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Information Systems An information system (IS) is a system composed of people and


computers that processes or interprets information. These are systems deigned to get the
right info to the right people at the right time in the right amount and in the right format
2. Data These are items that refer to an elementary description of things, events, activities
and transactions that are recorded, classified, stored but not organized to convey any
specific meaning
3. Information Refers to data that has organized so that it has meaning and value to the
recipient
4. Knowledge Consists of data/information that have been organized and processed to
convey understanding, experience, accumulated learning and expertise
5. IT architecture A high-level map or plan of the information assets in an organization
6. IT infrastructure Consists of the physical facilities, IT components, IT services and IT
personnel that support the organization

7. Types Of Information Systems These are:


a. Computer-based IS A CBIS uses computer technology to perform some or all of its
intended tasks. It has different components:
i. Hardware Devices viz. processor, monitor that accept data, info, process
and display it
ii. Software Programs that enable hardware to process data
iii. Database Collection of related files containing data
iv. Network A connecting system enabling resource sharing b/w computers
v. Procedures Set of instructions detailing how to combine above
components to process info
vi. People Interface with the above components
They have advantages like ability to perform high speed, high volume calculations,
storing large amounts of data, increasing effectiveness and efficiency of people
b. Application program Designed to support a specific task or business process, e.g.
HRIS, Accounting IS, etc

c. Enterprise Resource Planning (ERP) Integrates the various functional ISs via a
common database
d. Transaction Processing System (TPS) Supports the monitoring, collection, storage
and processing of data from the orgs basic business transactions
e. Inter-organizational Information Systems (IOSs) ISs that connect two or more
organizations. E.g. Supply chain management, E-commerce systems
f. Office Automation Systems (OASs) These support the clerical staff, low and middle
mgmt. and knowledge workers
g. Business Intelligence (BI) systems refers to the information that is available for the
enterprise to make decisions on. Provide computer based support for complex, nonroutine decisions, primarily for middle managers and knowledge workers. Allow
users to perform their own data analysis
h. Expert systems (ES) Attempt to duplicate the work of human experts by applying
reasoning capabilities, knowledge and expertise in a specific domain
i. Dashboards Provide rapid access to timely and structured info. Applicable to all
managerial levels

8. Data Warehouse - A data warehouse is a subject-oriented, integrated, time-variant and nonvolatile collection of data in support of management's decision making process. The aspects
are:
a. Subject oriented can be used to analyse a particular subject area
b. Integrated Integrates data from various sources
c. Time-variant It retains historical data and adds recent data as time progresses
d. Non-volatile Once data is entered, it will not change
9. Importance of IS to organizations They are basically four-fold:

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a. Communication Helps in faster and easier sharing of information between


employees
b. Operations IS offer more complete and recent info which helps in efficient
operation
c. Decisions IS delivers all required info and creates models which show the results of
your decisions. Helps to choose b/w alternatives
d. Records Helps in keeping records of all company transactions, financial info, etc.
Helps in knowing trends
Application in all the above areas leads to better efficiency, reduction of time taken for any
activity, increase in productivity
Impacts of IS on Organizations and Society- These are:
a. IT will reduce the number of middle managers by increasing productivity per person
b. IT will change the managers jobs. It gives them more time to devote to planning
rather than day to day activities. Also, change the nature of the job, laying emphasis
on work completed
c. IT might eliminate requirements of some types of jobs. Others argue that IT would
create new types of jobs
d. IT impacts employees health and safety due to long exposure to computers but they
also provide opportunities for people with disabilities
e. IT also improves quality of life due to the plethora of labour reducing devices
available
Benefits of IS These are
a. Improved Decision Making
b. New product/service development
c. Operational excellence
d. Customer /Supplier Relationship Management
e. Confers a competitive advantage
f. Survival
In-House Production or Outsourcing This decision is usually decided based on two theories:
a. Agency theory An agency is the relationship between two parties, one is a principal
and the other is an agent of the principal. These relationships occur when principals
hire the agent to perform some service for them. Agency theory is used to solve
problems that can exist in such relationships which usually arise either when desires
and goals of both parties are in conflict or when they have different risk tolerances
b. Transaction Cost Theory Formulated by Ronal Coase in 1937. It states that people
begin to organise their production in firms when the transaction cost of coordinating
production through the market exchange, given imperfect information, is greater
than within the firm.
Types of Information Technology These are basically of three types as expounded by
Andrew McAfee, which are:
a. Functional IT This assists with the execution of discrete tasks. It can be used
without complements (things which add to it functionality) but effectiveness
increases when they are used. E.g. Spreadsheets, Word processors. Its main
advantages are:
i. Enhancing experimentation capability
ii. Increasing precision
b. Network IT This facilitates interaction without specifying the parameters (how they
interact). This doesnt impose complements but lets them emerge over time,

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doesnt specify tasks or sequences and accepts data in all formats. E.g. E-mail, IM.
Main advantages:
i. Facilitates collaboration
ii. Allows expression of judgements and opinions
iii. Fosters emergence, which is the appearance of high level patterns because
of low-level interactions
c. Enterprise IT The IT applications that companies adopt to restructure interactions
among groups of employees or with business partners. These impose complements
all over the organization, defines tasks and sequences and accepts data only in
specific formats. E.g. ERP software. Main advantages:
i. Redesign business processes
ii. Standardize work flows
iii. Monitor activities and events efficiently
Managing the Three worlds of IT effectively There are three steps for managers:
a. They must select the IT applications that will deliver the organizational capabilities
they desire
b. They must lead adoption efforts that result in the creation of complements for the
technologies
c. They must shape the exploitation of IT by ensuring that technologies, capabilities
and complements stay aligned
Electronic Commerce EC describes the process of buying, selling, transferring or
exchanging products ,services or information via computer netwroks
Electronic business This is a broader concept referring to e-commerce as well as servicing
customers, collaborating with business partners and performing e-transactions within an
organization
Degree of digitization Refers to the extent to which commerce has been transformed from
physical to digital. There are three types of orgs:
a. Bricks and mortar Purely physical presence
b. Virtual All aspects are digital
c. Clicks and mortar All other combos of digital and physical dimensions
Types of EC These are:
a. B2C
b. B2B
c. C2C Major strategies for conducting C2C on the Web are auctions and classified
ads
d. B2E - Org uses EC internally to provide information and services to employees
e. E-government Use of Internet tech in general and EC in particular to deliver info
and public services to citizens. AKA G2C
f. Mobile commerce EC done entirely in a wireless environment
EC business models and mechanisms The major types are:
a. Electronic catalogues Consist of a product database, directory, search mechanism
and a presentation function
b. Auction A competitive process in which bids are solicited. E-auctions broaden
customer base and shorten cycle time. Two major types:
i. Forward Sellers place items at sites for auction and buyers bid
continuously for them. Highest bidders win
ii. Reverse Buyer posts a request for quotation and suppliers submit bid.
Lowest bidder wins, cetus paribus

c. E-storefronts A web site that represents a single store


d. E-malls A collection of individual shops under a single URL. Two types:
i. Referral mall Cant buy anything and are transferred to a participating
storefront
ii. Participative mall Can buy
e. For other business models check Pg 205
20. Capturing business value with social technologies A McKinsey study estimates that social
platforms can unlock $900bn to $1.3 trillion in value in the four sectors studied (Financial
services, Consumer packaged goods, Pro services, Advanced manufacturing representing
20% of global industry sales) alone. Two thirds of this value creation lies in improving
communication and collaboration within and among enterprises.
a. Productivity possibilities Using social tech to increase communication and
collaboration would increase productivity of interaction workers by 20-25%, due to
shift in channels from one-one to many-many types of comm. This aims to unlock
the vast amount of info within email and other social messages for wider use,
reducing searching time and increasing knowledge base
b. Social tech can also unlock the potential in additional areas. For the major areas
covered, these are:
i. Consumer packaged goods Some companies have gained the same level of
consumer insight at only 60-80% of earlier costs by using insights from
extensive online activities. Interactive product campaigns can increase
advertising productivity by 30-60%
ii. Advanced manufacturing Collaboration among highly educated knowledge
workers would increase their effectiveness by negating the silo effect that
currently occurs
iii. Professional services Social tech can be used to reform internal work flows
of pro service firms and provide meaningful real time interactions with
customers. Potential to cocreate services with customers
iv. Consumer-facing financial services Social tech can improve service
delivery, reduce costs and enhance customer experience
c. Next practices Focus should be to discover the next practices and not the current
best practices, as:
i. Usually the decisions that make the most difference is not the choice of the
tech but getting people to interact more. Cultures conducive to broad
collaboration and sharing would thrive
ii. The practices would vary from firm to firm. Experimentation that tests
different practices and tech would be crucial
iii. Creating a critical mass of participation would be crucial. Bottom-up tech is
necessary along with support by the top leader
21. Challenges of managing in a Networked economy The myriad challenges are glanced upon
below:
a. Changing market structure and industry dynamics More alternatives exist for
designing and building orgs, IT expands data processing capacity, enables real time
transactions and connectivity
b. Impact of IT on core operations and strategy IT is now being used for improving
performance of core processes, improve local level support performance, transform
orgs, turnaround and launch new ventures

c. IT is being used to increase the functionality and flexibility of processes and systems,
integrate sales channels, improve performance of knowledge workers, attract and
retain top talent, suppliers and customers
d. The time taken for orgs to successfully reorient themselves in the fast changing
environment limits the speed of change

Identifying and Assimilating IT


Phase 1
Opportunity Identification and
Investment
Success
Lack of
attention and
commitment

Phase 2
Organizational Learning
and Adaptation

Stagnation
Block A

Success

Narrowly
focused and
not marketed

Phase 3
Rationalization and
Continuous Evolution
Success

Stagnation
Block B

Too efficiency
dominated

Stagnation
Block C

Widespread Technology
Transfer

Source: Applegate, Lynda M., Robert D. Austin, and F. Warren McFarlan., Corporate Information Strategy and Management. Burr Ridge, IL: McGraw-Hill/Irwin, 2002.
Introduction Figure I-5

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e. Security of IT assets is a major issue


Ethical and Social issues in IS Ethics refers to the principles of right and wrong that
individuals use to make choices to guide their behaviour. Its fundamental tenets are
responsibility, accountability and liability. A point to remember is that what is unethical is
not always illegal
Trends in technology leading to such issues These are:
a. Computing power doubles every two years which means that orgs are more
dependent than ever before on their information systems
b. Better data storage implies that more individual data can be stored for longer
c. Networks enable the collection, integration and distribution of huge amounts of info
by orgs
Types of ethical issues These are broadly classified into four major types
a. Privacy issues involve collecting, storing, disseminating info about individuals
b. Accuracy issues Involve the authenticity of info that is processed
c. Property issues Involve the ownership and value of info
d. Accessibility issues Revolve around who should have access to info and their ode
of access
Privacy issues Information privacy is the right to determine when and to what extent info
about an individual can be gathered or disseminated. Usual legal decisions paint a picture

that gives the need of society precedence over an individuals right to privacy. Rapid
advances in IT has enabled the creation of digital dossiers, an electronic description of you
and your habits. The process is called profiling. Many comps now prepare such dossiers and
sell them to law enforcers and companies that want to know their customers or employees
better. Other issues are:
a. Electronic surveillance Tracking peoples activities with the help of computers has
become a major issue
b. Personal info in databases This raises the question of the accuracy of the data,
their mode of use, and how secure the storage is
c. Information on social networks This info may be offensive or even false. Policing
them is a challenge
d. Privacy cods and policies These are guidelines to protect the privacy of customers
or employees. Many companies use the opt-out model which permits info collection
until the customer specifically requests it to stop. Opt-in models are the opposite
e. Absence of uniform standards for privacy protection in various countries
26. IS for operational excellence and Customer Intimacy Companies have three fundamental
business strategies:
a. Operational excellence - providing customers with reliable products and services at
competitive prices, delivered with minimal inconvenience
b. Customer Intimacy - means segmenting and targeting markets precisely and then
tailoring offerings to match exactly the demands of those niches
c. Product Leadership - means offering customers leading edge products that
consistently enhance the customers use or application of the product, thereby
making its rivals goods obsolete
Companies cant compete on all three fronts. OE means cutting out all non-essential costs
whereas CI implies heavy spending to get to know customers just a bit better. Masters of
Two are companies that excel on both fronts. The key is to focus on a specific group of
customers, get to know them better than others and tailor operations to cater to them
better at lower costs. IS helps in identifying such groups and also cutting the flab out of
operations
27. Enterprise Applications These are of various types, viz.
a. Transaction Processing System Monitor, collect, store and process data generated
from all business transactions. Usually source data automation is used to
automatically capture and record transaction data. This data is either processed in
batches or Online (as soon as they occur
b. Functional Area Information Systems These provide info primarily to low and midlevel managers in the various functional areas

28. Enterprise Resource Planning Integrates the planning, management and use of all of an
organizations resources. Their characteristics are:
a. It integrates all functional areas and enables seamless information transfer across
them. SAP, Oracle and PeopleSoft are the main ERP software vendors
b. Early ERP systems did not extend to all functional areas. New ERP II systems do
c. ERP II systems are interorganizational ERP systems that provide web-enabled links
between a companys key business systems and its customers, suppliers,
distributors, etc. They include a variety of modules for all functional areas
d. Benefits of ERP These are:
i. Organizational flexibility, agility and ability to adapt faster by integrating
former departmental silos
ii. Decision support The essential info provided by ERP improve managers
ability to make better, more timely decisions
iii. Quality and efficiency They improve business processes resulting in better
quality and efficiency of customer service, production and distribution
iv. Decreased costs Can reduce transaction costs, hardware and software
costs
e. Drawbacks of ERP
i. The business processes in the software are usually predefined by the vendor
which companies may have to modify to best suit them
ii. They are extremely complex, expensive and time consuming to implement
29. Supply Chain Management It aims to plan, organize and optimize the various activities
performed along the supply chain to reduce friction along the supply chain. They reduce
uncertainty and risks by decreasing inventory levels and cycle time and improving business
processes and customer service. Its other characteristics are:
a. Push vs Pull model Most SCMS use the push model, in which a forecast is made
about sales and production is designed to produce that amount and the company
pushes these products on the customers. In the pull model, production begins with a
customer order and companies only produce the amount ordered
b. Problems along supply chain The problems include not being to deliver products
when customers want, high inventory costs and loss of revenues. These arise due to
two main sources:

i. Uncertainties which could include demand forecast, delivery times


ii. Need to coordinate several activities and business partners
The bullwhip effect refers to erratic shifts in orders up and down the supply chain
due to the fact that variables that affect customer demand become magnified when
viewed by managers further upstream
c. Solutions to Supply chain problems Vertical integration, JIT systems, Vendor
Managed Inventories
d. IT support to SCM Three main IT systems that do so are:
i. Electronic Data Interchange (EDI) A standard that allows business partners
to exchange routine docs electronically
ii. Extranets These connect the intranets of a companys various business
partners
iii. Web services
30. Customer Relationship Management An organizational strategy in which orgs focus on
satisfying customers by assessing their requirements for products and services and then
providing quick and high-quality service (pg 308 diagram). The process:
a. It begins with marketing by soliciting prospects from a target population of potential
customers
b. It will be able to sell to a proportion of that market
c. Of that percentage, a certain number will become repeat customers and are
segmented into low-value and high-value repeat customers
d. Customer churn is a process in which orgs will lose a percentage of their customer
CRMs share two basic elements
a. They must identify the various types of customer touch points
b. They need to consolidate the data obtained for each customer
Types of CRM
a. Collaborative CRM Integrates communications b/w organization and
customers in all aspects of marketing, sales and support
b. Operational CRM The component that support the front-office business
processes viz, sales, marketing and service. The two major parts of this are
customer-facing applications and customer touching applications:
a. Customer facing applications Include customer interaction centres,
Sales force automation, Campaign management
b. Customer touching Applications Include search and comparison
capabilities, Technical and other info, Customised products and services,
Customised web pages, Loyalty programs
c. Analytical CRM Analyse customer behaviour and perceptions in order to
provide actionable business intelligence. These use data warehouses, data
mining, decision support and other BI systems
31. Knowledge Discovery in Databases KDD is an automatic, exploratory analysis and
modelling of large data repositories aiming to identify new and useful patterns from large
and complex data sets. There are nine basic steps:

a. Develop an understanding of the application domain i.e. how and where decisions
would be applied
b. Select and create a data set on which discovery will be performed
c. Pre-process and cleanse the data
d. Transform data to enable more efficient application of algorithms to extract info
e. Choose the appropriate data mining task, e.g. clustering, regression
f. Choose the data mining algorithm
g. Employ the algorithm
h. Evaluate the results w.r.t goals previously decided
i. Use the discovered knowledge by incorporating it into another system
32. Data Mining These form the core of KDD, involving the inferring of algorithms that explore
the data, develop the model and discover previously unknown patterns. These are
essentially of two types:
a. Discovery-oriented Those that automatically identify patterns in data. These are
further classified as:
i. Descriptive methods These are oriented towards data interpretation and
understanding how underlying data relates to its parts
ii. Predictive methods these aim to build a behavioural model and can
predict one or more variables
b. Verification-oriented Deal with the evaluation of a hypothesis proposed by an
external source. Include traditional statistical methods such as ANOVA

33. Knowledge management cycle describes the way in which knowledge is captured,
processed and distributed in an organization.

The steps are:


a. Create Knowledge is created when people determine new way of
doing things
b. Capture From internal or external sources. Capturing from internal
sources requires knowing the points where knowledge is generated and
also for external sources
c. Organize New knowledge must be refined and cleaned so that it can
be actionable
d. Store In a reasonable format and made easily accessible
e. Manage The knowledge can then be used to gain competitive
advantages and gain more insights
f. Disseminate Knowledge must be shared within anyone in the
organization who needs it so that it can be used further for the orgs
welfare
34. Role of IT in managing knowledge The two main types of knowledge are:
a. Explicit knowledge This is formalized and codified, and is sometimes referred to as
know-what. It is easy to identify, store, retrieve. The biggest challenge with this type

of knowledge is ensuring necessary level of access, storage and review. IT helps in all
these aspects
b. Tacit/Implicit Referred to as know-how and refers to intuitive, hard to define
knowledge that is largely experience based. An IT system relies on codification,
which is often difficult for the holder. Hence, role of IT in tacit knowledge mgmt. is
hard to tell.

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