Business Informational Systems 24-2

Business (definition by the prof.): a group of people who are trying to maximize value by
solving individual customer’s problems and therefore creating profit using its processes
and resources.

ESG (Environmental / Social / Governmental considerations):

 Carbon dioxide tendencies

 Tendencies abt children labor
 Following rules dictated by ESG is necessary in order to keep business running in
modern world
o Example of fossil fuel company who failed to get insurance from 30+ insurance
companies due to sustainability problems
The first car manufacturer in the world was Mercedes in 1890 (actually Peugeot)
 Labor division by Ford (aka Fordism)
 Conveyer belt system
 Black T was the first car manufactured by Ford

Market Segmentation: is the practice of dividing your target market into approachable groups
Changes in tendencies:
1. Personalization: is the act of tailoring a service or a product to accommodate a specific
individual or group
2. Digitization: is the process of converting analog information into a digital format
3. Digitalization: involves the integration of digital technologies into business operations to
optimize processes, enhance customer experiences and drive innovation = making
information available online
4. Digital Transformation: is the integration of digital technologies into all areas of a business,
fundamentally changing how you operate and deliver value to customers
 Modern business tendencies include personalization, digital transformation and
ESG

Value-Cost Dilemma:
 The value customers perceive must be greater than the price they pay
 The price must be greater than the cost the company spends on producing the
product / service

Traditional Business: profit maximization is maximizing the value and minimizing the cost
 Reaching the reduction of average cost through mass production
Business with Digital Technology: maximization of the value through innovations, marketing and
solving INDIVIDUAL customer’s problems
 Reaching personalization through mass customization
Business Portfolio (strategy): refers to the approach a company uses to manage its collection
of businesses, products, services or investments in order to achieve its longterm goals.
 Biz Portfolio collection of products, services, business units, or investments that a
company manages. Represents the diverse areas in which a business operates or
invests
Market Share represents the percentage of total sales in an industry or specific market that a
company or product captures, relative to its customers -> signal of a company success
BUT IN DIGITALIZATION WORLD -> CUSTOMER SHARE
Maximization of the value while decreasing the cost of production referred as Magic of
Digitalization
 Solving of individual customer problems can be reached through Digital Transformation
o Through digital transformation, companies can leverage data, automation, AI, and
other technologies to create personalized, fast, and effective solutions to
individual customers’ problems. It enhances the ability to meet customer needs in
a more precise and responsive way, leading to higher satisfaction and stronger
relationships.

 Generativity as key characteristic of Digital Transformation: once established it will

generate numerous things. It enables digital platforms and systems to evolve, innovate
and adapt continuously, and foster continuous innovation, creativity and adaptability

On-Demand Service: business model that allows consumers to request and receive services or
products instantly or within a short timeframe, typically through digital platform or app.
 Contexualized what, where in what form customer wants to receive the service
Product Servitization: business strategy that involves transforming a traditional product-based
offering into a service-oriented model (providing valie through services rather than just selling
physical products, allowing companies to create more sustainable revenue streams and enhance
customer relationships.
 Integration of services with products (additional services alongside their products
maintenance, repair, training, support etc)
  Focus on outcomes
 Long-term customer relationship

ICBM:
 I – Internet of Things
 C – Cloud Computing
 B – Big Data
 M – Mobile
 A- Artificial Intelligence
 M – Material

1. Understanding of customer problems

2. Designing solutions to solve the problems
3. Designing service models
4. Securing necessary resourcesand designing new processes

MOQ: minimum order quantity breaking point (related to cost / quantity)

ㅂ
Global Trends
 Trend Analysis: examination of trends to identify its nature, causes, speed of
development and potential impacts
 Trend Monitoring: trends viewed as particularly important in a specific community,
industry or sector are carefully monitored, watched, and reported to key decision makers
 Trend projection: when numerical data is available, a trend can be plotted to display
changes through time into the future
 Computer Simulation: complex systems can be modeled by means of mathematical
equations and different scenarios can be run against the model to determine “what if”
analysis
 Historical Analysis: historical events are studied to anticipate the outcome of current
developments

Reasons for studying trends include finding new ideas, identifying the opportunities, identify
early warning signals, gain confidence, beat the competition etc

Modern Trends Shaping our Future:

1. The world’s population will double over the next 40 years
a. African countries due to medicine, technology advance will face population increase
(Niger, Yemen, Angola, Uganda etc)
 b. Developed countries will have longer lives of population
2. People in developed countries are living longer
a. On average, each generation in the US lives 3 years longer than the previous one
3. The growth in information industries is creating a knowledge-dependent global society
a. Less promotion opportunities, low number of low level managers
b. Every company relies on information technology to do their business
c. Society has been transformed into knowledge-society
 Knowledge workers are generally higher paid and their proliferation is increasing overall
prosperity
 Top managers must be computer literate
4. The global economy is becoming more integrated
a. E-business and the Internet will reduce the cost of doing business and will allow small
businesses to compete with global giants
5. The economy and society are dominated by technology
6. Pace of technological innovation is increasing
a. 50% of what students learn in their freshman year of college is obsolet, revised or
taken for their senior year
7. Time is becoming one of the world’s most precious commodities
a. Workers spend more time on work
b. Balance of work-life balance
Technologies that are shaping our future:
 Digital (3D printing, big data, digital twin [digital version of physical thing], 5G,
 Teleliving (telework, telemedicine)
o Teleliving: refers to using information devices and the Internet to conduct all
aspects of life seamlessly (shopping, working, learning, playing, healing, praying
(church))
 Alternative Energy Sources
 Autonomic computing (Ai)

Chapter 1: Business Driven Technology

Internet of Things: a world where interconnected internet enabled devices or “things” have
the ability to collect and share data without human intervention
Machine-to-Machine (M2M): refers to devices that connect directly to other devices
 Data driven decision making is not exclusively right
 Intuition driven DM and Data driven is 50/50
Open System: interacts with its environment, exchanging matter, energy or information.
Close System: does not interact with its environment in terms of matter exchange, it is
isolated, meaning that all inputs and outputs are contained within the system itself
 Chapter 2: Identifying Competitive Advantage
Things before starting a business
1. Choose what market to serve (customer problems, solutions I can offer)
a. First mover, competitive strategy, functional strategy

 Being first mover (monopolistic market) advantage of charging any price supplier
wants
 Market determines the price in perfect competition; in monopoly supplier determines
the price
Shareholder capitalism -> Stakeholder capitalism
Different Types of Analysis
 SWOT
o Strengths, Weaknesses, Opportunities and Threats
 5 Forces Model
o Barriers to entry, Bargaining Power of Suppliers, Bargaining power of buyers,
Threat of substitutes, threat of rivalry
o Rivalry: how many rivals are present in the market
 Many rivals = not favorable condition
o Buyer Power:
 Many buyers = good
o Supplier power:
 Many suppliers = good
o Substitutes:
 Many substitutes = bad
o New Entrants:
  A lot of potential competitors = bad

Walmart case:
 Making accent on the low price they provide customer with
 VMS (Vehicle Management System)
 Cross-docking system

Business Process: set of activities that acccomplish a specific task such as a specific process

Value chain analysis:

 Inbound Logistics
 Operations
 Outbound Logistics
 Marketing and Sales
 Service

Support value activities:

 Firm infrastructure
 Human Resource management
 Technology development
 Procurement: purchases inputs such as raw materials, resources, equipment and supplies

Chapter 3: Strategic Initiatives:for implementing competitive advantages

5 Basic Supply Chain Activities
1) Plan: prepare to manage all resources required to meet demand
2) Source: build relationships with suppliers to procure raw materials
3) Make: manufacture products and create production schedule
4) Deliver: Plan for transportation of goods to customers
5) Return: Support customers and product returns

Effective and efficient SCM systems can enable an organization to:

 Decrease the power of its buyers
 Increase its own supplier power
 Increase switching costs to reduce the threat of substitute products or services
 Create entry barriers thereby reducing the threat of new entrants
  Increase efficiencies while seeking a competitive advantage through cost leadership
Customer relationship management (CRM): involves managing all aspects of a
customer’s relationship with an organization to increase customer loyalty and retention
and an organization’s profitability
Not just technology, but a strategy, process and business goals that an
organization ,must embrace on an enterprise wide level: CRM can enable an organization
to
 Identify types of customers
 Design individual customer marketing campaigns
 Treat each customer as an individual
 Understand customer buying behaviors

Evolution of CRM:
CRM reporting technology: help organizations identify their customers across their
applications
CRM analysis technologies: help

Enterprise resource planning: integrates all departments and functions throughout an

organization into a single IT system so that employees can make decisions by vuiewing
enterprise wide information of all business operations

RI – return of investment
CIO Chief information officer – oversees all uses of MIS and ensures the strategic alignment
of MIS with business goals and objectives
CKO Chief knowledge officer - responsible for collecting, maintaining and distributing the
organization’s knowledge
CPO Chief privacy officer – responsible for ensuring the ethical and legal use of information
CFO’s main point is how to prioritize technologies
Critical success. Factors (CFS): the crucial steps companies make to perform to achieve
their goals and objectives and implement strategies
 Create high quality products
 Retain competitive advantages
 Reduce product costs
 Increase customer satisfaction
 Hire and retain the best professionals

KPI Key Performance Indicators: quantifable metrics a company uses to evaluate

progress toward critical success factors:
 Turnover rates of employees (do customers repurchase?)
  Percentage of help desk calls answered in the first minute
 Number of product returns: if there a lot of product returns + there is may be some
problem
 Number of new customers
 Average customer spending

There is no way to maximize profit, there are only two ways: to maximize value or to
minimize costs

Efficiency MIS metrics: measures the performance of the MIS system itself including
thoughput, speed and availability
 Throughout
 Transaction speed
 System availability
 Information accuracy
 Web traffic
 Response time
Effectiveness MIS metric: measures the impact MIS has on business processes and
activities including customer satisfaction, conversion rates and sell-through increases
 Usability
 Customer satisfaction
 Conversion rates
 Financial
Benchmark: baseline values the system seeks to attain
Benchmarking: a process of continuously measuring system results comparing those
results to optimal system performance (benchmark values) and identifying steps and
procedures to improve system performance

Metrics for measuring and managing strategic initiatives include:

 Website metrics
 Supply chain amanagement (SCM) metics
 Customer relatoiinship

Security increase = Lowering the speed of business processes

Back order – ordering but supplier does not have it neither in inventory not cannot produce
it
Strategy -> Value chain -> Business process reengineering -> Supply chain
management; Customer relationship management;

Chapter 5: Ethics and Information Security

Information Ethics: govern the ethical and moral issues arising from the development
and use of information technologies, as well as the creation, collection, duplication,
distribution and processing of information itself
SaaS: Software as a Service
What we know, what we have, what we are

Chapter 6: Valuing and Strong Organizational Information Databases

GIGO Computing Theory (Garbage in – Garbage out): it is a concept in computing and data
processing that means if incorrect, poor-quality, nonsensical data is inout into system, the
output will also be flawed or meaningless
Multimodal Data Model: Information levels (individual knowledge, goals and strategies);
information formats (letters, memos, faxes, emails, reports);
information granularities (reports for each salesperson, product, part)
4 primary traits of the value of the information:
 Information Type
 Information Timeliness
o Real time infromation and Non-real time information
 Real time information when u need that information you can get it
 Real-time system; provides real-time information in response to requests
 Information Quality
o Business decisions are only as good as the quality of the information used to
make deciszions
o Information integrity: accuracy, consistency and reliability of data throughout
its lifecycle (storage, transmission and retrieval, maintaining its original state)
 Information Governance
o Data governance: refers to the overall management of the availability,
usability, integrity and security of company data
o Master data management (MDM): the practice of gathering data and ensuring
that it Is uniformma ccurate, consistent and complete
o Data validation: includes the tests and evaluations used to determine
compliance with data governance policies to ensure correctness of data
2 types of information:
  Transactional information (airlines tickets, sales receipt)
 Analytical information (product statistics, sales projections)
Improving the quality = inproving effectiness and efficiency

Characteristics of high-quality information:

 Accurate
 Complete
 Consistent
 Unique
 Timely

Why do we have poor-quality information?

Data Gap analysis: company examines its data to determine if it can meet business
expectations, while identifying possible data gaps or where missing data might exist

Database: maintains information about various types of objects (inventory), events

(transactions), people (employees), and places (warehouse)
Database management systems (DBMS): allows users to create, read, update and delete
data in a relational database
Database management type:
 Hierarchical DB: organizing data in a tree-like structure where records are arranged
in a parent-child relationship, similar to hierarchy
 Relational DB: organizing into tables (also called relations) consisitng of rows and
columns. Each row represents a record, and each column represents a data attribute.
Relationships b/w tables are established using foreign keys
 Object oriented DB: stores data as objects, similar to how data is represented in
object-oriented programming. Objects can contain both data and methods for
manipulating that data. Objects are organized into classes and subclasses, and they
can inherit properties from other objects.
Processes and data = a company from MIS perspective
Relational Database:
Advantages:
  Increased flexibility
 Increased scalability and perfomance
o Scalability: refers to how well a system can adapt to increased demands
 Reduced information redundancy
o Redundancy: the duplication of data or storing the same information in miltiple
places
 Increased information integrity
o Information integrity: meansures the quality of information
o Integrity constraint: rules that help ensure the quality of information
 Relational integrity constraint
 Business-critical integrity constraint
 Increased information scarcity

Network Technologies
Network basics;
 Telecommunication system: enable the transmission of data over public or private
networks
 Network: a communications system created by linking two or more devices and
establishing a standard methodology in which they can communicate
o Voice communication
o Data communication
3 types of networks:
 LAN Local area network (b/w buildings in campus)
 MAN Metropolitan area network (b/w some institutions located in metropolitan area)
 WAN Wide area network (multiple cities)
Wireless network = extended form of networks

Can be differentiated by:

 Architecture (peer-to-peer (playing role of server and client simultaneously); client-
server (centralized form of network)
 Topology (bus, star, ring, hybrid, wireless)
 Protocols (Ethernet, Transmission Control Protocol/ Internet protocol TCP/IP)
 Media (coaxial, twisted pair, fiber optical)

P2P Network: any network without a central file server and in which all computers in the
network have access to the public files located on all other workstations
Client Server Network: model for applications in which the bulk of the back-end processing
takes place on a server, while the front-end processing is handled by the clients
 Client: a computer that is designed to request information from a server (front-end)
 Server: a computer that is dedicated to providing information in response to external
requests (back-end)

Network operating system: the operating system that runs a network, steering
information b/w computers and managing security and users
Packet-switching: occurs when the sending computer divides a message into a number
of efficiently sized units called packets, each of which contains the address of the
destination computer
Router: an intelligent connecting device that examines each packet of data it receives and
then decides which way to send it onward toward its destination

Network Topology: refers to the geometric arrangement of the actual physical

organization of the computers and other network devices in a network
 Bus
 Star
 Ring
 +Wireless
 +Hybrid

Protocols: a standard that specifies the format of data as well as the rules to be followed
during transmission
 Ethernet: a physical and data layer technology for LAN
 Transmission control / internet protocol: provides the technical foundation for
the public internet as well as for large numbers of private network TCP/IP
Interoperability: the capability of two or more computer systems to share data and
resources, even though they are made by different manufacturers

Voice over IP: uses TCP / IP technologies to transmit voice calls over long-distance
telephone lines

Network transmission data: refers to the various types of media used to carry the
signal b/w computers
 Wire media (guided): Transmission material manufactured so that signals will be
confined to a narrow path and will behave predictably
o Twisted-pair cable
o Coaxial cable (thick, fast)
o Fiber-optic cable (the fastest way to send message as a light)
  Wireless media (unguided): natural parts of the Earth’s environment that can be
used as physical paths to carry electrical signals

E-business networks characteristics:

 Provide for the transparent exchange of information with suppliers, trading partners
and customers
 Reliability and security
 Increase in size
 Combination of e-business and physical business