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Week 5 Lecture 1 - Challenges of IS
Management of Information Systems
Challenges of IS
The Internet connects people and organizations from all over
the globe. The Internet significantly reduces physical distances
between trading organizations and time zone limitations on
trade speed. Without the Internet, global commerce would
decrease, and business travel and extended business transactions
would increase. The Internet facilitates global trade through its
compression of distance and time.
Although the Internet has made connecting easier, the world
consists of a massive quantity of significantly diverse cultures.
The world is becoming a global village. However, in
international commerce, there are still cultural differences to
consider. Cultural differences can be found between Middle
Eastern, European, Asian, African, American, and other regions.
Cultural differences can be demonstrated by different
perspectives, different ways of dress, individualism,
collectivism, power distance, ethics, and human rights policies.
Figure 5 Internet users by global region © Cengage Learning
2015
The web facilitated the global exchange of information which
spurred global business-to-business (B2B) and business-to-
consumer (B2C) commerce. Global companies must tailor their
websites to local consumers. These companies must offer
websites in the local language of the consumer. Ideally, local
teams should maintain the local versions of websites.
Figure 6 Percentage of non-English speaking Internet users ©
Cengage Learning 2015
When designing, or planning global information systems,
particularly Web, or mobile technologies, legal, cultural and
other differences in implementations must be taken into
account. While assessing whether to leverage IT for
international communication and commerce, significant
challenges must be considered. Some challenges are
technological barriers, regulations, tariffs, electronic payment
mechanisms, different languages, cultures, economics, and
political considerations. Another challenge, in addition to legal
and cultural issues, is the integration of disparate supply chain
management systems. Legal considerations are differences and
copyright laws, differences in consumer protection, and
differences in privacy laws.
Week 5 Lecture 2 - Decision Support and Expert Systems
Management of Information Systems
Decision Support and Expert Systems
Structured and unstructured problems
A structured problem has a process to solve it already defined.
An unstructured problem has a number of factors that may not
be fully understood, to consider and no defined process by
which to solve it. Most problems faced by managers are on a
spectrum between structured and unstructured; these are called
semi-structured problems.
Figure 7 Structured and semi-structured problems © Cengage
Learning 2015
A fully unstructured problem is one that does not allow the
manager to select rationally any manageably small number of
alternatives from which to select the optimal one.
Decision Support System
A sensitivity analysis is a what-if test that measures the degree
that a change in one factor will affect other factors. Decision
support systems (DSSs) are used to save time in decision-
making. A DDS is a computer-supported information system
designed to help knowledge workers select alternatives in
problem solutions. A spreadsheet is an excellent tool for
building a DSS since it offers other calculations, and functions
for statistical and financial analysis.
Spreadsheet programs are an excellent tool for building DSSs
thanks to their good modeling power. They offer many
arithmetic, statistical, and financial analysis functions. If the
students already know how to use net present value formulas,
you may want to assign the building of a simple DSS to analyze
the NPV of three or four alternative investment options. After
they decide which alternative is the best, they should answer the
question “How would your answer change if the interest rate
goes up by 2% per annum?” This demonstrates a “what if”
analysis.
Expert System
When it is not possible to exploit a DSS, an expert system can
be used to solve problems and make decisions in a relatively
narrow domain. An expert system emulates the knowledge of an
expert to solve problems and make decisions.
Week 5 Objectives
Explain why multinational corporations must use global
information systems
Provide elementary advice for designing websites for an
international audience
Cite the cultural, legal, and other challenges to implementing
international information systems
List and explain the phases in decision making
Articulate the difference between structured and unstructured
decision making
Describe the typical software components that decision support
systems and expert systems comprise
Give examples of how decision support systems and expert
systems are used in various domains
Describe the typical elements and uses of geographic
information systems
List the benefits and risks of automated decision making
© Cengage Learning 2015
1
1
Explain why multinational corporations must use global
information systems
Provide elementary advice for designing websites for an
international audience
Cite the cultural, legal, and other challenges to implementing
international information systems
List and explain the phases in decision making
Articulate the difference between structured and unstructured
decision making
Describe the typical software components that decision support
systems and expert systems comprise
Give examples of how decision support systems and expert
systems are used in various domains
Describe the typical elements and uses of geographic
information systems
List the benefits and risks of automated decision making
Multinational Organizations
An increasing number of corporations are becoming
multinational
Global information system: a system that serves organizations
in multiple countries
Used by multinational corporations
Overseas operations must abide by local laws, yet be sensitive
to local cultures and standards
© Cengage Learning 2015
2
2
An increasing number of corporations are becoming
multinational
A global information system is a system that serves
organizations in multiple countries
These information systems are used by multinational
corporations
Overseas operations must abide by local laws, yet be sensitive
to local cultures and standards
The Web and International commerce. The web has become an
important vehicle for B2B and B2C commerce
The ratio of non-English speakers to English speakers on the
web is growing. Over 70 percent of Internet users reside in non-
English speaking countries
Internet opens enormous global opportunities
Chinese market is expected to be the largest in the future
The web offers opportunities to increase revenue and to save on
costs
Online manuals replace paper documents
Web sites and documentation are presented in many languages
Global businesses must be sensitive to local audiences
Accommodate languages other than English
Globalization is designing global sites to cater to local needs
and preferences
Example: McDonald’s menu changes to appeal to local palates
© Cengage Learning 2015
3
Figure 9.3 Imperatives to consider when designing websites for
an international audience
© Cengage Learning 2015
Imperatives to consider when designing websites for an
international audience
Plan for an international audience
Learn cultural preferences, convention differences, and legal
differences, Tailor local sites to the local people’s preferences,
what they buy and how they pay.
Translate languages for local audience. Make sure a human
translates, or that a person reviews automated translations.
Ensure that all visitors are offered the same level of service.
Do not let any visitor feel less important than other visitors.
Avoid cultural imperialism. Give the local audience a homey
experience.
International companies must “think globally, act locally”
Acting locally means being sensitive to regional customs and
language nuances
Control must be decentralized
Strategic planning should be global, but can be followed with a
local flavor
3
Challenges of
Global Information Systems
Global information systems face challenges such as:
Technological barriers
Regulations and tariffs
Electronic payment mechanisms
Different languages and cultures
Economic and political considerations
Different measurement and notation standards
Legal barriers
Different time zones
© Cengage Learning 2015
4
4
Global information systems face challenges such as:
Technological barriers
Regulations and tariffs
Electronic payment mechanisms
Different languages and cultures
Economic and political considerations
Different measurement and notation standards
Legal barriers
Different time zones
Technological Challenges
Not all countries have adequate information technology
infrastructure to allow companies to build an international IS
Broadband communication lines are needed to support today’s
graphics-rich webpages
Companies can offer two versions of their websites to
compensate for slower bandwidth
Language is another technological challenge
Eight-bit byte code is not sufficient for languages with large
character sets
Unicode allows for 65,536 characters
Must coordinate with databases and applications
Telephone number and postal code formats are different in
different countries
Regulations and Tarrifs
Countries have different import regulations and tariffs
Executives may be reluctant because of hassles of learning the
laws, taxes, tariffs, and regulations of other countries
Companies must comply with the laws of destination countries
NextLinx software helps importers and exporters using web
commerce
Differences in Payment Mechanisms
Easy payment for online purchases is expected
Credit cards are the preferred payment method in North
America
Not all countries have adopted this preference
High level of stolen credit cards in Eastern Europe
Europeans prefer debit cards
Most Japanese reluctant to use credit cards
Language Differences
International parties must agree on a common language for
communication
Data might not be transmittable internationally in real time
because it must first be translated
English is considered the de facto international language
Companies in the forefront of web-based
e-commerce translate their original websites into local
languages
Cultural Differences
People from different countries vary in their:
Tastes
Gestures
Preferred colors
Treatment of people of certain gender or age
Attitudes about work
Opinions about ethical issues
Conservative groups in other countries may dislike the
“Americanization” of their cultures
Web designers must be sensitive to cultural differences
Conflicting Economic, Scientific, and Security Interests
Corporate management’s goal is to seize a large market share
and maximize organization profits
National government’s goal is to protect its economic,
scientific, and security interests
Scientific information is an important national resource as well
as a great source of income for foreign corporations
Occasionally interests conflict
© Cengage Learning 2015
5
5
Corporate management’s goal is to seize a large market share
and maximize organization profits
National government’s goal is to protect its economic,
scientific, and security interests
Scientific information is an important national resource as well
as a great source of income for foreign corporations
Occasionally interests conflict
Weapons manufacturers have technical drawings that are
valuable to both the company and the security of country
Governments may not allow the exchange of weapon designs
U.S. Customs and Border Protection (CBP) strictly regulates
software applications and technologies that present potential
danger
May be used against the U.S. in times of warfare or in acts of
terrorism
Countries treat trade secrets, patents, and copyrights differently
May hinder the transfer of documents to certain divisions of a
multinational corporation
Intellectual property is tightly protected in the U.S. and
Western Europe, but less so in other countries
Political challenges
Information is power
Some countries oppose the policy of free access to information
as a threat to their sovereignty
Viewed as an opportunity for other nations control indigenous
resources
Governments may require that only open source software is
used in government operations
Global corporations must ensure compatibility with software
adopted by local governments
Some governments limit how the Internet is used
Free speech is not a universal principle
Web content restrictions are common in many countries
Global companies must obey local laws
May require collaboration with the government, resulting in
arrest and prosecution of local users
Ethical dilemma: how to balance the business interest with
moral principles, and not help dictatorships violate civil rights
Different Standards
Differences in standards must be considered when integrating
ISs internationally
Records may be incompatible
United States uses the English system of weights and measures;
the rest of the world uses the metric system
NASA lost a $125 million Mars orbiter mission due to an error
in a data transfer, caused by a mismatch between U.S. and
metric measurements
© Cengage Learning 2015
6
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Differences in standards must be considered when integrating
ISs internationally
Records may be incompatible
United States uses the English system of weights and measures;
the rest of the world uses the metric system
NASA lost a $125 million Mars orbiter mission due to an error
in a data transfer, caused by a mismatch between U.S. and
metric measurements
Different standards also exist for:
Dates
Times
Temperatures
Addresses
United States uses month/day/year format; the rest of the world
uses day/month/year
Companies must adapt their ISs to changing formal or de facto
standards
European Article Number (EAN): bar code that includes an
extra number to identify country
Universal Product Code (UPC): American standard without the
last extra number
American Uniform Code Council (UCC): promoted the use of
European standard
U.S. companies had to adapt ISs to recognize, record, and
process the new bar code standard
UCC is now trying to expand product codes to the 14-digit
Global Trade Item Numbers (GTINs)
GTINs support global supply chains by allowing many more
product ID values
The major push to use RFID tags in the U.S. could expand to
the rest of the world
Legal Barriers
Countries have different laws that affect global business in
general, and e-commerce in particular
Differing laws pose challenges to:
International transfer of data
Free speech
Location of legal proceedings when disputes arise
© Cengage Learning 2015
7
7
Countries have different laws that affect global business in
general, and e-commerce in particular
Differing laws pose challenges to:
International transfer of data
Free speech
Location of legal proceedings when disputes arise
Privacy laws
Respect for privacy in international business is an unresolved
challenge
The majority of democratic nations try to protect individual
privacy
Laws reflect a difference in approach to issue of privacy
European Union practices conflicting with U.S. practices
Personal data
Collected only for specified purposes
Cannot be processed without the unambiguous consent of the
subject
Collecting organizations must identify themselves
Subjects have the right to know to whom their data is disclosed
Subjects may object to processing of their personal data
American companies are busy collecting, buying, and selling
data for marketing and decision making
Discrepancy between the European and American approaches
prevents unrestricted flow of information
EU directive is only a framework
EU countries may have more restrictive laws
Other applicable laws affecting online business include those
that address:
Free speech
What can or cannot be displayed online
Gambling
Auctioning
Sale of alcoholic beverages and drugs
Time zone differences
Different global regions require policies for work and
information systems
Teleconferencing systems must be available most of the day,
sometimes 24 hours per day
Allows employees from different time zones to discuss
problems that need immediate resolution
Teams in support centers may work shifts to accommodate
clients worldwide
Managers must be aware of incorrect time stamping in different
locales
Systems at both locations can be designed to record local times
of both locations, or record a single time (that of the company
headquarters_
Decision Support
An organization’s success depends on the decisions made by
employees
Computer-based systems are beneficial for:
Large amounts of information
Intensive processing
Types of decision support aids
Decision support systems (DSSs)
Expert systems (ESs)
Applications today may combine both types
Provide single optimal solution or set of solutions
© Cengage Learning 2015
8
8
An organization’s success depends on the decisions made by
employees
Computer-based systems are beneficial for:
Large amounts of information
Intensive processing
Types of decision support aids
Decision support systems (DSSs)
Expert systems (ESs)
Applications today may combine both types
Provide single optimal solution or set of s
Decision support modules today may be part of larger enterprise
applications
Also called business analysis tools or business intelligence
applications
Designed to streamline the decision-making process
Data warehouses and online processing (OLAP) technologies
have enhanced the ability to use data for decision making
A decision must be made whenever more than one possible
action is available
It can be difficult to make decisions when many reasonable
alternatives are present
In business, there may be dozens, hundreds, or even millions of
different courses of actions available to achieve a desired result
Decision making is a three-phase process
Intelligence phase: collect facts, beliefs, and ideas
Design phase: design the method for considering the collected
data, to reduce the alternatives to a manageable number
Choice phase: select an alternative from the remaining choices
Businesses collect data internally and externally
A model is an abstraction of reality, such as:
Tabletop representations of buildings
Maps: represent a geographical area
Mathematical equations representing relationships among
variables
Managers either choose universal models or design their own
models
A structured problem is one in which an optimal solution can be
reached through a single set of steps
An Algorithm is a sequence of steps to complete a task
Parameters are categories of data that are considered in an
algorithm
Most mathematical and physical problems are structured, but
many business problems are not
An Unstructured problem is one for which there is no algorithm
that leads to an optimal solution
May not be enough information
May be a large number of potential factors
Unstructuredness is closely related to uncertainty
Examples of unstructured problems
Weather prediction
Stock market prediction
A Semistructured problem is one that is neither fully structured
nor totally unstructured
Professionals encounter semistructured problems almost daily in
many different industries
The goal is to choose the one alternative that will bring about
the best outcome
Decision Support Systems
Decision support system (DSS): a computer-based information
system designed to help knowledge workers select one of many
alternative solutions to a problem
DSSs can help corporations by:
Increasing market share
Reducing costs
Increasing profitability
Enhancing product quality
© Cengage Learning 2015
9
9
Decision support system (DSS) is a computer-based information
system designed to help knowledge workers select one of many
alternative solutions to a problem
DSSs can help corporations by:
Increasing market share,
Reducing costs,
Increasing profitability,
And Enhancing product quality
Most DSSs consist of three components,
A Data management module,
A Model management module,
And aDialog module
These components help users to
Enter a request in a convenient manner,
Search vast amounts of data,
Process the data through desired models,
And View the results in a desired format
© Cengage Learning 2015
10
Figure 10.3 The components of a DSS and their interaction ©
Cengage Learning 2015
A Data management module is a database or data warehouse
that provides data for the intelligence phase
It enables access to data
And provides a means to select data by specified criteria
Many DSSs are intertwined with other organizational systems,
including data warehouses, data marts, and ERP systems
A Model management module turns data into useful information
A fixed model, a dynamically modified model, or a collection of
models may be offered
A dynamically modified model is automatically adjusted based
on changing relationships among variables
Models are used to predict output
They are often based on mathematical research
Patterns or models may be unique to a certain a industry, such
as:
ATM placement,
Truck route planning,
Airline ticket pricing,
And Car rental pricing
A linear regression model is a general statistical model that is
often to find a best-fit linear relationship between two variables
A linear relationship can be translated into a program in a DSS
The actual data points rarely lie directly on the regression line,
illustrating the uncertainty
Regression models are not necessarily always straight lines;
they may be curves
Models often describe relationships between more than two
variables
Some DSSs simulate physical environments
A Dialog module is part of a DSS that allows user interaction
with the program
It prompts the user to select a model and data to process
It allows the user to change parameters and view the results of
the changes
And it displays the results of the analysis in textual, tabular, or
graphical format
Many DSSs are available through the Internet
10
© Cengage Learning 2015
11
Figure 10.5 A DSS can help marketers make decisions on how
to spend promotion resources
© Cengage Learning 2015
A Sensitivity analysis is conducted to test the degree to which
the total profit grows or shrinks if one or more of the factors is
increased or decreased
The results indicate the relative sensitivity of the profit to the
changes
If a small change in a parameter causes a significant change to
the outcome, the sensitivity of the outcome to the parameter is
high
If the outcome is affected very little by a large change in a
parameter, the sensitivity of the outcome to the parameter is low
Sensitivity analysis is called what-if analysis a DSS can
perform sensitivity analysis on multiple parameters
simultaneously
DSSs can be used on demand or integrated into a scheme that
enforces corporate policy
DSSs help maintain standard criteria in decision making
throughout the organization
Automated decision production is becoming very popular
The only labor required is for data entry
DSSs are used in many industries
Book sales and food production and retailing: to forecast the
number of patrons, the amount of ingredients to purchase, etc.
Tax planning: tax helper applications such as TurboTax and
TaxCut
Web site planning and adjustment: to analyze shopper behavior,
and to design Web sites based on page usage
DSSs are used in many industries (cont'd.)
Yield management (revenue management): to maximize revenue
from airline trips or lodging
Financial services: to determine loan amounts, and to qualify
customers based on credit history
Benefits selection: to allow employees to make decisions about
their benefits
11
© Cengage Learning 2015
12
Figure 10.6 Components of an expert system; numbers indicate
the order of processes
© Cengage Learning 2015
An Expert system (ES) emulates the knowledge of a human
expert
Solves problems
Makes decisions in a relatively narrow domain
A Domain a specific area of knowledge
The purpose is to replicate the unstructured and undocumented
knowledge of experts, and make that expertise available to
novices
A Neural network is a program that emulates how the human
brain works
ESs are part of artificial intelligence (AI) research
AI focuses on methods and technologies that emulate how
humans learn and solve problems
A Knowledge base is used by an ES
A collection of facts and relationships among them populate the
knowledge base
An ES uses an inference engine that is built as a series of IF-
THEN rules
Inference engine: software that combines data input by the user
with the data relationships in the knowledge base
Neural networks: mimic the way a human brain learns
Used by more sophisticated ESs
Constructed with a set of rules, but then it refines itself based
on its decision success rate
Beneficial in detecting fraudulent transactions and claims
Intelligent agent: software that is dormant until it detects a
certain event, and then performs a prescribed action
Case-based reasoning: methodology of solving a new problem
established on the solutions of similar problems
Applied in case-based ESs
Especially useful in medical decision making
12
© Cengage Learning 2015
13
Figure 10.7 IF-THEN rules, different combinations of
conditions lead to different conclusions
© Cengage Learning 2015
ESs have been implemented in many industries
Medical diagnosis
Help doctors with the diagnosis of symptoms and treatment
advice
Can help enhance the accuracy of Alzheimer’s disease diagnosis
Medical management
Help discern patients’ tests and treatments
Assist with health information management
Implemented in many industries (cont'd.)
Credit evaluation
Used to approve credit card charges
Used to analyze financial reports submitted with credit
applications
Local loan officers may periodically update the knowledge base
adjusting it for current loan policy
Detection of insider securities trading
Helps prevent trading of stocks based on private information by
analyzing the stock’s history
Implemented in many industries (cont'd.)
Detection of common metals
Helps nonexperts identify common metals and alloys outside
laboratories
Based on results of simple chemical tests and other information
available at the scene
Diagnosis and prediction of mechanical failure
Allows vehicle to diagnose its own mechanical problems
Provides alerts when approaching traffic jam, navigation
assistance, Internet service, etc.
13
Group Decision Support Systems
Group decision support system (GDSS)
Also called a group intelligence system, collaborative system,
or group system
Facilitates the contribution of ideas, brainstorming, and
choosing promising solutions
Allow participants to define a problem, contribute ideas, then
vote on the decision
Help structure the decision-making process while allowing
participants to remain anonymous
© Cengage Learning 2015
14
Group decision support system (GDSS)
Also called a group intelligence system, collaborative system,
or group system facilitates the contribution of ideas,
brainstorming, and choosing promising solutions
GDSSs allow participants to define a problem, contribute ideas,
then vote on the decision
GDSSs help structure the decision-making process while
allowing participants to remain anonymous
14
Geographic Information Systems (GISs)
GIS: aid for map-related decisions
Processes location data
GISs are used to help:
Find shortest paths for deliveries or school bus routes
City planning for police coverage and health care resources
Find oil drilling locations
Locate suitable outdoor recreation sites
Decide placement of ATMs
© Cengage Learning 2015
15
15
A Geographic Information System GIS is an aid for map-related
decisions
A GIS processes location data
GISs are used to help find the shortest paths for deliveries or
school bus routes
They are used in city planning for police coverage and health
care resources
GISs are used to find oil drilling locations and to locate suitable
outdoor recreation sites
They are also used to decide placement of ATMs
GIS components are a Database of quantitative and qualitative
data, a Database of maps, a Program that displays information
on maps
Web technology helps promote the use of GISs
Examples are Google Earth, Mapquest, Yahoo Maps
HTML and XML support the presentation of marked maps
GISs are used to aid in sales and government work
Summary
Companies conducting web-based business must accommodate
non-English speaking audiences
Companies must tailor to local preferences
Organizations must be aware of cultural differences and
payment preferences
Businesses must be aware of tariff and legal issues
Linguistic, cultural, economic, and political challenges must be
addressed
© Cengage Learning 2015
16
16
Companies conducting web-based business must accommodate
non-English speaking audiences
Companies must tailor to local preferences
Organizations must be aware of cultural differences and
payment preferences
Businesses must be aware of tariff and legal issues
Linguistic, cultural, economic, and political challenges must be
addressed
Laws governing the collection and manipulation of personal
data in the U.S. and European Union are different
The U.S. and EU have incompatible data privacy laws, which
restrict the flow of personal data between the U.S. and EU
Decision aids include decision support systems, expert systems,
group decision support systems, geographic information
systems, etc.
Three major phases of decision-making process: intelligence,
design, and choice
Types of problems: spectrum from unstructured to structured
Most DSSs have three components: data management module,
model management module, and dialog module
Sensitivity analysis measures how parameters affect results, and
allow “what if” analysis
Spreadsheets allow users to create DSSs without expertise
Expert systems are designed to emulate the knowledge of an
expert, using artificial intelligence techniques
Neural network software may be integrated into an expert
system to emulate learning
Expert systems are used in narrow domains where decisions are
unstructured
Geographic information systems are used when decisions
involve locations and routes
Computerized decision aids may overlook important
circumstances, leading to inaccuracies or unfairness to
individuals

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  • 1. Week 5 Lecture 1 - Challenges of IS Management of Information Systems Challenges of IS The Internet connects people and organizations from all over the globe. The Internet significantly reduces physical distances between trading organizations and time zone limitations on trade speed. Without the Internet, global commerce would decrease, and business travel and extended business transactions would increase. The Internet facilitates global trade through its compression of distance and time. Although the Internet has made connecting easier, the world consists of a massive quantity of significantly diverse cultures. The world is becoming a global village. However, in international commerce, there are still cultural differences to consider. Cultural differences can be found between Middle Eastern, European, Asian, African, American, and other regions. Cultural differences can be demonstrated by different perspectives, different ways of dress, individualism, collectivism, power distance, ethics, and human rights policies. Figure 5 Internet users by global region © Cengage Learning 2015 The web facilitated the global exchange of information which spurred global business-to-business (B2B) and business-to- consumer (B2C) commerce. Global companies must tailor their websites to local consumers. These companies must offer websites in the local language of the consumer. Ideally, local teams should maintain the local versions of websites. Figure 6 Percentage of non-English speaking Internet users © Cengage Learning 2015 When designing, or planning global information systems,
  • 2. particularly Web, or mobile technologies, legal, cultural and other differences in implementations must be taken into account. While assessing whether to leverage IT for international communication and commerce, significant challenges must be considered. Some challenges are technological barriers, regulations, tariffs, electronic payment mechanisms, different languages, cultures, economics, and political considerations. Another challenge, in addition to legal and cultural issues, is the integration of disparate supply chain management systems. Legal considerations are differences and copyright laws, differences in consumer protection, and differences in privacy laws. Week 5 Lecture 2 - Decision Support and Expert Systems Management of Information Systems Decision Support and Expert Systems Structured and unstructured problems A structured problem has a process to solve it already defined. An unstructured problem has a number of factors that may not be fully understood, to consider and no defined process by which to solve it. Most problems faced by managers are on a spectrum between structured and unstructured; these are called semi-structured problems. Figure 7 Structured and semi-structured problems © Cengage Learning 2015 A fully unstructured problem is one that does not allow the manager to select rationally any manageably small number of alternatives from which to select the optimal one. Decision Support System A sensitivity analysis is a what-if test that measures the degree that a change in one factor will affect other factors. Decision support systems (DSSs) are used to save time in decision- making. A DDS is a computer-supported information system designed to help knowledge workers select alternatives in
  • 3. problem solutions. A spreadsheet is an excellent tool for building a DSS since it offers other calculations, and functions for statistical and financial analysis. Spreadsheet programs are an excellent tool for building DSSs thanks to their good modeling power. They offer many arithmetic, statistical, and financial analysis functions. If the students already know how to use net present value formulas, you may want to assign the building of a simple DSS to analyze the NPV of three or four alternative investment options. After they decide which alternative is the best, they should answer the question “How would your answer change if the interest rate goes up by 2% per annum?” This demonstrates a “what if” analysis. Expert System When it is not possible to exploit a DSS, an expert system can be used to solve problems and make decisions in a relatively narrow domain. An expert system emulates the knowledge of an expert to solve problems and make decisions. Week 5 Objectives Explain why multinational corporations must use global information systems Provide elementary advice for designing websites for an international audience Cite the cultural, legal, and other challenges to implementing international information systems List and explain the phases in decision making Articulate the difference between structured and unstructured decision making Describe the typical software components that decision support systems and expert systems comprise Give examples of how decision support systems and expert systems are used in various domains Describe the typical elements and uses of geographic
  • 4. information systems List the benefits and risks of automated decision making © Cengage Learning 2015 1 1 Explain why multinational corporations must use global information systems Provide elementary advice for designing websites for an international audience Cite the cultural, legal, and other challenges to implementing international information systems List and explain the phases in decision making Articulate the difference between structured and unstructured decision making Describe the typical software components that decision support systems and expert systems comprise Give examples of how decision support systems and expert systems are used in various domains Describe the typical elements and uses of geographic information systems List the benefits and risks of automated decision making Multinational Organizations An increasing number of corporations are becoming multinational Global information system: a system that serves organizations in multiple countries Used by multinational corporations Overseas operations must abide by local laws, yet be sensitive to local cultures and standards © Cengage Learning 2015
  • 5. 2 2 An increasing number of corporations are becoming multinational A global information system is a system that serves organizations in multiple countries These information systems are used by multinational corporations Overseas operations must abide by local laws, yet be sensitive to local cultures and standards The Web and International commerce. The web has become an important vehicle for B2B and B2C commerce The ratio of non-English speakers to English speakers on the web is growing. Over 70 percent of Internet users reside in non- English speaking countries Internet opens enormous global opportunities Chinese market is expected to be the largest in the future The web offers opportunities to increase revenue and to save on costs Online manuals replace paper documents Web sites and documentation are presented in many languages Global businesses must be sensitive to local audiences Accommodate languages other than English Globalization is designing global sites to cater to local needs and preferences Example: McDonald’s menu changes to appeal to local palates © Cengage Learning 2015 3 Figure 9.3 Imperatives to consider when designing websites for an international audience
  • 6. © Cengage Learning 2015 Imperatives to consider when designing websites for an international audience Plan for an international audience Learn cultural preferences, convention differences, and legal differences, Tailor local sites to the local people’s preferences, what they buy and how they pay. Translate languages for local audience. Make sure a human translates, or that a person reviews automated translations. Ensure that all visitors are offered the same level of service. Do not let any visitor feel less important than other visitors. Avoid cultural imperialism. Give the local audience a homey experience. International companies must “think globally, act locally” Acting locally means being sensitive to regional customs and language nuances Control must be decentralized Strategic planning should be global, but can be followed with a local flavor 3 Challenges of Global Information Systems Global information systems face challenges such as: Technological barriers Regulations and tariffs Electronic payment mechanisms Different languages and cultures Economic and political considerations Different measurement and notation standards Legal barriers
  • 7. Different time zones © Cengage Learning 2015 4 4 Global information systems face challenges such as: Technological barriers Regulations and tariffs Electronic payment mechanisms Different languages and cultures Economic and political considerations Different measurement and notation standards Legal barriers Different time zones Technological Challenges Not all countries have adequate information technology infrastructure to allow companies to build an international IS Broadband communication lines are needed to support today’s graphics-rich webpages Companies can offer two versions of their websites to compensate for slower bandwidth Language is another technological challenge Eight-bit byte code is not sufficient for languages with large character sets Unicode allows for 65,536 characters Must coordinate with databases and applications Telephone number and postal code formats are different in different countries Regulations and Tarrifs Countries have different import regulations and tariffs Executives may be reluctant because of hassles of learning the laws, taxes, tariffs, and regulations of other countries Companies must comply with the laws of destination countries
  • 8. NextLinx software helps importers and exporters using web commerce Differences in Payment Mechanisms Easy payment for online purchases is expected Credit cards are the preferred payment method in North America Not all countries have adopted this preference High level of stolen credit cards in Eastern Europe Europeans prefer debit cards Most Japanese reluctant to use credit cards Language Differences International parties must agree on a common language for communication Data might not be transmittable internationally in real time because it must first be translated English is considered the de facto international language Companies in the forefront of web-based e-commerce translate their original websites into local languages Cultural Differences People from different countries vary in their: Tastes Gestures Preferred colors Treatment of people of certain gender or age Attitudes about work Opinions about ethical issues Conservative groups in other countries may dislike the “Americanization” of their cultures Web designers must be sensitive to cultural differences Conflicting Economic, Scientific, and Security Interests
  • 9. Corporate management’s goal is to seize a large market share and maximize organization profits National government’s goal is to protect its economic, scientific, and security interests Scientific information is an important national resource as well as a great source of income for foreign corporations Occasionally interests conflict © Cengage Learning 2015 5 5 Corporate management’s goal is to seize a large market share and maximize organization profits National government’s goal is to protect its economic, scientific, and security interests Scientific information is an important national resource as well as a great source of income for foreign corporations Occasionally interests conflict Weapons manufacturers have technical drawings that are valuable to both the company and the security of country Governments may not allow the exchange of weapon designs U.S. Customs and Border Protection (CBP) strictly regulates software applications and technologies that present potential danger May be used against the U.S. in times of warfare or in acts of terrorism Countries treat trade secrets, patents, and copyrights differently May hinder the transfer of documents to certain divisions of a multinational corporation Intellectual property is tightly protected in the U.S. and Western Europe, but less so in other countries Political challenges Information is power Some countries oppose the policy of free access to information
  • 10. as a threat to their sovereignty Viewed as an opportunity for other nations control indigenous resources Governments may require that only open source software is used in government operations Global corporations must ensure compatibility with software adopted by local governments Some governments limit how the Internet is used Free speech is not a universal principle Web content restrictions are common in many countries Global companies must obey local laws May require collaboration with the government, resulting in arrest and prosecution of local users Ethical dilemma: how to balance the business interest with moral principles, and not help dictatorships violate civil rights Different Standards Differences in standards must be considered when integrating ISs internationally Records may be incompatible United States uses the English system of weights and measures; the rest of the world uses the metric system NASA lost a $125 million Mars orbiter mission due to an error in a data transfer, caused by a mismatch between U.S. and metric measurements © Cengage Learning 2015 6 6 Differences in standards must be considered when integrating ISs internationally Records may be incompatible United States uses the English system of weights and measures;
  • 11. the rest of the world uses the metric system NASA lost a $125 million Mars orbiter mission due to an error in a data transfer, caused by a mismatch between U.S. and metric measurements Different standards also exist for: Dates Times Temperatures Addresses United States uses month/day/year format; the rest of the world uses day/month/year Companies must adapt their ISs to changing formal or de facto standards European Article Number (EAN): bar code that includes an extra number to identify country Universal Product Code (UPC): American standard without the last extra number American Uniform Code Council (UCC): promoted the use of European standard U.S. companies had to adapt ISs to recognize, record, and process the new bar code standard UCC is now trying to expand product codes to the 14-digit Global Trade Item Numbers (GTINs) GTINs support global supply chains by allowing many more product ID values The major push to use RFID tags in the U.S. could expand to the rest of the world Legal Barriers Countries have different laws that affect global business in general, and e-commerce in particular Differing laws pose challenges to: International transfer of data Free speech Location of legal proceedings when disputes arise
  • 12. © Cengage Learning 2015 7 7 Countries have different laws that affect global business in general, and e-commerce in particular Differing laws pose challenges to: International transfer of data Free speech Location of legal proceedings when disputes arise Privacy laws Respect for privacy in international business is an unresolved challenge The majority of democratic nations try to protect individual privacy Laws reflect a difference in approach to issue of privacy European Union practices conflicting with U.S. practices Personal data Collected only for specified purposes Cannot be processed without the unambiguous consent of the subject Collecting organizations must identify themselves Subjects have the right to know to whom their data is disclosed Subjects may object to processing of their personal data American companies are busy collecting, buying, and selling data for marketing and decision making Discrepancy between the European and American approaches prevents unrestricted flow of information EU directive is only a framework EU countries may have more restrictive laws Other applicable laws affecting online business include those that address: Free speech What can or cannot be displayed online Gambling
  • 13. Auctioning Sale of alcoholic beverages and drugs Time zone differences Different global regions require policies for work and information systems Teleconferencing systems must be available most of the day, sometimes 24 hours per day Allows employees from different time zones to discuss problems that need immediate resolution Teams in support centers may work shifts to accommodate clients worldwide Managers must be aware of incorrect time stamping in different locales Systems at both locations can be designed to record local times of both locations, or record a single time (that of the company headquarters_ Decision Support An organization’s success depends on the decisions made by employees Computer-based systems are beneficial for: Large amounts of information Intensive processing Types of decision support aids Decision support systems (DSSs) Expert systems (ESs) Applications today may combine both types Provide single optimal solution or set of solutions © Cengage Learning 2015 8 8 An organization’s success depends on the decisions made by employees
  • 14. Computer-based systems are beneficial for: Large amounts of information Intensive processing Types of decision support aids Decision support systems (DSSs) Expert systems (ESs) Applications today may combine both types Provide single optimal solution or set of s Decision support modules today may be part of larger enterprise applications Also called business analysis tools or business intelligence applications Designed to streamline the decision-making process Data warehouses and online processing (OLAP) technologies have enhanced the ability to use data for decision making A decision must be made whenever more than one possible action is available It can be difficult to make decisions when many reasonable alternatives are present In business, there may be dozens, hundreds, or even millions of different courses of actions available to achieve a desired result Decision making is a three-phase process Intelligence phase: collect facts, beliefs, and ideas Design phase: design the method for considering the collected data, to reduce the alternatives to a manageable number Choice phase: select an alternative from the remaining choices Businesses collect data internally and externally A model is an abstraction of reality, such as: Tabletop representations of buildings Maps: represent a geographical area Mathematical equations representing relationships among variables Managers either choose universal models or design their own
  • 15. models A structured problem is one in which an optimal solution can be reached through a single set of steps An Algorithm is a sequence of steps to complete a task Parameters are categories of data that are considered in an algorithm Most mathematical and physical problems are structured, but many business problems are not An Unstructured problem is one for which there is no algorithm that leads to an optimal solution May not be enough information May be a large number of potential factors Unstructuredness is closely related to uncertainty Examples of unstructured problems Weather prediction Stock market prediction A Semistructured problem is one that is neither fully structured nor totally unstructured Professionals encounter semistructured problems almost daily in many different industries The goal is to choose the one alternative that will bring about the best outcome Decision Support Systems Decision support system (DSS): a computer-based information system designed to help knowledge workers select one of many alternative solutions to a problem DSSs can help corporations by: Increasing market share Reducing costs Increasing profitability Enhancing product quality © Cengage Learning 2015
  • 16. 9 9 Decision support system (DSS) is a computer-based information system designed to help knowledge workers select one of many alternative solutions to a problem DSSs can help corporations by: Increasing market share, Reducing costs, Increasing profitability, And Enhancing product quality Most DSSs consist of three components, A Data management module, A Model management module, And aDialog module These components help users to Enter a request in a convenient manner, Search vast amounts of data, Process the data through desired models, And View the results in a desired format © Cengage Learning 2015 10 Figure 10.3 The components of a DSS and their interaction © Cengage Learning 2015 A Data management module is a database or data warehouse that provides data for the intelligence phase It enables access to data And provides a means to select data by specified criteria Many DSSs are intertwined with other organizational systems, including data warehouses, data marts, and ERP systems
  • 17. A Model management module turns data into useful information A fixed model, a dynamically modified model, or a collection of models may be offered A dynamically modified model is automatically adjusted based on changing relationships among variables Models are used to predict output They are often based on mathematical research Patterns or models may be unique to a certain a industry, such as: ATM placement, Truck route planning, Airline ticket pricing, And Car rental pricing A linear regression model is a general statistical model that is often to find a best-fit linear relationship between two variables A linear relationship can be translated into a program in a DSS The actual data points rarely lie directly on the regression line, illustrating the uncertainty Regression models are not necessarily always straight lines; they may be curves Models often describe relationships between more than two variables Some DSSs simulate physical environments A Dialog module is part of a DSS that allows user interaction with the program It prompts the user to select a model and data to process It allows the user to change parameters and view the results of the changes And it displays the results of the analysis in textual, tabular, or graphical format Many DSSs are available through the Internet 10 © Cengage Learning 2015
  • 18. 11 Figure 10.5 A DSS can help marketers make decisions on how to spend promotion resources © Cengage Learning 2015 A Sensitivity analysis is conducted to test the degree to which the total profit grows or shrinks if one or more of the factors is increased or decreased The results indicate the relative sensitivity of the profit to the changes If a small change in a parameter causes a significant change to the outcome, the sensitivity of the outcome to the parameter is high If the outcome is affected very little by a large change in a parameter, the sensitivity of the outcome to the parameter is low Sensitivity analysis is called what-if analysis a DSS can perform sensitivity analysis on multiple parameters simultaneously DSSs can be used on demand or integrated into a scheme that enforces corporate policy DSSs help maintain standard criteria in decision making throughout the organization Automated decision production is becoming very popular The only labor required is for data entry DSSs are used in many industries Book sales and food production and retailing: to forecast the number of patrons, the amount of ingredients to purchase, etc. Tax planning: tax helper applications such as TurboTax and TaxCut Web site planning and adjustment: to analyze shopper behavior, and to design Web sites based on page usage DSSs are used in many industries (cont'd.)
  • 19. Yield management (revenue management): to maximize revenue from airline trips or lodging Financial services: to determine loan amounts, and to qualify customers based on credit history Benefits selection: to allow employees to make decisions about their benefits 11 © Cengage Learning 2015 12 Figure 10.6 Components of an expert system; numbers indicate the order of processes © Cengage Learning 2015 An Expert system (ES) emulates the knowledge of a human expert Solves problems Makes decisions in a relatively narrow domain A Domain a specific area of knowledge The purpose is to replicate the unstructured and undocumented knowledge of experts, and make that expertise available to novices A Neural network is a program that emulates how the human brain works ESs are part of artificial intelligence (AI) research AI focuses on methods and technologies that emulate how humans learn and solve problems A Knowledge base is used by an ES A collection of facts and relationships among them populate the knowledge base An ES uses an inference engine that is built as a series of IF- THEN rules Inference engine: software that combines data input by the user
  • 20. with the data relationships in the knowledge base Neural networks: mimic the way a human brain learns Used by more sophisticated ESs Constructed with a set of rules, but then it refines itself based on its decision success rate Beneficial in detecting fraudulent transactions and claims Intelligent agent: software that is dormant until it detects a certain event, and then performs a prescribed action Case-based reasoning: methodology of solving a new problem established on the solutions of similar problems Applied in case-based ESs Especially useful in medical decision making 12 © Cengage Learning 2015 13 Figure 10.7 IF-THEN rules, different combinations of conditions lead to different conclusions © Cengage Learning 2015 ESs have been implemented in many industries Medical diagnosis Help doctors with the diagnosis of symptoms and treatment advice Can help enhance the accuracy of Alzheimer’s disease diagnosis Medical management Help discern patients’ tests and treatments Assist with health information management Implemented in many industries (cont'd.) Credit evaluation Used to approve credit card charges Used to analyze financial reports submitted with credit applications
  • 21. Local loan officers may periodically update the knowledge base adjusting it for current loan policy Detection of insider securities trading Helps prevent trading of stocks based on private information by analyzing the stock’s history Implemented in many industries (cont'd.) Detection of common metals Helps nonexperts identify common metals and alloys outside laboratories Based on results of simple chemical tests and other information available at the scene Diagnosis and prediction of mechanical failure Allows vehicle to diagnose its own mechanical problems Provides alerts when approaching traffic jam, navigation assistance, Internet service, etc. 13 Group Decision Support Systems Group decision support system (GDSS) Also called a group intelligence system, collaborative system, or group system Facilitates the contribution of ideas, brainstorming, and choosing promising solutions Allow participants to define a problem, contribute ideas, then vote on the decision Help structure the decision-making process while allowing participants to remain anonymous © Cengage Learning 2015 14 Group decision support system (GDSS) Also called a group intelligence system, collaborative system, or group system facilitates the contribution of ideas,
  • 22. brainstorming, and choosing promising solutions GDSSs allow participants to define a problem, contribute ideas, then vote on the decision GDSSs help structure the decision-making process while allowing participants to remain anonymous 14 Geographic Information Systems (GISs) GIS: aid for map-related decisions Processes location data GISs are used to help: Find shortest paths for deliveries or school bus routes City planning for police coverage and health care resources Find oil drilling locations Locate suitable outdoor recreation sites Decide placement of ATMs © Cengage Learning 2015 15 15 A Geographic Information System GIS is an aid for map-related decisions A GIS processes location data GISs are used to help find the shortest paths for deliveries or school bus routes They are used in city planning for police coverage and health care resources GISs are used to find oil drilling locations and to locate suitable outdoor recreation sites They are also used to decide placement of ATMs GIS components are a Database of quantitative and qualitative data, a Database of maps, a Program that displays information on maps
  • 23. Web technology helps promote the use of GISs Examples are Google Earth, Mapquest, Yahoo Maps HTML and XML support the presentation of marked maps GISs are used to aid in sales and government work Summary Companies conducting web-based business must accommodate non-English speaking audiences Companies must tailor to local preferences Organizations must be aware of cultural differences and payment preferences Businesses must be aware of tariff and legal issues Linguistic, cultural, economic, and political challenges must be addressed © Cengage Learning 2015 16 16 Companies conducting web-based business must accommodate non-English speaking audiences Companies must tailor to local preferences Organizations must be aware of cultural differences and payment preferences Businesses must be aware of tariff and legal issues Linguistic, cultural, economic, and political challenges must be addressed Laws governing the collection and manipulation of personal data in the U.S. and European Union are different The U.S. and EU have incompatible data privacy laws, which restrict the flow of personal data between the U.S. and EU
  • 24. Decision aids include decision support systems, expert systems, group decision support systems, geographic information systems, etc. Three major phases of decision-making process: intelligence, design, and choice Types of problems: spectrum from unstructured to structured Most DSSs have three components: data management module, model management module, and dialog module Sensitivity analysis measures how parameters affect results, and allow “what if” analysis Spreadsheets allow users to create DSSs without expertise Expert systems are designed to emulate the knowledge of an expert, using artificial intelligence techniques Neural network software may be integrated into an expert system to emulate learning Expert systems are used in narrow domains where decisions are unstructured Geographic information systems are used when decisions involve locations and routes Computerized decision aids may overlook important circumstances, leading to inaccuracies or unfairness to individuals