Principles of Business Information Systems, 4th Edition

Princ ipl e s of

BUSINESS INFORMATION SYSTEMS fourth edition

Australia • Brazil • Canada • Mexico • Singapore • United Kingdom • United States

ralph

Stair George

Reynolds Thomas

Chesney

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Brief Contents

Overview1 1 An Introduction to Information Systems 3 2 Information Systems in Organizations 35

Information Technology Concepts65 3 Hardware: Input, Processing, Output and Storage Devices 67 4 Software: Systems and Application Software 113 5 Organizing and Storing Data 155 6 Computer Networks 185

Business Information Systems231 7 Operational Systems 233 8 Management Information and Decision Support Systems 265 9 Knowledge Management and Specialized Information Systems 305 10 Pervasive Computing 335

Systems Development365 11 Systems Analysis 367 12 Systems Design and Implementation 411

Information Systems in Business and Society449 13 Security, Privacy and Ethical Issues in Information Systems 451

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Contents

Preface xiii Approach of the Text xiii Goals of this Text xiv Changes to the Fourth Edition xvii Structure of the Text xix About the Authors xxi Acknowledgements xxi Digital Resources Page xxii

1 Overview

1 An Introduction to Information Systems 3 Principles 3 Learning Objectives 3 Why Learn About Information Systems? 4 What is an Information System? 4 What is a System? 4 What is Information? 6 What is an Information System? 6 The Characteristics of Valuable Information 7 Manual and Computerized Information Systems 8 Business Information Systems 12 Information Systems @ Work: Translating Shakespeare into Xhosa 12 Enterprise Systems: Transaction Processing Systems and Enterprise Resource Planning 13 MIS and DSS 16 Knowledge Management, Artificial Intelligence, Expert Systems and Virtual Reality 17 Systems Development 19 Systems Investigation and Analysis 20

Systems Design, Implementation, and Maintenance and Review 20 Information Systems in Society, Business and Industry 21 Ethical and Societal Issues: Ethical Robots21 Security, Privacy and Ethical Issues in Information Systemsand the Internet 22 Computer and Information Systems Literacy 23 Information Systems in the Functional Areas ofBusiness 24 Information Systems in Industry 24 Global Challenges in Information Systems 24 Infographic 1: Increasing size of data 25 Summary 27 Self-Assessment Test 29 Review Questions 29 Discussion Questions 29 Web Exercises 29 Case One: Boaty McBoatface: The Online Survey That Went Viral 30 Case Two: Health Information Systems in South Africa 31 Case Three: Australian Drones Join The Postal Service 32 Notes 33

2 Information Systems inOrganizations 35 Principles 35 Learning Objectives 35 Why Learn About Information Systems in Organizations? 36 An Introduction to Organizations 36 Organizational Structures 38 Organizational Change 41 Ethical and Societal Issues: Customers Out of Pocket After Direct Transfer Error 43

Contents

Reengineering and Continuous Improvement 45 User Satisfaction and Technology Acceptance 46 Information Systems @ Work: Neto Helps Australian Small Businesses Get Online 47 The Applications Portfolio 48 Success Factors 49 Competitive Advantage 50 Factors That Lead Firms to Seek Competitive Advantage 50 Evaluating IS 51 Productivity 51 Return on Investment and the Value of Information Systems 52 Careers in Information Systems 53 Operations 53 Systems Development 53 Support 55 Information Service Units 55 Typical IS Titles and Functions 55 Summary 57 Self-Assessment Test 58 Review Questions 58 Discussion Questions 58 Web Exercises 58 Case One: Nailed it! Instagram and Cloud Computing Ensure Success 59 Case Two: Crosswords and Cybersecurity 60 Case Three: Raining Wine from the Cloud 61 Notes 62 World Views Case: ABAZONG Training and Consulting (Pty) Ltd Helps Organizations and Users With Information Security Consultation and Training Awareness 63

Information Technology Concepts 65

3 Hardware: Input, Processing, Output and Storage Devices 67 Principles 67 Learning Objectives 67 Why Learn About Hardware? 68 Computer Systems: Integrating the Power of Technology 68 Hardware Components 69

Hardware Components in Action 70 Processing and Memory Devices: Power, Speed and Capacity 71 Processing Characteristics and Functions 71 Memory Characteristics and Functions 72 Multiprocessing 74 Parallel Computing 74 Secondary Storage 75 Access Methods 76 Secondary Storage Devices 76 Enterprise Storage Options 78 Input and Output Devices: The Gateway to Computer Systems 81 Characteristics and Functionality 82 Input Devices 83 Output Devices 87 Computer System Types 91 Portable Computers 93 Nonportable Single-User Computers 95 Multiple-User Computer Systems 96 Information Systems @ Work: 3D Printers Arrive in the Operating Theatre 97 Green Computing 100 Ethical and Societal Issues: Mobile Technology Fighting Human Trafficking 102 Summary 103 Self-Assessment Test 105 Review Questions 105 Discussion Questions 105 Web Exercises 105 Case One: Moore’s Law About to be Overturned 106 Case Two: Sen.Se is Helping to Create the Internet of Things 107 Case Three: The €30 computer 108 Notes 109

4 Software: Systems and Application Software 113 Principles 113 Learning Objectives 113 Why Learn About Systems and Application Software? 114 An Overview of Software 114 Systems Software 114 Application Software 115 Supporting Individual, Group and Organizational Goals 115 Systems Software 116

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Contents

Operating Systems 116 Current Operating Systems 120 Information Systems @ Work: Privacy for Everyone, Everywhere 122 Workgroup Operating Systems 123 Enterprise Operating Systems 124 Embedded Operating Systems 124 Utility Programs 125 Middleware 127 Application Software 127 Overview of Application Software 127 Personal Application Software 129 Mobile Application Software 133 Workgroup Application Software 134 Enterprise Application Software 135 Application Software for Information, Decision Support andCompetitive Advantage 136 Programming Languages 136 Ethical and Societal Issues: Adblockers: Salvation for Web Users Or a High-Tech Protection Racket? 137 The Evolution of Programming Languages 138 Visual, Object-Oriented and Artificial Intelligence Languages 138 Software Issues and Trends 140 Software Bugs 140 Copyrights and Licences 141 Freeware and Open-Source Software 141 Software Upgrades 143 Global Software Support 144 Summary 144 Self-Assessment Test 146 Review Questions 147 Discussion Questions 147 Web Exercises 147 Case One: Software Cuts Legal Costs 147 Case Two: Ready. Steady. Go! 149 Case Three: Software Error Dooms Spacecraft 150 Notes 151

5 Organizing and Storing Data 155 Principles 155 Learning Objectives 155 Why Learn About Organizing Data? 156 Data Management and Data Modelling 156 Relationships Between Tables 158 Designing Relational Databases 159 Database Management Systems 163 Creating and Modifying the Database 163 Storing and Retrieving Data 164

Manipulating Data and Generating Reports 165 Database Administration 166 Selecting a Database Management System 167 Using Databases with Other Software 167 Database Applications 168 Linking Databases to the Internet 168 Big Data Applications 168 Data Warehouses 169 Ethical and Societal Issues: Three Words and a Few Symbols Cost a Business €40m 170 Data Mining 171 Business Intelligence 172 Information Systems @ Work: The IBM Quantum Experience 173 Distributed Databases 175 Online Analytical Processing (OLAP) 176 Visual, Audio and Other Database Systems 177 Summary 178 Self-Assessment Test 179 Review Questions 180 Discussion Questions 180 Web Exercises 180 Case One: Click Here to Reset Your Password 180 Case Two: Machine Learning: How Many Books Have You Read? 182 Case Three: Protect Your Data: Life is Valuable 183 Notes 184

6 Computer Networks 185 Principles 185 Learning Objectives 185 Why Learn About Computer Networks? 186 Telecommunications 186 Channel Bandwidth 187 Guided Transmission Media Types 187 Wireless Transmission Media Types 189 Telecommunications Hardware 193 Networks and Distributed Processing 195 Network Types 195 Ethical and Societal Issues: The Great British Data Grab 197 Distributed Processing 200 Client/Server Systems 200 Communications Software 201 Software-Defined Networking 203 Securing Data Transmission 203 Virtual Private Network (VPN) 205 The Internet 205 How the Internet Works 206 Internet Applications 208

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Contents

The World Wide Web 208 Information Systems @ Work: Tech Firms Plan the Highest Capacity Atlantic Data Link 211 Email 215 Telnet and FTP 215 Cloud Computing 215 Intranets and Extranets 218 The Internet of Things 219 Summary 221 Self-Assessment Test 223 Review Questions 223 Discussion Questions 224 Web Exercises 224 Case One: Instant Messaging is Easier to Secure Than Email 224 Case Two: Anatomy of a Hack 225 Case Three: Digital Cartography Gets It Wrong 226 Notes 227 World Views Case: IT Purchase Decisions: What Should You Buy? 229

Business Information Systems 231

7 Operational Systems 233 Principles 233 Learning Objectives 233 Why Learn About Operational Systems? 234 Introduction 234

Traditional Transaction Processing Applications 245 Order Processing Systems 245 Purchasing Systems 247 Accounting Systems 248 Electronic and Mobile Commerce 249 Electronic Commerce 249 Mobile Commerce 250 Ethical and Societal Issues: Controlling Transactions with Biometrics 251 Production and Supply Chain Management 252 Customer Relationship Management and Sales Ordering 254 Financial and Managerial Accounting 255 Hosted Software Model for Enterprise Software 256 International Issues Associated with Operational Systems 256 Different Languages and Cultures 257 Disparities in Information System Infrastructure 257 Varying Laws and Customs Rules 257 Multiple Currencies 257 Summary 258 Self-Assessment Test 259 Review Questions 259 Discussion Questions 260 Web Exercises 260 Case One: Non-Linear Presentations 260 Case Two: When Stock Becomes a Liability 262 Case Three: Netflix Analytics Creates Content That We’ll Watch 263 Notes 264

8 Management Information and Decision Support Systems 265

Enterprise Resource Planning 235 Advantages of ERP Systems 235 Disadvantages of ERP Systems 236 ERP for Small- and Medium-Sized Enterprises (SMEs) 238

Principles 265 Learning Objectives 265 Why Learn About Management InformationSystems and Decision Support Systems? 266

Transaction Processing Systems 238 Traditional Transaction Processing Methods and Objectives 239 Transaction Processing Activities 241 Information Systems @ Work: Fast Food Chain Yonghe King Upgrades Their POS 244

Decision Making and Problem Solving 266 Programmed versus Non-Programmed Decisions 267 Optimization, Satisficing and Heuristic Approaches 268 Sense and Respond 268 Big Data 269

Contents

An Overview of Management Information Systems 269 Inputs to a Management Information System 269 Outputs of a Management Information System 270 Characteristics of a Management Information System 273

Knowledge Management Systems 306 Overview of Knowledge Management Systems 306 Obtaining, Storing, Sharing and Using Knowledge 307 Technology to Support Knowledge Management 308

Functional MIS 274 Financial Management Information Systems 275 Manufacturing Management Information Systems 277 Marketing Management InformationSystems 280 Human Resource Management Information Systems 282 Geographic Information Systems 284

Artificial Intelligence 309 The Nature of Intelligence 310 The Difference Between Natural and Artificial Intelligence 311 Information Systems @ Work: Playing with Atoms 312 The Major Branches of Artificial Intelligence 313

Decision Support Systems 285 Characteristics of a Decision Support System 285 Capabilities of a Decision Support System 286 A Comparison of a DSS and an MIS 287 Information Systems @ Work: Non-Linear What-If Analysis in LibreOffice 288 Components of a Decision Support System 290 Group Support Systems 292 Ethical and Societal Issues: Online Divorce Form Error ‘Could Have Led to Unfair Settlements’ 292 Characteristics of a GSS that Enhance Decision Making 293 Executive Support Systems 295 Capabilities of Executive Support Systems 295 Summary 297 Self-Assessment Test 298 Review Questions 299 Discussion Questions 299 Web Exercises 299 Case One: Smart Meters Capture Big Data For Energy Decisions 299 Case Two: Taking Designs into the Next Dimension 301 Case Three: Using Agent Modelling as a Decision Support Tool 302 Notes 303

9 Knowledge Management and Specialized Information Systems 305 Principles 305 Learning Objectives 305 Why Learn About Knowledge Management and Specialized Information Systems? 306

Ethical and Societal Issues: Augmented Reality’s Killer App 318 Expert Systems 319 When to Use Expert Systems 319 Components of Expert Systems 320 Virtual Reality 326 Interface Devices 327 Forms of Virtual Reality 327 Virtual Reality Applications 327 Summary 328 Self-Assessment Test 329 Review Questions 329 Discussion Questions 330 Web Exercises 330 Case One: A ‘Soft’ Octopus Robot 330 Case Two: 360° Video Makes Virtual Reality Accessible 331 Case Three: Game-Show-Winning AI Now Diagnoses Rare Diseases 333 Notes 334

10 Pervasive Computing 335 Principles 335 Learning Objectives 335 Why Learn About Pervasive Computing? 336 Introduction 336 Wireless Internet Access 337 Mobile Devices 337 Smartphone 338 Wearable Technology 339 Ethical and Societal Issues: Pay Up Or Your Data Gets It! 340 Information Systems @ Work: The Blockchain Creates Tamper-Proof Transactions 341

Contents

E-Money 343 Tangible Media 344 Personal Robotics 345 Virtual Pets 345 Computer Supported Cooperative Work 346 Videoconferencing 346 Messaging 346 Interactive Whiteboards 347 Wikis 348 MMOGs 348 Blogs, Podcasts and Live Streaming 348 Cloud Tools 349 More Applications of Electronic and Mobile Commerce 350 Retail and Wholesale 350 Manufacturing 350 Marketing 352 Investment and Finance 353 Auctions 353 Anywhere, Anytime Applications of Mobile Commerce 353 Advantages of Electronic and Mobile Commerce 354 Teleworking 355 Summary 355 Self-Assessment Test 356 Review Questions 357 Discussion Questions 357 Web Exercises 357 Case One: Someone to Share a Journey With 357 Case Two: Kids Finally Get a Real Magic Wand at Disney 358 Case Three: Let’s Play and Become Famous 359 Notes 361 World Views Case: Information Systems at Damelin, South Africa 362

4 Systems Development

365

11 Systems Analysis 367 Principles 367 Learning Objectives 367 Why Learn About Systems Analysis? 368

An Overview of Systems Development 368 Participants in Systems Development 368 Information Systems Planning and Aligning Organization and IS Goals 370 Establishing Objectives for Systems Development 372 Systems Development Lifecycles 374 The Traditional Systems Development Lifecycle 374 Prototyping 376 Information Systems @ Work: Open-Source Software Conquers Data Science 378 Rapid Application Development, Agile Development, JointApplication Development and Other Systems Development Approaches 379 The End-User Systems Development Lifecycle 380 Outsourcing and On-Demand Computing 380 Genetic Programming 381 Factors Affecting System Development Success 382 Involvement 382 Degree of Change 382 Managing Change 383 Quality and Standards 383 Use of Project Management Tools 385 Use of Computer-Aided Software Engineering (CASE)Tools 387 Systems Investigation 388 Initiating Systems Investigation 388 Participants in Systems Investigation 388 Feasibility Analysis 389 The Systems Investigation Report 389 Ethical and Societal Issues: The Very Last Step in Systems Development 390 Systems Analysis 391 General Considerations 392 Participants in Systems Analysis 392 Data Collection and Analysis 392 Requirements Analysis 396 Critical Success Factors 398 The IS Plan 398 Screen and Report Layout 398 Requirements Analysis Tools 399 Object-Oriented Systems Analysis 399 The Systems Analysis Report 400 Understanding Software Bias 401 Summary 401 Self-Assessment Test 404

Contents

Review Questions 404 Discussion Questions 405 Web Exercises 405 Case One: Hackathon Culture 405 Case Two: Failover from Amazon 406 Case Three: The Internet of Bananas 1.0 407 Notes 409

12 Systems Design and Implementation 411 Principles 411 Learning Objectives 411 Why Learn About Systems Design andImplementation? 412 Systems Design 412 Interface Design and Controls 413 Design of System Security and Controls 414 Generating Systems Design Alternatives 417 Freezing Design Specifications 422 The Contract 422 The Design Report 422 Information Systems @ Work: Creating Computer Games Without Needing to Program 423 Systems Implementation 424 Acquiring Hardware from an IS Vendor 425 Acquiring Software: Make or Buy? 425 Acquiring Database and Telecommunications Systems 428 User Preparation 428 IS Personnel: Hiring and Training 428 Site Preparation 429 Data Preparation 429 Installation 429 Testing 429 Ethical and Societal Issues: Modelling a Mass Shooting 430 Start-Up 431 User Acceptance 432 Systems Operation and Maintenance 433 Reasons for Maintenance 433 Types of Maintenance 434 The Request for Maintenance Form 434 Performing Maintenance 435 The Financial Implications of Maintenance 435 The Relationship Between Maintenance and Design 435 Systems Review 436 Types of Review Procedures 436

Factors to Consider During Systems Review 437 System Performance Measurement 438 Summary 438 Self-Assessment Test 440 Review Questions 441 Discussion Questions 441 Web Exercises 441 Case One: Open-Source Project Aims to Create Artificial Life 442 Case Two: Build Your Own Robot 443 Case Three: GitHub 444 Notes 445 World Views Case: Systems Development at Damelin, South Africa 447

Information Systems in Business and Society 449

13 Security, Privacy and Ethical Issues in Information Systems 451 Principles 451 Learning Objectives 451 Why Learn About Security, Privacy andEthical Issues in Information Systems? 452 Computer Waste and Mistakes 452 Preventing Computer-Related Waste and Mistakes 453 Information Systems @ Work: Admiral to Price Car Insurance Based on Facebook Posts 455 Computer Crime 456 Preventing Computer-Related Crime 462 Crime Prevention by the State 463 Crime Prevention by Organizations 463 Crime Prevention by Individuals 465 Using Intrusion Detection Software 466 Using Managed Security Service Providers (MSSPs) 466 Preventing Crime on the Internet 466 Privacy 467 Privacy and the Government 467 Privacy at Work 468

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Contents

Email Privacy 468 Privacy and the Internet 468 Fairness in Information Use 469 Individual Efforts to Protect Privacy 470 Relevant Laws Governing Use of Technology 471 The Work Environment 472 Health Concerns 473 Avoiding Health and Environmental Problems 473 Ethical and Societal Issues: Kettle Botnet Heats Up 474 Ethical Issues in Information Systems 475 Summary 476 Self-Assessment Test 478 Review Questions 478

Discussion Questions 478 Web Exercises 478 Case One: Open-Access Pirates 478 Case Two: The Encryption Row Is Back 480 Case Three: On Patrol With the Love Police 481 Notes 482 World Views Case: Facebook: A Platform forCyberbullying and Cyber Racism or Not? 484 Answers to Self-Assessment Tests 487 Glossary 491 Index 503 Credits 519

Preface

As organizations continue to operate in an increasingly competitive and global marketplace, workers in all areas of business including accounting, finance, human resources, marketing, operations management and production must be well prepared to make the significant contributions required for success. Regardless of your future role, you will need to understand what information systems can and cannot do and be able to use them to help you accomplish your work. You will be expected to discover opportunities to use information systems and to participate in the design of solutions to business problems employing information systems. You will be challenged to identify and evaluate information systems options. To be successful, you must be able to view information systems from the perspective of business and organizational needs. For your solutions to be accepted, you must recognize and address their impact on fellow workers, customers, suppliers and other key business partners. For these reasons, a course in information systems is essential for students in today’s high-tech world. The primary objective of Principles of Business Information Systems fourth edition is to provide the best information systems text and accompanying materials for the first information technology course required of all business students. We want you to learn to use information technology to ensure your personal success in your current or future job and to improve the success of your organization. Principles of Business Information Systems stands proudly at the beginning of the information systems (IS) curriculum and remains unchallenged in its position as the only IS principles text offering the basic IS concepts that every business student must learn to be successful. This text has been written specifically for the introductory course in the IS curriculum. Principles of Business Information Systems treats the appropriate computer and IS concepts together with a strong managerial emphasis on meeting business and organizational needs.

Approach of the Text Principles of Business Information Systems offers the traditional coverage of computer concepts, but it places the material within the context of meeting business and organizational needs. Placing IS concepts in this context and taking a general management perspective sets the text apart from general computer books thus making it appealing not only to those studying for IS degrees but also to students from other fields of study. The text isn’t overly technical, but rather deals with the role that information systems play in an organization and the key principles a manager needs to grasp to be successful. These principles of IS are brought together and presented in a way that is both understandable and relevant. In addition, this book offers an overview of the entire IS discipline, while giving students a solid foundation for further study in advanced IS courses such as programming, systems analysis and design, project management, database management, data communications, website and systems development, electronic commerce and mobile commerce applications, and decision support. As such, it serves the needs of both general business students and those who will become IS professionals. xiii

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Preface

IS Principles First, Where They Belong Exposing students to fundamental IS principles is an advantage for students who do not later return to the discipline for advanced courses. Since most functional areas in business rely on information systems, an understanding of IS principles helps students in other course work. In addition, introducing students to the principles of IS helps future business function managers employ information systems successfully and avoid mishaps that often result in unfortunate consequences. Furthermore, presenting IS concepts at the introductory level creates interest among general business students who may later choose IS as a field of concentration.

Goals of this Text Principles of Business Information Systems has four main goals: 1 To provide a core of IS principles with which every business student should be familiar. 2 To offer a survey of the IS discipline that will enable all business students to understand the relationship of IS courses to their curriculum as a whole. 3 To present the changing role of the IS professional. 4 To show the value of the discipline as an attractive field of specialization. By achieving these goals, Principles of Business Information Systems will enable students to understand and use fundamental IS principles so that they can function more efficiently and effectively as workers, managers, decision makers and organizational leaders.

IS Principles Principles of Business Information Systems, although comprehensive, cannot cover every aspect of the rapidly changing IS discipline. The authors, having recognized this, provide students with an essential core of guiding IS principles to use as they face career challenges ahead. Think of principles as basic truths or rules that remain constant regardless of the situation. As such, they provide strong guidance in the face of tough decisions. A set of IS principles is highlighted at the beginning of each chapter. The ultimate goal of Principles of Business Information Systems is to develop effective, thinking, action-oriented employees by instilling them with principles to help guide their decision making and actions.

Survey of the IS Discipline This text not only offers the traditional coverage of computer concepts but also provides a broad framework to impart students with a solid grounding in the business uses of technology. In addition to serving general business students, this book offers an overview of the entire IS discipline and solidly prepares future IS professionals for advanced IS courses and their careers in the rapidly changing IS discipline.

Changing Role of the IS Professional As business and the IS discipline have changed, so too has the role of the IS professional. Once considered a technical specialist, today the IS professional operates as an internal consultant to all functional areas of the organization, being knowledgeable about their needs and competent in bringing the power of IS to bear throughout the organization. The IS

Preface

rofessional views issues through a global perspective that encompasses the entire organization p and the broader industry and business environment in which it operates. The scope of responsibilities of an IS professional today is not confined to just his or her employer but encompasses the entire interconnected network of employees, suppliers, customers, competitors, regulatory agencies and other entities, no matter where they are located. This broad scope of responsibilities creates a new challenge: how to help an organization survive in a highly interconnected, highly competitive global environment. In accepting that challenge, the IS professional plays a pivotal role in shaping the business itself and ensuring its success. To survive, businesses must now strive for the highest level of customer satisfaction and loyalty through competitive prices and ever-improving product and service quality. The IS professional assumes the critical responsibility of determining the organization’s approach to both overall cost and quality performance and therefore plays an important role in the ongoing survival of the organization. This new duality in the role of the IS employee – a professional who exercises a specialist’s skills with a generalist’s perspective – is reflected throughout the book.

IS as a Field for Further Study Employment of computer and IS managers is expected to grow much faster than the average for all occupations. Technological advancements will boost the employment of computer-related workers; in turn, this will boost the demand for managers to direct these workers. In addition, job openings will result from the need to replace managers who retire or move into other occupations. A career in IS can be exciting, challenging and rewarding! It is important to show the value of the discipline as an appealing field of study and that the IS graduate is no longer a technical recluse. Today, perhaps more than ever before, the IS professional must be able to align IS and organizational goals and ensure that IS investments are justified from a business perspective. The need to draw bright and interested students into the IS discipline is part of our ongoing responsibility. Upon graduation, IS graduates at many schools are among the highest paid of all business graduates. Throughout this text, the many challenges and opportunities available to IS professionals are highlighted and emphasized.

Changes to the Fourth Edition

Principles of Business Information Systems is an adaptation of the popular US textbook Principles of Information Systems, now in its fourteenth edition. With a more international outlook, this book is suitable for students in the UK, Europe, the Middle East and South Africa on introductory BIS or MIS courses. The new edition reflects the fact that this book has boosted its business emphasis but retained its technology focus. Continuing to present IS concepts with a managerial emphasis, this edition retains the overall vision, framework and pedagogy that made the previous US editions so popular: ■■

Principles of Business Information Systems keeps the same five-part structure, is packed with new real world examples and business cases, and highlights ethical issues throughout.

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It is still an IS text aimed at those studying business and management.

However, in order to increase its international relevance, we have made a number of changes. The main improvements are: ■■

Cases are more international in flavour, including examples from South Africa, Australia and Europe, and have a broader sector spread reflecting a wider variety of business types (including SMEs).

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The book has been brought completely up to date in terms of innovations in IT.

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Legal and ethical issues in IT have been made more international.

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A chapter on pervasive computing reflects the move of the computer away from the desktop to enter almost every aspect of our lives.

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Separate information systems are still discussed in Chapters 7, 8, 9 and 10 (all of Part 3) but we recognize that many large – and some small – companies take a more integrated approach and this is covered at the start of Part 3.

We want to note that at the time of this fourth EMEA edition going to press, the global COVID-19 pandemic is still at large worldwide. For the past few months governments across the world have introduced a range of social distancing, isolation and quarantine methods to help control the pandemic which has impacted businesses and their information systems worldwide. It is too early to tell what the full effects of this pandemic will be on business information systems, but references to and examples of effects there have been to date, are included in the new edition.

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Structure of the Text

Principles of Business Information Systems is organized into five parts – an overview of information systems, an introduction to information technology concepts, an examination of different classes of business information systems, a study of systems development and a focus on information systems in business and the wider society. The content of each chapter is as follows: Chapter 1 An Introduction to Information Systems Chapter 1 creates a framework for the entire book. Major sections in this chapter become entire chapters in the text. This chapter describes the components of an information system and introduces major classes of business information systems. It offers an overview of systems development and outlines some major challenges that IS professionals face. Chapter 2 Information Systems in Organizations Chapter 2 gives an overview of business organizations and presents a foundation for the effective and efficient use of IS in a business environment. We have stressed that the traditional mission of IS is to deliver the right information to the right person at the right time. In the section on virtual organizational structure, we discuss that virtual organizational structures allow work to be separated from location and time. Work can be done anywhere, anytime. The concept of business process reengineering (BPR) is introduced and competitive advantage is examined – higher quality products, better customer service and lower costs. Chapter 3 Hardware: Input, Processing, Output and Storage Devices This chapter concentrates on the hardware component of a computer-based information system (CBIS) and reflects the latest equipment and computer capabilities. Computer memory is explained and a variety of hardware platforms are discussed including mobile technology. Chapter 4 Software: Systems and Application Software You cannot come into contact with a computer without coming into contact with software. This chapter examines a wide range of software and related issues including operating systems and application software, open-source and proprietary software, software for mobile devices and copyrights and licenses. Chapter 5 Organizing and Storing Data Databases are the heart of almost all IS. A huge amount of data is entered into computer systems every day. Chapter 5 examines database management systems and how they can help businesses. The chapter includes a brief overview of how to organize data in a database, a look at database administration and discusses how data can be used competitively by examining both data mining and business intelligence. Chapter 6 Computer Networks The power of information technology greatly increases when devices are linked or networked, which is the subject of this chapter. Today’s decision makers need to access data wherever it resides. They must be able to establish fast, reliable connections to exchange messages, upload and download data and software, route business transactions to processors, connect to databases and network services, and send output to printers. This chapter examines the hardware involved and examines the world’s biggest computer network, the Internet.

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STRUCTURE OF THE TEXT

Chapter 7 Operational Systems Operational systems, such as transaction processing systems, allow firms to buy and sell. Without systems to perform these functions, firms could not operate. Organizations today are moving from a collection of non-integrated transaction processing systems to highly integrated enterprise resource planning systems to perform routine business processes and maintain records about them. These systems support a wide range of business activities associated with supply chain management and customer relationship management. This chapter examines transaction processing systems and enterprise resource planning systems. Chapter 8 Management Information and Decision Support Systems This chapter begins with a discussion of decision making and examines the decision-making process. Both management information systems and decision support systems are examined in detail. Their ability to help managers make better decisions is emphasized. Chapter 9 Knowledge Management and Specialized Information Systems A discussion of knowledge management leads onto a discussion of some of the special- purpose systems discussed in the chapter, including expert and knowledge-based systems. The other topics discussed include robotics, vision systems, virtual reality and a variety of other special-purpose systems. We discuss embedded artificial intelligence, where a rtificial intelligence capabilities and applications are placed inside products and services. Chapter 10 Pervasive Computing The move of information systems to leave the office desktop and enter every aspect of our lives is well underway. Many businesses are exploiting this to their advantage, as are their customers. This chapter examines some of the technologies that are enabling all of this to happen. New ones are being introduced almost every month. It is important that businesses understand the potential benefits they can bring. Chapter 11 Systems Analysis This chapter and the next examine where information systems come from. Systems investigation and systems analysis, the first two steps of the systems development, are discussed. This chapter provides specific examples of how new or modified systems are initiated and analyzed in a number of industries. This chapter emphasizes how a project can be planned, aligned with corporate goals and rapidly developed. Chapter 12 Systems Design and Implementation This chapter looks at how the analysis discussed in Chapter 11 can be used to design and build IT solutions. The chapter mainly looks at developing a new system but also examines solving a problem by buying an existing IS that has already been developed. Chapter 13 Security, Privacy and Ethical Issues in Information Systems This last chapter looks at security, privacy and ethical issues, something that is in the background throughout the text. A wide range of non-technical issues associated with the use of IS provide both opportunities and threats to modern organizations. The issues span the full spectrum – from preventing computer waste and mistakes, to avoiding violations of privacy, to complying with laws on collecting data about customers, to monitoring employees.

About the Authors

Ralph Stair received a BS in Chemical Engineering from Purdue University, an MBA from Tulane University, and a PhD from the University of Oregon. He has taught information systems at many universities. He has published numerous articles and books, including Succeeding With Technology, Programming in BASIC and many more. George Reynolds is an assistant professor in the Information Systems department of the College of Business at the University of Cincinnati. He received a BS in Aerospace Engineering from the University of Cincinnati and an MS in Systems Engineering from West Coast University. He taught part-time at Xavier University, the University of Cincinnati, Miami University and the College of Mount Saint Joseph while working full-time in the information systems industry, including positions at the Manned Spacecraft Center in Houston, Texas; the Jet Propulsion Lab in Pasadena, California; and Procter and Gamble in Cincinnati, Ohio. Thomas Chesney is Professor of Computational Social Science at Nottingham University Business School where he studies the behaviour of networked individuals. His work has appeared in the Information Systems Journal and Decision Support Systems. Thomas has a PhD in Information Systems from Brunel University, an MSc in Informatics from Edinburgh University where his specialism was knowledge management and engineering, and a BSc in Information Management from the Queen’s University of Belfast. He is a fellow of the Higher Education Academy and a member of the Association for Information Systems.

Acknowledgements We are indebted to the following reviewers for their perceptive feedback and expert insight on early drafts of this text: ■■

Paul Abanda, Damelin (EDUCOR), South Africa

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Jyoti Bhardwaj, School of Computing, Edinburgh Napier University, UK

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Marié Hattingh, University of Pretoria, South Africa

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Jane Nash (retired), Rhodes University, South Africa

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Ildikó Reisch, International Business School Budapest, Hungary

We would also like to thank the many lecturers who reviewed or contributed to the 4th edition MindTap, including: Riana Crafford (Akademia, South Africa); Marie H attingh (University of Pretoria, South Africa); Natasha Madhav (IIE, South Africa); Ramesh Sangaralingam (University of Oxford, UK); Shelley Usher (Portsmouth University, UK) Sarel Viljoen (University of the Western Cape, South Africa); and Zijian Wang (Hogeschool van Amsterstam, The Netherlands).

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PART 1 Overview

1 An Introduction to Information Systems 2 Information Systems in Organizations

01 An Introduction to Information Systems Principles

Learning Objectives

The value of information is directly linked to how it helps decision makers achieve organizational goals.

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Discuss why it is important to study and understand information systems.

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Describe the characteristics used to evaluate the quality of data.

Computers and information systems are constantly making it possible for organizations to improve the way they conduct business.

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Name the components of an information system and describe several system characteristics.

Knowing the potential impact of information systems and having the ability to put this knowledge to work can result in a successful personal career, organizations that reach their goals and a society with a higher quality of life.

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Identify the basic types of business information systems and discuss who uses them, how they are used and what kinds of benefits they deliver.

System users, business managers and information systems professionals must work together to build a successful information system.

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Identify the major steps of the systems development process and state the goal of each.

Information systems must be applied thoughtfully and carefully so that society, business and industry can reap their enormous benefits.

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Describe some of the threats to security and privacy that information systems and the Internet can pose.

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Discuss the expanding role and benefits of information systems in business and industry.

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Why Learn About Information Systems?

Information systems are used in almost every imaginable profession. Sales representatives use information systems to advertise products, communicate with customers and analyze sales trends. Managers use them to make major decisions, such as whether to build a manufacturing plant or research a cancer drug. From a small music store to huge multinational companies, businesses of all sizes could not survive without information systems to perform a ccounting and finance operations. Regardless of your chosen career, you will use information systems to help you achieve goals. This chapter presents an overview of information systems. The sections on hardware, software, databases, telecommunications, e-commerce and m-commerce, transaction processing and enterprise resource planning, information and decision support, special purpose systems, systems development, and ethical and societal issues are expanded to full chapters in the rest of the book. We will start by exploring the basics of information systems.

1.1 What is an Information System? People and organizations use information every day. Many retail chains, for example, collect data from their shops to help them stock what customers want and to reduce costs. Businesses use information systems to increase revenues and reduce costs. We use automated teller machines outside banks and access information over the Internet. Information systems usually involve computers, and together they are constantly changing the way organizations conduct business. Today we live in an information economy. Information itself has value, and commerce often involves the exchange of information rather than tangible goods. Systems based on computers are increasingly being used to create, store and transfer information. Using information systems, investors make multimillion-euro decisions, financial institutions transfer billions of euros around the world electronically, and manufacturers order supplies and distribute goods faster than ever before. Computers and information systems will continue to change businesses and the way we live. To define an information system, we will start by examining what a system is.

What is a System? A central concept of this book is that of a system. A system is a set of elements or components that interact to accomplish goals. The elements themselves and the relationships between them determine how the system works. Systems have inputs, processing mechanisms, outputs and feedback (see Figure 1.1). A system processes the input to create the output. For example, consider an automatic car wash. Tangible inputs for the process are a dirty car, water and various cleaning ingredients. Time, energy, skill and knowledge also serve as inputs to the system because they are needed to operate it.

system A set of elements or components that interact to accomplish goals.

Figure 1.1 Components of a System A system’s four components consist of input, processing, output and feedback.

Feedback Input

Processing

Output

The processing mechanisms consist of first selecting which cleaning option you want (wash only, wash with wax, wash with wax and hand dry, etc.) and communicating that to the operator of the carwash. Liquid sprayers shoot clean water, liquid soap or car wax depending on where your car is in the process and which options you selected. The output is a clean car. As in all systems,

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independent elements or components (the liquid sprayer, foaming brush and air dryer) interact to create a clean car. A feedback mechanism is your assessment of how clean the car is. System performance can be measured in various ways. Efficiency is a efficiency A measure of what measure of what is produced divided by what is consumed. For example, the is produced divided by what is consumed. efficiency of a motor is the energy produced (in terms of work done) divided by the energy consumed (in terms of electricity or fuel). Some motors have an efficiency of 50per cent or less because of the energy lost to friction and heat generation. Effectiveness is a measure of the extent to which a system achieves its effectiveness A measure of the goals. It can be computed by dividing the goals actually achieved by the total extent to which a system achieves its goals; it can be computed of the stated goals. For example, a company might want to achieve a net profit by dividing the goals actually of €100 million for the year with a new information system. Actual profits, achieved by the total of the stated however, might only be €85 million for the year. In this case, the effectiveness is goals. 85 per cent (85/100 = 85 per cent). Evaluating system performance also calls for using performance standards. A system performance standard is a specific objective of the s ystem. For system performance standard example, a system performance standard for a marketing campaign might be Aspecific objective of the system. to have each sales representative sell €100,000 of a certain type of product each year (see Figure 1.2a). A system performance standard for a manufacturing process might be to produce no more than 1 per cent defective parts (see Figure 1.2b). After standards are established, system performance is measured and compared with the standard. Variances from the standard are determinants of system performance.

150,000

Good

Standard = €100,000

100,000 75,000

Bad

50,000 25,000 Adams

Brown Davis Salesperson

Thomas

(a) 4

Defective parts (%)

Sales (€)

125,000

3 Bad

Standard = 1%

6 8 Production day (b)

Good

Figure 1.2 System Performance Standards (a) Sales broken down by salesperson. (b) Percentage of defective parts.

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What is Information? Information is one of those concepts that we all seem intuitively able to grasp but find tricky to define. In the 1940s, mathematician Claude Shannon defined it as: information is that which reduces uncertainty. Shannon was working on the technical problems involved in sending messages over communication networks, and his concept of information is actually quite different from what we in business information systems mean by ‘information’. Nevertheless, we can use his definition as a starting point. Imagine you are unsure of what today’s weather will be like. Getting out of bed you open the curtains to see that the sun is shining. You now know a bit more about what it’s going to be like: your uncertainty about the weather has been reduced. Therefore looking out of the window gave you information. When you turn on your radio and hear a detailed weather report, your uncertainty has been reduced further. When you look at the temperature gauge in your car, again your uncertainty has gone down. According to Shannon’s definition, each of these events has therefore given you information. However, his definition does not really capture what we would think of when we consider the information in, say, a management report. Therefore we simply define information as a collection of facts. These facts can take many forms. The temperature gauge in the car gives information in the form of a number. The radio gives audio information. Looking out of the window gives visual information. Other forms of information include text, images and video clips. Another term that is closely related to information is ‘data’. It’s not intuitive but a philosopher might define data as ‘variation’. To explain this: a blank page contains no data, but as soon as there is a mark on the page, that is, as soon as there is variation in the blankness, then data exist. Again this doesn’t really capture what we mean by data in the context of business information systems. The traditional information systems view is that the input to an information system is data, and the output from the system is information. This means therefore that the difference between them is to do with how much processing has been done: unprocessed facts are data; processed facts are information. Unfortunately, however, this distinction is of little practical use. Therefore we will simply use the terms ‘information’ and ‘data’ interchangeably and define them as a collection of facts which can come in a variety of formats. (Incidentally, strictly speaking, the term data is plural, so we would say ‘data are used’ rather than ‘data is used’. However, this is often not adhered to and we won’t worry too much about it here.)

What is an Information System? Now that we have defined the terms ‘system’ and ‘information’, we can define an information system: an information system (IS) is a set of interrelated components that collect, manipulate, store and disseminate information and provide a feedback mechanism to meet an objective. It is the feedback mechanism that helps organizations achieve their goals, such as increasing profits or improving customer service. In information systems, input is the activity of gathering and capturing data. In producing employment payment, for example, the number of hours every employee works must be collected before the cheques can be calculated or printed. In a university grading system, instructors must submit student grades before a summary of grades for the semester can be compiled and sent to the students. Processing means converting or transforming this input into useful outputs. Processing can involve making calculations, comparing data and taking alternative actions, and storing data for future use. In a payroll application, the number of hours each employee worked must be converted into net, or take-home, pay. Other inputs often include e mployee ID number and department. The required processing can first involve multiplying the number of hours

information system (IS) A set of interrelated components that collect, manipulate, store and disseminate information and provide a feedback mechanism to meet an objective. input The activity of gathering and capturing data. processing Converting or transforming input into useful outputs.

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worked by the employee’s hourly pay rate to get gross pay. If weekly hours worked exceed basic hours, overtime pay might also be included. Then tax must be d educted along with contributions to health and life insurance or savings plans to get netpay. After these calculations and comparisons are performed, the results are typically stored. Storage involves keeping data and information available for future use, including output. Output involves producing useful information, usually in the form of documents output Production of useful and reports. Outputs can include paycheques for employees, reports for information, often in the form of documents and reports. managers, and information supplied to stockholders, banks, government agencies and other groups. In addition, output from one system can become input for another. For example, output from a system that processes sales orders can be used as input to a customer billing system. Computers typically produce output on printers and display screens. Output can also be handwritten or manually produced reports, although this is not common. Lastly, feedback is information from the system that is used to make changes feedback Output that is used to input or processing activities. For example, errors or problems might make it to make changes to input or processing activities. necessary to correct input data or change a process. Consider a payroll example. ntered as 400 instead Perhaps the number of hours an employee worked was e of 40 hours. Fortunately, most information systems check to make sure that data falls within certain ranges. For number of hours worked, the range might be from 0 to 100 hours because it is unlikely that an employee would work more than 100 hours in a week. The information system would determine that 400 hours is out of range and provide feedback. The feedback is used to check and correct the input on the number of hours worked to 40. Feedback is also important for managers and decision makers. For example, a furniture maker could use a computerized feedback system to link its suppliers and manufacturing plants. The output from an information system might indicate that inventory levels for mahogany and oak are getting low – a potential problem. A manager could use this feedback to decide to order more wood from a supplier. These new inventory orders then become input to the system. In addition to this reactive approach, a computer system can also be proactive – predicting future events to avoid problems. This concept, often called forecasting, can be used to estimate future sales and order more inventory forecasting Predicting future before a shortage occurs. Forecasting is also used to predict the strength of events. hurricanes and where they will reach land, future stock-market values and who will win a political election.

The Characteristics of Valuable Information To be valuable to managers and decision makers, information should have some and possibly all of the characteristics described in Table 1.1. Many shipping companies, for example, can determine the exact location of inventory items and packages in their systems, and this information makes them responsive to their customers. In contrast, if an organization’s information is not accurate or complete, people can make poor decisions costing thousands, or even millions, of euros. Many claim, for example, that the collapse and bankruptcy of some companies, such as drug companies and energy-trading firms, was a result of inaccurate accounting and reporting information, which led investors and employees alike to misjudge the actual state of these companies’ finances and suffer huge personal losses. As another example, if an inaccurate forecast of future demand indicates that sales will be very high when the opposite is true, an organization can invest millions of euros in a new plant that is not needed. Furthermore, if information is not relevant, not delivered to decision makers in a timely fashion, or too complex to understand, it can be of little value to the organization. The value of information is directly linked to how it helps decision makers achieve their organization’s goals. For example, the value of information might be measured in the time required to make a decision or in increased profits to the company. Consider a market forecast

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that p redicts a high demand for a new product. If you use this information to develop the new product and your company makes an additional profit of €10,000, the value of this information to the company is €10,000 minus the cost of the information.

Table 1.1 Characteristics of Valuable Information Characteristics Definitions Accessible Information should be easily accessible by authorized users so they can obtain it in the right format and at the right time to meet their needs Accurate Accurate information is error free. In some cases, inaccurate information is generated because inaccurate data is fed into the transformation process Complete Complete information contains all the important facts, but not more facts than are necessary (see the Simple characteristic below) Economical Information should also be relatively economical to produce. Decision makers must always balance the value of information with the cost of producing it Flexible Flexible information can be used for a variety of purposes. For example, information on how much inventory is on hand for a particular part can be used by a sales representative in closing a sale, by a production manager to determine whether more inventory is needed, and by a financial executive to determine the total value the company has invested in inventory Relevant Relevant information is important to the decision maker Reliable Reliable information can be depended on. In many cases, the reliability of the information depends on the reliability of the data-collection method. In other instances, reliability depends on the source of the information. A rumour from an unknown source that oil prices might go up soon may not be reliable (even though it might be useful) Secure Information should be secure from access by unauthorized users Simple Information should be simple, not overly complex. Sophisticated and detailed information might not be needed. In fact, too much information can cause information overload, whereby a decision maker isunable to determine what is really important Timely Timely information is delivered when it is needed. Knowing last week’s weather conditions will not help when trying to decide what coat to wear today Verifiable Information should be verifiable. This means that you can check it to make sure it is correct, perhaps by checking many sources for the same information

Manual and Computerized Information Systems An information system can be manual or computerized. For example, some investment analysts manually draw charts and trend lines to assist them in making investment decisions. Tracking data on stock prices (input) over the last few months or years, these analysts develop patterns in graphical form (processing) that help them determine what stock prices are likely to do in the next few days or weeks (output). Some investors have made millions of euros using manual stock analysis information systems. Of course, today, many excellent computerized information systems

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follow stock indexes and markets and suggest when large blocks of stocks should be purchased or sold to take advantage of market discrepancies. The components of a computer-based information system (CBIS) are illustrated in Figure 1.3. Information technology (IT) refers to hardware, software, databases and telecommunications. A business’s technology infrastructure includes all the hardware, software, databases, telecommunications, people and procedures that are configured tocollect, manipulate, store and process data into information. The technology infrastructure is a set of shared IS resources that form the foundation of each computer-based information system.

computer-based information system (CBIS) A single set of hardware, software, databases, telecommunications, people andprocedures that is configured to collect, manipulate, store and process data into information. technology infrastructure All the hardware, software, databases, telecommunications, people and procedures that are configured to collect, manipulate, store and process data into information.

Figure 1.3 The Components of a Computer-Based Information System

Hardware

People

Software

Procedures

Telecommunications

Databases

Hardware consists of computer equipment used to perform input, processing hardware Any machinery (most and output activities. Input devices include keyboards, mice and other pointing of which uses digital circuits) that assists in the input, processing, devices, automatic scanning devices and equipment that can read magnetic storage and output activities of an ink characters. Investment firms often use voice-response technology to information system. allow customers to access their balances and other information with spoken commands. Processing devices include computer chips that contain the central processing unit and main memory. One processor chip, called the ‘Bunny Chip’ by some, mimics living organisms and can be used by the drug industry to test drugs instead of using animals, such as rats or bunnies.1 The experimental chip could save millions of euros and months of time in drug research costs, as well as having a positive impact by reducing animal testing. Speed is an important part of assessing hardware. The TOP500 project (www.top500.org) has collected statistics on the world’s fastest computers since 1993. Currently the fastest is the Summit computer at the Oak Ridge National Laboratory in Tennessee, USA. Summit is providing

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scientists with computing power to research problems in energy, artificial intelligence and human health. It is able to perform up to 143.5 petaflops; a petaflop is one thousand million million calculations per second.2,3 The many types of output devices include printers and computer screens. Bond traders, for example, often use an array of six or more computer screens to monitor bond prices and make split-second trades throughout each day. Another type of output device is a printer to print photos from a digital camera. Such printers accept the memory card direct from the camera. There are also many special-purpose hardware devices. Computerized event data recorders (EDRs) are now being placed into vehicles. Like an aeroplane black box, EDRs record a vehicle’s speed, possible engine problems, a driver’s performance and more. The technology is being used to monitor vehicle operation, determine the cause of accidents and investigate whether truck drivers are taking required breaks.

Software

Software consists of the computer programs that govern the operation of the computer. These programs allow a computer to process payroll, send bills to customers and provide managers with information to increase profits, reduce costs and provide better customer service. With software, people can work anytime at any place. Software, along with manufacturing tools, for example, can be used to fabricate parts a lmost anywhere in the world.4 Software called ‘Fab Lab’ controls tools, such as cutters, milling machines and other devices. A Fab Lab system, which costs about €15,000, has been used to make radio frequency tags to track animals in Norway, engine parts to allow tractors to run on processed castor beans in India and many other fabrication applications. The two types of software are system software, such as Microsoft Windows, which controls basic computer operations, including start-up and printing; and applications software, such as Microsoft Office, which allows you to accomplish specific tasks, including word processing and drawing charts. Sophisticated application software, such as Adobe Creative Suite, can be used to design, develop, print and place professional-quality advertising, brochures, posters, prints and videos on the Internet.

software The computer programs that govern the operation of the computer.

Databases

A database is an organized collection of facts and information, typically consisting of two or more related data files. An organization’s database can contain information on customers, e mployees, inventory, competitors’ sales, online purchases and much more. Most managers and executives consider a database to be one of the most valuable parts of a computer-based information system. One California real estate development company uses databases to search for homes that are undervalued and purchase them at bargain prices.5 It uses the database to analyze crime statistics, prices, local weather reports, school districts and more to find homes whose values are likely to increase. The database has helped the company realize an average 50 per cent return on investment. Increasingly, organizations are placing important databases on the Internet, which makes them accessible to many, including unauthorized users.

database An organized collection of electronic information.

telecommunications The electronic transmission of signals for communications; enables organizations to carry out their processes and tasks through effective computer networks. networks Computers and equipment that are connected in a building, around the country or around the world to enable electronic communications.

Telecommunications, Networks and the Internet

Telecommunications is the electronic transmission of signals for communications, which enables organizations to carry out their processes and tasks through computer networks. Large restaurant chains, for example, can use telecommunications systems and satellites to link hundreds of restaurants to plants and headquarters to speed credit card authorization and report sales and payroll data. Networks connect computers and equipment in a building, around the country or around the world to enable electronic communication. Investment firms can use wireless networks to connect thousands of investors with brokers or traders. Many hotels use wireless telecommunications to allow guests to

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connect to the Internet, retrieve voice messages and exchange email without plugging their computers or mobile devices into a phone socket. Wireless transmission also allows drones, such as Boeing’s Scan Eagle, to fly using a remote control system and monitor buildings and other areas. The Internet is the world’s largest computer network, actually consisting of Internet The world’s largest thousands of interconnected networks, all freely exchanging information. Research computer network, actually consisting of thousands of firms, colleges, universities, schools and businesses are just a few examples of interconnected networks, all freely organizations using the Internet. People use the Internet to research information, exchanging information. buy and sell products and services, make travel arrangements, conduct banking, and download music and videos, among other activities. After downloading music, you can use audio software to change a song’s tempo, create mixes of your favourite tunes and modify sound tracks to suit your personal taste. You can even mix two or more songs simultaneously, which is called ‘mashing’. You can also use many of today’s mobile phones to connect to the Internet from around the world and at high speeds.6 This not only speeds communications but allows you to conduct business electronically. Some airline companies are providing Internet service on their flights so that travellers can send and receive email, check investments and browse the Internet. Internet users can create blogs (weblogs) to store and share their thoughts and ideas with others around the world.7 You can also record and store TV programmes on computers or special viewing devices and watch them later.8 Often called ‘place shifting’, this technology allows you to record TV programmes at home and watch them at a different place when it’s convenient. The World Wide Web (WWW), or the web, is a network of links on the Internet to documents containing text, graphics, video and sound. Information about the documents and access to them are controlled and provided by tens of thousands of special computers called ‘web servers’. The web is one of many services available over the Internet and provides access to many hundreds of millions of documents. Widely available Internet access has allowed the development of cloud computing, where software and data storage are cloud computing A computing environment where software and provided as an Internet service and are accessed via a web browser. storage are provided as an Internet The technology used to create the Internet is also being applied within service and are accessed via a companies and organizations to create intranets, which allow people within an web browser. organization to exchange information and work on projects. One company, for intranets An internal company example, uses an intranet to connect its 200 global operating companies and network built using Internet and 20,000 employees. An extranet is a network based on web technologies that World Wide Web standards and products that allows people within allows selected outsiders, such as business partners and customers, to access an organization to exchange authorized resources of a company’s intranet. Companies can move all or most information and work on projects. of their business activities to an extranet site for corporate customers. Many extranet A network based on web people use extranets every day without realizing it – to track shipped goods, technologies that allows selected order products from their suppliers or access customer assistance from other outsiders, such as business partners, suppliers or customers, companies. If you log on to the FedEx site (www.fedex.com) to check the status to access authorized resources of of a package, for example, you are using an extranet. a company’s intranet.

People People are the most important element in most computer-based information systems. The people involved include users of the system and information systems personnel, including all the people who manage, run, program and maintain the system.

Procedures

Procedures include the strategies, policies, methods and rules for using the procedures The strategies, CBIS, including the operation, maintenance and security of the computer. For policies, methods and rules for example, some procedures describe when each program should be run. Others using a CBIS. describe who can access facts in the database, or what to do if a disaster, such as a fire, earthquake or hurricane, renders the CBIS unusable. Good procedures can help companies take advantage of new opportunities and avoid potential disasters. Poorly developed and inadequately implemented procedures, however, can cause people to waste their time on useless rules or result in inadequate responses to disasters, such as hurricanes or tornadoes.

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1.2 Business Information Systems The most common types of information systems used in business organizations are those designed for electronic and mobile commerce, transaction processing, management information and decision support. In addition, some organizations employ special-purpose systems, such as virtual reality, that not every organization uses. Together, these systems help employees in organizations accomplish routine and special tasks – from recording sales, processing payrolls and supporting decisions in various departments, to examining alternatives for large-scale projects and opportunities. Often in large organizations one information system is used to accomplish all of these tasks. In others, separate systems are used. When one system is used it is called an Enterprise Resource Planning System, and it does most if not all of the tasks of the other systems shown in Figure 1.4.

Figure 1.4 Business Information Systems The triangle shows the main types of information system used in businesses and the level within the business where they tend to be used.

Executive support systems

Strategic level

Tactical level Operational level

Support long-term, strategic decisions made by senior managers

Management information systems Decision support systems

Support mid-term decisions made by middle managers

Transaction processing systems Customer relationship management systems Supply chain management systems

Support the day-to-day running of the firm

Information Systems @ Work Translating Shakespeare into Xhosa Xhosa is an official language in South Africa and Zimbabwe, spoken by Bantu people. It uses three click-consonant sounds for X, Q and C. So the name Xhosa is pronounced by making a clicking or TCHICK sound for the X, resulting in TCHICK-hosa. A way of writing Xhosa using the Latin alphabet was developed in the early 19th century and the language is available as an option on Google Translate. Many people using Google Translate for the first time are amazed by its abilities. If you haven’t tried it, visit your local site (it’s www.translate.google.co.uk in the UK), enter some text, choose a language and hit translate. If you actually speak the language you translated into, how did it do? Does the translation make sense and does it say what you meant it to say? If you don’t speak that language, copy the translated text and translate it back into the first

language – it probably won’t be exactly the same, but does it still mean roughly what you said in the first place? Try translating the text through several other languages – English to German to French to Chinese and then back to English – what does it say now? This game is actually popular fodder for YouTube videos – YouTubers translate the lyrics of a popular song into another language, then back into the first language, and record themselves singing exactly what they ended up with. However, this technology has more serious applications. So how does it work? It relies on the one thing that Google is extremely good at – processing lots and lots of data, very, very quickly. Sorry to disappoint you if you thought the computer could actually understand what you are saying, but in fact it’s just doing some statistics. There are many

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books that have been translated by a human from one language into another, say Victor Hugo’s Notre Dame de Paris, which was written in French. To translate a French phrase, all the computer has to do is find the phrase in Notre Dame de Paris, or some other French book that has been translated, then go to the corresponding page and line in the translation, and return that to the user. But how does the computer know that the page and line are the exact words that translate the exact phrase that the user wrote? That’s where the statistics and data processing come in. The computer doesn’t just search for the phrase in one book, it looks in say 100 books (the actual figure Google uses is difficult to track down and probably varies) and finds roughly where the phrase will be in each. This will give 100 samples of text that contain the translation somewhere within them. It then chooses the phrase that appears most often in the sample of 100. For example, the line ‘igubu lokukhaphela ingoma endiyivuma ngesingqala’ in a Xhosa poem by Ncumisa Garishe MaMiya gets translated as ‘the drum of song that I sing in a thunderstorm’. Thissequence of words probably only appears in that one poem and nowhere else, so to translate it Google might look for three phrases ‘the drum of song’, ‘that I sing’ and ‘in a thunderstorm’ in its source material to find a translation for each. Then it will put all three together, perhaps also applying some rules it has been taught about grammar. Taking just the word ‘ingoma’, which means ‘song’, if the computer finds 100 sources where this word appears, and in 97 of the translations at around about the right point in the text the word ‘song’ appears, then that would seem to be a correct translation with 97 per cent confidence. The computer doesn’t have to understand anything about language to do this. Given enough sample text, the computer could translate all of Shakespeare. (Trying this, you get ‘ngoku kubusika kokunganeliseki kwethu’ for ‘now is the winter of our discontent’.)

Google Translate was developed under the leadership of computer scientist Franz Och and originally used documents created by the United Nations. The UN has a need to create a lot of written material accurately in a number of languages, and all of this material is freely available, which made it a good source to use. (We should point out that Google did not invent statistical translation.)

Questions 1 Try the exercises suggested in the case – how did Google Translate do? 2 Could this technology be used by a global firm or is the need for absolute accuracy so great that a human translator would always be needed? 3 What are some of the problems with using Google Translate to translate a web page? 4 What would the computer need in order to translate ‘Shakespeare into Xhosa’?

References ABC News, 2007. ‘Google seeks world of instant translations’. Available from: www.abc.net.au/ news/2007-03-29/google-seeks-world-ofinstant-translations/2229046. Accessed: 26 May 2020. Timmerman, L. 2016. Google Translate Star Leaves Venter’s Human Longevity For IlluminaBacked Grail. Forbes. Available from: www. forbes.com/sites/luketimmerman/2016/09/27/ google-translate-star-leaves-ventershuman-longevity-for-illumina-backedgrail/#3156753a5d7c. Accessed: 6 June 2020. Omniglot. Xhosa (isiXhosa). Available from: www. omniglot.com/writing/xhosa.htm. Accessed: 26 May 2020. XhosaKhaya. ‘Xhosa Lesson 2. How to say ‘click’ sounds’. Available from: www.youtube.com/ watch?v=31zzMb3U0iY. Accessed: 26 May 2020.

Enterprise Systems: Transaction Processing Systems and Enterprise Resource Planning Enterprise systems help organizations perform and integrate important tasks, such as paying employees and suppliers, controlling inventory, sending out invoices and ordering supplies. In the past, companies accomplished these tasks using traditional transaction processing systems. Today, they are increasingly being performed by enterprise resource planning systems. For example, Whirlpool Corporation, the large appliance maker, used enterprise resource planning to reduce inventory levels by 20 per cent and cut about 5 per cent from its freight and warehousing

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costs by providing managers with information about inventory levels and costs.9 The new system may have also helped the company increase its revenues by about €0.7 billion.

Transaction Processing Systems Since the 1950s, computers have been used to perform common business applications. Many of these early systems were designed to reduce costs by automating routine, labourtransaction Any businessintensive business transactions. A transaction is any business-related exchange, related exchange, such as such as payments to employees, sales to customers or payments to suppliers. payments to employees, sales Thus, processing business transactions was the first computer application to customers and payments to developed for most organizations. A transaction processing system (TPS) is suppliers. an organized collection of people, procedures, software, databases and devices transaction processing system (TPS) An organized collection of used to record completed business transactions. If you understand a transaction people, procedures, software, processing system, you understand basic business operations and functions. databases and devices used One of the first business systems to be computerized was the payroll to record completed business system. The primary inputs for a payroll TPS are the number of employee hours transactions. worked during the week and the pay rate. The primary output consists of paycheques. Early payroll systems produced employee paycheques and related reports required by tax authorities. Other routine applications include sales ordering, customer billing and customer relationship management, and inventory control. Some car xample, use their TPSs to buy billions of euros of needed parts each year companies, for e through websites. Because these systems handle and process daily business exchanges or transactions, they are all classified as TPSs. enterprise resource planning (ERP) system A set of integrated programs capable of managing a company’s vital business operations for an entire multisite, global organization.

Enterprise Resource Planning

An enterprise resource planning (ERP) system is a set of integrated programs that manages the vital business operations for an entire multisite, global organization. An ERP system can replace many applications with one unified set of programs, making the system easier to use and more effective. Although the scope of an ERP system might vary from company to company, most ERP systems provide integrated software to support manufacturing andfinance. In such an environment, a forecast is prepared that estimates customer demand for several weeks. The ERP system checks what is already available in finished product inventory to meet the projected demand. Manufacturing must then produce inventory to eliminate any shortfalls. In developing the production schedule, the ERP system checks the raw material and packing material inventories and determines what needs to be ordered to meet the schedule. Most ERP systems also have a purchasing subsystem that orders the needed items. In addition to these core business processes, some ERP systems cansupport functions such as human resources, sales and distribution. The primary benefits ofimplementing an ERP system include easing adoption of improved work processes and increasing access to timely data for decision making. An important type of transaction processing system handles transactions made e-commerce Any business electronically over the web. E-commerce involves any business transaction transaction executed electronically executed electronically between companies (business-to-business, ‘B2B’), between companies (businesscompanies and consumers (business-to-consumer, ‘B2C’), consumers and other to-business), companies and consumers (consumer-to-consumer, ‘C2C’), business and the public sector, and consumers (business-toconsumer), consumers and consumers and the public sector. You might assume that e-commerce is reserved otherconsumers (consumermainly for consumers visiting websites for online shopping, but web shopping is to-consumer), business and the only a small part of the e-commerce picture; the major volume of e-commerce– public sector, and consumers and and its fastest growing segment – is business-to-business (B2B) transactions the public sector. that make purchasing e asier for c orporations. This growth is being stimulated by increased Internet a ccess, growing user confidence, better payment systems and rapidly improving Internet and web security. E-commerce also offers opportunities for small businesses to market and sell at a low cost worldwide, allowing them to enter the global

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market. Mobile commerce (m-commerce) refers to transactions conducted anywhere, anytime. M-c ommerce relies on wireless communic ations that managers and corporations use to place orders and conduct business with handheld computers, portable phones, laptop computers c onnected to a network and other mobile devices (see Figure 1.5, which shows a mobile phone being used to make a contactless payment).

mobile commerce (m-commerce) Conducting business transactions electronically using mobile devices such as smartphones.

Figure 1.5 Contactless Payment M-commerce means that it is possible to pay for items using a smartphone or other mobile device.

E-commerce offers many advantages for streamlining work activities. Figure 1.6 provides a brief example of how e-commerce can simplify the process of purchasing new office furniture from an office-supply company. In the manual system, a corporate office worker must get approval for a purchase that exceeds a certain amount. That request goes to the purchasing department, which generates a formal purchase order to procure the goods from the approved vendor. Business-to-business e-commerce automates the entire process. Employees go directly to the supplier’s website, find the item in a catalogue and order what they need at a price set by their company. If approval is required, the approver is notified automatically. As the use of e-commerce systems grows, companies are phasing out their traditional systems. The resulting growth of e-commerce is creating many new business opportunities. E-commerce can enhance a company’s stock prices and market value. Today, several e-commerce firms have teamed up with more traditional brick-and-mortar businesses to draw from each other’s strengths. For example, e-commerce customers can order products on a website and pick them up at a nearby store. In addition to e-commerce, business information systems use telecommunications and the Internet to perform many related tasks. Electronic procurement (e-procurement), for example, involves using information systems and the Internet to acquire parts and supplies. Electronic business (e-business) goes beyond e-commerce and electronic business (e-business) e-procurement by using information systems and the Internet to perform all Using information systems and the Internet to perform all businessbusiness-related tasks and functions, such as accounting, finance, marketing, related tasks and functions. manufacturing and human resource activities. E-business also includes working with customers, suppliers, strategic partners and stakeholders. Compared with traditional business strategy, e-business strategy is flexible and adaptable.

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Figure 1.6 E-Commerce Greatly Simplifies Purchasing Please send us the following: Items Qty.

Thanks

Prepare requisition

Obtain approval of requisition

Requisition

Joe Bloggs Inc. 14 Mallard Drive Anywhere, UK AW3 124 Inbox

Bloggs

Vendor

Purchasing department Traditional process for placing a purchase order

Electronic purchase order

Bloggs

Vendor E-commerce process for placing a purchase order

MIS and DSS The benefits provided by an effective TPS are tangible and justify their associated costs in computing equipment, computer programs, and specialized personnel and supplies. A TPS can speed business activities and reduce clerical costs. Although early accounting and financial TPSs were already valuable, companies soon realized that they could use the data stored in these systems to help managers make better decisions, whether in human resource management, marketing or administration. Satisfying the needs of managers and decision makers continues to be a major factor in developing information systems.

Management Information Systems

A management information system (MIS) is an organized collection of people, procedures, software, databases and devices that provides routine information to managers and decision makers. An MIS focuses on operational efficiency. Marketing, production, finance and other functional areas are supported by MISs and linked through a common database. MISs typically provide standard reports generated with data and information from the TPS, meaning the output of a TPS is the input to an MIS. Producing a report that describes inventory that should be ordered is an example of an MIS. MISs were first developed in the 1960s and typically used information systems to produce managerial reports. In many cases, these early reports were produced periodically – daily,

management information system (MIS) An organized collection of people,procedures, software, databases and devices that provides routine information to managers and decision makers.

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weekly, monthly or yearly. Because of their value to managers, MISs have proliferated throughout the management ranks. For instance, the total payroll summary report produced initially for an accounting manager might also be useful to a production manager to help monitor and c ontrol labour and job costs.

Decision Support Systems By the 1980s, dramatic improvements in technology resulted in information systems that were less expensive but more powerful than earlier systems. People at all levels of organizations began using personal computers to do a variety of tasks; they were no longer solely dependent on the IS department for all their information needs. People quickly recognized that computer decision support system systems could support additional decision-making activities. A decision support system (DSS) is an organized collection of people, procedures, software, (DSS) Anorganized collection of people, procedures, software, databases and devices that support problem-specific decision making. The focus databases and devices used of a DSS is on making e ffective decisions. Whereas an MIS helps an organization to support problem-specific decision making. ‘do things right’, a DSS helps a manager ‘do the right thing’. In addition to assisting in all aspects of problem-specific decision making, a DSS can support customers by rapidly responding to their phone and email enquiries. ADSS goes beyond a traditional MIS by providing immediate assistance in solving problems. Many of these problems are unique and complex, and information is often difficult to obtain. For instance, a car manufacturer might try to determine the layout for its new manufacturing facility. Traditional MISs are seldom used to solve these types of problems; a DSS can help by suggesting alternatives and assisting in final decision making. DSSs are used when the problem is complex and the information needed to make the best decision is difficult to obtain and use. So a DSS also involves managerial judgement and perspective. Managers often play an active role in developing and implementing the DSS. ADSS recognizes that different managerial styles and decision types require different systems. For example, two production managers in the same position trying to solve the same problem might require different information and support. The overall emphasis is to support, rather than replace, managerial decision making. The essential elements of a DSS include a collection of models used to support a decision maker or user (model base), a collection of facts and information to assist in decision making (database), and systems and procedures (dialogue manager or user interface) that help d ecision makers and other users interact with the DSS. Software is often used to manage the database – the database management system (DBMS) – and the model base – the model management system (MMS). In addition to DSSs for managers, group decision support systems and executive support systems use the same approach to support groups and executives.10 A group decision support system, also called a group support system, includes the DSS elements just described, andsoftware, called groupware, to help groups make effective decisions. An executive support system, also called an executive information system, helps top-level managers, including afirm’s CEO, divisional directors and members of the board of directors, make better decisions. An executive support system can assist with strategic planning, top-level organizing and staffing, strategic control and crisis management.

Knowledge Management, Artificial Intelligence, Expert Systems and Virtual Reality Also, organizations often rely on specialized systems. Many use knowledge management systems (KMSs), an organized collection of people, procedures, software, databases and devices to create, store, share and use the organization’s knowledge and experience. According to a survey of CEOs, firms that use KMSs are more likely to innovate and perform better.11

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In addition to knowledge management, companies use other types of specialized systems. The Nissan Motor Company, for example, has developed a specialized system for its vehicles called ‘Lane Departure Prevention’ that nudges a car back into the correct lane if it veers off course.12,13 The system uses cameras and computers to adjust braking to get the vehicle back on course. The system switches off when the driver uses turn signals to change artificial intelligence (AI) The lanes. Other s pecialized systems are based on the notion of artificial ability of computer systems to intelligence (AI), in which the computer system takes on the characteristics mimic or duplicate the functions or ofhuman intelligence. The field of artificial intelligence includes several subfields characteristics of the human brain (see Figure 1.7). Computer scientists are predicting that deep learning will play or intelligence. a massive role in healthcare: computers will be used to analyze medical images, process health records and will fully automate certain teleoperated manipulation tasks of the surgical procedure (which means they will improve robot assisted surgery).14

Figure 1.7 The Major Elements of Artificial Intelligence

Robotics

Vision systems Process visual input Learning systems Learn how to deal with new situations from data on previous situations

Artificial intelligence

Expert systems

Natural language processing

Neural networks

Deep learning

Learning Systems Robotics is an area of AI in which machines take over complex, dangerous, routine or boring tasks, such as welding car frames or assembling computer systems and components. Vision systems allow robots and other devices to ‘see’, store and process visual images. Natural language processing involves computers understanding and acting on verbal or written commands in English, Spanish or other human languages. Learning systems allow computers to learn from past mistakes or experiences, such as playing games or making business decisions, and neural networks is a branch of AI that allows computers to recognize and act on patterns or trends. Some successful stock, options and futures traders use neural networks to spot trends and make them more profitable with their investments. State of the art AI is impressive. In 2011 the IBM supercomputer Watson competed against and beat two human champions in the game show Jeopardy. In December 2018, Google’s Waymo company launched driverless taxis in four suburbs of Phoenix, Arizona in the USA. Riders use an app similar to the Uber app and, for the time being, the cars all have a human driver present to intervene in case of an emergency.15

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Expert Systems

Expert systems give the computer the ability to make suggestions and act like an expert systems A system that expert in a particular field. It can help the novice user perform at the level of an gives a computer the ability to make suggestions and act like expert. The unique value of expert systems is that they allow organizations to an expert in a particular field (or) capture and use the wisdom of experts and specialists. Therefore, years of hardware and software that stores experience and specific skills are not completely lost when a human expert dies, knowledge and makes inferences, retires or leaves for another job. Expert systems can be applied to almost any field similar to a human expert. or discipline. They have been used to monitor nuclear reactors, perform medical diagnoses, locate possible repair problems, design and configure IS components, perform credit evaluations and develop marketing plans for a new product or new investment strategy. The collection of data, rules, procedures and relationships that must be followed to achieve value knowledge base A component of or the proper outcome is contained in the expert system’s knowledge base.

Virtual Reality

an expert system that stores all relevant information, data, rules, cases and relationships used by the expert system. virtual reality The simulation of a real or imagined environment that can be experienced visually in three dimensions.

Virtual reality is the simulation of a real or imagined environment that can be experienced visually in three dimensions. Originally, virtual reality referred to immersive virtual reality, which means the user becomes fully immersed in an artificial, computer-generated 3D world. The v irtual world is presented in full scale and relates properly to the human size. It can represent any 3D setting, real or abstract, such as a building, an archaeological excavation site, the human anatomy, a sculpture or a crime scene reconstruction. Virtual worlds can be animated, interactive and shared. Through immersion, the user can gain a deeper understanding of the virtual world’s behaviour and functionality. Virtual reality can also refer to applications that are not fully immersive, such as mouse-controlled navigation through a 3D environment on a graphics monitor, stereo viewing from the monitor via stereo glasses, stereo projection systems and others. A variety of input devices, such as head-mounted displays, data gloves, joysticks and handheld wands, allow the user to navigate through a virtual environment and to interact with virtual objects. Directional sound, tactile and force feedback devices, voice recognition and other technologies enrich the immersive experience. Because several people can share and interact in the same environment, virtual reality can be a powerful medium for communication, entertainment and learning. It is difficult to predict where information systems and technology will be in 10 to 20 years. It seems, however, that we are just beginning to discover the full range of their usefulness. Technology has been improving and expanding at an increasing rate; dramatic growth and change are expected for years to come. Without question, a knowledge of the effective use of information systems will be critical for managers both now and in the long term. But how are these information systems created?

1.3 Systems Development Systems development is the activity of creating or modifying business systems. systems development The activity Systems development projects can range from small to very large in fields as diverse of creating or modifying existing business systems. as stock analysis and video game development. People inside a company can develop systems or companies can use outsourcing, hiring an outside company to perform some or all of a systems development project. Outsourcing allows a company to focus on what it does best and delegate other functions to companies with expertise in systems development. Outsourcing, however, is not the best alternative for all companies. An alternative is agile systems development where systems are developed rapidly in close partnership with users. Working together, parts of the system are developed, tested, modified and refined over and over again until a usable system emerges. Developing information systems to meet business needs is highly complex and difficult – so much so that it is common for IS projects to overrun budgets and exceed scheduled

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completiondates. Her Majesty’s Revenue and Customs (HMRC), which collects taxes in the UK, settled out of court with an outsourcing company to recover funds lost due to a tax-related mistake caused by a failed systems development project.16 The failed project overpaid about €2.5 billion to some families with children or taxpayers in a low-income tax bracket. One strategy for improving the results of a systems development project is to divide it into several steps, each with a well-defined goal and set of tasks to accomplish (see Figure 1.8). These steps are summarized next.

Figure 1.8 An Overview of Systems Development

Systems investigation Understand the problem

Systems analysis Determines what must be done to solve the problem

Systems design The solution is planned out

Systems implementation The solution is built or bought, and replaces the old system

Systems maintenance and review The new system is evaluated

Systems Investigation and Analysis The first two steps of systems development are systems investigation and analysis. The goal of the systems investigation is to gain a clear understanding of the problem to be solved or opportunity to be addressed. A cruise line company, for example, might launch a systems investigation to determine whether a development project is feasible to automate purchasing at ports around the world. After an organization understands the problem, the next question is, ‘Is the problem worth solving?’ Given that organizations have limited resources – people and money – this question deserves careful c onsideration. If the decision is to continue with the solution, the next step, systems analysis, defines the problems and opportunities of the existing system. During systems investigation and analysis, as well as design maintenance and review, discussed next, the project must have the complete support of top-level managers and focus on developing systems that achieve business goals.17

Systems Design, Implementation, and Maintenance and Review Systems design determines how the new system will work to meet the business needs defined during systems analysis. Systems implementation involves creating or acquiring the various

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s ystem components (hardware, software, databases, etc.) defined in the design step, assembling them and putting the new system into operation. The purpose of systems maintenance and review is to check and modify the system so that it continues to meet changing business needs.

1.4 Information Systems in Society, Business and Industry Information systems have been developed to meet the needs of all types of organizations and people, and their use is spreading throughout the world to improve the lives and business activities of many citizens. To provide their enormous benefits, however, information systems must be implemented with thought and care. The speed and widespread use of information systems opens users to a variety of threats from unethical people.

Ethical and Societal Issues Ethical Robots ‘A robot may not injure a human being or, through inaction, allow a human being to come to harm.’ This is Isaac Asimov’s famous first law of robotics and means that a robot must never harm a human being. But what if a robot had to choose between one of two actions, both of which would cause harm? Believe it or not, there are devices interacting with humans right now that at any time could be required to make such a decision. Driverless vehicles are a good example and are currently being tested and used on roads all over the world. What would happen if a child ran out in front of a driverless car and the car could swerve, but if it did swerve it would hit another child standing by the side of the road? According to Nature magazine, people often respond that the child at the side is more innocent than the one who ran out and therefore the robot should not swerve. But what if two children ran out and only one stood at the side? Or if it was an adult at the side? What if the adult looked strong and healthy and the robot calculated that they were more likely than the child to survive being hit by the car? Answers to such questions often rely on what is known to philosophers as the doctrine of double effect: sometimes it is permissible to cause a harm as a side effect (or ‘double effect’) of bringing about a good result. Analyzing these situations is difficult for a decision-making program. The robot must predict two futures and assess whether the actions

in each is not allowed because it causes harm, or permissible because the harm is only a side effect of causing good. One question is whether this should be programmed into the robot or if the robot should be allowed to learn it for itself? Some computer scientists, like Michael Fisher from the University of Liverpool in the UK, think that rule-based systems could reassure the public. He told Nature magazine, ‘People are going to be scared of robots if they’re not sure what it’s doing’, he says. ‘But if we can analyse and prove the reasons for their actions, we are more likely to surmount that trust issue.’ On the other hand, the machine-learning approach (where the robot has to learn what is best for itself) would create robots that can learn from experience, which might ultimately make them more useful than a robot that must follow pre-programmed rules. According to Nature, many roboticists say that the best way forward will be a combination of the two approaches. The challenge is to make them work together. Recently a series of researchers at MIT created the Moral Machine, an online platform to collect data from people all over the world about human opinions on how machines should make decisions when faced with moral dilemmas like these. The site presents participants with scenarios such as brake failure resulting in the deaths of two elderly pedestrians or four young passengers. (continued)

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For each scenario, two possibilities are given and participants must choose which one is preferable. For its first major publication, the site was able to gather 40 million decisions from millions of people in over 230 countries and territories. Findings show that humans have a preference to spare humans over animals, spare more lives, and spare young lives, and that both male and female respondents have a preference for sparing female lives.

4 View the Moral Machine at www.moralmachine. mit.edu and judge a few of the scenarios. Are there any where you are unable to make a choice?

References Awad, E. et al. 2018. ‘The Moral Machine Experiment’. Nature 563, pp. 59–64.

Questions

Barych, J. 2016. ‘Steer driverless cars towards full automation’. Nature 536.

1 Should the robot swerve or not in each of the examples given? Can you justify your answer?

Deng, B. 2015. ‘Machine ethics: The robot’s dilemma’. Nature 523.

2 Would you be comfortable taking a robotic taxi? What about a driverless car?

The Moral Machine. www.moralmachine.mit.edu. Accessed 8 June 2020.

3 Could a robot ever learn whether or not to swerve? Wouldn’t it need to be in the situations many times in order to learn that?

Stanford Encyclopedia of Philosophy. plato. stanford.edu/entries/double-effect/ Accessed: 26 May 2020.

Security, Privacy and Ethical Issues in Information Systemsand the Internet Although information systems can provide enormous benefits, they do have some drawbacks.18 Computer-related mistakes are also a concern. In Japan, a financial services firm had trading losses of ¥245 million due to a typing mistake in entering a trade. In another case, criminals stole carbon credits worth about £30 million from a European carbon credit market.19 Increasingly, the ethical use of systems has been highlighted in the news. Ethical issues concern what is generally considered right or wrong. Some IS professionals believe that computers may create new opportunities for unethical behaviour. For example, a faculty member of a medical school falsified computerized research results to get a promotion – and a higher salary. In another case, a company was charged with using a human resource information system to time employee layoffs and firings to avoid paying pensions. More and more, the Internet is also a ssociated with unethical behaviour. Unethical investors have placed false rumours or incorrect information about

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a company on the Internet and tried to influence its stock price to make money. Information theft, such as stealing credit card numbers and other personal information, is another issue. To protect against these threats, you can install security and control measures. For example, many software products can detect and remove viruses and spam, or unwanted email, from computer systems. Information systems can help reduce other types of crime as well. In a New Zealand city, a free computer centre has cut vandalism by keeping young people off the street and giving residents a sense of pride. When a pair of headphones disappeared from the centre, the community rallied to make sure that they were promptly returned. You can install firewalls (software and hardware that protect a computer system or network from outside attacks) to avoid viruses and prevent unauthorized people from gaining access to your computer system. You can also use identification numbers and passwords. Some security experts propose installing web cameras and hiring ‘citizen spotters’ to monitor them. Use of information systems also raises work concerns, including job loss through increased efficiency and some potential health problems from making repetitive motions. Ergonomics, the study of designing and positioning workplace equipment, can help you avoid health-related problems of using computer systems.

Computer and Information Systems Literacy In the twenty-first century, business survival and prosperity have continued to become more difficult. For example, increased mergers among former competitors to create global conglomerates, continued downsizing of corporations to focus on their core businesses and to improve efficiencies, efforts to reduce trade barriers, and the globalization of capital all point to the increased internationalization of business organizations and markets. In addition, business issues and decisions are becoming more complex and must be made faster. Whatever career path you take, understanding information systems will help you cope, adapt and prosper in this challenging environment. A knowledge of information systems will help you make a significant contribution to the job. It will also help you advance in your chosen career or field. Managers are expected to identify opportunities to implement information s ystems to improve their business. They are also expected to lead IS projects in their areas of expertise. To meet these personal and organizational goals, you must acquire both computer literacy andinformation systems literacy. C omputer literacy is a knowledge of computer systems and computer literacy Knowledge of computer systems and equipment and the ways they function. It stresses equipment and devices (hardware), programs and instructions (software), databases and equipment and the ways they function; it stresses equipment telecommunications. and devices (hardware), Information systems literacy goes beyond knowing the fundamentals of programs and instructions (software), databases and computer systems and equipment. Information systems literacy is the knowledge of how data and information are used by individuals, groups telecommunications. information systems literacy and organizations. It includes knowledge of computer technology and the broader range of information systems. Most importantly, however, it Knowledge of how data and information are used encompasses how and why this technology is applied in business. Knowing by individuals, groups and about various types of hardware and software is an example of computer organizations. literacy. Knowing how to use hardware and software to increase profits, cut costs, improve productivity and increase customer satisfaction is an example of information systems literacy. Information systems literacy can involve recognizing how and why people (managers, employees, stockholders and others) use information systems; being familiar with organizations, decision-making approaches, management levels and information needs; and understanding how organizations can use computers and information systems to achieve their goals. Knowing how to deploy transaction processing, management information, decision support and expert systems to help an organization achieve its goals is a key aspect of information systems literacy.

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Information Systems in the Functional Areas ofBusiness Information systems are used in all functional areas and operating divisions of business. In finance and accounting, information systems forecast revenues and business activity, determine the best sources and uses of funds, manage cash and other financial resources, analyze investments and perform audits to make sure that the organization is financially sound and that all financial reports and documents are accurate. Sales and marketing use information systems to develop new goods and services (product analysis), select the best location for production and distribution facilities (place or site analysis), determine the best advertising and sales approaches (promotion analysis) and set product prices to get the highest total revenues (price analysis). In manufacturing, information systems process customer orders, develop production schedules, control inventory levels and monitor product quality. In addition, information systems help to design products (computer-assisted design or CAD), manufacture items (computerassisted manufacturing or CAM), and integrate machines or pieces of equipment (computerintegrated manufacturing or CIM). Human resource management uses information systems to screen applicants, administer performance tests to employees, monitor employee productivity and more. Legal information systems analyze product liability and warranties and help to develop important legal documents andreports.

Information Systems in Industry In addition to being used in every department in a company, information systems are used in almost every industry or field in business. The airline industry develops Internet auction sites to offer discount fares and increase revenue. Investment firms use information systems to analyze stocks, bonds, options, the futures market and other financial instruments, and provide improved services to their customers. Banks use information systems to help make sound loans and good investments, as well as to provide online payment for account holders. The transportation industry uses information systems to schedule trucks and trains to deliver goods and services at the lowest cost. Publishing companies use information systems to analyze markets and to develop and publish newspapers, magazines and books. Private healthcare organizations use information systems to diagnose illnesses, plan medical treatment, track patient records and bill patients. Retail companies are using the web to take orders and provide customer service support. Retail companies also use information systems to help market products and services, manage inventory levels, control the supply chain and forecast demand. Power management and utility companies use information s ystems to monitor and control power generation and usage. Professional services firms employ information systems to improve the speed and quality of services they provide to customers. Management consulting firms use intranets and extranets to offer information on products, services, skill levels and past engagements to their consultants. These industries are discussed in more detail as we continue through the book.

1.5 Global Challenges in Information Systems Changes in society as a result of increased international trade and cultural exchange, often called globalization, have always had a big impact on organizations and their information systems. In his book The World Is Flat, Thomas Friedman describes three eras of globalization (see Table 1.2).20 According to Friedman, we have progressed from the globalization of countries to the globalization of multinational corporations and individuals. Today, people in remote areas can use the Internet to compete with, and contribute to, other people, the largest

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corporations and entire countries. These workers are empowered by high-speed Internet access, making the world seem smaller and effectively levelling the global playing field. In the Globalization 3 era, designing a new aeroplane or computer can be separated into smaller subtasks and then completed by a person or small group that can do the best job. These workers can be located in India, China, Russia, Europe and other areas of the world. The subtasks can then be combined or reassembled into the complete design. This approach can be used to prepare tax returns, diagnose a patient’s medical condition, fix a broken computer and many other tasks.

Table 1.2 Eras of Globalization Era

Dates

Characterized by

Globalization 1

Late 1400–1800

Countries with the power to explore and influence the world

Globalization 2

1800–2000 Multinational corporations that have plants, warehouses and offices around the world

Globalization 3

2000–today Individuals from around the world who can compete and influence other people, corporations and countries by using the Internet and powerful technology tools

data f o e z i s g Increasin SD 800 KB

5 MB+

194 MB

4.7 GB

5 GB+

10 GB+

100 GB+

Decreasing cos t of data Increasing size of data: As the cost of storing data has fallen, the world’s need for data storage has increased.

Today’s information systems have led to greater globalization. High-speed Internet access and networks that can connect individuals and organizations around the world create more international opportunities. Global markets have expanded. People and companies can get products and services from around the world, instead of around the corner or across town.

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These opportunities, however, introduce numerous obstacles and issues, including challenges involving culture, language and many others. ■

Cultural challenges. Countries and regional areas have their own cultures and customs that can significantly affect individuals and organizations involved in global trade.

■

Language challenges. Language differences can make it difficult to translate exact meanings from one language to another.

■

Time and distance challenges. Time and distance issues can be difficult to overcome for individuals and organizations involved with global trade in remote locations. Large time differences make it difficult to talk to people on the other side of the world. With long distance, it can take days to get a product, a critical part or a piece of equipment from one location to another location.

■

Infrastructure challenges. High-quality electricity and water might not be available in certain parts of the world. Telephone services, Internet connections and skilled employees might be expensive or not readily available.

■

Currency challenges. The value of different currencies can vary significantly over time, making international trade more difficult and complex.

■

Product and service challenges. Traditional products that are physical or tangible, such as a car or bicycle, can be difficult to deliver to the global market. However, electronic products (e-products) and electronic services (e-services) can be delivered to customers electronically, over the phone, networks, through the Internet or other electronic means. Software, music, books, manuals, and help and advice can all be delivered over the Internet.

■

Technology transfer issues. Most governments don’t allow certain military-related equipment and systems to be sold to some countries. Also, some believe that foreign companies are stealing the intellectual property, trade secrets, copyrighted materials, and counterfeiting products and services.21, 22

■

National laws. Every country has a set of laws that must be obeyed by citizens and organizations operating in the country. These laws can deal with a variety of issues, including trade secrets, patents, copyrights, protection of personal or financial data, privacy and much more. Laws restricting how data enters or exits a country are oftencalled ‘trans-border data-flow laws’. Keeping track of these laws and incorporating them into the procedures and computer systems of multinational and trans-national organizations can be very difficult and time consuming, requiring expert legal advice.

■

Trade agreements. Countries often enter into trade agreements with each other. TheEU has trade agreements among its members.23 The North American Free TradeAgreement (NAFTA) and the Central American Free Trade Agreement (CAFTA) are other examples.24 Others include the Australia–United States Free Trade Agreement and agreements between Bolivia and Mexico, Canada and Costa Rica, Canada and Israel, Chile and Korea, Mexico and Japan, the USA and Jordan and many others.25

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An Introduction to Information Systems

Summary The value of information is directly linked to how it helps decision makers achieve the organizational goals. Information systems are used in almost every imaginable career area. Regardless of your chosen career, you will find that information systems are indispensable tools to help you achieve your goals. Learning about information systems can help you get your first job, earn promotions and advance your career. Information is a collection of facts. To be valuable, information must have several characteristics: it should be accurate, complete, economical to produce, flexible, reliable, relevant, simple to understand, timely, verifiable, accessible and secure. The value of information is directly linked to how it helps people achieve their organization’s goals. Computers and information systems are constantly making it possible for organizations to improve the way they conduct business. A system is a set of e lements that interact to accomplish a goal or set of objectives. The components of a system include inputs, processing mechanisms and outputs. A system uses feedback to monitor and control its operation to make sure that it continues to meet its goals and objectives. System performance is measured by its efficiency and effectiveness. Efficiency is a measure of what is produced divided by what is consumed; effectiveness measures the extent to which a system achieves its goals. Asystem’s performance standard is a specific objective. Knowing the potential impact of information systems and having the ability to put this knowledge to work can result in a successful personal career, organizations that reach their goals and a society with a higher quality of life. Information systems are sets of interrelated elements that collect (input), manipulate and store (process), and disseminate (output) data and information. Input is the activity of capturing and gathering new data, processing involves converting or transforming data into useful outputs, and output involves producing

useful information. Feedback is the output that is used to make adjustments or changes to input or processing activities. The components of a computer-based information system (CBIS) include hardware, software, databases, telecommunications and the Internet, people and procedures. The types of CBISs that organizations use can be classified into: (1) e-commerce and m-commerce, TPS and ERP systems; (2) MIS and DSS; and (3) specialized business information systems. The key to understanding these types of systems begins with learning their fundamentals. E-commerce involves any business transaction executed electronically between parties such as companies (business to business), companies and consumers (business to consumer), business and the public sector, and consumers and the public sector. The major volume of e-commerce and its fastest-growing segment is business-to-business transactions that make purchasing easier for big corporations. E-commerce also offers opportunities for small businesses to market and sell at a low cost worldwide, thus allowing them to enter the global market right from start-up. M-commerce involves ‘anytime, anywhere’ computing that relies on wireless networks and systems. The most fundamental system is the transaction processing system (TPS). A transaction is any business-related exchange. The TPS handles the large volume of business transactions that occur daily within an organization. An enterprise resource planning (ERP) system is a set of integrated programs that can manage the vital business operations for an entire multisite, global organization. A management information system (MIS) uses the information from a TPS to generate information useful for management decision making. A decision support system (DSS) is an organized collection of people, procedures, databases and devices that help make problem-specific decisions. A DSS differs from an MIS in the support given to users, the emphasis on decisions, the development and approach, and the system components, speed and output.

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Specialized business information systems include knowledge management, artificial intelligence, expert and virtual reality systems. Knowledge management systems are organized collections of people, procedures, software, databases and devices used to c reate, store, share and use the organization’s knowledge and experience. Artificial intelligence (AI) includes a wide range of systems in which the computer takes on the characteristics of human intelligence. Robotics is an area of AI in which machines perform complex, dangerous, routine or boring tasks, such as welding car frames orassembling computer systems and components. Vision systems allow robots and other devices to have ‘sight’ and to store and process visual images. Natural language processing involves computers interpreting and acting on verbal or written commands in English, Spanish or other human languages. Learning systems let computers learn from past mistakes or experiences, such as playing games or making business decisions, while neural networks is a branch of AI that allows computers to recognize and act on patterns or trends. An expert system (ES) is designed to act as anexpert consultant to a user who is seeking advice about a specific situation. Originally, the term ‘virtual reality’ referred to immersive virtual reality, in which the user becomes fully immersed in an artificial, computer-generated 3D world. Virtual reality can also refer to applications that are not fully immersive, such as mouse-controlled navigation through a 3D environment on a graphics monitor, stereo viewing from the monitor via stereo glasses, stereo projection systems and others. System users, business managers and information systems professionals must work together to build a successful information system. Systems development involves creating or modifying existing business systems. The major steps of this process and their goals include systems

OVERVIEW

investigation (gain a clear understanding of what the problem is), systems analysis (define what the system must do to solve the problem), systems design (determine exactly how the system will work to meet the business needs), systems implementation (create or acquire the various system components defined in the design step), and systems maintenance and review (maintain and then modify the system so that it continues to meet changing business needs). Information systems must be applied thoughtfully and carefully so that society, business and industry can reap their enormous benefits. Information systems play a fundamental and everexpanding role in society, business and industry. But their use can also raise serious security, privacy and ethical issues. Effective information systems can have a major impact on corporate strategy and organizational success. Businesses around the globe are enjoying better safety and service, greater efficiency and effectiveness, reduced expenses, and improved decision making and control because of information systems. Individuals who can help their businesses realize these benefits will be in demand well into the future. Computer and information systems literacy are prerequisites for numerous job opportunities, and not only in the IS field. Computer literacy is knowledge of computer systems and equipment, and information systems literacy is knowledge of how data and information are used by individuals, groups and organizations. Today, information systems are used in all the functional areas of business, including accounting, finance, sales, marketing, manufacturing, human resource management and legal information systems. Information systems are also used in every industry, such as airlines, investment firms, banks, transportation companies, publishing companies, healthcare, retail, power management, professional services and more.

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Self-Assessment Test 1 Input is ___________ to produce output. 2 A ___________ is a specific objective of a system. 3 ___________ is information from a system that is used to make changes to the input. 4 Providing software and data storage via a web browser is usually called ___________. 5 The most important element in an information system is the ___________.

1 7 A business related exchange is known as a ___________. 8 M-commerce involves paying for goods and services using a ___________. 9 The activity of creating an information system is called ___________. 10 When a person has the ability to use a computer they are known as being ___________.

6 An ___________ supports long-term strategic decision making.

Review Questions 1 Describe what an information system is. What are its main elements? 2 Define the word ‘system’. 3 What are the main components of a system? What does each of them do? 4 What are the characteristics of good quality information? 5 Describe what a TPS does.

6 What is m-commerce? 7 Define telecommunications. 8 What is virtual reality and how could it be used in an organization? 9 What are the main steps in systems development? 10 What are some of the global challenges in the field of information systems?

Discussion Questions 1 List the areas of your life that are impacted byinformation systems. Select a few of these and describe how things would be different without IS.

2 If driverless technology was perfected, how would you organize the country’s daily commute to work? Would we all own a car or would you take a different approach?

Web Exercises 1 Search for information about a system that you interact with (it doesn’t have to be a software system). Describe the main input, processing and output.

2 Find examples of software that allows working from home including perhaps during the coronavirus (COVID-19) pandemic. What are the features that each example offers that facilitate home working?

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Case One Boaty McBoatface: The Online Survey That Went Viral Oh dear. It has happened before and it will happen again. A serious organization naively assumes that the Internet-using public will take its survey seriously. Having just spent over €300 million on a new Arctic-going research vessel, the Natural Environment Research Council (NERC) thought it would stir up interest in its work by running an online poll to decide what to name it. Perhaps the public would suggest naming it after a famous explorer. Or maybe Sir David Attenborough, a name synonymous in the UK with TV nature programmes. A few weeks later and the results were in. The winning suggestion? ‘Boaty McBoatface’. The suggestion received 124,109 votes, a massive four times as many as the runner up, Poppy-Mai, named after a 16-month-old girl with incurable cancer. The chief executive of the NERC, Duncan Wingham, was then faced with the dilemma of choosing between a credible name and overwhelming public opinion. As mentioned, this is not the first time this sort of thing has happened. In 2012, soft drinks maker PepsiCo ran a survey to ‘Dub the Dew’ and give their new flavour a brand name. Unfortunately pranksters from the online community 4Chan stepped in and the name ‘Hitler Did Nothing Wrong’ rose to the top of the suggestions (although other communities were also blamed for this). The UK government was quick to put the breaks on Boaty McBoatface. Jo Johnson, the then science minister said, ‘The new royal research ship will be sailing into the world’s iciest waters to address global challenges that affect the lives of hundreds of m illions of people, including global warming, the melting of polar ice and rising sea levels. That’s why we want a name that lasts longer than a social media news cycle and reflects the serious nature of the science it will be doing. There are many excellent suggestions among the 7,000 names put forward by members of the public and we’ll make a decision as to which one should be put forward for the royal warrant when we’ve had a chance to review them all’. There was even more to answer for. A parliamentary inquiry into the affair criticized NERC and its partners in the British government for not having sufficiently planned for what would happen

after the naming contest ended. NERC had invited the public to engage with their new research ship but didn’t specify what engagement they were looking for and how to proceed if and when people actually engaged. The Atlantic magazine asked ‘What’s the point of getting people involved if their involvement stops at voting in an online poll? It’s a bit like asking someone on a date without gaming out what you’ll do if you get a “yes”’. Some people thought the NERC could compromise and use Boaty McBoatface in some way without actually giving that name to the ship (perhaps by using the name for a raft or life vessel). In fact, NERC did indeed announce that Boaty McBoatface would be the name of the ship’s remote submarine and the ship itself would be called The Sir David Attenborough.

Questions 1 If you were chief executive of the NERC, what would your decision be? 2 Are online surveys of this kind just too dangerous for an organization? 3 What are the advantages of this sort of survey? 4 Is there no such thing as bad publicity? Who would have heard of this €300m ship if it had not been for the Boaty McBoatface suggestion?

References Ellis-Petersen, H. 2016. ‘Boaty McBoatface Wins Poll to Name Polar Research Vessel’. The Guardian. Available from: www.theguardian. com/environment/2016/apr/17/boatymcboatface-wins-poll-to-name-polar-researchvessel. Accessed: 8 June 2020 Friedman, U. 2016. ‘The Lessons of Boaty McBoatface’. The Atlantic. Available from: www .theatlantic.com/international/archive/2016/05/ boaty-mcboatface-parliament-lessons/482046/. Accessed: 26 May 2020. HVCulture, 2012. ‘4Chan Trolls Take Over Mountain Dew “Dub the Dew” Campaign’. Available from: archives.hypervocal.com/ news/2012/4chan-trolls-take-over-mountaindews-dub-the-dew-contest/. Accessed: 8 June 2020.

CHAPTER 1

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Rosenfeld, E. 2012. ‘Mountain Dew’s “Dub the Dew” Online Poll Goes Horribly Wrong’. Time. Available from: newsfeed.time.com/2012/08/14/ mountain-dews-dub-the-dew-online-poll-goeshorribly-wrong/. Accessed: 8 June 2020.

The Guardian, 2016. ‘Boaty McBoatface May Not Be Name of New Polar Research Vessel’. Available from: www.theguardian.com/ environment/2016/apr/18/boaty-mcboatfacemay-not-be-name-of-new-polar-researchvessel. Accessed: 26 May 2020.

Case Two Health Information Systems in South Africa Hospitals and health workers have long recognized the importance of good information. A knowledge of diagnoses made by doctors in the past, and a record of treatments that were given to patients along with the outcomes, all help to create the most promising treatment plans for future patients. Information on the geography of health problems also helps to create a national strategy that can be used to make health-related decisions and plan responses to disease outbreaks. The data may even be used to predict and prevent those outbreaks. South Africa’s Health Information Systems Program is a not-for-profit non-governmental organization that aims to empower healthcare workers and decision makers to improve the coverage, quality and efficiency of health services through the use of open standards and data exchange mechanisms. They subscribe to an open source philosophy, freely sharing their training materials and software solutions. Their staff members include nine software developers and ten database administrators who create web-based and mobile solutions. This use of web standards means that their software will run on most operating systems and on most devices, which means there will be few, if any, access problems. One of their main systems, called DHIS2, is used to collect a range of data. This includes case-based data from in-patient admissions, essentially recording the who, what, when and where of patients being seen. Data is also stored on disease outbreaks and responses. New mothers and young children are seen as being particularly vulnerable, and so data is stored to improve their care. The results of lab tests and information on

stocks of drugs and other treatments in hospitals are also recorded, as is data on patient deaths. The system includes a variety of ways to view all of this including charts and graphs. Geographic features that allow users to view maps of hospitals and to visualize the catchment areas for each are also available. All of this is seen through a clear, easy to navigate, information dashboard. The COVID-19 pandemic has also highlighted how important it is to have information and systems in place to deal with health crisis situations. One important but previously often overlooked feature that is included in DHIS2 is social networking. In other words, DHIS2 allows for communication between users. This often encourages knowledge sharing and means that health professionals do not have to work in isolation. Patients too are realizing the importance of sharing their data. For instance, in a case unrelated to the HIS program, South African members of PatientsLikeMe recently contributed to an online survey of drug use which gave health professionals vital information. PatientsLikeMe is a web-based community of patients who compare the treatments they receive, and discuss their symptoms and experiences. The goal is for patients to support each other and to use the data generated to develop new treatment plans using cutting edge analytics. Towards that goal, in 2016 the NHS in the UK gave a company owned by Google access to 1.6 million patients from three hospitals. One of the goals is to develop software to alert staff to patients at risk of deterioration and death through kidney failure. However, local papers have reported that some patients are concerned about privacy and sharing sensitive data with a private company.

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Questions

References

1 What devices could be used to collect health information and what are the advantages and disadvantages of each?

Quinn, B. 2016. ‘Google Given Access to Healthcare Data of up to 1.6 Million Patients’. The Guardian. Available from: www.theguardian.com/ technology/2016/may/04/google-deepmindaccess-healthcare-data-patients. Accessed 8 June 2020. www.hisp.org/ Accessed 16 June 2020. www .patientslikeme.com/ Accessed 16 June 2020.

2 What are the advantages of health professionals discussing patients with each other online? Are there any disadvantages? 3 Why do you think the Health Information Systems Program uses an open source philosophy? 4 Why are patients concerned with sharing sensitive data with a private company?

Patients Like Me. blog.patientslikeme.com/ patient-experiences/results-from-patientslikemesurvey-highlight-patient-beliefs-about-medicalmarijuana. Accessed 26 May 2020.

Case Three Australian Drones Join The Postal Service Australia’s national postal service occassionally uses drones to make deliveries. Testing has begun that may in the near future see some customers receiving parcels from the sky. This could be good news for those who live in more remote areas and for people whose mailboxes are a distance from their doors, such as farmers, some of whom have to drive many miles to the gates of their property where deliveries are usually left. The drones are remote controlled by an operator and have been built by Australian company ARI Labs. They feature a parachute in case of engine failure and have a camera at the front giving the operator a real-time view of what is ahead of the drone. The customer lays out a landing grid that the operator can see (essentially a brightly coloured picnic blanket) when they get close to the delivery address. Some operators use a headset to immerse themselves in the experience of flying. This involves wearing goggles that display the feed from the camera and give them the sense that they are actually on board the drone. Doing this often makes people physically sick when they start to use it, and even after that initial period, some people will never enjoy the sensation. It’s like sea sickness and can last for several hours. There are several explanations for it but the most likely seems to be that the body is getting signals through the eyes that it is moving, but nothing from the rest of the senses.

When the drone is nearing its destination, a message is sent to the receiver that it is about to land and to put out the landing grid. What happens next is being tested, but it’s likely to be that the drone lands, drops the parcel on the ground and then takes off again, allowing the receiver to then go safely in and pick up their package, having never interacted directly with the drone. Others are interested in this technology. Drones have been used to deliver contraband into prisons and to smuggle drugs across borders. In the UK, there were 33 incidents of smuggling contraband into prisons involving devices in 2015. This has caused some police forces to train up eagles to grab them in mid flight! Australia’s Civil Aviation Safety Authority is monitoring the tests carefully and will decide whether to allow the postal service to go ahead with the scheme. Australia Post CEO Ahmed Favour said that although the company hoped to get the drones delivering soon, they would only start shipping parcels ‘once we are 100 percent sure that it’s safe and reliable’. As yet, no details have been released about the cost of the service to customers.

Questions 1 What precautions would have to be taken to get this technology off the ground? 2 What other uses can you think of for this technology?

CHAPTER 1

An Introduction to Information Systems

3 What alternatives are there to the use of a headset for drone operators? 4 Will all police forces need to start training eagles?

References BBC, 2016. ‘Drones Seized over HMP Pentonville Carrying Drugs and Phones’. Available from: www.bbc.co.uk/news/uk-englandlondon-37152665. Accessed: 26 May 2020.

McCormick, R. 2016. ‘Australia’s Postal Service is Testing Drone Deliveries’. The Verge. Available from: www.theverge. com/2016/4/18/11449560/australia-postdrone-delivery-test. Accessed: 26 May 2020. BBC, 2016. ‘Police “Ponder Eagles to Tackle Drones”’. Available from: www.bbc.co.uk/news/ uk-35519470. Accessed: 26 May 2020.

Notes 1

Schupak, Amanda, ‘The Bunny Chip’, Forbes, 15August 2005, p. 53. 2 The Top 500 Website. www.top500.org. Accessed 26 May 2020. 3 Oak Ridge National Laboratory Website. www.olcf. ornl.gov/summit. Accessed 26 May 2020. 4 Port, Otis, ‘Desktop Factories’, Business Week, 2May 2005, p. 22. 5 Barron, Kelly, ‘Hidden Value’, Fortune, 27 June 2005, p. 184[B]. 6 Yun, Samean, ‘New 3G Cell Phones Aim to Be Fast’, Rocky Mountain News, 1 August 2005, p.1B. 7 Tynan, Dan, ‘Singing the Blog Electric’, PC World, August 2005, p. 120. 8 Mossberg, Walter, ‘Device Lets You Watch Shows on a Home TV, TiVo from Elsewhere’, Wall Street Journal, 30 June 2005, p. B1. 9 Anthes, Gary, ‘Supply Chain Whirl’, Computerworld, 8 June 2005, p. 27. 10 Majchrzak, Ann, et al., ‘Perceived Individual Collaboration Know-How Development’, Information Systems Research, March 2005, p. 9. 11 Darroch, Jenny, ‘Knowledge Management, Innovation, and Firm Performance’, Journal of Knowledge Management, Vol. 9, No. 3, March 2005, p. 101. 12 Staff, ‘Nissan Developing Smart Cars’, CNN Online, 1 March 2005. 13 Consumer Reports. ‘Guide to Lane Departure Warning & Lane Keeping Assist’. 5 August 2019. www.consumerreports.org/car-safety/lanedeparture-warning-lane-keeping-assist-guide/” www.consumerreports.org/car-safety/lanedeparture-warning-lane-keeping-assist-guide/. Accessed 19 June 2020. 14 Esteva, A. et al. 2019. ‘A Guide to Deep Learning in Healthcare’, Nature Medicine, Vol. 25, pp. 24–29. 15 Sage, A. 2018. ‘Waymo Unveils Self-Driving Taxi Service in Arizona for Paying Customers’,

Reuters. Available from: uk.reuters.com/article/ us-waymo-selfdriving-focus/waymo-unveils-selfdriving-taxi-service-in-arizona-for-paying-customersidUKKBN1O41M2. Accessed 28 April 2020. 16 Staff, ‘Tax Credit Fiasco Costs EDS £71m’, news. bbc.co.uk/1/hi/business/4460800.stm. Accessed: 26 May 2020. 17 Hess, H.M., ‘Aligning Technology and Business’, IBM Systems Journal, Vol. 44, No. 1, 2005, p. 25. 18 Cavusoglu, Huseyin, et al., ‘The Value of Intrusion Detection Systems in Information Technology Security Architecture’, Information Systems Research, March 2005, p. 28. 19 G. Jelten, T. ‘Cyberthieves Target European Carbon Credit Market’, National Public Radio. Available from: www.npr.org/2011/01/22/133123389/ cyberthieves-target-european-carbon-creditmarket. Accessed 26 May 2020. 20 Friedman, Thomas, The World Is Flat, Farrar, Straus and Giroux, 2005, p. 488. 21 Balfour, Frederik, ‘Invasion of the Brain Snatchers’, Business Week, 9 May 2005, p. 24. 22 Bodner, M. Business Insider. ‘Russia is willing to sell arms to just about anyone, but even Moscow has its limits’. 24 July 2019. www.businessinsider. com/limits-on-russian-willingness-to-sellarms-to-other-countries-2019-7?r=US&IR=T” www.businessinsider.com/limits-on-russianwillingness-to-sell-arms-to-other-countries-20197?r=US&IR=T. Accessed 19 June 2020. 23 Europa – The European Union On-Line, www.europa.eu/, 8 June 2020. 24 Smith, Geri, et al., ‘Central America Is Holding Its Breath’, Business Week, 20 June 2005, p. 52. 25 SICE – Foreign Trade Information System. Available from: www.sice.oas.org/agreements_e.asp. Accessed 26 May 2020.

02 Information Systems inOrganizations Principles

Learning Objectives

The use of information systems to add value to the organization is strongly influenced by organizational structure and the organization’s attitude and ability to change.

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Identify the value-adding processes in the supply chain and describe the role of information systems within them.

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Provide a clear definition of ‘organizational structure’ and ‘organizational change’ and discuss how these affect the implementation of information systems.

Because information systems are so important, businesses need to be sure that improvements to existing systems or completely new systems help lower costs, increase profits, improve service or achieve a competitive advantage.

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Identify some of the strategies employed to lower costs or improve service.

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Define the term ‘competitive advantage’ and discuss how organizations are using information systems to achieve such an advantage.

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Discuss how organizations justify the need for information systems.

Cooperation between business managers and IS personnel is the key to unlocking the potential of any new or modified system.

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Define the types of roles, functions and careers available in information systems.

PART 1

OVERVIEW

Why Learn About Information Systems in Organizations?

The impact that computers have in organizations cannot be overstated. Office work has been transformed almost beyond all recognition, and many workers could not operate without their computer. All of this happened before the rise in popularity hannel for sharing information. When that of the Internet as a c happened, the Internet changed everything all over again! No matter what path your career takes, you will almost certainly come into contact with information systems every day. Marketing departments, accounts departments, order processing, shipping and logistics all rely on information systems. Researchers, medical doctors, mechanics – it is difficult to think of a profession where the computer does not play a c entral role. Even musicians use information systems to get the sound they want. In this chapter, you will see how the use of information systems in every part of organizations can help produce higher-quality products and increase their returns on investment.

2.1 An Introduction to Organizations An organization is a formal collection of people and other resources established to accomplish a set of goals. The primary goal of a forprofit organization is to maximize shareholder value, often measured by the price of the company stock. Non-profit organizations include social groups, religious groups, universities, charities and other o rganizations that do not have profit as their goal. An organization is a system, which, as you will recall from Chapter 1, means that it has inputs, processing mechanisms, outputs and feedback. Resources such as materials, people and money serve as inputs to the organizational system from the environment, go through a transformation mechanism and then are produced as o utputs to the environment. The outputs from the transformation mechanism are usually goods or services which are of higher relative value than the inputs alone. Through adding value or worth, organizations attempt to achieve their goals. How does the organizational system increase the value of resources? In the transformation mechanism, subsystems contain processes that help turn inputs into goods or services of increasing value. These processes increase the relative worth of the combined inputs on their way to becoming final outputs. Consider a car maker. Its inputs are the staff it has hired, the assembly equipment it has bought, raw materials such as metal and plastic, and preassembled components such car radios. The processing that it does is turning the materials into finished vehicles, which are the output. The finished product is worth more than the cost of the components. This amount is the value that has been added. The value chain, popularized by Michael Porter in his book, Competitive value chain A series (chain) of activities that includes inbound Strategy,1 is a useful tool for analyzing where and how this value gets added. logistics, warehouse and storage, The value chain is a series (chain) of activities that includes inbound logistics, production, finished product storage, warehouse and storage, production, finished product storage, outbound outbound logistics, marketing and logistics, marketing and sales, and customer service. The value chain of a sales, and customer service. manufacturing company is shown in Figure 2.1. Analyzing value chains when developing information systems often results inefficient transaction processing systems (explained fully in a later chapter), an expanding market and the sharing of information.2 The value chain is used to examine what happens to raw materials to add value to them before the finished product is sold to customers. Information systems can be focused on those activities that add the most value. The value chain can also reveal linkages between different activites (say marketing and production) which can be exploited using IS (to increase communication between the two for instance). organization A formal collection of people and other resources established to accomplish a set of goals.

CHAPTER 2

Information Systems inOrganizations

Figure 2.1 The Value

Environment

Chain of a Manufacturing Company Managing raw materials, inbound logistics, and warehouse and storage facilities is called ‘upstream management’, and managing finished product storage, outbound logistics, marketing and sales, and customer service is called ‘downstream management’.

Organizational system

Process subsystem

Raw materials

Material and physical flow

Supply chain and customer relationship management

Processing raw materials

Decision flow

Finished products

Value flow

Data flow

Information system(s)

The value chain is just as important (although it can be a little more difficult to apply) to companies that don’t manufacture products but provide services, such as tax preparers and legal firms. By adding a significant amount of value to their products and services, companies ensure success. Supply chain management (SCM) and customer relationship management (CRM) are two key parts of managing the value chain. SCM helps determine what supplies are required for the value chain, what quantities are needed to meet customer demand, how the supplies should be processed (manufactured) into finished goods and services, and how the shipment of supplies and products to customers should be scheduled, monitored and controlled. 3 For example, in the car manufacturing company mentioned previously, SCM can identify key suppliers and parts, negotiate with vendors for the best prices and support, make sure that all supplies and parts are available to manufacture cars and send finished products to dealerships around the countrywhen they are needed. Increasingly, SCM is accomplished using the Internet and electronicmarketplaces (e-marketplaces).4 When an organization has many suppliers, it can use business-to-business exchanges. Zoodel, for example, facilitates international trade in the Middle East and elsewhere including Kazakhstan, Lebanon, Iran, China, Afghanistan, Iraq, Oman, Turkey and Russia. Their web portal can help buyers find the products they are looking for and facilitate communication between buyer and seller to allow them to negotiate, place orders and arrange delivery. Zoodel checks all sellers through a verification and inspection process and guarantees payment using an escrow system.5 CRM programs help a company manage all aspects of customer encounters, including marketing and advertising, sales, customer service after the sale and help to retain loyal customers. CRM can assist a company with collecting data on customers, contacting customers, informing them about new products and actively selling products to existing and new customers. Often, CRM software uses a variety of information sources, including sales from retail stores, surveys, email and Internet browsing habits, to compile comprehensive customer profiles. CRM systems can also collect customer feedback which can be used to design new products and services. Tesco, the UK’s largest retail operation,6 encourages its customers to use its Clubcard, which allows it to collect information on c ustomer transactions. It uses this information to provide outstanding customer service and deliver loyalty rewards and perks to valued customers. 7 In return, customers are rewarded with discounts on Tesco products, holidays and other deals. Figure 2.2 shows the Tesco website which the company uses to help with CRM.

PART 1

OVERVIEW

Figure 2.2 Tesco Website Tesco uses its website to help with customer relationship management.

What role does an information system play in these processes? A traditional view of information systems holds that organizations use them to control and monitor processes and ensure e ffectiveness and efficiency. Under this view, the output from a company’s information systems is used to make changes to company processes. These changes could involve using different raw materials (inputs), designing new assembly-line procedures (product transformation) or d eveloping new p roducts and services (outputs). Here, the information system is external to the process and serves to monitor or control it. A more contemporary view, however, holds that information systems are often so intimately involved that they are part of the process itself. From this perspective, the information system plays an integral role in the process, whether providing input, aiding product transformation or producing output. Consider a telephone directory business that creates telephone books for international businesses. A customer requests a telephone directory listing all steel suppliers in Western Europe. Using its information system, the directory business can sort files to find the suppliers’ names and telephone numbers and organize them into an alphabetical list. The information system itself is an inseparable part of this process. It does not just monitor the process externally but works as part of the process to transform raw data into a product. In this example, the information system turns input (names and telephone numbers) into a sellable output (a telephone directory). The same system might also provide the input (the files storing the data) and output (printed pages for the directory). This latter view provides a new perspective on how and why businesses can use information systems. Rather than attempting to understand information systems independently of the organization, we must consider the potential role of information systems within the process itself, often leading to the discovery of new and better ways to accomplish the process.

Organizational Structures organizational structure Organizational subunits and the way they relate to the overall organization.

Organizational structure refers to organizational subunits and the way they relate to each other. An organization’s structure depends on its approach to management and can affect how it views and uses information systems. The types of organizational structures typically include traditional, project, team and virtual.

CHAPTER 2

Information Systems inOrganizations

Traditional Organizational Structure

A traditional organizational structure, also called a hierarchical structure, is like a managerial pyramid where the hierarchy of decision making and authority flows from the strategic management at the top, down to operational management and non-management employees. Compared to lower levels, the strategic level, including the managing d irector of the company and directors, has a higher degree of d ecision authority, more impact on business goals and more unique problems to solve (see Figure 2.3).

traditional organizational structure An organizational structure similar to a managerial pyramid, where the hierarchy of decision making and authority flows from strategic management at the top, down to operational management and nonmanagement employees. Also called a hierarchical structure.

Staff position

B. Wang, Director, Accounting

A. Bailey, Solicitor

C. Rodrig, Director, Information systems

Figure 2.3 A Traditional

S. Burry, Managing Director

Organizational Structure

R. Henderson, Director, Marketing

K. Kelly, Director, Production

S. Samuel, Manager

L. Bashran, Manager

W. Osborn, Director, Human resources

Line positions

In most cases, department heads report to a managing director or top-level manager. The departments are usually divided according to function and can include marketing, production, information systems, finance and accounting, research and development, and so on. The positions or departments that are directly associated with making, packing, or shipping goods are called line positions. Aproduction manager who reports to a director of production is an example of a line position. Other positions might not be directly involved with the formal chain of command but instead assist a department or area. These are staff positions, such as a solicitor, reporting to the managing director. Today, the trend is to reduce the number of management levels, or layers, in the traditional organizational structure. This type of structure, often called a flat flat organizational structure An organizational structure, empowers employees at lower levels to make decisions organizational structure with a and solve problems without needing permission from mid-level managers. reduced number of management layers. Empowerment gives employees and their managers more responsibility empowerment Giving employees and authority to make decisions, take action and have more control over their and their managers more jobs. For example, an empowered shop assistant can respond to customer responsibility and the authority requests and problems without needing permission from a manager. In a factory, to make decisions, take certain empowerment might mean that an assembly-line worker can stop production actions and have more control over their jobs. to correct a problem before the product is passed to the next station. Information systems can be a key element in empowering employees because they provide the information employees need to make decisions. The employees might also be empowered to develop or use their own personal information systems, such as a simple forecasting model or spreadsheet.

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OVERVIEW

Project and Team Organizational Structures

A project organizational structure is centred on major products or services. For example, in a manufacturing firm that produces baby food and otherbaby products, each line is produced by a separate unit. Traditional functions such asmarketing, finance and production are positioned within these major units (see Figure 2.4). Many project teams are temporary – when the project is complete, the members go on to new teams formed for another project.

project organizational structure A structure centred on major products or services.

Figure 2.4 A Project

Director, Finance

Organizational Structure

T. Walker, Board Director, Baby Food Project

Director, Marketing Director, Production Director, Sales

Director, Finance

B. Worth, Managing Director, Baby Products Company

W. Butler, Board Director, Nappy Project

Director, Marketing Director, Production Director, Sales

Director, Finance

O. Teco, Board Director, Communications and Stroller Project

Director, Marketing Director, Production Director, Sales

team organizational structure A structure centred on work teams or groups.

The team organizational structure is centred on work teams or groups. In some cases, these teams are small; in others, they are very large. Typically, each team has a leader who reports to an upper-level manager. Depending on its tasks, the team can be temporary or permanent. A healthcare company, for example, can form small teams to organize its administrators, physicians and others to work with individual patients.

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Virtual Organizational Structure

A virtual organizational structure is made up of individuals, teams or virtual organizational structure complete business units that work with other individuals, teams or complete A structure that employs individuals, groups or complete business units in business units in different geographic locations. This almost always requires geographically dispersed areas that the use of the Internet (or other telecommunications), and the teams can exist can last for a few weeks or years, for a few weeks or years. The people involved might be in different countries often requiring telecommunications and operating in different time zones. In other words, virtual organizational or the Internet. structures allow people who work together to be separated by location and time. The people might never meet physically, which explains the use of the word ‘virtual’. In Chapter 10 we will examine some of the technologies that make this form of collaborative work possible. Despite their physical separation, members of a virtual organization can collaborate on any a spect of a project, such as supplying raw materials, producing goods and services, and delivering goods and services to the marketplace. A company can use a virtual organizational structure with its own dispersed workers who have distinct skills and abilities to reduce costs. PwC, a global accounting giant, uses virtual teams of 5 to 50 people in the learning and education department.8 According to Peter Nicolas, the company’s Learning Solutions manager, ‘Virtual teaming is the norm for us’. The company takes advantage of software and technology, including Microsoft Live Meeting, Centra Software’s Virtual-Classroom Application and Lotus Notes from IBM, to help the teams work from distant locations. In addition to reducing costs or increasing revenues, a virtual organizational structure can provide an extra level of security. For instance, dispersing employees and using a virtual structure can provide an ability to deal with a disaster at the primary location. If this happened, the company would still have sufficient employees at other locations to keep the business running. Today’s workers are performing company work at home, at a customer’s location, in coffee shops, on pleasure boats and at convenient work centres in suburbia. People can work at any time. Using the Internet and email, workers can put the finishing touches to a new business proposal in Europe or Asia, while co-workers in North America are sleeping. Successful virtual organizational structures share key characteristics. One strategy is to have in-house employees concentrate on the firm’s core businesses and use virtual employees, groups or businesses to do everything else. Using information systems to manage the activities of a virtual structure is essential, often requiring specialized software to coordinate joint work. Even with sophisticated IS tools though, teams may still need face-to-face meetings, especially at the beginning of new projects.

Organizational Change Most organizations are constantly undergoing change, both minor and major. The need for o rganizational change can be caused by internal factors, such organizational change The as those initiated by e mployees at all levels, or external factors, such as activities responses that are necessary wrought by competitors, stockholders, new laws, community regulations, natural so that for-profit and non-profit organizations can plan for, occurrences (such as hurricanes) and general economic conditions. In the 1990s, implement and handle change. the Internet caused massive changes in the way millions of organizations did business. The COVID-19 pandemic “lockdowns” and a rapid transition to homeworking in many countries throughout the world has changed work practices, certainly on a temporary level and possibly more permanently – an unforeseen environmental change. Change can be sustaining or disruptive. Sustaining change such as new or cheaper production equipment can help an organization improve its operations. For example, many factories are now able to use robots because prices for robots are falling and their useful lifetime is increasing, leading to a big market in second-hand robots.9 Global Robots, for example, based in the UK, buys and sells industrial robots in large numbers from big manufacturers including ABB, Fanuc, Motoman and Kuka with the aim of making robots affordable to a wide market. They have agents in the USA, Scandinavia, Russia and Eastern Europe.10

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OVERVIEW

Disruptive change, on the other hand, often harms an organization’s performance or even puts it out of business. In general, disruptive technologies might not originally have good performance, low cost or even strong demand. Over time, however, they often replace existing technologies. They can cause good, stable companies to fail when they don’t change or adopt the new technology. Voice Over IP (VoIP) telephone technology is currently disrupting the business models of established companies such as BT (www.bt.com) who, in response, are moving towards providing broadband Internet connections as their main product. Overcoming resistance to change, especially disruptive change, can be the hardest part of bringing information systems into a business. Occasionally, employees even attempt to sabotage a new information system because they do not want to learn the new procedures and commands. The best way to avoid this resistance is to involve the employees in the decision to implement the change, and consult them on the development or purchase of the information system. When a company introduces a new information system, a few members of the organization must become agents of change – champions of the new system and its benefits. Understanding the dynamics of change can help them confront and overcome resistance so that the new system can be used to maximum efficiency and effectiveness. A significant portion of an organization’s expenses are used to hire, train and compensate talented staff. So organizations try to control costs by determining the number of employees they need to maintain high-quality goods and services. Strategies to contain costs are outsourcing, on-demand computing and downsizing. outsourcing Contracting with Outsourcing involves contracting with outside professional services outside professional services to meet to meet specific business needs. Often, companies outsource a specific specific business needs. business process, such as recruiting and hiring e mployees, developing advertising materials, promoting product sales or setting up a global telecommunications network. Organizations often outsource a process to focus more closely on their core business and target limited resources to meet strategic goals. South Africa has a sophisticated manufacturing and service-based economy, and many small businesses from the UK and Australia are outsourcing their services to that country. In addition to a highly skilled workforce, there are time zone advantages too (everyone is awake at the same time for at least part of the day), and potential cost savings. The Shopper Collective in Australia, which helps its clients to understand their customers better, outsources its data analytics to South Africa.11, 12 Other reasons for outsourcing are to trim expenses or benefit from the expertise of a service provider. A growing number of organizations, however, are finding that outsourcing does not necessarily lead to reduced costs. One of the primary reasons for cost increases is poorly written contracts that tack on charges from the outsourcing vendor for each additional task. Other potential drawbacks of outsourcing include loss of control and flexibility, overlooked opportunities to strengthen core competency and low employee morale. On-demand computing is an extension of the outsourcing approach, on-demand computing Contracting and many companies offer on-demand computing to business clients and for computer resources to rapidly respond to an organization’s varying customers. On-demand computing, also called on-demand business and workflow. Also called on-demand utility computing, involves rapidly responding to the organization’s flow of business and utility computing. work as the need for computer resources varies. It is often called ‘utility computing’ because the organization pays for computing resources from a computer or consulting company just as it pays for electricity from a utility company. This approach treats the information system – including hardware, software, databases, telecommunications, personnel and other components – more as a service than as separate products. In other words, instead of purchasing hardware, software and database systems, the organization only pays a fee for the systems it needs at peak times. The a pproach can save money because the organization does not pay for systems that it doesn’t routinely need. It also allows the organization’s IS staff to concentrate on more strategic issues.

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Downsizing involves reducing the number of employees to cut costs. The downsizing Reducing the number term ‘rightsizing’ is also used. Rather than pick a specific business process of employees to cut costs. to downsize, companies usually look to downsize across the entire company. Downsizing clearly reduces total payroll costs, although employee morale can suffer. Employers need to be open to alternatives to reducing the number of employees and use layoffs as the last resort. It’s simpler to encourage people to leave voluntarily through early retirement or other incentives. Voluntary downsizing programmes often include a buyout package offered to certain classes of employees (for example, those over 50 years old). The buyout p ackage offers employees certain benefits and cash incentives if they voluntarily retire from the company. Other options are job sharing and transfers. Organizational learning is closely related to organizational change. organizational learning The According to the concept of organizational learning, organizations adapt adaptations to new conditions or to new conditions or alter their practices over time. Assembly-line workers, alterations of organizational practices over time. secretaries, shop assistants, managers and executives all learn better ways of doing business and incorporate them into their day-to-day activities. Collectively, these adjustments based on experience and ideas are called ‘organizational learning’. In some cases, the adjustments can be a radical redesign of business processes, often called ‘reengineering’. In other cases, these adjustments can be more incremental, a concept called ‘continuous improvement’. Both adjustments reflect an organization’s strategy: the long-term plan of action for achieving their goals.

Ethical and Societal Issues Customers Out of Pocket After Direct Transfer Error A Direct Debit is an instruction from a customer to their bank giving permission for a third party to collect varying amounts from their account, usually in order to pay regular bills. In the UK, the Direct Debit Guarantee applies to all banks and building societies and protects customers in the event of errors made in payments such as an incorrect amount being taken or a payment being made on the wrong date. The guarantee says that, ‘If an error is made in the payment of your Direct Debit, by the organisation or your bank or building society, you are entitled to a full and immediate refund of the amount paid from your bank or building society’. Many Internet banking customers assume that the guarantee applies to online transfers that they have made, but in fact this is not the case. At the end of 2014, a record label manager and her husband fell victim to a sophisticated email scam. The couple had some work done to their house and received an email from what they thought was their builder giving them instructions on how to pay. The email asked for over £25,000 to be transferred and gave the account number and sort code of the bank

it was to be paid into. Later that day, they arranged payment and thought no more of it, until they received a second email chasing payment. At that point they looked into it and realized the first email had been sent by a scammer. The email address had been slightly different: ‘development’ instead of ‘developments’ in the company name. The money had been sent from Lloyds Bank to Barclays Bank. Contacting Lloyds, they were told that the bank had simply followed their instructions. So they turned to Barclays. Initially, the bank refused to give them any information, citing that they had to protect the identity of the fraudster in line with data protection legislation. They did learn something though. ‘Our own questioning with the banks had traced our money to an account in the north [of England] owned by a man called “Harry”. It, of course, had been immediately fully withdrawn and closed’, said Sarah Fisher, the victim. Eventually, Barclays said that by the time it was alerted, the couple’s £25,000 had been ‘utilized’ by the account holder, so it was unable to return any of their cash. (continued)

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Its letter added: ‘We do not report scam claims to the police because the bank is not the victim’. However, they also said they would cooperate fully with the police as part of a criminal investigation. Following up on this story, The Guardian newspaper sent one of their journalists to open an account at Barclays. ‘It was impossible without giving the bank my full name, date of birth, addresses for the past three years, email address, phone number, income and employment details, including my full company address. It also required permission from me to make checks on everything I submitted’. When the couple reported the incident to the police, they did not pursue an investigation but instead referred the case to Action Fraud, the UK’s national fraud and cybercrime reporting centre. ‘The reason the police are citing for not pursuing an investigation is that this type of crime is so rife they haven’t got the resources – they say that compared to some of the cases they are dealing with, it’s small scale’, says Mrs Fisher. City of London Police Commander Chris Greany concedes that this type of ‘invoicing fraud’, where people are fooled into transferring funds, is an emerging threat. ‘Those with viable lines of inquiry have been sent to local police forces to investigate’, he says. The name for this kind of fraud is an Authorised Push Payment Scam, and has become common. The story above has been repeated many times, eventually causing UK banks to act. In February 2018, the Payment Systems Regulator created a steering committee to develop a code of practice to guide how the financial sector should respond to reported cases. In May 2019 the new code of practice was published, recommending that victims should be reimbursed unless they ignored their bank’s warnings or were grossly negligent in transferring the money. While signing up to the code is voluntary, many of the main high street players joined immediately. If one of their customers is scammed, the bank will have to decide whether or not to refund them within 15 working days, and then make the refund as soon as possible. Banks should also be proactive, identifying customers whom they feel are at a high risk of being scammed and warning them in advance. They should also delay payments while they investigate potential scams, and freeze accounts they believe might belong to scammers. All of this comes too late to help Sarah Fisher though.

OVERVIEW

Questions 1 How could banks identify customers who are likely to be victims? 2 How could delayed payments be a problem for banks? 3 What additional controls could banks offer their customers? 4 How should you assess emails that ask for money transfers?

References APPCRM Steering Group, 2019. ‘Contingent Reimbursement Model Code for Authorised Push Payment Scams’. Available from: www.appcrmsteeringgroup.uk/wp-content/ uploads/2019/02/APP-scams-Steering-GroupFinal-CRM-Code.pdf. Accessed 27 May 2020. Collinson, P. 2016. ‘£25,000 Stolen Online. But Even More Shocking: Barclays Washes its Hands of It’. The Guardian. Available from: www.theguardian.com/money/blog/2016/ mar/05/scams-fraud-barclays-online-crimeprevent. Accessed 27 May 2020. DirectDebit.co.uk website. www.directdebit. co.uk/DirectDebitExplained/pages/ directdebitguarantee.aspx. Accessed 27 May 2020. French, M. 2019. ‘More Protection for Money Transfer Scam Victims from May’. Money Saving Expert. Available from: www. moneysavingexpert.com/news/2019/03/moreprotection-for-money-transfer-victims-frommay/. Accessed 9 June 2020. Jones, R. 2016. ‘Is Barclays Doing Enough to Protect Its Customers?’ The Guardian. Available from: www.theguardian.com/money/2016/ mar/12/barclays-fraud-email-con-trickpressure-bank. Accessed 9 June 2020. Jones, R. 2016. ‘Email Scam Costs Couple £25,000 – But No One Will Help’. The Guardian. Available from: www.theguardian.com/ money/2016/mar/04/fraud-scam-emailbarclays-lloyds. Accessed 9 June 2020. Payment Systems Regulator, 2019. ‘PSR Welcomes Today’s Publication of an Industry Code to Protect Consumers Against Authorised Push Payment (APP) Scams’. Available from: www.psr. org.uk/psr-publications/news-announcements/ PSR-welcomes-industry-code-to-protectagainst-app-scams. Accessed 27 May 2020.

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Reengineering and Continuous Improvement To stay competitive, organizations must occasionally make fundamental changes to the way they do business. In other words, they must change the activities, tasks or processes they use to achieve their goals. Reengineering, also called ‘process redesign’ reengineering Also known as and ‘business process reengineering’ (BPR), involves the radical redesign ‘process redesign’ and ‘business of business processes, organizational structures, information systems and process reengineering’ (BPR). The radical redesign of business values of the organization to achieve a breakthrough in business results. processes, organizational structures, Reengineering can reduce delivery times, increase product and service quality, information systems and values enhance customer satisfaction, and increase revenues and profitability. of the organization to achieve a When the Mittal Steel plant in Vanderbijlpark, South Africa, reengineered its breakthrough in business results. steelmaking operations, introducing new automated systems, it was able to reduce the amount of raw materials used in its processes and increase its output of steel, which was of a higher quality than before. It was also able to reduce processing time and improve plant availability.13 In contrast to simply automating the existing work process, reengineering challenges the fundamental assumptions governing its design. It requires finding and vigorously challenging old rules blocking major business process changes. These rules are like anchors weighing down a firm and keeping it from competing effectively. Table 2.1 provides some examples of such rules.

Table 2.1 Selected Business Rules that Affect Business Processes Rule

Original Rationale

Potential Problem

Hold small orders until full lorry load shipments can be assembled

Reduce delivery costs

Customer delivery is slow

Do not accept an order until customer credit is approved

Reduce potential for bad debt

Customer service is poor

Let headquarters make all merchandizing decisions

Reduce number of items carried in inventory

Customers perceive organization has limited product selection

In contrast to reengineering, the idea of continuous improvement is continuous improvement to constantly seek ways to improve business processes and add value Constantly seeking ways to improve business processes to add value to to p roducts and services. This continual change will increase customer products and services. satisfaction and loyalty and ensure long-term profitability. Manufacturing companies make continual product changes and improvements. Service organizations regularly find ways to provide faster and more effective a ssistance to customers. By doing so, these companies increase customer loyalty, minimize thechance of customer dissatisfaction and diminish the opportunity for competitive inroads. Table 2.2 compares these two strategies.

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Table 2.2 Comparing Business Process Reengineering and Continuous Improvement

Business Process Reengineering

Continuous Improvement

Strong action taken to solve serious problems

Routine action taken to make minor improvements

Top-down change driven by senior executives

Bottom-up change driven by workers

Broad in scope; cuts across departments

Narrow in scope; focus is on tasks in a given area

Goal is to achieve a major breakthrough

Goal is continuous, gradual improvements

Often led by outsiders

Usually led by workers close to the business

Information system integral to the solution

Information systems provide data to guide the improvement team

User Satisfaction and Technology Acceptance To be effective, reengineering and continuous improvement efforts must result in satisfied users and be accepted and used throughout the organization. You can determine the actual usage of an information system by the amount of technology diffusion and infusion. technology diffusion A measure Technology diffusion is a measure of how widely technology is spread of how widely technology is spread throughout an organization. An organization has a high level of technology throughout the organization. diffusion if computers and information systems are located in most departments. Some online merchants, such as BT (www.bt.com), have a high diffusion and use computer systems to perform most of their business functions, including marketing, purchasing and billing. technology infusion The extent Technology infusion, on the other hand, is the extent to which technology to which technology is deeply permeates an area or department. In other words, it is a measure of how deeply integrated into an area or embedded technology is in an area of the organization. Some architectural department. firms, for example, use computers in all aspects of designing a building from drafting to final blueprints. The design area, thus, has a high level of infusion. Of course, a firm can have a high level of infusion in one part of its operations and a low level of diffusion overall. The architectural firm might use computers in all aspects of design (high infusion in the design area), but not to perform other business functions, including billing, purchasing and marketing (low diffusion). Diffusion and infusion often depend on the technology available now and in the future, the size and type of the o rganization, and the environmental factors that include the competition, government regulations, suppliers and so on. This is often called the ‘technology, organization and environment’ (TOE) framework.14 An active research area in IS involves identifying why people accept and use one system but dislike and therefore don’t use another. One early model, the Technology Acceptance Model (TAM), shows that people will use a system if it is easy to use and useful to them. This in itself is unhelpful to IS developers; however, TAM has been the basis for a large body of research that is ongoing and which hopes to produce more practical results. Although an organization might have a high level of diffusion and infusion with computers throughout the organization, this does not necessarily mean that information systems are being used to their full potential.

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Information Systems @ Work Neto Helps Australian Small Businesses Get Online In 2011, Australian entrepreneur Ryan Murtagh saw an opportunity to help get small businesses online. Having been an e-retailer, he realized the struggle involved in scaling up an e-commerce store efficiently. This set him on the path to developing an end-to-end e-commerce platform designed to automate and streamline online trading for small to medium sized businesses. By focusing on the ‘pain points’ he had experienced himself, he assembled a team and set about solving these problems through software, using a company called Neto. Five years later, thousands of businesses use their platform to run online stores, and cumulatively they have turned over more than €1 billion through the service. One of these companies is Bicycles Online. Founded by Jonathon Allara and James van Rooyen, Bicycles Online is an Australian owned, online speciality retailer of road bikes, mountain bikes, bike parts, accessories and clothing. As the business began to grow, the two were faced with a number of business obstacles. They sold their products through multiple channels: their own website, eBay, a number of shopping comparison websites and industry specific marketplaces. They also had just expanded from one to two warehouses. They needed an e-commerce solution that allowed

them to accurately and effectively manage stock and fulfil orders across multiple warehouse locations and multiple sales channels, preferably one that integrated well with freight providers and Australia Post. Searching online they stumbled across Neto. ‘With Neto, all integrations that we need are built into the system and we also have the ability to build custom integrations with Neto to other marketplaces if need be. The in-built shipping labelling and manifesting as well as the real-time shipping quotes and multi-carrier support have had a significant impact on our business. The time taken for us to fulfil orders has halved and we have also experienced significant cost savings with our freight charges by being able to have the option to choose the most cost effective freight option on an order by order basis’, said Mr Allara. Bicycles Online prides itself on offering the same level of services that customers would get in a brick-and-mortar store, or better, combined with competitive pricing. These services include free shipping, 14-day test rides and a national network of centres where bikes can be serviced. By using Neto, Bicycles Online gets to focus on what it knows – bikes – and uses Neto to focus on what it knows – online platforms.

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Using Neto, netohq.com, they were able to create and customize what Neto refers to as their ‘e-commerce ecosystem’, which means their entire online presence. Using a combination of eBay, accounting software Xero, Australia Post and help desk software Zendesk, they were able to streamline their business processes and increase sales. ‘By moving over our platform to Neto we have been able to seamlessly manage our order fulfilment and inventory management across two warehouses’, said Mr Allara. ‘Neto has provided us with a solution that centralises our sales channel management – we can sell bikes online, whether it is on our main website, eBay or other marketplaces. When we were operating on our previous e-commerce system, integration with eBay and other marketplaces was very difficult and required linking up with third-party systems to try and do so– which can be costly and sometimes unreliable.’ Australia’s largest telecommunications and media company Telstra Corporation Limited has taken notice and recently invested in Neto. Speaking in 2015, Telstra Business Group Managing Director, Will Irving, said, ‘We estimate that by 2020, 82 per cent of SMEs will have a web presence, rising from 58 per cent today. The role of e-commerce will only become more important in the competitive retail environment. The Neto

OVERVIEW

platform allows businesses to meet the needs of customers at their convenience: where they want and when they want’. Mr Murtagh said, ‘With the technical expertise and scale that Telstra brings, I believe that this partnership will allow us to accelerate our development plans and to provide Australian SMEs with an even better product and a higher level of service and support’.

Questions 1 Why is it important for Bicycles Online to integrate with freight providers? 2 How can a company’s social media presence integrate well with its retail website? 3 Why would Telstra be interested in Neto? 4 Why would Bicycles Online sell through so many channels?

References Bicycles Online Case Study. Neto website. Available from: www.neto.com.au/bicyclesonline-case-study. Accessed 27 May 2020. Gopal, S. 2015. ‘Telstra Acquires E-Commerce Platform Neto’. Power Retail. Available from: powerretail.com.au/news/telstra-acquires-ecommerce-platform-neto/ www.neto.com.au/ about-us. Accessed 9 June 2020.

The Applications Portfolio applications portfolio A scheme for classifying information systems according to the contribution they make to the organization.

In Chapter 1 we looked at how information systems can be classified by the management level of theuser. The applications portfolio is perhaps a more useful classification scheme. It sorts information systems according to the contribution they make to the business. According to the applications portfolio, there are four types of system:

support applications Support applications make work more convenient but are not essential.

1 Support: Support applications are nice to have, but are not essential. They include things that are convenient, but without them the organization can still conduct business. Typical support applications include electronic diaries and instant messaging software, used to let employees in an office communicate with each other.

key operational applications Key operational applications are essential. Without them the organization could not conduct business.

2 K ey operational: Key operational applications are essential. Without them the organization would not be able to do business. Transaction processing systems, mentioned in Chapter 1 and discussed fully in Chapter 8, are an example. If the checkout system at a Tesco shop malfunctions, Tescowould be unable to sell goods until it was repaired. The website of every e-commerce business is key operational.

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strategic application A strategic 3 Strategic: A strategic application is an information system that gives a application gives a firm a business an advantage over some or all of its competitors. Some ideas competitive advantage. for what this advantage might be are discussed later in this chapter in the section on Competitive Advantage. The term ‘strategic’ should not be confused with the same term used to describe senior management in a business. A strategic system could appear anywhere in the company hierarchy.

4 Future strategic: A future strategic application (also known as a ‘potential strategic’ or ‘high potential’ application) is an idea for, or a prototype of, an information system which, if developed, might one day become a strategic system. A company may have ten future strategic systems and decide to invest in only one. This decision is often a judgement call made by senior management. It may be that the technology to develop a future strategic system is currently too expensive and the company is waiting for prices to fall.

future strategic application Future strategic applications are ideas for systems which, if fully developed and deployed, might one day become strategic applications.

There is an endless cycle at work with systems starting life in one part of the portfolio and finishing in another. Typically an innovative, leading company will come up with an idea for a potential strategic system. If they invest in it and it is successful, it becomes a strategic system. Their competitors see that they have an advantage and so create their own versions of the system. Eventually, the system will become industry standard and then be key operational. In the meantime, the innovative company will have had more ideas for future strategic systems, and so the cycle starts again. Companies that see themselves as industry followers rather than industry leaders will not have strategic or future strategic systems in their portfolio.

Success Factors Many writers have suggested reasons why some information systems are implemented successfully and others are not. It is of vital importance that a company’s information systems are aligned with the company’s goals. Misalignment is a frequently cited reason for information systems failure. The main way of achieving alignment is for senior alignment When the output from managers to consider the business processes they have in place to achieve an information system is exactly is needed to help a company company goals, and ask what information systems are needed to support these what achieve its strategic goals, the two business processes. Less frequently, a business, typically a small business or are said to be in alignment. even a single entrepreneur, will consider what technology is available and ask what business goals can be achieved using it. In this case, information technology is dictatingbusiness strategy instead of business strategy dictating what information technology is used. Both are valid paths to alignment. Other common success factors are: ■

Senior management must be committed to the development or purchase of the information system and support it fully.

■ End-users

of the system should be involved as early and as much as possible in the development or purchase of the system.

■

ime must be taken to carefully determine what the system must do, T something known as requirements engineering. Requirements must be clearly stated and understood and accepted by everyone involved. trong project management in the development or purchase of the S information system.

Later on in this text we will examine Joint Application Development, a method for creating IS which places users at the centre of the development.

requirements engineering Also known as ‘requirements analysis’ and ‘requirements capture’. Identifying what an information system is needed (required) to do. Once the requirements have been identified, a solution can then be designed.

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2.2 Competitive Advantage A competitive advantage is the ability of a firm to outperform its industry, that is, to earn a higher rate of profit than the industry norm15 and can result from higher-quality products, better customer service and lower costs. Establishing and maintaining a competitive advantage is complex. An organization often uses its information system to help it do this. Ultimately, it is not how much a company spends on information systems but how it makes and manages investments in technology. Companies can spend less and get more value.

competitive advantage The ability of a firm to outperform its industry; that is, to earn a higher rate of profit than the industry norm.

Factors That Lead Firms to Seek Competitive Advantage A number of factors can lead a company to seek to attain a competitive advantage. Michael Porter, a prominent management theorist, suggested a simple but widely accepted five-forces model A widely model of the competitive forces in an industry, also called the five-forces model. accepted model that identifies A strong force can put a business at a disadvantage and lead it to invest in five key factors that can lead technology that can weaken it. The five forces are: (1) the rivalry among existing to attainment of competitive competitors, (2) the threat of new entrants, (3) the threat of substitute products advantage, including (1) the rivalry among existing and services, (4) the bargaining power of buyers, and (5) the bargaining power of competitors, (2) the threat of suppliers. The more these forces combine in any instance, the more likely firms new entrants, (3) the threat of will seek competitive advantage and the more dramatic the results of such an substitute products and services, advantage will be. (4) the bargaining power of buyers, and (5) the bargaining power of Given the five market forces just mentioned, Porter and others have suppliers. proposed a number of strategies to attain competitive advantage, including cost leadership, differentiation, niche strategy, altering the industry structure, creating new products and services, and improving existing product lines and services. 16 In some cases, one of these strategies becomes dominant. For e xample, with a cost leadership strategy, cost can be the key consideration at the expense of other factors if needs be.

Cost Leadership The intent of a cost leadership strategy is to deliver the lowest possible products and services cost. In the UK, supermarket Asda has used this strategy for years. Cost leadership is often achieved by reducing the costs of raw materials through aggressive negotiations with suppliers, becoming more efficient with production and manufacturing processes, and reducing warehousing and shipping costs. Some companies use outsourcing to cut costs when making products or completing services.

Differentiation The intent of differentiation as a strategy is to deliver different products and services. This strategy can involve producing a variety of products, giving customers more choice, or delivering higher-quality products and services. Many car companies make different models that use the same basic parts and components, giving customers more options. Other car companies a ttempt to increase perceived quality and safety to differentiate their products. Some consumers are willing to pay higher prices for vehicles that differentiate on higher quality or better safety.

Niche Strategy A niche strategy will deliver to only a small, niche market. Porsche, for example, doesn’t produce inexpensive estate cars or saloons. It makes high-performance sports cars and fourwheel drives. Rolex only makes high-quality, expensive watches. It doesn’t make inexpensive, plastic watches that can be purchased for €20 or less.

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Altering the Industry Structure Changing the industry to become more favourable to the company or organization is another strategy companies use. The introduction of low-fare airline carriers, such as easyJet, has forever changed the airline industry, making it difficult for traditional airlines to make high profit margins. To fight back, airlines such as British Airways cut their flight prices and started to emphasize their strengths over low-cost airlines in their advertising. These include landing in central airports rather than airports many miles out of the city they supposedly serve, and extra staff and resources to cope if there is a fault with an aircraft, or adverse weather grounds all planes. Creating strategic alliances can also alter the industry structure. A strategic alliance, also strategic alliances (strategic called a ‘strategic partnership’, is an agreement between two or more companies partnership) An agreement between two or more companies that involves the joint production and distribution of goods and services. that involves the joint production

Creating New Products and Services

and distribution of goods and services.

Some companies introduce new products and services periodically or frequently as part of their strategy. This strategy can help a firm gain a competitive advantage, especially in the computer industry and other high-tech businesses. If an organization does not introduce new products and services every few months, the company can quickly stagnate, ecline. Companies that stay on top are constantly developing new lose market share and d products and services.

Improving Existing Product Lines and Services Making real or perceived improvements to existing product lines and services is another strategy. Manufacturers of household products are always advertising ‘new and improved’ products. In some cases, the improvements are more perceived than real refinements; usually, only minor changes are made to the existing product, such as reducing the amount of sugar in a breakfast cereal. Some mail order companies are improving their service by using Radio Frequency Identification (RFID) tags to identify and track the location of their products as they are shipped from one location to another. Customers and managers can instantly locate products as they are shipped from suppliers to the company, to warehouses and finally to customers. Other potentially successful strategies include being the first to market, offering customized products and services, and hiring talented staff, the assumption being that the best people will determine the best products and services to deliver to the market and the best approach to deliver these products and services. Companies can also combine one or more of these strategies.

2.3 Evaluating IS Once an information system has been implemented, management will want to assess how successful it has been in achieving its goals. Often this is a difficult thing to do, and many businesses do not attempt to take anything more than an informal approach to evaluation. 17 Businesses can use measurements of productivity, return on investment (ROI), net present value and other measures of performance to evaluate the contributions their information systems make to their businesses.

Productivity Developing information systems that measure and control productivity is a key element for most organizations. Productivity is a measure of the output achieved divided by the input required. A higher level of output for a givenlevel of input means greater productivity; a lower level of output for a given level of input means lower productivity. Thenumbers assigned to productivity levels are not

productivity A measure of the output achieved divided by the input required. Productivity = (Output ÷ Input) × 100%.

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always based on labour hours – productivity can be based on factors such as the amount of raw materials used, resulting quality, or time to produce the goods or service. The value of the p roductivity number is not as significant as how it compares with other time periods, settings and organizations. After a basic level of productivity is measured, an information system can monitor and compare it over time to see whether productivity is increasing. Then a company can take corrective action if productivity drops below certain levels. In addition to measuring productivity, an information s ystem can be used within a process to significantly increase productivity. Thus, improved productivity can result in faster customer response, lower costs and increased customer satisfaction. In the late 1980s and early 1990s, overall productivity did not seem to improve as a company increased its investments in information systems. Often called the productivity paradox, this situation troubled many economists who were expecting to see dramatic productivity gains. In the early 2000s, however, productivity again seemed to be on the rise.

Return on Investment and the Value of Information Systems return on investment (ROI) One measure of IS value that investigates the additional profits or benefits that are generated as a percentage of the investment in IS technology.

One measure of IS value is return on investment (ROI). This measure investigates the additional profits or benefits that are generated as a percentage of the investment in IS technology. A small business that generates an additional profit of €20,000 for the year as a result of an investment of €100,000 for additional computer equipment and software would have a return on investment of 20 per cent (€20,000/€100,000). In many cases, however, it can be difficult to accurately measure ROI.18

Earnings Growth Another measure of IS value is the increase in profit or earnings growth it brings. For instance, a mail-order company might install an order-processing system that generates a 7 per cent earnings growth compared with the previous year.

Market Share Market share is the percentage of sales that a product or service has in relation to the total market. If installing a new online catalogue increases sales, it might help a company to increase its market share by 20 per cent.

Customer Awareness and Satisfaction Although customer satisfaction can be difficult to quantify, about half of today’s best global companies measure the performance of their information systems based on feedback from internal and e xternal users. Some companies use surveys and questionnaires to determine whether the IS investment has increased customer awareness and satisfaction.

Total Cost of Ownership Another way to measure the value of information systems was developed by the Gartner Group and is called the total cost of ownership (TCO). This approach breaks down total costs into areas such as the cost to acquire the technology, technical support, administrative costs and end-user operations. Other costs in TCO include retooling and training costs. TCO can help to develop a more accurate estimate of the total costs for systems that range from desktop computers to large mainframe systems. Market research groups often use TCO to compare products andservices. ROI, earnings growth, market share, customer satisfaction and TCO are only a few measures that companies use to plan for and maximize the value of their IS investments. Regardless of the

total cost of ownership (TCO) The measurement of the total cost of owning computer equipment, including desktop computers, networks and large computers.

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difficulties, organizations must attempt to evaluate the contributions that information systems make to assess their progress and plan for the future. Information technology and personnel are too important to leave to chance.

Risk In addition to the ROI measures of a new or modified information system, managers should also consider the risks of designing, developing and implementing these systems. Information systems can sometimes be costly failures. Some companies, for example, have attempted to implement enterprise resource planning (ERP) systems (see Chapter 7) and failed, costing them millions of euros. In other cases, e-commerce a pplications have been implemented with little success. The costs of development and implementation can be greater than the returns from the new system.

2.4 Careers in Information Systems Realizing the benefits of any information system requires competent and motivated IS personnel, and many companies offer excellent job opportunities. Professionals with careers in information systems typically work in an IS department as web developers, computer programmers, systems analysts, database developers and administrators, computer operators, technical support or in other positions. In addition to technical skills, they need skills in written and verbal communication, an understanding of organizations and the way they operate, and the ability to work with people and in groups. Today, many good information, business and computer science schools require these business and communications skills of their graduates. It is not uncommon for IS personnel to undertake remote working, where colleagues are not co-located but are in separated geographical areas, using many of the information technologies described in this book to facilitate this. Contract work, where IS professionals complete shortterm contracts, maybe for six months, are also not unusual. In general, IS professionals are charged with maintaining the broadest perspective on organizational goals. Most medium to large organizations manage information resources through an IS department. In smaller businesses, one or more people might manage information resources, with support from outsourced services. As shown in Figure 2.5, the IS department has three primary responsibilities: operations, systems development and support.

Operations People in the operations component of a typical IS department work with information systems in corporate or business unit computer facilities. They tend to focus more on the efficiency of IS functions rather than their effectiveness. System operators primarily run and maintain IS equipment and are typically trained at technical schools or through on-the-job experience. They are responsible for starting, stopping and correctly operating mainframe systems, networks, back-up drives, disc devices, printers and soon. Otheroperations include scheduling, hardware maintenance and preparing input and output. Data-entry operators convert data into a form the computer system can use. They can use terminals or otherdevices to enter business transactions, such as sales orders and payroll data. Increasingly, data entry is being automated – captured at the source of the transaction rather than entered later. In addition, companies might have local area network (LAN) and web operators who run the local network and any websites the company has.

Systems Development The systems development component of a typical IS department focuses on specific development projects and ongoing maintenance and review. Systems analysts and

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programmers, for example, address these concerns to achieve and maintain IS effectiveness. The role of a systems analyst is multifaceted. Systems analysts help users determine what outputs they need from the system and construct plans for developing the necessary programs that produce these outputs. Systems analysts then work with one or more programmers to make sure that the appropriate programs are p urchased, modified from existing programs or developed. A computer programmer uses the plans the systems analyst has created to develop or adapt one or more computer programs that produce the desired outputs. Often, analysts will be using an agile approach to software development, where software is written rapidly and then continuously improved. One such approach is called Scrum where small teams intensively work together on small tasks that can be completed within one month.

Figure 2.5 The IS

Chief Executive

Department Not all businesses will have all of these divisions, and in many firms people will take on multiple roles.

Chief Information Officer

Information resource management functions

Operations

Other functional areas

Systems development

Support

Computer facility operations

Systems analysis and design

Hardware and software acquisition

Data entry

Programming

Data administration

Local area network operations

Web development

User training

Web operations

Information service unit

Web administration

Information centre

With the dramatic increase in the use of the Internet, intranets and extranets, many companies have web or Internet developers who create effective and attractive websites for customers, internal personnel, suppliers, stockholders and others who have a business relationship with the company.

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Support The support component of a typical IS department provides user assistance in hardware and software acquisition and use, data administration, user training and assistance, and web administration. In many cases, support is delivered through an information centre. Because IS hardware and software are costly, a specialized support group often manages computer hardware and software acquisitions. This group sets guidelines and standards for the rest of the organization to follow in making purchases. It must gain and maintain an understanding of available technology and develop good relationships with vendors. A database administrator focuses on planning, policies and procedures regarding the use of corporate data and information. For example, database administrators develop and disseminate information about the organization’s databases for developers of IS applications. In addition, the database administrator monitors and controls database use. User training is key to getting the most from any information system, and the support area ensures that appropriate training is available. Training can be provided by internal staff or from external sources. For example, internal support staff can train managers and employees in the best way to enter sales orders, to receive computerized inventory reports and to submit expense reports electronically. Companies also hire outside firms to help train users in other areas, including the use of word processing, spreadsheets and database programs. Web administration is another key area for support staff. With the increased use of the Internet, web administrators are sometimes asked to regulate and monitor Internet use by employees and managers to make sure that it is authorized and appropriate. Web administrators also maintain the organization’s website to keep it accurate and current, which can require substantial resources. The support component typically operates the helpdesk. A helpdesk provides users with assistance, training, application development, documentation, equipment selection and setup, standards, technical assistance and troubleshooting.

Information Service Units An information service unit is basically a miniature IS department attached and directly reporting to a functional area in a large organization. Notice the information service unit shown in Figure 2.5. Even though this unit is usually staffed by IS professionals, the project assignments and the resources necessary to accomplish these projects are provided by the functional area to which it reports. Depending on the policies of the organization, the salaries of IS professionals staffing the information service unit might be budgeted to either the IS department or the functional area.

Typical IS Titles and Functions The organizational chart shown in Figure 2.5 is a simplified model of an IS department in a typical medium or large organization. Many organizations have even larger departments, with increasingly specialized positions such as librarian or quality assurance manager. Smaller firms often combine the roles shown in Figure 2.5 into fewer formal positions.

The Chief Information Officer The role of the chief information officer (CIO) is to employ an IS department’s equipment and personnel to help the organization attain its goals. The CIO is a senior manager concerned with the overall needs of the organization who sets organization-wide policies, and plans, manages and acquires information systems. Some of the CIO’s top concerns include integrating IS operations with business strategies, keeping up with the rapid pace of technology, and defining and assessing the value of systems development projects. The high level of the CIO position

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reflects that information is one of the organization’s most important resources. A CIO works with other high-level officers in an organization, including the finance director and the chief executive officer, in managing and controlling total corporate resources. CIOs must also work closely with advisory committees, stressing effectiveness and teamwork and viewing information systems as an integral part of the o rganization’s business processes – not an a djunct to the organization. Thus, CIOs need both technical and business skills.

Administrators 2

local area network (LAN) A computer network that connects computer systems and devices within a small area, such as an office, home or several floors in abuilding.

Local area network (LAN) administrators set up and manage the network h ardware, software and security processes. They manage the addition of new users, software and devices to the network. They also isolate and fix operational problems. LAN administrators are in high demand and often solve both technical and non-technical problems. Database administrators manage the use, maintenance and security of a company’s databases. Often a database administrator will help users extract the data they need in the format they require.

Internet Careers These careers are in the areas of web operations, web development and web administration. As with other areas in IS, many top-level administrative jobs are related to the Internet. These career opportunities are found in both traditional companies and those that specialize in the Internet. Internet jobs within a traditional company include Internet strategists and administrators, Internet systems developers, Internet programmers and Internet or website operators.

Systems Developers Systems developers design and write software. Typically, developers will be graduates with degrees in technical subjects such as computer science, mathematics or engineering. However, many big employers have graduate recruitment schemes where degree subject is less important than an ability tolearn. On such schemes, graduates are taught the skills they need. The skills needed by developers include the ability to design solutions to problems and communicate these solutions to other d evelopers and to users, and the technical skill to create these solutions. Software development can be extremely challenging and exciting. Often, systems developers are employed to create software to support business goals, such as developing the organization’s transaction processing system. Alternatively, systems developers may work in a software house, where the software they write is the product the organization sells. One of the fastest growing areas of software development is the games industry, with many universities now offering degrees in games development.

Other IS Careers Other IS career opportunities include technical writing (creating technical manuals and user guides) and user interface design. Often, the people filling IS roles have completed some form of certification. Certification is a process for testing skills and knowledge resulting in an certification A process for testing skills and knowledge which results e ndorsement by the certifying authority that an individual is capable of in a statement by the certifying performing a particular job. Certification frequently involves specific, vendor- authority that an individual is provided or vendor-endorsed coursework. Popular certification programs capable of performing a particular include Microsoft Certified Systems Engineer, Certified Information Systems kind of job. Security Professional (CISSP), Oracle Certified Professional and many others.

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Summary The use of information systems to add value to the organization is strongly influenced by organizational structure and the organization’s attitude and ability to change. An organization is a formal collection of people and other resources established to accomplish a set of goals. The primary goal of a for-profit organization is to maximize shareholder value. Non-profit organizations include social groups, religious groups, universities and other organizations that do not have profit as the primary goal. O r g a n i z a t i o n s a re s y s t e m s w i t h i n p u t s , transformation mechanisms and outputs. Valueadded processes increase the relative worth of the combined inputs on their way to becoming final outputs of the organization. The value chain is a series (chain) of activities that include (1) inbound logistics, (2) warehouse and storage, (3) production, (4) finished product storage, (5) outbound logistics, (6) marketing and sales, and (7) customer service. Organizational structure refers to how organizational subunits relate to the overall organization. Several basic organizational structures include traditional, project, team and a virtual one. A virtual organizational structure employs individuals, groups or complete business units in geographically dispersed areas. These can involve p eople in different countries operating in different time zones and different cultures. Organizational change deals with how profit and nonprofit organizations plan for, implement and handle change. Change can be caused by internal or external factors. According to the concept of organizational learning, organizations adapt to new conditions or alter practices over time. Because information systems are so important, businesses need to be sure that improvements to existing systems, or completely new systems, help lower costs, increase profits, improve service or achieve a competitive advantage. Business process reengineering involves the radical redesign of business processes, organizational structures, information systems and values of the organization, to achieve a breakthrough in results. Continuous improvement to business processes can add value to products and services. The extent to which technology is used throughout an organization can be a function of technology diffusion, infusion and acceptance. Technology

diffusion is a measure of how widely technology is in place throughout an organization. Technology infusion is the extent to which technology permeates an area or department. User satisfaction with a computer system and the information it generates depends on the quality of the system and the resulting information. Outsourcing involves contracting with outside professional services to meet specific business needs. This approach allows the company to focus more closely on its core business and to target its limited resources to meet strategic goals. Downsizing involves reducing the number of employees to reduce payroll costs; however, it can lead to unwanted side effects. Competitive advantage is usually embodied in either a product or service that has the most added value to consumers and that is unavailable from the competition, or in an internal system that delivers njoyed by its competition. The benefits to a firm not e five-forces model explains factors that lead firms to seek competitive advantage: the rivalry among existing competitors, the threat of new market entrants, the threat of substitute products and services, the bargaining power of buyers, and the bargaining power of suppliers. Strategies to address these factors and to attain competitive advantage include cost leadership, differentiation, niche strategy, altering the industry structure, creating new products and services, improving existing product lines and services, and other strategies. Cooperation between business managers and IS personnel is the key to unlocking the potential of any new or modified system. Information systems personnel typically work in an IS department. The chief information officer (CIO) employs an IS department’s equipment and personnel to help the organization attain its goals. Systems analysts help users determine what outputs they need from the system and construct the plans needed to develop the necessary programs that produce these outputs. Systems analysts then work with one or more system developers to make sure that the a ppropriate programs are purchased, modified from existing programs or developed. The major responsibility of a computer programmer is to use the plans developed by the systems analyst to build or adapt one or more computer programs that produce the desired outputs.

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Computer operators are responsible for starting, stopping and correctly operating mainframe systems, networks, tape drives, disc devices, printers and so on. LAN administrators set up and manage the network hardware, software and security processes. Trained personnel are also needed to set up and manage a company’s Internet site, including Internet strategists, Internet systems developers, Internet p rogrammers and website operators. Information

OVERVIEW

systems personnel can also support other functional departments or areas. In addition to technical skills, IS personnel need skills in written and verbal communication, an understanding of organizations and the way they operate, and the ability to work with people (users). In general, IS personnel are charged with maintaining the broadest enterprise-wide perspective.

Self-Assessment Test 1 A minimum number of management layers results in a ___________ organization structure. 2 Giving employees and their managers more responsibility and authority is known as ___________. 3 Outsourcing computing resources to a third party is known as ___________. 4 The radical redesign of business processes is known as ___________. 5 ___________ are information systems that an organization could not operate without.

6 Productivity equals ___________. 7 If a firm can outperform its industry it has a ___________. 8 ___________ is the percentage of sales that a product or service has in relation to the total market. 9 An agreement between two or more companies is known as a ___________. 10 The head of the information systems department is the ___________.

Review Questions 1 What is the value chain?

6 What is a support application?

2 Describe a virtual organization structure.

7 Describe some of the ways in which IS can be evaluated.

3 What is technology diffusion? 4 Describe on-demand computing.

8 Why would a company constantly develop new products?

5 Define continuous improvement and compare it with reengineering.

Discussion Questions 1 Search on www.indeed.com or similar for some current information systems job opportunities for recent graduates. What skills are required? Which are the areas that interest you the most?

2 How would you help an employee cope with rapid organizational change?

Web Exercises 1 Search for information about the career of a CIO in a top organization. What skills must they have displayed at each stage?

2 Select an object on the desk in front of you. Sketch out its value chain. How were the raw materials that it is made of processed in a way that made them more valuable?

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Case One Nailed it! Instagram and Cloud Computing Ensure Success After her graduation in fashion, New Zealand born Anna Ross found herself working in Melbourne in the clothing industry, putting in 90 hour weeks for little money. ‘I just couldn’t do it anymore’, she says. ‘I decided I hated working in fashion.’ Looking for a way out, she soon started designing and selling her own silver jewellery. With little start-up capital, it took two years but eventually she noticed a gap in the market and started to manufacture nail polish. ‘Nail polish is something I have enjoyed from a young age’, she says. ‘It’s fun and there is something almost cathartic about painting your nails.’ The gap she spotted was an unmet demand for ethically produced, professional quality polish. ‘I was really just testing the waters, but there turned out to be so much demand.’ It took a year to perfect the product, which is vegan accredited, not tested on animals and made in Australia. She hired a chemist to help her get the colours right, without the need for any unpleasant chemicals. She called her brand Kester Black. To market her product, Ms Ross used social media, carefully crafting an online presence that made her company seem much larger than it actually was. By publishing beautifully shot photos on Instagram, Ms Ross turned her brand into a lifestyle product that attracted customers who desired the lifestyle she portrayed in the photos. Nick Bez, a director at Australian market research group Mobium Group, told business reporter Kate Stanton that, ‘Being savvy with social media and using the online environment to talk to a wider audience, means you can be a little brand and have a persona of something much bigger’. In an interview with online magazine The Design Files, Ms Ross explained her use of cloud computing. When Kester Black got big enough that an additional employee was needed, she used the cloud to hand over responsibilities to her new administrator. Using Google Docs meant that they could both be working on the same

document at the same time, from anywhere with an Internet connection. They used Gmail to communicate and Google calendar to coordinate manufacturing, accounting, pay reminders, marketing and event listings. They also used Dropbox for storage of all important documents that they both had to access. All of this software is available for free and offers basic functionality (although users must agree to having some of their data used for targeted advertising), yet it is powerful enough to have helped a young company get off the ground.

Questions 1 How can social media change people’s perception of a company? 2 Are there any dangers with using social media as a platform for promotion? 3 What are some of the advantages of using Google Docs? 4 What other cloud-based services could small businesses benefit from?

References Feagins, L. 2014. ‘Anna Ross of Kester Black’. The Design Files. Available from: thedesignfiles. net/2014/08/small-business-anna-rossof-kester-black/. Accessed 27 May 2020. Kester Black website. www.kesterblack.com. Accessed 27 May 2020. Life With Bird Interview. ‘Meet the Maker: Anna Ross’. Web page no longer available. www. lifewithbird.com/blogs/news/15954284-meetthe-maker-anna-ross-of-kester-black. Accessed 1 November 2016. Stanton, K. 2016. ‘From Unhappy Employee to Successful Entrepreneur’. BBC. Available from: www.bbc.co.uk/news/business35724763. Accessed 27 May 2020.

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Case Two Crosswords and Cybersecurity

In the 2014 film The Imitation Game, Alan Turing is shown recruiting code breakers by publishing a crossword in the Daily Telegraph with a message asking people who could solve it in ten minutes or fewer to get in touch. This is based on a real event. The actual crossword used was published on 13 January 1942 and gave readers 12 minutes not 10. Clues included ‘when hammering take care not to hit this (5,4)’ and ‘those well brought up help these over stiles (4,4)’. It might seem like a strange way to apply for a job, but puzzles are still used by the intelligence community. The current ‘coding challenge’ issued by the British security service MI5 is an image showing pink and blue lines with the instructions: ‘Intelligence isn’t always obvious and our engineers and analysts work hard to unlock it. There’s a clue in the image file below, if you can find it’. Opening the file in a text editor reveals a further Shakespearian sounding clue hidden in a comment: ‘As I read, numbers I see. Twould be a shame not to count this art among the great texts of our time.’ You can use a search engine to find the image using this line if you want to see it. The important part of the message seems to be ‘count this art’. The challenge is to count the number of pink pixels followed by the number of blue pixels repeatedly. For that you’ll need software that can pick apart an image file (you could try the ‘png’ package in the programming language R if you want to give it a go). Spoiler alert: to give it away, the numbers refer to letters using ASCII character coding (the American Standard Code for Information Interchange gives each character a numerical representation) to reveal the message, ‘Congratulations, you solved the puzzle! Why don’t you apply to join our team?’ There’s probably a new puzzle on the MI5 website by now if you want a fresh challenge. In November 2016, UK Chancellor Philip Hammond said that the country must develop the capability to launch a counter cyber-attack. He said, ‘The UK must strike back at hostile

states in cyberspace and be capable of mounting sophisticated cyber-attacks of its own in place of military strikes’. With information technology having such a rapid pace of change, it is not an easy thing to recruit people with the skillset to deal with problems from technology that hasn’t even been invented yet. ‘Sometimes when you are screening [new recruits], you don’t even know what kind of technology or problems they are going to be dealing with by the time they actually sit there and have the responsibility upon their shoulders’, says Nadav Zafrir, an ex-member of Israel’s famous Unit 8200 which runs electronic surveillance and other cyber activities. Mr Zafrir left Unit 8200 in 2013 to found Team 8, which aims to build successful companies that can transform cybersecurity. Team 8 says that they work ‘with innovative leaders and entrepreneurs to address the biggest problems in cybersecurity and create differentiated, independent leaders in the cybersecurity market. Our mission is to initiate and build long-term, innovative cybersecurity companies that can truly make the world a safer place and assist enterprises in coping with the most daunting cyber challenges’. The skills that Team 8 are developing are exactly what the UK will need if it is to develop its cyber-war capabilities. ‘We literally had to redefine [a] control hierarchy as otherwise we wouldn’t be able to create the magic that these kids can bring with them. I think a lot of them are more agile, better prepared, speak languages that we didn’t even know existed in terms of coding and stuff like that’, Mr Zafrir says. ‘We had to adapt not only the recruiting process, but also the day-to-day control systems in many ways in order to create this magic.’ And the answers to Alan Turing’s puzzle? ‘Right nail’ and ‘Lame dogs’. Don’t be too surprised if you didn’t get them. Apparently, Telegraph readers in the 1940s had very different ideas about how crossword clues work from what we have today.

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Questions

References

1 How could children at school be encouraged to consider a career in cybersecurity?

www.mi5.gov.uk/careers/opportunities/codingchallenge. Accessed 9 June 2020.

2 How could job recruitment be made to be ‘future proof’?

www.telegraph.co.uk/history/world-wartwo/11151478/Could-you-have-been-acodebreaker-at-Bletchley-Park.html. Accessed 27 May 2020. www.theguardian.com/politics/2016/nov/01/ uk-must-build-cyber-attack-capability-chancellorsays-cybersecurity. Accessed 9 June 2020.

3 Should governments rely on private firms for their nation’s cybersecurity? 4 How could this same approach be used by organizations to hire IT professionals?

Case Three Raining Wine from the Cloud Baacco is a search engine which helps customers find and buy premium yet affordable wines. It describes itself as a ‘cloud first business’ and uses over 20 cloud-based tools to reach customers in the UK, France, Germany, Spain and Belgium. The idea came when founder Tai Alegbe was trying to find a wine he had seen on a London restaurant’s menu. He felt it should be possible to buy it somewhere but couldn’t find it in a store. Sensing a challenge, he set about searching for a UK distributor who supplied it and found that it was difficult but not impossible to buy. He then realized there was a gap in the marketplace, so he and four friends founded Baacco, ‘the ultimate new way to search, discover and shop for top-quality and affordable wines; whilst connecting with specialist wine merchants’. The Baacco website allows customers to search for wines from distributors and new sellers who are not represented in the supermarket chains and high street wine stores. Crucially, Baacco facilitates communication between sellers and customers to create an open discussion between wine experts and consumers who don’t really understand grapes yet know what they like. Baacco uses the cloud to process payments in different regions and currencies and to analyze their customers’ experience. For instance, they use Crazy Egg to see how people are using their website. Crazy Egg can create maps of the most visited pages in a website from customer clicks, and a map of how far down a web page customers

tend to scroll. The idea is to ferret out the parts of the site that aren’t viewed so that they can be changed. Baacco uses Mixpanel to do something similar for users of their mobile app. Mixpanel will help predict which app users are most likely to use to make a purchase and when. These tools have been essential. ‘They allow us to build, measure and learn about our customers far quicker than any other method’, Mr Alegbe says. One warning raised by Crazy Egg was that customers in France and Spain were getting to the checkout and then leaving the website. Investigating this, Baacco found that those customers were being put off by unfamiliar payment logos. The cloud tools helped the business to grow. ‘We scaled up our business by gaining an early understanding of which marketing channels had proven to be most successful, and then making sure the unit economics for that channel made sense for the business’, said Mr Alegbe. They also helped the business appear much bigger to customers than it really was, which is a recurring theme in case studies of small businesses who access the cloud. ‘The cloud provides a more affordable, flexible and scaleable platform that greatly enhances small retailers’ opportunities to manage, share and control its data – and function like a globally integrated enterprise’, says Vish Ganapathy, vice president and chief technology officer at IBM.

PART 1

Questions

References

1 What were the advantages to Baacco in using cloud computing?

Baacco website. twitter.com/baacco_com? lang=en. Accessed 9 June 2020.

2 How would knowing where people stop scrolling down a web page help to redesign that page?

Crazy Egg website. www.crazyegg.com. Accessed 27 May 2020.

3 How could a company decide between two possible changes they are considering making to their website?

OVERVIEW

4 Investigate and list some other cloud services Baacco could potentially use.

The Formations Company, 2016. ‘Did Someone Say Wine? Tai Alegbe Talks About His Wine Search Business’. Available from: www. theformationscompany.com/blog/tai-alegbetalks-about-his-wine-search-business-baaccothe-formations-company. 9 June 2020. Mix Panel website. www.mixpanel.com/about. Accessed 27 May 2020.

Notes 1

Porter, M.E., 1980, Competitive Strategy, Free Press, New York. 2 Zhu, K., Kraemer, K., ‘Post-Adoption Variations in Usage and Value of E-Business by Organizations’, Information Systems Research, March 2005, p. 61. 3 Handfield, R. NC State University. ‘What is Supply Chain Management (SCM)?’ 19 February 2020. scm.ncsu.edu/scm-articles/article/whatis-supply-chain-management-scm” scm.ncsu. edu/scm-articles/article/what-is-supply-chainmanagement-scm. Accessed 19 June 2020. 4 Grey, W., et al., ‘The Role of E-Marketplaces in Relationship-Based Supply Chains’, IBM Systems Journal, Vol. 44, No. 1, 2005, p. 109. 5 Zoodel Website. www.zoodel.com/en/aboutUs. Accessed 27 May 2020. 6 Stevens, B. 2018. ‘Amazon Now 5th Largest Retailer in the UK’, Retail Gazette. Available from: www.retailgazette.co.uk/blog/2018/04/amazonnow-5th-largest-retailer-uk. Accessed 27 May 2020. 7 Rowley, Jennifer, ‘Customer Relationship Management Through the Tesco Clubcard Loyalty Scheme’, International Journal of Retail & Distribution Management, 1 March 2005, p. 194. 8 Gordon, Jack, ‘Do Your Virtual Teams Deliver Only Virtual Performance?’, Training Magazine, 1 June 2005. 9 BBC News. ‘Robots ‘to replace up to 20 million factory jobs’ by 2030’. 26 June 2019. www.bbc.co.uk/news/ business-48760799. Accessed 19 June 2020. Robotwork Website. Available from: www.robots.com. Accessed 27 May 2020. 10 Global Robots Website. www.globalrobots.com/ about.aspx. Accessed 27 May 2020. 11 White, L. 2018. ‘Why Small Businesses are Outsourcing to South Africa’, The Sydney Morning

Herald. Available from: www.smh.com.au/ business/small-business/why-small-businessesare-outsourcing-to-south-africa-20180501p4zcq1.html. Accessed 28 April 2020. 12 About Match, www.aboutmatch.co.uk/ Aboutmatch/Forms/Article/Why%20UK%20 companies%20are%20flocking%20to%20 South%20Africa%20for%20contact%20 centre%20services.aspx. Accessed 8 June 2020. 13 See Siemens VAI Website. Available from: www. industry.siemens.com/metals-mining/en/index. htm/. Accessed 31 October 2007. 14 Tornatzky, L., Fleischer, M., The Process of Technological Innovation, Lexington Books Lexington, MA, 1990, and Zhu, K. and Kraemer, K., ‘Post-Adoption Variations in Usage and Value of E-Business by Organizations’, Information Systems Research, March, 2005, p. 61. 15 Besanko, D., Dranove, D., Shanley, M. and Schaefer, S., Economics of Strategy, 4th ed. Hoboken, NJ: Wiley, 2007. 16 Porter, M.E. and Millar, V., ‘How Information Systems Give You Competitive Advantage’, Journal of Business Strategy, Winter 1985. See also Porter, M.E., Competitive Advantage New York: Free Press, 1985. 17 Irani, Z. and Love, P.E.D., ‘Evaluating the Impact of IT on the Organization’ in Galliers, R. and Leidner, D. (eds), Strategic Information Management, 3rd ed. Burlington, MA: Butterworth-Heinemann, 2003. 18 Huber, Nick, ‘Return on Investment: Analysts to Offer Tips on Measuring the Value of IT’, Computer Weekly, 26 April 2005, p. 20.

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Information Systems inOrganizations

World Views Case ABAZONG Training and Consulting (Pty) Ltd Helps Organizations and Users With Information Security Consultation and Training Awareness Paul Abanda Damelin College, South Africa ABAZONG Training and Consulting is run by individuals that collectively have decades of experience working within businesses. Their team focuses on helping organizations implement working solutions to information security management standard. Their staff ensure that there is a business-wide solution to organizational security data, which can take the form of physical and logical infrastructures. The organization has established relationships in order to support businesses and enable them to offer services in the areas of information security corporate training, penetration testing and information security auditing, software project development and security management. Their staff members are knowledge leaders in the industry and are among the most active Sub Sahara African participants in industry conferences, blogs and podcasts. Furthermore, the team has addressed security problems in South Africa and several other African countries, and they have a good understanding of information security and the standards that govern security. The ISO 27001 information security management systems audit (ISMSA) standard considers every risk critical in identifying potential dangers and disruption in the quality, quantity and distribution or relevance of data that can put a business at risk. ISO 27001 improves business reliability and demonstrates the integrity of data, systems and the obligation to information security. This helps to transform organizational culture, opening up new venture opportunities with security conscious customers and thereby improving employee ethics and strengthening the notion of workplace confidentiality. The precision of ABAZONG Training and Consulting’s technical competence is guaranteed to ensure that businesses operate at optimal levels in their requirements, which are data loss prevention, vulnerability management, logical access, anti-virus protection, system integration, software integration, or any other specialized IT security services. Their dedicated technical professionals ensure that businesses receive the most appropriate solution that is aligned to meet the objectives of ISO 27001’s information security management systems standard. Questions 1 What are the advantages and disadvantages of creating awareness of the ISO 27001 information security management systems standard? 2 Identify the dangers that are associated with lack of training on the protection of organizational information systems. 3 What is a code of ethics and why should employees be ethical? 4 How does ABAZONG Training and Consulting assist organization security awareness? 5 Why should IS professionals become certified in ISOs?

PART 1

OVERVIEW

PART 2 Information Technology Concepts

3 Hardware: Input, Processing, Output and Storage Devices 4 Software: Systems and Application Software 5 Organizing and Storing Data 6 Computer Networks

03 Hardware: Input, Processing, Output and Storage Devices Principles Computer hardware must be carefully selected to meet the evolving needs of the organization and its supporting information systems.

Learning Objectives ■

Describe the role of the central processing unit and main memory.

■

State the advantages of multiprocessing and parallel computing systems and provide examples of the types of problems they address.

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Describe the access methods, capacity and portability of various secondary storage devices.

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Identify and discuss the speed, functionality and importance of various input and output devices.

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Identify the characteristics and discuss the usage of various classes of single-user and multiuser computer systems.

The computer hardware industry is rapidly changing and highly competitive, creating an environment ripe for technological breakthroughs.

■

Describe Moore’s Law and discuss its implications for future computer hardware developments.

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Give an example of recent innovations in computer CPU chips, memory devices and input/output devices.

The computer hardware industry and users are implementing green computing designs and products.

■

Define the term green computing and identify the primary goals of this program.

■

Identify several benefits of green computing initiatives that have been broadly adopted.

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Information Technology Concepts

Why Learn About Hardware?

Organizations invest in computer hardware to improve worker productivity, increase revenue, reduce costs, provide better customer service, speed up time-to-market and enable collaboration among employees. Organizations that don’t make wise hardware investments are often stuck with outdated equipment that is unreliable and that cannot take advantage of the latest software advances. Such obsolete hardware can place an organization at a competitive disadvantage. Managers, no matter what their career field and educational background, are expected to help define the business needs that the hardware must support. In addition, managers must be able to ask good questions and evaluate options when considering hardware investments for their areas of the business. This need is especially true in small organizations which might not have information system specialists. Managers in marketing, sales and human resources often help IS specialists assess opportunities to apply computer hardware and evaluate the options and features specified for the hardware. Managers in finance and accounting especially must keep an eye on the bottom line, guarding against overspending, yet be willing to invest in computer hardware when and where business conditions warrant it.

Today’s use of technology is practical – it’s intended to yield real business benefits. Using the latest information technology and providing additional processing capabilities can increase employee productivity, expand business opportunities and allow for more flexibility. This chapter concentrates on the hardware component of a computer-based information system (CBIS). Recall that hardware refers to the physical components of a computer that perform the input, processing, output and storage activities of the computer. When making hardware decisions, the overriding consideration of a business should be how hardware can support the objectives of the information system and the goals of the organization.

3.1 Computer Systems: Integrating the Power of Technology People involved in selecting their organization’s computer hardware must clearly understand current and future business requirements so that they can make informed acquisition decisions. Consider the following examples illustrating the range of hardware challenges and opportunities that exist: ■

The Large Hadron Collider (LHC), built to gain a better understanding of what our universe is made of and how it began, captures about 3 gigabytes of data per second. The mission of the LHC Computing Grid is to store and analyze all this data using 132,922 physical processors, 300 petabytes of online disk storage and 230 petabytes of magnetic tape storage. For perspective, one gigabyte can store seven minutes of HD-TV while one petabyte is equivalent to 13.3 years of HD-TV.

■

Biomedical engineers are exploring a process called bioprinting, which uses 3D printers to create living tissue capable of naturally integrating into the body. This will eventually enable the construction of fully functional human organs.

■

At the other end of the scale, rather than providing laptops, tablets or smartphones, some businesses are allowing their employees to choose their own technology. Sometimes funds are given for the employee to buy their own hardware, the idea being that the employee will get something that they are comfortable with – the right screen

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Hardware: Input, P rocessing, Output and Storage Devices

size, resolution and weight for them, for example. With Internet standards and other standard protocols, the company should be reassured that there won’t be accessibility problems. This is called Bring Your Own Technology.1 As these examples demonstrate, choosing the right computer hardware requires understanding its relationship to the information systems and the needs of an organization.

Hardware Components Computer system hardware components include devices that perform input, processing, data storage and output, as shown in Figure 3.1. Recall that any system must be able to process (organize and manipulate) data, and a computer system does so through an interplay between one or more central processing units and primary storage. Each central processing unit (CPU) consists of three associated elements: the arithmetic/logic unit, the control unit and the register areas. The arithmetic/ logic unit (ALU) performs mathematical calculations and makes logical comparisons. The control unit sequentially accesses program instructions, decodes them and c oordinates the flow of data in and out of the ALU, the registers, the primary storage and even secondary storage and various output devices. Registers are high-speed storage areas used to temporarily hold small units of program instructions and data immediately before, during and after execution by the CPU. Primary storage, also called main memory or memory, is closely associated with the CPU. Memory holds program instructions and data immediately before or after the registers. To understand the function of processing and the interplay between the CPU and memory, let’s examine the way a typical computer executes a program instruction.

Figure 3.1 Hardware

Communications devices

Processing device Control unit Input devices

Arithmetic/ logic unit

Secondary storage

central processing unit (CPU) The part of the computer that consists of three associated elements: the arithmetic/logic unit, the control unit and the register areas. arithmetic/logic unit (ALU) The part of the CPU that performs mathematical calculations and makes logical comparisons. control unit The part of the CPU that sequentially accesses program instructions, decodes them and coordinates the flow of data in and out of the ALU, the registers, the primary storage and even secondary storage and various output devices. registers A high-speed storage area in the CPU used to temporarily hold small units of program instructions and data immediately before, during and after execution by the CPU. primary storage (main memory; memory) The part of the computer that holds program instructions and data.

Output devices

Components These components include the input devices, output devices, communications devices, primary and secondary storage devices and the central processing unit (CPU). The control unit, the arithmetic/logic unit (ALU) and the register storage areas constitute the CPU.

PART 2

Information Technology Concepts

Hardware Components in Action Executing any machine-level instruction involves two phases: instruction and execution. During the instruction phase, a computer performs the following steps: ■

Step 1: Fetch instruction. The computer reads the next program instruction to be executed and any necessary data into the processor.

■

Step 2: Decode instruction. The instruction is decoded and passed to the appropriate processor execution unit. Each execution unit plays a different role. The arithmetic/ logic unit performs all arithmetic operations; the floating-point unit deals with noninteger operations; the load/store unit manages the instructions that read or write to memory; the branch processing unit predicts the outcome of a branch instruction in an attempt to reduce disruptions in the flow of instructions and data into the processor; the memorymanagement unit translates an application’s addresses into physical memory addresses; and the vector-processing unit handles vector-based instructions that accelerate graphics operations.

instruction time (i-time) The time it takes to perform the fetch instruction and decode instruction steps of the instruction phase.

The time it takes to perform the instruction phase (Steps 1 and 2) is called the instruction time (i-time). The second phase is execution. During the execution phase, a computer performs the following steps:

■

Step 3: Execute instruction. The hardware element, now freshly fed with an instruction and data, carries out the instruction. This process could involve making an arithmetic computation, logical comparison, bit shift or vector operation.

■

Step 4: Store results. The results are stored in registers or memory.

The time it takes to complete the execution phase (Steps 3 and 4) is called the execution time (e-time). After both phases have been completed for one instruction, they are performed again for the second instruction and so on. Completing the instruction phase followed by the execution phase is called a machine cycle, as shown in Figure 3.2. Some processing units can speed up processing by using pipelining, whereby the processing unit gets one instruction, decodes another and executes a third at the same time. Modern desktop and laptop processors are capable of handling up to 20 stages at the same time. When doing this, essentially the fetch-execute cycle is split up into more, smaller stages. In addition to these 20 stages happening at the same time, since each stage is smaller than each of the traditional fetch, decode, execute, store stages, they should run quicker.

execution time (e-time) The time it takes to execute an instruction and store the results. machine cycle The instruction phase followed by the execution phase. pipelining A form of CPU operation in which multiple execution phases are performed in a single machine cycle.

Figure 3.2 Execution of an Instruction In the instruction phase, a program’s instructions and any necessary data are read into the processor (1). Then the instruction is decoded so that the central processor can understand what to do (2). In the execution phase, the ALU does what it is instructed to do, making either an arithmetic computation or a logical comparison (3). Then the results are stored in the registers or in memory (4). The instruction and execution phases together make up one machine cycle.

Processing device Control unit

ALU

(2) Decode I-Time (1) Fetch

(3) Execute E-Time Registers

Memory

(4) Store

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Hardware: Input, P rocessing, Output and Storage Devices

3.2 Processing and Memory Devices: Power, Speed and Capacity The components responsible for processing – the CPU and memory – are housed together in the same box or cabinet, called the system unit. All other computer system devices, such as the monitor, secondary storage and keyboard, are linked directly or indirectly into the system unit housing. In this section we investigate the characteristics of these important devices.

Processing Characteristics and Functions Because organizations want efficient processing and timely output, they use a variety of measures to gauge processing speed. These measures include the time it takes to complete a machine cycle and clock speed.

Machine Cycle Time As you’ve seen, a computer executes an instruction during a machine cycle. The time in which a machine cycle occurs is measured in nanoseconds (one-billionth of one second) and p icoseconds (one-trillionth of one second). Machine cycle time also can be measured by how many instructions are executed in one second. This MIPS Millions of instructions per measure, called MIPS, stands for millions of instructions per second. MIPS is second, a measure of machine cycle time. another measure of speed for computer systems of all sizes.

Clock Speed Each CPU produces a series of electronic pulses at a predetermined rate, called the clock speed, which affects machine cycle time. The control unit clock speed A series of executes instructions in accordance with the electronic cycle or pulses of the electronic pulses produced at a predetermined rate that affects CPU ‘clock’. Each instruction takes at least the same amount of time as the machine cycle time. interval between pulses. The shorter the interval between pulses, the faster each instruction can be executed. Clock speed is often measured in megahertz (MHz, millions of cycles per megahertz (MHz) Millions of second) or gigahertz (GHz, billions of cycles per second). Unfortunately, the cycles per second, a measure of faster the clock speed of the CPU, the more heat the processor generates. clock speed. This heat must be dissipated to avoid corrupting the data and instructions gigahertz (GHz) Billions of cycles per second, a measure of clock the computer is trying to process. Also, chips that run at higher temperatures speed. need bigger heat sinks, fans and other components to eliminate the excess heat. This increases the size of the computing device whether it is a desktop computer, tablet computer or smartphone, which increases the cost of materials and makes the device heavier – counter to what manufacturers and customers desire. Chip designers and manufacturers are exploring various means to avoid heat problems in their new designs. ARM is a computer chip design company whose energy-efficient chip architecture is broadly used in smartphones and tablet computers. Its Cortex-A7 chip design is expected to lead to much cheaper smartphones with a battery life five times longer than in current devices. Its more powerful Cortex-A15 processor can be used for processing-intensive tasks such as navigation or video playback.2 Manufacturers are also seeking more effective sources of energy as portable devices grow increasingly power hungry. A number of companies are exploring the substitution of fuel cells for lithium ion batteries to provide additional, longer-lasting power. Fuel cells generate electricity by consuming fuel (often methanol), while traditional batteries store electricity and release it through a chemical reaction. A spent fuel cell is replenished in moments by simply refilling its reservoir or by replacing the spent fuel cartridge with a fresh one.

PART 2

Information Technology Concepts

Physical Characteristics of the CPU

Most CPUs are collections of digital circuits imprinted on silicon wafers or chips, each no bigger than the tip of a pencil eraser. To turn a digital circuit on or off within the CPU, electrical current must flow through a medium (usually silicon) from point A to point B. The speed the current travels between points can be increased by either reducing the distance between the points or reducing the resistance of the medium to the electrical current. Reducing the distance between points has resulted in ever smaller chips, with the circuits packed closer together. Gordon Moore, who would cofound Intel (the largest maker of microprocessor chips) and become its chairman of the board, hypothesized that progress in chip manufacturing ought to make it possible to double the number of transistors (the microscopic on/off switches) on a single chip every two years. The hypothesis Moore’s Law A hypothesis stating became known as Moore’s Law, and this ‘rule of thumb’ has become a goal that transistor densities on a single that chip manufacturers have met more or less for more than four decades. chip will double every two years. Chip manufacturers have been able to improve productivity and performance by putting more transistors on the same size chip while reducing the amount of power required to perform tasks. Furthermore, because the chips are smaller, chip manufacturers can cut more chips from a single silicon wafer and thus reduce the cost per chip. As silicon-based components and computers perform better, they become cheaper to produce and therefore more plentiful, more powerful and more a part of our everyday lives. This process makes computing devices affordable for an increasing number of people around the world and makes it practical to pack tremendous computing power into the tiniest of devices.

Memory Characteristics and Functions Main memory is located physically close to the CPU, although not on the CPU chip itself. It provides the CPU with a working storage area for program instructions and data. The chief feature of memory is that it rapidly provides the data and instructions to the CPU.

Storage Capacity Like the CPU, memory devices contain thousands of circuits imprinted on a silicon chip. Each circuit is either conducting electrical current (on) or not conducting current (off). Data is stored in memory as a combination of on or off circuit states. Usually, 8 bits are used to represent a byte (B) Eight bits that together character, such as the letter A. Eight bits together form a byte (B). In most cases, represent a single character of storage capacity is measured in bytes, with 1 byte equivalent to one character of data. data. The contents of the Library of Congress, with over 126 million items and 530 miles of bookshelves, would require about 20 petabytes of digital storage. It is estimated that all the words ever spoken represented in text form would equal about 5 exabytes of information.3 Table 3.1 lists units for measuring computer storage.

Table 3.1 Computer Storage Units Name

Abbreviation

Number of Bytes

Byte

Kilobyte

210 or approximately 1024 bytes (exactly 1024 bytes is called a kibibyte)

Megabyte

220 or 1024 kilobytes (about 1 million)

Gigabyte

230 or 1024 megabytes (about 1 billion)

Terabyte

240 or 1024 gigabytes (about 1 trillion)

Petabyte

250 or 1024 terabytes (about 1 quadrillion)

Exabyte

260 or 1024 petabytes (about 1 quintillion)

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Hardware: Input, P rocessing, Output and Storage Devices

Types of Memory Computer memory can take several forms. Instructions or data can be temporarily stored in and read from random access memory (RAM). As random access memory (RAM) currently designed, RAM chips are volatile storage devices, meaning they A form of memory in which instructions or data can be lose their contents if the current is turned off or disrupted (as happens in a temporarily stored. power surge, blackout or electrical noise generated by lightning or nearby machines). RAM chips are mounted directly on the computer’s main circuit board or in other chips mounted on peripheral cards that plug into the main circuit board. These RAM chips consist of millions of switches that are sensitive to changes in electrical current. RAM comes in many varieties: static random access memory (SRAM) is byte-addressable storage used for high-speed registers and caches; dynamic random access memory (DRAM) is byte-addressable storage used for the main memory in a computer; and double data rate synchronous dynamic random access memory (DDR SDRAM) is an improved form of DRAM that effectively doubles the rate at which data can be moved in and out of main memory. Other forms of RAM memory include DDR2 SDRAM and DDR3 SDRAM. Read-only memory (ROM), another type of memory, is nonvolatile, read-only memory (ROM) meaning that its contents are not lost if the power is turned off or interrupted. A nonvolatile form of memory. ROM provides permanent storage for data and instructions that do not change, such as programs and data from the computer manufacturer, including the instructions that tell the computer how to start up when power is turned on. ROM memory also comes in many varieties: programmable read-only memory (PROM), which is used to hold data and instructions that can never be changed; erasable programmable read-only memory (EPROM), which is programmable ROM that can be erased and reused; and electrically erasable programmable read-only memory (EEPROM), which is user-modifiable read-only memory that can be erased and reprogrammed repeatedly through the application of higher than normal electrical voltage. Chip manufacturers are competing to develop a nonvolatile memory chip that requires minimal power, offers extremely fast write speed and can store data accurately even after a large number of write-erase cycles. Such a chip could eliminate the need for RAM and simplify and speed up memory processing. Phase change memory (PCM) is one potential approach to provide such a memory device. PCM employs a specialized glass-like material that can change its physical state, shifting between a low-resistance crystalline state to a high-resistance gaseous state by applying voltage to rearrange the atoms of the material. Although microprocessor speed has roughly doubled every 24 months over the past decades, memory performance has not kept pace. In effect, memory has become the principal bottleneck to system performance. Cache memory is a type of cache memory A type of highhigh-speed memory that a processor can access more rapidly than main speed memory that a processor can access more rapidly than main memory to help ease this bottleneck (see Figure 3.3). Frequently used data memory. is stored in easily accessible cache memory instead of slower memory such as RAM. Because cache memory holds less data, the CPU can access the desired data and instructions more quickly than when selecting from the larger set in main memory. Thus, the CPU can execute instructions faster, improving the overall performance of the computer system. Cache memory is available in three forms. The level 1 (L1) cache is on the CPU chip. The level 2 (L2) cache memory can be accessed by the CPU over a high-speed dedicated interface. The latest processors go a step further and place the L2 cache directly on the CPU chip itself and provide high-speed support for a tertiary level 3 (L3) external cache. Memory capacity contributes to the effectiveness of a computer. For example, complex processing problems, such as computer-assisted product design, require more memory than simpler tasks such as word processing. Also, because computer systems have different types of memory, they might need other programs to control how memory is accessed and used. In other cases, the computer system can be configured to maximize memory usage. Before purchasing additional memory, an organization should address all these considerations.

PART 2

Information Technology Concepts

Figure 3.3 Cache

Memory Processors can access this type of highspeed memory faster than main memory. Located on or near the CPU chip, cache memory works with main memory. A cache controller determines how often the data is used, transfers frequently used data to cache memory and then deletes the data when it goes out of use.

Memory (main store)

CPU

Typically 4 MB Cache controller

Miss

Hit

Cache memory Typically 256 KB or more

Multiprocessing Generally, multiprocessing involves the simultaneous execution of two or more instructions at the same time. One form of multiprocessing uses coprocessors. A coprocessor speeds processing by executing specific types of instructions while the CPU works on another processing activity. Coprocessors can be internal or external to the CPU and may have different clock speeds than the CPU. Each type of coprocessor performs a specific function. For example, a maths coprocessor chip speeds up mathematical calculations, while a graphics coprocessor chip decreases the time it takes to manipulate graphics. multicore microprocessor A multicore microprocessor combines two or more independent processors A microprocessor that combines into a single computer so that they share the workload and boost processing two or more independent capacity. In addition, a dual-core processor enables people to perform multiple processors into a single computer so that they share the workload tasks simultaneously, such as playing a game and burning a CD. and improve processing capacity. When selecting a CPU, organizations must balance the benefits of processing speed with energy requirements and cost. CPUs with faster clock speeds and shorter machine cycle times require more energy to dissipate the heat generated by the CPU, and are bulkier and more expensive than slower ones. multiprocessing The simultaneous execution of two or more instructions at the same time. coprocessor The part of the computer that speeds processing by executing specific types of instructions while the CPU works on another processing activity.

Parallel Computing Parallel computing is the simultaneous execution of the same task on multiple processors to obtain results faster. Systems with thousands of such processors are known as massively parallel processing systems, a form of multiprocessing that speeds processing by linking hundreds or thousands of processors to operate at the same time, or in parallel, with each processor having its own bus, memory, discs, copy of the operating system and applications. The processors might communicate with one another to coordinate when executing a computer program, or they might run independently of one another but under the direction of another processor that distributes the work to the other processors and collects their results. The dual-core processors mentioned earlier are a simple form of parallel computing. The most frequent uses for parallel computing include modelling, simulation and analyzing large amounts of data. Parallel computing is used in medicine to develop new imaging systems to complete ultrasound scans in less time with greater accuracy, enabling doctors to provide better diagnoses to patients, for example. Instead of building physical

parallel computing The simultaneous execution of the same task on multiple processors to obtain results faster. massively parallel processing systems A form of multiprocessing that speeds processing by linking hundreds or thousands of processors to operate at the same time, or in parallel, with each processor having its own bus, memory, discs, copy of the operating system and applications. bus A bus is a connection between components within a computer, or devices connected to a computer.

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Hardware: Input, P rocessing, Output and Storage Devices

models of new products, engineers can create a virtual model of them and use parallel computing to test how the products work and then change design elements and materials as needed. The European Space Agency is using parallel computing to solve aerospace problems, such as calculating interplanetary trajectories. They use open source software to optimize how their algorithms are distributed between multiple processors so that they run as fast as possible.4 They have made the software they use to do this open source so that anyone can use it, although not everyone has access to parallel systems. grid computing The use of a Grid computing is the use of a collection of computers, often owned by multiple collection of computers, often individuals or organizations, to work in a coordinated manner to solve a common owned by multiple individuals or organizations, to work in a problem. Grid computing is a low-cost approach to parallel computing. The grid coordinated manner to solve can include dozens, hundreds or even thousands of computers that run collectively a common problem. to solve extremely large processing problems. Key to the success of grid computing is a central server that acts as the grid leader and traffic monitor. This controlling server divides the computing task into subtasks and assigns the work to computers on the grid that have (at least temporarily) surplus processing power. The central server also monitors the processing and, if a member of the grid fails to complete a subtask, it restarts or reassigns the task. When all the subtasks are completed, the controlling server combines the results and advances to the next task until the whole job is completed. CERN is the European Organization for Nuclear Research and its main area of research is the study of the fundamental constituents of matter and the forces acting between them.5 CERN uses grid computing with the processing power of over 300,000 high-end personal computers. This computing power is needed to process some 25 petabytes of data generated each year by the Large Hadron Collider (LHC) particle accelerator looking for evidence of new particles that can provide clues to the origins of our universe.6

3.3 Secondary Storage Storing data safely and effectively is critical to an organization’s success. Driven by many factors such as needing to retain more data longer to meet government regulatory concerns, storing new forms of digital data such as audio and video, and keeping systems running under the onslaught of increasing volumes of email, the world’s information is more than doubling every two years. IBM, which is investing heavily in technologies (such as Watson, its cognitive computer system) that can help organizations manage all that unstructured data, estimates that more than 80 per cent of the 2.5 billion gigabytes of data created every day comes in the form of unstructured data such as video, audio and image objects.7 The Indian government has undertaken a massive effort to register its 1.3 billion residents in a universal citizen ID system. Called Aadhaar, the result is the world’s largest database of biometric data including retina scans, fingerprints and multiple facial images of each individual. The database has applications at India’s borders to recognize travellers and to identify people who should not be in controlled areas such as the hangar area of an airport. The system can also be used in crowd control to recognize the gender and age of a crowd of people and identify where security personnel might be most needed. The system has massive ethical issues but its legality has been upheld by the Indian courts.8 For most organizations, the best overall data storage solution is probably a combination of different secondary storage options that can store large amounts secondary storage Devices of data, instructions and information more permanently than allowed with main that store large amounts of data, instructions and information more memory. Compared with memory, secondary storage offers the advantages of permanently than allowed with nonvolatility, greater capacity and greater economy. On a cost-per-megabyte main memory. basis, secondary storage is considerably less expensive than primary memory (see Table 3.2). The selection of secondary storage media and devices requires understanding their primary characteristics: access method, capacity and portability.

PART 2

Information Technology Concepts

Table 3.2 Cost Comparison for Various Forms of Storage All forms of secondary storage cost considerably less per gigabyte of capacity than SDRAM, although they have slower access times. A 25 GB Blu-ray disc costs about €0.03 per gigabyte, while an industrial strength SD card can cost around €15 per gigabyte – 500 times more expensive. Description

Cost

Storage Capacity (GB)

Cost Per GB

1.6 TB 4 mm back-up data tape cartridge

€30.00

1,600

€0.02

1 TB desktop external hard drive

€50.00

50,000

€0.001

50 GB rewritable Blu-ray disc

€6.00

€0.12

64 GB flash drive

€8.00

€0.13

€30.00

€0.94

€0.28

Industrial strength SD (Secure Digital) card able to support extreme temperatures SD Card

€9 Cost varies depending on use

Cloud storage

Unlimited storage

~€10/month

An objective of a credit card company’s information system might be to rapidly retrieve stored customer data to approve customer purchases. In this case, a fast access method is critical. In other cases, such as equipping the Coca-Cola field sales force with pocket-sized personal computers, portability and storage capacity might be major considerations in selecting and using secondary storage media and devices. In addition to cost, capacity and portability, organizations must address security issues to allow only authorized people to access sensitive data and critical programs. Because the data and programs kept on secondary storage devices are so critical to most organizations, all of these issues merit careful consideration.

Access Methods sequential access A retrieval method in which data must be accessed in the order in which it was stored. direct access A retrieval method in which data can be retrieved without the need to read and discard other data. sequential access storage device (SASDs) A device used to sequentially access secondary storage data. direct access storage device (DASDs) A device used for direct access of secondary storage data.

Data and information access can be either sequential or direct. Sequential access means that data must be accessed in the order in which it is stored. For example, inventory data might be stored sequentially by part number, such as 100, 101, 102 and so on. If you want to retrieve information on part number 125, you must read and discard all the data relating to parts 001 to 124. Direct access means that data can be retrieved directly without the need to pass by other data in sequence. With direct access, it is possible to go directly to and access the needed data – for example, part number 125 – without having to read through parts 001 to 124. For this reason, direct access is usually faster than sequential access. The devices used only to access secondary storage data sequentially are called sequential access storage devices (SASDs); those used for direct access are called direct access storage devices (DASDs).

Secondary Storage Devices Secondary data storage is not directly accessible by the CPU. Instead, computers usually use input/output channels to access secondary storage and transfer the desired data using intermediate areas in primary storage. The most common forms of secondary storage devices are magnetic, optical and solid state.

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Magnetic Secondary Storage Devices Magnetic storage uses tape or disc devices covered with a thin magnetic coating that enables data to be stored as magnetic particles. Magnetic tape is a type of sequential magnetic tape A type of sequential secondary storage secondary storage medium, which is now used primarily for storing backups medium, now used primarily of critical organizational data in the event of a disaster. Examples of tape for storing backups of critical storage devices include cassettes and cartridges measuring a few millimetres organizational data in the event of in diameter, requiring very little storage space. Magnetic tape has been used a disaster. as storage media since the time of the earliest computers, such as the 1951 Univac computer.9 Continuing advancements have kept magnetic tape as a viable storage medium. For example, IBM and FUJIFILM Corporation of Japan recently achieved a recording density of 123 billion bits per square inch on low-cost magnetic tape. While still in development, this innovation represents the equivalent of a 220-terabyte tape cartridge (enough to hold the text of approximately 220 million books) that could fit into the palm of your hand.10 Australia Wide IT offers clients a range of backup options including magnetic tape.11 A magnetic disc is a direct access storage device that represents bits using magnetic disc A direct access small magnetized areas and uses a read/write head to go directly to the desired storage device with bits represented by magnetized areas. piece of data. Because direct access allows fast data retrieval, this type of storage is ideal for companies that need to respond quickly to customer requests, such as airlines and credit card firms. For example, if a manager needs information on the credit history of a customer or the seat availability on a particular flight, the information can be obtained in seconds if the data is stored on a direct access storage device. Magnetic disc storage varies widely in capacity and portability. Hard discs, though more costly and less portable, are more popular because of their greater storage capacity and quicker access time. Putting an organization’s data online involves a serious business risk – the loss of critical data can put a corporation out of business. The concern is that the most critical mechanical components inside a magnetic disc storage device – the disc drives, the fans and other input/output devices – can fail. Thus organizations now require that their data storage devices be fault tolerant; that is, they can continue with little or no loss of performance if one or more key components fail. A redundant array of independent/inexpensive discs (RAID) is a redundant array of independent/ method of storing data that generates extra bits of data from existing data, inexpensive discs (RAID) A method of storing data that allowing the system to create a ‘reconstruction map’ so that if a hard drive fails, generates extra bits of data from it can rebuild lost data. With this approach, data is split and stored on different existing data, allowing the system physical disc drives using a technique called striping to evenly distribute the to create a ‘reconstruction map’ data. RAID technology has been applied to storage systems to improve system so that, if a hard drive fails, the system can rebuild lost data. performance and reliability. RAID can be implemented in several ways. In the simplest form, RAID subsystems duplicate data on drives. This process, called disc mirroring, provides an exact copy that disc mirroring A process of protects users fully in the event of data loss. However, to keep complete duplicates storing data that provides an exact of current backups, organizations need to double the amount of their storage copy that protects users fully in the capacity. Other RAID methods are less expensive because they only duplicate event of data loss. part of the data, allowing storage managers to minimize the amount of extra disc space they must purchase to protect data. Optional second drives for personal computer users who need to mirror critical data are available for less than €75. RAID technology is often used by universities and colleges to mirror their learning environment, such as Moodle. That way if a problem occurs before exam time, all materials can be made available quickly and accurately. Virtual tape is a storage technology for less frequently needed data so virtual tape A storage device for that it appears to be stored entirely on tape cartridges, although some parts less frequently needed data so that it might actually be located on faster hard discs. The software associated with a appears to be stored entirely on tape virtual tape system is sometimes called a virtual tape server. Virtual tape can cartridges, although some parts of it might actually be located on faster be used with a sophisticated storage-management system that moves data hard discs. to slower but less costly forms of storage media as people use the data less

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often. Virtual tape technology can decrease data access time, lower the total cost of ownership and reduce the amount of floor space consumed by tape operations. Baldor Electric Company designs, manufactures and markets industrial electric motors, transmission products, drives and generators. The firm implemented a virtual tape system to replace its tape-based storage system consisting of thousands of magnetic tapes. Baldor uses the new virtual tape system to back up its five production databases twice a day and stores the data for 14 days. The time to create backups has been cut by 40 per cent, and the new system takes up about 100 square feet less of data-centre floor space.12 3

Optical Secondary Storage Devices

An optical storage device uses special lasers to read and write data. The lasers record data by physically burning pits into the disc. Data is directly accessed from the disc by an optical disc device. This optical disc device uses a low-power laser that measures the difference in reflected light caused by a pit (or lack thereof) on the disc. compact disc read-only memory A common optical storage device is the compact disc read-only memory (CD-ROM) A common form of (CD-ROM), with a storage capacity of 740 megabytes of data. After data is optical disc on which data cannot be recorded on a CD-ROM, it cannot be modified because the disc is read-only. A modified once it has been recorded. CD burner, the informal name for a CD recorder, is a device that can record data to a compact disc. CD-recordable (CD-R) and CD-rewritable (CD-RW) are the two most common types of drives that can write CDs, either once (in the case of CD-R) or repeatedly (in the case of CD-RW). CD-rewritable (CD-RW) technology allows PC users to back up data on CDs. A digital video disc (DVD) looks like a CD, but it can store about 135 digital video disc (DVD) A storage medium used to store software, video minutes of digital video or several gigabytes of data. At a data transfer rate of games and movies. 1.352 megabytes per second, the access speed of a DVD drive is also faster than that of the typical CD-ROM drive. Software, video games and movies are often stored and distributed on DVDs. The Blu-ray high-definition video disc format based on blue laser technology stores at least three times as much data as a DVD. DVD and Blu-ray discs were used for storing movies for home entertainment, but this is less popular now given the rise of streaming services. In addition, the discs can become unreliable over time as they are exposed to light, humidity and chemical changes inside the disc itself. As a result, the data stored on such discs can become unreadable over time. Thus, disc manufacturers are focused on developing longer-lasting DVD and Blu-ray technology. optical storage device A form of data storage that uses lasers to read and write data.

Solid State Secondary Storage Devices A solid state storage device (SSD) stores data in memory chips rather than on hard disk drives or optical media. These memory chips require less power and provide much faster data access than magnetic data storage devices. In addition, SSDs have no moving parts, so they are less fragile than hard disk drives. All these factors make the SSD a preferred choice over hard disk drives for portable computers. A universal serial bus (USB) flash drive is one example of a commonly used SSD. USB flash drives are external to the computer and are removable and rewritable. They are very popular for moving data between different computers (a laptop and a desktop for example). Most weigh less than 30g and can provide a wide range of storage capacity. Samsung has developed a 15.36-terabyte solid state storage device based on 48-layer 3D chip technology. This technology allows for vertical stacking of flash cells, thus requiring less space to store data. It also improves performance and requires less power.

Enterprise Storage Options Businesses need to store large amounts of data created throughout an organization. Such large secondary storage is called enterprise storage and comes in three forms: attached storage, network-attached storage (NAS) and storage area networks (SANs).

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Attached Storage Attached storage methods include the tape, hard discs and optical devices discussed previously, which are connected directly to a single computer. Attached storage methods, though simple and cost effective for single users and small groups, do not allow systems to share storage, and they make it difficult to back-up data. Because of the limitations of attached storage, firms are turning to network-attached storage (NAS) and storage area networks (SANs). These alternatives enable an organization to share data storage resources among a much larger number of computers and users, resulting in improved storage efficiency and greater cost effectiveness. In addition, they simplify data back-up and reduce the risk of downtime. Nearly one-third of system downtime is a direct result of data storage failures, so eliminating storage problems as a cause of downtime is a major advantage.

Network-Attached Storage

Network-attached storage (NAS) is hard disc storage that is set up with network-attached storage (NAS) its own network address rather than being attached to a computer. Figure3.4 Hard disc storage that is set up with its own network address shows a NAS storage device. NAS includes software to m anage storage rather than being attached to a access and file management, relieving the users’ computers of those tasks. computer. The result is that both application software and files can be served faster because they are not competing for the same processor resources. C omputer users can share and access the same information, even if they are using different types of computers. Common applications for NAS include consolidated storage, Internet and e-commerce applications, and digital media.

Figure 3.4 NAS Storage Device a network-attached storage device with six disks.

One of the most popular Swiss skiing destinations is the Davos Klosters resort with more than 300 kilometres of ski slopes, 5 mountain railways, and 22 hotels with 1,700 beds. Resort guests expect hassle-free hotel check-ins, an always available online ticket shop, reliable information display boards, and efficient and on-time mountain railways. It takes powerful information systems to meet these expectations. The resort decided to implement NAS storage devices to make sure its information systems are reliable and provide fast access to data, dependable backups of operational data and easy expansion of storage capacity.13

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storage area network (SAN) A special-purpose, high-speed network that provides high-speed connections between data storage devices and computers over a network.

Information Technology Concepts

Storage Area Network

A storage area network (SAN) is a special-purpose, high-speed network that provides direct connections between data storage devices and computers across the enterprise (see Figure 3.5). A SAN also integrates different types of storage subsystems, such as multiple RAID storage devices and magnetic tape back-up systems, into a single storage system. Use of a SAN offloads the network traffic associated with storage onto a separate network. The data can then be copied to a remote location, making it easier for companies to create backups and implement disaster recovery policies.

Figure 3.5 Storage Area Network A SAN provides high-speed connections between data-storage devices and computers over a network.

Computer 1 Storage device 1

Computer 2

Storage device 2 Storage area network

Computer 3

Storage device 3

Using a SAN, an organization can centralize the people, policies, procedures and practices for managing storage, and a data storage manager can apply the data consistently across an enterprise. This centralization eliminates inconsistent treatment of data by different system administrators and users, providing efficient and cost-effective data storage practices. NorthgateArinso is a global human resources services provider that equips its clients with HR solutions using advanced technology, outsourcing and consulting. The firm’s systems support multicountry payroll, training, recruiting and talent management.14 NorthgateArinso implemented two integrated data centres, one in London and one in Brussels, with an information systems architecture based on standard servers from a single supplier and data storage provided by SAN hardware and software. The SAN makes the total data stored available to all users. The company’s prior collection of separate servers, applications and databases is now integrated into an infrastructure that is easier to manage and can more flexibly meet the challenges of a highly fluctuating workload.15 A fundamental difference between NAS and SAN is that NAS uses file input/output, which defines data as complete containers of information, while SAN deals with block input/output, which is based on subsets of data smaller than a file. SAN manufacturers include EMC, Hitachi Data Systems Corporation, Xiotech and IBM. As organizations set up large-scale SANs, they use more computers and network connections than in a NAS environment and, consequently, the network becomes difficult to manage. In response, software tools designed to automate storage using previously defined policies are finding a place in the enterprise. Known as policy-based storage policy-based storage management Automation of management, the software products from industry leaders such as Veritas storage using previously defined Software Corporation, Legato Systems, EMC and IBM automatically allocate policies. storage space to users, balance the loads on servers and discs, and reroute network traffic when systems go down – all based on policies set up by system administrators.

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The trend in secondary storage is towards higher capacity, increased portability and automated storage management. Organizations should select a type of storage based on their needs and resources. In general, storing large amounts of data and information and providing users with quick access make an organization more efficient.

Storage as a Service

Storage as a service is a data storage model in which a data storage storage as a service A data service provider rents space to people and organizations. Users access their storage model where a data storage service provider rented data storage via the Internet. Such a service enables the users to store rents space to individuals and and back-up their data without requiring a major investment to create and organizations. maintain their own data storage infrastructure. Businesses can also choose pay-per-use services where they rent space on massive storage devices housed either at a service provider (such as Hewlett-Packard or IBM) or on the customers’ premises, paying only for the amount of storage they use. This approach is sensible for organizations with wildly fluctuating storage needs, such as those involved in the testing of new drugs or in developing software. Amazon, Google, Microsoft, Stortech based in South Africa, HP and IBM are a few of the storage-as-a-service providers used by organizations. Amazon.com’s Simple Storage Service (S3) provides storage as a service with a monthly cost of roughly €0.10 per GB stored and €0.075 per GB of data transferred into the Amazon.com storage. Box.net, Carbonite, SugarSynch, Symantec and Mozy are a few of the storage-as-a-service providers used by individuals. This set of providers all charge less than €6 per month for up to 5 GB of storage. A Mozy customer who had his laptop stolen was able to provide police with photos of the thief because Mozy continued to back-up data after the laptop was stolen, including the thief’s photos and documents. The customer accessed the photos from his online storage site, and police captured the thief and returned the laptop. Mozy is now owned by Dell and offers a number of solutions for clients if an item of technology has been stolen.16

Storing Data in DNA Scientists are currently experimenting with even more advanced storage technologies, including the use of DNA molecules to store vast amounts of data for long periods of time. DNA molecules consist of four chemicals connected end-to-end, similar to the sequences of ones and zeros that computers use to represent data. One gram of DNA is capable of holding 455 exabytes (one exabyte is equivalent to a billion gigabytes).17 In addition, data could be stored in DNA for thousands of years. By comparison, today’s most powerful desktop hard drives hold around 6 terabytes of data and might last 50 years.18 At this time, the cost of synthesizing DNA to store data and the cost of decoding the data stored in DNA are prohibitively expensive, unless the data needs to be archived for at least 600 years. It will likely be a decade or more before the technology evolves to the point where DNA data storage is practical.19 Startup company Catalog is working to reduce the cost of ‘printing’ to DNA.20

3.4 Input and Output Devices: The Gateway to Computer Systems Your first experience with computers is usually through input and output devices. These devices are the gateways to the computer system – you use them to provide data and instructions to the computer and receive results from it. Input and output devices are part of a computer’s user interface, which includes other hardware devices and software that allow you to interact with a computer system.

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As with other computer system components, an organization should keep its business goals in mind when selecting input and output devices. For example, many restaurant chains use handheld input devices or computerized terminals that let food servers enter orders efficiently and accurately. These systems have also cut costs by helping to track inventory and market to customers.

Characteristics and Functionality 3

In general, businesses want input devices that let them rapidly enter data into a computer system, and they want output devices that let them produce timely results. When selecting input and output devices, businesses also need to consider the form of the output they want, the nature of the data required to generate this output, and the speed and accuracy they need for both. Some organizations have very specific needs for output and input, requiring devices that perform specific functions. The more specialized the application, the more specialized the associated system input and output devices. The speed and functions of input and output devices should be balanced with their cost, c ontrol and complexity. More specialized devices might make it easier to enter data or output information, but they are generally more costly, less flexible and more susceptible to malfunction.

The Nature of Data Getting data into the computer – input – often requires transferring human-readable data, such as a sales order, into the computer system. ‘Human-readable’ means data that peoplecanread and understand. A sheet of paper containing inventory adjustments is an example of humanreadable data. In contrast, machine-readable data can be read by computer devices (such as the universal barcode on many grocery and retail items) and is typically stored as bits or bytes. Inventory changes stored on a disc is an example of machine-readable data. Some data can be read by people and machines, such as magnetic ink on bank cheques. Usually, people begin the input process by organizing human-readable data and transforming it into machine-readable data. Every keystroke on a keyboard, for example, turns a letter symbol of a human language into a digital code that the machine can manipulate.

Data Entry and Input Getting data into the computer system is a two-stage process. First, the human-readable data is converted into a machine-readable form through data entry. The second stage involves transferring the machine-readable data into the system. This is data input. Today, many companies are using online data entry and input: they communicate and transfer data to computer devices directly connected to the computer system. Online data entry and input place data into the computer system in a matter of seconds. Organizations in many industries require the instantaneous updating offered by this approach. For example, when ticket agents enter a request for concert tickets, they can use online data entry and input to record the request as soon as it is made. Ticket agents at other terminals can then access this data to make a seating check before they process another request.

data entry Converting human-readable data into a machine-readable form. data input Transferring machine-readable data into the system.

Source Data Automation Regardless of how data gets into the computer, it should be captured and edited at its source. Source data automation involves capturing and editing data where it is originally created and in a form that can be directly entered into a computer, thus ensuring accuracy and timeliness. For example, using source data automation, salespeople enter sales orders into the computer at the time and place they take the orders. Any errors can be detected and corrected immediately. If an

source data automation Capturing and editing data where it is initially created and in a form that can be directly entered into a computer, thus ensuring accuracy and timeliness.

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item is temporarily out of stock, the salesperson can discuss options with the customer. Prior to source data automation, orders were written on paper and entered into the computer later (usually by a clerk, not by the person who took the order). Often the handwritten information wasn’t legible or, worse still, got lost. If problems occurred during data entry, the clerk had to contact the salesperson or the customer to ‘recapture’ the data needed for order entry, leading to further delays and customer dissatisfaction.

Input Devices Data entry and input devices come in many forms. They range from special-purpose devices that capture specific types of data to more general-purpose input devices. Some of the specialpurpose data entry and input devices are discussed later in this chapter. First, we focus on devices used to enter and input general types of data, including text, audio, images and video for personal computers.

Personal Computer Input Devices A keyboard and a computer mouse are the most common devices used for entry and input of data such as characters, text and basic commands. Some companies are developing keyboards that are more comfortable, more easily adjusted and faster to use than standard keyboards. These ergonomic keyboards, such as the split keyboard offered by Microsoft and others, are designed to avoid wrist and hand injuries caused by hours of typing. Other keyboards include touchpads that let you enter sketches on the touchpad while still using keys to enter text. Wireless mice and keyboards keep a physical desktop free from clutter. You use a computer mouse to point to and click symbols, icons, menus and commands on the screen. The computer makes a number of actions in response, such as placing data into the computer system.

Speech-Recognition Technology

Using speech-recognition technology, a computer equipped with a speech-recognition technology source of speech input, such as a microphone, can interpret human speech Input devices that recognize human speech. as an alternative means of providing data or instructions to the computer. The most basic systems require you to train the system to recognize your speech patterns or are limited to a small vocabulary of words. More advanced systems can recognize continuous speech without requiring you to break your speech into discrete words. Interactive voice response (IVR) systems allow a computer to recognize both voice and keypad inputs. Companies that must constantly interact with customers are eager to reduce their customer support costs while improving the quality of their service. For example, Time Warner implemented a speech-recognition application as part of its customer call centre. Subscribers who call customer service can speak commands to begin simple processes such as ‘pay my bill’ or ‘add ShowTime’. The voice recognition system saves time and money even though most people would prefer to speak to a live person. ‘We have roughly 13 million customers, and a few seconds or minutes here or there for each customer can really add up to longer hold times and higher staffing costs – which makes cable rates climb’, says Time Warner spokesman Matthew Tremblay.21

Digital Cameras

Digital cameras record and store images or video in digital form, so when digital cameras An input device you take pictures, the images are electronically stored in the camera. You can used with a PC to record and store images and video in digital form. download the images to a computer either directly or by using a flash memory card. After you store the images on the computer’s hard disc, you can then edit and print them, send them to another location or paste them into another application. This digital format saves time and money by eliminating the need to process film in order to share photos. For

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example, you can download a photo of your project team captured by a digital camera and then post it on a website or paste it into a project status report. Digital cameras have eclipsed film cameras used by professional photographers for photo quality and features such as zoom, flash, exposure controls, special effects and even video-capture capabilities. With the right software, you can add sound and handwriting to the photo. Many computers and smartphones come equipped with a digital camera to enable their users to place video calls and take pictures and videos. Canon, Casio, Nikon, Olympus, Panasonic, Pentax, Sony and other camera manufacturers offer full-featured, high-resolution digital camera models at prices ranging from €200 to over €3,000. Some manufacturers offer pocket-sized camcorders for less than €100. The police department in Wallis, Mississippi, consists of only five officers but is one of the first departments in the USA to use tiny digital cameras that clip onto the front pocket of the officers’ uniforms. The cameras are the size of a pack of chewing gum and come with a memory card capable of holding hours of evidence. The cameras record each police stop in its entirety and provide evidence that supports prosecution of suspects.22

Scanning Devices Scanning devices capture image and character data. A page scanner is like a photocopier. You either insert a page into the scanner or place it face down on the glass plate of the scanner and then scan it. With a handheld scanner, you manually move or roll the scanning device over the image you want to scan. Both page and handheld scanners can convert monochrome or colour pictures, forms, text and other images into machine-readable digits. Considering that US enterprises generate an estimated 1 billion pieces of paper daily, many companies are looking to scanning devices to help them manage their documents and reduce the high cost of using and processing paper. Silicon Valley Bank (SVB) Financial Group is headquartered in Santa Clara, California, and is surrounded by hundreds of high-tech companies and start-up ventures in the life science, clean technology, venture capital, private equity and premium wine markets.23 SVB used to store loan and deposit documents for some 4,000 clients in paper files at its headquarters. The firm received more than 75 requests per day from branches for copies of documents, with each request taking about 15 minutes to process. SVB implemented document-scanning hardware and software that can create a digital, online copy of all documents.

Optical Data Readers You can also use a special scanning device called an optical data reader to scan documents. The two categories of optical data readers are for optical mark recognition (OMR) and optical character recognition (OCR). You use OMR readers for grading tests and other purposes such as forms. With this technology, you use pencils to fill in bubbles or check boxes on OMR paper, which is also called a ‘mark sense form’. OMR systems are used in standardized tests, including the USA’s SAT and GMAT tests, and on Lotto tickets in the UK. In contrast, most OCR readers use reflected light to recognize and scan various machine-generated characters. With special software, OCR readers can also convert handwritten or typed documents into digital data. After being entered, this data can be shared, modified and distributed over computer networks to hundreds or thousands of people.

Magnetic Ink Character Recognition (MICR) Devices In the 1950s, the banking industry became swamped with paper cheques, loan applications, bank statements and so on. The result was the development of magnetic ink character recognition (MICR), a system for reading banking data quickly. With MICR, data is placed on the bottom of a cheque or other form using a special magnetic ink. Using a special character set, data printed with this ink is readable by people and computers (see Figure 3.6).

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Bank identification number

Account number

Cheque number

Magnetic Strip Cards

A magnetic strip card stores a limited amount of data by modifying the magnetism of tiny iron-based particles contained in a band on the card. The magnetic strip is read by physically swiping the card at a terminal. For this reason, such cards are called a contact card. Magnetic strip cards are commonly used in credit and debit cards, transportation tickets and ID cards.

Figure 3.6 MICR Device Magnetic ink character recognition technology codes data on the bottom of a cheque or other form using special magnetic ink, which is readable by people and computers. For an example, look at the bottom of a bank cheque. Although cheques are not used as much now, they are still the most likely place you will see MICR. Previously MICR was used on airline tickets and it is sometime used in creating durable shelf tags and coupon books. magnetic strip card A type of card that stores a limited amount of data by modifying the magnetism of tiny iron-based particles contained in a band on the card.

Chip-and-PIN Cards Most European countries as well as many countries in Asia and South America have converted to chip-and-PIN (personal identification number) technology, which uses ‘smart card technology. 24 This technology employs a computer chip that communicates with a card reader using radio frequencies, which means the cards do not need to be swiped at a terminal. Chip-and-PIN cards require different terminals chip-and-PIN card A type of card that employs a computer chip that from those used for magnetic stripe cards. For security, the card holder is communicates with a card reader also required to enter a PIN at the point of sale, making such cards more using radio frequencies; it does not effective at preventing fraud. Although credit card fraud is a problem, credit need to be swiped at a terminal. card issuers cannot force merchants to invest in the new terminals required for chip-and-PIN cards. As a result, deployment of this technology is lagging.

Contactless Cards

A contactless card has an embedded chip that only needs to be held close contactless card A card with an to a terminal to transfer its data; no PIN needs to be entered. Contactless embedded chip that only needs to be held close to a terminal to credit card payments are common now in many parts of the world, and transfer its data; no PIN needs to these areas are rapidly becoming ‘cashless’, something that is a problem for be entered. buskers, beggars, charity collectors and others who rely on the availability of small change. Many locations have moved towards mobile contactless payments using a service such as Apple Pay instead, although the effect is the same. For example, mobile payment is more common in China than contactless card payment.

Point-of-Sale Devices

Point-of-sale (POS) devices are terminals used to capture data for data entry. They are frequently used in retail operations to enter sales information into the computer system. The POS device then computes the total charges, including any tax. In medical settings, POS devices are often used for remote

point-of-sale (POS) devices A terminal used to enter data into the computer system.

monitoring in

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hospitals, clinics, laboratories, doctors’ offices and patients’ homes. With network-enabled POS equipment, medical professionals can instantly get an update on the patient’s condition from anywhere at any time via a network or the Internet. POS devices use various types of input and output devices, such as keyboards, barcode readers, scanning devices, printers and screens. Much of the money that businesses spend on computer technology involves POS devices. Special input devices can be attached to smartphones and computers to accept payments from credit and debit cards for goods and services. Intuit Go Payment and Square can provide a small credit card scanner that plugs into your smartphone.25

Automated Teller Machine (ATM) Devices Another type of special-purpose input/output device, the automated teller machine (ATM), is a terminal that bank customers use to perform transactions with their bank accounts. Companies use various ATM devices, sometimes called kiosks, to support their business processes. Some can dispense tickets, such as for airlines, concerts and football games. Some colleges use them to produce transcripts.

Pen Input Devices By touching the screen with a pen input device, you can activate a command or cause the computer to perform a task, enter handwritten notes, and draw objects and figures. Pen input requires special software and hardware. Handwriting recognition software, for example, c onverts handwriting on the screen into text. The Tablet PC from Microsoft and its hardware partners can transform handwriting into typed text and store the ‘digital ink’ in the same way in which a person writes it. People can use a pen to write and send an email, add comments to Word documents, mark up PowerPoint presentations and even hand-draw charts in a document. The data can then be moved, highlighted, searched and converted into text. Pen input is especially attractive if you are uncomfortable using a keyboard. The success of pen input depends on how accurately and at what cost handwriting can be read and translated into digital form. Audi AG installed interactive white boards at its five technical training locations in Germany. PowerPoint presentations can be projected onto the screen, and trainers can draw over the image and highlight features by circling or underlining. Consequently, static presentations have become more interactive.26

Touch-Sensitive Screens Advances in screen technology allow display screens to function as input as well as output devices. By touching certain parts of a touch-sensitive screen, you can start a program or trigger other types of action. Touch-sensitive screens can remove the need for a keyboard, which conserves space and increases portability. Touchscreens are frequently used at petrol stations to allow customers to select grades of petrol and request a receipt; on photocopy machines for selecting options; at fast-food restaurants for entering customer choices; at information centres for finding facts about local eating and drinking establishments; and at amusement parks to provide directions to patrons. They are also used in kiosks at airports and department stores. Touchsensitive screens are also being considered for gathering votes in elections in some countries. As touchscreens get smaller, the user’s fingers begin to block the information on the display. Nanotouch technology is being explored as a means of overcoming this problem. Using this technology, users control the touchscreen from its backside so that fingers do not block the display. As the user’s finger moves on the back of the display, a tiny graphical finger is projected onto the touchscreen. Such displays are useful for mobile audio players the size of a coin.

Barcode Scanners and QR Readers A barcode scanner employs a laser scanner to read a barcoded label and pass the data to a computer. The barcode reader may be stationary or hand-held to support a wide variety of

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uses. This form of input is used widely in store checkouts and warehouse inventory control. Barcodes are also used in hospitals, where a nurse first scans a patient’s wristband and then a barcode on the medication about to be administered to prevent medication errors. A QR or Quick Response code is a way of representing text as an image that can be interpreted through a digital camera. A QR code typically contains a webpage URL. The three large squares in the corners allow a computer to tell ‘which way up’ the code is.

Radio Frequency Identification

Radio frequency identification (RFID) is a technology that employs a radio frequency identification microchip with an antenna to broadcast its unique identifier and location to (RFID) A technology that employs receivers. The purpose of an RFID system is to transmit data via a mobile a microchip with an antenna to broadcast its unique identifier and device called a tag (see Figure 3.7), which is read by an RFID reader and location to receivers. processed according to the needs of a computer program. One popular application of RFID is to place microchips on retail items and install in-store readers that track the inventory on the shelves to determine when shelves should be restocked. The RFID tag chip includes a special form of EPROM memory that holds data about the item to which the tag is attached. A radio frequency signal can update this memory as the status of the item changes. The data transmitted by the tag might provide identification, location information or details about the product tagged, such as date manufactured, retail price, colour or date of purchase. Farmers in Australia use RFID tags to keep track on their sheep to help trace food from farm to fork.27

Figure 3.7 RFID Tag An RFID tag is small compared to current barcode labels used to identify items.

Output Devices Computer systems provide output to decision makers at all levels of an organization so they can solve a business problem or capitalize on a competitive opportunity. In addition, output from one computer system can provide input into another computer system. The desired form of this output might be visual, audio or even digital. Whatever the output’s content or form, output devices are designed to provide the right information to the right person in the right format at the right time.

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Information Technology Concepts

Display Monitors

The display monitor is a device used to display the output from the computer. Because early monitors used a cathode-ray tube to display images, they were sometimes called CRTs. The cathode-ray tubes generate one or more electron beams. As the beams strike a phosphorescent compound (phosphor) coated on the inside of the screen, a dot on the screen called a pixel lights up. A pixel is a dot of colour on a photo image or a point of pixel A dot of colour on a photo image or a point of light on a light on a display screen. It appears in one of two modes: on or off. The electron display screen. beam sweeps across the screen so that as the phosphor starts to fade, it is struck and lights up again. A plasma display uses thousands of smart cells (pixels) consisting of plasma display A type of display using thousands of electrodes and neon and xenon gases that are electrically turned into plasma smart cells (pixels) consisting of (electrically charged atoms and negatively charged particles) to emit light. The electrodes and neon and xenon gases that are electrically turned plasma display lights up the pixels to form an image based on the information in into plasma (electrically charged the video signal. Each pixel is made up of three types of light – red, green and atoms and negatively charged blue – with the plasma display varying the intensities of the lights to produce a particles) to emit light. full range of colours. Plasma displays can produce high resolution and accurate representation of colours to create a high-quality image. LCD displays are flat displays that use liquid crystals – organic, oil-like material LCD displays Flat display that uses liquid crystals – organic, oilplaced between two polarizers – to form characters and graphic images on a backlit like material placed between two screen. These displays are easier on your eyes than CRTs because they are flickerpolarizers – to form characters free, brighter and do not emit the type of radiation that concerns some CRT users. and graphic images on a backlit In addition, LCD monitors take up less space and use less than half of the electricity screen. required to operate a comparably sized CRT monitor. Thin-film transistor (TFT) LCDs are a type of liquid crystal display that assigns a transistor to control each pixel, resulting in higher resolution and quicker response to changes on the screen. TFT LCD monitors have displaced the older CRT technology and are available in sizes from 12 to 30 inches. Many companies now provide multimonitor solutions that enable users to see a wealth of related information at a single glance. Organic light-emitting diode (OLED) display uses a layer of organic organic light-emitting diode material sandwiched between two conductors, which in turn are sandwiched (OLED) display Flat display that between a glass top plate and a glass bottom plate. When electric current is uses a layer of organic material applied to the two conductors, a bright, electroluminescent light is produced sandwiched between two directly from the organic material. OLEDs can provide sharper and brighter conductors, which in turn are sandwiched between a glass top colours than LCDs and CRTs, and, because they do not require a backlight, the plate and a glass bottom plate displays can be half as thick as LCDs and are flexible. Another big advantage so that when electric current is is that OLEDs do not break when dropped. OLED technology can also create applied to the two conductors, a 3D video displays by taking a traditional LCD monitor and then adding layers of bright, electroluminescent light is produced directly from the transparent OLED films to create the perception of depth without the need for organicmaterial. 3D glasses or laser optics. The iZ3D monitor is capable of displaying in both 2D and 3D modes. Because most users leave their computers on for hours at a time, power usage is an important factor when deciding which type of monitor to purchase. Energy efficiency ratings for these displays are very high as LEDs produce light with very little power.28 OLED monitors use even less power than LCD monitors. Aspect ratio and screen size describe the size of the display screen. Aspect ratio is the ratio of the width of the display to its height. An aspect ratio of 4 to 3 is common. For widescreen LCD monitors used for viewing DVD movies in widescreen format, playing games or displaying multiple screens side-by-side, an aspect ratio of 16 to 10 or 15 to 9 is preferred. The screen size is measured diagonally from the outside of the screen casing for CRT monitors and from the inside of the screen casing for LCD displays. With today’s wide selection of monitors, price and overall quality can vary tremendously. The quality of a screen image is measured by the number of horizontal and vertical pixels used to create it. Resolution is the total number of pixels contained in the display; the more pixels, the clearer and sharper the image. The size of the display monitor also affects the quality of the

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viewing. The same pixel resolution on a small screen is sharper than on a larger screen, where the same number of pixels is spread out over a larger area. Over the years, display monitor sizes have increased and display standards and resolutions have changed, as shown in Table 3.3.

Table 3.3 Common Display Monitor Standards and Associated Resolutions Standard

Resolution (number of horizontal pixels × vertical pixels)

WSXGA (Wide SGXA plus)

1680 × 1050

UXGA (Ultra XGA)

1600 × 1200

WUXGA (Wide Ultra XGA)

1920 × 1200

QXGA (Quad XGA)

2048 × 1536

Another way to measure image quality is the distance between one pixel on the screen and the next nearest pixel, which is known as dot pitch. The common range of dot pitch is from 0.25 mm to 0.31 mm. The smaller the dot pitch, the better the picture. A dot pitch of 0.28 mm or smaller is considered good. Greater pixel densities and smaller dot pitches yield sharper images of higher resolution. The characteristics of screen colour depend on the quality of the monitor, the amount of RAM in the computer system and the monitor’s graphics adapter card. Digital Video Interface (DVI) is a video interface standard designed to maximize the visual quality of digital display devices such as flat-panel LCD computer displays. Companies are competing on the innovation frontier to create thinner display devices for computers, mobile phones and other mobile devices. In its effort to gain an edge, LG Philips has developed an extremely thin display that is only 0.15 mm thick, or roughly as thick as a human hair. The display is also so flexible that it can be bent or rolled without damage. Nokia has demonstrated a flexible portable computer that you can actually twist and bend to change a music track or adjust the volume. As of May 2020, Nokia is still working on a foldable screen.29 Such screens open possibilities for manufacturers to make mobile phones and laptops with significantly larger displays but without increasing the size of the device itself, as the screen could be rolled up or folded and tucked away into a pocket. The Microsoft Surface platform is designed to help people learn, collaborate and make decisions. The Surface can be used as a tablet, mounted on the wall, or embedded in furniture or fixtures. Its large 40-inch screen is an effective way to share photos, maps, modelling and simulations. The Surface allows a single user or multiple users to manipulate digital content by motion of their hands. In 2011, the Bank of Canada implemented the Surface as a component of its Discovery Zone, a unique and digitally interactive approach to engage customers to learn more about the bank, its services and its employees. Arbie, an animated character, guided people through various applications with the results displayed on the Surface screen. Other banks took notice. In 2019, the Royal Bank of Canada launched a digitally enhanced “branch of the future” where clients can get hands-on demonstrations of RBC’s product offerings through its digital and mobile platforms.30

Printers and Plotters One of the most useful and common forms of output is called hard copy, which is simply paper output from a printer. The two main types of printers are laser printers and inkjet printers, and they are available with different speeds, features and capabilities. Some can be set up to accommodate paper forms, such as blank cheque forms and invoice forms. Specialist printers allow businesses to create full-colour, customized and individualized printed output using

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standard paper and data input. Ticket-receipt printers, such as those used in restaurants, ATMs and point-of-sale systems, are also widely used. The speed of a printer is typically measured by the number of pages printed per minute (ppm). Similar to a display screen, the quality, or resolution, of a printer’s output depends on the number of dots printed per inch (dpi). A 600-dpi printer prints more clearly than a 300-dpi printer. A recurring cost of using a printer is the inkjet or laser cartridge that must be replaced periodically every few thousand pages for laser printers and every 500 to 900 pages for inkjet printers. Inkjet printers that can print 10 to 40 ppm for black-and-white output and 5 to 20 ppm for colour output are available for less than €150. With an initial cost much less than colour laser printers, inkjet printers can print vivid hues and can produce high-quality banners, graphics, greeting cards, letters, text and photo prints. However, the cost of ink over time can be very expensive. Laser printers are generally faster than inkjet printers and can handle a heavier print load volume. Mobile print solutions enable users to wirelessly send documents, email messages and attachments, presentations and even boarding passes from any smartphone, tablet or laptop to any mobile-enabled printer in the world. For example, PrinterOn Enterprise enables any print requests from any mobile or fixed device to be routed to any of over 10,000 printers worldwide that are configured with the PrinterOn Enterprise service. Mobile users who use the service only need to access a directory of PrinterOn printers and locations and then send an email with the attachment to be printed to the email address of the printer. American Airlines Admiral Club, Delta Sky Club, Embassy Suites and DoubleTree by Hilton have installed PrinterOn printers at many of their locations.31 Plotters are a type of hard-copy output device used for general design work. Businesses typically use plotters to generate paper or acetate blueprints, schematics and drawings of buildings or new products. Standard plot widths are 24 inches and 36 inches (the widths are always measured in inches), and the length can be whatever meets the need from a few inches to many feet. Given environmental concerns, many users are trying to reduce the amount they print. E-readers, described in a later section, are a potential solution to this with users copying files to their e-reader to read rather than printing them to read, although material on an e-reader cannot as easily be annotated as paper.

3D Printers 3D printers have created a major breakthrough in how many items will be manufactured (see the Information Systems @ Work section). 3D printing technology takes a three-dimensional model of an object stored on a computer and sends it to a 3D printer to create the object using strands of a plastic filament or synthetic powder. The filament comes in spools of various colours and is fed through a heated extruder that moves in several directions to place super thin layers on top of each other. The stacks are then bonded together, often using ultraviolet light, to create a 3D object. 3D printers come with a wide range of capabilities in terms of how fast they can build objects and how large an object they can build. 3D printers for home use typically cost upwards of €300 while commercial 3D printers can cost tens of thousands of euros.32 3D printing is commonly used by aerospace firms, auto manufacturers and other designintensive companies. It is especially valuable during the conceptual stage of engineering design when the exact dimensions and material strength of the prototype are not critical. Some architectural design firms are using 3D printers to create full colour models of their projects to show clients. 3D printing can cut costs and reduce the waste and carbon footprint associated with traditional manufacturing. With 3D printing, production and assembly can be local, with no need to ship products thousands of miles to their destination. Only the raw materials needed to create the object, be it carbon fibre, metal powder, plastic filament, or some other substance, are used. Product parts can be replaced using parts manufactured with 3D printing so the entire product doesn’t have to be disposed of and replaced each time it malfunctions.33

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Hardware: Input, P rocessing, Output and Storage Devices

Digital Audio Players

A digital audio player is a device that can store, organize and play digital digital audio player A device that music files. MP3 (MPEG-1 Audio Layer-3) is a popular format for c ompressing can store, organize and play digital music files. a sound sequence into a very small file, while preserving most of the original MP3 A standard format for sound quality when it is played. By compressing the sound file, it requires compressing a sound sequence less time to download the file and less storage space on a hard drive. into a small file. You can use many different music devices smaller than a pack of cards to download music from the Internet and other sources. These devices have no moving parts and can store hours of music. Apple expanded into the digital music market with an MP3 player (the iPod) and the iTunes Music Store, which allows you to find music online, preview it and download it in a way that is safe, legal and affordable. Many music streaming services now exist such as Spotify and Deezer. Other MP3 manufacturers include Dell, Sony, Samsung, Iomega, Creative and Motorola, whose Rokr product was the first iTunes-compatible phone. The Apple iPod Touch, with a 3.5-inch widescreen, is a music player that also plays movies and TV shows, displays photos and connects to the Internet. You can, therefore, use it to view YouTube videos, buy music online, check emails and more. The display automatically adjusts the view when it is rotated from portrait to landscape. An ambient light sensor adjusts brightness to match the current lighting conditions.

E-book Readers The digital media equivalent of a conventional printed book is called an e-book (short for electronic book). The Project Gutenberg Online Book Catalog lists over 36,000 free e-books and a total of over 100,000 e-books available. E-books can be downloaded from Project Gutenberg (www.gutenberg.org) or many other sites onto personal computers or dedicated hardware devices known as e-book readers. The devices themselves cost from around €70 to €170, and downloads of the bestselling books and new releases cost less than €9.99. The e-book reader has the capacity to store thousands of books. The Amazon Paperwhite uses tiny LEDs at the bottom of the device that point toward the display. The light is dispersed across the entire screen making the device very easy on the eyes.34 E-book readers are lighter than most books and the screen is the same size as a novel. Thus, these readers are more compact than most paperbacks and can be easily held in one hand. Recent e-book readers display content in 16 million colours and high resolution. On most e-readers, the size of the text can be magnified for readers with poor vision.

3.5 Computer System Types In general, computers can be classified as either special purpose or general purpose. S pecialpurpose computers are used for limited applications, for example by military, government and scientific research groups such as the CIA and NASA. Other applications include specialized processors found in appliances, cars and other products. For example, mechanics connect special-purpose computers to your car’s engine to identify specific performance problems. As another example, IBM is developing a new generation of computer chips to develop so-called cognitive computers that are designed to mimic the way the human brain works. Rather than being programmed as today’s computers are, cognitive computers will be able to learn through experiences and outcomes and mimic human learning patterns.35 General-purpose computers are used for a variety of applications and to execute the business applications discussed in this text. General-purpose computer systems can be divided into two major groups: systems used by one user at a time and systems used by multiple concurrent users. Table 3.4 shows the general ranges of capabilities for various types of computer systems. General-purpose computer systems can range from small handheld computers to massive supercomputers that fill an entire room. We will first cover single-user computer systems.

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Table 3.4 Types of Computer Systems Single-user computer systems can be divided into two groups: portable computers and nonportable computers. Factor

Single-User Computers Portable Computers

Handheld

Laptop

Notebook

Netbook

Tablet

Cost

€100–€300

€350–€2,000

€500–€2,000

€150–€600

€150–€400

Weight (pounds)

1000

Fifth generation and beyond

Natural and intelligent languages

1980s

IF gross pay is greater than 40, THEN pay the employee overtime pay

Visual, Object-Oriented and Artificial Intelligence Languages Today, programmers often use visual and object-oriented languages. In the future, they may be using artificial intelligence languages to a greater extent. In general, these languages are easier for nonprogrammers to use, compared with older generation languages. Visual programming uses a graphical or ‘visual’ interface combined with text-based commands. Prior to visual programming, programmers were required to describe the windows, buttons, text boxes and menus that they were creating for an application by using only textbased programming language commands. With visual programming, the software engineer drags and drops graphical objects such as buttons and menus onto the application form. Then, using a programming language, the programmer defines the capabilities of those objects in a separate code window. Visual Basic was one of the first visual programming interfaces. Today, software engineers use Visual Basic.NET, Visual C++, Visual C# (# is pronounced ‘sharp’ as in music) and other visual programming tools. Many people refer to visual programming interfaces such as Visual C# as ‘visual programming languages’. This custom is fine for casual references, but a lesser-known category

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Software: Systems and Application Software

of p rogramming language is more truly visual. With a true visual programming language, p rogrammers create s oftware by manipulating programming elements only graphically, without the use of any text-based programming language commands. Examples include Alice, Mindscript and Microsoft Visual Programming Language (VPL). Visual programming languages are ideal for teaching novices the basics about programming without requiring them to memorize programming language syntax. Some programming languages separate data elements from the procedures or actions that will be performed on them, but another type of programming language ties them together into units called objects. An object consists of data and the actions that can be performed on the data. For example, an object could be data about an employee and all the operations (such as payroll calculations) that might be performed on the data. Programming languages that are based on objects are called object-oriented programming languages. C ++ and Java are popular general-purpose object-oriented programming languages.69 Languages used for web development, such as Javascript and PHP, are also object oriented. In fact, most popular languages in use today take the object-oriented approach – and for good reason. Using object-oriented programming languages is like constructing a building using prefabricated modules or parts. The object containing the data, instructions and procedures is a programming building block. The same objects (modules or parts) can be used repeatedly. One of the primary advantages of an object is that it contains reusable code. In other words, the instruction code within that object can be reused in different programs for a variety of applications, just as the same basic prefabricated door can be used in two different houses. An object can relate to data on a product, an input routine or an order-processing routine. An object can even direct a computer to execute other programs or to retrieve and manipulate data. So, a sorting routine developed for a payroll application could be used in both a billing program and an inventory control program. By reusing program code, programmers can write programs for specific application problems more quickly. By combining existing program objects with new ones, programmers can easily and efficiently develop new object-oriented programs to accomplish organizational goals. Programming languages used to create artificial intelligence or expert systems applications are often called fifth-generation languages (5GLs). Fifth-generation languages are sometimes called natural languages because they use even more English-like syntax than 4GLs. They allow programmers to communicate with the computer by using normal sentences. For example, computers programmed in fifth-generation languages can understand queries such as ‘How many athletic shoes did our company sell last month?’ With third-generation and higher-level programming languages, each statement in the language translates into several instructions in machine language. A special software program compiler A special software called a compiler converts the programmer’s source code into the machineprogram that converts the language instructions, which consist of binary digits, as shown in Figure 4.4. programmer’s source code A compiler creates a two-stage process for program execution. First, the into the machine-language compiler translates the program into a machine language; second, the CPU instructions, which consist of executes that program. Another approach is to use an interpreter, which is a binary digits. language translator that carries out the operations called for by the source code. An interpreter does not produce a complete machine-language program. After the statement executes, the machine-language statement is discarded, the process continues for the next statement and so on. The majority of software used today is created using an integrated development environment. An integrated development environment, or IDE, combines all the tools required for software engineering into one package. For example, the popular IDE Microsoft Visual Studio includes an editor that supports several visual programming interfaces and languages, a compiler and interpreter, programming automation tools, a debugger (a tool for finding errors in the code) and other tools that provide convenience to the developer.70

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Figure 4.4 How a Compiler Works A compiler translates a complete program into a complete set of binary instructions (Stage 1). After this is done, the CPU can execute the converted program in its entirety (Stage 2).

Stage 1:

Computer program

Stage 2:

INFORMATION TECHNOLOGY CONCEPTS

Convert program

Compiler

Machinelanguage program

Execute program

Machinelanguage program

Program execution

Software Development Kits (SDKs) often serve the purpose of an IDE for a particular platform. For example, software developers for Google’s Android smartphone platform use Java (an object-oriented programming language) along with the Eclipse SDK. They use special code libraries provided by Google for Android functionality, and they test out their applications in an Android Emulator.71 IDEs and SDKs have made software development easier than ever. Many novice coders and some who might have never considered developing software are publishing applications for popular platforms such as Facebook and the iPhone.

4.5 Software Issues and Trends Because software is such an important part of today’s computer systems, issues such as software bugs, licensing, upgrades, global software support and taxation have received increased attention. The governor of Colorado and the Colorado General Assembly, for example, repealed a tax on certain types of software.72 The tax repeal should help Colorado’s software industry. Software can also be harmful to companies and countries. Many tech companies now offer rewards to users who find software bugs. Facebook for example will pay at least 500 US dollars as a ‘bug bounty’ with this figure increasing depending on the severity of the error.73

Software Bugs A software bug is a defect in a computer program that keeps it from performing as it is designed to perform. 74 Some software bugs are obvious and cause the program to terminate unexpectedly. Other bugs are subtler and allow errors to creep into your work. Computer and software vendors say that as long as people design and program hardware and software, bugs are inevitable. 75 The following list summarizes tips for reducing the impact of software bugs: ■

■

Check the manual or read-me files for solutions to known problems.

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■

Access the support area of the manufacturer’s website for patches.

■

Install the latest software updates.

■

Before reporting a bug, make sure that you can recreate the circumstances under which it occurs.

■

After you can recreate the bug, call the manufacturer’s tech support line.

■

Consider waiting before buying the latest release of software, to give the vendor a chance to discover and remove bugs. Many schools and businesses don’t purchase software until the first major revision with patches is released.

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Copyrights and Licences Most companies aggressively guard and protect the source code of their software from competitors, lawsuits and other predators.76 As a result, most software products are protected by law using copyright or licensing provisions. Those provisions can vary, however. In some cases, you are given unlimited use of software on one or two computers. This stipulation is typical with many applications developed for personal computers. In other cases, you pay for your usage. If you use the software more, you pay more. This approach is becoming popular with software placed on networks or larger computers. Most of these protections prevent you from copying software and giving it to others. Some software now requires that you register or activate it before it can be fully used. This requirement is another way software companies prevent illegal distribution of their products. When people purchase software, they don’t actually own the software, but rather they are licensed to use the software on a computer. This is called a single-user licence. single-user licence A software A single-user licence permits you to install the software on one or more computers, used by one person. A single-user licence does not allow you to licence that permits you to install the software on one or more copy and share the software with others. Table 4.8 describes different types of computers, used by one person. software licences. Licences that accommodate multiple users are usually provided at a discounted price.

Table 4.8 Software Licences Licence

Description

Single-user licence

Permits you to install the software on one computer, or sometimes two computers, used by one person

Multiuser licence

Specifies the number of users allowed to use the software and can be installed on each user’s computer. For example, a 20-user licence can be installed on 20 computers for 20 users

Concurrentuser licence

Designed for network-distributed software, this licence allows any number of users to use the software but only a specific number of users to use it at the same time

Site licence

Permits the software to be used anywhere on a particular site, such as a college campus, by everyone on the site

Freeware and Open-Source Software Some software developers are not as interested in profiting from their intellectual property as others and have developed alternative copyrights and licensing agreements. Freeware is

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software that is made available to the public for free.77 Software developers might give away their product for several reasons. Some want to build customer interest and name recognition. Others simply don’t need the money and want to make a valuable donation to society. Still others, such as those associated with the Free Software Foundation (www.fsf.org), believe that all software should be free. Some freeware is placed in the public domain where anyone can use the software free of charge. (Creative works that reach the end of their term of copyright revert to the public domain.) Table 4.9 shows some examples of freeware.

Table 4.9 Examples of Freeware

Software

Description

Thunderbird

Email and newsgroup software

Pidgin

Instant messaging software

Adobe Reader

Software for viewing Adobe PDF documents

AVG Anti-Virus

Antivirus security software

WinPatrol

Antispyware software

IrfanView

Photo-editing software

Freeware differs slightly from free software. Freeware simply implies that the software is distributed for free. The term free software was coined by Richard Stallman and the Free Software Foundation and implies that the software is not only freeware, but it is also open open-source software Software source. Open-source software is distributed, typically for free, with the source that is distributed, typically code also available so that it can be studied, changed and improved by its for free, with the source code users.78 Open-source software evolves from the combined contribution of its also available so that it can be users. The Code For America (CFA) organization, for example, used openstudied, changed and improved by its users. source software in Boston and other US cities to help cities and municipalities solve some of their traffic problems, such as locating fire hydrants that might be completely covered with snow in the winter. 79 CFA made its efforts free to other cities and municipalities. Table 4.10 provides examples of popular open-source software applications.

Table 4.10 Examples of Open-Source Software Software

Each employee might have one laptop; each laptop might belong to one employee (but some are for general use and therefore won’t belong to anyone). To resolve this relationship, implement three tables – an employee table, a laptop table and a new table that we will call ‘owns’. The owns table only has two fields – employee number and laptop number. The primary key of owns is a ‘composite key’, i.e. it is the employee number and laptop number combined, and each combination of the two is unique.

4. One-to-many relationship, many side obligatory to one side.

Customer

Order

Customer – Order

A customer can place many orders but might have placed no orders; each order must be placed by one and only one employee. Resolve this relationship by taking the primary key from customer and posting it as a foreign key in order. 5. One-to-many relationship, many side optional to one side.

Student

Elective

Student – Elective module

A student might take one elective module; each module is taken by many students (i.e. the students don’t have to take an elective module). Most companies would implement this in the same way as for Relationship 4 above. However, the way to avoid nulls in the foreign key is to implement three tables – one for student, one for elective module and one that we’ll call ‘studies’ (as a student studies a module). The studies table has just two fields – student number and module number. The primary key of the studies table is student number (or you could implement a composite key). 6. Many-to-many relationship.

Student

Student – Tutor

Each tutor teaches many students; each student is taught by many tutors.

Tutor

To resolve this relationship, implement three tables – one for student, one for tutor, and a third we’ll call ‘teaches’. The teaches table has two fields – student number and tutor number, and its primary key is a composite key, i.e. a combination of student number and tutor number.

Figure 5.6 A Database Design (Also Known as a Data Model or a Database Schema) Primary keys are identified with a # symbol, foreign keys are underlined.

Customer{Customer_Number#, FirstName, Surname, Telephone} Order{Order_Number#, Description, Price, Colour, Customer_Number} Supplier{Supplier_Number#, Company_Name, Contact_FirstName, Contact_Surname, Telephone}

CHAPTER 5

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Organizing and Storing Data

5.2 Database Management Systems How do we actually create, implement, use and update a database? The answer is found in the DBMS. A DBMS is a group of programs used as an interface between a database and application programs or between a database and the user. The capabilities and types of database systems vary, however, but generally they provide the following.

Creating and Modifying the Database Schemas or designs are entered into the DBMS (usually by database personnel) via a data definition language. A data definition language (DDL) is a collection of instructions and commands used to define and describe data and relationships in a specific database. A DDL allows the database’s creator to describe the data and relationships. Structured Query Language (SQL) is a DDL. Figure 5.7 shows four SQL statements to create a database called Lettings, a table called Landlords and insert a record about John Smith.

data definition language (DDL) A collection of instructions and commands used to define and describe data and relationships in a specific database.

Figure 5.7 SQL as a

CREATE DATABASE Lettings;

DDL SQL code is being used to create a database called ‘Lettings’ with a table called ‘Landlords’ which has three fields: ‘Firstname’, ‘Surname’ and ‘Telephone’. The code then enters one landlord called John Smith into the table.

USE Lettings; CREATE TABLE landlords( Firstname CHAR(10), Surname CHAR(10), Telephone CHAR(10)); INSERT INTO landlords( ‘John’, ‘Smith’, ‘123456’);

Another important step in creating a database is to establish a data dictionary, a detailed description of all data used in the database. The data dictionary describes all the fields in the database, their range of accepted values, the type of data (such as alphanumeric or numeric), the amount of storage space needed for each and a note of who can access each and who updates each. Figure 5.8 shows a typical data dictionary entry.

Attribute

Data Type

Primary Key?

Required?

Customer_Number

Text

First_Name

Text

Surname

Text

Date_of_Birth

Date

data dictionary A detailed description of all the data used in the database.

Figure 5.8 A Typical Data Dictionary Entry for the Customer Table for an Office Furniture Seller

A data dictionary helps achieve the advantages of the database approach in these ways: ■

Reduced data redundancy. By providing standard definitions of all data, it is less likely that the same data item will be stored in different places under different names.

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For example, a data dictionary reduces the likelihood that the same part number would be stored as two different items, such as PT_NO and PARTNO. ■

Increased data reliability. A data dictionary and the database approach reduce the chance that data will be destroyed or lost. In addition, it is more difficult for unauthorized people to gain access to sensitive data and information.

■

Assists program development. With a data dictionary, programmers know what data is stored and what data type each field is. This information is valuable when writing programs that make use of the data.

■

Easier modification of data and information. The data dictionary and the database approach make modifications to data easier because users do not need to know where the data is stored. The person making the change indicates the new value of the variable or item, such as part number, that is to be changed. The database system locates the data and makes the necessary change.

Storing and Retrieving Data 5

One function of a DBMS is to be an interface between an application program and the database. When an application program needs data, it requests that data through the DBMS. Suppose that to calculate the total price of a new car, a car dealer pricing program needs price data on the engine option – six cylinders instead of the standard four cylinders. The application program thus requests this data from the DBMS. In doing so, the application program follows a logical access path. Next, the DBMS, working with various system programs, accesses a storage device, such as disc drives, where the data is stored. When the DBMS goes to this storage device to retrieve the data, it follows a path to the physical location (physical access path) where the price of this option is stored. In the pricing example, the DBMS might go to a disc drive to retrieve the price data for six-cylinder engines. This relationship is shown in Figure 5.9.

Figure 5.9 Logical and

Data on storage device

Physical Access Paths

Physical access path (PAP) DBMS DBMS Logical access path (LAP) Management inquiries

Other software

Application programs

This same process is used if a user wants to get information from the database. First, the user requests the data from the DBMS. For example, a user might give a command, such as LIST ALL OPTIONS FOR WHICH PRICE IS GREATER THAN 200 EUROS. This is the logical access path (LAP). Then, the DBMS might go to the options price section of a disc to get the information for the user. This is the physical access path (PAP).

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Two or more people or programs attempting to access the same record in the same database at the same time can cause a problem. For example, an inventory control program might attempt to reduce the inventory level for a product by ten units because ten units were just shipped to a customer. At the same time, a purchasing program might attempt to increase the inventory level for the same product by 200 units because more inventory was just received. Without proper database control, one of the inventory updates might not be correctly made, resulting in an inaccurate inventory level for the product. Concurrency control concurrency control A method of dealing with a situation in which can be used to avoid this potential problem. One approach is to lock out all two or more people need to access other application programs from access to a record if the record is being the same record in a database at the same time. updated or used by another program.

Manipulating Data and Generating Reports After a DBMS has been installed, employees, managers and consumers can use it to review reports and obtain important information. Some databases use Query-by-Example (QBE), which is a visual approach to developing database queries or requests. Alternatively, SQL can be used to query the database. For example, SELECT * FROM EMPLOYEE WHERE JOB_CLASSIFICATION = ‘C2’. This will output all employees who have a job classification of ‘C2’. The ‘*’ tells the DBMS to include all columns from the EMPLOYEE table in the results. In general, the commands that are used to manipulate the database are part of the data data manipulation language manipulation language (DML), of which SQL is an example. (So SQL is both (DML) The commands that are used to manipulate the data in a a DDL and DML.) SQL commands can be used in a computer program to database. query a database, which is convenient for programmers. SQL, which is pronounced like the word ‘sequel’, was developed in the 1970s at the IBM Research Laboratory in San Jose, California. In 1986, the American National Standards Institute (ANSI) adopted SQL as the standard query language for relational databases. Since ANSI’s acceptance of SQL, interest in making SQL an integral part of relational databases on both mainframe and personal computers has increased. SQL has many built-in functions, such as average (AVG), find the largest value (MAX), find the smallest value (MIN) and others. Table 5.2 contains examples of SQL commands.

Table 5.2 Examples of SQL Commands SQL Command

Description

This query displays all clients (ClientName) and the amount they SELECT ClientName, Debt FROM Client WHERE Debt > 1000 owe the company (Debt) from a database table called Client for clients who owe the company more than €1,000 (WHERE Debt > 1000) SELECT ClientName, ClientNum, This command is an example of a join command that combines OrderNum FROM Client, Order WHERE data from two tables: the client table and the order table (FROM Client.ClientNum=Order.ClientNum Client, Order). The command creates a new table with the client name, client number and order number (SELECT ClientName, ClientNum, OrderNum). Both tables include the client number, which allows them to be joined. This is indicated in the WHERE clause, which states that the client number in the client table is the same as (equal to) the client number in the order table (WHERE Client.ClientNum=Order.ClientNum) GRANT INSERT ON Client to Guthrie This command is an example of a security command. It allows Bob Guthrie to insert new values or rows into the Client table

SQL lets programmers learn one powerful query language and use it on systems ranging from PCs to the largest mainframe computers. Programmers and database users also

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find SQL valuable because SQL statements can be embedded into many programming languages (discussed in Chapter 4), such as C#, Visual Basic and COBOL. Because SQL uses standardized and simplified procedures for retrieving, storing and manipulating data in a database system, the popular database query language can be easy to understand anduse. After a database has been set up and loaded with data, it can produce any desired reports, documents and other outputs. These outputs usually appear in screen displays or hard-copy printouts. The output-control features of a database program allow you to select the records and fields to appear in reports. You can also make calculations specifically for the report by manipulating database fields. Formatting controls and organization options (such as report headings) help you to customize reports and create flexible, convenient and powerful information-handling tools. A DBMS can produce a wide variety of documents, reports and other outputs that can help organizations achieve their goals. The most common reports select and organize data to present summary information about some aspect of company operations. For example, accounting reports often summarize financial data such as current and past-due accounts. Many companies base their routine operating decisions on regular status reports that show the progress of specific orders towards completion and delivery. Databases can also provide support to help executives and other people make better decisions. CloudERP, based in South Africa, develops software apps to help streamline processes and make data available to help with decision making.1 The apps all make use of existing, open source business software, which helps lower costs. In addition, and as was discussed in the previous chapter, open source software is generally better quality than proprietary software. A database is central to every business selling over the Internet. Amazon, for example, has a huge amount of data on customers’ past purchases, which its competitors must envy, that it uses to make personal recommendations and generate more sales. Each time a retur ning customer comes back to the website, a report is produced of their recommendations, which becomes part of the web page itself, something described later in this chapter.

Database Administration Database systems require a skilled database administrator (DBA). A DBA is expected to have a clear understanding of the fundamental business of the organization, be proficient in the use of selected DBMSs and stay abreast of emerging technologies and new design approaches. The role of the DBA is to plan, design, create, operate, secure, monitor and maintain databases. Typically, a DBA has a degree in computer science or management information systems, and some on-the-job training with a particular database product or more extensive experience with a range of database products. The DBA works with users to decide the content of the database – to determine exactly what entities are of interest and what attributes are to be recorded about those entities. Thus, personnel outside of IS must have some idea of what the DBA does and why this function is important. The DBA can play a crucial role in the development of effective information systems to benefit the organization, employees and managers. The DBA also works with programmers as they build applications to ensure that their programs comply with DBMS standards and conventions. After the database is built and operating, the DBA monitors operations logs for security violations. Database performance is also monitored to ensure

database administrator (DBA) The role of the database administrator is to plan, design, create, operate, secure, monitor and maintain databases.

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that the system’s response time meets users’ needs and that it operates e fficiently. If there is a problem, the DBA attempts to correct it before it becomes serious. Some organizations have also created a position called the data data administrator A administrator, a non-technical but important role that ensures data is non-technical position responsible for defining and implementing managed as an important organizational resource. The data administrator is consistent principles for a variety responsible for defining and implementing consistent principles for a variety of of data issues. data issues, including setting data standards and data definitions that apply across all the databases in an organization. For example, the data administrator would ensure that a term such as ‘customer’ is defined and treated consistently in all corporate databases. This person also works with business managers to identify who should have read or update access to certain databases and to selected attributes within those databases. This information is then communicated to the database administrator for implementation. The data administrator can be a high-level position reporting to top-level managers.

Selecting a Database Management System The DBA often selects the DBMS for an organization. The process begins by analyzing database needs and characteristics. The information needs of the organization affect the type of data that is collected and the type of DBMS that is used. Important characteristics of databases include the following: ■

Database size. The number of records or files in the database.

■

Database cost. The purchase or lease costs of the database.

■

Concurrent users. The number of people who need to use the database at the same time (the number of concurrent users).

■

Performance. How fast the database is able to update records.

■

Integration. The ability to be integrated with other applications and databases.

■

Vendor. The reputation and financial stability of the database vendor.

The amount of electronic data in the world is estimated to double every two years. 2 Companies such as Tesco and Sainsbury’s add billions of rows to their databases every day, as they capture every scrap of data that they can on their customers. Scientific databases are larger still. By 2017, CERN, the European Organization for Nuclear Research, had more than 200 petabytes of data in its archive.3

Using Databases with Other Software DBMSs are often used with other software packages or the Internet. A DBMS can act as a front-end application or a back-end application. A front-end application is one that directly interacts with people or users. Marketing researchers often use a database as a front end to a statistical analysis program. The researchers enter the results of marketing questionnaires or surveys into a database. The data is then transferred to a statistical analysis program to determine the potential for a new product or the effectiveness of an advertising campaign. A back-end application interacts with other programs or applications; it only indirectly interacts with people or users. When people request information from a website, the website can interact with a database (the back end) that supplies the desired information. For example, you can connect to a university website to find out whether the university’s library has a book you want to read. The website then interacts with a database that contains a catalogue of library books and articles to determine whether the book you want is available.

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5.3 Database Applications Database applications manipulate the content of a database to produce useful information. Common manipulations are searching, filtering, synthesizing and assimilating the data contained in a database using a number of database applications. These applications allow users to link the company databases to the Internet, set up data warehouses, use databases for strategic business intelligence, place data at different locations, use online processing and open connectivity standards for increased productivity, and search for and use unstructured data, such as graphics, audio and video.4, 5

Linking Databases to the Internet

Linking databases to the Internet is an incredibly useful application for organizations and individuals. Every e-commerce website uses database technology to dynamically create its web pages, saving vast amounts of effort. Every time you visit Amazon, for instance, or the South African fashion retailer Edgars, or one of thousands of other Internet businesses, the pages you see are created at that time from a database of product and customer information. This simplifies the maintenance of the website – to add new stock, all that needs to be done is enter a new record in the product table. Many governments have published their public records databases online to give their citizens easy access to them. The National Archives, for example, is the official archive and publisher for the UK government and in this role, manages the website www.legislation.gov.uk.6 This site publishes all UK laws and should be required reading for anyone accused of a crime – if for no other reason than to check that what the prosecutors say they did is actually a crime! Likewise many museums are publishing photographs of their collections online. The British Museum does this and says it is to offer everyone unparalleled access.7 Developing a seamless integration of traditional databases with the Internet is often called a ‘semantic web’. A semantic web allows people to access and manipulate a number of traditional databases at the same time through the Internet. Many software vendors – including IBM, Oracle, Microsoft, Macromedia, Inline Internet Systems and Netscape Communications – are incorporating the capability of the Internet into their products. Such databases allow companies to create an Internet-accessible catalogue, which is nothing more than a database of items, descriptions and prices. In addition to the Internet, organizations are gaining access to databases through networks to get good prices and reliable service. Connecting databases to corporate websites and networks can lead to potential problems, however. One database expert believes that up to 40 per cent of websites that connect to corporate databases are susceptible to hackers taking complete control of the database. By typing certain characters in a form on some websites, a hacker can issue SQL commands to control the corporate database.

Big Data Applications Much of the data that organizations store comes from their Transaction Processing Systems, which are described fully in Chapter 7. However, firms are frequently storing less well-structured data too, such as photos, videos, data from customers’ blogs, data from social networks and from their own website, including the order in which people view their web pages. All of this is often called Big Data – large amounts of unstructured data that are difficult or impossible to capture and analyze using traditional DBMSs. Big Data can provide valuable insights to help organizations achieve their goals. It can reveal which potential customers are most likely to purchase which products. It can identify where and when a customer tends to shop. It can even determine how much a customer would be willing to pay for a product.

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Special Big Data hardware and software tools have been developed to collect, store and analyze these data. Apache Hadoop is an open-source database that can be used to manage large unstructured datasets in conjunction with relational databases.8 Yahoo! for example, uses Hadoop to collect and analyze exabytes (millions of terabytes) of data.9 Oracle has developed Big Data Appliance, which is a combination of hardware and software specifically designed to capture, store and analyze large amounts of unstructured data. IBM has developed InfoSphere BigInsights, which is based on Hadoop, to help organizations analyze continuously created data.

Data Warehouses The data necessary to make sound business decisions is stored in a variety of locations and formats. This data is initially captured, stored and managed by transaction processing systems that are designed to support the day-to-day operations of the organization. For decades, organizations have collected operational, sales and financial data with their transaction processing systems (explained fully in Chapter 7). A data data warehouse A database warehouse is a database or a collection of databases that holds business or collection of databases that collects business information from information from many sources in the enterprise, covering all aspects of the many sources in the enterprise, company’s processes, products and customers. The data warehouse provides covering all aspects of the business users with a multidimensional view of the data they need to analyze company’s processes, products business conditions. A data warehouse stores historical data that has been and customers. extracted from transaction processing systems, as well as data from external sources (see Figure 5.10). This operational and external data is ‘cleaned’ to remove inconsistencies and integrated to create a new information database that is more suitable for business analysis.

Figure 5.10 Elements

Data from Transaction Processing System (TPS) database

of a Data Warehouse

External databases (e.g. population demographics, environment data, competitor information) Data extraction and cleansing Click stream data from website

Department spreadsheets and databases

Data warehouse

Query and analysis tools

Extremely rich and useful information

Data warehouses typically start out as very large databases, containing millions and even hundreds of millions of data records. As this data is collected from various sources, one data

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warehouse is built that business analysts can use. To keep it accurate, the data warehouse receives regular updates. Old data that is no longer needed is purged. It is common for a data warehouse to contain from three to ten years of current and historical data. Data-cleaning tools can merge data from many sources to make the warehouse, automate data collection and verification, delete unwanted data and maintain the data. Data warehouses can also receive data from unique sources. Warehouse management software, for example, can accept information from radio frequency identification (RFID) technology, which is being used to tag products as they are shipped or moved from one location to another. A data warehouse can be extremely difficult to establish, with the typical cost exceeding €2 million.

Ethical and Societal Issues 5

Three Words and a Few Symbols Cost a Business €40m In October 2015, almost 157,000 customers of the telecoms giant TalkTalk had their personal details stolen from the company’s computers. This was around 4 per cent of the company’s entire customer base and included 15,656 people whose bank account numbers and sort codes were taken. The company was quick to respond, with the CEO Baroness Diana Mary Harding appearing on a number of television news programmes almost immediately giving out information. In a move that should be admired, her information seemed to be ‘hot off the press’ and was released as soon as TalkTalk had uncovered it. This speed and openness was welcomed, but it did mean that at times, Baroness Harding was badly briefed. In one interview she said the company had been the subject of a ‘sequential attack’. What she meant was an SQL Injection attack (SQL is usually pronounced Sequel). It’s a little technical, but here’s what this means in detail. When you enter data into a textbox on a website (for instance when you type in your name and address on an e-commerce site), what you are doing on almost all such websites is interacting directly with the company’s database. This can be very dangerous and web designers have to be careful to implement this correctly. Let’s say you type in the address: 10 London Road. Behind the scenes a computer converts this to an SQL command which looks like this: INSERT INTO CUSTOMER (Address_Line_1) VALUES (“10 London Road”);

Note that the computer adds”); at the end of the statement. If the web designers haven’t been careful enough, a user can play with this. Let’s say we type in exactly the following: 10 London Road”); Hello!

The close quotes, bracket and semi colon that we typed in ourselves will cause trouble. The computer might interpret this as its own close quotes and then send this to the database: INSERT INTO CUSTOMER (Address_Line_1) VALUES (“10 London Road”); Hello!”);

The first part is perfectly valid and will be run by the database, but our “); after London Road will end the statement before it should come to an end. Then the Hello!”); will generate an error message. Now, if instead we type the following into the textbox, there will be a big problem: ABC”); SELECT * FROM CUSTOMER;

The computer will generate the following SQL: INSERT INTO CUSTOMER (Address_Line_1) VALUES (“ABC”); SELECT * FROM CUSTOMER; ”);

Look at this carefully to make sure you can see what is going on. The first part is the INSERT statement generated by the computer trying to insert the first line of our address. We have artificially ended this by putting ”); after ABC. (By the way, the ABC is irrelevant – it’s just there to try to make this clearer. A space would have done instead.) Then we

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have injected SELECT * FROM CUSTOMER; This is perfectly valid SQL and the database will obey it and return all the data from the customer table. The ”); on its own at the very end will generate an error message but by that stage, who cares? We’ve already stolen all the customer data. That’s pretty much it! That’s all it took to steal customer data from TalkTalk. To prevent this attack the web designers should have verified the input from the textbox properly – there are a variety of ways of doing this. There are bug bounties available if you find vulnerabilities in a company’s website and let them know. Usually they are only offered by large firms. Facebook and Google for instance have a bug bounty scheme. Run a web search for ‘penetration test’ if you want to know more. You should remember however that if you play around with SQL Injection ‘just to see what happens’, there is a risk that you could be fined or even arrested.

Questions 1 How should companies inform customers of a data theft? Should the information given out be hot off the press? 2 Create a strategy that a company could use to secure its data from SQL Injection attacks. 3 Should business information systems students learn the technical details of attacks like

these or should this information be kept more secret? 4 Should companies give bug bounties? Is this at all risky? How and where should they be advertised?

References Farrell, S. 2015. ‘Nearly 157,000 Had Data Breached in TalkTalk Cyber-Attack’. The Guardian. Available from: www.theguardian. com/business/2015/nov/06/nearly-157000had-data-breached-in-talktalk-cyber-attack. Accessed 28 May 2020. Monaghan, A. 2015. ‘TalkTalk Profits Halve After Cyber-Attack’. The Guardian. Available from: www.theguardian.com/business/2016/may/12/ talktalk-profits-halve-hack-cyber-attack. Accessed 28 May 2020. The Register, 2013. ‘Further Confusion As TalkTalk Claims It Was Hit By “Sequential Attack”’. Available from: www.theregister. co.uk/2015/10/26/talktalk_sequential_attack/. Accessed 28 May 2020. Scott, T. 2013. ‘Hacking Websites with SQL Injection’. Computerphile. Available from: www.youtube.com/watch?v=_jKylhJtPmI. Accessed 28 May 2020.

Data Mining Data mining is the process of analyzing data to try to discover patterns and data mining The process of relationships within the data. Typically, a data warehouse is mined. Like gold analyzing data to try to discover patterns and relationships within mining, data mining sifts through mountains of data to find a few nuggets of the data. valuable information. There are a number of data mining tools and techniques. Association rules algorithms are used to find associations between items in the data. A question that an association rule algorithm might be used to answer is, if someone buys eggs, how likely is it that they will also buy cheese? This information could be used in a supermarket to lay out the goods in the best configuration. Rattle (Figure 5.11) is an extremely powerful data mining application which can be used within the programming language R. Both are entirely free and can be downloaded from www.r-project.org/. Data mining is used extensively in marketing to improve customer retention; identify crossselling opportunities; manage marketing campaigns; market, channel and pricing analysis; and customer segmentation analysis (especially one-to-one marketing). Data-mining tools help users find answers to questions they haven’t thought to ask.

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Figure 5.11 Data Mining with Rattle Rattle is a software package that runs in the R programming language. Both are available for free. To get started visit www.r-project.org.

E-commerce presents another major opportunity for effective use of data mining. Attracting customers to websites is tough; keeping them can be tougher. For example, when retail websites launch deep-discount sales, they cannot easily determine how many first-time customers are likely to come back and buy again. Neither do they have a way of understanding which customers acquired during the sale are price sensitive and more likely to jump on future sales. As a result, companies are gathering data on user traffic through their websites and storing that data in databases. This data is then analyzed using datamining techniques to personalize and customize the website, and develop sales promotions targeted at specific customers. Traditional DBMS vendors are well aware of the great potential of data mining. Thus, companies such as Oracle, Sybase, Tandem and Red Brick Systems are all incorporating data-mining functionality into their products. Table 5.3 summarizes a few of the most frequent applications for data mining. See Case Two at the end of the chapter for an explanation of one data-mining algorithm.

Business Intelligence business intelligence (BI) The process of gathering enough of the right information in a timely manner and usable form, and analyzing it to have a positive impact on business strategy, tactics or operations.

Closely linked to the concept of data mining is the use of databases for business-intelligence purposes. Business intelligence (BI) involves gathering enough of the right information in a timely manner and usable form, and analyzing it so that it can be used to have a positive effect on business strategy, tactics or operations. Zoho Analytics is BI software that users, without help, can set up to create visually appealing data visualizations and insightful dashboards.10 BI turns data into useful information that is then distributed throughout an enterprise.

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Table 5.3 Common Data-Mining Applications Application Description Branding and positioning Enable the strategist to visualize the different positions of of products and services competitors in a given market using performance (or other) data on dozens of key features of the product and then to condense all that data into a perceptual map of only two or three dimensions Customer churn Predict current customers who are likely to switch to a competitor Direct marketing Identify prospects most likely to respond to a direct marketing campaign (such as a direct mailing) Fraud detection Highlight transactions most likely to be deceptive or illegal Market basket analysis Identify products and services that are most commonly purchased at the same time (e.g. nail polish and lipstick) Market segmentation Group customers based on who they are or what they prefer Trend analysis Analyze how key variables (e.g. sales, spending, promotions) vary over time

Information Systems @ Work The IBM Quantum Experience IBM Research has recently made quantum computing available to members of the public by allowing access to a first-of-a-kind quantum computing platform delivered via the IBM Cloud onto any desktop or mobile device. Called the IBM Quantum Experience, the platform will allow users to run algorithms and experiments on IBM’s quantum processor to explore tutorials and simulations around what might be possible with quantum computing. It has been realized for several decades that there are great advantages to storing, transmitting and processing information encoded in systems that exhibit quantum properties, as this would dramatically improve computational power for particular tasks. ‘Quantum computers are very different from today’s computers, not only in what they look like and are made of, but more importantly in what they can do’, said Arvind Krishna, senior vice president and director, IBM Research. ‘Quantum

computing is becoming a reality and it will extend computation far beyond what is imaginable with today’s computers. This moment represents the birth of quantum cloud computing. By giving hands-on access to IBM’s experimental quantum systems, the IBM Quantum Experience will make it easier for researchers and the scientific community to accelerate innovations in the quantum field, and help discover new applications for this technology.’ The physics of small particles like photons and electrons are strange. These particles can exist in more than one state at the same time and can form partnerships with each other in a way that even if the two of them are separated by several miles, each of them somehow knows what state the other is in. This is known as entanglement. If these particles could be reliably manipulated, they could quickly perform computing tasks that would take normal computers many thousands of years, (continued)

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because they would be able to perform multiple calculations simultaneously. To understand why this is, imagine a simple calculation: XXX + XXX = XXXX, where each of the Xs is either a 1 or a 0 (there is an extra X in the result as this would be a bigger number than the others). Taking just the first XXX, this number could be 000 or 001 or 110; there are only a few permutations of 1s and 0s possible (in fact there are 8 – see if you can list them). If a quantum computer could create Xs that were simultaneously 1 and 0, then every possible permutation of 1s and 0s – every way of possibly adding together XXX and XXX – could be calculated in one addition. In a traditional computer this would take 64 additions, so the quantum computer will be much faster! (Why 64 additions? This figure comes from: 0+0, 0+1, 0+2, 0+3 ... then 1+0, 1+1, 1+2, 1+3 ... all the way up to 7+7.) The problem is that quantum states are very fragile. The most critical aspect of quantum computers is that they must be ‘closed boxes’: a quantum computer’s internal operations, while under the programmer’s control, must be isolated from the rest of the universe, otherwise its particles will lose their entanglement. Small amounts of information leakage cause a destructive process known as decoherence. However, if decoherence can be solved, there are huge gains to be had. IBM envisions medium-sized quantum processors of 50–100 qubits to be operational within the next decade. A quantum computer built of just 50 qubits would work faster than any of the current top 500 fastest supercomputers, which reflects the tremendous potential this technology has. The IBM Quantum Experience computer has 5 qubits. IBM is not the only one working towards this goal. Documents leaked by the whistle-blower Edward Snowden reveal that the US National Security Agency (NSA) has been conducting ‘basic research’ to determine whether it is possible to build a quantum computer that would be useful

competitive intelligence One aspect of business knowledge limited to information about competitors and the ways that knowledge affects strategy, tactics and operations.

INFORMATION TECHNOLOGY CONCEPTS

for cracking encrypted communications. This is because quantum computers should excel at factoring large numbers which could be used to break commonly used encryption methods, which derive their security from the fact that ordinary computers can’t find factors quickly. So, in principle, the NSA could use a quantum computer to read secret data. Another possible application is super-fast searches to sift through vast amounts of data. However, the Snowden documents state that they are nowhere near reaching this goal. Currently, the tutorials at the IBM Quantum Experience cover the basic principles of qubits, lessons illustrating entanglement and how entangled particles can create the logic gates necessary to build a computer, and a first look at programming quantum algorithms.

Questions 1 Why would IBM release this platform to the general public? Is there a business case for it? 2 Why would the NSA be interested in quantum computing? 3 Who else should be interested? Who do you think the users of the IBM Quantum Experience are? 4 Have a look at the IBM Quantum Experience website. If you are feeling brave, register for an account and try the first tutorial.

References IBM press release, 2016. ‘IBM Makes Quantum Computing Available on IBM Cloud to Accelerate Innovation’. Available from: www-03. ibm.com/press/us/en/pressrelease/49661.wss. Accessed 28 May 2020. Ladd, T. D. et al. 2010. ‘Quantum Computers’. Nature, Vol. 464, pp. 45–53. The IBM Quantum Experience website. researchweb.watson.ibm.com/quantum/. Accessed 28 May 2020.

Competitive intelligence is one aspect of BI and is limited to information about competitors and the ways that knowledge affects strategy, tactics and operations. Competitive intelligence is a critical part of a company’s ability to see and respond quickly and appropriately to the changing marketplace. Competitive intelligence is not espionage: the use of illegal means to gather information. In fact, almost all the information a competitive-intelligence professional needs can be collected by examining published information

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sources, conducting interviews and using other legal, ethical methods. Using a variety of analytical tools, a skilled competitive-intelligence professional can by deduction fill the gaps in information already gathered. The term counterintelligence describes the steps an organization takes to counterintelligence The steps protect information sought by ‘hostile’ intelligence gatherers. One of the most an organization takes to protect information sought by ‘hostile’ effective counterintelligence measures is to define ‘trade secret’ information intelligence gatherers. relevant to the company and control its dissemination.

Distributed Databases Distributed processing involves placing processing units at different locations and linking them via telecommunications equipment. A distributed database – a database in which the data is spread across several smaller databases connected through telecommunications devices – works on much the same principle. A user in the London branch of a clothing manufacturer, for example, might make a request for data that is physically located at corporate headquarters in Milan, Italy. The user does not have to know where the data is physically stored (seeFigure5.12).

distributed database A database in which the data is spread across several smaller databases connected via telecommunications devices.

Figure 5.12 The Use of a Distributed Database This figure shows how data from a clothing manufacturer is stored across multiple sites.

Warehouse

Research and development HQ

SHOP

2 1

Research and development

Retail outlet

User request

For the clothing manufacturer, computers might be located at the headquarters, in the research and development centre, in the warehouse and in a company-owned retail store.

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Telecommunications systems link the computers so that users at all locations can access the same distributed database no matter where the data is actually stored.

Wide Column Store

Distributed databases often don’t use the relational model. When data is stored in tables using the relational model, in order to find a specific piece of information the computer must look up separate facts in separate tables – the first table is searched for the primary key of interest to find the relevant foreign key of interest; the computer then switches to a second table and searches for that foreign key (which of course is the primary key of the second table) and so on. When there is a lot of data stored in many tables, and the tables are stored across multiple computers, this can be slower than alternatives such as a wide column store. Wide column store databases such as Apache Cassandra and Google Bigtable do not use SQL – in fact they are referred to as NoSQL databases. One way of thinking about wide column store databases is a set of ‘raggedy’ tables that don’t have the same number of columns in each row. This means that data that would be stored in many relational tables can be stored in one table in a wide column store, potentially reducing the number of processes that must be performed to access any one fact in the data. Distributed databases give organizations more flexibility in how databases are organized and used. Local offices can create, manage and use their own databases, and people at other offices can access and share the data in the local databases. Giving local sites more direct access to frequently used data can improve organizational effectiveness and efficiency significantly. The Medical Literature Analysis and Retrieval System Online, or MEDLINE, is an online bibliographic database which stores details of papers and news reports published in medical journals. Over 5,000 journals are included in 40 languages. The details for each paper are its title, the authors and their affiliations, the abstract and a link to the paper on the publisher’s website. MEDLINE allows users all over the world to search for health related information.11 Despite its advantages, distributed processing creates additional challenges in integrating different databases (information integration), maintaining data security, accuracy, timeliness and conformance to standards. 12, 13 Distributed databases allow more users direct access at different sites, thus controlling who accesses and changes data is sometimes difficult.14 Also, because distributed databases rely on telecommunications lines to transport data, access to data can be slower. To reduce telecommunications costs, some organizations build a replicated database A database replicated database. A replicated database holds a duplicate set of that holds a duplicate set of frequently used data. The company sends a copy of important data to each frequently used data. distributed processing location when needed or at predetermined times. Each site sends the changed data back to update the main database on an update cycle. This process, often called data synchronization, is used to make sure that replicated databases are accurate, up to date and consistent with each other. A railway, for example, can use a replicated database to increase punctuality, safety and reliability. The primary database can hold data on fares, routes and other essential information. The data can be continually replicated and downloaded from the master database to hundreds of remote servers across the country. The remote locations can send back the latest figures on ticket sales and reservations to the main database.

Online Analytical Processing (OLAP) For nearly two decades, databases and their display systems have provided flashy sales presentations and trade show demonstrations. All you have to do is ask where a certain product is selling well, for example, and a colourful table showing sales performance by online analytical processing region, product type and time frame appears on the screen. Called online (OLAP) Software that allows users analytical processing (OLAP), these programs are now being used to store to explore data from a number of perspectives. and deliver data warehouse information efficiently. The leading OLAP software

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vendors include Cognos, Comshare, Hyperion Solutions, Oracle, MineShare, WhiteLight and Microsoft. (Note that in this context, the word ‘online’ does not refer to the Internet – it simply means that a query is made and answered immediately, as opposed to a user submitting a query and the processing taking place at some other time, for instance at night when the servers are used less.) The value of data ultimately lies in the decisions it enables. Powerful information-analysis tools in areas such as OLAP and data mining, when incorporated into a data warehousing architecture, bring market conditions into sharper focus and help organizations deliver greater competitive value. OLAP provides top-down, query-driven data analysis; data mining provides bottom-up, discovery-driven analysis. OLAP requires repetitive testing of user-originated theories; data mining requires no assumptions and instead identifies facts and conclusions based on patterns discovered. OLAP, or multidimensional analysis, requires a great deal of human ingenuity and interaction with the database to find information in the database. A user of a data-mining tool does not need to figure out what questions to ask; instead, the approach is, ‘here’s the data, tell me what interesting patterns emerge’. For example, a data-mining tool in a credit card company’s customer database can construct a profile of fraudulent activity from historical information. Then, this profile can be applied to all incoming transaction data to identify and stop fraudulent behaviour, which might otherwise go undetected. Table 5.4 compares the OLAP and data-mining approaches to data analysis.

Table 5.4 Comparison of OLAP and Data Mining Characteristic

OLAP

Data Mining

Purpose Supports data analysis and Supports data analysis and decision making decision making Type of analysis supported Top-down, query-driven data Bottom-up, discovery-driven analysis data analysis Skills required of user Must be very knowledgeable of Must trust in data-mining tools the data and its business to uncover valid and worthwhile context hypotheses

Visual, Audio and Other Database Systems Organizations are increasingly finding a need to store large amounts of visual and audio signals in an organized fashion. Credit card companies, for example, enter pictures of charge slips into an image database using a scanner. The images can be stored in the database and later sorted by customer name, printed and sent to customers along with their monthly statements. Image databases are also used by medical staff to store X-rays and transmit them to clinics away from the main hospital. Financial services, insurance companies and government branches are using image databases to store vital records and replace paper documents. Drug companies often need to analyze many visual images from laboratories. The PetroView database and analysis tool allows petroleum engineers to analyze geographic information to help them determine where to drill for oil and gas. Visual-fingerprint database are often used to solve cold cases.15 Visual databases can be stored in some object-relational databases or special-purpose database systems. Many relational databases can also store graphic content. Combining and analyzing data from different databases is an increasingly important challenge. Global businesses, for example, sometimes need to analyze sales and accounting data stored around the world in different database systems. Companies such as IBM are developing virtual

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database systems to allow different databases to work together as a unified database system. DiscoveryLink, one of IBM’s projects, can integrate biomedical data from different sources. The Center for Disease Control and Prevention (CDC) in the USA also has the problem of integrating more than 100 databases on various diseases. In addition to visual, audio and virtual databases, there are a number of other special-purpose database systems. Spatial data technology involves using a database to store and access data according to the locations it describes and to permit spatial queries and analysis. MapExtreme is spatial technology software from MapInfo that extends a user’s database so that it can store, manage and manipulate location-based data. Police departments, for example, can use this type of software to bring together crime data and map it visually so that patterns are easier to analyze. Police officers can select and work with spatial data at a specified location, within a rectangle, a given radius or a polygon such as their area of jurisdiction. For example, a police officer can request a list of all alcohol shops within a two-mile radius of the police station. Builders and insurance companies use spatial data to make decisions related to natural hazards. Spatial data can even be used to improve financial risk management, with information stored by investment type, currency type, interest rates and time. 5

Summary Data management and modelling are key aspects of organizing data and information. Data is one of the most valuable resources that a firm possesses. The most common way to organize data is in a relational database. A relational database is made up of tables, each table is made up of records and each record is made up of fields. Loosely, each table stores information about an entity. An entity is someone or something that the firm wants to store information about. The fields are the characteristics or attributes about the entity that are stored. A record collects together all the fields of a particular instance of an entity. A primary key uniquely identifies each record. Designing a database involves identifying entities and the relationships between them, as well as the attributes of each entity. There are rules to follow to convert related entities into a data model, a list of all tables to be implemented in the database, with primary and foreign keys identified. Basic data manipulations include selecting, projecting and joining. A well-designed and well-managed database is central to almost all information systems and is an extremely valuable tool in supporting decision making. A DBMS is a group of programs used as

an interface between a database and its users and other application programs. When an application program requests data from the database, it follows a logical access path. The actual retrieval of the data follows a physical access path. Records can be considered in the same way: a logical record is what the record contains; a physical record is where the record is stored on storage devices. Schemas are used to describe the entire database, its record types and their relationships to the DBMS. Schemas are entered into the computer via a data definition language, which describes the data and relationships in a specific database. Another tool used in database management is the data dictionary, which contains detailed descriptions of all data in the database. After a DBMS has been installed, the database can be accessed, modified and queried via a data manipulation language. A specialized data manipulation language is Structured Query Language (SQL). SQL is used in several popular database packages today and can be installed on PCs and mainframes. Popular single-user DBMSs include Corel Paradox and Microsoft Access. IBM, Oracle and Microsoft are the leading DBMS vendors. Selecting a DBMS begins by analyzing the information needs of the organization. Important

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characteristics of databases include the size of the database, the number of concurrent users, its performance, the ability of the DBMS to be integrated with other systems, the features of the DBMS, the vendor considerations and the cost of the DBMS. The number and types of database applications will continue to evolve and yield real business benefits. Organizations are building data warehouses, which are relational DBMSs specifically designed to support management decision making. Data mining, which is the automated discovery of patterns and relationships in a data warehouse, is emerging as a practical approach to generating hypotheses about the patterns and anomalies in the data that can be used to predict future behaviour. Predictive analysis is a form of data mining that combines historical data with assumptions about future conditions to forecast outcomes of events such as future product sales or the probability that a customer will default on a loan. Business intelligence is the process of getting enough of the right information in a timely manner and usable form and analyzing it so that it can have a positive effect on business strategy, tactics or operations. Competitive intelligence is one aspect of business intelligence limited to information about competitors and the ways that information affects strategy, tactics and operations. Competitive

intelligence is not espionage – the use of illegal means to gather information. Counterintelligence describes the steps an organization takes to protect information sought by ‘hostile’ intelligence gatherers. With the increased use of telecommunications and networks, distributed databases, which allow multiple users and different sites access to data that may be stored in different physical locations, are gaining in popularity. To reduce telecommunications costs, some organizations build replicated databases, which hold a duplicate set of frequently used data. Online analytical processing (OLAP) programs are being used to store data and allow users to explore the data from a number of different perspectives. An object-oriented database uses the same overall approach of object-oriented programming, first discussed in Chapter 4. With this approach, both the data and the processing instructions are stored in the database. An object-relational database management system (ORDBMS) provides a complete set of relational database capabilities, plus the ability for third parties to add new data types and operations to the database. These new data types can be audio, video and graphical data that require new indexing, optimization and retrieval features. In addition to raw data, organizations are increasingly finding a need to store large amounts of visual and audio signals in an organized fashion. There are also a number of special-purpose database systems.

Self-Assessment Test 1 A _________ uniquely identifies a record. 2 A relational database is made up of _________. 3 An _________ is a person, place or thing about whom or about which a company stores data. 4 If a company stores a fact only once, it is said to have reduced _________. 5 SQL is a data _________ language and a data _________ language. 6 The _________ statement is used to extract data from a database.

7 The person who manages a database is the _________. 8 A collection of databases collecting information on all aspects of a business is known as a data _________. 9 _________ is a popular and free data mining tool. 10 A database that holds a duplicate set of frequently used data is _________.

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Review Questions 1 What can you do with SQL? 2 Explain the CREATE SQL statement. 3 Explain the SELECT SQL statement. 4 What does DBMS stand for? What does it do? 5 What is data mining?

7 How can data mining be used to improve an e-commerce website? 8 What is Hadoop? 9 How does Rattle work? 10 List some SQL functions.

6 What is business intelligence?

Discussion Questions 5

1 Should a company store every scrap of data it can get its hands on?

2 Should there be any industries or sectors where data mining is considered unethical?

Web Exercises 1 Write an SQL statement to create the order table for the furniture seller. If you are comfortable and competent at installing software from the web, download the DBMS LibreOffice Base and implement the table.

2 If you are comfortable and competent at installing software from the web, install R and the Rattle package. Search for a YouTube tutorial and work through it.

Case One Click Here to Reset Your Password Nature magazine recently published a list of the most common passwords. The top five were: 1 123456 2 password 3 qwerty 4 12345 5 123456789 It’s understandable that people are stressed with trying to manage their passwords – almost every time you make a purchase online – or even read an article in an online newspaper – a company tries to get you to ‘register for all these great benefits’ that you probably don’t want or care about. When money isn’t on the line (that is, when they’re not handing over their credit card details), many people seem to care less and use 12345 as their password.

What’s more interesting is where Nature is getting its data, because password information is not as easy to find as you might think, unless the company storing them doesn’t know what they are doing. Nature can’t have just phoned up Google to ask them for their most common passwords, and we know that not just because Google probably wouldn’t tell them – we know it because Google doesn’t know your password! Have you ever forgotten your login details, requested them from a company and then been annoyed when you get emailed a link to click on to reset them? Why don’t they just send me my password? If they did send just your password, it would mean that any systems administrator at your email company could see it. And by extension, any systems administrator at the company you’re dealing with could see it as well. Rather than having

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a field in a database called ‘password’ which someone could peer into, it’s much safer not to store passwords at all. So how does that work? One way a small company can achieve this is by forming a partnership with a big technology company. You may have seen this when you get the option to ‘login with your Facebook account’ or ‘login with your Google account’ when you are buying something from a craft shop or secondhand book store. What’s happening is that the company you’re dealing with is passing on the responsibility of identifying you to someone who is better at it than they are. Another approach is to store an encrypted version of your password. So your password – let’s say in plain text it’s ‘bubblegum’ – gets transformed into a meaningless encrypted string. It looks like gibberish, maybe it’s ‘jh8yg2buj’, and is what gets stored in the database. This may sound like a good idea but it means that everyone who uses the same password generates the same gibberish and anyone who managed to get access to the database could easily identify which were the common passwords. If they figured out one, they would have access to many accounts. There have even been cases of big technology firms storing encrypted passwords alongside the plain text password hints. So an unauthorized person could look in the database and see the gibberish ‘kj3oy’ stored alongside the user’s hint ‘the name of my cat’. A few tries and they’ll guess the password is ‘moggy’! A better approach, called salting, involves the company adding a random string of text to your password, then encrypting both of these together and storing the (now much longer) encrypted gibberish. The same random string is added to your password every time you type it in – it’s unique to you. This is then run through the encryption algorithm and the gibberish that is generated is compared with the gibberish that is stored in the database. This means that if anyone sees the file

of gibberish, they can’t work out any patterns. It also means that when you ask for your password, the company can’t give it to you because they don’t know it (they only store the gibberish). To add to the security, instead of storing a password hint, if you forget your password some companies will send a code in a text to your mobile phone, which you must type in. Incidentally, many hackers won’t bother trying to see the password database in the first place. It’s much easier to contact you and say something like: ‘Hi, I’m from IT. We’re having a problem with our password file, it’s got all mangled up. You won’t be able to login until we fix it. We have your password stored as bubblegum. Is that right?’ Many people are likely to quickly say ‘No my password is moggy’.

Questions 1 If your credit card is not involved and you don’t really care about the service you are registering for, does it matter if you use 12345 as your password? 2 The hacker at the end is using something called social engineering. How would you protect yourself from this sort of attack? How would you protect your employees? 3 Why do you think Facebook and Google offer a login service? 4 Why do you think people use such easy to guess passwords? How could you prevent this?

References Mitnick, K. 2012. ‘Ghost In The Wires: My Adventures as the World’s Most Wanted Hacker’. Back Bay. Scott, T. 2013. ‘How NOT to Store Passwords!’ Computerphile. Available from: www.youtube. com/watch?v=8ZtInClXe1Q. Accessed 28 May 2020. Waldrop, M. 2016. ‘The Human Side of Cybercrime’. Nature, Vol. 533, Issue 7602, pp. 164–167.

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Case Two Machine Learning: How Many Books Have You Read?

Developed at the University of Waikato, New Zealand, Weka is a collection of machine learning algorithms for data-mining tasks. Named after a flightless bird found only in New Zealand, Weka is open source software. Weka is a popular way to learn data mining. One application for Weka is text mining, which involves processing chunks of text to extract useful summary information from it. For example, Weka has been used to automatically process movie reviews to determine whether most reviewers like it or love it, something known as ‘sentiment analysis’. When Google announced Google Books, researcher Erez Lieberman Aiden saw an opportunity to text mine on a grand scale. In 1996, Google cofounders Sergey Brin and Larry Page had the idea for Google Books, a world in which vast collections of books are digitized, indexed by a computer program to analyze their content and explore the connections between them. In fact, the program they envisioned for this task was their BackRub algorithm, which developed into the Google search program, the core search technology that makes Google Google! Before being in a position to make it happen, Brin and Page envisioned people everywhere being able to search through all of the world’s books to find the ones they’re looking for. Fast forward 15 years and the eventual size of the data Lieberman Aiden’s team examined was an amazing 4 per cent of all books ever published. That’s 361 billion words in English, 45 billion in French, 37 billion in German and 13 billion in C hinese. This cannot be read by a human. The only way to digest it is by using software such as Weka. To digitize the books, Google used optical character recognition, a set of algorithms that transform a picture of a word into the corresponding digital text. This process isn’t perfect. The most common error was reading an s as an f, because of how s was written in the Middle Ages. (It’s called a ‘medial s’ and leads to all sorts of jokes featuring the word succour, which was used more frequently back then than it is today!) The team analyzed the resulting dataset to investigate cultural trends and explore how grammar has evolved. Actually, this is quite a simple example of text mining. All that the team

was doing was creating frequency counts of words (counting the number of times each word was used). The main challenge they had was in dealing with the amount of data. The frequencies allowed the team to report on a number of phenomena. For instance, in the 1950s, ‘speed up’ overtook ‘sped’ as the most frequently used verb meaning to get faster. One hundred years previously in America, ‘burned’ overtook ‘burnt’; it wasn’t until the 1980s that this happened in the UK. Any given year is discussed a lot in print over the following three years, after which mentions of it drop vastly. Fame is more short lived than it used to be: in the past, famous people were mentioned in books for longer than famous people are today. The name they gave to analyzing these data with text mining is culturomics. Weka can be downloaded from the University of Waikato website, and there are many books and online tutorials to help you if you would like to explore it, and the Culturomics dataset can be explored at its website.

Questions 1 What uses of culturomics, if any, can you think of for a business? 2 What uses of sentiment analysis can you thinkof? 3 Why should a business be interested in text mining? 4 Should every company that collects data have a knowledge of software such as Weka?

References Culturomics website. www.culturomics.org. Accessed 28 May 2020. Google Books history. books.google.com/googlebooks/about/history.html. Accessed 28 May 2020. Michel, J. et al., 2011. ‘Quantitative Analysis of Culture Using Millions of Digitized Books’. Science, Vol. 331, Issue 6014, pp. 176–182. Weka website. www.cs.waikato.ac.nz/ml/weka/. Accessed 28 May 2020.

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Case Three Protect Your Data: Life is Valuable You should think twice before you hand over sensitive data to a company that is likely to be a target for hackers. The web is awash with dating sites and each of them is trying to carve out a particular niche. There are sites for those looking for a long-term partner, a one-night stand, a person who works in uniform, a person of the same religion, or a discreet relationship. Ashley Madison falls into the latter category. It specializes in helping married people have an affair. As you would imagine, the list of the site’s members is extremely sensitive and so it was with some amount of shock and shame that those members woke to news of a data breach in July 2015. The site had been hacked. The perpetrators gave themselves the name Impact Team and seemed to have been led by an ex-employee. Journalist Brian Krebs was one of the first to hear about the leak. An anonymous informant had sent him a link to a database of real names, addresses and credit card numbers of Ashley Madison members. More than 30 million people in more than 40 countries were affected, including South Africa. Technology news site www.MyBroadBand.co.za was keen to take a look. ‘Unfortunately’, reporter J an Vermeulen said, ‘the country code field in the Ashley Madison member database did not have a single value for all South African users – making it difficult to get an accurate total [of South African users]. However, it was possible to query the number of .za email addresses used to register accounts, as well as the South African cities and towns members said they were “looking for action” in’. They found about 50,000 users. Elsewhere, politicians, priests, military members, civil servants and celebrities were waking up to the news that their secret was out. In fact hundreds of public figures were found among the listed membership. An Alabama newspaper printed all the names of people from that region who were in the Ashley Madison’s database. ‘There’s a very real chance that people are going to overreact’, Brian Krebs wrote. ‘I wouldn’t be surprised if we saw people taking their lives because of this.’

Sadly, in fact, there were a small number of suicides, including a priest from Louisiana. There were blackmail threats too. These came first electronically via email and then physically as letters. The letters demanded payment, in the thousands of dollars, to avoid having their membership of the site made public. The security journalist Graham Cluley reported one such letter which demanded over $4,000 be paid in Bitcoin (see Chapter 10 for more information about Bitcoin) with a threat to expose the existence of the account ‘to people close to’ the victim if he or she refused. The advice on receiving any such letter is to ignore it – the blackmailer can always demand more money and has no motivation to destroy what information they have.

Questions 1 How could users of sites like this protect themselves from data breaches? 2 What should Ashley Madison’s response have been? 3 What would your advice be to anyone who received a similar letter? 4 Do partners not have a right to see if their loved one is on a site like this?

References Ashley Madison website. www.ashleymadison.com/. Accessed 28 May 2020. Hern, A. 2016. ‘Spouses of Ashley Madison Users Targeted with Blackmail Letters’. The Guardian. www.theguardian.com/technology/2016/mar/03/ ashley-madison-users-spouses-targeted-byblackmailers. Accessed 12 June 2020 Lamont, T. 2016. ‘Life after the Ashley Madison Affair’. The Guardian. www.theguardian.com/ technology/2016/feb/28/what-happened-afterashley-madison-was-hacked. Accessed 12 June 2020 Vermeulen, J. 2015. ‘Ashley Madison Hack List: South African Details’. MyBroadBand. www. mybroadband.co.za/news/security/135972ashley-madison-hack-list-south-african-details. html. Accessed 28 May 2020.

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Notes 1

CloudERP Website, www.clouderp.biz. Accessed 28 May 2020. 2 Inside Big Data, 2017. ‘The Exponential Growth of Data’. Available from: www.insidebigdata. com/2017/02//16/the-exponential-growth-of-data. Accessed 28 April 2020. 3 Gaillard, M. 2017. ‘CERN Data Center Passes the 200-Petabyte Milestone’, www.home.cern/news/ news/computing/cern-data-centre-passes-200petabyte-milestone. Accessed 28 May 2020. 4 Gray, Jim and Compton, Mark, ‘Long Anticipated, the Arrival of Radically Restructured Database Architectures Is Now Finally at Hand’, ACM Queue, vol. 3, no. 3, April 2005. 5 Wall, M. Techwalla. ‘What Are Database Applications?’ www.techwalla.com/articles/whatare-database-applications” www.techwalla.com/ articles/what-are-database-applications. Accessed 19 June 2020. 6 National Archives Legislation Website. www. legislation.gov.uk. Accessed 28 May 2020. 7 British Museum Website. www.britishmuseum.org/ research/collection_online/search.aspx. Accessed 28 May 2020.

Vijayan, J., ‘Hadoop works alongside RDBMS’, Computerworld, 22 August 2011, p. 5. 9 Bednarz, A. ‘Rise of Hadoop challenge for IT’, Network World, 13 February 2012, p. 1. 10 Zoho Website. www.zoho.eu. Accessed 28 May 2020. 11 National Library of Medicine Website. www.nlm. nih.gov/bsd/medline.html. Accessed 28 May 2020. 12 Kay, Russell, ‘Enterprise Information Integration’, Computerworld, 19 September 2005, p. 64. 13 Bouchrika, I. EJB Tutorial. ‘Challenges for a Distributed System’. 21 September 2013. www. ejbtutorial.com/distributed-systems/challengesfor-a-distributed-system” www.ejbtutorial.com/ distributed-systems/challenges-for-a-distributedsystem. Accessed 19 June 2020. 14 Babcock, Charles, ‘Protection Gets Granular’, InformationWeek, 23 September 2005, p. 58. 15 Dissell, R. 2019. New fingerprint searches in unsolved cases can solve violent crimes. Available from: www.cleveland.com/metro/2017/03/ new_fingerprint_senew_fingerprint_searches_in_ unsolved_cases_can_solve_violent_crimesarches_ in_un.html. Accessed 12 June 2020.

06 Computer Networks Principles

Learning Objectives

Effective communications are essential to organizational success.

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Define the terms ‘communications’ and ‘telecommuni cations’ and describe the components of a telecommuni cations system.

Communications technology lets more people send and receive all forms of information over great distances.

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Identify several communications hardware devices and discuss their function.

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Describe many of the benefits associated with a telecommunications network.

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Define the term ‘communications protocols’ and identify several common ones.

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Briefly describe how the Internet works, including alternatives for connecting to it and the role of Internet service providers.

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Describe the World Wide Web and the way it works.

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Explain the use of web browsers, search engines and other web tools.

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Outline a process for creating web content.

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Define the terms ‘intranet’ and ‘extranet’ and discuss how organizations are using them.

The Internet is like many other technologies – it provides a wide range of services, some of which are effective and practical for use today, others are still evolving, and still others will fade away from lack of use.

Because the Internet and the World Wide Web are becoming more universally used and accepted for business use, management, service and speed, privacy and security issues must continually be addressed and resolved.

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Why Learn About Computer Networks?

We have examined hardware and software, and paid special attention to how data is organized for storage. The power of information technology greatly increases when devices are linked or networked, which is the subject of this chapter. Today’s decision makers need to access data wherever it resides. They must be able to establish fast, reliable connections to exchange messages, upload and download data and software, route business transactions to processors, connect to databases and network services, and send output to printers. Regardless of your chosen career field, you will need the communications capabilities provided by computer networks. The world’s largest network is the Internet. To say that the Internet has had a big impact on organizations of all types and sizes would be a huge understatement. Since the early 1990s, when the Internet was first used for commercial purposes, it has affected all aspects of business. Businesses use the Internet to sell and advertise their products and services, reaching out to new and existing customers. People working in every field and at every level use the Internet in their jobs. Whatever your career, you will probably use the Internet daily.

6.1 Telecommunications Telecommunications refers to the electronic transmission of signals for communications, by such means as telephone, radio and television. Telecommunications impacts businesses greatly because it lessens the barriers of time and distance. Telecommunications is not only changing the way businesses operate but also the nature of commerce itself. As networks are connected with one another and transmit information more freely, a competitive marketplace demands excellent quality and service from all organizations. Figure 6.1 shows a general model of telecommunications. The model starts with a sending unit (1), such as a person, a computer system, a terminal or another device, that originates the message. The sending unit transmits a signal (2) to a telecommunications device (3). The telecommunications device – a hardware component that facilitates electronic communication – performs many tasks, which can include converting the signal into a different form or from one type to another. The telecommunications device then sends the signal through a medium (4). Atelecommunications medium is any material substance that carries an electronic signal to support communications between a sending and receiving device. Another telecommunications device (5)connected to the receiving computer (6) receives the signal. The process can be reversed, and the receiving unit (6) can send another message to the original sending unit (1). An important characteristic of telecommunications is the speed at which information is transmitted, which is measured in bits per second (bps). Common speeds are in the range of thousands of bits per second (Kbps) to millions of bits per second (Mbps) and even billions of bits per second (Gbps). Advances in telecommunications technology allow us to communicate rapidly with clients and co-workers almost anywhere in the world. Communication between two people can occur synchronously or asynchronously. With synchronous communication, the receiver gets the m essage almost instantaneously when it is sent. Phone communication is an example of synchronous communication. With asynchronous communication, there is a measurable delay between the sending and receiving of the message, sometimes hours or even days. Sending a letter through the post office or by email are e xamples of asynchronous communications. Bothtypes of communications are important in business. However, to use telecommunications effectively, you must carefully analyze telecommunications media and devices.

telecommunications The electronic transmission of signals for communications; enables organizations to carry out their processes and tasks through effective computer networks.

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Figure 6.1 Elements

Medium (4)

of a Telecommunications System Telecommunications devices relay signals between computer systems and transmission media.

Signal (2)

Medium (4)

Signal (2)

Telecommunications device (5) Sending computer system and equipment (1) Medium (4)

Signal (2) Telecommunications device (3)

Receiving computer system and equipment (6)

Channel Bandwidth Telecommunications channel bandwidth refers to the rate at which data is e xchanged, usually measured in bits per second (bps) – the broader the bandwidth, the more information can be exchanged at one time. Broadband communications can exchange data very quickly, as opposed to narrowband communications which supports a much lower rate of data exchange. Telecommunications professionals consider the capacity of the channel when they recommend transmission media for a business. In general, today’s organizations need more bandwidth for increased transmission speed to carry out their daily functions. To increase bandwidth, first consider the different types of telecommunications media you can use.

channel bandwidth The rate at which data is exchanged over a communications channel, usually measured in bits per second (bps). broadband communications A telecommunications system in which a very high rate of data exchange is possible. narrowband communications A telecommunications system that supports a much lower rate of data exchange than broadband.

Guided Transmission Media Types Transmission media can be divided into two broad categories: guided transmission media, in which communications signals are guided along a solid medium; and wireless, in which the communications signal is broadcast over airwaves as a form of electromagnetic radiation. There are many different guided transmission media types. Table 6.1 summarizes the guided media types by physical media type. Several guided transmission media types are discussed in the sections following the table.

Twisted-Pair Wire Twisted-pair wire contains two or more twisted pairs of wire, usually copper (see Figure 6.2a). Proper twisting of the wire keeps the signal from ‘bleeding’ into the next pair and creating electrical interference. Because the twisted-pair wires are insulated, they can be placed close together and packaged in one group. Hundreds of wire pairs can be grouped into one large wire cable. Twisted-pair wires are classified by category, depending on the frequency of data transmission. The lower categories are used primarily in homes. Higher categories are sometimes used in smaller networks. Ten gigabit ethernet (labelled IEEE 802.3an) is an emerging standard for transmitting data at the speed of 10 billion bits per second for limited distances over shielded twisted-pair wires. It will be used for the high-speed links that connect groups of computers or to move data stored in large databases on large computers to stand-alone storage devices.1

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Table 6.1 Guided Transmission Media Types Guided Media Types

Media Type

Description

Advantages

Disadvantages

Twisted-pair wire

Twisted pairs of copper wire, shielded or unshielded

Used for telephone service; widely available

Transmission speed and distance limitations

Coaxial cable

Inner conductor wire surrounded by insulation

Cleaner and faster data trans mission than twisted-pair wire

More expensive than twistedpair wire

Fibre-optic cable

Many extremely thin strands of glass bound together in a sheathing; uses light beams to transmit signals

Diameter of cable is much smaller than coaxial; less distortion of signal; capable of high transmission rates

Expensive to purchase andinstall

Broadband over power lines

Data is transmitted over standard high-voltage powerlines

Can provide Internet service to rural areas where cable and phone service may be non-existent

Can be expensive and may interfere with ham/amateur radios, andpolice and fire communications

Figure 6.2 Types of Guided Transmission Media (a) Twisted-pair wire (b) Coaxial cable (c) Fibre-optic cable

(a)

(b)

(c)

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Coaxial Cable Figure 6.2b shows a typical coaxial cable. Coaxial cable falls in the middle of the guided transmission media in terms of cost and performance. The cable itself is more expensive than twisted-pair wire but less so than fibre-optic cable. However, the cost of installation and other necessary communications equipment makes it difficult to compare the total costs of each media. Coaxial cable offers cleaner and crisper data transmission (less noise) than twistedpair wire. It also offers a higher data transmission rate. Companies such as Virgin Media are aggressively courting customers for telephone service, enticing them away from the phone companies such as BT by bundling Internet and phone services along with TV.

Fibre-Optic Cable Fibre-optic cable, consisting of many extremely thin strands of glass or plastic bound together in a sheathing (a jacket), transmits signals with light beams (see Figure 6.2c). These high-intensity light beams are generated by lasers and are conducted along the transparent fibres. These fibres have a thin coating, called cladding, which effectively works like a mirror, preventing the light from leaking out of the fibre. The much smaller diameter of fibre-optic cable makes it ideal when there is not room for bulky copper wires – for example, in crowded conduits, which can be pipes or spaces carrying both electrical and communications wires. In such tight spaces, the smaller fibre-optic telecommunications cable is very effective. Because fibre-optic cables are immune to electrical interference, they can transmit signals over longer distances with fewer expensive repeaters to amplify or rebroadcast the data. Fibre-optic cable and associated telecommunications devices are more expensive to purchase and install than their twisted-pair wire counterparts, although the cost is decreasing. Laying thousands of miles of fibre-optic cable across its vast expanses is credited for helping propel India into the high-tech world. With the capability that this infrastructure provided, Indian workers were able to collaborate closely with their Western counterparts even though they were thousands of miles away.2 As a result, India has emerged as a key business partner to many firms that have outsourced part of their business operations or that use Indian firms for information systems projects.

Broadband Over Power Lines Many utilities, cities and organizations are experimenting with providing network connections over standard high-voltage power lines. Manassas, Virginia, became the first city in the USA to offer this service to all its citizens. To access the Internet, broadband over power lines (BPL) users connect their computer to a special hardware device that plugs into any electrical wall socket. A potential issue with BPL is that transmitting data over unshielded power lines can interfere with both ham radio broadcasts, and police and fire radios. However, BPL can provide Internet service in rural areas where broadband access is unavailable, because electricity is prevalent in homes even more than telephone lines.3

Wireless Transmission Media Types Many technologies are used to transmit communications wirelessly. The major technologies include microwave, satellite, radio and infrared. Their key distinguishing feature is the frequency at which signals are transmitted.

Microwave Transmission Microwave is a high-frequency (300 MHz–300 GHz) signal sent through the air (see Figure 6.3). Terrestrial (Earth-bound) microwaves are transmitted by line-of-sight devices, so that the line of sight between the transmitter and receiver must be unobstructed. Typically, microwave stations are placed in a series – one station receives a signal, amplifies it and retransmits it to the next microwave transmission tower. Such stations can be located roughly 30 miles apart before the curvature of the Earth makes it impossible for the towers to ‘see one another’. Microwave signals can carry thousands of channels at the same time.

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Figure 6.3 Microwave

Communications Because they are line-of-sight transmission devices, microwave dishes are frequently placed in relatively high locations, such as atop mountains, towers or tall buildings.

INFORMATION TECHNOLOGY CONCEPTS

Microwave relay station Microwave relay station

Microwave relay station

th ht pa of-sig Line- 30 miles) t (abou

Earth

A communications satellite also operates in the microwave frequency range (see Figure 6.4). The satellite receives the signal from the Earth station, amplifies the relatively weak signal and then rebroadcasts it at a different frequency. The advantage of satellite communications is that it can receive and broadcast over large geographic regions. Such problems as the curvature of the Earth, and mountains and other structures that block the line-of-sight microwave transmission, make satellites an attractive alternative. Geostationary, low Earth orbit and small mobile satellite stations are the most common forms of satellite communications. A geostationary satellite orbits the Earth directly over the equator approximately 35,400km (22,000 miles) above the Earth so that it appears stationary. Three such satellites, spaced at equal intervals (120 angular degrees apart), can cover the entire world. A g eostationary s atellitecan be accessed using a dish antenna aimed at the spot in the sky where the satellite hovers. A low Earth orbit (LEO) satellite system employs many satellites, each in a circular orbit at an altitude of a few hundred kilometres. The satellites are spaced so that from any point on the Earth at any time, at least one satellite is on a line of sight. A very small aperture terminal (VSAT) is a two-way satellite ground station with a dish antenna smaller than three metres in diameter. Many retail chains employ this technology to support point-of-sale transactions, including credit cards. News organizations employ VSAT dishes that run on battery power to transmit news stories from remote locations. VSAT technology is being used to rebuild the telecommunications infrastructure in Afghanistan and Iraq.

5G Wireless Communication Wireless communications have evolved through four generations of technology and services. The first-generation (1G) of wireless communications standards originated in the 1980s and was based on analogue communications. The second-generation (2G) networks were fully digital, superseding 1G networks in the early 1990s. With 2G networks, phone conversations were encrypted, mobile phone usage was expanded, and short message services (SMS) or texting was introduced. 3G wireless communications supports wireless voice and broadband speed data communications in a mobile environment at speeds of 2 to 4 Mbps. Additional capabilities include mobile video, mobile e-commerce, location-based services, mobile gaming, and the

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downloading and playing of music. 4G broadband mobile wireless delivered more advanced versions of enhanced multimedia, smooth streaming video, universal access and portability across all types of devices. 4G can deliver 3 to 20 times the speed of 3G networks for mobile devices such as smartphones, tablets and laptops. The latest generation (which is what the ‘G’ stands for), 5G, is bringing higher data transmission rates, lower power consumption, higher connection reliability with fewer dropped calls, increased geographic coverage and lower infrastructure costs. In the UK, the 5G network is currently being rolled out in stages and most users will need to upgrade their devices to make full use of it. The development is controversial though, with parts of the development contract possibly going to Chinese company (the decision is under review) Huawei against the advice of the USA, that thinks the Chinese government will use this as an opportunity to gather data on UK military bases and power stations.4 Vodacom Group is planning to launch 5G services in South Africa in 20205 using hardware being built by African operator Liquid Telecom.

Figure 6.4 Satellite

Communications satellite

Microwave station

Transmission Communica tions satellites are relay stations that receive signals from one Earth station and rebroadcast them to another.

Microwave station

Approximately 35,400 km

Earth

Wi-Fi

Wi-fi is a wireless telecommunications technology brand owned by the Wi-Fi wi-fi A medium-range wireless Alliance which consists of about 300 technology companies including AT&T, telecommunications technology brand owned by the Wi-Fi Dell, Microsoft, Nokia and Qualcomm. The Alliance exists to improve the Alliance. interoperability of wireless local area network products based on the IEEE 802.11 series of telecommunications standards. Wi-fi is a medium-range wireless option typically operating up to about 30 metres around a single building. With a wi-fi network, the user’s computer, smartphone or tablet has a wireless adapter that translates data into a radio signal and transmits it using an antenna.

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A wireless access point, which consists of a transmitter with an antenna, receives the signal and decodes it. The access point then sends the information to the Internet over a wired connection. When receiving data, the wireless access point takes the information from the Internet, translates it into a radio signal and sends it to the device’s wireless adapter (see Figure 6.5). Mobile devices typically come with built-in wireless transmitters and software that enable them to detect the existence of a wi-fi network and alert the user. The area covered by one or more interconnected wireless access points is called a ‘hot spot’. Wi-fi has proven so popular that hot spots have been established in many airports, coffee shops, libraries, university campuses and hotels.

Figure 6.5 A Typical Mobile Transmission Scenario Using a mobile phone, the caller dials the number (1). The signal is sent from the phone’s antenna to the low-powered mobile antenna located in that area (2). The signal is sent to the regional mobile phone switching office, also called the mobile telephone subscriber office (MTSO) (3). The signal is switched to the local telephone company switching station located nearest the call destination (4). Now integrated into the regular phone system, the call is switched to the number originally dialled (5), all without the need for operator assistance.

(5)

(2) (4) (1) (3)

Near Field Communication

Near field communication (NFC) is a very short-range wireless connectivity technology designed for consumer electronics, smartphones and credit cards. Once two NFC-enabled devices are in close proximity (touching or a few centimetres apart), they exchange the necessary communications parameters and passwords to enable Bluetooth, wi-fi or other wireless communications between the devices. Because only two devices participate, NFC establishes a peer-to-peer network. Barclays Bank was one of the first banks in the UK to offer a contactless payment system built into its credit cards. Customers can pay for goods easily and safely by waving their card across a reader in the store. The system uses NFC technology.

near field communication (NFC) A very short-range wireless connectivity technology designed for consumer electronics, smartphones and credit cards.

Bluetooth A wireless communications specification that describes how smartphones, computers, printers and other electronic devices can be interconnected over distances of a few metres at a rate or about 2 Mbps.

Bluetooth

Bluetooth is a wireless communications specification that describes how smartphones, computers, printers and other electronic devices can be interconnected over distances of a few metres at a rate of about 2 Mbps. One important application of bluetooth is in hands-free use of mobile phones when driving, using a bluetooth headset to connect to a phone.

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Ultra Wideband

Ultra wideband (UWB) communications involves the transmission of extremely ultra wideband (UWB) A form short electromagnetic pulses lasting just 50 to 1,000 picoseconds. (One of short-range communication picosecond is one trillionth or one-millionth of one-millionth of a second.) The that employs extremely short electromagnetic pulses lasting pulses are capable of supporting data transmission rates of 480 to 1320 Mbps 50 to 1,000 picoseconds that are over relatively short ranges of 10 to 50 metres. UWB offers several advantages transmitted across a broad range over other communications means: a high throughput rate, the ability to transmit of radio frequencies or several virtually undetected and impervious to interception or jamming, and a lack of gigahertz. interference with current communications services. Potential UWB applications include wirelessly connecting printers and other devices to desktop computers or enabling home multimedia networks. Manufacturers of medical instruments are using UWB for video endoscopes, laryngoscopes and ultrasound transducers.6

Infrared Transmission Another mode of transmission, called infrared transmission, sends signals through the air via light waves at a frequency of 300 GHz and above. Infrared transmission requires line-of-sight transmission and short distances – under a few hundred metres. Infrared transmission can be used to connect a display screen, a printer and a mouse to a computer, meaning there are no wires to clutter up the desk. Some special-purpose phones can also use infrared transmission. You can use infrared to e stablish a wireless network, with the advantage that devices can be moved, removed and installed without expensive wiring and network connections. The Apple remote is a remote control made for use with Apple products withinfrared capabilities. It has just six buttons: Menu, Play/Pause, Volume Up, Volume Down, Previous/ Rewind and Next/Fast-forward. The Mac Mini features an infrared port designed to work with the Apple remote and supports Front Row, a multimedia application that allows users to access shared iTunes and iPhoto libraries and video throughout their home.7

Telecommunications Hardware Telecommunications hardware devices include modems, multiplexers and front-end processors.

Modems At different stages in the communication process, telecommunications often uses transmission media of different types and capacities. If you use an analogue telephone line to transfer data, it can only accommodate an analogue signal (a variable signal continuous analogue signal A variable in both time and amplitude so that any small fluctuations in the signal are signal continuous in both time and amplitude so that any small meaningful). Because a computer generates a digital signal representing fluctuations in the signal are bits, you need a special device to convert the digital signal to an analogue meaningful. signal and vice versa (see Figure 6.6). Translating data from digital to analogue digital signal A signal that is called ‘modulation’, and translating data from analogue to digital is called represents bits. ‘demodulation’. Thus, these devices are modulation/demodulation devices or modems A telecommunications hardware device that converts modems. (modulates and demodulates) Modems can dial telephone numbers, originate message sending and answer communications signals so they incoming calls and messages. Cellular modems in laptop computers allow people can be transmitted over the communication media. on the go to communicate with other computer systems and devices.

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Figure 6.6 How a

Modem Works Digital signals are modulated into analogue signals, which can be carried over existing phone lines. The analogue signals are then demodulated back into digital signals by the receiving modem.

Analogue transmission

Digital transmission

Modem

multiplexer A device that encodes data from two or more data sources onto a single communications channel, thus reducing the number of communications channels needed and therefore lowering telecommunications costs.

Modem

Multiplexers

A multiplexer is a device that encodes data from two or more data sources onto a single communications channel, thus reducing the number of communications channels needed and therefore lowering telecommunications costs (see Figure 6.7).

Figure 6.7 Use of a Multiplexer to Consolidate Data Communications Onto a Single Communications Link

Communications link

Multiplexer

Front-End Processors front-end processors A specialpurpose computer that manages communications to and from a computer system serving hundreds or even thousands of users.

INFORMATION TECHNOLOGY CONCEPTS

Front-end processor

Host computer

Front-end processors are special-purpose computers that manage communications to and from a computer system serving hundreds or even thousands of users. They poll user devices to see if they have messages to send and facilitate efficient, error-free communications. By performing this work, the front-end processor relieves the primary computer system of much of the overhead processing associated with telecommunications.

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Private Branch Exchange

A private branch exchange (PBX) is a telephone switching exchange that private branch exchange (PBX) A serves a single organization. It enables users to share a certain number of outside telephone switching exchange that lines (trunk lines) to make telephone calls to people outside the organization. serves a single organization. This sharing reduces the number of trunk lines required, which in turn reduces the organization’s telephone costs. A PBX also enables the routing of calls between individuals within the organizations. The PBX can also provide many other functions including voicemail, voice paging, three-way calling, call transfer and call waiting. A VoIP-PBX can accept Voice over IP (VoIP) calls as well as traditional phone calls. With VoIP calls, the callers’ voices are converted into packets of data for routing over the Internet.

Switches, Bridges, Routers and Gateways In addition to communications protocols, certain hardware devices switch messages from one network to another at high speeds. A switch uses the physical device address in each incoming message on the network to determine to which output port it should forward the message to reach another device on the same network. A bridge connects one local area network (LAN) to another LAN that uses the same telecommunications protocol. A router forwards data packets across two or more distinct networks towards their destinations through a process known as ‘routing’. A gateway is a network device that serves as an entrance to another network.

6.2 Networks and Distributed Processing

switch A telecommunications device that uses the physical device address in each incoming message on the network to determine to which output port it should forward the message to reach another device on the same network. bridge A telecommunications device that connects one LAN to another LAN that uses the same telecommunications protocol. router A telecommunications device that forwards data packets across two or more distinct networks towards their destinations, through a process known as routing. gateway A telecommunications device that serves as an entrance to another network. computer network The communications media, devices and software needed to connect two or more computer systems and/or devices.

A computer network consists of communications media, devices and software needed to connect two or more computer systems or devices. The computers and devices on the networks are called ‘network nodes’. After they are connected, the nodes can share data, information and processing jobs. Increasingly, businesses are linking computers in networks to streamline work processes and allow employees to collaborate on projects. If a company uses networks effectively, it can grow into an agile, powerful and creative organization. Organizations can use networks to share hardware, programs and databases. Networks can transmit and receive information to improve organizational effectiveness and efficiency. They enable g eographically separated workgroups to share information, which fosters teamwork, innovative ideas and new business strategies.

Network Types Depending on the physical distance between nodes on a network and the communications and services it provides, networks can be classified as personal area, local area, metropolitan area or wide area.

Personal Area Networks

A personal area network (PAN) is a wireless network that connects information technology devices within a range of ten metres or so. One device serves as the controller during wireless PAN initialization, and this controller device mediates communication within the PAN. The controller broadcasts a beacon that synchronizes all devices and allocates time slots for the devices. With a PAN, you

personal area network (PAN) A network that supports the interconnection of information technology within a range of ten metres or so.

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can connect a laptop, digital camera and portable printer without physical c ables. You could download digital image data from the camera to the laptop and then print it on a high-quality printer – all wirelessly. The Bluetooth communication protocol is the industry standard for PAN communications. A personal area network could be used to create a home office connecting a wireless mouse, keyboard and printer to a laptop, and the laptop to a smart TV to which videos could be cast. 6

Local Area Networks A network that connects computer systems and devices within a small area, such as an office, home or several floors in a building, is a LAN. Typically, LANs are wired into office buildings and factories (see Figure 6.8). A lthough LANs often use unshielded twisted-pair wire, other media – including fibre-optic cable – is also popular. Increasingly, LANs are using some form of wireless communications.

Figure 6.8 A Typical LAN All network users within an office building can connect to each other’s devices for rapid communication. For instance, a user in research and development could send a document from her computer to be printed at a printer located in the desktop publishing centre.

Executive computers and devices

Production centre computers and devices

Finance and accounting computers and devices

Research and development computers and devices

Marketing and sales computers and devices

Copy centre, printing and desktop publishing computers and devices

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An example of a sophisticated LAN is the one that DigitalGlobe uses. DigitalGlobe is the ompany responsible for the detailed satellite images accessed by millions of Google Earth c users. The firm uses a high-speed LAN (10 GB/sec) to connect workers to its huge file storage system (200 TB) so that new images can be quickly captured and added to its rapidly growing repository of Earth photos.8 A basic type of LAN is a simple peer-to-peer network that a small business might use to share files and hardware devices such as printers. In a peer-to-peer network, you set up each computer as an independent computer, but let other computers access specific files on its hard drive or share its printer. These types of networks have no server. Instead, each computer is connected to the next machine. Examples of peer-to-peer networks include Windows for Workgroups, Windows NT and AppleShare. Performance of the computers on a peer-to-peer network is usually slower because one computer is actually sharing the resources of another computer. However, these networks provide a good foundation from which small businesses can grow. The software cost is minimal, and businesses can use the network cards if they decide to enlarge thesystem. In addition, peer-to-peer networks are becoming cheaper, faster and easier to use for home-based businesses. With more people working at home, a trend which began to rise following the COVID-19 pandemic, connecting home computing devices and equipment intoa unified network is on the rise. Small businesses are also connecting their systems and equipment. Ahome or small business network can connect computers, printers, scanners andother devices. Aperson working on one computer, for example, can use data and programs stored on another computer’s hard disc. In addition, several computers on the network can share a single printer. To make home and small business networking a reality, many companies are offering standards, devices and procedures.

Ethical and Societal Issues The Great British Data Grab Almost all computer communications are sent as beams of light along fibre-optic cables. (See the Information Systems @ Work case in this chapter for more information.) Light is easily reflected. If you stand in your kitchen at night with the light on and look out of the window, all that you will see is your own reflection. However, someone standing outside will be able to see you perfectly. What is happening is that the glass in the window is reflecting some of the light back to you while letting some of it travel straight through. A more refined version of this effect can be used to split a beam of light; in other words, you end up with two copies of the beam. When you do this with the fibre-optic cables that carry electronic communications, you get two perfect copies of those communications. A previously top secret UK GCHQ government project is doing this with almost all Internet traffic that passes through British landing stations

(the buildings where Internet cables leave the UK land network and continue overseas). All signals are copied. One copy continues to its intended destination, the other is saved for a few days so that it can be processed and searched. This is being done with the full knowledge and cooperation – although perhaps not willing cooperation – of the companies that manage the cables, and there have been some reports of these companies being paid for their p articipation. Reports also suggest that these companies are forbidden from revealing the existence of warrants compelling them to allow GCHQ access to the cables. Codenamed Tempora, we only know about its existence through the work of whistleblower Edward Snowden. Operating indiscriminately, Tempora collects data on everyone, not just those s uspected of committing a crime. Lawyers for GCHQ said it would be impossible to list the total number of

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people whose data was taken because ‘this would be an infinite list which we couldn’t m anage’. The Guardian newspaper reported an anonymous source with knowledge of the intelligence community saying that GCHQ was collecting a ‘vast haystack of data’. ‘Essentially’, they said, ‘we have a process that allows us to select a small number of needles in a haystack. We are not looking at every piece of straw. There are certain triggers that allow you to discard or not examine a lot of data so you are just looking at needles. If you had the impression we are reading millions of emails, we are not. There is no intention in this whole programme to use it for looking at UK domestic traffic – British people talking to each other. The vast majority of the data is discarded without being looked at … we simply don’t have the resources’. So what could GCHQ do with this data? If a terrorist emailed another terrorist to say, ‘I’m going to bomb the palace tomorrow’, a computer could identify this as a threatening phrase and report it to a human who would then assess what to do next. If, instead, the terrorist had used an encrypted instant messaging service, all GCHQ would have got is a meaningless string of text (see Case One in this chapter for more details on this). Even more basically, if the terrorist had emailed, ‘I’m going to deliver the parcel to grandma tomorrow’, then again the GCHQ computer would get nothing. Some people think this alone makes Tempora useless, although on the other hand, after the palace had been attacked, the data could be used to build a case against any suspects. What about using data-mining algorithms to predict who the terrorists are by their online behaviour before they get up to any mischief? As

INFORMATION TECHNOLOGY CONCEPTS

we have discussed already in this book, data mining can be very good at making predictions, but in order to do this, you need data. Lots of data. If you want to predict who might buy a tin of baked beans, you need data on people who bought beans and people who did not. And there is ample data available on both. When it comes to terrorists, we may have plenty of data on people who do not commit acts of terror, but almost none on those who do, making this prediction very unlikely to succeed.

Questions 1 Should this project be kept secret? What has really changed since we all found out about it? If nothing, then what difference does it make if we know about it? 2 How would terrorists respond to this information? What could GCHQ do next? 3 Why can’t data-mining algorithms be used to predict who the terrorists are? 4 Should GCHQ be allowed to collect this data?

References Goldacre, B. 2015. I Think You’ll Find It’s a Bit More Complicated Than That. New York: Fourth Estate. MacAskill, E. et al. 2013. ‘GCHQ Taps Fibre-Optic Cables for Secret Access to World’s Commu nications’. The Guardian. Available from: www. theguardian.com/uk/2013/jun/21/gchq-cablessecret-world-communications-nsa. Accessed 28 May 2020. Shubber, K. 2013. ‘A Simple Guide to GCHQ’s Internet Surveillance Programme Tempora’. Wired. Available from: www.wired.co.uk/article/ gchq-tempora-101. Accessed 28 May 2020.

Metropolitan Area Networks

A metropolitan area network (MAN) is a telecommunications network that connects users and their computers in a geographical area that spans a campus or city. Most MANs have a range of roughly 100 kilometres. For example, a MAN might redefine the many networks within a city into a single larger network or connect several LANs into a single campus LAN. EasyStreet (an Internet service provider) and OnFibre (a metro network solutions provider) designed a MAN for the city of Portland, Oregon, to provide local businesses with fast (more than 1 Gps), low-cost Internet connections.9

metropolitan area network (MAN) A telecommunications network that connects users and their devices in a geographical area that spans a campus or city.

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Wide Area Networks

A wide area network (WAN) is a telecommunications network that connects wide area network (WAN) A large geographic regions. A WAN might be privately owned or rented and telecommunications network that ties together large geographic includes public (shared users) networks. When you make a long-distance phone regions. call or access the Internet, you are using a WAN. WANs usually consist of computer equipment owned by the user, together with data communications equipment and telecommunications links provided by various carriers and service providers (seeFigure 6.9).

Figure 6.9 A Wide Area Network WANs are the basic long-distance networks used around the world. The actual connections between sites, or nodes, might be any combination of satellites, microwave or cabling. When you make a longdistance telephone call or access the Internet, you are using a WAN.

Mesh Networking

Mesh networking is a way to route communications among network mesh networking A way to nodes (computers or other devices) by allowing for continuous connections route communications between network nodes (computers or other and reconfiguration around blocked paths by ‘hopping’ from node to node devices) by allowing for continuous until a connection can be established. In the full mesh topology, each node connections and reconfiguration (workstation or other device) is connected directly to each of the other nodes. around blocked paths by ‘hopping’ In the partial mesh topology, some nodes might be connected to all the others, from node to node until a connection can be established. and other nodes are c onnected only to nodes with which they frequently exchange communications (see Figure 6.10). Mesh networks are very robust: if one node fails, all the other nodes can still communicate with each other, directly or through one or more intermediate nodes. Mesh networks are being set up to b lanket large areas to provide Internet access, secure connections to corporate networks and VoIP calls. Many cities throughout Europe are setting up mesh networks to give residents, sometimes free, Internet access.

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Figure 6.10 Partial Mesh Network

Distributed Processing When an organization needs to use two or more computer systems, it can use one of three basic processing alternatives: centralized, decentralized or distributed. With centralized processing, all processing occurs in a single location or facility. This approach offers the highest degree of control because a single centrally managed computer performs all data processing. With decentralized processing, processing devices are placed at various remote locations. Each computer system is isolated and does not communicate with another system. Decentralized systems are suitable for companies that have independent operating divisions. With distributed processing, computers are placed at remote locations but connected to each other via telecommunications devices. One benefit of d istributed processing is that managers can allocate data to the locations that can process it most efficiently. The 11 September 2001 terrorist attacks on the World Trade Center in New York and the relatively high level of natural disasters such as hurricane Katrina in the Gulf of Mexico in the southern USA in 2005 sparked many companies to distribute their workers, o perations and systems much more widely, a reversal of the recent trend towards centralization. The goal is to minimize the consequences of a catastrophic event at one location while ensuring uninterrupted systems availability.

centralized processing Processing alternative in which all processing occurs at a single location or facility. decentralized processing Processing alternative in which processing devices are placed at various remote locations.

Client/Server Systems Users can share data through file server computing, which allows authorized users to download entire files from certain computers designated as file servers. After downloading data to a local computer, a user can analyze, manipulate, format and display data from the file (see Figure 6.11).

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Figure 6.11 File Server

File downloaded to user

File server

Connection The file server sends the user the entire file that contains the data requested. The user can then analyze, manipulate, format and display the downloaded data with a program that runs on the user’s personal computer, and copy data back to the server.

In client/server architecture, multiple computer platforms are dedicated to client/server An architecture in special functions such as database management, printing, communications which multiple computer platforms are dedicated to special functions and program execution. These platforms are called servers. Each server is such as database management, accessible by all computers on the network. Servers can be computers of all printing, communications and sizes; they store both application programs and data files and are equipped program execution. with operating system software to manage the activities of the network. The server distributes programs and data to the other computers (clients) on the network as they request them. An application server holds the programs and data files for a particular application, such as an inventory database. The client or the server can do the processing. An email server sends and receives emails. A web server sends out webpages. A client is any computer (often a user’s personal computer) that sends messages requesting services from the servers on the network. A client can converse with many servers concurrently (see Figure 6.12).

Figure 6.12 Client/

Server

Client

Server

Server Connection Multiple computer platforms, called servers, are dedicated to special functions. Each server is accessible by all computers on the network. The client requests services from the servers, provides a user interface and presents results to the user.

Client

Server

Communications Software In Chapter 4 you learned that all computers have operating systems that control many functions. When an application program requires data from a disc drive, it goes through the operating system. Now consider a computer attached to a network that connects large disc drives, printers, and other equipment and devices. How does an application program request data from a disc drive on the network? The answer is through the network operating system.

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A network operating system (NOS) is systems software that controls the computer systems and devices on a network and allows them to communicate with each other. The NOS performs the same types of functions for the network as operating system software does for a computer, such as memory and task management and coordination of hardware. When network equipment (such as printers, plotters and disc drives) is required, the NOS makes sure that these resources are used correctly. In most cases, companies that produce and sell networks provide the NOS. For e xample, NetWare is the NOS from Novell, a popular network environment for p ersonal computer systems and equipment. Software tools and utilities are available for managing networks. With network-management software n etwork-management software, a manager on a networked personal Software that enables a manager computer can monitor the use of individual computers and shared hardware on a networked desktop to monitor (such as printers), scan for viruses and ensure compliance with software the use of individual computers licences. Network-m anagement software also simplifies the process of and shared hardware (such as printers), scan for viruses and updating files and programs on computers on the network – a manager can ensure compliance with software make changes through a c ommunications server instead of on individual licences. computers. In addition, network-management software protects software from being copied, modified or downloaded illegally, and performs error control to locate telecommunications e rrors and potential network problems. Some of the many benefits of network-management s oftware include fewer hours spent on routine tasks (such as installing new software), faster response to problems and greater overall network control. Network management is one of the most important tasks of IS managers. In fact, poor management of the network can cause a whole company to suffer. Because companies use networks to communicate with customers and business partners, network downtime or slow performance can even mean a loss of business. Network management includes a wide range of technologies and processes that monitor the infrastructure and help IS staff identify and address problems before they affect customers, business partners or employees. Fault detection and performance management are the two types of network-management products. Both employ the Simple Network Management Protocol (SNMP) to obtain key information from individual network components. SNMP allows anything on the network, including switches, routers, firewalls and even operating systems and server products and utilities, to communicate with management software about its current operations and state of health. SNMP can also control these devices and products, telling them to redirect traffic, change traffic priorities or even to shut down. Fault management software alerts IS staff in real time when a device is failing. Equipment vendors place traps (code in a software program for handling unexpected or unallowable conditions) on their hardware to identify problems. In addition, the IS staff can place agents – automated pieces of software – on networks to monitor functions. When a device exceeds a given performance threshold, the agent sends an alarm to the company’s IS fault management program. For example, if a CPU registers that it is more than 80 per cent busy, the agent might trigger an alarm. Performance management software sends messages to the various devices (i.e. polls them) to sample their performance and to determine whether they are operating within acceptable levels. The devices reply to the management system with performance data that the system stores in a database. This real-time data is correlated to historical trends and displayed graphically so that the IS staff can identify any unusual variations. Today, most IS organizations use a combination of fault management and performance management to ensure that their network remains up and running and that every network component and application is performing acceptably. With the two technologies, the IS staff can identify and resolve fault and performance issues before they affect customers and service. The latest network-management technology even incorporates automatic fixes – the networkmanagement system identifies a problem, notifies the IS manager and automatically corrects the problem before anyone outside the IS department notices it. network operating system (NOS) Systems software that controls the computer systems and devices on a network and allows them to communicate with each other.

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Sierra Pacific is a wood products provider in the USA that, prior to installing networkmanagement software, learned about network problems in the worst way – from users calling the network operations centre to complain. The company has operations in about 50 distributed server locations, including deep in the woods where users are connected through routers to a high-speed network. Sierra Pacific installed Systems Intrusion Analysis and Reporting Environment open-source software on all servers to collect network and performance data around the clock and forward it to a central network server. Now, Sierra Pacific has the data it needs to identify bottlenecks and failed components before users are affected.10

Software-Defined Networking A typical network comprises hundreds or thousands of network devices that perform such tasks as routing and switching of data through the network, providing network access and control, and enabling access to a variety of applications and services. In today’s current network environment, each network device must be configured individually, usually via manual keyboard input. For a network of any size, this becomes a labour-intensive and error-prone effort, making it difficult to change the network so it can meet the changing needs of the organization. Software-defined networking (SDN) is an emerging approach to networking that allows network administrators to manage a network via a controller that does not require physical access to all the network devices. This approach automates tasks such as configuration and policy management and enables the network to dynamically respond to application requirements. As a result, new applications can be made available sooner, the risk of human error (a major contributor to network downtime) is reduced, and overall network support and operations costs are also reduced. Google is implementing Andromeda, the underlying software-defined networking architecture that will enable Google’s cloud computing services to scale better, more cheaply and more quickly. With SDN, even though many customers are sharing the same network, they can be configured and managed independently with their own address management, firewalls and access control lists. Google competitors in cloud services, such as Microsoft and Amazon, also employ software-defined networks.11

Securing Data Transmission The interception of confidential information by unauthorized individuals can compromise private information about employees or customers, reveal marketing or new product development plans, or cause organizational embarrassment. Organizations with widespread operations need a way to maintain the security of communications with employees and business partners, wherever their facilities are located. Guided media networks have an inherently secure feature: only devices physically attached to the network can access the data. Wireless networks, on the other hand, are surprisingly often configured by default to allow access to any device that attempts to ‘listen to’ broadcast communications. Action must be taken to override the defaults. Encryption of data is one approach taken to protect the security of communications over both wired and wireless networks. Encryption is the encryption The process of process of converting an original message into a form that can be understood converting an original message into a form that can be understood only by the intended receiver. An encryption key is a variable value that is only by the intended receiver. applied (using an algorithm) to a set of unencrypted text to produce e ncrypted encryption key A variable value text or to decrypt encrypted text (see Figure 6.13). The key is chosen from that is applied (using an algorithm) one of a large number of possible encryption keys. The longer the key, the to a set of unencrypted text to greater the number of possible encryption keys. An encryption protocol based produce encrypted text or to decrypt encrypted text. on a 56-bit key, for example, has 256 different possible keys, while one based on a 128-bit key has 2,128 different possible keys. Of course, it is essential that the key be kept secret from possible interceptors. A hacker who obtains the key by whatever means can recover the original message from the encrypted data.

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Figure 6.13

INFORMATION TECHNOLOGY CONCEPTS

Encrypted text

Encryption Process Original message: Hello John

Encryption software or hardware

Unencrypted text

Decryption software or hardware

Hello John

Ciphertext ?8AA;7%Bx

Encryption methods rely on the limitations of computing power for their security. If breaking a code requires too much computing power, even the most determined hacker cannot be successful. With headquarters in Dallas, Texas, 7-Eleven operates franchises or licenses over 8,800 stores in North America and another 33,900 in 16 countries. The company uses encryption to secure its email. Todd Cohen, leader of 7-Eleven’s Information Security, Risk and Compliance practice, states that ‘The protection of sensitive partner information is essential to our leadership as a trusted retailer. Email is a critical communication tool in everyday business with our partners, and [encryption services] enable us to use email securely and confidently’.12

Securing Wireless Networks WEP and WPA are the two main approaches to securing wireless networks such as wi-fi and WiMAX. Wired equivalent privacy (WEP) used to use encryption based on 64-bit key, which has been upgraded to a 128-bit key. WEP represents an early attempt at securing wireless communications and is not difficult for hackers to crack. Most wireless networks now use the Wi-Fi Protected Access (WPA) security protocol that offers significantly improved protection over WEP. The following steps, while not foolproof, help safeguard a wireless network: ■

Connect to the router and change the default logon (admin) and password (password) for the router. These defaults are widely known by hackers.

■ Create

a service set identifier (SSID). This is a 32-character unique identifier attached to the header portion of packets sent over a wireless network that differentiates one network from another. All access points and devices attempting to connect to the network must use the same SSID.

■

Configure the security to WPA. Surprisingly, many routers are shipped with encryption turned off.

■

Disable SSID broadcasting. By default, wireless routers broadcast a message communicating the SSID so wireless devices within range (such as a laptop) can identify and connect to the wireless network. If a device doesn’t know the wireless network’s SSID, it cannot connect. Disabling the broadcasting of the SSID will discourage all but the most determined and knowledgeable hackers.

■

Configure each wireless computer on the network to access the network by setting the security to WPA and entering the same password entered to the router.

War driving involves hackers driving around with a laptop and antenna trying to detect insecure wireless access points. Once connected to such a network, the hacker can gather enough traffic to analyze and crack the encryption.

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Virtual Private Network (VPN) The use of a virtual private network is another means used to secure the transmission of communications. A virtual private network (VPN) is a virtual private network (VPN) A private network that uses a public network (usually the Internet) to connect private network that uses a public multiple remote locations. A VPN provides network connectivity over a network (usually the Internet) to connect multiple remote locations. p otentially long physical distance and thus can be considered a form of wide area network. VPNs support secure, encrypted connections between a company’s employees and remote users through a third-party service provider. Telecommuters, salespeople and frequent travellers find the use of a VPN to be a safe, reliable, low-cost way to connect to their corporate intranets. It also proved invaluable for facilitating smooth remote working for whole business teams during the COVID-19 pandemic. Often, users are provided with a security token that displays a constantly changing password to log onto the VPN. This solution avoids the problem of users forgetting their password while providing added security through use of a password constantly changing every 30to 60 seconds. Werner Enterprises is a transportation and logistics company with a fleet of 7,250 trucks, nearly 25,000 tractors, and more than 13,000 employees and independent contractors. 13 Most of its business is in North America, but it is expanding globally with customers in Africa, China, Europe and Latin America. Werner employs a VPN solution to link its Shanghai operations centre to its headquarters and data centre in Omaha, Nebraska, so that employees can access load management systems to support global operations.14

6.3 The Internet The Internet is the world’s largest computer network. Actually, the Internet is a collection of interconnected networks, all freely exchanging information. Nobody knows exactly how big the Internet is because it is a collection of separately run, smaller computer networks. There is no single place where all the connections are registered. Figure 6.14 shows the staggering growth of the Internet, as measured by the number of Internet host sites or domain names. Domain names are discussed later inthe chapter. The Internet is truly international in scope, with users on every continent – including Antarctica. China has spent many billions on its telecommunications infrastructure in the last few years. China, however, restricts the use of the Internet.15In 2005, for example, China implemented new Internet rules. A ccording to the Xinhua News Agency of China, ‘[Only] healthy and civilized news and information that is beneficial to the improvement of the quality of the nation, beneficial to its economic development and conductive to social progress will be allowed. The sites are prohibited from spreading news and information that goes against state security and public interest’. The penalties for sharing unauthorized information are severe, with more than one Internet user being imprisoned for things they have published online. The ancestor of the Internet was the ARPANET, a project started by the ARPANET A project started by USDepartment of Defense (DoD) in 1969. The ARPANET was both an experiment theUS Department of Defense (DoD) in 1969 as both an in reliable networking and a means to link DoD and military research contractors, experiment in reliable networking including many universities doing military-funded research. (ARPA stands for the and a means to link DoD and Advanced Research Projects Agency, the branch of the DoD in charge of awarding military research contractors, grant money. The agency is now known as DARPA – the added Dis for D efense.) including many universities doing military-funded research. The ARPANET was highly successful, and every university in the country wanted to use it. This wildfire growth made it difficult to manage the ARPANET, particularly its large and rapidly growing number of university sites. So, the ARPANET was broken into two networks: MILNET, which included all military sites, and a new, smaller ARPANET, which included all the non- military sites. The two networks remained connected, however, through use of the Internet Protocol (IP) A Internet Protocol (IP), which enables traffic to be routed from one network to communication standard that another as needed. Katie Hafner’s book, Where Wizards Stay Up Late: The Origins enables traffic to be routed from one network to another as needed. of the Internet, gives a detailed description of the history of the Internet.16

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Figure 6.14 Internet

850

Growth: Number of Internet Domain Names

800

INFORMATION TECHNOLOGY CONCEPTS

750 700 650 600 550

6 Millions

500 450 400 350 300 250 200 150 100 50 0 19 994 4 1994

19 996 6 1996

19 998 8 1998

20 000 0 2000

2002 2 20 2

2 4 20 2004

2006

20 2 008 8 2008

2010 20 010

Today, people, universities and companies are attempting to make the Internet faster and easier to use. Robert Kahn, who managed the early development of the ARPANET, wants to take the Internet to the next level. He is president of the non-profit organization, National Research Initiatives, which provides guidance and funding for the development of a national information infrastructure. The organization is looking into using ‘digital objects’, which allow all types of computer systems to use and share programs and data. To speed Internet access, a group of corporations and universities called the University Corporation for Advanced Internet Development (UCAID) is working on a faster, new Internet. Called Internet2 (I2), Next Generation Internet (NGI) or Abilene (depending on the universities or corporations involved), the new Internet offers the potential of faster Internet speeds, up to 2 Gbps or more.17 Some I2 connections can transmit data at 100 Mbps, which is about 200 times faster than dial-up connections. This speed would allow you to transfer the contents of a DVD in less than a minute.

How the Internet Works The Internet transmits data from one computer (called a host) to another (see Figure 6.15). If the receiving computer is on a network to which the first computer is directly connected, it can send the message directly. If the receiving and sending computers are not directly connected to the same network, the sending computer relays the message to another computer, which forwards it on. The message might be sent through a router to reach the forwarding computer. The forwarding host, which needs to be attached to at least one other network, delivers the message directly if it can or passes it to another forwarding host. A message can pass through a dozen or more forwarders on its way from one part of the Internet to another. The various networks that are linked to form the Internet work in much the same way – they pass data around in chunks called packets, each of which carries the addresses of its sender and its receiver. The set of conventions used to pass packets from one Transmission Control Protocol host to another is known as the Internet Protocol (IP). Many other protocols (TCP) The widely used transportare used in connection with IP. The best known is the Transmission Control layer protocol that most Internet applications use with IP. Protocol (TCP), which operates at the transport layer. Many people use TCP/

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IP as an abbreviation for the combination of TCP and IP used by most Internet applications. After a network following these standards links to a backbone – one backbone One of the Internet’s of the Internet’s high-speed, long-distance communications links – it becomes high-speed, long-distance communications links. part of the worldwide Internet community.

Figure 6.15 Routing

LAN

Messages Over the Internet

Host computer 1

Host computer 2

Router/gateway Router/gateway

Router/gateway

Router/gateway Host computer 3

Router/gateway

Host computer 4

Each computer on the Internet has an assigned address called its uniform uniform resource locator (URL) resource locator (URL), to identify it to other hosts. The URL gives those who An assigned address on the Internet for each computer. provide information over the Internet a standard way to designate where Internet elements such as servers, documents and newsgroups can be found. Consider the URL for Cengage Learning, http://www.cengage.co.uk. The ‘http’ specifies the access method and tells your software to access a file using the Hypertext Transport Protocol. This is the primary method for interacting with the Internet. In many cases, you don’t need to include http:// in a URL because it is the default protocol. Thus, http://www.cengage.co.uk can be abbreviated to www.cengage.co.uk. The ‘www’ part of the address signifies that the files associated with this website reside on the World Wide Web server of ‘cengage.co.uk’. The ‘cengage.co.uk’ itself is the domain name that identifies the Internet host site. Domain names must adhere to strict rules. They always have at least two parts, with each part separated by a dot (full stop). For some Internet

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addresses, the far right part of the domain name is the country code (such as uk for the United Kingdom, au for Australia, ca for Canada, dk for Denmark, fr for France and jp for Japan). Many Internet addresses have a code denoting affiliation categories. Table 6.2 contains a few popular categories. The far left part of the domain name identifies the host network or host provider, which might be the name of a university or business.

Table 6.2 Some Top-Level Domain Affiliations 6

Affiliation ID

Affiliation

com

Commercial organizations

edu

Educational sites (mostly based in the USA)

gov

Government sites (mostly based in the USA)

net

Networking organizations

org Organizations scot

Related to Scotland and Scottish culture

Originally, Herndon, Virginia-based Network Solutions, Inc. (NSI), was the sole company in the world with the direct power to register addresses using .com, .net or .org domain names. However, its government contract ended in October 1998, as part of the US government’s moveto turn management of the web’s address system over to the private sector. Today, other companies, called registrars, can register domain names, and additional companies are seeking accreditation to register domain names from the Internet Corporation for Assigned Names and Numbers (ICANN). Some registrars are concentrating on large corporations, where the profit margins might be higher, compared with small businesses or individuals. Internet service provider (ISP) An Internet service provider (ISP) is any company that provides people Any company that provides people and organizations with access to the Internet. Thousands of organizations serve or organizations with access to the as Internet service providers, ranging from universities to major communications Internet. giants such as BT and AT&T. To use this type of connection, you must have an account with the service provider and software that allows a direct link via TCP/IP. In most cases, ISPs charge a monthly fee of around €20 for unlimited Internet connection through a standard modem. Some ISPs are experimenting with low-fee or no-fee Internet access, though strings are attached to the no-fee offers in most cases, typically that the user must subscribe to telephone services as well.

6.4 Internet Applications Many people believe the terms ‘Internet’ and ‘World Wide Web’ are synonymous. However the web, which is examined next, is just one application of the Internet. Others also discussed in this section are email, telnet and FTP. More applications are given in Chapter 10. World Wide Web (WWW or W3) A collection of tens of thousands of independently owned computers that work together as one in an Internet service.

The World Wide Web The World Wide Web was developed by Tim Berners-Lee at CERN, the European Organization for Nuclear Research in Geneva. He originally conceived of it as an internal document-management system. From this modest beginning, the World

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Wide Web (web, WWW or W3) has grown to a collection of tens of thousands of independently owned computers that work together as one in an Internet service. These computers, called web servers, are scattered all over the world and contain every imaginable type of data. Thanks to the high-speed Internet circuits connecting them and some clever cross-indexing software, users can jump from one web computer to another effortlessly, creating the illusion of using one big computer. Because of its ability to handle multimedia objects, including linking multimedia objects distributed on web servers around the world, the web has become the most popular means of information access on the Internet today. The web is a menu-based system that uses the client/server model. It organizes Internet resources throughout the world into a series of menu pages or screens that appear on your computer. Each web server maintains pointers or links to data on the Internet and can retrieve that data. However, you need the right hardware and telecommunications connections, or the web can be painfully slow. Data can exist on the web as ASCII characters, word-processing files, audio files, graphic and video images, or any other sort of data that can be stored in a computer file. A website is like a magazine, with a cover page called a home page which home page A cover page for a includes links to the rest of its material. The words on a website are typically website that has graphics, titles written in hypertext. Hypertext allows the linking of certain words to other web and text. pages, so users can click on them to access related material. This feature gives hypertext Text used to connect web pages, allowing users to the web its name, as all information is linked together like a spider’s web. access information in whatever Hypertext Markup Language (HTML) is the standard page description order they wish. language for web pages. One way to think about HTML is as a set of highlighter Hypertext Markup Language pens that you use to mark up plain text to make it a web page – one colour (HTML) The standard page for the headings, another for bold and so on. The HTML tags let the browser description language for web pages. know how to format the text: as a heading, as a list or as main text, for HTML tags Codes that let the example. HTML also tells whether pictures, videos and other elements should web browser know how to format be inserted, and where they should go. Users mark up a page by placing text – as a heading, as a list, or as HTML tags before and after a word or words. For example, to turn a sentence body text – and whether images, sound or other elements should into a heading, you place the tag at the start of the sentence. At the end be inserted. of the sentence, you place the closing tag . When you view this page in your browser, the sentence will be displayed as a heading. So, an HTML file is made up of two things: text and tags. The text is your message, and the tags are codes that mark the way words will be displayed. All HTML tags are enclosed in a set of angle brackets (< and >), such as . The closing tag has a forward slash in it, such as for closing bold. Consider the following text and tags: Principles of Business Information Systems This HTML code centres Principles of Information Systems as a major, or level 1, heading. The ‘h1’ in the HTML code indicates a first-level heading. On some web browsers, the heading might be 14-point type size with a Times Roman font. On other browsers, it might be a larger 18-point size in a different font. There is a standard, but not all browsers stick to it. Figure 6.16 shows a simple document and its corresponding HTML tags. Notice the tag at the top indicating the beginning of the HTML code. The indicates the beginning of the title: ‘Cengage Learning – Shaping the Future of Global Learning’. The tag indicates theend of the title. Some newer web standards are gaining in popularity, including Extensible Markup Language (XML), Extensible Hypertext Markup Language (XHTML), Cascading Style Sheets (CSS), D ynamic HTML (DHTML) and Wireless Markup Language (WML). WML can display web pages on small screens, such as smartphones and PDAs. XHTML is a combination of XML Extensible Markup Language (XML) The markup language and HTML that has been approved by the World Wide Web Consortium (W3C). for web documents containing Extensible Markup Language (XML) is a markup language for web documents structured information, including containing structured information, including words and pictures. XML does not words, pictures and other have a predefined tag set. With HTML, for example, the tag always means elements.

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a first-level heading. The content and formatting are contained in the same HTML document. With XML, web documents contain the content of a web page. The formatting of the content is contained in a separate style sheet. A few typical instructions in XML follow: Hardware Input Devices Processing and Storage Devices Output Devices 6

Figure 6.16 Sample Hypertext Markup Language Shown on the left of the screen is a document, and at the right are the corresponding HTML tags.

How the preceding content is formatted and displayed on a web page is contained in the c orresponding style sheet, such as the following cascading style sheet (CSS). Note that thechapter title ‘Hardware’ is displayed on the web page in a large font (18 points). ‘Hardware’ will appear in bold blue text. ‘Input Devices’ and the other titles will appear in a smaller font (12points) in italic red text: chapter: (font-size: 18pt; color: blue; font-weight: bold; display: block; font-family: Arial; margin-top: 10pt; margin-left: 5pt) topic: (font-size: 12pt; color: red; font-style: italic; display: block; font-family: Arial; margin-left: 12pt) XML includes the capabilities to define and share document information over the web. A company can use XML to exchange ordering and invoicing information with web browser Software that its customers. CSS improves web page presentation, and DHTML provides creates a unique, hypermediadynamic presentation of web content. These standards move more of the based menu on a computer screen, processing for animation and dynamic content to the web browser and provide providing a graphical interface to the web. quicker access and displays. hypermedia An extension of hypertext where the data, including text, images, video and other media, on web pages is connected allowing users to access information in whatever order they wish.

Web Browsers

A web browser translates HTML so you can read it. It provides a graphical interface to the web. The menu consists of graphics, titles and text with hypertext links. Hypermedia links you to Internet resources, including text

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documents, graphics, sound files and newsgroup servers. As you choose an item or resource, or move from one document to another, you might be accessing various computers on the Internet without knowing it, while the web handles all the connections. The beauty of web browsers and the web is that they make surfing the Internet fun. Clicking with a mouse on a highlighted word or graphic whisks you effortlessly to computers halfway around the world. Most browsers offer basic features such as support for backgrounds and tables, displaying a web page’s HTML source code and a way to create hot lists of your favourite sites. Web browsers enable net surfers to view more complex graphics and 3D models, as well as audio and video material, and to run small programs embedded in web pages called applets. A web browser applets A small program plug-in is an external program that is executed by a web browser when it is needed. embedded in web pages. For example, if you are working with a web page and encounter an Adobe pdf file, the web browser will typically run the external Adobe pdf reader program or plug-in to allow you to open the file. Microsoft Internet Explorer and Google Chrome are examples of web browsers for PCs. Safari is a popular web browser from Apple for their Macintosh computer, and Mozilla Firefox is a web browser available in numerous languages that can be used on PCs, computers with the Linux operating system and Apple Mac computers.

Information Systems @ Work Tech Firms Plan the Highest Capacity Atlantic Data Link According to the European Subsea Cables A s s o c i a t i o n , 9 7 p e r c e n t o f t h e w o r l d ’s communications are transported around the world via fibre-optic submarine cables. Subsea cables are bundles of fibre-optic cables, thin strands of glass just a little thicker than a human hair. Data is transmitted along the cables as a beam of light and can therefore reach the other side of the planet – to all intents and purposes– immediately. (See the Ethical and Societal Issues case in this chapter for more information about the light that travels along these cables.) Each strand is capable of carrying vast amounts of information, upwards of 400 Gb per second. The first subsea communications cable was laid in 1850 between the UK and France to carry a telegraph signal. Modern cables, all 361 of them, connect the entire planet, and they lie deep, preferably buried under the sea floor, although sometimes they just rest on the bottom. With all the insulation and water proofing needed they are just too big to get your hands around and because of their size can be a danger to fishing boats if they get caught on them. Fishing equipment and ships’ anchors can damage the cables, which is why, particularly on the continental shelf, it’s best to bury them. The most

common method of doing this is a cable plough. The plough sinks to the bottom and is pulled along by a ship at the surface. The front of the plough digs a shallow trench in the sea floor, the cable slides in and the back of the plough covers it up. Microsoft and Facebook teamed up to build a link between the USA and Europe in order to quickly and cheaply move data between their data centres. Microsoft wanted to use the cable to boost its cloud service while Facebook committed to expanding global Internet access. The cable stretches from Virginia in the USA to Bilbao, Spain and is being managed by Spanish telecommunications firm Telefonica. They sell any unused capacity on the cable to other customers. Called MAREA, the cable carries more data than any other, a staggering 160 terabits per second, and is over 6,000 km long. Construction began in August 2016 and was completed a year later. Microsoft’s director of global network acquisition, Frank Rey, said, ‘This marks an important new step in building the next generation infrastructure of the internet’. In the past, the two companies had joined in with a group of telecom companies that operate subsea cables, but this didn’t give them the speed and control that they needed. ‘The consortium

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model is much slower than what we would like’, says Najam Ahmad, Facebook’s vice president of network engineering. Bilbao is already a landing point for one cable, the TGN-Western Europe link, and it has good connections into Spain. Most trans-Atlantic cables join the USA to the UK, but Microsoft and Facebook may have had security fears about landing their cable in the UK (again see the Ethical and Societal Issues case in this chapter). Landing sites have to have little marine traffic (boats), generally calm conditions and allow the cables to be buried as described above, to avoid damage.

INFORMATION TECHNOLOGY CONCEPTS

3 How will this improve Microsoft’s cloud service? 4 Why are good connections so important in choosing a landing site?

References Jennings, R. 2016. ‘What Is MAREA? Oh, Just An Epic Shift That Changes Everything’. Computer World. Available from: www.computerworld. com/article/3075319/cloud-computing/mareafacebook-microsoft-itbwcw.html. Accessed 28 May 2020.

1 Why do technology companies want direct control over communication cables?

Metz, C. 2016. ‘Facebook and Microsoft Are Laying a Giant Cable Across the Atlantic’. Wired. www.wired.com/2016/05/facebookmicrosoft-laying-giant-cable-across-atlantic/. Accessed 28 May 2020.

2 Was this good news for the people of Virginia and Bilbao?

Subsea cable map. www.submarinecablemap.com/. Accessed 28 May 2020.

Questions

Search Engines and Web Research Looking for information on the web is like browsing in a library – without the alphabetic listing of books in the card catalogue, it is difficult to find information. Web search tools – called search engines – take the place of the card catalogue. Most search engines, such search engines A web search tool. as Google, are free. They make money by, among other things, charging advertisers to put ad banners in their search engine results. Companies often pay a search engine for a sponsored link, which is usually displayed at the top of the list of links for an Internet search. Google handles nearly 90 per cent of Internet searches.18 Search engines that use keyword indexes produce an index of all the text on the sites they examine. Typically, the engine reads at least the first few hundred words on a page, including the title and any keywords or descriptions that the author has built into the page structure. The engine throws out common words such as ‘and’, ‘the’, ‘by’ and ‘for’. The engine assumes remaining words are valid page content; it then alphabetizes these words (with their associated sites) and places them in an index where they can be searched and retrieved. Some companies include a meta tag in the HTML header for search engine robots from sites such as Google to find and use. Meta tags are not shown on the web page when it is displayed; they only help search engines discover and display a website. To place the search results in the most relevant order, Google counts the number of links that are made to each from other websites and puts the one with the most at the top. Today’s search engines do more than look for words, phrases or sentences on the web. For e xample, you can use Google to search for images and video.19 You can even search for geographic locations to get a view from the skies using satellites.20 Google, for example, offers Google Maps and Google Earth to provide aerial views. After downloading and installing Google Earth, you can type an address and Google will show you the neighbourhood or even a house in some cases. Microsoft Virtual Earth and Local Search also give aerial views and close-ups of some locations, including retail stores in some cases.21 You can also use news organizations’ websites, such as the BBC’s (www.bbc.co.uk/news), to access current information on a variety of topics. Some websites maintain versions in different languages, especially for research purposes. In addition, many ordinary web users are publishing lists of their favourite web pages

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along with explanations of what they are, to classify web content and to make it easier for them (and others) to retrieve information. Such lists are known as ‘folksonomies’, although this word has been voted one of the most annoying Internet terms.

Web Programming Languages

There are a number of important web programming languages. Java, for Java An object-oriented example, is an object-oriented programming language from Sun Microsystems programming language from Sun based on the C++ programming language, which allows small programs – the Microsystems based on C++ that allows small programs (applets) applets mentioned earlier – to be embedded within an HTML document. When to be embedded within an HTML the user clicks the appropriate part of an HTML page to retrieve an applet document. from a web server, the applet is downloaded onto the client workstation, where it begins executing. Unlike other programs, Java software can run on any type of computer. Programmers use Java to make web pages come alive, adding splashy graphics, animation and real-time updates. The user accesses the web page from a web server. If the user clicks the app rectangle to execute the Java applications, the client’s computer checks for a copy on its local hard drive. If it does not find the applet, the client requests the web server to download the applet. The web server that delivers the Java applet to the web client cannot determine what kind of hardware or software environment the client is running, and the developer who creates the Java applet does not have to worry about whether it will work correctly on Windows, UNIX or Mac OS. Java is thus often described as a ‘cross-platform’ programming language. In addition to Java, companies use a variety of other programming languages and tools to develop websites. Ruby on Rails is a popular software framework for developing web applications that is optimized for programming productivity. It has been used by companies like Airbnb, Fab.com and Hulu to develop their web-based products. VBScript and ActiveX (used with Internet Explorer) are Internet languages used to develop web pages and perform important functions, such as accepting user input. Hypertext P reprocessor, or PHP, is an open-source programming language. PHP code or instructions can be embedded directly into HTML code. Unlike some other Internet languages, PHP can run on a web server, with the results being transferred to a client computer. PHP can be used on a variety of operating systems. It can also be used with a variety of database management systems, such as DB2, Oracle, Informix, MySQL and many others. These characteristics – running on different operating systems and database management systems, and being an opensource language – make PHP popular with many web developers.

Developing Web Content The art of web design involves working within the technical limitations of the web and using a set of tools to make appealing designs. A study at Glamorgan University Business School in Wales, for example, concluded that women prefer web pages with more colour in the background and informal pictures and images.22 Men prefer darker colours and like 3D, moving images. You can create a web page using one of the following approaches: (a) write your copy with a word processor and then use an HTML converter to convert the page into HTML format; (b) use an HTML editor to write text (it will add HTML tags at the same time); (c) edit an existing HTML template (with all the tags ready to use) to meet your needs; or (d) use an ordinary text editor such as Notepad and type the start and end tags for each item. After you develop web content, your next step is to place or publish the content on a web server so others can access it. Popular publishing options include using ISPs, free sites and web hosting. BT’ s starter package comes with 5 GB of web space and users can pay to increase this. 23 Free sites offer limited space for a website. In return, free sites often require the user to view advertising or agree to other terms and conditions. Web hosting services provide space on their websites for people and businesses that don’t have the financial resources, time or skills to host their own website. A web host charges a

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monthly fee, depending on services offered. Some web hosting sites include domain name registration, web authoring software, and activity reporting and monitoring of the website. Often, FTP (described later in this chapter) is used to copy files from the developer’s computer to the web server. Some web developers are creating programs and procedures to combine two or more websites into one website, called a ‘mash-up’.24 A mash-up is named for the process of mixing two or more (often hip-hop) songs into one song. A website containing crime information, for example, can be mashed up with a mapping website to produce a website with crime information placed on top of a map of a metropolitan area. People are becoming very creative in how they mash up several websites into new ones. Mashing up websites is becoming popular, but not everyone is happy with the practice. Some companies are trying to block the mash-up of the content on their website without permission. After a website has been constructed, a content management system (CMS) can keep the website running smoothly. CMS consists of both software and support. Companies that provide CMS can charge from €11,000 to more than €400,000 annually, depending on the complexity of the website being maintained and the services being performed. Adobe Experience Manager is an example of a CMS. Many products make it easy to develop web content and interconnect web services. Microsoft, for example, has introduced a development and web services platform called .NET. The .NET platform allows developers to use different programming languages to create and run programs, including those for the web. The .NET platform also includes a rich library of programming code to help build XML web applications.

Web Services

Web services consist of standards and tools that streamline and simplify communication among websites, promising to revolutionize the way we develop and use the web for business and personal purposes. Internet companies, including Amazon, eBay and Google, are now using web services. Amazon, for example, has developed Amazon Web Services (AWS) to make the contents of its huge online catalogue available by other websites or software applications. The key to web services is XML. Just as HTML was developed as a standard for formatting web content into web pages, XML is used within a web page to describe and transfer data between web service applications. XML is easy to read and has wide industry support. Besides XML, three other components are used in web service applications:

web services Standards and tools that streamline and simplify communication among websites for business and personal purposes.

1 SOAP (Simple Object Access Protocol) is a specification that defines the XML format for messages. SOAP allows businesses, their suppliers and their customers to communicate with each other. It provides a set of rules that makes it easier to move information and data over the Internet. 2 WSDL (Web Services Description Language) provides a way for a web service application to describe its interfaces in enough detail to allow a user to build a client application to talk to it. In other words, it allows one software component to connect to and work with another software component on the Internet. 3 UDDI (Universal Discovery Description and Integration) is used to register web service applications with an Internet directory so that potential users can easily find them and carry out transactions over the web.

Developing Web Content and Applications Popular tools for creating web pages and managing websites include Adobe Dreamweaver, M icrosoft Expression Web and the open source alternative Nvu. Such software allows users to create web pages using an interface similar to a word-processor. The software converts what the user types into HTML code and creates hyperlinks to connect the pages.

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Web application frameworks have arisen to simplify web development by providing the foundational code – or framework – for a professional interactive website which users can customize as they need. Websites are usually developed on a user’s computer and then uploaded to a web server. Although a business may manage its own web server, the job is often outsourced to a web-hosting company.

Email Email or electronic mail is a method of sending communications over computer networks. It is no longer limited to simple text messages. Depending on your hardware and software, and the hardware and software of your recipient, you can embed sound and images in your message and attach files that contain text documents, spreadsheets, graphics or executable programs. Email travels through the systems and networks that make up the Internet. Gateways can receive email messages from the Internet and deliver them to users on other networks. Thus, you can send email messages to anyone in the world if you know that person’s email address and you have access to the Internet or another system that can send email. For large organizations whose operations span a country or the world, email allows people to work around the time zone changes. Some users of email claim that they eliminate two hours of verbal communications for every hour of email use. Some companies use bulk email to send legitimate and important information to sales representatives, customers and suppliers around the world. With its popularity and ease of use, however, some people feel they are drowning in too much email. Many emails are copies sent to a large list of corporate users. Users are taking a number of steps to cope with and reduce their mountain of email. For instance, some users only look at their in-boxes once each day. Many companies have software that scans incoming messages for possible junk or bulk email, called spam, and deletes it or places it in a separate file. Some have banned the use of copying others in on emails unless it is critical.

Telnet and FTP Telnet is a terminal emulation protocol that enables you to log on to other computers on the Internet to gain access to their publicly available files. Telnet is particularly useful for perusing library holdings and large databases. It is also called ‘remote logon’. File Transfer Protocol (FTP) is a protocol that describes a file transfer process between a host and a remote computer. Using FTP, users can copy files from one computer to another. Companies, for example, use it to transfer vast amounts of business transactional data to the computers of their customers and suppliers. You can also use FTP to gain access to a wealth of free software on the Internet. FTP can be used to upload or download content to a website.

Telnet A terminal emulation protocol that enables users to log on to other computers on the Internet to gain access to public files. File Transfer Protocol (FTP) A protocol that describes a file transfer process between a host and a remote computer and allows users to copy files from one computer to another.

Cloud Computing Cloud computing refers to a computing environment in which software and cloud computing A computing storage are provided as an Internet service and accessed by users through environment where software and their web browser. Google and Yahoo!, for example, store the email of many storage are provided as an Internet service and are accessed via a users, along with calendars, contacts and to-do lists on their servers meaning web browser. those users don’t have to store these data on their own desktops and can access them from any device. Apple developed its iCloud service to allow people to store their documents, music, photos, apps and other content on its servers. 25 In addition to its social networking features, Facebook offers users the ability to store personal photos in the cloud as does Flickr and many other photo sites. Pandora delivers music, and Hulu and YouTube

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deliver movies via the cloud. LibreOffice, Google Apps, Microsoft Office 365, Zoho and others provide web-delivered productivity and information management software. Cloud computing offers many advantages to businesses. With cloud computing, organizations can avoid large, up-front investments in hardware as well as the ongoing investment in the resources that would be required to manage that hardware. Instead, they can provision just the right type and size of information system resources from their cloud computing provider, pay for it on an ongoing basis, and let the service provider handle the system support and maintenance. In most cases, the cloud computing service provider provides access to state-of-the-art technology at a fraction of the cost of owning it and without the lengthy delays that can occur when an organization tries to acquire its own resources. This can increase the speed and reduce the costs of new product and service launches. For example, Spotify offers its users instant access to over 16 million licensed songs. The company faces an ongoing struggle to keep pace with the rapid release of new music, adding over 20,000 tracks to its catalogue each day. In 2016, Spoify moved from using Amazon’s cloud service to using Google’s. In all, the move involved transfering 1.5 billion files.26 Cloud computing can be deployed in several different ways. The methods discussed thus far in this chapter are considered public cloud services. Public cloud computing refers to deployments in which service providers offer their cloud-based services to the general public, whether that is an individual using Google Calendar or a corporation using the Salesforce.com application. In a private cloud deployment, cloud technology is used within the confines of a private network.

Public Cloud Computing In a public cloud computing environment, a service provider organization owns and manages the infrastructure (including computing, networking and storage devices) with cloud user organizations (called tenants) accessing slices of shared hardware resources via the Internet. The service provider can deliver increasing amounts of computing, network and storage capacity on demand and without requiring any capital investment on the part of the cloud users. Thus, public cloud computing is a great solution for organizations whose computing needs vary greatly depending on changes in demand. Amazon, Cisco Systems, IBM, Microsoft, Rackspace, Verizon Communications Inc. and VMware are among the largest cloud computing service providers. These firms typically offer a monthly or annual subscription service model; they may also provide training, support and data integration services.27 Public cloud computing can be a faster, cheaper and more agile approach to building and managing your own IT infrastructure. However, since cloud users are using someone else’s data centre, potential issues with service levels, loss of control, disaster recovery and data security should not be overlooked. Data security in particular is a key concern because when using a public cloud computing service, you are relying on someone else to safeguard your data. In addition, your organization’s data may reside on the same storage device as another organization’s (perhaps even a competitor’s) data. All of the potential issues of concern must be investigated fully before entering into a public cloud computing arrangement. Organizations subject to tight regulation and complex regulatory requirements (e.g. financial, healthcare and public utility organizations) must ensure that their own processes and applications as well as those of the cloud provider are compliant. If the cloud provider resides in a different country from the user, the user must ensure that the data protection laws in their country can be followed when storing data in another country. A major startup issue is the effort of getting your organization’s data moved to the cloud in the first place. That introduces an issue of vendor lock-in, meaning once an organization’s servers and data are hosted with one cloud provider, it is not likely to be willing to go through the time-consuming migration process a second time to move to a different provider in the future. So choose your cloud provider wisely, as it is a business relationship that you and your business will likely need to live with for the foreseeable future. Cloud computing can

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be divided into three main types of services: Infrastructure as a service (IaaS) is an information systems strategy in which an organization outsources the equipment used to support its data processing operations, including servers, storage devices and networking components. The service provider owns the equipment and is responsible for housing, running and maintaining it. The outsourcing organization may pay on a per-use or monthly basis. Software as a service (SaaS) is a software delivery approach that provides users with access to software remotely as a web-based service. SaaS pricing is based on a monthly fee per user and typically results in lower costs than a licensed application. Another advantage of SaaS is that because the software is hosted remotely, users do not need to purchase and install additional hardware to provide increased capacity. Furthermore, the service provider handles necessary software maintenance and upgrades. Platform as a service (PaaS) provides users with a computing platform, typically including operating system, programming language execution environment, database services and a web server. The user can create an application or service using tools and/or libraries from the provider. The user also controls software deployment and configuration settings. The PaaS provider provides the networks, servers, storage and other services required to host the consumer’s application. PaaS enables application developers to develop, test and run their software solutions on a cloud platform without the cost and complexity of buying and managing the underlying hardware and software. Organizations contemplating moving to the cloud are advised to proceed carefully, as almost one in three organizations encounter major challenges during the transition. Frequent problems include complex pricing arrangements and hidden costs that reduce expected cost savings, performance issues that cause wide variations in performance over time, poor user support and greater than expected downtime.28 Condé Nast, publisher of Vogue, The New Yorker and Wired magazines, among many others, decommissioned its 67,000-square-foot data centre and migrated its data and processing capacity to Amazon Web Services (AWS). Over a period of just three months in 2014, the firm migrated 500 servers; 1 petabyte of storage; 100 database servers; 100 switches, routers and firewalls, and all of its mission-critical applications to AWS. According to Condé Nast, operating costs have been cut by 40 per cent and performance has improved by 30 per cent to 40 per cent since the transition, which created a dynamic environment that can adjust as the company needs it to. The old data centre facilities were eventually put on the market and sold.29

Private Cloud Computing A private cloud environment is a single tenant cloud. Organizations that implement a private cloud often do so because they are concerned that their data will not be secure in a public cloud. Private clouds can be divided into two distinct types. Some organizations build their own on-premises private cloud, and others elect to have a service provider build and manage their private cloud (sometimes called a virtual private cloud). A general rule of thumb is that companies that spend €1 million or more per month on outsourced computing are better off implementing an on-premises private cloud.30 Many complications must be overcome and deep technical skills and sophisticated software are needed to build and manage a successful private cloud. An organization might establish several private clouds, with one for finance, another one for product development and a third for sales, for example. Each private cloud has a defined set of available resources and users, with predefined quotas that limit how much capacity users of that cloud can consume. Revlon is a global cosmetics, hair colour, fragrance and skin-care company with recent annual sales exceeding €1.7 billion.31 The firm implemented an on-premises private cloud that includes 531 applications and makes up 97 per cent of the company’s computing power. The private cloud has helped reduce application deployment time by 70 per cent and, as a result of virtualization and consolidation, reduced data centre power consumption by 72 per cent.32

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Autonomic Computing An enabling technology for cloud computing is autonomic computing or the ability of IT systems to manage themselves and adapt to changes in the computing environment, business policies and operating objectives. The goal of autonomic computing is to create complex systems that run themselves, while keeping the system’s complexity invisible to the end user. Autonomic computing addresses four key functions: self-configuring, selfhealing, self-optimizing and self-protecting.33 As cloud computing environments become increasingly complex, the number of skilled people required to manage these environments also increases. Autonomic computing is used to reduce the overall cost of operating and managing complex cloud computing environments. While this is an emerging area, software products such as Tivoli from IBM are partially filling the need.

6.5 Intranets and Extranets

An intranet is an internal company network built using Internet and World Wide Web standards and products. Employees of an organization use it to gain access to company information. After getting their feet wet with public websites that promote company products and services, corporations are seizing the web as a swift way to streamline – even transform– their organizations. A big advantage of using an intranet is that many people are already familiar with Internet technology, so they need little training to make effective use of their corporate intranet. An intranet is an inexpensive yet powerful alternative to other forms of internal communication, including conventional computer setups. One of an intranet’s most obvious virtues is its ability to reduce the need for paper. Because web browsers run on any type of computer, the same electronic information can be viewed by any employee. That means that all sorts of documents (such as internal phone books, procedure manuals, training manuals and requisition forms) can be inexpensively converted to electronic form on the web and be constantly updated. An intranet provides employees with an easy and intuitive approach to accessing information that was previously difficult to obtain. For example, it is an ideal solution to providing information to a mobile sales force that needs access to rapidly changing information. A rapidly growing number of companies offer limited access to their intranet to selected customers and suppliers. Such networks are referred to as extranets, and connect people who are external to the company. An extranet is a network that links selected resources of the intranet of a company with its customers, s uppliers or other business partners. Again, an extranet is built around web technologies. Eikos Risk Applications in South Africa, for example, uses an extranet to provide tailored content to its clients. The firm is an insurance broker, and their extranet gives clients access to policy information, information about claims and facility management reports. Clients log in to the extranet on a secure web page. Security and performance concerns are different for an extranet than for a website or network-based intranet. User authentication and privacy are critical on an extranet so that information is protected. Obviously, performance must be good to provide a quick response to customers and suppliers. Table 6.3 summarizes the differences between users of the Internet, intranets and extranets.

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Table 6.3 Summary of Internet, Intranet and Extranet Users Type

Users

Need User ID and Password?

Internet

Anyone

Intranet

Employees and managers

Yes

Extranet

Employees, managers and business partners

Yes

6.6 The Internet of Things The Internet of Things (IoT) is a network of physical objects or ‘things’ embedded with sensors, processors, software and network connectivity to enable them to exchange data with the manufacturer of the device, device operators and other connected devices. Sensors are being installed in a variety of machines and products, ranging from home appliances to cars to clothing to grocery products. A sensor is a device that is capable of sensing something about its surroundings, such as pressure, temperature, humidity, pH level, motion, vibration, or level of light. The sensor detects an event or changes in quantity and produces a corresponding output, usually an electrical or optical signal. To be truly part of the IoT, these networked devices need IP addresses and a connection to the public Internet. The data is then transmitted over the Internet to an operational historical database containing data from many sensors. The database may be on a data storage device in a local control room, in an enterprise data centre in another state, or hundreds of miles away in the cloud. The Operational data can be accessed via the Internet and analyzed by users with personal computers or portable devices including smartphones. Updates, alerts or even automatic adjustments may be sent to the devices on the IoT based on this analysis. According to Don DeLoach, CEO and president of Infobright Inc., manufacturing has been automated at various levels for many years, but IoT brings automation to a deep, broad level, one where interconnectivity between various elements in manufacturing exists in a way it did not before. 34 Applying analytics to these streams of data enables workers to detect patterns and potential problems as they are occurring and to make appropriate adjustments in the operation of the devices being measured. For example, sensors embedded in General Electric (GE) aircraft engines collect some 5,000 individual data points per second. This data is analyzed while the aircraft is in flight to adjust the way the aircraft performs, thereby reducing fuel consumption. The data is also used to plan predictive maintenance on the engines based on engine component wear and tear. In 2013, this technology helped GE earn $1 billion in incremental income by delivering performance improvements, less downtime and more flying miles.35 Other examples of the types of organizations using sensors and the IoT to monitor and control key operational activities include: ■ Asset monitoring. Food and drug manufacturers can monitor shipping containers for changes in temperatures that could affect product quality and safety using cheap battery-powered sensors and 4G LTE connectivity. ■

Construction. SK Solutions is using IoT technology to prevent cranes from colliding on crowded construction sites in Dubai. The Internet-connected system collects data from sensors mounted to the cranes and other equipment to detect if construction cranes are swinging too close to each other and, if so, halts them from moving further.36

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■

Agriculture. Farmers are using IoT technology to collect data about water moisture and nitrogen levels to improve yields while conserving water, a precious commodity in many places.

■

Manufacturing. IoT-enabled sensors on plant-floor equipment, such as a conveyor line, can alert plant floor personnel to problems in real time.The data can also be analyzed to uncover patterns to allow technicians to predict potential failures or redeploy resources in a more optimal fashion.

■

Predictive maintenance. Sensors are used extensively in the utilities industry to capture operational data to achieve 24/7 uptime. Sensor data is carefully analyzed to predict when critical pieces of equipment or power lines are about to fail so that quick, anticipatory corrective action can take place before any failure.

■

Retailing. Retailers use in-store sensors to detect in-store behaviour and optimize the shopping experience in order to increase revenue and market share. Streaming data from sensors is analyzed, along with other information (like inventory, social media chatter and online-shop user profiles) to send customized and personal offers while the shopper is in the process of making a purchase decision.

■

Traffic monitoring. The Aegean motorway is the oldest and most important motorway in Greece, connecting the country’s largest cities, Athens and Thessaloniki. More than 5,000 devices are deployed along a 200-km stretch of the highway to keep drivers safe and the roadway running efficiently. All these devices must work in a smooth and coordinated fashion to monitor traffic, detect traffic incidents using traffic cameras, warn travellers of road conditions via electronic billboards and operate toll booths. The devices are connected to a central control system using Cisco’s Internet of Everything system to connect data, people, processes and things.37

Unfortunately, there can be many issues with simply receiving and recognizing usable sensor data. Sometimes a faulty sensor or bad network connection results in missing data or sensor data lacking time stamps indicating when the reading occurred. As a result, sensor data can be incomplete or contain inconsistent values indicating a potential sensor failure or a drop in a network. Developers of IoT systems must be prepared for and be able to detect faulty sensor data. Security is a very major issue with IoT applications. In today’s manufacturing environment, the factory network is a closed environment designed to communicate with plant sensors and devices but not typically with the outside world. So, a key decision organizations must make when considering implementation of an IoT is: Are the benefits of doing so sufficient to overcome the risk of making detailed company information accessible through the Internet and exposing internal systems to hacking, viruses and destructive malware? Hackers who gain access to an organization’s IoT can steal data, transfer money out of accounts and shut down websites, and they can also wreak physical havoc by tampering with critical infrastructure like air traffic control systems, healthcare devices, power grids, and supervisory control and data acquisition (SCADA) systems. One of the first things developers of IoT applications should focus on is building in security from the start. This needs to include ways of updating the system in a secure manner.

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Summary Effective communications are essential to organ izat ional success. Telecommunications refers to the electronic transmission of signals for communications, including telephone, radio and television. Telecommunications is creating profound changes in business because it removes the barriers of time and distance. The elements of a telecommunications system include a sending unit, such as a person, a computer system, a terminal or another device, that originates the message. The sending unit transmits a signal to a telecommunications device, which performs a number of functions such as converting the signal into a different form or from one type to another. A telecommunications device is a hardware component that facilitates electronic communication. The telecommunications device then sends the signal through a medium, which is anything that carries an electronic signal and serves as an interface between a sending device and a receiving device. The signal is received by another telecommunications device that is connected to the receiving computer. The process can then be reversed, and another message can pass from the receiving unit to the original sending unit. With synchronous communications, the receiver gets the message instantaneously, when it is sent. Voice and phone communications are examples. With asynchronous communications there is a delay between sending and receiving the message. A communications channel is the transmission medium that carries a message from the source to its receivers. Communications technology lets more people send and receive all forms of information over greater distances. The telecommunications media that physically connect data communications devices can be divided into two broad categories: guided transmission media, in which communications signals are guided along a solid medium, and wireless media, in which the communications signal is sent over airwaves. Guided transmission media include twisted-pair wire cable, coaxial cable, fibre-optic cable and broadband over power lines. Wireless media types include microwave, cellular and infrared.

A modem is a telecommunications hardware device that converts (modulates and demodulates) communications signals so they can be transmitted over the communication media. A multiplexer is a device that encodes data from two or more data sources onto a single communications channel, thus reducing the number of communications channels needed and, therefore, lowering telecommunications costs. A front-end processor is a special-purpose computer that manages communications to and from a computer system serving hundreds or even thousands of users. Telecommunications carriers offer a wide array of phone and dialling services, including digital subscriber line (DSL) and wireless telecommunications. The effective use of networks can turn a company into an agile, powerful and creative organization, g iving it a long-term competitive advantage. Networks let users share hardware, programs and databases across the organization. They can transmit and receive information to improve organizational effectiveness and efficiency. They enable geographically separated workgroups to share documents and opinions, which fosters teamwork, innovative ideas and new business strategies. The physical distance between nodes on the network and the communications and services provided by the network determines whether it is called a p ersonal area network (PAN), local area network (LAN), metropolitan area network (MAN) or wide area network (WAN). A PAN connects information technology devices within a range of about 10 metres. The major components in a LAN are a network interface card, a file server and a bridge or gateway. A MAN connects users and their computers in a geographical area larger than a LAN but smaller than a WAN. WANs link large geographic regions, including communications between countries, linking systems from around the world. The electronic flow of data across international and global boundaries is often called transborder dataflow. A mesh network is a way to route communications between network nodes (computers or other devices) by allowing for continuous connections and reconfiguration around blocked paths by ‘hopping’ from node to node until a connection can be established.

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A client/server system is a network that connects a user’s computer (a client) to one or more host computers (servers). A client is often a PC that requests services from the server, shares processing tasks with the server and displays the results. Many companies have reduced their use of mainframe computers in favour of client/server systems using midrange or personal computers to achieve cost savings, provide more control over the desktop, increase flexibility and become more responsive to business changes. The start-up costs of these systems can be high, and the systems are more complex than a centralized mainframe computer. When people on one network want to communicate with people or devices in a different organization on another network, they need a common communications protocol and various network devices to do so. A communications protocol is a set of rules that govern the exchange of information over a communications channel. There are myriad communications protocols, including international, national and industry standards. In addition to communications protocols, telecommunications uses various devices. A switch uses the physical device address in each incoming message on the network to determine which output port to forward the message to in order to reach another device on the same network. A bridge is a device that connects one LAN to another LAN that uses the same telecommunications protocol. A router forwards data packets across two or more distinct networks towards their destinations, through a process known as routing. A gateway is a network device that serves as an entrance to another network. When an organization needs to use two or more computer systems, it can follow one of three basic data-processing strategies: centralized, decentralized or distributed. With centralized processing, all processing occurs in a single location or facility. This approach offers the highest degree of control. With decentralized processing, processing devices are placed at various remote locations. The individual computer systems are isolated and do not commu nicate with each other. With distributed processing, computers are placed at remote locations but are connected to each other via telecommunications d e v i c e s . T h i s a p p ro a c h h e l p s m i n i m i z e t h e consequences of a catastrophic event at one location, while ensuring uninterrupted systems availability. Communications software performs important functions, such as error checking and message formatting. A network operating system controls the

INFORMATION TECHNOLOGY CONCEPTS

computer systems and devices on a network, allowing them to communicate with one another. Networkmanagement software enables a manager to monitor the use of individual computers and shared hardware, scan for viruses and ensure compliance with software licences. The Internet is like many other technologies – it provides a wide range of services, some of which are effective and practical for use today, others are still evolving and still others will fade away from lack of use. The Internet started with ARPANET, a project sponsored by the US Department of Defense (DoD). Today, the Internet is the world’s largest computer network. Actually, it is a collection of interconnected networks, all freely exchanging information. The Internet transmits data from one computer (called a host) to another. The set of conventions used to pass packets from one host to another is known as the Internet Protocol (IP). Many other protocols are used with IP. The best known is the Transmission Control Protocol (TCP). TCP is so widely used that many people refer tothe Internet protocol as TCP/IP, the combination of TCP and IP used by most Internet applications. Each computer on the Internet has an assigned address to identify it from other hosts, called its uniform resource locator (URL). There are several ways to connect to the Internet: via a LAN whose server is an Internet host or via an online service that provides Internet access. An Internet service provider is any company that provides access to the Internet. To use this type of connection, you must have an account with the service provider and software that allows a direct link via TCP/IP. Among the value-added services ISPs provide are electronic commerce, intranets and extranets, website hosting, web transaction processing, network security and administration, and integration services. Because the Internet and the World Wide Web are becoming more universally used and accepted for business use, management, service and speed, privacy and security issues must continually be addressed and resolved. A rapidly growing number of companies are doing business on the web and enabling shoppers to search for and buy products online. For many people, it is easier to shop on the web than search through catalogues or trek to the high street. The steps to creating a web page include organizing storage space on a web server; writing your copy with a word-processor, using an HTML

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editor, editing an existing HTML document, or using an ordinary text editor to create your page; opening the page using a browser, viewing the result on a web browser, and correcting any tags; adding links to your home page to take viewers to another home page; adding pictures and sound; uploading the HTML file to your website; reviewing the web page to make sure that all links are working correctly; and advertising your web page. After a website has been constructed, a content management system (CMS) can be used to keep the website running smoothly. Web services are also used to develop web content. Web services consist of a collection of standards and tools that streamline and simplify communication between websites, which could revolutionize the way people develop and use the web for business and personal purposes. An intranet is an internal corporate network built using Internet and World Wide Web standards and products. It is used by the employees of an organization to gain access to corporate information. Computers using web server software store and manage documents built on the web’s HTML format.

With a web browser on your PC, you can call up any web document – no matter what kind of computer it is on. Because web browsers run on any type of computer, the same electronic information can be viewed by any employee. That means all sorts of documents can be converted to electronic form on the web and constantly be updated. An extranet is a network that links selected resources of the intranet of a company with its customers, suppliers or other business partners. It is also built around web technologies. Security and performance concerns are different for an extranet than for a website or network-based intranet. User authentication and privacy are critical on an extranet. Obviously, performance must be good to provide quick response to customers and suppliers. Management issues and service and speed affect all networks. No centralized governing body controls the Internet. Also, because the amount of Internet traffic is so large, service bottlenecks often occur. Privacy, fraud and security issues must continually be addressed and resolved.

Self-Assessment Test 1 ___________ is the rate at which data is exchanged.

6 ___________ and ___________ are communications software.

2 Fibre-optic cable transmits data as a ___________.

7 The ___________ tag turns text on a web page bold.

3 Using electricity cables for data transmission is ___________. 4 A very short range wireless data transmission is ___________. 5 A ___________ uses a physical device address in each incoming message on a network to determine to which output port it should forward the message to reach another device on the same network.

8 ___________ allow websites to communicate with each other. 9 FTP is ___________. 10 Google Docs and Zoho are examples of ___________.

Review Questions 1 What is the difference between synchronous and asynchronous communication? 2 Describe a metropolitan area network. How does it compare to a LAN? 3 Describe microwave transmission. 4 What can you do with a PAN?

5 What is mesh networking? 6 What are some of the uses of NFC? 7 What is FTP used for? 8 What is an intranet? 9 What is HTML? 10 What is a web service?

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Discussion Questions 1 What are the advantages of using cloud computing?

2 What will you use 5G for?

Web Exercises 6

1 Find a map of the Internet cables that connect the world. ‘Drive’ past by using Google StreetView or similar. Is the station marked in any way?

2 Search for an HTML tutorial and work your way through it.

Case One Instant Messaging is Easier to Secure Than Email If you look at the top left corner of your web browser you’ll notice that web pages start with ‘http://’. Sometimes an ‘s’ is added to give ‘https’ and a padlock might also appear. The ‘s’ stands for secure and when you see it, all traffic that leaves your computer to go to the web server that is storing the web page you are currently looking at, and all the traffic that comes back, is encrypted using something called ‘forward secrecy’. The result is that messages between your computer and the web server appear to everyone else as mixed up, random gibberish. The messages only make sense when your computer and the server decrypt them. This is easy to achieve when the two computers (yours and the server) are interacting with each other directly or ‘synchronously’. So if you are instant messaging someone, using WhatsApp for example, your chat can be secured. However, this doesn’t work with email. Email is asynchronous. An email to your friend gets sent to your email provider and then their email provider and then later your friend accesses their provider’s server to read it. Your computer is at no time in direct contact with your friend’s computer. But why does this make a difference? It’s all to do with the code or key that is used to lock up the message. Let’s say you encrypt your email message somehow. How could your friend get hold of the key to unlock it? You could email it to them, but it would have to go to them as plain

text not gibberish, otherwise your friend couldn’t use it, which defeats the whole purpose. In that case you may as well not bother to encrypt the message in the first place. However, when two computers interact directly they can create what’s known as a shared secret. This provides ‘forward secrecy’ because the secret code is created and used once and then discarded, meaning that past messages are always secure. (It’s called forward secrecy because it protects past messages against future compromises.) In brief, this works as follows. Each computer chooses a private number and one of them chooses and shares a public number with the other computer. Each computer performs a calculation on its private number and the public number. For now, let’s say the calculation is multiplication. The result is shared with each computer. The shared result is then multiplied by the receiving computer’s private number. Each computer should now have the same number, a number that has never been shared publicly. Let’s try it. Computer 1 creates private number 5 and public number 10. Multiplying each of these gets 50 which is shared with Computer 2. Meanwhile Computer 2 creates private number 6 meaning it shares 6*10 which is 60 with Computer 1. Computer 1 multiplies 60 by its private number 5 giving 300. Computer 2 multiplies 50 by 6 also giving 300.

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It will be obvious that any observer in the middle could work backwards from the publicly shared numbers to come up with the supposedly secret code 300. That is why https in reality doesn’t use multiplication, it uses something called ‘clock arithmetic’. Clock arithmetic just means divide by some number and take the remainder. The result is a super secret code that is used once and then forgotten. The size of the numbers used means that each code is extremely unlikely to ever be used twice. Ever! It would be like two people choosing the same grain of sand on a million planet Earths. This has grave implications for those governments who would like to be able to read everyone’s private messages. Especially given how easy the above is to 1) explain and 2) implement on a computer. (Note that some software developers are working on end-to-end encryption for email, to make it as secure as encrypted instant messaging. The Dark Mail Technical Alliance for instance states as their mission, ‘To bring the world our unique end-toend encrypted protocol and architecture that is the “next-generation” of private and secure email’.)

Questions 1 Does this mean that email is less secure than instant messaging? 2 Should a government be able to read all instant messages? Why or why not? 3 Investigate clock arithmetic in enough detail so that you can explain it to a friend. 4 Could governments ever be able to control encryption technology?

References Dark Mail Technical Alliance website. www. darkmail.info/. Accessed 28 May 2020. MacCormick, J. 2012. Nine Algorithms That Changed the Future. Princeton, NJ: Princeton University Press. Wu, Thomas (1997-11-11). ‘The Secure Remote Password Protocol’. Internet Society Symposium on Network and Distributed System Security.

Case Two Anatomy of a Hack A Remote Administration Tool (RAT) is software that allows users to access their computer from a distance. The classic example is accessing your work computer, which is usually underneath the desk in your office, from home. A RAT lets users do anything that they would be able to do if they were at their computer including creating, reading, copying and deleting files. Cybercriminals use RATs to steal both data and processing time on a company’s computers. Many businesses have been victims of this sort of attack, and many more are but do not yet realize it. PlugX is a good example of a RAT attack. Discovered in 2012, this software is used in targeted attacks, so called spear-phishing. A spear-phishing attack is where cybercriminals identify particular targets, actual individuals, often on social media, who work for a particular firm, and then contact them with an email that appears to come from a friend.

For example, an employee who works for a company that the cybercriminals want to target announces this fact on his Facebook page. The criminals can see this and also who his friends are. They may also be able to see his company email address, or they may be able to guess this– it’s often just ‘first_name.surname@ c o m p a n y. c o m ’ . T h e y s e n d h i m a n e m a i l , with content tailored to arouse his interest. The message will appear to be from one of his friends – the friend’s name is taken from Facebook – and will contain an attachment, typically a Word file, with a name that should appeal to them. For instance, if the basis of their Facebook friendship appears to be rock climbing, then the attachment will appear to be about climbing. The attached file contains what is known as a software dropper, a program that installs the

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RAT. Essentially, the dropper fools the operating system into letting it install its program, which is downloaded from the Internet. Once installed, PlugX allows the cybercriminals to copy files, log keystrokes and capture video and screen shots. It hides its activity well so that the user may suspect nothing. Kevin O’Reilly from security firm Context IS told the BBC that ‘once it’s got a foothold it makes sure it will run automatically with Windows and it will then phone home and be told to do whatever its controllers want it to do. Ultimately, this is controlled by a person. It does not do much by itself’. In other words, the software gives an external human control over a business’s computer. They can use it to have a look at the company’s data and steal it if they desire, or they may use the processor to work on something they want, effectively stealing the use of a company resource. PlugX has been used to attack governmentrelated institutions and key industries all over the world, including in Japan, Russia and Tibet, and is thought to have been used to steal government and political secrets. ‘In the old days’, said former FBI agent Eric O’Neill, ‘spies had to sneak into buildings to steal documents. Nowadays they don’t. Espionage and spies have evolved.’

INFORMATION TECHNOLOGY CONCEPTS

Questions 1 Outline a company policy that would minimize the threat of PlugX. 2 Why would cybercriminals want to steal data? 3 Who would want to steal government and political secrets? 4 Should an employee be blamed if they allow a malicious RAT to be installed?

References Certeza, R. 2012. ‘Pulling the Plug on PlugX’. Trend Micro. Available from: www.trendmicro. co.uk/vinfo/uk/threat-encyclopedia/webattack/112/pulling-the-plug-on-plugx. Accessed 28 May 2020. Tarakanov, D. 2016. ‘PlugX Malware: A Good Hacker Is an Apologetic Hacker’. Kaspersky Labs. Available from: securelist.com/plugxmalware-a-good-hacker-is-an-apologetichacker/74150/. Accessed 8 June 2020. Tarakanov, D. 2012. ‘PlugX is Becoming Mature’. Kaspersky Labs. Available from: www.securelist. com/blog/research/57670/plugx-is-becomingmature. Accessed 28 May 2020. Ward, M. 2016. ‘The Anatomy Of a Nation-State Hack Attack’. BBC. Available from: www.bbc. co.uk/news/technology-34474879. Accessed 28 May 2020.

Case Three Digital Cartography Gets It Wrong Each object that connects to the Internet – whether it’s a computer, a fridge, a car or even a dog (the Internet of Dogs is, believe it or not, an active area of research) – is assigned an IP or Internet Protocol address. Basically it’s a unique identifier. Every Internet connected device needs one. When you visit a website, that site’s server has almost always taken a note of your IP, which becomes a record of all the online addresses that have visited it. But the IP address doesn’t relate to your specific computer, because it changes when you connect at home, at work, a hotel or in a cafe. IP addresses aren’t tied to specific location addresses either – they

often are, but they don’t have to be, and the phone company can change your IP address. Basically, the server that notes down your IP address has a rough idea of where you are in the world, but no more than that. Massachusetts-based digital mapping company MaxMind decided it wanted to provide ‘IP intelligence’ for companies who wanted to pin down the location of the people who were using different websites. The company battles online fraud, and one of their services is known as IP geolocation, in essence finding what building address goes along with an IP address. Content providers could

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use this information to send letters to people who are downloading and sharing content illegally. The police could use it to identify the location of a computer that was involved in a crime. However, as was said above, IP geolocation isn’t an exact science, and often it is difficult to pin an IP address to a physical address. As technology writer Kashmir Hill explains, ‘MaxMind decided to set default locations at the city, state and country level for when it knows only roughly where the IP address lives. If it knows only that an IP address is somewhere in the U.S., and can’t figure out anything more about where it is, it will point to the centre ofthe country’. If you happen to live in the centre of the country (in the USA it’s in Northern Kansas, near the Nebraska border), this could be a big problem. James and Theresa Arnold moved into their rented 623-acre farm in Butler County, Kansas, in March 2011. The house gave them the privacy they craved but less than a week after they had moved in, law officials turned up looking for a stolen vehicle. More followed. They were accused and implicated in countless thefts, abduction plots and computer fraud. Police showed up looking for missing persons and runaway children, and to check on attempted suicides. They had no idea why. This went on for five years until they read an article by Ms Hill about MaxMind. MaxMind was identifying their property as the default spot for IPs when it knew nothing other than it’s ‘in the US’ – their house is in the north of the state, near the Nebraska border. Having finally found out what was happening, the couple took to the courts. Court documents report that ‘In 2013, the Butler County Sheriff Department ran a background check on the plaintiffs because of all the activity taking place at the residence’, and they were receiving, ‘weekly reports about fraud, scams, stolen Facebook accounts, missing person reports’ linked to the home.

MaxMind company founder said, ‘to my knowledge, we have never claimed that our database could be used to locate a household’. In any case, MaxMind has now changed the default centre points to be in the middle of a body of water.

Questions 1 Why do you think MaxMind’s clients (the police for instance) were not aware of the inexact nature of this service? 2 What could MaxMind do to keep the service being useful but stop problems like this? 3 What other uses could IP geolocation be put to? 4 Should IP geolocation be an exact science? (Should telecoms firms be forced to pin down exactly where devices are?)

References Farivar, C. 2016. Kansas couple sues IP mapping firm for turning their life into a “digital hell”. Arstechnica. Available from: www.arstechnica. com/tech-policy/2016/08/kansas-couple-suesip-mapping-firm-for-turning-their-life-into-adigital-hell/. Accessed 8 June 2020. Hill, K. 2016. Kansas couple who live in a ‘digital hell’ sue mapping company MaxMind. Splinter. Available from: splinternews.com/kansas-couple-who-livein-a-digital-hell-sue-mapping-co-1793861054. Accessed 8 June 2020. Hill, K. 2016. ‘How a mapping glitch turned a random Kansas farm into a digital hell’. Splinter News. fusion.net/story/287592/ internetmapping-glitch-kansas-farm/. Accessed 28 May 2020. www.maxmind.com. Accessed 28 May 2020. www.bbc.co.uk/news/technology-37048521. Accessed 28 May 2020.

Notes 1

Hajduczenia, M., Carlson, S., Dove, D., Laubach, M., Law, D., Zimmerman, G. IEEE Standards University. ‘Evolution of ethernet standards in IEEE 802.3 Working Group’. 16 August 2016. www.standardsuniversity.org/e-magazine/

august-2016-volume-6/evolution-ethernetstandards-ieee-802-3-working-group/” www. standardsuniversity.org/e-magazine/august-2016volume-6/evolution-ethernet-standards-ieee-8023-working-group/. Accessed 19 June 2020.

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Di Stefano, Theodore F., ‘India’s Hi-Tech Dominance: How Did IT Happen?’ E-Commerce Times, 14 April 2006. 3 Orzech, Dan, ‘Surfing Through the Power Grid’, Wired News, 20 October 2005. 4 Kelion, L. 2020. ‘Huawei Set for Limited Role in UK 5G Networks’. BBC. Available from: www.bbc. co.uk/news/technology-51283059. Accessed 28 April 2020. 5 Reuters, 2020. ‘Vodacom to Launch 5G Services in South Africa in 2020’. Available from: www. reuters.com/article/us-vodacom-grp-safrica-5gidUSKBN1ZY1PM. Accessed 28 April 2020. 6 Gelke, H. ‘Harnessing Ultra-Wideband for Medial Applications’, Medical Electronic Design. Available from: patents.google.com/patent/EP1847214A2/ en. Accessed 8 June 2020. 7 Honan, Mathew, ‘Apple Unveils Intel-Powered Mac Minis’, Computerworld, 28 February 2006. 8 Mearian, Lucas, ‘Google Earth’s Photographer Builds Out Infrastructure’, Computerworld, 1 March 2006. 9 Staff, ‘EasyStreet and OnFibre Bring State-ofthe-Art Network to Portland’, Press Releases, OnFibre. Available from: www.businesswire.com/ news/home/20050120005233/en/EasyStreetOnFiber-Bring-State-of-the-Art-NetworkPortland. Accessed 8 June 2020. 10 Dubie, Denise, ‘Sierra Pacific Taps Open Source Management Tools’, Network World, 12 December 2005. 11 Higginbotham, Stacy, ‘Google Launches Andromeda, a Software Defined Network Underlying Its Cloud’, Gigaom, 2 April 2014. Available from: www.gigaom.com/2014/04/02/google-launchesandromeda-a-software-defined-networkunderlying-its-cloud. Accessed 28 April 2020. 12 4-Traders Web site, ‘ZIX: 08/23/2011 7-Eleven Expands Secure Email Services with ZIX Corporation’, 4-Traders, investor.zixcorp. com/news-releases/news-release-details/7eleven-expands-secure-email-services-zixcorporation?field_nir_news_date_value[min]=2018. Accessed 8 June 2020. 13 Werner Enterprises Web site, ‘About Werner’. www. werner.com/content/about. Accessed 28 May 2020. 14 Buxbaum, P. 2016. Werner Enterprises Celebrates 10 Years in China. Golbal Trade. Available from: www.globaltrademag.com/werner-enterprisescelebrates-10-years-china/. Accessed 8 June 2020.

INFORMATION TECHNOLOGY CONCEPTS

Staff, ‘China Tightens Web-Content Rules’, Wall Street Journal, 26 September 2005, p. B3. 16 Hafner, Katie, Where Wizards Stay Up Late: The Origins of the Internet, Touchstone, Rockefeller Center, New York, 1996. 17 Internet2 Website. Available from: www.internet2. edu. Accessed 28 May 2020. 18 Statista website. www.statista.com/ statistics/216573/worldwide-market-share-ofsearch-engines. Accessed 13 June 2020. 19 Duo, M. ‘21 Alternative Search Engines To Use in 2020’. Kinsta. 10 April 2020. kinsta.com/blog/ alternative-search-engines/” kinsta.com/blog/ alternative-search-engines/. Accessed 19 June 2020. 20 Guth, Robert, et al., ‘Sky-High Search Wars’, The Wall Street Journal, 24 May 2005, p. B1. 21 Staff, ‘Microsoft Looks for a Place Among Competitors with MSN Local Search’, Rocky Mountain News, 21 June 2005, p. 6B. 22 Staff, ‘Study: Web Site’s Appearance Matters’, CNN Online, 11 August 2005. 23 BT Website, 2014. Available from: www.business. bt.com/domains-and-hosting/web-hosting. Accessed 28 May 2020. 24 Hof, Robert, ‘Mix, Match, and Mutate’, Business Week, 25 July 2005, p. 72. 25 iCloud, Apple. Available from: www.apple.com/ icloud. Accessed 28 May 2020. 26 Heath, N. 2016. Switching clouds: What Spotify learned when it swapped AWS for Google’s cloud. Tech Republic. Available from: www.techrepublic. com/article/switching-clouds-what-spotifylearned-when-it-swapped-aws-for-googles-cloud/. Accessed 8 June 2020. 27 Cloud Computing Options, PC Today, June 2014. 28 Ramel, David, ‘New Research Shows Staggering Failure Rates for Cloud Projects’, Enterprise Systems, 26 June 2014. Available from: www.esj. com/articles/2014/06/26/cloud-projects-fail.aspx. Accessed 28 April 2020. 29 Olavsrud, Thor, ‘Why a Media Giant Sold Its Data Center and Headed to the Cloud’, CIO, 15 July 2014. Available from: www.cio.com/article/2453894/why-amedia-giant-sold-its-data-center-and-headed-to-thecloud.html. Accessed 8 June 2020. 30 Ovide, Shira and Boulton, Clint, ‘Flood of Rivals Could Burst Amazon s Cloud’, The Wall Street Journal, 25 July 2014. Available from: www.wsj. com/articles/storm-clouds-over-amazon-business1406328539?mg=id=wsj. Accessed 28 April 2020. 31 Revlon Fact Sheet, Revlon. Available from: www. revlon.com/about/fact-sheet. Accessed 21 February 2016.

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Revlon, ‘Revlon, Inc. Moves to the Cloud with Juniper Networks to Increase Global Business Agility’, Juniper Networks. Available from: www. techrepublic.com/resource-library/casestudies/ revlon-inc-moves-to-the-cloud-with-junipernetworks-to-increase-global-business-agility/. Accessed 8 June 2020. 33 Autonomic Computing, IBM. Available from: www. ibm.com/developerworks/tivoli/autonomic.html. Accessed 28 May 2020. 34 Romeo, J. et al. 2015. A Practical Guide to the Internet of Things. Newton, MA: Tech Target. 35 Kepes, Ben, ‘The Internet of Things, Coming Soon to an Airline near You’, Runway Girl

Network, 14 March 2015. Available from: www. runwaygirlnetwork.com/2015/03/14/the-internetof-things-coming-soon-to-an-airline-near-you. Accessed 28 April 2020. 36 Van Zyl, Gareth, ‘Internet of Everything Helps Prevent Dubai Crane Collisions’, Web Africa, 4 June 2014. Available from: www.itwebafrica. com/cloud/516-africa/233009-internet-ofeverything-helps-prevent-dubai-crane-collisions. Accessed 28 April 2020. 37 Cisco, ‘Reducing Costs with a Converged Roadway Network’. Available from: audentiagestion.fr/cisco/pdf/Aegean-Motorway-voc-casestudy.pdf. Accessed 13 June 2020.

World Views Case IT Purchase Decisions: What Should You Buy? Laptop or desktop? Windows, OS X or GNU Linux? Tablet or smartphone? As an IT manager, how do you actually go about choosing technology for your colleagues? What do they really need? What will they need in six months’ time? And, once you’ve chosen, how do you select between all the different suppliers? Some technology will come with a one-year warranty, others will have two. Some will feature a 24-hour helpline, while some will be cheaper than others. Tadashi Tokieda’s first job was as a painter. Judging by his web page, he probably means the artistic kind rather than a decorator, but this is rather unclear. In any case, later in life he switched careers and began to study mathematics, learning from notes written in Russian (he grew up in Japan). A few years later he ended up as professor of mathematical physics at the University of Cambridge. Professor Tokieda thinks that everyone – whether studying information systems or not – should know about the following. We think he’s probably right. Let’s say we’ve got to choose between four laptop computers. An independent online technology review magazine has given each of them a rating out of ten, on six characteristics: price, computational speed, screen resolution, screen size, future proofing and weight. The results are shown in the table below. Feature

Laptop A

Laptop B

Laptop C

Laptop D

Price

Speed

Resolution

Screen size

Future proof

Weight

We could take the average score of each and use that to judge which is best, but if we did there might be a laptop that has one really strong feature but which is otherwise mediocre that could win. Instead we’ll compare them two at a time to try to see if that helps. Let’s start with Laptop A versus Laptop B. Imagine choosing one feature from each laptop at random (and we don’t necessarily have to compare the same feature for each laptop) – which computer is more likely to come out on top? It’s clear that Laptop B will beat Laptop A four times out of six, which is more than half the time so we’ll say Laptop B has it.

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Comparing Laptop B with Laptop C, Professor Tokieda has a neat argument we can use to avoid any complicated sums. Laptop C beats Laptop B half the time, because 8 – which will come up half the time – will beat both 7 and 3. However, even if screen size, future proof or weight is chosen, Laptop C can still beat Laptop B some of the time, so overall Laptop C will win more than half the time. Therefore, it beats Laptop B. Do the same for Laptop C and D. Here, Laptop C loses half the time (any time that screen size, future proof or weight are chosen) and of the other possibilities (price, speed and resolution) Laptop D wins at least some of the time. So, Laptop D beats Laptop C more than half the time. Therefore, out of all of the laptops, D is the overall winner. Except, no it isn’t. Now compare Laptop A with Laptop D: Laptop A will beat it four times out of the six, more than half. So we have: Laptop B beats Laptop A Laptop C beats Laptop B Laptop D beats Laptop C Laptop A beats Laptop D And this is the lesson: when comparing technologies in this way, we cannot conclude that just because Technology 1 beats Technology 2, and Technology 2 beats Technology 3, that Technology 1 will beat Technology 3. The fancy name for this is that the choices are non-transitive. Essentially, here we have been comparing probabilities: the probability that a randomly chosen feature of one laptop will be rated higher than a randomly chosen feature of another laptop, but the same thing can happen with a simple purchase rule. Imagine that a user is about to choose between three smartphones that vary on price and screen size as shown in the table below. Feature

Smartphone A

Smartphone B

Smartphone C

Price

€100

€150

€200

Screen size

Small

Medium

Large

The company finance officer suggests the following decision rule: choose the cheaper phone if the difference in price is greater than 50, and if the difference in price is 50 or less, choose the phone with the larger screen size. When choosing between A and B, B is chosen as the price difference is 50 and B has the larger screen. When choosing between B and C the situation is the same and C is chosen. However, when choosing between A and C, the price difference is greater than 50 so A is chosen. Our preferences are therefore: C over B, B over A, A over C. Questions 1 So how would you explain this to the finance officer? 2 How would you choose between Laptop A, B, C and D? 3 Could you design a purchasing strategy to avoid this sort of problem in the future? 4 Should the choice be up to the IT manager or the user?

References Numberphile video. ‘The Most Powerful Dice’. Available from: www.youtube.com/ watch?v=zzKGnuvX6IQ. Accessed 28 May 2020. Plous, S. 1993. The Psychology of Judgment and Decision Making. New York: McGraw Hill.

PART 3 Business Information Systems

7 Operational Systems 8 Management Information and Decision Support Systems 9 Knowledge Management and Specialized Information Systems 10 Pervasive Computing

07 Operational Systems Principles

Learning Objectives

An organization must have information systems that support the routine, dayto-day activities that occur in the normal course of business and help a company add value to its products and services.

■

Identify the basic activities and business objectives common to all transaction processing systems.

■

Identify key control and management issues associated with transaction processing systems.

Traditional transaction processing ystems support the various business s functions of organizations that have not yet implemented enterprise resource planning systems.

■

Describe the inputs, processing and outputs for the transaction processing systems associated with the order processing, purchasing and accounting business functions.

Electronic and mobile commerce allow transactions to be made by the customer, with less need for sales staff, and open up new opportunities for conducting business.

■

Define e- and m-commerce and describe various forms of e-commerce.

A company that implements an enterprise resource planning system is creating a highly integrated set of systems, which can lead to many business benefits.

■

Identify the challenges multinational corporations must face in planning, building and operating their transaction processing systems.

■

Discuss the advantages and disadvantages associated with the implementation of an enterprise resource planning system.

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Why Learn About Operational Systems?

You might recall from Chapter 2 that operational systems support the day-to-day running of a firm. Operational systems, such as transaction processing systems (TPS), allow firms to buy and sell. Without systems to perform these functions, the firm could not operate. Organizations today are moving from a collection of non-integrated transaction processing systems to highly integrated enterprise resource planning (ERP) systems to perform routine business processes and maintain records about them. These systems support a wide range of business activities associated with supply chain management and customer relationship management (as mentioned in Chapter 1). A lthough they were initially thought to be cost effective only for very large companies, even small and medium-sized companies are now implementing these systems to reduce costs and improve service. Employees who work directly with customers – whether in sales, customer service or marketing – require high-quality transaction processing systems and their associated information to provide good customer service. Companies selling online need electronic- and mobile-commerce software to allow customers to perform transactions. No matter what your role, it is very likely that you will provide input to or use the output from your organization’s systems. Your effective use of these systems will be essential to raise the productivity of your firm, improve customer service and enable better decision making. Thus, it is important that you understand how these systems work and what their capabilities and limitations are.

7.1 Introduction Part 3 of this book describes the main types of business information system. This chapter looks at those systems that manage the day-to-day running of the firm. Without them an organization couldn’t operate. They include systems that sell products and services to customers (transaction processing systems), systems that buy materials from suppliers (supply chain management systems), systems that help manage the after-sales service (customer relationship management systems) and systems that maintain tax records (accounting systems). Then Chapter 8 looks at systems used by the organization to manage its longer-term operations and make decisions about product offerings and marketing campaigns. Chapter 9 looks at more specialized systems including robotics and artificial intelligence. Chapter 10 then looks at the ways information technology has become part of our work and home environment. Often, especially with the systems described in this chapter and the next, the output from one of the systems is the input to another of the systems. An alternative approach to having separate systems to do all of the jobs that are discussed is to have one enterprise-wide system that does all of them. This is the ERP approach, which is described at the start of this chapter. ERP doesn’t really fit into either the day-to-day running category or the longterm planning category since it does both, and the decision to include it in this chapter rather than the next is fairly arbitrary. Also there is no agreed minimum set of tasks that a system has to perform in order for it to be classed as an ERP. However the expectation is that an ERPdoes some of the tasks described in this chapter, plus some of the tasks described in the next c hapter. One way of looking at the material in Chapters 7 and 8 is that if an organization has an ERP, then the systems described are sub-systems of their ERP. If an organization does not have an ERP, then the systems described are stand-alone information systems in their own right.

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7.2 Enterprise Resource Planning ERP systems evolved from systems (called materials requirements planning or MRP systems) that allowed companies to plan out how much raw material they would need at a certain time in the future, plan their production, control their inventory and manage their purchasing process. Many organizations recognized that their existing systems lacked the integration needed to coordinate these activities and also to share valuable information across all the business functions of the firm. As a result, costs were higher and customer service suffered. This led firms to start to create new systems, which came to be known as ERP systems. Large organizations, especially members of the Fortune 1000, werethe first to take on the challenge of implementing ERP. An ERP is a system that manages an entire company’s vital business information. Many firms consider themselves to have an ERP if the system manages most, rather than all, of their information.

Advantages of ERP Systems Increased global competition, executives’ desire for control over the total cost and product flow through their enterprises, and ever-more-numerous customer interactions drive the demand for enterprise-wide access to real-time information. ERP offers integrated software from a single vendor to help meet those needs. The primary benefits of implementing ERP include improved access to data for operational decision making, elimination of inefficient or outdated systems, improvement of work processes and technology standardization. ERP vendors have also developed specialized systems for specific applications and market segments.

Improved Access to Data for Operational Decision Making ERP systems operate via an integrated database, using one set of data to support all business functions. The systems can support decisions on optimal sourcing or cost accounting, for instance, for the entire enterprise or for business units, rather than gathering data from multiple business functions and then trying to coordinate that information manually or reconciling it with another application. The result is an organization that looks seamless, not only to the outside world but also to the decision makers who are deploying resources within that organization. The data is integrated to facilitate operational decision making and allows companies to provide greater customer service and support, strengthen customer and supplier relationships and generate new business opportunities. A number of software developers offer specialist ERP systems tailored to particular industries. LS Retail, for example, has an ERP designed for pet stores. They claim their solution is ‘purrfect’ (yes, it says that on their website), and that it is simple to implement and learn. One customer, Care-A-Lot Pet Supply, was able to use their software to manage transactions made by them buying from suppliers and tracking stock into their warehouses, and transactions made by customers in their stores. LS Retail software printed a barcode on each customer receipt that could be scanned to return all the data on that transaction. This prevented items from being returned and refunded at full price when they were sold at discount, and items being returned after a specific time period.1

Elimination of Costly, Inflexible Legacy Systems Adoption of an ERP system enables an organization to eliminate dozens or even hundreds of separate systems and replace them with a single, integrated set of applications for the entire enterprise. In many cases, these systems are decades old, the original developers are long

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gone and the systems are poorly documented. As a result, the systems are extremely difficult to fix when they break, and adapting them to meet new business needs takes too long. They become an anchor around the organization that keeps it from moving ahead and remaining competitive. An ERP system helps match the capabilities of an organization’s information systems to its business needs – even as these needs evolve.

Improvement of Work Processes

Competition requires companies to structure their business processes to be as effective and customer oriented as possible. ERP vendors do considerable research to define the best business processes. They gather the requirements of leading companies within an industry and combine them with findings from research institutions and consultants. The individual application modules included in the ERP system are then designed to support these best practices, which should be one of the most efficient and effective ways to complete a business process. Thus, implementation of an ERP system ensures good work processes based on best practices. For example, for managing customer payments, the ERP system’s finance module can be configured to reflect the most efficient practices of leading companies in an industry. This increased ptimal chain of activities, with all efficiency ensures that everyday business operations follow the o users being supplied with the information and tools they need to complete each step. With 22,000 employees serving 4.7 million customers and generating revenues of €14 billion, Achmea is the largest insurance company in the Netherlands. The company had grown rapidly through acquisition and had evolved to using a mix of manual data collection and reporting processes. The company converted to an ERP system to standardize on a set of industry best practices, streamlined work processes and sophisticated data analysis tools across all divisions and operating companies. As a result, the company could reduce staffing levels in some areas of the business by as much as 30 per cent, thus improving p roductivity and cutting costs. In addition, the time required to complete month-end financial reporting was reduced by 30 per cent, with an increase in the accuracy and reliability of thedata.2

Upgrade of Technology Infrastructure When implementing an ERP system, an organization has an opportunity to upgrade the information technology (hardware, operating systems, databases, etc.) that it uses. While centralizing and formalizing these decisions, the organization can eliminate the multiple hardware platforms, operating systems and databases it is currently using – most likely from a variety of vendors – and standardize on fewer technologies and vendors. This reduces ongoing maintenance and support costs as well as the training load for those who must support the infrastructure. Some of the major trends in ERP systems are integrating artificial intelligence, the Internet of Things and process automation, which for larger companies includes the use of robots. Motis Fire Rescue in Canada is a company that makes fire fighting tools that sell across the globe. They described the machines that they use to make their tools as ‘dumb’ and wanted to make them smarter and extend their life. To do this, they needed to measure the temperature of the machines when they were working, how much they vibrated, and how often and for how long they were ‘down’ (turned off to cool and rest). So sensors were added that send data to a Raspberry Pi. The Pi is connected to the company’s wi-fi and sends the data to Microsoft’s Azure IoT Hub, which provides cloud storage. Later on it is accessed from there and analyzed.3

Disadvantages of ERP Systems Unfortunately, implementing ERP systems can be difficult and can disrupt current business practices. Some of the major disadvantages of ERP systems are the expense and time required for implementation, the difficulty in implementing the many business process changes

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that accompany the ERP system, the problems with integrating the ERP system with other systems, difficulty in loading data into the new system, the risks associated with making a major commitment to a single vendor and the risk of implementation failure.

Expense and Time in Implementation Getting the full benefits of ERP takes time and money. Although ERP offers many strategic advantages by streamlining a company’s TPS, large firms typically need three to five years and spend tens of millions of euros to implement a successful ERP system.

Difficulty Implementing Change In some cases, a company has to radically change how it operates to conform to the ERP’s work processes – its best practices. These changes can be so drastic to long-time employees that they retire or quit rather than go through the change. This exodus can leave a firm short of experienced workers. Sometimes, the best practices simply are not appropriate for the firm and cause great work disruptions.

Difficulty Integrating with Other Systems Most companies have other systems that must be integrated with the ERP system, such as financial analysis programs, e-commerce operations and other applications. Many companies have experienced difficulties making these other systems operate with their ERP system. Other companies need additional software to create these links.

Difficulty in Loading Data into New ERP System A major amount of work is required to load existing data from various sources into the new ERP database. The new ERP system may have the capability to store hundreds or even thousands of data items (e.g. customer name, bill to address, product description, etc.). The data items that will be required depend on the scope of ERP implementation. If certain processes or transactions are not included within the scope of implementation, there will be less data to load. Data mapping is the examination of each data item required for the new ERP system and determining where that data item will come from. While most of the data for the new system will come from the files of existing legacy systems, some data items may need to be pulled from manual systems or may even need to be created for the new system. Data clean-up is required because the legacy systems are likely to contain data that is inaccurate, incomplete or inconsistent. For example, the same customer may be listed multiple times in existing customer files with varying billing addresses, or products may appear in the existing inventory files that have not been produced for years. Data loading can be performed either by using data conversion software that reads the old data and converts it into a format for loading into the database or by end-users entering data via the input screens of the new system.

Risks in Using One Vendor The high cost to switch to another vendor’s ERP system makes it extremely unlikely that a firm will do so. After a company has adopted an ERP system, the vendor has less incentive to listen and respond to customer concerns. The high cost to switch also comes with the risk that the ERP vendor allows its product to become outdated or goes out of business. Selecting an ERP system involves not only choosing the best software product but also the right long-term business partner. It was unsettling for many companies that had implemented PeopleSoft, J.D. Edwards or Siebel Systems enterprise software when these firms were acquired by Oracle.

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Risk of Implementation Failure Implementing an ERP system for a large organization is extremely challenging and requires tremendous amounts of resources, the best IS and business people, and plenty of management support. Unfortunately, large ERP installations occasionally fail, and problems with an ERP implementation can require expensive solutions. The following list provides tips for avoiding many common causes for failed ERP implementations:

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Assign a full-time executive to manage the project.

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Appoint an experienced, independent resource to provide project oversight and to verify and validate system performance.

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Allow sufficient time for transition from the old way of doing things to the new system and new processes.

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Plan to spend a lot of time and money training people.

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Define metrics to assess project progress and to identify project-related risks.

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Keep the scope of the project well defined and contained to essential business processes.

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Be wary of modifying the ERP software to conform to your firm’s business practices.

ERP for Small- and Medium-Sized Enterprises (SMEs) 7

It is not only large Fortune 1000 companies that are successful in implementing ERP. SMEs (both for-profit and not-for-profit) can achieve real business benefits from their ERP efforts. Many SMEs elect to implement open-source ERP systems. With open-source software, anyone can see and modify the source code to customize it to meet their needs. Such systems are much less costly to acquire and are relatively easy to modify to meet business needs. A wide range of organizations can perform the system development and maintenance. Table 7.1 lists some of the open-source ERP systems geared for SMEs. The following sections outline systems that can be considered as sub-systems of an ERP, or as information systems in their own right.

Table 7.1 Open-Source ERP Systems Vendor

ERP Solutions

Apache

Open For Business ERP

Compiere

Compiere Open Source ERP

Openbravo

Openbravo Open Source ERP

WebERP

7.3 Transaction Processing Systems Every organization has many transaction processing systems (TPS). These systems include order processing, inventory control, payroll, accounts payable, accounts receivable and the general ledger, to name just a few. The input to these systems includes basic business transactions, such

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as a customer placing an order, an employee purchasing supplies, a customer payment and an employee signing on and off at the start and end of a day. The processing activities include data collection, data editing, data correction, data manipulation, data storage and document production. The result of processing business transactions is that the organization’s records are updated to reflect the status of the operation at the time of the last processed transaction. A TPS also has a second important function – it collects data which is input to other essential information systems – management information systems, decision support systems and other special-purpose information systems (all discussed in the following chapters). A transaction processing system serves as the foundation for these other systems. These higher-level systems require the basic business transaction data captured by the TPS (see Figure 7.1).

Figure 7.1 TPS, Strategic level

Tactical level Operational level

Low

High

Routine

Decision support

Complexity + sophistication of analysis

High

Low

ESS

MIS/DSS

TPS

MIS/DSS and ESS in Perspective An ERP system operates at all three levels and does some or all of the functions of each of thesesystems. ESS stands for Executive Support System.

TPS support routine operations in the business. The amount of support for decision making that a TPS directly provides managers and workers is low. Because TPS often perform activities related to customer contacts – such as order processing and invoicing – these information systems play a critical role in providing value to the customer. For example, by capturing and tracking the movement of each package, shippers such as FedEx can provide timely and accurate data on the exact location of a package. Shippers and receivers can access an online database and, by providing the tracking number of a package, find the package’s current location. If the package has been delivered, they can see who signed for it (a service that is especially useful in large companies where packages can become ‘lost’ in internal distribution systems and postrooms). Such a system provides the basis for added value through improved customer service.

Traditional Transaction Processing Methods and Objectives batch processing systems A form With batch processing systems, business transactions are accumulated over a period of time and prepared for processing as a single unit or batch of data processing where business transactions are accumulated over (see Figure 7.2a). Transactions are accumulated for the appropriate length of a period of time and prepared time needed to meet the needs of the users of that system. For example, for processing as a single unit or it might beimportant to process invoices and customer payments for the batch. accounts receivable system daily. On the other hand, the payroll system might receive process data weekly to create payments, update employee earnings records and distribute labour costs. The essential characteristic of a batch processing system is that there is some delay between an event and the eventual processing of the related transaction to update the organization’s records.

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Figure 7.2 Batch ersus Online V Transaction Processing (a) Batch processing inputs and processes data in groups. (b) In online processing, transactions are completed as they occur.

Terminal

Output

Terminal

Data from transactions is grouped into a batch periodically, possibly once a day

All input processed together as a batch

Terminal

(a)

Terminal

(b)

Terminal Online transaction processing

With online transaction processing (OLTP), each transaction is processed immediately, without the delay of accumulating transactions into a batch (seeFigure7.2b). Consequently, at any time, the data in an online system reflects the current status. This type of processing is essential for businesses that require access to current data such as airlines, ticket agencies and stock investment firms. Many companies find that OLTP helps them provide faster, more efficient service, one way to add value to their activities in the eyes of the customer. Increasingly, companies are using the Internet to capture and process transaction data such as customer orders and shipping information from e-commerce applications. Although the technology is advanced enough, TPS applications do not always run using online processing. For many applications, batch processing is more appropriate and cost effective. Payroll transactions and billing are typically done via batch processing. Specific goals of the organization define the method of transaction processing best suited to the various a pplications of the company. Because of the importance of transaction processing, organizations expect their TPS to accomplish a number of specific objectives, some of which are listed next. Depending on the specific nature and goals of the organization, any of these objectives might be more important than others.

online transaction processing (OLTP) A form of data processing where each transaction is processed immediately, without the delay of accumulating transactions into a batch.

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■

Process data generated by and about transactions. The primary objective of any TPS is to capture, process and update databases of business data required to support routine business activities. Utilities, telecommunications companies and financial-services organizations especially are under pressure to process ever-larger volumes of online transactions.

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Maintain a high degree of accuracy and integrity. Ensuring that the data is processed accurately and completely is critical because reports generated by the TPS are used toexecute key operational activities such as fulfilling customer orders and scheduling shipments to various customer locations.

■

Avoid processing fraudulent transactions. Related to data integrity is the need to avoid processing fraudulent transactions. Advanced fraud detection software offers real-time transaction screening and reporting and analysis of user behaviour, with the ability to learn new fraudulent behaviours as criminals develop new techniques. For example, large regular payments into the accounts of a business that would not be expected to take such payments (a sweet shop for instance) would be flagged as possible money laundering.4

■

Produce timely user responses and reports. The ability to conduct business transactions quickly can be essential for an organization’s bottom line. For instance, if bills (invoices) are sent to customers a few days later than planned, payment is delayed, possibly forcing the firm to seek costly short-term borrowing to avoid cash flow problems. As a result, firms employ monitoring systems to measure and ensure system performance.

■

Increase labour efficiency. Before businesses used computers, manual processes often required rooms full of administrators and office equipment to process the necessary business transactions. Today, TPS substantially reduce these and other labour requirements.

■

Help improve customer service. Another objective of TPS is to assist an organization in providing a fast, efficient service. People clearly appreciate the convenience of transacting and making purchases on a website from the comfort of their own homes. Not only can this increase customer satisfaction, but it can also make the seller more efficient too.

■

Help build and maintain customer loyalty. A firm’s TPS are often the means for customers to communicate. Customer interaction with these systems must, therefore, keep customers satisfied and returning.

■

Achieve competitive advantage. A goal common to almost all organizations is to gain and maintain a competitive advantage (discussed in Chapter 2). When a TPS is developed or modified, the personnel involved should carefully consider the significant and long-term benefits the new or modified system might provide. Table 7.2 summarizes some of the ways that companies can use transaction processing systems to achieve competitive advantage.

Transaction Processing Activities TPS capture and process data of fundamental business transactions. This datais used to update databases and to produce a variety of reports people both within and outside the enterprise use. The business data goes through a transaction transaction processing cycle The process of data collection, processing cycle that includes data collection, data editing, data c orrection, data editing, data correction, data manipulation, data storage and document production (see Figure 7.3). data manipulation, data storage

Data Collection Capturing and gathering all data necessary to complete the processing of transactions is called data collection. In some cases, it can be done manually, such as by collecting handwritten sales orders or a customer typing in their credit card details on a web page. In other cases, data collection is automated via special input devices such as barcode scanners and RFID readers.

and document production.

data collection Capturing and gathering all data necessary to complete the processing of transactions.

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Table 7.2 Examples of Transaction Processing Systems for Competitive Advantage Competitive Advantage

Example

Customer loyalty increased Customer interaction system to monitor and track each customer interaction with the company Superior service provided Tracking systems that customers can access to determine to customers shipping status Better relationship with suppliers Internet marketplace to allow the company to purchase products from suppliers at discounted prices

Superior information gathering Order configuration system to ensure that products ordered will meet customers’ objectives Costs dramatically reduced Warehouse management system employing RFID technology to reduce labour hours and improve inventory accuracy Inventory levels reduced Collaborative planning, forecasting and replenishment to ensure the right amount of inventory is in stores

Figure 7.3 DataProcessing Activities Common to Transaction Processing Systems

Original data

Data collection

Data editing

Bad data

Good data

Data correction

Data manipulation

Data storage

TPS reports

Document production

Data collection begins with a transaction (e.g. taking a customer order) and results in data that serves as input to the TPS. Data should be captured at its source and recorded accurately in a timely fashion, with minimal manual effort, and in an electronic or digital form that can be directly entered into the computer. This approach is called ‘source data automation’. An example of source data automation is a barcode reader at a supermarket which speeds the checkout process. Using

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barcodes is quicker and more accurate than having a shop assistant enter codes manually at the cash register. The product ID for each item is determined automatically, and its price is retrieved from the item database. This TPS uses the price data to determine the customer’s bill. It also updates the shop’s inventory database and its database of purchases. This data is then used by the shop’s management information systems to generate reports (discussed in the next chapter).

Data Editing and Correction

data editing The process of An important step in processing transaction data is to perform data editing for validity and completeness to detect any problems. For example, quantity and checking data for validity and completeness. cost data must be numeric and names must be alphabetic, otherwise the data is not valid. Often, the codes associated with an individual transaction are edited against a database containing valid codes. If any code entered (or scanned) is not present in the database, the transaction is rejected. For example, when you are buying something online, the system will usually check whether you have entered a correctly formatted email data correction The process of address, and will not allow the transaction to proceed if you have not. A data correction involves re-entering data that was not typed or scanned properly. It re-entering data that was not typed or scanned properly. is not enough simply to reject invalid data. The system should also provide error messages that alert those responsible for editing the data. Error messages must specify the problem so proper corrections can be made. For example, a scanned barcode must match a code in a master table of valid codes. If the code is misread or does not exist in the table, the shop assistant should be given an instruction to rescan the item or type the information manually.

Data Manipulation

Another major activity of a TPS is data manipulation, the process of data manipulation The process of performing calculations and other performing calculations and other data transformations related to business data transformations related to transactions. Data manipulation can include classifying data, sorting data business transactions. into categories, performing calculations, summarizing results and storing data in the organization’s database for further processing. In a payroll TPS, for example, data manipulation includes multiplying an employee’s hours worked by the hourly pay rate. Overtime pay and tax deductions are also calculated.

Data Storage Data storage involves updating one or more databases with new transactions. As has a lready been emphasized several times in this chapter, this data can be further processed and manipulated by other systems so that it is available for management reporting and d ecision making. Thus, although transaction databases can be considered a by-product of transaction processing, they have a pronounced effect on nearly all other information systems and decisionmaking processes in an organization.

Document Production and Reports

document production The Document production involves generating output records, documents process of generating output and reports. These can be hard-copy paper reports or displays on computer records and reports. screens (sometimes referred to as ‘soft copy’). Electronic payslips for example, are produced by a payroll TPS, whereas an outstanding balance report for invoices might be a soft-copy report displayed by an accounts receivable TPS. In addition to major documents such as payments and invoices, most TPS provide other useful management information and decision support, such as printed or on-screen reports that help managers and employees perform various activities. A report showing current inventory is one example; another might be a document listing items ordered from a supplier to help an administrator check the order for completeness when it arrives. A TPS can also produce reports required by law, such as taxstatements.

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Information Systems @ Work Fast Food Chain Yonghe King Upgrades Their POS

Transaction processing systems allow companies to conduct business. A good example is a Point of Sale (POS) system. A POS is the system that processes sales. Examples include cash registers, self-service touch-screen displays, barcode readers and the printers that create receipts. Online, the part of an e-commerce website where you enter your credit card details is the POS. Chinese fast food chain Yonghe King wanted to upgrade their technology to allow for rapid growth. Starting with 70 restaurants in the 1990s, their initial setup was able to cope with an expansion to 300 locations, but the parent company Jollibee Foods Corporation was keen to push this further to over 1,000. The original POS system had limited integration with their back-end systems, which meant it was difficult to analyze sales data. Analyzing sales data is vital – the knowledge contained within it is a treasure trove for any business. Sales data can help a company choose its product range and tailor it in individual outlets to cater for local demand. It helps plan sales promotions and assess whether they have been successful, and it helps to just get to know customers better. Yonghe King wanted a solution that would connect multiple POS systems at the front of each restaurant to back-office computers in each outlet and a single corporate data centre. They brought in Shanghai company Partner Tech, a division of Partner Tech Corporation Worldwide, to implement a new POS system based on the Windows Embedded operating system. Partner Tech is a global provider of solutions for the retail, food and hospitality industries. They chose a Windows platform rather than opensource equivalent Linux in order to take advantage of its built-in features such as enhanced security. Using Microsoft would also mean that it should be easier to connect with multiple peripheral devices and applications. Yonghe King replaced their existing POS devices with the latest Partner Tech model and networked them with a back-office PC running Windows. The PCs were then connected to a server computer running in the Yonghe King headquarters, which is based in Shanghai. At the front of each restaurant the POS systems includes a touchscreen

and an integrated card reader, a cash drawer and a receipt printer. In addition to handling sales, the devices also allowed for the creation of loyalty cards with a rewards scheme to encourage customers to share personal data. Billy Yu, IT Director at Jollibee Foods said, ‘By implementing a standardized POS solution from Partner Tech based on Windows Embedded, we can halve the time it takes to open new stores and save about ¥800,000 annually’. The POS sends orders to the kitchen printer, where paper is still valued as it can be moved about and marked as complete. Sales information is routed to the back-end PC and from there to headquarters. The restaurant managers use the PC to analyze sales data, and at headquarters they use data mining algorithms to create business intelligence. The information that is collected also improves inventory management. ‘Let’s use beef noodle soup as an example’, says Yu. ‘The POS devices tell us not only that we are selling exactly 1.6 million a day across all locations, but also how many we are selling at individual stores. As a result, we have a more accurate idea of how much inventory to deliver to each restaurant.’

Questions 1 Would you have advised Yonghe King to use Windows or an open-source platform? 2 How does the POS help Yonghe King open stores and expand? 3 How does a loyalty card capture personal data from customers? 4 How could sales data determine product ranges?

References Microsoft customer success stories. Available from: www.microsoft.com/windowsembedded/ en-us/customer-stories-details.aspx?id=43. Accessed 29 May 2020. Posmatic. ‘What is Point of Sale?’ Available from: www.posmatic.com/point-of-sale/what-ispoint-of-sale.php. Accessed 29 May 2020.

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7.4 Traditional Transaction Processing Applications This section presents an overview of several common transaction processing systems that s upport the order processing, purchasing and accounting business functions (see Table 7.3).

Table 7.3 Systems that Support Order Processing, Purchasing and Accounting Functions Order Processing

Purchasing

Accounting

Order processing Inventory control (raw materials, packing materials, spare parts and supplies)

Budget

Sales configuration

Purchase order processing

Accounts receivable

Shipment planning

Receiving

Payroll

Shipment execution

Accounts payable

Asset management

Inventory control (finished product)

General ledger

Accounts receivable

Order Processing Systems The traditional TPS for order processing include order entry, sales configuration, shipment planning, shipment execution, inventory control and accounts receivable. Running these systems efficiently and reliably is critical to an enterprise. Figure 7.4 is a system-level flowchart that shows the various systems and the information that flows among them. Table 7.4 summarizes the input, processing and output (IPO) of the essential systems that include the traditional order processing systems.

Data entry and input Processing

Documents Pick list Payments to vendors Receiving notices Paycheques

Internally generated transactions Shipped orders Purchase orders Employee time cards Externally generated transactions Customer orders Vendor invoices Customer payments

Documents and reports

Databases Database update Customer orders Inventory Purchase orders Customers Suppliers

Operational reports Finished product inventory status Inventory status of raw materials, packing materials, and spare parts

Figure 7.4 Traditional TPS Systems that Support the Order Processing Business Function

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Table 7.4 IPO of the Traditional TPS Systems that Support Order Processing System Input

Processing

Output

Order entry

Customer order information via a variety of means: data entry by sales rep, customer input, mail, phone, e-commerce or computer to computer via EDI orXML formats

Order is checked for completeness and accuracy. On-hand inventory is checked toensure each item can be shipped in the quantity ordered or a substitute item is suggested

An open order record

Sales configuration

Customer order information including model and options desired

Review customer order information and ensure the configuration will meet the customer’s needs; suggest additional options and featureswhen appropriate

Revised customer order

Shipment planning

Open orders, i.e. orders received but not yet shipped

Determine which open orders willbe filled, when and from whichlocation each order will beshipped to minimize delivery costs and meet customer desireddelivery dates

Pick list for each order to be filled from each shipping location showing the items and quantities needed to fill the order

Shipment execution

Pick list and data entered bywarehouse operations personnel as they fill the order

Data entered by warehouse operations personnel capturedand used to update record of what was shipped to the customer

A shipped order record specifying exactly what was shipped to the customer – this can be different from what was ordered

Inventory control (finished product)

Record of each item picked to fill a customer order

Inventory records are updated toreflect current quantity of eachitem

Updated inventory database and various management reports

Accounts receivable

Shipped order records receivedfrom shipment execution that show preciselywhat was shipped oneach order; payments fromcustomers

Determine amount owed by each customer for each order placed

Invoice statement containing details of each order and its associated costs; customers’ accounts receivable data is updated

Beaulieu Group LLC is the third-largest carpet manufacturer in the world. Its major customers include US home improvement chains The Home Depot and Lowe’s Companies. Its most popular brands are Beaulieu, Coronet, Hollytex and Laura Ashley Home. In an effort to streamline its traditional order processing process, the firm equipped 250 of its commercial accounts sales staff with an order entry application that runs on a Pocket PC. With the new system, salespeople enter customer orders, access the company’s pricing databases and make changes to orders over a wireless network. If a wireless connection cannot be made at the customer’s site, the salesperson can enter orders on the Pocket PC and then transmit the data later when communications can be established. The new process has improved the way salespeople interact with customers and reduced the time they spend filling out paperwork. Previously, orders had to be written out at a customer’s site and then sent to the company’s central office, where clerical workers keyed them into an order processing system. As a result, the salespeople spent too much time on administrative work entering and correcting orders and not enough time selling.

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Purchasing Systems The traditional TPS that support the purchasing business function include inventory control, purchase order processing, receiving and accounts payable (see Figure 7.5). Table 7.5 shows the IPO associated with this collection of systems. Figure 7.6 shows a possible early form of transacting being undertaken.

Figure 7.5 Traditional TPS Systems that Support the Purchasing Business Function

Raw materials Packing materials Spare parts Inventory control Inventory control status report

Employees

Purchase order request

Purchase order

Purchase order processing

Purchase order

Material

Receiving

Supplier

Receiving notice

7 Accounts payable

Invoice Payment

Table 7.5 IPO for the Traditional TPS Systems that Support Purchasing System Input

Processing

Output

Inventory control

Records reflecting any increase or decrease in the inventory of specific items of raw materials, packing materials or spare parts

Withdrawals are subtracted from inventory counts of specific items; additions are added to the inventory count

The inventory record of each item is updated to reflect its current count

Purchase order processing

Inventory records, employeeprepared purchase order requests, information on preferred suppliers

Items that need to be ordered are identified, quantities to be ordered are determined, qualified supplier with whom to place the order is identified

Purchase orders are placed with preferred suppliers for items

Receiving

Information on the quantity and quality of items received

Receipt is matched to purchase order, input data is edited for accuracy and completeness

Receiving report is created, inventory records are updated to reflect new receipts

Accounts payable Purchase orders placed, Supplier invoice matched to information on receipts, supplier original purchase order and invoices receiving report

Payment generated to supplier

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Figure 7.6 An Early Transaction Processing System? The boys are trying to transact with the gent, who looks like he’s already done a deal with one of their competitors.

accounting systems Systems that include budget, accounts receivable and payable, payroll, asset management and general ledger.

Accounting Systems The primary accounting systems include the budget, accounts receivable and payable, payroll, asset management and general ledger (see Figure 7.7). Table 7.6 shows the input, processing and output associated with these systems.

Figure 7.7 Traditional TPS Systems that Support the Accounting and Finance Business Function

Asset management

Customer

Payments Shipped orders

Cost of assets

Accounts receivable

Accounts payable

Amounts owed by customers Amounts paid by customers

Labour costs

Payroll

Time cards

Payments

Employees

Amounts owed by company Amounts paid by company

General ledger Expense transactions Budget

Asset depreciation

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Table 7.6 IPO for the Traditional TPS Systems that Support Accounting System Input

Processing

Output

Budget

Amounts budgeted for various categories of expense

Accumulates amount spent in each budget category

Budget status report showing amount under/over budget

Accounts receivable

Shipment records specifying exactly what was shipped to a customer

Determines amount to be paid by customer including delivery costs and taxes

Customer bills and monthly statements, management reports summarizing customer payments

Accounts payable

Purchase orders placed, information on receipts, supplier invoices

Supplier invoice matched to original purchase order and receiving report

Payment generated to supplier

Payroll

Number of hours worked by each employee, employee pay rate, employee tax and withholding information

Calculates employee gross pay and net pay and amount to be withheld for statutory purposes and employee benefit programmes

Payment and pay slip, payroll register (a tax year end summary report of all payroll transactions), P60 forms

Asset management

Data regarding the purchase of capital assets

Calculates depreciation and net value of all corporate assets

Listing of all assets showing purchase price and current value after depreciation

General ledger

All transactions affecting the financial standing of the firm

Posts financial transactions to appropriate accounts specified in the firm’s chart of accounts

Financial reports such as the profit and loss statement, balance sheet

7.5 Electronic and Mobile Commerce Electronic Commerce Electronic commerce (e-commerce) is conducting a business electronic commerce transaction (e.g. distribution, buying, selling and servicing) electronically (e-commerce) Conducting business transactions (e.g. over computer networks, prima rily the Internet but also extranets and distribution, buying, selling and corporate networks. An e -commerce system is a type of transaction servicing) electronically over processing system. B usiness activities that are strong candidates computer networks such as the for conversion to e-commerce are paper based, time-consuming Internet, extranets and corporate and inconvenient for customers. Thus, some of the first business networks. processes that companies converted to an e-commerce model were those related to buying and selling. Integrated e-commerce systems directly link business-to-consumer (B2C) a firm’s website, which allows customers to place orders, with its order e-commerce A form of e-commerce in which customers processing system. This is the traditional business-to-consumer (B2C) deal directly with an organization e-commerce model. and avoid intermediaries. Early B2C e-commerce pioneers competed with the traditional ‘brick-andmortar’ retailers. For example, in 1995, Amazon.com challenged well-established US booksellers Waldenbooks, and Barnes and Noble. Although Amazon did not become profitable until 2003, the firm has grown from selling only books on a US website, to selling a wide variety of products (including clothes, CDs, DVDs, home and garden supplies, and consumer electronic devices) on international websites in Canada, China, France, Germany, Japan and the UK. Today, Amazon is one of the world’s biggest companies (it is currently number 28 according to Forbes).5

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The reasons people shop online rather than go to high street shops include convenience, because there is often a wider product range available online, and because costs are often less online. In addition, many sellers personalize their web pages for each individual customer, something high street shops cannot do. This personalization is sometimes called B2Me B2Me A form of e-commerce e-commerce. By using B2C e-commerce to sell directly to consumers, where the business treats each producers or providers of consumer products can eliminate the intermediaries customer as a separate market between them and the consumer. In many cases, this squeezes costs and segment. Typical B2Me features inefficiencies out of the supply chain and can lead to higher profits and lower include customizing a website for each customer, perhaps based prices for consumers.6 The elimination of intermediate organizations between on their previous purchases and the producer and the consumer is called ‘disintermediation’. personalized (electronic) marketing Dell is an example of a manufacturer that has successfully embraced literature. this model to achieve a strong competitive advantage. People can specify their own unique computer online, and Dell assembles the components and ships the computer directly to the consumer within five days. Dell does not inventory computers and does not sell through intermediate resellers or distributors. The savings are used to increase Dell’s profits and reduce consumer prices. Business-to-business (B2B) e-commerce is a subset of e-commerce business-to-business (B2B) e-commerce A subset of where all the participants are organizations. B2B e-commerce is a useful tool e-commerce where all the for connecting business partners in a virtual supply chain to cut re-supply participants are organizations. times and reduce costs. Many travel agents specialize in organizing business travel. Business Travel Direct in the UK provides flight and hotel bookings, tailoring its s ervice for business customers. The sort of things B2B travel agents must deal with that high street agents may not are, for example, that the person who purchases the flight tickets may not be the p erson who will be travelling, and the decision on whether to travel may be made by a group rather than an individual. consumer-to-consumer (C2C) Consumer-to-consumer (C2C) e-commerce is another subset of e-commerce A subset of e-commerce that involves consumers selling directly to other consumers. e-commerce that involves eBay is an example of a C2C e-commerce site; customers buy and sell items consumers selling directly to other directly with each other through the site. Founded in 1995, eBay has become consumers. one of the most popular websites in the world, where 182 million users browse over 1 billion listings posted by 25 million sellers.7,8,9 Other popular online auction websites include Craigslist, uBid, Yahoo! Auctions, Onsale, WeBidz and many others. The growth of C2C is responsible for reducing the use of the classified pages of a newspaper to advertise and sell personal items. e-government The use of E-government is the use of information and communications technology information and communications to simplify the sharing of information, speed up formerly paper-based technology to simplify the sharing processes and improve the relationship between citizen and government. of information, speed up formerly Government-to-consumer (G2C), government-to-business (G2B) and paper-based processes and improve the relationship between government-to-g overnment (G2G) are all forms of e-government, each citizen and government. with different a pplications. For example, citizens can use G2C applications to submit their tax returns online, apply for planning permission and submit e-petitions. G2B applications support the purchase of materials and services from private industry by government procurement offices, enable firms to bid on government contracts and help businesses receive current government regulations related totheir operations. G2G applications are designed to improve communications between the various levels of government.

Mobile Commerce Mobile commerce (m-commerce) relies on the use of wireless devices, such as personal digital assistants, mobile phones and smartphones, to transact. Handset manufacturers such

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as HTC, Samsung and Sony Ericsson are working with communications carriers such as Vodafone to develop wireless devices, related technology and services. In addition, content providers and mobile service providers are working together more closely than ever. Content providers recognize that customers want access to their content whenever and wherever they go, and mobile service providers seek out new forms of content to send over their networks. In June 2017, the number of mobile phone subscribers passed 5 billion.10 The number of devices connected to the Internet via the mobile network is much higher than this. The current version of the mobile network which is starting to be rolled out is 5G, the fifth generation. Many users will not notice any difference between accessing data through 5G and accessing through their home broadband via wi-fi. The Internet Corporation for Assigned Names and Numbers (ICANN) created a .mobi domain in late 2005 to help attract mobile users to the web.11 mTlD Top Level Domain Ltd of Dublin, Ireland, is responsible for administration of this domain and helping to ensure that the .mobi destinations work fast, efficiently and effectively with user handsets. 12 In most western E uropean countries, communicating via wireless devices is common, and consumers are much more willing to use m-commerce. Japanese consumers are generally enthusiastic about new technology and are much more likely to use mobile technologies for making purchases.

Ethical and Societal Issues Controlling Transactions with Biometrics Biometrics – data about human bodies such as a person’s fingerprints, the shape of their face, patterns on their eye retinas, and voice tone and pitch – are increasingly being used to control access to transaction processing systems. Many people reading this will already be using their fingerprints to unlock their phone, which allows them to transact with any number of apps. Banks and other financial institutions are investigating the use of facial recognition software to identify their customers rather than relying on customers typing in passwords. Some companies are using biometrics to control access to their ERP system. Founded in 2000, Suprema is at the forefront of this technology. A leading provider of biometrics based security, and one with major market shares in Europe, the Middle East and Africa, Suprema offers fingerprint recognition hardware and software for buildings (controlling access to doors and elevators, for example) and mobile computers, identifying the machine’s user and giving them access to software. One of their main products is called BioStar 2. Over 1 billion people use Suprema technologies. As a result, Suprema’s database contains data

about the bodies of many millions of people who use BioStar 2 to access a range of secure devices. This is some of the most personal data imaginable. It includes fingerprint data and images of users’ faces, as well as more traditional data – home address, telephone number and email. Data on how these people access the devices being protected is also stored: when and how often people use their mobile computer, for example. Thus it came as quite a shock in August 2019, when Israeli researchers with security company vpnMentor found that the data on over 1 million BioStar 2 users was available publicly and unencrypted. vpnMentor said on their company blog, ‘The data leaked in the breach is of a highly sensitive nature. It includes detailed personal information of employees and unencrypted user names and passwords, giving hackers access to user accounts and permissions at facilities using Biostar 2. Malicious agents could use this to hack into secure facilities and manipulate their security protocols for criminal activities. This is a huge leak that endangers both the businesses and organizations involved, as (continued )

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well as their employees. Our team was able to access over 1 million fingerprint records, as well as facial recognition information. Combined with the personal details, usernames, and passwords, the potential for criminal activity and fraud is massive’. One particularly worrying aspect of this is that while exposed users can change passwords, they are unable to change their fingerprints. One of the researchers involved, Noam Rotem, told The Guardian newspaper, ‘We were able to find plaintext passwords of administrator accounts’. (See the case ‘Click Here to Reset Your Password’ in Chapter 5 to see how these data should be stored.) ‘We [were] able to change data and add new users’, he added. It took Suprema just over a week to fix the breach.

Questions 1 If you worked for a bank, how would you balance the needs of customers to readily access their account and the need to prevent fraudsters accessing their account?

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2 Which do you think is more secure – access controlled by fingerprint or access controlled by password? Explain your answer. 3 Can any company really be trusted with our data? 4 Why do you think vpnMentor tests the vulnerability of a company like Suprema?

References SightCorp. ‘Why Facial Recognition is Important for Banking Services’. Available from: sightcorp. com/blog/why-facial-recognition-is-important-forbanking-services/. Accessed 9 June 2020. Suprema website. www.supremainc.com/en/main. asp. Accessed 9 June 2020. Taylor, J. 2019. ‘Major Breach Found in Biometrics System Used by Banks, UK Police and Defence Firms’. The Guardian. Available from: www. theguardian.com/technology/2019/aug/14/ major-breach-found-in-biometrics-systemused-by-banks-uk-police-and-defence-firms. Accessed 15 June 2020. vpnMentor blog. www.vpnmentor.com/blog/reportbiostar2-leak/. Accessed 9 June 2020.

For m-commerce to work effectively, the interface between the wireless device and its user needs to improve to the point that it is nearly as easy to purchase an item on a wireless device as it is to purchase it on a home computer. In addition, network speed must improve so that users do not become frustrated. Security is also a major concern, particularly in two areas: the security of the transmission itself and the trust that the transaction is being made with the intended party. Encryption can provide secure transmission. Digital certificates can ensure that transactions are made between the intended parties. The handheld devices used for m-commerce have several limitations that complicate their use. Their screens are small, perhaps no more than a few square centimetres, and might be able to display only a few lines of text. Their input capabilities are limited to a few buttons, so entering data can be tedious and error prone. They have less processing power and less bandwidth than desktop computers, which are usually hardwired to a high-speed LAN. They also operate on limited-life batteries. For these reasons, it is currently impossible to directly access many websites with a handheld device. Web developers must rewrite web applications so that users with handheld devices can access them.

7.6 Production and Supply Chain Management Production and supply chain management systems follow a systematic process for developing a production plan that draws on the information available in the system database.

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The process starts with sales forecasting to develop an estimate of future customer demand. This initial forecast is at a fairly high level with estimates made by product group rather than by each individual product item. The sales forecast extends for months into the future. The sales forecast will be produced using specialized software and techniques. Many organizations are moving to a collaborative process with major customers to plan future inventory levels and production rather than relying on an internally generated sales forecast. The sales and operations plan takes demand and current inventory levels into account and determines the specific product items that need tobe produced and when to meet the forecast future demand. Production capacity and any seasonal variability in demand must also be considered. The result is a high-level production plan that balances market demand with production capacity. Panasonic and other companies have outsourced the development of a sales and operation plan to i2Technologies in India. Best Buy, a major Panasonic customer, collects information on sales of Panasonicitems at its shops’ checkout stations and sends the data to i2. i2 processes the data and sends manufacturing recommendations to Panasonic, which become the basis for factory schedules.13 Demand management refines the production plan by determining the amount of weekly or daily production needed to meet the demand for individual products. The output of the demand management process is the master production schedule, which is a production plan for all finished goods. Detailed scheduling uses the production plan defined by the demand management process to develop a detailed production schedule specifying production scheduling details, such as which item to produce first and when production should be switched from one item to another. A key decision is how long to make the production runs for each product. Longer production runs reduce the number of machine setups required, thus reducing production costs. Shorter production runs generate less finished product inventory and reduce inventory holding costs. Materials requirement planning determines the amount and timing for placing raw material orders with suppliers. The types and amounts of raw materials required to support the planned production schedule are determined based on the existing raw material inventory and the bill of materials or BOM, a sort of ‘recipe’ of ingredients needed to make each product item. The quantity of raw materials to order also depends on the lead time and lot sizing. Lead time is the time ittakes from when a purchase order is placed until the raw materials arrive at the production facility. Lot size has to do with discrete quantities that the supplier will ship and the amount that is economical for the producer to receive and/or store. For example, a supplier might ship a certain raw material in batches of 80,000 units. The producer might need 95,000 units. A decision must be made to order one or two batches. Purchasing uses the information from materials requirement planning to place purchase orders for raw materials and transmit them to qualified suppliers. Typically, the release of these purchase orders is timed so that raw materials arrive just in time to be used in production and minimize warehouse and storage costs. Often, producers will allow suppliers to tap into data via an extranet that enables them to determine what raw materials the supplier needs, thus minimizing the effort and lead time to place and fill purchase orders. Production uses the detailed schedule to plan the details of running and staffing the production operation. Companies must capture accurate information about what was produced and in what quantities. Many companies have personal computers on the production floor that count the number of cases of each product item p roduced by scanning a universal product code (UPC) code on the packing material. Other approaches for capturing production quantities include the use of RFID chips and manually entering the data via a PDA. Separately, production-quality data can be added based on the results of quality tests run on a sample of the product for each batch of product produced. Typically, this data includes the batch identification number, which identifies this production run versus any other production run and the results of various product quality tests.

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7.7 Customer Relationship Management and Sales Ordering Customer Relationship Management

A customer relationship management (CRM) system helps a company manage all aspects of customer encounters, including marketing and advertising, sales, customer service after the sale and programmes to keep and retain loyal customers (see Figure 7.8). The goal of CRM is to understand and anticipate the needs of current and potential customers to increase customer retention and loyalty while optimizing the way that products and services are sold. Businesses implementing CRM systems report business benefits such as improved customer satisfaction, increased customer retention, reduced operating costs and the ability to meet customer demand. CRM software automates and integrates the functions of sales, marketing and service in anorganization. The objective is to capture data about every contact a company has with a customer through every channel, and store it in the CRM system so the company can truly understand customer actions. CRM software helps an organization build a database about its customers that describes relationships in sufficient detail so that management, salespeople, customer service providers – and even customers – can access information to match customer needs with product plans and offerings, remind them of service requirements and know what other products they have purchased. The focus of CRM involves much more than installing new software. Moving from a culture of simply selling products to placing the customer first is essential to a successful CRM deployment. Before any software is loaded onto a computer, a company must retrain employees. Who handles customer issues and when must be clearly defined, and computer systems need to be integrated so that all pertinent information is available immediately, whether a customer calls a sales representative or customer service representative. In addition to using stationary computers, most CRM systems can now be accessed via wireless devices.

customer relationship management (CRM) system Asystem that helps a company manage all aspects of customer encounters, including marketing and advertising, sales, customer service after the sale and programmes to retain loyal customers.

Figure 7.8 Customer Relationship Management System

Product development Personal data Market research Transaction history CRM system

Customer

Quality control

Click stream data from web Sales Data from feedback surveys Better relationship with customers

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The gig economy refers to the popularity of jobs that last for a short time (a ‘gig’ rather than a ‘job’). Popular examples include Uber drivers and Deliveroo delivery people. It can be a way for companies to shirk their employer responsibilities including offering pensions and paid leave. On the other hand, it does suit many people who can work when they choose to. Information provider Destination CRM claims that, ‘According to Aspect Software’s most recent Agent Experience Index, 16 percent of current customer service agents are working gig economy jobs, and many more have expressed an interest in that type of on-demand work’.14 If this is done correctly, customers shouldn’t notice. When phoning what they think is a call centre, customers are being put through to a gig worker’s home phone where the worker can deal with their query. The worker should have access to the relevant customer data – orders they have placed and support they have previously had – on their laptop or desktop computer.

Sales Ordering Sales ordering is the set of activities that must be performed to capture a customer sales order. A few of the essential steps include recording the items to be purchased, setting the sales price, recording the order quantity, determining the total cost of the order including delivery costs and confirming the customer’s available credit. The determination of the sales prices can become quite complicated and include quantity discounts, promotions and incentives. After the total cost of the order is determined, it is necessary to check the customer’s available credit to see if this order puts the customer over his or her credit limit. Many SMEs are turning to ERP software to make it easier for their large customers to place orders with them. Vetco International Inc. is a small supplier of safety equipment to major oil firms such as ExxonMobile and BP. The firm uses SAP’s Business One suite, which has modules that automate purchasing, sales and distribution, sales management and other business functions. It cost Vetco about €110,000 to implement the software because it is compatible with the SAP software used by many of its customers. The software enables Vetco to connect its product catalogues via easy web access to the purchasing systems of its much larger customers. The goal is to capture more business by ensuring that its offerings are just a click away from the oil companies’ purchasing departments.15 Medical ERP systems have particularly strict requirements for managing stock – many medicines come with non-negotiable expiry dates. Medical equipment too has rigid compliance standards that must be met. IQMS Manufacturing Software develops ERP systems designed for manufacturers of medical equipment. The software allows companies to track their products, manage warranties and service schedules, and demonstrate compliance with quality standards. Similarly, the COVID-19 pandemic generated an urgent need for additional protective clothing, face masks and ventilators with strict standards. Non-medical manufacturers in other fields were quickly able to learn the standards required, and adapt their own businesses to meet this urgent demand.

7.8 Financial and Managerial Accounting The general ledger is the main accounting record of a business. It is often divided into different categories, including assets, liabilities, revenue, expenses and equity. These categories, in turn, are subdivided into sub-ledgers to capture details such as cash, accounts p ayable, a ccounts receivable and so on. In an ERP system, input to the general ledger occurs s imultaneously with the input of a business transaction to a specific module. Here are several examples of how this occurs: ■

An order administrator records a sales, and the ERP system automatically creates an accounts receivable entry indicating that a customer owes money for goods received.

■

A buyer enters a purchase order, and the ERP system automatically creates an accounts payable entry in the general ledger registering that the company has an obligation to pay for goods that will be received at some time in the future.

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■

A dock worker enters a receipt of purchased materials from a supplier, and the ERP system automatically creates a general ledger entry to increase the value of inventory on hand.

■

A production worker withdraws raw materials from inventory to support production, and the ERP system generates a record to reduce the value of inventory on hand.

Thus the ERP system captures transactions entered by workers in all functional areas of thebusiness. The ERP system then creates the associated general ledger record to track the financial impact of the transaction. This set of records is an extremely valuable resource that companies can use to support financial accounting and managerial accounting. Financial accounting consists of capturing and recording all the transactions that affect a company’s financial state and then using these documented transactions to prepare financial statements for external decision makers, such as stockholders, suppliers, banks and government agencies. These financial statements include the profit and loss statement, balance sheet and cash flow statement. They must be prepared in strict accordance with the rules and guidelines of the governing agencies. All transactions that affect the financial state of the firm are captured and recorded in the database of the ERP system. This data is used in the financial accounting module of the ERP system to prepare the statements required by various constituencies. The data can also be used in the managerial accounting module of the ERP system, along with various assumptions and forecasts, to perform v arious analyses such as generating a forecasted profit and loss statement to assess the firm’s future profitability.

Hosted Software Model for Enterprise Software 7

Business application software vendors are experimenting with the hosted software model to see if the approach meets customer needs and is likely to generate significant revenue. This pay-as-you-go approach is appealing to small businesses because they can then experiment with p owerful software capabilities without making a major financial investment. Also, using the hosted software model means the small business firm does not need to employ a full-time IT person to maintain key business applications. The small business firm can expect additional savings from reduced hardware costs and costs associated with maintaining an appropriate computer environment (such as air conditioning, power and an uninterruptible power supply). Not only is the hosted software model attractive to small and medium-sized firms but even some large companies are experimenting with it. DuPont, the large, multinational chemical company, was one of the early adopters of the hosted software model. The firm is retooling its sales force by leveraging best practices and focusing its e-business and marketing capabilities into 16 high-powered global centres. As part of the change, DuPont uses the hosted SAP Sales on Demand software across the enterprise to provide a common systems platform and a common set of business processes for DuPont’s entire sales force. It has integrated the hosted system with its SAP ERP software and retired some of its legacy CRM applications. The business goal was to make sure that the firm presents itself as one DuPont to customers who buy from different DuPont businesses. Its largest customers are served as ‘corporate accounts’ with a point of contact who can manage all their interactions with DuPont to ensure the maximum benefit to the customer.16

7.9 International Issues Associated with Operational Systems Operational systems must support businesses that transact with customers, suppliers, business partners, shareholders and government agencies in multiple countries. Different languages and cultures, disparities in IS infrastructure, varying laws and customs rules, and m ultiple currencies

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are among the challenges that must be met by an operational system of a m ultinational company. The following sections highlight these issues.

Different Languages and Cultures Teams composed of people from several countries speaking different languages and familiar with different cultures might not agree on a single work process. In some cultures, people do not routinely work in teams in a networked environment. Despite these complications, many multinational companies can establish close connections with their business partners and roll out standard IS applications for all to use. However, sometimes they require extensive and costly customization. For example, even though English has become a standard business language among executives and senior managers, many people within organizations do not speak English. As a result, software might need to be designed with local language interfaces to ensure the successful implementation of a new system. Other customizations will also be needed; date fields for example: the European format is day/month/year, Japan uses year/month/day, and the US date format is month/day/year. Sometimes, users might also have to implement manual processes to override established formatting to enable systems to function correctly.

Disparities in Information System Infrastructure The lack of a robust or common information infrastructure can also create problems. For example, much of Latin America lags behind the rest of the world in Internet usage, and online marketplaces are almost non-existent there. This gap makes it difficult for multinational companies to get online with their Latin American business partners. Even something as mundane as the fact that the power plug on a piece of equipment built in one country might not fit into the power socket of another country can affect the infrastructure.

Varying Laws and Customs Rules Numerous laws can affect the collection and dissemination of data. For example, labour laws in some countries prohibit the recording of worker performance data. Also, some countries have passed laws limiting the transborder flow of data linked to individuals. Specifically, European Community Directive 95/96/EC of 1998 requires that any company doing business within the borders of the (currently) 27 European Union member nations protect the privacy of customers and employees. It bars the export of data to countries that do not have data-protection standards comparable to the European Union’s. Trade custom rules between nations are international laws that set practices for two or more nations’ commercial transactions. They cover imports and exports, and the systems and procedures dealing with quotas, visas, entry documents, commercial invoices, foreign trade zones, payment of duty and taxes, and many other related issues. For example, the North American Free Trade Agreement (NAFTA) of 1994 created trade custom rules to address the flow of goods throughout the North American continent. Most of these custom rules and their changes over time create headaches for people who must keep systems consistent with the rules.

Multiple Currencies The enterprise system of multinational companies must conduct transactions in multiple currencies. To do so, a set of exchange rates is defined, and the information systems apply these rates to translate from one currency to another. The systems must be current with foreign currency exchange rates, handle reporting and other transactions such as cash receipts, issue vendor payments and customer statements, record retail store payments and generate financial reports in the currency of choice.

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Summary

An organization must have information systems that support the routine, day-to-day activities that occur in the normal course of business and help a company add value to its products and services. Transaction processing systems (TPS) are at the heart of most information systems in businesses today. A TPS is an organized collection of people, procedures, software, databases and devices used to capture fundamental data about events that affect the organization (transactions). All TPS perform the following basic activities: data collection, which involves the capture of source data to complete a set of transactions; data editing, which checks for data validity and completeness; data correction, which involves providing feedback of a potential problem and enabling users to change the data; data manipulation, which is the performance of calculations, sorting, categorizing, summarizing and storing data for further processing; data storage, which involves placing transaction data into one or more databases; and document production, which involves outputting records and reports. The methods of transaction processing systems include batch and online. Batch processing involves the collection of transactions into batches, which are entered into the system at regular intervals as a group. Online transaction processing (OLTP) allows transactions to be entered as they occur. Organizations expect TPS to accomplish a number of specific objectives including processing data generated by and about transactions, maintaining a high degree of accuracy and information integrity, compiling accurate and timely reports and documents, increasing labour efficiency, helping provide increased and enhanced service, and building and maintaining customer loyalty. In some situations, an effective TPS can help an organization gain a competitive advantage. Traditional TPS support the various business functions of organizations that have not yet implemented enterprise resource planning systems. The traditional TPS systems that support the order processing business functions include order entry, sales configuration, shipment planning, shipment execution, inventory control and accounts receivable.

The traditional TPS that support the purchasing function include inventory control, purchase order processing, accounts payable and receiving. The traditional TPS that support the a ccounting business function include the budget, accounts receivable, payroll, asset management and general ledger. Electronic and mobile commerce allow transactions to be made by the customer, with less need for sales staff, and open up new opportunities for conducting business. E-commerce is the conducting of business activities electronically over networks. Business-to-business (B2B) e-commerce allows manufacturers to buy at a low cost worldwide, and it offers enterprises the chance to sell to a global market. Business-to-consumer (B2C) e-commerce enables organizations to sell directly to consumers, eliminating intermediaries. In many cases, this squeezes costs and inefficiencies out of the supply chain and can lead to higher profits and lower prices for consumers. C onsumer-to-consumer (C2C) e-commerce involves consumers selling directly to other consumers. Online auctions are the chief method by which C2C e-commerce is currently conducted. Mobile commerce is the use of wireless devices such as PDAs, mobile phones and smartphones to facilitate the sale of goods or services – anytime, anywhere. The market for m-commerce in North America is expected to mature much later than in western Europe and Japan. Although some industry experts predict great growth in this arena, several hurdles must be overcome, including improving the ease of use of wireless devices, addressing the security of wireless transactions and improving network speed. M-commerce provides a unique opportunity to establish one-on-one marketing relationships and support communications anytime and anywhere. A company that implements an enterprise resource planning system is creating a highly integrated set of systems, which can lead to many business benefits. ERP software supports the efficient operation of business processes by integrating activities throughout a business, including sales, marketing, manufacturing, logistics, accounting and staffing. Implementation of an ERP system can provide many advantages, including providing access to data

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for operational decision making; elimination of costly, inflexible legacy systems; providing improved work processes; and creating the opportunity to upgrade technology infrastructure. Some of the disadvantages associated with an ERP system are that they are time consuming, difficult and expensive to implement. Although the scope of ERP implementation can vary from firm to firm, most firms use ERP systems to support production and supply chain management, customer relationship management and sales ordering, and financial and managerial accounting. The production and supply chain management process starts with sales forecasting to develop an estimate of future customer demand. This initial forecast is at a fairly high level with estimates made by product group rather than by each individual product item. The sales and operations plan takes demand and current inventory levels into account and determines the specific product items that need to be produced and when to meet the forecast future demand. Demand management refines the production plan by

determining the amount of weekly or daily production needed to meet the demand for individual products. Detailed scheduling uses the production plan defined by the demand management process to develop a detailed production schedule specifying production scheduling details such as which item to produce first and when production should be switched from one item to another. Materials requirement planning determines the amount and timing for placing raw material orders with suppliers. Purchasing uses the information from materials requirement planning to place purchase orders for raw materials and transmit them to qualified suppliers. Production uses the detailed schedule to plan the details of running and staffing the production operation. Numerous complications arise that multinational corporations must address in planning, building and operating their TPS. These challenges include dealing with different languages and cultures, disparities in IS infrastructure, varying laws and customs rules, and multiple currencies.

Self-Assessment Test 1 ERP stands for __________. 2 Systems that allow an organization to conduct business are __________. 3 OLTP is __________. 4 RFID can be used to __________ the data necessary for transaction processing. 5 The process of performing calculations and other data transformations is __________.

7 Systems used to improve interaction between a government and its citizens form __________. 8 CRM stands for __________. 9 A wholesaler selling to a high street shop via the Internet is an example of __________. 10 When you sell an old textbook on Amazon to another student you are taking part in __________ commerce.

6 Buying a book on a smartphone is an example of __________.

Review Questions 1 Compare and contrast batch processing and OLTP. 2 What basic transaction processing activities are performed by all TPS? 3 How could RFID be used to minimize data entry errors? 4 What are some of the advantages of ERP? 5 List several TPS that support order processing.

6 Why do data need correction? 7 What is B2Me? 8 Where do data for a CRM come from? 9 What is the relationship between m-commerce and e-commerce? 10 What are some of the international challenges associated with operational systems?

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Discussion Questions 1 Think of a transaction you have made within the past week. What information was exchanged – what did you give and what did you get back?

2 How can an ERP give improved access to data for operational decision making?

Web Exercises 1 Log into Amazon and browse through your account and your orders. List some of the information that they store about you.

2 Search for information about two customer relationship management systems. What are the main features offered by them?

Case One Non-Linear Presentations

Enterprise software is used to facilitate the day-today running of a business. Without it, the business could not ‘transact’ – they could not sell goods and services to customers. In effect, they could not do business. Support applications are not essential but they are nice to have, and can be replaced easily if there is a problem. Presentation software is an example of a support application. At the end of 2015, BBC technology reporter Jane Wakefield wrote the following: ‘Most people who’ve endured a terrible PowerPoint presentation will have experienced boredom, followed by frustration, then anger that it took up an hour – or possibly even more – of their lives that they will never get back’. She is right that many people will have experienced this: Click. A slide with a colourful background covered in text appears. The presenter reads the text. Click. A new slide, more text, more reading. Another click ... and so on. Perhaps it’s not the fault of the software, but the presenter. If they were a better public speaker, it wouldn’t be so boring. On the other hand, PowerPoint with its templates full of different ways to stack up bullet lists of text does have to take some of the blame. PowerPoint certainly encourages a linear approach to slides, moving from one to the next in one direction only. What if the speaker wants to go from Slide 1 to Slide 2, then back to Slide 1, jump to Slide 10, before going back to Slide 3? There may be good reason for doing this too. It’s easy

to imagine a p resentation that includes a taster at the start of something from later in the presentation to show ‘where we’re going with this’. Of course, you can jump back and forth using PowerPoint, but the software discourages it. Or you could duplicate slides but that’s not usually a good idea (if you update one, you might forget to update the other). At the far end of the presentation scale, if you have watched footage on YouTube of Steve Jobs in action at his product launches, if there even were any slides, there was certainly no text on any of them! Wakefield identifies alternatives, many of which are freely available on the web. These include Keynote, Slides, Prezi, SlideRocket, Easel.ly, Emaze and Slidedog. Emaze makes it easy to incorporate a video as the slide background, which could be effective in grabbing an audience’s attention. Prezi, discussed next, uses an innovative zoom feature. ‘But’, she says, ‘Microsoft’s software, launched in 1990, still dominates the market – with an estimated 1.2 billion users worldwide and millions of presentations made each day using the software’. Introduced in 2008, Prezi takes a very different approach, eschewing the linear structure of slides for essentially one massive diagram that the presenter zooms in and out of (see Figure 7.9). Researchers Brian Perron and Alyson Stearns say that Prezi, ‘allows for both a linear and a free-flowing presentation of a story line. The user creates a

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presentation on a large blank workspace called the canvas, where all the elements of a presentation are visible. A story line is then created by arranging the elements on the canvas’. It takes a little getting used to, but this approach should free presenters from thinking about slides to thinking about stories and the messages they want to get across through them. Some researchers, however, have found that too much zooming in and out can cause motion sickness in the audience. Aaron Weyenberg helps makes slide shows for the well-known TED (Technology, Entertainment and Design) conferences. He regularly asks presenters whether they need any slides at all. ‘TED’s most viewed talk of all time’, he says, ‘hasn’t

a single slide, and many of TED’s most successful talks have a focus on what’s said, not seen.’

Questions 1 What purposes do slides serve? You should be able to list several key points. 2 Outline a guide to using Prezi that would minimize motion sickness. Does your guide effectively turn it back into PowerPoint? 3 Why do you think Steve Jobs was considered to be such a good presenter? 4 Recreate a recent presentation you gave as a talk without slides. Do you think you have made it better or worse?

Figure 7.9 Prezi

References Perron, B. and Stearns, A. 2010. ‘A Review of a Presentation Technology: Prezi’. Research on Social Work Practice. Vol. 21, Issue 3. Potter, N. 2014. ‘How to Stop Your Prezi Making People Feel Sick!’ Available from: www.prezi.com/c0lzoedtstfp/

how-to-stop-your-prezi-making-people-feelsick/. Accessed 9 June 2020. Wakefield, J. 2015. ‘How to Avoid “Death by PowerPoint”’. BBC. Available from: www.bbc .co.uk/news/technology-35038429. Accessed 29 May 2020.

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Case Two When Stock Becomes a Liability

South African company New Era Solutions is helping its clients to reduce stock. Working with their partners Epicor Software Corporation, New Era offers warehouse management systems to control the movement and storage of materials in a warehouse and process goods coming into the warehouse and leaving it. Warehouse management software, part of an ERP system, allows a company to manage its inventory and minimize so-called ‘dead stock’. A manufacturing company buys raw materials and turns them into finished products. Each of these (materials and products) is stock. Stock includes the materials coming in, products at all stages of being finished, and the final products ready to be shipped. Stock is a major company asset and is usually the main source of a company’s revenue. However, there are times when stock can become a liability: stock can generate revenue but it is also a cost. It costs money to keep it, as the warehouse needs security guards, electricity, there may be rent to pay, or payments on a building loan. IT Online explains how stock can be a liability. ‘As a distributor, the process of making money on goods does not begin when goods enter your warehouse; it only generates income when it leaves. While stock is waiting to be sold, it costs money to store it. The longer it stays in a warehouse, the less likely it is that it will be sold’. Eventually stock that sits long enough can be considered to be ‘dead’. At that point it becomes a liability. There are various ways of getting rid of dead stock. A company could sell it off cheaply, donate it to charity, try to return it to their supplier, bundle it with a new product to try to sell old and new together, or simply dump it. There are other gimmicks that could be used like ‘a free gift with every purchase’. According to New Era, the best way to deal with dead stock is to avoid it altogether. One cause of dead stock is in mishandling customer orders. Let’s say a customer wants a customized product– it could be as simple as wanting it to be blue when it’s usually red. Then the company buys in blue raw materials, manufacturers and ships the finished product to the customer, but they bought in too much material. Now they have blue stuff lying around in the warehouse, unable to use it to create a product, as only one customer wanted blue. The best way to avoid this is to use ERP software with

warehouse management capabilities to accurately forecast exactly the materials that will be needed. ‘Best in class companies perform better as they are able to make more informed decisions based on accurate data’, says Stuart Scanlon, sales and marketing director at New Era. Recent research into small manufacturing enterprises in South Africa found that small businesses only want to implement ERP if they think it will integrate easily with existing systems with a quick implementation time. This isn’t usually what you get with ERP, which tend to bring with them great upheaval and change. Mr Scanlon says, ‘implementing a new ERP system is one of the most disruptive exercises a business can undertake and often emotions cloud what should be a logical decision’.

Questions 1 List some of the costs associated with running a warehouse. 2 How does warehouse management software help reduce dead stock? 3 How could a company decide at what point stock becomes dead stock? 4 How can companies deal with the disruption that implementing an ERP creates?

References Adam, R., Kotzé, P. and Merwe, A. 2011. ‘Acceptance of Enterprise Resource Planning Systems by Small Manufacturing Enterprises’. The 13th International Conference on Enterprise Information Systems. Franco, S. 2014. ‘Collaboration Key for ERP’. IT Web. Available from: www.itweb.co.za/content/ XnWJadvbAdNqbjO1. Accessed 9 June 2020. IT Online. 2013. ‘Analysing Stock to Increase Profit’. Available from: www.it-online. co.za/2013/12/12/analysing-stock-to-increaseprofit/. Accessed 29 May 2020. New Era Solutions website. www.newerasol.co.za. Accessed 9 June 2020. TradeGecko. ‘What is Dead Stock and 3 Tips to Fix It!’ Available from: www.tradegecko.com/ what-is-dead-stock. Accessed 29 May 2020.

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Case Three Netflix Analytics Creates Content That We’ll Watch Netflix has had a long interest in predicting what its viewers will like to watch. In 2006 it announced a $100,000 prize for the data mining team that could best decide whether someone will enjoy a particular movie. (In brief: Netflix had personal data about its members and the movies that they liked, then released just the personal data to the teams and compared their predictions with the real data on what people actually liked.) But the Netflix analytics division didn’t stop there. Netflix is a data-driven company. With its streaming service, it is able to capture information on how its members watch TV, including where and when they watch, what shows they watch and on what devices, when they pause, rewind and fast forward, if they stop watching and when in the show/series they stop, the ratings they give shows and how they search for content (the search terms they use coupled with their browsing behaviour). They also know when people cancel their membership. Using all of this, Netflix can predict what you might like to watch, how long TV shows and series should be for maximum viewer engagement, when the shows should be released (what time of year, week and day), whether someone may be about to cancel their subscription, and of course what content new TV shows should have to maximize viewers. The most famous example is House of Cards, developed by film director David Fincher. In 2011, Netflix decided to outbid well-known channels like HBO for the right to show the US version of British political drama House of Cards, spending over $4 million per episode. This was the first time they had invested so heavily in content. According to entertainment industry analyst Zach Bulygo, Netflix based the decision on three key pieces of data. They knew a lot of their members had watched the David Fincher directed movie The Social Network from beginning to end; they knew the British version of House of Cards had been popular; and they knew that those members who watched the British version had also tended to watch other films directed by riedland, Netflix’s chief David Fincher. Jonathan F communications officer, said, ‘Because we have a

direct relationship with consumers, we know what people like to watch and that helps us understand how big the interest is going to be for a given show. It gave us some confidence that we could find an audience for a show like House of Cards.’ Once they had the rights to the show they started to promote it, and again for this they turned to their database. Netflix made ten different trailers, each geared towards different audiences. They then looked into their data to determine what sort of audience each member was, and showed them their own semi-personalized advert for the show. Those who were classed as fans of the main cast saw a trailer featuring them heavily. Those who liked drama saw a trailer emphasizing this aspect of the show. The strategy appears to be working. House of Cards brought in 2 million new US subscribers in the first quarter of 2013, which was a 7 per cent increase over the previous quarter. It also brought in 1 million new subscribers from elsewhere in the world. These new members alone almost paid Netflix back for the cost of House of Cards. And a survey suggested that the show made 86 per cent of subscribers less likely to cancel their subscription.

Questions 1 Does a data-driven approach make it less likely that innovative shows will be produced in the future? 2 Does personalized advertising threaten traditional broadcast television? 3 How would you have approached the 2006 Netflix competition? You can look up the winning entry to see what they did. 4 How could similar approaches be used in other sectors such as the fitness industry?

References Bulygo, Z. blog. n.d. ‘How Netflix Uses Analytics To Select Movies, Create Content, and Make Multimillion Dollar Decisions’. Kissmetrics. Available from: blog.kissmetrics.com/hownetflix-uses-analytics/. Accessed 29 May 2020.

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Greenfield, R. 2013. ‘Netflix Has Almost Already Paid for “House of Cards” in New Subscribers’. The Wire. Available from: www.thewire.com/ technology/2013/04/netflix-subscribers-houseof-cards/64458/. Accessed 29 May 2020. Lieberman, D. 2013. ‘“House Of Cards” Makes Netflix Subscribers More Loyal: Survey’. Deadline. Available from: www.deadline.com/2013/02/

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house-of-cards-netflix-subscribers-loyaltysurvey-433784/. Accessed 29 May 2020. Roettgers, J. 2013. ‘For House of Cards and Arrested Development, Netflix Favours Big Data over Big Ratings’. Gigaom. Available from: gigaom.com/2013/02/12/netflix-ratings-bigdata-original-content/. Accessed 9 June 2020.

Notes 1

LS Retail Website. www.lsretail.com/customers/ care-a-lot-pet-supply. Accessed 29 May 2020. 2 Briefings Direct, 2013. ERP for IT Helps Dutch Insurance Giant Achmea to Reinvent IT Processes to Improve Business Performance Across the Board. Available from: www. briefingsdirecttranscriptsblogs.com/2013/03/erpfor-it-helps-dutch-insurance-giant.html. Accessed 9 June 2020. 3 IOT and ERP – Where to Begin? Available from: www.erpsoftwareblog.com/2018/12/iot-erpcrowe/. Accessed 9 June 2020. 4 Altexsoft, 2018. ‘How to Choose Fraud Detection Software: Features, Characteristics’, Key Providers. Available from: www.altexsoft.com/ blog/business/how-to-choose-fraud-detectionsoftware-features-characteristics-key-providers/. Accessed 9 June 2020. 5 Wardini, J. ‘The Rise of Amazon – From Humble Beginnings to Global Domination’. ECN. 5 June 2018. www.ecommerce-nation.com/the-riseof-amazon-from-humble-beginnings-to-global- domination/. Accessed 19 June 2020. 6 Ismail, K. ‘Direct to Consumer Marketing: How Brands Are Cutting Out the Middle Man’. CMSWire. 30 September 2019. www.cmswire. com/digital-marketing/direct-to-consumer- marketing-how-brands-are-cutting-out-themiddle-man/. Accessed 19 June 2020. 7 eBay Website. www.ebayinc.com/stories/news/ ebay-expands-presence-in-india-through-paytmmall-integration. Accessed 9 June 2020. 8 Sawers, P. 2015. ‘eBay is 20 Years Old Today’, VentureBeat. Available from: www.venturebeat. com/2015/09/03/ebay-is-20-years-old-today/. Accessed 9 June 2020.

Wiggers, K. 2019. ‘How AI Helps eBay Connect Buyers and Sellers across 1.2 Billion Listings’, VentureBeat. Available from: venturebeat. com/2019/03/13/ebay-details-how-ai-improvesuser-experience-across-1-2-billion-listings/. Accessed 9 June 2020. 10 GSMA Website. www.gsma.com/newsroom/ press-release/number-mobile-subscribersworldwide-hits-5-billion/. Accessed 9 June 2020. 11 Mello, John P. Jr, ‘New .mobi Domain Approved but Challenges Remain’, TechNewsWorld, 11 May 2006. 12 Mello, John P. Jr, ‘New .mobi Domain Approved but Challenges Remain’, TechNewsWorld, 11 May 2006. 13 Anthes, Gary, ‘Sidebar: It’s All Global Now’, Computerworld, 20 February 2006. 14 Klie, L. 2019. ‘The Gig Economy Isn’t New, but It Might Be Worth a Second Look’. DestinationCRM. Available from: www.destinationcrm.com/Articles/ Columns-Departments/Front-Office/The-GigEconomy-Isnt-New-but-It-Might-Be-Worth-aSecond-Look-129263.aspx. Accessed 9 June 2020. 15 McDougall, Paul, ‘Closing the Last Supply Gap’, Information Week, 8 November 2005. 16 Songini, Marc, ‘SAP Launches First Piece of Hosted CRM Service’, Computerworld, 16 February 2006.

08 Management Information and Decision Support Systems Principles

Learning Objectives

Good decision-making and problemsolving skills are key to developing effective information and decision support systems.

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Define the stages of decision making.

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Discuss the importance of implementation and monitoring in problem solving.

A management information system (MIS) must provide the right information to the right person in the right format at the righttime.

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Explain the uses of MISs and describe their inputs and outputs.

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Discuss information systems in the functional areas of business organizations.

Decision support systems (DSSs) support decision-making effectiveness when faced with unstructured or semi-structured business problems.

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List and discuss important characteristics of DSSs that give them the potential to be effective management support tools.

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Identify and describe the basic components of a DSS.

Specialized support systems, such as group support systems (GSSs) and executive support systems (ESSs), use the overall approach of a DSS in situations such as group and executive decision making.

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State the goals of a GSS and identify the characteristics that distinguish it from a DSS.

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Identify the fundamental uses of an ESS and list the characteristics of such a system.

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Why Learn About Management InformationSystems and Decision Support Systems?

The previous chapter looked at systems at the operational level ofa firm (see also Figures 1.4 and 8.11). This chapter considers systems higher up, at the tactical and strategic levels. The true potential of information systems in organizations is in helping employees make more informed decisions, something that is supported by both management information and decision support systems. Transportation coordinators can use management information reports to find the least expensive way to ship products to market and to solve bottlenecks. A bank or credit union can use a group support system to help it determine who should receive a loan. Shop managers can use decision support systems to help them decide what and how much inventory to order to meet customer needs and increase profits. An entrepreneur who owns and operates a temporary storage company can use vacancy reports to help determine what price to charge for new storage units. Everyone wants to be a better problem solver and decision maker. This c hapter shows you how information systems can help. It begins with an overview of decision making and problem solving.

8.1 Decision Making and Problem Solving

Organizations need to make good decisions. In most cases, strategic planning and the overall goals of the organization set the course for decision making, helping employees and business units achieve their objectives and goals. Often, information systems also assist with strategic planning, helping top management make better decisions. In business, one of the highest compliments you can receive is to be recognized by your colleagues and peers as a ‘real problem solver’. Problem solving is a critical activity for any business organization. After identifying a problem, you begin the problem-solving process with decision making. A well-known model developed by Herbert Simon divides the decision-making phase The first decision-making phase of the problem-solving process into three stages: part of problem solving, including intelligence, design and choice. This model was later incorporated by George three stages: intelligence, design Huber into an expanded model of the entire problem-solving process (see and choice. Figure 8.1).

Figure 8.1 How

Intelligence

ecision Making Relates D to Problem Solving Decision making

Design

Choice

Implementation

Monitoring

Problem solving

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The three stages of decision making – intelligence, design and choice – are augmented by implementation and monitoring to result in problem solving. The first stage in the problem-solving process is the intelligence stage. intelligence stage The first stage During this stage, you identify and define potential problems or opportunities. of decision making in which potential problems or opportunities For example, you might learn about the need for an intervention or change in are identified anddefined. an unsatisfactory situation. During the intelligence stage, you also investigate resource and environmental constraints. For example, if you were a French farmer, during the intelligence stage you might explore the possibilities of shipping apples from your farm to shops in Ireland. The perishability of the fruit and the maximum price that consumers in Ireland are willing to pay for the fruit are problem constraints. Aspects of the problem environment that you must consider include import/export laws regarding the shipment of food products. In the design stage, you develop alternative solutions to the problem. In design stage The second stage addition, you evaluate the feasibility of these alternatives. In the fruit shipping of decision making in which alternative solutions to the problem example, you would consider the alternative methods of shipment, including are developed. the transportation times and costs associated with each. choice stage The third stage of The last stage of the decision-making phase, the choice stage, requires decision making which requires selecting a course of action. Here you might select the method of shipping fruit selecting a course of action. by air from you as the solution. The choice stage would then conclude with problem solving A process that selection of an air carrier. As you will see later, various factors influence choice; goes beyond decision making to include the implementation and the act of choosing is not as simple as it might first appear. monitoring stages. Problem solving includes and goes beyond decision making. It also implementation stage A stage of includes the implementation stage, when the solution is put into effect. For problem solving in which a solution example, if your decision is to ship fruit to Ireland as air freight using a specific is put into effect. air freight company, implementation involves informing your farming staff of the monitoring stage The final stage of the problem-solving process in new activity, getting the fruit to the airport and actually shipping the product. which decision makers evaluate The final stage of the problem-solving process is the monitoring stage. the implementation. Inthis stage, decision makers evaluate the implementation to determine whether the anticipated results were achieved and to modify the process in light of new information. Monitoring can involve feedback and adjustment. For example, you might need to change your air carrier if it regularly has shipping delays.

Programmed versus Non-Programmed Decisions In the choice stage, various factors influence the decision maker’s selection of a solution. One such factor is whether the decision can be programmed. Programmed decisions are made using a rule, procedure or quantitative programmed decisions method. For example, to say that inventory should be o rdered when inventory Adecision made using a rule, procedure or quantitative method. levels drop to 100 units is a programmed decision because it adheres to a rule. Programmed decisions are easy to computerize using traditional information systems. The connections between system elements are fixed by rules, procedures or numerical relationships. In other words, they are structured and deal with routine, well-defined decisions. Non-programmed decisions, however, deal with unusual or exceptional non-programmed decisions situations. In many cases, these decisions are difficult to quantify. Determining Adecision that deals with unusual or exceptional situations that can the appropriate training programme for a new employee, deciding whether be difficult to quantify. to start a new type of product line and weighing the benefits and drawbacks of installing a new pollution control system are examples. Each of these decisions contains unique characteristics, and standard rules or procedures might not apply to them. Today, decision support systems help solve many non-programmed decisions, in which the problem is notroutine, and rules and relationships are not well defined (unstructured or ill-structured problems).

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Optimization, Satisficing and Heuristic Approaches

In general, computerized decision support systems can either optimize or satisfice. An optimization model finds the best solution, usually the one that will best help the organization meet its goals. For example, an optimization model can find the appropriate number of products that an organization should produce to meet a profit goal, given certain conditions and assumptions. Optimization models use problem constraints. A limit on the number of available work hours in a manufacturing facility is an example of a problem constraint. Some spreadsheet programs, such as Microsoft Excel, have optimizing features. A business such as an appliance manufacturer can use an optimization program to reduce the time and cost of manufacturing appliances and increase profits. Optimization software also allows decision makers to explore various alternatives. Consider a few examples of how you can use optimization to achieve huge savings. Bombardier Flexjet, a company that sells fractional ownership of jets, used an optimization program to save almost €22 million annually to better schedule its aircraft and crews.1 Hutchinson Port Holdings, the world’s largest container terminal, saved even more – over €37 million annually.2 The company processes a staggering 10,000 trucks and 15 ships every day, and used optimization to maximize the use of its trucks. Deere & Company, a manufacturer of commercial vehicles and equipment, increased shareholder value by over €75 million annually by using optimization to minimize inventory levels and by enhancing customer satisfaction.3 Laps Care from TietoEnatorAM is an information system that used optimization to assign medical personnel to home healthcare patients in Sweden while minimizing costs. The system has improved care while increasing efficiency by 10 to 15 per cent and lowering costs by €20 million.4 A satisficing model is one that finds a good – but not necessarily the best– satisficing model A model that will problem s olution. Satisficing is usually used because modelling the problem find a good – but not necessarily the best – problem solution. properly to get an optimal decision would be too difficult, complex or costly. Satisficing normally does not look at all possible solutions but only at those likely to give good results. Consider a decision to select a location for a new manufacturing plant. To find the optimal (best) location, you must consider all cities in Europe. A satisficing a pproach is to consider only five or ten cities that might satisfy the company’s requirements. Limiting the options might not result in the best decision, but it will likely result ina good decision, without spending the time and effort to investigate all cities. Satisficing is a good alternative modelling method because it is sometimes too expensive to analyze every alternative to find the best solution. Heuristics, often referred to as ‘rules of thumb’ – commonly accepted heuristics Commonly accepted guidelines or procedures that usually find a good solution – are often used guidelines or procedures that usually find a good solution. in decision making. An example of a heuristic is to order four months’ supply of inventory for a particular item when the inventory level drops to 20 units or less; although this heuristic might not minimize total inventory costs, it can serve as a good rule of thumb to avoid running out of stock without maintaining excess inventory. Trend Micro, a provider of antivirus software, has developed an antispam product that is based on heuristics. The software examines emails to find those most likely to be spam. It doesn’t examine all emails. At the time of writing, the UK is wrestling with the problems of trying to leave the European Union. If it does, goods crossing from the UK to the EU will require checks and those checks will produce a lot of data. There are fears that this will cause delays with trucks and lorries backed up along motorways for many miles on both sides of the border. If this happens, any system that could reduce waiting times would become very valuable indeed. While a scheme such as Brexit will be extremely disruptive, disruption often creates opportunities for optimizing software, satisficing models and systems that exploit heuristics.

Sense and Respond Sense and Respond (SaR) involves determining problems or opportunities (sense) and developing systems to solve the problems or take advantage of the opportunities (respond).5

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SaR often requires nimble organizations that replace traditional lines of authority with those that are flexible and dynamic. IBM, for example, used SaR with its microelectronics division to help with inventory control. It used mathematical models and optimization routines to control inventory levels. The models sensed when a shortage of inventory for customers was likely and responded by backlogging and storing extra inventory to avoid the shortages. In this application, SaR identified potential problems and solved them before they became a reality. SaR can also identify opportunities, such as new products or marketing approaches, and then respond by building the new products or starting new marketing campaigns. One way to implement the SaR approach is through management information and decision support systems, discussed in the next section.

Big Data The amount of data that some companies are currently collecting is becoming so huge that it is difficult to process using traditional database technology. This phenomenon is referred to as Big Data, and it is currently a hot research topic in information systems. Big Data is of interest because of the additional insight it can offer into customer behaviour, logistics, factory design and a host of other applications. Big Data involves new ways of capturing data, processing it and visualizing the patterns and trends in it. Often processing Big Data requires many computers operating in parallel.

8.2 An Overview of Management Information Systems A management information system (MIS) is an integrated collection of people, procedures, databases, hardware and software that provides managers and decision makers with information to help achieve organizational goals. The primary purpose of an MIS is to help an organization achieve its goals by providing managers with insight into the regular operations of the organization so that they can control, organize and plan more effectively. One important role of the MIS is to provide the right information to the right person in the right format at the right time. In short, an MIS provides managers with information, typically in reports, that supports effective decision making and provides feedback on daily operations. For example, a manager might request a report of weekly sales, broken down by area. On the basis of this information, she might decide to redistribute her mobile sales staff to have greater coverage in one place and less inanother. Figure 8.2 shows the role of an MIS within the flow of an organization’s information. Note that business transactions can enter the organization through traditional methods or via the Internet or an extranet connecting customers and suppliers to the firm’s ERP or transaction processing systems. The use of MIS spans all levels of management. That is, they provide support to and are used by employees throughout the organization.

Inputs to a Management Information System As shown in Figure 8.2, data that enters an MIS originates from both internal and external sources, including the company’s supply chain, first discussed in Chapter 2. The most significant internal data sources for an MIS are the organization’s various TPS and ERP systems. As discussed in Chapter 5, companies also use data warehouses to store valuable business information. Other internal data comes from specific functional areas throughout thefirm. External sources of data can include customers, suppliers, competitors and stockholders whose data is not already captured by the TPS, as well as other sources, such as the Internet. In addition, many companies have implemented extranets to link with selected suppliers and other business partners to exchange data and information.

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Figure 8.2 Sources of Managerial Information The MIS is just one of many sources of managerial information. Decision support systems, executive support systems and expert systems also assist in decision making.

BUSINESS INFORMATION SYSTEMS

Supply chain and business transactions

Input and error list

ERP systems and TPS

Operational databases

Databases of valid transactions

Corporate databases of internal data

Management information systems

Databases of external data

Drill-down reports Exception reports Demand reports Scheduled reports

Decision support systems

Corporate extranet

Application databases

Key-indicator reports

Corporate intranet

Executive support systems

Specialized information systems

Employees

Suppliers and other stakeholders

The MIS uses the data obtained from these sources and processes it into information more usable by managers, primarily in the form of predetermined reports. For example, rather than simply obtaining a chronological list of sales activity over the past week, a national sales manager might obtain his or her organization’s weekly sales data in a format that allows him or her to see sales activity by region, by local sales representative, by product and even in comparison with last year’s sales.

Outputs of a Management Information System The output of most management information systems is a collection of reports that are distributed to managers. These can include tabulations, summaries, charts and graphs. Management reports can come from various company databases, data warehouses and other sources. These reports include scheduled reports, key-indicator reports, demand reports, exception reports and drill-down reports (see Figure 8.3).

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Scheduled Reports

Scheduled reports are produced periodically, or on a schedule, such as daily, scheduled reports A report weekly or monthly. For example, a production manager could use a weekly produced periodically, or on a summary report that lists total payroll costs to monitor and control labour schedule, such as daily, weekly or monthly. and job costs. A manufacturing report generated once per day to monitor the production of a new item is a nother example of a scheduled report. Other scheduled reports can help managers control customer credit, performance of sales representatives, inventory levels and more.

Figure 8.3 Reports

(a) Scheduled Report Daily Sales Detail Report Order #

Customer ID

Salesperson ID

P12453 C89321 P12453 C89321 P12454 C03214 P12455 C52313 P12456 C34123 ......... .........

CAR CAR GWA SAK JMW ..........

Prepared: 08/10/17 Planned Ship Date Quantity Item # Amount 08/12/14 08/12/14 08/13/14 08/12/14 08/13/14 ............

144 288 12 24 144 .......

Generated by an MIS The types of reports are (a) scheduled, (b) key– indicator, (c) demand, (d) exception and (e–h) drill-down.

P1234 €3,214 P3214 €5,660 P4902 €1,224 P4012 €2,448 P3214 €720 ....... .......

(b) Key-Indicator Report Daily Sales Key-Indicator Report Prepared: 08/10/17

This Month

Last Month

Last Year

Total Orders Month to Date Forecasted Sales for the Month

€1,808 €2,406

€1,694 €2,224

€1,914 €2,608

Salesperson ID

Amount

CAR €42,345 GWA €38,950 SAK €22,100 JWN €12,350 .......... .......... .......... .......... (d) Exception Report Daily Sales Exception Report – Orders Over €10,000 Prepared: 08/10/17 Order #

Customer ID

P12345 C89321 P22153 C00453 P23023 C32832 ......... ......... ......... .........

Salesperson ID GWA CAR JMN .......... ..........

Planned Ship Date Quantity Item # 08/12/14 08/12/14 08/11/14 ............ ............

Amount

576 P1234 €12,856 288 P2314 €28,800 144 P2323 €14,400 ....... ....... .......... ....... ....... ..........

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Figure 8.3 Continued

BUSINESS INFORMATION SYSTEMS

(e) First-Level Drill-Down Report Earnings by Quarter (Millions)

Actual

Forecast Variance

2nd Qtr

2014

€12.6

€11.8 6.8%

1st Qtr

2014

€10.8

€10.7 0.9%

4th Qtr

2014

€14.3

€14.5 –1.4%

3rd Qtr

2014

€12.8

€13.3 –3.8%

(f) Second-Level Drill-Down Report Sales and Expenses (Millions) Qtr: 2nd Qtr 2014

Actual

Forecast

Variance

€110.9

€108.3

2.4%

Expenses

€98.3

€96.5

1.9%

Profit

€12.6

€11.8

6.8%

Gross Sales

(g) Third-Level Drill-Down Report Sales by Division (Millions)

Qtr: 2nd Qtr 2014

Actual

Beauty Care

€34.5

€33.9 1.8%

Health Care

€30.0

€28.0

7.1%

Soap

€22.8

€23.0

– 0.9%

Snacks

€12.1

€12.5

– 3.2%

Electronics

€11.5

€10.9

5.5%

€110.9

€108.3

2.4%

Total

Forecast

Variance

(h) Fourth-Level Drill-Down Report Sales by Product Category (Millions) Qtr: 2nd Qtr 2014 Division: Health Care

Actual

Forecast

Toothpaste

€12.4

€10.5

18.1%

Mouthwash

€8.6

€8.8

– 2.3%

Over-the-Counter Drugs

€5.8

€5.3

9.4%

Skin Care Products

€3.2

€3.4

– 5.9%

€30.0

€28.0

7.1%

Total

Key-Indicator Reports key-indicator report A summary of the previous day’s critical activities; typically available at the beginning of each workday.

Variance

A key-indicator report summarizes the previous day’s critical activities and is typically available at the beginning of each workday. These reports can summarize inventory levels, production activity, sales volume and the like. Keyindicator reports are used by managers and executives to take quick, corrective action on significant aspects of the business.

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Demand Reports

Demand reports are developed to give certain information upon request. In other demand reports A report words, these reports are produced on demand. Like other reports discussed in this developed to give certain information at someone’s request. section, they often come from an organization’s database system. For example, an executive might want to know the production status of a particular item – a demand report can be generated to provide the requested information by querying the company’s database. Suppliers and customers can also use demand reports. FedEx, for example, provides demand reports on its website to allow its customers to track packages from their source to their final destination. Other examples of demand reports include reports requested by executives to show the hours worked by a particular employee, total sales to date for a product and so on.

Exception Reports

Exception reports are reports that are automatically produced when a situation exception reports A report is unusual or requires management action. For example, a manager might set a automatically produced when a situation is unusual or requires parameter that generates a report of all items which have been purchased and management action. then returned by more than five customers. Such items may need to be looked at to identify any p roduction problem, for instance. As with key-indicator reports, exception reports are most often used to monitor aspects important to an organization’s success. In general, when an exception report is produced, a manager or executive takes a ction. Parameters or trigger points for an exception report should be set carefully. Trigger points that are set too low might result in too many exception reports; trigger points that are too high could mean that problems requiring action are overlooked. For example, if a manager wants a report that contains all projects over budget by €1,000 or more, the system might retrieve almost every company p roject. The €1,000 trigger point is probably too low. A trigger point of €10 ,000 might be more appropriate.

Drill-Down Reports

Drill-down reports provide increasingly detailed data about a situation. drill-down reports A report Through the use of drill-down reports, analysts can see data at a high level providing increasingly detailed data about a situation. first (such as sales for the entire company), then at a more detailed level (such as the sales for one department of thecompany) and then a very detailed level (such as sales for one sales representative). Managers can drill down into more levels of detail to individual transactions if they want.

Developing Effective Reports Management information system reports can help managers develop better plans, make better decisions and obtain greater control over the operations of the firm, but, in practice, the types of reports can overlap. For example, a manager can demand an exception report or set trigger points for items contained in a key-indicator report. In addition, some software packages can be used to produce, gather and distribute reports from different computer systems. Certain guidelines should be followed in designing and developing reports to yield the best results. Table8.1 explains some of these guidelines.

Characteristics of a Management Information System In general, MIS perform the following functions: ■

Provide reports with fixed and standard formats. For example, scheduled reports for inventory control can contain the same types of information placed in the same locations on the reports. Different managers can use the same report for different purposes.

■

Produce hard-copy and soft-copy reports. Some MIS reports are printed on paper, whichare hard-copy reports. Most output soft copy, using visual displays on computer

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screens. Soft-copy output is typically formatted in a report format. In other words, a manager might display an MIS report directly on the computer screen, but the report would still appear in the standard hard-copy format. ■

Use internal data stored in the computer system. MIS reports use primarily internal sources of data that are contained in computerized databases. Some MISs also use external sources of data about competitors, the marketplace and so on. The web is a frequently used source for external data.

■

Allow users to develop their own custom reports. Although analysts and programmers might be involved in developing and implementing complex MIS reports that require data from many sources, users are increasingly developing their own simple programs to query databases and produce basic reports. This capability, however, can result in several users developing the same or similar reports, which can increase the total time expended and require more storage, compared with having an analyst develop one report for all users.

■

Require users to submit formal requests for reports to systems personnel. When IS personnel develop and implement MIS reports, they typically require others to submit aformal request to the IS department. If a manager, for example, wants a production report to be used by several people in his or her department, a formal request for the report is often required. User-developed reports require much less formality.

Table 8.1 Guidelines for Developing MIS Reports Guidelines Reason

Tailor each report to user needs

The unique needs of the manager or executive should be considered, requiring user involvement and input

Spend time and effort roducing only reports that p are useful

After being instituted, many reports continue to be generated even if no one uses them anymore

Pay attention to report content and layout

Prominently display the information that is most desired. Do not clutter the report with unnecessary data. Use commonly accepted words and phrases. Managers can work more efficiently if they can easily find desired information

Use management-by- exception reporting

Some reports should be produced only when a problem needs to be solved or an action should be taken

Set parameters carefully

Low parameters might result in too many reports; high parameters mean valuable information could be overlooked

Produce all reports in a timely fashion

Outdated reports are of little or no value

Periodically review reports

Review reports at least once per year to make sure they are still needed. Review report content and layout. Determine whether additional reports are needed

8.3 Functional MIS Most organizations are structured along functional lines or areas. This functional structure is usually apparent from an organization chart. Some traditional functional areas are finance, manu facturing, marketing and human resources, among others. The MIS can also be divided along those functional lines to produce reports tailored to individual functions (see Figure 8.4).

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Figure 8.4 An

Supply chain and business transactions

Extranet

Supply chain and business transactions

ERP systems and TPS

Databases of valid transactions

An organization’s MIS

Financial MIS

Manufacturing MIS

Drill-down reports

Internet

Databases of external data

Marketing MIS

Human resource MIS

Drill-down reports

Exception reports

Organization’s MIS The MIS is an integrated collection of functional information systems, each supporting particular functional areas.

Other MIS

Drill-down reports

Exception reports

Demand reports

Key-indicator reports

Scheduled reports

Drill-down reports Exception reports

Demand reports

Key-indicator reports

Scheduled reports

Financial Management Information Systems A financial MIS provides financial information not only for executives but also for a broader set of people who need to make better decisions on a daily basis. Financial MIS are used to streamline reports of transactions. Most financial MIS perform the following functions:

financial MIS A management information system that provides financial information not only for executives but also for a broader set of people who need to make better decisions on a daily basis.

■

Integrate financial and operational information from multiple sources, including the Internet, into a single system.

■

Provide easy access to data for both financial and non-financial users, often through the use of a corporate intranet to access corporate web pages of financial data and information.

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■

Make financial data immediately available to shorten analysis turnaround time.

■

Enable analysis of financial data along multiple dimensions – time, geography, product, plant, customer.

■

Analyze historical and current financial activity.

■

Monitor and control the use of funds over time.

Figure 8.5 shows typical inputs, function-specific subsystems and outputs of a financial MIS, including profit and loss, auditing, and uses and management of funds.

Figure 8.5 Overview ofa Financial MIS

Customers' suppliers

Supply chain and business transactions

Internet or extranet

Supply chain and business transactions

ERP systems and TPS

Operational databases

Accounts receivable Accounts payable Asset management Invoicing General ledger

8 Databases of valid transactions from each TPS

Additional corporate databases of internal data

Financial MIS Profit/loss and cost systems Auditing Use and management of funds

Databases of external data Financial application databases

Financial statements Users and managements of funds Financial statics for control Financial DSS

Financial GSS

Specialized financial information systems

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277

Financial MIS are used to compute revenues, costs, profits and for auditing. auditing Analyzing the financial Auditing involves analyzing the financial condition of an organization and condition of an organization and determining whether financial statements and reports produced by the financial determining whether financial statements and reports produced MIS are accurate. Financial MIS are also used to manage funds. Internal uses of by the financial MIS are accurate. funds include purchasing additional inventory, updating plant and equipment, hiring new employees, acquiring other companies, buying new computer systems, increasing marketing and advertising, purchasing raw materials or land, investing in new products, and increasing research and development. External uses of funds are typically investment related. Companies often invest excess funds in such external revenue generators as bank accounts, stocks, bonds, bills, notes, futures, options and foreign currency using financial MIS.

Manufacturing Management Information Systems More than any other functional area, advances in information systems have revolutionized manufacturing. As a result, many manufacturing operations have been dramatically improved over the last decade. Also, with the emphasis on greater quality and productivity, having an effective manufacturing process is becoming even more critical. The use of computerized systems is emphasized at all levels of manufacturing – from the shop floor to the executive suite. People and small businesses, for example, can benefit from manufacturing MISs that once were only available to large corporations. Personal fabrication systems, for example, can make circuit boards, precision parts, radio tags and more.6 Personal fabrication systems include precise machine tools, such as milling machines and cutting tools, and sophisticated software. The total system can cost €15,000. For example, in a remote area of Norway, Maakon Karlson uses a personal fabrication system that makes radio tags to track sheep and other animals. The use of the Internet has also streamlined all aspects of manufacturing. Figure8.6 gives an overview of some of the manufacturing MIS inputs, subsystems and outputs. Shoptech Software offers a manufacturing MIS, E2 Shop System, as a mobile app or desktop application. ‘Shop’ here refers to workshop, where machines and other tools are used to produce and repair goods – think of a factory or your local garage. E2 Shop takes care of all data related to manufacturing – buying raw materials, estimating jobs for clients, accepting orders from customers, managing inventory, scheduling jobs and organizing delivery. Extra modules are available to manage the time employees work on jobs. The system is designed for medium- to large-sized firms that produce any sort of physical goods.7 The manufacturing MIS subsystems and outputs monitor and control the flow of materials, products and services through the organization. As raw materials are converted to finished goods, the manufacturing MIS monitors the process at almost every stage. New technology could make this process easier. Using specialized computer chips and tiny radio transmitters, companies can monitor materials and products through the entire manufacturing process. Car manufacturers, who convert raw steel, plastic and other materials into a finished vehicle, also monitor their manufacturing processes. Car manufacturers add thousands of euros of value to the raw materials they use in assembling a car. If the manufacturing MIS also lets them provide additional services such as customized paint colours on any of their models, it has added further value for customers. In doing so, the MIS helps provide the company with the edge that can differentiate it from its competitors. The success of an organization can depend on the manufacturing function. Some common information subsystems and outputs used in manufacturing are discussed next. ■

Design and engineering. Manufacturing companies often use computer-aided design (CAD) with new or existing products (Figure 8.6). For example, Boeing uses a CAD system to develop a complete digital blueprint of an aircraft before it ever begins its manufacturing process. As mock-ups are built and tested, the digital blueprint is constantly revised to reflect the most current design. Using such technology helps Boeing reduce its manufacturing costs and the time to design a new aircraft.

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Figure 8.6 Overview of a Manufacturing MIS

BUSINESS INFORMATION SYSTEMS

Suppliers' customers

Extranet or intranet

Supply chain and business transactions

Operational databases

Supply chain and business transactions

ERP systems and TPS

Databases of valid transactions from each TPS

Manufacturing MIS Design and engineering Production scheduling Inventory control Material requirements planning Just in time (JIT) Process control Quality control Manufacturing application Quality control reports databases Process control reports

Receiving and inspecting Inventory Personnel Production Order processing

Databases of internal data

Databases of external data

JIT reports MRP reports Production schedule CAD output

Manufacturing DSS

Manufacturing ESS

Specialized manufacturing information systems

Master production scheduling and inventory control. Scheduling production and controlling inventory are critical for any manufacturing company. The overall o bjective of master production scheduling is to provide detailed plans for both short-term and long-range scheduling ofmanufacturing facilities. Many techniques are economic order quantity used to minimize inventory costs. Most determine how much and when (EOQ) The quantity that should to order inventory. One method of determining how much inventory to be reordered to minimize total order is called the economic order quantity (EOQ). This quantity is inventory costs. calculated to minimize the total inventory costs. The when-to-order reorder point (ROP) A critical question is based on inventory usage over time. Typically, the question is inventory quantity level. answered in terms of a reorder point (ROP), which is a critical inventory material requirements planning (MRP) A set of inventory-control quantity level. When the inventory level for a particular item falls to the techniques that help coordinate reorder point, or critical level, the system generates a report so that an thousands of inventory items order is immediately placed for the EOQ of the product. Another when the demand for one item inventory technique used when the demand for one item depends on the is dependent on the demand for another. demand for another is called material requirements planning (MRP). ■

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The basic goal of MRP is to determine when finished products, such as cars or aeroplanes, are needed and then to work backwards to determine deadlines and resources needed, such as engines and tyres, to complete the final just-in-time (JIT) inventory product on schedule. Just-in-time (JIT) inventory and manufacturing Aphilosophy of inventory is an approach that maintains inventory at the lowest levels without management in which inventory sacrificing the availability of finished products. With this approach, and materials are delivered inventory and materials are delivered just before they are used in a just before they are used in manufacturing a product. product. A JIT inventory system would arrange for a car windscreen to be delivered to the assembly line just before it is secured to the car, rather than storing it in the manufacturing facility while the car’s other components are being assembled. JIT, however, can result in some organizations running out of inventory when demand exceeds expectations.8 ■

Process control. Managers can use a number of technologies to control and streamline the manufacturing process. For example, computers can directly control computer-aided manufacturing manufacturing equipment, using systems called computer-aided (CAM) A system that directly manufacturing (CAM). CAM systems can control drilling machines, controls manufacturing equipment. assembly lines and more (Figure 8.7). Computer-integrated computer-integrated manufacturing (CIM) uses computers to link the components of the manufacturing (CIM) Using production process into an effective system. CIM’s goal is to tie together computers to link the components of the production process into an all aspects of production, including order processing, product design, effective system. manufacturing, inspection and quality control, and shipping. A flexible manufacturing system (FMS) is an approach that allows manufacturing flexible manufacturing system (FMS) An approach that allows facilities to rapidly and efficiently change from making one product to manufacturing facilities to rapidly another. In the middle of a production run, for example, the production and efficiently change from making one product to making another. process can be changed to make a different product or to switch manufacturing materials. By using an FMS, the time and cost to change manufacturing jobs can be substantially reduced, and companies can react quickly to market needs and competition.

■

uality control and testing. With increased pressure from consumers and ageneral Q concern for productivity and high quality, today’s manufacturing organizations are placing more emphasis on quality control, a process quality control A process that ensures that the finished product that ensures the finished product meets the customer’s needs. meets the customer’s needs. Information systems are used to monitor quality and take corrective steps to eliminate possible quality problems.

Figure 8.7 A VanguardClass Nuclear Powered Submarine This submarine carries UK Trident nuclear missiles and is soon to be retired from service. Computer aided design will be used in all aspects of the design of its replacement, to be called the Dreadnought class.

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Marketing Management InformationSystems A marketing MIS supports managerial activities in product development, distribution, pricing decisions, promotional effectiveness and sales forecasting. Marketing functions are increasingly being performed on the Internet. Many companies are developing Internet marketplaces to advertise and sell products. The amount spent on online advertising is worth billions of euros annually. Software can measure how many customers see the advertising. Some companies use software products to analyze customer loyalty. Some marketing departments are actively using blogs to publish company-related information and interact with customers.9 Customer relationship management (CRM) programs, available from some ERP vendors, help a company manage all aspects of customer encounters. CRM software can help a company collect customer data, contact customers, educate customers on new products and sell products to customers through a website. An airline, for example, can use a CRM system to notify customers about flight changes. New Zealand’s Jade Stadium, for example, uses CRM software from GlobalTech Solutions to give a single entry point to its marketing efforts and c ustomer databases, instead of using about 20 spreadsheets. 10 The CRM software will help Jade Stadium develop effective marketing campaigns, record and track client contacts, and maintain an accurate database of clients. Yet, not all CRM systems and marketing sites on the Internet aresuccessful. Customization and ongoing maintenance of a CRM system can be expensive. Figure 8.8 shows the inputs, subsystems and outputs of a typical marketing MIS. Subsystems for the marketing MIS include marketing research, product development, promotion and advertising, and product pricing. These subsystems and their outputs help marketing managers and executives increase sales, reduce marketing expenses and develop plans for future products and services to meet the changing needs of customers.

marketing MIS An information system that supports managerial activities in product development, distribution, pricing decisions and promotional effectiveness.

■

Marketing research. The purpose of marketing research is to conduct a formal study of the market and customer preferences. Computer systems are used to help conduct and analyze the results of surveys, questionnaires, pilot studies and interviews. Messages on social media sites such as Facebook and Twitter are regularly used for market research, as companies search for their brand names to see what people are saying about them.

■

Product development. Product development involves the conversion of raw materials into finished goods and services and focuses primarily on the physical attributes of the product. Many factors, including plant capacity, labour skills, engineering factors and materials are important in product development decisions. In many cases, a computer program analyzes these various factors and selects the appropriate mix oflabour, materials, plant and equipment, and engineering designs. Make-or-buy decisions can also be made with the assistance of computer programs.

■

Promotion and advertising. One of the most important functions of any marketing effort is promotion and advertising. Product success is a direct function of the types of advertising and sales promotion done. Increasingly, organizations are using the Internet to advertise and sell products and services. With the use of GPS, marketing firms can promote products such as local shops and restaurants to mobile devices like phones and tablets that are close by. You could receive a discount coupon for a shop as you walk past it!

■

Product pricing. Product pricing is another important and complex marketing function. Retail price, wholesale price and price discounts must be set. Most companies try to

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evelop pricing policies that will maximize total sales revenues. Computers are often d used to analyze the relationship between prices and total revenues. Some companies are using Internet behavioural pricing, where the price customers pay online depends on what they might be willing to pay based on information on past transactions and Internet searches that reveal individual shopping behaviours. ■

Sales analysis. Computerized sales analysis is important to identify products, sales personnel and customers that contribute to profits and those that do not. Several reports can be generated to help marketing managers make good sales decisions (see Figure 8.9). The sales-by-product report lists all major products and their sales for a period of time, such as a month. This report shows which products are doing well and which need improvement or should be discarded altogether. The sales-by-salesperson report lists total sales for each salesperson for each week or month. This report can also be subdivided by product to show which products are being sold by each salesperson. The sales-by-customer report is a tool that can be used to identify high- and low-volume customers.

Figure 8.8 Overview of

Supply chain and business transactions

Operational databases

ERP systems and TPS

Databases of valid transactions from each TPS

Marketing research Product development Promotion and advertising Product pricing

a Marketing MIS

Order processing inventory

8 Databases of internal data

Marketing MIS Databases of external data Marketing application databases

Sales by customer Sales by salesperson Sales by product Pricing report Total service calls Customer satisfaction Marketing DSS

Marketng GSS

Specialized marketing information systems

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Figure 8.9 Reports Generated to Help Marketing Managers Make Good Decisions (a)This sales-by-product report lists all major products and their sales for the period from August to December. (b) This salesby-salesperson report lists total sales for each salesperson for the same time period. (c) This salesby-customer report lists sales for each customer for the period. Like all MIS reports, totals are provided automatically by the system to show managers at a glance the information they need to make good decisions.

BUSINESS INFORMATION SYSTEMS

(a) Sales by product Product

August

September

October

November

December

Total

Product 1

152

Product 2

156

162

177

163

122

780

Product 3

202

145

122

633

Product 4

345

365

352

341

288

1,691

(b) Sales by salesperson Salesperson

August

September

October

November

December

Total

Jones

162

Kline

166

155

156

122

133

732

Lane

166

155

104

106

630

Miller

245

225

305

291

301

1,367

August

September

October

November

December

Total

Ang

234

334

432

411

301

1,712

Braswell

277

Celec

1,202

1,445

1,322

998

667

5,634

Jung

287

Human Resource Management Information Systems A human resource MIS (HRMIS), also called a personnel MIS, is concerned with activities related to previous, current and potential employees of the organization. Because the personnel function relates to all other functional areas in the business, the HRMIS plays a valuable role in ensuring organizational success. Some of the activities performed by this important MIS include workforce analysis and planning, hiring, training, job and task assignment, and many other personnel-related issues. An effective HRMIS allows a company to keep personnel costs at a minimum, while serving the required business processes needed to achieve corporate goals. Although human resource information systems focus on cost reduction, many of today’s HR systems concentrate on hiring and managing existing employees to get the total potential of the human talent in the organization. According to the High Performance Workforce Study conducted by Accenture, the most important HR initiatives include improving worker productivity, improving adaptability to new opportunities and facilitating organizational change. Figure 8.10 shows some of the inputs, subsystems and outputs of the HRMIS.

human resource MIS (HRMIS) Aninformation system that is concerned with activities related to employees and potential employees of an organization, also called a personnel MIS.

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Figure 8.10 Overview

Supply chain and business transactions

Operational databases

ERP systems and TPS

Databases of valid transactions from each TPS

Needs and planning assessments Recruiting Training and skills development Scheduling and assignment Employee benefits Outplacement Benefit reports Salary surveys

ofan HRMIS

Payroll Order processing Personnel

Databases of internal data

HRMIS

Databases of external data

Human resource databases

Scheduling reports Training test scores Job applicant profiles Needs and planning reports

Human resource DSS

Human resource GSS

Specialized human resource information systems

Human resource subsystems and outputs range from the determination of human resource needs and hiring through retirement and outplacement. Most medium and large organizations have computer systems to assist with human resource planning, hiring, training and skills inventorying, and wage and salary administration. Outputs of the human resource MIS include reports, such as human resource planning reports, job application review profiles, skills inventory reports and salary surveys. ■

Human resource planning. One of the first aspects of any HRMIS is determining personnel and human needs. The overall purpose of this MIS subsystem is to put the right number and kinds of employees in the right jobs when they are needed. Effective human resource planning can require computer programs, such as SPSS and SAS, to forecast the future number of employees needed and anticipating the future supply of people for these jobs. IBM is using an HR pilot program, called Professional Marketplace, to plan for workforce needs, including the supplies and tools the workforce needs to work efficiently.11 Professional Marketplace helps IBM to catalogue employees into a glossary of skills and abilities. Like many other companies, HR and workforce costs are IBM’s biggest expense.

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■

Personnel selection and recruiting. If the human resource plan reveals that additional personnel are required, the next logical step is recruiting and selecting personnel. Companies seeking new employees often use computers to schedule recruiting efforts and trips, andto test potential employees’ skills. Many companies now use the Internet to screen forjob applicants. Applicants use a template to load their CVs onto the Internet site. HR managers can then access these CVs and identify applicants they are interested in interviewing.

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Training and skills inventory. Some jobs, such as programming, equipment repair andtax preparation, require very specific training for new employees. Other jobs mayrequire general training about the organizational culture, orientation, dress standards and expectations of the organization. When training is complete, employees often take computer-scored tests to evaluate their mastery of skills and new material.

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Scheduling and job placement. Employee schedules are developed for each employee, showing his or her job assignments over the next week or month. Job placements are often determined based on skills inventory reports, which show which employee might be best suited to a particular job. Sophisticated scheduling programs are often used in the airline industry, the military and many other areas to get the right people assigned to the right jobs at the right time.

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Wage and salary administration. Another HRMIS subsystem involves determining salaries and benefits, including medical insurance and pension payments. Wage data, such as industry averages for positions, can be taken from the corporate database and manipulated by the HRMIS to provide wage information reports to higher levels of management.

Geographic Information Systems 8

Although not yet common in organizations, a geographic information system (GIS) is a computer system capable of assembling, storing, manipu lating and displaying geographically referenced information; that is, data identified according to its location. A GIS enables users to pair maps or map outlines with tabular data to describe aspects of a particular geographic region. For example, sales managers might want to plot total sales for each region in the countries they serve. Using a GIS, they can specify that each region be shaded to indicate the relative amount of sales – no shading or light shading represents no or little sales, and deeper shading represents more sales. Staples Inc., the large office supply store chain, used a geographic information system to select about 100 new store locations, after considering about 5,000 possible sites.12 Finding the best location is critical. It can cost up to €750,000 for a failed store because of a poor location. Staples uses a GIS tool from Tactician Corporation, along with software from SAS. Although many software products have seen declining revenues, the use of GIS software is increasing. One of the most popular geographic information systems is Google Maps with its accompanying Street View option. People often use Google Maps to plan journeys and Street View to look for parking options. As business tools, both are extremely powerful. People search for services – cafes, garages, hotels, a Post Office and such like – that are close to them, which is a powerful example of ubiquitous computing (see Chapter 10) and the perfect marriage of a small interactive screen, a mobile data connection to access the maps, and a Global Positioning System receiver so that the device knows its exact location. Companies can also embed maps onto their own website to show customers where they are located.

geographic information system (GIS) A computer system capableof assembling, storing, manipulating and displaying geographic information; that is, data identified according to its location.

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8.4 Decision Support Systems Management information systems provide useful summary reports to help solve structured and semi-structured business problems. Decision support systems (DSSs) offer the potential to assist in solving both semi-structured and unstructured problems. A DSS is an organized collection of people, procedures, software, databases and devices used to help make decisions that solve problems. The focus of a DSS is on decision-making effectiveness when faced with unstructured or semi-structured business problems. As with a TPS and an MIS, a DSS should be d esigned, developed and used to help an organization achieve its goals and objectives. Decision support systems offer the potential to generate higher profits, lower costs, and better products and services. Decision support systems, although skewed somewhat towards the top levels of management, are used at all levels. To some extent, today’s managers at all levels are faced with less structured, non-routine problems, but the quantity and magnitude of these decisions increase as a manager rises higher in an organization. Many organizations contain a tangled web of complex rules, procedures and decisions. DSSs are used to bring more structure to these problems to aid the decision-making process. In addition, because of the inherent flexibility of decision support systems, managers at all levels are able to use DSSs to assist in some relatively routine, programmable decisions in lieu of more formalized management information systems.

Characteristics of a Decision Support System DSSs have many characteristics that allow them to be effective management support tools, some of which are listed here. Of course, not all DSSs work the same. ■

Provide rapid access to information. DSSs provide fast and continuous access to information.

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Handle large amounts of data from different sources. For instance, advanced database management systems and data warehouses have allowed decision makers to search for information with a DSS, even when some data resides in different databases on different computer systems or networks. Other sources of data can be accessed via the Internet or over a corporate intranet. Using the Internet, an oil giant can use a decision support system to save hundreds of millions of euros annually by coordinating a large amount of drilling and exploration data from around the globe.

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Provide report and presentation flexibility. Managers can get the information they want, presented in a format that suits their needs. Furthermore, output can be displayed on computer screens or printed, depending on the needs and desires of the problem solvers.

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Offer both textual and graphical orientation. DSSs can produce text, tables, line drawings, pie charts, trend lines and more. By using their preferred orientation, managers can use a DSS to get a better understanding of a situation and to convey this understanding to others.

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Support drill-down analysis. A manager can get more levels of detail when needed by drilling down through data. For example, a manager can get more detailed information for a project – viewing the overall project cost, then drilling down and seeing the cost for each phase, activity and task.

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Perform complex, sophisticated analysis and comparisons using advanced software packages. Marketing research surveys, for example, can be analyzed in a variety of ways using programs that are part of a DSS. Many of the analytical programs associated with a DSS are actually stand-alone programs, and the DSS brings them together.

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Support optimization, satisficing and heuristic approaches. By supporting all types of decision-making approaches, a DSS gives the decision maker a great deal of

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flexibility incomputer support for decision making. For example, what-if analysis, the process of making hypothetical changes to problem data and observing the impact on the results, can be used to control inventory. Given the demand for products, such as cars, the computer can determine the necessary parts and components, including engines, transmissions, windows and so on. With what-if analysis, a manager can make changes to problem data, say the number of cars needed for next month, and immediately see the impact on the parts requirements.

what-if analysis The process of making hypothetical changes to problem data and observing the impact on the results.

Perform goal-seeking analysis. Goal-seeking analysis is the process of determining the problem data required for a given result. For example, a financial goal-seeking analysis The manager might be considering an investment with a certain monthly net process of determining the problem data required for a given income, and the manager might have a goal to earn a return of 9 per cent result. on the investment. Goal seeking allows the manager to determine what monthly net income (problem data) is needed to yield a return of 9 per cent (problem result). Some spreadsheets can be used to perform goal-seeking analysis. ■

Perform simulation. Simulation is the ability of the DSS to duplicate the features of a real system. In most cases, probability or uncertainty is involved. For simulation The ability of the DSS example, the number of repairs and the time to repair key components of to duplicate the features of a real system. a manufacturing line can be calculated to determine the impact on the number of products that can be produced each day. Engineers can use this data to determine which components need to be reengineered to increase the mean time between failures and which components need to have an ample supply of spare parts to reduce the mean time to repair. Drug companies are using simulated trials to reduce the need for human participants and reduce the time and costs of bringing a new drug to market. Drug companies are hoping that this use of simulation will help them identify successful drugs earlier in development. Corporate executives and military commanders often use computer simulations to allow them to try different strategies in different situations. Corporate executives, for example, can try different marketing decisions under various market conditions. Military commanders often use computer war games to fine-tune their military strategies in different warfare conditions. The Turkish army, for example, uses simulation to help coordinate its fuelsupply system.13 ■

Capabilities of a Decision Support System Developers of DSSs strive to make them more flexible than management information systems and to give them the potential to assist decision makers in a variety of situations. DSSs can assist with all or most problem-solving phases, decision frequencies and d ifferent degrees of problem structure. DSS approaches can also help at all levels of the decision-making process. A single DSS might provide only a few of these capabilities, depending on its uses and scope. ■

Support for problem-solving phases. The objective of most DSSs isto assist decision makers with the phases of problem solving. As previously discussed, these phases include intelligence, design, choice, implementation and monitoring. A specific DSS might support only one or a few phases. By supporting all types of decision-making approaches, a DSS gives the decision maker a great deal of flexibility in getting computer support for decision-making activities.

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Support for different decision frequencies. Decisions can range on a continuum from one-of-a-kind to repetitive decisions. One-of-a-kind decisions are typically handled

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by an ad hoc DSS. An ad hoc DSS is concerned with situations or decisions that come up only a few times during the life of the organization; in small businesses, they might happen only once. Forexample, a company might need to change the layout of its open plan offices. Repetitive decisions are addressed by an institutional DSS. An institutional DSS handles situations or decisions that occur more than once, usually several times per year or more. An institutional DSS is used repeatedly and refined over the years. For example, a DSS used to assist helpdesk staff solve employees’ computer problems and queries.

ad hoc DSS A DSS concerned with situations or decisions that come up only a few times during the life of the organization. institutional DSS A DSS that handles situations or decisions that occur more than once, usually several times per year or more. An institutional DSS is used repeatedly and refined over the years.

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Support for different problem structures. As discussed previously, decisions can range from highly structured and programmed to unstructured and highly structured problems non-programmed. Highly structured problems are straightforward, Problems that are straightforward requiring known facts and relationships. Semi-structured or and require known facts and unstructured problems, on the other hand, are more complex. The relationships. relationships between the pieces of data are not always clear, the data semi-structured or unstructured might be in a variety of formats, and it is often difficult to manipulate or problems More complex problems in which the relationships between obtain. In addition, the decision maker might not know the information the pieces of data are not always requirements of the decision in advance.

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Support for various decision-making levels. Decision support of formats, and the data is often difficult to manipulate or obtain. systems can provide help for managers at different levels within the organization. Operational managers can get assistance with daily and routine decision making. Tactical decision makers can use analysis tools to ensure proper planning and control. At the strategic level, DSSs can help managers by providing analysis for long-term decisions requiring both internal and external information (see Figure 8.11).

clear, the data might be in a variety

Figure 8.11 DecisionLow

Decision frequency

High

Strategic level

Strategic managers involved with long-term decisions

Tactical level Operational level

Making Level Strategic managers are involved with long-term decisions, which are often made infrequently. Operational managers are involved with decisions that are made more frequently.

Operational managers involved with daily decisions

A Comparison of a DSS and an MIS A DSS differs from an MIS in numerous ways, including the type of problems solved, the support given to users, the decision emphasis and approach, and the type, speed, output and development of the system used. Table 8.2 lists brief descriptions of these differences. You should note that entity resource planning systems include both MISs and DSSs (and, as discussed in the previous chapter, TPS).

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Table 8.2 Comparison of a DSS and an MIS

Factor DSS

MIS

Problem Type

A DSS can handle unstructured problems that cannot be easily programmed

An MIS is normally used only with structured problems

Users

A DSS supports individuals, small groups and the entire organization. In the short run, users typically have more control over a DSS

An MIS supports primarily the rganization. In the short run, o users have less control over an MIS

Support

A DSS supports all aspects and phases of decision making; it does not replace the decision maker – people still make the decisions

This is not true of all MIS systems – some make automatic decisions and replace the decision maker

Emphasis Approach

A DSS emphasizes actual decisions and decision-making styles. A DSS is a direct support system that provides interactive reports on computer screens

An MIS usually emphasizes information only. An MIS is typically an indirect support system that uses regularly produced reports

Speed

Because a DSS is flexible and can be implemented by users, it usually takes less time to develop and is better able to respond to user requests

An MIS’s response time is usually longer

Output

DSS reports are usually screen oriented, with the ability to generate reports on a printer

An MIS typically is oriented towards printed reports and documents

Development

DSS users are usually more directly involved in its development. User involvement usually means better systems that provide superior support. For all systems, user involvement is the most important factor for the development of a successful system

An MIS is frequently several years old and often was developed for people who are no longer performing the work supported by the MIS

Information Systems @ Work Non-Linear What-If Analysis in LibreOffice LibreOffice is a free suite of office applications that includes a word processor (called Writer), a spreadsheet package (Calc) and drawing software (Draw). It is a legitimate alternative to Microsoft Office and does not change as much. As a commercial software house, Microsoft has to release a new version every year or so in order to keep their revenue streams flowing, and they have

to change the interface so that customers can see that they are getting something new. LibreOffice is under no such pressure and as such the interface is much more stable. You can download it from www. libreoffice.org. Calc allows you to create spreadsheet models that can be used as decision support systems to perform ‘what-if’ analyses. A very simple example

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is to decide whether to open a burger bar in a new town. The data this would need might include the population of the town, the average number of times they eat out, the number of competing outlets, the percentage of vegetarians, percentage of halal and kosher meat eaters, the cost of meat and the running costs of the bar. This could all be assembled into an equation to work out how many customers we could expect each week and the expected turnover. By changing the values in the cells we could also see what would happen if for example: • recession hits and people don’t go out for food as much; • a meat scare causes people to turn vegetarian; • a competing burger bar opens next door. This model would involve a relatively simple linear equation, but Calc allows us to create nonlinear situations to answer more complex what-if questions. A good example of a non-linear relationship, where the output is not directly proportional to the input, is predator-prey interaction. For instance, foxes prey on rabbits. As the number of foxes increases, more rabbits get eaten and the population of rabbits falls. As it falls, the foxes will find less food and so the number of foxes will fall. As the number of foxes falls, the pressure on the rabbits is reduced and the population can recover, so the number of rabbits rises. When the rabbits recover, they can sustain more foxes and the number of foxes grows again. All of this happens over and over in an endless cycle. We can model this in Calc with two simple equations called the Lotka-Volterra equations. You’ll need two columns labelled Rabbits and Foxes. In the next row insert numbers for the initial population, say 100 rabbits and 20 foxes. This is the state of affairs in Time Period 1. Then we need three constants: the growth rate of rabbits, the rate of predation (which is the percentage of rabbits that get eaten by foxes), and the death rate of foxes. A good set of values for these to see what is going on is 0.02, 0.0005 and 0.05. In the next row under rabbits and foxes we need two formulae that relate to the first row. (The logic of this is that the number of creatures alive in Time Period 2 depends on the number or creatures that existed in Time Period 1.)

The formula under rabbits is: rabbits + (0.02 * rabbits – (0.0005 * rabbits * foxes)) and the formula under foxes is: foxes + (0.005 * rabbits * foxes – (0.05 * foxes)) You will have to change these to refer to the relevant cells (rabbits is the cell that contains the value 100, the initial population of rabbits; foxes is thecell with 20), and it would be best to enter the three constants into three cells over at one side and use absolute referencing to refer to them in the formulae. Also watch your parentheses! Then you have to copy these formula down maybe 1,000 rows. The real fun starts when you draw a line graph of the output: number of creatures on the y-axis, time on the x-axis and one line for rabbits and one for foxes. You should see a nice oscillation between the two populations. Then at last you can start your what-if analysis. What if alternatives to foxes eating rabbits die out and the rate of predation goes up? How high does it have to go before all the rabbits die out? What happens to the rabbit population if a new virus appears killing foxes at a higher rate? Put the death rate up to 0.3 to see. What we have done simplifies reality enormously but in fact the Lotka-Volterra equations have been used to study real populations in the wild!

Questions 1 Implement the predator-prey example and try the questions at the end. 2 Which is more useful for what-if analysis – the numbers or the graph? Explain your decision. 3 What are some of the problems with the burger bar decision? Did we make any bad assumptions? 4 Why would someone pay for Microsoft Office when LibreOffice is available?

References LibreOffice website. www.Libreoffice.org. Accessed 29 May 2020. Wolfram Mathworld. ‘Lotka-Volterra Equations’. Available from: mathworld.wolfram.com/LotkaVolterraEquations.html. Accessed 10 June 2020.

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Components of a Decision Support System At the core of a DSS are a database and a model base. In addition, a typical DSS contains a user interface, also called dialogue manager, that allows decision makers to easily access and manipulate the DSS and to use common business terms and phrases. Finally, access to the Internet, networks and other computer-based systems permits the DSS to tie into other powerful systems, including the TPS or function-specific subsystems. Internet s oftware agents, for example, can be used in creating powerful decision support systems. Figure 8.12 shows a conceptual model of a DSS, although specific DSSs might not have all these components.

dialogue manager A user interface that allows decision makers to easily access and manipulate the DSS and to use common business terms and phrases.

Figure 8.12 Conceptual Model of a DSS DSS components include a model base; database; external database access; and access to the Internet and corporate intranet, networks and other computer systems.

Database

DBMS

Access to the Internet and corporate intranet, networks and other computer systems

Model base

MMS

External database access

External database

The Database The database management system allows managers and decision makers to perform qualitative analysis on the company’s vast stores of data in databases and data warehouses (discussed in Chapter 5). DSSs tap into vast stores of information contained in the corporate database, retrieving information on inventory, sales, personnel, production, finance, accounting and other areas.14 Data mining and business intelligence, introduced in Chapter 5, are often used in DSSs. Airline companies, for example, use a DSS to help identify customers for round-trip flights between major cities. The DSS can be used to search a data warehouse to contact thousands of customers who might be interested in an inexpensive flight. A casino can use a DSS to search large databases to get detailed information on patrons. It can tell how much each patron spends per day on gambling, and more. Opportunity International uses a DSS to help it make loans and provide services to tsunami victims and others in need around the world.15 According to the information services manager of Opportunity International, ‘We need to pull all the data … to one central database that we can analyze, and we need a way to get that information back out to people in the field’. A DSS can also be used in emergency medical situations to make splitsecond, life-or-death treatment decisions.16 A database management system can also connect to external databases to give managers and decision makers even more information and decision support. External databases can include the Internet, libraries, government databases and more. The combination of internal and external database access can give key decision makers a better understanding of the company and its environment.

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The Model Base In addition to the data, a DSS needs a model of how elements of the data are related, in order to help make decisions. The model base allows managers and model base Part of a DSS that decision makers to perform quantitative analysis on both internal and external provides decision makers with data.17 The model base gives decision makers access to a variety of models access to a variety of models and assists them in decision making. so that they can explore different scenarios and see their effects. Ultimately, it assists them in the decision-making process. Procter & Gamble, maker of Pringles potato crisps, Pampers nappies and hundreds of other consumer products, uses DSSs to streamline how raw materials and products flow from its suppliers to its customers, saving millions of euros.18 Scientists and mathematicians also use DSSs.19 DSSs can be excellent at predicting customer behaviours.20, 21 Most banks, for example, use models to help forecast which customers will be late with payments or might default on their loans. The models and algorithms used in a DSS are often reviewed and revised over time.22 As a result of Hurricane Katrina in the USA, for example, US insurance companies revised their models about storm damage and insurance requirements.23 Model management software (MMS) is often used to coordinate the model management software use of models in a DSS, including financial, statistical analysis, graphical and Software that coordinates the use of models in a DSS. project-management models. D epending on the needs of the decision maker, one or more of these models can be used (see Table 8.3).

Table 8.3 Model Management Software Model Type

Description

Software

Financial

Provides cash flow, internal rate of return and other investment analysis

Spreadsheet, such as Microsoft Excel

Statistical

Provides summary statistics, trend projections, hypothesis testing and more

Statistical program, such as SPSS or SAS

Graphical

Assists decision makers in designing, developing and using graphic displays of data and information

Graphics programs, such as Microsoft PowerPoint

Project Management

Handles and coordinates large projects; also used to identify critical activities and tasks that could delay or jeopardize an entire project if they are not completed in a timely and costeffective fashion

Project management software, such as Microsoft Project

The User Interface or Dialogue Manager The user interface or dialogue manager allows users to interact with the DSS to obtain information. It assists with all aspects of communications between the user and the hardware and software that constitute the DSS. In a practical sense, to most DSS users, the user interface is the DSS. Upper-level decision makers are often less interested in where the information came from or how it was gathered than that the information is both understandable and accessible.

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8.5 Group Support Systems The DSS approach has resulted in better decision making for all levels of individual users. However, many DSS approaches and techniques are not suitable for a group decision-making environment. Although not all workers and managers are involved in committee meetings and group decision-making sessions, some tactical and strategic-level group support system (GSS) Software application that consists managers can spend more than half their decision-making time in a group ofmost elements in a DSS, plus setting. Such managers need assistance with group decision making. A group software to provide effective support system (GSS), also called a group decision support system, consists support in group decision making; of most of the elements in a DSS, plus software to provide effective support in also called a group decision support system. group decision-making settings (see Figure 8.13).24

Ethical and Societal Issues Online Divorce Form Error ‘Could Have Led to Unfair Settlements’

From April 2014 to December 2015, a form on the UK Ministry of Justice’s website contained an error that caused a miscalculation. The form, known rather unimaginatively as Form E, helps divorcing couples provide the courts with full details of their financial arrangements. The error meant that the calculation to produce totals – by adding assets and subtracting liabilities, which are entered earlier on the form – failed to take account of the liabilities. The effect was that a person using it would appear to have more money than they actually had. In divorce proceedings, which try to split a couple’s assets fairly, this was a major oversight. The mistake meant that the settlements of couples separating within a 20-month period were incorrect. Each year 120,000 couples in England and Wales (who use the system) go through a divorce, although the Ministry was quick to point out that not all couples use the online form but choose to supply the information on paper. Nicola Matheson-Durrant, of the Family Law Clinic, was the first to spot the problem. She told TheGuardian newspaper that, ‘having discovered the fault and advised the MoJ, it became apparent that not a single solicitor, barrister or judge in the whole of the UK had noticed this error. It is such a critical fault’. A Courts and Tribunals Services spokesman said: ‘Officials are taking steps to identify rapidly cases where this regrettable error may have had an impact, and we will be writing to anyone affected

as soon as possible’. Solicitors Howell Jones said, ‘this is obviously a concern but in reality the chance of the error going unnoticed by the person signing the form, the spouse on the other side reviewing it and the Court when considering the matter is quite low’.

Questions 1 In technical terms this was a very simple mistake. How do you think such a simple mistake could appear on such an important website? 2 What do you think the Courts and Tribunals Services should have done after the mistake was discovered? 3 How can Howell Jones say the chance of it going unnoticed is low? It did go unnoticed for over a year after all. 4 Do you think some did but just did not report it? Why would someone do this?

References Carr, S. 2015. Divorce form error on government website ‘could have led to unfair settlements’. The Mirror. Available from: www.mirror. co.uk/news/uk-news/divorce-form-errorgovernment-website-7032462. Accessed 16 June 2020. Oakes, R. 2015. Divorce form error ‘could have led to unfair settlements’. Freeths. Available

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from: family.freeths.co.uk/post/102d2nh/divorceform-error-could-have-led-to-unfair-settlements. Accessed 16 June 2020. BBC, 2015. Divorce form error ‘could have led to unfair settlements’. Available from: www.bbc.co.uk/ news/uk-35128010. Accessed 10 June 2020.

Howell Jones website. www.howell-jones.com/ news_post.php?id= bbc-ministry-of-justiceerror-website-form-divorce-unfair-settlementlegal-law-howell-jones-family-s. Accessed 16 June 2020.

Figure 8.13 Database

Model base

GSS software

GSS

Access to the Internet and corporate intranet, networks and other computer systems

External database access

onfiguration of a GSS C A GSS contains most of the elements found in a DSS, plus software to facilitate group member communications.

External database

Any technology that allows groups of people to interact could be labelled as a GSS. Many forms of private social media would qualify – a WhatsApp group for example. Google Sheets could be used to create a basic GSS. A Google Sheet spreadsheet has all the essential elements of a DSS plus the ability for multiple users to communicate by text with each other while using it. Group support systems are used in most industries. Architects are increasingly using GSSs tohelp them collaborate with other architects and builders to develop the best plans and to compete for contracts. Manufacturing companies use GSSs to link raw material suppliers to their own company systems.

Characteristics of a GSS that Enhance Decision Making It is often said that two heads are better than one. When it comes to decision making, GSSs unique characteristics have the potential to result in better decisions. Developers of these systems try to build on the advantages of individual support systems while adding new approaches, unique to group decision making. For example, some GSSs can allow the exchange of information and expertise among people without direct face-to-face interaction. The following sections d escribe some characteristics that can improve and enhance decision making. ■

Design for groups. The GSS approach acknowledges that special procedures, devices and approaches are needed in group decision-making settings. These procedures must foster creative thinking, effective communications and good group decision-making techniques.

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Ease of use. Like an individual DSS, a GSS must be easy to learn and use. Systems that are complex and hard to operate will seldom be used. Many groups have less tolerance than do individual decision makers for poorly developed systems.

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Flexibility. Two or more decision makers working on the same problem might have different decision-making styles and preferences. Each manager makes decisions in a unique way, in part because of different experiences and cognitive styles. An effective GSS not only has to support the different approaches that managers use to make decisions but also must find a means to integrate their different perspectives into a common view of the task at hand.

brainstorming A decision-making approach that often consists of members offering ideas ‘off the top of their heads’. group consensus approach A decision-making approach that forces members in the group to reach a unanimous decision. nominal group technique A decision-making approach that encourages feedback from individual group members, and the final decision is made by voting, similar to the way public officials areelected.

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ecision-making support. A GSS can support different decision-making D approaches such as brainstorming, the group consensus approach or the nominal group technique.

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nonymous input. Many GSSs allow anonymous input, where group A members do not know which of them is giving the input. For example, some organizations use a GSS to help rank the performance of managers. Anonymous input allows the group decision makers to concentrate on the merits of the input without considering who gave it. In other words, input given by a top-level manager is given the same consideration as input from employees or other members of the group. Some studies have shown that groups using anonymous input can make better decisions and have superior results compared with groups that do not use anonymous input. Anonymous input, however, can result in flaming, where an unknown team member posts insults or even obscenities on the GSS.

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Reduction of negative group behaviour. One key characteristic of any GSS is the ability tosuppress or eliminate group behaviour that is counterproductive or harmful to effective d ecision making. In some group settings, dominant individuals can take over the discussion, which can prevent other members of the group from presenting creative alternatives. In other cases, one or two group members can sidetrack or subvert the group into areas that are n on-productive and do not help solve the problem at hand. Other times, members of a group might assume they have made the right decision without e xamining alternatives – a phenomenon called ‘groupthink’. If group sessions are poorly planned and executed, the result can be a tremendous waste of time. GSS designers are developing software and hardware systems to reduce these types of problems. Procedures for effectively planning and managing group meetings can be incorporated into the GSS approach. A trained meeting facilitator is often employed to help lead the group decision-making process and to avoid groupthink.

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Parallel communication. With traditional group meetings, people must take turns addressing various issues. One person normally talks at a time. With a GSS, every group member can address issues or make comments at the same time by entering them into a PC or workstation. These comments and issues are displayed on every group member’s PC or workstation immediately. Parallel communication can speed meeting times and result in better decisions.

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Automated recordkeeping. Most GSSs can keep detailed records of a meeting automatically. Each comment that is entered into a group member’s PC or workstation can be recorded. In some cases, literally hundreds of comments can be stored for future review and analysis. In addition, most GSSs packages have automatic voting and ranking features. After group members vote, the GSS records each vote and makes the appropriate rankings.

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8.6 Executive Support Systems Because top-level executives often require specialised support when making strategic decisions, many companies have developed systems to assist executive decision making. This type of system, called an executive support system (ESS), is executive support system (ESS) a specialized DSS that includes all hardware, software, data, procedures and Specialized DSS that includes all hardware, software, data, people used to assist senior-level executives within the organization. In some procedures and people used to cases, an ESS, also called an executive information system (EIS), supports assist senior-level executives decision making of members of the board of directors, who are responsible to within the organization. stockholders. An ESS is a special type of DSS and, like a DSS, an ESS is designed to support higher-level decision making in the organization. The two systems are, however, different in important ways. DSSs provide a variety of modelling and analysis tools to enable users to thoroughly analyze problems – that is, they allow users to answer questions. ESSs present structured information about aspects of the organization that executives consider important. In other words, they allow executives to ask the right questions. The following are general characteristics of ESSs: ■

Are tailored to individual executives. ESSs are typically tailored to individual executives; DSSs are not tailored to particular users. They present information in the preferred format of that executive.

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Are easy to use. A top-level executive’s most critical resource can be his or her time. Thus, an ESS must be easy to learn and use and not overly complex.

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Have drill-down abilities. An ESS allows executives to drill down into the company to determine how certain data was produced. Drilling down allows an executive to get moredetailed information if needed.

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Support the need for external data. The data needed to make effective top-level decisions is often external – information from competitors, the government, trade associations and journals, consultants and so on. An effective ESS can extract data useful to the decision maker from a wide variety of sources, including the Internet and other electronic publishing sources.

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Can help with situations that have a high degree of uncertainty. Most executive decisions involve a high degree of uncertainty. Handling these unknown situations using modelling and other ESS procedures helps top-level managers measure the amount of risk in a decision.

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Have a future orientation. Executive decisions are future oriented, meaning that decisions will have a broad impact for years or decades. The information sources to support future-oriented decision making are usually informal – from organizing golf partners to tying together members of social clubs or civic organizations.

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Are linked with value-added business processes. Like other information systems, executive support systems are linked with executive decision making about value-added business processes.

Capabilities of Executive Support Systems The responsibility given to top-level executives and decision makers brings unique problems and pressures to their jobs. The following is a discussion of some of the characteristics of executive decision making that are supported through the ESS approach. ESSs take full

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advantage of data mining, the Internet, blogs, podcasts, executive dashboards and many other technological innovations. As you will note, most of these decisions are related to an organization’s overall profitability and direction. An effective ESS should have the capability to support executive decisions with components such as strategic planning and organizing, crisis management and more. ■

Support for defining an overall vision. One of the key roles of senior executives is to provide a broad vision for the entire organization. This vision includes the organization’s major product lines and services, the types of businesses it supports today and in the future, and its overriding goals.

strategic planning Determining long-term objectives by analyzing the strengths and weaknesses of theorganization, predicting future trends and projecting the development of new product lines.

for strategic planning. ESSs also support strategic planning. Strategic planning involves determining long-term objectives by analyzing the strengths and weaknesses of the organization, predicting future trends, and projecting the development of new product lines. It also involves planning the acquisition of new equipment, analyzing merger possibilities, and making difficult decisions concerning downsizing and the sale of assets if required by unfavourable economic conditions.

■ Support

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Support for strategic organizing and staffing. Top-level executives are concerned with organizational structure. For example, decisions concerning the creation of new departments or downsizing the labour force are made by top-level managers. Overall direction for staffing decisions and effective communication with labour unions are also major decision areas for top-level executives. ESSs can be employed to help analyze the impactof staffing decisions, potential pay raises, changes in employee benefits and new work rules.

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Support for strategic control. Another type of executive decision relates to strategic control, which involves monitoring and managing the overall operation of the organization. Goal seeking can be done for each major area to determine what performance these areas need to achieve to reach corporate expectations. Effective ESS approaches can help top-level managers make the most of their existing resources and control all aspects of the organization.

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Support for crisis management. Even with careful strategic planning, a crisis can occur. Major disasters, including hurricanes, tornadoes, floods, earthquakes, fires, pandemics (such as the COVID-19 global pandemic crisis) and terrorist activities, can totally shut down major parts of the organization. Handling these emergencies is another responsibility for top-level executives. In many cases, strategic emergency plans can be put into place with the help of an ESS. These contingency plans help organizations recover quickly if an emergency or crisis occurs.

Decision making is a vital part of managing businesses strategically. IS systems such as information and decision support, group support and executive support systems help employees by tapping existing databases and providing them with current, accurate information. The increasing integration of all business information systems – from TPS to MIS to DSS to ESS– can help organizations monitor their competitive environment and make better-informed decisions. Organizations can also use specialized business information systems, discussed in the next two chapters, to achieve their goals.

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Summary Good decision-making and problem-solving skills are key to developing effective information and decision support systems. Every organization needs effective decision making and problem solving to reach its objectives and goals. Problem solving begins with decision making. A well-known model developed by Herbert Simon divides the decisionmaking phase of the problem-solving process into three stages: intelligence, design and choice. During the intelligence stage, potential problems or opportunities are identified and defined. Information is gathered thatrelates to the cause and scope of the problem. Constraints on the possible solution and the problem environment are investigated. alternative solutions to the In the design stage, problem are developed and explored. In addition, the feasibility and implications of these alternatives are evaluated. Finally, the choice stage involves selecting the best course of action. In this stage, the decision makers evaluate theimplementation of the solution to determine whether the anticipated results were achieved and to modify the process in light of new information learned during the implementation stage. Decision making is a component of problem solving. In addition to the intelligence, design and choice steps of decision making, problem solving also includes implementation and monitoring. Implementation places the solution into effect. After a decision has been implemented, it is monitored and modified if needed. Decisions can be programmed or nonprogrammed. Programmed decisions are made using a rule, procedure or quantitative method. Ordering more inventory when the level drops to 100 units or fewer is an example of a programmed decision. A non-programmed decision deals with unusual or exceptional situations. Determining the best training programme for a new employee is an example of a non-programmed decision. Decisions can use optimization, satisficing or heuristic approaches. Optimization finds the best solution. Optimization problems often have an objective such as maximizing profits given production and material constraints. When a problem is too complex for optimization, satisficing is often used. Satisficing finds a good, but not necessarily the best,

decision. Finally, a heuristic is a ‘rule of thumb’ or commonly used guideline or procedure used to find a good decision. A management information system (MIS) must provide the right information to the right person in the right format at the right time. A management information system is an integrated collection of people, procedures, databases and devices that provides managers and decision makers with information to help achieve organizational goals. An MIS can help an organization achieve its goals by providing managers with insight into the regular operations of the organization so that they can control, organize and plan more effectively and efficiently. The primary difference between the reports generated by the TPS and those generated by the MIS is that MIS anagerial decision m aking at the reports support m higher levels of management. Data that enters the MIS originates from both internal and external sources. The most significant internal sources of data for the MIS are the organization’s various TPS and ERP systems. Data warehouses and data marts also provide important input data for the MIS. External sources of data for the MIS include extranets, customers, suppliers, competitors and stockholders. The output of most MIS is a collection of reports that are distributed to managers. MIS have a number of common characteristics, including producing scheduled, demand, e xception and drill-down reports; producing reports with fixed and standard formats; producing hard-copy and soft-copy reports; using internal data stored in organizational computerized databases; and having reports developed and implemented by IS personnel or end users. Most MISs are organized along the functional lines of an organization. Typical functional management information systems include financial, manufacturing, marketing, human resources and other specialized systems. Each system is composed of inputs, processing subsystems and outputs. Decision support systems (DSSs) support decision-making effectiveness when faced with unstructured or semi-structured business problems. DSS characteristics include the ability to

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handle large amounts of data; obtain and process data from different sources; provide report and presentation flexibility; support drill-down analysis; perform complex statistical analysis; offer textual and graphical orientations; support optimization, satisficing and heuristic approaches; and perform what-if, simulation and goal-seeking analysis. DSSs provide support assistance through all phases of the problem-solving process. Different decision frequencies also require DSS support. An ad hoc DSS addresses unique, infrequent decision situations; an institutional DSS handles routine decisions. Highly structured problems, semi-structured problems and unstructured problems can be supported by a DSS. A DSS can also support different managerial levels, including strategic, tactical and operational managers. A common database is often the link that ties together a company’s TPS, MIS and DSS. The components of a DSS are the database, model base, user interface or dialogue manager, and a link to external databases, the Internet, the corporate intranet, extranets, networks and other systems. The database can use data warehouses and data marts. Access to other computer-based systems permits the DSS to tie into other powerful systems, including the TPS or function-specific subsystems.

Specialized support systems, such as group support systems (GSSs) and executive support systems (ESSs), use the overall approach of a DSS in situations such as group and executive decision making. A group support system (GSS) consists of most of the elements in a DSS, plus software to provide effective support in group

decision-making settings. GSSs are typically easy to learn and use, and can offer specific or general decision-making support. GSS software, also called ‘groupware’, is specially designed to help generate lists of decision alternatives and perform data analysis. These packages let people work on joint documents and files over a network. The frequency of GSS use and the location of the decision makers will influence the GSS alternative chosen. The decision room alternative supports users in a single location who meet infrequently. Local area networks can be used when group members are located in the same geographic area and users meet regularly. Teleconferencing is used when decision frequency is low and the location of group members is distant. A wide area network is used when the decision frequency is high and the location of group members is distant. Executive support systems (ESSs) are specialized decision support systems designed to meet the needs of senior management. They serve to indicate issues of importance to the organization, indicate new directions the company might take and help executives monitor the company’s progress. ESSs are typically easy to use, offer a wide range resources and handle a variety of of computer internal and external data. In addition, the ESS performs sophisticated data analysis, offers a high degree of specialization and provides flexibility and comprehensive communications abilities. An ESS ndividual decision-making styles. also supports i Some of the major decision-making areas that can be supported through an ESS are providing an overall vision, strategic planning and organizing, strategic control and crisis management.

Self-Assessment Test 1 The first stage in decision making is the ___________ stage.

6 An MIS that supports promotional effectiveness is a ___________ MIS.

2 A programmed decision can be made by a computer by following a ___________.

7 GIS stands for ___________.

3 A model that produces a good enough decision is called ___________. 4 Most of the data for an MIS comes from a ___________. 5 A regular, periodic report is called ___________.

8 Making hypothetical changes to data and observing the results is ___________. 9 A GSS supports decision making by a ___________. 10 A decision-making approach that encourages ideas ‘off the top’ of participants’ heads is ___________.

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Review Questions 1 Compare and contrast a programmed and nonprogrammed decision using examples.

6 List some of the characteristics of a decision support system.

2 Outline the main distinguishing features of some of the reports produced by an MIS.

7 What is a GSS?

3 What is a satisficing model?

8 Explain what-if analysis and how you could implement it using a spreadsheet.

4 Explain the main components of decision making.

9 What is a GIS?

5 What is CAD?

10 What is an ESS?

Discussion Questions 1 What functionality would you need to add to a DSS to create a GSS?

2 Should mid-level managers be given numerical data or graphical data? Which is better to use to make decisions?

Web Exercises 1 Search for the website for the European Spreadsheet Risks Interest Group and read through the horror stories section.

2 Search for unusual applications for spreadsheets. To start you off, you could try looking for artificial intelligence and games.

Case One Smart Meters Capture Big Data For Energy Decisions Governments all over the world are putting in place laws and regulations to govern the installation of smart meters that send regular information about utility usage back to energy providers. This information could come in from every household as often as once every 30 minutes. Germany, for instance, has mandated that every house must have a smart meter by 2020 to record electricity use. In the UK, the Department of Energy and Climate Change has plans in place for the installation of 53 million electricity smart meters in homes and businesses by 2020. European directive 2009/72/EG lays out the common rules for all EU states regarding the internal market in electricity and requires ‘smart grids, which should be built in a way that encoura ges decentralised generation and energy efficiency’. Similar plans are afoot for metering gas and water. This represents a huge opportunity for SAP, the German multinational software corporation that

creates software to manage business operations, because the energy retailers are turning to partners such as these to help with every aspect of the roll out, from back office planning and field services execution to data management and analytics. In Turkey, energy use is booming. In response to steadily increasing demand for electricity, the Turkish government has imposed requirements on energy providers to optimize the national energy supply. This includes providing monthly reports to the regulatory authorities on consumption, load peaks and supply interruptions. In response, energy supplier Yedas̹ turned to SAP. Based in Samsun in north Turkey, Yedas̹ has a total of 1.5 million electricity customers and took the new statutory requirement as an opportunity to restructure how it collects and processes measurement data from meters installed in customers’ homes. They

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blackouts. Data from smart meters are intended to reduce waste and eliminate blackouts.

Questions 1 Should citizens have a choice in whether a smart meter is installed in their homes? 2 Why was testing so important for Yedas̹? 3 How will smart meters make electricity production more efficient? 4 What are some of the privacy concerns with smart meters?

References

predicted that the Turkish government would begin to roll out smart meters and wanted to be ready for over a million meter readings coming in every half hour, a daunting amount! To process these data, Yedas̹ chose SAP for Utilities, a specialist tool with intelligent meter management software created by SAP partner BTC, a German IT firm. The BTC software maps the billing process from the meter through a communication unit (hub) to the SAP software in an integrated manner. A BTC subsidiary in Istanbul coordinated the installation of the new meters and hubs that would communicate with them. The areas covered by Yedas̹ are thinly populated and mountainous so it was especially important to immediately establish on site that the installations were successful and operating before the team left – they didn’t want to have to come back! This was done by testing communication between the BTC information hub and the meters in near real time using the BTC software. Another tricky task faced by the project team was the inconsistent metering landscape among industrial and commercial customers. Unlike in many countries, customers in Turkey often own their own electricity meters – they do not belong to Yedas̹. Power stations create electricity and it must be used immediately – it cannot be stored at scale. Workers at the stations make educated guesses about how much output the station needs to produce. They have a good idea of when people will get out of bed and will be putting on their kettles in the morning, and will increase output at that time. They keep an eye on when popular TV programmes are on and make sure there is enough energy for everyone to enjoy them. And they know when people go to bed and make reductions accordingly. If they get it wrong, it will either be wasteful or will cause

Bird & Bird, 2016. ‘Germany Launches Smart Metering Roll-Out’. Available from: www. twobirds.com/en/news/articles/2016/ germany/july/germany-launches-smartmetering-roll-out. Accessed 29 May 2020. BTC website. www.btc-ag.com/en/consulting. htm. Accessed 29 May 2020. B2B Marketing, 2012. ‘Awards 2012 Case Study: Category 15: “Smart metering” for SAP by DNX’. Available from: www.b2bmarketing.net/ en-gb/partner-downloads/awards-2012case-study-category-15-smart-meteringsap-dnx. Accessed 10 June 2020. Computer Weekly. ‘Big Data: Utilities Rise to the Smart Meter Challenge’. Available from: www.computerweekly.com/feature/Big-DataUtilities-rise-to-the-smart-meter-challenge. Accessed 29 May 2020. Directive 2009/72/EC. Official Journal of the European Union. eur-lex.europa.eu/legalcontent/EN/ALL/?uri=celex%3A32009L0072. Accessed 10 June 2020. SAP. ‘Succeed in the Energy and Utilities Industry with SAP Solutions’. Available from: go.sap.com/uk/solution/industry/utilities.html. (Link no longer available.) Visintin, G., 2014. ‘New Software for Smart Meters’. Available from: news.sap.com/new-softwaresmart-meters/. (Link no longer available.) London School of Economics and Political Science. ‘Are smart meters good for UK households?’, 9 January 2019. www.lse.ac.uk/ GranthamInstitute/news/are-smart-metersgood-for-uk-households/” www.lse.ac.uk/ GranthamInstitute/news/are-smart-meters-goodfor-uk-households/. Accessed 19 June 2020.

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Case Two Taking Designs into the Next Dimension Established in 2002, Avia Technique has become a leading repair centre for aircraft components, w i t h t h e i r b u s i n e s s d i re c t o r C h r i s Wr i g h t emphasizing their reputation for quality, service and competitiveness. Avia’s capabilities are on creating aircraft safety components including engine fire extinguishers, oxygen bottles and masks, emergency locators as well as life jackets and evacuation slides and rafts. The safety requirements are strict and aircraft cannot fly without the proper, certified safety gear. Atthe same time, every second a plane sits on a runway awaiting parts costs an airline dearly. Avia Technique partners with many airlines throughout the world to ensure that this doesn’t happen. Avia designs its own components. Originally, this was done using Autodesk’s AutoCAD LT software, which is a two-dimensional drafting and documenting tool. Designs were therefore available only in 2D and it was difficult for potential customers – who often held non-technical roles – to visualize them. This meant that Avia had to build a prototype even before an order had been won, something which takes time and is costly. The lack of a 3D model had a negative effect on Avia’s marketing output too. To produce photos for sales brochures involved more prototypes being built, suitable for a glossy magazine, and hiring a photographer. Avia tur ned to Cadline, a company with modelling expertise and a partner of Autodesk. ‘Cadline’s sales consultant swiftly identified our needs and pinpointed the solutions we required’, says Paul Trevena, Avia’s Business Development Manager. Together they selected Autodesk Product Design Suite Premium (PDSP) to deliver a 3D modelling and visualization capability and Autodesk Vault Professional to deliver the required data management and collaboration tools. ‘PDSP is a real godsend’, Mr Trevena says. ‘The time it takes us to develop new products, from first concept to final design, has been cut by half. This means development costs are reduced, our route to market is quicker, and it’s easier to win new projects. The ease with which we can manipulate designs has improved too. Now that we can create assemblies on screen, we are

able to put components together and check that the finished product will work as intended. The Product Design Suite has also helped us to reduce our error rate, which has saved time because we don’t have to go back over designs to make corrections’. Animated, realistic images can be seen by customers on screen, and the software produces photo quality images from designs, rendered to show how the product will look when it is finished. ‘The images are so sophisticated that we can use them in our sales brochures’, says Mr Trevena. It also means that customers can be involved right from the start and through every aspect of the design process, as they will be able to understand and comment on even early designs. If customers have their own 3D designs of the components they need, these can be imported into PDSP, which means they can be quickly integrated into Avia’s own products and any changes required in the customers’ designs can be sent to them in detail. ‘This is a revelation to our business. We have also been able to reduce the number of visits to suppliers and sub-contractors as we can transfer data electronically instead.’

Questions 1 What is the problem with 2D designs? 2 What are the advantages of 3D designs? 3 Why is it important to Avia that the software can import designs? 4 How could this software ‘reduce the error rate’? Does this seem like a legitimate claim?

References Aviva Technique website. www.aviatechnique. co.uk. Accessed 29 May 2020. Aviva Technique case study. ‘Flying through Designs in Half the Time’. Autodesk Inventor LT web page. Available from: www.autodesk.co.uk/products/inventor-lt/ overview?plc=INVLT&term=1-YEAR&support= ADVANCED&quantity=1. Accessed 10 June 2020.

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Case Three Using Agent Modelling as a Decision Support Tool

This chapter discussed having decision support systems perform simulations. Simulation can be used for what-if style analysis to estimate what changes or results a particular decision might lead to. A simulation is a model of a situation. The model can be manipulated and changed to see what might happen if the same changes were made to the real situation. This is almost always easier and cheaper than making the real changes. Armed with a model of a city centre for instance, a user can ask: ‘what if we open a cafe on that street?’‘What if we change the bus route to go around that corner?’‘What if we make half of the car park into shops?’‘What do these changes do to the way the city operates?’ A spreadsheet is a good tool for making a decision support system, and spreadsheets can be used to create a simulation. However, it is often much better to use specialist simulation software. NetLogo is a good example. NetLogo is open-source software developed at Northwestern University. Its approach to simulation is something called agent modelling. An agent is essentially a procedure or object of software code. The agent represents a discrete decision-making unit, and how it makes decisions is by following the rules in its code. In the city centre example, an agent might represent a pedestrian, a cyclist or a car driver. The decisions that these agents make are how to behave in the city centre. The drivers will (mostly) obey traffic laws; the pedestrians will pause for a gap in traffic when crossing a road; the cyclists will follow the bike routes. When they are created, these agents will be given a destination and then set off on their way. The simulation progresses in discrete time steps. At each time step the agents move forward a bit. The rules agents can be incredibly detailed or very sparse. Modellers create agents by programming the decision rules that they follow. One of the most powerful aspects of agent modelling is that in any particular simulation, there can be many different types of agents and each agent can have its own set of rules; alternatively, it can be useful to have one type of agent with only one set of rules.

If you are interested in learning how to program a computer, agent modelling with NetLogo may be a good place to start. The programs are usually very short because they typically consist of tiny blocks of code that are run many thousands of times (every time one of the many agents makes a decision). So even if there are 1,000 agents, you only need to specify the rules that each type of agent follows once; after you’ve done that, then all 1,000 agents have been programmed! Also, NetLego is based on a programming language called Logo, which was created for children to use, so it should be as easy as any language to learn. NetLogo comes with dozens of example simulations that can be studied. One of these is called Paths. Paths is a model about how tracks emerge along commonly travelled routes: paths emerge from routes that many travellers share. People tend to take routes that other travellers have taken before them. You can see this sort of thing in parks where the grass has turned to hard dirt from people repeatedly walking on it. This can be used to determine an ideal set of routes between a set of points of interest without needing a central planner. This has been used on university campuses so that when new buildings are made, paths are initially not created but are left as grass for a time until users of the space have created their own hard dirt tracks. After that happens, the construction crew comes back and fills in those tracks properly with concrete or whatever. To see the simulation in action, download NetLogo from the Northwestern webpage, install and run it, then select File, Models Library, and search for Paths. Don’t worry about any of the options – just click Setup and Go (it can be useful to slow everything down with the Normal Speed slider at the top of the screen, otherwise it all goes very fast). The yellow agents start to move about the screen. Now imagine the green represents your university campus or your city centre. Start to place buildings in it by clicking in the green area. Create at least 20 buildings. The agents should start to create popular paths between the buildings you have placed. Some paths will be used more than

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others. What happens if you create a new building once the paths have settled? If you click on the Code tab at the top of the screen, you will see the entire program used to create the simulation. This probably won’t be very clear but at the same time you might achieve a sense of what it is doing by reading down the code.

Questions 1 How could Paths be changed to study a city centre? (Search NetLogo for its Traffic models for some ideas.)

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2 What advantages does an agent model have over a DSS created with a spreadsheet? 3 What behaviour should agents follow in order to create a model of a fire drill from one of your college buildings? 4 What other situations in a college could agent models be used to simulate?

Reference www.ccl.northwestern.ed/. Accessed 29 May 2020.

Notes 1

Lacroix, Yvan, et al., ‘Bombardier Flexjet Significantly Improves Its Fractional Aircraft Ownership Operations’, Interfaces, January–February, 2005, p. 49. 2 Murty, Katta, et al., ‘Hongkong International Terminals Gains Elastic Capacity’, Interfaces, January–February, 2005, p. 61. 3 Troyer, Loren, et al., ‘Improving Asset Management and Order Fulfillment at Deere’, Interfaces, January–February, 2005, p. 76. 4 Tieto Website. Available from: www.tieto.com. Accessed 29 May 2020. 5 Kapoor, S., et al., ‘A Technical Framework for Sense-and-Respond Business Management’, IBM Systems Journal, Vol. 44, 2005, p. 5. 6 Port, Otis, ‘Desktop Factories’, Business Week, 2 May 2005, p. 22. 7 Shoptech Website. www.shoptech.com/about-us. Accessed 29 May 2020. 8 Wysocki, Bernard, et al., ‘Just-In-Time Inventories Make US Vulnerable in a Pandemic’, The Wall Street Journal, 12 January 2006, p. A1. 9 Richmond, Rita, ‘Blogs Keep Internet Customers Coming Back’, The Wall Street Journal, 1 March 2005, p. B8. 10 Peart, Mark, ‘Service Excellence & CRM’, New Zealand Management, May 2005, p. 68. 11 Forelle, Charles, ‘IBM Tool Deploys Employees Efficiently’, The Wall Street Journal, 14 July 2005, p. B3. 12 Anthes, Gary, ‘Beyond Zip Codes’, Computerworld, 19 September 2005, p. 56. 13 Sabuncuoglu, Ihsan, et al., ‘The Turkish Army Uses Simulation to Model and Optimize Its Fuel-Supply System’, Interfaces, November–December, 2005, p. 474.

Havenstein, Heather, ‘Celtics Turn to Data Analytics Tools for Help Pricing Tickets’, Computerworld, 9 January 2006, p. 43. 15 Havenstein, Heather, ‘Business Intelligence ToolsHelp Nonprofit Group Make Loans to Tsunami Victims’, Computerworld, 14 March 2005, p. 19. 16 Rubenstein, Sarah, ‘Next Step Toward Digitized Health Records’, The Wall Street Journal, 9 May 2005, p. B1. 17 Bhattacharya, K., et al., ‘A Model-Driven Approach to Industrializing Discovery Processes in Pharmaceutical Research’, IBM Systems Journal, Vol. 44, No. 1, 2005, p. 145. 18 Anthes, Gary, ‘Modelling Magic’, Computerworld, 7 February 2005, p. 26. 19 Port, Otis, ‘Simple Solutions’, Business Week, 3 October 2005, p. 24. 20 Mitchell, Robert, ‘Anticipation Game’, Computerworld, 13 June 2005, p. 23. 21 River Logic. ‘Five Decision Support System Examples You Need to Know’. 18 October 2019. www.riverlogic.com/blog/five-decision-supportsystem-examples” www.riverlogic.com/blog/fivedecision-support-system-examples. Accessed 19 June 2020. 22 Aston, Adam, ‘The Worst Isn’t Over’, Business Week, 16 January 2006, p. 29. 23 Babcock, Charles, ‘A New Model for Disasters’, Information Week, 10 October 2005, p. 47. 24 Majchrak, Ann, et al., ‘Perceived Individual Collaboration Know-How Development Through Information Technology-Enabled Contextualization’, Information Systems Research, March 2005, p. 9.

09 Knowledge Management and Specialized Information Systems Principles

Learning Objectives

Knowledge management systems allow organizations to share knowledge and experience among their managers and employees.

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Describe the role of the chief knowledge officer (CKO).

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List some of the tools and techniques used in knowledge management.

Artificial intelligence systems form a broad and diverse set of systems that can replicate human decision making for certain types of well-defined problems.

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Define the term ‘artificial intelligence’ and state the objective of developing artificial intelligence systems.

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List the characteristics of intelligent behaviour and compare the performance of natural and artificial intelligence systems for each of these characteristics.

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Identify the major components of the artificial intelligence field and provide one example of each type of system.

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List the characteristics and basic components of expert systems.

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Identify at least three factors to consider in evaluating the development of an expert system.

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Outline and briefly explain the steps for developing an expert system.

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Identify the benefits associated with the use of expert systems.

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Define the term ‘virtual reality’ and provide three examples of virtual reality applications.

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Discuss examples of specialized systems for organizational and individual use.

Expert systems can enable a novice to perform at the level of an expert, but must be developed and maintained very carefully.

Virtual reality systems can reshape the interface between people and information technology by offering new ways to communicate information, visualize processes and express ideas creatively.

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Why Learn About Knowledge Management and Specialized Information Systems?

Knowledge management systems are used in almost every industry. If you are a manager, you might use a knowledge management s ystem to support decisive action to help you correct a problem. If you are a production manager at a car company, you might oversee robots, a specialized information system, that attach windscreens to cars or paint body panels. As a stock trader, you might use a system called a neural network to uncover patterns and make money trading stocks and stock options. As a marketing manager for a PC manufacturer, you might use virtual reality on a website to show customers your latest laptop and desktop computers. If you are in the military, you might use computer simulation as a training tool to prepare you for combat. In a xpert system to determine where to drill for oil and gas. You will petroleum company, you might use an e see many additional examples of using these information systems throughout this chapter. Learning about these systems will help you discover new ways to use information systems in your day-to-day work.

9.1 Knowledge Management Systems Defining knowledge is difficult. One definition is that knowledge is the awareness and understanding of a set of information and the ways that information can be made useful to support a specific task or reach a decision. Knowing the procedures for ordering more inventory to avoid running out is an example of knowledge. In a sense, information tells you what has to be done (low inventory levels for some items), while knowledge tells you how to do it (make two important phone calls to the right people to get the needed inventory shipped overnight). A knowledge management system (KMS) is an organized collection of people, procedures, software, databases and devices used to create, store, share and use the organization’s knowledge and experience.1

Overview of Knowledge Management Systems 9

Like the other systems discussed throughout this book, KMSs attempt to help organizations achieve their goals. For businesses, this usually means increasing profits or reducing costs. For non-profit organizations, it can mean providing better customer service or providing special needs to people and groups. Many types of firms use KMSs to increase profits or reduce costs. A KMS stores and processes knowledge. This can involve different types of knowledge. Explicit knowledge is objective and can be measured and documented in reports, papers and rules. For example, knowing the best road to take to minimize drive time from home to the office when a major motorway is closed due to an accident is explicit knowledge. It can be documented in a report or a rule, as in ‘If the A453 is closed, take the M1 to junction 25 and from there to the office’. Tacit knowledge, on the other hand, is hard to measure and document and typically is not objective or formalized. Knowing the best way to negotiate with a foreign government about n uclear disarmament or deal with a volatile hostage situation often requires a lifetime of experience and a high level of skill. These are examples of tacit knowledge. It is difficult to write a detailed report or a set of rules that would always work in every hostage situation. Many organizations actively attempt to convert tacit knowledge to explicit knowledge to make the knowledge easier to measure, document and share with others.

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In a well-known Harvard Business Review paper called ‘The Knowledge Creating Company’ (from the November–December, 1991 issue), Ikujiro Nonaka describes four ways in which knowledge can be created: 1 When an individual learns directly from another individual, in an apprentice type relationship, tacit knowledge is created from tacit knowledge. 2 When two pieces of explicit knowledge are combined. For example, a website mash-up couldbe considered an example of this type of new knowledge. (Mash-ups were described in Chapter 6 as the combining of information from two or more web pages into one web page.) 3 When an expert writes a book teaching others, explicit knowledge is being created from tacitknowledge. 4 When someone reads that book and (eventually) becomes an expert themselves, tacit knowledge has been created by explicit knowledge. A diverse set of technologies can help capture, create and share knowledge. Expert systems (this chapter) can be used to share explicit knowledge. Blogs (Chapter 10) can be used to share tacit knowledge. Data mining algorithms (Chapter 5) can be used to discover new knowledge.

Obtaining, Storing, Sharing and Using Knowledge Knowledge workers are people who create, use and disseminate knowledge. They are usually professionals in science, engineering or business, and belong to professional organizations. Other e xamples of knowledge workers include writers, researchers, educators and corporate designers. The chief knowledge officer (CKO) is a top-level executive who chief knowledge officer (CKO) helps the organization work with a KMS to create, store and use knowledge Atop-level executive who helps the organization use a KMS to to achieve organizational goals. The CKO is responsible for the o rganization’s create, store and use knowledge to KMS and typically works with other executives and directors, including the achieve organizational goals. managing director, finance director and others. O btaining, storing, sharing and using knowledge is the key to any KMS.2 Using a KMS often leads to additional knowledge creation, storage, sharing and usage. A meteorologist, for example, might develop sophisticated mathematical models to predict the path and intensity of hurricanes. Business professors often conduct research in marketing strategies, management practices, corporate and individual investments and finance, effective accounting and auditing practices, and much more. Drug companies and medical researchers invest billions of euros in creating knowledge on cures for diseases. Although knowledge workers can act alone, they often work in teams to create or obtain knowledge. After knowledge is created, it is often stored in a ‘knowledge repository’. The knowledge repository can be located both inside and outside the organization. Some types of software can store and share knowledge contained in documents and reports. Adobe Acrobat PDF files, for example, allow you to store corporate reports, tax returns and other documents, and send them to others over the Internet. You can use hardware devices and software to store and share audio and video material.3 Traditional databases and data warehouses, discussed in Chapter 5, are often used to store the organization’s knowledge. Specialized knowledge bases in expert systems, discussed later in the chapter, can also be used. Because knowledge workers often work in groups or teams, they can use collaborative work software and group support systems to share knowledge. Intranets and passwordprotected Internet sites also provide ways to share knowledge. Many universities and colleges use an intranet as a learning management system to distribute class notes, monitor attendance, submit reports and essays, and return marks. A good example is the open-source software Moodle, but alternatives are available. Intoweb in South Africa has developed their College Learner Management System to assist in online distance learning. 4 Because knowledge can

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be critical in maintaining a competitive advantage, businesses should be careful in how they share it. Although they want important decision m akers inside and outside the organization to have complete and easy access to knowledge, they also need to protect knowledge from competitors and others who shouldn’t see it. As a result, many businesses use patents, copyrights, trade s ecrets, Internet firewalls and other measures to keep prying eyes from seeing important knowledge that is often expensive and hard to create. In addition to using information systems and collaborative software tools to share knowledge, some organizations use non-technical approaches. These include corporate retreats and gatherings, sporting events, informal knowledge worker lounges or meeting places, kitchen facilities, day-care centres and comfortable workout centres. Using a knowledge management system begins with locating the organization’s knowledge. This is often done using a knowledge map or directory that points the knowledge worker to the needed knowledge. Drug companies have sophisticated knowledge maps that include database and file s ystems to allow scientists and drug researchers to locate previous medical studies. Lawyers can use powerful online knowledge maps, such as the legal section of Lexis-Nexis, to research legal opinions and the outcomes of previous cases. Medical researchers, university professors and even textbook authors use Lexis-Nexis to locate important knowledge. Organizations often use the Internet or corporate web portals to help their knowledge workers find knowledge stored in documents and reports. The following are examples of profit and non-profit organizations that use knowledge and knowledge management systems. HomeAway rents holiday homes in over 190 countries. They use knowledge management software from Bloomfire to organize information for their customer support employees. The software allows a searchable database of knowledge to be built up over time and kept up to date. Support personnel can query it via a Q&A style interface to quickly assist with customer enquires.5 Scenechronize is a software tool aimed at Hollywood production companies, used to manage scripts and prevent them from being leaked online. Actors and the production team can read their scripts and related notes, but the text disappears as soon as they do. The software was famously used by the Game of Thrones production team and infamously complained about by the actors involved. Scenechronize can also help manage and communicate production schedules. The software can be considered a knowledge management system as it allows knowledge workers to create, manage and share knowledge about a production.6

Technology to Support Knowledge Management KMSs use a number of tools discussed throughout this book. In Chapter 2, for example, we explored the importance of organizational learning and organizational change. An effective KMS is based on learning new knowledge and changing procedures and approaches as a result.7 A manufacturing company, for example, might learn new ways to program robots on the factory floor to improve accuracy and reduce defective parts. The new knowledge will likely cause the manufacturing company to change how it programs and uses its robots. In Chapter 5 on database systems, we investigated the use of data mining and business intelligence. These powerful tools can be important in capturing and using knowledge. Enterprise resource planning tools, such as SAP, include knowledge management features.8 We have also seen how groupware could improve group decision making and collaboration. Groupware can also

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be used to help capture, store and use knowledge. In the next chapter, we will examine more technology thatcould be used to share knowledge. Lastly, of course, hardware, software, databases, telecommunications and the Internet, discussed in Part 2, are important technologies used to support KMSs. Many companies provide specific KM products and services aimed at commercial organizations. In addition, many educators and software developers have created learning support systems to facilitate knowledge management in schools, colleges and universities. Indian software developer Zoho, for example, helps companies share knowledge with their customers. Their Desk software has a ‘self-service portal’ feature which creates a searchable database of product help, which appears to customers as a familiar FAQ list. Desk is designed to be used by customers, not employees. Called Help Centre, Zoho boasts that it provides faster answers to customer queries, a shorter waiting list of customers needing help and happier customers. If desired, access can be limited to premium customers only, to all customers, or it can be given to the general public. The portal can also be customized with the company’s own branding.9 Collective Knowledge is an open source collaborative framework designed to allow users to share knowledge. The knowledge to be shared comes in the form of computer programs called ‘automation tasks’ or actions. The framework makes it easy for others to install and use these programs. Part of what makes this so clever is that the automatic installation process includes detecting and installing all the relevant software, downloading datasets and models (which might be statistical or mathematical models that describe relationships within the data), assembling all of this together and running it. One popular use of Collective Knowledge is in sharing and demonstrating data analyses of scientific data. For instance, a scientist collects data, analyzes it and publishes it in an academic journal. Collective Knowledge can be used to share that data with anyone who wants it along with the analyses that were carried out, in the form of computer programs. The programs, which can be edited, can be run on the data to see exactly what the scientist did and verify it. Anyone can reproduce the work. Often, even the code used to produce a particular figure or diagram is included, as well as code to create the statistical results that were published.10 In addition to these tools, several artificial intelligence systems, discussed next, can be used in a KMS.

9.2 Artificial Intelligence At a Dartmouth College conference in 1956, John McCarthy proposed the use of the term artificial intelligence (AI) to describe computers with the ability to mimic or duplicate the functions of the human brain. Advances in AI have since led to systems that recognize complex patterns.11 Many AI pioneers attended this first conference; a few predicted that computers would be as ‘smart’ as people by the 1960s. This prediction has not yet been realized and there is a debate about whether it actually ever could be; however, the benefits of AI in business and research can be seen today, and the research continues. artificial intelligence systems Artificial intelligence systems include the people, procedures, hardware, People, procedures, hardware, software, data and knowledge needed to develop computer systems and software, data and knowledge needed to develop computer machines that demonstrate characteristics of intelligence. Researchers, scientists systems and machines that and experts on how human beings think are often involved in developing these demonstrate characteristics of intelligence. systems.

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Milestones in Artificial Intelligence Many major milestones in artificial intelligence have been passed. This trend is likely to increase.

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Milestones in

Artificial intelligence I type what you say

ELIZA chatbot

Chess game between IBM Deep Blue and Garry Kasparov

Speech recognition software

Self driving cars

1966

1997

1995

2018

The Nature of Intelligence intelligent behaviour The ability to learn from experiences and apply knowledge acquired from experience, handle complex situations, solve problems when important information is missing, determine what is important, react quickly and correctly to a new situation, understand visual images, process and manipulate symbols, be creative and imaginative, and use heuristics.

From the early AI pioneering stage, the research emphasis has been on d eveloping machines with intelligent behaviour. Machine intelligence, however, is hard to achieve. Some of the specific characteristics of intelligent behaviour include the ability to do the following: ■ Learn

from experience and apply the knowledge acquired from experience. Learning from past situations and events is a key component of intelligent behaviour and is a natural ability of humans, who learn by trial and error. This ability, however, must be carefully programmed into a computer system. Today, researchers are developing systems that can learn from experience. In 2019, a poker-playing AI program called Pluribus beat five professional human poker players in a game of ‘no-limit Texas hold ’em poker’. It was the first time that an AI has beaten elite human players at a game that has more than two players. The move from two-player games – where there is often a clear winning strategy, even if it is difficult to find, as in chess – to multiplayer games increases the complexity of the task as there are competing interests and no clear win–lose conditions.12, 13

■

Handle complex situations. People are often involved in complex situations. World leaders face difficult political decisions regarding terrorism, conflict, global economic conditions, hunger and poverty. In a business setting, top-level managers and executives must handle a complex market, challenging competitors, intricate government regulations and a demanding workforce. Even human experts make mistakes in dealing with these situations. Developing computer systems that can handle perplexing situations requires careful planning and elaborate computer programming.

■

Solve problems when important information is missing. The essence of decision making is dealing with uncertainty. Often, decisions must be made with too little information or inaccurate information because obtaining complete information is too costly or even impossible. Today, AI systems can make important calculations, comparisons and decisions even when information is missing.

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Determine what is important. Knowing what is truly important is the mark of a good decision maker. Developing programs and approaches to allow computer systems and machines to identify important information is not a simple task. React quickly and correctly to a new situation. A small child, for example, can look over a ledge or a drop-off and know not to venture too close. The child reacts quickly and correctly to a new situation. Computers, on the other hand, do not have this ability without complex programming. Understand visual images. Interpreting visual images can be extremely difficult, even for sophisticated computers. Moving through a room of chairs, tables and other objects can betrivial for people but extremely complex for machines, robots and computers. Such machines require an extension of understanding visual images, called perceptive system A system that a perceptive system. Having a perceptive system allows a machine to approximates the way a person approximate the way a person sees, hears and feels objects. Military sees, hears and feels objects. robots, for example, use cameras and perceptive systems to conduct reconnaissance missions to detect enemy weapons and soldiers. Detecting and destroying them can save lives. Process and manipulate symbols. People see, manipulate and process symbols every day. Visual images provide a constant stream of information to our brains. By contrast, computers have difficulty handling symbolic processing and reasoning. Although computers excel at numerical calculations, they aren’t as good at dealing with symbols and 3D objects. Recent developments in machine-vision hardware and software, however, allow some computers to process and manipulate symbols on a limited basis. Be creative and imaginative. Throughout history, people have turned difficult situations into advantages by being creative and imaginative. For instance, when defective mints with holes in the middle were shipped, an enterprising entrepreneur decided to market these new mints as ‘LifeSavers’ instead of returning them to the manufacturer. Icecream cones were invented at the St Louis World’s Fair when an imaginative store owner decided to wrap ice cream with a waffle from his grill for portability. Developing new and exciting products and services from an existing (perhaps negative) situation is a human characteristic. Computers cannot be imaginative or creative in this way, although software has been developed to enable a computer to write short stories. Use heuristics. For some decisions, people use heuristics (rules of thumb arising from experience) or even guesses. In searching for a job, you might rank the companies you are considering according to profits per employee. Today, some computer systems, given the right programs, obtain good solutions that use approximations instead of trying to search for an optimal solution, which would be technically difficult or too time consuming.

This list of traits only partially defines intelligence. Unlike the terminology used in virtually every other field of IS research in which the objectives can be clearly defined, the term ‘intelligence’ is a formidable stumbling block. One of the problems in AI is arriving at a working definition of real intelligence against which to compare the performance of an AI system.

The Difference Between Natural and Artificial Intelligence Since the term ‘artificial intelligence’ was defined in the 1950s, experts have disagreed about thedifference between natural and artificial intelligence. Can computers be programmed to have common sense? Profound differences separate natural from artificial intelligence, but they are declining in number (see Table 9.1). One of the driving forces behind AI research is an a ttempt to understand how people actually reason and think. Creating machines that can reason is possible only when we truly understand our own processes for doing so.

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Table 9.1 A Comparison of Natural and Artificial Intelligence Natural Intelligence (Human) Ability to

Low

Artificial Intelligence (Machine)

High

Low

High

Use sensors (see hear, touch, smell)

√

Be creative and imaginative

√

Learn from experience

√

Adapt to new situations

√

Afford the cost of acquiring intelligence

√

Acquire a large amount of external information

√

Use a variety of information sources

√

Make complex calculations

√

Transfer information

√

Make a series of calculations rapidly and accurately

√

Information Systems @ Work Playing with Atoms

ScienceAtHome, based at Aarhus University in Denmark, creates fun games with the aim of revolutionizing scientific research and teaching through game-play. The team includes scientists, game developers, designers and visual artists. One of their games, Quantum Moves, aims to help build a working quantum computer. Quantum computers have been mentioned before in this text (see the Information Systems @ Work case in Chapter 5). They attempt to use the strange behaviour of small particles (photons or electrons) to compute. In a quantum computer, a single atom is used in place of a single bit (it’s called a qubit for quantum binary digit). A bit can take on a value of 1 or 0; an atom acting as a bit can take on a value of 1 and 0 at the same time. This means that long complex calculations can be represented with far fewer ‘bits’ as all possible values are processed simultaneously.

One problem is that atoms are very excited and move about a lot, which makes them hard to handle. To slow them down, they are cooled to extreme temperatures and then trapped by shining a laser on them. According to ScienceAtHome, this is like an egg tray of atoms. To perform calculations, the atoms must interact. They are moved in the egg tray by devices called optical tweezers which manipulate the laser that has trapped the atom. The problem is that no one knows how best to move the atoms. That’s where the game comes in. Players manipulate the tweezers and a simulated atom reacts based on accurate quantum mechanics calculated by the game engine. ‘Why not gamify these complicated problems and ask players all around the world to help us?’ asks physicist Jacob Sherson. Soon after its release, almost 2,000 players were tackling Quantum Moves and generating

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a lot of data for ScienceAtHome. The player base is extremely diverse – for instance, two top players are a female accountant and a male taxi driver. Each time the game is played, one atom trajectory is created. They already have over 300,000. ‘What’s more’, says ScienceAtHome, ‘player data showed exactly what Jacob’s first idea hinted at. Humans can solve the quantum problem more efficiently than computers!’ You can see the current leaderboard and play the game at: www. scienceathome.org/games/quantum-moves-2/ about-quantum-moves-2/. ScienceAtHome has also contributed to social science. In 2016 this leaderboard broke down, just as nearly 5,000 new players joined after the publication of a high profile paper on Quantum Moves was published. For a time there was no leaderboard, then an all-time top 5 leaderboard, and then a personal leaderboard showing individual players how they were ranked in the entire community of players. The impact of this on gamer behaviour was studied by social scientists at Aarhus University. It was previously believed that a leaderboard creates more competitive behaviour and enhanced gamer performance, but the results of this study did not support this.

Questions 1 What do you think would motivate someone to play a ScienceAtHome game? 2 What are the benefits of ScienceAtHome for the research team? 3 Are there any business problems that could be gamified? To start the ideas off, could routing passengers through an airport be a possibility? 4 If quantum computers are going to be as powerful as scientists predict, should governments intervene now to control their development?

References Science At Home website. www.scienceathome. org/about-us. Accessed 11 June 2020. Lieberoth, A. et al., 2014. ‘Getting Humans to do Quantum Optimization: User Acquisition, Engagement and Early Results from the Citizen Cyberscience Game Quantum Moves’. Human Computation, Vol. 1, Issue 2, pp. 221–246. Pedersen, M. et al., 2017. ‘Leaderboard Effects on Player Performance in a Citizen Science Game’. Available from: arxiv.org/abs/1707.03704. Accessed 11 June 2020.

The Major Branches of Artificial Intelligence AI is a broad field that includes several specialty areas, such as expert systems, robotics, vision systems, natural language processing, learning systems and neural networks. Many of these areas are related; advances in one can occur simultaneously with, or result in, advances in others.

Expert Systems

An expert system consists of hardware and software that stores knowledge and makes inferences, similar to those of a human expert. Because of their many business applications, expert systems are discussed in more detail in their own section later in this chapter.

Robotics

expert system Hardware and software that stores knowledge and makes inferences, similar to ahuman expert.

Robotics involves developing mechanical or computer devices that can robotics Mechanical or computer paint cars, make precision welds and perform other tasks that require a high devices that perform tasks requiring a high degree of degree of precision or that are tedious or hazardous for human beings. Some precision or that are tedious or robots are mechanical devices that don’t use the AI features discussed in this hazardous for humans. chapter. Others are sophisticated systems that use one or more AI features or characteristics, such as the vision systems, learning systems or neural networks, discussed later in the chapter. For many businesses, robots are used to do the ‘three Ds’ – dull, dirty and dangerous jobs.14, 15 Manufacturers use robots to assemble and paint products. The NASA shuttle crash of the early 2000s, for example, has led some people to recommend using robots instead of people to explore space and perform scientific research (see Figure 9.1). Some

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robots, such as Sony’s Aibo, can be used for companionship. Contemporary robotics combine both high-precision machine capabilities and sophisticated controlling software. The controlling software in robots is what is most important in terms of AI.

Figure 9.1 Robots in Space Madrid, Spain, 28 August 2019: Scale reproduction of the ESA ExoMars Rover, Mars Exploration Robot.

The field of robotics has many applications, and research into these unique devices continues. The following are a few examples: ■

IRobot is a company that builds a number of robots, including the Roomba Floorvac for cleaning floors and the PackBot, an unmanned vehicle used to assist and protect soldiers.16

■

The Porter Adventist Hospital in Denver, Colorado, uses a €67,959 Da Vinci Surgical System to perform surgery on prostate cancer patients.17 The robot has multiple arms thathold surgical tools. According to one doctor at Porter, ‘The biggest advantage is it improves recovery time. Instead of having an eight-inch incision, the patient has a “bandaid” incision. It’s much quicker’.

■

DARPA (the Defence Advanced Research Project Agency) sponsors the DARPA Grand Challenge, a 212 km (132 mile) race over rugged terrain for computercontrolled cars.18

■

Because of an age limit on camel jockeys, the state of Qatar decided to use robots in its camel races.19 Developed in Switzerland, the robots have a human shape and only weigh 27kg (59 lb). The robots use global positioning systems (GPS), a microphone to deliver voice commands to the camel and cameras. A camel trainer uses a joystick to control the robot’s movements on the camel. Camel racing is very popular in Qatar.

■

In military applications, robots are becoming real weapons. The US Air Force is developing a smart robotic jet fighter. Often called ‘unmanned combat air vehicles’ (UCAVs), these robotic war machines, such as the X-45A, will be able to identify and destroy targets without human pilots. UCAVs send pictures and information to a central command centre and can be directed to strike military targets. These new machines extend the current Predator and Global Hawk technologies the military used in Afghanistan after the 11 September 2001 terrorist attacks.20

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■

Disney Imagineering has created stunt robots that can be flung into the air, twist and turn in exciting ways (similar to how computer generated characters move in Disney movies) and land at speeds faster than any human could survive. The plan is to use them in Disney parks’ live shows.21

■

Boston Dynamics is at the cutting edge of robotics. Their robot dog, available in a range of sizes, can climb stairs, navigate rough terrain and can be used for exploration.22

Although robots are essential components of today’s automated manufacturing and military systems, future robots will find wider applications in banks, restaurants, homes, doctors’ offices and hazardous working environments such as nuclear stations. The Repliee Q1 and Q2 robots from Japan are ultra-humanlike robots or androids that can blink, gesture, speak and even appearto breathe.23 Microrobotics is a developing area. Also called micro-electro-mechanical systems (MEMSs), microrobots are the size of a grain of salt 24, 25 and can be used in a p erson’s blood to monitor the body, and for other purposes in air bags, mobile phones, refrigerators and more. If you would like to try to make a robot, LEGO Mindstorms is a good place to start (Figure 9.2).

Figure 9.2 Lego Mindstorms This LEGO kit contains programmable bricks, motors and sensors so that users can build their own robots. The robot can be programmed in a range of languages, including Java and Visual Basic, as well as LEGO’s own easy to use graphical environment.

Vision Systems

Another area of AI involves vision systems. Vision systems include hardware vision systems The hardware and and software that permit computers to capture, store and manipulate visual software that permit computers to capture, store and manipulate images. visual images. For example, vision systems can be used with robots to give these machines ‘sight’. Factory robots typically perform mechanical tasks with no visual stimuli. Robotic vision extends the capability of these systems, allowing the robot to make decisions based on visual input. Generally, robots with vision systems can recognize black and white and some grey shades but do not have good colour or 3D vision. Other systems concentrate on only a few key features in an image, ignoring the rest. Another potential application of a vision system is fingerprint analysis. Even with recent breakthroughs in vision systems, computers cannot see and understand visual images the way people can.

Natural Language Processing and Voice Recognition

As discussed in Chapter 4, natural language processing allows a computer to understand and react to statements and commands made in a ‘natural’ language, such as English. In some cases, voice recognition is used with natural language processing. Voice recognition involves converting sound waves into

natural language processing Processing that allows the computer to understand and react to statements and commands made ina ‘natural’ language, such as English.

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words. Dragon Systems’ Naturally Speaking uses continuous voice recognition, or natural speech, allowing the user to input data into the computer by speaking at a normal pace without pausing between words. The spoken words are transcribed immediately onto the computer screen. After converting sounds intowords, natural language processing systems can be used to react to the words or commands by performing a variety of tasks. Brokerage services are a perfect fit for voice-recognition and natural language processing technology to replace the existing ‘press 1 to buy or sell shares’ touchpad telephone menu system. People buying and selling use a vocabulary too varied for easy access through menus and touchpads, but still small enough for software to process in real time. Several brokerages – including Charles Schwab & Company, Fidelity Investments, DLJdirect and TD Waterhouse Group – offer these services. These systems use voice recognition and natural language processing to let customers access pension accounts, check balances and find stock quotes. Eventually, the technology may allow people to make transactions using voice commands over the phone and to use search engines to have their questions a nswered through the brokerage firm’s call centre. One of the big advantages isthat the number of calls routed to the customer service department drops considerably after new voice features are added. That is desirable to brokerages because it helps them staff their call centres correctly – even in volatile markets. Whereas a typical person uses a vocabulary of about 20,000 words or less, voice-recognition software can have a built-in vocabulary of 85,000 words. Some companies claim that voice-recognition and natural language processing software is so good that customers forget they are talking to a computer and start discussing the weather or sports results. Google Duplex is a Google project that pulls together many technologies, one of which is natural language processing. Duplex allows Google computers to call and talk to businesses, acting as a personal assistant to a user. It can be used to book a hair appointment or reserve a table for lunch. The system might even have called you! Duplex regularly passes the famous Turing test, as the employee who answers the phone rarely realizes they are speaking to a computer. To do this it uses tricks such as saying ‘erm’ down the phone if there are any time lags in its processing.26 Another form of natural language processing involves reading text rather than understanding speech. The author Carl Malamud has assembled a huge store of scientific articles that are usually hidden behind publisher paywalls, and plans to make them available for scientists to ‘mine’ for new insights. At no time can the scientists themselves read or download the papers (which would break copyright law) but instead a computer bot can scan the text, develop an understanding from it, and suggest knowledge gaps or other research avenues.27

Learning Systems

Another part of AI deals with learning systems, a combination of software and hardware that allows a computer to change how it functions or reacts to situations based on feedback it receives. For example, some computerized games have learning abilities. If the computer does not win a game, it remembers not to make the same moves under the same conditions again. Tom Mitchell, director of theCenter for Automated Learning and Discovery at Carnegie Mellon University, is experimenting with two learning software packages that help each other learn.28 He believes that two learning software packages that cooperate are better than separate learning packages. Mitchell’s learning software helps Internet search engines do a b etter job of finding information. Learning systems software requires feedback on the results of actions or decisions. As a minimum, the feedback needs to indicate whether the results are d esirable (winning a game) or undesirable (losing a game). The feedback is then used to alter what the system will do in the future.

learning systems A combination of software and hardware that allows the computer to change how it functions or reacts to situations based on feedback it receives.

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An increasingly important aspect of AI involves neural networks, also neural networks A computer called ‘neural nets’. A neural network is a computer system that can act like system that attempts to simulate the functioning of a human brain. or simulate the functioning of a human brain. The systems use massive parallel processors in an architecture that is based on the human brain’s own mesh-like structure. In addition, neural network software simulates a neural network using standard computers. Neural networks can process many pieces of data at the same time and learn to recognize patterns. Some of the specific abilities of neural networks include discovering relationships and trends in large databases, and solving complex problems for which all the information is not present. A particular skill of neural nets is analyzing detailed trends. Large amusement parks and banks use neural networks to determine staffing needs based on customer traffic – a task that requires precise analysis, down to the half-hour. Increasingly, businesses are using neural nets to help them navigate ever-thicker forests of data and make sense of myriad customer traits and buying habits. One application, for example, would be to track the habits of insurance customers and predict which ones will not renew a policy. Staff could then suggest to an insurance agent what changes to make in the policy to persuade the consumer to renew it. Some pattern-recognition software uses neural networks to analyze hundreds of millions of bank, brokerage and insurance accounts involving a trillion euros to uncover money laundering and other suspicious money transfers.

Other Artificial Intelligence Applications A few other artificial intelligence applications exist in addition to those just discussed. A genetic algorithm, also called a genetic program, is an genetic algorithm An approach to approach to solving large, complex problems in which many repeated solving large, complex problems operations or models change and evolve until the best one emerges. The first in which a number of related operations or models change and step is to change or vary competing solutions to the problem. This can be evolve until the best one emerges. done by changing the parts of aprogram or by combining different program segments into a new program. The second step is to select only the best models or algorithms, which continue to evolve. Programs or program segments that are not as good as others are discarded, similar to natural selection or ‘survival of the fittest’, in which only the best species survive. This process of variation and natural selection continues until the g enetic algorithm yields the best possible solution to the original problem. For example, some investment firms use genetic algorithms to help select the best stocks or bonds. Genetic algorithms are also used in computer science and mathematics. Genetic algorithms can help companies determine which orders to accept for maximum profit. This approach helps companies select the orders that will increase profits and take full advantage of the company’s production facilities. Genetic algorithms are also being used to make better decisions in developing inputs to neural networks. An intelligent agent (also called an ‘intelligent robot’ or ‘bot’) consists of intelligent agent Programs and a programs and a knowledge base used to perform a specific task for a person, knowledge base used to perform a specific task for a person, a a process or another program. Like a sports agent who searches for the best process or another program; also sponsorship deals for a top athlete, an intelligent agent often searches to find called intelligent robot or bot. the best price, schedule or solution to a problem. The programs used by an intelligent agent can search large amounts of data as the knowledge base refines the search or accommodates user preferences. Often used to search the vast resources of the Internet, intelligent agents can help people find information on an important topic or the best price for a new digital camera. Intelligent agents can also be used to make travel arrangements, monitor incoming email for viruses or junk mail, and coordinate meetings and schedules of busy executives. In the human resources field, intelligent agents help with online training. The software can look ahead in training materials and know what to start next.

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Ethical and Societal Issues Augmented Reality’s Killer App

Very often, when a new technology appears, a few pioneers will experiment with it, creating different product ideas to see if any of them take off. The one that does gets to introduce the technology to the general public, and often – for a time at least – use of it really explodes. Sometimes this is called the technology’s ‘killer app’. In the next chapter we will see that wearable computing is still waiting for its killer app. If and when it arrives, you will see wearables everywhere, almost overnight. For a long time, augmented reality awaited its killer app. It may just have arrived. Augmented reality is the integration of digital information alongside the user’s real environment, in real time. In other words, digital glasses overlay virtual content on top of whatever the user is looking at in the real world. (Augmented reality doesn’t have to be visual, but so far that’s all that has really been explored.) Unlike virtual reality, which creates a totally artificial environment, augmented reality mixes real and virtual content. A typical example is displaying navigational directions through an eyetap (a tiny computer screen that you wear on one eye like half a pair of glasses). Then when the user walks along, they can see reality through one eye and the directions through the other. A more sophisticated version would display a line that the wearer could follow rather than instructions in text. The line would adjust as the wearer moved their head so that it always appeared on the ground where the person needs to walk. Something similar is available for cars where the route is displayed on the windscreen. The driver can see reality (the road) and the route at the same time, with the route overlaid on top of the road. There have been other ideas. For example, copyrights and other information on artworks that are visible only to electronic cameras have been suggested (that way if someone photographs your painting, the copyright notice appears in the photo), as has displaying information to engineers about parts of a complex machine that is being repaired.

In summer 2016, a new mobile app appeared that brought augmented reality to masses of game players. Pokémon Go mixes the characters of Pokémon with the real world, encouraging players to get out and about to capture the virtual creatures. The Pokémon appear as augmented reality – they are overlaid on the image captured by the players’ smartphone/tablet cameras. The Pokémon website advises players to ‘get on your feet and step outside to find and catch wild Pokémon. Explore cities and towns around where you live and even around the globe to capture as many Pokémon as you can. As you move around, your smartphone will vibrate to let you know you’re near a Pokémon. Once you’ve encountered a Pokémon, take aim on your smartphone’s touch screen and throw a Poké Ball to catch it. Be careful when you try to catch it, or it might run away! Also look for PokéStops located at interesting places, such as public art installations, historical markers, and monuments, where you can collect more Poké Balls and other items’. For a time at least, Pokémon Go was a massive success, with many players becoming almost addicted to the game overnight. However, some players took it too far. Users have been involved in car accidents while playing the game, wandered into traffic and been robbed. The game has led players to some strange places too, including cemeteries and strip clubs. Two men fell off a cliff in San Diego while trying to catch a Pokémon. Both ended up in hospital. Turkey and Israel have both warned players of the dangers of too much sun exposure while playing, and in Bosnia, a nongovernmental agency warned citizens in a Facebook post of the dangers of playing the game in dangerous areas, citing the risk of wandering onto old landmines that have existed since the 1992 Bosnian War. Nineteen-year-old Shayla Wiggins from Wyoming was trying to find a Pokémon in a well but instead found a man’s corpse. ‘I was walking towards the bridge along the shore when I saw something in the water’, she told County 10 News. ‘I had to take a second look and I realized it was a body.’

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Questions 1 Could the app developers have been more socially responsible about sending users out into the real world? 2 Is this game popular because it involves going outside, or is it just because it’s Pokémon? What else might explain its success? 3 What other applications can you think of for augmented reality? 4 This app involves getting out and about around the world. What data could users pick up along the way that might help with traffic planning or nature conservation?

References www.whatis.techtarget.com/definition/augmentedreality-AR. Accessed 1 June 2020.

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Pokemon website. www.pokemon.com/uk/ pokemon-video-games/pokemon-go/. Accessed 11 June 2020. Serhan, Y. 2016. The Health Risks of Pokémon Go. The Atlantic. Available from: www.theatlantic. com/news/archive/2016/07/pokemon-go-healthwarning/492899/. Accessed 11 June 2020. www.bbc.co.uk/newsbeat/article/36757858/ pokemon-go-player-finds-dead-body-inwyoming-river-while-searching-for-a-pokestop. Accessed 1 June 2020. Hernandez, D. 2016. ‘Pokemon Go’ players fall off 90-foot ocean bluff. The San Diego Union-Tribue. Available from: www. sandiegouniontribune.com/news/crime-courtsfire/sdut-pokemon-go-encinitas-cliff-fall2016jul13-story.html. Accessed 11 June 2020.

9.3 Expert Systems An expert system outputs a recommendation based on answers given to it by users (who are not e xperts in the field). The intention of the system is to capture the expert’s knowledge and make it available to those who lack this knowledge. Expert systems have been developed to diagnose medical conditions, resolve engineering problems and solve energy problems. They have also been used to design new products and systems, develop innovative insurance products, determine the best use of timber and increase the quality of healthcare. Like human experts, expert systems use heuristics, or rules of thumb, to arrive at conclusions or make suggestions. Theresearch conducted in AI since the mid-1990s is resulting in expert systems that explore new business possibilities, increase overall profitability, reduce costs and provide superior service to customers and clients.

When to Use Expert Systems Sophisticated expert systems can be difficult, expensive and time consuming to develop. The following is a list of factors that normally make expert systems worth the expenditure of time and money. Develop an expert system if it can do any of the following: ■

Provide a high potential payoff or significantly reduce downside risk.

■

Capture and preserve irreplaceable human expertise.

■

Solve a problem that is not easily solved using traditional programming techniques.

■

Develop a system which is more consistent than human experts.

■

Provide expertise needed at a number of locations at the same time or in a hostile environment that is dangerous to human health.

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Provide expertise that is expensive or rare.

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Develop a solution faster than human experts can.

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Provide expertise needed for training and development to share the wisdom and experience of human experts with many people.

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Components of Expert Systems An expert system consists of a collection of integrated and related components, including a knowledge base, an inference engine, an explanation facility, a knowledge base acquisition facility and a user interface. A diagram of a typical expert system is shown in Figure 9.3.

Figure 9.3 Components of an Expert System

Explanation facility

Knowledge base

Inference engine

User interface

Knowledge base acquisition facility

Experts

User

The Knowledge Base

The knowledge base stores all relevant information, data, rules, cases and relationships that the expert system uses. A knowledge base is a natural e xtension of a database (presented in Chapter 5) and an information and decision support system (presented in Chapter 8). A knowledge base must be developed for each unique application. For example, a medical expert system contains facts about diseases and symptoms. The following are some tools and techniques that can be used to create a knowledge base.

knowledge base A component of an expert system that stores all relevant information, data, rules, cases and relationships used by the expert system.

■

Assembling human experts. One challenge in developing a knowledge base is to assemble the knowledge of multiple human experts. Typically, the objective in building a knowledge base is to integrate the knowledge of people with similar expertise (for example, many doctors might contribute to a medical diagnostics knowledge base).

■

Fuzzy logic. Another challenge for expert system designers and developers is capturing knowledge and relationships that are not precise or exact. Instead of the yes/no, or true/ false conditions of typical computer decisions, fuzzy logic allows shades of grey, or what are known as ‘fuzzy sets’. Fuzzy logic rules help computers evaluate the imperfect or imprecise conditions they encounter and make educated guesses based on the probability of correctness of the decision.

■ Rules.

A rule is a conditional statement that links conditions to actions or outcomes. In many instances, these rules are stored as IF-THEN statements, such as ‘IF a certain set of network conditions exists, THEN a certain network problem diagnosis is appropriate’. In an expert system for a weather forecasting

IF-THEN statements Rules that suggest certain conclusions.

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operation, for example, the rules could state that if certain temperature patterns exist with a given barometric pressure and certain previous weather patterns over the last 24 hours, then a specific forecast will be made, including temperatures, cloud coverage and wind-chill factor. Figure 9.4 shows how to use expert system rules in determining whether a person should receive a mortgage loan from a bank. These rules can be placed in almost any standard program language discussed in Chapter 4 using ‘IF‑THEN’ statements or into special expert systems shells, discussed later in the chapter. In general, as the number of rules that an expert system knows increases, theprecision of the expert system also increases. ■

Cases. An expert system can use cases in developing a solution to a current problem or situation. This process involves (1) finding cases stored in the knowledge base that are similar to the problem or situation at hand, and (2) modifying the solutions to the cases to fit or accommodate the current problem or situation.

Mortgage application for loans from €100,000 to €200,000

Figure 9.4 Rules for a Credit Application

If there are no previous credit problems and If monthly net income is greater than 4 times monthly loan payment and If deposit is 15% of the total value of the property and If net assets of borrower are greater than €25,000 and If employment is greater than three years at the same company

Then accept loan application

9 Otherwise check other credit rules

The Inference Engine

The overall purpose of an inference engine is to seek information and relationships from the knowledge base and to provide answers, predictions and suggestions the way a human expert would. In other words, the inference engine is the component that delivers the expert advice. To provide answers and give advice, expert systems can use backward and forward chaining. Backward chaining is the process of starting with conclusions and working backwards to the supporting facts. If the facts do not support the conclusion, another conclusion is selected and tested. This process is continued until the

inference engine Part of the expert system that seeks information and relationships from the knowledge base and provides answers, predictions and suggestions the way a human expert would. backward chaining The process ofstarting with conclusions andworking backwards to the supporting facts.

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correct conclusion is identified. Forward chaining starts with the facts and works forwards to the conclusions. Consider the expert system that forecasts future sales for a product. Forward chaining starts with a fact such as ‘The demand for the product last month was 20,000 units’. With the forward-chaining approach, the expert system searches for rules that contain a reference to product demand. For example, ‘IF product demand is over 15,000 units, THEN check the demand for competing products’. As a result of this process, the expert system might use information on the d emand for competitive products. Next, after searching additional rules, the expert system might use information on personal income or national inflation rates. This process continues until the expert system can reach a conclusion using the data supplied by the user and the rules that apply in the knowledge base.

forward chaining The process of starting with the facts and working forwards to the conclusions.

The Explanation Facility

An important part of an expert system is the explanation facility, which a llows a user or decision maker to understand how the expert system arrived at certain conclusions or results. A medical expert system, for example, might reach the ertain symptoms conclusion that a patient has a defective heart valve given c and the results of tests on the patient. The explanation facility a llows a doctor to find out the logic or rationale of the diagnosis made by the expert system. The expert system, using the explanation facility, can indicate all the facts and rules that were used in reaching the conclusion. This facility allows doctors to determine whether the expert system is processing the data and information correctly and logically.

explanation facility Component of an expert system that allows a user or decision maker to understand how the expert system arrived at certain conclusions orresults.

The Knowledge Acquisition Facility

A difficult task in developing an expert system is the process of creating and updating the knowledge base. In the past, when more traditional programming languages were used, developing a knowledge base was tedious and time consuming. Each fact, relationship and rule had to be programmed into the knowledge base. In most cases, an experienced programmer had to create and update the knowledge base. Today, specialized software allows users and decision makers to create and modify their own knowledge bases through the knowledge acquisition facility. knowledge acquisition facility Part of the expert system that The purpose of the knowledge acquisition facility is to provide a convenient provides convenient and efficient and efficient means for capturing and storing all components of the knowledge means of capturing and storing all base. Knowledge acquisition software can present users and decision the components of the knowledge makers with easy-to-use menus. After entering the appropriate attributes, the base. knowledge acquisition facility correctly stores information and relationships in the knowledge base, making the knowledge base easier and less expensive to set up and maintain. Knowledge acquisition can be a manual process or a mixture of manual and automated procedures. Regardless of how the knowledge is a cquired, the knowledge base must be validated and updated frequently to make sure that it is still a ccurate.

The User Interface Specialized user interface software is employed for designing, creating, updating and using expert systems. The main purpose of the user interface is to make an expert system easier for users and decision makers to develop and use. At one time, skilled computer personnel created and operated most expert systems; today, the user interface permits decision makers to develop and use their own expert systems. Because expert systems place more emphasis on directing user activities than do other types of systems, text-oriented user interfaces (using menus, forms and scripts) might be more common in expert systems than the graphical interfaces often used with DSS. Atypical user interface between a user and the expert system for a credit application is as follows:

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Expert System: Are there any previous credit problems? User: No. Expert System: Is the applicant’s net income greater than four times the monthly loan payment? User: Yes. Expert System: Is the deposit greater than 15 per cent of the property value? User: Yes. Expert System: Are the net assets of the borrower greater than €25,000? User: Yes. Expert System: Has the borrower worked more than three years at the same company? User: Yes. Expert System: Accept the loan application.

Expert Systems Development Like other computer systems, expert systems require a systematic development approach for best results. This approach includes determining the requirements for the expert system, identifying one or more experts in the area or discipline under investigation, constructing the components of the expert system, implementing the results, and maintaining and reviewing the complete system.

Participants in Developing and Using Expert Systems Because of the time and effort involved in the task, an expert system is developed to address only a specific area of knowledge. This area of knowledge iscalled the domain. The domain expert is the person or group with the expertise or knowledge the expert system is trying to capture. The domain expert (individual or group) can usually do the following: ■ Recognize ■ Develop

the real problem.

a general framework for problem solving.

■

Formulate theories about the situation.

■

Develop and use general rules to solve a problem.

■

Know when to break the rules or general principles.

■

Solve problems quickly and efficiently.

■

Learn from experience.

■ Know

domain The area of knowledge addressed by the expert system. domain expert The individual or group who has the expertise or knowledge one is trying to capture in the expert system.

what is and is not important in solving a problem.

■ Explain

the situation and solutions of problems to others.

A knowledge engineer is a person who has training or experience in the design, development, implementation and maintenance of an expert system, including training or experience with expert system shells. The knowledge user is the person or group who uses and benefits from the expert system. Knowledge users do not need any previous training in computers or expert systems.

Expert Systems Development Tools and Techniques

knowledge engineer A person who has training or experience inthe design, development, implementation and maintenance of an expert system. knowledge user The person or group that uses and benefits from the expert system.

Theoretically, expert systems can be developed from any programming language. Since the introduction of computer systems, programming languages have b ecome easier to use, more powerful and increasingly able to handle specialized requirements. In the early days of expert systems development, traditional high-level languages, including Pascal, FORTRAN and COBOL, were used (see Figure 9.5). LISP was one of the first special languages developed and used for e xpert system a pplications. PROLOG was also d eveloped to build expert systems. Since the 1990s, however, other expert system products (such as shells) have become available that remove the burden of programming, allowing non-programmers to develop and benefit from the use of expert systems.

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An expert system shell is a collection of software packages and tools used to design, evelop, implement and maintain expert systems. Expert system shells are available for d both personal computers and mainframe systems. Some shells are inexpensive, costing less than €400. In a ddition, off-the-shelf expert system shells are complete and ready to run. The user enters the appropriate data or parameters, and the expert system provides output to the problem or situation. Some expert system products can analyze LAN networks, monitor air quality in commercial buildings, and evaluate oil and drilling operations. Table 9.2 lists a few expert system products.

Figure 9.5 Expert

High

Systems Development

Ease of use

Expert systems shells

Special programming languages

Traditional programming languages Low Before 1980

1980s

1990s and beyond

Table 9.2 Popular Expert System Products 9

Name of Product

Application and Capabilities

Financial Adviser Analyzes financial investments in new equipment, facilities and the like; requests the appropriate data and performs a complete financial analysis G2 Assists in oil and gas operations. Transco, a British company, uses it to help in the transport of gas to more than 20 million commercial and domestic customers HazMat Loader

Analyzes hazardous materials in truck shipments

LSI Indicator Helps determine property values; developed by one of the largest residential title and closing companies MindWizard Enables development of compact expert systems ranging from simple models that incorporate business decision rules to highly sophisticated models; PC-based and inexpensive RAMPART Analyzes risk. The US General Services Administration uses it to analyze risk to the approximately 8,000 federal buildings it manages

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Applications of Expert Systems and Artificial Intelligence Expert systems and artificial intelligence have wide applications in business and government. Alist of applications, some of which have already been mentioned, is given next: ■

Credit granting and loan analysis. Many banks employ expert systems to review a customer’s credit application and credit history data from credit bureaus to make a decision on whether to grant a loan or approve a transaction.

■

Stock picking. Some expert systems help investment professionals pick stocks and other investments.

■

Catching cheats and terrorists. Some gambling casinos use expert system software to catch cheats. The CIA is testing the software to see whether it can detect possible terrorists when they make hotel or airline reservations.

■

Budgeting. Car companies can use expert systems to help budget, plan and coordinate prototype testing programs to save hundreds of millions of euros.

■

Games. Some expert systems are used for entertainment. For example, 20Q (www.20Q.net).

■

Information management and retrieval. The explosive growth of information available to decision makers has created a demand for devices to help manage the information. Bots can aid this process. Businesses might use a bot to retrieve information from large distributed databases or a vast network like the Internet.

■

AI and expert systems embedded in products. The antilock braking system on today’s cars is an example of a rudimentary expert system. A processor senses when the tyres are beginning to skid and releases the brakes for a fraction of a second to prevent the skid. AI researchers are also finding ways to use neural networks and robotics in everyday devices, such as toasters, alarm clocks and televisions.

■

Plant layout and manufacturing. FLEXPERT is an expert system that uses fuzzy logic to perform plant layout. The software helps companies determine the best placement for equipment and manufacturing facilities. Expert systems can also spot defective welds during the manufacturing process. The expert system analyzes radiographic images and suggests which welds could be flawed.

■

Hospitals and medical facilities. Some hospitals use expert systems to determine a patient’s likelihood of contracting cancer or other diseases. Hospitals, pharmacies and other healthcare providers can use CaseAlert by MEDecision to determine possible high-risk or high-cost patients. MYCIN is an early expert system developed at Stanford University to analyze blood infections. UpToDate is another expert system used to diagnose patients. To help doctors in the diagnosis of thoracic pain, MatheMEDics has developed THORASK, a straightforward, easy-to-use program, requiring only the input of carefully obtained clinical information. The program helps the less experienced to distinguish the three principal categories of chest pain from each other. It does what a true medical expert system should do without the need for complicated user input. The user answers basic questions about the patient’s history and directed physical findings, and the program immediately displays a list of diagnoses. The diagnoses are presented in decreasing order of likelihood, together with their estimated probabilities. The program also provides concise descriptions of relevant clinical conditions and their presentations, as well as brief suggestions for diagnostic approaches.

■

Help desk and assistance. Customer service help desks use expert systems to provide timely and accurate assistance. The automated help desk frees up staff to handle more complex needs while still providing more timely assistance for routine calls.

■

Employee performance evaluation. An expert system developed by Austin-Hayne, called Employee Appraiser, provides managers with expert advice for use in employee performance reviews and career development.

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■

Virus detection. IBM is using neural network technology to help create more advanced software for eradicating computer viruses, a major problem in businesses. IBM’s neural network software deals with ‘boot sector’ viruses, the most prevalent type, using a formof artificial intelligence that generalizes by looking at examples. It requires a vast number of training samples, which in the case of antivirus software are fragments of virus code.

■

Repair and maintenance. ACE is an expert system used by AT&T to analyze the maintenance of telephone networks. IET-Intelligent Electronics uses an expert system to diagnose maintenance problems related to aerospace equipment. General Electric Aircraft Engine Group uses an expert system to enhance maintenance performance levels at all sites and improve diagnostic accuracy.

■

Shipping. CARGEX cargo expert system is used by Lufthansa, a German airline, to help determine the best shipping routes.

■

Marketing. CoverStory is an expert system that extracts marketing information from a database and automatically writes marketing reports.

■

Warehouse optimization. United Distillers uses an expert system to determine the best combinations of liquor stocks to produce its blends of Scotch whisky. This information is then supplemented with information about the location of the casks for each blend. The system optimizes the selection of required casks, keeping to a minimum the number of ‘doors’ (warehouse sections) from which the casks must be taken and the number of casks that need to be moved to clear the way. Other constraints must be satisfied, such as the current working capacity of each warehouse, and the maintenance and restocking work that may be in progress.

■

Diagnosis. Expert systems in the medical profession and in diagnosis in relation to the COVID-19 pandemic.

9.4 Virtual Reality 9

The term ‘virtual reality’ was initially coined by Jaron Lanier, founder of VPL Research, in 1989. Originally, the term referred to immersive virtual reality in which the user becomes fully immersed in an artificial, 3D world that is completely generated by a computer. Immersive virtual reality can represent any 3D setting, real or abstract, such as a building, an archaeological excavation site, human anatomy, a sculpture or a crime scene reconstruction. Through immersion, the user can gain a deeper understanding of the virtual world’s behaviour and functionality. A virtual reality system enables one or more users to move and react in a computersimulated environment. Virtual reality simulations require special interface devices that transmit the sights, sounds and sensations of the simulated world to the user. These devices can also record and send the speech and movements of the participants to the simulation program, enabling users to sense and manipulate virtual objects much as they would real objects. This natural style of interaction gives the participants the feeling that they are immersed in the simulated world. For example, a car manufacturer can use virtual reality to help it simulate and design factories. A related term is ‘augmented reality’, which refers to the combination of computer generated data (images, sounds, etc.) with stimuli from the real world. For example, an augmented reality system might project instructions onto the user’s eye, on top of the real-world images they are seeing, so they could look at both at the same time.

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Interface Devices To see in a virtual world, often the user wears a head-mounted display (HMD) with screens directed at each eye. The HMD also contains a position tracker to monitor the location of the user’s head and the direction in which the user is looking. Using this information, a computer generates images of the virtual world – a slightly different view for each eye – to match the direction that the user is looking and displays these images on the HMD. Many companies sell or rent virtual-reality interface devices, including Virtual Realities (www.vrealities.com), Amusitronix (www.amusitronix.com), Mindflux (www.mindflux.com.au) and others. With current technology, virtual-world scenes must be kept relatively simple so that the computer can update the visual imagery quickly enough (at least ten times per second) to prevent the user’s view from appearing jerky and from lagging behind the user’s movements. The Electronic Visualization Laboratory at the University of Illinois at Chicago introduced a room constructed of large screens on three walls and the floor on which the graphics are projected. The CAVE®, as this room is called, provides the illusion of immersion by projecting stereo images on the walls and floor of a room-sized cube. Several persons wearing lightweight stereo glasses can enter and walk freely inside the CAVE®. A head-tracking system continuously adjusts the stereo projection to the current position of the leading viewer. Users hear sounds in the virtual world through speakers mounted above or behind the screens. Spatial audio is possible, allowing for position tracking. When a sound source in virtual space is not directly in front of or behind the user, the computer transmits sounds to arrive at one ear a little earlier or later than at the other and to be a little louder or softer and slightly different in pitch. The haptic interface, which relays the sense of touch and other physical sensations in the virtual world, is the least developed and perhaps the most challenging to create. Currently, with the use of a glove and position tracker, the computer locates the user’s hand and measures finger movements. The user can reach into the virtual world and handle objects; however, it is difficult to realize sensations of a person tapping a hard surface, picking up an object or running a finger across a textured surface. Touch sensations also have to be synchronized with the sights and sounds of the user’s experience.

Forms of Virtual Reality Aside from immersive virtual reality, virtual reality can also refer to a pplications that are not fully immersive, such as mouse-controlled navigation through a 3D environment on a graphics monitor, stereo viewing from the monitor via stereo glasses, stereo projection systems and others. Some virtual reality applications allow views of real environments with superimposed virtual objects. Motion trackers monitor the movements of dancers or athletes for subsequent studies in immersive virtual reality. Telepresence systems (such as telemedicine and telerobotics) immerse a viewer in a real world that is captured by video cameras at a distant location and allow for the remote manipulation of real objects via robot arms and manipulators. Many believe that virtual reality will reshape the interface between people and information technology by offering new ways to communicate information, visualize processes and express ideas creatively.

Virtual Reality Applications There are many applications for virtual reality in gaming, medicine and education. Probably the most likely place school children will have used VR is in computer games but companies like Class VR develop educational content aimed at younger school children. The material is intended to encourage students to be more focused in class, although research into this claim is warranted.29

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Summary

Knowledge management systems allow organizations to share knowledge and experience among their managers and employees. Knowledge is an awareness and understanding of a set of information and the ways that information can be made useful to support a specific task or reach a decision. A knowledge management system (KMS) is an organized collection of p eople, procedures, software, databases and devices used to create, store, share and use the organization’s knowledge and experience. Explicit knowledge is objective and can be measured and documented in reports, papers and rules. Tacit knowledge is hard to measure and document and is typically not objective or formalized. Knowledge workers are people who create, use and disseminate knowledge. They are usually professionals in science, engineering, business and other areas. The chief knowledge officer (CKO) is a top-level executive who helps the organization use a KMS to create, store and use knowledge to achieve btaining, storing, sharing organizational goals. O and using knowledge is thekey to any KMS. The use of a KMS often leads to additional knowledge creation, storage, sharing and usage. Many tools and techniques canbe used to create, store and use knowledge. These tools and techniques are available from IBM, Microsoft and other organizations.

complex calculations, but human beings arebetter than computers at all other attributes of intelligence. Artificial intelligence is a broad field that includes several key components, such as expert systems, robotics, vision systems, natural language processing, learning systems and neural networks. An expert system consists of the hardware and software used to produce systems that behave as a human expert would in a specialized field or area (e.g. credit analysis). Robotics uses mechanical or computer devices to perform tasks that require a high degree of precision or are tedious or hazardous for humans (e.g. stacking cartons on a pallet). Vision systems include hardware and software that permit computers to capture, store and manipulate images and pictures (e.g. face-recognition software). Natural language processing allows the computer to understand and react to statements and commands made in a ‘natural’ language, such as English. Learning systems use a combination of software and hardware to allow a computer to change how it functions or reacts to situations based on feedback it receives (e.g. a computerized chess game). A neural network is a computer system that can simulate the functioning of a human brain (e.g. disease diagnostics system). A genetic algorithm is an approach to solving large, complex problems in which a number of related operations or models change until the best one emerges.

Artificial intelligence systems form a broad and d iverse set of systems that can replicate human decision making for certain types of welldefined problems. The term artificial intelligence is used to d escribe computers with the ability to mimic or duplicate the functions of the human brain. The objective of building AI systems is not to replace human decision making completely but to replicate it for certain types of well-defined problems. Intelligent behaviour encompasses several characteristics, including the abilities to learn from experience and apply this knowledge to new experiences; handle complex situations and solve problems for which pieces of information might be missing; determine relevant information in a given situation; think in a logical and rational manner and give a quick and correct response; and understand visual images and process symbols. Computers are better than people at transferring information, making a series of calculations rapidly and accurately, and making

Expert systems can enable a novice to perform at the level of an expert, but must be developed and maintained very carefully. An expert system consists of a collection of integrated and related components, including a knowledge base, an inference engine, an explanation facility, a knowledge acquisition facility and a user interface. The knowledge base is an extension of a database, discussed in Chapter 5, and an information and decision support system, discussed in Chapter 8. It contains all the relevant data, rules and relationships used in the expert system. The rules are often composed of IF-THEN statements, which are used for drawing conclusions. Fuzzy logic allows expert systems to incorporate facts and relationships into expert system knowledge bases that might be imprecise or unknown. The inference engine processes the rules, data and relationships stored in the knowledge base to provide answers, predictions and suggestions the way a human expert would. Two common methods for processing include backward and forward chaining. Backward

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chaining starts with a conclusion, then searches for facts to support it; forward chaining starts with a fact, then searches for a conclusion to support it. The explanation facility of an expert system allows the user to understand what rules were used in arriving at a decision. The knowledge acquisition facility helps the user add or update knowledge in the knowledge base. The user interface makes it easier to develop and use theexpert system. The people involved in the development of an expert system include the domain expert, the knowledge engineer and the knowledge users. The domain expert is the person or group who has the expertise or knowledge being captured for the system. The knowledge engineer is the developer whose job is to extract the expertise from the domain expert. The knowledge user is the person who benefits from the use of the developed system. The steps involved in the development of an expert system include: determining requirements, identifying e xperts, constructing expert system components, implementing results, and maintaining and reviewing the system. Expert systems can be implemented in several ways. A fast way to acquire an expert system is to purchase anexpert system shell or existing package. The shell p rogram is a collection of software packages and tools used to design, develop, implement and maintain expert systems. The benefits of using an expert system go beyond the typical reasons for using a computerized

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processing solution. Expert systems display ‘intelligent’ behaviour, manipulate symbolic information and draw conclusions, provide portable knowledge and can deal with uncertainty. Expert systems can be used to solve problems in many fields or disciplines and can assist in all stages of the problem-solving process. Virtual reality systems can reshape the interface between people and information technology by offering new ways to communicate information, visualize processes and express ideas creatively. A virtual reality system enables one or more users to move and react in a computer-simulated e nvironment. Virtual reality simulations require special interface devices that transmit the sights, sounds and sensations of the simulated world to the user. These devices can also record and send the speech and movements of the p articipants to the simulation program. Thus, users can sense and manipulate virtual objects much as they would real objects. This natural style of interaction gives the participants the feeling that they are immersed in the simulated world. Virtual reality can also refer to applications that are not fully immersive, such as mouse-controlled navigation through a 3D environment on a graphics monitor, stereo viewing from the monitor via stereo glasses, stereo projection systems and others. Some virtual reality applications allow views of real environments with superimposed virtual objects. Virtual reality applications are found in medicine, education and training, and entertainment.

Self-Assessment Test 9 1 AI systems demonstrate characteristics of 2 Two branches of AI are ______ and ________. 3 Research into robots that are the size of a grain of salt is called _________.

6 An application for an expert system is ____________. 7 HMD stands for ____________. 8 A program that solves a problem by evolving new solutions repeatedly is a __________.

4 Systems like a Google search on a smartphone that allow users to give voice input are examples of _____________________.

9 A program that attempts to simulate a human brain is a _________.

5 The component of an expert system that stores relevant data and rules is the _________.

10 A system that attempts to approximate the way a person feels is ________.

Review Questions 1 Compare and contrast human and machine intelligence. 2 Explain the main elements of an expert system.

3 Give a definition of intelligent behaviour. 4 What is the difference between a domain expert and a knowledge engineer?

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5 What is augmented reality? 6 List some applications for robots. 7 Explain the term ‘natural language processing’. 8 What is a CKO?

BUSINESS INFORMATION SYSTEMS

9 What could an organization do with virtual reality? 10 What does an expert system interface l ook like?

Discussion Questions 1 List some areas where artificial intelligence is outperforming human intelligence.

2 List some applications for expert systems in your university or college.

Web Exercises 1 Search for some of the more serious Lego Mindstorms models that have been created.

2 Search for a game of 20 Questions where you play against a computer. Can you beat the machine?

Case One A ‘Soft’ Octopus Robot

When you think of robots, the images that come to mind are probably heavy bomb disposal units, expensive NASA equipment on Mars or even the Lego Mindstorms kit that was mentioned in this chapter. Octobot (Figure 9.6) is nothing like these. Its designers have eschewed conventional electronics and power sources to create a pliable robot that operates without rigid parts. Less than 10 cm long and 2 cm tall, Octobot is made of silicone rubber and is intended to squeeze into tight spaces, mould to its surroundings and handle delicate objects safely. Robot researcher Michael Wehner said that Octobot could ‘either handle something that’s very delicate, or move the body around to get into tight spaces in search and rescue, or maybe internal medicine. Something that’s soft like an earthworm could crawl through the body better than something that’s rigid, like a crab’. One key feat that has been achieved by the team, based at Harvard University, is to create soft versions of the processors and batteries, which are usually hard. ‘This work is new and really exciting’, says roboticist Daniela Rus. To achieve this, Octobot is powered by liquid fuel, made mostly from hydrogen peroxide. When this is exposed to platinum infused into two segments of the robot’s internal network, it converts into water and oxygen. This oxygen inflates segments of Octobot and extends one of its arms before exiting through exhaust vents. This is repeated to create

movement in a similar way to how a snake moves (note that Octobot doesn’t attempt to mimic the motions of a real octopus). The robot can run for 8minutes on 1 millilitre of fuel. As for the processor, the robot is controlled with microfluidic logic that autonomously regulates the chemical reactions and fluid flow. Microfluidic logic uses fluid to create versions of logic gates from the surface tension of the liquid and its resistance to pressure. Flow equates to the movement of electrons around a conventional computer, and bits are stored by using the presence of a droplet at a location to represent a value of 1 and the absence of a droplet to represent 0. The channels in the fluid logic gates and the body of the robot were created using 3D printing. Professor Jennifer A. Lewis, the co-leader of the research said, ‘Through our hybrid assembly approach, we were able to 3D print each of the functional components required within the soft robot body, including the fuel storage, power, and actuation, in a rapid manner. The octobot is a simple embodiment designed to demonstrate our integrated design and additive fabrication strategy for embedding autonomous functionality’. Octobot was intended to showcase the technology – it was not designed with a specific task in mind. Materials engineer Robert Shepherd says, ‘What needs to happen next is work out how to reprogram it to perform different actions’.

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Figure 9.6 Octobot

Questions 1 Octobot is at least partly inspired by octopi. What other aspects of nature could inspire robot design and what would each of your ideas bring to robotics? 2 Why do you think the team used 3D printing technology? 3 What are the advantages and disadvantages of microfluidic logic? 4 What applications can you think of for Octobot?

References Burrows, L. 2016. ‘The First Autonomous, Entirely Soft Robot’. Harvard Gazette. Available from: www.news.harvard.edu/gazette/story/2016/08/ the-first-autonomous-entirely-soft-robot/. Accessed 1 June 2020.

Ratner, P. 2016. ‘Harvard Scientists Create a Revolutionary Robot Octopus’. Big Think. Available from: www.bigthink.com/paul-ratner/ harvard-team-creates-octobot-the-worlds-firstautonomous-soft-robot. Accessed 11 June 2020. Shen, H. 2016. ‘Beyond Terminator: Squishy “Octobot” Heralds New Era of Soft Robotics’. Nature. Available from: www.nature.com/news/beyond-terminatorsquishy-octobot-heralds-new-era-of-softrobotics-1.20487. Accessed 1 June 2020. Toepke, M. et al. 2007. ‘Microfluidic Logic Gates and Timers’. The Royal Society of Chemistry, Vol. 7, pp. 1449–1453. Wehner, M. et al. 2016. ‘An Integrated Design and Fabrication Strategy for Entirely Soft, Autonomous Robots’. Nature, Vol. 536, pp. 451–455.

Case Two 360° Video Makes Virtual Reality Accessible There is a lot of jargon in the IT industry and most of it is not ‘owned’ by anyone. So when someone starts to redefine a term, who can say if they are right or wrong? In addition, many technologies naturally evolve into something that sometimes doesn’t look much like the original idea. So it is with virtual reality. The original definition was a technology that fully immerses a user in an artificial,

3D world that is completely generated by computer. This immersion is typically created by wearing a headset that sends images to the user’s eyes and adjusts these depending on the angle of the user’s head. But what if the user was viewing the 3D computer generated world on an ordinary 2D monitor – would that count as VR? Or if instead of a computer generated world, what if the scene was

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a video recording from the real world? The term VR has been co-opted by some to encompass both of these, and as was said in the first line – who is to say if they are right or wrong? Either way, use of the technologies that are making all of this happen are bringing mass use of full VR closer and closer. The 360º videos are taken by special cameras that record a 360º degree view of a scene. So if one was placed on a tripod in the middle of a room it would record the entire room. The 360º videos can be viewed on a normal computer monitor. The interface has a direction button which the user can click to move the direction of view. Many people have experienced 360º photographs on Google StreetView, which were taken with expensive technology. However, now cameras that can do this cost from as little as €300 and are being used to capture parties, weddings and travel adventures. (These cameras record a horizontal wraparound view. To take vertical up and down views still requires more expensive gear.) Whether this all takes off is still an unanswered question, but the option to upload 360º videos to YouTube has helped. Once the video has been made, it can be published on YouTube with only a little additional work than a normal video. (YouTube explains that a 360º video needs to include additional metadata to be enabled, but this is easy to do.) Adoption by big content providers such as the New York Times will also help. They have created NYT VR, a mobile app that can be used to simulate richly immersive scenes from across the globe. Their first series presents three portraits of children driven from their homes by war and persecution. ‘This new filmmaking technology enables an uncanny feeling of connection with people whose lives are far from our own’, said editor Jake Silverstein. NYT VR can be viewed on a normal computer monitor, tablet or a smartphone, or users can opt to fold together Google Cardboard to get a 3D view. Created by Google engineers, David Coz and Damien Henry, using time given to Google employees for their own personal innovative projects, Google Cardboard is a holder for a smartphone that when viewed through one end shows half of the screen to one eye and half to the other. This means that software on the device can be used to split the screen in two and create a 3D image for the viewer. Made, as the name suggests, from cardboard, the

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product comes flat packed and users must fold the thing together. Google advertises the product as a fun and affordable way to experience virtual reality. In the meantime, and further up the cost scale, Sony is pushing VR technology for its Playstation console. For over €300, players can purchase a headset that runs on a standard PlayStation 4, although a PlayStation Camera is also required, with no complex setup. Early reviews suggest the system is physically comfortable, robust and secure even after several hours’ play.

Questions 1 What do you think is holding back full VR? 2 Could Google Cardboard help bring VR to the general public? 3 What applications can you think of for 360º video? 4 Why does Google allow employees to spend time on personal projects?

References Freeman, W. 2016. ‘PlayStation VR Review: If This Is the Future of Virtual Reality, Sign Me Up’. The Guardian. Available from: www.theguardian.com/technology/2016/ oct/10/playstation-vr-virtual-reality-review. Accessed 11 June 2020. Goldman, J. 2016. ‘Street View Your Life: These Are the 360-Degree Cameras Coming for 2016’. CNET. Available from: www.cnet.com/uk/ news/360-degree-cameras-2016. Accessed 1 June 2020. Google Cardboard. arvr.google.com/cardboard/. cardboard. Accessed 11 June 2020. Popper, B. 2016. ‘YouTube Introduces Live 360 Video, the Gateway Drug to Virtual Reality’. The Verge. Available from: www.theverge. com/2016/4/18/11450484/youtube-live-360degree-video-announced-neal-mohan-interview. Accessed 1 June 2020. Statt, N. 2014. ‘Facebook has Oculus, Google has Cardboard’. CNET. Available from: www.cnet. com/news/facebook-has-oculus-google-hascardboard. Accessed 1 June 2020. YouTube help. support.google.com/youtube/ answer/6178631?hl=en-GB.” Accessed 11 June 2020.

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Case Three Game-Show-Winning AI Now Diagnoses Rare Diseases On 14 February 2011, a contestant unlike any other took to the stage of the popular US gameshow Jeopardy! In an amazing show of computational strength, IBM’s artificial intelligence Watson challenged and beat the game’s existing champions. The computer was not connected to the Internet and had to process the host’s questions just as the other contestants did. It was not a push over, but Watson eventually won. IBM immediately started asking, what next? The researchers behind Watson have been quick to say that Watson does not actually think. ‘The goal is not to model the human brain’, said David Ferrucci from IBM Research. ‘The goal is to build a computer that can be more effective in understanding and interacting in natural language, but not necessarily the same way humans do it’. To win Jeopardy! Watson had to assemble different pieces of unstructured information from a variety of sources to produce its answer – the exact answer to any question is unlikely to be on any web page. IBM explains that for each possible answer Watson considers, it finds evidence that may support or refute that answer. So for each of hundreds of possible answers, it finds hundreds of bits of evidence and then with hundreds of algorithms scores the degree to which the evidence supports the answer. The answer with the best evidence assessment will earn the most confidence. The highest-ranking answer becomes the answer Watson gives. These skills are useful in many applications. Watson is now at work with doctors in Germany at the Undiagnosed and Rare Diseases Centre at the University Hospital in Marburg, attempting to diagnose complex medical cases. The hospital has more than 6,000 patients on its waiting list. ‘That number is almost a nightmare’, says the head of the medical team, Professor Dr Jurgen Schafer. ‘We need new ideas and new technology.’ It is not unusual for the patients who come to the hospital to have been seen by up to 40 other doctors who have failed to diagnose them. ‘It is not uncommon for our patients to have thousands of medical documents, leaving us overwhelmed not only by the large number of patients, but also by the huge amount

of data we have to review’, Professor Schafer said. ‘Our work is often like looking for the proverbial needle in the haystack – even the smallest piece of information could lead to an accurate diagnosis.’ The Watson computer ‘reads’ the patients’ medical files alongside vast amounts of medical literature to offer a series of ranked diagnoses. Pricing information for using Watson has not been disclosed, but hospitals and healthcare networks who want will be able to buy or rent Watson’s advice either using IBM’s cloud service or by running it on their own servers. Since the Jeopardy! win, IBM’s researchers have shrunk Watson to a pizza-boxsized server that can fit in any data centre. And they have improved its processing speed by 240 per cent. What was once a fun project has morphed into an essential healthcare tool and it won’t stop there. Most information is unstructured and Watson will find employment analyzing it in a wide variety of sectors.

Questions 1 Why would IBM bother to try to win a TV gameshow? 2 What fears might people have about Watson and are any of them justified in your opinion? 3 Why is Watson suitable for diagnosing rare diseases? 4 What other applications can you think of for Watson?

References BBC, 2016. ‘IBM AI system Watson to Diagnose Rare Diseases in Germany’. Available from: www.bbc.co.uk/news/technology-37653588. Accessed 1 June 2020. IBM web page. www-03.ibm.com/ibm/history/ibm100/ us/en/icons/watson. Accessed 8 June 2020. The IBM Watson web page. www.ibm.com/watson/ what-is-watson.html. Accessed 8 June 2020. Upbin, B. 2013. ‘IBM’s Watson Gets Its First Piece of Business in Healthcare’. Forbes. Available from: www.forbes.com/sites/bruceupbin/2013/02/08/ ibms-watson-gets-its-first-piece-of-business-inhealthcare/#1e7b352444b1. Accessed 8 June 2020.

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Notes 1

Kimble, Chris, et al., ‘Dualities, Distributed Communities of Practice and Knowledge Management’, Journal of Knowledge Management, Vol.9, 2005, p. 102. 2 Peterson, O. Process St. ‘How To Build a Knowledge Management System (KMS): The Basics’. 31 January 2020. www.process.st/ knowledge-management-system/” www.process. st/knowledge-management-system/. Accessed 19 June 2020. 3 Woods, Ginny Parker, ‘Sony Sets Its Sights on Digital Books’, The Wall Street Journal, 16 February 2006, p. B3. 4 Intoweb Website. www.intoweb.co.za/?page=college %20learner%20management%20system. Accessed 8 June 2020. 5 Bloomfire Website. bloomfire.com/knowledgemanagement-software. Accessed 8 June 2020 6 Fast Company, 2019. ‘This App is Why You’ve Never Seen a Leaked Game of Thrones Script’. Available from: www.fastcompany. com/90333984/this-app-is-why-youve-neverseen-a-leaked-game-of-thrones-script. Accessed 28 April 2020. 7 Hsiu-Fen, Lin, et al., ‘Impact of Organizational Learning and Knowledge Management Factors on E‑Business Adoption’, Management Decision, Vol.43, 2005, p. 171. 8 Pelz-Sharpe, Alan, ‘Document Management and Content Management Tucked Away in Several SAP Products’, Computer Weekly, 2 August 2005, p.26. 9 Zoho Website. www.zoho.com/desk. Accessed 29 May 2020. 10 Collective Knowledge Website. www. cknowledge. org. Accessed 29 May 2020. 11 Quain, John, ‘Thinking Machines, Take Two’, PC Magazine, 24 May 2005, p. 23. 12 Brown et al. 2019. ‘Superhuman AI for Multiplayer Poker’. Science, Vol. 365, Issue 6456, pp. 885–890. 13 Heaven, D. 2019. ‘No Limit: AI Poker Bot is First to Beat Professionals at Multiplayer Game’. Nature, Vol. 571, pp. 307–308. 14 Staff, ‘Send in the Robots’, Fortune, 24 January 2005, p. 140.

Hangar Technology. Medium. ‘Robotics (Drones) Do Dull, Dirty, Dangerous & Now Difficult’. 28 February 2018. medium.com/hangartech/ robotics-drones-do-dull-dirty-dangerous-nowdifficult-a860c9c182a4. Accessed 19 June 2020. 16 iRobot Website. Retrieved from: www.irobot.com. Accessed 29 May 2020. 17 Freeman, Diane, ‘RobotDoc’, Rocky Mountain News, 27 June 2005, p. 1B. 18 DARPA ‘Grand Challenge’. Retrieved from: www. darpa.mil/about-us/timeline/-grand-challenge-forautonomous-vehicles. Accessed 8 June 2020. 19 El-Rashidi, Yasime, ‘Ride’em Robot’, The Wall Street Journal, 3 October 2005, p. A1. 20 Airforce Technology website. www.airforcetechnology.com/projects/x-45-ucav. Accessed 15 June 2020. 21 Panzarino, M. 2018. ‘Disney Imagineering has Created Autonomous Robot Stunt Doubles’, TechCrunch. Available from: www.techcrunch.com/2018/06/28/ disney-imagineering-has-created-autonomous-robotstunt-doubles. Accessed 28 April 2020. 22 www.bostondynamics.com/spot. Accessed 1 June 2020. 23 thefutureofthings.com/3238-microrobots-to-travelin-our-blood-vessels/. Accessed 18 June 2020. 24 www.youtube.com/watch?v=IcsAiMgbSY0& feature=PlayList&p=BCD48951882855B3&in dex=2. Accessed 18 June 2020. 25 Chamberlain, Ted, ‘Ultra-Lifelike Robot Debuts in Japan’, National Geographic News, 10 June 2005. 26 Callaham, J. 2019. ‘What is Google Duplex and How Do You Use It?’ Android Authority. Available from: www.androidauthority.com/what-is-googleduplex-869476. Accessed 28 April 2020. 27 Pulla, P. 2019. ‘The Plan to Mine the World’s Research Papers’. Nature, Vol. 571, pp. 316–318. 28 Anthes, Gary, ‘Self Taught’, Computerworld, 6 February 2006, p. 28. 29 Class VR website. www.classvr.com/virtual-realityin-education. Accessed 15 June 2020.

10 Pervasive Computing Principles

Learning Objectives

The term ‘computing’ no longer refers to a computer on a desk. Mobile devices are letting employees access information from wherever they happen to be. In addition, these same technologies are allowing customers to interact with businesses in new ways.

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Identify the range of devices that now incorporate computing power.

Teams made up of people living in different geographical regions are able to work together efficiently and effectively, without ever having to meet. This work is facilitated by a range of technologies.

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Describe the business benefits of mobile devices.

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Discuss and evaluate the technologies that can be used to support teamwork when team members are separated by time and/or space.

E-commerce and m-commerce can be used in many innovative ways to improve the operation of an organization.

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Describe how to select mobile systems to support business objectives.

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Why Learn About Pervasive Computing?

The move of information systems from the office desktop into every aspect of our lives is well underway. Many businesses are exploiting this to their advantage, as are their customers. A mobile sales force can stay in touch with head office easily and submit orders faster than before. Employees can take work with them on the plane or train and remain in full contact using text, audio and video. Potential customers are starting to expect to be able to communicate with companies in a number of ways, and if a business fails to recognize this fact, it could lose customers to competitors who offer these communication channels. In addition, customers who have experienced poor service from a company are willing and able to communicate those experiences to other potential customers. This chapter examines some of the technologies that are enabling all of this to happen. New ones are being introduced almost every month. It is important that businesses understand the potential benefits they can bring.

10.1 Introduction Information systems are no longer tied to a desk in an office. As we saw in the chapter on hardware, mobile devices are allowing computing power to be taken on the move. Increasingly, computers look more like the picture shown in Figure 10.1. This change is m oving in two directions. New devices are being developed that people are happy to carry with them– tiny devices such as the iPod or a smartphone. Such devices do not have the functionality of a PC, but they are more convenient and can be taken anywhere. The other direction is that rather than a new device, computing power is being incorporated into existing devices pervasive computing A term and objects that are already well known to us, such as a jacket, a pair of meaning the move of the computer glasses or a car. This move away from the desktop is known as pervasive away from the desktop and towards something that is all computing, or ubiquitous computing: ubiquitous because computers are all around us, all the time. around us, even if we don’t always realize it. Perhaps from where you are

Figure 10.1 The

Conventional View of aComputer The idea that computers must have a monitor, keyboard and mouse is being challenged by pervasive computing.

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sitting you can see a laptop, smartphone and a tablet computer. On any one of these devices you could read or post a blog entry, access the web, and pay for goods and services. People are using these devices to do all sorts of things on the move – buy cinema tickets to avoid queuing for them, check in for a flight, pay for a taxi journey. In this chapter we will look at some of these technologies and e xamine their business potential. We computer supported cooperative will also meet a particular class of system use, called computer supported cooperative work, which is allowing teams to work together on projects, work A term that refers to technologies which allow groups to regardless of where they happen to be. Many of the technologies described work together to achieve goals. in this chapter are waiting for a ‘killer application’ that will allow them to take off. Maybe you’ll be able to think of one!

10.2 Wireless Internet Access Central to being able to access information ‘on the move’ is wireless Internet access. The range of options available for wireless communication was described in Chapter 6, but for many people the options they have currently are wi-fi and 4G with 5G rapidly being rolled out. In the UK, as in other countries, 5G access is currently patchy but even when it is available many users will have to purchase new devices to be able to use it. 1 A wi-fi hotspot is an area where wireless access is hotspot An area where wi-fi wireless Internet access is available. Many bars and cafés p rovide their customers with wi-fi. available. T-Mobile has set up wi-fi hotspots in many a irports, coffee houses and bookshops. 2 This is useful for e mployees who are away from the office a lot. BT Fon uses wi-fi routers in its customer’s homes to allow others to connect to the Internet. Fon works by having its routers broadcast two wi-fi signals – one private, just for use by the customer who owns the the router, and one public and accessible to registered members of the Fon community.3 A wireless service is now expected by customers in major hotels. Many city centres have free wi-fi access. In the UK, most cities have free wi-fi, as do other cities throughout Europe, such as Oulu in Finland. 4 In Norwich, over 200 antennae are used to provide a hotspot blanket over the city. 5 As a user walks out of range of one antenna and into the range of another, the system seamlessly hands over access between the two, in the same way that the mobile phone network does. Wi-fi access speeds are slightly slower than broadband, although this is perhaps made up for in convenience. The first entire nation to be given free wireless Internet access was the tiny Polynesian island of Niue with a population of just 2,000.6 The local authorities in the town of Knysna in South Africa have installed w i-fi to allow access to residents who have historically been cut off from Internet access because the town is so remote. Computers have been installed in the local library to give access to those who can’t afford wi-fi-enabled devices. The business benefits of wi-fi are clear – mobile access to information; employees away on business can easily send and receive email, using any one of a number of devices, some of which are discussed next. They can access information on company websites or read about local conditions on news services. They could also access sensitive information on company extranets.

10.3 Mobile Devices The list of devices that can make use of wi-fi hotspots is growing. It now includes desktop computers (useful if you happen to live within a hotspot), laptops, tablet PCs, mobile phones, mobile game consoles such as the Nintendo DS, pocket PCs, VoIP phones, smartwatches, e-readers and fitness monitors. As we will see, other mobile devices are stand-alone and do not require Internet access to make them useful.

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Smartphone

Smartphones and tablet computers are now a viable alternative to laptops. These tiny devices are cheaper and more robust than laptops and can be combined with a range of accessories to increase their functionality. Possibly the most useful accessory is a keyboard that can be attached to the smartphone so that data can be entered into it, as it could into a laptop or PC. Both fold up and roll up versions are available. These keyboards can be attached by a cable or wirelessly using the bluetooth protocol described in Chapter 6. South Korean company Celluon manufactures a device that projects a laser keyboard onto a surface such as the tray table on a plane, and detects when you press one of the virtual keys.7 Attaching a keyboard to a smartphone provides an extremely portable word processor. Many workers in the western world would not be satisfied with such a tiny screen; however, such miniature devices are common in the Far East. It is true that you are unlikely to want to type at a smartphone for as long as you would a laptop; however, many people do prefer the light weight of a smartphone and keyboard to that of a laptop. If a smartphone and keyboard are combined with wi-fi access, the smartphone becomes a powerful tool to access all Internet services. Without the keyboard, a smartphone can be cumbersome to use. Another useful accessory is a cable to enable the smartphone to be attached to a projector. Portable projectors8 can be used to project Microsoft PowerPoint slides from a smartphone. The system even comes with a remote control so that the speaker can progress from one slide to the next without having to be beside the device – functionality that few PCs provide. This is an extremely convenient way for business people to take a presentation with them. For example, a salesperson could present to clients all over the world and only have to carry a smartphone with accessories and, unless one was available at each location, a data projector. One drawback to using a smartphone to give presentations is that it is difficult to create or edit PowerPoint slides on them. Therefore they only become an alternative to carrying a laptop if the presentation is not going to change. If it is known that the presentation will not change, and it is known that there is the appropriate hardware at the presentation location, it becomes more convenient to simply carry the presentation files on a flash drive, or even simply upload them to the web, where they can be downloaded for the presentation. By connecting a global positioning system (GPS) receiver and installing global positioning system (GPS) A navigation system that enables map software such as TomTom,9 a smartphone can be used as a powerful a receiver to determine its precise navigational aid, either in a car or, if the GPS receiver is wireless (again using location. the Bluetooth protocol), on foot. Fleet operators use GPS for vehicle tracking, safety and performance monitoring. GPS is also used by breakdown agencies such as the RAC and AA – the location of a broken down vehicle is fed into an information system which uses GPS information on the whereabouts of the fleet to make the decision on which patrol to send to the rescue. The AA now allows stranded motorists to track where their mechanic is via their smartphone.10 A smartphone can also be used to play audio and video files. Many people use one instead of a dedicated music device such as an MP3 player. Some people download news clips each night from a provider such as the BBC, and watch them on the train on the way to work the next morning. YouTube users can download videos to their device when they have a strong wi-fi signal to watch later if Internet access is unavailable. YouTube Premium users can do this via the YouTube app, but others can use third-party software (although note that doing it this way breaks the YouTube terms of service).11 Watching news programmes in this way could replace the traditional activity of reading the morning newspaper, plus it takes up less space on crowded public transport than a newspaper, is cleaner, and arguably easier to digest and more interesting.

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Wearable Technology Miniaturizing smartphone technology further allows it to become part of the clothes we wear, for example a jacket or belt. Coupled with other things we are comfortable wearing, for instance glasses with which to receive visual information or earphones for audio information, computing power can become something we routinely take with us and use everywhere. The term ‘wearable technology’ usually refers to computers that are worn wearable computing A term that on the body, although it could also be used to encompass non-computing refers to computers and computing technology such as mechanical watches and glasses. The term wearable technology that are worn on the body. computing is used to distinguish between the two. If a smartphone is attached to a user’s belt, it is being ‘worn’ by that user. However, wearable computing refers to something more than this. The term really means the use of largely invisible computing technology, to seamlessly augment a human’s task. So far, there are few everyday applications for wearable computing, and many of the commercial examples available have more novelty value than business value. However, one application which is often mentioned is navigation, where the clothes you wear somehow tell you where to go. For example, a GPS receiver could be built into a special jacket, which could apply pressure on one side of the body to guide the wearer in the opposite direction, just like a gentle hand was pushing them that way. The interface for telling the jacket where you want to go could be a smartphone with a Bluetooth link between it and the jacket. A research group at the Massachusetts Institute of Technology (MIT) developed an early platform which was used to experiment with potential applications. MIThril had a number of ways of interacting with the body. Suggested uses for MIThril included navigation and accessing the Internet on the move. However, neither of thes

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