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- Chapter 3
- Information Systems Management In Practice 5E
- McNurlin & Sprague
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- “Strategic use” of IT is defined as “having a significant, long-term
impact on a firm’s growth rate, industry, and revenue.”
- Historically, the strategic use of IT has followed an evolution from
improving internal processes and structures of a firm, to improving the
products, services, and relationships with its customers, and then with
its partners.
- These evolution stages are characterized as:
- Looking inward
- Looking outward
- Looking across
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- What is e-business? The use of
telecommunications networks, particularly the Internet, to conduct
business transactions.
- Three categories of e-business (see Figure 3.2):
- Business-to-employee: Intranet-based applications internal to a firm
- Business-to-consumer: Internet-based applications for a firm’s
customers
- Business-to-business: Extranet-based applications for a firm’s business
partners
- Originally the term e-commerce was used to refer to these three
categories. However, the term is
now only used to refer to business-to-consumer applications, and the
term e-business is used to refer to these three categories.
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- Key Components that have accelerated the acceptance of e-business:
- Wide access to a public network
- Standard communication protocol
- Standard user interface
- E-business applications run over the Internet, drastically reducing
access and communications costs.
- With standardized communication protocols and user interfaces,
implementation and training costs are far lower.
- As a result, a much broader set of users and firms has access to the
systems, allowing rapid growth.
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- Intranets
- Intranets are private company networks that use Internet technologies
and protocols, and possibly the Internet itself.
- Benefits of using intranets
- Wider access to company information
- More efficient and less expensive systems development
- Decreased training
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- Managerial concerns
- How to integrate legacy systems into the intranet
- Deciding how much control of the systems should be decentralized
- Proposed solutions
- Create a corporate portal to act as the gateway to the firm’s internal
resources, information, and Internet services.
- Develop separate departmental or divisional portals, such as sales, HR,
operations, and finance portals.
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- The E-Business Model
- Redefining Customer Value
- “Demanding on-demand”: reduces the time it takes to respond to
customer requests
- Convenience: allows gathering and managing customer information
- Access to a wide range of competitive prices and sellers for products
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- Redesigning Relationships with Business Partners
- E-business allows:
- “disintermediation”: bypassing intermediaries by directly linking
customers to the manufacturer.
- the development of “virtual organizations,” where a firm does not own
parts of the value chain, but rather controls the coordination of
other firms to appear as a single firm.
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- IT has been used to reduce costs and time of interorganizational
transactions, for example:
- Interorganizational Systems (IOS)
- Reservation systems, electronic funds transfer systems, Electronic Data
Interchange Systems (EDI)
- Electronic Data Interchange Systems (EDI)
- Transmission, in standard syntax, of data for business transactions
between computers of independent organization
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- Goal: Eliminate paper documents involved in business transactions
- Barriers:
- Technology available
- Standards/lack of standards
- Value-added network (VAN): Third party companies that provide
communication links and EDI services to other companies
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- Traditional Versus Internet–Based EDI
- Overcomes many technical barriers to EDI
- Eliminates the need for expensive telecommunication network
- Flexible systems
- Multimedia documents rather than simple streams of text
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- Supply chain includes processes such as: logistics, procurement,
production, and distribution
- Strategic options
- Build-to-order mode of operation
- Elimination of intermediaries
- Redesign the procurement process
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- Challenge
- Variety of platforms
- Incompatible
- Approach
- Database Management Systems (DBMS)
- ERP Systems
- Extranet
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- Evolution of the Internet: Quality of Service
- Next Generation Internet (NGI)
- Research and develop advanced network technologies
- Deploy high-speed test bed networks
- Develop and demonstrate revolutionary applications that demand
high-speed networks not currently available on today’s internet
- University Consortium for Advanced Internet (UCAID)
- Internet 2 (advanced academic network)
- Abilene (support the demands of the advanced research applications of
the UCAID)
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- Security - ranks as one of the top management and consumer concerns
- Divided into three categories:
- 1. Sniffing: interception and reading of electronic messages as they
travel over the communication networks
- Protection: Encryption (DES, RSA)
- 2. Spoofing: assumption of a false identity and the execution of
fraudulent transactions
- Protection: Authentication (RSA)
- 3. Hacking: unauthorized access to a host computer
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- Privacy
- Intellectual Property Rights
- Copyrights
- Patents
- Trademarks
- Trade Secrets
- Legal Jurisdiction
- Content Regulation
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- IT is a strategic asset that can be used to:
- Look outward to incorporate products and services
- Look inward to re-design and create new business processes
- Look across to link with other organizations
- make permanent changes in the nature of business with e-business
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