1 REVIEW FOR EXAM 3 BUS Abdou Illia, Spring 2005

2 Information Systems For E-Business Part 1

3 What technologies would help implement your E-Business model? What technologies would take care of my concerns? What kind of issues/concerns you have to deal with? Who are you? How far you can go digital? - What product/service? - How customers find, purchase, pay prod./serv. - How product/service are delivered? Who are your customers? E-Business Triangle

4 E-Business Technologies Web design TCP/IP Java Firewalls Electronic Payments, Online Billing Encryption E-Business Issues Copyright Privacy Security Intellectual Property Taxation Trust Jurisdiction E-Business models B2B B2C C2C E-Gvt: G2B, G2C E-Business Triangle

5 Components of E-Business  Each component could be Physical or Digital.  The extent to which a Business is an e-Business depends on the extent to which the components are digital. Processes: Process of finding the product, purchasing and paying.

6 E-Business Models  Business-to-Consumer – B2C Business sells product directly to the consumer.  Business-to-Business – B2B Businesses sell to other businesses.  Consumer-to-Consumer – C2C Consumers sell directly to other consumers.

7 B2C Models  Subscription Consumers pay to have regular access to site. Consumersreports.com  Online storefront Web site acts as intermediary between manufacturer and consumer. Amazon.com

8 B2C Models (continued)  Bricks-and-clicks Combines a traditional retail outlet with an online storefront  CircuitCity.com CircuitCity.com  Advertising Sell advertising space on web site to other companies  Sports.yahoo.com Sports.yahoo.com

9 B2C Models (continued)  Internet presence Use web presence to provide information about products and services  Exxon.com Exxon.com  Intermediary New types of intermediaries connect buyers and sellers  E-Trade.com E-Trade.com

10 B2B Models  B2B is much larger than B2C Size estimates range from $543 Billion to $6.8 Trillion Increase 50% per year  Information exchanges Exchange business documents over the Internet EDI via the Internet  Direct sellers Direct sales model, direct to other businesses  Dell Premier pages  Cisco  New intermediaries Virtual hubs match buyers and sellers  E-Hospitality E-Hospitality

11 C2C Models  Online garage sales  Online auctions Allows consumers to buy and sell goods with other consumers EBay.com  C2C services Sell expertise directly to other customers Keen.com  Online communities Allow people with similar interests to come together Chat rooms Discussion boards

12 E-Government Business Models  Government-to-citizen (G2C) Provide government services to citizens over the Internet  Vehicle registration renewal  Online voting  Government-to-business (G2B) Helps government and business work together more efficiently Reduces paperwork and costs for business and government

13 E-Business Issues  E-Business raises a number of difficult legal, social, and ethical issues Protection of intellectual property Taxation of e-business transactions Jurisdiction – whose laws apply when a transaction crosses many international boundaries Trust  TRUSTe TRUSTe

14 Security  Hackers: who attempts to gain unauthorized access to a computer system  Spoofing (spoof attacks)  Denial of service attacks  Distributed denial of service attacks  Ping of Death attacks

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16 Summary Questions MalagaNotes 1)What are the three elements of the e-business triangle? 2) (a) Which business model do online auction sites use? (b) Which ones governments use? 3)(a) What is a Denial of service attack? What is a spoof attack? What is a Ping of Death attack? 4)Do Encryption protect the data stored on a server computer?

17 Information Systems For Decision-Making Part 2

18 The Decision-Making Process  Simon’s model of the decision-making process Intelligence Design Choice

19 Intelligence Phase  Scan the environment for a problem.  Determine if decision- maker can solve the problem. Within scope of influence  Fully define the problem by gathering more information about the problem. Scan Environment for problem to be solved or decision to be made Data source MIS Problem ? END Problem within scope of influence? No Yes END No Gather more information about the problem Internal & External data

20 Design Phase  Develop a model of the problem. Determine type of model. Verify model.  Develop and analyze potential solutions. Develop a model of problem to be solved Verify that the model is accurate Develop potential solutions

21 Choice Phase  Select the solution to implement. More detailed analysis of selected solutions might be needed. Verify initial conditions. Analyze proposed solution against real-world constraints.

22 Decision Support Systems  Major components Data management subsystem  Internal and external data sources Model management subsystem  Typically mathematical in nature User interface  How the people interact with the DSS  Data visualization is the key  Text  Graphs  Charts User Interface Model Management - Sensitivity Analysis - What-if Analysis - Simulation - Goal-seeking Analysis Data Management - Transactional Data - Data warehouse - Business partners data - Economic data

23 Modeling Tools and Techniques  Simulation Used to examine proposed solutions and their impact  Sensitivity analysis  Determine how changes in one part of the model influence other parts of the model  What-if analysis  Manipulate variables to see what would happen in given scenarios  Goal-seeking analysis  Work backward from desired outcome Determine monthly payment given various interest rates. Works backward from a given monthly payment to determine various loans that would give that payment.

24 Groups Decision Support Systems  DSS designed to help groups make decisions with the help of a Group Facilitator  GDSS Tools: Brainstorming tools: Allow users enter ideas simultaneously & anonymously Commenter tools: Allow users to anonymously comment on others’ ideas Categorizing tools: Groups ideas into categories Idea-ranking tools: Ranks ideas. Identify the best ones. Electronic-voting tools: Allow users to vote for their favorite ideas. GDSS tools Front Screen

25 Executive Information Systems  Computer-based tool that specifically helps top-level management make strategic decisions Processes both internal and external data Presents data in summary form Drill-down is a key feature – gives the manager the ability to see more details when needed

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27 KWS. Expert Systems  AI systems that codify human expertise in a computer system Main goal is to transfer knowledge from one person to another Wide range of subject areas  Medical diagnosis  Computer purchasing Knowledge engineer elicits the expertise from the expert and encodes it in the expert system

28 Expert Systems Components  Knowledge base: database of the expertise, often in IF THEN rules.  Inference engine: derives recommendations from knowledge base and problem-specific data  User interface: controls the dialog between the user and the system  Explanation system: Explain the how and why of recommendations Knowledge base Domain Expert Knowledge Engineer Expertise Explanation System Inference Engine User Interface User System Engineer Encoded expertise IF family is albatross AND color is white THEN bird is laysan albatross. IF family is albatross AND color is dark THEN bird is black footed albatross Example of rules

29 Summary Questions MalagaNotes 1)What are the steps of a decision making process according to the Simon’s model? Explain each step. 2) (a) What are the major components in a DSS? (b) What is the function of each? 3)(a) What is the difference between a DSS and a GDSS? What is a Group facilitator? What are the main tools used in a GDSS to help users reach a decision? 4)What is an EIS? What is the difference between a DSS and an EIS? 5)What is an Expert System? What are the main components of an Expert system? What is a knowledge engineer?

30 Information Systems For Business Integration Part 3

31 Business Integration? Sales Department Logistics Department Production Department Horizontal Integration VerticalVertical IntegrationIntegration Suppliers Customers

32 Systems for Horizontal Integration  Enterprise Resource Planning (ERP) system integrate all the internal processes through a common information system ERP system Sales Department Logistics Department Production Department Warehouse Marketing Department Accounting Department Common Database Process1Process2Process1Process2Process1Process2Process1Process2Process1Process2Process1Process2

33 Integrating Internal Processes with ERP  ERP systems integrate all the functions and departments within an organization through a common information system  Most common modules for an ERP system Finance Manufacturing: helps from product development to production Human resources: Handles all HR functions Procurement: helps manage the purchase of office supply & raw material Marketing: manage relationship with customers  ERP mainly used by medium and large businesses Average lifetime cost: $15 Million (in 2003) Implementation process: up to 5 years

34 Vertical Integration with suppliers  Possible problems: Raw material shortage Receiving more raw material than needed Etc. Suppliers Company’s Internal processes Lack of good integration Q: What kind of solution can provide business integration in this specific case? Sales Department Process1 Process2 Delivery Department Process1 Process2 Production Department Process1 Process2

35 Systems for Vertical Integration  Electronic Data Interchange (EDI): Direct computer-to-computer transfer of business documents in electronic form Suppliers Company’s Internal processes Sales Department Process1 Process2 Delivery Department Process1 Process2 Production Department Process1 Process2 EDI System Value Added Network (VAN) or Private network connection

36 Electronic Data Interchange (EDI)  Allows automatic transfer of electronic order forms and their automatic processing  EDI relies on a pair of message standards ANSI X12 – used in North America EDIFACT – international, but widely used in Europe  Advantages: Eliminates paperwork Reduces errors Speeds supply process  Disadvantages: Provides connection only between two companies Doesn’t help in supply planning.

37 Systems for Vertical Integration  Supply chain management (SCM) system provide a direct electronic connection with suppliers Company’s Internal processes Sales Department Process1 Process2 Delivery Department Process1 Process2 Production Department Process1 Process2 SCM System Network connection Suppliers - Forecast demand - Handle purchase of supply - Manage storage + shipping Three main functions

38 Supply Chain Management (SCM)  Stages of SCM (SC Council’s Reference Model): 1)Planning: develop and implement processes that attempt to forecast demand for products and services  Goal: Balance demand with supply of raw material 2)Sourcing: determine who should supply the items required  Goal: Be supplied on time, within budget 3)Production: make the product 1)Schedule production 2)Ensure raw materials are on hand when needed 4)Product delivery (logistics) 1)Everything from receiving a customer inquiry to invoicing 2)Warehouse management is one very important factor 5)Returns: managing returns of raw materials as well as finished goods

39 Vertical Integration with customers  Possible problems: Out of product Poor customer support Etc. Customers Lack of good integration Q: What kind of solution can provide business integration in this specific case? Company’s Internal processes Sales Department Process1 Process2 Delivery Department Process1 Process2 Production Department Process1 Process2

40 Systems for Vertical Integration  Customer Relationship Management (CRM) information system to manage all the functions that deal with customers  Goal of CRM is to increase sales and repeat business by learning the customer Remember the customer’s needs and preferences Determine the customer’s satisfaction with service Determine which customers are in the magic 20 percent (or have the potential to become part of it)

41 CRM software  CRM software modules include Personalization Marketing automation Sales force automation Service and support

42 Summary Questions MalagaNotes 1)What is the difference between Horizontal integration and Vertical integration? 2) (a) What king of IS could be used for horizontal integration of business processes? (b) What kind of IS could be used for vertical integration of business processes? 3)(a) What are the common modules found in ERP systems? (b) Name few ERP software vendors. (c) What are the success factors of ERP implementation? 4)What is EDI? What kind of network connections are usually used in EDI? What is the EDI message standard used in the U.S.? 5)What is a SCM system? What is the main goal of an SCM system? What are the stages of SCM? 5)What is a CRM software used for? What is their goal?

43 Information Systems For Strategic Advantage Part 4

44 Value Chain? Q1: Which internal processes are directly related to getting raw materials and transforming them into something of greater value? Internal Business Processes Sales Process Production Process Purchasing Process Warehousing Process Marketing/ Service Process Accounting Process Delivery Process Suppliers Customers Human Resources Process Purchase Price + Added Value + Profit Margin = Sales Price

45 Value Chain?  Business processes directly related to taking raw materials and transforming them into something of greater value.  Business processes that support Value Chain activities but do not directly add value to a product or service.

46 Inbound logistics: Purchasing and receiving raw materials Operations: Actual conversion of raw material into finished products Outbound logistics: Getting the product to the customers Marketing & Sales: Getting the customers buy the products Service: Keeping products work after purchase Q2: In a Value Chain, primary activities include function such as Accounting T F Q3: The cost of implementing and managing IS is part of the value chain T F

47 Porter’s Value Chain Analysis tool  Tool for analyzing internal business activities that bring products and services to market.  Process of analyzing the activities within an organization’s value chain  Companies gain strategic value by focusing on a particular portion of the value chain  IT can help reduce the costs of these processes, thus increasing profit margins

48 Porter’s Competitive Forces Model: Dealing with external factors Industry competition Industry Competition: Rivalry with the industry New Entrants: Potential competitors. E.g. IBM could decide to use Dell’s direct selling model Suppliers: Bargaining power of suppliers. The more suppliers, the less their bargaining power Customers: Bargaining power of customers. Individual has less bargaining power than corporations. Substitutes: Potential for substitute products to undercut our market share.

49 Porter’s Competitive Forces Model  Five components Level of competition in industry Threat of new entrants into industry Bargaining power of customers Bargaining power of suppliers Threat of substitute products  Uses for CFM Determine company’s own position within industry Identify competitive forces and threats early Analyze industries and market segments to determine their future prospects  Possible strategic decisions based on CFM Begin producing substitute product Exit a declining market segment

50 Summary Questions MalagaNotes 1)What is Value Chain? What group of activities are there in Porter’s Value Chain Analysis tool? 2) Could companies gain strategic value by focusing on only one activity in the value chain? 3)What kind of Information systems could help performing each of the primary and support activities of Porter’s Value Chain? 4)What are the possible uses of Porter’s Competitive Force Model? 10 5)What kind of Information systems could help dealing with Competitive Forces issues?

51 Managing the Development and Purchase of IS Part 5

52 Traditional Systems Development Life Cycle (SDLC)  Seven phases 1)Planning5) Testing 2)Systems Analysis6) Implementation 3)Systems Design7) Maintenance 4)Development  Usually complete one phase before beginning the next  Problem in later phase may require return to previous phase Planning Analysis Design Development Testing Implementation Maintenance

53 SDLC: Recap StepsKey actorsTools/Techniques 1. PlanningProject Manager 2. System AnalysisSystem Analyst, Users.Interviews, observing users at work, DFD 3. System DesignSystem analyst (or system designer) System Flowchart, Structure chart 4. DevelopmentProgrammers, database developers, network engineers Program Flowchart, Pseudo code, programming languages, DBMS 5. TestingDevelopment team, Users 6. ImplementationDevelopment team, UsersDirect cutover, parallel conversion, pilot testing, staged conversion 7. Maintenanceinternal IS staff, external consultant

54 Summary Questions MalagaNotes 1)What is a System Development Methodology? What is it used for? 2) What are the 7 phases of the SDLC methodology? 3)What are kind of Feasibility analyses need to be performed during the Planning phase? Why is the system development schedule important? 4)What are the two steps in the Systems Analysis phase? What techniques and tools are used during the Systems Analysis phase? 5)What tools do programmers usually use during the Development phase? 6)What is the difference between the Verification and the Validation tests performed during systems testing?

55 Prototyping Actors Development team, Users System analyst, programmer Users System analyst, programmer Identify basic requirements Develop a prototype Is User satisfied? Use the prototype Revise the prototype Operational prototype Develop final system (improved prototype) YES NO

56 Prototyping  Advantages Working model ready to use quickly Works in situation where requirements are changing Works in situations where users cannot explicitly express their requirements  Disadvantage Only a limited number of users involved

57 Joint Application Development (JAD)  A SDM that addresses: The limited scale of users involvement problem of Prototyping Potential implementation problem due to limited user involvement  A SDM that brings together the Development team and a significant number of users to define system requirements and develop a prototype.

58 Joint Application Development (JAD) Identify a valid sample of users Set a JAD team ( Users, IS professionals, scribe ) Run the 1 st JAD session (JAD team + Facilitator) Develop system prototype ( based on agreed requirements ) Run the 2 nd JAD session (JAD team + Facilitator) Improve system prototype ( based on JAD session results ) Objectives Identify agreed systems requirements Test the system and identify agreed changes

59 Joint Application Development (JAD)  Advantages: Helps alleviate conflicting requirements Greater user involvement leads to greater user acceptance of final system  Disadvantages Could be expensive and time consuming

60 Rapid Application Development (RAD)  Combines JAD, Prototyping, and integrated CASE (ICASE) tools to decrease the time for systems development  ICASE tools provide code generating capability ICASE tools can produce a completed program based on the diagrams developed by systems analysts ICASE tools can generate table for a database based on detailed system specifications

61 Summary Questions MalagaNotes 1)What are the main problems associated with SDLC? 2) What is Prototyping? What are the steps of Prototyping? In what kind of situations Prototyping might be the best SDM to use? 3)What is JAD? Typically, who could be a member of a JAD team? Usually, what is the main objective of the 1 st JAD session ? What is the main problem associated with JAD? 4)What is RAD? What is an ICASE tool

62 Object-Oriented Analysis and Design (OOAD)  Uses same phases as SDLC  System Analysis and Design phases view system In terms of objects (e.g. customers, employees, products) NOT in terms of processes  OOAD identifies each object in the system along with its properties (e.g. SSN, Name, address, etc. for Student) its procedures (e.g. Register for a class, Apply for graduation)  Advantages Reduces time to develop system (objects’ reuse) Can lead to high-quality systems (reuse of tested objects and procedures)

63 Purchasing Software  Commercial off-the-shelf (COTS) software Less expensive May not contain all the needed features  Phases in COTS SDLC System planning Systems analysis Request for proposals Proposal evaluation Implementation Maintenance } here is the difference

64 Request for Proposals (RFP)  Details the requirements for the new systems and invites interested parties to submit a proposal for the system  Sections in an RFP Summary of existing systems Specific description of the features of the new system Proposal evaluation criteria Budget constraints Timetable for deliverables Details of other miscellaneous information

65 Request for Proposals (RFP)  Summary of existing systems Internal business processes Type of computers used etc.  Description of the features of the new system Requirements for hardware Requirements for software Requirements databases Requirements for network How many transactions per minutes? etc  Proposal evaluation criteria Features, reliability, speed, etc.  Budget constraints Maximum budget vs. No budget information  Details of other miscellaneous information Vendor’s past projects, client references, etc.

66 Evaluating Proposals  Usually using a point-system Number of points for each requirement More points to more important requirements  Evaluation approaches Specific requirements  Eliminate proposals that don’t meet requirements  Compare remaining proposals Demonstrations  At vendor’s location vs. At client site Benchmarks  Running system with sample data to see how it performs

67 Summary Questions MalagaNotes 1)What is the difference between OOAD and SDLC? What is an object’s property? What is a procedure? What are the main advantages of OOAD? 2) What is a COST software? How does the Traditional SDLC SDM differ from COST SDLC? In what kind of situations Prototyping might be the best SDM to use? 3)What are the common sections found in a Request For Proposals? What is a point-system for evaluating proposals? What are the common proposal evaluation approaches?