Samenvatting Information Systems: The foundation of e-business

van Steven Alter

H1: Moving toward E-Business as Usual
Business professional: A person in a business or government organization who manages
other people or works as a professional in fields such as sales, manufacturing, consulting and
accounting.
Work system: a system in which human participants and/or machines perform a business
process using information, technology, and other resources to produce products and/or
services for internal or external customers.
Information system: a work system whose business process is devoted to capturing,
transmitting, storing, retrieving, manipulating, and displaying information, thereby supporting
other work systems.
Work system framework: can be used for businesses with or without information
technology. See page 8 for the framework.
System: a set of interacting components that operate together to accomplish a purpose.
Subsystem: a component of a system, even though it can also be considered a system in its
own right.
A systems:
Purpose is the reason for its existence and the reference point for measuring its
success.
Boundary defines what is inside the system and what is outside. (the way orders are
entered over the web versus the delivery step.)
Environment is everything pertinent to the system that is outside of its boundaries.
Example: competition, culture, laws.
Inputs are the physical objects and information that cross the boundary to enter it
from its environment. Example: customer requirements, parts to build computers.
Outputs are the physical objects and information that go from the system into its
environment. Example: delivery of a computer
A business process is a related group of steps or activities in which ppl use information and
other resources to create value for internal or external customers.
Subprocesses are parts of a process that are processes in their own right because they consist
of well-defined steps related in time and place, have a beginning and end, and have inputs and
outputs. (Example: writing a manuscript, designing a layout for the book)
Value added: the amount of value it creates for its internal or external customer. Example: an
assembled computer by a customer. Value added is the difference between the value of the
components and the value of the assembled computer.
Functional silos: a functional area. Sometimes businesses have an inward-looking
orientation, they focus too much on what happens within the silos while showing little
concern for coordinating across the functional areas.
Value chain: the set of processes a firm uses to create value for its customers. It contains the
primary processes as well as the support processes.
Supply chain: the transactions, coordination, and movement of goods between the firms
suppliers and the firm. The customer experience includes every aspect of the customers
involvement with the firms product.

How systems in organizations are built and maintained is described in terms of four
phases:
1. Initiation: is the process of defining the need to change an existing work system,
identifying the people who should be involved in deciding what to do, and describing
in general terms how the work system should operate differently and how any
information system that supports it should operate differently.
2. Development: the process of acquiring and configuring hardware, software, and other
resources needed to perform both the required IT-related functions and the required
functions not related to IT. This phase starts by deciding exactly how the computerized
and manual parts of the work system will operate. It then goes on to acquire the
needed resources.
3. Implementation: the process of making a new work system operational in the
organization. This phase starts from the point when the software runs on the computer
and has been tested.
Update (vorig jaar tentamenvraag)
Results from an research group:
16 % of the information systems are completed on schedule and within budget;
53 % were late, went over budget, or produced fewer functions than planned;
31 % were cancelled before completion
4. Operation and maintenance: the ongoing operation of the work system and the
information system, plus efforts directed at enhancing either system and correcting
bugs.
Functions IT can perform:
-capturing data
-transmitting data
-storing information
-retrieving information
-manipulating data
-displaying information
Major directions of improvements (future)
-Greater miniaturization, speed, and portability
-Greater connectivity
-Greater use of digitized information and multimedia
-Better software techniques and interfaces with people

H2: Understanding Systems from a Business Viewpoint

Framework: a brief set of ideas for oganizing a thought process about a particular type of
thing or situation.
System analysis step:
1. Define the problem
2. Describe the current system in enough depth
3. Design potential improvements
4. Decide what to do
PBSA Principle Based Systems Analysis
How to PBSA:
1. Define the problem and the work system together
2. Use work system principles for summarizing the current situation and searching for
possible improvements.
Principle #1: Please the customers
Principle #2: Perform the work efficiently
Principle #3: Serve the participants
Principle #4: Create value from information
Principle #5: Minimize effort absorbed by technology
Principle #6: Deploy infrastructure as a genuine resource
Principle #7: Minimize unintended conflicts and risks
3. Make a recommendation that addresses the problem while supporting the
organizations priorities.
Eight elements for summarizing a work system:
1. Customers
2. Products and services
3. business process
4. participants
5. information
6. technology
7. context
8. infrastructure

H3: Business Processes

DFD Data Flow Diagram
Used symbols: process, data flow, data store, external entity
Eight characteristics for system-design choices that affect business process performance:
1. degree of structure
2. range of involvement
3. level of integration
4. rhythm
5. complexity
6. degree of reliance on machines
7. prominence of planning and control
8. attention to errors and exceptions
Three kinds of tasks:
-Structured, semi structured and unstructured.
Process performance variable
1. Activity rate
2. Output rate
3. Consistency
4. Productivity
5. Cycle time
6. Downtime
7. Security
Activity rate: number of work steps that are performed per unit time
Output rate: amount of output (completions) that a process produces per unit time
Consistency is a business process means applying the same techniques in the same way to
obtain the same desired results.
Productivity: the relationship between the amount of output produced by a business process
and the amount of money, time, and effort it consumes.
Seven causes of waste:
1. defects in products
2. overproduction of goods not needed
3. inventories of goods awaiting further processing or consumption
4. unnecessary processing
5. unnecessary movement of people
6. unnecessary transport of goods
7. time spent waiting for process equipment to finish its work, or for an upstream activity
The ways information systems can help improve communication include:
Permitting communication that could not take place otherwise
Making communication situations more effective

Eliminating unnecessary person-to-person communication by making

information available through the web or other computerized means
Making communication systematic to minimize wasted effort and confusion
Satisficing: choosing a satisfactory alternative rather than searching for an optimal
alternative.
Phases of Decision-Making
Intelligence (collection and analysis of data)
Design (systematic study of the problem, alternatives)
Choice (selection of the preferred alternative)
Implementation (putting the decision into effect)
Common flaws in Decision-Making:
Poor Framing (wrong descriptions)
Recency effects (making decision by taking the most recent advice)
Primacy effects (difficult to change an opinion once they have defined it)
Poor probability estimation (only thinking of common causes, not taking special
causes in consideration)
Overconfidence (thinking you know more than you know, only remembering
supporting facts and ignore the contrary ones)
Escalation phenomena (once something is adopted as a course of action it is difficult
to let go of it when receiving poor results or negative feedback)
Association bias (trying to repeat past successes for new challenges)
Groupthink (a groups desire to make the best decision often is the wrong decision)

H4: Basic Ideas for Describing Data

Five primary types of data:
1. Predefined data items: numerical or alphabetical items whose meaning and format
are specified explicitly (eg: credit card number, transaction date)
2. Text
3. Images
4. Audio
5. Video
Record: a set of fields, each of which is related to the same thing, person or event.
Key: a field that uniquely identifies which person, thing or event the record describes.
Logical view of data: how the user or programmer thinks about the data
Physical view of data: how and where the data is stored in the computer
Accessing Data:
Push: Data is being given to the user without asking for a specific type of data. Used a
lot in the past, and they were called reports.
-Push is Pre-programmed
Pull: The user has to give some commands to get the information he/she wants, and
the user only gets the specific information he/she asked for.
Pull is Ad Hoc

Data modelling: The process of defining what data is used or produced in an information
system and how the data is organized. Basic tool: entity-relationship diagram (ERD)
In a database you have:
Entities (Professor Jones)
Entity types (professors)
Relationships (professors related with classrooms)
Attributes (phone number, address from the professors)
Types of databases:
Relational databases: a set of two-dimensional tables in which one or more keyfields in each table are associated with corresponding fields in other tables.
Requires normalization (eliminates redundancies and inconsistent dependencies)
Data language is called SQL (Structured Query Language)
Multidimensional Databases: a single file, each of whose columns can be viewed as
a separate dimension. Benefit: makes calculations and summarization more efficient.
Search data with slicing and dicing (see page 148).
Data Warehouse: a combination of a database and software designed to support
business analysis and management decision-making. Data is downloaded periodically
from transaction databases. A small data warehouse devoted to a particular business
function is called a data mart.
Geographic Information Systems (GIS): data based on spatial or geographic coordinates.
Hypermedia database: A database with clickable text (hyperlinks). something like the
internet (only the internet is not a database)
URL (Uniform resource locator)
Applets: Small programs on a web page to rotate a logo or perform calculations on data input.
DBMS: Database Management System
-providing effective ways to organize data (identifying errors during data collection,
discouraging data redundancy).
-making programming more efficient (recycling programmed scripts/methods)
Methods for accessing data in a computer system
Sequential Access: individual records within a single file are processed in sequence
until all records have been processed or until the processing is terminated for some
other reason. Used for data stored on tape, but can also be used for data on a disk.
You dont have to know the exact location of the data.
Direct Access: finding an individual item in a file immediately. Calculating the
approximate location on the hard disk where the item is to be found. Sometimes a
collision occurs.
Indexed Access: keeping an index of data (eg: names Aap to Azziz are on track 43)
Also called indexed sequential access method (ISAM).
When a track is full and more space is needed, data is stored in a special overflow
area. Degrades performance.
A logical reference identifies the data the programmer wants but doesnt say exactly how to
find the data. The DBMS converts the reference into a physical reference.

Distributed databases: A database which is stored on remote locations and each location
contains a part of the database. Alternative: replication databases. Parts of the database are
on remote locations, and when changed, they are later loaded into the central database.
Three (four) main factors related to information usefulness: (see page 163)
Information quality
1. Accuracy
2. Precision
3. Completeness
4. Age
5. Timeliness
6. Source
Information accessibility
1. Availability
2. Admissibility
Information presentation
1. level of summarization
2. Format
Information Security
1. Access restriction
2. Encryption
Two types of models
1. Mental models
2. Mathematical models, containing what-if questions. An organized sequence of what
if questions is called sensitivity analysis. It determines how much the results of the
model change when a decision or important assumption changes.

H5: Types of Information Systems

CAD Computer-aided design: helps changing the nature of design processes.
Supply Chain Systems:
Determine material requirements for future weeks or months
Generate new orders
Send the orders to suppliers
Obtain commitment dates for likely receipt
Verify that the ordered material actually arrived
The first commercial software packages that addressed major parts of the supply chain were
called material requirements planning (MRP) systems. It shows how many units of the
finished product and intermediate products must be started, when the units must be started,
when the materials must be ordered etc.
Electronic data interchange (EDI): the electronic transmission of business data from one
firm to another firm.
Supply chain management (SCM): this goes beyond automating data transfers. It is the
overall system of coordinating closely with suppliers and firms so they both benefit from it.

Most current factories are only partially automated because it is possible to get better results
by automating some functions and leaving others to the flexibility, common sense, and
ingenuity of human workers.
Computer-integrated manufacturing (CIM): computerized data collection, dataflows,
planning, accounting etc.
Reasons for adopting CIM: reduce cost, better quality, better customer service, greater
flexibility in responding to customer requirements, and quicker time-to-market with new
products.
Mass customization: the use of mass production techniques to produce customized products
and services.
Point-of-sale: (POS): a system that uses barcodes to generate customer bills. Many
supermarkets now give their repeat customers an ID card (bonuskaart). Using ID cards in
conjunction with POS systems provides an extra benefit, namely a history of every item the
repeat customer purchased.
Direct marketing: the process of selling through communications addressed to specific
customers who are likely to be interested in the product.
Sales force automation (SFA): data handling and data retrieval tasks related to sales
business. Common problem: most SFA packages cant do this automatically, so sales people
have to enter the data in the system themselves, and many salespeople resent this.
Customer relationship managements (CRM): includes everything in SFA, plus data from
customer interactions such as service calls, website activity etc. Another sales application
sometimes linked with CRM is the ability to generate an on the spot price, without getting
verification from the headquarter.
Information system categories often overlap and change as new applications combine new
capabilities with old ones.
List of different Information systems
!!(zie voor een grote samenvatting van betekenis/functie van deze informatie systemen
blz. 191/192)
Office automation System (OAS)
Communication system
Transaction processing System (TPS)
Management information system (MIS)
Executive Information System (EIS)
Decision support system (DSS)
Enterprise System (All decisions and conclusions from the other systems are the
input for this system, and then it combines all information providing consistent,
accessible information used in business processes such as purchasing, sales, etc)
Intranets: private communication networks providing employees wit all kinds of useful
information.
Extranets: the same as the intranet, only now for customers, providing them with product
info, manuals, warranties, etc.
Tacit knowledge: knowledge based on behaviour, understanding the culture within a work
environment, shared through experience and social interaction.
Explicit knowledge: Precisely and formally articulated and is often codified in databases.

Group support system (GSS): supports communication by helping facilitate meetings,

capabilities: display material, electronic brainstorming, topic commenting, issue analysis,
voting, alternative evaluation.
Batch processing: information is stored but not immediately processed.
Easier than real time, cheaper and less technology-dependent.
Real time processing: speaks for it selves, is very much technology-dependent, if the system
goes down, the process fails and can cause big problems.
From MIS to EIS: EIS attempts to take over where the traditional MIS approach falls short.
MIS is often too inflexible for many questions executives really care about, such as
understanding problems and new situations.
MIS and EIS systems are not totally suitable for all managers. Managers in a small company
often have different tasks and level of involvement in the company than managers of a large
company. The management functions such as planning, organizing, leading and controlling
are not an adequate description of what managers actually do.
DSSs are typically designed to solve the structured parts of the problem and help isolate
places where judgment and experience are required.
Important techniques used in supporting DSS systems:
-Simulation create a mathematical model of the situation.
-Optimization optimize the mm. model so that it can be used to search for optimal values
of decision variables.
-OLAP and data mining (Online Analytical Processing) use statistical techniques to
analyze business results (find relations in for example diaper sales with beer sales in evening
hours)
-Expert Systems Summarize an experts view of an area of knowledge in terms of facts and
rules. Apply these and they can help decide what to do.
-Neural Networks Use AI (Artificial Intelligence) for decision making (generating
forecasts, etc)
-Fuzzy Logic replace either-or logic with logic based on relative degrees of inclusion in
sets. (?) used in relation with Neural Networks. Looks a bit like reasoning like a person does,
knows conditions such as: slightly profitable, somewhat profitable, etc.
-Case-based reasoning: Create a dbase of examples that may help in making decisions.
-Intelligent Agents: Use AI to find for example the lowest price of a camera in databases.
Forward chaining: starts with data and tires to draw conclusions from the data, especially if
there is no clear goal.
Backward chaining: starts with a tentative conclusion and then looks for facts in the dbase
supporting that conclusion. These are both part of an Expert System.
Enterprise Resource planning (ERP) systems capabilities:
Operations and logistics: inventory management, production planning, etc.
Financials: accounts receivable and payable, cash management, analysis.
Sales and marketing: order management, sales management, pricing, etc.
Human resources: employee time accounting, payroll, travel expenses.
The effort required to implement an ERP is enormous.
Zie ook pagina 217/218 voor alle goals van alle behandelde information systems.

H6: Customer, Product and E-Commerce

Three dimensions of a products and services:

1. information
2. physical
3. service
Characteristics of Information Products
Intangible Information has no weight, you cant touch it or feel it
Copyable Info can be copied numerous times at almost no cost.
Nonconsumable when you copy or use the info, it does not change, even if values
changed
Transportable Info can be moved at almost no cost
Manipulable Manipulating information is easier than manipulating things.
Supplier-customer encounters: occurs through interactions between customers and
providers who are strangers.
Supplier-customer relationship: Same as above but they know each other personally.
Smart product: programmed to obtain info from its environment and act appropriately.
Interactive product: provides immediate response to interactive commands.
Programmable product: accepts instructions from the user and executes them later (ex:
VCR)
Customer Experience for:
A pure product
A pure service
Usage
Execution
Maintenance
(no maintenance)
Retirement (get rid of it)
(no retirement)
Delivery has turned out to be a central issue in e-commerce, everything can be OK, but if the
product does not arrive or is delayed the customer is not happy. If this happens a lot, people
stop shopping online.
Help-desking via the web is cheaper than using a help desk that operates with telephones.
Product performance variables
Cost improve product performance in ways that reduce the customers internal costs.
Quality Make it easier to customize the product for the customer
Responsiveness Increase flexibility to make it easier to respond to what customer
wants.
Reliability Make the business process more consistent.
Conformance to standards and regulations Systematize work to make the output
more consistent.
Total cost of ownership (TCO): this includes money plus time, effort and attention that
could be used for other purposes.
Competitive advantage occurs when a firms value chain generates superior product and
service features, quality, availability, lower cost, or other things customers care about.
Three strategies described by Porter:
1. Cost leadership strategy competing on lower costs.
2. Product differentiation strategy providing more value than competitors

3. Focus strategy selling products or services into a restricted market niche with limited
competition.
Mission-Critical information systems: Info systems that are important to keep business
running, their failure prevents or delays basic business activities such as selling or buying.
Strategic information systems: Systems designed to play a major role in an organizations
competitive strategy. These systems typically increase the customers perceived value by
customizing products, augmenting products thorough information and services, eliminating
delays, etc.
The ultimate result of many strategic information systems is that the capabilities in the system
become a competitive necessity and are no longer a source of competitive advantage because
all the major competitors do something similar.
Clicks and bricks: a strategy of using e-commerce while maintaining store- or office-based
channels.
Pricing has become more difficult with the introduction of the web, and especially shopbots.
They compare prices on the internet and give the results to customers who are trying to find
the best price for their products.
Yield management systems try to maximize revenue by selling the same service to different
customers at different prices (a seat on a flight).
Recommendations for a website to sell products/services:
Keep it simple, be consistent, provide clear navigation, organize around the customer, make
the shopping experience effective, minimize unnecessary input from the user, avoid excessive
download times, make the site visually appealing, design for common screen sizes, keep the
site updated, etc.
E-business and e-commerce are not magic bullets, but rather, increasingly commonplace
methods that are being incorporated into the operations of most companies.
Elements of a business that must operate together:
- Strategy
- Culture
- Physical resources
- Human resources
- Leadership
- Information
- Systems
Product Performance:
- Cost
- Quality
- Responsiveness
- Reliability
- Conformance
Competitive Outcomes
- Customer satisfaction
- Market share
- Profitability
- Image