Chapter One

Moving Toward E-business as Usual

OBJECTIVES
Definition of Business. Definition of Work Systems, Information Systems, and E-Business. Business processes, functional areas, and the value chain. E-Commerce Business Models. E-Business ssumptions. !hases in "uildin# and maintainin# systems. Information technolo#y as drivin# force for innovation. $"stacles %hen applyin# I& in the real %orld.

ANSWERS TO REALITY CHECKS

Reality Check: Describing a business as a syste The text states that ideas pertaining to systems, in general, can be used for thinking about how a business operates. 1. Summarize your understanding of the inputs, outputs, and major subsystems of any business with which you are familiar. 2. xplain your !iew of the ad!antages and disad!antages of di!iding any business or go!ernment organization into specialized functional areas.

'. In the case of personal computer makers( &he inputs are the various components of the personal computer. &he output is an assem"led, %orkin# personal computer. Ma)or su"systems of the "usiness include( desi#n, production, sales, delivery and service.

*. While or#ani+in# a "usiness around functional units has the advanta#e of fosterin# speciali+ation of la"or, on the other hand, such a "reakdo%n may not "e entirely supportive of the "usiness processes.

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Reality Check: !hases in building and

aintaining syste s

This section identified four phases in building and maintaining systems. 1. &se the phases to describe a project of any type that you ha!e done. 2. 'dentify the important challenges in each phase of your project and explain whether the challenges you encountered are related to the general discussion of the phases. '. &he four phases that can "e used to descri"e any pro)ect are, namely( initiation, development, implementation, and operation and maintenance. ,or instance, in the case of a pro)ect consistin# of %ritin# a soft%are pro#ram( Initiation ( decidin# on the purpose of the pro#ram. Development( decidin# on the e-pected inputs, outputs, and al#orithm for the pro#ram, as %ell as choosin# the most appropriate pro#rammin# lan#ua#e for implementation. Implementation ( actual codin# then testin# of the pro#ram. $peration and maintenance ( usin# the pro#ram and maintainin#.updatin# it.

*. &he challen#es at each phase for such a pro)ect include( Initiation ( not havin# a clear idea of the utility or reason for %ritin# the pro#ram. Development( system re/uirements for comple- soft%are pro)ects are usually hard to esta"lish. Implementation ( codin# and testin# of comple- soft%are re/uires coordinatin# the activities of a team of pro#rammers. $peration and maintenance ( Maintenance of any soft%are pro#ram %ith a realistic level of comple-ity is often hard to do.

Reality Check: !rogress in processing data This section identified four important trends in processing data. 1. xplain how these trends ha!e affected you directly.

2. 'dentify areas where you wish the trends had affected you but you ha!e not felt any impact yet. '. &hese trends have affected people as follo%s( 0reater miniaturi+ation, speed, and porta"ility( has resulted in the proliferation of afforda"le cell phones and personal di#ital assistants 1!D s2. 0reater connectivity and continuin# conver#ence of computin# and communications( has resulted in the %idespread use of the Internet. 0reater use of di#iti+ed information and multimedia( has increased the e-chan#e and sharin# of information amon# individuals and corporations alike. Better soft%are techni/ues and interfaces %ith people( has resulted in more user-friendly soft%are and hard%are devices.

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Chapter One"#o!ing Toward $%usiness as &sual

*. Some people may not have felt the impact of these trends yet if they are still resistin# the use of di#ital devices 3 computers, cell phones, or !D s. ,or those %ho do use them, the full impact of these trends may still not "e reali+ed "ecause of the lack of interopera"ility "et%een di#ital devices. Reality Check: Obstacles to applying $T in the real world This section identified fi!e obstacles to applying 'T. 1. 'dentify examples of techno$hype that you ha!e encountered and explain whether you think these were accidentally or intentionally misleading in any important way. 2. (escribe se!eral situations in which you ha!e encountered any of the other four obstacles to applying 'T in the real world. '. E-amples of techno-hype include promotin# the Internet as the solution for all kinds of "usiness pro"lems. Some of this techno-hype is accidental, "ut some is intentional in order to promote certain products. *. Situations %here one may encounter any of the other four o"stacles to applyin# I& include( Difficulty "uildin# and modifyin# information systems( due to their comple-ity to solve realistic real-%orld "usiness pro"lems. Difficulty inte#ratin# systems that are "uilt for different purposes( system inte#ration is often hard %hen dealin# %ith application packa#es from different vendors. $r#ani+ational inertia and pro"lems of dealin# %ith chan#e( an or#ani+ation4s culture is usually the reason %hy the or#ani+ation cannot adapt to deal %ith chan#e. 0enuine difficulty anticipatin# %hat %ill happen( simply due to the dynamic and evolvin# nature of "usiness practices and information technolo#ies.

ANSWERS TO WEBCHECKS
%eb check: )ook at (ell*s web site, www.dell.com, and see how it presents its product options and how it explains its manufacturing process. Dell4s %e" site allo%s customers to confi#ure the computers they desire to purchase, and o"tainin# dynamically the correspondin# pricin# at that particular point in time. &he %e" site does not e-plain Dell4s manufacturin# process per se, "ut it does #ive details a"out the various service options that are offered to customers.

ANSWERS TO REVIEW QUESTIONS

1. 'n what ways is (ell +omputer an e$business, Dell Computer is an e-"usiness for many reasons, most prominently( "ecause it applies information and communication technolo#ies to conduct "usiness.

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2. 'n what way is an information system a special type of work system, n information system is a special type of %ork system in the sense that its "usiness process is devoted to capturin#, transmittin#, storin#, retrievin#, manipulatin#, and displayin# information, and in doin# so( providin# support for other %ork systems. -. .hat is the difference between a system and a subsystem, system comprises su"systems. &he "reakdo%n of a system into su"systems ena"les "uildin# a system in a modular fashion, developin# and testin# each system "efore inte#ratin# them to form a %orkin# system. /. .hat is a business process, "usiness process is a related #roup of steps or activities in %hich people use information and other resources to create value for internal or e-ternal customers. 0. (istinguish between business processes that cross functional areas of business and those that are specific to functional areas. 1rocesses that cross functional areas are those essential processes for an entire "usiness. 1rocesses related to a specific functional area are those other essential processes that can "e vie%ed as "elon#in# to a particular functional area.

2. .hat is a functional silo and why is that important, Strictly ali#nin# "usiness processes in terms of "usiness functions sometimes reinforces an in%ard-lookin# orientation that is called operatin# throu#h functional silos. &his in%ard focus devotes too much attention to %hat happens %ithin the functional area 1the 5silo62 %hile sho%in# little concern for coordinatin# across the functional areas in order to ma-imi+e customer value. It is therefore important to reali+e their detrimental effects and to or#ani+e around customer-oriented processes. 3. .hy does it make sense to extend the !alue chain to include aspects of the supply chain and customer experience, E-tendin# the value chain to include aspects of the supply chain and customer e-perience can provide opportunities to increase value for the customer. 4. .hat is the difference between e$business and e$commerce, E-commerce is the part of e-"usiness that a customer e-periences directly. It refers to usin# the Internet and other communication technolo#y for marketin#, sellin#, and servicin# products. E-"usiness includes e-commerce "ut also covers internal processes of the "usiness such as production, inventory mana#ement, product development, risk mana#ement, finance, kno%led#e mana#ement, and human resources.

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Chapter One"#o!ing Toward $%usiness as &sual

5. .hat are the phases of building and maintaining a system, &he phases of "uildin# and maintainin# a system are initiation, development, implementation and operation and maintenance. 16. .hy is it important for business professionals to be in!ol!ed throughout the four phases of building and maintaining a system, Business professionals should stay involved throu#hout the four phases of "uildin# and maintainin# a system in order to ensure that the system is developed and implemented to support the "usiness and the "usiness processes. 11. .hat are the six basic data processing operations, &he si- "asic data processin# operations are( capturin#, transmittin#, storin#, retrievin#, manipulatin#, and displayin# data. 12. .hy does #oore*s )aw describe a phenomenon unlike other things in the history of business, Moore4s 7a% is a prediction that chip capacities %ill dou"le appro-imately every '8 months. It has held true for over *9 years, and is e-pected "y many e-perts to pro"a"ly continue to do so for years to come. &he phenomenon of dou"lin# chip capacity is unlike other thin#s in the history of "usiness "ecause in no other are has exponential increase in performance has "een e-perienced for so lon#. 1-. 7ow does portability of computers make it difficult to control the flow of information, While porta"le devices have allo%ed users to carry them around conveniently, the added mobility of these devices have made it harder to control the flo% of information since such flo% re/uires( locali+in# the user.device, and esta"lishin# a connection for data transmission to the user.device at the current location. Such a connection may involve "oth %ireless and %ired communications technolo#ies.

1/. xplain why open systems can be !iewed both as an opportunity and as a threat. $pen systems are an opportunity since they support the interopera"ility of soft%are and hard%are from different vendors. &hey are a threat to hard%are and soft%are suppliers that try to use a strate#y of providin# uni8ue and incompatible system capa"ilities, in order lock in customers "y makin# "rand s%itchin# difficult. 10. 7ow do continuing trends toward connecti!ity and interoperability pro!ide opportunities to compete more effecti!ely, Interopera"ility is necessary for open systems, and deployin# open systems that rely on connectivity and interopera"ility can support a ran#e of opportunities to compete more effectively "y makin# it easier and cheaper to "uild information systems and transmit data. :educin# these costs in turn makes it more practical to

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Chapter One"#o!ing Toward $%usiness as &sual

use information systems to help people %ork to#ether and to link more effectively %ith customers, there"y ena"lin# a firm to compete more effectively.

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Chapter One"#o!ing Toward $%usiness as &sual

12. 'n what ways ha!e computers and the 'nternet been the object of unrealistic expectations and hype, &echnolo#y in #eneral, includin# computers and the Internet, have "een su")ect to unrealistic e-pectations to solvin# "usiness pro"lems, often i#norin# crucial aspects for the success of "uildin# an I&-"ased solution, such as or#ani+ational issues. 13. .hat was the year 2666 problem, &he year *999 pro"lem 1also kno%n as ;*<2 %as related to the %ay many information systems use )ust t%o di#its to identify the year portion of a date, resultin# in the interpretation of 5996 in many systems as the year '=99 instead of *999. 14. 7ow is organizational inertia related to information systems, $r#ani+ational inertia is the tendency to continue doin# thin#s in the same old %ay, and therefore to resist chan#e. Inertia related to information systems reco#ni+es the fact that formal systems are only a component of or#ani+ational operations and decision processes. >ust chan#in# an information system may therefore not have much impact unless other thin#s are chan#ed, such as the %ay %ork is or#ani+ed and the incentives that are esta"lished for the participants. 15. 7ow does the history of past business and technology predictions explain why the growth of the .orld .ide .eb was a major surprise, &he history of past "usiness and technolo#y predictions has proven that it is /uite hard to predict the rate of adoption of ne% technolo#y, as %ell as the impact of ne% technolo#ies on "usinesses and on society. &he #ro%th of the World Wide We" %as therefore a ma)or surprise since it was not predicted %hen the We" emer#ed at the "e#innin# of the =94s. Moreover, the %idespread use of the We" and its impact on "oth the %ay people and "usinesses alike interact and communicate has "een /uite phenomenal.

ANSWERS TO DISCUSSION QUESTIONS

'. &he definitions that are that are comparatively easy to us are those that )ust deal %ith the information and communication technolo#ies, as opposed to those definitions that deal %ith the "usiness, or the impact of these technolo#ies on the "usiness itself. *. Some of the ne% assumptions a"out %ork systems that chan#ed %ith e-"usiness and that people have e-perienced include those that deal %ith allo%in# customers to ne#otiate %ith vendors the customi+ation of products to the customers4 individual needs. Some assumptions that are e-a##erated or unrealistic include those dealin# %ith the technolo#y used in %ork systems. &he differences may "e due to the fact that the first set of assumptions deals %ith the impact of e-"usiness on customers, %hile the second set deals %ith the impact of technolo#y on %ork systems.

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Chapter One"#o!ing Toward $%usiness as &sual

?. $r#ani+ational chan#e can affect individuals since it usually re/uires them to learn ne% skills and to perform ne% tasks. @. &echno-hype may "e more dama#in# than advertisin# or e-a##eration since it may discoura#e people from adoptin# certain technolo#ies alto#ether %hen 1due to hype2 these technolo#ies do not live up to their e-pectations. A. While most of the e-amples are surprisin#, they are )ustifia"le %hen put in the appropriate conte-t in time( %hen they %ere made and the information and kno%led#e availa"le at that time 3 as the sayin# #oes( 5hindsi#ht has *9.*9 vision.6 Bevertheless, the implications for a "usiness tryin# to analy+e e-"usiness approaches is to "e cautious a"out techno-hype, and to collect as much information as possi"le, includin# success or failure stories of other "usinesses %ho have tried to adopt e-"usiness 3 if such information is availa"le. C. Information systems are indeed chan#in# the nature of #lo"al competition since they transcend traditional #eo#raphic "orders.

Case 1: +evi ,trauss: ,elling Custo i-ed Casual Clothing

'. $ne similarity "et%een Dell and 7evi-Strauss is allo%in# clients to personally customi+e the product they desire. Do%ever, the differences include the comple-ity of the product, and the comple-ity of the "usiness process needed to produce it, %hich are more comple- for computers. *. 7evi-Strauss is an e-"usiness "ecause it applies information and communication technolo#ies to conduct "usiness. ?. &he "usiness processes in the fashion industry rely on sendin# information from fashion desi#ners to manufacturin# locations %here the actual production of the products is carried out. E-"usiness seems, therefore, essential for "usinesses in this industry to maintain a competitive advanta#e.

Case : .ershey /oods: %hy a Candy Maker Missed Chocolate Deliveries 0or .alloween
'. &he four phases of "uildin# and maintainin# systems as they relate to the Dershey ,oods case study, as %ell as the pro"lems encountered in each phase, are( Initiation ( the I& system as commissioned %as too comple-. Development( the comple- re/uirements for the system may have resulted in a system that is not technically feasi"le. Implementation ( usin# multi vendors made it difficult to assi#n responsi"ility for the pro"lems. $peration and maintenance ( the system %ent online %ith a hu#e piece of it all at once, %hich, in retrospect, proved to "e at the root of many pro"lems that follo%ed.

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ccordin# to the case study, Dershey seems to have mainly encountered the follo%in# difficulties( Difficulty "uildin# and modifyin# information systems, and

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Difficulty inte#ratin# systems that are "uilt for different purposes.

ccordin# to the case study, Dershey %anted to "ecome a full fled#ed e-"usiness, ho%ever, it seems the underlyin# information system %as attempted all at once as opposed to an incremental, modular approach to developin# and deployin# it.

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