Moving Towards E-Business
Information Systems and IT Audit
Information
Recommended Study Material:
Information Systems: The foundation of E-Business by Stevent
Alter
CISA Review Manual
Course Website
Schedule
Class/Week Topic Reading
1,2 Moving Toward E-Business Chapter 01
3,4 Understanding Systems from a Business view Point
Chapter 02
5,6 Business Process Chapter 03
7,8 Information and Data-bases 9,10 Customer, product and
E-commerce
11,12 Building and Maintaining
information Systems
13,14 Security and Ethical
Challenges
Course Evaluation
Description %age Marks
Theory 70% 70
Lab 10% 10
Presentation 10% 10
Report 10% 10
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Opening Case - Dell Computer
Business insight:
What is the point of this case?
What are the two management concepts
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Opening Case - Dell Computer
Business insight:
Sell directly to customers
Decide how much to produce based on demand
estimates & contracts produce on demand
What makes this approach possible?
Outsourcing
Negative holding costs!
Mass customization
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Opening Case - Dell Computer
Dell:
http://www.dell.com
Debate:
What is more important to Dell, the fact
that it sells computers over the Web, or
the fact that its manufacturing process
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What is Business
Business is an economic activity, which is
related with continuous and regular
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Work Systems, Information
Systems, and E-Business
E-business
= the practice of performing
& coordinating business processes
through the extensive use of
information
technology (IT)
IT = computer and communication technologies
E-business does NOT equal the Internet,
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Work System
= a system in which
people and/or machines perform a
business process
using resources (e.g.,
information, technology) to create
products/services for
internal or external
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Information System
= a work system that processes information, thereby supportingother work systems
Capture Transmit Store
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Four Main Themes:
Businesses operate through systems
Business professionals are part of all
phases of building & maintaining information systems
Technological advances drive business
innovation
The success of IT-based systems is NOT
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Systems & Subsystems
System
= a set of interacting components
that operate together to accomplish a
purpose
Subsystem
= a system component
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System Terminology:
Purpose
The reason for the system’s existence
The reference for measuring the system’s success
Boundary
Separates the system from its environment
Environment
Everything pertinent to the system that is outside the
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Inputs
Objects & information that enter the system from the environment
Outputs
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The Work System Framework
The concept of a work system can be used to
visualize almost any system that operates in an organization.
The Work System Framework helps you think
about business processes and the information systems that support them. It focuses on the
work being done.
Work is the application of human and physical
resources such as people, equipment, time, effort, and money to generate outputs used by internal or external customers.
It ideas from several prominent management
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Examples of Information Systems
Supporting Business Processes
Bar-code scanners and computers identify items
sold and calculate the bill (Performing customer checkout).
Airline reservation system keeps track of flights
and accepts reservations for customers (making airline reservations).
System that identifies people by scanning and
analyzing voice prints (preventing unauthorized access to restricted areas).
Word processing system for typing and revising
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Elements of the Work System
Framework:
The internal or external customers of the
business process
The products and/or services generated by the
business process.
The steps in the business process.
The participants in the business process.
The information the business process uses or
creates.
The technology (if any) the business process
uses.
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The Work System Framework
The Work System framework implies that
although people sometimes speak of computers as systems, the system business professionals should focus on is the system performing the work.
The system performing the work is much
broader than the technology. It includes the business processes, the participants, any
information used, and any technology used.
The links are two-way, implying that the
elements should be in balance. Also, changes in one place may result in changes in other
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Consider Some Work Systems
Ordering a Pizza
Use of an Automated Teller Machine
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Business Processes & the Value
Chain
Business process
A related group of steps (subprocesses)
and/or activities that use resources (including information) to create value for internal or
external customers
Design Process creates the Product design to that
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Business Processes & the Value
Chain
Subprocess = a well-defined part of a process that are processes in their own right because they consist of well-defined steps related in time and place, have a beginning and end, and have inputs and outputs.
Process is Text Book Designing and subprocesses are writing, revising the manuscript , designing book’s
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Business Processes & the Value
Chain
Value added:A porcesse’s value added is the amount of value it creates for its eternal and external customers.
A process is Assemble a computer , The value added is the difference between the value of the components and the value of the assembled components.
General Electric Plan Process.
Activity = less well-defined process component
E.g communication with others
Often an important role of IT is to transform an
activity into a better-defined subprocess
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A process must
add value
for its
customers
Always analyze whether a process or
subprocess adds value or not
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Business Processes & Functional
Areas
Traditional organizational structure is
centered around
functional areas
May reinforce an inward-looking orientation
Functional silos
Current trend: reorganize around
Alter – Information Systems 4thed. © 2002 Prentice Hall
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Three Types of Processes
Processes that cross
functional areas
e.g. Creating a new product.
Processes related to a
specific functional area
Paying texes
Activities &
subprocesses occurring in every functional area
Common activities
Possible
problems when functional areas are
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Question:
What are some typical
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Some Functional Areas in a Typical
College or University
Admissions
Records and Registration Financial Aid
Bursar
Human Resources Accounts Payable
Budget, Finance, and
Accounting
Parking Services
Academic Department University Advancement Student Services
Residence Life Public Safety Physical Plant Student Career
Development
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The Value Chain
The set of processes used by a firm to
create value for its customers. Includes:
Primary processes
– directly create thevalue as perceived by the customers
Support processes
– indirectly create value36
Primary processes for a hypothetical
restaurant
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The Supply Chain & the Customer
Experience
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Supply chain – the transactions,
coordination, and movement of goods
between the firm and its suppliers
Each layer provides an
opportunity
to
increase value to the customer and/or
improve efficiency
Basic approach:
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The Trend Toward E-Business
Much more than a cool Web site!
E-commerce
– the part of e-business that
the customer experiences directly
B2B
(business-to-business) vs.
B2C
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1. Initiation
Defining the need for a new work system
or for the change of an existing one
May occur as result of a known problem,
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2. Development
Acquiring & configuring hardware,
software, and other resources
Decide how the different parts of the system will operate
Acquire the resources
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3. Implementation
Making the new process operational
Planning
User training
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4. Operation & Maintenance
Supporting the ongoing operation of the
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Main Trends
Greater miniaturization, speed, and
portability
Greater connectivity + continuing
convergence of computing and
communications
Greater use of digitized information &
multimedia
Better software and user interfaces
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IT Based Innovations in Every
Business Function
Product Design
Procurement Systems
Manufacturing Systems
Sales and Marketing
Delivery Systems
Customer Service Systems
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Computer-Aided Design
Enable designers to
visualize
how a
product will look.
The need to produce physical mock-ups
has been significantly reduced.
Originally applied in engineering and
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Supply Chain Management
EDI (Electronic Data Interchange) is changing
the entire model of supply chain management in businesses.
The cost of processing simple transactions can
be reduced by more than an order of magnitude (e.g. purchase orders from $55 ea. To $2.50
ea.).
SCM and EDI are essential ingredients to the
transformation of relationships between suppliers and customers.
Among the most notable initial applications was
Baxter Healthcare where hospital supplies were ordered directly with computer terminals in
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Manufacturing
Computer-integrated manufacturing (CIM)
integrates the use of technology across the manufacturing process, not just the design phases.
The information content of a product is the value
that is added through use of information systems rather than not using them.
Mass production techniques allows for mass
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Mass Customization:
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Sales and Marketing
IT has drastically changed the approach
to marketing.
Amazon.com capitalizes on electronic
commerce.
Point of Sales (POS) systems provide
new ways to affect marketing - e.g. linking information about the customer with the sale.
Loyalty Cards at Supermarkets Ask for your Home Zip code
Discreet observation and collection. BJ’s Wholesale Club product recall.
All to better improve the addressability in
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Delivery and Logistics Systems
Delivery (logistics) Systems transport materials
where they are needed.
The need for accurate and accessible
information on where a product is located.
U.S. Army experience in Gulf War Federal Express
New products are being developed: Instead of
delivering physical goods such as paper and forms, consider what can be delivered over the network.
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Customer Service
The need for information on a customer’s
current status.
Work is still needed to integrate some
voice-response systems with customer databases (e.g. Bank Help Centers).
Have the right information available when you
need it.
Optical Scan relevant documents
Be able to initiate transactions and process
them immediately.
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Finance Systems
Consider how technology is being used to
replace currency as a form of barter.
Direct Deposit Payroll. Smart cards.
Electronic stock trading.
Web-Based Real Estate Marketing (2% vs. 6%).
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Question?
How have any of these innovations
affected you?
Can you identify any IT-based
innovations that have affected
business functions?
Why does the technology provide
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Dramatic Progress in Processing
Data
Data Processing functions: capture, transmit,
store, retrieve, manipulate, display
Greater Miniaturization, Speed, and Portability Greater Connectivity and Convergence of
Computing and Communications
Greater Use of Digitization and Multimedia
Better Software Techniques and Interfaces with
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Six Data Processing Functions Performed by IT
FUNCTION: CAPTURE
Definition: Obtain a representation of information in a form permitting it to be transmitted or stored
Example: Keyboard, bar code scanner, document scanner, optical character recognition, sound recorder, video camera, voice recognition software
FUNCTION: TRANSMIT
Definition: Move information from one place to another
Example: Broadcast radio, broadcast television via regional transmitters, cable TV, satellite broadcasts, telephone networks, data transmission
networks for moving business data, fiber optic cable, fax machine, electronic mail, voice mail, internet
FUNCTION: STORE
Definition: Move information to a specific place for later retrieval
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Six Data Processing Functions Performed by IT
FUNCTION: RETRIEVE
Definition: Find the specific information that is currently needed
Example: Paper, computer tape, floppy disk, hard disk, optical disk, CD-ROM, flash memory
FUNCTION: MANIPULATE
Definition: Create new information from existing information through summarizing, sorting, rearranging, reformatting, or other types of calculations
Example: Computer (plus software)
FUNCTION: DISPLAY
Definition: Show information to a person
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Miniaturization:
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Progress in Memory Chip Capacity Since
1973
1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 1 kilobit 4 kilobit 16 kilobit 64 kilobit 256 kilobit 1 megabit 4 megabit 16 megabit 64 megabit 256 megabit 1,024 4,096 16,384 65,536 262,144 1,048,576 4,194,304 16,777,216 67,108,864 268,435,456 Approximate date of widespreadcommercial availability Type of chip
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Important Concept:
Convergence
of
computing
and
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Unrealistic Expectations &
Techno-hype
Technology is almost never a solution by
itself
Often vendors claim to “sell solutions”
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Difficulty Building & Modifying IT
Systems
Factors most often associated with
success:
User involvement
Executive support
Clear statement of requirements
Proper planning
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Difficulty Integrating IT Systems
One of the most difficult issues –
examples:
Medicare’s insurance claims (aborted) system
A unified system would have had to integrate 72
existing systems, built & operated by different insurance companies
Y2K problem
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Organizational Inertia
Often a change that has a positive impact
in some areas, may also have a negative
impact in other areas
Natural tendency of both organizations &
individuals to resist change
Overcoming inertia may require a
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Genuine Difficulty Anticipating
What Will Happen
No one really knows how a particular
innovation will develop in time
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Reality Check!
What are some examples of “techno-hype”
you have encountered?
