2. Managing Information in a Global World
Chapter 17
Managing Information in a Global World

3. Copyright © 2015 by Nelson Education Ltd.
Explain the strategic importance of information.
Describe the characteristics of useful information (i.e., its value and costs).
Explain the basics of capturing, processing, and protecting information.
Describe how companies can access and share information and knowledge.
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4. Copyright © 2015 by Nelson Education Ltd.
Managing Information
THEN
NOW 4
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5. Copyright © 2015 by Nelson Education Ltd.
Moore’s Law
Moore’s Law: the prediction that the cost of computing will drop by 50 percent every 18 months as computer-processing power doubles
Exhibit 17.1 shows that Gordon Moore, one of the founders of Intel Corporation, was right. In 1965, Moore predicted that computer-processing power would double and its cost would drop by 50 percent about every two years.
If car manufacturers had achieved the same power increases and cost decreases attained by computer manufacturers, a fully outfitted Lexus or Mercedes sedan would today cost less than $1,000.
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6. Why Information Matters
Raw Data
Information
Raw data: facts and figures
Information: useful data that can influence people’s choices and behaviour 1
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7. Strategic Importance of Information First-Mover Advantage
First-mover advantage: the strategic advantage that companies earn by being the first to use new information technology to substantially lower costs or to make a product or service different from that of competitors
First-mover advantages can be sizable. On average, first movers earn a 30 percent market share compared to the 19 percent for the companies that follow. Over 70 percent of market leaders started as first movers.
1.1
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8. Using Information Technology to Sustain a Competitive Advantage
The key to sustaining competitive advantage is using information technology to continuously improve and support the core functions of the business.
Thanks to the innovative use of information technology and the largest private satellite network and database system in the world, Wal-Mart’s costs are 10 percent lower than competitors’. Wal-Mart is one of the first retailers to use computers and bar codes to track sales and inventory data and to share data with suppliers. Today, Wal-Mart’s $4 billion supplier network, Retail Link, allows vendors such as Ted Haedicke of Coca-Cola to “look at how much [and at what kind of] Coke [has] sold and what prices at any store in the Wal-Mart system.” He went on to say, “You can’t do that with any other retailer today.”
1.2
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9. Characteristics and Costs of Useful Information
accurate
complete
relevant
timely
acquisition
processing
storage
retrieval
communication costs
Acquisition cost: cost of obtaining data you don’t have
Processing cost: cost of turning raw data into usable information
Storage cost: cost of physically or electronically archiving information for later use and retrieval
Retrieval cost: cost of accessing already-stored and processed information
Communication cost: cost of transmitting information from one place to another 2
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10. Capturing Information: Electronic Era
Bar codes
RFID tags
Electronic scanners
Optical character recognition
Bar code: a visual pattern that represents numerical data by varying the thickness and pattern of the vertical bars
Radio frequency identification (RFID) tags: tags containing minuscule microchips that transmit information via radio waves and can be used to track the number and the location of objects into which tags have been inserted
Electronic scanners: an electronic device that converts printed text and pictures into digital images
Optical character recognition software: to scan and convert original or digitized documents into ASCII (American Standard Code for Info Interchange) text or Adobe PDF documents. ASCII text can be searched, read, and edited with standard word processing, , desktop publishing, database management, and spreadsheet software, while PDF documents can be searched and edited with Adobe’s Acrobat software.
3.1
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11. Class Activity: Capturing Information in the Electronic Era
Beyond the Book
RFID: The Future Market with IBM
Watch this video, and discuss your thoughts on capturing this kind of information.
Video:
Have students watch the IBM-produced commercial that depicts the future of shopping. It generates a good conversation with students.
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12. Class Activity: QR Codes
Beyond the Book
QR Code Set to Revolutionize
How many of you have used QR codes? How many have a smartphone?
In groups of four, pick a product or service you would like to introduce into the marketplace.
How would they begin to use QR codes throughout the supply chain from vendor to retailer to
capture,
process, and
protect
the information gathered?
QR code: specific matrix bar code (two-dimensional code), readable by dedicated QR bar code readers and camera phones. Code consists of black modules arranged in a square pattern on a white background. Encoded information can be text, a URL, or other data.
Video:
Watch the CBC video, and poll the class to determine how many students knew what QR codes were, how many have used QRC before, and how many have smartphones. Divide the class into smaller groups and have each group pick a product or service they would like to introduce into the marketplace. How would they begin to use QR codes throughout the supply chain from vendor to retailer to capture, process, and protect the information gathered?
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13. Processing Information
Data Mining
Supervised
What if?
Unsupervised
Why?
Processing information: transforming raw data into meaningful information
Data mining: the process of discovering patterns and relationships in large amounts of data. Data mining splits a data set in half, finds patterns in one half, and tests the validity of those patterns by trying to find them again in the second half of the data set. Data come from data warehouses. Data in data warehouses can be analyzed using two kinds of data mining.
Data warehouse: stores huge amounts of data that have been prepared for data mining analysis by being cleaned of errors and redundancy
Supervised data mining: the process in which a user tells data mining software to look and test for specific patterns and relationships in a data set. This is done through a series of “what if?” questions or statements, such as if coupons placed in the Sunday paper increase or decrease sales.
Unsupervised data mining: the process in which a user simply tells thedata mining software to uncover whatever patterns and relationships it can find in a data set. Unsupervised data mining is good at identifying association or affinity patterns, sequence patterns, and predictive patterns. It can also identify what data mining technicians call data clusters.
Association or affinity patterns: occur when two or more database elements tend to occur together in a significant way. One company found that beer and diapers tended to be bought together between 5 and 7 p.m. Question: Why? Answer: Husbands, who were told by wives to buy diapers on the way home, also decided to pick up a six-pack.
Sequence patterns: when two or more database elements occur together in a significant pattern but one of the elements precedes the other.
Predictive patterns: help identify database elements that differ
Data clusters: when three or more database elements occur together (i.e., cluster) in a significant way
3.2
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14. Protecting Information
Authentication
Authorization
Two-factor
authentication
Biometrics
Virus
Data
encryption
SSL
VPN
EIS
Firewall
Authentication: making sure potential users are who they claim to be
Authorization: granting authenticated users approved access to data, software, and systems
Two-factor authentication: authentication based on what users know, such as a password, and what they have in their possession, such as a secure ID card or key
Biometrics: identifying users by unique, measurable body features, such as fingerprint recognition or iris scanning
Virus: a program or piece of code that, against your wishes, attaches itself to other programs on your computer and can trigger anything from a harmless flashing message to a reformatting of your hard drive to a system-wide network shutdown
Data encryption: transformation of data into complex, scrambled codes that can be unencrypted only by authorized users who possess unique decryption keys
Secure sockets layer (SSL): Internet browser–based encryption provides secure off-site Web access to some data and programs
Virtual private network (VPN): software that securely encrypts data sent by employees outside a company network, decrypts data when it arrives within a company computer network, and does the same when data is sent back to employees outside of the network
Executive information system (EIS): data processing system that uses internal and external data sources to provide the information needed to monitor and analyze organizational performance
Firewall: a protective hardware or software device that sits between computers in and internal organizational network and in outside networks, such as the Internet
3.3
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15. Class Activity: Protecting Information
Beyond the Book
In groups of four, discuss the following questions:
How many of you have backed up your computer this week? This month?
Discuss the need to protect information from outside threats but also from random hardware failure (crashes).
Share answers as a class.
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16. Class Activity: Sharing Information
Beyond the Book
Why do you think companies would want to share information?
When do you think companies would want to share information?
With whom do you think companies would want to share information?
Discuss answers as a class.
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17. Accessing and Sharing Information and Knowledge
Internal
EIS
Intranets
Corporate portal
External
EDI
Extranet
Knowledge
DSS
Expert system
Internal
Executive info system (EIS): Land’s End’s Dashboard (EIS) instantly display costs, revenue, colour-coded charts and graphs, and an early alert system that utilizes key performance metrics to target items selling faster than expected
Intranet: Collaboration tools, like wikis, where team members post all the relevant information for a project they’re working on together; customizable accounts; presence awareness (whether someone you’re looking for on network is in office, meeting, working from home, etc.); instant messaging; and simultaneous access to files for virtual team members
Corporate portal: a hybrid of EIS and intranets that allows managers and employees to access customized information and complete specialized transactions using a Web browser. Hillman Group Canada sells the nuts, bolts, fasteners, keys, and key-cutting machines that you find in Home Depot, Lowes, Home Hardware, and nearly every other hardware store. Hillman’s 1,800 employees produce products for 25,000 customers worldwide. The company’s portal provides a real-time revenue report for every product it makes on a continuous basis, with updated production and sales numbers. This portal also offers 75 specialized reports, which are accessed by 800 managers and employees.
External
Electronic data interchange (EDI)
Extranet
Knowledge
Decision support system (DSS)
Expert systems 4
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18. Security Threats to Data and Data Networks
Denial of service, Web server attacks, and corporate network attacks
Solution: Implement firewall, password control, server-side review, threat monitoring, and bug fixes, and turn PCs off when not in use.
Password cracking software and unauthorized access to PCs
Solution: Close ports and firewalls, disable file and print sharing, and use strong passwords.
Sources: “Top 10 Security Threats,” PC Magazine, April 10, 2007, 66; M. Sarrel, “Master End-User Security,” PC Magazine, May 2008, 101; K. Bannan, “Look Out: Watching You, Watching Me,” PC Magazine, July 2002, 99; A. Dragoon, “Fighting Phish, Fakes, and Frauds,” CIO, 1 September 2004, 33; B. Glass, “Are You Being Watched?” PC Magazine, 23 April 2002, 54. 4
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19. Security Threats to Data and Data Networks
Viruses, worms, Trojan horses, and rootkits
Solution: Use antivirus software and firewalls and control Internet access.
Spyware, adware, malicious scripts, and applets
Solution: Disable browser script support and use security, blocking, and spyware/adware software.
snooping
Solution: Encrypt message, ensure strong password protection, and limit physical access to machines.
Sources: “Top 10 Security Threats,” PC Magazine, April 10, 2007, 66; M. Sarrel, “Master End-User Security,” PC Magazine, May 2008, 101; K. Bannan, “Look Out: Watching You, Watching Me,” PC Magazine, July 2002, 99; A. Dragoon, “Fighting Phish, Fakes, and Frauds,” CIO, 1 September 2004, 33; B. Glass, “Are You Being Watched?” PC Magazine, 23 April 2002, 54. 4
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20. Security Threats to Data and Data Networks
Keystroke monitoring
Solution: Use antivirus software to catch Trojan horses, control Internet access to transmission, and implement system monitoring and physical access control.
Phishing
Solution: Educate and warn users and customers about the dangers. Encourage both not to click on potentially fake URLs, which might take them to phishing websites. Instead, have them type your company’s URL into the Web browser.
Sources: “Top 10 Security Threats,” PC Magazine, April 10, 2007, 66; M. Sarrel, “Master End-User Security,” PC Magazine, May 2008, 101; K. Bannan, “Look Out: Watching You, Watching Me,” PC Magazine, July 2002, 99; A. Dragoon, “Fighting Phish, Fakes, and Frauds,” CIO, 1 September 2004, 33; B. Glass, “Are You Being Watched?” PC Magazine, 23 April 2002, 54. 4
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21. Security Threats to Data and Data Networks
Spam
Solution: Filter known spam sources and senders on servers and have users create further lists of approved and unapproved senders on their personal computers.
Cookies
Solution: Use cookie managers to control and edit cookies and use ad blockers.
Sources: “Top 10 Security Threats,” PC Magazine, April 10, 2007, 66; M. Sarrel, “Master End-User Security,” PC Magazine, May 2008, 101; K. Bannan, “Look Out: Watching You, Watching Me,” PC Magazine, July 2002, 99; A. Dragoon, “Fighting Phish, Fakes, and Frauds,” CIO, 1 September 2004, 33; B. Glass, “Are You Being Watched?” PC Magazine, 23 April 2002, 54. 4
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