Commerce 2ka3: Final Exam

McMaster
COMMERCE 2KA3
FINAL EXAM
STUDY GUIDE
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Commerce 2KA3
Chapter 1: Information Systems in Business Today

There are 3 interrelated changes in the technology area: 1) the emerging mobile digital
platform, 2) the growing business use of big data, and 3) the growth in cloud computing,
where more and more business software runs over the internet
Digital Firm: can be defined along several dimensions; it is one in which nearly all of the
organization’s significant business relationships with customers, suppliers, and employees
are digitally enabled and mediated. Core business process are accomplished through digital
networks spanning the entire organization or linking multiple organizations
Business Processes: refer to the set of logically related tasks and behaviours that
organizations develop over time to produce specific business results and the unique
manner in which theses activities are organized and coordinated
Key Corporate Assets: intellectual property, core competencies, and finical and human
assets- are managed through digital means.
Time shifting: refers to business being done continuously 24/7 rather than in a workday
Operational excellence: businesses continually seek to improve the efficiency of their

operations in order to achiever higher profitability
Business Model: describes how a company produces, delivers, and sells a product or
service to create wealth
Competitive Advantage: when firms achieve one or more of these business objectives:
operational excellence, new products, services, and business models; customer/supplier
intimacy, and improved decision making- chances are they have achieved a competitive
advantage
Information Technology (IT): consist of all the hardware and software that a firm needs
to use in order to achieve its business objectives
Information System: is a set of interrelated components that collect or retrieve, process,

store, and distribute information to support decision making and control in an organization
Information: data that have been shaped into a firm that is meaningful and useful to
human beings
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

Input: captures or collects raw data from within the organization or from its external
environment
Processing: converts this raw input into a meaningful form
Output: transfers the process information to the people who will use it or to the activities
for which it will be used
Feedback: is output that is returned to appropriate members of the organization to help

them evaluate or correct the input or processing stage
Information system literacy: the broad understanding of information systems, which

encompasses an understanding of the management and organizational dimensions of
systems as well as the technical dimensions of the system
Computer Literacy: focuses primarily on knowledge of information technology
Management Information Systems (MIS): tries to achieve this broader information

system literacy. Deals with behavioural issues as well as technical issues surrounding the
development, use, and impact of information systems used by managers and employees in
the firm
Senior Management: makes long-range strategic decisions about products and services
and ensures the finical performance of the firm
Middle Management: carries out the programs and plans of senior management, and
operational management
Operational management: is responsible for monitoring the daily activities of the

business
Knowledge workers: such as engineers, scientists, or architects, design products or

services and create new knowledge for the firm
Data workers: secretaries or clerks assist with the scheduling and communications at all
levels of the firm
Production or service workers: actually produce the product and deliver the service
Business functions: specialized tasks performed by business organizations, consist of

sales and marketing, manufacturing, and production, finance and accounting, and HR
Culture: each organization has its own unique culture or fundamental set of assumptions,
values, and ways of doing things, that has been accepted most of its members

Computer Hardware: is the physical equipment used for input, processing, and output
activities in an information system
Computer software: consists of the detailed, pre-programmed instructions that control

and coordinate the computer hardware components in an information system
Data management technology: consist of the software governing the organization of data
on physical storage media
Networking and telecommunications technology: consisting of both physical devices

and software, links the various pieces of hardware and transfers data from one physical
location to another
Network: links two or more computers to share data or resources such as a printer
Internet: the world’s largest and most widely used network
Intranets: internal corporate networks based on Internet technology
Extranets: private intranets extended to authorized users outside the organization
World wide web: is a service or information space provided on the internet that uses
universally accepted standards for storing, retrieving, formatting, and displaying
information in a page format on the internet
Complementary assets: are those assets required to derive value form a primary
investment
Organizational and management capital: firms that support their technology

investments with commensurate investments in complementary assets, such as new
business models, new business process, management behaviour, organizational culture, or
training, receive superior returns, while those firms failing to make complementary
investments receive fewer or no returns on their information technology investments
Sociotechnical view: optimal organizational performance is achieved by jointly optimizing

both the social and technical systems used in production

Commerce 2KA3
Chapter 2: How Businesses Use Information
Business Processes: refer to the manner in which work is organized, coordinated and
focused to produce a valuable product or service. They are the collection of activities
required to produce a product or service. These activities are supported by flows of
materials, information, and knowledge among the participants in business processes.
sales
Systems for Different Management Groups
Transaction Processing systems (TPS):a computerized system that performs and

records daily routine transactions necessary to conduct business, such as sales order entry,
hotel reservations, payroll, employee record keeping and shipping
Business intelligence: a contemporary term for data and software tools for organizing,
analyzing, and providing access to data to help managers and other enterprise users make
more informed decisions
Management Information Systems (MIS): designates a specific category of information

systems serving middle management. Provide middle managers with routine reports on
the organization’s current performance. MIS summarize and report on the company’s basic
operations using data supplied by transaction processing systems. TPS supply summarized
transaction data to MIS reporting system, which combine this data to generate reports
Decision-support system (DSS): focus on problems that are unique and rapidly changing
and for which the procedure for arriving at a solution may not be fully predefined in
advance. DSS uses internal info from TPS and MIS, they often bring in information from
external sources, such as current stock process or product process of competitors

Executive Support System (ESS): a system that focus on strategic issues and long-term
trends, both in the firm and in the external environment. Questions like: What will
employment levels be in five years? What ware the long-term industry cost trends? What
products should we be making in five years? ESS addresses non-routine decisions requiring
judgment, evaluation, and insight because there is no agreed-on procedure.
Portal: information is delivered to senior executives through this, uses a web interface to
present integrated personalized business content
Digital Dashboard: the information is displayed upon a singe screen, graphs and charts of
key performance indicators for managing a company.
Enterprise Applications: systems that span functional areas, focus on executing business
processes across the business firm, and include all levels of management. These
applications help businesses become more flexible and productive by coordinating their
business processes more closely
Enterprise Systems: also known as enterprise resource planning (ERP) systems, firms use
them to integrate business process in manufacturing and production, finance, and
accounting, sales and marketing, and human resources into a single software system
Supply Chain Management systems (SCM) Systems: used by firms to help manage
relationships with their suppliers. These systems help suppliers, purchasing firms,
distributors, and logistics companies share information about orders, production,
inventory levels, and delivery of products, and services, so they can source, produce, and
deliver goods and services efficiently
Interorganizational system: eg, SCM systems because they automate the flow of
information across organizational boundaries
Customer Relationship Management CRM Systems: firms use these to help manage their
relationships with their customers. CRM systems provide information to coordinate all of
the business processes that deal with customers in sales, marketing, and service to
optimize revenue, customer satisfaction, and customer retention.
Knowledge Management systems KMS: some firsm perform better than others because
they have better knowledge about how to create, produce, and deliver products and
services. KMS or knowledge management systems enable organizations to better manage
processes for capturing and applying knowledge and expertise. These systems collect all
relevant knowledge and experience in the firm and make it available whenever and
wherever
Electronic Business (e-business): refers to the use of digital technology and the internet
to execute the major business processes of an enterprise. E-business includes activities for
the internal management of the firm and for coordination with suppliers and other
business partners.

Electronic Commerce (e-commerce): is part of e-business that deals with the buying and
selling of goods and services over the internet. It also encompasses activities, supporting
those market transactions, such as advertising, marketing, customer support, security,
delivery, and payment
E government: refers to the application of the Internet and networking technologies to

digitally enable government and public sector agencies’ relationships with citizens,
businesses, and other arms of government
Systems for Collaboration and Social Business

Collaboration: is working with others to achieve shared and explicit goals
Teams: have a specific mission that someone in the business assigned them. Team
members need to collaborate on the accomplishment of specific task and collectively
achieve the team mission.
Collaboration and teamwork are important today more than ever for the following reasons
- Changing nature of work
- Growth of professional work
- Changing organization of the firm
- Changing scope of the firm
- Emphasis on innovation
- Changing culture of work and business
Social Business: the use of social networking platforms, like FB, twitter, etc, to engage
their employees, customers, and suppliers. These tools enable workers to set up profiles,
form groups, and follow each other. The goal of social business is to deepen interaction-
sharing, innovation, and decision making.
Cyberlocker: online file sharing services that allow users to upload files to secure online
storage sites from which the files can be shared with others
Information System Department: the informal organizational unit responsible for

information technology services. The info system department is responsible for
maintaining the hardware, software, data storage, and networks that comprise the firms IT
infrastructure
Programmers: are highly trained technical specialists who write the software instructions
for computers
System analyst: constitute the principal liaisons between the information systems group
and the rest of the organization

Information Systems Manager: are leaders of teams of programmers and analysts,

project managers, physical facility mangers, telecommunications managers, or database
specialists. They are also manager of computer operation and data entry staff
Chief Information Officer (CIO): a senior manager who overseas the use of information
technology n the firm. Todays CIOs are expected to have a strong business background as
well as information systems expertise and play a leadership role in integrating technology
into the firm’s business strategy
Chief Security Offices (CSO): is in charge of information systems security for the firm and
is responsible for enforcing the firm’s information security policy. Responsible for
educating and training uses and information systems specialists about security, keeping
management aware of security threats and breakdowns, and maintaining the tools and
polices chosen to implement security
Chief Privacy Officer (CPO) responsible for ensuring that the company complies with
existing data privacy laws
Chief Knowledge Officer (CKO): is responsible for the firms knowledge management
program The CKO helps design programs and systems to find new sources of knowledge or
to make better sue of existing knowledge in organizational and management processes
End Users: are representatives of department outside of the information systems group
for whom applications are developed. These users are playing an increasingly large role in
the design and development of info systems
IT governance: includes the strategy and polices for using information technology within
an organizations. It specifies the decisions rights and framework for accountability to
ensure that the use of information technology supports the organization’s strategies and
objectives

Commerce 2KA3
Chapter 3: Information Systems, Organizations, and Strategy
Organizations and Information Systems

Organization: is a stable, formal social structure that takes resources from the
environment and processes them to produce outputs. The technical definition focuses on 3
elements of an organization. Capital and labour (the production factors provided by
environment) the origination (the firm doing the transformations), and the products and
services (consumed by environment)
Routines: sometimes called standard operating procedures are precise rules, procedures,
and practices, that have been developed to cope with virtually all expected situations.
Disruptive Technologies: are substitute products that perform as well or better than
anything currently produced. Eg. Car substituted the horse drawn carriage
There are 5 basic kinds of organizational structure
How Information Systems Impact Organizations and Business Firms

Transaction Cost Theory: firms and individuals seek to economize on transaction costs
such as locating and communicating with distant suppliers, monitoring contract
compliance, buying insurance, obtaining information on products, and buying their own
suppliers and distributors, as both GM and Ford used to do. Firms thought that by
integrating vertically they could reduce transaction costs.
Agency Theory: the firm is viewed a s a nexus of contracts among self-interested

individuals rather than as a unified, profit maximizing entity. A principal owner employs

agents (employees) to perform work on his or her behalf. Agents need constant
management and supervision or they will pursue their own best interests instead of the
owners
Information systems reduce the number of levels in an organization by providing managers

with information to supervise larger numbers of works and by giving lower-level
employees more authority to make decisions
Implications for the Design and Understanding of Information Systems

The info system must be developed with a clear understanding of the organization it will be
used in. The central organizational factors that must be considered are as follows:
- the environment in which the organization must function
- the structure of the organization: hierarchy, specialization, routines, and business
processes
- the organization’s culture and politics
- The type of organization and its style of leadership
- The principle interest groups affected by the system and the attitudes of workers
who will be using the system
- The kinds of tasks, decisions, and business process that the information system is
designed to assist
Competitive Forces Model: provides a general view of the firm, its competitors, and the
firm’s environment. The strategic position of the firm and its strategies are determined not
only by competition, but also by four other forces in the industry’s environment: new
market entrants, substitute products, customers, and suppliers
Product Differentiation: a power a firm has over its consumers that prevents them from
easily switching to a competitors products or services. If product differentiation in a
market is low, competitors are forced to compete based on price alone
Efficient Customer Response System: directly links consumer behaviour to distribution

and production and supply chains
Mass customization: the ability to offer individually tailored products or series using the
same production resources as mass production
Switching Costs: the costs of switching from one product to a competing product

Value Chain Model: highlights specific activities in the business where competitive
strategies can best be applied and where information systems are most likely to have a
strategic impact
Primary activities: are most directly related to the production and distribution of the
firm’s products and services, which create value for the customer
Support Activities: make the delivery of the primary activities possible and consist of
organization infrastructure, human resources, technology, and procurement.
Benchmarking: involves comparing the efficiently and effectiveness of your business

processes against strict standards and then measuring the efficiency and effectiveness of
your business processes those standards.

Best Practices: are usually identified by consulting companies, research organizations,

government agencies, and the industry associations as the most successful solutions or
problem solving methods for consistently and effectively achieving a business objective.
Core competency: is an activity for which a firm is a world-class leader. Relies on

knowledge that is gained over many years of practical field experience with a technology,
this knowledge is supplemented with a long-term research effort and committed
employees.
Network Economics: business model based on a network may help firms strategically.
Marginal costs of an additional participant to a network (internet of phone services) is
close to zero while marginal benefits of that same participant are much higher
Virtual Company: uses networks to link people, assets, and ideas, enabling, it to ally with
other companies to crate and distribute products and services without being limited by
traditional organization boundaries or physical locations
Business Ecosystem: another term for a loosely coupled but interdependent network of
suppliers, distributors, outsourcing firms, transportation service firms, and technology
manufactures
Using Systems for Competitive Advantage: Management Issues

Strategic Transitions: a movement between levels of sociotechnical systems

Commerce 2KA3
Chapter 4: Social, Ethical, and Legal Issues in the Digital Firm

The growing use of behavioural targeting techniques can be a double edged sword (by
showing you ads relevant to you interests), but it can also create new opportunities for
invading your privacy and enabling reckless use of that information in a variety of
decisions about you.
In today’s current legal environment, managers who violate the law and are convicted will
most likely spend time in prison. Although business firms would in the past often pay for
legal defence of their employees enmeshed in civil charges and criminal investigations,
firms are now encouraged to cooperate with prosecutes to reduce charges against the
entire firm for obstructing investigations

Five Moral Dimensions of the Information Age

Information rights and obligations: What information rights do individuals and
organizations posses with respect to themselves? What can they protect?
Property rights and obligations: How can traditional intellectual property rights be
protected in digital society in which tracing and accounting for ownership are difficult and
ignoring such property rights is so easy?
Accountability and Control: who can and will be held accountable for harm done to
individual and collective information and property rights?
System quality: what standards of data and system quality should we demand to protect
individual rights and the safety of society
Quality of Life: what values should be preserved in an information- and knowledge based
society? Which intuitions should we protect from violation/ Which cultural values and
practices are supported by the new information technology?

Profiling: the use of computers to combine data from multiple sources and create
electronic dossiers of detailed information on individuals
Nonobvious relationship Awareness (NORA): a new data analysis technology that has
given the government and the private sector even more powerful profiling capabilities.
NORA can take information about people form many disparate sources, such as
employment applications, telephone records, customer listings, and wanted lists, and
correlate relationships to find obscure hidden connections that might help identify
criminals or terrorists.
Advances in networking, including the Internet, promise to greatly reduce the costs of
moving and accessing large quantities of data and open the possibility of mining large pools
of data remotely using small desktop machines, permitting an invasion of privacy on a scale
and with precisions previously unimaginable.
Responsibility: means that you accept the potential costs, duties, and obligations for the
decisions you make.
Accountability: a feature of systems and social institutions; means that mechanisms are in
place to determine who took responsible action and who is responsible
Liability: the concept of responsibility further to the area of laws. Liability is a feature of
political systems in which a body of laws is in place that permits individuals to recover the
damages done to them by other actors, systems, or organizations
Due Process: a related feature of law-governed societies and is a process in which laws are
known and understood, and there is an ability to appeal to higher authorities to ensure that
the laws are applied correctly.
The above 4 basic concepts form the basis of an ethical analysis of information systems and
those who mange them. First information technologies are filtered through social
institutions, organizations, and individuals. The impacts of an information system are in
existence because of institutional, organizational and individual actions. Second
responsibility for the consequences of technology falls clearly on the institutions,
organizations, and individual managers who choose to use the technology. Third, in an
ethical, political society, individuals and others can recover damages done to them through
a set of laws characterized by due process.
Ethical Analysis
When confronted with a situation that seems to present ethical issues, it should be
analyzed using the following five-step process:
1. Identify and describe the facts clearly
2. Define the conflict or dilemma and identify the higher-order values involved
3. Identify the stakeholders
4. Identify the options that you can reasonably take
5. Identify the potential consequences of you options

Candidate Ethical Principles

1. Golden Rule: Do unto others as you would have them do unto you
2. Immanuel Kant’s Categorical Imperative: If an action is not right for everyone to
take, it is not right for anyone
3. Descartes’ Rule of Change: If an action cannot be taken repeatedly, it is not right to
take at all
4. Utilitarian Principle: take the action that achieves the higher or greater value
5. Risk Aversion Principle: take the action that produces the least harm or the least
potential cost
6. Ethical No Free Lunch Rule: assume that virtually all tangible and intangible
objects are owned by someone else unless there is a specific declaration otherwise.
Professional Codes of Conduct

When groups of people claim to be professionals, they take on special rights and
obligations because of their special claims to knowledge, seldom, and respect. Professional
codes of conduct promulgate by association of professionals, such as the Canadian Medical
Association (CMA), the Canadian bar Association (CBA), the Canadian Information
Processing Society (CIPS), and the Association of Computing Machinery (ACM). The
professional groups take responsibility for the partial regulation of their professions by
determining entrance qualifications and competence.
The Moral Dimensions of Information System

Privacy: the claim of individuals to be left alone, free from surveillance or interference
from other individuals or organizations, including the state.
Personal Information Protection and Electronic Documents Act (PIPEDA):establishes

principles to govern the collection, use, and disclosure of personal information:
accountability, identifying the purpose for the collection of personal information, obtaining
consent, limiting collection, limiting use, disclosure and retention, ensuring accuracy,
providing individuals with access to information about themselves, and giving individuals a
right o challenge an organization’s compliance with these principles.
Canada’s Standards Association’s Model Privacy Code: published in 1996, it establishes

10 basic principles for all organizations that collect or use personal information.
These practices are:
- Accountability
- Identifying purposes
- Consent
- Limiting collection
- Limiting use, disclosure, retention
- Accuracy
- Safeguards
- Openness
- Individual access
- Challenging compliance

Informed Consent: consent given with knowledge of all the facts needed to make a
rational decision
Safe Harbour: a private, self-regulating policy and enforcement mechanism that meets the
objectives of government regulators and legislation but does not involve government
regulation or enforcement.
Cookies: are small text files deposited on a computer hard drive when a user visits Web
sites. They identify visitors Web browser software and track visits to the web site.
Web Beacons : also called web bugs, are tiny software programs that keep a record of
users’ online clickstream and report this data back to whoever owns the tracking file
invisibly embedded in email messages and Web pages that are designed to monitor the
behaviour of the user visiting the a website or sending an email
Spyware: much like a web beacon, can be secretly installed on an internet users computer
by piggy backing on larger applications. Once installed, it calls out to websites to send
banner ads and other unsolicited material to the user, and it can report the users
movements on the internet to other computers.
Opt-out: an opt-out model of informed consent permits the collection of personal

information until the consumer specifically requests that the data not be collected.
Opt-in: The model that privacy advocates would rather see more use of, in which
businesses are prohibited from collecting any personal information unless the consumer
specifically takes action to approve collecting any personal information unless the
consumer specifically takes action to approve information collection and use
Intellectual Property: considered to be intangible property created by individuals or

corporations. Information technology has made it difficult to protect intellectual property
because computerized information can be so easily copied or distributed on networks.
Intellectual property I subject to a variety of protections under three different legal
traditions: trade secrets, copyright, and patent law
Trade Secrets: not based on information in the public domain, trade secrets have
arisen out of the broad duty of good faith and the principle of equity that whoever
has received information in confidence shall not take unfair advantage of it
Canada has stated that the test for whether there has been a breach of confidence
consist of three elements
1. The information conveyed must be confidential (not public knowledge)
2. The information must have been communicated in confidence
3. The information must have been misused by the part to whom it was
communicated

Copyright: a statutory grant that protects creators of intellectual property from

having their work copied by others for any purpose for a period of at least 50 years.
Patent: a patent grants the owner an exclusive monopoly on the ideas behind an
invention for between 17 and 20 years. The intent behind patent law is to ensure
that inventors of new machines, devices, or methods receive the full financial and
other rewards of their labours yet still make widespread use of the invention
possible by providing detailed diagrams fro those wishing to use the idea under
licence from the patent’s owner
Digital Millennium Copyright Act (DMCA): of 1998 provides some copyright

protection. Implemented a World intellectual property organization treaty that
makes it illegal to circumvent technology-based protections of copyrighted
materials
Computer Crime: is the commission of illegal acts through the use of a computer or
against a computer system. Computers or computer systems can be the object of the crime,
as well as the instrument of a crime.
Computer Abuse: is the commission of acts involving a computer that may not be illegal
but that are considered unethical. The popularity of the Internet and email has turned one
form of computer abuse spamming into a serious problem fro both individuals and
businesses
Spam: is junk email sent by organizations or individuals to a mass audience of Internet

users who have expressed no interest n the product or service being marketed
Digital Divide: exists in both Canadian and US Schools, with schools in high poverty areas
less likely to have computers, high-quality educational technology programs, or Internet
access availability for their students
Repetitive Stress Injury (RSI): occurs when muscle groups are forced through receptive
actions often with high impact loads or tens of thousands of under low-impact loads. The
single largest source of RSI is computer keyboards.
Carpal tunnel Syndrome (CTS): the most common kind of computer-related RSI, in which
pressure on the median nerve through the wrists bony structure produces pain
Computer Vision Syndrome: refers to any eyestrain condition related to display screen
use in computers of all sorts. It symptoms include headaches, blurred vision, and dry
irritated eyes
Technostress: newest computer related malady, stress induced by computer use. Its
symptoms include aggravation, hostility towards humans, impatience, and fatigue.

Commerce 2KA3
Chapter 5: IT Infrastructure and Emerging Technologies
Information Technology (IT) Infrastructure: the shared technology resources that

provide the platform for the firms specific information system applications. Includes
hardware, software, and services such as consulting, education, and training- that are
shared across the entire firm or across entire business units in the firm
Evolution of IT Infrastructure
Mainframe: 1959 to present, the introduction of the IBM 1401 and 7090 transistorized
machines in 1959 marked the beginning of widespread commercial use mainframe
computers. Mainframe computers became powerful enough to support thousands of online
remote terminals connected to the centralized mainframe using proprietary
communication protocols and proprietary data lines.
- Period of highly centralized computing under control of professional programmers
and system operators
Minicomputers: produced by Digital Equipment Corporation (DEC) in 1965, these

computers offered powerful machines at far lower prices than IBM mainframes, making
possible decentralized computing. iN more recent years the mini computer has evolved
into a midrange computer or midrange server and is part of a network

Personal Computer Era (1981 to Present): PC’s were first widely adopted in business
use in 1981, at first DOS operating system, a text-based command language, and later the
Microsoft windows operating system, the Wintel PC computer became the standard
desktop personal computer.

Clietn/Server Era (1983 to Present): desktop or ;aptop computers called clients are
networked to powerful server computers, that provide the client computers with a variet of
services and capabilities

Commerce 2KA3
Chapter 6: Databases and Information Management

Effective information systems provide users with accurate, timely, and relevant
information. Accurate information is free of errors; information is timely when it is
available to decision makers when it is needed. Information is relevant when it is useful
and appropriate for the types of work and decisions that require it
Computer systems organize data in a hierarchy starting with bits and bytes and progress to
fields, record, files, and databases.
Bit: represents the smallest unit of data a computer can handle
Byte: a group of bits, represents a single character which can be a letter, a number, or
another symbol
Field: a group of characters becomes a word, or a complete number a person’s name or

age) is an example of this
Record: a group of related fields (such as the students name, courses taken, the date, the
grade received are a record
File: a group of records of the same type is called a file
Entity: an entity is a person, place, thing, or event about which we store and maintain
information
Attribute: each characteristic or quality describing a particular entity
Problems with the Traditional File

Environment
Data Redundancy: the presence of duplicate

data in multiple data files so that the same data
are stored in more than one place or location. It
wastes storage and leads to data inconsistency
Data Inconsistency: the same attribute may

have different values in its different places of
storage
Program-data Dependence: refers to the

coupling of data stored in files and the specific
programs required to update and maintain
those files so that changes in programs require
changes to the data

Lack of flexibility: traditional file systems cannot deliver ad hoc reports or respond to
unanticipated information requirements in a timely fashion
Poor Security: there is little control or management of data, access to and dissemination of
information may be out of control. Management may have no way of knowing who is
accessing or even making changes to the organization’s data
Lack of Data Sharing and Availability: pieces of information in different files and
different parts of the organization cannot be related to one another, it is virtually
impossible for information to be shared or access in a timely manner.
The Database Approach to Data Management

Database: a collection of data organized to serve many applications efficiently by
centralizing the data and controlling redundant data.
Database Management Systems (DBMS): is software that permits an organization to

centralize data, manage them efficiently, and provide access to the stored data by
application programs. DBMS relives the programmer or end user from the task of
understanding where and how the data are actually stored by separating the logical and
physical views of data. Data management software makes the physical database available
for different logical views required by users. DBMS reduces data redundancy and
inconsistency by minimizing isolated files in which the same data are repeated.
Relational DBMS: represent data as two-dimensional tables (called relations). Tables may
be referred to as files, each table contains data on an entity and its attributes
Tuples: Rows in a table are commonly referred to as records or in technical terms

tuples.
Key Field: The field in a table that uniquely identifies each record so that the record
can be retrieved, updated, or sorted
Each table in a relational database has one field that is designated as its primary
key. This key field is the unique identifier for all the information in any row of the
table, and is this primary key cannot be duplicated
Foreign key: essentially a lookup field to look up data about another key
Relational databases are combined easily to deliver data required by users,

provided that any two tables share a common data element. There are 3 basic
operations in a relational database, that are used to develop useful sets of data:
select, join, and project. Select operation create a subset consisting of all records in
the file that meet the stated criteria. The join operating combines relational tables to
provide the user with more information that is available in individual tables. The

project operation creates a subset consisting of columns in a table, permitting the

user to create new tables that contain only the information required
Non-relational Database management systems: are a more flexible data model and are
designed for managing large data sets across many distributed machines and for easily
scaling up or down. They are useful for accelerating simple queries against large volumes of
structured and unstructured data, including social media, web, graphics, and other forms of
data that are difficult to analyze with traditional SQL-based tools
Capabilities of Database Management Systems

A DBMS includes capabilities and tools for organizing, managing, and accessing the data in
the database. The most important are its data definition language, data dictionary, and data
manipulation language
Data Definition: capability to specify the structure of the content of the database, used to
create database tables and to define the characteristics of the fields
Data Dictionary: is an automated or manual file that stores definitions of data elements
and their characteristics
Data manipulation Language: most DBMS have a specialized language, which is used to
add, change, delete, and retrieve the data in the database
Structured Query Language (SQL): the most prominent data manipulation language
To create a database, you must understand the relationships among the data, the type of
data that will be maintained in the database, how the data will be used, and how the
organization will need to change to manage data from a company-wide perspective.
Normalization: the process of creating small, stable, yet flexible and adaptive structures
from complex groups of data
Referential integrity rules ensure that the relationships between coupled tables remain
consistent. When one table has a foreign key that points to another table, you many not add
a record to the table with the foreign key unless there is a corresponding record in the
linked table
Entity-relationship diagram: data designers document their data model with these. These
diagrams illustrate the relationships between the entities. Boxes represent entities, lines
connecting boxes represent relationships A line connecting two entities that ends with a
crows foot topped by a short mark indicates a one-to-many relationship.

Using Databases to Improve Business Performance and Decision Making

Databases are used to keep track of basic transactions, such as paying suppliers, processing
orders, keeping track of customers, and paying employees. They also provide information
that will help the company run the business more efficiently and help manager and
employees make better decisions.
Big Data: describes datasets with volumes so huge that they are beyond the ability of a
typical DBMS to capture, store, and analyze. Big data does not refer to any specific quantity
but usually refers to data in the petabyte and Exabyte range, billions and trillions of records
Data warehouse: is a database that stores current and historical data of potential interests
to decisions makers through the company. The data originate in many core operational
transaction work systems, such as systems for sales customer accounts, and manufacturing,
and may include data from Web transactions
Data Mart: a subset of a data warehouse in which a summarized or highly focused portion
of the organization’s data is placed in a separate database for a specific population.
Hadoop: is an open-source software framework managed by the Apache Software

Foundation that enables distributed parallel processing of huge amounts of data across
inexpensive computers. It breaks a big data problem down into sub-problems, distributes
them among up to thousands of inexpensive computer processing nodes, and then
combines the smaller data set that is easier to analyze.
In-memory-computing: another way of facilitating big data analysis relies primarily on a

computer’s main memory RAW for data storage. User access data stored in system
primary memory, thereby eliminating bottlenecks from retrieving and reading data in a
traditional, disk-based database and dramatically shortening query response times.
Analytic Platforms: using both relational and non-relational technologies that are
optimized for analyzing large datasets.

Once data has been captured and organized using the business intelligence technologies we
have just described, they are available for further analysis using software for database
querying and reporting, multidimensional analysis (OLAP), and data mining.
Online Analytic Processing (OLAP): supports multidimensional data analysis, enabling

users to view the same data in different ways using multiple dimensions. Each aspect of
information- product, pricing, cost, region, or time period- represents a different
dimension. A product manager could use a multidimensional data analysis tool to learn
how many washers were sold in the East in June, how that compares with the previous
month and the previous June, and how it compares with the sales forecast.
Data Mining: is more discovery driven. Data mining provides insights into corporate data
that cannot be obtained with OLAP by finding hidden patterns and relationships in large
databases and inferring rules from them to predict future behaviour. The information
obtained with data mining include associations, sequences, classifications, clusters, and
forecasts
- Association: are occurrences linked to a single event (sales and their increase
when promotions are taking place)
- Sequences: are events that are linked over time (sales (of appliances) and how
they relate to the sale of a previous item (a home))
- Classification: recognizes patterns that describe the group to which an item
belongs by examining existing items that have been classified and by inferring a
set of rules (defining characteristics of customers who are likely to leave)
- Clustering: works in a manner similar to classification when no groups have yet
been defined (partitioning a database into groups of customers based on
demographics and types of personal investments)
- Forecasting: uses predictions in a different way. It uses a series of existing values
to forecast what other values will be
Text Mining: tools are now available to help businesses analyze data found in e-mail,
memos, call centre transcripts, survey responses, legal cases, patent descriptions, and
service reports. These tools are able to extract key elements from unstructured big data
sets, discover patterns and relationships, and summarize the information

Sentiment Analysis: software is able to mine text comments in an e-mail message, blog,
social media, conversation, or survey from to detect favourable and unfavourable opinions
about specific subjects
Web mining: businesses turn to this to help them understand customer behaviour,
evaluate the effectiveness of a particle web site, or quantify the success of a marketing
campaign. Web mining looks or patterns in data through content mining, structure mining,
and usage mining
Database Server: IN a client/server environment, the DBMS resides on a dedicated

computer. The DBMS receives the SQL requests and provides and the required data
Common Gateway Interface (CGI): a CGI script is a compact program using the CGI
specification for processing data on a web server
Establishing an Information Policy

Every business, large and small needs an information policy. Data are an important
resource, and you want the use of it to be controlled
Information Policy: specify the organization’s rules for sharing, disseminating, acquiring,
standardizing, classifying, and inventorying information. Information policy lays out
specific procedures and accountabilities, identifying which users and organizational units
can share information
Data Administration: is responsible for the specific polices and procedures through which
data can be managed as an organizational resource. These responsibilities include
developing information policy, planning for data, overseeing logical database design and
data dictionary development, and monitoring how information systems users use data
Data Governance: used to describe many of these activities, deals with the polices and
processes for managing the availability, usability, integrity, and security of the data
employed in an enterprise, with special emphasis on promoting privacy, security, data
quality, and compliance with government regulations
Data Administration: in close coordination with users, the design group establishes the
physical database, the logical relations among elements, and access rules and security
procedures. The functions it perform are all part of database admin’

Inaccurate, untimely, and inconsistent data can all lead to incorrect decisions, product
recalls, and financial losses
Data Quality Audit: is a structured survey of the accuracy and level of completeness of the
data in an information system. Surveying entire data files, surveying samples from data
files, or surveying end users for their perceptions of data quality are methods of
performing data quality audits.
Data cleansing: aka data scrubbing, consist of activities for detecting and correcting data
in a database that are incorrect, incomplete, improperly formatted, or redundant. Data
cleansing not only corrects errors but also enforces consistency amount different sets of
data that originated in spate information systems

Commerce 2KA3
Chapter 9: Enterprise Applications to Manage Supply Chains and Respond to

Customers
Enterprise Systems
Companies are becoming increasingly more connected both internally and with other
companies

Enterprise Software: is built around thousands of predefined business processes that

reflect best practices. Companies implementing this software must first select the function
of the systems they wished to use and then map their business processes to predefined
business process in the software. Enterprise systems provide much valuable information
for improving management decision-making. Corporate headquarters has access to up-to-
the-minute data on sales, inventory, and production
Supply Chain Management Systems

If you mange a small firm that makes a few products or sells a few services, chances are you
will have a small number of suppliers. But if you manage a firm that produces more
complex products and services, then you will have hundreds of suppliers and your
suppliers will have their own set of suppliers. You now need to coordinate that activities of
hundreds or even thousands of other firms in order to produce your products and services
Supply chain: is a network of organizations and business processes for procuring raw
materials, transforming these materials into intermediate and finished products, and
distributing the finished products to customers. It links suppliers, manufacturing plants,
distribution centres, retail outlets, and customers to supply goods and services from source
through consumption. Material, information, and payments flow through the supply chain
in both directions. Goods start through the supply chain, are transformed into intermediate
products, and finally, into finished products. The upstream portion of the supply chain
includes the company’s suppliers, the suppliers and the processes for managing
relationships with them. The downstream portion consists of the processes for
distributing and delivering products to the final customers.

Information Systems and Supply Chain Management

Inefficiencies in the supply chain are caused by inaccurate or untimely information. These
supply chain inefficiencies waste as much as 25% of company’s operating costs.
Just-in-time strategy: If a manufacturer had perfect information about exactly how many
units of product customers wanted, when customers wanted them, and when they could be
produced, then this strategy would be implemented. It would arrive exactly at the moment
they were needed and finished goods would be shipped as they left the assembly line.
Uncertainties arise because events cannot be foreseen- uncertain product demand, late
shipments from suppliers, defective parts or raw materials.
Safety Stock: acts as a buffer for the lack of flexibility in the supply chain, although, excess
inventory is expensive, low fill rates are also costly because businesses may be lost from
cancelled orders.
Bullwhip Effects: information about the demand for a product gets distorted as it passes
from one entity to the next across the supply chain. A slight rise in demand for an item
might cause different members in the supply chain - distributors, manufactures, suppliers,
secondary suppliers, and tertiary suppliers – to stockpile inventory so each ahs enough just
in case. Bullwhip is tamed by reducing uncertainties about demand and supply when all
members of the supply chain have accurate and up-to-date information. If supply chain
members share dynamic information

Supply Chain management Software

Supply Chain Planning Systems: enable the firm to model its existing supply chain,
generate demand forecasts for products, and develop optimal sourcing and manufacturing
plans.
Demand Planning: One of the most important – and complex – supply chain planning
functions. Determines how much product a business needs to make to satisfy all of its
customers’ demands.
Supply Chain Execution Systems: manage the flow of products through distribution
centres and warehouses to ensure that products are delivered to the right locations in the
most efficient manner. They track physical status of goods, the management of materials,
warehouse and transportation operations, and financial information involving all parties.
Demand-Driven Supply Chains: From Push to Pull Manufacturing and Efficient

Customers Response
Push-based Model: production master schedules are based on forecasts or best guesses of
demand for products, and products are pushed to customers.
Pull-based Model: aka demand driven or build-to-order model, actual customers orders or
purchases trigger events in the supply chain. Transactions to produce and deliver only
what customers have ordered move up the supply chain from retailers to distributors to
manufacturers and eventually to suppliers.

Customer Relationship Management Systems

Touch Point: aka a contact point, is a method of interaction with the customer, such as
telephone, email, customers service desk, conventional mail etc.
Customer Relationship Management Software

Partner Relationship Management (PRM): uses many of the same data, tools, and
systems as customer relationship management to enhance collaboration between company
and its selling partners. If a company does not sell directly to customers but rather works
through distributors or retailers, PRM helps these channels sell to customers directly.
Employee Relationship Management (ERM): software that deals with employee issues
that are closely related to CRM, such as setting objectives, employee performance
management, performance-based compensation and employee training.

Sales Force Automation (SFA): sales force automation modules in CRM systems help sales
staff increase their productivity by focusing sales efforts on the most profitable customers,
those who are good candidates for sales and service
Cross-selling: is the marketing of complementary products to customers. Common in

financial services. CRM tools also help firms manage and execute marketing campaigns at
all stages from planning to determining the rate of success for each campaign
Operational CRM: includes customers facing applications such as tools for sales force
automation, call centre and customer service support, and marketing information.
Analytical CRM: includes applications that analyze customer data generated by

operational CRM applications

Customer Lifetime Value (CLTV): based on the relationship between the revenue
produced by a specific customer, the expenses incurred in acquiring and servicing that
customer and the expected life of the relationship between the customer and the company
Customer Churn Rate: measures the number of customers who stop using or purchasing
products or services from a company. It is an important indicator of the growth or decline
of a firm’s customer base
Social CRM: tools that enable a business to connect customer conversations and
relationships from social networking sites to CRM processes.

Commerce 2KA3
Chapter 10: E-Commerce: Digital Markets and Digital Goods
E-commerce refers to the use of the Internet and the Web to transact business. It is
digitally-enabled commercial transactions that occur over the Internet and the Web.
Commercial transactions involve the exchange of values across organizational or individual
boundaries in return for products and services. Began in 1995
E-commerce is ubiquitous, meaning that it is available just about everywhere, at all times.
Ketspace: a marketplace extended to beyond traditional boundaries and removed from a

temporal and geographic location
Transaction Costs: the costs of participating in a market. To transact business, it is no

longer necessary that you spend time or money travelling to a market, and much less
mental effort is required to make a purchase
Global Reach: e commerce technology permits commercial transaction to cross cultural

and national boundaries far more conveniently and cost effectively than is the case in
traditional commerce.

Key Entry Costs: the cost merchants must pay simply to bring their goods to market
Search Costs: the effort required to find suitable products: universal standards reduce
search costs
Richness: refers to the complexity and content of a message

Information Density: the total amount and quality of information available to all market
participants, consumers and merchants alike.
Price Transparency: refers to the ease with which consumers can find out the variety of
prices in a market
Cost Transparency: refers to the ability of consumers to discover the actual costs
merchants pay for products
Price Discrimination: selling the same goods, or nearly the same goods to different
targeted groups at different targeted groups at different prices.
Personalization: merchants can target their marketing messages to specific individuals by

adjusting the messages to a person’s clickstream behaviour, name, interests, and past
purchases.
Customization: changing the delivered product or service based on a user’s preferences or

prior behaviour
Information Asymmetry: exists when one party in a transaction has more information
that is important for the transaction than the other party
Menu Costs: the merchants cost of changing prices
Dynamic Pricing: the price of a product varies depending on the demand characteristics of
the customer or the supply situation of the seller
Disintermediation: the removal of organizations or business process layer responsibility

for intermediary steps in a value chain
Digital Goods: are goods that can be delivered over digital networks

Business to Consumer (B2C): electronic commerce involves retailing products and

services to individual shoppers
Business-to-business (B2B): electronic commerce involves sales of goods and services

among businesses
Consumer-to-consumer (C2C): electronic commerce involves consumer selling directly to

consumers
Mobile Commerce (m-commerce): the use of handheld wireless devices for purchasing
goods and services from any location
E-tailers: online retail stores, they come in all sizes
Intellectual Property: refers to all forms of human expression that can be put into a
tangible medium such as text, CDs, or DVDs, or stored on any digital media, including web.
Podcasting: is a method of publishing audio or video broadcasts via the Internet, allowing
subscribing users to download audio or video files onto their personal computers or
portable music players
Streaming: is a publishing method for music and video files that flows a continuous steam
of content to a user’s device without being stored locally on the device.
Market Creators: build a digital environment in which buyers and sellers can meet,
display products, search for products and establish prices
Community Providers: are sites that create a digital online environment where people
with similar interests can transact (buy and sell goods); share interests, photos, videos,;
communicate with like-minded people; receive interest-related information; and even play
out fantasies by adopting personalities called avatars.

Revenue Model: describes how the firm will earn revenue, generate profits, and produce a
superior return on investment.
Advertising Revenue Model: a website generates revue by attracting a large audience of

visitors who can then be exposed to advertisements. It is the most widely used revenue
model in e-commerce; arguably, without adverting revenues; the world would have been a
different place
Sales Revenue Model: companies derive revenue by selling goods, information, or

services to customers.
Micropayment Systems: provide content providers with a cost-effective method for

processing high volumes of very small monetary transactions. (itunes)
Subscription revenue Model: a website offering content or services chargers a

subscription fee for access to some or all of its offerings on an ongoing basis
Free/Freemium Revenue Model : firms offer basic services or content for free while
charging a premium for advanced or special features.
Transaction Fee Revenue Model: a company receives a fee for enabling or executing a
transaction (ebay makes money when people buy something on from someone else on
ebay)
Affiliate revenue Model: web(called affiliate web sites) sites send visitors to other
websites in return for a referral fee or percentage of the revenue from any resulting sales
Social Shopping: sites like Pinterest, Kaboodle, ThisNext, allow you to swap shopping
ideas with friends
Wisdom Crowds: creating sites where thousands, or millions of people can interact offers
businesses new ways to market and advertise to discover who likes or hates their products
Crowd Sourcing: firms can be actively helped in solving some business problems using
this method, a form of soliciting advice from the external environment
Prediction Markets: are established peer-to-peer betting markets where participants

make bets on specific outcomes of say, quarterly sales of a new product, designs for new
products, or political elections
Long-tail Marketing: the internet enables firms to do this, allows marketers to

inexpensively find potential customers for products where demand is very low
Behavioural Targeting: refers to tracking the clickstreams of individuals on thousands of

websites for the purpose of understanding their interests and intentions and exposing
them to advertisements that are uniquely suited to their behaviour

Social Graph: a mapping of all significant online social relationships. Synonymous with the
idea of a social network
Electronic Data Interchange (EDI): enables the computer-to-computer exchange

between two organizations of standard transactions such as invoices, bills, of lading,
shipment schedules, or purchase orders
Private Industrial Networks: aka private exchange: typically consist of a large firm using
a secure Web site to link to its suppliers and other key business partners. The network is
owned by the buyer, and it permits the firm and designated supplier, distributors, and
other business partners to share product design and development, marketing, production
scheduling, inventory management, and unstructured communication, including graphics
and email
Net Marketplace: sometimes called e-hubs, provider a single digital marketplace based on
Internet technology for many different buyers and sellers. They are industry owned or
operate as independent intermediaries between buyers and sellers> Generate revenues
from purchase and sale transactions and other services provided to clients
Direct Goods: goods used in production process, such as sheet metal for auto body
production
Indirect goods: are all other goods not directly involved in the production process, such as
office supplies or products for maintenance and repair
Exchanges: are independently owned third party net marketplaces that connect thousands
of supplies and buyers for spot purchasing
Location based Services: include geosocial services, geoadvertising, and geoinformation

services. Together these services are the basis GPS
Geosocial Service: can tell you where your friends are meeting
Geoadvertising: can tell you where to find the nearest Italian restaurant
Geoinformation Services: tell you the price of a house that you are looking at or about
special exhibits at a museum you are passing
Co-Location Agreement: your firm purchases or leases a web server (and has total control
over its operation) but locates the server in a vendor’s physical facility

Commerce 2KA3
Chapter 11: Managing Knowledge
Data: a flow of events or transactions captured by an organization’s systems that, by itself,

is useful for transacting, but little else
To turn data into information, a firm must expand resources to organize data into
categories of understanding, such as monthly, daily, regional, or store-based reports of
total sales.
To transform information into knowledge, a firm must expend additional resources to

discover patterns, rules, and contexts where the knowledge works
Wisdom: the collective and individual experiences of applying knowledge to the solution of
problems. Involves, where, when, and how to apply knowledge
Tacit Knowledge: knowledge residing in the minds of employees that has not been
documented
Explicit Knowledge: knowledge that has been documented and that which is easy to share
and teach
Important dimensions of knowledge

- Knowledge is a firm’s asset
- Knowledge has different forms
- Knowledge has a location
- Knowledge is situational

Organizational Learning: organizations that learn adjust their behaviour to reflect that
learning by creating new business processes and by changing patterns of management
decision making
Knowledge management: refers to the set of business processes developed in an

organization to create, store, transfer, and apply knowledge. Knowledge management
increases the ability of the organization to learn from its environment and to incorporate
knowledge into its business processes.
Organizational and management capital is defend as the set of business processes,

culture, and behaviour required to obtain value from investment in information
systems.
Communities of Practice (COPs): informal social networks of professionals and

employees within and outside the firm who have similar work-related activities and
interests. The activities of these communities include self-education and group education,
conferences online newsletters, and day-to-day sharing of experience and techniques to
solve specific work problems.
Enterprise-wide Management systems: are general-purpose firm-wide efforts to collect,

store, distribute, and apply digital content and knowledge. These systems include
capabilities for searching for information, storing both structured and unstructured data,
and locating employee expertise within the firm
Knowledge Work Systems (KWS): are specialized systems with discovering and creating
new knowledge for a company
Intelligent techniques: data mining, expert systems, neural networks, fuzzy logic, genetic
algorithms, and intelligent agents

Enterprise-Wide Knowledge Management Systems

Structured Knowledge: is explicit knowledge that exits in formal documents, as well as in
formal rules that organizations derive by observing experts and their decisions-making
behaviours. About 80% of an organization’s business content is semi-structured or
unstructured
Enterprise Content Management System: help organizations manage both types of

information. They have capabilities for knowledge capture, storage, retrieval, distribution,
and preservation to help firms improve their business processes and decisions
Taxonomy: a classification scheme, to organize information into meaningful categories so

that it can be easily accessed
Digital Asset Management Systems: help companies classify, store, and distribute digital
objects
Knowledge Network Systems: address the problem that arises when the appropriate
knowledge is not in the form of a digital document but instead resides in the memory of
individual experts in the firm. Provide online directory of corporate experts and their
profiles, with details about their job experience, projects, publications, and educational
degrees
Social Bookmarking: make it easier to search for and share information by allowing users
to save their bookmarks to web pages on a public web sire and tag these bookmarks with
keywords
Folksonomies: User created taxonomies created for shared bookmarks, or a lists of tags
that can be shared with other people to help them find information of interest
Learning Management Systems (LMS): provides tools for the management, delivery,
tracking, and assessment of various types of employee learning and training.
Knowledge Work Systems

Knowledge workers perform three key roles that are critical to the organization and to the
managers who work within the organization:
- Keeping the organization current in knowledge as it develops in the external world-
in technology, science, social thought, and the arts
- Serving as internal consultants regarding their areas of knowledge, the changes
taking place, and opportunities
- Acting as change agents, evaluating, initiating, and promoting change projects
Computer-Aided design (CAD): automates the creating and revision of designs, using
computers and sophisticated graphics software.

3-D printing: aka additive manufacturing, which uses machines to make solid objects,
layer by layer, from specifications in a digital file, #-D printing is currently being used to
produce prototypes and small items, such as jewellery and hip implants, as well as larger
ones such as aircraft parts
Virtual Reality Systems: have visualization, rendering, and simulation capabilities that go
far beyond those of conventional CAD systems. They use interactive graphics software to
create computer-generated simulations so close to reality that users almost believe they
are participating in a real-world simulation.
Augmented reality (AR): is a related technology for enhancing visualization. AR provides

a live direct or indirect view of a physical real-world environment whose elements are
augmented by virtual computer-generated imagery
Virtual Reality Modeling Language (VRML): the standard for virtual applications
developed for the w Web use. It is a set of expectations for interactive, 3-D modelling on the
worldwide web that can organize multiple media types, including animation, images, and
audio to put users in a simulated real-world
Investment Workstations: Bloomberg terminals to leverage the knowledge and time of its
brokers, traders, and portfolio managers.
Intelligent Techniques
Knowledge Discovery: neural networks and data mining are using for that. They can
discover underlying patterns, categories, and behaviours in large data sets that could not
be discovered by managers alone or simply through experience.
Artificial Intelligence (AI): technology, which consists of computer-based systems (both

hardware and software) that attempt to emulate human behaviour. These systems would
be able to learn languages, accomplish physical tasks, use perceptual apparatus, and
emulate human expertise and decision-making
Expert Systems: are an intelligent technique for capturing tacit knowledge in a very
specific and limited domain of human expertise

Knowledge base: expert systems model human knowledge as a set of rules
Inference engines: the strategy used to search through the knowledge base
Forward Chaining: the inference engine begins with the information entered by the
user and searches the rule base to arrive at a conclusion.
Backward Chaining: the strategy for searching the rule base starts with a
hypothesis and proceeds by asking the user questions about selected facts until the
hypothesis is either confirmed or disproved.
Case-based Reasoning (CBR): descriptions of past experiences of human specialists,

represented as cases, are stored in a database for later retrieval when the user encounters
a new case with similar parameters
Fuzzy Logic: is a rule-based technology that can represent this type of imprecision by
creating rules that use approximate or subjective values. It can describe a particular
phenomenon or process linguistically and then represent that description in a small
number of flexible rules
Machine Learning: is the study of how computer programs can improve their
performance without explicit programming. A machine that leans is a machine that, like
humans, can recognize patterns in data can change its behaviours based on its recognition
of patterns, experiences, or prior learning’s.
Neural Networks: are used to solve complex, poorly understood problems for which large
amounts of data have been collected. They fund patterns and relationships in massive
amounts of data that would be too complicated and difficult for a human being to analyze
Genetic Algorithms: are useful for finding the optimal solution for a specific problem by
examining a very large number of possible solutions for that problem. They are based on
techniques inspired by evolutionary biology, such as inheritance, mutation, selection, and
recombination
Intelligent Agents: are software programs that work without direct human intervention to
carry to specific tasks for an individual user, business process, or software application.
Agents use a built in or learned knowledge base to accomplish tasks or make decisions on
the user’s behalf
Agent-based Modelling: applications have been developed to model the behaviour of

consumers, stock markets, and supply chains, and to predict the spread of epidemics
Hybrid AI systems: genetic algorithms, fuzzy logic, neural networks, and expert systems
can be integrated into a single application to take advantage of the best features of these
technologies. These systems are being increasingly used un business.

Commerce 2KA3
Chapter 12: Enhancing Decision Making
Decision Making and Information Systems

There are a variety of types of decisions; they can be structured, semistructured, and
unstructured
Unstructured Decisions: are those in which the decisions maker must provide judgement,
evaluation, and unsought to solve the problem. These decisions are very important, and are
nonroutine, and there is no well-known or agreed-on procedure for making them. These
decisions are common in senior management positions.
Structured Decisions: are repetitive and routine, they involve a definite procedure for
handling them so that they do not have to be treated each time as if they were new.
Common in operational management and among individual employees and teams
Semistructured: where only party of the problem has a clear-cut answer provided by an
accepted procedure. IN general, structured decisions are more prevalent in lower
organizational levels, while unstructured problems are more common at higher levels of
the firm
The Decision-Making Process

Decision making is a multistep process, the following are the 4 stages
1. Intelligence: consists of discovering, identifying, and understanding the problems
occurring in the organization
2. Design: Involves identifying and exploring various solutions to the problem
3. Choice: consists of choosing among solution alternatives
4. Implementation: involves making the chosen alternative work and continuing to
monitory how well the solution is working

Managers and Decision Making in the Real World

Decisions are made in order to be above average managers and employees, earn above
average ROIs, and increase profitability
Model Of management: a classical model describing what managers do, unquestioned

unit 1920s. It describes the 5 functions of managers are planning, organizing, coordinating,
deciding, and controlling. Does not address exactly what managers do when they plan,
decide, and control the work of others.
Behavioural Models: State that the actual behaviour of managers appears to be less
systematic, more informal, less reflective, more reactive, and less well organized than the
classical model would have us believe. Managerial behaviour has 4 attributes that differ
greatly from the classical description. Managers perform a great deal of work at
unrelenting pace. Managerial activities are fragmented; most activities last for less than 9
minutes, and only 10% of activities exceed one hour in duration. 3rd managers prefer
current , specific, and ad hoc info. 4th they prefer oral forms of communication as it is more
flexible, requires less effort, and brings a faster response than written communication.
Managerial roles: are expectations of the activities that managers should perform in an
organization. Mintzberg developed this theory, he states that there are 10 managerial roles
which can be further classified into the following 3 categories of roles.
Interpersonal Roles: managers act as a figurehead for the organization when they
represent their companies to the outside world and perform symbolic duties such as
giving out employee awards
Informational Roles: act as the nerve centres of their organizations, receiving the
most concreter, up-to-date info and redistributing it to those who need it
Decisional Role: act as entrepreneurs by initiating new kinds of activities; they

handle disturbances arising in the organization; allocate resources; and negotiate
conflicts

Information Quality: high quality decisions require high quality information. Below is a
chart dictating the dimensions of what make information quality or not
Management Filters: managers absorb information through a series of filters to make

sense of the world around them. Managers have selective attention, focus on certain kinds
of problems, and solutions, and have a variety of biases that reject information that does
not conform to their prior conception
Organizational Inertia: organizations are bureaucracies with limited capabilities and

competencies for acting decisively. When environments change and businesses need to
adapt, there is often a lot of resistance to the decision calling for change.
Business Intelligence in the Enterprise

Business Intelligence: all organizations, including business firms, take in information
from their environments, attempt to understand the meaning of information, and then
attempt to act on the information. Hardware and software vendors and information
technology consultants often use the term to describe the infrastructure for warehousing,
integrating, reporting, and analyzing data that comes from the business environment, and
big data
Business Intelligence Environment

There are 6 elements in the business intelligence environment
- Data from the business environment
- Business intelligence infrastructure
- Business Analytics Toolset
- Managerial users and methods
- Delivery Platform
- User Interface

Business Intelligence and Analytics Capabilities

Business Intelligence and analytic promise to deliver correct, nearly real-time info to
decision makers, and the analytic tools help them quickly understand the information and
take action. The following are the 6 analytic functions that BI systems deliver
- Production Reports: predefined reports based on industry-specific
requirements
- Parameterized Reports: users enter parameters in order to receive filtered
data often in table format
- Dashboards/scorecards: these are visual tools for presenting performance
data defined by users
- Ad hoc Query/search/report creation: these allows users to create their own
reports based on queries and searches
- Drill Down: this is the ability to move from a high-level summary to a more
detailed view
- Forecasts, Scenarios, Models: these include the ability to perform linear
forecasting what if scenario analysis, and analyze data using standard statistical
tools
Predictive Analytics: use statistical analysis, data mining, techniques, historical data, and
assumptions about future conditions to predict future trends and behaviour patterns.
Data Visualization: the presentation of data in visual forms and utilizing visual analytics
to help users see patterns and relationships in large amounts of data that would be difficult
to discern if the data were presented as traditional lists.
Geographic Information Systems (GIS): are a special category of tools for helping
decisions makers visualize problems requiring knowledge about the geographic
distribution of people or other resources

Business Intelligence Constituencies

- 3 levels of management, lower supervisory management, middle management,
and senior management
Sensitivity Analysis: models that ask what-if questions repeatedly to predict a rang eof
outcomes when one or more variables are changed multiple times. Backward sensitivity
analysis helps decision makers with goal seeking
Pivot Table: super users and analysts employ these multidimensional spreadsheets to
identify and understand patterns in business information that may be useful for
semistructured decisions making
Balanced Scorecard Method: a frameworl for operationalizing a firms strategic plan by

focusing on measurable outcomes on four dimensions of firm performance: financial,
business process, customer, and learning and growth
Performance on each of the above dimensions is measuring used Key Performance

Indicators (KPIs)
Key Performance Indicators (KPIs): measures proposed by senior management for

understanding how well the firm is performing along any given dimension
Business Performance Management (BPM):originally defined by an industry group in

2004, BPM attempts to systematically translate a firm’s strategies into operational targets.
Once strategies and targets are identified a set of KPIs are developed that measure
progress towards the targets

Employee self service have significant drill-down capabilities if managers need more
detailed views of data?
Group Decision-Support Systems (GDSS): developed to support group and

organizational decision-making. It is an interactive computer-based system for facilitating
the solution of unstructured problems by a set of decision makers working together as a
group in the same location or in different locations. GDSS-guided meetings take place in
conference rooms with special hardware and software tools to facilitate group decision
making

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McMaster

Chapter 1: Information Systems in Business Today

Operational excellence: businesses continually seek to improve the efficiency of their

Information System: is a set of interrelated components that collect or retrieve, process,

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Processing: converts this raw input into a meaningful form

Feedback: is output that is returned to appropriate members of the organization to help

Information system literacy: the broad understanding of information systems, which

Computer Literacy: focuses primarily on knowledge of information technology

Management Information Systems (MIS): tries to achieve this broader information

Operational management: is responsible for monitoring the daily activities of the

Knowledge workers: such as engineers, scientists, or architects, design products or

Business functions: specialized tasks performed by business organizations, consist of

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Computer software: consists of the detailed, pre-programmed instructions that control

Networking and telecommunications technology: consisting of both physical devices

Internet: the world’s largest and most widely used network

Intranets: internal corporate networks based on Internet technology

Extranets: private intranets extended to authorized users outside the organization

Organizational and management capital: firms that support their technology

Sociotechnical view: optimal organizational performance is achieved by jointly optimizing

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Chapter 2: How Businesses Use Information

Systems for Different Management Groups

Transaction Processing systems (TPS):a computerized system that performs and

Management Information Systems (MIS): designates a specific category of information

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E government: refers to the application of the Internet and networking technologies to

Systems for Collaboration and Social Business

Information System Department: the informal organizational unit responsible for

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Information Systems Manager: are leaders of teams of programmers and analysts,

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Chapter 3: Information Systems, Organizations, and Strategy

Organizations and Information Systems

There are 5 basic kinds of organizational structure

How Information Systems Impact Organizations and Business Firms

Agency Theory: the firm is viewed a s a nexus of contracts among self-interested

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Information systems reduce the number of levels in an organization by providing managers

Implications for the Design and Understanding of Information Systems

Efficient Customer Response System: directly links consumer behaviour to distribution

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Benchmarking: involves comparing the efficiently and effectiveness of your business

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Best Practices: are usually identified by consulting companies, research organizations,

Core competency: is an activity for which a firm is a world-class leader. Relies on

Using Systems for Competitive Advantage: Management Issues

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Chapter 4: Social, Ethical, and Legal Issues in the Digital Firm

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Five Moral Dimensions of the Information Age

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Candidate Ethical Principles

Professional Codes of Conduct

The Moral Dimensions of Information System

Personal Information Protection and Electronic Documents Act (PIPEDA):establishes