ITSS 3300 Timothy Stephens exam 1 UTD

The purpose of Information Systems in Business

is to support the achievement of the organization's strategic, tactical, and operational goals

· Interdependence (Relationship) of IT and Business

Businesses rely on information systems to help them achieve their goals; a business without adequate information systems will inevitably fall short. But information systems are also products of the businesses that use them. Businesses shape their information systems and information systems shape businesses.

Transformation

Emerging Technologies, Challenges, Time and Space Shift

Effects of Emerging Technology Organizations and Information Systems

Advances in technology enable quicker and cheaper information system changes, enabling the organization to be more agile in addressing changing customer wants and needs, even creating new market opportunities. The net effect is an ever-increasing interdependence between Business organizations' Information Systems and the outside environmental changes brought on by emerging technologies affecting both the internal workings of the business and its customers.

There is a price to pay for this transformation

primarily the loss of individual privacy.

How Information Systems Are Transforming Business

◦Mobile digital platform

◦Systems used to improve customer experience, respond to customer demand, reduce inventories, and more

◦Growing online news media readership

◦More knowledge of customers' locations, behaviors, tendencies

◦Video systems can and do record everything

◦Expanded artificial intelligence capabilities enable self-learning systems

◦Expanding e-Commerce and Internet advertising and processing

New federal security, health information, and accounting laws

Challenges Facing Organizational Information Systems

◦Ability to use information technology and data

◦Ability to implement corporate strategies and achieve corporate goals

◦Ability to speedily act/react to changing market conditions

◦Ability to protect corporate information assets

◦Ability to adequately fund, implement, and sustain organizational information systems.

Time shifting and space shifting

Business can be conducted at any time (time shifting) and any place (space shifting

Strategic Business Objectives of Information Systems

1.Operational excellence

2.New products, services, and business models

3.Customer and supplier intimacy

4.Improved decision making

5.Competitive advantage

6.Survival

Operational Excellence

Information systems and technology are important tools in achieving greater efficiency and productivity

◦Example: Walmart's Retail Link system links suppliers to stores for superior replenishment system

Improvements of efficiency and productivity lead to higher profitability!

New Products, Services, and Business Models

Business model: describes how company produces, delivers, and sells product or service to create wealth

Information systems and technology are major enabling tools for new products, services, business models

◦Breakthroughs: Apple's iPad, Google's Android OS, and Netflix

◦Newer Examples: 'Alexa', Ring, Facial Recognition, Wind Turbines

Customer and Supplier Intimacy

Serving customers well leads them to return, increasing revenue and profits

◦Example: Amazon tracks browsing and purchasing to suggest other products for consideration and purchase

Intimacy with suppliers allows them to provide vital inputs, which lowers costs

◦Example: Manufacturers' access to suppliers' inventory systems to check availability before ordering.

Improved Decision Making

Accurate, Timely, and Complete Information Enables Objective, Data-Driven Decision-Making.

The Consequences:

◦Relying Solely on Forecasting, Experience, or Simply Luck

◦Creating the Wrong Product, Marketing, Cost

◦Over/Under Production

◦Mis-Allocation of Resources

◦Poor Production Quality

◦Missed Customer Expectations

Competitive Advantage

Delivering better performance

Charging less for superior products

Responding to customers and suppliers in real time

◦Examples: Amazon, Walmart, UPS

Survival

Information technologies as necessity of business

Industry-level changes

◦Example: Introduction of ATMs

Governmental regulations requiring record-keeping

◦Examples: HIPAA, Sarbanes-Oxley Act, Dodd-Frank Act

The Sarbanes-Oxley Act (2002)

requires that public firms keep all data, including e-mail, on record for 5 years

Dodd-Frank Act (2010)

requires financial services firms to develop extensive new compliance reports

HIPAA (Health Insurance Portability and Accountability Act

addresses the storage, retrieval, and access to protected patient health information, by health care providers, insurers and other related parties.

Definition of Information Technology

Although organization and management are important too, it's the technology that enables the systems and the organizations and managers who use the technology. Intranets and extranets'.

•Computer hardware, software, and data

•Data management technology

•Networking and telecommunications technology

•Networks, the Internet, intranets and extranets, World Wide Web

•IT infrastructure: provides platform that system is built upon

Intranets

Intranets are private networks used by corporations

Extranets

extranets are similar except that they are directed at external users

Internet

connects millions of different networks across the globe

Data

◦ are streams of raw facts.

Raw data from a supermarket checkout counter can be processed and organized to produce meaningful information

Information

◦ is data shaped into meaningful form.

such as the total unit sales of dish detergent or the total sales revenue from dish detergent for a specific store or sales territory.

information system

◦Set of interrelated components

◦Collect, process, store, and distribute information

◦Support decision making, coordination, and control

◦IS = IT + Procedures + People

Input

Captures raw data from organization or external environment

output

Transfers processed information to people or activities that use it

feedback

Output is returned to appropriate members of organization to help evaluate or correct input stage

Activities of an Information System

Activities of information systems produce information organizations need:

◦Input: Captures raw data from organization or external environment

◦Processing: Converts raw data into meaningful form

◦Output: Transfers processed information to people or activities that use it

◦Feedback: Output is returned to appropriate members of organization to help evaluate or correct input stage

Computer/Computer Program

◦Computers and software are technical foundation and tools, similar to the material and tools used to build a house

Definitions of Business

•An organization or economic system, where goods and services are exchanged for one another or for money.

•Every ________ requires some form of investment and enough customers to whom its out can be sold on a consistent basis in order to make a profit

•_______ can be public or privately owned, not-for-profit or state-owned

Key Components of a Business

•Product, Goods, and Services

•Customers

•Management and Operations

•Investment, Sustainability

•Profit, Return

Organizations Definition and Features

•Use of hierarchical structure

•Separation of business functions

•Goals, management and leadership styles, types of tasks

•Accountability, authority in system of impartial decision making

•Routines and business processes

•Organizational politics, culture, environments, and structures

Levels in an Organization

Business organizations are hierarchies consisting of three principal levels: senior management, middle management, and operational management. Information systems serve each of these levels. Scientists and knowledge workers often work with middle management.

Senior management typically executives and board of directors (and their committees).

Middle Management typically vice presidents and director levels (manage overall business level functions)

Operational Management typically production and line level supervisors

Separation Of Business Functions

Organizations typically have some form of separate management structures for various business functions:

-Sales and Marketing

-Human Resources

-Finance and Accounting

-Supply Chain

-Manufacturing, Production

Information Systems must support all of these functions and their processes.

Routines/Activites (standard operating procedures)

•Precise rules, procedures, and practices developed to cope with virtually all expected situations

•Coincide with the Separation of Business Functions

Business Processes

Collections of routines

Business Organization

Collection of business processes

Routines and Business Processes

•Routines/Activites (standard operating procedures)

•Business Processes:

•Business Organization:

Organizational Culture and Politics

Culture - May be powerful unifying force as well as restraint on change

Encompasses set of assumptions that define goal and product

◦What products the organization should produce

◦How and where it should be produced

◦For whom the products should be produced

Influenced by

◦Management - Executives, Boards, etc

◦Workforce

◦Competition

◦Regulatory

Politics - Divergent viewpoints lead to political struggle, competition, and conflict.

Political resistance greatly hampers organizational change.

Organizational Resistance to Change

Information systems become bound up in organizational politics because they influence access to a key resource—information

Information systems potentially change an organization's structure, culture, politics, and work

Information technology controls innovation, as a critical element of the organization

Information Technology flattens organizations

◦Decision making is pushed to lower levels

◦Fewer managers are needed (IT enables faster decision making and increases span of control)

◦Organizations flatten because in authority increasingly relies on knowledge and competence rather than formal positions

Flattening Organizations

Information systems can reduce the number of levels in an organization by providing managers with information to supervise larger numbers of workers and by giving lower-level employees more decision-making authority.

Information Silo's'

Separation of Business Functions can create

· IT Organizations and governance

Often headed by Chief Information Officer (CIO)

◦Other senior positions include Chief Security Officer (CSO), Chief Knowledge Officer (CKO), Chief Privacy Officer (CPO), Chief Data Officer (CDO), Chief Information Security Officer (CISO)

◦Programmers

◦Systems Analysts

◦Information Systems Managers

◦Business Analysts

IT Governance

◦Strategies and Policies for Using IT in the Organization

◦Decision rights

◦Accountability

◦Capital Budgets

◦Project / Program Management

◦Organization of Information Systems Function

◦Centralized, decentralized

Strategic Plans

typically answer the "Why" question, in terms of overall direction of the organization:

◦Competitive / Marketplace, Information Systems, Management, Human Resources, Key Investments

◦Plans typically created by/for executives, boards

Tactical Plans

address the "What" question:

◦Specific Product Decisions, System Selection and Implementation, Resource Management (People, $$, etc.)

◦Plans typically created by/for vice presidents and director levels in the organization

As opposed to Operational

which answers the "How", "When", "Who", "Where" questions:

◦Process Improvement, Cost Containment Initiatives, System Programming, Training and Retention Programs, Maintenance and Sustainability

◦Plans typically created by/for operational managers in the organization

Business Information As An Asset

Information System is an instrument for creating value.

Investments in IT will hopefully result in superior returns.

◦Increases in productivity, revenue, long-term strategic positioning

◦Uncertainty - Good returns are not guaranteed, with considerable variation

Complementary assets 'hedge the bet' on asset investment.

◦Complementary Asset - Required to derive value from a primary investment

◦Invest in both organizational and management to make the technology investment work properly

Examples of Complementary Assets:

Organizational - Appropriate Business Model, Efficient Business Practices, IT governance

Managerial - Incentives for Management innovation, Teamwork and collaborative work environments, Data Management

Social - Internet and telecommunications infrastructure, technology standards

Key Considerations For Technical Strategy

Budgeting and Capital - Return on Investment in Building, Acquiring, Sustaining, and Protecting Assets

Synergies - The total is greater than the sum of its parts

◦Strategic Acquisitions (and merging technology)

Core Competencies - Activity where the organization is a "leader"

◦Rely on knowledge, experience, and sharing across the boundaries of business units

Competitive Landscape - Products, Customers, Competitors, Resources

◦Development of Market Share (Make vs. Buy vs. Acquire)

Pace of Change - Expected life of technological assets

◦How far in the future will your expected investment be relevant?

Virtualization - Physical assets no longer necessary

◦Virtual Office, Virtual Reality

Artificial Intelligence - Logical, self-learning technology

◦Self-Driving Cars, Clones, 3D-Printing

Ethics - Social Impact

Not always a simple 'right' or 'wrong'

Business Processes definition

Business processes

◦Sets of activities, routines, steps

◦Flows of material, data, information, knowledge

◦May be tied to functional area or be cross-functional

Businesses: Can be seen as collection of business processes

Business processes may be assets or liabilities

Structured Process

Support operational and structured managerial decisions and activities

Standardized

Usually formally defined and documented

Exceptions rare and not (well) tolerated

Process structure changes slowly and with organizational agony

Example: Customer returns, order entry, purchasing, payroll, etc.

Dynamic process

Support strategic and less structured managerial decision and activities

Less specific, fluid

Usually informal

Exceptions frequent and expected

Adaptive processes that change structure rapidly and readily

Example: Collaboration; social networking; ill-defined, ambiguous situations

Business Process Modeling

Graphic representation of activities in a business process

BPMN Standards are established for graphic elements

Activity documentation part of a broader design process - UML

Common Software/Tools:

◦Microsoft Visio - Free from UTD Microsoft Download

◦LucidChart - Free Trial

◦Microsoft Powerpoint

Rational Software Modeler - Free Trial from IBM

Business Process Redesign(Re-Engineering)

•Business process management (BPM)

-Variety of tools, methodologies to analyze, design, optimize processes

-Used by firms to manage business process redesign

•Steps in BPM

1.Identify processes for change

2.Analyze existing processes

3.Design the new process

4.Implement the new process

5.Continuous measurement

Improving Process Quality

Process efficiency

◦Ratio of outputs to inputs.

Process effectiveness

◦How well a process achieves organizational strategy.

How can processes be improved (efficiency and/or effectiveness)?

◦Change process structure.

◦Change process resources.

◦Change both.

Performing an activity.

◦Partially automated, completely automated.

Augmenting human performing activity.

◦Ex: Common reservation system.

Controlling data quality.

◦Ensure data complete and correct before continuing process activities.

Process efficiency

◦Ratio of outputs to inputs.

Process effectiveness

◦How well a process achieves organizational strategy.

Information Silos

An information silo exists when data are isolated in separated information systems.

Information system silos arise when:

•IS supports departmental processes rather than enterprise-level processes.

•Personal and workgroup support applications are created over time.

•Organizations grow, especially by merger and acquisitions.

What are the problems of information silos?

◦Data duplicated.

◦Data inconsistency.

◦Data isolated.

◦Disjointed processes.

◦Lack of integrated enterprise information.

◦Inefficiency: decisions made in isolation.

◦Increased cost for organization.

Solving the Problems of Information Silos

√Integrate into single database.

√Revise applications.

Manage to avoid problems

Business Value

Integration, Integration, Integration! Tools, Data, Processes

•

•Prevent Information Silos

•Increase operational efficiency

•Accurate, complete, and timely data across entire enterprise

•Provide complete organizational information to support decision making

•Enable rapid responses to customer requests for information or products

•Include analytical tools to evaluate overall organizational performance

•Enables Business Intelligence and accurate Analytics

ERP Solution Components

••ERP: Enterprise Resource Planning

••Vendor applications: Configurable, can be altered without changing program code. Set configuration parameters specifying how ERP application programs will operate: Hourly payroll application configured to specify number of hours in standard workweek, hourly wages for different job categories, wage adjustments for overtime and holiday work, etc.

••ERP Databases:

••Database Management System: Database program to keep database consistent when certain conditions arise

••Stored procedure: Database program to enforce business rules

Accounting and Finance Systems

•Accounting Entries - Debits and Credits

•Implementation Considerations: Chart of Accounts, Departments

•Financial Reporting and Analysis

•Implementation Considerations: Business Intelligence, Visualization

•Accounts Receivable Management

•Implementation Considerations: Customers, Products/Services/Charges

•Treasury - Disbursement, Reconciliation

•Implementation Considerations: Banking

•Asset Management - Depreciation, Maintenance

•Implementation Considerations: Capital and Equipment

•Budgeting and Forecasting/Planning

•Implementation Considerations: Business Intelligence, Funding

•Auditability and Controls

•Implementation Considerations: Workflow, Employees

Human Resource Systems

•Recruiting - Internal and External

•Implementation Considerations: People, Sources

•HR Actions - Hire/On-Board, Positions, Evaluations, Terminations

•Implementation Considerations: People, Departments, Positions

•Time and Attendance - Pay Practices, Vacations, Time Clock, Scheduling

•Implementation Considerations: People, Positions, Shifts, Departments

•Benefits Administration - Eligibility/Enrollment, Corporate Payments

•Implementation Considerations: People, TPAs, Banking

•Payroll - Salary Administration, Taxes, Disbursements

•Implementation Considerations: People, Govt/Tax, Banking, Positions

The Supply Chain

•Network of organizations and processes for:

•Procuring materials, transforming them into products, and distributing the products

•Upstream supply chain

•Firm's suppliers, suppliers' suppliers, processes for managing relationships with them

•Downstream supply chain

•Organizations and processes responsible for delivering products to customers

•Internal supply chain

•Internal warehouse

Customer Relationship Management?

•Customer relationship management (CRM)

•Knowing the customer

•In large businesses, too many customers and too many ways customers interact with firm

•CRM systems

•Capture and integrate customer data from all over the organization

•Manage all interactions with customer

•Consolidate and analyze customer data

•Distribute customer information to various systems and customer touch points across enterprise

ERP implementing challenges Challenges

•Very Expensive to Purchase and Implement Enterprise Applications

•High Risk to Organization, High Visibility

•Technology Changes

•Business Process Changes

•Requirements Gaps

•Transition Issues

•(Internal and External)

•Organizational Learning, Resistance to Changes

•Switching Costs, Dependence on Software Vendors

•Data Standardization, Management, Cleansing

No-So Futuristic' Trends in Enterprise Applications

•Service Oriented Architecture standards

•Open-source applications

•On-demand solutions (vs On-Premise)

•Cloud-based versions

•Functionality for mobile platform

•Social CRM

•Incorporating social networking technologies

•Company social networks

•Monitor social media activity; social media analytics

•Manage social and web-based campaigns

•Business intelligence

•Inclusion of BI and AI with enterprise applications

•Flexible reporting, ad hoc analysis, "what-if" scenarios, digital dashboards, data visualization

•Service Oriented Architecture (SOA) = Style of software design where services are provided to the other components by application components, through a communication protocol over a network. Architecture is independent of vendors, products and technologies

•Open-Source = Source code generally available to public

•On-Demand Solutions (vs On Premise) = On Premise is situation where hardware and software reside locally. On-Demand is a "pay-as-you-go" with vendors offering software as a service (SaaS).

Why E-Commerce is Different

Ubiquity

◦Marketspace is virtual

◦Transaction costs reduced

Universal standards

◦One set of technology standards: Internet standards

Interactivity

◦Real-time transactions and activities

Digital Markets and Digital Goods in a Global Marketplace

Disintermediation

◦Removing the 'middle-man' in a transaction

Types of E-commerce

Three major types

◦Business-to-consumer (B2C)

◦Example: BarnesandNoble.com

◦Business-to-business (B2B)

◦Example: Granger.com

◦Consumer-to-consumer (C2C)

◦Example: eBay

E-commerce can be categorized by platform

◦Mobile commerce (m-commerce)

How e-Commerce Makes Money

Revenue Models

-Advertising

-Sales

-Subscription

-Free/Freemium

-Transaction fee

-Affiliate (thewirecutter.com)

Business Models

ØPortal (Bing, Google)

ØE-tailer (Amazon)

ØContent provider (iTunes)

ØTransaction broker (Expedia)

ØMarket creator (eBay)

ØService provider (Dropbox)

ØSocial/Community provider (Instagram)

Cookies

Cookies are used to remember things about websites: your login information, what you have in your shopping cart, what language you prefer, etc.

They are created by websites and sit in your browser until they expire.

Types of Cookies

Session Cookies - Typically last only for current session

◦Example: Non-personalized Shopping Cart Contents

First Party Persistent - Used only by web site that created it

◦Example: Bank Web Site Login Info

Third Party Persistent - Tracking cookies available anytime

◦Examples: Ads, Social Media Widgets, Web Analytics, Malware

Advertising Network

-------- and their use of tracking programs have become controversial among privacy advocates because of their ability to track individual consumers across the Internet.

Social E-commerce and Social Network Marketing

-------------- based on digital social groups

Features of social e-commerce driving its growth

◦Newsfeed

◦Timelines

◦Social sign-on

◦Collaborative shopping

◦Network notification

◦Social search (recommendations and 'Likes')

Social media

◦The fastest growing media for branding and marketing

◦Relatively few actual purchases through social media, but leads to other channels

◦Bots can produce misleading, or outright false information

Business to Business

EDI, Private Exchanges, Net marketplaces (hubs), Exchanges

Private industrial networks

◦Private exchanges

◦Large firm using a secure website to link to suppliers and partners

Net marketplaces (e-hubs)

◦Single digital marketplace for many buyers and sellers

◦May focus on direct or indirect goods

◦May be vertical or horizontal marketplaces

Exchanges

Independently owned third-party Net marketplaces for spot purchasing

Electronic Data Interchange (EDI)

Computer-to-computer exchange of standard transactions such as invoices, purchase orders

Major industries have EDI standards

◦Define structure and information fields of electronic documents

More companies are moving toward web-enabled private networks

◦Allow them to link to a wider variety of firms than EDI allows

◦Enable sharing a wider range of information

Mobile = M-commerce

By 2021, 54% of all e-commerce will be conducted via M-commerce

Fastest growing form of e-commerce

◦Some areas growing at 50 percent or more

Main areas of growth

◦Mass market retailing (Amazon, eBay, etc.)

◦Sales of digital content (music, TV, etc.)

◦In-app sales to mobile devices

Threats and Challenges

◦Internet connectivity issues (Very remote locations)

◦Data Security

◦Development Costs

◦Diversity of devices (BYOD)

means purchasing and selling of goods and services over wireless handheld devices such as smartphones, tablets, laptop, palmtop or other personal digital assistant (PDA

Location-Based Services and Applications

Used by vast majority of smartphone owners

Based on GPS map services

Geosocial services

◦Where friends are

Geoadvertising

◦What shops are nearby

Geoinformation services

◦Price of house you are passing

◦

OOPS!What about privacy and security

Organizational Knowledge

· Structured, Semi-Structured, Unstructured, Tacit, Explicit

· Knowledge - as an intangible asset to the organization

Three major types of knowledge in an enterprise

◦Structured, explicit knowledge

◦Reports, presentations

◦Formal rules

◦Semistructured documents

◦E-mails, videos

◦Unstructured, tacit knowledge

Tacit knowledge

is the kind of knowledge that is difficult to transfer to another person by means of writing it down or verbalizing it. For example, that London is in the United Kingdom is a piece of explicit knowledge that can be written down, transmitted, and understood by a recipient. However, the ability to speak a language, ride a bicycle, knead dough, play a musical instrument, or design and use complex equipment requires all sorts of knowledge that is not always known explicitly, even by expert practitioners, and which is difficult or impossible to explicitly transfer to other people.

· Explicit

· Knowledge - as an intangible asset to the organization

Knowledge that can be readily articulated, codified, accessed and verbalized. It can be easily transmitted to others. Most forms of explicit knowledge can be stored in certain media. The most common forms of explicit knowledge are manuals, textbooks, documents, procedures, and how-to videos. Knowledge also can be audio-visual. Engineering works and product design can be seen as other forms of explicit knowledge where human skills, motives and knowledge are externalized

4 Stages of Knowledge Management

1. Knowledge Acquisition

◦Documenting Tacit and Explicit knowledge

◦Storing documents, reports, presentations, best practices

◦Unstructured documents (e.g., e-mails)

◦Developing online expert networks

◦Creating Knowledge

◦Tracking Data from Transaction Processing Systems and External Sources

2. Knowledge Storage

-Knowledge storage includes the ways in which knowledge is stored as well as the importance of management in creating and maintaining repositories of knowledge.

◦Databases

◦Content and Document Management Systems

◦Role of Management

3. Knowledge Dissemination

◦Portals, wikis

◦E-mail, instant messaging

◦Search engines, collaboration tools

◦A deluge of information?

◦Training programs, informal networks, and shared management experience help managers focus attention on important information.

4. Knowledge Application

-the need to see and evaluate knowledge in terms of organizational capital and return on investment.

◦New business practices

◦New products and services

New markets

Types of Knowledge Management Systems

Enterprise-Wide Knowledge Management Systems

◦General-purpose firm-wide efforts to collect, store, distribute, and apply digital content and knowledge

◦Learning and Content Management Systems

◦Collaboration Tools

ex: Learning Management, Content Management, Collaboration

Knowledge Work Systems

◦Specialized systems built for engineers, scientists, other knowledge workers charged with discovering and creating new knowledge

Intelligent Techniques

◦Diverse group of techniques used for discovering knowledge, distilling knowledge, discovering optimal solutions

Learning Management Systems (LMS

Provide tools for management, delivery, tracking, and assessment of employee learning and training

◦Support multiple modes of learning

◦CD-ROM, web-based classes, online forums, and so on

◦Automates selection and administration of courses

◦Assembles and delivers learning content

◦Measures learning effectiveness

Massively open online courses (MOOCs)

◦Web course open to large numbers of participants

Enterprise-wide content management systems

reducing time spent searching for documents, minimizing rework, and improving decisions.

Help capture, store, retrieve, distribute, preserve documents and semi-structured knowledge

Bring in external sources

◦News feeds, research

Tools for communication and collaboration

◦Blogs, wikis, and so on

Digital asset management systems

Document management

Key Problem: Developing Taxonomy (Classification or Index)

Collaboration

Why Use Collaboration Tools?

◦Communicate! Communicate! Communicate!

◦E-mail and Discussions

◦Virtual Meetings

◦Store (and Find) Documents and Information

◦Content Management

◦Media and Document Management

◦Make Decisions and Solve Problems

◦Group Communication

◦Shared Content

◦Manage Projects

◦Schedule and Deliverables

◦Tasks and Assignments

Examples of Collaboration Management Systems:

◦Microsoft SharePoint - Office 365

◦Google - Docs, Groups

◦Blackboard - eLearning

E-mail Do's and Don'ts

DO!

Have a clear subject line

Use a professional salutation

Proofread your message

Reply to all emails

Keep private material confidential

DON'T

Forget a signature line

Assume the recipient knows what you're talking about

"Shoot from the lip"

Knowledge Work (and Workers) System

Augmented reality (AR) is a related technology for enhancing visualization. AR provides a live direct or indirect view of a physical real-world environment whose elements are augmented by virtual computer-generated imagery. The user is grounded in the real physical world, and the virtual images are merged with the real view to create the augmented display

◦VRML - Virtual Reality Modeling Systems

Intelligent Techniques

Expert Systems (Rules, Inferences), Case-Based, Fuzzy Logic, Neural Networks, Genetic Algorithms, Intelligent Agents

- Expert Systems (Rules, Inferences

An expert system contains a number of if/then rules to be followed. The rules are interconnected, the number of outcomes is known in advance and is limited, there are multiple paths to the same outcome, and the system can consider multiple rules at a single time. The rules illustrated are for simple credit-granting expert systems.

An inference engine works by searching through the rules and "firing" those rules that are triggered by facts gathered and entered by the user. Basically, a collection of rules is similar to a series of nested IF statements in a traditional software program; however, the magnitude of the statements and degree of nesting are much greater in an expert system.

This graphic illustrates the types of rules that might be used by salespeople to determine whether or not to add a client to a prospect database. Using this chart, what would happen to a client that was determined to have an income of $80,000 and was given Financial Advice.

Case-Based Reasoning

Descriptions of past experiences of human specialists (cases), stored in knowledge base

System searches for cases with characteristics similar to new one and applies solutions of old case to new case

Successful and unsuccessful applications are grouped with case

Stores organizational intelligence

CBR found in:

◦Medical diagnostic systems

◦Customer support

Fuzzy Logic

Rule Based Technology that represents imprecision used in linguistic categories (e.g. cold, cool, etc.) to represent a range of values

Describe situation linguistically, then represent in a small number of rules

Used when if-then rules are extremely difficult:

◦Autofocus Systems

◦Detecting Medical Fraud

Neural Networks

Find patterns and relationships in massive amounts of data too complicated for humans to analyze

"Learn" patterns by searching for relationships, building models, and correcting over and over again

Humans "train" network by feeding it data inputs for which outputs are known, to help neural network learn solution by example

Used in medicine, science, and business for problems in pattern classification, prediction, financial analysis, and control and optimization

Genetic Algorithms

Useful for finding optimal solution for specific problem by examining very large number of possible solutions for that problem

Conceptually based on process of evolution

◦Search among solution variables by changing and reorganizing component parts using processes such as inheritance, mutation, and selection

Used in optimization problems (minimization of costs, efficient scheduling, optimal jet engine design) in which hundreds or thousands of variables exist

Able to evaluate many solution alternatives quickly

Intelligent Agents

Work without direct human intervention to carry out repetitive, predictable tasks

◦Deleting junk e-mail

◦Finding cheapest airfare

Use limited built-in or learned knowledge base

◦Some are capable of self-adjustment, for example: Siri

Chatbots

Agent-based modeling applications:

◦Model behavior of consumers, stock markets, and supply chains

◦Predict spread of epidemics