Chapter Nine Information Technology and E-Commerce © 2007 The McGraw-Hill Companies, Inc., All Rights Reserved. McGraw-Hill/Irwin Introduction to Business

9 - 3 Learning Objectives 1.Distinguish between data, information, and knowledge and identify the characteristics of useful information. 2.Explain the relationship between IT, competitive advantage, and profitability. 3.Discuss five major IT applications used by companies today to build competitive advantage. 4.Identify the major hardware and software components of IT and E-Commerce and describe how they have evolved over time.

9 - 4 Information Technology and Profitability Information -a set of data, facts, numbers, and words that has been organized in such a way that it provides its users with knowledge

9 - 5 Information Technology and Profitability Knowledge -what a person perceives, recognizes, identifies, or discovers from analyzing data and information Learning -an increase in the store or stock of people’s expertise or knowledge

9 - 6 Information, Knowledge, and Learning Figure 9.1

9 - 7 Information Technology and Profitability Information technology -the many different kinds of computer and communications hardware and software and the skills of their designers, programmers, managers, and technicians who create and manage it

9 - 8 Question? What is managing information to achieve a better fit between a company’s business model and the forces in its environment? A.Organizational culture B.Organizational learning C.Erudition D.Business model balancing

9 - 9 Information Technology and Profitability Organizational learning -managing information and knowledge to achieve a better fit between a company’s business model and the forces in its environment

Useful Information and Knowledge Complete Accurate and reliable Relevant Timely

Characteristics of Useful Information Figure 9.2

Useful Information and Knowledge Information overload -a situation in which managers have to process so much information it actually reduces their understanding of a situation Real-time information -information that is constantly updated

Gaining a Competitive Advantage with IT Superior productivity Superior quality Superior innovation Superior customer responsiveness

IT and Competitive Advantage Figure 9.3

Major Information Technology Applications Chief information officer -the top manager of a company’s IT function

Major Information Technology Applications Transaction processing systems Knowledge management systems Expert systems and artificial intelligence Enterprise resource planning systems E-commerce systems

Five Major IT Applications Figure 9.4

Transaction Processing Systems Transaction processing systems -an IT system designed to collect, record, and manipulate the data related to a company’s day-to-day business operations

Knowledge Management Systems Knowledge management systems -an IT system that analyzes the information collected from the TP system but filters and analyzes it to make it more useful to managers

Knowledge Management Systems Best practices -the set of skill-based competencies that allow a particular function to perform at its optimal level IT consultants -expert employees who use their knowledge and learning to solve their customers’ IT problems

Expert Systems and Artificial Intelligence Expert systems -an advanced IT system that can reason through a company’s information, diagnose problems, and suggest solutions Artificial intelligence -an IT system that reasons and learns like a human being

Enterprise Resource Planning Systems Enterprise resource planning systems -multimodule applications software packages that coordinate all of a company’s functional activities

Primary and Secondary Value- Chain Functions Figure 9.5

E-Commerce Systems E-Commerce -trade that takes place between companies, and between companies and individual customers via the Internet (or other IT systems)

Question? What is a company’s internal system of computers and Web sites accessible only by its employees? A.Web B.Internet C.Ethernet D.Intranet

E-commerce Systems B2B marketplace -an industry-specific trading platform set up to connect buyers and sellers using the Internet Intranet -a company’s internal system of computers and Web sites accessible only by its employees

Types of E-Commerce Figure 9.6

Hardware Components of IT and E-Commerce Legacy systems Mainframe computers Microprocessors and personal computers Network computers: servers and clients The world wide web and the Internet Wired and wireless broadband technology

Legacy Systems Legacy systems -the hardware and software components of a company’s IT system at any one point in time

The World Wide Web and the Internet Router -hardware and software that electronically transfers data between networks to its intended destination, such as a specific web page or computer

The World Wide Web and the Internet Ethernet -a local area communication technology that transmits information between computers at speeds of between 10 and 100 million MBPs using coaxial or fiber optic cable

Figure 9.7 Four Levels of IT and Computing

Wired and Wireless Broadband Technology Broadband technology -a type of communications hardware that allows for the rapid transmission of vast amounts of information Wi-Fi -a type of Ethernet technology that allows computer users to access the Internet wirelessly

Software Components of Information Technology PC software Networking software Computer security software Wireless hand-held software IT and business occupation

Software Components of Information Technology Best-of-breed solution -the highest performing IT hardware or software application currently available for managing a particular information processing or multimedia task

PC Software Industry standard -a predominant type of technology used in an industry -other technologies must be compatible with the industry standard to be widely adopted

Computer Security Software Firewall -software that gives a company’s computers safe access to the Internet but blocks computers from outside the firm from gaining access to the company’s intranet

Computer Security Software Hackers -people who seek to invade a company’s databases and steal the information for malicious or illegal reasons

Protecting the Intranet by a Firewall Figure 9.8

Computer Security Software Computer virus -software code deliberately written to harm hardware and software and corrupt files and databases See a current list of virus threats

Video: Hillerich & Bradsby The company faced a crucial decision – to implement a system of connected stand alone computers or to start over moving toward supply chain management that integrated all functions within a central database. Which of the major applications of information technology did Hillerich and Bradsby turn to? Why?