Exam 1 Review September 11, 2013

Intro to IT Management

Technologies & business functions Supply Chain Management (SCM) Systems – Refer to a category of IS that support the activities related to business supply chain. Typical activities supported: – Procurement / purchase of supplies – Tracking orders from suppliers – Taking/Handling customers orders – Invoicing – Tracking customers orders SCM systems are typically part of Enterprise Resource Planning (ERP) systems 3

Technologies & business functions Customer Relationship Management (CRM) Systems – Refer to a category of IS that support the activities related to managing and nurturing a company’s interactions with customers, clients, and sales prospects. – Help increase organizational effort by multiple departments like marketing, sales, support division, and customer service to improve customer relations – Goals are to help : (1) find, attract, and win new clients – (2) nurture and maintain existing customers – (3) entice former customers back into the fold Typical activities supported: – Managing Sales teams – Tracing potential customers – Running MKT campaigns – Analyzing sales SCM systems are typically part of ERP systems 4

IT, IS, MIS  Information technology (IT) refers to  a field concerned with the use of technology in managing and processing information  Computer-based tools used to capture, store, protect, process, retrieve, and transmit information  IT is a main part of Business Intelligence  Business Intelligence is a broad array of applications and technologies used to gather, provide access to, and analyze data and information to support decision making  Information technology is an important enabler of business success and innovation 5

IT, IS, MIS (cont.)  Management information systems (MIS) :  Is a business function and academic discipline  Deals with the application of information systems and information technology to solve business problems  MIS is a business function, similar to Accounting, Finance, Operations, and Human Resources 6

IT, IS, MIS (cont.)  Information Systems – systems designed for use by organizations in order to transform raw data into information that can help workers do their job and managers make decisions.  An information system has the following key components:  People  Technology  Procedures 7 Technology Hardware Software Databases Networks

8 All IS are IPO systems The output of one system can be an input for another system I P O Rate = $10/hour Hours = 45 Mrs. Johnson’s weekly salary is $450. WS = numeric variable WS = 10 * 45

9 Information system vs. Information Technology Information System Information Technologies HardwareSoftware Databases Network Information

IT and Competitive Advantages

GAINING COMPETITIVE ADVANTAGE  Organizations watch their competition through environmental scanning  e.i., the acquisition and analysis of events and trends in the environment external to an organization  Socrates Technology-based Competitive Strategy system ( ) – Used by the U.S government  SWOT analysis – Strengths, Weaknesses, Opportunities, Threats (Stanford Research Institute )  Porter’s Five-Force Model  Porter, M.E. (1979) How Competitive Forces Shape Strategy, Harvard business Review, March/April 1979  Porter, Michael (1985) Competitive Advantage, Free Press, New York. 11

PORTER’S FIVE FORCES MODEL 12 Threat of New Entrants  Entry barriers - Customers’ switching cost - Capital Requirements - Access to distribution channels - Economies of scale  Industry Growth rate Buyers Power  Buyers’ switching Cost  Buyers concentration  Threat of backward integration  Threat of forward integration  Buyers volume Suppliers Power  Suppliers concentration  Cost of switching supplier  Substitute inputs  Threat of forward integration Threat of Substitutes  Relative quantity of substitutes  Relative price of substitutes  Buyers’ switching cost Rivalry # of competitors & industry concentration Buyers volume Market growth Exit barriers Buyers’ switching cost

Rivalry Among Existing competitors  Industry Concentration – % of market held by largest firms – Bureau of Census’ Concentration Ratios (CR) – CRs measure market share held by the 4, 8, 25, 50 largest firms in sector – High CR  Few competitors, less attractive industry, less rivalry(?)  Market growth – Slow market growth  Increased rivalry  Exit barriers – High cost abandoning a product  Firm must compete  Switching cost – Low buyer switching cost  More intense rivalry 13 Rivalry  # of competitors & Industry concentration  Buyers volume  Market growth  Exit barriers  Buyers’ switching cost

Buyer Power  Assessed by analyzing the ability of buyers to directly impact the price they are willing to pay for an item.  High Buyers’ switching cost  Less Buyer power  Buyers concentration  Few buyers with large market  share More buyer power  Buyer’s Threat of backward integration  Example: Large automakers vs. Tire manufacturers  Seller’s Threat of forward integration  Example: Movie producers vs. Movie theaters 14 Buyers Power  Buyers’ switching Cost  Buyers concentration  Threat of backward integration  Threat of forward integration  Buyers volume

Supplier Power  Assessed by the suppliers’ ability to directly impact the price they are charging for supplies  High Supplier concentration  More supplier power  Example: Drug industry vs. Hospitals  High cost to switch supplier  More supplier power  Presence of substitute inputs  Less supplier power 15 Suppliers Power  Suppliers concentration  Cost of switching supplier  Substitute inputs  Threat of forward integration

Threat of Substitutes  More substitute products or services  More demand elasticity  More competition  Affordable substitutes  More switching  Low switching cost  More intense competition 16 Threat of Substitutes  Relative quantity of substitutes  Relative price of substitutes  Buyers’ switching cost

Threat of New Entrants  High when it is easy for new competitors to enter a market  Low when entry barriers are high  Entry barriers are high with  significant capital requirements  high switching cost  Hard to access distribution channels 17 Treat of New Entrants  Entry barriers - Customers’ switching cost - Capital Requirements - Access to distribution channels - Economies of scale  Industry Growth rate

Generic Competitive Strategies  Three basic strategies for pursuing competitive advantage  Cost leadership – Exploiting all sources of cost advantage while complying with industry norms  Differentiation – Offering unique and distinctive product/service through innovation  Focus – Targeting segments (niche markets) and exploiting the under-performance of broad competitors in the segments through cost leadership or differentiation 18

Strategy  Planned set of actions to be taken in order to achieve a strategic goal  A good strategy is characterized by – Uniqueness – Sustainability  All strategies are relative to the competitors 19

Diffusion of Innovation Life Cycle 1)New IT 2)Growth 3)Maturity 4)Decline 20

IT Infrastructure: Hardware

22 The Core Computer Components  Four subsystems in a computer system: 1. Input subsystem3. Output subsystem 2. Processing subsystem4. I/O (Storage) subsystem Input Process Output Input/Output (storage)

23 I/O or Secondary Storage devices  Secondary compared to the main primary memory called RAM  Nonvolatile 1 storage of digital data - Could be Magnetic, Optical,  Magnetic storage (i.e. data stored on magnetically coated surface)  Examples: Magnetic tape, Hard disk, floppy disk  Sequential access (e.g. tape) or direct access (e.g. HDD)  HDDs are electromechanical devices with spinning disks and movable disks –Use standards/interfaces like Parallel ATA (PATA) or IDE (Integrated Drive Electronics) Serial ATA (SATA) 2 SCSI (Small Computer System Interface) –SCSI provides disk fault-tolerance by using RAID – Redundant Array of Inexpensive Disks; that is multiple disks set together to provide continued service in case one disk fails. –Disk speed: Transfer rate in MBps (Megabytes per second) or GBps Average Read Time (in milliseconds or ms) Platter rotation speed in RPM (5400/7200/10,000/15,000)  State Solid Disks (SSD)  use microchips which retain data in non-volatile memory chips  No moving parts | Have lower access time and latency  Can replace your existing HDD if same interface 1. Means that the stored data wouldn’t disappear (or be deleted) in case of power shortage 2. In SATA and PATA, ATA stands for Advanced Technology Attachment 256GB Crucial m4 2.5-inch SATA 6GB/s RPM = Revolution Per Minute = # complete turns in 1 minute

24 Processing subsystem  Motherboard: chipset that all components connect to Motherboard  CPU Socket types  Pin Grid Array (PGA) (CPU must have pins to fit in the socket holes)  Land Grid Array (LGA) with locks  Zero Insertion Force (ZIP)  Note: CPU socket must of the same type as motherboard’s

25 Processing subsystem (cont.)  Two major components in processing subsys. –CPU (Central Processing Unit) or Processor(s) –Primary Storage: Random Access Memory (RAM) holds running programs and the data they use Read Only Memory (ROM) contains critical programs such as those that boot Busses that transfer data CPU Primary Storage Other components on the Motherboard

26 Central Processing Unit  Clock: generate time that synchronize other components  ICU: Fetches instructions from RAM  ALU: Execute instructions (arithmetic & logic operations)  Registers: Store control information, data, intermediate results Processor Clock Instruction Control Unit Arithmetic Logic Unit Registers

27 Front Side Bus and Northbridge CPU Northbridge (Memory Controller) Southbridge (Memory Controller) RAM AGP Video Card PCI bus Real Time Clock USB Other devices Front Side Bus  FSB: bi-directional data bus carrying data b/w CPU and Northbridge  FSB speed is measured in Hz; e.g. 800 MHz FSB (or in GB Transfer/s in newer Intel – 4.8 GT/s = 4.8x2 = 9.6 GB/s ) Quad Core Intel® Xeon® W GHz, 8M L3, 4.8GT/s Cache MemoryClock CPU speed/Clock rate Cache Memory Quick Path Interconnect QPI/FSB speed AMD Phenom II X GHz, Socket AM3, 6MB Cache, 2GHz (4GT/s) FSB

28 Grid Computing  Connecting geographically remote computers to create a “virtual supercomputer”  Takes advantage of fact that most computers use about 25% of their CPU in average.  Advantages: Cost savings Speed Reliability (because if one fails, the still system functions)