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The .com [dot com] Bubble
ADM 3713
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Intel Stock Price
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Bubbles in the past
Tulip Bubble1637
South Sea Bubble1720
Railway Bubble1840s
dot Com Bubble ~ 2000
U.S. Housing Bubble2008
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Nortel10 years
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Intel10 years
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CISCO10 years
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Qualcomm10 years
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JDS Uniphase10 years
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Sun10 years
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The South Sea Bubble (1720)
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By the way
I can calculate the motion of heavenly
bodies, but not the madness of people.
Isaac Newtonafter he lost 20,000 in the
South Sea Bubble
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IBM10 years
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Microsoft10 years
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What the bubble means
Capital is easy to get (tooeasy)
A market for new issues (equity financing)
Large number of IPOs (1999457)
Stock prices increase
PE ratio increases dramatically
Prices return to normal suddenly
(200176 IPOs)
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The Bubble
Lasted from the IPO for Netscape (Aug. 1995)
Until after Y2K(year 2000)
Say, mid 1998 until mid 2000, about 24 months
Nasdaq
DOW
S&P 500
All hit highs they have not reached since
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Consequences of the Bubble
for IT Many internet firms (.coms) disappeared,
but
Innovation didnt slow down
Capital investment continued
But entrepreneurship did drop
Venture capital was more difficult to get Investment in technology became subject to more scrutiny
Outsourcingbecame more popularthought torequire less capital to keep up with technology
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Consequences of the Bubble
for IT Some companies
ENRON
WorldCom
Adelphi
Went too far trying to exploit the bubble
Executives are serving time
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Look out for
When you are doing research:
Reading books, magazines, cases, other
references
Always note whether or not it was written
before, during, or after the bubbleBeforeusually optimistic
Aftermore realistic (not necessarily more accurate)
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Paradigm Shifts and Bubbles
Paradigm Shifts
technology discontinuity
customer need
time
Bubble morelikely here
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Nortel (2000) vs.
The South Sea Bubble (1720)
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Guess
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Same company - later
Feb-13 ADM 3713 22
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Feb-13 ADM 3713 23
Remember
What is a Bubble?
The Dot. Com bubble
Its consequences Recent adjustments
Nortelbankrupt
Sun Microsystemsbought by Oracle
EDS bought by HP GoogleAndroid, Chromenew software player??
RIM ???HP ???
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Remember
IPO (Initial Public Offering)
Venture capital
PE Ratio
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End
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Big Iron, Hardware, Moores Law
ADM 3713
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The Five IT costs or
components
Where is the network?
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In the Beginning
Computers to 1945
Analog vs. digital .. Digital won
Computers 1945-1964
IAS, Urbana and the Illiac
Tubes to transistors
Computers 1965-1982
Dominance of IBMBig Iron
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More Recently
1982 to 1995
LSI - Large Scale Integrationchips
Made things smaller - microscopic
The Internete-mail, file transfer Application Providersservices
1996 to Present
The Web, search engines
Outsourcing
Applications over the Internet (cloud computing)
Social computing, cell phones, etc.
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Also
Transition of the dominant player
IBMMicrosoft GoogleRoom DesktopMobileCentralized Distributed Ubiquitous
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IBM 7094
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S/360 40
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S/360 50
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A note about Mainframes Big Iron
Often called Legacy Systems
Still important in some applications
Banks Insurance companies
Credit card processing
Governments
Moving from legacy systems to modern
systems is expensive and difficult
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A system
Feedback!
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A ComputerSystem
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Simpler version of a System
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Memory, storage, bytes
CPUs only process data expressed as a
series of 0s and 1s bits
Digital computer systems use bits Analog computer systems use continuous signals (usually voltages)
8 bits 1 byte
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Bytes
It turns out
A byte is pretty smallneed to consider
many of themKilo (1000s)
Mega (millions) 1 MB 1 million bytes
Giga (billions) 1GB 1 billion bytesTera (trillions)
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Bytes
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ASCII Codes
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ASCII Codes
(Being replaced by Unicode)
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Bytes
A single byte mayrepresent an ASCII character
E.g., an A a 1a $
ASCII is a standard set of 256 codes used torepresent numbers letters and a few other
characters
Unicodeis a newer standard using 2 bytesimportant for multilingual data - 65,000 codes
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Bytes
One typewritten page is two KB (double
spaced)
If, each character (and space) is representedby an ASCII code, each takes one byte, 8
bits
500 pages are (about) one MB 500,000 pages are about one GB
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Note
Bcapital B means bytes
bsmall b, means bits
KB a kilobyte, 1000 bytes 8000 bits
Kb a kilobit, 1000 bits 125 bytes
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End
Feb-13 ADM 3713 51
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Moores Law
ADM 3713
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Some Players in
Information TechnologyEconomists:
David Hume
Alfred Marshal
Ronald Coase
Brian Arthur
John Nash
CharlesVickery
Scientists:
ClaudeShannon
Paul Baran
GordonMoore
Bob Metcalf
HerbGrosch
EricSchmidt
Entrepreneurs:
Bill Gates
Andy Grove
Michael Dell
(Amazon)
(E-Bay)
(Google)
Don Tapscott
George Gilder
Charles Handy
Chris Anderson
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The Players who have Laws
named after them Herbert (Herb) Grosch
Gordon Moore
Robert (Bob) Metcalf
Paul Baran
Claude Shannon
Ronald H. Coase
Eric Schmidt
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A few people have made a lot of money
from information technology
Who hasgiven away the most??
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The CPU and microprocessors
Industry built onMoores Law
Dominant manufacturerINTEL
Others: IBM, AMD, Motorola. TexasInstruments
Microprocessors are everything (e.g., cell phones,
MP3 players, video cards, routers) CPUs are microprocessors in computers
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Moores Law
Gordon Moore predicted in 1965 that the:
price/performance of microprocessors willdouble every 18 months
What works now for $10
will cost $5 in 18 months
$2.50 in 36 months
$1.25 in 54 months
In 10 years it will cost 8 cents!
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Moores Law
Firms, companies, industries that
recognized Moores law have prospered.
Those that ignored it have disappeared!!
A few, that try to provide a distinctive product
at a premium price (Apple) have survived
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For example, Intel (INTC)(prospered)
Designed a CPU architecture or family for PCs
e.g., Apple and SUN are other architectures
The Intel family 8088, 80286, 80386, 80486,Pentium, Pentium II, Pentium III, Pentium
IV, etc. (Core Duo, Quad)
Appear 18 to 24 months apart.
A very deliberate, successful, design and
marketing strategy. Intel manages innovation
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Intel Processors
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Intel Stock Price
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Suppose. . .
Your business was manufacturingand
marketing a product (or service) that
decreased in cost by half every 18 months:How could you possibly stay in business?
- suppose you were selling hamburgers?
E.g., PC manufacturers
Long distance telephone providers (service)
Disk drive manufacturers
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Suppose. . .
Your business was buying a componentthat was decreasing in cost this way
How would you price your product?How would you keep your margins?
How could you leverage this price change to:
increase your market? develop new uses (innovation)?
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Suppose. . .
Your business was buying equipment or aservice that was decreasing in cost this way
How can you exploit this to lower your costsand increase your profits?
What do you have to do to say competitive?
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Some Strategies
Industries go through commoditizationInnovative products that commanded high
prices at the beginning eventually becomecommodities
Need to change strategiesmove to Low cost, high volumecreate a demand
Move to standardsConsolidate (merge) with competitors
Form alliances to keep costs down
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Examples
What have you bought
When it was new, innovative
That is now a lot less expensive, a lot morecommon?
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Some Strategiesfor Competitive Advantage
1. Low(production, operating)cost(within yourindustry)(notnecessarily low prices)
2. Differentiate (from your competitors) (better service)
3. Focus (niche market, be best in a smaller market)
4. Innovation (new features)
5. Growth (increase market share)
6. Alliances (concentrate on your core)
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Examples
Moores Law works for: PCs
Storage
Cell Phone devices Printers
Screens, monitors
Long distance telephone service
Does Moores law work for? IPhone
IPod
Cell phone services
Software, consulting services
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Other ICT devices(Information, Communication Technologies)
Moores Law applies to:
Disk drives
PrintersTelecommunication devices
Other accessories
Because they are based on microprocessorsand the manufacturing technology that hasspun off from them
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But
Moores Law doesnt seem to apply to
software products
Why?What might change this?
Moores law doesnt seem apply to services consultants, integrators, web designers, etc.
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TopPhilanthropists
9. Michael and Susan Dell $993 million
2. Bill and Melinda Gates (Foundation)$5,458 million
1. Gordon and Betty Moore (Foundation)$7,046million
Source: Business Week, November 28, 2005 (from 2001 to 2005)
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Remember
What Moores Law says:prices drop byhalf every 18 months (or performancedoubles)
In stories, cases, and examples ask:
Does Moores Law affect the business? If so, how (e.g., strategy, profits, competition)?
Where? ( e.g., Operations, products)
What does the firm use that Moores Lawdoesnt apply to?
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An Example
Here is an early computer
What might it be used for?
Why was it never popular?
Why are Honeywell, Xerox, General Electric,
Ford, RCA -- no longer in the computer business?
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End
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Hardware
ADM 3713
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The Five IT costs or
componentsp.6
Where is the network?
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In the Beginning
Computers to 1945
Analog vs. digital .. Digital won
Computers 1945-1964IAS, Urbana and the Illiac
Tubes to transistors
Computers 1965-1982Dominance of IBMBig Iron
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More Recently
1982 to 1995
LSI - Large Scale Integrationchips
The Internete-mail, file transfer
Application Providers
1996 to Present
The Web, search engines
Outsourcing Applications over the Internet (cloud computing)
Social computing, cell phones, etc.
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Also
Transition of the dominant player
IBMMicrosoft GoogleRoom DesktopMobileCentralized Distributed Ubiquitous
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IBM 7094
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S/360 40
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S/360 50
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A note about Mainframes Big Iron
Often called Legacy Systems
Still important in some applications
Banks Insurance companies
Credit card processing
Governments
Moving from legacy systems to modernsystems is expensive and difficult
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A system
Feedback!
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A ComputerSystem p. 91
Si l i
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Simpler version p. 89
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Memory, storage, bytes
CPUs only process data expressed as a
series of 0s and 1s bits
Digital computer systems use bits Analog computer systems use continuous signals (usually voltages)
8 bits 1 byte
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Bytes
It turns out
A byte is pretty smallneed to consider
many of themKilo (1000s)
Mega (millions) 1 MB 1 million bytes
Giga (billions) 1GB 1 billion bytesTera (trillions)
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Bytes
ASCII Codes
(Being replaced by Unicode)
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( g p y )
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Bytes
A single byte mayrepresent an ASCIIcharacter
E.g., an A a 1a $ ASCII is a standard set of 256 codes usedto represent numbers letters and a few othercharacters
Unicodeis a newer standard using 2 bytesimportant for multilingual data
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Bytes
One typewritten page is two KB (double
spaced)
If, each character (and space) is representedby an ASCII code, each takes one byte, 8
bits
500 pages are (about) one MB 500,000 pages are about one GB
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Note
Bcapital B means bytes
bsmall b, means bits
KB a kilobyte, 1000 bytes 8000 bits
Kb a kilobit, 1000 bits 125 bytes
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About Time
It turns out, a second is a long time
Need to talk about fractions of seconds
Millisecond1 thousandthMicrosecond1 millionth
Nanosecond1 billionth
Light travels about 30 cm in 1 nanosecond
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Rates
Together, size and time measure rates
E.g., Megabytes per secondMB/sec
Also as frequencies times per second
E.g., 3 MegaHertz3 million times per second
Other terms:
Baudbit per second
Bandwidthnumber of bits per second (through agiven channel), e.g., from the Internet to your computer
CPUs perform operations in
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CPUs perform operations in
clock cycles 1 hertz is one (clock) cycle per second E.g., the sequence of operations to add two numbers
might be:
1. retrieve the instruction2. Decode the instruction
Execute the instruction:3. get first number
4. get second number
5. add the two numbers
6. Store the result
This is six clock cycles
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CPU Speeds
Measured in Megahertz (and Gigahertz)
Millions (billions) of (clock) cycles per
second A single arithmetic operation may take
several cycles
Advanced CPUs can overlap operations E.g., dual core, quad core
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Three ways to make a CPU faster
1. Speed up the clock (more steps per
second)
2. Do some steps in parallel Do next step 1 while steps 4, 5 and 6 are
happening
3. Use a larger word size (internally in theCPUthe bus)
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All these things depend on more transistors
in a CPU
Moores Law talked about: Cramming more components onto
integrated circuits
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CPU Speeds
Newer CPUs have special instructions
E.g., Pentium III had special instructions forhelping graphics and sounds.
Pentium IV does more steps in parallel
Current CPUs have a 32 bit internal wordsize (orbus)
Newer CPUs have a 64 bit internal busIt is the backplaneof Schmidts Law
Why more RAM memory is a
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Why more RAM memory is aGOOD THING
Run larger programs (a biggerdesk)
More simultaneous users
More simultaneous programs Often faster (larger cache for disks)
May make peripherals run faster
Why more RAM memory is a
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Why more RAM memory is aGOOD THING
Relatively cheap, (compared the CPU)
Easy to install
Doesnt (normally) require reconfiguring
Note:
Cache memoryusually is right on the CPUchip
So you cant change it, and it is more expensive
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Types of Memory
Current PCs 1000 MB to 4000 MB of memory
Original PC had 64 KB
How many times larger is 1000 MB?
Cache Memoryon the CPU chip
Very fast, expensive
Video Memoryon the video adapter
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Typical test questions
6. If a CD holds 640 MB of data and your
computer reads it a 2 MB per second
How long will it take to read the whole CD?7. If a DVD holds 4.7 GB of data how long
will it take to read it?
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A typical test question
8. A SD card holds 2 GB, how many pages
of typed text can be written on one?
2 GB = 2,000,000 KB 1 page is 2 KB
This SD card can hold 2,000,000/2 = 1
million pages
Analog to Digital
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Analog to Digitalreality is analog
Bitsno size, colour or weight and can travel at
the speed of light.
Digitizingtaking samples of an analog signal
CDs take 44.1K per second. But each sample is
16 bits.
Bandwidthnumber of bits per second (through
a given channel). the channels capacity A CD needs 44.1 x 16 x 2 (stereo) =1.4 Mbps
Buses and Connectors
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Buses and Connectorshave different bandwidths
Internal bus
USB 1.1, 2.0
Wireless 802.11 Digital monitors
Older
Serial Port
Parallel Port
Infrared
ISA
PCI
SCSI
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USB 2 0
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USB 2.0(USB 3.0 now the current version)
Announced April 2000an example of a Standard
Controlled by the USB Implementers Forum
This is an organization of manufacturers USB has a bandwidth of 480 Mb/sec
It can provide power for low power devices
How many bytes per second?How long does it take to transfer a 6 GB DVD?
A l d Di i l
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Analog and Digital
Analog signals are continuous
E.g., sound, light, radio waves, etc.
Digital signals are a stream of bits, on andoff, 1s and 0s.
Analog signals usually get distorted when
they are transmitted or stored. Digital signals can be reproduced perfectly
A l d Di i l
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Analog and Digital
Analog signals are hard to mix,
E.g., radio and television use different parts of
the spectrum, TV signals use different channels
Cable is a different wire from telephone
It is possible to mix digital signals
E.g., you computer receives pictures,
documents (e-mail and web pages), sounds,
video, all on the same network.
Di i l Si l B d id h
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Digital Signals Bandwidth
64,000 bits per secondvoice
1.4 million bpshigh fidelity music
45 million bpsvideo
P bl
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Problem
A CD can hold about 72 minutes of music.
How many bytes is this?
A
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Answer
72 min. x 60 = 4,320 seconds
4,320 x 1.4 = 6,048 Mb
6,048 / 8 = 756 MB
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Software(Chapter 3 pp. 102-108, TB pp.463)
ADM 3713
S ft
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Software
The set ofinstructionsthat tell a computersCPU what to do
E.g.
Read a number from memory
Read another number
Add the two numbers together
Store the result in memory
The instructions are sometimes called computercode
S ft
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Software
Writing instructions is calledprogramming
orcoding
The code is in a language all imperativeverbs
There are many different languages and
dialects It is slow, tedious and expensive
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T
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Types pp.105-107
Systemssoftwareoperating systems (O/S)
Windows, Unix, MacOS, Linux, Android
telecommunications software andservices
Database Management Systems (DBMS)
Application software
word processing vs. more specific applications Project Management
running an ATM
Third Part s OEM
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Third Party vs. OEM
OEMOriginal Equipment Manufacturer
E.g., Dell, Microsoft, Intel, IBM, Apple
Buying accessories, software, services etc.not from the OEMyou are said to be
dealing with a third party First partyyou
Second partyOEM, your primary vendor
Third partyanother vendor
Operating Systems (O/S)
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Operating Systems (O/S)
Computer Operating Systems
MS Windows
UnixOthers have fallen by the wayside
Special Purpose O/S
In ATMsOther devices, Cell Phones, etc. - Android
Windows vs Unix
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Windows vs. Unix
Windows is owned and marketed byMicrosoft -proprietary
Many versions over time: Win 95, Win 98, Win2000, Win XP, Vista, etc.
Succeeded in the market by
incorporating many good ideas
Increasingeconomies of scale
Bloodthirsty competitiveness
Windows vs Unix
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Windows vs. Unix
Unix Core(kernel) is open available to anyoneopen source software
Each manufacturer tailors it to their products
Sun SunOS, HP HP/UX IBM AIX
Linux is a generic type that most manufacturersnow usebut sold by several different vendors
and still tailored Android isproprietary,but freely available
What does the O/S do?
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What does the O/S do?
O/S, generally,specific to hardware
Shields the applications from hardwaredependence
For example, to an application program MSExcel a spreadsheetall disks look alike big,small, floppy, CDs, DVDs, flash drives, etc.
Definition: O/S a program that manages theresourcesof a computer, e.g., memory,CPU, printers, disk drives, network, etc.
What else does the O/S do?
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What else does the O/S do?
Manages the user interfacehow you seethecomputerthe windows, the file folders, etc.
Includes utilities such assearch (or find)
Some devices have special characteristics E.g., Printer
Cant be shared so the O/S spools or queues the output todisk for later printing.
E.g., Mouse Needs to react immediately, O/S, gives this a high priority,ability to interrupt other functions
Why the O/S is so Important
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Why the O/S is so Important
Because it shields the applications from hardware
dependence
It enables developers (3rd parties) to create an
application that will run on different platforms
cell phones, tabletsfrom various manufacturers
(2nd
party) So, over the last 25 years or so, apps are a huge
industry!Feb-13 ADM 3713 139
Developing Software Products is
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1. Slow (takes years)
2. Error Prone (lots of post sale adjustments)
3. Expensive4. Also - risky
5. Requires talent. Some people are better
than others. A few people are very good.6. Moores Law doesnt seem to apply
Software Products
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Software Products
7. Very difficult to specify the design,
difficult to control the development.
Software Products
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Software Products
8. Market may be difficult to define, can
vary from very narrow and specific to
very broad. Sometimes, vertically
integrated, sometimes wide (horizontal).
E.g., a Word Processor or a WP for
lawyers
a spreadsheet, an accounting package, an
accounting package fordentists
Horizontal vs Vertical
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Horizontal vs. Vertical
This concept is important
Some firms target a horizontal market
They sell their products to a wide range of companies,
e.g., Office Depot, utilities, transportation, banks,insurance, etc.
Some firms target or are embedded in a specific
industry, e.g., manufacturers of printing presses,
aircraft, specialty services
This is called a vertical market
Off-the-Shelf vs. Custom
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pp. 366-367
Customizedtailored (created) to meet the
specifications of an organization
Off-the-Shelfsupports common business
processes
Tailor off-the-shelfmodify to your needs
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Horizontal vs Vertical Software
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Feb-13 ADM 3713 146
Horizontal vs. Vertical Software
Software Issues
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Feb-13 ADM 3713 147
Software Issues
Costs Software is Expensive!
ERP software starts at $100,000
may cost $50 or $100 million to implement in a large firm
Cost CICS $20,000 per month, on one machine in one room used bydedicated terminals (IBM had 20,000 customers)
Upgrades to Windows $50 x 2,000 $100,000
every couple of yearsbut more difficult to
deploy
Difficult to control costs, difficult to allocate costs
Programming Languages pp 459 466
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Programming Languages pp.459-466
HTML and tags
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HTML and tags
Another approach to programming acomputerthat also has a long history
More capable hardware has made itimportant
E.g., HTML (for Web pages) uses tagsaround the text
Describes the structure: text, headings, listsAnd Links
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Tags (or codes)
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Feb-13 ADM 3713 151
Tags (or codes)
Content Management Software (CMS)
Now important for firms to keep their webpages up-to-date
Especially, when the web pages are designedand hosted by an outside organization(outsourced)
CMS allows you to enter unformatted data
(e.g., text) and edits it for the corporate webpages
Other Software Problems
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Other Software Problems
One approach, is central distribution from aserviceprovider (ASP).
Training, old and new employees, required before
hiring or is it the responsibility of HR? Ownership, e.g., by you, or your employees who
write software?, or by the provider?
Standardizatione.g., one word processor, one
spreadsheet across the whole company? Problems with a mobile workforce, or people
working from home, on their own laptop?
Today
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Today
Very few companies write computer programs fortheir own use.
Usually they buy programs (applications) from
specialized vendors Database companies e.g., Oracle
Application companies E.g., PeopleSoft, J.D. Edwards (now both part of Oracle)
Enterprise companies e.g., SAP (SystemAnalyse undProgrammentwicklung), IBM
$500,000 and up ($50,000,000 or so)
Application Service Providers ASPs
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the Cloud cloud computing
Not entirely a new idea
Result of:
Modern high speed networksHigh cost of maintaining software
Accounting and financial considerations
Corporate focus Also called SaaS (Software as a Service)
ASPs value
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ASPs value
You rent the use of software, as you
need it, this may give you:
1. Predictable pricing
2. No up-front capital expenditure
3. Rapid deployment
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Most of these issues will come up again
They are fundamental management
problems Software and hardware for an enterprise are
the means of production
In a bitbusiness they are vitalManagers must make good choices
Note
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Note
Keep Your Software
up-to-date
Learn how to use itUseyour word processorits not just a
typewriter
Useyour spreadsheetits not just a pocketcalculator
Usetheir help
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End
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A Note about Software
economics
ADM 3713
A Note about
S ft E i
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Feb-13 ADM 3713 161
Software Economics
Software exhibitsIncreasing Economies of
Scale
Under the right circumstances software is
immensely profitable
Normally, production, eventually, results in
decreasing economies of scale
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But,Software
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u ,So w e
1. Doesnt cost anything or take any time toreplicateit doesnt weigh anything
2. Has the property (Metcalfs Law) that the
larger the market the more the marketgrows
I.E., you prefer to use the same software that
your supplier and your customers use One software product, e.g., MS Windows, can
become ubiquitous
Increasing Economies of Scale
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Feb-13 ADM 3713 164
g
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Free?
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Feb-13 ADM 3713 166
Open-source software
Publicly available and free
Source code may be available
Sometimes distributed as freeware or shareware
With an optional fee
Sometimes a complete version has a fee
Dont confuse with limited time free trials
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End
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Feb-13 ADM 3713 168
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Network Basics
What is the Internet?Chapter 3 pp.109-118
TB pp. 467- 487
ADM 3713
Internet
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Feb-13 ADM 3713 170
Some material here
More material later focusing on the web
and e-commerce
Five Significant Technologies
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g g
1. Microprocessors, LSI circuits, chips
2. Software
3. Databases
4. Packet switched networksThe Internet5. Search Engines
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Thomas Watson
saidThe world
will need about five
computers
He was out byhow
many!
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Definitions
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Feb-13 ADM 3713 176
Switched circuits
A networking technique that sets up a physical
connection between two parties, for the duration of
the session. (This is the phone system).Packet switching
Technology that breaks blocks of data into small,
fixed bundles and routes them through the available
communications channels. (This is the Internet).
The Internet:
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Combines
Computers
Telecommunications
Is a redesign of
How signals can move
How people can connect to one another
The value (or cost) of communicating
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Formal definition
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A global information system that: Is logically linked together by a globally unique address
space based on the Internet Protocol (IP) or itssubsequent extensions/follow-ons;
Is able to support communications using theTransmission Control Protocol/Internet Protocol(TCP/IP)
Provides, uses or makes accessible, either publicly or
privately, high-level services layeredon thecommunications and related infrastructure described . ..
Open Architecture
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Each distinct network would stand on its own and
no internal changes would be required to connect
it to the Internet
Communications would be on a best effort basis
Networks would be connected by routers(blackboxes)no information would be retained about
individual packets No global operations control
Whats Important
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1. Globally unique address space
2. Based on the Internet protocol (IP)
3. Able to supportTCP/IP
4. Provides services layeredon the
communications infrastructure
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. . . Every public and private network that
has agreed to exchange communication
using TCP/IPit is a standard
This includes big, backbone networks,
local campus LANs, and your house or
apartment
Circuit Switched NetworksNot the Internet
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Feb-13 ADM 3713 183
Not the Internet
Technology that sets up a fixed circuit
between two points for the duration of a
connection and takes down the circuit when
the message is finished.
Conventional telephones
Circuits are switched to make a pipe
Circuit switching andPacket switching
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Feb-13 ADM 3713 184
Packet switching Circuit switching is
like a railway
Directedness (tracks)
Control Central command
Needs a central office
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Packet Switching p. 113
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Feb-13 ADM 3713 186
Technology that breaks blocks of data into
small fixed, bundles and routes them
through any available communications
channel
The Internet is based on packet switching
Using TCP/IP packets and protocols
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TCP/IP Protocol(s) p. 114
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Feb-13 ADM 3713 188
IP defines a 128 bit address
Handles addressing and forwarding of packets
Extended to 128 bits (called IPv6) from 32 bits (IPv4)
TCP defines handling, segmentation,reassembly, concatenation, separation and
recovery of packets
The Routers give direction
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Feb-13 ADM 3713 189
Routers are like
highway signs
Routers are (black)boxesreally a specialpurpose computer
Routers and Signs
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Feb-13 ADM 3713 190
Routers allow
different paths to get
to the same destination
Routers
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Feb-13 ADM 3713 191
Routers can route
packets around a
blockage
Packets for onemessage may:
Go along different
routes
Arrive out of order
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Feb-13 ADM 3713 192
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So
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Feb-13 ADM 3713 194
Packets are sent to
their destination with
the assistance of
routers (This is the IP part)
At the receiving end:
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Feb-13 ADM 3713 195
Each packet ischecked to ensure themessage is complete
They are assembledinto their original form
(This is the TCP parton your desktop)
Textbook
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Feb-13 ADM 3713 196
Has a simplified diagrams
pp. 483
p. 114
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Feb-13 ADM 3713 197
Global Address Space
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Feb-13 ADM 3713 198
Every computer has an IP numberp. 114, p.483
Every one is different
128 bits (was 32 bits) Domain namese.g. unb.ca
Name servers
Match names and IP numbers Managed by the Domain Name Server (DNS)
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Feb-13 ADM 3713 199
Stupid vs. Intelligent
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Feb-13 ADM 3713 200
In the (new Internet)
stupidnetwork, thedata tells the network
where it wants to go
The (old telephone)
intelligentnetwork,tells the data which
path to follow
Packet switched
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Feb-13 ADM 3713 201
Always on
No call
Time not a factor Customers are not distinguishable
purpose of data is not known
For the Internet
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Feb-13 ADM 3713 202
Overhead is very low, there is no permanent
circuit
Connection is not reliable best effort
Intelligenceis at the edge, the PC is smart,routers are dumb
Services are at the edge, there is no central
officethis is where business is conductedThe Internet is like the oceanno one owns it
Telecos
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Feb-13 ADM 3713 203
Dont like the Internet, want to control it like a
telephone system
Intelligence in a central officethe handset is
dumb Services in the central office, e.g., call waiting, 911,
the central office is owned by the service provider
Control the services,
prevent Skype force users to their brand,
charge for different services and volume of use
Client/server Networks pp. 112, 472
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Feb-13 ADM 3713 204
A network in which one or more computersare servers and provide services to othercomputers, called clients.
Services might be:E-mail
Web pages
DatabasesBusiness rule processing
Client or Server
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Feb-13 ADM 3713 205
People use the machines on their desks (or
in their hands). These are normally the
clientmachines.
Services are provided by (usually) larger
machines on the network that run
unattended (in the backroom or anywhere on the
Internet). These are the server machines.
Client/Server
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Feb-13 ADM 3713 206
Shares processing between the desktop and
the backroom
Allows the firm to centralize control of
information, the database(s)on the server
Allows employeescustomers, suppliers
local use and analysisat the desktop
Anywhere..
Examples ofServices
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Feb-13 ADM 3713 207
E-mailreceiving, sending (use the SMTPprotocol)
Web servers (use the HTTP protocol)
Database serversfor the firms data (use theSQL language)
File systems (use the FTP protocol)
Authentication (use the SSL protocol)
Examples of IP ServicesAs compared to applications
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Feb-13 ADM 3713 208
TCP/IP services:
E-mailreceiving,
sending
Web servers Authentication
Security and
encryption
File systems Database servers
Applications:
You Tube
Facebook
Amazon E-Bay
SaaS (cloud
computing)
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The Commercial Network
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Feb-13 ADM 3713 210
Yourmachine
Ethernet over copper to your router or Wi-fi
Your router (to a modem) to
To your ISPs router (Rogers, Aliant)
The ISPs Router
To the long haul internet provider (Sprint,
etc.) (Reversed at the other end)
The Commercial Network
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Feb-13 ADM 3713 211
IP Names and Addresses pp.115
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Feb-13 ADM 3713 212
Each network has an address
UNB Fredericton 131.202.xxx.xxx
The lower numbers are assigned to campusnetworks and machines
Networks also use namessomething.unb.ca p. 183
.203
unicorn
Internet
www.
amazon com
R
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Feb-13 ADM 3713 213
.7
jupiter.49
mars
Faculty of Admin 131.202.8
Library 131.202.45
Router
web mail
dns
amazon.com
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Feb-13 ADM 3713 214
Neotrace
16 hops
197 ms return
131.202.53.114
204.146.80.99
CA*Net design
Fiber
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Feb-13 ADM 3713 215
Good points
Cheap
Dielectric
High capacity (fast) (incredibly high)
Hard to install in built up areas
(One way is to thread it through gas pipes)
Twisted Pair(Copper)UTP, Cat-5. Cat-6, RJ45 Carries Ethernet
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Twisted Pair to Router
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Fiber(glass)
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Feb-13 ADM 3713 220
Fiber (Fibre)
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Feb-13 ADM 3713 221
Many orders of magnitude faster than
copper and wireless
Cheaper
WDMallows the capacity to increase
Adds lambdas
Aliant and FiberOP
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Feb-13 ADM 3713 222
BellAliantFibreOP25/5
~$88.00 per month 20 Mbpsdownload
5 Mbpsupload RogersExtreme Plus
~$70.00 per month 25 Mbpsdownload
1 Mbpsupload 125 GB per month
Aliant and FiberOP
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Feb-13 ADM 3713 223
The artificial scarcity is created two ways:
The download speed100 Mbps might be
reasonable
Making the upload speed slower than the
download speedno technical reason for
thisit probably takes extra equipment to
throttle it
Free?
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Feb-13 ADM 3713 224
Book:Free: The Future of a Radical Price
By Chris Anderson
In order to stay in their traditional businesses
Firms create artificial scarcity Treat an abundant (cheap) thinghard drive capacity,bandwidth, peripheral services (e-mail ids, security,some software) as if they were scarce and charge forthem
This treats a scarce thingyour timeas if it wereabundant
Speed Dating - Aliant and Rogers
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Feb-13 ADM 3713 225
Paradigm Shift?
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Feb-13 ADM 3713 226
Paradigm Shifts
technology discontinuitycustomer need
function
time
Circuit switching
Packet switching
Why in the Internet intelligence is at
the edge
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Feb-13 ADM 3713 227
Packet switching as used by the Internet
Services are at the edge
a service provider (the one who makes money) can be
anywhere The network provider
doesnt need to provide added services, just a reliable access.
Doesnt need to know about or charge for the type of use
only the time or volume (- has a fixed cost)
Moores Law the capital cost is dropping
A disruptive technology
What is the next . . .?
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Feb-13 ADM 3713 228
IP telephony (VOIP (voice over IP)) Skype
Wireless IP telephony
Convergence
Cell phones and the wireless InternetFixed wireless to the home?
Fibre to the home?
TV Who wins? Who loses?
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Firewalls, encryption, VPNspp. 425, 426, 424
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Feb-13 ADM 3713 230
Important
Talk about later
IP utilities on your PC(Laptop, Tablet?, Smartphone?)
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Feb-13 ADM 3713 231
Ipconfig /all Tells you your IP address (and MAC address)
ping Tells you whether an address is active (and whether or
not your machine is working) tracert
lists the nodes to a destination
arp Most recently accessed IPs
nslookup Resolves IP numbers and names
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End
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Feb-13 ADM 3713 233
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The Properties of the Internet
ADM 3713
1. Mediating Technology
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Feb-13 MBA 6106 235
Connects people
B2B, B2C, etc,
Facilitates exchange (cf. a bank)
Two-way (not one way, like TV or radio) This gives the customerspower
2. Universality
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Feb-13 MBA 6106 236
Can enlarge the world
Market anywhere
Can shrink the world
Work anywhere
3. Network Externalities
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Feb-13 MBA 6106 237
The more users the better: increases value
Metcalfs Law: value of something isnumber of users N N2
N = 10 then value = 100 N = 20 then value = 400
N = 1000 then value = 1,000,000
The reverse is trueif a new technology
(say, a new cell phone technology) doesn't take off,it has low value (and profit).
4. Distribution Channel
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Feb-13 MBA 6106 238
bit Products digital productsmusic, life
insurance, stock trades
Information
Replacement Disintermediation (e.g., travel agency, stock broker)
Extension
Price drops may be enough to increase market
(also a mediating technology)
5. Time Moderator
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Feb-13 MBA 6106 239
Shrink time
Information and bit products are available
immediately
Enlarge time
24 x 7 availability
E-mail delivered when read
6. Information Asymmetry
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Feb-13 MBA 6106 240
When one party in a transaction knows
more than another.
E.g., real estate brokers know more about the
housing market than the typical seller or buyer
E.g., a car dealer knows more about his costs
than a car buyer
This term also comes from Economics
The Internet can
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Feb-13 MBA 6106 241
Shrink Information Asymmetry
Reduces the disparity of access to information
between parties in a transaction
A buyer can search for information and know(almost) as much as the seller
E.g, car dealer cost
Examples
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Feb-13 MBA 6106 242
Term Life Insurance
The term life premiums have dropped $1 billion
in USA
Vendors had an information monopoly, theInternet reduced this
Coffins?
7. Infinite Virtual Capacity
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Access to information, response time and
storage of data and information is notconstrained by technology
Because of Moores Law
No shortages
8. Low Cost Standard
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Internet technology is open
Available to anyone at one of the profit sites
Costs are far lower than any competing
technologies
(for a variety of reasons)
9. Creative Destroyer
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Barriers to entry are low, substitute
products and services are available1. Brand-new industrieshave been created
2. Transforms the structure, conduct, performance ofexisting industries
3. Competitive advantagein existing industries (andnew ones) can be enhanced
10. Transaction-Cost Reducer
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Reduces the cost of doing business
Searching
Communicating
Negotiating
Reduces information asymmetry
Both Transaction costs andAgency costs
Remember
T i
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Transaction costsare incurred during the processof buying or selling, on top of the PRICE of
whatever is changing hands. If these costs can be
reduced, the PRICE MECHANISM will operate moreefficiently.
Agency coststhe costs of managing the business
E.g., Rent for facilities, accounting and legal costs
Limitations of the Internet
K l d
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Knowledgeneed this
Tacit knowledge Non verbal, acquired by experience
Explicit knowledge Coded, verbalized, specified
Peopleneed to recognize
Bounded rationalitysome things can be so
new and different, they are indistinguishablefrom magic
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End
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Feb-13 ADM 3713 250
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Eric SchmidtSchmidts Law
ADM 3713
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Eric Schmidt
Wh th t k
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Feb-13 ADM 3713 253
When the network
becomes as fast as the
backplane, the
computer hollows out
Fast means bandwidth
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Remember
M L S h idt L
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Moores Law
And its consequences
CPU architecture
family Commodity,
commoditization
Schmidts Law
Backplane
Bandwidth
Strategies forcompetitive advantage
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End
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The Internet Layerspp. 479-481
ADM 3713
Layers of the Internet
The open architectureof the Internet is designed
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The open architectureof the Internet is designedin layers
These can be thought of as separate pieces of
software or different collections ofprotocols They allow free development of products that can
interact with one another (are compatible)
To us, they are rather abstract
To internet engineers they are real
Layers
1 A li ti
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1. Application (+ Presentation + Session)
2. Transport
3. Network
4. Data Link
5. Physical
Curiously
This is an abstract model to enable
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This is an abstract model to enable
engineers to build the Internet, but
Each layer has turned out to be a businessopportunity!!
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The Internet Value Sites
ADM 3713
Who provides your layers?Who do you do business with?
Application
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Application
Transport
Network
Data Link
Physical
Value
Value Network
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Value Network
The various firms using the Internet to create
value for the customers
Profit Sites
Specific types (or places where) of value is
created and examples of firms that operate atthat spot
I Users
1 E Commerce
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1. E-Commerce Real money for real products and services
2. Content aggregators
Collect and distribute information3. Brokers/Agents and 4. Market Makers
Act as an intermediary
5. Service Providers outsourcers
II Communications Services
6 Backbone Operators
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6. Backbone Operators
Control the Internet
7. ISPs/OSPs
Provide access to the web
8. Last Mile
Provide Internet connections to consumers
Wired and wireless
III Suppliers
9 Content Creators
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9. Content Creators
Developers and owners of intellectual capital
10. Software suppliers
Provide application and system software
11. Hardware suppliers
Provide communication and computer
hardware and accessories
Examples
BrunNet Oracle/PeopleSoft
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BrunNet
Aliant
Sprint
Microsoft Cisco
Dell
SAP
Oracle/PeopleSoft
LearnStream
L.L. Bean
Google Yahoo
Amazon
E-Bay
Examples
Ditech com
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Ditech.com
mortgages
In cases
What properties of the Internet are
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What properties of the Internet areimportant?
What layers are important and
What value sites show up?
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Managing in the Digital WorldChapter 1
ADM 3713
Note: Definitions on Tests
1 What is it? (the definition)
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1. What is it? (the definition)
2. Why is it important?
3. Give an example
Chapter 1 pp. 2-51
Chapter 1
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Chapter 1
1. Information Systems Today
2. Globalization (part 1)
3. Information Systems
4. ISgood and bad
------------------------------------------
1. ISvs. privacy
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In the Information Society
Computers are:
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Computers are:Powerful, inexpensive easy to use
Telecommunication is:
Global, inexpensive, accessible In much of the world the population is:
Computerliterate(know how to use a computer)
Have computerfluency(know how to learn andapply new technologies)
But
Some parts of the world are not in the
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Some parts of the world are not in theInformation Society
Not just because of where they live, but
also:How they live (attitudes)
Their government (politics)
Globalization pp. 10-20
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Globalization: Economic Changes1-281
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Economic Changes
Increases in international trade, development of global
financial systems and currency, and outsourcing of
labor
Globalization: Cultural Changes1-282
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Cultural Changes
Increased multiculturalism through TV and movies;
international travel and immigration; ethnic foods;
Facebook, FarmVille, Twitter, and YouTube
Globalization: Technological Changes1-283
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Technological Changes
Low-cost computing platforms and communicationtechnologies; e-mail, Skype, and instant messaging; low-cost global telecommunications infrastructure; global
patent and copyright enforcement
Globalization: 1.0, 2.0, 3.01-284
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Opportunities p. 18
Due to:
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Due to:Falling transportation costs
Falling telecommunication costs
Leads to:
Reaching new markets
Managing a global workforce
Challenges p. 19
Governments
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GovernmentsPolitical system
E.g., Autarky (the opposite of Globalization)
GeoeconomicTime zones, infrastructure reliability, expertise
Cultural
Social organizations, advertising
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What is an Information System?
A set of interrelated components that
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set o te e ated co po e ts t atCollect (or retrieve) data
Process,
Store,Analyze, and
Distribute information
to support decision-makingand controlinan organization leads to knowledge
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What an information system does:
Input data Process Data Output Data
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p p
Stores Data
Controlby software, by people, by
procedures
Feedbackto correct data, software,
improve the process
Systems also have
A programcontrols the process
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p og a pA sequence of rules or instructions
Written instructions
Computer program Mechanical devices (e.g., clock)
A political program
The feedback can change this program
What is a system?
A group ofcomponentsthat interact to
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g p pachieve some purpose
With these characteristics1. Input
2. Processing
3. Output
4. Feedback
5. Control
a System
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Input Process Output
Feedback/
Control
An Information System
network
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Input Process Output
Feedback/
Control
Store Data Store Data
Store Data
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Components of Business
Processes
- a network of activities, resources, facilities andi f ti t hi b i f ti
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information to achieve a business function
1. Activities
2. Resources
3. Facilities
Components of Business
Processes
4. Information
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Data
Information
Knowledge
Wisdom
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DATA vs. INFORMATION
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Raw factsRepresent events
E.g. sales from a cash
register
Organized dataMeaningful to people
E.g. sales trends,
comparison of sales
by brand
Data vs. Information vs. Knowledge
Data (Item). Elementary description of things,events activities and transactions that are
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events, activities and transactions that arerecorded, classified and stored but are notorganized to convey any specific meaning.
Information. Data organized so that they havemeaning and value to the recipient.
Knowledge. Data and/or information organizedand processed to convey understanding,experience, accumulated learning and expertise as
they apply to a current problem or activity. Wisdom. ----
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Development and Use of
Information Systems
You need to:
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Take an active role in order to ensure thatsystem will meet your needs
Understand how they are constructed
Consider the users needs during development
Learn how to employ the system
Take into account ancillary functions
Security Backup
Recovery
What Is MIS?
Management Information Systems
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MIS is the development and use of
information systems that help businesses
achieve their goals and objectives Key elements:
Development and use
Information systems
Business goals and objectives
Ask Questions
How can I apply information technologies
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in a business environment to help my
organization focus on top-line competitive
advantage? How can I apply information technologies
in a business environment to help my
organization focus on bottom-linecompetitive advantage?
Ask Questions
What will a system do for you?
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1. What is the purpose?
2. What will using it enable us to do?
3. What goal can we accomplish through its
use?
4. Will it aid us in reaching our objectives?
Ask Questions
These are the questions you should ask asd b i
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you read business cases
For example in 7-11
Moores Law predicted that the number ofi hi ld d bl
What Is the Shape of Things to
Come?
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transistors on a computer chip would double
every two years (18 to 24 months)
This prediction has been generally accuratefor more than 40 years
Moores Law is one of the few predictions
in area of IT that has really stood the test oftime
Within the next decade?1. Unlimited storagewill be almost free
2. Analytical softwarewill reveal hidden treasures
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3. The real and virtual world will collide as wide-areanetworksbecome cheap, reliable, and widely available
4. These technology trends will enable deep, powerful,
performance-enhancinginnovations that will be felt inalmost every industry
5. Many of these will combine existing things, e.g., a
GPS, a cell phone, Googleto find the nearest Pizza,
or ATM or Manicurist
Business of IT and IS
Business is changing because of advances in IS
and ITMobilitydeviceswill change what it means to go to work
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Mobility deviceswill change what it means to go to work
Industriesare undergoing significant change because of theshifts in technology
Can IS provide Competitive
Advantage?
Does IT/IS Matter?
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Maybe (probably)
Does IT Destroy Jobs?
Maybe
Feb-13 ADM 3713 310
However
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d
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End
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Feb-13 ADM 3713 313
Ch 2
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Chapter 2
In Chapter 2
ENABLING ORGANIZATIONAL STRATEGY THROUGHINFORMATION SYSTEMS
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Decisions
Organizational Decision-Making Levels
Organizational Functional Areas
Sources of Competitive Advantage
Identifying Where to Compete: Analyzing Competitive Forces
Identifying How to Compete: Analyzing the Value Chain
INTERNATIONAL BUSINESS STRATEGIES IN THE DIGITAL
WORLD
Four Behavioral Topics
1. Decision Making
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2. Estimating (later)
3. Resistance to Change (later)
4. Assessing Risk (later)
Making Decisions
In IT/IS decisions must be made all the timeWhat technology to acquire?
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What technology to acquire?
What technology to get rid of?
Who to choose as a supplier?How much to pay?
The IT/IS part of the firm makes these typesof decisions all the time and participates in
larger decisions
Managers Roles(all very important to IT managers)
Interpersonal RolesFi h d l d li i
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Figurehead, leader, liaison
Informational Roles
Monitor, disseminator, spokesperson, analyzer
Decisional roles
Entrepreneur, disturbance handler, resource
allocator, negotiator
Why decision making is difficult
1. Number of alternatives (large andgrowing)
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growing)
2. Under time pressure
3. Necessity to conduct a sophisticatedanalysis (simulation, modeling)
4. Necessity to involve (consult) experts
Making Estimatesan important part of the decision process
Long term estimates:H l ill th t h l l t?
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How long will the technology last?
How much will it cost to run?
Short term estimates:How much will it cost to acquire?
How long will it take to install?
IT management needs to know the strategicdirection of the firm:
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direction of the firm: IT decisions are medium to long term, 5 to 10 years.
IT decisions are expensive and returns may notshow up for a couple of years.
IT decisions require specialized personnel, these
need to be hired, trained and retained.
Only in the past few years have the IT part ofthe firm been given a role in strategy
Examples of IT Decisions
Major Initiatives (big Systems)S l Ch i M t (SCM)
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Supply Chain Management (SCM) Automates tracking inventory and information among
business processes and across companies Three flows in the supply chain
Information
Goods
Financial
IT Decisions
From the IT point of view, strategicdirection of the firm includes (for example):
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direction of the firm includes (for example):
To what degree is the firm going to participate
in e-commerce? What is the firms policy about outsourcing?
Is the firms strategy to grow its market?
Is the firms strategy to be a low costproducer?Is the firm moving to global operations?
These lead to
Decisions such as choosing:Appropriate database design and products
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Appropriate database design and products
Network design and suppliers
Software productsERP, CRM, SCM systems
Decisions
Decision Structure: Structured
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Structured
We know what information we need
That information is accessible
Decision rules are clear
Semi-structured One or more of the three previous characteristics are
not met to some degree
Unstructured All three characteristics are not met to a large degree
Problem Structure
Usually we assume:People knowwhat they need and want
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People knowwhat they need and want
People can tell us what they need and want
What they want doesnt change
This may be true in structuredsituations
Problem Structure
But:People may notknow exactly what they want
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People may notknow exactly what they want
These are un-structured situations
People may know morethan they can say
Then these are semi-structuredsituations
Problem Structure
Learning takes placewants needs change
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wants, needs change
(looks like people are changing their minds)
This also creates semi-structuredsituations
Example
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Feb-13 ADM 3713 329
Decision-Making Levels of anOrganization
2-330
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Operational Level2-331
Day-to-day business processes
Interactions with customers
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Decisions:
structured,
recurring, and
can often be automated using IS.
IS used to:
optimize processes, and
understand causes of performance problems.
Operational Level (contd)2-332
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Managerial Level2-333
Functional managers
Monitor and control operational-level activities Focus: effectively utilizing and deploying resources
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Goal: achieving strategic objectives
Managers decisionsSemistructured
Moderately complex
Time horizon of few days to few months
IS can help with:performance analytics (dashboards),
predictive analysis, and
Managerial Level (contd)2-334
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Executive Level2-335
The president, CEO, vice presidents, board of
directors
D i i
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Decisions
Unstructured
Long-term strategic issues
Complex and nonroutine problems with long-term
ramifications
IS is used to:obtain aggregate summaries of trends and projections,
and
rovide KPIs across the or anization.
Executive Level (contd)2-336
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Organizational Functional Areas2-337
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Business Process Supported byFunctional Area IS
2-338
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Kinds of Information Systemsin the firm
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Feb-13 ADM 3713 339
Examples
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Three ways to make decisions
1. Rational Model2 Garbage Can Model
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2. Garbage Can Model
3. Scoring Method
All three are used all the time!!
1. The Rational Model
(also called the SimonsModel after HerbSimon) has four phases:
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1. Intelligenceproblem identification or
opportunity seeking
2. Designenumeration of alternatives plus
advantages/disadvantages
3. Choicemake selections
4. Implementationdo, control
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Stages of Decision-Making(Simon)
INTELLIGENCE:Collectinformation; identify problem
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DESIGN:Conceive alternatives;select criteria
CHOICE:Use criteria to evaluatealternatives; select
IMPLEMENTATION:Putdecision into effect; allocate
resources; control
RationalModel
Can be used to analyze structured, semi-structured and unstructured situations
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Note the similarity to a system
Input, output, feedback and control Also called systems approach to decision
making
2. Garbage Can Modeland the skonkworks
Garbage Can Model: In this model decision-makers have a large number of
bl d i i h i I
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problems and opportunities at the same time. In
addition, they have a large number of solutions
available to them. Solutions are such things as money,personnel, information, systems, knowledge etc. The
problems and solutions float around in a garbage can.
When an appropriate solution and problem find each
other, the problem is solved.
The skonkworks
Popular in firms that depend on innovation tosustain competitive advantage:
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Small groups working on unofficial projects are
tolerated (sometimes encouraged)
These groups are called skonkworks E.g., IBMs PC
Texas Instruments
Lockheed aircraft
Develop an idea then go around and try to sell it withinthe firm
3. Weighted Characteristics Method
of Decision Making (orScoring)
a common method of decision making when youare faced with several alternatives. It has the
f ll i
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following steps.1. Select characteristics.
2. Give characteristics a weight. (This is an arbitrary scalemay be 1 to 5, 1 to 100, etc).
3. Evaluate alternatives on each characteristic and assign a
score.
4. Multiply scores by weights and add.
Select (consider) the alternative with the highest score.
Scoring Method of Decision Making
Characteristics Supplier 1 Supplier 2 Supplier 3
Weight Score Weight x
Score
Score Weight x
Score
Score Weight x
Score
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Total
Scoring Method - Problem
This a widely used method of makingdecisions, but:
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May lead you to believe that an unstructured
decision is semi-structured or that a semi-structured decision is structured.
Sometimes masks real problems
More subjective than most people think
Summary
Types of decisionsStructured
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Semi-structured
Unstructured
Repetitive
Simons Model (rational model)
Garbage Can
Weighted Characteristics (Scoring)
Decisions in Cases
What types of decisions are being made? Structured, unstructured, semi-structured
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What types of decisions do the players think they
are making?
What mechanism was used to make the decision? Rational, Garbage can, Scoring, Other
Did the decision makers consider the strategicdirection of the firm?
Selecting a PC
Choose the characteristics How important is each characteristic?
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p
Weight them (1 to 5)
Choose possible brands (or models) How closely does each brand match the
characteristics?
Assign a %
Selecting a PC
ScoreMultiply the weight by the % and add
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Debate, reflect
How do you get information?
1. RFIRequest for informationWidely used for new, innovative, non-standard,
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one-off projects, or projects that are new to you
2. RFPRequest for proposalSent to a select group
More formal
Generally, you know what you want
How do you get information?
3. RFQRequest for quoteOften binding (must take lowest)
d f i h
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Used for routine purchases
How much do you tell the prospectivevendor about your process?
The characteristics? The Weights?
Non-disclosure agreements
In a case
Give examples ofData, information
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Types of decision making, decision levels
Decision making steps
Competitive Advantage
(N.B.dont confuse with comparative advantage)
C titi Ad t idi d
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Feb-13 ADM 3713 359
Competitive Advantageproviding a product orservice in a way that customers valuemore thanwhat your competition is able to do.
How can IT help?
Kinds of Information Systemsin the firm
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7/29/2019 Study for MIS
360/485
Feb-13 ADM 3713 360
IS from aFunctionalPerspective
Sales & Marketing Business Processes Manufacturing & Production Business
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7/29/2019 Study for MIS
361/485
Feb-13 ADM 3713 361
Processes
Finance & Accounting Business P