information technology

IInnttrroodduuccttiioonn ttoo IInnffoorrmmaattiioonn TTeecchhnnoollooggyy
Introduction to Information Technology, 2nd Edition
Turban, Rainer & Potter
© 2003 John Wiley & Sons, Inc.
1-1
22nndd EEddiittiioonn
TTuurrbbaann,, RRaaiinneerr && PPootttteerr
© 22000033 JJoohhnn WWiilleeyy && SSoonnss,, IInncc..
Chapter 1:
Introduction: Business and Information Technology
Modified: Mr Qasim Al-ajmi
Source: Roberta M. Roth, Ph.D. University of Northern Iowa

1-2
CChhaapptteerr PPrreevviieeww
In this chapter, we will study:
◦ Marketplace pressures faced by today’s businesses and
various tactical and strategic responses.
◦ The distinction between data, information, and
knowledge.
◦ The characteristics of high quality information.
◦ The components of an information system.
◦ The capabilities organizations expect of information
systems.
◦ Opportunities to use information systems strategically.

TTooddaayy’’ss BBuussiinneessss EEnnvviirroonnmmeenntt
Characterized by:
◦ Rapid Change
◦ Complexity
◦ Global Economy
◦ Hyper-competition
◦ Customer Focus
Businesses face pressure to produce
more with fewer resources
1-3

1-4
CCaassee 11:: RReevveerrssee AAuuccttiioonn SSaavveess UUnniivveerrssiittyy MMoonneeyy
Purchasing officials at a large university saved a surprising
amount of money on their latest large purchase – a big
order of lighting purchase.
◦ They used a type of electronic auction called a reverse auction,
which makes use of the Internet to bring all parties together for
the bidding.
◦ In a reverse auction, there is one buyer & many would-be sellers.
The buyer invites sellers to bid on a proposal, and the lowest
bidder wins.
◦ The university paid $5,000 for the auction service but saved more
than $30,000 on the purchase.
◦ In the past, buying large quantities of electronic lighting equipment
would have involved only two or three bidders and would have
taken a week or two to complete. The reverse auction attracted 16
bidders and took place in 30 minutes.

Case 1: Reverse Auction SSaavveess UUnniivveerrssiittyy MMoonneeyy
Questions:
◦ What other categories of products might be
targets for this type of buying behavior?
◦ What other impacts do you see the Internet
having on the traditional purchasing process?
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OOrrggaanniizzaattiioonnaall RReessppoonnsseess
Pressures provoke proactive and reactive
organizational responses.
Business responses to pressures may
involve use of Information Technology and
Information Systems.
In some cases, IT is the only solution to
business pressures.
Knowledge of IT capabilities is essential
to today’s businesspeople.
1-6

1-7
CCaassee 22:: IIss tthhee TThhiirrdd TTiimmee tthhee CChhaarrmm ffoorr tthhee IIRRSS
During the past 25 years, the IRS has twice failed to
modernize its information systems.
◦ In 1978, President Jimmy Carter halted a project to network the
IRS’s central databases because the agency could not protect tax
payer privacy. In 1995, Congress stopped a second effort, after the
IRS had spent 10 years and over $2 billion on the project with little
to show for the money.
◦ The IRS has begun a $10 billion, 10-year IT modernization program
to streamline interactions with tax payers and tax professionals.
This program includes a secure Web Portal, a public information
site, and an intranet to help the 90,000 IRS employees quickly gain
access to technical, legal, procedural, and record information.
◦ For the program to succeed, the IRS must master secure
transactions over the Web, standardize data from a huge number of
legacy databases, and overcome its history of failed information
technology projects.

1-8
CCaassee 22:: IIss tthhee TThhiirrdd TTiimmee tthhee CChhaarrmm ffoorr tthhee IIRRSS
◦ In addition to taking a public relations beating in recent years
for overzealous auditing practices, the IRS has also been
downsized, making it more difficult to collect taxes and catch
tax evaders.
◦ Information technology that automates tax-payers’
interactions would let the IRS redeploy resources now
dedicated to customer service.
Questions:
◦ What factors make a government bureaucracy more or less
susceptible to systems development failure compared to a
private , for profit, organization? Why?
◦ What should be the primary motive for developing a new
information system in a government bureaucracy? In a
private for-profit organization? Why?

WWhhyy SShhoouulldd YYoouu LLeeaarrnn AAbboouutt IITT??
What can be done with IT and the
consequences of using IT are very interesting.
Organizational structure, management, and
business processes are often changed with IT.
Career opportunities are abundant in IT.
IT affects every business functional area.
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SSoommee KKeeyy DDeeffiinniittiioonnss
Data: raw facts; collected, not organized.
Information: data organized in a
meaningful way.
Knowledge: information organized to
convey understanding, experiences,
accumulated learning, or expertise.
1-10

WWhhaatt iiss aann IInnffoorrmmaattiioonn SSyysstteemm??
A system that collects, processes, stores,
analyzes, and disseminates information.
1-11
Collect
Inputs
Process
And
Transform
Produce
Outputs
Store
Data
Instructions
Calculations
Reports

WWhhaatt MMaakkeess IInnffoorrmmaattiioonn UUsseeffuull??
1-12
It is accurate
◦ Free of errors
It is complete
◦ Includes everything needed
It is flexible
◦ Can be viewed in various
ways
It is reliable
◦ Results are always
consistent
It is relevant
◦ Applies to the issue under
study
It is timely
◦ Available when needed
It is verifiable
◦ Basis for results can be
traced
It is accessible
◦ All those who need the
information can get to it
It is secure
◦ Free from contamination
(accidental or deliberate)

WWhhaatt iiss MMeeaanntt bbyy aa
““CCoommppuutteerr--BBaasseedd IInnffoorrmmaattiioonn SSyysstteemm””??
An information system using computer
and telecommunications technology to
perform its intended tasks.
◦ Employs some combination of hardware,
software, database, network, procedures, and
people.
An information system developed to
provide a solution to a business problem.
1-13

Organizations Have HHiigghh EExxppeeccttaattiioonnss ooff
TThheeiirr IInnffoorrmmaattiioonn SSyysstteemmss
Fast, accurate processing of business
transactions.
Storage, retrieval, analysis, and data sharing to
◦ Increase communication
◦ Reduce overload
◦ Span organizational boundaries
◦ Support and improve decision making.
Distinctive capabilities providing competitive
advantage.
1-14

1-15
Case 33:: ““BBrriicckkss aanndd CClliicckkss””
aarree PPrroovviinngg ttoo bbee aa GGoooodd FFiitt
Not too long ago, forecasters predicted that Internet
companies selling everything from books to pet food
would put traditional retailers “Out-of-Business”.
◦ After all, why would anybody drive to the mall when they
could shop online at any time of day? These predications
have NOT turned out to be correct.
◦ Giants such as Wal-Mart and Home Depot are expanding
and refining their Internet Offerings. Federated
Department Stores and Staples are combining Internet
operations with their Catalog businesses. These firms are
using an integrated, multi-channel marketing model where
people can shop online and then walk into the stores as
educated consumers.

1-16
◦ For example, Target Stores <target.com> considers its Internet
presence to be more valuable for marketing and customer
relations than for sales. At Target’s Web site, the most popular area
is its “Bridal Registry”, where visitors can print out prenuptial
shopping lists, then go to their local Target and pick up the goods.
About 10% of all visitors to Target’s Web Site simply want to find
directions to the store.
◦ Home Depot was criticized on Wall Street when the company did
not quickly develop a full-scale Internet business. Instead of offering
all its products for sale online nationwide, Home Depot ties its
Internet shopping and Order Fulfillment to existing stores in only a
few markets. Internet orders in these markets can be filled by a
store’s regular staff during slow times. Home Depot says its
objectives is not to maximize Internet sales, but to maximize the
relationship with its customers.

1-17
◦ At Borders, executives are hoping that customers will use its Web
site and the 335 Super-stores and the 900 Waldenbooks stores it
manages interchangeably. For instance, a customer might go online
to see if her local Borders store has a book she wants, reserve it,
then drive down to the store to pick it up and pay for it – sitting in
on a poetry reading and buying a latte while she is in the store.
Questions:
◦ What appears to be the dominant strategy for established
business that want to enter Electronic Commerce?
◦ Electronic Commerce can be conducted by Virtual Companies
that exist only as an Organized Network of Order-Filling suppliers
and a Web-based Transaction entity – almost no “Brick and
Mortar” infrastructure. Are the values of brand names more or less
important to such companies to traditional companies?

1-18
Case 4: Business Intelligence aatt LL.. LL.. BBeeaann
 A crucial element of E-Commerce is the creation of a unified, single
view of the customer. That is, a customer’s online, catalog, and store-based
retail activities are tracked, stored, and consolidated in one
place; resulting in a better understanding of a buying patterns.
◦ L. L Bean, the privately held 87-year old company, is best know for
its mail-order catalog business. Top management at L. L. Bean
decided that E-commerce was a necessary channel to reach
customers. As a result, Bean launched <llbean.com> through
which customers can choose from nearly 1000 out of 16000
products that Bean offers in its print catalog.
◦ L. L. Bean wanted the new sales channel to augment rather than
cannibalize existing business. Bean developed a business intelligence
(BI) system to understand the precise impact of the Web site on its
sales and customer-base.

1-19
Case 4: Business Intelligence aatt LL.. LL.. BBeeaann
◦ To apply BI system, Bean had to consolidate date from three
sources – catalog, retail, and e-commerce – in one place
(company’s data warehouse).
◦ All customers’ orders and purchasing information is forwarded to
the data warehouse. The company keeps track of such things as
how many times customers have been contacted, from which retail
store orders originate, the number of promotions received, and, of
course, the items ordered.
◦ The business intelligence system and the data warehouse have
given L. L. Bean knowledge of the synergies between e-commerce
site and catalog business.
Questions:
◦ Identify the benefits of the business intelligence system to the L. L.
Bean?
◦ How important is a unified and single view of the customer? Why?
How do Data Warehouses contribute to such a view?

1-20
Key TTeecchhnniiccaall TTrreennddss ttoo MMoonniittoorr
Constantly improving
cost-performance ratio
Increasing storage and
memory
User friendly interfaces
Client/server architecture
Network computers
Enterprisewide
computers
Intranets and extranets
Data warehousing
Data mining
Object-oriented
environment
Electronic document
management
Multimedia
Intelligent systems
Portable computing
Internet expansion
Electronic commerce
Integrated home
computing

CChhaapptteerr SSuummmmaarryy
Today’s businesses face myriad pressures.
Information technology provides tools
and capabilities to respond to those
pressures.
Knowledge of IT and its applications
helps businesspeople develop business
strategies that effectively employ IT.
1-21

Copyright © 2003 John Wiley & Sons, Inc. All rights reserved.
Reproduction
or translation of this work beyond that permitted in Section 117 of the
1976
United Stated Copyright Act without the express written permission of
the
copyright owner is unlawful. Request for further information should be
addressed to the Permissions Department, John Wiley & Sons, Inc.
The
purchaser may make back-up copies for his/her own use only and not
for
distribution or resale. The Publisher assumes no responsibility for
errors,
omissions, or damages, caused by the use of these programs or from
the
use of the information herein.

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