Chapter PreviewChapter PreviewIn 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.
Case 1:Case 1: Reverse Auction Saves University Money Reverse Auction Saves University Money
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 2:Case 2: Is the Third Time the Charm for the IRS Is the Third Time the Charm for the IRS
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.
Case 2:Case 2: Is the Third Time the Charm for the IRS Is the Third Time the Charm for the IRS
◦ 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?
Organizations Have High Expectations of Organizations Have High Expectations of Their Information SystemsTheir Information SystemsFast, accurate processing of business
transactions.Storage, retrieval, analysis, and data sharing to◦ Increase communication◦ Reduce overload◦ Span organizational boundaries◦ Support and improve decision making.
Case 3: “Bricks and Clicks” Case 3: “Bricks and Clicks” are Proving to be a Good Fitare Proving to be a Good Fit
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.
Case 3: “Bricks and Clicks” Case 3: “Bricks and Clicks” are Proving to be a Good Fitare Proving to be a Good Fit
◦ 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.
Case 3: “Bricks and Clicks” Case 3: “Bricks and Clicks” are Proving to be a Good Fitare Proving to be a Good Fit◦ 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?
Case 4: Business Intelligence at L. L. BeanCase 4: Business Intelligence at L. L. Bean
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.
Case 4: Business Intelligence at L. L. BeanCase 4: Business Intelligence at L. L. Bean◦ 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?
