clients. e) The Amazon.com review should be directed at the book and not the professor.

In using the Amazon site, you are using a forum designed for books improperly and providing an unsolicited teaching review in a public forum. Since the review is misplaced, the author is justified in asking to have it removed. You are not acting ethically because you are misappropriating a technology for your own personal use.

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f) If you are indicating the river rafting company’s trips are unsafe, when in fact they are safe, then you are using a public form inappropriately and acting unethically. Since your actions are likely to harm the river rafting company’s reputation, you are also likely acting illegally. You would have to prove that the company is operating unsafely. If you could not do this, then you will have slandered the company’s reputation and they could seek damages. This case differs from d) in that the negative publicity is based on a falsehood where as in d) it is agreed to have occurred. g) In creating a Facebook account in the owner’s name, you are acting deceptively and posing as the owner online. You are likely posting pictures and content of the owner without first obtaining their permission and hence acting unethically. When you quote the owner, particularly from quotes that are out of context, there is a potential of slander. In directing others to the site you are promoting and making public your accusations and hence opening up the potential for further slander.

These actions are clearly unethical and provide an unfair portrayal of the owner which will be difficult for them to overcome.

2. On the basis of your answers for Question 1, formulate ethical principles for creating or using social networks for business purposes.

There are a number of ethical principles related to the use of social networks. This provides a good basis for discussion. Don’t limit the number of principles developed.

Some examples of principles might include the following.

The first is that accounts should not be misrepresented. It is never ethical to pose as another person when doing so might affect decisions by others. The second is that posting pictures and thoughts from others should be done only after gaining permission to do so. Finally, organizations owe it to their customers to allow for positive and negative feedback in a forum. The company is also responsible for addressing comments and concerns left by customers.

3. On the basis of your answers for Question 1, formulate ethical principles for creating or using user-generated content for business purposes.

There are a number of ethical principles related to user-generated content. This provides a good basis for discussion. Don’t limit the number of principles developed.

Some examples of principles might include the following: It should be clear in requesting reviews that the reviews on the company’s website are owned by the company and not the reviewer. The organization should make sure that they can respond to the reviews before asking for the reviews. Limits on language and other elements in the reviews should be developed and communicated to reviewers.

Reviewers should also be notified that reviews can be removed for several reasons.

Organizations should work to validate the respondents and reviewers so that they reflect the true nature of the review.

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4. Summarize the risks that a business assumes when it chooses to sponsor usergenerated content.

This can be a substantial list. Ask small groups (4 to 5 students) to come up with their top 5 risks. Spend some time going through the room asking each group to add one or more new risks to the list as you move through the class.

5. Summarize the risks that a business assumes when it uses social networks for business purposes.

Again, this can be a substantial list. Make sure to get students to concentrate on the social networks aspect of the question. Ask small groups (4 to 5 students) to come up with their top 5 risks. Spend some time going through the room asking each group to add one or more new risk to the list as you move through the class.

You will likely develop a strong top 10 list of risks a manager should be aware of when considering social networking.

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CHAPTER 10 ACQUIRING INFORMATION SYSTEMS THROUGH PROJECTS CHAPTER OVERVIEW We have changed chapter 10 quite dramatically in this third version. We decided to focus on the acquisition of information systems. We did this instead of focusing on the more traditional system analysis and design approach that has underlying elements of software development. Don’t get us wrong, we believe that the analysis and design of systems is a fundamental skill in Management Information Systems. No other functional area in business teaches business systems analysis and design.

The chapter on systems analysis and design in traditional Introductory MIS texts focuses on the waterfall method and developing systems. We have tried to change this perspective somewhat. The chapter title has be changed to acquiring systems to recognize the fact that most systems are no longer developed “in-house,” but rather acquired through other channels. Understanding sourcing options for systems and the roles that business people have in these acquisitions is important for any business student.

We therefore wanted to let students know there are a variety of ways of acquiring systems but that there is a common process for analyzing how best to do this. It is impossible, of course, to cover all that needs to be covered about system acquisition in one chapter. We have done our best to provide the basics.

We also want to recognize the growing importance of projects. IT projects serve as the vehicle for introducing the students to analysis and design. This reflects the project focus that most services companies bring to systems development. IT project management is growing in popularity in many business schools and introducing the project management material to the introductory class is therefore appropriate.

The focus at the end of the chapter on outsourcing is also important. Many students have voiced the concern that MIS jobs are “disappearing” because they are being outsourced or they have been offshored. These are important points to discuss with the students and a discussion item is provided below to help address this issue. It is difficult to argue that a portion of technical jobs have been moved to other countries/companies.

What students tend not to realize, however, is that MIS training focuses as much on communication with business people as communication with technical people. It may be the case that programming and web design work can be done more cost effectively in different countries. However, the communication still occurs between business people and the skilled technical people doing the work. This communication used to be difficult when all of the people were in the same country and the same building! With offshoring and outsourcing, communication skills become even more important. New job titles such as resource manager have begun appearing as companies try to deal with the added complexity of working with technical people across time zones, cultural barriers, and language barriers.

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While the landscape has changed, the core communication issues that MIS has struggled through in the past remain today. The discussion item below helps to bring this point home to students by focusing on their own career choices.

A Discussion Exercise for this Lecture I like to raise this discussion near the discussion of outsourcing. It usually works best after talking about outsourcing and offshoring. The discussion begins with a focus on the past. I first position the students by asking the following: “What skills do you think are going to be most important for work in the next two decades?”

You may get lots of answers. Someone will say MIS skills (and the class will laugh) others will talk about critical thinking, communication, networking, etc. You then move to the next step by asking people to think about the past. You might say: “In the past, the skill you acquired meant quite a bit to your livelihood. Choosing the wrong skill could mean a real disaster.”

Provide them with an example. A favorite is elevator operators. Ask the class: “How many people in New York City lost their jobs when elevators changed from manual control to automatic control?”

The numbers are astounding. Assume 10,000 buildings with an average of 5 elevators and 2 shifts a day and you get 100,000 people. And that is just one automation! You can then follow up this with the following discussion: “What jobs do see out there now that are like the elevator operators?” (That is, jobs that can be replaced by less expensive technology?)

Students will give some answers. Ask them about bookkeeping, financial analysis, and computer programming. Can these skills be easily replaced? Push them a bit and ask if these jobs can be shifted to other countries. The answer is that they can. This usually makes students think a bit and the room gets a bit quieter.

Now is the learning moment. Ask the students what skills they think are important and not easily replicated by machines or outsourced to different countries. In information systems, the jobs that seem to be the hardest to replicate are the jobs where you communicate with clients and provided personal services. Now ask them, knowing what they know now, would they rather be getting hard technical skills (like programming) or business skills (like bookkeeping or linear programming) or would they be better off learning softer skills such as communication and service skills that are backed by these hard skills?

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Hopefully students will recognize that their long-term personal competitive advantage will likely come from the combination of hard skills and the communication and people skills that will be required.

CHAPTER OBJECTIVES 1.

2.

3.

4.

5.

6.

7.

8.

Understand the options organizations have in acquiring information systems.

Understanding what is meant by a project and why IT projects are risky.

Understand what systems analysis and design is.

Know the five phases of the systems development life cycle.

Know how system definition is accomplished.

Know how an information system is implemented.

Know the tasks for systems maintenance.

Understand information systems outsourcing

CHAPTER OUTLINE Q1 Q2 Q3 Q4 Q5 Q6 Q7

How can information systems be acquired?

What are IT projects, and what does PMBOK mean?

What should you know about IT operations and IT projects?

Why are IT projects so risky?

What is SDLC? How are information systems designed, implemented, and maintained?

What is outsourcing, and what are application service providers?

ANSWERS TO USING YOUR KNOWLEDGE QUESTIONS 1. Using the knowledge you have gained from this chapter, summarize the roles that you think users should take during an information systems development project. What responsibilities do users have? How closely should they work with the IS team? Who is responsible for stating requirements and constraints? Who is responsible for managing requirements?

Roles could include business experts, application testers. The main responsibility is to be as honest and straightforward as possible during the information gathering steps to ensure that the scope of the project determined during this stage meets the PROPER needs of the users. Depending on the size of the project the user should be close enough for the IS team to learn what they need and return to get information, The project manager and business analysts are ultimately responsible for requirements but the users should feel they own these requirements as well.

2. If you ask users why they did not participate in requirements specification some of the common responses include the following.

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a. “I wasn’t asked.” b. “I didn’t have time.” c. “They were talking about a system that would be here in 18 months, and I’m just worried about getting the order out the door today.” d. “I didn’t know what they wanted.” e. “I didn’t know what they were talking about.” f. “I didn’t work here when they started the project.” g. “The whole situation has changed since they were here; that was 18 months ago!”

Comment on each of these statements. What strategies do they suggest to you as a future user and as a future manager of users? There are no simple answers to these questions. What the question is attempting to do is to show students the various reactions to requests to participate. We would like to convince more users to join in the process and hopefully students will see the benefits of adding their experience to the team.

3. Consider outsourcing the following business functions:   

Employee cafeteria General ledger accounting Corporate IT infrastructure (networks, servers, and infrastructure applications such as email)

a. Compare the benefits of outsourcing for each business function. b. Compare the risks of outsourcing for each business function. c. Do you believe that the decision to outsource is easier for some of these functions than for others? Why or Why not?

Answers to these questions depend to some degree on the industry that the business is in. For example an employee cafeteria is not likely part of the core delivery of services for a company (unless it is McDonalds). Most companies do not try to differentiate themselves based on their general ledger accounting but clearly it is more part of the core than the cafeteria. The IT infrastructure in a bank is critical. But in a cement factory it may not be.

Encourage the students to create a table and talk about the differences between the three items.

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4. Assume that you are a project manager charged with developing the implementation plan to switch from driving on the right side of the road to the left. Which conversion approach would you use and why?

You have four alternatives:    

Pilot Phased Parallel Plunge

Of these four, the phased approach likely has the best probability of success. The Plunge will create havoc as cars make the transition. The Parallel does not seem to be physically possible and the pilot would be difficult to monitor and costly to implement. A phased approach would allow resources to be placed where the transition is being made with the possibility for a smooth transition over time.

ANSWERS TO COLLABORATIVE EXERCISES Note: These exercises are designed to get students thinking about skill requirements for the future. If students are encouraged to think about this, they will find that many of the skills that MIS people are trained in will be important in the coming decades. It is easy to say this to students, but it has a much more lasting impression if students discover this for themselves. The collaboration is an important part of the assignment because it gets students listening to other students about what skills are important.

The roles of project manager and business analyst are increasingly being recognized by the wider community. Students should be aware of these roles and also consider what skills are required to be successful in these roles. So the second question is intended to get students thinking about these two roles in associate with their own careers.

1. Take a look at the report written by David Ticoll for the Canadian Information and Communication Technology Council, “Jobs ICTS 2.0: How Canada can win in the 21st century global marketplace for Information and Communications Technologies and Services (ICTS).” (Go to www.ccict.ca/pdfs/Reports_briefs/Ticoll%20-%20Jobs2-0.pdf). The report suggests that changes in the demands for skills has created new opportunities for students, companies, and educators in the ICT area. Discuss the findings in this report and answer the following questions: a. What skills are employers looking for in ICTS 2.0? How do these skills differ from the skills in ICTS 1.0? b. What will the changes in ICTS as outlined in this report mean to the members of your group? How will traditional business jobs change? Create a list of at least Copyright © 2014 Pearson Canada Inc. 123

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five ways that you, as a business professional, can take advantage of the changes that are coming to the industry. c. Where could a student best begin to develop the skills that are noted in ICTS 2.0?

Develop a list of opportunities that people who are interested in developing these skills can be a part of.

2. Visit sites that offer certification for project managers and business analysts (for example, www.pmi.org, www.theiiba.org, www.businessanalystworld.com, and www.pmac-ampc.ca). Use the information you find to answer the following questions. a. Compare and contrast the roles of a project manager and a business analyst.

Identify the most important skills for each of these roles. Are there skills that are common to both roles? b. Identify five different types of certification that a person could collect in project management and/or business analysis. Provide at least three reasons why certification is important for those who are interested in project management or business analysis. c. Provide three reasons why the roles of project manager and business analysis are getting so much attention in the workplace.

ANSWERS TO CASE STUDIES MIS in USE 10: From Lemons to Lemonade 1. What do you think is Chantelle’s biggest asset to an employer?

Her biggest asset is her ability to recognize and solve problems using technology and her knowledge of the business.

2. How would you decide how and when to change jobs?

This is a personal question but one that draws different reactions from different people. There is no single answer and students should be aware of this. When the average person changes jobs at least 6 times in their business career, it is an important question for students to be considering.

3. How have jobs and careers changed in the past 20 years? (Hint: How many employers have your parents worked for? How many do you anticipate working for?)

Jobs no longer last for lives. Careers change and employees move between organizations more rapidly than ever before. Technology even makes working at home, for yourself, a reality for many people. The work world is changing and students should be aware of this.

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4. How well do you think Chantelle’s job allowed her to see more of the company from other functional areas?

One of the great advantages of IT is the fact that it is literally incorporated into all business functions. In Chantelle’s position, it is easier for her to see different functions and how they work together than for people who work only within a specific function.

5. How does Chantelle’s situation compare to Dee’s? Would the situation be any different if Chantelle worked for a much larger company?

Again students will draw several analogies depending on their point of view and the assumptions that they make about the work that Dee and Chantelle do.

Case Study 10: Email or Freemail?

1. What are the benefits and risks that Provident faces when considering maintaining their own email system or moving to services such as Gmail? (Hint: How much control do you have when you use free web services, and how are they funded?)

Benefits: Cheaper, easy to use, large storage, set up for companies and others to use Risks: Can’t adjust the mail system much for a companies needs, issues of privacy and security (Google always reads MY mail, how can this be safe?)

2. How is email different, if at all, from other technology or non-technology services such as telephone systems or regular mail? (Hint: How differentiated are these services, and are there various levels of service) Telephone has different levels of service (cell phone, personal phone, T1 business lines). Regular mail has couriers and express mail. So email is no different in that there are several levels of support and several different price points—freemail being one of those price points.

3. How should a company decide which functions should be provided internally and which ones should be obtained externally? Is there a difference between the cafeteria or health services, and an information system?

Yes there are differences. There are legal issues relating to the storage and ownership of the emails. There are privacy issues relating to who can view the email and to what purposes the information in the email can be used. There are ethical issues in regards to information that your clients might be sending though email that are subsequently used in other ways by free services.

4. How does the industry in which a firm operates or the actions of its competitors affect your recommendation? (Hint: Would your recommendation differ if Provident was a health services organization)?

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might not be allowed to use a system such as Gmail, which would force them to go with their current system or another private email service.

5. Are there any other options that Provident should consider? (Hint: Is there a midpoint between self-service options and using free services?)

Some email providers do offer a paid option for email that provides better security and a more personal email address (usually intended for organizations). They tend to cost a monthly fee based on users and space used but it does allow a firm to get a more secure email service and not have to focus funds into the development of their own service.

THE REAL ESTIMATION PROCESS Goals  

Sensitize students to the challenges of software scheduling Alert students to possible consequences when negotiating a schedule

Background and Presentation Strategies There are many formal methods for scheduling, and I’ve worked at companies that have attempted to implement some of those methods. But invariably, requirements change, personnel depart, management loses patience with the discipline required to manage the schedules, or some other factor invalidates the good intentions of the project’s managers. Companies that have an effective process for scheduling software projects are extremely rare.

If anyone had figured software scheduling out, you’d think it would be Microsoft. But look how late both Vista and SQL Server 2005 were. Clearly, they don’t know how to do it, either. The Software Institute at Carnegie Mellon developed the software maturity model that rates organizations on their use of effective development processes. Perhaps some of that model’s level-4 or level-5 companies know how to schedule software development and how to manage to that schedule.

For complex software, with real users and with real requirements and management problems, I’m skeptical that anyone has figured it out. I think schedule risk is one of the major reasons that organizations choose to license software. The schedule (and attendant cost) risks of in-house software development are just too great.

Perhaps there’s something about the nature of software that means you can’t know how long it will take until you’ve done it. If so, the only organizations that can afford that kind of risk are vendors who can amortize the cost (whatever it turns out to be) over hundreds or thousands of users.

The protagonist of this exercise has been burned many times. He’s been asked to work weekends, holidays, and nights and to put in 80- and 90-hour work weeks during “crunch time” and he’s not doing it anymore. He’ll give what he thinks is a fair contribution— Copyright © 2014 Pearson Canada Inc. 126

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and he’ll probably do quite a bit more than that—but he no longer believes in heroics.

“The more rabbits you pull out of the hat, the more rabbits they expect you to pull out of a hat, until all you’re doing is pulling rabbits out of the hat. Nope, not anymore!”

Two important takeaways for the students: 



Software developers are optimists. Ensure that they have not planned schedules assuming that people work full time. People can’t work all the time—they get sick, go to the dentist, serve jury duty, write employee evaluations, sit on design reviews, apply for patents, and so on. Plans should apply a factor like 0.6 to compute the number of effective labor hours for each employee.

Be aware of the consequences of negotiating a schedule. If the developers have used a sensible process for creating the schedule, it is seldom worth reducing it. They’re optimists, anyway, and chances are the project will take longer than they think. If you trust that developer management is making effective use of the developers’ time, leave the schedules alone.

There is one important point not brought out by this exercise: Large projects are much harder to schedule than small ones. Also, if the project lasts longer than a year, watch out! Longer projects mean more chance for technology change, requirements change, and employee turnover. All of these factors increase the likelihood of schedule delays.

Suggested Responses for Discussion Questions 1. I think the developer has been burned many times. We can learn a lot by understanding his points.

2. There’s a risk when management attempts to negotiate schedules. As stated in the takeaway, noted previously, if management trusts that development management has used a sensible process to obtain the schedules, and if they trust development management to effectively utilize developers’ time, leave the schedule alone.

Alternatively, if the product must be produced more quickly, remove requirements.

But do so realistically, and not as part of a negotiating ploy.

As a manager, consider, too, the implications of negotiating a schedule. You’re essentially telling the developers that you do not trust them, that you think they’re attempting to deceive you with a relaxed schedule. Rather than a harsh negotiation with the implications just stated, you might ask the developers to show you their schedule, to discuss their scheduling methodology with you, and then, as a team, work together to determine if there are any tasks for which the schedule could be compressed, or ways of rearranging tasks for greater schedule efficiency.

3. Without any further information about the costs of the one-month difference, I’d prefer the 13-month shipment. Software that is produced when in “late mode” is typically lower in quality than software that is produced on a planned schedule. I’d bet (absent more information) that such quality matters will translate into costs high enough to swamp the costs of the two extra months of development.

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4. Return the plan to development management and tell them to plan more realistically.

This planning mistake would raise serious flags in my mind about the competency of the development team. I’d do something to get that team more training, bring in consulting expertise, or start looking for new development managers.

5. If schedules are always unreasonable, then nobody believes anything. Schedules lose relevance, importance, and meaning. “Everybody knows this is a phony schedule.

Don’t knock yourself out.”

6. I’d listen. I’d ask them to help me develop a plan and a process that would not have the result they fear. I’d work with them to develop that plan and to implement it.

7. This is a good question for the students to discuss. Some factors that may make software scheduling harder are:     

changing technology. changing requirements. that software is mental – it’s logical poetry. It’s as varied as the human mind. that large differences exist in the amount of quality code that different developers generate. These differences complicate planning. that different tasks require different amounts of time. Writing an application where the tools and techniques are known is far simpler than inventing or applying a new technology. This complicates the planning process. Consider the IRS’s CADE example.

In other ways, software is similar to managing any other complex project. It requires clearly defined tasks and schedules, unambiguous assignments of personnel to tasks, careful follow-up on assignments, management of critical paths and schedules, effective communication, and other skills students will learn in their project management classes.

8. Learn project management skills. Be aware of the difficulty of scheduling software projects. Understand the need to manage “requirements creep.” Be willing to remove features and functions if the schedule must be kept. Always plan on delays in software projects. Don’t assume that because a project is late that software management is incompetent. It may be, but it may also be that unavoidable factors intervened.

Wrap Up    

What did you learn from this exercise?

As a future manager, how will you plan your activities around software schedules?

How useful are the insights of this contrarian?

What characteristics make some contrarians’ comments more useful than others?

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CHAPTER 11 STRUCTURE, GOVERNANCE, AND ETHICS CHAPTER OVERVIEW This is a chapter with a lot of big concepts. We believe that topics such as IT services structure, governance, alignment, and IS audit have not been featured in introductory courses. This is likely because these topics are more executive in nature and may be difficult for students to understand. We believe that these topics provide some of the best opportunities for business majors outside of MIS to see the impact of systems within organizations. Hopefully this will spur these business majors to take a few more MIS courses before they complete their degree. There are three main topics and we have discussed them separately below.

1. The Structure of IT Services It is a challenge, when teaching the Introduction to MIS course, to give students a feeling for how important the IT services department will be in their future work. Any good manager knows that getting the IS people on your side is critical for success in many projects. Understanding how the IS department is organized, and what the department is responsible for, is the first step in being able to effectively access the services. This chapter therefore provides students with a broad view of the IS department.

There are two points that we believe are particularly important to emphasize about IT services structure. The first is to separate operations (maintaining the infrastructure) and projects (changing the infrastructure). Students will generally be unaware of this separation so it is important to make the separation clear. We find this separation quite naturally leads to a discussion of what operations and projects are and what is different about them. We think it is also important to note that projects and operations must coexist in any successful system.

The second point is that the web has introduced a new layer of concern for the IS department – the presentation layer – and that the effects of this presentation layer have been quite large. The reason for mentioning this point is to widen the student’s perspective as to what jobs are created when the presentation layer becomes important and visible to the customer. The jobs require skills in both technology and other business functional areas such as human resource management, marketing/branding and operations. IS skills are now a part of a broad area of work and not just about technology.

2. Architecture, Alignment, and Governance The next section considers IT architecture. It is impossible to show students an IT architecture because the architecture is so complex. But this should not stop us from explaining what is complex and why it is complex. Starting with the questions and overwhelming them is a good place to start this discussion.

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Alignment rises naturally from the discussion of strategy and architecture. A summary article on alignment is a very good resource for this discussion (Chan, Y. E. and Reich, B. H., “IT Alignment: What Have We Learned?” Journal of Information Technology, 4, 22, 2007: 297–315.). We would suggest taking some time to read through the article to give an idea of where alignment research has come from and where it is going.

It is important to realize that students largely are unaware of the difficulties of aligning IT with strategy. It seems like such a natural thing to do that students cannot see why it is difficult to do. The Wal-Mart example in the book is a good way to start considering alignment. Should a low cost retailer be looking for low cost IT? It is not always obvious.

The most important message in the section is that alignment is supported through a greater degree of communication between the IS department and other departments. This provides another example where the ability to communicate is again a key role in being successful with information systems.

Questions about alignment also move naturally to questions of governance. Governance is an increasingly important topic in IS and organizations are learning very quickly that IT and IS governance require significant resources. Bill 198/Budget Measures Act and Sarbanes-Oxley are a good way to demonstrate the importance of governance. There is a good MIS in Use case that asks students to questions the value of Sarbanes-Oxley. This can make for a good discussion or assignment question. Figure 11-5 shows the perspective that governance need not only be about control. The idea of governance is to encourage the development of more effective and efficient processes throughout the organization.

Since governance requires control, the question of IS audit naturally follows governance.

IS audit is an increasingly popular field and provides an opportunity for accountants in your class. In this section we have focused on providing information about certification and techniques for running audits. It is not necessary to walk students through COBIT for them to understand that there are some significant opportunities in the accounting/IS field.

3. Ethics We believe a discussion of ethics is very appropriate for this introductory course. There are a number of good “What do YOU think” exercises that can be used for discussions on ethics as discussed below.

Exercises You Can Use in Class Exercise 1: Discussing Sarbanes-Oxley and Bill 198 The Sarbanes-Oxley and Bill 198 topic is an important topic, but students have a hard time wrapping their heads around this topic. Using discussion questions alone may not fully engage students. One way to engage them is to get them to think about something that touches them. The following series of questions is a good way to get students to start thinking about why measures like Bill 198 and Sarbanes-Oxley were implemented:

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1. “How many people have purchased stock (traded shares) in a company?” You will normally get some responses here.

2. “Why did you buy a particular stock?” Normally you will hear answers like “because it was going to go up” or “I wanted to make money.” There will be many others. The point is that the person evaluated the stock and put a price on it.

3. “How can you estimate how much a stock is worth” This can be a long answer but what you want to do is move the answer towards placing some value on a company.

Here we are making the assumption that the value of the stock is in some way connected with the value of the company.

4. “OK, so how do you know how valuable a company is?” Hopefully someone will mention financial statements like a balance sheet or statement of income.

5. “OK, so how do you know if financial statements are accurate?” You will likely have to answer this, though some people might mention auditors. The answer is that statements are verified through an auditing process.

6. The final question “So who makes the rules for the auditors to follow and provides consequences for unreliable audits?” This is where you introduce government regulations. Once you get to this point, you have engaged the students with enough background to be able to consider Sarbanes-Oxley and Bill 198 questions that are available in the MIS in Use 11 case.

This exercise is general enough to begin a class, but it is likely best to use this discussion exercise right before you lecture on IT auditing and Sarbanes-Oxley and Bill 198.

Exercise 2: Ethical Issues using the “What do YOU think?” exercises.

Ethical issues in IS can provide material for an engaging discussion. There are four “What do YOU Think” exercises that you can use as the basis for an ethics discussion in the course. An explanation of each of these exercises can be found in the notes in the appropriate chapter in this manual. The exercises are: The Digital Divide” found in Chapter 3.

“Nobody Said I Shouldn’t” found in Chapter 5 “Hiding the Truth” found in Chapter 9 “Ethics of Misdirected Information” found in Chapter 11 These discussions work best if you ask students to read the material before and bring their book to class. You can then start the discussion buy focusing on questions that students discuss in small groups. Give the small groups a set amount of time to discuss (5-10 minutes will be enough). You can then facilitate a larger class discussion by asking students to talk about what their group discussed. You can also use the information from the exercise notes (found at the end of each chapter in the instructor resource manual)

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CHAPTER OBJECTIVES 1.

2.

3.

4.

5.

6.

Understand why you need to know about the IT department.

Understand the responsibilities of the IT department.

Know how the IT department is organized.

Understand what IS-related job positions exist.

Understand how organizations decide how much to spend on IT. Know your rights and responsibilities.

CHAPTER OUTLINE Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8

How is the IT department organized?

What jobs exist in IT services?

What is IT architecture?

What is alignment, why is it important, and why is it difficult?

What is information systems governance?

What is an information systems audit, and why should you care about it?

What is information systems ethics?

What is Green IT, and why should you care about it?

ANSWERS TO USING YOUR KNOWLEDGE QUESTIONS 1. Figure 11-3 shows illustrates the links between industry structure, competitive strategy, value chains, business processes and information systems. As we have learned in this chapter, there can be misalignment between strategy and information systems. In your opinion, where do things go wrong and how do organizations get out of alignment?

Students can choose a variety of answers here. You should be looking for justification for their answers. The most likely answer is that the misalignment occurs primarily in the design, development and integration of business process with information systems. This is because it is in this area that the business strategy is executed. While many companies can create good strategy, it is another thing to actually execute the strategy. The misalignment likely occurs where strategy meets execution.

2. Research the IT architecture at your university or college. Is there an available IT architecture and do you have enterprise architects? What IT architectural issues can you see developing and how would you manage them?

This question will vary from school to school. If there is an enterprise architect in the school, you will likely be able to get information from them. I have found these individuals to have a keen desire to communicate their views on architecture with all who will listen. The university environment is often difficult to manage from an IT perspective so the architecture will likely provide some interesting insights.

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3. Consider two car repair shops. One is newly renovated, has a bright, clean reception/office area at the front of the shop and standard company overalls for all employees. It has just invested in a new computer application that integrates the parts ordering, repair and service cost estimate, and accounting. Next door, the other repair shop has a small, dimly lit office at the rear of the shop crammed with notes and papers. The office looks like it was last painted in the early 1960s. It has no computer and still runs on a paper-based system. When you ask the owners of the two repair shops they both note that their company’s strategic objectives are well aligned with their information technology planning and that each shop maintains a competitive advantage. How can this be true?

Two shops in the same industry can have different strategies and hence have different IT architecture to support their strategies. Repair Shop A seems to be differentiating itself in regards to service and offering a quality experience to the customer (likely at higher prices). Repair shop B might be taking a low cost strategy and hence the expenditure on IT might be viewed as an additional expense (and hence contrary to saving cost).

4. The goal of IS governance is to improve the benefits of an organization’s IT investment over time. However, people who are accountable for governance usually do not manage directly but rather sit on a corporate board that oversees the company’s operations. What mechanisms can the board use to improve the benefits a company realizes from its IT investments? Use the web or other resources to provide some specific examples of board techniques to improve the IT performance.

Boards create incentives for companies to improve their operations by setting targets and rewarding mangers for meeting those targets. This is done in two ways: 1) establishing audit procedures that require development of best practices and 2) considering the efficiency and effectiveness of the organization by benchmarking against other organizations in the industry.

One example of a technique that can be used by boards to improve IT performance might be recommending the establishment of an “IT Balanced Scorecard.” This is a measurement-based approach to governance that highlights not only financial, but also other measures of success for IT (such as customer satisfaction, employee satisfaction, project performance, etc.). Establishing this type of measurement and providing the correct incentives for managers within the firm can alter business processes that affect changes within the organization. This is just one example.

Setting audit control procedures for IS audit is another example.

5. Explain how IS governance and IS audit are related. Can a firm complete an IS audit without having IS governance in place? Can IS governance exist without an IS Audit?

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there is likely no reason for establishing audit procedures for IS. With Bill 198 and Sarbanes-Oxley, IS audit is required and therefore some sort of IS governance is necessary for compliance for publicly traded companies.

6. The Zachman framework is explained in more detail at this site (www.zachmaninternational.com). Use this information and the Zachman framework to develop a diagram of your personal IT architecture. Remember to include all of the technical support that you would use (including resources and school as well as mobile devices).

This will likely be a difficult exercise for students. There are many answers to this question. What is important is to get students to start thinking at various levels of abstraction about the systems they interact with. The Zachman framework will not be that useful for a single individual, but it becomes quite valuable as the organization gets larger and more complex.

7. COBIT is just one method for developing a document to support IT governance.

Identify reasons why companies would choose not to use COBIT for an information systems audit. Search the web for at least one more method and develop a comparison of COBIT with the method you have found. What are the benefits of using the new method you have found? Can you suggest ways to improve COBIT? Some companies would choose NOT to use COBIT because    

it is too expensive to implement. it goes beyond what is necessary for compliance to Bill 198. the COBIT practices are not well enough known or understood. other auditing frameworks exist.

Some examples of other (but related methods) include   

Microsoft Operations Framework (MOF) Framework for ICT Technical Support (FITS) ITIL

The benefits of using these frameworks will vary between companies. Some of the frameworks are less extensive and hence less expensive to implement. Some of the frameworks are vendor-specific, which may match up well with particular companies.

In addition, some of the framework may be more prevalent than COBIT within a particular industry.

The largest complaint with COBIT is that is nearly impossible to comply with (it is too extensive) and that few people really understand it. So more must be done to establish the value of COBIT.

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ANSWERS TO COLLABORATIVE EXERCISES Note: This exercise requires the students to do some research, to how they can be more conscious about their energy usage relating to information technology. As for answers, there are a wide number of possible choices and see both the vosts and benefits of using the technology.

1. This chapter introduced the concept of green IT. Do some research into methods that will help make your personal computing more green. To complete the assignment your team should: a. Identify at least three things that you can do to reduce the energy consumption of your everyday computing resources. b. Estimate the savings that your group could achieve from the above recommendations. c. Combine what you have learned in parts (a) and (b) and create a one-page description of your proposal to reduce energy consumption. Your description should be aimed at people who are not familiar with green computing. Be prepared to share your document with the class.

2. Read the “The Ethics of Misdirected Information” exercise on page 364–365. a. Discuss your answers to the Exercise’s questions, and talk about any differences you may have. Try to form a consensus, and come up with a set group answers to the questions. Did your group find this to be a difficult task? Why or why not? b. What did you learn about ethics from this exercise? Be prepared to share your document with the class.

For answers to this question look at the write-up associated with the exercise later in this section. This question simply turns the individual assignment into a group assignment so that students can experience what others think is right and wrong.

Understanding that different people have different sets of values is important and group exercises can do this effectively.

ANSWERS TO CASE STUDIES MIS in Use 9: Sarbanes-Oxley: Boon or Bane?

1. In your opinion, will millions, perhaps billions of dollars be wasted in unnecessary compliance with Sarbanes-Oxley and the Budget Measures Act? Since this is an opinion question it is difficult to provide a single answer. For this reason, this case is likely best used as a basis for a class discussion. You will find differences in opinion and that makes for an opportunity for learning.

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2. In the long run, will these acts hamper North American corporations that must compete internationally against corporations that are not burdened by them? Will they ultimately work to reduce investor choices?

The international question is an important consideration. Sarbanes-Oxley will add cost to organizations that must comply. The question is whether there are benefits added by complying with the act. Students may argue that in the long run, compliance makes for a better foundation for investing and will actually make firms more attractive. It is not clear what the outcomes will be.

3. Given the requirements of the Sarbanes-Oxley Act, do you believe that a privately owned company like DSI would have incentives to choose to become a public company?

There are clearly significant costs to going public. On the margin, one would expect that many firms will wait longer before going public. However, it will be difficult to finance growing organizations without access to the public market. So the likely outcome is fewer organizations going public with the average size of the company going public getting larger over time.

Cast Study 11: Governance at Pacific Blue Cross 1. What are the various roles of decision-making participants at PBC? The number of participants will depend upon the project type, with larger, more complex projects tending to involve more people. But key among these are business managers who sponsor or drive a project and various others, such as information technologists, who have information or advisory roles. The main element of the governance plan at PBC is to ensure that the business benefits of various projects are well articulated and understood, that there is a formal approval plan, and that after each project steps are taken to ensure that expected benefits were actually achieved and delivered.

2. How important is communication and buy-in to implementing the new system?

Communication and buy-in are necessary but not sufficient. If managers do not understand the benefits or do not agree to the changes that are being proposed, then it is very difficult for the changes to be successfully implemented. These two factors, however, are not enough on their own and several other factors (such as technical feasibility and adequate availability of the correct resources) are also provided, 3. Can you think of reasons why an organization would resist governance processes?

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allows progress and increases the probability of success, but at the same time, can also tend to highlight poor process and failures. Because this will often stop managers from publicizing successes and discounting failures or proceeding with “pet projects,” it can sometimes be resisted.

4. What challenges may exist in the system?

Although time, budget, and scope sound like objective, fixed items there are several ways that managers can disguise changes. For example, projects can be delivered in stages, or changes in calendar date avoided if the resource plan is altered. Budget can also be obscured by changing fixed and variable costs, or failing to consider the relationship between external costs and internal development or administrative costs.

Scope is also open to discussion and managers frequently argue whether a change is minor or major. Often “social” pressure to report all projects as “green” rather than “yellow” or “red” can result in inadequate management reporting or a sudden change from green to red status.

5. Are the foundational principles valid or reasonable? Why did Dr. Boivie make sure these principles were shared by the CEO? This can be a good opportunity to remind students of the maxim to find out what their boss’ priorities are because these should be their priorities. Regardless of the quality of the changes that Dr. Boivie wishes to achieve at PBC, they will be a lot more difficult without the support of her boss. This may be less relevant if the changes are ultimately successful, but if not, or if they are resisted by the rest of the PBC team, then the CEO’s support of Dr. Boive’s initiative will be very important to her continued reputation and ongoing employment at PBC.

ETHICS OF MISDIRECTED INFORMATION Goals   

Teach students about the problem of unintentionally revealing sensitive information in public places Explore ethical issues concerning the use of misdirected information Differentiate between unethical and illegal

Background and Presentation Strategies I begin by asking the students what are the only two questions that a business professional can ask in an elevator. Usually someone will have worked in a law or CPA office and they’ll know. The standard answer is:  

What floor?

How is the weather?

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That’s it. No other question is allowed in an elevator. Airplanes and public places, like Starbucks in this story, are other places to avoid conversations about sensitive matters.

The first scenario happened to me. Fortunately, I was relieved of my ethical dilemma when a third party purchased the property from underneath all of us.

The people were loud and boorish. I wasn’t sneaking around picking up newspapers by their table. I was passively sitting while they talked, very loudly. They were speaking loudly on cell phones to their inspector and their bank! I suppose I’m confounding my dislike for loud, public, cell phone users with my ethical principles. What difference does it make, ethically, if they were rude?

Did I have a responsibility to move to another table where I couldn’t hear them? Or to warn them that I could hear them and that I was bidding on the same property? Or, did fate just drop something in my lap, like winning the lottery? I asked our agent about it, and she said by all means use the information. But do I want the realtor to be the guardian of my ethical principles? If so, I am avoiding my personal responsibility.

Usually, my students say they would use the information and never look back. I don’t think I agree.

When evaluating behavior in business, we can consider three sets of criteria: ethics, corporate policy, and laws. Behaviors concerning the latter two categories are easy to define: Is the behavior against a law or corporate policy?

Ethical behavior is harder to define. Microsoft Encarta defines ethical as “conforming to accepted standards” or “consistent with agreed principles of correct moral conduct” and ethics as “a system of moral principles governing the appropriate conduct for an individual or group.”

So, the question becomes, “What system of moral principles governs conduct for business professionals?” This is the core of the matter that we will address in several exercises in the text.

The legal community makes this issue clear, at least among lawyers and in the courts.

Use of any misdirected information is unethical, and court judgments can be lost by a party that uses such information. Legal ethics state that if a lawyer mistakenly receives a document intended for the other side, the lawyer is forbidden to use the contents of that document and is supposed to direct the document to its proper source, or at least return it to the sender with an appropriate notice. Often, law firms place a notice reminding the receiver of that obligation at the bottom of every email or other correspondence. (You also will find it at the bottom of some corporate emails.)  

If we apply the lawyer’s criteria to the scenarios in A-D, they are all unethical.

Should professional business people have a lower standard than lawyers?

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Suggested Responses for Discussion Questions 1. I don’t think the medium should make a difference. Using the lawyer’s criteria mentioned earlier, the use of information in either case is unethical. Also, there’s a difference in that the email server at the real estate office has a record that it sent that email to you. In scenario A, no one could prove you heard. That difference doesn’t change the ethics – it just changes the chance that you might be discovered.

Also, in scenario B there is another possibility: If you received the terms of their offer, there’s a good chance the addresses were switched and they received the terms of your offer. From a practical perspective, setting aside the ethical issues, it’s probably best to let your agent know what happened.

2. Scenario C is more complicated. For one, what if the customer wants you to have that information? Or, what if that information is false, the real number is higher, but the customer wants you to think that’s their top number? This could be a mistake or a negotiating ploy. I think notifying the customer is not only ethical, it’s also smart.  

Nothing is more serviceable than the truth. Maybe it’s not the most convenient, but it’s the easiest in the long run.

I don’t think whether the information gives you or your company an advantage is relevant. By the way, your company may have a written ethical policy that governs your behavior here. You could lose your job by not following those guidelines.

3. I think a person could make an argument that it is more ethical to lie to your friend about having received the email. The purpose of your lie would be to save your friend from embarrassment. However, lying to friends is not a great way to build relationships. It might be better to tell your friend that you did receive the email: that you’re available to talk about it if he or she wants; and that, as a good friend, you can also forget all about it.

4. I think the actions of the person in scenario E are most unethical and undoubtedly against corporate policy. This is “You’re fired!” territory. Were I that person’s employer, I would not provide a reference. I don’t think the person should have received the email, and I don’t think the person should notify his or her friend.

Anyone who abused his job authorities in this way is unlikely to care about the ethical principles of telling his or her friend, however. They’d probably tell. To me, the whole scenario stinks! 

By the way, we talk about this in Chapters 5 and 11, but corporate email is not secure. Even if someone has not invaded the corporate system, as this person did, emails you send at work are not private.

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5. a. For definitions, see Background and Presentations Strategies. b. I suppose one could argue that business is competitive; it’s dog-eat-dog, and you’ll take any advantage that falls in your lap. (Of course, there is the possibility that the emails are setups, and you could be playing into someone’s plan.) Or, it might be that in some industries, such behaviors are normal. If they are truly normal, if everyone accepts them, then according to the definition of ethical, these behaviors are ethical. c. One argument, a pragmatic one, centers on the idea that “nothing is more serviceable than the truth.” Once you start taking advantage of information under the table, you’ve placed yourself in a spot to be manipulated (if, for example, the top number in scenario C is not really the top number). Another argument is a personal one: “I strive to act ethically, and I know I won’t be happy engaging in unethical behavior. I want to work around people and industries in which ethical behavior is expected.” A third argument takes the moral high ground. It doesn’t matter if ethical behavior is pragmatic or personally preferred, unethical behavior is just wrong.

6. Answer is up to the students. See the Wrap Up. Wrap Up Some questions to summarize the discussion:    

How do you define the difference between legal and ethical?

Can something be against corporate policy and still be legal?

What is your personal policy about dealing with information that is misdirected to you?

Did your thoughts about this matter change as a result of this discussion? If so, how?

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CHAPTER 12 MANAGING INFORMATION SECURITY AND PRIVACY CHAPTER OVERVIEW We saved the security management chapter until the very end of the book. Not because it is unimportant, but rather because students must have a good idea of organizations and the technology available in organizations to understand the threat. We decided to start this chapter with a brief mention of personal privacy and identity theft. The reason we did that was to try to engage the student in understanding why security is important. In the section below, we describe a discussion exercise that you might use to start the security discussion. We believe it is important for students to internalize the threat before they are able to consider how to better manage the threat.

The focus of the chapter is on corporate security relating to information technology. The students learn about the various threats and how companies try to decrease or eliminate risks and threats. We think it is important for the students to understand that systems users are an important part of the security of the systems. We like to draw attention to the section on “Developing a Safe Password” to show them that the systems are only as secure as the people who use the systems. This shows that every employee is responsible for security (not just the IT services people) There are three cases that can be used to illustrate the threats to systems. The MIS in Use 12 case describes how a professor responds when a student asks for access to the Instructor’s Resources for a textbook being used in class. Another case focuses on privacy and the federal government and a final case considers phishing and the dangers it represents. These cases provide lots of opportunity to discuss potential threats. Since some students are not aware of these threats, it is important to mention these threats in the lecture.

When talking about security, we like to use the analogy to the “Bear Story” which goes as follows: Two people are camping in the forest. They have their boots and clothing on, ready to go for a hike when they both see, in the distance, a grizzly bear that captures their scents and begins to quickly move their way. One of the campers immediately kicks off his boots and jams his feet into his running shoes. The other camper looks at him and says “Why are you putting on running shoes? You can’t outrun a grizzly!” The first camper responds: “I don’t have to outrun the grizzly. I just have to outrun you.”

And off he goes…

What the story helps to illustrate is that security does not (and in practical terms cannot) be perfect. What security measures have to do is make it harder to impact your organization than other organizations. You have to make it more difficult to hack into Copyright © 2014 Pearson Canada Inc. 141

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your company than other companies. The chapter provides information about how this can be accomplished. The important message in the lecture is that often the largest impact on security is taking care of the simple things such as ensuring employees create reasonable passwords and having employees knowledgeable enough so that they do not give ID’s and passwords over the phone. Oh yah, and lock the door on the way out.

Discussion Exercises for this Lecture We like to use this exercise at the start of the security class. This exercise is listed as the collaborative exercise for Chapter 12. We suggest that you use it in class to talk about security. The general idea goes like this: “You and your friend are going to a pancake breakfast at a restaurant. In the next four minutes, come up with as many ideas as you can for getting away with eating and not paying for the pancake breakfast.”

The most important idea is to get people brainstorming as many ideas as possible. At the end of the 4 minutes, ask groups to list out their ideas. It should be relatively easy to get to 10 or 12 ideas.

So what’s the point? After you have collected the ideas and praised your students for their great work, remind the students that they spent only 4 minutes to create these ideas and for something worth about $10.

Now get them to ask themselves, how many ideas could you generate if your task was to find a way to someone’s personal identity. That is the real threat of security. Some very bright people, perhaps people from halfway across the globe, are looking for a way to access your information. How can you keep them out? And remember, they will be back once they learn something new.

We find this exercise does well to wake students up to the pressure that can be applied to organizations and the IS department charged with securing access and security.

CHAPTER OBJECTIVES 1.

2.

3.

4.

5.

6.

7.

Know the sources and types of security and identity threats.

Understand the elements of a security program.

Understand how technical safeguards protect against security threats.

Understand how data safeguards protect against security threats.

Understand how human safeguards protect against security threats.

Understand what is necessary for disaster preparedness.

Know how organizations should respond to security incidents.

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CHAPTER OUTLINE Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8

What is identity theft?

What is PIPEDA? What types of security threats do organizations face?

How can technical safeguards protect against security threats?

How can data safeguards protect against security threats?

How can human safeguards protect against security threats?

What is disaster preparedness?

How should organizations respond to security incidents?

ANSWERS TO APPLYING YOUR KNOWLEDGE QUESTIONS 1. Find the cheapest way possible to purchase your own credit report. Several sources to check are equifax.com, experion.com, and transunion.com. a. Search for guidance on how best to review your credit records. Summarize what you learn.

Monitor the balances of financial accounts. Look for unexplained charges or withdrawals. Be watchful for the following situations that may suggest identity theft:    

failing to receive bills or other mail, signaling an address change by the identity thief; receiving credit cards for which you did not apply; denial of credit for no apparent reason; or receiving calls from debt collectors or companies about merchandise or services you didn’t buy.

b. What actions should you take if you find errors in your credit report?

Under the Canadian Credit Reporting Act, both the consumer reporting company and the information provider (the person, company, or organization that provides information about you to a consumer reporting company) are responsible for correcting inaccurate or incomplete information in a report.

All credit holders are entitled to a copy of their credit history, which can be obtained at no cost by contacting one of two major reporting agencies.

Equifax Canada, 1-800-465-7166, www.equifax.ca Trans Union of Canada, 1-800-663-9980, www.tuc.ca

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c. Define identity theft. Search the Web and determine the best course of action for someone who has been the victim of identity theft.

Identity theft is when someone obtains some piece of your sensitive information, like your SIN, date of birth, address, and phone number, and uses it without your knowledge to commit fraud or theft.

If you think you are a victim of identity theft, or if have erroneously provided personal/financial information, then you should take the following steps: Step 1 - Contact your local police force and file a report.

Step 2 - Contact your bank/financial institution and credit card company Step 3 - Contact the two national credit bureaus and place a fraud alert on your credit reports.

Equifax Canada Toll free: 1 800 465-7166 TransUnion Canada Toll free: 1 877 525-3823 Step 4 - Always report identity theft and fraud. Contact the Canadian Anti-Fraud Centre.

For more information see: http://www.rcmp-grc.gc.ca/scams-fraudes/id-theft-vol-eng.htm 2. Suppose you lose your company laptop at an airport. What is more valuable the laptop or the data? Under what circumstances should you now focus on updating your resumé?

If the laptop is lost through careless or irresponsible behavior, then the consequences in terms of job retention are much greater. The employee must notify the organization right away and disclose loss of the laptop and the data stored on the laptop. This way the organization can determine the actions that are needed based on the nature of the compromised data. If confidential data on the laptop is encrypted, the potential damage will be less significant. If the employee happens to have data he/she is not authorized to have on that laptop, then he or she should polish that resumé.

3. Suppose Akbar’s company, noted earlier in the chapter introduction, is located in a hurricane zone and that it has been given 36 hours’ warning that a serious, category 4 hurricane is headed its way. a. List all the information systems assets that are in danger.

Damage to the infrastructure, including hardware, software, networks, and databases. Loss of electricity and communication services. Losses due to actions taken during recovery.

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b. For each asset in your list in a, describe an appropriate safeguard.

The infrastructure could be protected through physical security, such as being housed in a strong building. Backup generators can provide a temporary power supply. Losses due to actions taken during recovery can be minimized by a disaster recovery plan that specifies the responsibilities of each person during the recovery process. c. Suppose Akbar has done little disaster preparedness planning. Summarize what you would do in that 36-hour period.

Make complete backups and move them to a secure, off-site location. Move as much equipment as possible to a secure location. Arrange to set up and run mission critical systems from the secure location. d. Suppose Akbar does have a disaster preparedness plan. Summarize what you would do in that 36-hour period With a plan in place, DSI has probably arranged for remote backup facilities. DSI should launch its plan, move to the remote location, and set up operations from that location for the duration of the disaster. e. Compare your answers to c and d. In your own words, state the advantages of a disaster preparedness plan.

The disaster preparedness plan will outline all the steps that need to be taken, assign tasks and responsibilities to personnel, and will have arranged for the remote backup facilities. The plan will guide all actions taken and should result in a smooth transition of operations to the remote facility. If the plan has been practiced, the transition should be relatively smooth. Without such a preparedness plan, DSI will be scrambling to arrange for some sort of safe location. There is a high likelihood that essential things will be overlooked and losses will occur due to the ensuing confusion.

ANSWERS TO COLLABORATIVE EXERCISES Note: This exercise is one of Peter Tingling’s suggestions. It is a great way to introduce security to students. It works best as a group exercise during class time because it is exciting and fun. Beyond that, it is a great way for the students to become aware of the many ways that their personal identity can be put at risk. Part C is particularly important and can be followed up by a discussion of how to protect your personal identity.

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skills are required to be successful in these roles. So the second question is intended to get students thinking about these two roles in association with their own careers.

1. Your group has been given the task of finding ways to enjoy a free pancake breakfast at a restaurant. Do not feel limited by any ethical or legal issues related to getting the breakfast. In a brainstorming session, come up with as many ideas as you can for getting a free breakfast. a. List the ideas that you created and prioritize them in the order that your group thinks would be the most successful. b. Try the exercise again, but this time ask your group come up with as many ideas as you can for gathering someone else’s personal information so that it could be used for identity theft. You can use whatever mechanisms you think might be successful. Again, don’t consider ethical or legal restraints. c. Recognize that there are groups of people, with lots of resources, thinking about exactly what your group has just thought about. Now that you have your list, create a list of things you can do to protect your personal information. Be ready to share the information you have learned with others in your class.

ANSWERS TO CASE STUDIES MIS in USE 12a: What Is My True Name?

1. Why do you think this situation has occurred? (Hint: Who could benefit?)

Anonymous email and web services that do not require some form of external validation or are not provided by a trusted third party reduce the certainty that the person requesting the service can be confidently identified. The very remote nature of the Internet in many cases makes it much more likely that individuals will attempt to gain access to systems that they would not normally otherwise attempt to access.

In this case, the student had completed the request in order to obtain access to instructor materials and so gain an edge over other students taking a particular course.

2

Who has been harmed (if anyone), or is this a “victimless” situation?

This is certainly not victimless. The professor has been harmed by impersonation because acts completed by the students may be incorrectly prescribed to him. Other students are also harmed in that their grades may be artificially lowered as a result of this student gaining unauthorized access. This ultimately would also affect the university’s reputation (and by reflection, other students who may also be judged as people who are willing to circumvent access controls and obtain services fraudulently). Professors are also affected because the publisher and university may implement more restrictive services.

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3. Are the registration procedures adequate? What changes, if any, would you recommend?

Despite the fact that the process identified this request as fraudulent it is likely that the processes are inadequate. If Roark had not already registered on the site or if the requestor had chosen a domain name that was closer to the legitimate university name, it is possible that the request would have been routinely approved and access would have been granted. While a balance between ease of access and security needs to be maintained, it would seem that the emphasis to date has been on access.

Changes are difficult and may be rejected by faculty, but could require that email addresses matched the main domain name of the host university and that faculty were listed on the main university faculty page. What is often useful when considering approval is to review a matrix of granting or not granting access against valid and invalid requests and discussing the concepts of Type I vs Type II mistakes and the tradeoffs involved. Many students are often aware that it is not possible to improve one without decreasing the other. In this case, however, it is likely that denying valid requests is preferable to approving invalid requests.

4. What action should be taken by Roark, the university, or the publisher? Does it matter where the request came from (i.e., if it was a student at Roark’s university)?

In many cases it may not possible for the university to take any action given that requests can come from anywhere in the world. In this case the request did originate at Roark’s home university and the school was able to trace and identify the request.

The publisher may have greater ability to seek corrective action because it operates in many jurisdictions and will have connections at more universities.

5. Is this a case of identity theft?

The criminal code of Canada (R.S., 1985, c. C-46, s. 403; 1994, c. 44, s. 27.) reads as follows: 403. Every one who fraudulently personates any person, living or dead, (a) with intent to gain advantage for himself or another person, (b) with intent to obtain any property or an interest in any property, or (c) with intent to cause disadvantage to the person whom he personates or another person, is guilty of an indictable offence and liable to imprisonment for a term not exceeding ten years or an offence punishable on summary conviction.

This, therefore, is a clear case of identity theft. However, after meeting with the student and reviewing the situation, Roark (in reality an author of this book), declined to request that the police be contacted, because the student admitted guilt, was remorseful, and it was a first offence.

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6. Assuming that the individual is identified, what would be an appropriate penalty?

The situation was covered by the university’s policy on academic misconduct and the student admitted the violation. As noted above, the student admitted guilt, had his transcript marked with a violation of academic misconduct and was suspended for two semesters.

MIS in USE 12b: Privacy and the Federal Government 1. How important are agencies such as the Privacy Commissioner?

Without agencies such as the Privacy Commissioner, it would be easy for businesses and governments to acquire even greater control over private information. Our society places a great deal of trust in information and the institutions that protect it. So the Privacy Commissioner has an extremely important job that is increasing in importance.

2. What tools does the Privacy Commissioner have and how can they be used (Hint: Does it matter if the organization in question resides outside of Canada?)

The Privacy Commissioner has the ability to set policy and law within Canada and can assert these on people and organizations within Canada. The Privacy Commissioner does not have a jurisdiction outside of Canada so the office cannot have control over global organizations (unless they choose to operate in Canada) 3. How might Facebook respond to the Privacy Commissioner?

Facebook could set up a privacy information site and have users sign agreements.

Facebook might also simply not choose to act in response and see that the Privacy commissioner would do. In addition, Facebook could try to include higher levels of privacy in the site itself.

4. How does an organization respond to conflicting privacy issues (e.g., PIPEDA and the US Patriot Act)?

Organizations must first consider the legal ramifications and determine which jurisdiction would have the ultimate say. Once this is determined, then the organization can respond to the privacy issues as necessary. There will always be a range of responses that the company can take (as noted above).

THE FINAL FINAL WORD Goal Inspire the students to use what they have learned to find, create, and manage innovative applications of IS technology.

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Background and Presentation Strategies The best is yet to come!

It’s tempting to look at Microsoft and Bill Gates, Oracle and Larry Ellison, or Dell and Michael Dell and think, “All the good opportunities are gone.” But, the great news is, it’s not true. Rather, the great opportunities are in front of us. Although I’m sure that many fortunes are yet to be made by companies that develop, market, and sell technology products, I think most of the great opportunities involve innovative applications of the technology that already exists or that others will develop.

The second-wave phenomenon identified by Harry Dent makes sense to me. Although his predictions of a 30,000 Dow-Jones average by 2010 seem over the top (not cited in the exercise, but see his book referenced in the footnote), his analysis about the second wave, the application of technology use, seems sensible to me.

Getty Images (GYI) is an excellent example of success through innovative applications of IS and IT. The company has harnessed database technology to create a system that produces images at near zero marginal cost. I learned about GYI in September 2004, when its stock was trading at $53 or so. I thought, “This is interesting. I should buy some of their stock.” Did I? No. And their stock? In 2005, a year later, GYI was trading at $81, a 50-some percent increase in less than a year. GYI is not the last company to find innovative applications of technology. Many, many more such opportunities exist, and our students are positioned to take advantage of them. Even students who are uninterested in entrepreneurial opportunities can apply their knowledge to find innovative ways to accomplish the organization’s competitive advantage.

Suggested Responses for Discussion Questions I think this is a very important exercise and I assign it for substantial credit. This exercise asks students to:    

take business seriously, take their goal of becoming a business professional seriously, take the knowledge they have learned from this class seriously, merge those interests together into a document that can be useful to them during the early years of their careers.

I caution the students to write this memo using as specific language as they can. They should write it expecting that they will evaluate themselves on it in a few years. The more specific the memo is, the easier it will be to perform the evaluation. I have the students email me their memos, and I take a lot of time grading it. If the student is seriously engaged in the assignment, I sometimes ask for several revisions and amplifications.

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In many ways, this question, this memo, is our bottom line. What have the students learned from the class that will help them further their careers as business professionals?

There are so many possibilities—and that’s the beauty of teaching this class. This exercise can be useful to anyone who takes their goal of becoming a business professional seriously.

Wrap Up   

The best is yet to come!

What that best is—what happens next—will be in large measure up to you.

Prosper, do good work, and have fun!

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