Chapter 15 - Managing Global Systems

Some of the major factors that drive the internationalization of business are the growth of inexpensive international communication and transportation.  They have developed a world of cultured world with stable expectations or norms. Political stability and a growing global knowledge base that is widely shared also contribute to the world culture. Global markets, global production, coordination, distribution, and global economies of scale are the general factors that create the conditions. 

The alternative factors for developing global business are multinational, franchiser, domestic exporter and transnational.  Multinationals typically rely on decentralized independence among foreign units with some movement toward development of networks.  Franchisers typically duplicate systems across many countries and use centralized financial controls.  Usually domestic exporters are centralized in domestic headquarters with some decentralized operations permitted.  Transnational firms have to permit considerable decentralization of development and develop networked system configurations.

Global information systems create challenges because political, cultural and language diversity greatly increases the differences in business processes and organizational culture  and encourages growth of disparate local information systems that are hard to implement.  The solution to the problem is to define a small subset of core business processes and concentrate on creating systems to support these processes.  Managers will have to intentionally cooperate widely dispersed foreign units to act in the development and operation of these systems, being cautious to maintain total control.  

Integrating a global system mandates an implementation strategy that considers both technology platforms and business design. The biggest telecommunications and hardware problems are connectivity and systems integration.  Going with either a proprietary architecture or with open systems technology are the choices for integration.  Global networks can be very complicated to operate and build.  A company has a choice of either building their own global network or developing global networks based on the Internet.  Building interfaces to existing systems and finding applications that work with various organizational frameworks, cultural and language are the main issues concerning building interfaces.

Chapter 14 - Managing Projects

Project management activities include assessing the risk, planning the work, acquiring resources required to accomplish the task, estimating, organizing the work, directing execution and analyzing the results.  Project management must also deal with  major variables: scope, cost, quality, time and risk.  Excelling in project management is crucial for ensuring the logistics of managing systems are carried out timely and efficiently.

It is crucial that organizations have an information systems plan that explains how information technology supports the attainment of their business documents and goals all their system applications and IT infrastructure components.  Most large companies have a management structure that ensures that the important systems receive priority.  Some of the methods that can be used to select and evaluate are portfolio analysis, critical success factor and scoring models.

A company can assess the value of information systems projects by calculating its costs and benefits.  Intangible benefits cannot be immediately quantified and tangible benefits are quantifiable.  Any benefit that exceed costs should be analyzed using capital budgeting methods to ensure a project has a good return on invested capital.

The principal risk factors in information systems projects are determined by project size, project structure and experience with technology.  Whenever there is a lack of user participation, lack of management support and poor management of the implementation of the project; the chances of failure are increased. Projects that involve business process re engineering, mergers and acquisitions and enterprise applications have the highest failure rate, because they require the largest amount of organizational change.


Some strategies useful for managing project risk and system implementation are implementation, user support and involvement, control of the implementation process and mechanisms for dealing with the level of risk in each new systems project.  The contingency approach to project management can help control the situation better than most other means of doing so.  The risk level of each project is what determines the appropriate mix of external and internal integration tools, formal planning tools and formal control tools that are applied.

Chapter 13 - Building Information Systems

Building new systems produces organizational change because the act itself is a form of planned organizational change.  There are four kinds of technology enabled change, automation, rationalization of procedures, business process redesign and paradigm shift.  Currently many firms use business process management to redesign work flows in order to create dramatic changes in productivity.  Companies also use business process management to aid in six sigma, total quality management and promotion.

Systems analysis and design, conversion, testing, maintenance and production are all core activities within systems development.  Systems analysis is the study and analysis of existing systems and the identification of requirements for their solutions.  Systems designs shows how technical and organizational components fit together; as well as provide the specification for information system solution.

Structured methodology and object-oriented development models are the two principal methodologies for designing and modeling systems.  Structured methodology consists of the data flow diagram, which is the main tool for structured analysis, and the structure chart which is used for representing structured software design.  Object-oriented development systems display a collection of objects that combine processes and data; and is based on inheritance and class.

There are many alternative methods for building information systems.  The oldest method is the systems life cycle which requires that information systems be developed in stages.  Prototyping is another method and it includes building an experimental system quickly and at a low cost for end-users to evaluate and interact with.  Another method is using a software package, this method is convenient because it reduces the amount of design, programming, installation, testing and maintenance needed to build a system.  End user development is the development of information systems by the end user, they can be created informally and in a short amount of time.  The last alternative method the chapter focused on was outsourcing.  It includes using external vendor to operate or build a companies information system instead of using the companies internal information systems staff.

There are some new, more modern approaches to system building.  Many firms have starting using joint application design (JAD), rapid application design (RAD), reusable software components and agile development.  RAD uses object-oriented software, visual programming, fourth generation tools and prototyping.  Agile development breaks a large project into a set of smaller ones.  Component based software increases the speed of application development by combining objects into suites of software used to create business applications.

Chapter 12 - Enhancing Decision Making

Every organization has different levels (strategic, management, operational) and with those levels are different decision making requirements.  Decisions can be structured, semi-structured and unstructured.  Structured decisions are usually at the operational level and unstructured are usually at the strategic level.  Decision making can be made by individual employees or by teams or groups.  Intelligence, design, choice and implementation are the four levels of decision making.  Despite their intent systems to support decision making don't always have better outcomes because of problems with information quality, management filters an organizational culture.

Classic models of managerial activities stressed the functions of organizing, planing, coordinating, controlling and deciding.  More modern research looks at the behavior of managers has found that the real daily activities of a manager are fragmented, brief in duration and variegated; and that is why many managers tend to avoid making grand game changing decisions.  IT provides new tools for managers to carry out their daily activities.  They are able to plan, forecast, monitor with better accuracy and speed than ever before.  IS is great for helping mangers disseminate information and allocate information but there is still some opportunity around supporting unstructured decisions.

Business intelligence and analytics guarantee accurate, almost real-time information for decision making.  A BI environment consists of information from the business environment, the BI infrastructure, a BA tool set, managerial users and methods and the user interface.  There are six analytic functionalities that BI systems deliver to achieve these ends: pre-defined production reports, parametrized reports, dashboards and scorecards, ad hoc queries and searches, the ability to drill down and the ability to model scenarios and create forecasts.

Business within organizations uses BI for monitoring the performance of their company.  Most of the decisions are somewhat structured and Management information systems are used to support the decision making.  For making unstructured decisions decision support systems are used, which include powerful analytics and modeling tools.  Group decision support systems (GDSS) help employees working together make decisions more efficiently.  GDSS feature special conference room facilities where people can contribute ideas, suggestions and solutions using networked computers and software tools for organizing ideas, making and setting priorities, gathering information and documenting meeting sessions. 

Chapter 11 - Managing Knowledge

Knowledge management is a set of processes to store, create, transfer and apply knowledge in the organization.  A large part of a companies value is dependent on the ability to manage and create knowledge.  There are three different types of knowledge management systems.  They are enterprise wide knowledge management systems, knowledge work systems and intelligent techniques.

The types of systems used for enterprise-wide knowledge systems are used company wide to collect, store, distribute and apply digital content and knowledge.  Enterprise content management systems provide tools for organizing as well as databases and tools for organizing semi-structured knowledge, like email or rich media.  Knowledge network systems give directories and other tools for locating employees.  Enterprise wide knowledge systems usually provide significant information if they are designed well and give employees the ability to share, locate and use knowledge more efficiently.

Knowledge work systems (KWS) back up the creation of new knowledge and integrate it into the organization.  KWS need east access to an external knowledge base, computer hardware that can support software with graphics, document management, analysis, communications and a user friendly interface.  Computer-aided design (CAD) systems, virtual reality systems and augmented reality applications create interactive simulations that act and look just like the real world.

There are many important business advantages to using intelligent techniques for knowledge management.  Artificial intelligence is just as it sounds, so it lacks the breadth, flexibility, and general human intelligence; but it can be used to extend organizational knowledge, codify and capture.  The expert systems capture tacit information from a limited domain of human expertise and express knowledge in the form of rules.  Expert systems are best for problems of classification or diagnosis.  Case-based reasoning models organizational knowledge that can be consistently updated and refined.  Fuzzy logic is a software technology that expresses knowledge in the form of rules that use approximate or subjective values.  Neural networks consist of hardware and software that try to mimic the thought processes of the actual human brain.  They are great for their ability to learn without programming and recognize patterns that can't be easily described by humans.  Thy are currently used in science, business and medicine to discern complicated patterns.  Genetic algorithms create solutions using genetically based processed like fitness, mutation and crossover.  Thy are typically used for process optimization, product design and monitoring industrial systems.  Intelligent agents are software programs with built in or learned knowledge bases that carry out repetitive, specific and predictable tasks for users, business processes and software applications.  Intelligent agents can be used to navigate through data to find important, useful information for the user.

Chapter 10 - E-Commerce: Digital Markets, Digital Goods

Chapter 10 starts by discussing some of the features that are unique to e-commerce, digital markets and digital goods.  E-Commerce includes digitally enabled commercial transactions between companies and people.  Ubiquity, global reach, universal technology standards, richness, information density and interactivity are all unique e-commerce features.  Digital markets tend to be more transparent and they have reduced information asymmetry, transaction and search costs as well as the ability to change prices based on market conditions.  Music, software, videos and books are all digital goods and can all be delivered over a digital network.  Digital products are great because once the original has been created the price of delivering the product is typically lower.

E-tailers, market creators, transaction brokers, content providers, community and service providers and portals are all e-commerce business models.  The main e-commerce revenue models are sales, advertising, free-freemium, subscription, affiliate and transaction fee.

E-commerce has transformed marketing by identifying marketers new ways of communication with millions of customers and at a low cost.  Companies use crowd sourcing to use the "wisdom of crowds" and improve product offerings and grow customer value.  Behavioral targeting techniques are also used to increase the effectiveness of rich media, banner and video ads.

Business to business transactions have also been affected by e-commerce.  It is used to enable companies to locate suppliers, place orders, solicit bids and track orders electronically.  Net marketplaces provide individual, digital marketplace for sellers and buyers.  Even more private industrial networks link a company with its suppliers and other strategic business partners and develop extremely efficient and responsive supply chains.

For location based applications like, finding local hotels and restaurants m-commerce is best suited.  Millions of people use mobile phones and other hand held devices to pay bills, banking, securities, music and games.  M-commerce does require wireless portals and digital payment systems.

Anytime you build an e-commerce website you must ensure that you have a clear understanding of the business objectives that must be achieved and the technology necessary to hit those goals.  E-commerce sites can be hosted locally or outsourced to external service providers.

Chapter 9 - Achieving Operational Excellence and Customer Intimacy: Enterprise Applications

Enterprise systems help businesses achieve operation excellence by collecting data and feeding into numerous applications that can support nearly all of an organizations internal business activities.  As new information is entered by one process the information is made available immediately to other business processes.  The enterprise systems support organizational centralization by enforcing uniform data standards and business processes throughout the company and a single unified technology platform.  The company-wide data generated by enterprise systems often helps managers evaluate company performance.

In order for supply chain management systems to coordinate planning, production and logistics with suppliers they must automate the flow of information among members of the supply chain so they can use it to make better decisions about how to much purchase and when and where to ship it.  The more accurate the information received the less likelihood of uncertainty and the impact of the bull whip effect.  Supply chain management software includes software for supply chain planning and for supply chain execution.  Internet technology supports the management of global supply chain information.  Better communication between the chain members also gains better customer response and movement toward a demand-driven model.

Customer relationship management (CRM) systems integrate and automate customer facing processes in sales, marketing and customer service which provides an enterprise-wide view of customers.  Many companies use this knowledge to enhance customer interactions and provide them with better service or the ability to provide new products and services.  The biggest customer relationship management software packages provide capabilities for both operational CRM and analytical CRM.  They typically include modules for managing relationships with selling partners and for employee relationship management.

As enterprise applications are difficult to implement there are challenges that arise.  Enterprise applications require extensive organizational change, big software investments and careful assessment of exactly how these systems will enhance organizational performance.  In order for the systems to enhance operations they must be integrated into systems that are not flawed, that and ensuring that all employees understand how to use systems and how they should work help enhance a successful roll out.  Training for all employees using the technology is necessary as well.

Service platforms integrate data and processes from the various enterprise applications and from legacy applications to create new and composite business processes.  The new services are driven through enterprise portals which can integrate applications so that information appears to come from a single source.  Mobile, cloud and open source versions of this are products that are becoming more and more readily available.