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Lecture 1

Business Objectives of Information Systems
Pg 49 Operational Excellence
Businesses continuously seek to improve the efficiency of their operations in order to achieve higher
profitability. E.g Walmart takes advantage of information systems technology to monitor the
availability and demand of the products, preventing any unavailability of products on the shelf.
New products, Services and Business models
Information systems technologies are a major enabling tool for firms to create new products and
services, as well as entirely new business models. A business model describes how a company
produces, delivers, and sells a product or service to create wealth. E.g introduction of e-commerce
Customer and Supplier Intimacy
Creating better network and relationship with customers, improving service level -> better profits.
Building relationship with suppliers causes suppliers to provide better vital inputs -> lower costs.
Improved decisions making
Over or underproduction of goods and services, misallocation of resources, and poor response times
is common without IT. These poor outcomes raise costs and lose customers. Ability to make use of
real-time data to make decisions.
Competitive Advantage
It is the results of achieving the business objectives of IT. Doing better things than other
organisations lead to more profits and sales.
In order to survive in high competitive markets, organisations should keep up with latest IT trends to
provide better services. E.g. Introduction of ATMs leads organisations to set up ATMs in retail
services to keep up with it.
The Interdependence between Organizations and Information Technology

The basic point of this graphic is that in order to achieve its business objectives, a firm will need a
significant investment in IT. Going the other direction (from right to left), having a significant IT
platform can lead to changes in business objectives and strategies.
Emphasize the two-way nature of this relationship. Businesses rely on information systems to help
them achieve their goals; a business without adequate information systems will inevitably fall short.

retrieving. Computer programs. . increase firm profitability. Data management technology: consists of the software governing the organization of data on physical storage media. processing. and create new products. Software: detailed.But information systems are also products of the businesses that use them. process. enhance organizational performance. Data: are streams of raw facts representing events occurring in organizations or the physical environment before they have been organized and arranged into a form that people can understand and use Computers provide the equipment for storing and processing information. store. and distributing information that managers can use to improve decision making. visualize complex subjects. preprogramed instructions that control and coordinate the computer hardware components in an information system. transforming. Private intranets extended to authorized users outside the organization are called extranets. or software. and distribute information to support decision making and control in an organization. formatting. An information system can be defined technically as a set of interrelated components that collect (or retrieve). The World Wide Web is a service provided by the Internet that uses universally accepted standards for storing. Networking and telecommunication technologies: consisting of both physical devices and software. links the various pieces of hardware and transfers data from one physical location to another. Information: we mean data that have been shaped into a form that is meaningful and useful to human beings. Information technology (IT) consists of all the hardware and software that a firm needs to use in order to achieve its business objectives What is Information System?     Hardware: physical equipment used for input. and. Internal corporate networks based on Internet technology are called intranets. information systems are part of a series of value-adding activities for acquiring. and displaying information in a page format on the Internet From a business perspective. Businesses shape their information systems and information systems shape businesses. Information systems may also help managers and workers analyze problems. are sets of operating instructions that direct and control computer processing. and output activities in an information system. ultimately.

IT standards services that provide the firm and its business units with policies that determine which information technology will be used. supply chain management. But IT infrastructure is also a set of firm wide services budgeted by management and comprising both human and technical capabilities.Management Management’s job is to make sense out of the many situations faced by organizations.g laptops. IT infrastructure includes investment in hardware. These services include the following: - - - Computing platforms used to provide computing services that connect employees. Management. and suppliers. manage accounting for the IT expenditure. Chapter 5 IT-infrastructure Information technology (IT) infrastructure defined as the shared technology resources that provide the platform for the firm’s specific information system applications. voice. IT research and development services that provide the firm with research on potential future IT projects and investments that could help the firm differentiate itself in the marketplace . and formulate action plans to solve organizational problems. IT infrastructure consists of a set of physical devices and software applications that are required to operate the entire enterprise. and provide project management services. when. make decisions. mobile phones Telecommunications services that provide data. and how IT education services that provide training in system use to employees and offer managers training in how to plan for and manage IT investments. and services—such as consulting. telecommunications. customers. Data management services that store and manage corporate data and provide capabilities for analysing the data Application software services that provide enterprise-wide capabilities such as enterprise resource planning. and suppliers into a coherent digital environment.Dimensions of information systems Organisations. software. whereas the lower levels consist of operational personnel. customer relationship management. Physical facilities management services that develop and manage the physical installations required for computing. Organisation’s values and culture can affect business processes and objectives. and training—that are shared across the entire firm or across entire business units in the firm. and knowledge management systems that are shared by all business units. coordinate with the business units for IT services. Information technology can play a powerful role in helping managers design and deliver new products and services and redirecting and redesigning their organizations. The upper levels of the hierarchy consist of managerial. and video connectivity to employees. education. and technical employees. professional. customers. E.Organizations have a structure that is composed of different levels and specialties. and data management services IT management services that plan and develop the infrastructure.

Evolution of infrastructure 5 eras of IT infrastructure evolution General-purpose Mainframe computer (1959 to present) - powerful operating system that could provide time sharing. the Wintel PC computer (Windows operating system software on a computer with an Intel microprocessor) became the standard desktop personal computer.g MS word 1990s made it possible to link them into networks Client/Server Era (1983 to Present) . multitasking. a text-based command language --> the Microsoft Windows operating system. and virtual memory in more advanced models support thousands of online remote terminals connected to the centralized mainframe using proprietary communication protocols and proprietary data lines 1965: less expensive Digital Equipment Corporation’s minicomputers introduced  decentralised computing Personal computer era (1981 to present) - - DOS operating system. Proliferation of PCs in the 1980s and early 1990s launched a spate of personal desktop productivity software tools E.

Thousands or even hundreds of thousands computers are located in cloud data centres Provide computing power.- - - - Desktop or laptop computers called clients are networked to powerful server computers that provide the client computers with a variety of services and capabilities Computer processing work is split between these two types of machines. such as enterprise applications and Web services Cloud and Mobile Computing - a model of computing that provides access to a shared pool of computing resources (computers. .g Google (drive. whereas the server typically processes and stores shared data. inexpensive machines that cost much less than minicomputers or centralized mainframe systems Enterprise Computing Era (1992 to Present) - Transmission Control Protocol/Internet Protocol (TCP/IP) networking standard to tie their disparate networks together Using software to links different pieces of computer hardware and smaller networks into an enterprise-wide network so that information can flow freely across the organization and between the firm and other organizations. usually based on inexpensive chips and often using multiple processors in a single computer box. depending on the kind of service being requested. The client is the user point of entry. Moore’s law and micro processing power (1) The power of microprocessors doubles every 18 months (2) Computing power doubles every 18 months (3) The price of computing falls by half every 18 months Exponential growth in the number of transistors and the power of processors coupled with an exponential decline in computing costs is likely to continue. [client  internet  web server  application server  sales / production / accounting / HR  data] Client/server computing enables businesses to distribute computing work across a series of smaller. data storage. E. Two-tiered client/server architecture: client <--> server Multi-tier (often called N-tier) client/server architectures in which the work of the entire network is balanced over several different levels of servers. and services). often the Internet Can be accessed on an as-needed basis from any connected device and location. applications. 2. docs) Technology drivers of infrastructure evolution 1. over a network. Chip manufacturers continue to miniaturize components. Law of mass digital storage The amount of digital information is roughly doubling every year. storage. or manages network activities The term “server” refers to both the software application and the physical computer on which the network software runs. serves up Web pages. and high-speed Internet connections to firms that want to maintain their IT infrastructures remotely.

Without these economies of scale. and mobile computing devices. Declining communication costs and the internet Rapid decline in the costs of communication and the exponential growth in the size of the internet. To take advantage of the business value associated with the Internet. utilization of communication and computing facilities explodes. 5. the value of the entire system grows exponentially and continues to grow forever as members increase. Metcalfe’s law and network economics The value or power of a network grows exponentially as a function of the number of network members. In telecommunications. Widespread adoption of Unix as the enterprise server operating system of choice made possible the replacement of proprietary and expensive mainframe infrastructures. and the TCP/IP standard enabled these LANs to be connected into firm-wide networks. Technology standards unleash powerful economies of scale and result in price declines as manufacturers focus on the products built to a single standard. As communication costs fall toward a very small number and approach 0. and greatly expand the power of their client/server networks. . which rapidly multiply the number of actual and potential links among network members. As the number of members in a network grows linearly. the cost of storing digital information is falling at an exponential rate of 100 percent a year. desktop clients. including wireless connectivity. and ultimately. see Chapter 7). to the Internet. The Wintel PC with the Windows operating system and Microsoft Office desktop productivity applications became the standard desktop and mobile client computing platform. Standards and network effects Technology standards are specifications that establish the compatibility of products and the ability to communicate in a network. the Ethernet standard enabled PCs to connect together in small local area networks (LANs.Fortunately. computing of any sort would be far more expensive than is currently the case. The increasing returns to scale that network members receive as more and more people join the network. Demand for information technology has been driven by the social and business value of digital networks. 4. firms must greatly expand their Internet connections. 3.

each built to solve a specific type of problem. Discussion  Does a dual-core computer perform at twice the speed of a single-core computer? (Hint: Reading . . It is better to build different cores. One problem is that not all computing tasks can be split among processors. 7 Infrastructure components These components constitute investments that must be coordinated with one another to provide the firm with a coherent infrastructure. Cores share the same I/O and memory (their speed matters).Chip wars go to the core)  The more core the merrier? (Hint: Reading – Multicore) The speed of buses and I/O are likely to be the bottleneck.

reliable. They take up less space than traditional box-based servers. Programs are not stored on the user’s PC but are used over the Internet and accessed through the Chrome Web browser. mobile computing devices such as netbooks and laptops but not including iPhones or BlackBerrys) and server machines. Also included in this category is middleware software supplied by vendors such as BEA for achieving firm wide integration by linking the firm’s existing application systems. Oracle. Google’s Chrome OS provides a lightweight operating system for cloud computing using netbooks. The mainframe market has actually grown steadily over the last decade. The client machines use primarily Intel or AMD microprocessors. Operating system platforms UNIX and Linux are scalable. Blade servers. The leading database software providers are IBM (DB2). User data resides on servers across the Internet 3. 4. are ultrathin computers consisting of a circuit board with processors. although the number of providers has dwindled to one: IBM. and much less expensive than mainframe operating systems. and network connections that are stored in racks. which we discussed in the chapter-opening case. and Sybase (Adaptive Server Enterprise). Data management and storage Responsible for organizing and managing the firm’s data so that they can be efficiently accessed and used. 2. Secondary storage may be provided by a hard drive in each blade server or by external mass-storage drives.1. . Microsoft (SQL Server). Enterprise software applications The largest providers of enterprise application software are SAP and Oracle. IBM has also repurposed its mainframe systems so they can be used as giant servers for massive enterprise networks and corporate Web sites. memory. Computer hardware platforms Includes client machines (desktop PCs.

Leading consulting firms providing this expertise include Accenture. and Wipro Technologies.In addition to disk arrays and tape libraries. and must relate to. Software . This market is exploding with new providers of cellular wireless. reducing the number of server computers by increasing the size and power of each. Infosys. A Web hosting service maintains a large Web server. 6. and software integration. or series of servers. so-called legacy systems and ensuring the new elements of the infrastructure work with one another. Storage area networks (SANs) connect multiple storage devices on a separate highspeed network dedicated to storage. HP Enterprise Services. Software integration means ensuring the new infrastructure works with the firm’s older. Legacy systems are generally older transaction processing systems created for mainframe computers that continue to be used to avoid the high cost of replacing or redesigning them. Replacing these systems is cost prohibitive and generally not necessary if these older systems can be integrated into a contemporary infrastructure. 7. wireless services. the firm’s general networking infrastructure and hardware and software platforms. wide area networking. and provides fee-paying subscribers with space to maintain their Web sites. high-speed Internet. Consulting and system integration services Implementing a new infrastructure requires significant changes in business processes and procedures. IBM Global Services. The Internet revolution created a veritable explosion in server computers. large firms are turning to network-based storage technologies. and Internet access. with many firms collecting thousands of small servers to run their Internet operations. training and education. Internet platforms Internet platforms overlap with. and Internet telephone services. 5. Networking/Telecommunications platforms Telecommunications platforms are typically provided by telecommunications/telephone services companies that offer voice and data connectivity. Since then there has been a steady push toward server consolidation. The SAN creates a large central pool of storage that can be rapidly accessed and shared by multiple servers.

A public cloud is maintained by an external service provider. and available to the general public.g Financial institutions and health Infrastructure providers Cloud computing has some drawbacks. or decreased to meet changing user demand.g IBM offers a Smart Business Application Development & Test service for software development and testing on the IBM Cloud 3) Cloud software as service: Customers use software hosted by the vendor on the vendor’s hardware and delivered over a network. and applications as a set of virtualized services that are shared by users inside a company. • Rapid elasticity: Computing resources can be rapidly provisioned. • Measured service: Charges for cloud resources are based on amount of resources actually used. and other computing resources from cloud service providers to run their information systems.Contemporary hardware platform trends Cloud Computing Essential characteristics • On-demand self-service: Individuals can obtain computing capabilities such as server time or network storage on their own. data. A multicore processor is an integrated circuit to which two or more processor cores have been attached for enhanced performance. reduced power consumption. Unless users make provisions for storing their data locally. . storage. Cloud computing consists of three different types of services: 1) Cloud infrastructure as service: Customers use processing. High performance and power saving processors Another way to reduce power requirements and hardware sprawl is to use more efficient and power-saving processors. increased. leading to data security issues. networks. Another limitation of cloud computing is the possibility of making users dependent on the cloud computing provider. Users access these applications from a Web browser. E. Leading examples are Google Apps. which provides common business applications online. • Ubiquitous network access: Individuals can use standard network and Internet devices. to access cloud resources. • Location independent resource pooling: Computing resources are pooled to serve multiple users. A private cloud is a proprietary network or a data center that ties together servers. networking. accessed through the Internet. The user generally does not know where the computing resources are located. storage. including mobile platforms. such as Amazon Web Services. and the data and software are maintained on the providers’ remote servers. 2) Cloud platform as services: Customers use infrastructure and programming tools hosted by the service provider to develop their own applications. with different virtual resources dynamically assigned according to user demand. E. the responsibility for data storage and control is in the hands of the provider. and more efficient simultaneous processing of multiple tasks.

Both Wikipedia and open source software tap on the wisdom of the masses to create something that is free and available to all. Java Virtual Machine that interprets Java programming code for that machine. and modify the source code much faster. processor-independent. Open source software is by definition not restricted to any specific operating system or hardware technology. distribute. because Linux works on all the major hardware platforms from mainframes to servers to clients. and integration.This technology enables two or more processing engines with reduced power requirements and heat dissipation to perform tasks faster than a resource-hungry chip with a single processing core. Linux Linux. Linux and open source software Open source software is software produced by a community of several hundred thousand programmers around the world. an operating system related to Unix. Software for the web: Java and Ajax Java is an operating system-independent. regardless of the specific microprocessor or operating system the device uses. Contemporary software platform trend 1. particularly Linux and the applications it supports. and with more reliable results. The Java platform has migrated into handheld devices etc. Thousands of programmers around the world working for no pay can read. object oriented programming language that has become the leading interactive environment for the Web. Open source software is free and can be modified by users. Java is being used for more complex e-commerce and e-business applications that require communication with an organization’s back-end transaction processing systems. At the enterprise level. Works derived from the original code must also be free. has profound implications for corporate software platforms: cost reduction. The rise of open source software. although most open source software is currently based on a Linux or Unix operating system. perfect. Linux is available in free versions downloadable from the Internet or in low-cost commercial versions that include tools and support from vendors such as Red Hat. 2. reliability and resilience. Ajax allows a client and server to exchange small pieces of data behind the scene so that an entire Web page does not have to be . netbooks. Ajaz (Asynchronous JavaScript and XML) is another Web development technique for creating interactive Web applications that prevents all of this inconvenience. than small teams of programmers working for a single software company. Linux applications are embedded in cell phones. smartphones. Java software is designed to run on any computer or computing device. and the software can be redistributed by the user without additional licensing. and consumer electronics.

reloaded each time the user requests a change. and finance to human resources. and cloud-based software services and tools. Enterprise application software vendors such as SAP and Oracle-PeopleSoft have developed powerful software packages that can support the primary business processes of a firm worldwide from warehousing. Services for delivering and providing access to software remotely as a Web-based service are now referred to as software as a service (SaaS). These large-scale enterprise software systems provide a single. the cost of switching to a competing mobile platform rises. integrated. Instead of buying and installing software programs. outsourcing custom application development to an external vendor. Software packages and Enterprise Software - - - A software package is a prewritten commercially available set of software programs that eliminates the need for a firm to write its own software programs for certain functions. on your computer. Apps are small pieces of software that run on the Internet. and can be accessed with an Internet connection and standard Web browser. Apps tie the customer to a specific hardware platform: As the user adds more and more apps to his or her mobile phone. with users paying either on a subscription or per-transaction basis. supply chain management. . Cloud-based software services and tools - - Cloud-based software and the data it uses are hosted on powerful servers in massive data centers. 4. or on your cell phone and are generally delivered over the Internet. which often operate offshore in low-wage areas of the world. such as payroll processing or order handling. Web mashups combine the capabilities of two or more online applications to create a kind of hybrid that provides more customer value than the original sources alone. Software outsourcing - Enables a firm to contract custom software development or maintenance of existing legacy programs to outside firms. worldwide software system for firms at a cost much less than they would pay if they developed it themselves. Ajax uses JavaScript programs downloaded to your client to maintain a near-continuous conversation with the server Mashups and Apps - Mashups refer to mix and match of software components to create own customized applications. subscribing companies rent the same functions from these services. customer relationship management. Software outsourcing and cloud services There are three external sources for software: software packages from a commercial software vendor.

and even utility and real estate costs for running and housing the technology. Companies could reduce the size of the information systems staff required to support their infrastructure if the firm .Management Issue 1. The total cost of ownership (TCO) model can be used to analyze these direct and indirect costs to help firms determine the actual cost of specific technology implementations. the cost of renting software adds up to more than purchasing and maintaining an application in-house. Making wise infrastructure investments If too much is spent on infrastructure. Total cost of ownership of technology asset The actual cost of owning technology resources includes the original cost of acquiring and installing hardware and software. Firms using cloud computing and SaaS will need to fashion new contractual arrangements with remote vendors to make sure that the hardware and software for critical applications are always available when needed and that they meet corporate standards for information security. but firms should evaluate this option carefully in light of security requirements and impact on business processes and work flows. In addition to switching to cloud services. and changes in business volume all impact computer workload and must be considered when planning hardware capacity. Firms using mobile computing and cloud computing platforms will require new policies and procedures for managing these platforms. Gains in productivity and efficiency from equipping employees with mobile computing devices must be balanced against increased costs from integrating these devices into the firm’s IT infrastructure and from providing technical support. technical support. important business services cannot be delivered and the firm’s competitors (who spent just the right amount) will outperform the underinvesting firm. and securing them and for controlling the data and applications that run on them. 3. these firms could reduce their TCO through greater centralization and standardization of their hardware and software resources. In some instances. Yet there may be benefits to using SaaS if it allows the company to focus on core business issues instead of technology challenges. maintenance. it lies idle and constitutes a drag on firm financial performance. If too little is spent. training. 4. Cloud computing may be a low-cost way to increase scalability and flexibility. updating. New applications. They will need to inventory all of their mobile devices in business use and develop policies and tools for tracking. mergers and acquisitions. It is up to business management to determine acceptable levels of computer response time and availability for the firm’s mission-critical systems to maintain the level of business performance they expect. Dealing with platform and technology change Scalability refers to the ability of a computer. Rent/buy: The decision either to purchase your own IT assets or rent them from external providers is typically called the rent-versus-buy decision. or system to expand to serve a large number of users without breaking down. as well as ongoing administration costs for hardware and software upgrades. product.

In a centralized infrastructure.” Explain the statement using the concepts of SaaS and TCO. That’ll be cheaper for all of us in the short run. the cost of renting software can add up to more than purchasing the application. “Adobe’s jump to the cloud and software-as-a-service is sure to attract other big companies. because companies can cut the direct cost of software acquisition. and I suspect it won’t be long until we hear about the next product that’s going from $100 to own to $10/month to rent. . Companies pay either on a subscription or per transaction basis.minimizes the number of different computer models and pieces of software that employees are allowed to use. and don’t need to buy and install software programs. However. Ans: SaaS is a software delivery model in which access to software is delivered remotely as a Webbased service. SaaS is a good choice in the short run. and companies like Adobe are desperately hoping we’ll be too stupid to bother thinking about the long run. systems can be administered from a central location and troubleshooting can be performed from that location. in the long run. Based on TCO analysis.