Information Technology: The Challenge and Potential

1. Information Technology:The Challenge and Potential

2. A Quick Review: • What is an Information System? • Evolutionary concept • Early emphasis on support of operations, management, analysis, and decision-making in organizations. • Today technology provides support for not only for decision-making, but support for communication and information access. • Our emphasis will be on the support of work systems that use information technology to capture, transmit, store, retrieve, manipulate, and display information. • Gorry and Scott-Morton’s Framework • 1971 Framework talked of looking at information systems in a decision-making framework. Although limited to just decision-making, it provides a perspective on the wide range of opportunity for information systems support.

3. Work-Centered Analysis Framework

4. The WCA Framework • A useful way of thinking about information systems and their relationship to customers and participants from the perspective of a business professional. • A work system is a system that produces products for internal and external customers through a business process performed by human participants with the help of information technology. • An information system is a particular type of work system that uses information technology to capture transmit store, retrieve, manipulate, or display information, thereby supporting one or more other work systems.

5. Amazon.com • The point of this case is not about technology essentially, rather it is about how information systems and information technology can transform business operations. • How does Amazon.com provide value for its customers? • What has “transformed” in this business? • How has competitive advantage changed to competitive necessity?

6. Work-Centered Analysis Framework

7. Amazon.Com - WCA CUSTOMER Person who purchases books Wholesalers that supply the books Amazon.com’s shipping department PRODUCT Information about books that might be purchased Information describing each book order Books that are eventually delivered

8. Amazon.Com - WCA • BUSINESS PROCESS • Major Steps: • Purchaser logs on to www.amazon.com • Purchaser identifies desired book or gives search criteria • Purchaser looks at book-related information and decides what to order • Purchaser enters order • Amazon.com orders book from wholesaler • Wholesaler sends book to Amazon.com • Shipping department packages order and sends it to the purchaser • Rationale: • Instead of forcing book buyers to go to typical bookstores, permit them to use • online access from home or from work.

9. Amazon.Com - WCA PARTICIPANTS People interested in purchasing books Order fulfillment department of wholesaler Shipping department of Amazon.com TECHNOLOGY Personal computer used by purchaser Computers and networks used by Amazon.com for order processing INFORMATION Orders for books Price and other information about each book

10. Some Common Themes • The nature of business is changing. • New combinations of product and services. • Limitations of geography are disappearing • technology is changing rapidly • organizations are flatter and less hierarchical. • Business professional must participate in all the major phases of building and maintaining IT-enabled systems. • Advances in IT will drive business innovation. • The success of IT-enabled systems is not guaranteed by using the latest technology.

11. Questions? • Identify some new products or services that have changed due to information technology? • Identify some organizations that have become less hierarchical.

12. Information Technology:The Challenge and Potential

13. Key Point • Business Professionals participate in all the major phases of building and maintaining IT-enabled systems, and therefore need knowledge and skills necessary for that participation. • Next Question then…. • How are Information Systems Developed?

14. Phases in Building and Maintaining Systems

15. Phases in Building and Maintaining Systems • Initiation • Define the need to change a work system. • Development • Acquire and configure necessary hardware, software, and other resources for IT-related and non-IT related functions. • Implementation • Make the system operational in the organization. • Operation and Maintenance • On-going operation and maintenance of the work system and the information system.

16. IT Based Innovations in Every Business Function • Product Design • Procurement Systems • Manufacturing Systems • Sales and Marketing • Delivery Systems • Customer Service Systems • Finance Systems

17. IT-Based Innovation • Telecommuting • Value Chain • Product Design • computer aided design (CAD)

18. Computer-Aided Design • Enable designers to visualize how a product will look. • The need to produce physical mock-ups has been significantly reduced. • Originally applied in engineering and architecture, it is now being applied in other areas such as surgery, clothes design, and hairdressing.

19. CAD inunexpected places

20. Supply Chain Management • EDI (Electronic Data Interchange) is changing the entire model of supply chain management in businesses. • The cost of processing simple transactions can be reduced by more than an order of magnitude (e.g. purchase orders from $55 ea. To $2.50 ea.). • SCM and EDI are essential ingredients to the transformation of relationships between suppliers and customers. • Among the most notable initial applications was Baxter Healthcare where hospital supplies were ordered directly with computer terminals in hospital stock rooms.

21. The Basic Supply Chain Management Process

22. Customers link to suppliers using EDI

23. Manufacturing • Computer-integrated manufacturing (CIM) integrates the use of technology across the manufacturing process, not just the design phases. • The information content of a product is the value that is added through use of information systems rather than not using them. • Mass production techniques allows for mass customization.

24. Mass Customization:Building a customized bicycle

25. Sales and Marketing • IT has drastically changed the approach to marketing. • Amazon.com capitalizes on electronic commerce. • Point of Sales (POS) systems provide new ways to affect marketing - e.g. linking information about the customer with the sale. • Loyalty Cards at Supermarkets • Ask for your Home Zip code • Discreet observation and collection. • BJ’s Wholesale Club product recall. • All to better improve the addressability in marketing.

26. The Four P’s of Marketing at Amazon.com PRODUCT Amazon.com offers 2.5 million books for sale. PRICE Although Amazon.com charges for delivery, it can offer deep discounts for some books because it does not have to pay for rent for retail stores and because its inventory costs are low. PLACE Customers buy books from their homes or offices instead of going to a book store. PROMOTION Amazon.com provides extensive background information about some books. It promotes its business be advertising on other Web sites and through traditional media such as radio.

27. Delivery and Logistics Systems • Delivery (logistics) Systems transport materials where they are needed. • The need for accurate and accessible information on where a product is located. • U.S. Army experience in Gulf War • Federal Express • New products are being developed: Instead of delivering physical goods such as paper and forms, consider what can be delivered over the network. • Consider impact of Global Positioning Systems.

28. Customer Service • The need for information on a customer’s current status. • Work is still needed to integrate some voice-response systems with customer databases (e.g. Bank Help Centers). • Have the right information available when you need it. • Optical Scan relevant documents • Be able to initiate transactions and process them immediately. • E.g. Car Rental Returns

29. Finance Systems • Consider how technology is being used to replace currency as a form of barter. • Direct Deposit Payroll. • Smart cards. • Electronic stock trading. • Web-Based Real Estate Marketing (2% vs. 6%). • Eliminate the “middleman” and commissions.

30. Question? • How have any of these innovations affected you? • Can you identify any IT-based innovations that have affected business functions? • Why does the technology provide such innovation?

31. Data Processing Progress

32. Dramatic Progress in Processing Data • Data Processing functions: capture, transmit, store, retrieve, manipulate, display • Greater Miniaturization, Speed, and Portability • Greater Connectivity and Convergence of Computing and Communications • Greater Use of Digitization and Multimedia • Better Software Techniques and Interfaces with People

33. Six Data Processing Functions Performed by IT FUNCTION: CAPTURE Definition: Obtain a representation of information in a form permitting it to be transmitted or stored Example: Keyboard, bar code scanner, document scanner, optical character recognition, sound recorder, video camera, voice recognition software FUNCTION: TRANSMIT Definition: Move information from one place to another Example: Broadcast radio, broadcast television via regional transmitters, cable TV, satellite broadcasts, telephone networks, data transmission networks for moving business data, fiber optic cable, fax machine, electronic mail, voice mail, internet FUNCTION: STORE Definition: Move information to a specific place for later retrieval Example: Paper, computer tape, floppy disk, hard disk, optical disk, CD-ROM, flash memory

34. Six Data Processing Functions Performed by IT FUNCTION: RETRIEVE Definition: Find the specific information that is currently needed Example: Paper, computer tape, floppy disk, hard disk, optical disk, CD-ROM, flash memory FUNCTION: MANIPULATE Definition:Create new information from existing information through summarizing, sorting, rearranging, reformatting, or other types of calculations Example: Computer (plus software) FUNCTION: DISPLAY Definition: Show information to a person Example: Laser printer, computer screen

35. Miniaturization:Comparison of a vacuum tube and an integrated circuit

36. Progress in Memory Chip Capacity Since 1973 Approximate date of widespread commercial availability Capacity in number of bits Type of chip 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 1 kilobit 4 kilobit 16 kilobit 64 kilobit 256 kilobit 1 megabit 4 megabit 16 megabit 64 megabit 256 megabit 1,024 4,096 16,384 65,536 262,144 1,048,576 4,194,304 16,777,216 67,108,864 268,435,456

37. Using a portable computer to give parking tickets

39. Convergence: GPS

40. A leading edge flat panel monitor and a computer terminal from the 1980s

41. The positive and negative impacts of technical change

42. Obstacles When Applying IT • Unrealistic Expectations and Techno-Hype • Difficulty Building and Modifying IT-Based Systems • Difficulty Integrating IT-Based Systems • Organizational Inertia and Resistance to Change • Genuine Difficulty anticipating what will Happen

43. Reality Check! • What are some examples of “techno-hype” you have encountered? • Have you experienced any of these “obstacles” when applying IT?