BulletPoints summary with the 8th edition of Information Systems Today: Managing in the Digital World by Valacich and Schneider

Super Short Summary on Information Systems Today: Managing in the Digital World

How to manage the digital world? - BulletPoints 1

• Open innovation entails opening up the innovation process to outside entities, including academia, individual innovators, research labs, other companies and suppliers.
• Globalization is the integration of economies over the world. Globalization leads to several changes, namely:
  • Economic changes
  • Technological changes
  • Cultural changes
• There are five trends in IT that have an effect on the shape of organizations and society:
  • Mobile
  • Social media
  • The internet of things
  • Cloud computing
  • Big data
• To collect, distribute and create useful data, information systems use information technology. Information technology includes telecommunications networks, software and hardware. Physical computer equipment is defined as hardware and the program that tells the computer what to do is the software. If two or more computer systems are linked with communications equipment then we speak of a telecommunications network.
• IS is the combination of people and information technology (IT) that create, collect, process, store and distribute data. IT includes hardware, software and telecommunication networks. IS personal has to have technical competency, business competency and systems competency. Information systems can be used to improve customer service, to increase productivity or profitability, to reach more customers or to gain competitive advantage. There are several different information systems that organizations can use. These can be classified into different categories. Some of the main categories are:
  • Transaction processing system (TPS)
  • Management information system
  • Office automation system
  • Decision support system
  • Business intelligence system
  • Electronic commerce system
• Information technology has a dual nature. It can effectively be used as a competitive weapon but it can also lead to negative outcomes. For instance, PlayStation created a Network to offer premium services, but it has been plagued with outages, outraging gamers. If the system would work as it was supposed to, it would have led to great advantages, but instead it remains an Achilles heel. Another example is FedEx, which is a global leading company in the transportation industry. If a transport company improves the transport by making use of an information system then this gives the company a competitive advantage over other companies namely.
• Computer ethics is defined as the moral issues and standards of conduct corresponding to the use of information systems. As the use of computers increased, several ethical issues have emerged. Especially concerns about privacy have emerged due to increased sharing of information and digitally duplicating. There are also issues related to intellectual property.
• In many businesses there are guidelines for the ethical use of computer systems and information. Also on universities and schools there are certain guidelines for the students how to use computers or software. Most organizations ask their people to act responsibly and legally. The Computer Ethics Institute is a study organization that studies the impact of information technology on ethics and public and corporate policy. This institute has several guidelines for how to use computers. These include things like do not use the computer to harm others, to steal, to look in someone's files.

How to gain competitive advantage? - BulletPoints 2

• Information systems can have strategic value to a company since much information is needed for an organization to support its business processes. Business processes are defined as the activities an organization performs to reach its business goals. These activities include the core activities to transform inputs into outputs as well as the supporting activities that make the core activities possible. Businesses can use several types of information systems for the different levels in the organization. Every level has different responsibilities and therefore needs different information systems. Different levels are operational, managerial and executive level.
• Information systems can be used for several reasons. Some reasons are:
  • Automating; doing things faster
  • Organizational learning; doing things better
  • Supporting strategy: doing things smarter
• When thinking about strategy, organizations first have to analyze competitive forces, to identify where in the market they should compete. Being the first to enter a market, gives the first-more advantage. Then an organization has to choose a generic strategy. For instance, it could use the low-cost leadership strategy. With this strategy a firm offers the best prices in its industry for its goods or services. Another strategy that an organization can pursue is the differentiation strategy. This strategy means that the firm will provide better products or services than its rivals. The differentiation can be focused on a particular segment of the consumers. An organization can also choose to provide products or services with reasonable good quality at competitive prices. Such a strategy is called the best-cost provider strategy. The third step includes identifying resources and capabilities. These can give a cost or differentiation advantage. Value creation occurs when an organization can provide products at a lower cost or with superior benefits for the customer. The last step in identifying how to compete, is the analyzing of the value chain. A value chain consists of activities that add value throughout the organization. IS plays a role in optimizing this chain.
• If a firm has an advantage over its rivals in the field of consumer attraction and defending against competitive forces than it is said to have a competitive advantage. There are several sources of competitive advantage. Some examples are:
  • Superior customer service
  • Best made product of the market
  • Lower costs than rivals
  • Brand name and reputation
  • First entrant of the market (first-mover advantage)
  • Technology benefits
  • Shorter developing time
• It is very difficult to determine the value of the IS infrastructure of a company. There are several different methods that can be used to determine the value. Four approaches are:
  • Economic value
    This is the value of the investment in terms of improving the infrastructure to increase profitability.
  • Architectural value
    This value measures if the investment can make use of the capabilities of the infrastructure to meet the business needs.
  • Operational value
    This value is derived from determining if the investment improves the business processing requirements.
  • Regulatory and compliance value
    This value is based on whether the investment is able to meet the requirements for security, control and integrity.
• A digital platform is a type of business model that creates a digital ecosystem where users can create and consume value, like Wikipedia. A shared collaborative economy is a system in which assets or services are shared between private individuals.
• Companies have to innovate in order to differentiate themselves. If a company upgrades its old systems to a new system this will only give him a short competitive advantage over its rivals. To sustain a competitive advantage the firm must keep investing in new technologies. However, it is impossible to keep track of all the new technologies. You have to focus on the ones that will make or break your success.
• Incremental innovation entails enhancing or upgrading existing products, services or processes, while radical or disruptive innovation entails using a markedly new or different technology to access new customer segments and provide benefits an replacement. Disruptive technologies are defined as new technologies, services or products that eventually will replace the existing dominant technology in the market. Such innovations lead to a lot of changes in the market. The innovation will be adapted in the industry and this will lead to improvements.
• If an organization wants to deploy a new information system then the processes, resources etc. of the firm need to be ready to adapt to the new system. The organization needs the following:
  • Process requirements: the people in the organization must be willing to change
  • Resource requirements: to make a change one must have the necessary human resources available
  • Risk tolerance requirements: the people of the organization must have tolerance for risk and uncertainty
• The innovation process consists of:
  • Organizing to make innovation choices: Making smart innovative choices is done best when starting early when identifying investors, displaying executive leadership, building a team of expert innovators and educating the organization.
  • Implementing the innovation process: The disruptive innovation cycle consists of choosing enabling/emerging technologies, matching technologies to (economic) opportunities, executing business innovation for growth and assessing value of the technology. Growth will be most successful when selecting technologies that have the biggest potential.
  • Thinking about investments in radical innovations: this consist of putting technology ahead of strategy and ahead of marketing, while taking into consideration that innovation is continuous.

How to manage infrastructure and services? - BulletPoints 3

• Infrastructure is defined as the technical structures that enable the provision of services. An infrastructure is needed in any area where people work or live. People are often not aware of all the components of the infrastructure since these are invisible for people. For instance, people often do not know where their water comes from. Both the people and businesses located in an area depend on the infrastructure of a city. Cities with a good infrastructure are more livable and attract more inhabitants and businesses.
• When making decisions and strategy, companies rely on information systems infrastructure. This infrastructure consists of software, hardware, storage, data centers and networking. Organizations depend on three capabilities supported by information systems to enable their business processes. These three capabilities are storage, transmission of data and processing. Almost all the business processes rely on an information system infrastructure. IS architecture entails the organization’s technologies, systems and processes that support an organization’s specific business processes and strategy.
• A database is defined as a collection of related data that is organized in such a way that it enables data searches, and is crucial to the operations and competitive advantage of a company. It is therefore important for the success of a company.
• Database management systems (DBMSs) are a type of software that enables an organization to more easily retrieve, store and analyze data. These systems are used by organizations in order to harness the power of the databases. How the data is gathered, stored and manipulated has a large effect on the success of organizations.
• Hardware are the computers that run the databases and applications that are necessary for analyzing the business and processing transactions. In a company there are many different business processes and therefore the company needs different types of computers to support these processes. The computers can be divided into classes. The five general classes are:
  • Supercomputer
  • Mainframe
  • Server
  • Workstation
  • Personal computer
• The storage of data is crucial for the success of the organization. Organizations store data for three purposes on the basis of life span, access speed and timeliness. These three purposes are:
  • Operational (like processing transactions)
  • Backup (short-term copies of organizational data)
  • Archival (long-term copies of organizational data)
• Each computer in a network has one of the three following roles:
  • Server: a computer makes it possible for the users of the network to access files, communications, printing and other services.
  • Client: a computer that uses the services that are provided by the server, like a PC, laptop, Outlook email.
  • Peer: a computer that can both provide and request a service.
• Computing networks are often classified into three types:
  • Personal area network (PAN)
  • Local area network (LAN)
  • Wide area network (WAN)
• In the cloud data is processed, stored and transmitted. A utility computing model is used by the cloud that enables companies to pay for computing resources only when they need them. These resources include processing, networking or data storage. The cloud computing model has several characteristics, which are:
  • On-demand self-service
  • Rapid elasticity
  • Broad network access
  • Resource pooling
  • Measured service
• Cloud computing has become popular but it also comes with some issues which the management must consider. The management must choose which services, data or applications it wants to move to the cloud. When evaluating different public cloud services the management must consider the following strategic issues:
  • Availability/reliability of the service
  • Scalability
  • Viability
  • Security, privacy and compliance
  • Diversity of offerings
  • Openness
  • Costs

What is e-commerce? - BulletPoints 4

• The electric commerce (EC) is defined as the exchange of services, goods and money supported by communication technologies, especially the Internet. The exchange occurs between firms, between firms and customers and between customers. The online market has become a major part of the global economy nowadays. Therefore, it has become a strategic necessity for companies to be on the Web.
  • Business-to-consumer (B2C) EC is defined as the transactions between consumers and businesses.
  • However, EC is also used by organizations to conduct business. They make use of business-to-business (B2B) EC, in which there are transactions between business and business partners like intermediaries or suppliers.
  • There are also transactions that do not involve firms. This EC is called consumer-to-consumer (C2C) EC, like eBay.
  • Another form is consumer-to-business (C2B) EC. With C2B consumers offer products, services and labor to companies.
• The mobile commerce (m-commerce) is defined as an electronic transaction or information interaction that is made using a wireless, mobile device and mobile networks. This transaction must lead to the transfer of real value in exchange for goods, services or information. The m-commerce trend is the result of the increased use of the mobile devices.
• E-government is defined as the use of information systems to provide organizations, citizens and other governmental agencies with information about public services and to enable interaction with the government. We can consider three different relationships when it comes to e-government:
  • Government-to-citizens (G2C) EC
    This includes interactions between local, state and federal governments and their citizens.
  • Government-to-business (G2B) EC
    This includes business relationships with all levels of government.
  • Government-to-government (G2G) EC
    This includes electronic interactions between different levels of a government within a country or interactions between countries.
• E-finance is the use of IS to provide financial services and markets. This includes E-banking and online brokerage. Online brokerage has seen a steady growth over the past several years. Fintech or financial technology refers to technologies that support activities in the financial sector.
• E-tailing is defined as the online sales of goods and services. There are several different strategies a company can use:
  • Brick-and-mortar business strategy
    The company decides to operate solely in the physical market. The business activities are approached in a traditional way by using physical locations like retail stores. Companies using this strategy do not sell their products or services online.
  • Click-and-mortar business strategy (also called bricks-and-clicks business strategy)
    Companies using this strategy choose to extend their traditional offline retail channels by using the Internet. So they use both EC and physical locations.
  • Click-only strategy
    These companies conduct business electronically in the cyberspace. They focus completely on EC and do not have physical locations.
• When the Web was introduced this created new ways of communication between companies and customers. The Web is not only used for communication between companies and their customers but also to facilitate transactions. This reduced the transaction costs of companies. The Internet has also led to new business and revenue models. Some of these models are:
  • Mass customization
  • Disintermediation
  • Group buying
  • New revenue and pricing models
  • Social commerce
• The Long Tail business model is centered around these three benefits in terms of product, place and price. This business model refers to catering to niche markets while also purely selling mainstream products. The distribution of the customers is a standard normal distribution. The mass market is reflected by the center of the distribution and the niche markets are reflected by the long tails.
• Companies design their websites such that the online experience of their customers is improved. The online needs of customers can be categorized in terms of three concepts. These concepts are:
  • Structural firmness
    This refers to the characteristics that influence the security and performance of the Web site.
  • Functional convenience
    This refers to the characteristics that make interacting with the Web site more convenient and easier.
  • Representational delight
    This refers to the characteristics that stimulate the senses of the customer. People are more likely to visit sites that look good.
• To measure the performance of Internet marketing you can use the click-through rate or the conversion rate. The click-through rate reflects the number of surfers who click on an ad divided by the number of times it was displayed. The conversion rate is the percentage of visitors who perform the desired action.
• The mobile commerce is defined as any electronic transaction or information interaction that is made using a wireless mobile device and mobile networks. The mobile commerce has grown substantially the past few years. The mobile commerce is primarily driven by the use of tablets. Tablets are often used as couch computers.
• Consumers use the Internet to sell things to other consumers, which is the C2C EC. The two most popular mechanisms that consumers use to trade with other consumers online are e-cautions and online classifields.
• Electronic auctions (e-auctions) provide a place where sellers can offer goods and products for sale and where buyers can bid on the items. This generally occurs on a one-to-one basis.
• Online classfields are C2C e-commerce enabled by web capabilities, like craigslist, but in contrast to e-auctions for example, no transaction is made online. Platform based C2C models such as Uber, allows people to lend, borrow and purchase a service.
• A crucial part for EC and m-commerce is that the transactions on Web sites are secure. Cryptocurrencies are virtual currencies that use encryption technology to secure transaction and to generate new units of the currency. Even though we think that people are critical when it comes to online transactions, there are many people that do not hesitate to reveal sensitive information to sites that are unknown or fraudulent. There are many people that have become a victim of fraudulent sites.
• Because people try to illegally share DRM-free content, there are often watermarks placed which can be traced back to the original purchaser. A digital watermark is defined as an electronic version of physical watermarks that are placed on paper currency to prevent copying.

How to use social media? - BulletPoints 5

• Social media has offered us a new set of capabilities for individuals and businesses. Social media can enhance organizational collaboration and communication.
• Organizations depend on effective collaboration and communication within and outside the boundaries of the organization. It is necessary that there is communication and collaboration between the different departments, business partners, external stakeholders and customers. Companies that operate globally need good communication and collaboration between the different locations or subsidiaries.
• Groupware is defined as a class of software that enables people to work together more effectively. We can distinguish groupware on the ground of whether there is synchronous or asynchronous collaboration and communication and whether groups work together face-to-face or distributed. Groupware supports several modes of group interaction:
  • Live meetings in electronic meeting facility
  • Electronic meeting facility as home base
  • Virtual teams
  • Synchronous distributed meetings
• Most large organizations use intranet-based employee portals. An intranet is a private network of an organization and the members of the organization can access the intranet with their Web browser. The member of the organization can communicate with each other via the intranet network. Because of the increased use of mobile devices it is necessary that the intranet can be accessible from any device. Because of this companies allow their employees to use virtual private networks (VPNs). The intranet allows employees to access information at any time (real-time access) which increases the efficiency and effectiveness of collaboration. The intranet makes updating, managing and distributing corporate information less complicated.
• A few years ago the Web was seen as a one-way medium with a strict restriction between content creators and content consumers. This Web was referred to as Web 1.0. Over the past few years there have been several technology changes which has led to new uses of the Web. People can now share information online and collaborate because of dynamic web applications. These applications are referred to as Web 2.0 applications in which the role of the users, the passive consumer, is shifted to the creator. Many organizations have incorporated Web 2.0 applications into their business models.
• The success of the applications depends on the network effect. The network effect means that the value of a network increases as more people use the network. Web sites can choose to make parts of their data or functionality available to other Web sites. This enables them to create dynamic and unique applications, or mashups, easily and quickly. A mashup is defined as an application that uses data from one or more service providers.
• Social media (or social software) are Web 2.0 applications that embody core Web 2.0 values like collaboration. Social media allows people to interact, communicate and collaborate in several ways. People nowadays share more personal information online than in the past.
• Enterprise 2.0 refers to companies using social media within the boundaries of the company or between the company and its customers or stakeholders. This can help a company when sharing organizational knowledge, increasing productivity of the business or connecting with customers. Web 3.0 might be centered around mobility or around context, with information filters based on contextual factors.
• The use of social media applications can enhance cooperation, communication, collaboration and connection. Companies can use several social media tools for communication, like:
  • Blogs
    Blogging is defined as creating an online text diary, consisting of chronological entries that include everything from the daily life of a person.
  • Microblogging tools
    Microblogging tools enable people to let other people know their thoughts. These tools are sometimes also referred to as social presence tools. The text updates of microblogging are relatively short compared to the text of blogs.
  • Instant messaging
    Instant messaging, also called online chat, enables people to have real-time written conversations.
  • Virtual worlds
    In virtual words there is real-time communication and people can use avatars for this communication.
• As stated before, social media can also enhance cooperation. Cooperation between organizations and individuals creates benefits for both. A company can use several cooperative social media applications:
  • Media sharing
  • Social bookmarking
  • Social cataloging
  • Tagging
  • Geotagging
  • Social Bookmarking
  • Social cataloging
• The Web has grown over the past years and the number of Web sites increased. This makes finding the relevant information more difficult. Social search is used to increase the relevance of search results by including content from blogs, social networks or microblogging.
• Once something is on the Internet it never disappears, the Internet does not forget. There are many organizations that have known public relations blunders. Companies must be able to react quickly and appropriate to issues that emerge in social media, since it has changed the way we interact and will continue to do so.

How can information systems be used to enhance business intelligence? - BulletPoints 6

• Business intelligence (BI) is defined as the use of information systems to collect and analyze data and information to improve making good business decisions. It refers to tools and techniques for analyzing and visualizing past data. The data and information can be both internal and external. Companies use business intelligence to gain or sustain a competitive advantage. Business processes occur at different organization levels and they are highly interconnected.
• Data-driven organizations are measurably more productive and profitable, can better respond to threats and opportunities and can better plan for the future. Modern organizations face challenges from external factors, but these factors can also create opportunities. Examples of such external factors are globalization, societal changes and governmental regulations. The business environment is very complex and business intelligence can help organizations to better make decisions in this environment. Business intelligence can help by collecting and analyzing internal and external data more effectively.
• With ever-increasing amounts of data, organizations need BI and advanced analytics to find meaningful patterns and relationships. If a company is able to effectively manage their data then this will increase the organizational performance of the company. However, many organizations are not able to harness the value of Big data. Big data is data which has high volume, velocity and variety. The trends in social and mobile field have led to an enormous amount of potential data. The large volume of data enables companies to make decisions that are based on more factors. However, managing and storing such large amount is a challenge for companies. Companies obtain data at a very high rate. Useful data can have several forms:
  • Structured data, like transaction data, which can be fitted in a spreadsheet or database
  • Semi-structured data, sensor data and like clickstreams
  • Unstructured data, like video and audio data
• To interact with the data in a database we can use database management systems (DBMs). DBMS is defined as a software application that enables you to store, organize, create and retrieve data from one or more databases. An example of a DBMS is Microsoft Access. Something that we can collect data about, like people, is called an entity. Entities are often referred to as tables, where each column is called an attribute and where each row is called a record.
• There are several different database types. A relational database management system (RDBMS) tries to balance efficiency of storage needs, ease of retrieval and other things by storing data in tables that are linked via relationships. Many organizations have used such a system to support their business processes. A management system that has become more popular is NoSQL. These databases can be distributed across multiple machines and can handle more types of data.
• For a company’s internet success, it is crucial to respond quickly to consumers. Therefore, it is necessary to have immediate automated responses when users make requests. This can be done using an online transaction processing (OLTP) system. The OLTP system gathers, transforms and updates data in the system.
• Master data is the data that is the most important to the business. Such data includes data about suppliers, customers, employees and inventory. Master data management is important because all the corporate levels of the company need to understand the master data.
• To extract information from existing data, companies often use information and knowledge discovery tools. Companies formulate hypotheses and business intelligence tools are used to test for relationships between data.
• Data mining enables us to find hidden predictive relationships in the data. Often data mining algorithms are used to find patterns and trends to develop prediction models. Algorithms are step-by-step procedures that are used in a computer program to make calculations or to perform other types of computer based processes.
• Business analytics increase business intelligence by using predictive modeling and statistical analysis to create explanatory models, identify trends and understand data. Business analytics helps us the understand why something is in a certain way and what it will be. It is for instance used to predict how people will react to a certain event.
• A special-purpose information system that is made to support the organizational decision making of a particular problem is called a decision support system (DSS). Such systems are often used by employees with a management function and improves human decision-making
• Knowledge management is defined as the process to obtain the greatest value from the knowledge assets of the organization. The knowledge assets are routines, principles, formulas, methods, underlying skills etc. They can be explicit or tacit.
• A knowledge management system contains a set of technology-based tools such as communication technologies and retrieval systems. The benefits of these systems are enhanced innovation, improved customer service, enhanced employee retention and improved performance of the organization.
• However, there are also challenges to knowledge management. These include focusing too much on technology, forgetting the main goal, dealing with too much knowledge and getting employee buy-in.
• Information visualization is another pillar of business intelligence applications. Visualization is defined as displaying complex relationships in the data by using graphical methods. This enables managers to get a quick view of the results and enhances business intelligence.

How to use enterprise information systems? - BulletPoints 7

• Generally, we see five different functional areas in a company:
  • Marketing
  • Manufacturing and operations
  • Accounting and finance
  • Supply chain management
  • Human resources
• A firm has to monitor its revenues and expense etc. When generating revenue there are several core business processes involved:
  • Order-to-cash
    The process that is associated with selling a service or product.
  • Procedure-to-pay
    All the processes associated with procuring goods from external sellers.
  • Make-to-stock and make-to-order
    The first is the process where goods are produced based on forecasts and stocked in warehouses. The second is the process where raw materials, accessories and subcomponents are procured based on forecasts but where the actual manufacturing only starts when the order is received.
• Companies want to optimize their core business processes to gain or sustain competitive advantage. The value chain is defined as the activities that add value to the end product. The activities of the value chain can support business processes.
• Core activities are the activities occur in the functional areas of the organization that process inputs and outputs. Core activities include:
  • Marketing and sales activities
  • Manufacturing and operations activities
  • Customer service activities
  • Inbound logistics activities
  • Outbound logistics activities
• Core activities can take place because of support activities. Support activities include:
  • Administrative activities
  • Infrastructure activities
  • Human resource activities
  • Technology development activities
  • Procurement activities
• If a company want to conduct its core business activities effectively then the functional areas of the company need to be able to share data with each other. Because of these challenges many organizations now use an enterprise-wide information system, also called enterprise system. This system has business applications for every business process and allows companies to integrate data across operations. The system uses an integrated database with a central storage which all users can access.
• Business process management (BPM) is a process in which people critically rethink and redesign business processes with the goal to improve performance measures. BMP uses information systems to streamline business processes. The steps of BPM are:
  1. Develop a vision
  2. Identify key processes
  3. Understand and measure existing processes
  4. Identify how the processes can be improved
  5. Design and implement the new processes
• BPM is still a popular approach to improve the business processes of organizations. There are several factors that lead to successful process improvement like, appropriate funding, realistic expectations, support by senior management and participants that are willing to make changes. BPR and BPM combined with these conditions lead to success:
  • Support by senior management
  • Shared vision by al organization managers
  • Realistic expectations
  • Participants empowered to make changes
  • The right people participating
  • Sound management practices
  • Appropriate funding
• A form of enterprise system that is often used is the enterprise resource planning (ERP) system. ERP systems use modules based on a common database that support the entire enterprise instead of just parts of it. With ERP it is easier to access information because it uses a central storage. Because of the central storage the information is available to everyone of the organization.
• With an ERP system it is also easier for organizations to implement audit controls and to comply with regulations imposed by the government. Many organizations that struggle with regulation and legal mandates are deploying an ERP.
• The configuration of ERP systems is a difficult activity. Configuration is an activity that has to be performed during the implementation of the ERP system. A key factor for the success of ERP implementation is setting up the database.
• As said before, the success of an enterprise system depends on the implementation of the system. Companies that have successfully installed an enterprise system often follow the following recommendations:
  • Secure executive sponsorship
    Most enterprise systems fail because there is no support from top level management.
  • Hire experts
    ERP systems are complex so it is wisely to hire experts
  • Train the users
    It is hard to learn how to use an enterprise system and therefore you should train the users of the system.
  • Evolve the implementation
    Once an ERP system is implemented, organizations must be able to adapt when the business requirements change.
  • Use a multidisciplinary approach for implementation
    The implementation of an enterprise system has an effect on the entire organization. Therefore, personnel from different levels must be included in the implementation project.
  • Evolve the implementation
    Some organizations fear the ability to quickly respond to changing business requirements, particularly because large ERP systems are difficult to install, maintain and upgrade, while this can have huge payoffs.

How to strengthen B2B relationships? - BulletPoints 8

• If companies develop strong and integrated relationships with suppliers, then they can compete more effectively. This is possible because the integrated relationships will enable them to reduce costs and to respond to market demands.
• The supply chain is defined as a collection of processes and companies, which are involved in the process from the raw materials’ suppliers, to the suppliers of intermediate components, to the final product and then to the consumer.
• Companies rely on several key supplies to produce their good or service. To secure the supply of these components, companies seek for lasting B2B relationships with suppliers. They spend a lot of time and money in selecting their suppliers and business partners.
• For B2B transactions it is necessary that companies communicate information with their business partners. Some companies keep such information private because this has strategic value.
• Often portals are used to interact with business partners. Portals are access points which enable business partners to access secured, proprietary information. This information can be distributed through an organization using an extranet. There are supplier portals and customer portals.
• When using a just-in-time (JIT) strategy, a company tries to optimize its ordering quantities such that the raw materials or components just arrive when they are needed for production. The order quantities are smaller and therefore the costs associated with storage and inventory are minimized. For this strategy, tight cooperation between the partners of the network is needed.
• With vendor-managed inventory (VMI), the suppliers to a manufacturer manage the inventory of the manufacturer based on service levels that are negotiated. So, the manufacturer or retailer does not manage its own inventories. The supplier monitors the stock levels and the sales of the manufacturer.
• When effectively managing supply chains, the bullwhip effect is reduced. this entails forecast errors and safety stocks multiplying, when moving up the chain. Thus a small fluctuation ripples into a large one the further down the chain it gets.
• Supply chain management (SCM) systems can be used to improve the coordination of suppliers, distribution and the production of products or services. When using SCM a company is able to reduce its inventory costs and improve customer service, which leads to increased revenue.
• The extent to which the supply chain of a company is focusing on minimizing procurement, transportation costs and production is called supply chain efficiency. Sometimes even sacrificing customer service. On the contrary we have supply chain effectiveness, which is the extent to which the supply chain of a company is focused on maximizing customer service. Here there is less focus on reducing production, procurement and transportation costs.
• A company’s supply chain strategy must seek for a balance between supply chain efficiency and effectiveness. SCM systems allow you to make trade-offs between efficiency and effectiveness.
• The execution of SCP is called supply chain execution (SCE). SCE is the process of improving the collaboration between all members of the supply chain. The four members are suppliers, producers, distributers and customers.
• There are three key elements of the supply chain that are involved in SCE:
  • Product flow
    The movement of goods from supplier à production à distribution à consumer
  • Information flow
    The movement of information along the supply chain
  • Financial flow
    The movement of financial assets through the supply chain
• The relationships between companies and customers are nowadays more complex than before. To develop a strategy for managing these relationships companies can use customer relationship management (CRM) systems.
• If a company can implement CRM successfully, then it can generate greater customer satisfaction. However, a company must make several changes in the enterprise to successfully implement CRM. This includes changes in:
  • Customer service
  • Employee training
  • Data collection, sharing and analyzing
  • Policies and business processes
• There are three primary components that each comprehensive CRM system has:
  • Operational CRM
    system to automate fundamental business processes for interacting with customers
  • Analytical CRM
    System to analyze customer behavior and perceptions
  • Collaborative CRM
    System to provide efficient and effective communication with customers
• An operational CRM consists of several components:
  • Sales force automation (SFA)
    This are the modules that support the daily sales activities.
  • Customer service and support (CSS)
    This are the modules that are used to automate the service and information requests, product returns and complaints.
  • Enterprise marketing management (EMM)
    This tool can help a company to execute the CRM strategy by improving promotion campaigns to reach consumers and attract them to the Web.
• Collaborative CRM can enhance communication in different ways, namely through:
  • Greater customer focus
  • Increased information integration.
  • Lower communication barriers

How to develop and acquire information systems? - BulletPoints 9

• To prove that an information system adds value to the organization, managers must provide strong arguments and evidence. If you are working in the field of finance, marketing, management or accounting then it is likely that you have to make the case for new or existing information systems.
• It should be that technology investments increase the productivity of the organization. However, there are cases where information systems have led to less effective communication and less productivity. This contradiction is known as the productivity paradox. There are several factors that lead to this productivity paradox of information systems:
  • Measurement problems
    Organizations often measure the wrong thing; they measure efficiency instead of effectiveness.
  • Time lags
    There may be a time lag between when the investment is made and when the investment leads to improvements.
  • Redistribution
    The new IS may lead to improvements for individual firms but not for an entire industry.
  • Mismanagement
    It could be that the new IS is not managed or implemented well.
• When making the business case, several different arguments can be used. Managers often use three types of arguments:
  • Arguments based on faith
  • Arguments based on fear
  • Arguments based on facts
• When a small firm develops a Web-based order entry system then it will follow the following steps:
  • Identify costs
  • Identify benefits
  • Perform cost-benefit analysis
  • Compare competing investments
• To determine the total cost of ownership (TCO) for an investment, you could use a cost-benefit analysis. The goal of TCO is to understand the total cost of acquisition and the costs associated with maintenance of the system.
• When the costs and benefits are identified, the cost-benefit analysis can be performed. In such an analysis you could compare total expected tangible costs with tangible benefits. You could also perform a break-even analysis, in which you calculate at which point costs and benefits are equal. Another analysis you cloud perform is the net-present-value analysis, which computes the present value of future cash flows by using the rate of return.
• System analysis and design is defined as the process of building, designing and maintaining information systems. This process is done by individuals who are referred to as system analysts.
• To meet the specifications of a company, custom software is developed. Compared to general purpose commercial technologies, custom software has two main benefits:
  • Customizability
  • Problem specificity (the company only pays for the features that it requires)
• The life of an information system, from conception to retirement, is described by the system development life cycle (SDLC). This cycle has the following four phases:
  1. System planning and selection
  2. System analysis
  3. System design
  4. System implementation and operation
• In the second phase, the goal of the designers is to fully understand how the business is currently using its information systems. This phase has three sub phases:
  1. Collecting requirements
  2. Modeling data
  3. Modeling process and logic
• The third phase of the cycle is the system design in which the proposed system designed. When building an IS, the following elements must be designed:
  • Processing and logic operations
  • Databases and files
  • Human-computer interface (HCI); an HCI is the contact point between a system and its users,
• The fourth phase is the implementation of the system. There are several activities that have the goal to transform the designed system into a working system. Activities include testing a software programming.
• After a system is installed it enters the phase of maintenance. This is a repeating phase. There are several maintenance types:
  • Corrective maintenance
  • Adaptive maintenance
  • Preventive maintenance
  • Perfective maintenance
• An external acquisition is defined as buying an existing system from an external party (vendor). When making an external acquisition, many organizations will use a competitive bid process. Most processes have the following five stages:

1. Systems planning and selection
2. Analysis of the systems
3. Development of request for proposal
4. Evaluation of the proposal
5. Selection of the vendor

• When companies buy an off-the-shelf software they often have to sign a license agreement. The two most important types of licenses are:
  • Shrink-wrap licenses and click-wrap licenses: the first is activated when the shrink wrap on the package is removed and the latter is used for downloaded software (like the accept button when downloading software)
  • Enterprise license (also called volume license)
    These licenses often contain limitations of liability and warranty disclaimers to protect the software.
• For an outsource project to be successful there must be a good relationship between the company and the outsourcing party. Companies can have different types of relationships with their outsourcing party.
  • Strategic relationship
  • Preferred relationship
  • Basic relationship

How to secure information systems? - BulletPoints 10

• Company’s dependence on information systems, tablets and other mobile devices to communicate is huge. We are very dependent on technology and therefore, many companies and individuals also focus on the security of information systems.
• Computer crime is the use of a computer to commit an illegal act. This includes, targeting a computer while committing an offense, the use of computers for a criminal act where the computer is not targeted, and the use of a computer to commit an offense.
• Hackers are defined as people who have the knowledge to gain access to computer systems without authorization. These people often steal or damage information that belongs to others. Some hackers only engage in hacking a system because they are curious and not because they want to harm others. Nowadays, we define those people that hack computers with the intention to harm others as crackers or black hats.
• Malicious software, also called malware, can be a virus or worm that is affecting the computer system. Such software can have a large effect in organizations and it costs them a lot of money.
• A virus is defined as a destructive program that leads to a disruption of the normal functioning of a computer system. Viruses can reproduce themselves and infect only a single computer. However, the virus can be spread to other computers via infected files.
• Other malicious software are worms and trojan horses. Worms are defined as a sort of virus that targets networks. The virus can spread by itself, without the sharing of infected files. A trojan horse is defined as something that appears to legitimate but contains a destructive virus.
• Denial-of-service (DoS) attacks are electronic attacks that disable the users of the system to use a certain service. The criminals often do this by using up all the resources of the system. These attacks are often performed by creating zombie computers. The computers in a certain location are infected with viruses and worms.
• Information systems can be threatened by three traditional things:
  • Spyware
    This is any software that gathers information about users via an Internet connection. The user does not know that his activities are being monitored. Keyloggers are able to find information like e-mail addresses, passwords and credit card numbers.
  • Spam
    This is electronic junk mail that usually has the goal of advertising. The worst form of spam is phising. Criminals exploit human weaknesses by using phishing attacks, shoulder surfing, social engineering and dumpster diving. Spear phising targets a specific person. Completely Automated Public Turing Test to Tell Computers and Humans Apart (CAPTCHA) consists of a distorted image with letters and numbers the user has to fill out in order to submit something.
  • Cookies
    A cookie is a small text file that is passed from the server to the Web browser on the computer of the user. The browser stores the text file message and then the message is send back to the server each time the browser requests a page from the server.
• Companies sometimes buy a software application and then try to copy the application to distribute it to all its employees. This copying is illegal and is referred to as software piracy. These practices are illegal because software often has patents and copyrights. Patents are often inventions of machines and material, and copyrights refer to creations of the mind.
• A cyberwar is defined as an organized attempt by the military of a country to disrupt or destroy the information and communication systems of another country. Cyberwars are launched by governments.
• In contrast, cyberterrorism is launched by individuals and organized groups. There are many types of cyberterrorist attacks. Examples include coordinated bomb attacks, manipulation of banking and financial information and the physical destruction of computer systems.
• Managing the potential risks of IS is crucial for organizations. Threats are continuously evolving and therefore securing information systems is a continuously process consisting of the following steps:
  1. Assessing risks
  2. Developing a security strategy
  3. Implementing controls and training
  4. Monitoring security
• In the first step, organizations perform information system risk assessment. They do this to understand the risks associated to availability, confidentially and integrity of data systems.
• For an information systems security strategy to be effective it must focus on the following controls:
  • Pretentive controls
  • Detective controls
  • Corrective controls
• Security of a system can also be achieved by changes in the organization. Most organizations provide their employees and customers with an acceptable use policy. The decisions of users are often guided by the following policies:
  • Confidential information policy
  • Security policy
  • Use policy
  • Backup policy
  • Accountmanagement policy
  • Incident handling procedures
  • Disaster recovery plan
• To safeguard information systems, the following controls are often used:
  • Firewalls
  • Systems development controls
  • Secure data centers
  • Human controls
  • Physical access restrictions
  • Encryption
  • Virus monitoring and prevention
• The last step of the process of securing information systems is monitoring the security. Organizations have to monitor the controls continuously. Both internal event and external events should be monitored. This can be done through monitoring external events, IS auditing, the Sarbanes-Oxley act (protects investors from fraudulent practices through control objective for information and related technology (COBIT) for example), responding to security incidents and computer forensics.
• It can also be beneficial for an organization to hire an external entity to review its controls. An information system audit is performed by an external auditor. When testing the tools and data, auditors often depend on computer-assisted audit tools. Such an audit can be beneficial for organizations since it can reduce costs or sustain competitive advantage.