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

In order for an information system to be effective, it must provide users with accurate, timely, and relevant information that is free of errors, available to decision makers when it is needed, and useful and appropriate for the types of work and decisions that require it.  Information systems arrange data in computer files in a hierarchy that starts with bits and bytes and progresses to fields, records, files, and databases.  The traditional approach to file processing encourages each department or area in a company to develop their own systems and data files, known as specialized applications.  These applications require a unique data file and their own computer program to operate.  Over time this leads to data that is difficult to maintain and manage.  This results in in data redundancy and inconsistency, program-data dependence, processing inflexibility, poor data security, and lack of data sharing and availability.

Database technology has evolved to reduce the many problems of the traditional file organization.  A database is defined as a collection of data organized to serve many applications efficiently by centralizing the data and controlling redundant data.  A single database can service multiple applications.  A database management system (DBMS) is a type of software that allows an organization to centralize data, manage them efficiently, and provide access to the stored data by application programs.  This minimizes redundant and inconsistent files. 

The most common type of DBMS used for PCs and larger computers and mainframes is the relational DBMS.  These databases organize data in two-dimensional tables called relations and each table consists of rows and columns.  As long as two tables share a common data element, the relational database tables can be combined easily to deliver data required by users. 

Object-oriented databases are used to handle graphics-based or multimedia applications.  This DBMS stores the data and procedures that act on those data as objects that can be automatically retrieved and shared.  They can also store more complex types of information that relational DBMS, however they are somewhat slow for processing large numbers of transactions compared to relational DBMS.

A DMBS has capabilities and tools for organizing, managing, and accessing the data in a database.  A data definition is a capability that specifies the structure of the content of the database.  It is used to create database tables and to define the characteristics of the fields in each table.  This information would be documented in a data dictionary.  A data dictionary is capability of an automated or manual file that stores definitions of data components and their characteristics.  A third capability is the data manipulating language.  A data manipulation language that is a specialized language in most DBMS that is used to add, change, delete, and retrieve the data in a database.  It contains commands that allow end users and programmers to extract data from the database to satisfy information requests and develop applications.  The most prominent data manipulation language used today is Structured Query Language (SQL). 

In order to create a database, the relationships among the data, the type of data that will be maintained in the database, how the data will be used, and how the organization will need to change to manage data from a company-wide perspective must be clearly understood.  A database requires a conceptual, or logical, design and a physical design.  The conceptual design is an abstract model of the database from a business perspective.  It describes how the data elements in the database are to be grouped to meet business information requirements.  The physical design shows how the database is actually arranged on direct-access storage devices. 

Databases are used by businesses to keep up with their day-to-day activities in addition to providing information that will help the company run more efficiently, and help managers and employees make better decisions.  Special capabilities and tools are required for analyzing large quantities of data and for accessing data from multiple systems.  One capability is data warehousing.  A data warehouse is a database that stores current and historical data of potential interest to decision makers throughout the company.  It makes the data available for anyone to access as needed, but it cannot be altered.  A data mart is a subset of data warehouses where a summarized or highly focused portion of the organization’s data is placed in a separate database for a specific set of users.  It typically focuses on a single subject area or line of business.

After the data is in data warehouses and data marts, it is available for further analysis using tools for business intelligence, such as multidimensional data analysis and data mining.  These tools enable users to analyze data to see new patterns, relationships, and insights that are useful to assist in decision making.  Online Analytical Processing (OLAP) is the capability for manipulating and analyzing large volumes of data from multiple perspectives, i.e., using multiple dimensions.  Data mining finds hidden patterns and relationships in large databases and deduces rules from them that are used to guide decision making and forecast the effect of those decisions.

A third capability for analyzing large quantities of data are the tools used for accessing internal databases through the Web.  Text mining tools are able to extract key elements from large unstructured data sets, discover patterns and relationships, and summarize the information.  Web mining is the discovery and analysis of useful patterns and information from the Web.

Once a database is set up, special policies and procedures for data management will need to be set into place.  This ensures that the data for the business remains accurate, reliable, and readily available to those who need and use it.  All businesses need an information policy.  This will specify the organization’s rules for sharing, disseminating, acquiring, standardizing, classifying, and inventorying information.  These policies lay out the specific procedures and accountabilities, identifying which users and organizational units can share information, where information can be distributed, and who is responsible for updating and maintaining the information.  In addition, additional steps must be taken to ensure that the data in organizational databases are accurate and remain reliable through audits and cleansing.

Chapter 5 - IT Infrastructure and Emerging Technologies

Information technology (IT) infrastructure is defined as the shared technology resources that provide the platform for the firm’s specific information system applications.  It includes the hardware, software applications, and services that are shared across the organization.   It provides the framework for serving customers, working with vendors, and overseeing internal business processes.

For over 50 years the IT infrastructure has evolved into what it is today.  The five eras of this evolution include the general-purpose mainframe and minicomputer era; the personal computer era; the client/server era; the enterprise computing era; and the cloud and mobile computing era.  Characteristics of one era may also be used in another era for other purposes.

The reasons for such change in the IT infrastructure is due to developments in technologies such as computer processing, memory chips, storage devices, telecommunications and networking hardware and software, and software design.  These developments have rapidly increased computing power while also reducing costs.  One technology driver of this change is Moore’s Law.  This is the assertion that the number of components of a chip doubles each year.  Another driver is the Law of Mass Digital Storage.  It provides that the cost of storing digital information is falling at an exponential rate.  Metcalf’s Law is a driver, which shows that a network’s value to participants, grows rapidly as the number of network members increases.  One other technology driver is the rapid decline in the costs of communication and the rapid growth in the size of the Internet.  Technology standards specify the compatibility of products and the ability to communicate in a network.

Seven major components make up the IT infrastructure, which must be coordinated to provide the firm with a coherent infrastructure.   These components include computer hardware platforms, operating system platforms, enterprise software applications, data management and storage, networking/telecommunications platforms, Internet platforms, and consulting and system integration services. 

Several hardware trends have changed how businesses organize their computing power.  One trend is an emerging mobile digital platform.  Mobile devices such as cell phones and smartphones have taken on many functions of handheld computers.  Soon these mobile devises will be the primary means of communication and accessing the Internet for businesses.  Another hardware trend is grid computing.  This involves connecting geographically remote computers into a single network to create a virtual supercomputer by combining the computational power of all computers on the grid.  The advantages of this trend are the cost savings, speed of computation, and agility.  A third hardware trend is virtualization.  This is the process of presenting a set of computing resources so that they can all be accessed in ways that are not restricted by physical configuration or geographic location.  It helps organizations increase equipment utilization rates by conserving data center space and energy usage and facilitates centralization and consolidation of hardware administration.  Cloud computing is another trend in which firms and individuals obtain computer processing, storage, software, and other services as a group of virtualized resources over a network, mainly the Internet.  It can be private or public and the cost to utilize is minimal.  Green computing is the practices and technologies for designing, manufacturing, using, and disposing of computers, servers, and associated devices (monitors, printers, storage devices, networking and communications systems) to minimize the impact of the environment.  Autonomic computing is developing systems that can configure themselves, optimize and tune themselves, heal themselves when broken, and protect themselves from outside intruders and self-destruction.  Another hardware trend is the use of more efficient and power-saving processors. 

Software trends have also changed how businesses organize their computing power.  One trend is open source software.  This is software produced by a community of thousands of programmers around the world and can modified by other users and redistributed.   Linux is probably the most well known open software and is embedded in cell phones, smartphones, netbooks, and consumer electronics.  Another trend is the software for the web.  Java and Ajax are the two most common.  Java is an operating system-independent, processor-independent, object-oriented programming language.  It can deliver only the software functionality needed for a particular task and can run on ay computer and operating system.  Ajax is a Web development technique for creating interactive Web applications that makes conversation with the server more seamless for the user.  A third trend is the use of web services and service-oriented architecture.  Web services are a set of loosely coupled software components that exchange information with each other using universal Web communication standards and languages.  They are able to exchange information between two different systems regardless of the languages and they can be used to build open standard Web-based applications that link systems of two different organizations.  A service-oriented architecture is a collection of Web services that are used to build a firm’s software system.  A fourth software trend is the external sources for software.  Three such sources include software packages from a commercial software vendor, outsourcing custom application development to an external vendor, and cloud-based software services and tools.  Mashups and apps are also a software trend that is used by individuals and businesses.  Mashups combine the capabilities of two or more online applications to create a kind of hybrid that provides more customer value than the original source along.  Apps are small pieces of software that run on the Internet, on the computer, or on a cell phone and are generally delivered over the Internet. 

Dealing with platform and infrastructure change, management and governance of the infrastructure, and making wise infrastructure investments are some of the challenged faces for creating and managing a coherent IT infrastructure.  A competitive forces model can be used as a guideline as to how much should be invested in the infrastructure and where to make strategic infrastructure investments.

Chapter 4 - Ethical and Social Issues in Information Systems

Ethics is defined as the principles of right and wrong that individuals, acting as free moral agents, use to make choices to guide their behaviors.  Ethical issues have become more prominent because of the evolution of information systems.  Ethical, social, and political issues are closely connected in an information society.  When one area is disturbed it causes an effect on the other two areas.  These issues raised by information systems center around five moral dimensions:  information rights and obligations, property rights and obligations, accountability and control, system quality, and quality of life.

Responsibility, accountability, and liability are the basic concepts that form the foundation of an ethical analysis of information systems.  In order to analyze a potential ethical situation, the following five-step process is helpful.  First the facts must be clearly identified and described.  Next the issue should be defined and the higher-order values involved identified.  Third the stakeholders must be identified.  Then the options that can be reasonable taken are identified.  Last identify potential consequences of one’s options. 

Once the analysis of the possible ethical situation is complete, several specific principles for conduct can be used to guide in the ethical decision.  These include the Golden Rule, Immanuel Kant’s Categorical Imperative, Descartes’ rule of change, the Utilitarian Principle, the Risk Aversion Principle, and the ethical “no free lunch” rule. 

Several privacy laws have been developed over the years to protect individuals and firms who use information systems.  The Privacy Act of 1974 has been the most important because it regulates the federal government’s collection, use, and disclosure of information.  Other federal privacy laws have been put in place to handle areas such as credit reporting, education, financial records, newspaper records, and electronic communications.  Most U.S. federal laws apply only to the federal government.  Fair Information Practices (FIP) was set forth to govern the collection and use of information about individuals and forms the basis of most U.S. and European privacy laws. 

The use of the Internet has opened up a challenge to protect an individual’s privacy.  As computer users access information, it is sent over many networks before reaching its final destination.  Each network it passes through is capable of monitoring, capturing, and storing communications that pass through it.  Due to the weak or lack of privacy protection policies, individuals are not always informed on their use of the user’s personal information.  Cookies, web beacons, and spyware are types of information that can be secretly put onto one’s computer to track their browsing activity. 

New technologies are now available to protect user privacy during Web use.  They are used for encrypting e-mail and making surfing activities appear anonymous, for preventing computers from accepting cookies, and for detecting and eliminating spyware.  One such tool is the Platform for Privacy Preferences which is used to enable automatic communication of privacy policies between a Web site and its visitors. 

Another challenge faced by Internet users is the existing laws and social practices that protect private intellectual property.  This is due to the ease of copying or distributing computerized information on networks.  Trade secret laws protect the actual ideas in a work product.  Copyright protects the creators of intellectual property from having their work copied by others for any purpose for a minimum of 70 years.  Patents grant the owner an exclusive monopoly on the ideas behind an invention for 20 years.  The rise of the use of the Internet and other electronic networks has made it more difficult to protect intellectual property.

Information technologies are also challenging existing liability laws and social practices for holding individuals and institutions accountable.  In addition, computer errors can cause serious harm to individuals and organizations.  Poor data quality is also to blame for disruptions and losses for businesses.  

Although information technologies hold many benefits to the quality of life of individuals, they also hold many challenges.  Negative social consequences can be extremely harmful to individuals, societies, and political institutions.  Some of the negative consequences include the balancing power between centralizing and decentralizing computing and decision making; reduced response time to competition due to the more efficient global marketplace; maintaining boundaries between family, work, and leisure; dependability on information systems and vulnerability if they fail; increase in computer crime and abuse; loss of jobs; the increase of racial and social class split; and the increase of health risks, such as repetitive stress injury, computer vision syndrome, and technostress.

Chapter 3 - Information Systems, Organizations, and Strategy

Summary

Information systems and organizations work together to function successfully.  The interaction between the two is influenced by mediating factors such as the surrounding environment, culture, organization’s structure, business processes, politics, and management’s decisions. 

The technical definition of an organization is a stable, formal social structure that takes resources from the environment and processes them to produce outputs.  The behavioral definition of an organization is that it is a collection of rights, privileges, obligations, and responsibilities that is delicately balanced over a period of time through conflict and conflict resolution.  These two definitions actually complement each other. 

All organizations have characteristics that affect the types of information systems they use.  The characteristics include routines and business processes, organizational politics, organizational culture, surrounding environments, structure, goals, constituencies, and leadership styles.  In addition, information systems have also had economic and organizational and behavioral impacts on organizations. 

In today’s business world some firms do better than others.  These firms are said to have a competitive advantage over others.  Michael Porter’s competitive forces model is used to understand this advantage.  This model provides an overview of the firm, its competitors, and its environment.  According to this model, five competition forces shape the outcome of the firm:  traditional competitors are constantly devising new and more efficient way to produce new products; new companies are always entering the market; there are substitute products and services that consumers may use if there is a change in what they had been using; the ability to attract and retain customers; and the variety of supplies a firm has. 

When a firm is faced with all of these competitive forces they can use information systems to respond some of them.  The four strategies used for dealing with the competitive forces include low-cost leadership, product differentiation, focus on market niche, and strengthening customer and supplier intimacy.  Because of the wide-use of the Internet competitive rivalry has become much more intense.  It has almost destroyed some industries and severely threatened others; but it has also created new markets and provided new opportunities for building brands with large and loyal customer bases. 

The value chain model is used to highlight specific activities in the business where competitive strategies can best be applied and where information systems are most likely to have a strategic impact.  It views firms as a chain of basic activities that add a margin of value to a firm’s products or services.  The activities are classified as primary activities or support activities.  Primary activities are directly related to the production and distribution of the firm’s products and services.  Support activities make the delivery of the primary activities possible and consist of organization infrastructure, technology, and procurement. 

Strategic information systems not only can change the organization, but its products, services, and operating procedures as well.  This change often drives the organization into new behavioral patterns.  Successfully using information systems to achieve a competitive advantage requires coordination of technology, organizations, and management.

Chapter 2 - Global E-Business and Collaboration

Summary

Information systems allow businesses to improve the execution and overall quality of their processes.  A business process is defined as a unique way in which organizations coordinate and organize work activities, information, and knowledge to produce a product or service.  They are important because they determine how well the organization can execute its business and they may also be a foundation of strategic advantage.  Information systems improve business processes by allowing automation on processes that were once performed manually.  This improvement gives businesses the ability to achieve greater efficiency, innovation, and customer service.

Because of the different interests, specialties, and levels in a business, different types of information systems are needed to support them.  One area where information systems is needed to support is the decision-making or management group.  Systems included are the transaction processing system, the management information system, the decision-support system, and systems for business intelligence. 

Enterprise applications are implemented in order to allow all systems to work together in a company.  They help businesses to become more flexible and productive by coordinating their business processes more closely and integrating groups of processes so they focus on efficient management of resources and customer service.  The four major enterprise applications are enterprise systems, supply chain management systems, customer relationship management systems, and knowledge management systems. 

Businesses are able to pull all of these systems and information together, work towards common goals, and coordinate plans and actions through collaboration.  It takes place within a business or between businesses, it can be short or long term, and it can be one-to-one or many-to-many.  In order for collaboration to be successful one will need a supportive business firm culture, the right business processes, and a strong investment in collaborative technologies.  Benefits of collaboration include productivity, quality, innovation, customer service, and financial performance.  The capability to collaborate along with implementing appropriate technology will enhance the overall performance of the firm.   

The information systems department is responsible for making sure the hardware, software, and other technologies used by the information systems are running properly and are up to date.  This departments consists of specialists including programmers, systems analysts, project leaders, and information systems managers.  Once the information systems department makes sure everything is in proper working condition, end users are the ones who these applications are made for.    

Chapter 1 - Organizations, Management, and the Networked Enterprise

Summary

Information technology has vastly changed the way businesses are conducted.  Three interrelated changes that are evolved in the use of technology are the emerging mobile digital platform, the growth of online software, and the growth in “cloud computing” where business is conducted over the Internet.  E-mail, online conferencing, and cell phones have now become necessary tools in conducting business.  These changes have allowed businesses to now become a fully digital firm.  They are able to sense and respond to their environments more quickly than traditional firms, giving them more flexibility to survive in turbulent times.

The use of information technology has become essential in the firm’s ability to achieve its strategic goals.  Information systems are used today for a business to achieve six strategic business objectives:  operational excellence; new products, services, and business models; customer and supplier intimacy; improved decision making; competitive advantage; and survival in today’s world.

An information system is defined as a set of interrelated components that collect (or retrieve), process, store, and distribute information to support decision making and control in an organization.  It can also assist managers and workers in analyzing problems, visualizing complex subjects, and creating new products.  Input, processing, and output produce the information needed by the managers and workers to accomplish these goals.

In order to fully understand information systems and use it effectively, knowledge of the broader organization, management, and information technology shaping the systems is needed.  The organization portion involves issues such as the organization’s hierarchy, functional specialties, business processes, culture, and political interest groups.  The management portion involves issues such as leadership, strategy, and management behavior.  The technology portion consists of computer hardware, software, data management technology, and networking and telecommunications technology.  Information systems are an important investment because it provides economic value to the business.

Some firms are able to achieve better results from their information system than others.  Awareness of the organizational and managerial dimensions of information systems is where to focus as to why this is.  Investing in information technology alone cannot make the organization more effective unless other complementary assets accompany them.  These are assets that are required to derive value from a primary investment.  They include new business models and business processes, supportive organizational culture and management behavior, appropriate technology standards, regulations, and laws.   

Issues and insights contributed from technical and behavioral disciplines contribute to the study of information systems.  The disciplines that contribute to the technical approach are computer science, management science, and operations research.  The disciplines contributing to the behavioral approach include psychology, sociology, and economics.  A sociotechnical view consists of the implementation of both the technical and social aspects and finding an optimal fit between them.