Information Systems: the short story

1. Information Systems: the short story ILTM Presentation July 16, 2002 Eric Santanen

2. Overview for Today • Information Systems Background • The origins & uses of “Data” • Data sharing & the Internet • Electronic Commerce • Supply Chain • Ethical Problems

3. Let’s Start from the Beginning… • What do you think most organizational information systems are used for? • What do they do? Why is it important? • Information System: • Collects, processes, stores, analyzes, & disseminates information • So what is “information” ?

4. The Building Blocks… • Data: Raw facts • 12:00pm Tuesday, July 16, temperature was 83 degrees • Information: Data in context • Today’s temperature is 4 degrees above the average temperature for this time of year • Knowledge: Using information to make a decision • Temperature control for a set of buildings

5. The Origins of “Data” • So where does the data and information that an organization uses come from? • There are two primary sources…

6. Transaction Processing Systems (TPS) • Primary interaction with suppliers, customers, employees, etc. • Comprises 90% of core, routine tasks • Respond to business transactions • Initiate transactions • Allow data maintenance • Follow the IPO model • Primary focus concerns data • What are TPS examples?

7. A Day in the Life of Data • What are examples of transactions that are recorded? • Where is this data stored? • What is this data used for? • We’ll see more on this shortly…

8. Enter the Internet • Data sharing is the backbone of buisness • What are some examples of data sharing? • Who is the primary beneficiary of data sharing?

9. Impacts of Information Systems • Information Systems are SocialSystems • They don’t just make business processes cheaper and faster • IS change the way people & organizations interact with one another: • On-line communities • E-mail, the Internet • Electronic commerce

10. Some Internet Statistics • What is the percentage of countries connected to the Internet? • 1997: 50% US households have a computer • Today: statistics are closer to 75-80% • December 1999: 205 million web users • Growth rates of up to 20% every month • In 2000, 30 million people use online trading

11. Internet Marketing • Unprecedented opportunity for individual marketing & sales • Know customers & treat each one differently • What is an example of doing this? • Detailed product information available “24/7” • Computers, books, music, video, clothes • Cost effective, custom tailored advertising • What are some new advertising methods? • Customize ads to individuals (BroadVision.com)

12. Overview of E-Commerce • Business transactions take place via the Internet: • What are some examples? • Benefits of e-commerce include: • Shorter cycle times, reduced cost, eliminate paper, reduced errors, globalization, enhance productivity, increasing customer base, sharing knowledge, many more! • What are specific benefits for: consumer, seller, society?

13. E-Commerce Benefits • Benefits for Organizations: • Can reach larger, world wide market • Lower capital outlay and operating costs • Remove intermediaries allowing 1-to-1 marketing • Decreases paper costs by up to 90% • Lowers costs with JIT inventory • Produce materials and services at 5-20% savings

14. E-Commerce Benefits, 2 • Benefits for Consumers: • Greater number of choices at less expense • Able to find detailed information 24/7 • Increased availability of customize products • Interact with other customers

15. E-Commerce Benefits, 3 • Benefits for Society: • Can work from home, less travel & pollution • A small warning is needed here… • Increase the standard of living for some • Consumers in rural areas can purchase products and services not normally available to them

16. Electronic Commerce Growth • Two primary models: B2B & B2C • What are they? • What are examples of each? • Total dollars spent: • Year B2C B2B • 1995 $10B • 1996 $518M • 1999 $100B • 2000 $15B • 2003 $2-3T in total • $50B lost in world-wide shipping fraud each year

17. Societal Benefits of IT • Quality of Life Improvements • Speech & vision recognition, AI are creating new employment opportunities (ADA of 1994) • Use of robotics in dangerous environments: inspecting bridges, cleaning subways, welding, more leisure time… • Health Care Improvements • Expert systems aid diagnosis, planning and assisting during surgery, pill sized cameras • Crime Fighting • Tracking gang members, visualizing patterns, locating missing children

18. A Brief Pause… • We’ve looked at • Information Systems • The Internet • Electronic Commerce • Any questions so far??

19. Supply Chain Management • The flow of materials, information, and services from raw suppliers, through the factory, to the end customer. Includes: • reduce uncertainty & risks, inventory, cycle time • Improve business processes, customer service • Increased profits & competitiveness • May not include physical products at all!

20. Problems in the Supply Chain • Occur within complex or long supply chains • Common sources of problems: • Unable to meet demand • Holding large or expensive inventory • Coordination of several activities, partners • Quality issues with materials, production (ISO) • What are some examples? Why do they happen? • How do you recognize supply chain problems?

21. E-Commerce & Supply Chain • How can E-Commerce improve SCM? • Green Mountain Coffee Roasters • www.gmcr.com

22. Hospitals Cut Costs • 15,000 purchase orders generated 1 yr • Average cost of $70 per PO • E-commerce reduced cost to $4 per PO • Savings of $840,000 per hospital per year! • Investment required for E-Commerce • Approximately $8k to $15k

23. Another Pause to Reflect… • Is everyone OK with Supply Chain Management concepts? • Was anything unclear?

24. The Dark Side… • Higher chance of fraud & crime • Buyers and sellers never meet face to face • Internet stock fraud, recent cases • Investment firms selling non-existent funds • 65% of all FTC complaints derive from on-line auctions

25. Remember all of that data? • Information Systems, the Internet, and E-commerce each contribute to the creation of extremely large databases • Often called “Data Warehousing” • Examples include major credit cards, insurance carriers, credit reporting agencies

26. So, Now the Data is Protected… • “Unauthorized” people cannot gain access to corporate databases • Everyone feel good about this? • What are the uses for this “protected data”? • How should this data be used? • For what purposes should it not be used? • How do you answer these questions?

27. A Framework of Ethical Issues • Privacy: personal information that you are required to reveal, employer surveillance, information that you keep to yourself • Accuracy: who is responsible, how can we be sure, accidental vs. intentional errors, who is responsible for errors • Property: information ownership, appropriate prices for exchange, use of proprietary databases, should experts be compensated for expert systems • Accessibility: who is allowed, provisions for persons with disabilities, what information are you privileged to obtain

28. Privacy • Privacy is not absolute! • Must be balanced with needs of society, ex: public right to know • In the Past: privacy was almost guaranteed! How? • Today: IS can quickly correlate data in multiple databases • Computer Aided Record Matching: can catch tax cheaters, fraud, “deadbeat dads” but can also be used for other purposes: blacklisting

29. Personal Data • Wealth of Available Information: TRW, Cable TV, Telephone, Credit Cards, Warrantee Cards, Lease Agreements • Ask a new set of Questions: • Where is info stored? Who controls access? Are records accurate? How do you fix them? How long does it take? • “But the computer says...”

30. Other Sensitive Information • Who is responsible for offensive material on Internet news groups? • What do you do about it? • International flow of data • Some countries closely regulate data flow across their boarders, but this is difficult • Who owns the data and whose laws apply? • Data transmitted by Polish company on a US satellite to a British company

31. Privacy Policies (!) • Data Collection: should be done only for legitimate business need, should be adequate, relevant and not excessive, individuals should give consent, consent can be implied • Data Accuracy: sensitive data should be verified before it is entered into a database, should be accurate & kept current, data should be made available to the individual for correction • Data Confidentiality: security should be implemented, 3rd party access should be restricted - except as required by law, should not be disclosed for purposes other than it was collected

32. Wrapping it all up • Information systems bestow many benefits to individuals, organizations, and society • However, there are many opportunities for abuse! • Always be watchful of how data will be used…

33. Questions?