Instructor's Manual, Chapter 14 Management Information Systems, Second Canadian Edition Page 14-1

Chapter 14
Knowledge-based Information Systems
Teaching Objectives
Students should be able to answer the following questions:
1. hy do !usinesses today need "no#ledge management programs and systems for
"no#ledge management$
%. hich information systems applications are most useful for distri!uting, creating, and
sharing "no#ledge in the firm$
&. hat are the !usiness !enefits of using artificial intelligence technology for "no#ledge
management$
4. 'o# can !usinesses use e(pert systems and case-!ased reasoning to capture "no#ledge$
). 'o# can organi*ations !enefit from using neural net#or"s and other intelligent techni+ues$
Key Terms
The following alphabetical list identifies the key terms discussed in this chapter. The page
number for each key term is provided.
AI shell, !" #nowledge assets, $
Artificial intelligence, !$ #nowledge base, !"
%ackward chaining, !& #nowledge engineer, !&
%est practices, $' #nowledge management, $
(ase)based reasoning *(%+,, "- #nowledge map, !.
(hief knowledge officer *(#/,, $ #nowledge repository, $"
(ommunity of practice, !0 #nowledge workers, $$
(omputer)aided design *(A1,, !2 #nowledge work systems *#3S,, $"
1ata workers, $$ 4eural network, ".
5nterprise information portal, ! /ffice systems, $$
56pert system, !! /rgani7ational learning, $
8orward chaining, !& /rgani7ational memory, $'
8u77y logic, " +ule base, !"
9enetic algorithms, "$ +ule)based e6pert system, !"
:ybrid AI systems, "! Tacit knowledge, $'
Inference engine, !" Teamware, !0
Information work, $$ ;irtual +eality <odeling =anguage *;+<=,, !-
Intelligent agent, "! ;irtual reality systems, !2
Investment workstation, !-
Teaching Sggestions
Section /ne, >#nowledge <anagement in the /rgani7ation,? introduces students to
organi7ational learning and knowledge management as well as systems infrastructure for
knowledge management. @ou should spend a few minutes discussing knowledge assets and
knowledge management. The opening vignette provides a great e6ample of how :ill #nowlton
Copyright 2005 Pearson Education Canada Inc.
Instructor's Manual, Chapter 14 Management Information Systems, Second Canadian Edition Page 14-%
(anada manages its knowledge assets. Ask your students to discuss how companies like
<icrosoft, 1ell, Air (anada, or (hapters might manage their knowledge assets.
Section Two, >Information and #nowledge 3ork Systems,? introduces students to the concept of
information work, how knowledge is created, shared, and distributedA knowledge work system
requirements, and e6amples of knowledge work systems. As an e6ample, you can use an
insurance company to help demonstrate the concepts presented in this section. The 3indow on
<anagement is also a good way to help reinforce the concepts presented in this section.
%ecause of the increasing use of IT to redesign systems and organi7ations, you should stress to
your students that knowledge management is critical. 4onetheless, knowledge management
has its limitations, particularly in the area of artificial intelligence. The sharing of knowledge and
the development of knowledge are critical to most organi7ations, and students must understand
this. Students should also understand the roles of the office, office information, and the creation
of knowledge. 8or this course, it also means understanding the kinds of software that support
these roles. 8or e6ample, provide your students with e6amples of group collaboration and the
software that supports it. Ask your students to identify uses for these software systems that are
not described in the te6t, so they can learn how to apply this chapterBs information. If you have
time, encourage your students to research specific e6amples of knowledge work systems. @our
students can use 8igure -)0 as a guide.
Section Three, >Artificial Intelligence,? introduces students to artificial intelligence, e6pert
systems, and cased)based reasoning. +emind your students of the history of our discipline. In
the early -&"2s, e6pert systems were believed to represent the future of artificial intelligence
and computers. To date, however, they have not lived up to e6pectations. <any e6pert systems
help human e6perts in such fields as medicine and engineering, but they are often very
e6pensive to produce and helpful only in special situations. Students must understand their
limitations and strengths. Ask your students to locate an e6pert system and evaluate its
strengths and limitations. 56pert system demonstrations and reviews are easily located on the
3eb. If you have time, ask your students to present their findings to the class.
Section 8our introduces students to other intelligent techniques, including neural networks,
fu77y logic, and genetic algorithms. /ne area of AI is neural networks, which are being used in
a number of disciplines such as voice recognition and natural)language processing.
@ou should mention to your students that AI is applied in many programs with which they are
familiar. 8or e6ample, the intelligent help systems of many application packages are a feature
that students should know. The wi7ards, as the te6t shows, are e6amples of intelligent agents.
Sometimes the level of intelligence of these agents does not need to be high, such as the
agents or robots that look for specific pieces of information on the Internet.
! "indow On# $o%es
"indow on &anagement' &anaging Constrction (rojects with the Internet
"hat are the management benefits of sing "eb-based constrction management
software) *ow do sch tools provide vale) "hat are the possible drawbac+s)
%etter coordination, improved document management, online storage of documents, online
collaboration among proCect team members, online document e6change, ability to track
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Instructor's Manual, Chapter 14 Management Information Systems, Second Canadian Edition Page 14-&
scheduling and performance, cost and error reduction, speed up construction, better overall
management, instant communication and revision of documents, elimination of manually
redrawing plans, reduced messaging, printing, and photo processing costs, and the ability to
electronically monitor progress are management benefits.
%y permitting the easy sharing and flow of information, these tools save time, errors, and costs
in communicating and designing systems and decision making between locations. Dossible
drawbacks include security issues, learning curves associated with the software, and resistance
to change.
"indow on Organi,ations' - Knowledge (ortal $ecomes .eacons/ Competitive
"eapon
*ow did .eacons obtain vale from sing a +nowledge portal)
The knowledge portal gives 1eaconsB attorneys a single point of access to the firmBs multitude of
documents. 1eaconsB clients can also use the portal to access their case files, provide
additional instructions for their cases, and check the status of their cases online. The portal
enables the company to be more competitive, enables its employees to easily locate and
access more information about a given subCect, facilitates the sharing of work with colleagues,
makes best practice information available, helps reduce rework, makes available human
resources information, organi7ational charts, and floor plans, enables the training of new
lawyers more quickly, and provides a personali7ed 3eb interface.
*ow did this system change the way the company condcted bsiness)
The most apparent change is the open, collaborative environment that now e6ists. Attorneys are
encouraged to share their work, instead of keeping it proprietary. (urrent and past case
information is now available online and easily accessible to all 1eaconsB attorneys as well as to
their clients.
"hat management0 organi,ation0 and technology isses had to be addressed to se this
portal sccessflly)
<anagement needed to identify the firmBs knowledge assets and determine how these assets
were to be made available. Additionally, management needed to encourage the attorneys,
especially the more e6perienced attorneys, to cooperate and share their work with others. Dart
of the management process involved determining which documents to inde6 and also how these
documents should be inde6ed and classified. The organi7ational issues involved changes in
culture, politics, standard operating procedures, and business processes. <anagement and
organi7ational issues also addressed to whom and how access to the online documents would
be granted. Technology issues addressed evaluating the costs, benefits, and capabilities of the
selected technology, inde6ing millions of documents, and training. Since portal technology that
met the firmBs needs was not available in -&&&, the firm hired <icrosoft and /racle to develop
the software and purchased Sun and (ompaq hardware.
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Instructor's Manual, Chapter 14 Management Information Systems, Second Canadian Edition Page 14-4
1or .iscssion 2estions
13 Knowledge management is a bsiness process0 not a technology3 .iscss3
3hile knowledge management is a set of business processes used to create, store,
transfer, and apply knowledge, it also dramatically benefits from the use of information
technology to support business processes. Information technology helps a company
create, share, capture, codify, and distribute its knowledge. The chapter provides many
e6amples of how technology supports knowledge management. 8or instance, you can
refer students to the 3indow on <anagement and 3indow on /rgani7ations.
43 *ow mch can the se of artificial intelligence change the management process)
AI does several things that change management. 8or e6ample, while e6pert systems
seldom eliminate human involvement, they can take over part of the human work, greatly
reducing the work of employees and enabling management to assign them to other work.
(ase)based reasoning systems can do the same, as (ompaq has shown with software
that enables customers to better solve their own problems, allowing management to
assign technicians to more productive work. Similarly, neural networks enable e6perts to
evaluate more pap smears with greater accuracy than they could beforeA this frees up
high)priced e6pertise to do more productive work.
5eview 2estions
13 "hat is +nowledge management) 6ist and briefly describe the information systems
that spport it and the +ind of information technology 7IT8 infrastrctre it re9ires3
#nowledge management is the set of processes developed in an organi7ation to create,
gather, store, maintain, and disseminate the firmBs knowledge. The maCor information
systems that support knowledge management are office systems, knowledge work
systems, group collaboration systems, and artificial intelligence systems. /ffice systems
are systems designed to increase the productivity of information workers in the office.
56amples of office systems include word processing, desktop publishing, imaging and
3eb publishing, electronic calendars, and desktop database.
#nowledge work systems are information systems that aid knowledge workers in the
creation and integration of new knowledge in the organi7ation. 56amples of knowledge
work systems include (A1, virtual reality, and investment workstations. 9roup
collaboration systems facilitate communication, collaboration, and coordination. 56amples
of group collaboration systems include groupware, teamware, and intranets. Artificial
intelligence is the development of systems that behave as humans. 56amples of artificial
intelligence systems include e6pert systems, neural nets, fu77y logic, genetic algorithms,
and intelligent agents. 4atural language, robotics, perceptive systems, e6pert systems,
and intelligent machines are artificial intelligence initiatives.
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Instructor's Manual, Chapter 14 Management Information Systems, Second Canadian Edition Page 14-)
43 *ow does +nowledge management promote organi,ational learning) *ow do
+nowledge management systems spport +nowledge networ+s0 +nowledge
repositories0 and commnities of practice)
#nowledge management promotes organi7ational learning as it defines and codifies the
organi7ationEs knowledge base. #nowledge management enables the organi7ation to learn
from its environment and incorporate this new knowledge into its business processes. 4ew
S/Ds can be created that reflect recent e6periences within the organi7ation. #nowledge
management systems enable the creation and support of knowledge networks, knowledge
repositories, and communities of practice. #nowledge networks enable people to be
linked, so that e6perts in a given area can be easily identified and share tacit knowledge.
#nowledge management streamlines the workflow and provides tools for creating a
knowledge repository. A knowledge repository is a collection of internal and e6ternal
knowledge stored in a single location for more efficient management and utili7ation by the
organi7ation. A community of practice is an informal group of people who may live or work
in many different locations but who share a common professional interest.
:3 .escribe the roles of the office in organi,ations3 "hat are the major activities that
ta+e place in offices)
/ffices are where data reside and where most knowledge work takes place. /ffices
coordinate the flow of information throughout the entire organi7ation. /ffices coordinate
the work of local professionals and information workers, coordinate work in the
organi7ation across levels and functions, and couple the organi7ation to the e6ternal
environment. The maCor activities of an office are managing documents, scheduling for
individuals and groups, communicating with individuals and groups, and managing data
about individuals and groups.
43 "hat are the principal types of information systems that spport information wor+er
activities in the office)
9roup collaboration systems, office systems, artificial intelligence systems, and knowledge
work systems are types of information systems that support information worker activities in
the office. 8or this question, students should also mention that a variety of office systems
are available to support office activity. Table -)- identifies several types of office
systems.
;3 "hat are the generic re9irements of +nowledge wor+ systems) "hy)
#nowledge work systems provide knowledge workers with the speciali7ed tools they need.
They must have adequate computing power to handle the speciali7ed tasks and comple6
calculations, provide easy access to e6ternal databases to support research, and present
a user)friendly interface.
These systems reflect the special needs of knowledge workers. In this day and age,
knowledge work is critical to most organi7ations, and in some organi7ations knowledge
work systems produce strategic advantage or the knowledge that enables their company
to keep up with others who are trying for strategic advantages.
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Instructor's Manual, Chapter 14 Management Information Systems, Second Canadian Edition Page 14-,
<3 .escribe how the following systems spport +nowledge wor+' compter-aided
design 7C-.80 virtal reality0 and investment wor+stations3
(A1 systems automate the creation and revision of designs using computers and
sophisticated graphics software. %y using (A1, a business benefits in many ways,
including the production of more sophisticated and functional designs, reducing the time
required to produce designs, reducing e6pensive engineering changes, preparing fewer
prototypes, and facilitating the tooling and manufacturing process.
;irtual reality systems have visuali7ation, rendering, and simulation capabilities. ;irtual
reality systems use interactive graphics software to create computer)generated
simulations that are so close to reality that users believe they are participating in a FrealF
world. The users actually feel immersed in the computer)generated world. ;irtual reality is
providing educational, scientific, and business benefits.
Investment workstations are computer systems that access and manipulate massive
amounts of financial data to manage financial trades and portfolio management. In
addition to massive amounts of data, financial data are produced so quickly that
speciali7ed, very powerful systems are necessary to keep up with the rapid speed of
finance and financial changes today.
=3 *ow does gropware spport information wor+) .escribe its capabilities and
Internet and intranet capabilities for collaborative wor+3

9roupware supports the electronic communication, collaboration, and coordination of
group work. 9roupware enables group members to electronically schedule meetings, hold
meetings, communicate, collaborate, share document preparation, and share knowledge
and work information. Internet tools are available to support e)mail, newsgroup
discussions, group scheduling, 3eb publishing, and point)to)point conferencing. 3eb
conferencing tools are available to facilitate online meetings, conferences, and
presentations. 9roups can use teamware to support group communication, collaboration,
and coordination via an intranet. Teamware is similar to groupware but does not provide
as powerful application development capabilities. Additionally, intranets provide the
foundation for enterprise knowledge environmentsA these knowledge environments can
then serve as knowledge maps. To facilitate the navigation of its knowledge resources, a
company can use an enterprise information portal.
>3 "hat is artificial intelligence) "hy is it of interest to bsiness)
Artificial intelligence is commonly defined as the effort to develop computer)based systems
*hardware and software, that behave as humans. These systems would be able to learn
natural languages, accomplish coordinated physical tasks *robotics,, and develop and
utili7e a perceptual apparatus that informs their physical behaviour and language *visual
and oral perception systems,, and emulate human e6pertise and decision making *e6pert
systems,. These systems would also e6hibit logic, reasoning, intuition, and common
sense. Artificial intelligence can help businesses store information in an active form as
organi7ational memory, create a mechanism that is not subCect to human feelings,
eliminate routine and unsatisfying Cobs held by people, and enhance the organi7ationBs
knowledge base by generating solutions to specific, massive, comple6 problems.
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Instructor's Manual, Chapter 14 Management Information Systems, Second Canadian Edition Page 14--
?3 "hat is the difference between artificial intelligence and natral or hman
intelligence)
Artificial intelligence is an effort to fashion computer systems that behave like human
beings. AI systems would have the ability to learn natural languages, accomplish
coordinated physical tasks, utili7e comple6 visual and oral perceptual systems, and use
comple6 logic, reasoning, and intuition. To date, the AI systems that have been developed
do not e6hibit all of the qualities of human intelligence, and in no way can be considered
very intelligent. AI systems are based on human e6pertise, but they can use only very
limited reasoning patterns and perform very limited tasks. AI systems also cannot learn on
their own and must be programmed by a human to follow certain rules or produce certain
solutions. 4onetheless, useful, even valuable AI systems have been developed. :uman
intelligence is definitely comple6 and broader than computer intelligence. :uman beings
can develop associations, use metaphors and analogies, and impose a conceptual
apparatus on the surrounding world all on their own.
1@3 .efine an e%pert system and describe how it can help organi,ations se their
+nowledge assets3
An e6pert system is a knowledge)intensive computer program that captures the e6pertise
of a human in limited domains of knowledge. 56pert systems can capture the knowledge
of skilled workers and in the form of a set of rules, adding to an organi7ationBs knowledge.
An e6pert system assists in decision making, can e6plain the reasoning behind a
recommended answer, and makes an e6pertBs knowledge more readily available to more
employees within the organi7ation.
113 .efine and describe the role of the following in e%pert systems' rle base0 -I shell0
and inference engine3
A rule base is the collection of knowledge in an AI system that is represented in the form
of I8)T:54 rules. An inference engine will either search the rule base to arrive at a
conclusion or will start with a hypothesis and work backwards. An AI shell is a user)friendly
programming environment that is used to develop e6pert systems. AI shells can quickly
generate user)interface screens, capture the knowledge base, and manage the strategies
for searching the rule base. The inference engine is the software that embodies the
strategy used to search through the rule baseA the inference engine can be forward or
backward chaining.
143 "hat is case-based reasoning) *ow does it differ from an e%pert system)
(ase)based reasoning *(%+, uses descriptions of past e6periences of human specialists,
representing them as >cases? and storing them in a database for later retrieval when the
user encounters a new case with similar parameters. The system searches for stored
cases similar to the new one, locates the closest fit, and offers the solution to the old case
for use with the new case. If the new case fits the solution, it is added to the case
database. If not, the case will be added with a new solution or e6planations as to why the
solution did not work. (%+ differs from e6pert systems in that it captures the knowledge of
the organi7ation rather than a single e6pert, and the knowledge is captured as cases
rather than if)then rules. Also, e6pert systems work by applying I8)T:54)5=S5 rules
against a knowledge base whereas (%+ represents knowledge as a series of cases. 3ith
case)based reasoning, the knowledge base is continuously updated by users.
Copyright 2005 Pearson Education Canada Inc.
Instructor's Manual, Chapter 14 Management Information Systems, Second Canadian Edition Page 14-.
1:3 .escribe three problems of e%pert systems3
56pert systems are limited to certain problems, working successfully only with problems of
classification that have few alternative outcomes. In addition, the outcomes must be
known in advance. Since some e6pert systems are comple6, their maintenance costs can
equal their development costs in a few years. The knowledge base is fragile and brittle
because these systems rely upon I8)T:54 representation. Such representation e6ists
primarily in te6tbooks and cannot be used for deep causal models or temporal trends.
56pert systems cannot represent knowledge that is essentially intuitive. 56pert systems
have no ability to learn over time. Therefore, keeping the e6pert systems up)to)date in
fast)moving fields such as medicine and computer sciences is a critical problem.
143 .escribe a neral networ+3 1or what +inds of tas+s wold a neral networ+be
appropriate)
4eural networks are usually physical devices *although they can be simulated with
software, that emulate the physiology of animal brains. The resistors in the circuits are
variable and can be used to FteachF the network. 3hen the network makes a mistake, i.e.,
chooses the wrong pathway through the network and arrives at a false conclusion,
resistance can be raised on some circuits, forcing other neurons to fire. Gsed after a false
conclusion, intervention teaches the machine the correct response. If this learning process
continues for thousands of cycles, the machine FlearnsF the correct response. The simple
neurons or switches are highly interconnected and operate in parallel so they can all work
simultaneously on parts of a problem. 4eural networks are very different from e6pert
systems where human e6pertise has to be modelled with rules and frames. In neural
networks, the physical machine emulates a human brain and can be taught from
e6perience.
An e6pert system is highly specific to a given problem and cannot be retrained. 4eural
networks do not model human intelligence or aim to solve specific problems. Instead of
putting human e6pertise into programs, neural network designers put intelligence into the
hardware in the form of a generali7ed capacity to learn. 4eural networks can solve entire
classes of problems. The neural network can be easily modified. 4eural networks,
therefore, promise a substantial savings in development cost and time. They allow much
greater generality and more closely appro6imate what we consider intelligence. They have
proven especially useful for visual pattern recognition problems. The students should be
able to relate to Dapnet and the system used by ;ISA.
1;3 .efine and describe f,,y logic3 1or what +inds of applications is it sited)
8u77y logic is a rule)based AI technology that tolerates imprecision, even using that
imprecision to solve problems we could not solve before. 8u77y logic creates rules that
use appro6imate or subCective values and incomplete or ambiguous data. 8u77y logic
represents more closely the way people actually think than traditional I8)T:54 rules. 8or
e6ample, if we all agree that -02 degrees is hot and )2 degrees is cold, then is !'
degrees hot, warm, comfortable, or coolH The answer is fu77y at best and cannot be
programmed in an I8)T:54 manner. Also, discuss with the students the fu77y logic
system used by Sendai to control acceleration so it will operate more smoothly and save
the subway company e6penses.
Copyright 2005 Pearson Education Canada Inc.
Instructor's Manual, Chapter 14 Management Information Systems, Second Canadian Edition Page 14-/
1<3 "hat are genetic algorithms) *ow can they help organi,ations solve problems) 1or
what +inds of problems are they sited)
9enetic algorithms *adaptive computation, are a variety of problem)solving methods that
are conceptually based on the method that living organisms use to adapt to their
environment I the process of evolution. 9enetic algorithms control the generation,
variation, adaptation, and selection of possible problem solutions using genetically based
processes. As solutions alter and combine, the worst ones are discarded, and the better
ones survive to go on and produce even better solutions.
9enetic algorithms are particularly suited to the areas of optimi7ation, product design, and
the monitoring of industrial systems. /rgani7ations can use genetic algorithms to minimi7e
costs and ma6imi7e profits and schedule and use resources efficiently. 9enetic algorithms
are ideal when problems are dynamic and comple6 and involve hundreds of variables or
formulas. 8or e6ample, 9eneral 5lectric used a genetic algorithm to help them design a Cet
turbine aircraft engine that required the use of about -22 variables and '2 constraint
equations. The te6t provides other e6amples.
1=3 "hat are intelligent agents) *ow can they be sed to benefit bsinesses)
Intelligent agents are software programs that use a built)in or learned knowledge base to
carry out specific, repetitive tasks for an individual user, business process, or software
application. %y watching the user of a program or system, an intelligent agent may
customi7e the software system to meet the userEs needs, reducing software support costs.
Intelligent agents can be used as wi7ards to help users do or learn how to perform a given
task. Intelligent agents can be used to carry out >smart? searches of the database, data
warehouse, or the Internet, reducing search costs and avoiding the problems of
misdirected searches.
-pplication Software A%ercise
Students will need to find an e6pert system tool that provides a mechanism, called the
inference engine, which automatically matches facts against patterns and determines
which rules are applicable.
+emind them about what >rules? the e6pert system is looking for: the >if? portion of a rule
can actually be thought of as the >whenever? portion of a rule since pattern matching
always occurs whenever changes are made to facts. The >then? portion of a rule is the set
of actions to be e6ecuted when the rule is applicable. The actions of applicable rules are
e6ecuted when the inference engine is instructed to begin e6ecution. The inference engine
selects a rule and then the actions of the selected rule are e6ecuted *which may affect the
list of applicable rules by adding or removing facts,. The inference engine then selects
another rule and e6ecutes its actions. This process continues until no applicable rules
remain.
If they want a good resource for their D1A, try
http:JJwww.bitsys.demon.co.ukJdownload.htm. This e6pert system for the palm is a trial
version of the K54 56pert System. The trial version is free to use but will only operate with
the demonstration knowledge base.
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Instructor's Manual, Chapter 14 Management Information Systems, Second Canadian Edition Page 14-10
/ther sites to direct students to include:
D( AI ) 56pert systems resources
http:JJwww.pcai.comJpcaiJ4ewL:omeLDageJaiLinfoJe6pertLsystems.html
This site hosts a brief introduction to e6pert systems and an e6tensive collection of links to
e6pert system 3eb sites, vendors, articles, and references.
The solution requires a very simple system with a limited number of rules. If students canEt
find e6pert system software to work with, they can build a primitive system using
spreadsheet software and the MI8 function of 56cel. Although 56cel allows for a limited
number of nested I8 statements, the conditions tested are comple6. The spreadsheet
solution provided here implements each I8 statement in a separate worksheet cell. The
instructor may want to implement these rules in another way.
Brop (roject
"ith a grop of three or for classmates0 select two gropware prodcts sch as
6ots Cotes0 OpenTe%t 6ive6in+0 or Broove and compare their featres and
capabilities3 To prepare yor analysis0 se articles from compter maga,ines and
the "eb sites for the gropware vendors3 If possible0 se electronic presentation
software to present yor findings to the class3
Information about =ive=ink can be found at http:JJwww.opente6t.comJ. Information about
=otus 4otes can be found at http:JJlotus.com, and information about 9roove can be found
at http:JJwww.groove.net. Students should find that the three products have different
intended purposes. 4otes, or more properly 4otes and 1omino, are more general)purpose
communication tools with collaboration built)in. @our students should look at the
applications of each toolA the =otus sites have e6ample applications. Some may have
=otus 4otes databases that they have helped build. =ivelink is a straightforward
collaboration tool. :ave students investigate the ease of use of each product. 9etting the
ma6imum use of =otus requires overcoming a rather steep learning curve.
Case Stdy D Can $oeing Keep 1lying *igh)
13 -naly,e $oeing and its bsiness strategy sing the vale chain and competitive
forces models3
%oeing produces quality passenger planes, business Cets, fighter planes, helicopters, flight
instruments, satellites, and missiles. %efore the entry of Airbus Industries into the Cumbo Cet
market, %oeing was the e6clusive manufacturer. Airbus Industries is now giving %oeing
stiff competition. AirbusBs A."2 has lower operating costs than %oeing, and Airbus can
build more modern technology into its planes, and it uses similar cockpit designs. 4ew
entrants into this market must make a significant investment. Airbus Industries is
subsidi7ed by the %ritish and 8rench governments. Also, the market for commercial
airplanes is shrinking.
To remain competitive, %oeing shifted its focus from the Cumbo Cet market to smaller, faster
airliners, building airliners that will fly nonstop from the departure location to the
destination. %oeing also wants to attract more first class and business)class passengers.
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Instructor's Manual, Chapter 14 Management Information Systems, Second Canadian Edition Page 14-11
Additionally, %oeingBs (5/ is moving the company to offer maintenance, modifications,
financing, and pilot training services, as well as shifting its focus to include new
businesses based on information and communications technologies. <any of %oeingBs
new initiatives and services are discussed in the case.
%efore %oeing moved to its Fpaperless designF model, its business processes were very
inefficient. %oeingBs production process was paper)intensiveA a lack of coordination
between its engineering and manufacturing units e6istedA its engineers worked in their own
areas and did not easily and readily communicate. In an effort to improve its value chain,
%oeing moved to a Fpaperless designF model. This allowed the company to dramatically
improve its procurement, technology, inbound logistics, operations, and outbound logistics.
43 Smmari,e the bsiness and technology conditions that cased $oeing to change
its bsiness strategy3 "hat management0 organi,ation0 and technology problems
prompted this change)
Increased competition, a shrinking commercial airplane market, and a decrease in air
travel are several business conditions that impacted %oeing. The case mentions numerous
management, organi7ation, and technology problems. To facilitate class discussion,
several of these problems are summari7ed in the following paragraphs.
%oeing management had problems with inventory management and needed to
standardi7e designs and to design units that required fewer parts. <anagement wanted to
reduce procurement costs and lower costs by using technology to improve its inefficient
business processes. <anagement also wanted to establish design)production teamsA the
formation of these teams encouraged group collaboration and assembled designers and
fabricators from a range of specialties.
5ngineers worked in Fseparate fiefdomsF and did not share information. %oeing had
trouble coordinating with e6ternal and internal suppliers. It also needed to improve
customer service and provide its -!0 222 employees and customers with access to much
needed information.
%efore its systems renovations, "22 computers were used to manage the coordination of
engineering and manufacturing. Also, multiple parts lists e6isted and required conversion.
To support production, %oeing used 22 software programs, each with their own
database. %ecause of acquisitions, %oeing had -" separate 51I connections for each of
its suppliers. %oeing employees were connected to hundreds of different intranets, causing
data and application sharing problems.
:3 *ow did $oeing change its bsiness processes and information systems to spport
its strategy) *ow do $oeingEs information systems provide vale)
%oeing streamlined and simplified the processes of configuring and assembling airplanes.
<anagement replaced its 22 software programs with four interconnected, off)the)shelf
software packages, enabling employees to work from the same database. <anagement
replaced the engineer fiefdoms with design)production teams, used Internet technology to
move all purchasing online, and created its (ommercial Aviation 3eb portal, enabling its
customers to access engineering drawings, manuals, official service bulletins and to
interact with %oeing engineers. %oeing participates in 56ostar, which is a global electronic
marketplace for the aerospace and defense industry. %oeing uses its knowledge
Copyright 2005 Pearson Education Canada Inc.
Instructor's Manual, Chapter 14 Management Information Systems, Second Canadian Edition Page 14-1%
management system to provide its engineers with access to maintenance and support
information, saving the service engineers the many hours required to research a question.
%oeing employees now use a portal to access and share common data and applications
over the 3eb. This portal enables designers to electronically collaborate.
43 "hat is the relationship of +nowledge management to $oeing/s bsiness strategy)
*ow is $oeing sing +nowledge management to e%ecte its bsiness model and
bsiness strategy)
#nowledge management is crucial to %oeingBs strategy. %oeing is using knowledge
management to create, store, transfer, and apply knowledge within the company. Ask your
students to provide specific e6amples.
;3 Avalate $oeing/s new bsiness strategy) "hat management0 organi,ation0 and
technology isses will $oeing face as it attempts to implement the strategy) "hat
role will +nowledge management play in this strategy) *ow sccessfl will $oeing
be in prsing that strategy)
@ou can use the suggested answers provided in Nuestion - to facilitate discussion for this
question. #nowledge management will play a crucial role in %oeingBs strategy, since
%oeingBs strategy involves switching to newer businesses based on information and
communications technologies. Student opinions about %oeingBs success will vary.
Copyright 2005 Pearson Education Canada Inc.