Bais 309 exam 1

BAIS 309 Management Information Systems Posey Exam 1. Chapters 1,2,3

why is intro to MIS the most important class in the business school

Managers must be able to assess and apply emerging technology and think non-routinely.

Digital technology is evolving exponentially and that evolution restructures industries, destroying the old that dont adapt

Digital revolution

the shift from mechanical/analog to digital devices

Information age

the age where information production /distribution/ control drives the economy

Bells Law

A new computer class forms roughly every decade, establishing a new industry.

• every 10 years, a new category of computing shows up

Moore’s Law

the number of transistors/square inch doubles every 18 months

• Processing is getting real cheap real fast, Nearly free compared to what it used to cost

Metcalfe’s law

the value of a network is equal to the square of its users connected

• network value increases exponentially with people

Kryder’s law

The storage space on a magnetic disk is increasing exponentially

Nielsen’s law

Network speed is increasing by around 50% every year for high end users

Job security

Marketable skill + the courage to use it

Routine skills get outsourced/ automated

Abstract reasoning

the ability to make and manipulate models

Systems thinking

The ability to model the components of the system to connect the inputs and outputs among those components into a sensible whole

You can see how parts connect

Collaberation

The activity of two or more people working together to achieve a common goal, result, or work product.

experimintation

Making a reasoned analysis… envisioning potential solutions… evaluating… developing the most promising ones, consistent with the resources you have

Management Information systems (MIS)

the management and use of information systems that help organizations achieve their strategies

Not technology - Its managing systems so the business wins strategically

Information systems (IS)

An assembly of hardware, software, data, and people that produces information

The whole working system, including humans and their steps

Information Technology (IT)

The products, methods, inventions, and standards used for the purpose of producing information

The stuff you can buy

MIS 3 Key elements

1. Management and use

2. Information systems

3. Strategies

5 component model

A model of IS components:

Computer hardware, software, Data, Procedures, People

It is present in every Information system

computer hardware

the electronic components + related gadgetry

Software

Instructions for computer

Data

Recorded facts or figures

Procedures

instructions for humans

People

those who operate/ service the computers, maintain data, support networks and use systems

Information only exists in the minds of people

IT and IS NOT SAME

IT - Hardware + software

IS - All 5 parts of component model

Data

Recorded facts/figures

Information

Not the printed report itself, Information is the data interpreted in peoples minds

Information can never be written on paper or shown on a device

Data must be Worth its Cost

Data isn’t free. For data to be worth its costs, the value of the information you can derive must justify systems’ cost + time to read/process it

IF nobody uses it to make a better decision, don’t collect it

How does organizational strategy determine information systems

you don’t design systems in a vacuum. you design systems to win your specific game

The 5 forces that determine Industry structure

1. Bargaining power of the customers

2. Threat of substitutions

3. Bargaining power of suppliers

4. Threat of new entrants

5. Rivalry among existing firms

If forces are strong, industry profits get competed away

Strategy is a response to these forces pressures

Substitutes NOT equal new entrants

Substitute is a different way to satisfy the same need, new entrant is a new competitor entering you industry

A substitute for McDonalds is eating at a fine restaurant, a new entrant is the burger king that just opened

supplier power v customer power

Supplier power is suppliers raising your costs/ limiting quantity they sell you.

Customer power is customers pushing prices down / demanding more

Porters 4 Competitive strategies

Axes:

• cost vs differentiation

• Industry-wide vs industry segment

Cost Leadership

Cost + Industry wide

Lowest cost across the industry

Diffirentiation

Differentiation + industry wide

Better product/service across the industry

Cost focus

Cost + industry segment

Lowest cost within an industry segment

Differentiation Focus

Differentiation + industry segment

Better product/ service within an industry segment

How does analysis of industry structure determine competitive strategy

All IS must reflect and facilitate the competitive strategy

How does competitive strategy determine value chain structure

If cost leader, activities are designed to be the lowest cost

If differentiation, the firm accepts higher cost only when margin stays positive (benefits outweigh costs)

How do businesses processes generate value

A network of activities that generate value by transforming inputs into outputs

A competitive advantage is often a process advantage - higher margin through better workflows, not just better products

Cost of process

Cost of inputs + cost of activities

Margin of process

Value of outputs - cost

Business processes

A business function that receives inputs and produces outputs

how does competitive strategy determine business processes and the structure of the information system

If you change strategy, your process design and system requirements change

Two roles of information systems relative to products

IS can be part of the product, or it can support the product

interactive map in the car or maintenance records

Principles of competitive advantage

Product/ service related

1. Create a new product or service

2. enhance products or services

3. Differentiate products or services

Process-related

4. Lock in customers and buyers

5. lock in suppliers

6. raise barriers to market entry

7. establish aliances

8. Reduce costs

First mover advantage

Gaining market share by being first doesn’t guarantee advantage and can be detrimental due to R&D + education costs (“Bleeding edge “)

Second mover advantage

Gaining market share by following/ improving, reducing costly R&D

Value

amount customer is willing to pay

Margin

Value generated - activity cost

Value chain

A network of value creating activities consisting of five primary and 4 support activities)

5 Primary activities

1. Inbound logistics - receiving, storing, and disseminating inputs

2. operations/ manufacturing - transforming inputs into final products

3. outbound logistics - collecting, storing, and distributing products to buyers

4. sales and marketing - inducing buyers to purchase + providing a means to do so

5. Customer service - assisting customers use + enhancing value

Support activities 4

1. Procurement - finding vendors, contracts, and negotiating prices (Not the same as inbound logistics )

2. Technology - Broadly includes R&D and developing methods + procedures

3. Human resources - recruiting, compensation, evaluation, training

4. Firm infrastructure -General management, finance, accounting, legal, govt affairs.

Inbound logistics v procurement

Inbound logistics receives/ handles inputs

procurement negotiates contracts

Business intelligence (BI) systems

Information systems that process operational, social, and other data to identify patterns, relationships, and trends for use by business professionals and other knowledge workers

• The output (patterns/ trends/ predictions) is called business intelligence

Types of BI in use (Hierarch matters)

1. Informing - Which products sell quickly/ are most profitable

2. Deciding - which customers shop where, build custom marketing plans

3. Problem solving - increase sales/ reduce waste (what is vs what should be )

4. Project management - building cafes/ expansion targeting

Deciding requires information, Problem solving requires deciding + informing, project management requires problem solving + deciding + informing.

Data acquisition

obtaining, cleaning, organizing, relating, and cataloging source data

Master data management

Making data from different sources uniform/consistent so later analysis works

Data aggregator

Gathers and sells info from multiple sources

Characteristics of good data

Accurate: Correct and complete

Timely: Available in time for its intended use

Relevant: Pertains to the context and the subject at hand

Just barely sufficeint: Enough to make the decision, but not an overwhelming data dump

Worth its cost: the value of the data must exceed the cost of collecting and storing it.

Three types of BI analysis

1. Reporting

2. Data Mining

3. Big Data

Reporting

processing structured data by sorting, grouping, summing, filtering, and formatting

Goal: Asses past performance (OLAP and RFM)

RFM analisis

ranks customers on a scale of usually 1-5 on 3 categories

Recency, Frequency, Money

OLAP (on line analytical processing)

Uses Measures (the Data item of interest to sum/average, like sales) and Dimensions (The characteristic of the measure, like region or date)

is more generic than RFM and provides the ability to sum, count, average, and perform other simple arithmetic operations on groups of data. • An OLAP report has measures and dimensions.

A measure is the data item of interest. It is the item that is to be summed or averaged or otherwise processed in the OLAP report. Total sales, average sales, and average cost are examples of measures. •

A dimension is a characteristic of a measure. Purchase date, customer type, customer location, and sales region are all examples of dimensions.

Data Mining

Using sophisticated statistical techniques to find patterns and relationships. Goal: Classify and predict

ex: (Market basket analysis to see what products are bought together)

Big Data

Finding patterns in massive volumes of data with high velocity and variety

Problems with operational data in BI

Dirty data: Errors like “g” for gender instead of “M’ or “F”

missing values: blank fields

Inconsistent data: data gathered over time that changed formats

nonintegrated data: data from two different systems that don’t match up

Wrong granularity: data is either too fine (too detailed) or too coarse (not detailed enough)

Too Much Data: Too many attributes (columns) or too many data points (Rows )

Knowledge management (KM)

The process of creating value from intellectual capital and sharing that knowledge with employees, managers, suppliers, and customers

• Storing company lessons and expertise so that when an expert employee leaves, their knowledge stays

Artificial inteligencce

the ability of a machine to simulate human abilities such as vision, communication, and decision making

Business intelligence systems framework

Data sources: Operational databases, social data, purchased data, employee knowledge

Acquire data: Obtain, cleanses, organize, catalog

Preform analysis: Reporting, Data Mining, Big Data, AI

Publish Results: Push (automatic delivery ) or pull (User requests it ) To knowledge workers via web servers, print, or knowledge management

Achieving Strategy chain

Five Forces → competitive strategy → Value chain → Business process→ IS design.