handouts session 1

Informatics for Management

Prof. dr. Peter De Bruyn

Introduction

(c) Peter De Bruyn

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Learning goals • Understand and explain what an information system in the context of businesses is – most important concepts, types and typologies

• Recognize and understand the value (opportunities) and threats (risks) of information systems • Be able to formulate and validate elementary functional requirements of an information system – BPMN, ERD, …

• Understand what the impact of IT might be for new and existing business models

Teaching method • 8 lectures – 5 theoretical sessions – 3 sessions combining theory + exercises

• active participation required in each of the sessions • additional texts and papers – important to be read after each session

• questions welcome during and after each lecture

(c) Peter De Bruyn

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Mandatory course material • Slides available at Pointcarré • Discussions and information provided during the lectures (take notes!) • Additional papers and texts • Guest lectures • Exercises presented during practical sessions

Recommended course material • Laudon & Laudon (2014), Management Information Systems: Managing the Digital Firm (14th edition), Prentice Hall – Global edition Part

Relevant Chapters

1

1, 3, 4, 6

2

2, 3, 8, 11

3

12, 13

4

3, 9

5

4, 7

6

5

Note: chapters 10 and 14 should not be studied

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Optional course material • Silver (2011), BPMN Method and Style (2nd edition), Cody-Cassidy Press • Fowler (2003), UML Distilled: A Brief Guide to the Standard Object Modeling Language (3rd Edition)

Follow the news and actuality

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What’s happening?

Reader (1) • Carr, N., 2003, IT Doesn’t Matter, Harvard Business Review, 81(5), pp. 41-49 • Brynjolfsson, E., 1993, The Productivity Paradox of Information Technology, Communications of the ACM, 36(12), pp. 67-77 • McAfee, A., 2006, Mastering the three worlds of Information Technology, Harvard Business Review, 84(11), pp. 141-149 • Brown & Vassey, 2003, Managing the Next Wave of Enterprise Systems: Leveraging Lessons from ERP, MIS Quarterly, 2(1), pp. 65-77 • Hammer, M., 1990, Reengineering work: Don’t Automate, Obliterate, Harvard Business Review, 68(4), pp. 104-112

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Reader (2) • Edelman, B., 2015, How to Launch Your Digital Platform, Harvard Business Review, 93(4), pp. 90-97 • Swanson, E.B., 2012, The Manager’s Guide to IT Innovation Waves, MIT Sloan Management Review, 53(2), pp. 75-83 • Davenport, T.H., 2013, Analytics 3.0, Harvard Business Review, 91(12), pp. 64-72 • McAfee, A., 2011, What Evevery CEO Needs to Know About the Cloud, Harvard Business Review, 89(11), pp. 124-132

Evaluation • This course will be evaluated by means of a written exam, consisting out of 3 parts: 1. set of multiple choice or short concept explaining questions 2. set of open questions (know, understand, apply theoretical knowledge) 3. set of exercises (apply and reflect on techniques)

• Questions may cover everything in class or the additional material (slides, papers)

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Course structure (1) 1. Introduction – –

agreements, context and motivation of the course introductory concepts of informatics in a business context

2. Enterprise applications –

what are information systems typically used for? what typical systems exist?

3. Development of enterprise applications – –

how are enterprise applications typically developed? which problems typically show up?

Course structure (2) 4. Impact of IT on business models –

e-business, e-commerce, …

5. Current trends in IT for business –

SaaS, data mining, social media, …

6. Expressing functional requirements: how can I explain what an IT application should do? – – –

(c) Peter De Bruyn

how can I make elementary data models? how can I make elementary process models? how can I derive elementary information from the data (generated by processes)?

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WHY ?

Efficiency and strategy

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Order in the morning delivered today?

IT at Bol.com? • • • • • •

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E-commerce website (ordering) Picking of products Shipping of products Inventory management (> purchasing) Tracking software for customers Recommendation software on website

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The Long Tail

Criticality

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Omnipresence (1) Accounting

…

Production

Information technology

Vendor relations

Human Resources

Omnipresence (2) • • • • • •

Accounting Information Systems Production Planning Systems Human Resources Management Systems Payment systems CAD/CAM systems Customer Relationship Management Systems • Routing/tracking-and-tracing systems • …

(c) Peter De Bruyn

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Growing Investments

source: Laudon & Laudon (2009)

Some facts and figures • Development costs (≠ TCO!) – Phenix project: 12 million euros – BSkyB CRM system: 265 million pounds

• Yearly IT budget city of Ghent: 20 million euros • National Railways Company of Belgium (NMBS) – > 2000 IT employees – implementation of ERP system: 500 million euros

• …

(c) Peter De Bruyn

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Productivity

Return on IT vs. IT paradox?

“We have seen computers everywhere except in the productivity statistics” (Robert Solow)

IT investment source: Laudon & Laudon (2009)

A good technology based business model?

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Business/IT Alignment Costs Benefits Timing Strategy Functional requirements …

Technology Design Programming Technical constraints

Defining alignment?

“applying IT in an appropriate and timely way and in harmony with business strategies, goals and needs” (Luftman and Brier, 1999)

(c) Peter De Bruyn

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Top IT issues according to CIOs

source: Kappelman et al. (2014)

A need for managerial IT’ers!

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Communication

source: Jurgen Appelo

An Enterprise/IT Architect should: * have business acumen * have knowledge of company strategy * “keep pace with current developments on the business side as well as on the IT side” * know business and technical terminology * “communicating is what they do all day”

Failures

(c) Peter De Bruyn

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Hypes

source: Gartner

Socio-technical system

Technology

Processes

People

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Introductory concepts

Some introductory concepts • • • • • • • • •

(c) Peter De Bruyn

Hardware? Software? Database? Network? Server? Internet? Computer Architecture? Process? Information System?

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Hardware (1)

Hardware (2) • Hardware refers to all physical components in computer systems – power supplies – motherboard • CPU • buses

– storage devices • DVD • hard disk drive • RAM

– input/output peripherals • printer • screen

– …

(c) Peter De Bruyn

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Hardware (3)

source: Economist.com

Hardware (4) • Moore’s law was first formulated in 1959 by Gordon Moore and states that the number of components (i.e., transistors) on a chip doubles every two years (= exponential growth!) • Implications or alternative formulations include – the processing power of micro processors doubles every 18 months – the price of transistors or data processing capacity is halved every 18 months

• Check earlier observation of increasing investments!

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Hardware (5) • In today’s society, there is an increased omnipresence of (interconnected) hardware devices – this allows organizations to gather much more finegrained information about customers and their products (see Internet of Things)

–

Software (1) • A software program is a set of specific instructions that can be performed on the processor of a computer (“intangible”) software data

(c) Peter De Bruyn

instructions tasks

data

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Software (2) • Software programs are typically the result of a set of instructions formulated by programmers through a programming language, which is ultimately transformed (“compiled”) into machine language (bits, 1/0) • Such programming languages provide the means to code tasks in a structured/algorithmic way by using: – sequences – iterations – selections

Software (3) • An instruction:

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Software (4) • A sequence of instructions:

Software (5) • An iteration (loop):

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Software (6) • A selection:

Software (7) • Algorithms can be grouped into “modules” such as data structures or processing functions: 1 5 2 4

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3

7

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Software (8) • Algorithms can be grouped into “modules” such as data structures or processing functions: some instructions … call to a module

response from the module

calculateSum (int a, int b)

call to another module

printSum (int theSum) response from that module some more instructions …

Software (9) • Software modules are intended to enable – re-use • if a good module already exists, we can re-use it

– reduction of complexity • we can split up a large problem into several subproblems • if somethings does not work, we can most likely relate the problem to a particular module (not the whole system) • we can collaborate with several people on the same project by each focusing on a module and than “assembling” them later on

– evolvability • we can modify or change one module and leave the other ones the same

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Software (10) • Currently, mainly 3rd generation languages (procedural languages) are used – one program instruction is transformed into multiple processor instructions

• Well-known older programming languages include: – COBOL (Common Business Oriented Language) – PASCAL

• Most popular languages at this moment are: – Java – .NET

Software (11) • Software systems are essential in an organizational context, as they – allow the processing of much data in a short time frame (e.g., in “batch”) – have low “processing” costs for calculations – perform their calculations error free when programmed correctly (>< humans) – can easily communicate over large distances – allow for automatisation

• Software architecture can be important from a business perspective: – how to achieve this modularity for re-use, reduced complexity and evolvability?

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Database (1) • A database is an organized collection of data stored in a computer • Example – data might be: • name of a person • address of a person • age of a person

– a database might contain: • all personal data of employees and customers of a company • all orders of a company

Database (2) • Most databases are so-called relational databases – all data is stored in a set of tables (columns, rows) – each table stores a set of properties (colums) regarding a set of instances (rows) – the tables are interlinked via so-called keys

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Database (3) properties (attributes)

instances (records)

Database (4) • Problems with duplication and consistency in a non-normalized table

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Database (5)

Database (6) • As databases can store many tables with many instances and many attributes, they are crucial for enterprises in storing and managing their data • This data can always be – – – – –

(c) Peter De Bruyn

created (add tables or instances) read (retrieve data regarding an instance) updated (update changed data) deleted (data no longer relevant) searched (obtain data adhering certain criteria)

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Database (7) • Elementary operations on relational databases can already provide interesting business insights! – e.g., give me an overview of the first name and last name of all customers living in Brussels – … who have at least bought 1 helmet – see part on SQL in part VI!

Database (8) • Serves an input for many software systems or stores information coming from software systems (output) • See data modeling in part VI! • Well-known relational databases are – – – – –

(c) Peter De Bruyn

DB2 MySQL Oracle PostgreSQL etcetera

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Network (1) • A computer network is the telecommunications network which allows multiple computers to exchange data with one another

Network (2) • Different types (geographic scale) – Personal Area Network (PAN) – Local Area Network (LAN) – Metropolitan Area Network (MAN) – Wide Area Network (WAN)

• Different transmission media – wireless (e.g., bluetooth) – cable (e.g., coax, UTP)

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Network (3) • Different topologies:

source: Wikipedia.org

Network (4) • Different types (organizational scale) – intranet: a network connecting a set of computers within a single organization – extranet: a network under control of a single organization but allowing restricted access to external parties (e.g., vendors) – internetwork: a network connecting different networks (e.g., the Internet, see infra)

• Well-known network protocols include: – TCP (for “chunking” of different packages) – IP (for “routing” from sender to receiver)

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Network (5) • Networks are crucial in the context of organizations as they allow – data sources to be exchanged internally (i.e., no duplicate data entry required) • allow cross-departmental collaboration instead of stand alone systems

– functionality to be remotely accessible (i.e., one computer can as a “service” from another computer) – interorganizational connections can easily be established, e.g.: • Vendor Managed Inventory (VMI) • Electronic Data Interchange (EDI)

Server (1) • In order to enable the offering of “services” from one computer to another computer or user, servers can be used in a network • A server typically only has those components which are necessary for its function – e.g., no screen, no dedicated keyboard, etcetera

• Depending on the service offered, different names are used – – – – –

(c) Peter De Bruyn

mail server web server application server database server …

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Server (2) • Gives rise to typical client-server architectures – fat/thick client: client performs significant tasks himself – thin client: client performs little or no significant tasks himself

request client

server response

Internet (1) • Is the largest internetwork – “a network of networks”

• Widespread adoption in developed countries – e.g., Belgium: 83% of households (Statbel, 2014)

• Has several important benefits – publicly and de facto freely accessible – makes use of worldwide adopted standards (e.g., TCP/IP) – highly scalable (computers, servers, etcetera can be freely adapted or removed) – is, to a large extent, agnostic of the kind/size of information which is transmitted and the kind of sending/receiving device

(c) Peter De Bruyn

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Internet (2)

source: International Telecommunications Union

Internet (3) • Origins: fear for destruction of communication means by a “first strike” – traditionally: direct, dedicated lines

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Internet (4) • DARPA (US military) started the development of a new type of network during ‘60s – called ARPANET – initiated to connect several research centers and universities

• Important principles – distributed connections – packet switching

Internet (5)

source: Laudon & Laudon (2009)

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Internet (6)

source: Laudon & Laudon (2009)

Internet (7) • The World Wide Web (WWW) is the most popular internet service – system with universally accepted standards for the storage, retrieval, formatting and displaying of information via web pages – uses a client-server architecture – makes use of • • • • •

(c) Peter De Bruyn

hyptertext markup language (HTML) hypertext transfer protocol (HTTP) uniform resource locators (URL) webservers web browsers

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Internet (8) • Other applications of the Internet include – – – – –

E-mail Chat/instant messaging News groups Telnet FTP

• Typical business applications – Voice over IP (VoIP) – Virtual Private Network (VPN)

• Implications for organizations (see part IV): – rise of e-business and e-commerce – increased transparency (prices, products, etcetera) – globalization (cf. the long tail)

Computer Architecture (1) • A computer architecture describes the fundamental organization of a computer system, its components and how they are related (with their environment). • Among other things, the configuration of the following components needs to be considered – interaction/user interface – database – application/business logic

• We can discern 3 major phases – mainframe – client/server – browser/cloud

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Computer Architecture (2): Phase 1 – the mainframe • Mainly ‘60s, ‘70s and ‘80s • Mainframe = large centralized computer capacity – database and business logic centralized – user interface via “dumb clients” (no own processing or storage capacity)

• Costs exceeded multiple millions – only for large and rich companies

• Downside = peak moments and network capacity (relevant?) • Sometimes still used

source: Laudon & Laudon (2009)

Computer Architecture (3): Phase 2 – PC and client/server • • • • •

Started around ‘80s Personal Computers (PCs) having their own (limited) storage and processing capacity arose, just as mini-computers/servers (less powerfull than mainframes) Data storage and logic are “distributed” which limits the amount of network traffic Interaction between servers (mainly large scale data storage) and “fat clients” (parts of processing, user interface) Risk: consistency among clients in case of updated business logic?

source: Laudon & Laudon (2009)

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Computer Architecture (4): Phase 3 – browser/cloud

source: Laudon & Laudon (2009)

Computer Architecture (5): Phase 3 – browser/cloud • Started around ‘90s • Computers and network connections (Internet) become commiditized for companies and consumers • All devices can be connected to the internet (mostly via browsers) • A very large network is created, connecting: – servers (large data storage and computing resources) – “thin clients” (desktops, laptops, smartphones, etcetera)

• Risks: – it all depends on the capacity and up-time of the network! – security?

(c) Peter De Bruyn

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Processes (1) •

A business process a set (sequence) of steps in order to produce a product or service (or support its production/delivery) – defined at a business/organizational level, it defines the way “things are (supposed to be) done in an organization” – some of the tasks might be done by humans, others by machines/software, etcetera – might be end-to-end

•

Came into attention (‘90s) after an identified need to work across different functions and departments in an organization – idea = global instead of local optimization – important in the context of enterprise applications: • need to be analyzed • need to be re-engineered • way to be enabled

•

See part VI on BPMN!

Processes (2)

Logistics

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Accounting Production

Marketing

Human Resources

…

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Processes (3)

source: creatily.com

Information Systems (1) • An information system is the combination of IT hardware, software, the supported processes and the people using all this People Processes Software Hardware

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Information Systems (2) • This highlights again the need for a sociotechnical approach… – people in the organization need to accept and use the technology proposed

• … and of business/IT alignment – the technology should support the goals of the organizational people

Information Systems (3) • The Technology Acceptance Model (TAM) (Davis, 1985) Perceived usefulness Design features

Attitude towards using

Actual system use

Perceived ease of use

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Papers to read/study • Carr, N., 2003, IT Doesn’t Matter, Harvard Business Review, 81(5), pp. 4149 • Brynjolfsson, E., 1993, The Productivity Paradox of Information Technology, Communications of the ACM, 36(12), pp. 67-77

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