1. Using Technology to Manage Information
Chapter 13
Using Technology to Manage Information
Using Technology to Manage Information
CHAPTER 13
The Future of Business
The Essentials 4th Edition Gitman & McDaniel
© Peter Cade / Iconica / Getty Images
Prepared by Deborah Baker
Chapter 13
Copyright ©2009 by South-Western, a division of Cengage Learning. All rights reserved

2. Learning Goals CHAPTER 13
Using Technology to Manage Information
1 How has information technology transformed business and managerial decision making?
2 Why are computer networks an important part of today’s information technology systems?
3 What types of systems make up a typical company’s management information system?
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3. Learning Goals (continued)
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Using Technology to Manage Information
How can technology management and planning help companies optimize their information technology systems?
5 What are the best ways to protect computers and the information they contain?
6 What are the leading trends in information technology?
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4. Information Technology
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Using Technology to Manage Information
information technology (IT)
The equipment and techniques used to manage and process information.
Information is at the heart of all organizations. Without information about the processes of and participants in an organization--including orders, products, inventory, scheduling, shipping, customers, suppliers, and employees--a business cannot operate.
This chapter focuses on IT’s role in business—details of MIS organization and equipment, as well as the challenges in a complex technological world.

5. Information Technology
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Using Technology to Manage Information 1
How has information technology transformed business and managerial decision making?
In less than 60 years, we have shifted from an industrial society to a knowledge-based economy driven by information. Computers are the tools of this information age. 1

6. Business Computing Equipment
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Using Technology to Manage Information
Business Computing Equipment
Desktop personal computers
Laptop computers
Minicomputers
Mainframe computers
Supercomputers
Exhibits 13.1 describes the types of computer equipment most commonly used in business MIS systems today. 1
Exhibit 13.1

7. Business and Personal Software Applications
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Using Technology to Manage Information
Business and Personal Software Applications
Word processing software
Spreadsheet software
Database management programs
Graphic and presentation programs
Desktop publishing software
Communications programs
Integrated software suites
Groupware
Financial software
Exhibit 13.2 summarizes the types of software used in management information systems today. 1
Exhibit 13.2

8. The Role of Supercomputers
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Using Technology to Manage Information
National security research
Scientific research
Demographic studies
Weather and environmental studies
Business applications
Even though most workers spend their days at desktop computers, other groups tackle massive computations at specialized supercomputer centers. Tasks that would take years on a PC can be completed in hours on a supercomputer. Supercomputers play a critical role in national security, scientific research, and demographic studies. Businesses use them for inventory and production management and for product design. 1

9. Information Technology
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chief information officer (CIO)
An executive with responsibility for managing all information resources in an organization.
knowledge worker A worker who develops or uses knowledge, contributing to and benefiting from information used in performing, planning, acquiring, searching, analyzing, organizing, storing, programming, producing, distributing, marketing, or selling functions.
Many companies entrust the management of information resources with a Chief Information Officer (CIO). Data is one of the most precious assets of a company.
Most jobs today depend on information, and knowledge workers develop or use knowledge in the functions listed in the above definition. 1

10. Information Technology
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Using Technology to Manage Information
management information systems (MIS)
The methods and equipment that provide information about all aspects of a firm’s operations.
database An electronic filing system that collects and organizes data and information.
Databases are at the core of business information systems. Companies can derive useful marketing information, including spending information, from their customer databases. 1

11. Management Information Systems
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Provide information about a firm’s operations
Provide managers with information needed to make decisions
Help managers categorize and identify ideas that result in operational and cost benefits
Management information systems are methods and equipment that provide information about all aspects of a firm’s operations, and provide managers with the information they need to make decisions. They help managers categorize and identify ideas that result in substantial operational and cost benefits. 1

12. CONCEPT check
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What are management information systems, and what challenges face the CIO in developing the company’s MIS?
Distinguish between data and information. How are they related? Why is data considered a valuable asset for a firm?
How does systems integration benefit a company? 1

13. Computer Networks
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Using Technology to Manage Information 2
Why are computer networks an important part of today’s information technology systems? 2

14. Computer Networks 2 computer network
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computer network
A group of two or more computer systems linked together by communications channels to share data and information.
A network includes clients and servers.
By making it easy and fast to share information, computer networks have created new ways to work and increase productivity. They provide more efficient use of resources, permitting communication and collaboration across distance and time. With file sharing, all employees can access the same information. Shared databases eliminate duplication of efforts.
Networks make it possible for companies to run enterprise software, large programs with integrated modules that manage internal operations. 2

15. Intranets
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intranet
An internal corporate wide area network that uses Internet technology to connect computers and link employees in many locations and with different types of computers.
Like LANs, intranets are private corporate networks. 2

16. Enterprise Portals 2 enterprise portal
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enterprise portal
A customizable internal Web site that provides proprietary corporate information to a defined user group, such as employees, supply chain partners, or customers.
Intranets, such as an enterprise portal, that take a broader view serve as sophisticated knowledge management tools. Portals can take one of three forms:
Business to employee (B2E)
Business to business (B2B)
Business to consumer (B2C) 2

17. Application Service Providers
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application service provider (ASP)
A service company that buys and maintains software on its servers and distributes it through high-speed networks to subscribers, for a set period and price.
Companies subscribe to an ASP and use the applications similar to using telephone voice mail. Other names for ASPs are on-demand software, hosted applications, and software-as-a-service. 2

18. Application Service Providers
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Applications for personal use
Collaborative applications
Enterprise applications
Categories of
Applications
An application service provider is a service company that buys and maintains software on its servers and distributes it through high-speed networks to subscribers, for a set period and price.
ASPs provide three major categories of applications to users:
Enterprise applications. Customer relationship management, enterprise resource planning, e-commerce, and data warehousing.
Collaborative applications for internal communications, , groupware, document creation, and management messaging.
Applications for personal use, such as games, entertainment software, and home-office applications. 2

19. Managed Service Providers
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managed service provider (MSP)
Next generation of ASPs, offering customization and expanded capabilities such as business processes and complete management of the network servers.
Managed service providers represent the next generation of ASPs, offering greater customization and expanded capabilities. 2

20. CONCEPT check
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What is a computer network? What benefits do companies gain by using networks?
How do a LAN and a WAN differ? Why would a company use a wireless network?
What advantages do VPNs offer a company? ASPs and MSPs? 2

21. Management Information Systems
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What types of systems make up a typical company’s management information system? 3

22. Management Information System Functions
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Operational decisions
Strategic decisions
Tactical decisions
Each type of information system serves a particular level of decision making: operation, tactical, and strategic. 3

23. Transaction-Processing Systems
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Using Technology to Manage Information
transaction-processing system (TPS)
An information system that handles the daily business operations of a firm. The system receives and organizes raw data from internal and external sources for storage in a database using either batch or online processing.
A firm’s integrated information system starts with its transactional processing system. 3

24. Management Information Systems
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Expert System
Uses artificial intelligence to get advice similar to solutions from consultants
Executive Information System
Provides specific information for strategic decisions
Decision Support System
Helps make decisions using computer models that ask “what if”
Management Support System
Uses the internal master database to perform higher-level analyses for decision making
Transaction Processing System
Handles the daily business operations of a firm
Office Automation System
Uses information technology to improve communications throughout the office
The firm’s integrated information systems starts with its transaction processing system, which handles the daily business operations of a firm. The system receives and organizes raw data from internal and external sources for storage in a database using either batch or online processing.
Management support systems use the internal master database to perform higher-level analyses that help managers make better decisions.
A decision support system uses interactive computer models that describe real-world processes. It is a tool for answering “what if” questions if certain changes were made.
Although similar to a DSS, an executive information system is customized for an individual executive.
An expert system gives managers advice similar to what they would get from a human consultant.
Office automation systems use the computer networks to improve communications. 3

25. Office Automation Systems
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Using Technology to Manage Information
Office Automation Systems
Word processing
Departmental scheduling
Cell phones
PDAs
Wireless devices
Pagers
Voic
Facsimile
Electronic bulletin boards
Computer conferencing
© Thomas Barwick / Getty Images
The key elements of office automation systems include:
Word processing
systems
departmental scheduling systems
Cellular phones
PDAs
Wireless devices
Pagers
Voic systems
Facsimile systems
Electronic bulletin boards
Computer conferencing
© iStockphoto.com / Kristian Sekulic 3

26. CONCEPT check
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Using Technology to Manage Information
What are the main types of management information systems, and what does each do?
Differentiate between the types of management support systems, and give examples of how companies use each.
How can office automation systems help employees work more efficiently? 3

27. Technology Management and Planning
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Using Technology to Manage Information 4
How can technology management and planning help companies optimize their information technology systems? 4

28. Technology Management and Planning
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Technology Management and Planning
Typical complaints about IT investments
Spending too much
Not getting adequate performance and payoff from IT investments
Investments do not relate to business strategy
Buying the latest technology for technology’s sake
Poor communications between IT specialists and IT users
With the help of computers, people have produced more data in the last 30 years than in the previous 5,000 combined. Companies make sizable investments in IT to help them manage this overwhelming amount of data. In many cases, however, companies do not reap the benefits of these expenditures. The typical complaints from senior executives are listed on this slide. 4

29. Managing Knowledge Resources
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Using Technology to Manage Information
Managing Knowledge Resources
knowledge management (KM)
The process of researching, gathering, organizing, and sharing an organization’s collective knowledge to improve productivity, foster innovation, and gain competitive advantage.
Information management focuses on collecting, processing, and condensing information, whereas the more difficult task of knowledge management focuses on researching, gathering, organizing, and sharing an organization’s collective knowledge to improve productivity, foster innovation, and gain competition advantage. 4

30. Technology Planning 4 Perform general needs assessment Rank projects
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Using Technology to Manage Information
Perform general needs assessment
Rank projects
Rank / choose hardware and software
Evaluate benefits of the technology
A good technology plan provides employees with the tools they need to perform their jobs at the highest levels of efficiency. The first step is a general needs assessment, followed by ranking of projects and specific choices of hardware and software. The final step is to evaluate the benefits of technology, for effectiveness and efficiency. 4

31. Questions for IT Project Planning
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What are the company’s overall objectives?
What problems does the company want to solve?
How can technology help meet those goals and solve the problems?
What are the company’s IT priorities both short and long term?
What type of technology infrastructure best serves the company’s needs?
Which technologies meet the company’s requirements?
Are additional hardware and software required? If so, will they integrate with the company’s existing systems?
Does the system design and implementation include the people and process changes, in addition to the technological ones?
Do you have the in-house capabilities to develop and implement the proposed applications, or should you bring in an outside specialist?
Exhibit 13.6 poses some basic questions departmental managers and IT specialists should ask when planning technology purchases. 4
Exhibit 13.6

32. CONCEPT check
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Using Technology to Manage Information
What are some ways a company can manage its technology assets to its advantage?
Differentiate between information management and knowledge management. What steps can companies take to manage knowledge?
List the key questions managers need to ask when planning technology purchases. 4

33. Protecting Computers and Information
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Using Technology to Manage Information 5
What are the best ways to protect computers and the information they contain? 5

34. Data Security Issues 5 Unauthorized access and Security breaches
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Using Technology to Manage Information
Deliberate damage to equipment and information
Computer viruses, worms, and Trojan horses
Unauthorized access and Security breaches
Spam
Software and media piracy
Unauthorized access affecting a company’s computer network can be expensive. The FBI estimates that computer crime costs more than $67 billion in 2005, compared to just $450 million dollars in Credit card fraud was about $5.5 billion in 2007.
Firms are taking steps to prevent these costly computer crimes and problems, which fall into the categories shown on this slide.
© iStockphoto.com / Angel Herrero de Frutos 5

35. Top Cyber Security Threats of 2008
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Attacks on Web browsers and plug-in components
Botnets
Cyber espionage
Breaches of mobile phones
Insider attacks
Malware
Web application vulnerabilities
Blended attacks
Supply-chain attacks 5
Exhibit 13.7:
Source: The SANS Institute, “Top Ten Cyber Security Menaces for 2008,” SANS.org; and
Thomas Claburn, Top 10 Cybersecurity Menaces for 2008 Listed,” InformationWeek.com, January 15, 2008

36. Methods Used to Protect Data
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Using Technology to Manage Information
Anti-virus software
Firewalls
Anti-spyware
Spam filters
VPNs
Intrusion prevention or detection system
Smart cards
Biometrics
Exhibit 13.8 shows the types of security measures companies use to protect data.
Preventing costly problems can be as simple as regularly backing up applications and data. 5
Exhibit 13.8:
Source: Joris Evers, Adapted from “Computer Crime Costs $67 Billion, FBI Says,” CNet News.com, January 19, 2006, Copyright © CNET Networks, Inc. All rights reserved. Reproduced by permission.

37. CONCEPT check 5 Describe the different threats to data security.
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Using Technology to Manage Information
Describe the different threats to data security.
How can companies protect information from destruction and unauthorized use?
Why are privacy rights advocates alarmed over the use of techniques such as data warehouses and data mining? 5

38. Trends in Information Technology
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What are the leading trends in information technology? 6

39. Trends in Information Technology
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Trends in Information Technology
Virtualization
Web-based applications
Grid computing
New trends in IT may appear in as little as six months. Some of the current trends that are reshaping the IT landscape are virtualization, Web-based applications, and the increasing use of grid computing.
Virtualization stands for virtual machine. The software tricks servers and other computers into running multiple operating systems and multiple applications simultaneously.
Web-based applications are smaller Web-based software packages downloaded from the Web. Google is reframing software and office tools as a service rather than a product.
Grid computing provides a way to divide a job into many smaller tasks and distribute them to a virtual supercomputer. Combining multiple desktop machines results in computing power that exceeds supercomputer speeds. 6

40. CONCEPT check
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Using Technology to Manage Information
What is virtualization and how does it benefit companies that use it? Are many companies offering viable virtualization platforms?
How are Web-based applications helping to reframe software and office tools as a service rather than a product?
What advantages does grid computing offer a company? What are some of the downsides to using this method? 6