Chapter 8

McGraw-Hill/Irwin Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
 Role of Information Technology
Adequate and timely market knowledge and
business information are key to an
organization's success
Information technology provides useful tools
to generate, share and manage vast amounts
of information
Data driven decision making lifts productivity
higher by 5 6% than traditional intuition
based decision making
 Evolution from Data Processing to Business
Intelligence
TECHNOLOGY in the 1970s

Data Processing (DP) -- Name for business

technology in the 1970s; primarily used to improve
the flow of financial information.

Data are the raw, unanalyzed and unorganized

facts and figures.

Information is processed and organized data that

managers can use for decision-making.

Relevant and useful information = Knowledge

B-3
 TECHNOLOGY in the 1980s

Early 1980s - Information Systems (IS) --

Technology that helps a company do business (i.e.
ATMs and voicemail).

In the late 1980s, business technology became

known as information technology as business
applied new technology to new methods of doing
business.

Information Technology (IT) -- Technology that

helps change business by allowing companies to use
new methods. eCommerce, Automated marketing
B-4
 TECHNOLOGY in the
LG1
EARLY 2000s

Business Intelligence (BI) --

www.workwisellc.com
Any variety of software applications
that analyze an organizations raw
data and take useful insights from it.

BI helps businesspeople focus

on whats important in the
organization such as deciding
how to react to problems and
opportunities in a prompt fashion.

B-5
 Business Intelligence Applications
As a discipline, BI is made up of several related activities, including
data mining, online analytical processing, querying and reporting.
Can address:
What products to promote or discontinue?
Will understanding selling trends help my production
schedule?
Which customers in the same vertical markets are
purchasing from me? How can I respond to it?
What could engineering/manuf. gain from having a
better understanding of product defects?
Do my primary suppliers hurt or help my delivery and
margins?
Which production resources are under performing
causing missed deliveries and order cancellations?
Source: Turn ERP Data into Business Intelligence. http://www.workwisellc.com/turn-erp-data-into-business-intelligence/
 Value Chain Supported by IT

Every component in the value chain is now supported by Information

7
Technology as its implementation base
 At the more granular level
Think about what IT does for a business

White, T. (2013) Information Technology Adds Value. TA Consulting. Retrieved: 4/30/15

slideshare.net/TerryWhite01/information-technology-adds-value
 Altering the Value Chain
Competitive advantage can come from :

Create new products and services

Lowering the cost to perform an activity and
Adding value to a product or service so buyers will be
willing to pay more.

IT Supports by:
Deployment of new technologies to the product offering
Designing work environments for competitive advantage
Making organizational operations more efficient

9
Basic Components of IT Infrastructure
 What is an Information System?
A processing system turning data into information
and information into knowledge
Dataunorganized, raw facts
InformationCollection of facts organized to be
meaningful
Knowledgeorganized and processed information
to convey understanding, extract critical
implications
Elements in the Study of Information Systems
 Information System Output: Flow and Users

Supports
flow of
informati
on up and
down the
decision
hierarchy

Because this figure depicts data from business events, the vertical information flows
upward. Other data, such as budgets, would flow downward.
 Information Technology Model

H/W
DATA

External Information
DATA
S/W

DATA

Components of IT
IS Functions
 Strategy inter-dependence
Where company is
going depends on
who it is and what
support it has.

Who it is depends on
What support it has
where company is
depends on who it is
going and what
and where it is going.
support it has.
 The Resource-Based View
Gaining competitive advantage through the use of
information resources.
Two subsets of information resources:
Enable firms to attain competitive advantage (rare and
valuable resources that are not common place).
Enable firms to sustain competitive advantage (resources
must be difficult to transfer or relatively immobile).

17
 KEY TYPES of BUSINESS INFORMATION
AVAILABLE
Business process information. E.g.
Transaction data at POS; ERP, SCM,CRM

Physical-world observations.
E.g. RFID, cameras, Wifi access, GPS

Biological data E.g. Fingerprinting,

Retina scan, Face-voice recognition

Public data E.g. Public records,

voluntary posting on social sites

Data that indicate personal

preferences or intentions Electronic
traces, Loyalty cards B-18
 Managing
Information FOUR CHARACTERISTICS that
MAKE INFORMATION USEFUL

1. Quality Accurate and

reliable data
2. Completeness sufficient
information to make a
sound decision
3. Timeliness Quick
delivery for prompt
response
4. Relevance Applicable
info
B-19
 HOW DO YOU
ORGANIZE DATA GLUT?
D/b

A data warehouse stores data on a single Data-

subject for a firm over a specific period. warehouse

Data mining is a technique for looking for

hidden patterns and unknown relationships Data
Mining
in large database

Mining tools include Yahoo Pipes that can

help companies mine the web to get correct
data.
 IT Resources
IS infrastructure:
It includes data, technology, people, and processes.
The infrastructure provides the foundation for the delivery of a
firms products or services.
Information repository (Data warehouse)
Logically-related data that is captured, organized and retrievable
by the firm
IT Capabilities
Network Data source
Web 2.0 assets Web 3.0 analytics

21
 Networking: Internet WEB 2.0
Web 1.0 Search and read

Web 2.0 -- The set of tools that

allow people to build social and
business connections, share
information and collaborate on
projects online.

Resources used but not owned

by the firm (Google docs,
LinkedIn, eBay, Facebook, wiki,
blog, etc.)

YouTube, Facebook and Twitter

are among the largest Web 2.0
companies.
B-22
Web 3.0
WEB 3.0
LG3

Web 3.0 -- A combination of technologies that adds

intelligence and changes how people interact with the
Web and vice versa.

As you pull data, the system learns about you

and your interests and pushes potentially relevant
information to you

Minefield for Data Analytics

B-23
 Networking: BEYOND the INTERNET
Network tools to protect proprietary
information

Intranet -- A companywide network closed to public

access that uses Internet-type technology.

Extranet -- A semiprivate network that lets more

than one company access the same information or
allows people on different servers to collaborate over
dedicated lines

Virtual Private Network (VPN) -- A private data

network that creates secure connections, or tunnels,
over regular Internet lines on-demand.
B-24
 VIRTUALIZATION and
CLOUD COMPUTING

Virtualization -- A process that allows networked

computers to run multiple operating systems and
programs through a central computer (server) at the
same time.

Cloud Computing -- A form of virtualization which

stores a companys data and applications at off-site
data centers accessed over the Internet.

Amazon, Google, Microsoft, IBM, Rackspace offer

cloud computing for monthly fee
B-25
ADVANTAGES / DISADVANTAGES of
CLOUD COMPUTING

Photo Courtesy of: Peter Baer B-26

 ISSUES in
TECHNOLOGY

E-mail can be snooped or information stolen; Phishing

Personal/Organization information stored can be

stolen.

Site owners can share your information without your

permission.

Cookies can track your movement around the web.

Impact on Environment

B-27
 Information technology continues to evolve
Acc. to Gartner study,
by 2018, 30% of organizations will formalize
workforce digital literacy strategies to improve
business outcomes and employee engagement1.
By 2020, information will be used to reinvent,
digitalize or eliminate 80% of business processes
and products from a decade earlier2.
The world has become a global village due
to advancement in IT
1. Ingelbrecht, N. et al. (2015) Top Consumer Trends That Will Impact the Digital Workplace in 2025. G00270460

2. Laney, D. and Zaidi, E. (2015) 100 Information and Analytics Predictions Through 2020. G00273368
 Conclusion
Using IS for strategic advantage requires more than
just knowing the technology.
Value chain analysis show us how IS adds value to
the primary activity of a business.
Know the risks and new developments associated
with using IS to gain strategic advantage.