Chapter 9: Achieving Operational Excellence and Customer Intimacy: Enterprise applications

Trying to inject a little humor into this blog…

Summary:

In chapter 2 of our textbook, the authors define Enterprise Systems as a set of software and business processes that integrate previously fragmented data from different systems. This is accomplished by storing all information in a centralized repository where it can be used by all parts of the business or organization. These are also commonly known as enterprise resource planning (ERP) systems and are essential for enabling a business to attain maximum efficiency and evaluate organizational performance.

Falling under the umbrella of ERP systems are supply chain management (SCM) systems. This software allows firms with large scale and complex manufacturing and distribution chains to effectively manage the business processes from producing and procuring raw materials to the final distribution of the finished product to the customer. Most supply chains can be broken down into 2 basic levels. The upstream portion includes the firms’ suppliers and the downstream portion deals with the processes for delivering and distributing the finished product to customers. Below is figure 9-2 from our textbook that illustrates Nike’s supply chain, but keep in mind that it is not to scale, in reality Nike has thousands of suppliers and distributors. 

A common issue with the utilization of SCM systems is the bullwhip effect. This occurs when information about the demand for a product is distorted as it moves through the supply chain processes.  To combat this problem, it behooves a company to consistently audit the accuracy of information passing through the system and being used for decision making. The software that runs SCM systems can be classified as either supply chain planning (SCP) systems or supply chain execution (SCE) systems. SCP’s tell the organization how to model their supply chain, and SCE’s actually direct the flow of products through the supply chain.

Unit 3 of this chapter explains the uses of customer relationship management (CRM) systems in an attempt to “get to know” the customer. CRM software crosses the full spectrum of customer relations, from personal tools that perform specific functions to organizational applications that capture all of the data from interactions with a customer and incorporate it into the other major enterprise systems that an organization uses. This software allows a firm to provide better customer service and better market their products to future customers. CRM software supports either the Operational or Analytical aspects of customer relations. The major CRM software producers include Oracle-owned Siebel Systems, Salesforce.com, and Microsoft Dynamics CRM.

One of the challenges to implementation of Enterprise Applications is a high cost of purchase. Including training, software, hardware, and consulting fees, the price can range into the double digit millions of dollars. Also, a firm must be ready for the fundamental changes to organization and processes that will occur with the introduction of ERP software. In the end, a company must look at whether or not they think the proverbial “juice” is worth the squeeze. 

Chapter 8: Securing Information Systems

Summary:

The same mechanisms that allow information systems to so effectively communicate with each other also provide a substantial vulnerability for malicious use and attack. All of the personal data and financial information that is collected by MIS, DSS, and ESS systems for effective decision making would be highly vulnerable to misuse and theft if not for the existence of Security and Control methods. Security refers to the procedures and measured used to prevent theft or damage to information systems. Controls are the methods and policies that maintain the accuracy and accountability of management and security standards. Anywhere that a large amount of digital data is stored is a likely target for hackers. The internet is designed to be an open system, but attacks such as a Denial-of-Service (DOS) attack causes serious disruptions and can be used to penetrate public and private networks. Without the presence of antivirus software or firewalls, almost every computer connected to the internet would be disabled by malicious software (MALWARE) such as a computer virus and a worm. Identity Theft is one of the fastest growing threats of IS security today. Identity theft is a crime in which a perpetrator obtains vital pieces of information about an individual in an attempt to impersonate someone else. The perpetrator is then able to perform various illegal activities such as obtaining a credit card using someone else’s name and social security number. Other types of attack include phishing, evil twins, pharming, and click fraud. All of these are explained in detail by our text.

Some organizations might be reticent to dump large amounts of money into overhauling and maintaining security for their information systems because it is not directly tied to profits, but the negative impact, to include legal ramifications, associated with data theft is vital to the operation of business today. Legal and regulatory requirements include the Health Insurance Portability and Accountability Act (HIPAA) and the well-known Sarbanes-Oxley Act of 2002. Our textbook states that one study found that a security breach of a large firm, on average, creates a loss of approximately 2.1% of market value (approximately $1.65 billion) per incident.

Being a military man myself, every good plan begins with a well thought out Risk Assessment. This determines the level of risk associated with a specific activity if not properly balanced with a control. When risks can be quantified and identified, then they are more easily mitigated. Information systems have General and Application controls as a framework for the risks they face. General controls govern the design, security and use of computer programs throughout an organizations network, while application controls are specific and unique to each computerized application. Organizations must also ensure the establishment of a security policy for protecting the company’s assets. A final check for all security frameworks should include frequent MIS audits to continually re-examine the environment for new threats.

The last section of this chapter presents the many technologies and tools that organizations have at their disposal for ensuring information security. Security software itself has become an enormous multi-billion dollar industry.

Below is a short video with some facts about Cyber-attacks and one company’s integrated strategy for protecting against them. 

Source - http://www.youtube.com/watch?v=NCV8j-Bn7HI

Chapter 7: Telecommunications, the Internet, and Wireless Technology

Summary:

In my opinion, the greatest, and primary, purpose of Information Technology is to facilitate a better medium of communication. With modern day global business and multi-national corporations, swift and effective communication is not only a luxury, but a necessity. The key component to successful communication lies in networks. The two traditional types of these were the telephone network and the computer network. Simple networks consist of two or more connected computers and include both hardware and system operating software via a hub or switch. The latest digital networks are made up of three technologies: client/server computing, packet switching, and standardized Transmission Control Protocol/Internet Protocol (TCP/IP). TCP/IP is arguably the most important technology, which allows for a common set of rules that enables communication across a diverse set of hardware and software platforms.

Within a network, communication can be accomplished by either an Analog or a Digital signal. Examples of an analog signal include the speakers on your computer, a set of earphones, or telephone handset, basically anything that creates a wave form that your ear can hear. Digital signals exist in binary format. That is the alternating system of zero’s (0) and one’s (1) that computers use to interpret data. Digital signals are more efficient and have less data deterioration, but they still need to be converted to analog signals for human consumption. This is accomplished through Modems. Without Cable, Digital Subscriber Line (DSL), or Wi-Fi modems, computers would not be able to communicate with analog networks such as telephone systems. Networks are generally classified in terms of geographical scope and include the Local Area Network (LAN) and Wide Area Network (WAN) and typically fall into one of the three major topologies described by the illustration below.

I have given the internet my own personal nickname, the MOAN, short for the Mother of All Networks. Indeed, the internet is the most extensive public communication system in the world. For something that most of us use on a daily basis, most people probably don’t know how it works. This chapter breaks down the “how” into terms that the lay-person may understand, from those that provide internet service, to emerging technologies and governance of its use.

You don’t have to look far to see that we are living in the age of the wireless revolution. Wireless technology is all about transmitting data at ever-increasing speeds. Examples include the emergence of 3G networks…then 4G networks…and the skies the limit. Cellular phone data, for voice transmission, has two major standards. Code Division Multiple Access (CDMA), which is primarily used in the U.S., and the Global System for Mobile Communications (GSM), used throughout Europe and most of the rest of the globe.

Other wireless technologies include the Radio Frequency Identification (RFID) systems. This technology has become so common-place in today’s society that RFID tags have been implanted for many years into our pets, and most recently humans for medical trials. They also provide organizations and key decision-makers with a powerful tool for tracking merchandise. The best example of this being Wal-Mart’s’ supply chain management network. 

FUTURE TECH: Implications of Google Glass

The internet and technology giant Google has been promoting the ground-breaking introduction of Google Glass, a wearable technology that merges the digital world with the physical world to form a “smart reality.” The potential for this product and the accompanying software technology is endless, yet I had only seen one article about this innovative technology before enrolling in this course. For those who do not take a particular interest in the tech industry, it is unlikely that they are aware of the existence of this product. Where is all the hype that Google executives are pushing so hard to create?

I believe that the potential for innovation with this product is being over-shadowed by possible violations of personal privacy and federal wiretapping laws. Public caution about getting too excited with Google Glass seems to be swayed heavily by today’s social-media mafia. In fact, there has already been one establishment in tech-savvy Seattle that has emplaced a ban on Google Glass in advance of their introduction to the public. Essentially, citing privacy issues, the owner expressed concern with the possibility of his patrons being videotaped without their knowledge or approval. Whether his reasoning, he runs a seedy bar that some patrons wouldn’t want other people knowing they go to, lends merit to his concerns or not, it definitely opens the debate for the negative uses that this technology could be used for. Please follow the link below for the full article.

http://www.komonews.com/news/local/Local-bar-owner-preemptively-bans-Google-Glass-197239521.html

Google Glass could be harmful to an individuals’ quality of life over a long enough timeline. Two diagnosed occupational illnesses related to technology are Computer Vision Syndrome (CVS) and Technostress. CVS is any eyestrain condition related to display screen use, and technostress is stress induced by computer use. Symptoms of technostress include aggravation, hostility toward humans and impatience…among others. These two maladies are the most likely to occur through the use of Google Glass, which, by its design, keeps users “plugged in” longer than almost any other device to date.

All negativity aside, the implications for this technology is exciting. I truly want to be a believer and would be very interested in trying it out…if it didn’t resemble that thing that Lavar Burton wore in Star Trek. Rule # 1 for my former job was to “always look cool” and this device in its present form would make that very difficult. I feel that if it was developed and engineered by Apple during the Steve Jobs era, it would probably be quite a bit more aesthetically pleasing in the same way as the IPad and the IPod.

Ultimately, I believe its introduction and shelf life of this product will closely resemble that of another “ground-breaking” invention that has maintained a presence in our society, albeit a much more minimal one than predicted and only in specific niche areas, the Segway. 

Chapter 6: Foundations of Business Intelligence: Databases and Information Management

Summary:

Digitalization of the business place creates massive amounts of data that must be properly managed to ensure efficiency. To do this, Information systems must be able to provide its users with accurate and timely information. This is why Data Management is so important. This chapter begins with an explanation of how computer systems organize data into a hierarchy. This hierarchy begins with a Bit, the smallest unit of data a computer can handle, and progresses to a Database, a group of related files.

The traditional data management style can make it difficult for companies to easily access data because of a tendency for functional systems and groups to be allowed to grow independently. The main problem with this system is data redundancy, inflexibility, poor security, and lack of availability. Enter the Database Management System (DBMS). This is software that permits an organization to centralize data, manage it efficiently, and provide access through application programs. The DBMS manages to accomplish this through the use of 3 capabilities. Data definition specifies the structure of the content of the database. Data dictionary capability automates the stored information about the data in the database. Data manipulation language, such as structured query language (SQL), is the specialized language for accessing and manipulating the data. 

Databases are not “one-size-fits-all” devices. Designing a database to fit an organizations needs is paramount to success. This requires both a logical and physical design. The logical aspect must reflect the business processes of the organization and meet the decision-making requirements. The physical aspect of its design illustrates how it is actually arranged on direct-access storage devices. As a whole, for a database to maintain efficiency, it must enforce referential integrity so the relationship between data tables remains consistent.

Navigating through the vast amounts of information in a database requires the use of powerful tools or software. One key tool is the Data Warehouse. A data warehouse consolidates current and historical data from different operational systems to a central database for analysis and decision-making. Another tool is Online Analytical Processing (OLAP). This enables the user to view the same data in different ways, using different dimensions such as price, cost, or time period.

Aside from managing database information, maintaining it requires policies and quality assurance checks for the sharing and use of gathered information. In most large corporations, a dedicated data administration department is responsible for information policy, protection, and enforcement. Inaccurate data creates serious implications for organizations that rely on this information for the day-to-day operation of their business. By conducting activities such as Data Cleansing, errors in data can be corrected and enforce industry-wide standards that prevent “bleed-over” into separate information systems. 

Chapter 5 – IT Infrastructure and Emerging Technologies

Summary:

In this chapter, we take a look at IT Infrastructure, which is the actual physical set of devices that is required to operate and maintain any information technology systems. This includes both Hardware (servers, computers, high speed data cables) and Software (programs, computer code, and internet browsers). Our text begins by describing the evolution of IT Infrastructure from the late 1950’s to the Cloud-computing revolution of the present day. Today, the infrastructure industry is a $1 Trillion enterprise, which can be easily illustrated by the software supremacy of companies like Microsoft, and hardware companies like IBM.

One of the most important gauge of how fast technology and processing power progresses is Moore’s Law, which states that the power of microprocessors doubles every 18 months, and vice versa, the cost of computing falls by half in the same time frame. Correlating to this law is the rapid decline in costs of communication. Unchecked, all of this astronomical growth on a global scale would be unattainable without established technology standards. Standardization of computing and communication maintains a compatibility of products throughout the global network.

Currently, the vast majority of computing is taking place on mobile platforms such as IPhones, laptops, tablet pc’s, etc. This hardware utilizes Operating System Platforms, usually through the use of Blade Servers(page 206), like Linux or Windows. There are several platforms that were developed primarily for the use of mobile devices. These include the Android OS, Google’s Chrome OS, and Apple’s Lion OS. Data management and storage is usually maintained on Storage Area Networks (SANs), which are connected to multiple storage devices that are on a separate network dedicated solely for rapid access to stored data.

This chapter attempts to cover and explain the most prevalent hardware processing platforms in use today. These include Green computing technology and the highly popular Cloud computing. Open source software allows for the sharing of vast amounts of information, often for free. Companies and organizations usually purchase their software applications from outside sources. This market is dominated by the “big players” Microsoft, Oracle and Adobe.

Managing the massive infrastructure of Information technology has its own issues. One of the ongoing issues is managing the constant change of infrastructure. Managers cope with this issue by monitoring the Scalability of their system. This refers to the ability of a system to expand to serve a larger network without breaking down. Most companies use a competitive forces model to analyze cost decision making in regards to IT infrastructure and establish the Total Cost Ownership of IT assets. This model, taken from our textbooks (page 227), is illustrated below. 

Chapter 4 – Ethical and Social Issues in Information Systems

Summary

The explosion of Information Technology within the last decade has presented us with new ethical, social, and political questions about issues such as the protection of privacy and intellectual property. The use of Information Systems potentially allows the expansion of the possible impact that individuals and organizations are capable of making. In fact, the last decade alone has been the one of the most ethically challenging times for U.S. and international business, with scores of to-big-to-fail organizations being brought to their knees by immoral and scandalous business behavior. Examples of this include such disasters as Enron, WorldCom, and Lehman Brothers to name a few, and also provide excellent case studies for what not to do.  

The chart below, taken from our textbook (page 155), illustrates the ripple-like effect that IT has on these issues and 5 moral dimensions associated with them. When studying it, imagine the center, IT and Systems, as a stone thrown into a pond. Prior to the introduction of ITS, the majority of society and individuals had an understanding of the accepted norms and rules of behavior, supported by laws, for the conduct of business. The “stone”, a new plethora of information that is suddenly tossed in the delicate ecosystem, creates ripples that have ever-expanding effects that established institutions cannot adjust to overnight.

Key to this chapter is the introduction of several ethical principles for decision analysis. Having just finished an ethics class taught by Dr. Lewis, I am familiar with many of them. They are briefly described, as each could be broken down and discussed in length, and include the well-known “Golden Rule”, Kant’s Categorical Imperative, Descartes’ rule of change, Utilitarian Principle, Risk Aversion Principle, and the “no free lunch” rule. If, when utilizing one of these principles, an action does not easily pass the test, it deserves a closer inspection than normal and should have a “proceed with caution” sign hung around its neck.

Information Technology Systems enable organizations to easily gather personal data about individuals. Coupled with the Internet and the ability for this data to be monitored at many points through the use of tools such as Cookies or spyware, the potential to decimate personal privacy is ever-present. Furthermore, the protection of intellectual property rights is difficult to enforce due to the near-constant development of new IT systems. One of the established protections for this is the Digital Millennium Copyright Act of 1998, which acted on a global scale to curtail copyright infringement.

In most instances, people would agree that technology has improved the average individuals’ quality of life. Unfortunately, there are some inherent disadvantages of the digital revolution. Computers are not infallible, and computer error can cause very real harm to individuals and organizations. The mere digitalization of jobs can replace human workers and have a negative impact on society and the economy. Mankind will always try to take advantage of their fellow man in any medium possible, so computer crime and abuse is rampant. Finally, health problems, associated with computer use, include repetitive stress injury, carpal tunnel syndrome, and technostress. 

Chapter 3: Information Systems, Organizations, and Strategy

Summary:

A more appropriate title for this chapter would have been How organizations utilize information systems for strategic decision making. To best understand this, we must first define what an organization is. The textbook definition is, “a stable, formal social structure that takes resources from the environment and processes them to produce outputs. “  As bastions of collectivity, organizations develop their own culture based off of the unquestioned assumptions that define their goals and products. Other features of organizations include the development of routines, or standard operating procedures, in business processes and the presence of politics brought about by varied viewpoints about resource management. Modern organizations are inherently specialized, hierarchical, and impartial, with the goal being to maximize efficiency. The differences in how an organization uses information systems is influenced by environmental factors such as goals, social roles, leadership styles, types of tasks performed, and type of structure.

The introduction of new Information Systems (IS) in organizations tends to be highly resisted. The very nature of an organization is resistant to change. For effective integration, information systems must be created with the end-user in mind. 4 factors must to be taken into consideration to ensure the successful introduction of a new technology: Tasks of the organization, People (culture, politics), Structure (hierarchy, routine, and business processes), and existing technology.

 Some technologies go so far as to be classified as Disruptive technologies. These are innovations that fundamentally change the business environment that an organization works in. For instance, a substitute product that works better than anything currently produced, like the automobile being substituted for the horse-drawn carriage. These technologies are intended to help an organization achieve a competitive advantage that will make the firm more profitable, productive, and valuable then their competitors. This chapter discusses the impact that the internet has on competitive advantage and further defines some of the different strategies for using information systems to both counter and enable competitive forces in an organizations’ environment.

Finally, Information technology greatly leverages the power of the business ecosystem. Our text describes a business ecosystem as loosely coupled but interdependent networks of suppliers, distributors, outsourcing firms, transportation service firms and technology manufacturers. Through the sharing of Information technology based platforms, developed by key firms such as Microsoft or Wal-Mart, entire industries can see enormous growth and profitability while ever-expanding the network of ecosystems in the environment.

Chapter 2: Global E-Business and Collaboration

Summary:

Business in the modern age relies heavily on information technology and information systems to optimize efficiency and improve business processes. This chapter begins by explaining what business processes are and how they are related to information systems, which are the set of interrelated components that collect, process, store, and distribute information to support decision making and control in an organization.

We are provided further elaboration of Management Information Systems (MIS) as they are used by middle management to monitor current performance and predict and control future performance. MIS data is mainly used for the routine decision making of day-to-day operations. In contrast, Decision-Support Systems (DSS) are utilized to help guide more non-routine decision making. Finally, Executive Support Systems (ESS) exist to provide long-term, strategic information to senior management to help address decision making that frequently requires high-level judgment and innovative solutions due to a lack of established procedure for uncommon situations. These are most commonly presented to executives in the form of a web Portal, utilizing an organizations intranet to provide relevant and personalized data, or a digital dashboard, a single-screen visual representation of key performance indicators. All of these systems form what is known as Business Intelligence, an all-encompassing term for the data and software tools that help managers and organizations make more informed decisions.

With the vast amount of data gathered by these systems, how can a business manage all the information effectively, if at all? Well, you introduce more systems to manage the systems of course! The systems are called Enterprise Applications. The four major types of enterprise applications are: enterprise systems, supply chain management systems, customer relationship management systems, and knowledge management systems. Each of these manages a specific set of functions and business processes to streamline the performance of the organization.

Albert Einstein once said “Nothing great was ever accomplished alone.”  Even in the E-World we live in, where many have minimal human business interactions because of the proliferation of E-Business, E-Commerce, and E-Government, collaboration is an integral part of accomplishing our goals. Collaboration is especially important today because of the overall change in the nature of work and the ease and availability of information through the internet. The text describes how most research on collaboration supports the position that teams are more efficient and get better results than individuals. The sharing of ideas also increases the likelihood of innovation.

As is the norm for this chapter, there are, of course, systems to support collaboration. These include the mundane and user friendly (email, Instant Message, social network sites) to the more complex (Google Doc’s, telepresence, virtual meetings, MS SharePoint).

Ultimately, all these systems and their information must be managed somehow. Aside from the smallest of organizations, most firms have an Information Systems Department assigned to manage these services. It is up to this department and the efforts of its Chief Information Officer, Chief Security Officer, Chief Privacy Officer, and Chief Knowledge Officer, or any other variation of these, to ensure that the Information Technology (IT) performs its intended functions.