Business driven information systems 3e by baltzan

baL60744_fm_i-1.indd vi 08/20/15 05:55 PM baL60744_fm_i-1.indd vii 08/20/15 05:55 PMCONTENTS IN FULL Preface xvi Acknowledgements xviii Highlights of this edition xix Text at a glance xx

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760741 781743

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ISBN 9781743760741

www.mhhe.com/au/baltzan3e

3e

Connect is proven to deliver better results Content integrates seamlessly with enhanced digital tools to

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BuSIneSS-drIven InforMaTIon SySTeMS 3e continues the excellent work

undertaken in the second edition to revise and update the developing area

of Information Systems With a completely revised design that allows for easy

navigation and close correlation to key topics in many tertiary courses, it is

a must-have for students studying Business-driven Information Systems

The approach provides both theoretical and practical discussion on

concepts that await today’s graduates, including mobile technologies,

cloud computing, privacy, security and social networking

Key features include:

• Case studies and industry examples: new and revised opening and closing case studies

that contain a balance between local and international examples, enabling students to

better understand concepts and theories

• Graduate spotlights: recent graduates share their unique career paths, demonstrating the

opportunities available to graduates in the area of Information Systems.

• Market-leading digital package: contains learnSmart and SmartBook, and is the first MIS

title in australia to offer such adaptive technology to maximise student productivity and

efficiency in learning.

• Expand your knowledge modules: a great feature that offers integration with the core

chapters and provides critical knowledge, using essential business applications such as

Microsoft® excel, Microsoft® access and adobe dreamweaver®.

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BUSINESS-DRIVEN INFORMATION SYSTEMS

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Dedication

To all our past students who have become IS professionals and respected experts

in their field around the globe – we are proud of you.

Kathy and Julie

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3e

Paige Baltzan • Kathy Lynch • Julie Fisher

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Additional owners of copyright are acknowledged on the acknowledgments page.

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editor at the address below.

Creator: Baltzan, Paige, author.

Title: Business-driven information systems / Paige Baltzan, Kathy Lynch, Julie Fisher.

Edition: Third edition.

ISBN: 9781743760741 (paperback)

Notes: Includes index.

Subjects: Industrial management—Data processing.

Information technology—Management.

Electronic commerce.

Business Computer programs.

Other Creators/Contributors:

Lynch, Kathy, 1950- author.

Fisher, Julie, author.

Dewey Number: 658.4038011

Published in Australia by

McGraw-Hill Education (Australia) Pty Ltd

Level 2, 82 Waterloo Road, North Ryde NSW 2113

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PART FIVE

PART FOUR

PART THREE

PART TWO

PART ONE

Information systems are business

Essentials of information systems

CHAPTER 5 TECHNICAL FUNDAMENTALS 142CHAPTER 6 SYSTEMS DEVELOPMENT AND

CHAPTER 7 ENTERPRISE ARCHITECTURE AND SECURITY 213

Enterprise information systems

CHAPTER 9 ENTERPRISE INFORMATION SYSTEMS: ERP AND SCM 302

CHAPTER 10 ENTERPRISE INFORMATION SYSTEMS: CRM AND

Business and transformation

CHAPTER 11 ETHICS, PRIVACY, SOCIAL MEDIA AND

Expand your knowledge modules

CONTENTS IN BRIEF

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CONTENTS IN FULL

Preface xvi Acknowledgements xviii

Highlights of this edition xix Text at a glance xxiii Digital resources xxv

PART 1 INFORMATION SYSTEMS ARE BUSINESS 2 CHAPTER 1 BUSINESS INFORMATION SYSTEMS 6

OPENING CASE STUDY

Google: king of search (and therefore information) 7

SECTION 1.1 // INFORMATION SYSTEMS IN BUSINESS 9

Information technology versus

Data, information, business

Data 11Information 12Business intelligence 14Knowledge 14

Common functional areas in an organisation 14

Transaction processing systems 20

Decision support systems 21Strategic support systems 24

SECTION 1.2 // BUSINESS STRATEGY 26

Identifying competitive advantages 26 Porter’s Five Forces Model—evaluating

Porter’s three generic strategies—

Value chain analysis—executing

Business in the global environment 35

CLOSING CASE STUDIES

Closing Case Study 1.1: e-Exam trial at CQU 37 Closing Case Study 1.2: Apple—

complications made simple 38

Critical business thinking 39Apply your knowledge 40

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CHAPTER 2 A BRAVE NEW CONNECTED WORLD 43

Disruptive technologies shape the world 44

SECTION 2.1 // OUR CONNECTED WORLD 45

Social, ethical and political issues 50

SECTION 2.2 // THE INTERNET AND

THE WEB: A TECHNOLOGY REVOLUTION 51

Disruptive and sustaining technologies 52

Disruptive versus sustaining technology 52

technologies 58Web 2.0, social media and business 60Blogs 60Wikis 60

The Internet of Things 62

Closing Case Study 2.1: Like us on Facebook! The rise of social business innovation 63 Closing Case Study 2.2: Barcelona

CHAPTER 3 e-BUSINESS AND MOBILE BUSINESS 70

Paywalls and the business future

SECTION 3.1 // E-BUSINESS 73

Expanding global reach 74

Opening new markets 74

strategies 80

Organisational strategies for e-business 81

Marketing/sales 81Financial services 82Procurement 83

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Leveraging existing systems 87Increasing liability 87Providing security 87Adhering to taxation rules 87

Trends in e-business: e-government and m-business 88

Increases location and monitoring capability 92Improves workflow 92Provides mobile business opportunities 92Provides an alternative to wiring 93

Protecting against theft 94Protecting wireless connections 94

Closing Case Study 3.1: Grocery shopping online 96 Closing Case Study 3.2: Shoes of Prey 97

CHAPTER 4 DECISIONS AND PROCESSES 102

Content streaming on demand 103

SECTION 4.1 // DECISION-MAKING SYSTEMS 105

Operational 107Managerial 107Strategic 108

Efficiency and effectiveness metrics 110The interrelationship between efficiency

and effectiveness MIS metrics 112Benchmarking—baseline metrics 112Visualisation 113

The future: artificial intelligence 115

Genetic algorithms 116Intelligent agents 117

SECTION 4.2 // BUSINESS PROCESSES 118

Support: changing business

Business process improvement 121Business process re-engineering 123Business process management 126

Is BPM for business or IT? 127BPM risks and rewards 127

The future: business process

Closing Case Study 4.1: True confessions—

of an airline revenue manager 133 Closing Case Study 4.2: Using virtual

reality to improve business decisions 134

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PART 2 ESSENTIALS OF INFORMATION SYSTEMS 138

CHAPTER 5 TECHNICAL FUNDAMENTALS 142

Supercell: concentrates on games not infrastructure 143

SECTION 5.1 // HARDWARE AND

Local area network (LAN) 160Wide area network (WAN) 160Metropolitan area network (MAN) 161Wireless networks 161

Broadband connection types 166

Addressing privacy concerns around

Closing Case Study 5.1: Everything to do with IT changes all the time: keeping up after you graduate 171 Closing Case Study 5.2: Advanced

computing infrastructure may lower the price of your next cuppa 172

CHAPTER 6 SYSTEMS DEVELOPMENT AND PROJECT

MANAGEMENT 178

Australia Post: staying relevant in the

Implementing agile methodologies 187

Having unclear or missing business requirements 189Poor communication between management and the development team 189Inadequate project management 189Skipping SDLC phases 189Changing technology 189Catering for the cost of finding

errors in the SDLC 189

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SECTION 6.2 // PROJECT MANAGEMENT 191

Managing software development projects 191

The triple constraint 192Project participants 193

Closing Case Study 6.1: Why do large

government IT projects fail? HealthSMART

project lets Victorian health services down 205 Closing Case Study 6.2: myki: an integrated travel card for Victoria 206

CHAPTER 7 ENTERPRISE ARCHITECTURE AND SECURITY 213

Sony hack stops the world:

well, Sony’s world 214

SECTION 7.1 // ENTERPRISE ARCHITECTURE 215

The business benefits of solid enterprise architecture 215 Supporting operations: information

architecture 216

Backup and recovery 217Disaster recovery 218Business continuity planning 220

Supporting change: infrastructure architecture 222

Accessibility 223Availability 223Maintainability 223Portability 223Reliability 224Scalability 224Usability 224

Supporting the environment:

sustainable enterprise architecture 225

SECTION 7.2 // ENTERPRISE SECURITY 241

The first line of defence: people 242 The second line of defence: technology 244

People: authentication and authorisation 244Data: prevention and resistance 246Attacks: detection and response 248

Preventing viruses on a mobile device 251

Closing Case Study 7.1: Developing an enterprise-wide architecture within Insurance Australia Group 252 Closing Case Study 7.2: Migration to

Google docs: Bleeding Technology Pty Ltd 253

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PART 3 ENTERPRISE INFORMATION SYSTEMS 258

CHAPTER 8 QUALITY DATA AND BUSINESS INTELLIGENCE 262

Chupa Chups: how sweet it is 263

SECTION 8.1 // DATA, INFORMATION AND

Increased scalability and performance 273

Reduced information redundancy 274

Increased information integrity (quality) 274

Increased information security 274

Integrating information among multiple

Information cleansing or scrubbing 280

SECTION 8.2 BUSINESS INTELLIGENCE (BI) 283

Cluster analysis 285Statistical analysis 286Association detection 286

BI, business analytics and data science:

Closing Case Study 8.1: XBRL and business information supply chains: enhancing business-to-government reporting 294 Closing Case Study 8.2: Data-driven

innovation (DDI)—set to lead the way! 296

CHAPTER 9 ENTERPRISE INFORMATION SYSTEMS: ERP AND SCM 302

Still sick after $1.25 billion:

Queensland Health ERP 303

SECTION 9.1 // ENTERPRISE RESOURCE

PLANNING (ERP) 305

ERP fundamentals 305

e-Business 313Business intelligence (BI) 313Supply chain management (SCM) 313Customer relationship management (CRM) 313

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SECTION 9.2 // SUPPLY CHAIN MANAGEMENT (SCM) 319

Improved visibility 322Improve collaboration 323Increased profitability 323

Cloud computing and SCM 326

Closing Case Study 9.1: GoPro goes

Closing Case Study 9.2: ERP system takes ATE tankers to the next level 328

CHAPTER 10 ENTERPRISE INFORMATION SYSTEMS: CRM AND COLLABORATION SYSTEMS 333

Bosch—power from the people 334

SECTION 10.1 // CUSTOMER RELATIONSHIP MANAGEMENT (CRM) 336

Collaborators 348

Groupware systems 354

File storage and sharing 356Email 356Wikis 356Instant messaging 357Conferencing 357

Closing Case Study 10.1: Creating enterprise resource planning (ERP) software beautifully 360 Closing Case Study 10.2: CRM systems: giving customers that uncanny valley feeling 361

PART 4 BUSINESS AND TRANSFORMATION 368

Bitcoin: a currency revolution? 373

SECTION 11.1 // ETHICS AND PRIVACY 375

Information does not have ethics; people do 377

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Ethical computer use policy 380

Information privacy policy 381

Acceptable use policy 382

Internet use policy 382

Email privacy policy 383

Anti-spam policy 384

Social media use in business 385

Workplace monitoring policy 386

Monitoring technologies 387

Protecting privacy: handling

Privacy statements 388

Third-party privacy programs 388

Global information privacy issues 389

Europe 389

The United States 390

Cloud computing and trans-border

privacy considerations 390

SECTION 11.2 // SOCIAL MEDIA 392

Social media and today’s business 392

SECTION 11.3 // FUTURE TRENDS 393

Trends shaping the future of business 394

The world’s population projected to be

9 billion by 2050 394People in developed countries are living longer 395Advances in communication technologies are changing the way we live and work 396The growth in information industries is

creating a knowledge-dependent global society 396The global economy is becoming more

integrated 396The economy and society are dominated by technology 397The pace of technological innovation is

increasing 398Time is becoming one of the world’s most

precious commodities 398

Closing Case Study 11.1: The Facebook experiment: legal—yes, but ethical? 399 Closing Case Study 11.2: Privacy, copyright

and online piracy of Dallas Buyers Club 400

PART 5 EXPAND YOUR KNOWLEDGE MODULES 406

GLOSSARY 424

INDEX 441

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PAIGE BALTZAN—US EDITION

Paige Baltzan teaches in the Department of Information Technology and Electronic Commerce at the

Daniels College of Business at the University of Denver She holds a BSBA specialising in Accounting/MIS

from Bowling Green State University and an MBA specialising in MIS from the University of Denver She is

a co-author of several books including Business Driven Technology, Essentials of Business Driven Information

Systems, I-Series, and a contributor to Management Information Systems for the Information Age

Before joining the Daniels College faculty in 1999, Paige spent several years working for a large telecommunications company and an international consulting firm, where she participated in client

engagements in the United States as well as South America and Europe Paige lives in Lakewood, Colorado,

with her husband, Tony and daughters Hannah and Sophie

KATHY LYNCH

Dr Kathy Lynch is a freelance education consultant and a retired Information Systems academic Her academic

employment was most recently as an Associate Professor in ICT Research and Development at the University

of the Sunshine Coast (Queensland), prior to this she was in the Faculty of Information Technology, Monash

University Her first academic appointment was as a lecturer in the Faculty of Education at Monash University

Kathy holds a PhD (cross-discipline Information Systems and Education) and a Master of IT (Research) from

Monash University Additionally, she holds several other postgraduate and undergraduate qualifications in

both IT and Education

Kathy has taught IT-related subjects in the secondary, vocational and university sectors across Australia

She is on numerous international and national review panels for grants, promotions and academic papers,

and has been a past Editor-in-Chief of the Australian Journal of Information Systems, and The Interdisciplinary

Journal of Management, Systems and Information.

She has instigated and led a broad range of practical business-driven information systems projects ranging from one of the first web-database systems in the Australian vocational sector in the early 90s, to portals for

indigenous language reconciliation, augmented reality, and e- and mobile-learning initiatives She has also

managed large enterprise-wide systems in both the tertiary and vocational sectors

Kathy’s research interests focus on the effective and efficient use of IT regardless of the domain, with a specific interest in e-learning in developing countries She is an Honorary Research Associate in numerous IT

faculties across the globe (Australia, Uganda and South Africa)

JULIE FISHER

Dr Julie Fisher is a Professor in the Faculty of Information Technology at Monash University, Australia She

has worked and conducted research in the information systems field for the last 25 years Julie is passionate

about teaching and has taught information systems to both undergraduate and postgraduate students

For much of her academic life Julie has conducted research in user interface design and usability, areas which are both critical for developing effective and efficient systems She has led projects involving the

usability testing of small business websites, the implementation of mobile devices in a hospital ward and

assisted with the development of health and other portals Julie has published widely in leading international

and national journals and conferences

AUTHORS

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PREFACE

The Australian and New Zealand edition of

Business-Driven Information Systems discusses

various business initiatives first, and how

technology supports those initiatives second The

premise for this unique approach is that business

initiatives should drive technology choices

Therefore every discussion first addresses the

business needs and then addresses the technology

that supports those needs

This text provides the foundation that will enable students to achieve excellence in business,

whether they major in operations management,

manufacturing, sales, marketing, finance, human

resources, accounting or virtually any other

business discipline Business-Driven Information

Systems is designed to give students the ability

to understand how information technology and

information systems can be a point of strength for

an organisation

Unlike many texts currently available, this third edition has been regionalised in order to best

reflect the needs of instructors and students in the

Asia–Pacific region The text therefore not only

provides many more regional examples and case

studies, but also reflects our business environments

with a focus on Small and Medium Enterprises

(SMEs)

Common business goals associated with information technology projects include reducing

costs, improving productivity, improving customer

satisfaction and loyalty, creating competitive

advantages, streamlining supply chains, global

expansion and so on Achieving these results is not

easy and this text aims to explore some of these issues

Implementing a new accounting system or marketing plan is not likely to generate long-term

growth or reduce costs across an entire organisation

Businesses must undertake enterprise-wide initiatives

to achieve broad general business goals such as

reducing costs

Information systems play a critical role

in deploying such initiatives by facilitating

communication and increasing business intelligence

Any individual anticipating a successful career in business (whether it is in the functional areas of accounting, finance, human resources or operations,

or in the systems area—specifically writing, administering or upgrading the organisation’s information systems) must understand the basics of information systems that can be found in this text

We have found tremendous success teaching information systems (IS) courses by demonstrating the correlation between business and IT Students who understand this tight correlation will therefore understand the power of this course Students learn

10 per cent of what they read, 80 per cent of what they personally experience and 90 per cent of what they teach others

The business-driven approach in this text takes the difficult and often intangible IS concepts, brings them to the students’ level and applies them using

a hands-on approach to reinforce the concepts

Teaching IS with a business-driven focus helps to:

• add credibility to IS

• open students’ eyes to IS opportunities

• attract students to study a major in IS

• engage students

FEATURES

Business-Driven Information Systems is

state-of-the-art in its discussions, presents concepts in an to-understand format and allows students to be active participants in learning The dynamic nature

easy-of information technology requires all students, and more specifically business students, to be aware of both current and emerging technologies

Students are facing complex subjects and need a clear, concise explanation to be able to understand and use these concepts successfully throughout their careers

By engaging students through the use of numerous case studies, exercises, projects and

questions that enforce concepts, Business-Driven Information Systems creates a unique learning

experience for both teaching staff and students

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• a handy reference to the AACSB standards

in each chapter for instructors and students, identifying which graduate attributes/skills will

be developed by completing the chapter and exercises

AUDIENCE

Business-Driven Information Systems is designed for

use in undergraduate or introductory MBA courses

in Information Systems, which are required in many Business Administration or Management programs as part of the common body of knowledge for all business majors Its contents are sufficient to be the grounding text for a course in Information Systems

LOGICAL LAYOUT

Students and teaching staff will find the text well organised with the topics flowing logically from one chapter to the next A definition of each term

is provided before it is covered in the chapter and

an extensive glossary is included at the back of the text

Each chapter offers a comprehensive opening case study, introduction, learning outcomes, closing case studies, key terms, critical business thinking questions, and practical business projects

The teachings in Business-Driven Information Systems are extended to Part 5 through the Expansion

Pack Modules or ‘technology plug-ins’, which offer online learning about core business applications

including Microsoft Excel® Microsoft Access® and Dreamweaver®, and include full pedagogical support

This text also includes integrated Discuss box features Different people in an organisation can view the same facts from different points of view and the cases will encourage students to consider some of those views

THOROUGH EXPLANATIONS

Complete coverage is provided for each topic that

is introduced Explanations are written so that students can understand the ideas presented and relate them to other concepts

SOLID THEORETICAL BASE

The text draws on current theory and practice

of information systems related to the business environment Current academic and professional journals cited throughout the text are found in the notes at the end of each chapter—creating a road map for additional, pertinent readings that can be the basis for learning beyond the scope of the chapters

Such topics are essential to gaining a full understanding of the strategies that a business must recognise, formulate and in turn implement In addition to addressing these in the chapter material, many illustrations are provided for their relevance to business practice

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Adapting a book of this scale has been a daunting

task, made easier by the quality of the US edition and

its approach to the coverage of the subject matter—

thank you to Paige and Amy A similar approach has

been adopted for this Australian and New Zealand

edition, the main focus having been on the relevance

of the real-world examples and cases used It has

also been an enlightening experience, dare we say,

even fun!

Nothing of this magnitude can be undertaken successfully alone; it has been a team effort and the

text has benefited from the thoughtful criticisms and

insights of instructors from institutions throughout

the Pacific region Particular thanks go to the

following people who took part in our Management

Information Systems symposium, participated in

our survey or reviewed the text—all of whom very

generously took the time to offer constructive and

invaluable suggestions on the regional market needs

and about the existing and proposed book content

We wish to thank our case contributors for adding significant regional flavour and to the digital

resource authors that added their expertise to this

book:

Peter Blakey, formerly of Massey University

Dr Yvette Blount, Macquarie University

ACKNOWLEDGMENTS

Dr Pari Delir Haghighi, Monash University

Dr Francis Gacenga, University of Southern Queensland

Dr Heather Gray, Griffith UniversityKenneth Howah, Central Queensland UniversityAssociate Professor Christian Jones, University

of the Sunshine Coast

Dr Tanya Linden, University of Melbourne

Dr Kim MacKenzie, Queensland University of Technology

Dr Alistair Robb, University of QueenslandPamela Spink, Monash University

Dr Lorraine Staehr, La Trobe UniversitySusan Sutherland, Consultant, Information Systems Canberra Pty Ltd

Dr Indrit Troshani, University of AdelaideMarie van der Klooster, formerly of Deakin University

Finally, particular thanks must extend to the McGraw-Hill team who provided support and a helping hand at every stage of development We would like to specifically acknowledge publisher Jillian Gibbs, senior product developer Lisa Coady and senior production editor Daisy Patiag

Their hard work and determination was much appreciated

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The text has been revised so as to show the change and growth in business-driven information systems and the technologies that underpin them Some content has been moved from one chapter and inserted into a different chapter; some content has been deleted This has been a result of feedback from academics currently teaching

IS, as well as global trends in IS degrees.

This edition has an additional content author, Professor Julie Fisher from Monash University, bringing further expertise and collaboration to the text Julie and Kathy have worked, researched and taught IS

together and individually for many years This collaboration enhances this edition of Business-Driven

• New or updated Closing Case studies for all chapters have been written by academics involved in teaching information systems Closing case study questions have also been included.

• Graduates who were spotlighted in previous editions have updated their profile to show where their degree has taken them Further, additional Graduate Spotlights have been included too Together, these show the career diversity a degree in IS can bring.

boxes is to highlight a real-world business issue related to the chapter, providing an opportunity for group debate or discussion.

challenge students to take the IS concepts presented in the chapter and apply them to business scenarios.

concepts and apply them using a hands-on approach to reinforce concepts, demonstrating the correlation between business and technology.

• The reach of Business-Driven Information Systems is extended with the Expand your knowledge modules,

a package containing 12 Technology plug-ins/modules that teach students how to solve business problems using essential business applications like Microsoft Excel ® ’Access ® and Dreamweaver ®.

• Two new Closing Cases; e-Exams and the Apple Watch, each demonstrating the strategic importance of business-driven information systems.

HIGHLIGHTS OF THIS EDITION

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• Expanded coverage of Web 2.0 and its role in business today.

• Expanded coverage of Web 3.0, including the Internet of Things.

• New Opening Case on 3D printing illustrates one of the latest disruptive technologies

in business today, and questions students to explore not only the business opportunities

it brings, but also its legal implications.

• Two new Closing Cases on Facebook and the Internet of Things, each demonstrating the business advantages (and concerns) of connectivity through the Internet.

E-BUSINESS AND MOBILE BUSINESS

3

• Updated coverage of e-business, including how to measure e-business success, organisational strategies for e-business and expanded coverage of e-government

m-Business content has also been updated.

• The Opening Case on paywalls has been updated (previously in Chapter 2) and looks

at print versus online news content It questions students to explore the business of limited free viewing of online newspapers, and its future.

• Two new Closing Cases, on online grocery shopping and Shoes of Prey, each demonstrating how businesses have changed due to e- and m-business models.

DECISIONS AND PROCESSES

4

• Updated coverage of business decision making and business processes.

• Content on the fundamental types of Information Systems (transaction processing systems, decision support systems and strategic support systems) have been moved to Chapter One to ensure that the basics of IS are covered very early on in the text.

• The Opening Case on Quickflix/Netflix has been updated to take a closer look at the impact on business when a decision is made to go (or not to go) online.

• The Closing Case on the airline industry has been revised, and a new case on virtual reality has been added, each demonstrating the role information systems play in business decision making.

• Two new Closing Cases, on keeping up to date with new technology post-graduaduation and the impact of advanced computing infrastructure on the price of coffee, each demonstrating the fundamental information technology used in business is rapidly changing and the need to keep current with these changes.

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• One new Closing Case on HealthSMART and a revised case on Myki, both of which present reasons as to why projects fail.

ENTERPRISE ARCHITECTURE AND SECURITY

7

• This chapter contains the content on enterprise security that was previously in Chapter 11 It has been updated and moved to strengthen the focus on enterprise-wide systems and technology.

• New Opening Case on the Sony hack illustrates the lengths some people will go to make a point; how the hack was done is a lesson for all The case questions students regarding legislation, regulations and business requirements in data retention, recovery and backup.

• Two new Closing Cases, on developing an enterprise-wide architecture and migrating

to google apps, each demonstrating the need to examine and implement information technology and systems across an enterprise rather than independently.

QUALITY DATA AND BUSINESS INTELLIGENCE

8

• Content in this chapter has been updated and re-organised to present a better logical flow of information It looks at the attributes and importance of quality data and databases, and then at data warehousing, data mining and business intelligence The concept of Big Data, and the relationship between BI, business analytics and data science is explored.

• New Opening Case on Chupa Chups illustrates the need to access reliable, useful and complete data across a large global company, and questions students to explore basic database schema and business intelligence tools.

• Two new Closing Cases on XBRL and supply chains and data-driven innovation, each demonstrating how large amounts of quality data are being prepared and used.

ENTERPRISE INFORMATION SYSTEMS: ERP AND SCM

9

• Content in this chapter has been updated and re-organised to present a better logical flow of information ERP and SCM are grouped together as they are commonly the initial enterprise information systems implemented in a large business.

• New Opening Case on Queensland Health illustrates what can go wrong during an ERP implementation, and questions the implications involved in implementing a government- wide ERP system as well as the tendering process.

• Two new Closing Cases, on GoPro and ATE tankers, both of which explore the importance of ERP and SCM, and how they can be effectively conducted and implemented.

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xxii

ENTERPRISE INFORMATION SYSTEMS:

CRM AND COLLABORATION SYSTEMS

10

• Content in this chapter has been updated and re-organised to present a more logical flow of information CRM and collaboration systems such as groupware and knowledge management systems are grouped together in this chapter as they are common enterprise information systems implemented in a large business.

• New Opening Case on Bosch illustrates how a large global company is using collaboration systems within their organisation and with their clients, and questions the collation of user profiles, user-generated content and the use of this content in business.

• Two new Closing Cases, one on Apple’s ERP systems which explores the importance of user experience in software development, and one that looks at the data contained in CRM systems from a legal perspective.

ETHICS, PRIVACY, SOCIAL MEDIA AND FUTURE TRENDS

• Two new Closing Cases, one on Facebook and one on online privacy and copyright, both demonstrating the legal and ethical implications when using online sources to generate, download or stream content.

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to be covered in each chapter

Every learning outcome corresponds to a relevant section

in the chapter, targeting student learning and revision.

KEY TERMS

Key terms are highlighted where they first appear and are defined in the margins They are also listed and defined in the glossary at the end of the book.

REAL-WORLD CASE STUDIES

Each chapter begins with an Opening case study, illustrating information systems in action in the business world Each case study is designed to contextualise the content to be covered in the chapter

Closing case studies reinforce concepts, themes and issues discussed in the chapter These case studies illustrate how the core concepts covered in each chapter have been implemented by prominent organisations and businesses.

CHAPTER 1 Information systems in business 9

8

I nformation is everywhere The amount of data and information in the world today is hard to estimate

– however, it is a lot and is growing at a terrific rate We are generating data from computers, sensors, cameras, phones, so much so that we are surpassing the capacity of the devices that store

it, let alone retrieve it Information technology and the systems allow for the logical and useable retrieval

of data But with this much data, business decisions need to be made as to what data and information needs to be retrieved, or alternatively, the end user be given the ‘power’ to decide themselves what data

or information they require.

Most organisations value information and the systems that house the information as strategic assets, therefore the first section of this chapter introduces data, information, business intelligence and knowledge, and their place in business The second section of this chapter focuses on business strategies help make business decisions, solve problems and find new, innovative opportunities and therefore possibly a company a competitive advantage through the use of information technology and systems.

Fact

a confirmed or validated piece of data

or information

Information age

when infinite numbers

of facts are widely available to anyone who can use a computer

Information technology (IT)

a field concerned with the use of technology

in managing and processing information

Information technology can be an important enabler of business success and innovation

1.1 Information systems in business

L e a r n i n g O u t c O m e s

1 Differentiate between information technology and information systems

2 Describe the information age and the differences between data, information, business intelligence and knowledge.

3 Outline the common functional areas in an organisation

4 Examine information technology’s impact on business

5 Explain a systems thinking approach in relationship to business

6 Describe and compare the different roles and responsibilities in information technology.

7 Identify the three main types of information systems, and how business personnel can use these systems

to make decisions and gain competitive advantage

Business in the information age

Facts … Did you know …

• Wotif.com was founded by an Aussie (in 2000)

• Kogan.com started in a garage in a suburb in Melbourne by its founder; a Monash IT graduate, Ruslan Kogan in 2006 (In 2012, Ruslan Kogan was named the richest Australian under 30, and in

2014 one of the 200 richest Australians 2 )

• A 15-30 second timeslot in the 2013 television broadcast of the AFL grand final cost up to $100,000 3

A fact is the confirmation or validation of an event or object In the past, people primarily learned facts from books Today, by simply clicking a button people can find out anything, from anywhere, at any time We live in the information age, when infinite numbers of facts are widely available to anyone who can use a computer The impact of information technology (IT)—a field concerned with the use

of technology to manage and process information—on the global business environment is equivalent

to the printing press’s impact on publishing and electricity’s impact on productivity University student start-ups were mostly unheard of before the information age Now, it is not at all unusual to read about

a business student starting a multimillion-dollar company from his or her bedroom Think of Mark Zuckerberg, who started Facebook from his university dorm room, or Michael Dell (Dell Computers) and Bill Gates (Microsoft), who both founded their legendary companies as university students It is not only the Americans who think of great IT ideas; Graeme Woods came up with his wotif idea when he was an

IT consultant after he finished his University of Queensland Information Systems post graduate degree 5

LO 1.1

10 Great just isn’t good enough Google see being great at something as a starting point, not an endpoint They set ourselves goals they know they can’t reach yet, because they know that by stretching to meet them

they can get further than they expected.

Why do businesses need Google?

It is not only the information obtained by Googling that one wants– whether for personal or business, but the additional information via products/applications that Google offers businesses Everyone of these products relies on information, and every bit of this information

is stored in a system somewhere, and in a format that is quickly useable, shareable, searchable and retrievable The use of this information coupled with data, technology, people and informed decisions are all key to the success of

businesses today – information systems are the connecters and conduits.

Opening case study reflection

1 What other web search engines are available Are they as popular as Google? Why/why not?

2 Explore the full list of Google products, then determine under which one of the following categories they would be used (more than one category is possible) Use at least the following headings: operational, strategic, business

personnel, IT personnel, decision support, global, value creation

3 Use Porter’s Five Forces Model and his Generic Business Strategies to analyse Google products in

relation to businesses.

sources

1 https://encrypted-tbn1.gstatic.com/images?q=tbn:ANd9GcQbhzeu ak8UQ79Ii9nspgCcwCnPfjMIjsRis7B0dnopEIlfT-274w

2 h t t p : / / w w w g o o g l e c o m a u / a b o u t / c o m p a n y / h i s t o r y / Accessed December 2014; http://www.businessweek.com/

cap Accessed December 2014).

3 (https://www.google.com.au/about/company/philosophy/)

4 products.png

taBLe 1.1 Tony’s snack company data

Order date

customer sales representative

Product Qty unit

total cost

$

Profit

$

5-Jan franklins Craig schultz Twisties 27 15 405 10 270 135

7-Jan 7-Eleven Craig schultz Pringles 79 12 948 6 474 474 7-Jan Coles Roberta Cross Twisties 52 15 780 $10 520 260

9-Jan Coles Craig schultz Twisties 66 15 990 $10 660 330 10-Jan Target Craig schultz Twisties 40 15 600 $10 400 200 11-Jan Coles Craig schultz Twisties 71 15 $1 065 $10 710 355

Information

Information is data converted into a meaningful and useful context Having the right information at

the right moment in time can be worth a fortune Having the wrong information at the right moment,

or the right information at the wrong moment, can be disastrous The truth about information is that its value is only as good as the people who use it People using the same information can make different decisions depending on how they interpret or analyse the information Thus information has value only insofar as the people using it do as well.

Tony can analyse his sales data and turn it into information to answer all the above questions and understand how his business is operating For instance, Table 1.2 shows that Roberta Cross made $5858 profit from Coles; further the data can answer the questions raised by Tony (Table 1.3) to help him identify and then address such issues as underperforming sales representatives and weak products.

A variable is a data characteristic that stands for a value that changes or varies over time For example,

in Tony’s data, price and quantity ordered can vary Changing the value of variables allows managers to create hypothetical scenarios to study future possibilities Tony may find it valuable to anticipate how sales or cost increases affect profitability To estimate how a 20 per cent increase in prices might improve profits, Tony simply changes the price variable for all orders, which automatically calculates the amount

of new profits To estimate how a 10 per cent increase in costs hurts profits, Tony changes the cost variable for all orders, which automatically calculates the amount of lost profits Manipulating variables

is an important tool for any business.

Business intelligence

Business intelligence (BI) is information collected from multiple sources such as suppliers, customers,

competitors, partners and industries that analyses patterns, trends and relationships for strategic decision making BI manipulates multiple variables and in some cases even hundreds of variables including such items as interest rates, weather conditions and even petrol prices (BI is covered in Chapter 8) Tony can use BI to analyse internal data such as company sales, along with external data about the environment such as competitors, finances, weather, holidays and even sporting events Both internal and external variables affect snack sales, and analysing these variables can help Tony determine ordering levels and sales forecasts For instance, BI can predict inventory requirements for Tony’s business for the week before the AFL Grand Final if, say, the home team is playing, average temperature is above 30 degrees and the stock market is performing well This is BI at its finest, incorporating all types of internal and external variables to anticipate business performance.

over time

Business intelligence

(BI)

information collected from multiple sources such as suppliers, customers, competitors, partners and industries that analyses patterns, trends and relationships for strategic decision

making

taBLe 1.2 Tony’s data sorted by customer ‘Coles’ and sales representative ‘Roberta Cross’

Order date customer sales

1 206 383 20 243 273 14 385 5 858

sorting the data reveals that Roberta Cross’s total sales to Coles were $20 243 resulting in a profit of $5858

(Profit $5 858 = sales $20 243 – costs $14 385)

taBLe 1.3 Information gained after analysing Tony’s data

tony’s Business information name total profit $

Who is Tony’s least valuable customer by total sales? Reject shop 45 673

Who is Tony’s least valuable customer by profit? ALDI 23 908 What is Tony’s best-selling product by total sales? Twisties 232 500 What is Tony’s weakest-selling product by total sales? Pringles 54 890 What is Tony’s best-selling product by profit? Grain Waves 13 050 What is Tony’s weakest-selling product by profit? Pringles 23 000 Who is Tony’s best sales representative by profit? Roberta Cross 1 230 980 Who is Tony’s weakest sales representative by profit? Craig schultz 98 980 What is the best sales representative’s best-selling product by total profit? Twisties 98 780 Who is the best sales representative’s best customer by total profit? Coles 345 900 What is the best sales representative’s weakest-selling product by total profit? Kettle 45 600 Who is the best sales representative’s weakest customer by total profit? IGA 56 050

43

A brave new connected world

What’s in IT for me?

CHAPTER

TWO

business opportunities that a connected world brings While it is difficult to imagine a time when the world was not connected, an increasingly connected world can pose challenges for businesses, and also offers a range of benefits—allowing businesses to share resources, reduce travel and enhance communication.

It is important to understand the evolution of the Internet and the characteristics that distinguish each stage of its progression, and the possibilities of what is to come next in this connected world of ours.

As future managers and knowledge workers, you need to understand the benefits that a connected world can offer your organisation and career You also need to be aware of the tools you can use to better engage with customers, share ideas and collaborate with colleagues and customers alike to resolve business problems.

SECTION 2.1 45

Our connected world

• The Web changed the world

• The Internet changed business

• Benefits of a connected world

• Challenges of a connected world

• Use of information technology

• Reflective thinking skills

PART 1 Information systems are business CHAPTER 2 Information systems in business

Create a summary of your findings to share with your class

How can learning about people such as Thomas friedman and Michael Porter help prepare you for a career in business? Name three additional business professionals you should follow to help prepare for your career in business.

Using Porter’s five forces Model (buyer power, supplier power, threat of new entrants, threat of substitute products and competition), evaluate the attractiveness of entering the movie rental business Be sure to include product differentiation, switching costs and loyalty programs in your analysis.

3 Working for the best

Each year, Fortune magazine creates a list of the top 100

companies to work for find the most recent list What types of

data do you think Fortune analysed to determine its company

rankings? What issues could occur if the analysis of the data were inaccurate? What types of information can you gain by analysing the list? Create five questions a student performing a job search could answer by analysing this list.

4 job surveys

Research the Internet for current Is jobs Which types of jobs are

on the rise? If there are any jobs you are unfamiliar with, research the Internet to determine the job characteristics List the top three jobs you would want if you were to pursue a career in Is What do help you prepare for these jobs? 3

5 communication is key

The ability to clearly communicate with your peers, team members, managers and end users is critical skill for all those involved in the IT business However, good communication skills do not come easily for many The 2013 movie “The Internship” (http://www.

theinternshipmovie.com/) is about two salesmen, Vince and Owen, who lots their jobs, however, they do not give up and apply for an internship with Google

Watch the film (or at least the trailer) and list the communication skills that Vince and Owen possess that the other applicants (and some of the employees), do not.

6 The Five Forces Model at work

your team is working for a small investment company that specialises in technology investments A new company, Geyser,

has just released an operating system that plans to compete with Microsoft’s operating systems your company has a significant amount of capital invested in Microsoft your boss, Kellee Lazarus, has asked you to compile a Porter’s five forces analysis for Microsoft to ensure your company’s Microsoft investment is not

it competitive advantage, that Nokia release its first comparable

“management [being]worried that the product could be a costly flop… [the] organization so swollen by its early success that it grew complacent, slow and removed from consumer desires” 36 Name three companies or products that today could be classed as having the first-mover advantage; what is their business strategy; are they global or local; who founded the organisation (how old are they and their country of residence); who is their closest competition (or rival) for one of the companies/products generate a Porter’s five forces analysis.

8 Applying the Three generic Strategies

This chapter discussed several examples of companies that pursue differentiated strategies so that they are not forced into positions where they must compete solely based on price In a team, choose an industry and find and compare two companies—one that is competing based on price and another that is pursuing

a differentiated strategy enabled by the creative use of IT some industries you may want to consider are clothing retailers, supermarkets, airlines and personal computers

Prepare a presentation for the class on the ways the company

is using IT to help it differentiate and compete against the low-cost provider

9 Top five things you will say to your grandchildren

Wired magazine recently posted a list of the top 10 things you

expression below, try to identify what it is referring to and why it will be considered outdated 37

1 Back in my day, we only needed 140 characters.

2 Televised contests gave cash prizes to whoever could store

the most data in their head.

2 Well, the screens were bigger, but they only showed the

movies at certain times of day.

4 We all had one, but nobody actually used it Come to think

of it, I bet my LinkedIn profile is still out there on the web somewhere.

5 you used to keep files right on your computer, and you had to

go back to that same computer to access them!

Established in 1881, sanford harvests and processes seafood in New Zealand, from the far North to stewart Island, delivering resulted in over NZ$433 million in sales revenue for the year ending september 2010.

since the early 1990s, the company has grown organically and through acquisitions, and is now listed on the NZX One consequence of the acquisitions strategy was inheriting disparate information systems and, in early 2005, sanford had to integrate its information management platform, a visionary company- wide enterprise resource planning (ERP) initiative it dubbed

‘Project fish’ Believed to be a world first for the fishing industry, sanford achieved a transformation of the very core of its business infrastructure and, through harnessing and integrating several software applications, has taken the lead in innovative and sustainable business practices.

Increasing customer service demands and growing regulatory requirements, combined with sanford’s commitment to the sustainability of New Zealand’s seafood supplies, had made it apparent that the existing standalone software applications were

no longer sufficient since then, sanford has continued to grow, and now not only owns 11 inshore fishing vessels for fresh fish, six at-sea scampi processing trawlers, four deep-sea vessels and three charter trawlers that typically have a crew of 40 and stay out at sea for 35 days The fishing fleet is complemented by eight land based processing facilities across New Zealand, from stewart Island and Bluff in the south to Auckland and Kaeo in the North

These plants, though owned by sanford, also process catch landed

by independent local or even overseas fishing vessels coming here from the still fish-rich south-Pacific and Antarctic waters.

Before 2005, Marel, a tracking system developed in Iceland, was used to track the fish as it was processed and packed in these plants However, no system other than the sharing of spreadsheets enabled a complete overview of the business and its inventory across all plants This process involved a lot of repetitive data re- entry and also led to numerous spreadsheets being held in various locations ‘Marel gave us great detail of each plant’s processing and packing but it was not presented in the context of the whole company,’ explains Teresa Borrell, project leader on Project fish

‘We were also operating one financial system in the North Island and another in the south Island with little integration between the two systems One of our key drivers for the project was to introduce a new level of organisation-wide inventory control and management.’

sanford subsequently achieved this goal with the introduction of another product developed in Iceland—Wisefish, an information management and finance system ‘Wisefish was the final piece

in our puzzle,’ says Borrell ‘We knew we had the foundation for increased business intelligence and transparency with Marel, but

we needed a way to access the latest information from its databases

in real time.’ All seafood that enters and exits a processing facility

is recorded through a barcode reader into the Marel system Each barcode creates a history of the fish from when it is caught at sea through the whole processing and sales dispatch cycle This data

is now imported into the centralised Wisefish system several times

a day to enable accurate financial processing and close to time business reporting Also integrated into the financial system

real-is the payroll software, which calculates the payments to staff

who are paid on the amount of fish caught using the information received from Wisefish Borrell says, ‘sanford has achieved its goal

of improved inventory control and management Project fish has delivered a truly integrated ERP platform for our business.’

sanford’s ability to service export markets has also improved

The company has increased insight into exactly what product is coming to market from fishing vessels and can confidently pre-sell fish before they even hit the shore Marel production data from at- sea-processing trawlers is sent daily via satellite to the shore office and then loaded into the system ‘With integrated real-time internet data, we can instantly see which market worldwide is giving a high return on a certain product and may even make a decision

to airfreight more stock instead of shipping it.’ Wisefish allows the marketers to see exactly what product is on board any vessel

at sea and in processing on shore, which makes it now feasible

to pre-sell fish Given the unique supply situation of this industry, with the uncertain and seasonal supply of any specific fish variety and the short shelf-life of fresh fish, the real-time information that Wisefish provides also gives the customer confidence in sanford’s ability to consistently supply on time and on order

Another positive outcome from the project has been the breaking down of the traditional ‘silo’ mentality This development has resulted in increased communication between branches and the opportunity for staff to add value to their roles ‘At an administration level, we’ve opened up the opportunity for our staff to become business analysts instead of number crunchers,’

says Borrell sanford can also provide the Ministry of fisheries and the New Zealand food safety Authority with faster access to information via direct electronic data transfer The scope of Project fish continues to evolve as its users become more familiar with its capabilities selected customers can now look up their contracts and loaded, and track the container to its delivery point The quantum leap sanford has achieved in its information and business infrastructure integration since late 2005 continued in 2012 with technology project looking at more eco-friendly ways of catching fish and more efficiently moving it to market.

CASe STuDY QueSTIONS

Q1 for the university, what business benefits and costs could

accrue from switching from all paper exams to all electronic exams? for students, what are the advantages and disadvantages?

Q2 What other issues or questions not directly discussed in the Case could you suggest might arise during this period of feasibility testing and evaluation?

Q3 An example was given of how an e-exam might bring more authenticity to a medical exam Can you think of several ways an e-exam could make an ICT exam more ‘authentic’?

Q4 If you were on the evaluation team for this trial, what do you think could be some of the business, organisational or technical issues that might be raised following the successful trial?

Q5: Opt-in and Opt-out are often issues relating to IT and

Business ethics particularly relating to online facilities

What do you see as the pro’s and con’s of in” or out” when it comes to e-exams?

“opt-Closing Case

EMPLOYABILITY SKILLS—AACSB

The AACSB feature outlines general skill areas that that particular chapter focuses on.

Trang 25

APPLY YOUR KNOWLEDGE

The Apply your knowledge projects invite students to use the concepts from each chapter in order to engage in a variety of business scenarios.

GRADUATE SPOTLIGHTS

Graduate spotlights, located at the start of each part

of the book, present IT graduates’ stories They share their experiences of studying business information systems and how those experiences have informed their career choices.

CRITICAL BUSINESS THINKING

At the end of each chapter, the Critical business thinking feature provides students with an opportunity to apply critical thinking skills and chapter concepts to business problems.

Create a summary of your findings to share with your class

How can learning about people such as Thomas friedman and Michael Porter help prepare you for a career in business? Name prepare for your career in business.

3 Working for the best

Each year, Fortune magazine creates a list of the top 100

companies to work for find the most recent list What types of rankings? What issues could occur if the analysis of the data were the list? Create five questions a student performing a job search could answer by analysing this list.

4 job surveys

Research the Internet for current Is jobs Which types of jobs are the Internet to determine the job characteristics List the top three you find interesting about these jobs? What skills can you build to help you prepare for these jobs? 3

5 communication is key

The ability to clearly communicate with your peers, team members, managers and end users is critical skill for all those involved in the IT business However, good communication skills do not come easily for many The 2013 movie “The Internship” (http://www.

theinternshipmovie.com/) is about two salesmen, Vince and Owen, who lots their jobs, however, they do not give up and apply for an internship with Google

Watch the film (or at least the trailer) and list the communication skills that Vince and Owen possess that the other applicants (and some of the employees), do not.

6 The Five Forces Model at work

your team is working for a small investment company that specialises in technology investments A new company, Geyser,

has just released an operating system that plans to compete with Microsoft’s operating systems your company has a significant amount of capital invested in Microsoft your boss, Kellee Lazarus, has asked you to compile a Porter’s five forces analysis for Microsoft to ensure your company’s Microsoft investment is not

it competitive advantage, that Nokia release its first comparable phone It has missed a great opportunity (and revenue) due to flop… [the] organization so swollen by its early success that it grew complacent, slow and removed from consumer desires” 36 Name three companies or products that today could be classed as having the first-mover advantage; what is their business (how old are they and their country of residence); who is their closest competition (or rival) for one of the companies/products generate a Porter’s five forces analysis.

8 Applying the Three generic Strategies

This chapter discussed several examples of companies that pursue where they must compete solely based on price In a team, choose an industry and find and compare two companies—one

a differentiated strategy enabled by the creative use of IT some industries you may want to consider are clothing retailers, supermarkets, airlines and personal computers

Prepare a presentation for the class on the ways the company

is using IT to help it differentiate and compete against the low-cost provider

9 Top five things you will say to your grandchildren

Wired magazine recently posted a list of the top 10 things you

expression below, try to identify what it is referring to and why it will be considered outdated 37

1 Back in my day, we only needed 140 characters.

2 Televised contests gave cash prizes to whoever could store the most data in their head.

2 Well, the screens were bigger, but they only showed the movies at certain times of day.

4 We all had one, but nobody actually used it Come to think

of it, I bet my LinkedIn profile is still out there on the web somewhere.

5 you used to keep files right on your computer, and you had to

go back to that same computer to access them!

Established in 1881, sanford harvests and processes seafood in

New Zealand, from the far North to stewart Island, delivering

resulted in over NZ$433 million in sales revenue for the year

ending september 2010.

since the early 1990s, the company has grown organically

and through acquisitions, and is now listed on the NZX One

consequence of the acquisitions strategy was inheriting disparate

its information management platform, a visionary

company-wide enterprise resource planning (ERP) initiative it dubbed

‘Project fish’ Believed to be a world first for the fishing industry,

infrastructure and, through harnessing and integrating several

sustainable business practices.

Increasing customer service demands and growing regulatory

requirements, combined with sanford’s commitment to the

sustainability of New Zealand’s seafood supplies, had made it

apparent that the existing standalone software applications were

no longer sufficient since then, sanford has continued to grow,

and now not only owns 11 inshore fishing vessels for fresh fish, six

‘super seiner’ tuna vessels, but also runs four large 50 to 75 metre

sea for 35 days The fishing fleet is complemented by eight land

Island and Bluff in the south to Auckland and Kaeo in the North

by independent local or even overseas fishing vessels coming here

from the still fish-rich south-Pacific and Antarctic waters.

Before 2005, Marel, a tracking system developed in Iceland,

was used to track the fish as it was processed and packed in these

enabled a complete overview of the business and its inventory

across all plants This process involved a lot of repetitive data

re-entry and also led to numerous spreadsheets being held in various

locations ‘Marel gave us great detail of each plant’s processing

company,’ explains Teresa Borrell, project leader on Project fish

‘We were also operating one financial system in the North Island

and another in the south Island with little integration between the two

new level of organisation-wide inventory control and management.’

sanford subsequently achieved this goal with the introduction of

management and finance system ‘Wisefish was the final piece

in our puzzle,’ says Borrell ‘We knew we had the foundation for

increased business intelligence and transparency with Marel, but

we needed a way to access the latest information from its databases

is recorded through a barcode reader into the Marel system Each

through the whole processing and sales dispatch cycle This data

is now imported into the centralised Wisefish system several times

a day to enable accurate financial processing and close to

real-time business reporting Also integrated into the financial system

is the payroll software, which calculates the payments to staff

who are paid on the amount of fish caught using the information received from Wisefish Borrell says, ‘sanford has achieved its goal

of improved inventory control and management Project fish has delivered a truly integrated ERP platform for our business.’

sanford’s ability to service export markets has also improved

The company has increased insight into exactly what product is coming to market from fishing vessels and can confidently pre-sell fish before they even hit the shore Marel production data from at- sea-processing trawlers is sent daily via satellite to the shore office data, we can instantly see which market worldwide is giving a high return on a certain product and may even make a decision

to airfreight more stock instead of shipping it.’ Wisefish allows the marketers to see exactly what product is on board any vessel

to pre-sell fish Given the unique supply situation of this industry, and the short shelf-life of fresh fish, the real-time information that

ability to consistently supply on time and on order

Another positive outcome from the project has been the breaking down of the traditional ‘silo’ mentality This development has resulted in increased communication between branches

and the opportunity for staff to add value to their roles ‘At an staff to become business analysts instead of number crunchers,’

says Borrell sanford can also provide the Ministry of fisheries and the New Zealand food safety Authority with faster access to information via direct electronic data transfer The scope of Project capabilities selected customers can now look up their contracts and loaded, and track the container to its delivery point The quantum leap sanford has achieved in its information and business infrastructure integration since late 2005 continued in 2012 with technology project looking at more eco-friendly ways of catching

fish and more efficiently moving it to market.

CASe STuDY QueSTIONS

Q1 for the university, what business benefits and costs could accrue from switching from all paper exams to all electronic

exams? for students, what are the advantages and disadvantages?

Q2 What other issues or questions not directly discussed in the Case could you suggest might arise during this period of

feasibility testing and evaluation?

Q3 An example was given of how an e-exam might bring more authenticity to a medical exam Can you think of several

ways an e-exam could make an ICT exam more ‘authentic’?

Q4 If you were on the evaluation team for this trial, what do you think could be some of the business, organisational or technical

issues that might be raised following the successful trial?

Business ethics particularly relating to online facilities

What do you see as the pro’s and con’s of in” or out” when it comes to e-exams?

“opt-Q6 e.g how to ‘sell’ the idea to reluctant students?

Closing

Case

study 1 URsULA DANTIN, UNIVERsITy Of AUCKLAND, NZ sTRATEGyBUsINEss

You may think only students well versed in advanced technology can compete in the information age

This is simply not true Many business leaders have created exceptional opportunities by coupling the

power of the information age with traditional business methods Here are just a few examples:

• Amazon is not a technology company; its original business focus was to sell books, and it now sells

nearly everything.

• Netflix is not a technology company; its primary business focus is to rent videos.

• Zappos is not a technology company; its primary business focus is to sell shoes, bags, clothing and

accessories.

Amazon’s founder, Jeff Bezos, at first saw an opportunity to change the way people purchase books

Using the power of the information age to tailor offerings to each customer and speed the payment

process, he in effect opened millions of tiny virtual bookstores, each with a vastly larger selection and

far cheaper product than traditional bookstores The success of his original business model led him to

the same thing for videos and shoes All these entrepreneurs were business professionals, not technology

creating innovative companies that now lead entire industries.

information technology versus information systems

Information technology and information systems are two closely related fields – each are required in

today’s organisations Information technology is primarily concerned with hardware and software

(for example servers, operating systems, web services, code, devices, networks (see Chapter 5), and

information systems is primarily concerned with the people, processes and the technology – it is a

large catch-all term referring to systems designed to create, gather, store, manipulate or disseminate

information IS deal with basically obtaining, storing and retrieving information, for example, the Dewey

system for identifying library books, protocols and terminology for product identification, customer

records, product ordering details, workplace communication

Regardless of the disciple, students frequently ask, ‘Why do we need to study information technology

or information systems?’ The answer is simple: they are everywhere in every business They affect nearly

every aspect of our lives—speed up the processes of work, rest and play through improvements in software,

hardware and systems Understanding them provides great insight to anyone learning about business.

It is easy to demonstrate the role of information technology in business by reviewing a paper or

online copy of a popular business magazine such as BusinessWeek, Business Review Weekly (BRW) or NZ

magazines, not technology magazines, yet they are filled with technology Students who understand

technology have an advantage in business.

Articles in these magazines typically discuss such topics as databases, customer relationship management, web services, supply chain management, ‘big data’, security, ethics, business intelligence

and so on These are the basis of information systems This text explores these topics in detail, along with

reviewing the associated business opportunities and challenges IT and IS can be important enablers of

business success and innovation This is not to say that they equal business success and innovation, or

that they represent business success and innovation They are most useful when they leverage the talents

of people.: they are not useful unless the right people know how to use and manage it effectively.

A management information system (MIS) is a business function just as marketing, finance, operations management and human resources management are business functions Formally defined, management

information systems (MIS) is a general name for the business function and academic discipline

covering the application of people, technologies and procedures—collectively called information

systems—to manage and solve business problems To perform the MIS function effectively, almost all

organisations today, particularly large and medium-sized ones, have an internal IT department, often

called Information Technology (IT), Information Systems (IS) or Management Information Systems

(MIS) When beginning to learn about IT, it is important to understand the relationships between data,

information, business intelligence and knowledge.

Pluses and minuses

The line famously quoted in the film Spider-Man, ‘With great power comes great responsibility’, applies to every

also lead to pitfalls and traps Online trading, for instance, brought many companies profits but has cost many with promises of high yield investments but no real profits are generated Online anonymity means the promoters

A manager must be able to analyse the good and the bad associated with technology

Review some companies that primarily operate on the Internet, such as Kogan, eBay, Craigslist or Amazon, and compile a list of the business opportunities and the potential pitfalls associated with doing business online.

Data, information, business intelligence and knowledge

Students who understand business along with the power associated with IT are well placed to create their own opportunities and perhaps even new industries—just as co-founders Chris DeWolfe and Tom Anderson did with MySpace, Mark Zuckerberg did with Facebook, and as Ruslan Kogan did with information age The core drivers of the information age are data, information, business intelligence and knowledge.

Data

Data are raw facts that describe the characteristics of an event or object Before the information age, managers manually collected and analysed data, a time-consuming and complicated task without which they would have little insight into how to run their business Lacking data, managers often found themselves making business decisions about how many products to make, how much material to order managers compile, analyse and comprehend massive amounts of data daily, which helps them make more successful business decisions.

The amount of data that we use or generate today is growing exponentially, and thus too much for the traditional IT based systems that store, collate, correlate, and retrieve the data Big data is the term used for data sets that are so large and complex it is difficult to process the data using traditional data mobile devices, web logs, software logs, cameras, and RFID readers The ‘size’ of big data is indefinable, needs to understand its data, what it needs to do with it, when, how quickly and in what format (see Chapter 8 for more on big data)

Table 1.1 shows sales data for Tony’s Snack Company, a fictitious business that supplies snacks to stores The data highlights characteristics such as order date, customer, sales representative, product, quantity and profit.

The second line in Table 1.1, shows that Roberta Cross sold 90 boxes of Twisties to Coles for $1350, resulting in a profit of $450 (note that profit = sales — costs) This data is useful for understanding individual sales but does not provide much insight into how Tony’s business is performing as a whole

Tony needs to ask questions to help him manage his day-to-day operations, such as:

• Who are my best customers?

• Who are my least profitable customers?

• What is my best-selling product?

• What is my slowest-selling product?

• Who is my strongest sales representative?

• Who is my weakest sales representative?

What Tony needs, in other words, is not data but information.

Data

raw facts that describe the characteristics of an event or object

Big data

data sets that are so large and complex it is difficult to process the data using traditional data processing applications

a general name for the

business function and

What job/position did you have when you were interviewed for the 2nd edition?

At the time of the 2nd edition, I held the same position as I do now—Partner at PRIME Process Management and software in the Business Process Management space Our clients call upon us to document their existing business processes, analyse and improve these, then implement the changes into their organisation.

What did your job/position involve?

In the earlier days, my job was more focused on the development of our product and services This was establishing, trialling and refining the product and services which would satisfy our customers This was

in addition to the day-to-day activities such as managing client projects, recruitment and retention and of course getting out there and selling our product and services.

What do you enjoy most about your job?

I get great satisfaction out of establishing teams, setting an objective and working with the team to achieve that I like bringing out the best in people I also enjoy doing strategic planning activities for the business

This gives room for creative thinking, making plans and working towards achieving our objectives.

What are your thoughts on the future of information systems?

I’m feeling positive I have seen the application of IT, hence the use of information systems, adopted in

a variety of industries—some faster than others There is so much more room for IT and information systems, let alone the continuous improvement of these.

What advice would you give to recent graduates looking to work in information systems?

I mentioned this in my write-up for the 2nd edition of this book and I feel it still holds true Anything that can be offshored will be offshored It is a good specialisation, but ensure you also develop excellent communication and interpersonal skills Focus on customer-facing roles where you can use your technical, business, communication and interpersonal skills, as these cannot be offshored so easily.

Apply your knowledge

BUsINEss PROJECTs

prOJeCt ONe Capitalising on your career

Business leaders need to be comfortable with management information systems (MIs) for the following (primary) reasons.

• The sheer magnitude of the dollars spent on MIs must be managed to ensure business value.

• Research consistently shows that when top managers are active in supporting MIs, they realise a number of benefits such as gaining

a competitive advantage, streamlining business processes and even transforming entire industries.

• When business leaders are not involved in MIs, systems fail and revenue is lost and entire companies can even fail because of poorly managed systems.

How do companies get managers involved in MIs? One of the biggest positive factors is managers’ personal experience with MIs and education, they are more likely to lead their companies in achieving business success through MIs.

1 search the Internet for examples of the types of technologies currently used in the field or industry that you plan to pursue for example, if you are planning a career in accounting or finance, you should become familiar with financial systems such as Oracle financials for a career in logistics or distribution, research supply chain management systems If marketing appeals to you, research customer relationship management systems, blogs, e-marketing and social networking.

2 As a competitive tool, MIs can differentiate products, services and prices from competitors’ offerings by improving product quality, shortening product development or delivery time, creating new MIs-based products and services, and improving customer service before, during and after a transaction search the Internet for examples of companies in the industry where you plan to work that have achieved a competitive advantage through MIs.

3 Create a brief report of your findings Include an overview of the type of technologies you found and how companies are using them to achieve a competitive advantage.

prOJeCt tWO Achieving alignment

Most companies would like to be in the market-leading position of Jetstar or Dell, which have used MIs to secure their respective spots

in the marketplace These companies are relentless about keeping the cost of technology down by combining the best of MIs and enough to coordinate their business and MIs.

Use any resource to answer the question, ‘Why is it challenging for businesses to align MIs and their other operations?’ Use the following questions to begin your analysis.

1 How do companies monitor competitive intelligence and create competitive advantages?

2 What are some of the greatest MIs challenges for most firms?

3 What drives MIs decisions?

4 Who or what is the moving force behind MIs decisions for most companies?

prOJeCt FOUr Porter’s five forces

setting strategic direction for a business is a challenge for even seasoned professionals The good news is that many tools are available to help you find competitive advantages, including Porter’s five forces Porter’s five forces Model analyses the competitive forces within the environment in which a company operates to assess the potential for profitability in an industry Its purpose is to combat these competitive forces by identifying opportunities, competitive advantages and competitive intelligence If the forces are strong, they increase competition; if the forces are weak, they decrease competition.

Porter’s five forces Model is a good framework for understanding market forces Break into groups and choose a comparison from the list below to perform a Porter’s five forces analysis.

• Notebook computer and tablet computer

• smart phone (eg iPhone) and non smart mobile phone

• iTunes and spotify

• GPs device and street directory

• Digital books and printed books

prOJeCt FIVe Adding value

To identify competitive advantages, Michael Porter created value chain analysis, which views a firm as a series of business processes that each add value to the product or service Value chain analysis is a useful tool for determining how to create the greatest possible value for customers The goal of value chain analysis is to identify processes in which the firm can add value for the customer and create a competitive advantage for itself, with a cost advantage or product differentiation

Cafe chain Gloria Jeans has employed you after your graduation for a temporary position that could turn into a full-time opportunity With new cafes popping up on every corner, coupled with the global recession, Gloria Jeans is worried about losing market share to competitors your boss, Heather sweitzer, is out of ideas for ways to improve the company’s profitability you decide that one of the knowledge to complete all of the elements required, but you know enough to get started and plan to take your draft to Heather next week.

Using your knowledge of Gloria Jean’s, create a value chain analysis feel free to make assumptions about operations; just be sure to list any that you make Also, be sure to write an overview of the tool and its potential value so Heather can understand how it works.

prOJeCt SIX Flat competition

‘When I was growing up in Minneapolis, my parents always said, “Tom, finish your dinner There are people starving in China and India.” Today I tell my girls, “finish your homework, because people in China and India are starving for your jobs.” And in a flat world, they can have them, because there’s no such thing as an American job anymore’ (Thomas friedman).

In his book The world is flat , Thomas friedman describes the unplanned cascade of technological and social shifts that effectively

levelled the economic world, and ‘accidentally made Beijing, Bangalore, and Bethesda next-door neighbors’ The video of Thomas friedman’s lecture at MIT discussing the flat world is available at http://mitworld.mit.edu/watch/the-world-is-flat-30-9321 If you want

to be prepared to compete in a ‘flat world’, you should watch this video and answer the following questions.

1 Do you agree or disagree with friedman’s assessment that the world is flat?

2 What are the potential impacts of a flat world for a student performing a job search?

3 What can students do to prepare themselves for competing in a flat world?

prOJeCt SeVeN Garbage in – garbage out

Electronic health records and computerized systems are being hailed as the best way to make the health system safer and more efficient But the rush to implement these systems might be doing more harm than good.

Genesis Burkett was born 16 weeks prematurely but was thriving in the neonatal intensive care unit When he was 40 days old, a pharmacy technician administered a routine IV bag of sodium chloride and calcium But there was a problem: When the technician entered the prescription information into the electronic system that told an automated machine how much of each solution to include,

he punched in the wrong dose of sodium—administering more than 60 times the amount Genesis’s tiny body could handle Within hours, the infant suffered a heart attack and died 38

Australia is rolling out an online eHealth system (http://www.ehealth.gov.au/) Individuals eHealth records allows you and your doctors, hospitals and other healthcare providers to view and share your health information to provide you with the best possible care Explore the web site to determine the risk of data ‘garbage in / garbage out’ situations suggest several ways for both the individual and the medical professionals could this overcome this problem?

We know that people use IT to work with information Knowing this, how could these types of errors occur? What could happen if you decided to use Wikipedia to collect BI for a research paper? What could Wikipedia do to help prevent these types of errors?

prOJeCt eIGht What’s wrong with this bathroom?

If you were the CEO of a global financial company that was experiencing a financial crisis, would you invest $1 million to renovate

your office? Probably not, and you are possibly wondering if this is a foolish and irrelevant question Guess what, this is a true story!

John Thain, the former CEO of Merrill Lynch, decided to spend Us $1.2 million refurbishing his office—well after Merrill Lynch posted huge financial losses Thain personally signed off all of the following (all in Us dollars):

• rug: $87 784

• mahogany pedestal table: $25 713

• 19th-century credenza: $68 179

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Adaptive learning

No two students are the same, so why should their learning experience be? Adaptive technology uses continual assessment and artificial intelligence to personalise the learning experience for each individual student As the global leader in adaptive and personalised learning technologies, McGraw-Hill Education is pioneering ways to improve results and retention across all disciplines

SmartBook

Fuelled by LearnSmart, SmartBook is the first and only adaptive reading experience available today Starting with an initial preview of each chapter and key learning objectives, students read material and are guided to the topics they most need to practise at that time, based on their responses to a continuously adapting diagnostic To ensure concept mastery and retention, reading and practice continue until SmartBook directs students to recharge and review important material they are most likely to forget

To find out more about SmartBook visit

www.mheducation.com.au/student-smartbook

LearnSmart Advantage is a series of adaptive learning products fuelled by LearnSmart—the most widely used

and adaptive learning resource proven to strengthen memory recall, increase retention and boost grades

LearnSmart is proven to improve academic performance, ensuring higher retention rates and better grades

A D V A N T A G E L E A R N I N G AT T H E S P E E D O F YO U

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Proven effective

With Connect, you can complete your coursework anytime, anywhere

Millions of students have used Connect and the results are in: research shows that studying with McGraw-Hill Connect will increase the likelihood that you’ll pass your course and get a better grade

Connect support

Connect includes animated tutorials, videos and additional

embedded hints within specific questions to help you succeed

The Connect Success Academy for Students is where you’ll find

tutorials on getting started, your study resources and completing

assignments in Connect Everything you need to know about

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Visual progress

Connect provides you with reports to help you identify what you should study and when your next assignment is due, and tracks your performance Connect’s Overall Performance report allows you to see all of your assignment attempts, your score on each attempt, the date you started and submitted the assignment, and the date the assignment was scored

To learn more about McGraw-Hill Connect®, visit

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McGraw-Hill Connect® is the only learning platform that continually adapts to you, delivering precisely

what you need, when you need it

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e-Exam trial at CQU

Ken Howah, Central Queensland University

Apple – complications made simple

Peter Blakey, formerly of Massey University, New Zealand

2

Disruptive technologies shape the world

Dr Kathy Lynch

Like us on Facebook! The rise of social business innovation

Barcelona Smart City

Dr Pari Delir Haghighi, Monash University

3

Paywalls and the business future

of newspapers

Dr Julie Fisher

Grocery shopping online

Dr Julie Fisher, Monash University

True confessions—of an airline revenue manager

Using virtual reality to improve business decisions

Marie van der Klooster, formerly of Deakin University

Advanced computing infrastructure may lower the price of your next cuppa

Dr Francis Gacenga, University of Southern Queensland

6

Australia Post: staying relevant in the e-business era

Dr Julie Fisher

Why do large government IT projects fail? HealthSMART

project lets Victorian health services down

myki: an integrated travel card for Victoria

Marie van der Klooster, formerly of Deakin University Updated

by Dr Julie Fisher, Monash University

Pamlea Spink, Monash University

Migration to Google docs: Bleeding Technololgy Pty Ltd

Susan Sutherland, Consultant, Information Systems Canberra Pty Ltd

Dr Indrit Troshani, University of Adelaide

Data-driven innovation (DDI) – set to lead the way!

CASE MATRIX BALTZAN 3E

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xxviii

CH OPENING CASE STUDY CLOSING CASE STUDY

9

Still sick after $1.25 billion:

Queensland Health ERP

Dr Kathy Lynch

GoPro goes into the cloud

ERP system takes ATE tankers to the next level

Dr Lorraine Staehr, La Trobe University

10

Bosch–power from the people

Dr Kathy Lynch

Creating enterprise research planning (ERP) software beautifully

CRM systems: giving customers that uncanny valley feeling

11

Bitcoin: a currency revolution?

Dr Julie Fisher

The Facebook experiment: legal – yes, but ethical?

Dr Kathy Lynch, formerly of University of the Sunshine Coast

Privacy, copyright and online piracy of Dallas Buyers Club

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PART ONE

INFORMATION

SYSTEMS ARE

BUSINESS

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CHAPTER 1 Business information systems

CHAPTER 2 A brave new connected world

CHAPTER 3 e-Business and mobile business

CHAPTER 4 Decisions and processes

M ost organisations today rely heavily on the use of information technologies to run various

aspects of their businesses—whether it is to order and ship goods, interact with their customers or conduct other business functions Information technology enables companies

to perform a variety of tasks both efficiently and effectively Moreover, information technology allows

an organisation to remain competitive in today’s fast-paced world This is especially true when one

considers the increasing popularity of conducting business over the Internet

Organisations that fail to take advantage of information technology run the risk of falling behind others that adopt information technology solutions Organisations must adapt to technological

advances and innovations to keep pace with today’s rapidly changing environment: their competitors

certainly will!

Though technology can be an exciting phenomenon on its own, as a business student you should understand that successful organisations do not utilise technology simply for the sake of technology

itself There must be a solid business reason for implementing technology Using a technological

solution just because it is available is not a good business strategy

The purpose of Part One is to raise awareness of the vast opportunities that can occur when you understand the tight correlation between business and technology Business strategies and processes

should always drive your technology choices Although sometimes awareness of an emerging

technology can lead to new strategic directions, the role of information technology, for the most part,

is to support business strategies and processes Understanding business strategies and determining

technology support structures is an important discussion and is covered thoroughly throughout this Part

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What interested you about working in/studying information systems?

I’ve always had a passion for expressing myself through a digital medium, so combining product design thoughts with my keen interest in graphic design and programming sparked my desire to understand the psychology of why and how digital interactions could help our lives I have also held the strong belief that there’s always a better, faster and easier way to do things.

What does your job/position involve?

I perform the role of a project manager working with a team of developers, marketers and salespeople to ensure that all the customer experiences are the same across different platforms We watch how clients and customers interact with our systems by monitoring their behaviours with our sites—heatmap tracking, funnel analytics and usability evaluations provide us with good insight for what we should develop next to ensure simple and intuitive interactions.

I believe that the next revolution in information systems won’t be technological, it will be social—the general population is becoming savvy in systems design and everyone knows what’s easy to use; standard interface interactions are now becoming an expected requirement.

What advice would you give to students wanting to work in information systems?

Volunteer! Seemingly simple volunteer tasks can lead to awesome networking opportunities to provide you with new experiences and even potential employment.

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What job/position did you have when you were interviewed for the 2nd edition?

At the time of the 2nd edition, I held the same position as I do now—Partner at PRIME Process Management Group At the time we had been established only a few years Our organisation provides consultancy, training and software in the Business Process Management space Our clients call upon us to document their existing business processes, analyse and improve these, then implement the changes into their organisation.

What did your job/position involve?

In the earlier days, my job was more focused on the development of our product and services This was establishing, trialling and refining the product and services which would satisfy our customers This was

in addition to the day-to-day activities such as managing client projects, recruitment and retention and of course getting out there and selling our product and services.

What do you enjoy most about your job?

I get great satisfaction out of establishing teams, setting an objective and working with the team to achieve that I like bringing out the best in people I also enjoy doing strategic planning activities for the business

This gives room for creative thinking, making plans and working towards achieving our objectives.

I’m feeling positive I have seen the application of IT, hence the use of information systems, adopted in

a variety of industries—some faster than others There is so much more room for IT and information systems, let alone the continuous improvement of these.

What advice would you give to recent graduates looking to work in information systems?

I mentioned this in my write-up for the 2nd edition of this book and I feel it still holds true Anything that can be offshored will be offshored It is a good specialisation, but ensure you also develop excellent communication and interpersonal skills Focus on customer-facing roles where you can use your technical, business, communication and interpersonal skills, as these cannot be offshored so easily.

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SECTION 1.1 9

Information systems in business

• Business in the information age

• Information technology versus information systems

• Data, information, business intelligence and

knowledge

• Common functional areas in an organisation

• A systems-thinking approach to information

• Identifying competitive advantages

• Porter’s Five Forces Model—evaluating industry attractiveness

• Porter’s three generic strategies—choosing a business focus

• Value chain analysis—executing business strategies

• Global IT

Business information systems

What’s in IT for me?

T his chapter sets the stage for the book It starts from ground zero by providing a clear description of

what information technology and information systems are and how they fit into business strategies and organisational activities It then provides an overview of how organisations operate in competitive environments and how they must continually define and redefine their business strategies to create competitive

advantages Doing so allows organisations to survive and thrive Importantly, information technology is shown

as a key enabler to help organisations operate successfully in such competitive environments

As a business student, you must understand the tight correlation between business and technology You must

first understand the role of information systems and their associated technologies in daily business activities,

and then understand their role in supporting and implementing enterprise-wide initiatives and global business

strategies After reading this chapter, you should have acquired a solid understanding of business-driven

information systems, and their place in the businesses of today

• Use of information technology

• Multicultural and diversity understanding

• Reflective thinking skills

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It’s official—Google is a word, not just a brand name: it is listed in the Oxford English Dictionary (OED), and it has been listed (as a verb) since June 2006

intr To use the Google search engine to find information on the Internet trans To search for information about (a person or thing) using the Google search engine (http://public.oed

com/the-oed-today/recent-updates-to-the-oed/

previous-updates/june-2006-update/)Googling, Googled and to Google have become synonymous with searching regardless of the search engine actually used by the searcher The key to searching

is in its results—the information presented It is this information that can drive a business to success through innovation, change, competitive advantage, added-value, growth, partnerships, profits and more

The company behind Googling is Google.com The company sprouted from nowhere in 1997; it originated

in 1996 with two Stanford University students (Larry Page and Sergey Brins) and their project BackRub For the past 10 years or so, Google is on everyone’s lips (or fingertips), and has put fortunes into the pockets of some: from zero to over US$400 million in just over

15 years, with less than 10 years as a public company

(Sources: www.google.com.au/about/company/history/

Accessed December 2014; www.businessweek.com/

2-in-market-cap Accessed December 2014)

articles/2014-02-12/google-at-400-billion-a-new-no-dot-What makes Google such a great business success?

Google professes that great products depend on great people Google hires people who are smart and determined, and they favour ability over experience There are more than 40 000 Googlers behind their applications

Here are Google’s ‘ten things we know to be true’

4 Democracy on the web works Google search works because it relies on the millions of individuals posting links on websites to help determine which other sites offer content of value

5 You don’t need to be at your desk to seek an answer

The world is increasingly mobile: people want access to information wherever they are, whenever they need it

6 You can make money without doing evil Google is

a business Hundreds of thousands of advertisers worldwide use AdWords to promote their products

Google has a set of guiding principles for its advertising programs and practices

7 There’s always more information out there Once Google had indexed more of the HTML pages on the Internet than any other search service, its engineers turned their attention to information that was not as readily accessible

8 The need for information crosses all borders Google’s mission is to facilitate access to information for the entire world, and in every language

9 You can be serious without a suit Google founders built the company around the idea that work should

be challenging, and the challenge should be fun They believe that great, creative things are more likely to happen with the right company culture—and that doesn’t just mean lava lamps and rubber balls There

is an emphasis on team achievements and pride

in individual accomplishments that contributes to Google’s overall success

10 Great just isn’t good enough Google sees being great

at something as a starting point, not an endpoint It sets goals that Googlers know they can’t reach yet, because they know that by stretching to meet them they can get further than they expected

Google: king of search (and therefore information)

Opening Case Study

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3 Use Porter’s Five Forces Model and his Generic Business Strategies to analyse Google products in relation to businesses.

Why do businesses need Google?

It is not only the information obtained by Googling that

one wants, whether for personal or business use, but the

additional information via products/applications that

Google offers businesses Every one of these products

relies on information, and every bit of this information

is stored in a system somewhere, and in a format that is

quickly useable, shareable, searchable and retrievable The

use of this information coupled with data, technology,

people and informed decisions are all key to the success

of businesses today—information systems are the

connectors and conduits

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CHAPTER 1 Business information systems 9

I nformation is everywhere The amount of data and information in the world today is hard to estimate—

however, it is a lot and is growing at a terrific rate We are generating data from computers,

sensors, cameras and phones so much that we are surpassing the capacity of the devices that store

it, let alone retrieve it Information technology and the systems allow for the logical and useable retrieval

of data But with this much data, business decisions need to be made as to what data and information

needs to be retrieved, or the end user needs to be given the ‘power’ to decide themselves what data or

information they require

Most organisations value information and the systems that house the information as strategic

assets; therefore, the first section of this chapter introduces data, information, business intelligence and

knowledge, and their place in business

The second section of this chapter focuses on business strategies that organisations use to make

business decisions, solve problems, find new, innovative opportunities and possibly gain a competitive

advantage, often through the use of information technology and systems

1.1 Information systems in business

L E A R N I N G O U T C O M E S

LO 1.1 Differentiate between information technology and information systems.

LO 1.2 Describe the differences between data, information, business intelligence and knowledge.

LO 1.3 Outline the common functional areas in an organisation.

LO 1.4 Explain a systems-thinking approach in relationship to business.

LO 1.5 Describe and compare the different roles and responsibilities in information technology.

LO 1.6 Identify the three main types of information systems, and how business personnel can use these

systems to make decisions and gain competitive advantage.

Business in the information age

Facts . . . Did you know . . .

• Wotif.com was founded by an Aussie (in 2000)

• Kogan.com was started in a garage in a suburb of Melbourne by its founder, Monash IT graduate

Ruslan Kogan, in 2006 (In 2012, Ruslan Kogan was named the richest Australian under 30, and in

2014 one of the 200 richest Australians.1)

• A 15–30 second timeslot in the 2013 television broadcast of the AFL grand final cost up to $100 000.2

A fact is the confirmation or validation of an event or object In the past, people primarily learned facts

from books Today, by simply clicking a button people can find out anything, from anywhere, at any

time We live in the information age, when infinite numbers of facts are widely available to anyone

who can use a computer The impact of information technology (IT)—a field concerned with the use

of technology to manage and process information—on the global business environment is equivalent

to the printing press’s impact on publishing and electricity’s impact on productivity University student

start-ups were mostly unheard of before the information age Now, it is not at all unusual to read about

a business student starting a multimillion-dollar company from his or her bedroom Think of Mark

Information age

when infinite numbers

of facts are widely available to anyone who can use a computer

Information technology (IT)

a field concerned with the use of technology

in managing and processing information Information technology can be an important enabler of business success and innovation

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PART 1 Information systems are business CHAPTER 1 Business information systems

You may think only students well versed in advanced technology can compete in the information age

This is simply not true Many business leaders have created exceptional opportunities by coupling the power of the information age with traditional business methods Here are just a few examples:

• Amazon is not a technology company; its original business focus was to sell books, and it now sells nearly everything

• Netflix is not a technology company; its primary business focus is to rent videos

• Zappos is not a technology company; its primary business focus is to sell shoes, bags, clothing and accessories

Amazon’s founder, Jeff Bezos, at first saw an opportunity to change the way people purchase books

Using the power of the information age to tailor offerings to each customer and speed the payment process, he in effect opened millions of tiny virtual bookstores, each with a vastly larger selection and far cheaper product than traditional bookstores The success of his original business model led him to expand Amazon to carry many other types of products The founders of Netflix and Zappos have done the same thing for videos and shoes All these entrepreneurs were business professionals, not technology experts However, they understood enough about the information age to apply it to a particular business, creating innovative companies that now lead entire industries

Information technology versus information systems

Information technology and information systems are two closely related fields—each is required in today’s organisations Information technology (IT) is primarily concerned with hardware and software;

for example, servers, operating systems, web services, code, devices, and networks to manage and process information (see Chapter 5) Information systems (IS) is primarily concerned with the people, processes and technology—it is a large catch-all term referring to systems designed to create, gather, store, manipulate or disseminate information IS deals with obtaining, storing and retrieving information: for example, the Dewey system for identifying library books, protocols and terminology for product identification, customer records, product ordering details and workplace communication

Regardless of the discipline, students frequently ask, ‘Why do we need to study information technology or information systems?’ The answer is simple: they are everywhere in every business

They affect nearly every aspect of our lives—speed up the processes of work, rest and play through improvements in software, hardware and systems Understanding them provides great insight to anyone learning about business

It is easy to demonstrate the role of information technology in business by reviewing a paper or

online copy of a popular business magazine such as BusinessWeek, Business Review Weekly (BRW) or NZ Business A significant number of articles are dedicated to technology in business These are business

magazines, not technology magazines, yet they are filled with technology Students who understand technology have an advantage in business

Articles in these magazines typically discuss such topics as databases, customer relationship management, web services, supply chain management, ‘big data’, security, ethics, business intelligence and so on These are the basis of information systems This text explores these topics in detail, along with reviewing the associated business opportunities and challenges IT and IS can be important enablers of business success and innovation This is not to say that they equal business success and innovation, or that they represent business success and innovation They are most useful when they leverage the talents of people They are not useful unless the right people know how to use and manage them effectively

A management information system (MIS) is a business function just as marketing, finance, operations management and human resources management are business functions Formally defined, management information systems (MIS) is a general name for the business function and academic discipline covering the application of people, technologies and procedures—collectively called information systems—to manage and solve business problems To perform the MIS function

a general name for the

business function and

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PART 1 Information systems are business CHAPTER 1 Business information systems 11

discuss Pluses and minuses

The line famously quoted in the film Spider-Man, ‘With great power comes great responsibility’, applies to every

type of technology you encounter in business Technology provides countless opportunities for businesses, but can also lead to pitfalls and traps Online trading, for instance, brought many companies profits but has cost many individual investors their life savings through fraud Ponzi schemes, for example, attract inexperienced investors with promises of high-yield investments but no real profits are generated 4 Online anonymity means the promoters disappear when the schemes end Sites such as Craigslist and eBay allow anyone to become

a provider of goods or services, and a few unethical individuals have even used Craigslist to run online prostitution rings A manager must be able to analyse the good and the bad associated with technology.

Review some companies that primarily operate on the Internet, such as Kogan, eBay, Craigslist or Amazon, and compile a list of the business opportunities and the potential pitfalls associated with doing business online.

effectively, almost all organisations today, particularly large and medium-sized ones, have an internal

IT department, often called Information Technology (IT), Information Systems (IS) or Management Information Systems (MIS) When beginning to learn about IT, it is important to understand the relationships between data, information, business intelligence and knowledge

Data, information, business intelligence and knowledge

Students who understand business along with the power associated with IT are well placed to create their own opportunities and perhaps even new industries—just as co-founders Chris DeWolfe and Tom Anderson did with MySpace, Mark Zuckerberg did with Facebook, and Ruslan Kogan did with Kogan

com Our primary goal in this book is to arm you with the knowledge you need to compete in the information age The core drivers of the information age are data, information, business intelligence and knowledge (Figure 1.1)

LO 1.2

FIGURE 1.1 Good decision making comes from wisdom

Source: Chalkley T Cartoon on information, knowledge and wisdom

Data

Data are raw facts that describe the characteristics of an event or object Before the information age, managers manually collected and analysed data, a time-consuming and complicated task without which they would have little insight into how to run their business Lacking data, managers often found themselves making business decisions about how many products to make, how much material to order

or how many employees to hire based on intuition or gut feelings In the information age, successful managers compile, analyse and comprehend massive amounts of data daily, which helps them make more successful business decisions

The amount of data that we use or generate today is growing exponentially, and thus too much for the traditional IT-based systems that store, collate, correlate and retrieve the data Big data is the term used for data sets that are so large and complex that it is difficult to process the data using traditional data processing applications Data sets grow in size in part because they increasingly gather data from

Data

raw facts that describe the characteristics of an event or object

Big data

data sets that are so large and complex it is difficult to process the data using traditional data processing applications

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