Chapter 17 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 1 Chapter 17 Prepared by Deborah Baker Texas Christian University Management 4th Edition Chuck Williams Managing Information

Chapter 17 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 2 What Would You Do?  London’s traffic problems are the worst in Europe— horse-drawn carriages in 1903 moved faster than traffic today!  The roads are antiquated and always congested.  A “Congestion Zone” fee has been created, and now a technological process must be designed to collect fees. Mayor’s Office, London, England. How do you process data into useful information to assess and collect the appropriate fees?

Chapter 17 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 3 Moore’s Law

Chapter 17 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 4 Why Information Matters After reading these sections, you should be able to: 1. explain the strategic importance of information. 2. describe the characteristics of useful information (i.e., its value and costs).

Chapter 17 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 5 Data versus Information  Raw data = facts + figures  Information = useful data that influences choices

Chapter 17 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 6 Strategic Importance of Information First-Mover Advantage Sustaining a Competitive Advantage 1 1

Chapter 17 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 7 First-Mover Advantage 1.1 First-Mover Advantage The strategic advantage that companies earn by being the first to use new information technology to lower costs or to differentiate a product

Chapter 17 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 8 AOL User Interface

Chapter 17 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 9 MSN Interface

Chapter 17 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 10 Sustaining a Competitive Advantage Competitive Disadvantage Competitive Parity Sustained Competitive Advantage Temporary Competitive Advantage Is it difficult for another firm to create or buy the IT? NOYES Does the information technology (IT) create value? NOYES Is the IT different across competing firms? NOYES Adapted from Exhibit

Chapter 17 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 11  Accurate  Complete  Relevant  Timely Characteristics of Useful Information 2 2

Chapter 17 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 12 Costs of Useful Information  Acquisition  Processing  Storage  Retrieval  Communication Costs 2 2

Chapter 17 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 13 Doing the Right Thing 2 2 Recycling Computer Equipment An estimated 250 million computers will be discarded over the next five years Computers and monitors contain hazardous materials, so tossing them in the trash is illegal Recycle appropriately, or donate old computers to individuals or charitable organizations

Chapter 17 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 14 Getting and Sharing Information After reading these sections, you should be able to: 3. explain the basics of capturing, processing, and protecting information. 4. describe how companies can share and access information and knowledge.

Chapter 17 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 15 Capturing Information ElectronicElectronic ManualManual Bar Codes Radio Frequency Identification Tags Electronic Scanners Optical Character Recognition 3.1

Chapter 17 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 16 RFID Technology

Chapter 17 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 17 Processing Information: Data Mining Supervised Data Mining Data Warehouse Unsupervised Data Mining Data Clusters Sequence Patterns Predictive Patterns Affinity Patterns 3.2

Chapter 17 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 18 Unsupervised Data Mining Data Clusters Sequence Patterns Predictive Patterns Affinity Patterns Three or more database elements occur together One of the elements precedes the other Helps identify database elements that are different Two or more database elements occur together significantly 3.2

Chapter 17 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 19 Protecting Information  Authentication  Authorization  Two-Factor Authentication  Firewalls  Antivirus software  Data encryption  Virtual private networks  Secure Sockets Layer (SSL) Encryption 3.3

Chapter 17 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 20 Doing the Right Thing 3.2 Password Dos and Don’ts 1. Don’t use any public information 2. Don’t use complete words 3. Use eight or more characters; include unique characters 4. Use longer, unique passwords 5. Consider passphrases 6. Don’t write your password 7. Change it every six weeks 8. Don’t reuse old passwords

Chapter 17 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 21 Accessing and Sharing Information and Knowledge Internal Access and Information Sharing Internal Access and Information Sharing External Access and Information Sharing Sharing of Knowledge and Expertise 4 4

Chapter 17 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 22 Executive Information System (EIS)  Uses internal and external data  Used to monitor and analyze organizational performance  Must provide accurate, complete, relevant, and timely information to managers 4.1

Chapter 17 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 23 Characteristics of Best-Selling EIS  Few commands to learn  Important views saved  3-D charts  Geographic dimensions Identification of Problems and Exceptions Ease of Use Analysis of Information Adapted from Exhibit 17.4  Compare to standards  Trigger exceptions  Drill down  Detect & alert newspaper  Detect & alert robots  Sales tracking  Easy-to-understand displays  Time periods 4.1

Chapter 17 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 24 Intranets  Private company networks  Allow employees to access, share, and publish information  A firewall permits only authorized internal access 4.1

Chapter 17 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 25 Why Companies Use Intranets  Inexpensive  Increase efficiencies and reduce costs  Intuitive and easy to use  Work across all computer systems  Can be built on top of existing network  Work with software programs that convert to HTML  Software is available at no cost or is less expensive Adapted from Exhibit

Chapter 17 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 26 Corporate Portals 4.1 Corporate Portals A hybrid of executive information systems and intranets that allow managers and employees to use a Web browser to gain access to customized company information and to complete specialized transactions

Chapter 17 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 27 External Access and Sharing Electronic Data Interchange Extranets Web Services Internet 4.2

Chapter 17 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 28 Benefits of External Access and Sharing Increased productivity Reduced data entry errors Improved customer service Faster communications Reduced costs 4.2

Chapter 17 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 29 Electronic Data Interchange (EDI) Electronic Data Interchange Electronic Data Interchange When two companies convert their purchase and ordering information to a standardized format to enable the direct electronic transmission of that information from one computer system to the other. 4.2

Chapter 17 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 30 Web Services Using standardized protocols to describe data from one company in such a way that those data can automatically be read, understood, transcribed, and processed by different computer systems in another company 4.2

Chapter 17 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 31 Extranet Allows companies to exchange information and conduct transactions with outsiders by providing them direct, Web-based access to authorized parts of a company’s intranet or information system 4.2

Chapter 17 Copyright ©2007 by South-Western, a division of Thomson Learning. All rights reserved 32 Sharing Knowledge and Expertise Decision Support System Decision Support System Helps managers to understand specific kinds of problems and potential solutions, and to analyze the impact of different decision options using “what if” scenarios Expert System Expert System An information system that contains the specialized knowledge and decision rules used by experts so that nonexperts can draw on this knowledge base to make decisions 4.3