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Chapter Nine

Information Technology and E-


Commerce: Managing Information,
Knowledge, and Business
Relationships

McGraw-Hill/Irwin
Introduction to Business © 2007 The McGraw-Hill Companies, Inc., All Rights Reserved.
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Chapter 9
Information Technology and E-Commerce: Managing
Information, Knowledge, and Business Relationships

1. Distinguish between data, information, and knowledge


and identify the characteristics of useful information.
2. Explain the relationship between IT, competitive
advantage, and profitability.
3. Discuss five major IT applications used by companies
today to build competitive advantage.
4. Differentiate B2B commerce and B2C Commerce
5. Identify the major hardware and software components of
IT and E-Commerce and describe how they have evolved
over time.
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Chapter 9
Information Technology and E-Commerce: Managing
Information, Knowledge, and Business Relationships

Informat ion T ec hnolo gy


• Computer and communications hardware and software combined with
• The skills of the designers, managers, users
• Applied to acquire, define, input, arrange, organize, manipulate, store
and transmit
• Facts, data and information
• To create business knowledge and promote organizational learning
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Chapter 9
Information Technology and E-Commerce: Managing
Information, Knowledge, and Business Relationships

Managing Informat ion / IT


• Businesses have overwhelming amount of data and
information about customers, competitors, and their own
operations
• Thus, must manage information and IT
• The ability to manage this input can mean the difference
between success and failure
• A secondary value chain function because all of a firm’s
business activities are linked to IT
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Chapter 9
Information Technology and E-Commerce: Managing
Information, Knowledge, and Business Relationships

• Char acteri sti cs of usef ul i nf orm ati on


are
• Complete
• Relevant
• Timely
• Accurate
• Reliable
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Chapter 9
Information Technology and E-Commerce: Managing
Information, Knowledge, and Business Relationships

IT bui lds a com petit ive advantage


superior productivity
• more data about business activities
superior quality
• monitor processes better
superior innovation
• faster product cycle times
superior responsiveness to customers
• more detail about customers
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Chapter 9
Information Technology and E-Commerce: Managing
Information, Knowledge, and Business Relationships

IT Sys tems Appl icati ons


• Transaction Processing (TP)
• capture data about basic day-to-day business transactions
• Knowledge Management (KM)
• take information and knowledge from the TP system and make it
more relevant to managers
• Enterprise resource planning (ERP)
• multi-module software that links all functional activities
• Artificial intelligence (AI)
• designed to imitate human behavior and provide computer-based
assistance / advice in performing certain business activities
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Chapter 9
Information Technology and E-Commerce: Managing
Information, Knowledge, and Business Relationships

• TPs capture transaction data


• accounting, purchasing, inventory, production, sales
• from routine day-to-day activities
• ERPs improve profitability by
• speeding up product development, improving sales
revenues
• driving down operating costs while maintaining quality
• improving customer satisfaction using customer
relationship management (CRM) systems
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Chapter 9
Information Technology and E-Commerce: Managing
Information, Knowledge, and Business Relationships

IT Sys tems Appl icati ons


• According to Pareto's Rule if managers possess 20 percent
of the necessary information, they can develop 80 percent of
the knowledge they need to improve efficiency and
effectiveness
• Data communication networks, both public and private,
carry streams of digital data
• The largest public communications network, the Internet, is
a gigantic network of networks linking millions of
computers offering information on business around the
world
• The Net is the most important e‑mail system in the world
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Chapter 9
Information Technology and E-Commerce: Managing
Information, Knowledge, and Business Relationships

Internet
• The World Wide Web is a system with universally accepted
standards for storing, formatting, retrieving, and displaying
information

• WWW provides common language that enables users


around the world to “surf” the Net using a common format

• HTTP and HTML


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Chapter 9
Information Technology and E-Commerce: Managing
Information, Knowledge, and Business Relationships

Int ranets
• Intranets are private networks that any company can
develop to extend Net technology internally - transmitting
information throughout the firm
• Intranets are accessible only to employees, with access to
outsiders prevented by hardware and software security
systems called firewalls
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Chapter 9
Information Technology and E-Commerce: Managing
Information, Knowledge, and Business Relationships

The Networked Organi zat ion


• Information networks are leading to leaner organizations
• Fewer employees and simpler organizational structures
• Because networked firms can maintain electronic, rather
than human, information linkages among employees and
customers
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Chapter 9
Information Technology and E-Commerce: Managing
Information, Knowledge, and Business Relationships

The Ne tw or ked Or ganiz at ion


• Operations are more flexible
• electronic networks allow businesses to offer greater product
variety and faster delivery cycles.
• intranets and the Internet allow greater collaboration among
internal units and with outside firms
• Geographic distance between workplace and office is more common
• electronic linkages are replacing the need for physical proximity
between the company and its workstations
• Improved management processes
• managers have rapid access to more information about the current
status of company activities
• easier access to electronic tools for planning and decision-making
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Chapter 9
Information Technology and E-Commerce: Managing
Information, Knowledge, and Business Relationships

B2B or B2C?
• E-commerce systems are either business to business (B2B)
or business to customer (B2C)
• In B2B the value chains are linked and allows them to
reduce operating costs and improve product quality
• The main elements of an information system include
hardware, software, data, and people
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Chapter 9
Information Technology and E-Commerce: Managing
Information, Knowledge, and Business Relationships

Hardware Com ponents of E- Com merce


• Legacy systems
• PCs, PDAs
• Servers / clients
• Internet
• PCs, servers, routers, fiber optic cable, telephone lines,
wireless / broadband technology
• WWW
• Content of Internet – web sites, web pages (HTML), web
servers, web hosts
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Chapter 9
Information Technology and E-Commerce: Managing
Information, Knowledge, and Business Relationships

Sof tware Component s of E- Com merce


• PC
• operating system, applications
• Computer security software
• firewalls
• virus protection
• Mobile computing software
• browsers
• e-mail
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Chapter 9
Information Technology and E-Commerce: Managing
Information, Knowledge, and Business Relationships

Managi ng I T: Control
• Control is important
• ensure that the system operates correctly
• that data and information are transmitted through
secure channels to people who really need them
• aided by the use of electronic security measures, such as
firewalls, that bar entry to the system by unauthorized
outsiders
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Chapter 9
Information Technology and E-Commerce: Managing
Information, Knowledge, and Business Relationships

Managi ng I T: Peopl e
• People are also part of the information system - IT
knowledge workers include
• systems analysts who design the systems
• programmers who write software instructions telling
computer what to do
• system users
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Chapter 9
Information Technology and E-Commerce: Managing
Information, Knowledge, and Business Relationships

Managi ng I nf orm ati on


• Never before has IT become so important that people become
computer literate and develop the skills that will allow them
to benefit from continuing advances in IT
• Evaluate the role of the Louisville Slugger video and relate to
IT, E-Commerce and business relationships

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