information system review question

7/23/2019 Information system review question

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CHAPTER 1

INFORMATION SYSTEMS IN GLOBAL BUSINESS TODAY

1. How are informaion !"!em! ran!formin# $%!ine!! an& w'a i! 'eir re(aion!'i) o

#(o$a(i*aion+

Describe how information systems have changed the way businesses operate and their

products and services.

Wireless communications, including computers and mobile hand-held computing devices, are keeping

managers, employees, customers, suppliers, and business partners connected in every way possible.

Email, online conferencing, the Web, and the Internet, are providing new and diverse lines of

communication for all businesses, large and small. Through increased communication channels and

decreased costs of the communications, customers are demanding more of businesses in terms of service

and product, at lower costs. E-commerce is changing the way businesses must attract and respond to

customers.

Identify three major new information system trends.

Three information system trends that are influencing the way businesses interact with employees,

customers, suppliers, and business partners include emerging mobile digital platforms, growth of

online software-as-a-service, and the growth of cloud computing.

Table 1-1, page , outlines new !I" changes and their impact on business. The table is organi#ed by the

three dimensions of information systems$ technology, management, and organi#ations.

Describe the characteristics of a digital firm.

• "ignificant business relationships with customers, suppliers, and employees are digitally

enabled and mediated.

• %ore business processes are accomplished through digital networks spanning the entire

organi#ation or linking multiple organi#ations.

• &ey corporate assets ' intellectual property, core competencies, and financial and human

assets ' are managed through digital means.

• They sense and respond to their environments far more rapidly than traditional firms.

• They offer e(traordinary opportunities for more fle(ible global organi#ation and

management, practicing time-shifting and space-shifting.

Describe the challenges and opportunities of globalization in a “flattened” world.

%ustomers no longer need to rely on local businesses for products and services. They can shop )*+ for

virtually anything and have it delivered to their door or desktop. %ompanies can operate )*+ from any



geographic location around the world. obs can ust as easily move across the state or across the ocean.

Employees must continually develop high-level skills through education and on-the-ob e(perience that

cannot be outsourced. usiness must avoid markets for goods and serves that can be produced offshore

much cheaper. The emergence of the Internet into a full- blown international communications system has

drastically reduced the costs of operating and transacting business on a global scale.

,. -'a ea/(" i! an informaion !"!em+ How &oe! i wor0+ -'a are i! mana#emen

or#ani*aion an& e/'no(o#" /om)onen!+

Define an information system and describe the activities it performs.

/n information system is a set of interrelated components that work together to collect, process, store,

and disseminate information to support decision making, coordination, control, analysis, and visuali#ation

in an organi#ation. In addition to supporting decision making, information systems may also helpmanagers and workers analy#e problems, visuali#e comple( subects, and create new products.

List and describe the organizational, management, and technology dimensions of information

systems.

• Or#ani*aion$ The organi#ation dimension of information systems involves issues such as

the organi#ation0s hierarchy, functional specialties, business processes, culture, and political

interest groups.

•

Mana#emen$The management dimension of information systems involves settingorgani#ational strategies, allocating human and financial resources, creating new products

and services and re-creating the organi#ation if necessary.

• Te/'no(o#"$ The technology dimension consists of computer hardware, software, data

management technology, and networking+telecommunications technology.

Distinguish between data and information and between information systems literacy and

computer literacy.

• ata are streams of raw facts representing events occurring in organi#ations or the physical

environment before they have been organi#ed and arranged into a form that people can

understand and use.

• Information is data that has been shaped into a form that is meaningful and useful to human

beings.

• Information systems literacy is a broad-based understanding of information systems. It

includes a behavioral as well as a technical approach to studying information systems.



• In contrast, computer literacy focuses primarily on knowledge of information technology. It is

limited to understanding how computer hardware and software works.

!plain how the Internet and the "orld "ide "eb are related to the other technology

components of information systems.

The Internet and World Wide Web have had a tremendous impact on the role information systems play in

organi#ations. These two tools are responsible for the increased connectivity and collaboration within and

outside the organi#ation. The Internet, World Wide Web, and other technologies have led to the redesign

and reshaping of organi#ations. They have helped transform the organi#ation0s structure, scope of

operations, reporting and control mechanisms, work practices, work flows, and products and services.

2. -'a a/a&emi/ &i!/i)(ine! are %!e& o !%&" informaion !"!em!+ How &oe! ea/'

/onri$%e o an %n&er!an&in# of informaion !"!em!+ -'a i! a !o/ioe/'ni/a( !"!em!

)er!)e/i3e+

List and describe each discipline that contributes to a technical approach to information

systems.

/ technical approach to information systems emphasi#es mathematically-based models to study

information systems and the physical technology and formal capabilities of information systems. "tudents

should know the differences between computer science 2theories of computability, computation methods,

and data storage and access methods3, management science 2development of models for decision making

and managerial practice3, and operations research 2mathematical techni4ues for optimi#ing organi#ational

parameters such as transportation, inventory control and transaction costs3.

List and describe each discipline that contributes to a behavioral approach to information

systems.

/ behavioral approach to information systems focuses on 4uestions such as strategic business integration,

behavioral problems of systems utili#ation, system design and implementation, social and organi#ational

impacts of information systems, political impacts of information systems, and individual responses to

information systems. "olutions to problems created by information technology are primarily changes in

attitudes, management, organi#ational policy, and behavior.

Describe the sociotechnical perspective on information systems.

/ sociotechnical perspective combines the technical approach and behavior approach to achieve optimal

organi#ational performance. Technology must be changed and designed to fit organi#ational and

individual needs and not the other way around. 5rgani#ations and individuals must also change through

training, learning, and allowing technology to operate and prosper.

C'a)er ,

GLOBAL E4BUSINESS



1. -'a are $%!ine!! )ro/e!!e!+ How are 'e" re(ae& o informaion !"!em!+

Define business processes and describe the role they play in organizations.

/ business process is a logically related set of activities that define how specific business tasks are performed. usiness processes are the ways in which organi#ations coordinate and organi#e work

activities, information, and knowledge to produce their valuable products or services.

6ow well a business performs depends on how well its business processes are designed and

coordinated. Well-designed business processes can be a source of competitive strength for a company if it

can use the processes to innovate or perform better than its rivals. %onversely, poorly designed or

e(ecuted business processes can be a liability if they are based on outdated ways of working and impede

responsiveness or efficiency.

Describe the relationship between information systems and business processes.

Information systems automate manual business processes and make an organi#ation more efficient. ata

and information are available to a wider range of decision-makers more 4uickly when information

systems are used to change the flow of information. Tasks can be performed simultaneously rather than

se4uentially, speeding up the completion of business processes. Information systems can also drive new

business models that perhaps wouldn0t be possible without the technology.

,. How &o !"!em! !er3e 'e 3ario%! (e3e(! of mana#emen in a $%!ine!!+

Describe the characteristics of transaction processing systems #$%&' and the roles they play in

a business.

• Transaction processing systems 2T7"3 are computeri#ed systems that perform and record daily

routine transactions necessary in conducting business8 they serve the organi#ation0s operational

level. The principal purpose of systems at this level is to answer routine 4uestions and to track the

flow of transactions through the organi#ation.

• /t the operational level, tasks, resources, and goals are predefined and highly structured.

• !anagers need T7" to monitor the status of internal operations and the firm0s relationship with

its e(ternal environment.

• T7" are maor producers of information for other types of systems.

• Transaction processing systems are often so central to a business that T7" failure for a few hours

can lead to a firm0s demise and perhaps that of other firms linked to it.

Describe the characteristics of management information systems #(I&' and e!plain how (I&

differ from $%& and from D&&.

• !iddle management needs systems to help with monitoring, controlling, decision-making, and

administrative activities.

• !I" provide middle managers with reports on the organi#ation0s current performance. This

information is used to monitor and control the business and predict future performance.



• !I" summari#e and report the company0s basic operations using data supplied by T7"s. The

basic transaction data from T7" are compressed and usually presented in reports that are

produced on a regular schedule.

• !I" serve managers primarily interested in weekly, monthly, and yearly results, although some

!I" enable managers to drill down to see daily or hourly data if re4uired.

• !I" generally provide answers to routine 4uestions that have been specified in advance and have

a predefined procedure for answering them.

• !I" systems generally are not fle(ible and have little analytical capability.

• !ost !I" use simple routines, such as summaries and comparisons, as opposed to sophisticated

mathematical models or statistical techni4ues.

• !I" differs from T7" in that !I" deals with summari#ed and compressed data from the T7".

While !I" have an internal orientation, "" will often use data from e(ternal sources, as well as data

from T7" and !I". "" supports 9what-if: analyses rather than a long-term structured analysis inherent

in !I" systems. !I" are generally not fle(ible and provide little analytical capabilities. In contrast, ""

are designed for analytical purposes and are fle(ible.

Describe the characteristics of decision support systems #D&&' and how they benefit

businesses.

• ecision-support systems 2""3 support nonroutine decision-making for middle managers.

• "" provide sophisticated analytical models and data analysis tools to support semistructured

and unstructured decision-making activities.

• "" use data from T7", !I", and e(ternal sources, in condensed form, allowing decision makers

to perform 9what-if: analysis.

• "" focus on problems that are uni4ue and rapidly changing8 procedures for arriving at a

solution may not be fully predefined.

• "" are designed so that users can work with them directly8 these systems include

interactive, user-friendly software.

Describe the characteristics of e!ecutive support systems #&&' and e!plain how these systems

differ from D&&.

• E(ecutive support systems help senior managers address strategic issues and long-term trends,

both in the firm and in the e(ternal environment.

• E"" address nonroutine decisions re4uiring udgment, evaluation, and insight because there is

no agreed-on procedure for arriving at a solution.

•E"" provide a generali#ed computing and communications capacity that can be applied to achanging array of problems.



• E"" are designed to incorporate data about e(ternal events, such as new ta( laws or competitors,

but they also draw summari#ed information from internal !I" and "".

• E"" are designed for ease-of-use and rely heavily on graphical presentations of data.

2. How &o !"!em! 'a (in0 'e ener)ri!e im)ro3e or#ani*aiona( )erforman/e+

!plain how enterprise applications improve organizational performance.

/n organi#ation operates in an ever-increasing competitive and global environment. The successful

organi#ation focuses on the efficient e(ecution of its processes, customer service, and speed to market.

Enterprise applications provide an organi#ation with a consolidated view of its operations across different

functions, levels, and business units. Enterprise applications allow an organi#ation to efficiently e(change

information among its functional areas, business units, suppliers, and customers.

Define enterprise systems, supply chain management systems, customer relationship

management systems, and )nowledge management systems and describe their business

benefits.

Ener)ri!e !"!em! integrate the key business processes of an organi#ation into a single central data

repository. This makes it possible for information that was previously fragmented in different systems to

be shared across the firm and for different parts of the business to work more closely together.

usiness benefits include$

• Information flows seamlessly throughout an organi#ation, improving coordination, efficiency, and

decision making.

• ;ives companies the fle(ibility to respond rapidly to customer re4uests while producing and

stocking only that inventory necessary to fulfill e(isting orders.

• Increases customer satisfaction by improving product shipments, minimi#ing costs, and

improving a firm0s performance.

• Improves decision making by improving the 4uality of information for all levels of management.

That leads to better analyses of overall business performance, more accurate sales and production

forecasts, and higher profitability.

In short, !%))(" /'ain mana#emen !"!em! help businesses better manage relationships with their

suppliers. 5bective of "%!$ ;et the right amount of products from the companies0 source to their point

of consumption with the least amount of time and with the lowest cost. "%! provides information to help

suppliers, purchasing firms, distributors, and logistics companies share information about orders,

production, inventory levels, and delivery of products and services so that they can source, produce, and

deliver goods and services efficiently. "%! helps organi#ations achieve great efficiencies by automating



parts of these processes or by helping organi#ations rethink and streamline these processes. "%! is

important to a business because through its efficiency it can coordinate, schedule, and control the delivery

of products and services to customers.


ecide when and what to produce, store, and move

<apidly communicate orders

Track the status of orders

%heck inventory availability and monitor inventory levels

<educe inventory, transportation, and warehousing costs

Track shipments

7lan production based on actual customer demand

<apidly communicate changes in product design

C%!omer re(aion!'i) mana#emen !"!em! enable a business to better manage its relationships with

e(isting and potential customers. With the growth of the Web, potential customers can easily comparison

shop for retail and wholesale goods and even raw materials, so treating customers better has become very

important.


• %<! systems provide information to coordinate all the business processes that deal with

customers in sales, marketing, and service to optimi#e revenue, customer satisfaction, and

customer retention. This information helps firms identify, attract, and retain the most profitable

customers8 provide better service to e(isting customers8 and increase sales.

• %<! systems consolidate customer data from multiple sources and provide analytical tools for

answering 4uestions such as$ What is the value of a particular customer to the firm over his+her

lifetime=

•%<! tools integrate a business0s customer-related processes and consolidate customer information from multiple communication channels, giving the customer a consolidated view of

the company.

• etailed and accurate knowledge of customers and their preferences help firms increase the

effectiveness of their marketing campaigns and provide higher-4uality customer service and

support.

5now(e&#e mana#emen !"!em! enable organi#ations to better manage processes for capturing and

applying knowledge and e(pertise. These systems collect all relevant knowledge and e(perience in the

firm, and make it available wherever and whenever it is needed to improve business processes and

management decisions. They also link the firm to e(ternal sources of knowledge.




• &!" support processes for ac4uiring, storing, distributing, and applying knowledge, as well as

processes for creating new knowledge and integrating it into the organi#ation.

• &!" include enterprise-wide systems for managing and distributing documents, graphics, andother digital knowledge obects8 systems for creating corporate knowledge directories of

employees with special areas of e(pertise8 office systems for distributing knowledge and

information8 and knowledge work systems to facilitate knowledge creation.

• &!" use intelligent techni4ues that codify knowledge and e(perience for use by other members

of the organi#ation and tools for knowledge discovery that recogni#e patterns and important

relationships in large pools of data.

!plain how intranets and e!tranets help firms integrate information and business processes.

ecause intranets and e(tranets share the same technology and software platforms as the Internet, they areeasy and ine(pensive ways for companies to increase integration and e(pedite the flow of information

within the company 2intranets alone3 and with customers and suppliers 2e(tranets3. They provide ways to

distribute information and store corporate policies, programs, and data. oth types of nets can be

customi#ed by users and provide a single point of access to information from several different systems.

usinesses can connect the nets to transaction processing systems easily and 4uickly. Interfaces between

the nets and T7", !I", "", and E"" systems provide input and output for users.



CHAPTER 2

INFORMATION SYSTEMS ORGANI6ATIONS AND STRATEGY

1. -'i/' fea%re! of or#ani*aion! &o mana#er! nee& o 0now a$o% o $%i(& an& %!e informaion

!"!em! !%//e!!f%(("+ -'a i! 'e im)a/ of informaion !"!em! on or#ani*aion!+

Define an organization and compare the technical definition of organizations with the behavioral

definition.

"tudents can make use of >igures ?') and >igure ?'? in answering this 4uestion.

The technical definition defines an organi#ation as a stable, formal social structure that takes resources

from the environment and processes them to produce outputs. This definition of an organi#ation focuses

on three elements$ %apital, labor, and production and products for consumption. The technical definition

also implies that organi#ations are more stable than an informal group, are formal legal entities, and are

social structures.

The behavioral definition states that an organi#ation is a collection of rights, privileges, obligations, and

responsibilities that are delicately balanced over a period of time through conflict and conflict resolution.

This definition highlights the people within the organi#ation, their ways of working, and their

relationships.

The technical definition shows us how a firm combines capital, labor, and information technology. The

behavioral definition e(amines how information technology impacts the inner workings of the

organi#ation.

Identify and describe the features of organizations that help e!plain differences in

organizations* use of information systems.

%ommon features for organi#ations include$

• Ro%ine! an& $%!ine!! )ro/e!!e!7 "tandard operating procedures have been developed that

allow the organi#ation to become productive and efficient thereby reducing costs over time.

• Or#ani*aiona( )o(ii/!7 ivergent viewpoints about how resources, rewards, and punishments

should be distributed bring about political resistance to organi#ation change.

• Or#ani*aiona( /%(%re7 /ssumptions that define the organi#ational goals and products create a

powerful restraint on change, especially technological change.

• Or#ani*aiona( en3ironmen!7 <eciprocal relationships e(ist between an organi#ation and

environments8 information systems provide organi#ations a way to identify e(ternal changes that

might re4uire an organi#ational response.



• Or#ani*aiona( !r%/%re7 Information systems reflect the type of organi#ational structure -

entrepreneurial, machine bureaucracy, divisionali#ed bureaucracy, professional bureaucracy, or

adhocracy.

Describe the major economic theories that help e!plain how information systems affect

organizations.

The two economic theories discussed in the book are transaction cost theory and agency theory. The

transaction cost theory is based on the notion that a firm incurs transaction costs when it buys goods in

the marketplace rather than making products for itself. Traditionally, firms sought to reduce transaction

costs by getting bigger, hiring more employees, vertical and hori#ontal integration, and small-

company takeovers. Information technology helps firms lower the cost of market participation

2transaction costs3 and helps firms shrink in si#e while producing the same or greater amount of output.

The agency theory views the firm as a ne(us of contracts among interested individuals. The owner

employs agents 2employees3 to perform work on his or her behalf and delegates some decision- makingauthority to the agents. /gents need constant supervision and management, which introduces

management costs. /s firms grow, management costs rise. Information technology reduces agency costs

by providing information more easily so that managers can supervise a larger number of people with

fewer resources.

Describe the major behavioral theories that help e!plain how information systems affect

organizations.

ehavioral theories, from sociology, psychology, and political science, are useful for describing the

behavior of individual firms. ehavioral researchers theori#e that information technology could changethe decision-making hierarchy by lowering the costs of information ac4uisition and distribution. IT could

eliminate middle managers and their clerical support by sending information from operating units directly

to senior management and by enabling information to be sent directly to lower-level operating units. It

even enables some organi#ations to act as virtual organi#ations because they are no longer limited by

geographic locations.

5ne behavioral approach views information systems as the outcome of political competition between

organi#ational subgroups. IT becomes very involved with this competition because it controls who has

access to what information, and information systems can control who does what, when, where, and how.

!plain why there is considerable organizational resistance to the introduction of information

systems.

There is considerable organi#ational resistance to new information systems because they change many

important organi#ational dimensions, such as culture, structure, politics, and work. @eavitt puts forth a

model that says that changes in technology are absorbed, deflected, and defeated by organi#ational task

arrangements, structures, and people. In this model the only way to bring about change is to change the

technology, tasks, structure, and people simultaneously. In a second model, the authors speak of the need

to unfree#e organi#ations before introducing an innovation, 4uickly implementing the new system, and

then refree#ing or institutionali#ing the change.

Describe the impact of the Internet and disruptive technologies on organizations.



The Internet increases the accessibility, storage, and distribution of information and knowledge for

organi#ations8 nearly any information can be available anywhere at any time. The Internet increases the

scope, depth, and range of information and knowledge storage. It lowers the cost and raises the 4uality of

information and knowledge distribution. That is, it lowers transaction costs and information ac4uisition

costs. y using the Internet, organi#ations may reduce several levels of management, enabling closer and

4uicker communication between upper levels of management and the lower levels. The Internet also

lowers agency costs.

isruptive technologies caused by technological changes can have different effects on different

companies depending on how they handle the changes. "ome companies create the disruptions and

succeed very well. 5ther companies learn about the disruption and successfully adopt it. 5ther companies

are obliterated by the changes because they are very efficient at doing what no longer needs to be done.

"ome disruptions mostly benefit the firm. 5ther disruptions mostly benefit consumers.

,. How &oe! Porer8! /om)eii3e for/e! mo&e( 'e() /om)anie! &e3e(o) /om)eii3e !rae#ie!

%!in# informaion !"!em!+

Define %orter*s competitive forces model and e!plain how it wor)s.

This model provides a general view of the firm, its competitors, and the firm0s environment. 7orter0s

model is all about the firm0s general business environment. In this model, five competitive forces shape

the fate of the firm$

traditional competitors

new market entrants

substitute products and services

customers

suppliers

Describe what the competitive forces model e!plains about competitive advantage.

"ome firms do better than others because they either have access to special resources that others do not,

or they are able to use commonly available resources more efficiently. It could be because of superior

knowledge and information assets. <egardless, they e(cel in revenue growth, profitability, or productivity

growth, ultimately increasing their stock market valuations compared to their competitors.

List and describe four competitive strategies enabled by information systems that firms can pursue.

The four generic strategies, each of which is often enabled by using information technology and systems

include$

• Low4/o! (ea&er!'i)7 @owest operational costs and the lowest prices.



• Pro&%/ &iffereniaion$ Enable new products and services, or greatly change the customer

convenience in using e(isting products and services.

• Fo/%! on mar0e ni/'e$ Enable a specific market focus and serve this narrow target market

better than competitors.

• Sren#'en /%!omer an& !%))(ier!$ Tighten linkages with suppliers and develop intimacy with

customers.

Describe how information systems can support each of these competitive strategies and give

e!amples.

• Low4/o! (ea&er!'i)$ Ase information systems to improve inventory management, supply

management, and create efficient customer response systems. E(ample$ Wal-!art.

• Pro&%/ &iffereniaion$ Ase information systems to create products and services that are

customi#ed and personali#ed to fit the precise specifications of individual customers. E(ample$

;oogle, eay, /pple, @ands0 End.

• Fo/%! on mar0e ni/'e$ Ase information systems to produce and analy#e data for finely tuned

sales and marketing techni4ues. /naly#e customer buying patterns, tastes, and preferences closely

in order to efficiently pitch advertising and marketing campaigns to smaller target markets.

E(ample$ 6ilton 6otels, 6arrah0s.

• Sren#'en /%!omer an& !%))(ier inima/ie!$ Ase information systems to facilitate direct

access from suppliers to information within the company. Increase switching costs and loyalty to

the company. E(ample$ I!, /ma#on.com

!plain why aligning I$ with business objectives is essential for strategic use of systems.

The basic principle of IT strategy for a business is to ensure the technology serves the business and not

the other way around. The more successfully a firm can align its IT with its business goals, the more

profitable it will be. usiness people must take an active role in shaping IT to the enterprise. They cannot

ignore IT issues. They cannot tolerate failure in the IT area as ust a nuisance to work around. They mustunderstand what IT can do, how it works, and measure its impact on revenues and profits.

2. How &o 'e 3a(%e /'ain an& 3a(%e we$ mo&e(! 'e() $%!ine!!e! i&enif" o))or%niie! for

!rae#i/ informaion !"!em a))(i/aion!+

Define and describe the value chain model.

The value chain model highlights specific activities in the business where competitive strategies can best

be applied and where information systems will most likely have a strategic impact. The model identifies

specific, critical leverage points where a firm can use information technology most effectively to enhance

its competitive position. The value chain model views the firm as a series of basic activities that add a



margin of value to a firm0s products or services. The activities are categori#ed as either primary or support

activities. 7rimary activities are most directly related to production and distribution of the firm0s products

and services, which create value for the customer. "upport activities make the delivery of primary

activities possible and consist of organi#ation infrastructure. / firm0s value chain can be linked to the

value chains of its suppliers, distributors, and customers.

!plain how the value chain model can be used to identify opportunities for information

systems.

Information systems can be used at each stage of the value chain to improve operational efficiency, lower

costs, improve profit margins, and forge a closer relationship with customers and suppliers. 5rgani#ations

can use information systems to help e(amine how value-adding activities are performed at each stage of

the value chain. Information systems can improve the relationship with customers 2customer relationship

management systems3 and with suppliers 2supply chain management systems3 who may be outside the

value chain but belong to an e(tended value chain. Information systems can help businesses track

benchmarks in the organi#ation and identify best practices of their particular industries. /fter analy#ingvarious stages in the value chain, an organi#ation can devise a list of candidate applications for

information systems.

Define the value web and show how it is related to the value chain.

/ value web is a collection of independent firms that use information technology to coordinate their value

chains to collectively produce a product or service. It is more customers driven and operates in a less

linear fashion than the traditional value chain. The value web is a networked system that can synchroni#e

the business processes of customers, suppliers, and trading partners among different companies in an

industry or in related industries.

!plain how the value web helps businesses identify opportunities for strategic information

systems.

Information systems enable value webs that are fle(ible and adaptive to changes in supply and demand.

<elationships can be bundled or unbundled in response to changing market conditions. >irms can

accelerate their time to market and to customers by optimi#ing their value web relationships to make

4uick decisions on who can deliver the re4uired products or services at the right price and location.

Information systems make it possible for companies to establish and operate value webs.

De!/ri$e how 'e Inerne 'a! /'an#e& /om)eii3e for/e! an& /om)eii3e a&3ana#e.

The Internet has nearly destroyed some industries and severely threatened others. The Internet has also

created entirely new markets and formed the basis of thousands of new businesses. The Internet has

enabled new products and services, new business models, and new industries to rapidly develop.

ecause of the Internet, competitive rivalry has become much more intense. Internet technology is based

on universal standards that any company can use, making it easy for rivals to compete on price alone and

for new competitors to enter the market. ecause information is available to everyone, the Internet raises

the bargaining power of customers, who can 4uickly find the lowest- cost provider on the Web.



CHAPTER 9

ETHICAL AND SOCIAL ISSUES

1. -'a e'i/a( !o/ia( an& )o(ii/a( i!!%e! are rai!e& $" informaion !"!em!+

!plain how ethical, social, and political issues are connected and give some e!amples.

Information technology has raised new possibilities for behavior for which laws and rules of acceptable

conduct have not yet been developed. The introduction of new information technology has a ripple effect,

raising new ethical, social, and political issues that must be dealt with on the individual, social, and

political levels. Ethical, social, and political issues are closely related. Ethical issues confront individuals

who must choose a course of action, often in a situation in which two or more ethical principles are in

conflict 2a dilemma3. "ocial issues spring from ethical issues as societies develop e(pectations in

individuals about the correct course of action. 7olitical issues spring from social conflict and are mainly

concerned with using laws that prescribe behavior to create situations in which individuals behave

correctly.

E(amples can identify issues surrounding the five moral dimensions of the information age. These

include$ information rights and obligations, property rights and obligations, accountability and control,

system 4uality, and 4uality of life. List and describe the )ey technological trends that heighten ethical concerns.

B%omputing power doubles every 1C months

Bata storage costs rapidly declining

Bata analysis advances

BDetworking advances and the Internet

Increasing computer power, storage, and networking capabilities including the Internet can e(pand the

reach of individual and organi#ational actions and magnify their impacts. The ease and anonymity with

which information can be communicated, copied, and manipulated in online environments are

challenging traditional rules of right and wrong behavior.

Differentiate between responsibility, accountability, and liability.

BRe!)on!i$i(i" is a key element of ethical actions. <esponsibility means that you accept the potential

costs, duties, and obligations for the decisions you make.

BA//o%na$i(i" is a feature of systems and social institutions. It means that mechanisms are in place to

determine who took responsible action.

BLia$i(i" 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 organi#ations.

,. -'a !)e/ifi/ )rin/i)(e! for /on&%/ /an $e %!e& o #%i&e e'i/a( &e/i!ion!+

List and describe the five steps in an ethical analysis.

• Identify and describe clearly the facts.

• efine the conflict or dilemma and identify the higher-order values involved.

• Identify the stakeholders.

• Identify the options that you can reasonably take.

• Identify the potential conse4uences of your options.

Identify and describe si! ethical principles.

• ;olden <ule. o unto others as you would have them do unto you

• Immanuel &ant0s %ategorical Imperative. If an action is not right for everyone to take, it

is not right for anyone



• escartes0 <ule of %hange. If an action cannot be taken repeatedly, it is not right to take

at all

• Atilitarian 7rinciple. Take the action that achieves the higher or greater value

• <isk /version 7rinciple. Take the action that produces the least harm or the least

potential cost

• 9Do >ree @unch: <ule. /ssume that virtually all tangible and intangible obects are

owned by someone else unless there is a specific declaration otherwise.

These principles should be used in conunction with an ethical analysis to guide decision making. The

ethical analysis involves identifying the facts, values, stakeholders, options, and conse4uences of actions.

5nce completed, you can consider which ethical principle to apply to a situation to arrive at a udgment.

+. "hy do contemporary information systems technology and the Internet pose challenges to

the protection of individual privacy and intellectual property

Define privacy and fair information practices.

Pri3a/" is the claim of individuals to be left alone, free from surveillance or interference from other

individuals or organi#ations, including the state. %laims of privacy are also involved at the workplace.

Fair informaion )ra/i/e! are a set of principles governing the collection and use of information about

individuals. >I7 principles are based on the notion of a mutuality of interest between the record holder

and the individual.

!plain how the Internet challenges the protection of individual privacy and intellectual

property.

%ontemporary information systems technology, including Internet technologies, challenges traditional

regimens for protecting individual privacy and intellectual property. ata storage and data analysis

technology enables companies to easily gather personal data about individuals from many different

sources and analy#e these data to create detailed electronic profiles about individuals and their

behaviors. ata flowing over the Internet can be monitored at many points. The activities of Web site

visitors can be closely tracked using cookies, Web beacons, and other Web monitoring tools. Dot all Web

sites have strong privacy protection policies, and they do not always allow for informed consent regarding

the use of personal information.

!plain how informed consent, legislation, industry self- regulation, and technology tools help

protect the individual privacy of Internet users.

The online industry prefers self-regulation rather than having state and federal governments passing

legislation that tightens privacy protection.

In >ebruary )F, the >ederal Trade %ommission 2>T%3 began the process of e(tending its fair

information practices doctrine to behavioral targeting. The >T% held hearings to discuss its program for

voluntary industry principles for regulating behavioral targeting. The online advertising trade group Detwork /dvertising Initiative, published its own self-regulatory principles that largely agreed with the

>T%. Devertheless, the government, privacy groups, and the online ad industry are still at loggerheads

over two issues. 7rivacy advocates want both an opt-in policy at all sites and a national o Dot Track list.

The industry opposes these moves and continues to insist on an opt-out capability being the only way to

avoid tracking. Devertheless, there is an emerging consensus among all parties that greater transparency

and user control 2especially making opt-out of tracking the default option3 is re4uired to deal with

behavioral tracking.

7rivacy protections have also been added to recent laws deregulating financial services and safeguarding

the maintenance and transmission of health information about individuals. The ;ramm-@each-liley /ct

of 1FFF, which repeals earlier restrictions on affiliations among banks, securities firms, and insurancecompanies, includes some privacy protection for consumers of financial services. /ll financial institutions



are re4uired to disclose their policies and practices for protecting the privacy of nonpublic personal

information and to allow customers to opt out of information-sharing arrangements with nonaffiliated

third parties.

The 6ealth Insurance 7ortability and /ccountability /ct of 1FFG 26I7//3, which took effect on /pril 1*,

)?, includes privacy protection for medical records. The law gives patients access to their personal

medical records maintained by healthcare providers, hospitals, and health insurers and the right to

authori#e how protected information about them can be used or disclosed. octors, hospitals, and other

healthcare providers must limit the disclosure of personal information about patients to the minimum

amount necessary to achieve a given purpose.

List and define three different regimes that protect intellectual property rights

• Trade secrets

• %opyright

• 7atent law

Traditional copyright law is insufficient to protect against software piracy because digital material

can be copied so easily. Internet technology also makes intellectual property even more difficult to protect because digital material can be copied easily and transmitted to many different locations

simultaneously over the Det. Web pages can be constructed easily using pieces of content from other

Web sites without permission.

CHAPTER :

IT INFRASTRUCTURE

1. -'a i! IT infra!r%/%re an& w'a are i! /om)onen!+

Define I$ infrastructure from both a technology and a services perspective.

Te/'ni/a( )er!)e/i3e is defined as the shared technology resources that provide the platform for the

firm0s specific information system applications. It consists of a set of physical devices and softwareapplications that are re4uired to operate the entire enterprise.

Ser3i/e )er!)e/i3e is defined as providing the foundation for serving customers, working with vendors,

and managing internal firm business processes. In this sense, IT infrastructure focuses on the services

provided by all the hardware and software. IT infrastructure is a set of firm-wide services budgeted by

management and comprising both human and technical capabilities.

List and describe the components of I$ infrastructure that firms need to manage.

IT infrastructure includes hardware, software, and services$

1. %omputing platforms$ Includes mainframes, midrange computers, desktop and laptop computers,

and mobile handheld devices ' anything that connect employees, customers, and suppliers into a

coherent digital environment.

). Telecommunications services$ ata, voice, and video connectivity between employees,

customers, and suppliers.

?. ata management$ "tore, manage and analy#e data.

*. /pplication software$ Includes enterprise resource planning, customer relationship management,

supply chain management, and knowledge management systems.

H. 7hysical facilities management$ evelop and manage the physical installations for computing,

telecommunications, and data management.

G. IT management$ 7lanning and developing the infrastructure, coordinate IT services among

business units, manage accounting for IT e(penditures, and provide proect management.

. IT standards$ 7olicies that determine which information technology will be used, when, and how.

C. IT education$ Employee training in system use and management training for IT investments.



F. IT research and development$ <esearch future IT proects and investments that can help the firm

differentiate itself from competitors.

,.-'a are 'e !a#e! an& e/'no(o#" &ri3er! of IT infra!r%/%re e3o(%ion+

List each of the eras in I$ infrastructure evolution and describe its distinguishing

characteristics.

1. ;eneral-purpose mainframe and minicomputer era 21FHF to present3$ %onsists of a mainframe

performing centrali#ed processing that could be networked to thousands of terminals and eventually

some decentrali#ed and departmental computing using networked minicomputers.

). 7ersonal computer era 21FC1 to present3$ ominated by the widespread use of standalone

desktop computers with office productivity tools.

?. %lient+server era 21FC? to present3$ %onsists of desktop or laptop clients networked to more

powerful server computers that handle most of the data management and processing.

*. Enterprise computing era 21FF) to present3$ efined by large numbers of 7%s linked together

into local area networks and the growing use of standards and software to link disparate networks

and devices into an enterprise-wide network so that information can flow freely across theorgani#ation.

H. %loud and mobile computing era 2) to present3$ / model of computing where firms and

individuals obtain computing power and software applications over the Internet, rather than

purchasing their own hardware and software.

Define and describe the following "eb server, application server, multitiered client/server

architecture.

1. Web server$ "oftware that manages re4uests for Web pages on the computer where they are

stored and that delivers the page to the user s computer.

). /pplication server$ "oftware that handles all application operations between browser-basedcomputers and a company0s back-end business applications or databases.

?. !ultitiered client+server architecture$ %lient+server network in which the work of the entire

network is balanced over several different levels of servers

Describe (oore*s Law and the Law of (ass Digital &torage

1. Moore8! Law7 The number of components on a chip with the smallest manufacturing costs per

component 2generally transistors3 had doubled each year. !oore later reduced the rate of growth

to a doubling every two years.

). Law of Ma!! Di#ia( Sora#e7 The amount of digital information is roughly doubling every

year. The cost of storing digital information is falling at an e(ponential rate of 1 percent a year.

?. oth of these concepts e(plain developments that have taken place in computer processing,

memory chips, storage devices, telecommunications and networking hardware and software, and

software design that have e(ponentially increased computing power while e(ponentially

reducing costs.

Describe how networ) economics, declining communication costs, and technology standards

affect I$ infrastructure.

1. Newor0 e/onomi/!$ !etcalfe0s @aw helps e(plain the mushrooming use of computers by

showing that a network s value to participants grows e(ponentially as the network takes on more

members. /s the number of members in a network grows linearly, the value of the entire system

grows e(ponentially and theoretically continues to grow forever as members increase.

). De/(inin# /omm%ni/aion /o!!7 <apid decline in communication costs and the e(ponential

growth in the si#e of the Internet is a driving force that affects the IT infrastructure. /s



communication costs fall toward a very small number and approach #ero, utili#ation of

communication and computing facilities e(plodes.

?. Te/'no(o#" !an&ar&!7 ;rowing agreement in the technology industry to use computing and

communication standards that define specifications that establish the compatibility of products

and the ability to communicate in a network. Technology standards unleash powerful economies

of scale and result in price declines as manufacturers focus on the products built to a singlestandard. Without economies of scale, computing of any sort would be far more

*. e(pensive than is currently the case.

2. -'a are 'e /%rren ren&! in !ofware )(aform!+

Define and describe open source software and Linu! and e!plain their business benefits.

5pen-source software provides all computer users with free access to the program code so they can

modify the code, fi( errors in it, or to make improvements. 5pen-source software is not owned by

any company or individual. / global network of programmers and users manage and modify the

software. y definition, open-source software is not restricted to any specific operating system or

hardware technology.

@inu( is the most well-known open-source software. It0s a ADI-like operating system that can be

downloaded from the Internet, free of charge, or purchased for a small fee from companies that

provide additional tools for the software. It is reliable, compactly designed, and capable of running

on many different hardware platforms, including servers, handheld computers, and consumer

electronics. @inu( has become popular during the past few years as a robust low-cost alternative to

ADI and the Windows operating system.

Thousands of open-source programs are available from hundreds of Web sites. usinesses can

choose from a range of open-source software including operating systems, office suites, Web

browsers, and games. 5pen-source software allows businesses to reduce the total cost of ownership.

It provides more robust software that0s often more secure than proprietary software.

Define 0ava and 1ja! and e!plain why they are important.

;a3a$ ava is a programming language that delivers only the software functionality needed for a

particular task. With ava, the programmer writes small programs called applets that can run on

another machine on a network. With ava, programmers write programs that can e(ecute on a variety

of operating systems and environments. >urther, any program could be a series of applets that are

distributed over networks as they are needed and as they are upgraded.

ava is important because of the dramatic growth of Web applications. ava is an operating system-

independent, processor-independent, obect-oriented programming language that can run on multiple

hardware platforms. It provides a standard format for data e(change on Web sites

A<a$ /a( is short for /synchronous ava"cript and !@. It allows a client and server to e(change

small pieces of data behind the scene so that an entire Web page does not have to be reloaded each

time the user re4uests a change. It0s another Web development techni4ue for creating interactive Web

applications that make it easier and more efficient for Web site users to complete forms and other

interactive features.

Define and describe "eb services and the role played by 2(L.



Web services offer a standardi#ed alternative for dealing with integration across various computer

platforms. Web services are loosely coupled software components based on !@ and open Web

standards that are not product specific and can work with any application software and operating system.

They can be used as components of Web-based applications linking the systems of two different

organi#ations or to link disparate systems of a single company. Web services are not tied to a particular

operating system or programming language. ifferent applications can use them to communicate with

each other in a standard way without time-consuming custom coding.

usinesses use Web services to tie their Web sites with e(ternal Web sites creating an apparently

seamless e(perience for users. The benefit derives from not having to re-create applications for each

business partner or specific functions within a single company.

!@ provides a standard format for data e(change, enabling Web services to pass data from one process

to another. It performs presentation, communication, and storage of data whereas 6T!@ simply

describes how data is presented on Web pages. !@ allows computers to manipulate and interpret data

automatically and perform operations on data without human intervention.

3ame and describe the three e!ternal sources for software.

Sofware )a/0a#e! an& ener)ri!e !ofware$ 7rewritten commercially available set of software

programs that eliminates the need for a firm to write its own software program for certain functions like

payroll processing or order handling. @arge-scale enterprise software systems provide a single,

integrated, worldwide software system for firms at a cost much less than they would pay if they

developed it themselves.

C(o%&4$a!e& !ofware !er3i/e! an& oo(!$ / business that delivers and manages applications and

computer services from remote computer centers to multiple users using the Internet or a private

network. Instead of buying and installing software programs, subscribing companies can rent the same

functions from these services. Asers pay for the use of this software either on a subscription or a per-

transaction basis. The business must carefully assess the costs and benefits of the service, weighing all

people, organi#ational, and technology issues. Ita must ensure it can integrate the software with its

e(isting systems and deliver a level of service and performance that is acceptable for the business

.

O%!o%r/in# /%!om a))(i/aion &e3e(o)men$ /n organi#ation contracts its custom software

development or maintenance of e(isting legacy programs to outside firms, fre4uently firms that operate

offshore in low-wage areas of the world. /n outsourcer often has the technical and management skills to

do the ob better, faster, and more efficiently. Even though it0s often cheaper to outsource the

maintenance of an IT infrastructure and the development of new systems to e(ternal vendors, a businessmust weight the pros and cons

Define and describe software mashups and apps.

Ma!'%)! are new software applications and services based on combining different online software

applications. Asers create new software applications and services by combining different online software

applications into a new application. The idea is to take different sources and produce a new work that is

9greater than: the sum of its parts. Web mashups combine the capabilities of two or more online

applications to create a kind of hybrid that provides more customer value than the original sources alone.

A))! are small pieces of software programs that are downloaded to computers or cell phones. /pps turnmobile handheld devices into general-purpose computing tools. They cost much less than full-fledged



software programs and perform one particular task. They tie customers to a specific hardware platform

like the /pple i7hone or /ndroid operating system and increase switching costs. usiness-related apps

allow users to create and edit documents, connect to corporate systems, schedule and participate in

meetings, track shipments, and dictate voice messages.

usinesses benefit most from these new tools and trends by not having to re-invent the wheel. /pps have

already been developed by someone else and a business can use them for its own purposes. !ashups let a

business combine previously developed Web applications into new ones with new purposes. They don0t

have to re-invent the previous applications from scratchJ merely use them in the new processes.

C'a)er =

Daa$a!e!

1. -'a are 'e )ro$(em! of mana#in# &aa re!o%r/e! in a ra&iiona( fi(e en3ironmen an& 'ow

are 'e" !o(3e& $" a &aa$a!e mana#emen !"!em+

List and describe each of the components in the data hierarchy.

>igure G-1 shows a sample data hierarchy. The data hierarchy includes bits, bytes, fields, records, files,

and databases. ata are organi#ed in a hierarchy that starts with the bit, which is represented by either a

2off3 or a 1 2on3. its are grouped to form a byte that represents one character, number, or symbol. ytes

are grouped to form a field, such as a name or date, and related fields are grouped to form a record.

<elated records are collected to form files, and related files are organi#ed into a database.

Define and e!plain the significance of entities, attributes, and )ey fields.

• Entity is a person, place, thing, or event on which information is obtained.

• Attribute is a piece of information describing a particular entity.

• Key field is a field in a record that uni4uely identifies instances of that uni4ue record so that it

can be retrieved, updated, or sorted. >or e(ample, a person0s name cannot be a key because

there can be another person with the same name, whereas a social security number is uni4ue.

/lso a product name may not be uni4ue but a product number can be designed to be uni4ue.

List and describe the problems of the traditional file environment.

7roblems with the traditional file environment include data redundancy and confusion, program-data

dependence, lack of fle(ibility, poor security, and lack of data sharing and availability. ata redundancy is

the presence of duplicate data in multiple data files. In this situation, confusion results because the data

can have different meanings in different files. 7rogram-data dependence is the tight relationship between

data stored in files and the specific programs re4uired to update and maintain those files. This dependency

is very inefficient, resulting in the need to make changes in many programs when a common piece of

data, such as the #ip code si#e, changes. @ack of fle(ibility refers to the fact that it is very difficult to

create new reports from data when needed. /d-hoc reports are impossible to generate8 a new report could

re4uire several weeks of work by more than one programmer and the creation of intermediate files to



combine data from disparate files. 7oor security results from the lack of control over data. ata sharing is

virtually impossible because it is distributed in so many different files around the organi#ation.

Define a database and a database management system and describe how it solves the problems

of a traditional file environment.

/ database is a collection of data organi#ed to service many applications efficiently by storing and

managing data so that they appear to be in one location. It also minimi#es redundant data. / database

management system 2!"3 is special software that permits an organi#ation to centrali#e data, manage

them efficiently, and provide access to the stored data by application programs.

/ !" can reduce the comple(ity of the information systems environment, reduce data redundancy and

inconsistency, eliminate data confusion, create program-data independence, reduce program development

and maintenance costs, enhance fle(ibility, enable the ad hoc retrieval of information, improve access and

availability of information, and allow for the centrali#ed management of data, their use, and security.

,. -'a are 'e ma<or /a)a$i(iie! of DBMS an& w'" i! a re(aiona( DBMS !o )owerf%(+

3ame and briefly describe the capabilities of a D4(&.

/ !" includes capabilities and tools for organi#ing, managing, and accessing the data in the database.

The principal capabilities of a !" include data definition language, data dictionary, and data

manipulation language.

• The data definition language specifies the structure and content of the database.

• The data dictionary is an automated or manual file that stores information about the data in

the database, including names, definitions, formats, and descriptions of data elements.

• The data manipulation language, such as "K@, is a speciali#ed language for accessing and

manipulating the data in the database.

Define a relational D4(& and e!plain how it organizes data.

The relational database is the primary method for organi#ing and maintaining data in information

systems. It organi#es data in two-dimensional tables with rows and columns called relations. Each table

contains data about an entity and its attributes. Each row represents a record and each column represents

an attribute or field. Each table also contains a key field to uni4uely identify each record for retrieval or

manipulation.

List and describe the three operations of a relational D4(&.

In a relational database, three basic operations are used to develop useful sets of data$ select, proect, and

oin.

• Select operation creates a subset consisting of all records in the file that meet stated criteria.

In other words, select creates a subset of rows that meet certain criteria.

• Join operation combines relational tables to provide the user with more information that is



available in individual tables.

• Project operation creates a subset consisting of columns in a table, permitting the user to

create new tables that contain only the information re4uired.

!plain why non-relational databases are useful.

There are four main reasons for the rise in non-relational databases$ cloud computing, unprecedented data

volumes, massive workloads for Web services, and the need to store new types of data. These systems use

more fle(ible data models and are designed for managing large data sets across distributed computing

networks. They are easy to scale up and down based on computing needs.

They can process structured and unstructured data captured from Web sites, social media, graphics.

Traditional relational databases aren0t able to process data from most of those sources. Don-relational

databases can also accelerate simple 4ueries against large volumes of structured and unstructured data.

There0s no need to pre-define a formal database structure or change that definition if new data are added

later.

2. -'a are !ome im)oran &aa$a!e &e!i#n )rin/i)(e!+

Define and describe normalization and referential integrity and e!plain how they contribute to

a well-designed relational database.

Dormali#ation is the process of creating small stable data structures from comple( groups of data whendesigning a relational database. Dormali#ation streamlines relational database design by removing

redundant data such as repeating data groups. / well-designed relational database will be organi#ed

around the information needs of the business and will probably be in some normali#ed form. / database

that is not normali#ed will have problems with insertion, deletion, and modification.

<eferential integrity rules ensure that relationships between coupled tables remain consistent. When one

table has a foreign key that points to another table, you may not add a record to the table with the foreign

key unless there is a corresponding record in the linked table.

Define and describe an entity-relationship diagram and e!plain its role in database design.

<elational databases organi#e data into two-dimensional tables 2called relations3 with columns and rows.

Each table contains data on an entity and its attributes. /n entity-relationship diagram graphically depicts

the relationship between entities 2tables3 in a relational database. / well-designed relational database will

not have many-to-many relationships, and all attributes for a specific entity will only apply to that entity.

Entity-relationship diagrams help formulate a data model that will serve the business well. The diagrams

also help ensure data are accurate, complete, and easy to retrieve.



9. -'a are 'e )rin/i)a( oo(! an& e/'no(o#ie! for a//e!!in# informaion from &aa$a!e! o

im)ro3e $%!ine!! )erforman/e an& &e/i!ion ma0in#+

Define big data and describe the technologies for managing and analyzing it.

Traditional databases rely on neatly organi#ed content into rows and columns. !uch of the data collected

nowadays by companies don0t fit into that mold.

Big data describes datasets with volumes so huge they are beyond the ability of typical database

management system to capture, store, and analy#e. The term doesn0t refer to any specific 4uantity of data

but it0s usually measured in the petabyte and e(abyte range. It includes structured and unstructured data

captured from Web traffic, email messages, and social media content like tweets and status messages. It

also includes machine-generated data from sensors.

ig data contains more patterns and interesting anomalies than smaller data sets. That creates the

potential to determine new insights into customer behavior, weather patterns, financial market activity

and other phenomena.

6adoop$ 5pen-source software framework that enables distributed parallel processing of huge amounts of

data across ine(pensive computers. The software breaks huge problems into smaller ones, processes each

one on a distributed network of smaller computers, and then combines the results into a smaller data set

that is easier to analy#e. It uses non-relational database processing and structured, semi-structured and

unstructured data.

In-memory computing$ rather than using disk-based database software platforms, this technology relies

primarily on a computer0s main memory for data storage. It eliminates bottlenecks that result from

retrieving and reading data in a traditional database and shortens 4uery response times. /dvances in

contemporary computer hardware technology makes in-memory processing possible.

/nalytic platforms$ Ases both relational and non-relations technology that0s optimi#ed for analy#ing large

datasets. They feature preconfigured hardware-software system designed for 4uery processing and

analytics.

List and describe the components of a contemporary business intelligence infrastructure.

usiness intelligence 2I3 infrastructures include an array of tools for obtaining useful information from

all the different types of data used by businesses today, including semi-structure and unstructured big data

in vast 4uantities. ata warehouses, data marts, 6adoop, in-memory processing, and analytical platforms

are all included in I infrastructures.

7owerful tools are available to analy#e and access information that has been captured and organi#ed in

data warehouses and data marts. These tools enable users to analy#e the data to see new patterns,

relationships, and insights that are useful for guiding decision making. These tools for consolidating,

analy#ing, and providing access to vast amounts of data to help users make better business decisions are



often referred to as business intelligence. 7rincipal tools for business intelligence include software for

database 4uery and reporting tools for multidimensional data analysis and data mining.

Describe the capabilities of online analytical processing #5L1%'.

ata warehouses support multidimensional data analysis, also known as online analytical processing

25@/73, enables users to view the same data in different ways using multiple dimensions. Each aspect of

information represents a different dimension.

5@/7 represents relationships among data as a multidimensional structure, which can be visuali#ed as

cubes of data and cubes within cubes of data, enabling more sophisticated data analysis. 5@/7 enables

users to obtain online answers to ad hoc 4uestions in a fairly rapid amount of time, even when the data are

stored in very large databases. 5nline analytical processing and data mining enable the manipulation and

analysis of large volumes of data from many perspectives, for e(ample, sales by item, by department, by

store, by region, in order to find patterns in the data. "uch patterns are difficult to find with normal

database methods, which is why a data warehouse and data mining are usually parts of 5@/7.

Define data mining, describing how it differs from 5L1% and the types of information it provides.

ata mining provides insights into corporate data that cannot be obtained with 5@/7 by finding hidden

patterns and relationships in large databases and inferring rules from them to predict future behavior. The

patterns and rules are used to guide decision making and forecast the effect of those decisions. The types

of information obtained from data mining include associations, se4uences, classifications, clusters, and

forecasts.

!plain how te!t mining and "eb mining differ from conventional data mining.

%onventional data mining focuses on data that have been structured in databases and files. Te(t mining

concentrates on finding patterns and trends in unstructured data contained in te(t files. The data may be in

email, memos, call center transcripts, survey responses, legal cases, patent descriptions, and service

reports. Te(t mining tools e(tract key elements from large unstructured data sets, discover patterns and

relationships, and summari#e the information.Web mining helps businesses understand customer behavior, evaluate the effectiveness of a particular

Web site, or 4uantify the success of a marketing campaign. Web mining looks for patterns in data through$

• Web content mining$ E(tracting knowledge from the content of Web pages.

• Web structure mining$ E(amining data related to the structure of a particular Web site.

• Web usage mining$ E(amining user interaction data recorded by a Web server whenever

re4uests for a Web site0s resources are received

CHAPTER >



TELECOMUNICATIONS

1. -'a are 'e )rin/i)a( /om)onen! of e(e/omm%ni/aion! newor0! an& 0e" newor0in#

e/'no(o#ie!+

Describe the features of a simple networ) and the networ) infrastructure for a large company.

/ simple network consists of two or more connected computers. asic network components include

computers, network interfaces, a connection medium, network operating system software, and either a

hub or a switch. The networking infrastructure for a large company relies on both public and private

infrastructures to support the movement of information across diverse technological platforms. It includes

the traditional telephone system, mobile cellular communication, wireless local-area networks,

videoconferencing systems, a corporate Web site, intranets, e(tranets, and an array of local and wide-area

networks, including the Internet. This collection of networks evolved from two fundamentally different

types of networks$ telephone networks and computer networks.

3ame and describe the principal technologies and trends that have shaped contemporary

telecommunications systems.

%lient+"erver computing, the use of packet switching, and the development of widely used

communications standards such as T%7+I7 are the three technologies that have shaped contemporary

telecommunications systems.

%lient+"erver computing has e(tended to networking departments, workgroups, factory floors, and other

parts of the business that could not be served by a centrali#ed architecture. The Internet is based on

client+server computing. 7acket "witching technology allows nearly full use of almost all available lines

and capacity. This was not possible with the traditional dedicated circuit-switching techni4ues that wereused in the past. T%7+I7 is a suite of protocols that has become the dominant standard of network

communications. 6aving a set of protocols for connecting diverse hardware and software components has

provided a universally agreed upon method for data transmission.

,. -'a are 'e main e(e/omm%ni/aion! ran!mi!!ion me&ia an& ")e! of newor0!+

3ame the different types of physical transmission media and compare them in terms of speed

and cost.

Typical speeds and costs for several of the transmission media are provided below.

Me&i%m S)ee& Co!

Twisted wire up to 1 !bps @ow

!icrowave up to GL !bps

"atellite up to GL !bps

%oa(ial cable up to 1 ;bps

>iber-optic cable up to GL Tbps 6igh

Define a L13, and describe its components and the functions of each component

/ @/D is a telecommunications network that is designed to connect personal computers and other digitaldevices within a half-mile or H-meter radius. @/Ds typically connect a few computers in a small office,



all the computers in one building, or all the computers in several buildings in close pro(imity. @/Ds

re4uire their own dedicated channels.

%omponents of a typical @/D consists of$ computers 2dedicated server and clients3, a network operating

system 2D5"3 residing on a dedicated server computer, cable 2wiring3 connecting the devices, network

interface cards 2DI%3, switches or a hub, and a router.

• 3I6 each computer on the network contains a network interface device.

• 6onnection medium Jfor linking network components8 can be a telephone wire, coa(ial

cable, or radio signal in the case of cell phone and wireless local-area networks 2wi-fi

networks3.

• 35& routes and manages communications on the network and coordinates network resources.

• Dedicated server provides users with access to shared computing resources in the network.

The server determines who gets access to data and in what se4uence.

• 6lient computers are connected to one another.

• &witches or hub act as a connection point between the computers. 6ubs are very simpledevices that connect network components and send data packets to other connected devices.

/ switch has more intelligence than a hub and can filter and forward data to a specified

destination.

• 7outer a special communications processor used to route data packets through different

networks, ensuring messages are sent to the correct address.

3ame and describe the principal networ) topologies.

The principal network topologies include$

• &tar topology: /ll devices on the network connect to a single hub and all network traffic

flows through the hub.

• 4us topology: 5ne station transmits signals, which travel in both directions along a single

transmission segment. /ll of the signals are broadcast in both directions to the entire network,

with special software to identify which components receive each message.

• 7ing topology: %onnects network components in a closed loop. !essages pass from

computer to computer in only one direction around the loop and only one station at a time

may tansmit.

2. How &o 'e Inerne an& Inerne e/'no(o#" wor0 an& 'ow &o 'e" !%))or /omm%ni/aion

an& e4$%!ine!!+

Define the Internet, describe how it wor)s and e!plain how it provides business value.

The Internet is a vast network of computers that connects millions of people all over the world. The

Internet uses the client+server model of computing and the T%7+I7 network reference model. Every

computer on the Internet is assigned a uni4ue numeric I7 address. Do one owns the Internet, and it has no

formal management organi#ation. 6owever, worldwide Internet policies are established by organi#ations

and government bodies, such as the Internet /rchitecture oard and the World Wide Web %onsortium.

The Internet must also conform to the laws of the sovereign nation-states in which it operates, as well as

the technical infrastructure that e(ist within the nation-state.



The Internet enables employees to gain remote access to the company0s internal systems through its Web

site. They are able to better service customers and suppliers, improve operational efficiency, increase

productivity, lower operational costs, have a broader market base, and reach more individual customers

on a global scale by establishing a Web presence. The cost of email and other Internet services tend to be

far lower than e4uivalent voice, postal, or over night delivery costs, making the Internet a very

ine(pensive communication medium. It is also a very fast method of communication, with messages

arriving anywhere in the world in a matter of seconds or minutes.

!plain how the Domain 3ame &ystem #D3&' and I% addressing system wor).

The Internet is based on the T%7+I7 networking protocol suite. Every computer on the Internet is assigned

a uni4ue Internet 7rotocol 2I73 address, which currently is a ?)-bit number represented by four strings of

numbers ranging from to )HH separated by periods.

/ domain name is the English-like name that corresponds to the uni4ue ?)-bit numeric I7 address for

each computer connected to the Internet. The omain Dame "ystem 2D"3 converts I7 addresses to

domain names so that users only need to specify a domain name to access a computer on the Internetinstead of typing the numeric I7 address. D" servers maintain a database containing I7 addresses

mapped to their corresponding domain names.

When a user sends a message to another user on the Internet, the message is first decomposed into

packets using the T%7 protocol. Each packet contains its destination address. The packets are then sent

from the client to the network server and from there on to as many other servers as necessary to arrive at a

specific computer with a known address. /t the destination address, the packets are reassembled into the

orginal message.

List and describe the principal Internet services.

Table -) lists and describes the maor Internet services$

• mail — person-to-person messaging8 document sharing.

• 3ewsgroups Jdiscussion groups on electronic bulletin boards.

• 6hatting and instant messaging Jinteractive conversations.

• $elnet — logging on to one computer system and doing work on another.

• 8ile $ransfer %rotocol #8$% ) Jtransferring files from computer to computer.

• "orld "ide "eb Jretrieving, formatting, and displaying information 2including te(t, audio,

graphics, and video3 using hyperte(t links.

Define and describe 9oI% and virtual private networ)s and e!plain how they provide value to

businesses.

9oice over Internet %rotocol #9oI% ) enables Internet technology to be used for telephone

voice transmission over the Internet or private networks. MoI7 offers the advantage of

avoiding tolls charged by local and long-distance telephone networks. MoI7 provides

businesses an opportunity to reduce costs because they no longer have to maintain separate

networks or provide support services and personnel for each different type of network. It

gives organi#ations fle(ibility because phones can be added or moved to different offices

without rewiring or reconfiguring networks.



• 9irtual private networ)s are secure, encrypted, private networks that have been configured

within a public network to take advantage of the economies of scale and management

facilities of large networks, such as the Internet. M7Ds are low-cost alternatives to private

W/Ds. M7Ds give businesses a more efficient network infrastructure for combining voice

and data networks.

List and describe alternative ways of locating information on the "eb.

• &earch engines are a facility on the Web that helps you find sites with the information and+or

services you want. E(amples$ ;oogle, NahooO, and !"D.

• Intelligent agent shopping bots use intelligent agent software for searching the Internet for

shopping information. E(amples$ !y"imon and >roogle.

• Blogs are informal yet structured Web sites where subscribing individuals can publish stories,

opinions, and links to other Web sites of interest.

• 7ich &ite &ummary or 7eally &imple &yndication #7&& ) is a simple way for people to have

content they want pulled from Web sites and fed automatically to their computers, where it

can be stored for later viewing. It0s commonly used with blogs.

• "i)is are collaborative Web sites where visitors can add, delete, or modify content on the

site, including the work of previous authors.

• "eb :.; provides second-generation interactive Internet-based services that enable people to

collaborate, share information, and create new services online. Web ). software applications

run on the Web itself instead of the desktop and bring the vision of Web-based computing

closer to reali#ation.

• "eb +.; #&emantic "eb' reduces the amount of human involvement in searching for and

processing Web information. It0s still in its infancy but promises to establish specific

meanings for data on the Web, categories for classifying the data, and relationships between

classification categories.

6ompare "eb :.; and "eb +.;.

Web ). refers to second-generation interactive Internet-based services that enable people to collaborate,

share information, and create new services online. Web ). is distinguished by technologies and services

like cloud computing, software mashups and widgets, blogs, <"", and wikis. These software applications

run on the Web itself instead of the desktop and bring the vision of Web-based computing closer to

reali#ation. Web ). tools and services have fueled the creation of social networks and other onlinecommunities where people can interact with one another in the manner of their choosing.

Web ?. focuses on developing techni4ues to make searching Web pages more productive and meaningful

for ordinary people. Web ?. is the promise of a future Web where all digital information and all contacts

can be woven together into a single meaningful e(perience. "ometimes referred to as the semantic Web,

Web ?. intends to add a layer of meaning atop the e(isting Web to reduce the amount of human

involvement in searching for and processing Web information. It also focuses on ways to make the Web

more 9intelligent,: with machine-facilitated understanding of information promoting a more intuitive and

effective user e(perience. Web ?. will use cloud computing, software-as-a-service, ubi4uitous

connectivity among mobile platforms and Internet access devices, and transformation of the Web into a

more seamless and interoperable whole.



9. -'" are RFID an& wire(e!! !en!or newor0! ?-SN!@ 3a(%a$(e for $%!ine!!+

Define 78ID, e!plain how it wor)s and describe how it provides value to businesses.

!obile wireless technology facilitates supply chain management by capturing data on the movement of

goods as these events take place and by providing detailed, immediate information as goods move among

supply chain partners. <adio fre4uency identification 2<>I3 systems provide a microchip that contains

data about an item and its location. The tags transmit radio signals over a short distance to special <>I

readers. The <>I readers then pass the data over a network to a computer for processing.

<>I gives businesses an opportunity to further automate their supply chain networks. The technology

allows more data on an <>I chip than typical barcodes. <>I systems track each pallet, lot, or unit item

in a shipment. The technology helps companies improve receiving and storage operations by improving

their ability to 9see: e(actly what stock is stored in warehouses or on retail store shelves.

Define "&3s, e!plain how they wor), and describe the )inds of applications that use them.

Wireless sensor networks 2W"Ds3 are networks of interconnected wireless devices with some processing

and radio-transmitting capability that are embedded into the physical environment to provide

measurements of many points over large spaces.

Wireless sensor networks are valuable for monitoring environmental changes, traffic patterns, security

incidents, or supply chain events. Wireless sensor networks can be placed in the field for years without

any maintenance or human intervention. That reduces costs to businesses using them.

Describe how users can access information from a company*s internal databases through the

"eb.

%onventional databases can be linked via middleware to the Web or a Web interface to facilitate user

access to an organi#ation0s internal data. Web browser software on a client 7% is used to access a

corporate Web site over the Internet. The Web browser software re4uests data from the organi#ation0s

database, using 6T!@ commands to communicate with the Web server. ecause many back-end

databases cannot interpret commands written in 6T!@, the Web server passes these re4uests for data to

special middleware software that then translates 6T!@ commands into "K@ so that they can be

processed by the !" working with the database. The !" receives the "K@ re4uests and provides

the re4uired data. The middleware transfers information from the organi#ation0s internal database back to

the Web server for delivery in the form of a Web page to the user. The software working between the Web

server and the !" can be an application server, a custom program, or a series of software scripts.

CHAPTER

SECURING INFORMATION SYSTEM

1. -'" are informaion !"!em! 3%(nera$(e o &e!r%/ion error an& a$%!e+

List and describe the most common threats against contemporary information systems.

The most common threats against contemporary information systems include$ technical, organi#ational,

and environmental factors compounded by poor management decisions. >igure C-1 includes the

following$



• Technical$ Anauthori#ed access, introducing errors

• %ommunications$ Tapping, sniffing, message alternation, theft and fraud, radiation

• %orporate servers$ 6acking, viruses and worms, theft and fraud, vandalism, denial of service

attacks

•

%orporate systems$ Theft of data, copying data, alteration of data, hardware failure, andsoftware failure. 7ower failures, floods, fires, or other natural disasters can also disrupt

computer systems.

• 7oor management decisions$ 7oorly designed safeguards that protect valuable data from

being lost, destroyed, or falling into the wrong hands.

Define malware and distinguish among a virus, a worm, and a $rojan horse.

!alware 2for malicious software3 is any program or file that is harmful to a computer user. Thus, malware

includes computer viruses, worms, Troan horses, and also spyware programs that gather information

about a computer user without permission.• Mirus$ / program or programming code that replicates itself by being copied or initiating its

copying to another program, computer boot sector or document.

• Worm$ / self-replicating virus that does not alter files but resides in active memory and

duplicates itself without human intervention.

• Troan horse$ / program in which malicious or harmful code is contained inside apparently

harmless programming or data. / Troan horse is not itself a virus because it does not

replicate but is often a way for viruses or other malicious code to be introduced into a

computer system.

Define a hac)er and e!plain how hac)ers create security problems and damage systems.

/ hacker is an individual who gains unauthori#ed access to a computer system by finding weaknesses in

security protections used by Web sites and computer systems. 6ackers not only threaten the security of

computer systems, but they also steal goods and information, as well as damage systems and commit

cybervandalism. They may intentionally disrupt, deface, or even destroy a Web site or corporate

information system.

Define computer crime. %rovide two e!amples of crime in which computers are targets and two

e!amples in which computers are used as instruments of crime.

The epartment of ustice defines computer crime as 9any violations of criminal law that involve a

knowledge of computer technology for their perpetration, investigation, or prosecution.: %omputer crime

is defined as the commission of illegal acts through the use of a computer or against a computer system.

Table C-) provides e(amples of computer crimes.

%omputers as targets of crime$

• reaching the confidentiality of protected computeri#ed data

• /ccessing a computer system without authority

• &nowingly accessing a protected computer to commit fraud

• Intentionally accessing a protected computer and causing damage, negligently or deliberately

• &nowingly transmitting a program, program code, or command that intentionally causes



damage to a protected computer

• Threatening to cause damage to a protected computer

%omputers as instruments of crime$

• Theft of trade secrets

• Anauthori#ed copying of software or copyrighted intellectual property, such as articles,

books, music, and video

• "chemes to defraud

• Asing email for threats or harassment

• Internationally attempting to intercept electronic communication

• Illegally accessing stored electronic communications, including email and voice mail

• Transmitting or processing child pornography using a computer

Define identity theft and phishing and e!plain why identity theft is such a big problem today.

Identity theft is a crime in which an imposter obtains key pieces of personal information, such as social

security identification number, driver0s license number, or credit card numbers, to impersonate someone

else. The information may be used to obtain credit, merchandise, or services in the name of the victim or

to provide the thief with false credentials.

It is a big problem today as the Internet has made it easy for identity thieves to use stolen information

because goods can be purchased online without any personal interaction. %redit card files are a maor

target of Web site hackers. !oreover, e-commerce sites are wonderful sources of customer personal

information that criminals can use to establish a new identity and credit for their own purposes.

7hishing involves setting up fake Web sites or sending email messages that look like those of legitimate

businesses to ask users for confidential personal data. The email instructs recipients to update or confirm

records by providing social security numbers, bank and credit card information, and other confidential

data either by responding to the email message or by entering the information at a bogus Web site. Dew

phishing techni4ues such as evil twins and pharming are very hard to detect.

Describe the security and system reliability problems created by employees.

The largest financial threats to business institutions come from employees. "ome of the largest

disruptions to service, destruction of e-commerce sites, and diversion of customer credit data and personal

information have come from insiders. Employees have access to privileged information, and in the

presence of sloppy internal security procedures, they are often able to roam throughout an organi#ation0s

systems without leaving a trace.

!any employees forget their passwords to access computer systems or allow other coworkers to use

them, which compromises the system. !alicious intruders seeking system access sometimes trick

employees into revealing their passwords by pretending to be legitimate members of the company in need

of information 2social engineering3. Employees can introduce errors by entering faulty data or by not

following proper instructions for processing data and using computer e4uipment. Information specialists

can also create software errors as they design and develop new software or maintain e(isting programs.



!plain how software defects affect system reliability and security.

The software can fail to perform, perform erratically, or give erroneous results because of undetected

bugs. / control system that fails to perform can mean medical e4uipment that fails or telephones that do

not carry messages or allow access to the Internet. / business system that fails means customers are

under- or over-billed. 5r, it could mean that the business orders more inventory than it needs. 5r anautomobile0s braking system may fail.

!aor 4uality problems are the bugs or defects caused by incorrect design. The other problem is

maintenance of old programs caused by organi#ational changes, system design flaws, and software

comple(ity. ugs in even mildly comple( programs can be impossible to find in testing, making them

hidden bombs.

,. -'a i! 'e $%!ine!! 3a(%e of !e/%ri" an& /onro(+

!plain how security and control provide value for businesses.

"ecurity refers to the policies, procedures, and technical measures used to prevent unauthori#ed access,

alteration, theft, or physical damage to information systems.

%ontrols consist of all the methods, policies, and organi#ational procedures that ensure the safety of the

organi#ation0s assets8 the accuracy and reliability of its account records8 and operational adherence to

management standards.

The business value of security and control$

• >irms relying on computer systems for their core business functions can lose sales and

productivity.

• Information assets, such as confidential employee records, trade secrets, or business plans,

lose much of their value if they are revealed to outsiders or if they e(pose the firm to legal

liability.

Describe the relationship between security and control and recent <.&. government regulatory

re=uirements and computer forensics.

@egal actions re4uiring electronic evidence and computer forensics also re4uire firms to pay more

attention to security and electronic records management. %omputer forensics is the scientific collection,

e(amination, authentication, preservation, and analysis of data held on or retrieved from computer storage

media in such a way that the information can be used as evidence in the court of law. It deals with thefollowing problems$

• <ecovering data from computers while preserving evidential integrity.

• "ecurely storing and handling recovered electronic data.

• >inding significant information in a large volume of electronic data.

• 7resenting the information to a court of law.

<ecent A.". government regulatory re4uirements include$

• 6ealth Insurance 7ortability and /ccountability /ct 26I7//3

• ;ramm-@each-liley /ct

• "arbanes-5(ley /ct



These laws re4uire companies to practice stringent electronic records management and adhere to strict

standards for security, privacy, and control.

2. -'a are 'e mo! im)oran oo(! an& e/'no(o#ie! for !afe#%ar&in# informaion re!o%r/e!+

3ame and describe three authentication methods.

/uthentication refers to the ability to know that a person is who he or she claims to be. "ome methods are

described below$

• What you know$ 7asswords known only to the authori#ed users.

• What you have$

o Token is a physical device that is designed to provide the identity of a single user.

o "mart card is a device that contains a chip formatted with access permission and

other data.

• What you are$ iometrics is based on the measurement of a physical or behavioral trait thatmakes each individual uni4ue.

Describe the roles of firewalls, intrusion detection systems, and antivirus software in promoting

security.

/ firewall is a combination of hardware and software that controls the flow of incoming and outgoing

network traffic. >irewalls prevent unauthori#ed users from accessing internal networks. They protect

internal systems by monitoring packets for the wrong source or destination, or by offering a pro(y server

with no access to the internal documents and systems, or by restricting the types of messages that get

through, for e(ample, email. >urther, many authentication controls have been added for Web pages as part

of firewalls.

Intrusion detection systems monitor the most vulnerable points or 9hot spots: in a network to detect and

deter unauthori#ed intruders. These systems often also monitor events as they happen to look for security

attacks in progress. "ometimes they can be programmed to shut down a particularly sensitive part of a

network if it receives unauthori#ed traffic.

/ntivirus software is designed to check computer systems and drives for the presence of computer viruses

and worms and often eliminates the malicious software, whereas antispyware software combats intrusive

and harmful spyware programs. 5ften the software can eliminate the virus from the infected area. To be

effective, antivirus software must be continually updated.

!plain how encryption protects information.

Encryption, the coding and scrambling of messages, is a widely used technology for securing electronic

transmissions over the Internet and over wi-fi networks. Encryption offers protection by keeping

messages or packets hidden from the view of unauthori#ed readers. Encryption is crucial for ensuring the

success of electronic commerce between the organi#ation and its customers and between the organi#ation

and its vendors.

Describe the role of encryption and digital certificates in a public )ey infrastructure.

igital certificates combined with public key encryption provide further protection of electronic



transactions by authenticating a user0s identify. igital certificates are data fields used to establish the

identity of the sender and to provide the receiver with the means to encode a reply. They use a trusted

third party known as a certificate authority to validate a user0s identity. oth digital signatures and digital

certificates play a role in authentication. /uthentication refers to the ability of each party to know that the

other parties are who they claim to be.

Distinguish between fault-tolerant and high-availability computing, and between disaster

recovery planning and business continuity planning.

>ault-tolerant computer systems contain redundant hardware, software, and power supply components

that can back the system up and keep it running to prevent system failure. "ome systems simply cannot be

allowed to stop, such as stock market systems or some systems in hospitals. >ault-tolerant computers

contain e(tra memory chips, processors, and disk storage devices to backup a system and keep it running.

They also can use special software routings or self-checking logic built into their circuitry to detect

hardware failures and automatically switch to a backup device.

6igh-availability computing, though also designed to ma(imi#e application and system availability, helps

firms recover 4uickly from a crash. >ault tolerance promises continuous availability and the elimination

of recovery time altogether. 6igh-availability computing environments are a minimum re4uirement for

firms with heavy electronic commerce processing re4uirements or for firms that depend on digital

networks for their internal operations.

isaster recovery planning devises plans for the restoration of computing and communications services

after they have been disrupted by an event such as an earth4uake, flood, or terrorist attack. isaster

recovery plans focus primarily on the technical issues involved in keeping systems up and running, such

as which files to back up and the maintenance of backup computer systems or disaster recovery services.

usiness continuity planning focuses on how the company can restore business operations after a disaster

strikes. The business continuity plan identifies critical business processes and determines action plans for

handling mission-critical functions if systems go down.

Identify and describe the security problems posed by cloud computing.

/ccountability and responsibility for protection of sensitive data reside with the company owning that

data even though it0s stored offsite. The company needs to make sure its data are protected at a level that

meets corporate re4uirements. The company should stipulate to the cloud provider how its data are stored

and processed in specific urisdictions according to the privacy rules of those urisdictions. The companyneeds to verify with the cloud provider how its corporate data are segregated from data belonging to other

companies and ask for proof that encryption mechanisms are sound. The company needs to verify how

the cloud provider will respond if a disaster strikes. Will the cloud provider be able to completely restore

the company0s data and how long will that take= Will the cloud provider submit to e(ternal audits and

security certifications=

Describe measures for improving software =uality and reliability.

Asing software metrics and rigorous software testing are two measure for improving software 4uality and

reliability.

"oftware metrics are obective assessments of the system in the form of 4uantified measurements. !etrics



allow an information systems department and end users to ointly measure the performance of a system

and identify problems as they occur. !etrics must be carefully designed, formal, obective, and used

consistently. E(amples of software metrics include$

• Dumber of transactions that can be processed in a specified unit of time.

• 5nline response time.

• Dumber of known bugs per hundred lines of program code.

Early, regular, and thorough testing will contribute significantly to system 4uality. Testing can prove the

correctness of work but also uncover errors that always e(ist in software. Testing can be accomplished

through the use of$

• Walkthroughs$ / review of a specification or design document by a small group of people.

• %oding walkthroughs$ 5nce developers start writing software, these can be used to review

program code.

• ebugging$ When errors are discovered, the source is found and eliminated.

CHAPTER 1

E4COMMERCE

1. -'a are 'e %ni%e fea%re! of e4/ommer/e &i#ia( mar0e! an& &i#ia( #oo&!+

Name an& &e!/ri$e fo%r $%!ine!! ren&! an& 'ree e/'no(o#" ren&! !'a)in# e4/ommer/e

o&a".

"tudents can answer this 4uestion by including information outlined in Table 1-1, which lists several business and technology trends shaping e-commerce today.

Li! an& &e!/ri$e 'e ei#' %ni%e fea%re! of e4/ommer/e.

Table 1-) outlines eight uni4ue features of e-commerce which include$

• E-commerce technology is %$i%io%! meaning that it is available ust about everywhere a

computer can connect to the Internet.

• It has #(o$a( rea/' permitting commercial transactions to cross cultural and national

boundaries far more conveniently and cost effectively than is true in traditional commerce.

• It operates according to %ni3er!a( !an&ar&! shared by all nations around the world, whereas

most traditional commerce technologies differ from one nation to the ne(t.• It provides information ri/'ne!! enabling an online merchant to deliver to an audience of

millions comple( and rich marketing messages with te(t, video, and audio in a way not

possible with traditional commerce technologies, such as radio, television, or maga#ines.

• It is inera/i3e meaning it allows for two-way communication between merchant and

consumer and enables the merchant to engage a consumer in ways similar to a face-to-face

e(perience but on a much more massive, global scale.

• It increases informaion &en!i" 2the total amount and 4uality of information available to all

market participants3.

• It permits )er!ona(i*aion an& /%!omi*aion Jmerchants can target their marketing

messages to specific individuals by adusting the message to a person0s name, interests, and

past purchases.

• So/ia( e/'no(o#" enables user content creation and distribution and supports social

networks.



Define a &i#ia( mar0e an& &i#ia( #oo&! an& &e!/ri$e 'eir &i!in#%i!'in# fea%re!.

igital markets are said to be more 9transparent: than traditional markets. Table 1-? describes

distinguishing features of digital markets. The Internet has created a digital marketplace where

millions of people are able to e(change massive amounts of information directly, instantly, and for free. Information asymmetry is reduced. igital markets are very fle(ible and efficient, with reduced

search and transaction costs, lower menu prices, and the ability to change prices dynamically based

on market conditions. igital markets provide many opportunities to sell directly to the consumer,

bypassing intermediaries, such as distributors or retail outlets. 5ther features include delayed

gratification, price discrimination, market segmentation, switching costs, and network effects.

igital goods are goods that can be delivered over a digital network and include music, video,

software, newspapers, maga#ines, and books. 5nce a digital product has been produced, the cost of

delivering that product digitally is e(tremely low. Dew business models based on delivering digital

goods are challenging bookstores, publishers, music labels, and film studios that depend on delivery

of traditional goods.

,. -'a are 'e )rin/i)a( e4/ommer/e $%!ine!! an& re3en%e mo&e(!+

Name an& &e!/ri$e 'e )rin/i)a( e4/ommer/e $%!ine!! mo&e(!.

Table 1-H identifies seven Internet business models.

• E4ai(er7 "ells physical products directly to consumers or individual businesses.

• Tran!a/ion $ro0er7 "aves users money and time by processing online sale transactions and

generates a fee each time.

• Mar0e /reaor7 7rovides a digital environment where buyers and sellers meet, search for

and display products, and establishes prices for those products8 it can provide online auctionsand reverse auctions.

• Conen )ro3i&er7 %reates revenue by providing digital content, such as digital news, music,

photos, or video over the Web.

• Comm%ni" )ro3i&er7 7rovides an online meeting place where people with similar interests

can communicate and find useful information.

• Pora(7 7rovides an initial point of entry to the Web along with speciali#ed content and other

services.

• Ser3i/e )ro3i&er7 7rovides Web ). applications such as photo sharing, video sharing, and

user-generated content as services. 7rovides other services such as online data storage and

backup.

Name an& &e!/ri$e 'e e4/ommer/e re3en%e mo&e(!.

There are si( e-commerce revenue models$

• A&3eri!in# revenue$ ;enerates revenue by attracting a large audience of visitors who can

then be e(posed to advertisements. It0s the most widely used revenue model in e-commerce.

• Sa(e! revenue$ %ompanies derive revenue by selling goods, information, or services to

customers.

• S%$!/ri)ion revenue$ / Web site offering content or services charges a subscription fee for

access to some or all of its offerings on an ongoing basis.

• Freefreemi%m revenue$ asic services or content are free while advanced or special features

cost e(tra.

• Tran!a/ion fee revenue$ / company receives a fee for enabling or e(ecuting a transaction.



• Affi(iae revenue$ "ites that steer customers to an affiliate business receive a referral fee or

percentage of the revenue from any resulting sales.

2. How 'a! e4/ommer/e ran!forme& mar0ein#+

E)(ain 'ow !o/ia( newor0in# an& 'e wi!&om of /row&! 'e() /om)anie! im)ro3e 'eir

mar0ein#.

Detworking sites sell banner, video, and te(t ads8 sell user preference information to marketers8 and

sell products such as music, videos, and e-books. %orporations set up their own social networking

profiles to interact with potential customers and 9listen: to what social networkers are saying about

their products, and obtain valuable feedback from consumers. /t user-generated content sites, high-

4uality video content is used to display advertising. 5nline communities are ideal venues to employ

viral marketing techni4ues.

%reating sites where thousands, even millions, of people can interact offers business firms new ways

to market and advertise products and services, and to discover who likes or dislikes their products. Ina phenomenon called 9the wisdom of crowds: some argue that large numbers of people can make

better decisions about a wide range of topics or products than a single person or even a small

committee of e(perts. In marketing, the wisdom of crowds concept suggests that firms should consult

with thousands of their customers first as a way of establishing a relationship with them, and second,

to better understand how their products and services are used and appreciated. /ctively soliciting

customer comments builds trust and sends the message to customers that the company cares what

they are thinking and that customer advice is valuable.

Define $e'a3iora( ar#ein# an& e)(ain 'ow i wor0! a in&i3i&%a( -e$ !ie! an& on a&3eri!in#

newor0!.

ehavioral targeting refers to tracking the click-streams of individuals for the purpose of understanding their interests and intentions, and e(posing them to advertisements which are uni4uely

suited to their behavior. Altimately, this more precise understanding of the customer leads to more

efficient marketing and larger sales and revenues. ehavioral targeting of millions of Web users also

leads to the invasion of personal privacy without user consent.

ehavioral targeting takes place at two levels$ at individual Web sites and on various advertising

networks that track users across thousands of Web sites. !ost e-commerce Web sites collect data on

visitor browser activity and store it in a database. They have tools to record the site that users visited

prior to coming to the Web site, where these users go when they leave that site, the type of operating

system they use, browser information, and even some location data. They also record the specific pages visited on the particular site, the time spent on each page of the site, the types of pages visited,

and what the visitors purchased. >irms analy#e this information about customer interests and behavior

to develop precise profiles of e(isting and potential customers.

CHAPTER 11

1. -'a i! 'e ro(e of 0now(e&#e mana#emen an& 0now(e&#e mana#emen )ro#ram! in $%!ine!!+



Define 0now(e&#e mana#emen an& e)(ain i! 3a(%e o $%!ine!!e!.

&nowledge management is the set of processes developed in an organi#ation to create, gather, store,

maintain, transfer, apply, and disseminate the firms knowledge. &nowledge management promotes

organi#ational learning and incorporates knowledge into its business processes and decision making./s the te(tbook points out, knowledge management enables the organi#ation to learn from its

environment and incorporate this new knowledge into its business processes. &nowledge

management helps firms do things more effectively and efficiently, and cannot be easily duplicated by

other organi#ations. This 9in-house: knowledge is a very valuable asset and is a maor source of

profit and competitive advantage

De!/ri$e 'e im)oran &imen!ion! of 0now(e&#e.

Table 11-1 describes the important dimensions of knowledge$

• 5now(e&#e i! a firm a!!e7 an intangible asset8 re4uires organi#ational resources8

e(periences network effects as its value increases as more people share it.

• 5now(e&#e 'a! &ifferen form!7 can be either tacit or e(plicit8 involves know-how, craft,

and skill8 involves knowing how to follow procedures8 involves knowing why, not simply

when, things happen.

• 5now(e&#e 'a! a (o/aion7 it0s a cognitive event involving mental models and maps of

individuals8 has both a social and an individual basis of knowledge8 is 9sticky, situated, and

conte(tual.

• 5now(e&#e i! !i%aiona(7 it0s conditional8 it0s related to conte(t.

Di!in#%i!' $eween &aa 0now(e&#e an& wi!&om an& $eween a/i 0now(e&#e an& e)(i/i

0now(e&#e.

Daa by itself has no meaning but is the first step in the creation of knowledge. 5now(e&#e includes

concepts, e(perience, and insight that provide a framework for creating, evaluating, and using

information. -i!&om is the collective and individual e(perience of applying knowledge to the

solution of problems. E)(i/i 0now(e&#e is knowledge that has been documented whereas a/i

0now(e&#e is the e(pertise and e(perience of organi#ational members that has not been formally

documented

De!/ri$e 'e !a#e! in 'e 0now(e&#e mana#emen 3a(%e /'ain.

<efer to >igure 11') for the knowledge management value chain. These steps include$

• A/%ire7 knowledge discovery, data mining, neural networks, genetic algorithms, knowledge

workstations, e(pert knowledge networks

• Sore7 document management systems, knowledge databases, e(pert systems

• Di!!eminae7 intranet portals, push email reports, search engines, collaboration• A))("7 decision support systems, enterprise applications



,. -'a are 'e $%!ine!! $enefi! of %!in# ine((i#en e/'ni%e! for 0now(e&#e mana#emen+

Define an e)er !"!em &e!/ri$e 'ow i wor0! an& e)(ain i! 3a(%e o $%!ine!!.

E(pert systems are an intelligent techni4ue for capturing tacit knowledge in a very specific and

limited domain of human e(pertise. These systems capture the knowledge of skilled employees in the

form of a set of rules in a software system that can be used by others in the organi#ation.

E(pert systems model human knowledge as a set of rules that collectively are called the knowledge

base. The strategy used to search through the collection of rules and formulate conclusions is called

the inference engine. The inference engine works by searching through the rules and 9firing: those

rules that are triggered by facts gathered and entered by the user.

E(pert systems help organi#ations make high-4uality decisions with fewer people. They are used in

discrete, highly structured, decision-making situations where e(pertise is e(pensive or in short supply.

Define /a!e4$a!e& rea!onin# an& e)(ain 'ow i &iffer! from an e)er !"!em.

%ase-based reasoning 2%<3 uses descriptions of past e(periences of human specialists, representing

them as 9cases: and storing them in a database for later retrieval when the user encounters a new case

with similar parameters. The system searches for stored cases similar to the new one, locates the

closest fit, and offers the solution to the old case for use with the new case. If the new case fits the

solution, it is added to the case database. If not, the case will be added with a new solution or

e(planations as to why the solution did not work. %< differs from e(pert systems in that it captures

the knowledge of the organi#ation rather than a single e(pert, and the knowledge is captured as cases

rather than if-then rules. /lso, e(pert systems work by applying I>-T6ED-E@"E rules against a

knowledge base whereas %< represents knowledge as a series of cases. With case-based reasoning,

the knowledge base is continuously updated by the users.

Define ma/'ine (earnin# an& #i3e !ome eam)(e!.

!achine learning is the study of how computer programs can improve their performance without

e(plicit programming. / machine that learns is a machine that, like a human being, can recogni#e

patterns in data and change its behavior based on its recognition of patterns, e(perience, or prior

knowledge.



Two e(amples are the ;oogle search engine that incorporates current search re4uests into its

algorithms and 9remembers: it for the ne(t search. The recommender engine on /ma#on suggests

other items you might be interested in based on patterns in prior consumption, behavior on other Web

sites, and the purchases of others who are 9similar.:

Define a ne%ra( newor0 an& &e!/ri$e 'ow i wor0! an& 'ow i $enefi! $%!ine!!e!.

Deural networks are usually physical devices 2although they can be simulated with software3 that

emulate the physiology of animal brains. Deural networks are used for solving comple(, poorly

understood problems for which large amounts of data have been collected. They find patterns and

relationships in massive amounts of data that would be too complicated and difficult for a human

being to analy#e. Deural networks 9learn: patterns from large 4uantities of data by sifting through

data, searching for relationships, building models, and correcting over and over again the model0s

own mistakes.

In a neural network, the resistors in the circuits are variable, and can be used to teach the network.

When the network makes a mistake, i.e., chooses the wrong pathway through the network and arrives

at a false conclusion, resistance can be raised on some circuits, forcing other neurons to fire. Ased

after a false conclusion, intervention teaches the machine the correct response. If this learning process

continues for thousands of cycles, the machine learns the correct response. The simple neurons or

switches are highly interconnected and operate in parallel so they can all work simultaneously on

parts of a problem. Deural networks are very different from e(pert systems where human e(pertise

has to be modeled with rules and frames. In neural networks, the physical machine emulates a human

brain and can be taught from e(perience.

Define an& &e!/ri$e f%**" (o#i/ #enei/ a(#ori'm! an& ine((i#en a#en!. E)(ain 'ow ea/'

wor0! an& 'e 0in&! of )ro$(em! for w'i/' ea/' i! !%ie&.

>u##y logic is a rule-based /I technology that tolerates imprecision by creating rules that use

appro(imate or subective values and incomplete or ambiguous data. >u##y logic represents more

closely the way people actually think than traditional I>-T6ED rules. >or e(ample, if we all agree

that 1) degrees is hot and -* degrees is cold, then is H degrees hot, warm, comfortable, or cool=The answer is fu##y at best and cannot be programmed in an I>-T6ED manner. apan0s "endai

subway system uses a fu##y logic system to control acceleration so it will operate more smoothly.

;enetic algorithms 2adaptive computation3 are a variety of problem-solving methods that are

conceptually based on the method that living organisms use to adapt to their environment 2process of

evolution.3 ;enetic algorithms control the generation, variation, adaptation, and selection of possible

problem solutions using genetically-based processes. /s solutions alter and combine, the worst ones

are discarded and the better ones survive to go on and produce even better solutions. ;enetic

algorithms are particularly suited to the areas of optimi#ation, product design, and the monitoring of

industrial systems. 5rgani#ations can use genetic algorithms to minimi#e costs and ma(imi#e profitsand schedule and use resources efficiently. ;enetic algorithms are ideal when problems are dynamic



and comple( and involve hundreds of variables or formulas. >or e(ample, ;eneral Electric used a

genetic algorithm to help them design a et turbine aircraft engine that re4uired the use of about 1

variables and H constraint e4uations.

Intelligent agents are software programs that use a built-in or learned knowledge base to carry out

specific, repetitive tasks for an individual user, business process, or software application. y watching

the user of a program or system, an intelligent agent may customi#e the software system to meet the

user0s needs, reducing software support costs. Intelligent agents can be used as wi#ards to help users

do or learn how to perform a given task. Intelligent agents can be used to carry out 9smart: searches

of the database, data warehouse, or the Internet, reducing search costs and avoiding the problems of

misdirected searches. /gent-based modeling applications model consumer, stock market, and supply

chain behavior.

information system review question

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