2. Before you visit homedepot.com, list some valuable services you think Home Depot can offer its customers on the Web,
Critical Thinking Questions
3. If you were a Home Depot competitor, what type of services might you offer customers above and beyond those mentioned here so that your organization could compete with Home Depot?
4. Consider the expense involved in opening regional call centers. How does this investment assist Home Depot in being a more efficient and effective company?
Sources: "Home Improvement and Electronics Retailers Lead IT Spending Growth in Retail," Business Wire, January 8, 2002; Marc Songini, "Home Depot Launches Major Integration," CRM projects, Computerworld, June 29, 2001, http://www.computerworld.com; Avaya Web site, http://www.avaya.com.
artificial intelligence (AI)
a field in which the computer system takes on the characteristics of human intelligence
SPECIAL-PURPOSE BUSINESS INFORMATION SYSTEMS: ARTIFICIAL INTELLIGENCE, EXPERT SYSTEMS, AND VIRTUAL REALITY
In addition toTPSs, MISs, and DSSs, organizations often use special-purpose systems. One of these systems is based on the notion of artificial intelligence (AI), where the computer system takes on the characteristics of human intelligence. The field of artificial intelligence includes several subfields (see Figure 1.13).
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Expert systems |
Neural networks |
~* Major Elements of Artificial 'exigence
Natural language processing
'ert system
"=m that gives a computer the " to make suggestions and act -r expert in a particular field
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: action of data, rules, proce--: and relationships that must.:.-.ed to achieve value or the: - ■ ctcome
: sal reality
■ i... the term referred to
-=.e virtual reality, which ■ -: "~e user becomes fully
m an artificial, three-
- ■ 5 z-ai world that is com-
- ce^erated by a computer
Artificial Intelligence
Robotics is an area of artificial intelligence in which machines take over complex, routine, or boring tasks, such as welding car frames or assembling computer systems and components. Vision systems allow robots and other devices to have "sight" and to store and process visual images. Natural language processing involves the ability of computers to understand and act on verbal or written commands in English, Spanish, or other human languages. Learning systems give computers the ability to learn from past mistakes or experiences, such as playing games or making business decisions, and neural networks is a branch of artificial intelligence that allows computers to recognize and act on patterns or trends. Some successful stock, options, and futures traders use neural networks to spot trends and make more profitable investments.
Expert Systems
Expert systems give the computer the ability to make suggestions and act like an expert in a particular field.31 The unique value of expert systems is that they allow organizations to capture and use the wisdom of experts and specialists. Therefore, years of experience and specific skills are not completely lost when a human expert dies, retires, or leaves for another job. Expert systems can be applied to almost any field or discipline. Expert systems have been used to monitor complex systems such as nuclear reactors, perform medical diagnoses, locate possible repair problems, design and configure information system components, perform credit evaluations, and develop marketing plans for a new product or new investment strategies. The collection of data, rules, procedures, and relationships that must be followed to achieve value or the proper outcome is contained in the expert system's knowledge base.
The 1980s and 1990s brought advances in both artificial intelligence and expert systems. More and more organizations are using these systems to solve complex problems and support difficult decisions. However, many issues remain to be resolved and more work is needed to refine their meaningful uses.
Virtual Reality
Originally, the term virtual reality referred to immersive virtual reality, which means the user becomes fully immersed in an artificial, three-dimensional world that is completely generated by a computer. The virtual world is presented in full scale and relates properly to the human size. It may represent any three-dimensional
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A Head-Mounted Display
The head-mounted display (HMD) was the first device of its kind providing the wearer with an immersive experience. A typical HMD houses two miniature display screens and an optical system that channels the images from the screens to the eyes, thereby presenting a stereo view of a virtual world. A motion tracker continuously measures the position and orientation of the user's head and allows the image-generating computer to adjust the scene representation to the current view. As a result, the viewer can look around and walk through the surrounding virtual environment.
(Source: Courtesy of Virtual Research Systems. Inc.)
setting, real or abstract, such as a building, an archaeological excavation site, the human anatomy, a sculpture, or a crime scene reconstruction. Virtual worlds can be animated, interactive, and shared. Through immersion, the user can gain a deeper understanding of the virtual world's behavior and functionality.
A variety of input devices such as head-mounted displays (see Figure 1.14), data gloves (see Figure 1.15), joysticks, and handheld wands allow the user to navigate through a virtual environment and to interact with virtual objects. Directional sound, tactile and force feedback devices, voice recognition, and other technologies are used to enrich the immersive experience. Several people can share and interact in the same environment. Because of this ability, virtual reality can be a powerful medium for communication, entertainment, and learning.
Virtual reality can also refer to applications that are not fully immersive, such as mouse-controlled navigation through a three-dimensional environment on a graphics monitor, stereo viewing from the monitor via stereo glasses, stereo projection systems, and others. Some virtual reality applications allow views of real environments with superimposed virtual objects. Motion trackers monitor the movements of dancers or athletes for subsequent studies in immersive virtual reality. Telepresence systems (e.g., telemedicine, telerobotics) immerse a viewer in a real world that is captured by video cameras at a distant location and allow for the remote manipulation of real objects via^obot arms and manipulators. Many believe that virtual reality is reshaping the interface between people and information technology by offering new ways to communicate information, visualize processes, and express ideas creatively.
Useful applications of virtual reality include training in a variety of areas (military, medical, equipment operation, etc.), education, design evaluation (virtual prototyping), architectural walk-throughs, human factors and ergonomic studies, simulation of assembly sequences and maintenance tasks, assistance for the handicapped, study and treatment of phobias (fear of flying), entertainment, and, of course, virtual reality games.
It is difficult to predict where information systems and technology will be in 10 to 20 years. It seems, however, that we are just beginning to discover the full range of their usefulness. Technology has been improving and expanding at an increasing rate; dramatic growth and change are expected for years to come. Without question, a knowledge of the effective use of information systems will be critical for managers both now and in the long term.
systems development
the activity of creating or modifying existing business systems
Systems development is the activity of creating or modifying existing business systems. Developing information systems to meet business needs is highly complex and difficult—so much so that it is common for information systems projects to overrun budgets and exceed scheduled completion dates. Business managers would like the development process to be more manageable, especially with predictable costs and timing. One strategy for improving the results of a systems development project is to divide it into several steps, each step with a well-defined goal and set of tasks to accomplish (see Figure 1.16). These steps are summarized next.
systems investigation
a stage of systems development that has as its goal to gain a clear understanding of the problem to be solved or opportunity to be addressed
SYSTEMS INVESTIGATION AND ANALYSIS
The first two steps of systems development are systems investigation and analysis. The goal of the systems investigation is to gain a clear understanding of the problem to be solved or opportunity to be addressed. Royal Caribbean, for ys terns analysis
=:age of systems development
пд which the problems and: oortunities of the existing sys-т~ are defined
> stems design
rage of systems development " a: determines how the new sys-r~ will work to meet the business T=ds defined during systems " а у sis
ystems implementation
rage of systems development -' ng which the various system:~oonents (hardware, software, i-.abases, etc.) defined in the т? gn step are created or
-:jired and then assembled and
- a "ew system is put into operation
example, launched a systems investigation to determine whether a development
project was feasible to automate purchasing at ports around the world. Once an organization understands the problem, the next question to be answered is "Is the problem worth solving?" Given that organizations have limited resources— people and money—this question deserves careful consideration. If the decision is to continue with the solution, the next step, systems analysis, defines the problems and opportunities of the existing system.
SYSTEMS DESIGN, IMPLEMENTATION, AND MAINTENANCE AND REVIEW
Systems design determines how the new system will work to meet the business needs defined during systems analysis. Systems implementation involves creating or acquiring the various system components (hardware, software, databases, etc.) defined in the design step, assembling them, and putting the new system into operation. The purpose of systems maintenance and review is to check and modify the system so that it continues to meet changing business needs.
.WHY LEARN ABOUT INFORMATION SYSTEMS?
stems maintenance and
с view
. - age of the systems develop--': process that has as its goal
: ~eck and modify the system so r: continues to meet changing
: "ess needs
Studies have shown that the involvement of managers and decision makers in all aspects of information systems is a major factor for organizational success, including higher profits and lower costs. A knowledge of information systems will help you make a significant contribution on the job. It will also help you advance in your chosen career or field. Managers are expected to identify opportunities to implement information systems to improve the business. They are also expected to be able to lead information system projects in their area of the business.
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s:c interactions with virtual "s via such devices as a data 1:->at senses hand position ~~r manipulation, operation,:: itrol of virtual worlds.
: ir Courtesy of Virtual -:qies, Inc.)
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| Systems investigation Understand problem | |
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| Systems analysis Understand solution | |
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-. = 'view of Systems:cment
Systems maintenance and review
Information systems play a fundamental and ever-expanding role in all business organizations. If you are to have a solid understanding of how organizations operate, it is imperative that you understand the role of information systems within these organizations. Moreover, in this new century, business survival and prosperity continues to become more difficult. For example, increased mergers among former competitors to create global conglomerates, continued downsizing of corporations to focus on their core businesses and to improve efficiencies, efforts to reduce trade barriers, and the globalization of capital all point to the increased internationalization of business organizations and markets. In addition, business issues and decisions are becoming more complex and must be made faster. An understanding of information systems will help you cope, adapt, and prosper in this challenging environment.
Regardless of your chosen field or the organization for which you may work, it is likely that you will use information systems. Why study information systems? A knowledge of information systems will help you advance in your career, solve problems, realize opportunities, and meet your own personal goals.
computer literacy
knowledge of computer systems and equipment and the ways they function; it stresses equipment and devices (hardware), programs and instructions (software), databases, and telecommunications
information systems literacy
knowledge of how data and information are used by individuals, groups, and organizations
COMPUTER AND INFORMATION SYSTEMS LITERACY You must acquire both computer literacy and information systems literacy to be able to use information systems to meet personal and organizational goals. Computer literacy is a knowledge of computer systems and equipment and the ways they function. It stresses equipment and devices (hardware), programs and instructions (software), databases, and telecommunications.
Information systems literacy goes beyond a knowledge of the fundamentals of computer systems and equipment. Information systems literacy is a knowledge of how data and information are used by individuals, groups, and organizations. It includes knowledge of not only computer technology but also aspects of the broader range of information technology. Most important, however, it encompasses how and why this technology is applied in business. Knowing about various types of hardware and software is an example of computer literacy. Knowing how to use hardware and software to increase profits, cut costs, improve productivity, and increase customer satisfaction is an example of information systems literacy. Information systems literacy can involve a knowledge of how and why people (managers, employees, stockholders, and other individuals) use information technology; a knowledge of organizations, decision-making approaches, management levels, and information needs; and a knowledge of how organizations can use computers and information systems to achieve their goals. Knowing how to deploy transaction processing, management information, decision support, and special-purpose systems to help an organization achieve its goals is a key aspect of information systems literacy.
INFORMATION SYSTEMS IN THE FUNCTIONAL AREAS OF BUSINESS Information systems are used in all functional areas and operating divisions of business. In finance and accounting, information systems are used to forecast revenues and business activity, determine the best sources and uses of funds, manage cash and other financial resources, analyze investments, and perform audits to make sure the organization is financially sound and that all financial reports and documents are accurate. In sales and marketing, information systems are used to develop new goods and services (product analysis), determine the best location for production and distribution facilities (place or site analysis), determine the best advertising and sales approaches (promotion analysis), and set product prices to get the highest total revenues (price analysis).
In manufacturing, information systems are used to process customer orders, develop production schedules, control inventory levels, and monitor product quality. In addition, information systems are used to design products {computer-assisted design,
or CAD), manufacture items (computer-assisted manufacturing, or CAAT), and integrate multiple machines or pieces of equipment {computer-integrated manufacturing, or CIM). Information systems are also used in human resource management to screen applicants, administer performance tests to employees, monitor employee productivity, and more. Legal information systems are used to analyze product liability and warranties and to develop important legal documents and reports.
INFORMATION SYSTEMS IN INDUSTRY Information systems are used in almost every industry or field. The airline industry employs Internet auction sites to offer discount fares and increase revenue. Investment firms use information systems to analyze stocks, bonds, options, the futures market, and other financial instruments, as well as to provide improved services to their customers. Banks use information systems to help make sound loans and good investments. The transportation industry uses information systems to schedule trucks and trains to deliver goods and services at the least cost. Publishing companies use information systems to analyze markets and to develop and publish newspapers, magazines, and books. Healthcare organizations use information systems to diagnose illnesses, plan medical treatment, and bill patients. HMOs have begun to use Web technology to access patients' insurance eligibility and other information held in databases to cut patient costs. Retail companies are using the Web to take customer orders and provide customer service support. Power management and utility companies use information systems to monitor and control power generation and usage. Professional services firms employ information systems to improve the speed and quality of services they provide to customers. Management consulting firms use intranets and extranets to provide information on products, services, skill levels, and past engagements to its consultants. These industries will be discussed in more detail as we continue through the book. |
summary |
The value.
i'i consists of raw facts; information is data trans-~med into a meaningful form. The process of defin-z relationships between data requires knowledge..".:тл ledge is an awareness and understanding of a set niormation and how that information can be made to support a specific task. To be valuable, infor-r.-.on must have several characteristics: it should be. -rate, complete, economical to produce, flexible, able, relevant, simple to understand, timely, verifi-. accessible, and secure. The value of information i.rectly linked to how it helps people achieve their;i-ization's goals.
PRINCIPLE |
_____ Models, computers, and information systems are constantly making it possible for organizations to improve the way they conduct business.
A system is a set of elements that interact to accomplish a goal or set of objectives. The components of a system include inputs, processing mechanisms, and outputs. Systems also contain boundaries that separate them from the environment and each other. Feedback is used by the system to monitor and control its operation to make sure it continues to meet its goals and objectives. Systems may be classified in many ways. They may be considered simple or complex. A stable, nonadaptive system does not change over time, while a dynamic, adaptive system does. Open systems interact with their environments; closed systems do not. Some systems exist temporarily; others are considered permanent.
System performance is measured by its efficiency and effectiveness. Efficiency is a measure of what is produced divided by what is consumed; effectiveness is a measure of the extent to which a system achieves its goals. A systems performance standard is a specific objective. A system variable is a quantity or item that can be controlled by the decision maker, such as how much of a product to produce, while a system parameter is a value or quantity that cannot be controlled, such as the cost of raw material.
There are four basic types of models: narrative, physical, schematic, and mathematical. These models serve as an abstraction or an approximation that is used to represent reality. Models enable us to explore and gain an improved understanding of real-world situations. The narrative model provides a verbal description of reality. A physical model is a tangible representation of reality, often computer designed or constructed. A schematic model is a graphic representation of reality such as a graph, chart, figure, diagram, illustration, or picture. A mathematical model is an arithmetic representation of reality.
ЧМКЧШиНД Knowing the potential impact of information systems and having the ability to put this knowledge to work can result in в successful personal career, organizations that reach their goafs, and a society with a higher quality of life.
Information systems are sets of interrelated elements that collect (input), manipulate and store (process), and disseminate (output) data and information. Input is the activity of capturing and gathering new data; processing involves converting or transforming data into useful outputs; and output involves producing useful information. Feedback is the output that is used to make adjustments or changes to input or processing activities.
The components of a computer-based information system include hardware, software, databases, telecommunications and the Internet, people, and procedures. CBISs play an important role in today's businesses and society. The key to understanding the existing variety of systems begins with learning their fundamentals. The types of business information systems used within organizations can be classified into four basic groups: (1) e-commerce, (2) TPS, (3) MIS and DSS, and (4) special-purpose business information systems.
E-commerce involves any business transaction executed electronically between parties such as companies (business-to-business), companies and consumers (business-to-consumer), business and the public sector, and consumers and the public sector. The major volume of e-commerce and its fastest-growing segment is business-to-business transactions that make purchasing easier for big corporations. E-commerce offers opportunities for small businesses by enabling them to market and sell at a low cost worldwide, thus enabling them to enter the global market right from start-up.
The most fundamental system is the transaction processing system (TPS). A transaction is any business-related exchange. The TPS handles the large volume of business transactions that occur daily within an organization. A workflow system is rule-based management software that directs, coordinates, and monitors execution of an interrelated set of tasks arranged to form a business process. The primary purpose of workflow systems is to provide end users with tracking, routing, document imaging, and other capabilities designed to improve business processes. An enterprise resource planning (ERP) system is a set of integrated programs that is capable of managing a company's vital business operations for an entire multisite, global organization.
The management information system (MIS) uses the information from a TPS to generate information useful for management decision making. Management information systems produce a variety of reports. Scheduled reports contain prespecified information and are generated regularly. Demand reports are generated only at the request of the user. Exception reports contain listings of items that do not meet a predetermined set of conditions.
A decision support system (DSS) is an organized ollection of people, procedures, databases, and evices used to support problem-specific decision.aking. The DSS differs from an MIS in the support:ven to users, the decision emphasis, the develop-ient and approach, and system components, speed, ™d output.
The special-purpose business information systems.elude artificial intelligence systems, expert systems, r.d virtual reality systems. Artificial intelligence (AI) ".eludes a wide range of systems, in which the com-uter system takes on the characteristics of human.telligence. Robotics is an area of artificial intelli-;nce in which machines take over complex, routine,: boring tasks, such as welding car frames or assem-/.ng computer systems and components. Vision sys-
ms allow robots and other devices to have "sight" r.d to store and process visual images. Natural lan-aage processing involves the ability of computers to r.derstand and act on verbal or written commands in r.glish, Spanish, or other human languages, earning systems give computers the ability to learn
?m past mistakes or experiences, such as playing inies or making business decisions, while neural net-rks is a branch of artificial intelligence that allows
mputers to recognize and act on patterns or trends.
-.e expert system (ES) is designed to act as an
:rert consultant to a user who is seeking advice г ^ut a specific situation. Originally, the term virtual
~'.ity referred to immersive virtual reality, in which ~: user becomes fully immersed in an artificial,
rce-dimensional world that is completely generated a computer. Virtual reality can also refer to appli--v.ons that are not fully immersive, such as mouse-
глrolled navigation through a three-dimensional:ronment on a graphics monitor, stereo viewing
m the monitor via stereo glasses, stereo projection
•:ems, and others.
Systems development involves creating or modifying existing business systems. The major steps of this process and their goals include systems investigation (gain a clear understanding of what the problem is); systems analysis (define what the system must do to solve the problem); systems design (determine exactly how the system will work to meet the business needs); systems implementation (create or acquire the various system components defined in the design step); and systems maintenance and review (maintain and then modify the system so that it continues to meet changing business needs).
Information systems play a fundamental and ever-expanding role in all business organizations. Computer and information systems literacy are prerequisites for numerous job opportunities. Computer literacy (a knowledge of computer systems and equipment) and information systems literacy (a knowledge of how data and information are used by individuals, groups, and organizations) are needed to get the most from any information system. Today, information systems are used in all the functional areas of business, including accounting, finance, sales, marketing, manufacturing, human resource management, and legal information systems. Information systems are also used in every industry, such as airlines, investment firms, banks, transportation companies, publishing companies, healthcare, retail, power management, professional services, and more.
Effective information systems can have a major impact on corporate strategy and organizational success. Businesses around the globe are enjoying better safety and service, greater efficiency and effectiveness, reduced expenses, and improved decision making and control because of information systems. Individuals who can help their businesses realize these benefits will be in demand well into the future.
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