Mgt 20600: IT Management & Applications Catalysts for IT Investment Hardware Thursday September 1, 2005

Reminders  Reading –For today  Fundamentals text, Chapter One  HBR article, “Why IT Doesn’t Matter Anymore” –For next week  Fundamentals text, Chapter Two, Hardware section  Homework –Homework One due next Friday, 9/9 by 5pm  Submit to Mgt ,.02,.03, or.04 dropbox –Homework Two is now available  Due Friday, 9/16 by 5pm  Next week’s class session: Software

“Why IT Doesn’t Matter Anymore”  Major points –Core functions of IT available to all  Can no longer provide a competitive advantage  Are now commodity factors of production  Need to turn focus to risks of disruption of IT infrastructure  Should eliminate wasteful spending on IT

“Why IT Doesn’t Matter Anymore” Discussion  Does the provocative title of the article accurately match the content?  Can you think of ways to counter the author’s argument?  Can you think of examples that run counter to the author’s argument?

“Why IT Doesn’t Matter Anymore”  Counterarguments –Some technologies may have become commodities but what really matters is how they are used  Example: Organizations use commodity wireless devices differently and those differences may provide competitive advantage –It’s not the technology itself that’s important, it’s thinking up and implementing new tech-enabled business processes that improve organizational performance –Organizations differ with respect to the efficiency and effectiveness with which they deploy and use technology, ultimately affecting organizational performance –Technology continues to evolve – yesterday’s invention is today’s commodity but the inventions keep on coming  Incorporating the inventions will continue to confer competitive advantage  Example: Radio frequency id tags (RFID)

Reasons for Adoption of Business Information Systems  Gives firm a competitive advantage –Significant, long-term benefit to a company over its competition –Ability to establish and maintain a competitive advantage is vital to a company’s success  Improves firm performance –Cuts costs –Higher productivity –Earnings growth –Market share –Customer awareness and satisfaction

Strategic Use of Business Information Systems  Change the structure of the industry  Create new products or services  Improve existing products or services

Strategic Use of Business Information Systems  Recording industry –Catalyst for change? –Change the structure of the industry –Create new products or services –Improve existing products or services  Network television –Catalyst for change? –Change the structure of the industry –Create new products or services –Improve existing products or services

Performance Improvement: Insurance Carrier IT Spending  Conservative spending on IT –Low proportion of revenues spent on IT compared to financial services firms –1% IT budget increases in 2005  Plan to increase spending on –Internet initiatives –Storage servers –PCs –Application development  Strategic goals for IT expenditures –Reduce operating costs –Acquire customers –Improve quality and employee efficiency

Performance Improvement: Home Depot  Has been relying on in-house developed systems that have become too costly to maintain  Now want new technology to support –Company’s expansion –Improved store operations –Improved customer service

Performance Improvement: Home Depot  Undertaking a $1 billion overhaul of its IT infrastructure –Replace old Point-of-Sale systems –Install self-checkout counters –Local area network upgrades –Data warehousing for sales and labor scheduling data –Price optimization software –SAP financial software –PeopleSoft ERP (enterprise resource planning) software –New software applications to streamline price check and receipt lookup services

Information System Technology: Hardware  Users must work closely with IS professionals to define business needs, evaluate options, and select the hardware and software that provide a cost-effective solution to those needs.

Information Systems: The System of Hardware Components Input DevicesMemory and Processor Storage and Output Devices

Hardware Components Diagram Figure 2.1: Computer System Components

Input Devices  A huge variety to choose from  Must match input device to task –Keyboard –Mouse –Microphones/voice recognition –Touch screens –Bar-code scanners –Point-of-sale devices –Radio frequency ID chips  Examples –Self check-out counter input devices? –Phone-based customer information system input device?

Processing the Inputs  Processing device works hand in hand with  Memory (book uses primary storage as a synonym for this) –To process  Data transferred to the system by the input devices  Instructions from the operating system and software applications

What a Processor Looks Like

What Memory Looks Like

Processing the Inputs: The Processor  Processors can vary according to –Size – how much data they can process at a time –Speed – how fast they execute instructions –Coordinated or multi-processing – how many processors work together –The materials from which they are made –How fast they can communicate with memory and with each other –Of course this affects the cost!  The trick is to buy the right processor for the task at hand!  Examples –WalMart’s transaction processing system –Individual executive’s spreadsheet analysis

Processing the Inputs: Memory  Memory varies according to –Size – how much capacity it has –Volatility – whether you lose what’s in it when the electricity goes off –Function – ROM (read-only memory) holds permanent instructions whereas RAM (random access memory) holds temporary data and instructions –Speed - How fast it can communicate with the processor (bus speed) –How close it is located to the processor (cache memory)  Again, you must match your memory purchase to the tasks you intend to perform

Storing the Output  Secondary or long-term storage is used to permanently store data or output  Greater capacity and greater economy than memory  Many different types of secondary storage devices that vary by –Capacity –Cost –Speed of data retrieval –Access method

Storing the Output  Secondary storage devices –Hard disk –Magnetic tapes –Magnetic disks –Redundant array of independent/inexpensive disks (RAID) –Compact disc read-only memory (CD-ROM) –CD-recordable (CD-R) discs –CD-rewritable (CD-RW) discs –Digital versatile disc (DVD) –Memory cards –Expandable storage –Storage Area Network (SAN)  Guess what! You have to match your storage device to the tasks you are undertaking!

What a Hard Disk Looks Like

Comparison of Secondary Device Capacities and Cost

Displaying the Output  There are also countless ways to display the output of your information processing  Output device types –Computer screen –Printer –Mobile device –Telephone –Head phones  Need I say it again! Match the output device to your needs and budget!

Information Systems: The System of Hardware Components Input DevicesMemory and Processor Storage and Output Devices

Computer System Types  Very often all the input, output, processing, memory, and storage devices will come bundled together in a computer system you buy as a whole  The major computer systems types are –Handheld computers –Portable computers –Thin client –Desktop computers –Workstations –Servers –Mainframe computers –Supercomputers  Each type has a very different role in life!  Your job, of course, is to choose which best fits your organization’s needs and budget

What a Mainframe Looks Like

What a SuperComputer Looks Like

Comparison of Major Computer System Types

Reminders  Reading –For today  Fundamentals text, Chapter One  HBR article, “Why IT Doesn’t Matter Anymore” –For next week  Fundamentals text, Chapter Two, Hardware section  Homework –Homework One due next Friday, 9/9 by 5pm  Submit to Mgt ,.02,.03, or.04 dropbox –Homework Two is now available  Due Friday, 9/16 by 5pm  Next week’s class session: Software