INTRODUCTION TO INFORMATION SYSTEMS 9TH EDITION BY R. KELLY RAINER, BRAD PRINCE 9CHAPTER 1_14) SOLU

SOLUTIONS MANUAL

INTRODUCTION TO INFORMATION SYSTEMS 9TH EDITION BY R. KELLY RAINER, BRAD PRINCE 9CHAPTER 1_14) SOLUTIONS MANUAL Chapter 1-14With Technology Guide (1 2 3) Chapter 1 – Introduction to Information Systems Chapter Outline 1.1 1.2 1.3 1.4

Why Should I Study Information Systems?

Overview of Computer-Based Information Systems How Does IT Impact Organizations?

Importance of Information Systems to Society

Learning Objectives 1. Identify the reasons why being an informed user of information systems is important in today’s world.

2. Describe the various types of computer-based information systems in an organization.

3. Discuss ways in which information technology can affect managers and nonmanagerial workers.

4. Identify positive and negative societal effects of the increased use of information technology.

Teaching Tips and Strategies Today’s students use technology in ways that were not even dreamed of just a decade ago. Because these students have grown up surrounded by and using technology, information technology is an integral part of their lives. Unfortunately, many students seldom think about the whys and wherefores behind the technology they use every day.

I have found they often fail to recognize, understand, or even see how information technology impacts them, their lives, and their careers. So it is important to let them know what is in it for them, even if they are not majoring in information systems. The textbook authors do a good job of this by including a ―What’s In IT for Me?‖ section at the start of each chapter.

Throughout this course, it is important for us to encourage our students to step back and observe the bigger picture of what comprises the fundamentals of management information systems. Unfortunately, you will find some students who will think this class is boring or even complain they already ―know it all.‖ Point out that they should look at the ―What’s In IT for Me?‖ section of the chapters. This should be done early in the course. As part of your introductions on the first day of class, you might consider asking students what their major is. Knowing each student’s major and possible career goals will help you tailor examples, classroom assignments and discussion to the interests of the students.

Explaining how MIS has affected businesses as well as workers helps to get students interested in this class. It also helps when they are told stories of how computers have evolved and how MIS and decision support systems (discussed in a late chapter) have made management decision-making easier and more reliable.

To support your class discussions and examples through the course, I try to bring in examples from the IM 1-1

local area. Most communities around college and university campuses have businesses or government

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agencies that operate data centers. Many times, students are unaware that they are there. In most cases, the local Chamber of Commerce or, if your school has one, a group of local business leaders who periodically meet with your dean might help you find these sites.

You might also consider supporting your class discussions on the importance of computer technology with examples of how companies have moved to e-mail to save money over using snail mail (postal service). Students can be introduced to the concept that IT must be paired with business processes to harness IT’s potential.

IT is important to business leaders all over the world. There are salary statistics for all majors. You can get this information from USA Today’s website at www.usatoday.com, Payscale.com (www.payscale.com), or Salary.com (www.salary.com). Historically, there are usually a few IT-related jobs in the top 10 highest-paying jobs for college grades. This usually gets some students’ attention, especially if they realize that if they are more technologically savvy they will tend to make more money.

Finally, have your students look at local help-wanted ads to see how many job postings for what might be considered non-technical jobs require some IT knowledge.

Blackboard/CMS Suggestions Most colleges and universities have design requirements on the structure of online courses and what should be included in the campus’s course management system, whether the class is online or as a supplement to an in-person lecture-based class. So what I am including in this section for this and the rest of the chapter Instructor Manuals is based on what I have learned from nearly fifteen years teaching this class, and almost ten years teaching it online.

I usually start the term with an online discussion question asking the students about their majors, what they think their technical knowledge is (this can sometimes be surprising because they usually overestimate what they really know), and if they have any fears about technology. For this exercise, I usually do not permit others in the class to comment on another student’s response. I use this mainly to gauge the knowledge and background of the class.

I always record a short video for each chapter for my online classes. I have found that if I record a complete lecture, most students do not watch it. So I do a ten- to fifteen-minute chapter overview video.

If you are teaching an online class or are looking for a short video for a lecture class, I can usually find topic-relevant videos on YouTube. Sometimes they are product demos or sales videos, but they still usually present relevant information or concepts.

Opening Case: The Digital and Physical Transformation of Grocery Stores 1. Provide examples to describe the physical transformations undertaken by the grocery industry.

ANSWER: Physical transformations include: - Self-checkout aisles - Based on digital technology (machine learning), microfulfillment centers are being built and used for quicker delivery of e-commerce orders - Opening smaller locations with greater convenience (as opposed to large big-box stores) - Physical delivery methods are used (based on technology) such as driverless vehicles and drones

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Level: Easy Section/Learning Objective: Section 1.1/Learning Objective 1 Bloom’s Category: Application AACSB Category: Technology 2. Provide examples to describe the digital transformations undertaken by the grocery industry.

ANSWER: Digital transformations include: - Electronic labelling to replace paper bar codes (digital pricing) - IoT sensors that can help with measurement of product and controlling temperature - Smart shelves that assist with inventory management Digital checkout processes including facial recognition for customer identity and payment verification, as well as scan and go (as opposed to cashier enabled checkout) NOTE: Students may include transformations that have both physical and digital impacts in their response to questions 1 and 2.

Level: Medium Section/Learning Objective: Section 1.1/Learning Objective 1 Bloom’s Category: Application AACSB Category: Technology 3. Which transformations are more important for the grocery industry: physical or digital? Support your answer.

ANSWER: Responses will vary but should be based on the information provided, including examples and a description of the impact the change has. Ideally, regardless of which option is chosen, it should be supported with a logical reason as to why it is and will continue to be important for the industry.

Level: Medium Section/Learning Objective: Section 1.1/Learning Objective 1 Bloom’s Category: Analysis AACSB Category: Technology IT’s About Business 1.1 The Digital Transformation of Vietnam 1. Information technologies do not always lead to transformation in organizations (or countries). a. Explain how the policies of the Vietnamese government led to the digital transformation of the country. b. Consider the Royal Spirit Group’s DBW factory. Provide examples of both technological and nontechnological initiatives that drove the factory’s sustainable operations. c. Consider Appota, Tiki, Skinlosophy, and Timo. Did technological initiatives drive each company’s success? If so, provide examples of such initiatives for each company.

ANSWER: 1a) In the 1980s the governments change to a market-based economy resulted in the ability to establish private businesses, which transformed to the telecommunications industry. It was no longer controlled by the communist party and restricted to government officials.

1b) 1c) Appota: The company’s success is based on technological growth and initiatives such as the

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development of an e-wallet, Wi-Fi password-sharing facility, as well as development of physical products that function via smartphones (i.e., a smart lock).

Tiki: The company has succeeded in alignment with e-commerce growth. In addition to the products being sold via e-commerce, Tiki is looking to continue growth through use of digital payments. They are seeing the use of e-wallets grow in alignment with digital transactions.

Skinlosophy: 80% of the company’s sales are online, which indicates a clear dependency on technology use as a key driver of success.

Timo: The use of technology is the basis for the company’s business model. Virtually all transactions can be done remotely and there is little to no need to meet with a bank representative. Instead, customers use the app for their purchases and other financial transactions. .

Level: Easy Section/Learning Objective: Section 1.1/Learning Objective 1 Bloom’s Category: Application AACSB Category: Technology 2. Explain how the development of the telecommunications infrastructure (fiber-optic cables and wireless) was a key driver of the country’s digital transformation.

ANSWER: Although costly, the ability to have phones increased in the 1990s with significant change occurring in the early 2000s. At that time, the government increased the number of telecommunication links so that all provinces would be connected. At the same time, foreign investment began for the industry (Siemens), which would leverage the infrastructure. Both of these improvements helped mobile networks emerge. With increased infrastructure, access and both personal and business use increased, leading to business start-ups and new ways of purchasing and selling existing products and services.

Level: Easy Section/Learning Objective: Section 1.1/Learning Objective 1 Bloom’s Category: Application AACSB Category: Technology 3. Why was Vietnam’s digital transformation a strategic necessity for the country? Consider examples from the country’s economic development in your answer.

ANSWER: Prior to the change in government policy, Vietnam was one of the poorest countries in the world. The digital transformation has increased internet access and contributed to significant growths in the country’s GDP (more than $6,000 per capita in early 2020). It is now one of the most digital economies in Southeast Asia. Some key facts include: - 96% of Internet users (66 million total users) access the Internet via mobile devices - 95% of the urban population owns a smartphone - More than 45 million people rose out of poverty by early 2020 - The country’s mobile e-commerce market value exceeded $3 billion as of May 2020 Level: Easy Section/Learning Objective: Section 1.1/Learning Objective 1 Bloom’s Category: Application AACSB Category: Technology

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IT’s About Business 1.2 Lemonade Disrupts the Insurance Industry 1. Discuss some of the problems with traditional insurance companies that Lemonade is trying to solve.

ANSWER: Some problems include: - Distrust from customers toward the company on the pricing and adjudication process (although industry perception, the speed of clarity of adjudication, and with the Giveback program assist with this)Inability for customers to understand the policy (addressed by Lemonade’s open-sourced policy) - Potential false claims by customers (addressed through Lemonade’s Giveback program) Level: Medium Section/Learning Objective: Section 1.2/Learning Objective 2 Bloom’s Category: Application AACSB Category: Technology 2. Provide three examples of how Lemonade uses information technologies to develop and support its business model.

ANSWER: The company uses algorithms to assess risk, price policies and adjudicate claims. Lemonade also delivers insurance policies and handles claims using chatbots. Chatbots guide customers through the application process by asking a series of questions and producing a quote very quickly. Lemonade has also open-sourced their policy and allowed for stakeholders to make edits and contributions to the policy (with control retained by Lemonade on the process).

Level: Easy Section/Learning Objective: Section 1.2/Learning Objective 2 Bloom’s Category: Application AACSB Category: Technology 3. What steps should traditional insurance companies take to compete with Lemonade? Provide examples to support your answer.

ANSWER: Lemonade’s business model is based on using technology to inform the decision-making process associated with pricing and adjudication of claims. It also introduces speed and convenience for both internal processes, as well as the customer experience. For traditional insurers to effectively compete, they will need to increase the transparency of processes (similar to the open-source policy used by Lemonade) so that customers understand how policies are priced. In addition, they should increase the internal use of technology to support consistent decision-making in pricing and adjudicating insurance policies and claims. Overall, Lemonade provides a level of speed and convenience (chatbots, algorithm for quick decision-making) that is not typically seen with traditional insurers as it can take days or even weeks to obtain a response from traditional companies.

Level: Medium Section/Learning Objective: Section 1.2/Learning Objective 2 Bloom’s Category: Application AACSB Category: Technology

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IT’s About Business 1.3 The Agriculture Industry’s Transformations 1. We addressed eight technologies that are transforming the agriculture industry. Provide examples of how these technologies work together synergistically in this transformation.

ANSWER: Student answers will vary but should include examples of synergy for the following eight technologies listed: 1. GPS 2. Digital imagery 3. Variable-rate technology 4. Sensors 5. Robotics 6. Drones 7. Autonomous vehicles 8. AI

Level: Medium Section/Learning Objective: Section 1.4/Learning Objective 3 Bloom’s Category: Application AACSB Category: Technology 2. Discuss the impact of the transformation of the agriculture industry as our planet’s population continues to increase. Provide examples to support your answer.

ANSWER: The need to produce enough food to feed the population will be critical. The transformation in the agriculture industry has enabled greater productivity despite fewer workers. For example, in the U.S. each farmer can now feed 265 people (as opposed to 26 people in 1930). This will continue to be important as the population increases, and the likelihood that the number of agricultural workers will not have the same pace of growth. Therefore, digital transformation will have to continue to improve the productivity so that the population is adequately ―fed.‖ Level: Medium Section/Learning Objective: Section 1.4/Learning Objective 3 Bloom’s Category: Reflective thinking AACSB Category: Technology

Before You Go On Review Questions Section 1.1 1. Rate yourself as an informed user. (Be honest; this isn’t a test!)

ANSWER: You will receive all types of answers to this question. Some will think they have a higher level of technology knowledge than they actually do.

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Level: Easy Section/Learning Objective: Section 1.1/Learning Objective 1 Bloom’s Category: Knowledge AACSB Category: Technology 2. Explain the benefits of being an informed user of information systems.

ANSWER: Informed users tend to get more value from whatever technologies they use. You will enjoy many benefits from being an informed user of IT. First, you will benefit more from your organization’s IT applications because you will understand what is ―behind‖ those applications (see Figure 1.1). That is, what you see on your computer screen is brought to you by your MIS department operating ―behind‖ your screen. Second, you will be in a position to enhance the quality of your organization’s IT applications with your input. Third, even as a new graduate, you will quickly be in a position to recommend—and perhaps help select—the IT applications that your organization will use. Fourth, being an informed user will enable you to keep abreast of both new information technologies and rapid developments in existing technologies. Remaining ―on top of things‖ will help you to anticipate the impacts that ―new and improved‖ technologies will have on your organization and to make recommendations on the adoption and use of these technologies. Finally, you will understand how IT can be used to improve your organization’s performance and teamwork as well as your own productivity.

Level: Medium Section/Learning Objective: Section 1.1/Learning Objective 1 Bloom’s Category: Comprehension AACSB Category: Technology 3. Discuss the various career opportunities offered in the IT field.

ANSWER: Career opportunities in IS are strong and are projected to remain strong over the next ten years. In fact, when Money Magazine’s Best Jobs in America (http://money.cnn.com/pf/bestjobs/2015/list/index.html) listed the ―top jobs‖ in America in 2015, 11 of the top 40 jobs related directly to information technology. These jobs (with their ranks) are: (1) Software Architect (10-year growth projection: 23% / median pay: $124,000) (2) Video Game Designer (19% / $79,900) (8) Database Designer (23% / $88,300) (9) Information Assurance Analyst (37% / 96,400) (14) User Experience Designer (18% / $89,300) (17) IT Program Manager (15% / $122,000) (27) Health Information Management Director (23% / $81,900) (32) Software Quality Assurance Manager (15% / $110,000) (38) IT Security Consultant (37% / $110,000) (39) Telecommunications Network Engineer (15% / $90,500) (40) Technical Consultant (23% / $101,000) Have your students check the site (http://money.cnn.com/pf/best-jobs/2015/list/index.html) for the current year.

Level: Easy Section/Learning Objective: Section 1.1/Learning Objective 1

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Bloom’s Category: Knowledge AACSB Category: Technology Section 1.2 1. What is a computer-based information system?

ANSWER: A computer-based information system (CBIS) is an information system that uses computer technology to perform some or all of its intended tasks. Although not all information systems are computerized, today most are. For this reason the term ―information system‖ is typically used synonymously with ―computer-based information system.‖ Level: Easy Section/Learning Objective: Section 1.2/Learning Objective 2 Bloom’s Category: Knowledge AACSB Category: Technology 2. Describe the components of computer-based information systems.

ANSWER: ● Hardware is a device such as the processor, monitor, keyboard, and printer. Together, these devices accept data and information, process them, and display them. ● Software is a program or collection of programs that enable the hardware to process data. ● A database is a collection of related files or tables containing data. ● A network is a connecting system (wireline or wireless) that permits different computers to share resources. ● Procedures are the set of instructions about how to combine the above components in order to process information and generate the desired output. ● People are those individuals who use the hardware and software, interface with it, or utilize its output.

Level: Medium Section/Learning Objective: Section 1.2/Learning Objective 2 Bloom’s Category: Knowledge AACSB Category: Technology 3. What is an application program?

ANSWER: An application (or app) is a computer program designed to support a specific task or business process.

Level: Easy Section/Learning Objective: Section 1.2/Learning Objective 2 Bloom’s Category: Knowledge AACSB Category: Technology 4. Explain how information systems provide support for knowledge workers.

ANSWER:

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Knowledge workers make decisions about situations that can significantly change the manner in which business is done. Information systems provide the databases, communications, and applications that allow them to store critical data used in analysis and tactical decision making.

Level: Easy Section/Learning Objective: Section 1.2/Learning Objective 2 Bloom’s Category: Comprehension AACSB Category: Technology 5. As we move up the organization’s hierarchy from clerical workers to executives, how does the type of support provided by information systems change?

ANSWER: At the lower organizational levels, systems are used primarily to automate routine tasks. Moving up in the organization, systems are used to analyze information for decision-making purposes.

Level: Easy Section/Learning Objective: Section 1.2/Learning Objective 2 Bloom’s Category: Comprehension AACSB Category: Technology Section 1.3 1. Why should employees in all functional areas become knowledgeable about IT? ANSWER: Information systems are important for several reasons, regardless of the employee’s functional area of responsibility: (1) IT facilitates the organizational activities and processes of today’s businesses. (2) Most jobs students will go to after graduating will require some knowledge of information technology.

(3) Employees that are able to use information technology will be able to give themselves an important advantage over their peers in the workplace. (4) Students will find that information systems will make their job easier and more efficient.

Level: Medium Section/Learning Objective: Section 1.3/Learning Objective 3 Bloom’s Category: Comprehension AACSB Category: Technology 2. Describe how IT might change the manager’s job.

ANSWER: IT often provides managers with near real-time information, meaning that managers have less time to make decisions, making their jobs even more stressful.

Level: Easy Section/Learning Objective: Section 1.3/Learning Objective 3 Bloom’s Category: Comprehension AACSB Category: Technology 3. Discuss several ways in which IT impacts employees at work.

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ANSWER: Many people have experienced a loss of identity because of computerization. They feel like ―just another number‖ because computers reduce or eliminate the human element that was present in noncomputerized systems.

The Internet threatens to exert an even more isolating influence than computers and television.

Encouraging people to work and shop from their living rooms could produce some unfortunate psychological effects, such as depression and loneliness.

They can adversely affect individuals’ health and safety. To illustrate this point, we consider two issues associated with IT: job stress and long-term use of the keyboard.

Computers can create new employment opportunities for people with disabilities by integrating speech- and vision-recognition capabilities.

Level: Easy Section/Learning Objective: Section 1.3/Learning Objective 3 Bloom’s Category: Application AACSB Category: Technology Section 1.4 1. What are some of the quality-of-life improvements made possible by IT? Has IT had any negative effects on our quality of life? If so, explain, and provide examples.

ANSWER: The workplace can be expanded from the traditional 9-to-5 job at a central location to 24 hours a day at any location. IT can provide employees with flexibility that can significantly improve the quality of leisure time, even if it doesn’t increase the total amount of leisure time.

However, IT can also place employees on ―constant call‖ where they are never truly away from the office, even when they are on vacation.

Level: Easy Section/Learning Objective: Section 1.4/Learning Objective 4 Bloom’s Category: Application AACSB Category: Technology 2. Describe the robotic revolution, and consider its possible implications for humans. How do you think robotics will affect your life in the future?

ANSWER: In fact, ―cyberpooches,‖ nursebots, and other mechanical beings may be our companions before we know it. Around the world, quasi-autonomous devices have become increasingly common on factory floors, in hospital corridors, and in farm fields. In our homes, iRobot (www.irobot.com) produces the Roomba to vacuum our floors, the Scooba to wash our floors, the Dirt Dog to sweep our garages, the Verro to clean our pools, and the Looj to clean our gutters.

We also have to look at advances made in building robotic devices to replace hands, legs, and arms.

To do some tasks, companies have started to replace human workers with robotic workers.

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Student answers will vary with regards to the impact it will have on their lives.

Level: Easy Section/Learning Objective: Section 1.4/Learning Objective 4 Bloom’s Category: Application AACSB Category: Technology 3. Explain how IT has improved health care practices. Has the application of IT to health care created any problems or challenges? If so, explain, and provide examples.

ANSWER: Medical personnel use IT to make better and faster diagnoses and to monitor critically ill patients more accurately. IT also has streamlined the process of researching and developing new drugs. Expert systems now help doctors diagnose diseases, and machine vision is enhancing the work of radiologists.

Surgeons use virtual reality to plan complex surgeries. They have also used a surgical robot to perform long-distance surgery by controlling the robot’s movements. Finally, doctors discuss complex medical cases via videoconferencing. New computer simulations recreate the sense of touch, allowing doctorsin-training to perform virtual procedures without risking harm to an actual patient. Challenges identified may vary by student based on their own knowledge and experience. They may highlight the challenge of individuals trying to self-diagnose and the implications of doing so.

Level: Medium Section/Learning Objective: Section 1.4/Learning Objective 4 Bloom’s Category: Application AACSB Category: Technology Discussion Questions 1. Would your university be a good candidate for digital transformation? Why or why not? Support your answer.

ANSWER: Answers will vary by student.

Level: Easy Section/Learning Objective: Section 1.1/Learning Objective 1 Bloom’s Category: Application AACSB Category: Technology 2. If you responded yes, then what types of digital initiatives should your university undertake to transform itself?

ANSWER: Answers will vary by student.

Level: Easy Section/Learning Objective: Section 1.1/Learning Objective 1 Bloom’s Category: Application AACSB Category: Technology

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3. Describe a business that you would like to start. Discuss how information technology could: (a) help you find and research an idea for a business, (b) help you formulate your business plan, and (c) help you finance your business.

ANSWER: This will be different depending on each student’s background and major. The responses related (a), (b), and (c) will depend on the service the business would be providing.

Level: Easy Section/Learning Objective: Section 1.1/Learning Objective 1 Bloom’s Category: Application AACSB Category: Technology 4. Your university wants to recruit high-quality high school students from your state. Provide examples of (a) the data that your recruiters would gather in this process, (b) the information that your recruiters would process from these data, and (c) the types of knowledge that your recruiters would infer from this information.

ANSWER: Senior testing scores—potential for success in college classes ACT/SAT scores—potential for success in college classes Location—some students may want to stay close to home Alumni parents (legacy students)—chance parents would want their children to attend same school as they did Other factors that may be unique to your school.

Level: Easy Section/Learning Objective: Section 1.1/Learning Objective 1 Bloom’s Category: Comprehension AACSB Category: Technology 5. Can the terms data, information, and knowledge have different meanings for different people? Support your answer with examples.

ANSWER: Yes. Students will have different responses based on their personal experiences and possibly their majors.

Level: Easy Section/Learning Objective: Section 1.1/Learning Objective 1 Bloom’s Category: Comprehension AACSB Category: Technology 6. Information technology makes it possible to never be out of touch. Discuss the pros and cons of always being available to your employers and clients (regardless of where you are or what you are doing).

ANSWER: This discussion should touch on e-mail and instant messaging and their impact on a 24/7/365 business environment. If you are teaching an online class or the students are familiar with the concept, discuss how being available has changed the way you are interacting with students. Social media such as

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Facebook Instagram, and Twitter should also be considered in the overall discussion given that businesses have embraced these as marketing tools.

Level: Medium Section/Learning Objective: Section 1.3/Learning Objective 3 Bloom’s Category: Application AACSB Category: Technology 7. Robots have the positive impact of being able to relieve humans from working in dangerous conditions.

What are some negative impacts of robots in the workplace?

ANSWER: Potentially reducing or eliminating some nonskilled repetitive production line jobs.

Level: Easy Section/Learning Objective: Section 1.3/Learning Objective 3 Bloom’s Category: Comprehension AACSB Category: Technology 8. Is it possible to endanger yourself by accessing too much medical information on the Web? Why or why not? Support your answer.

ANSWER: Discuss the issue of reliability of the sources of information and danger of self-diagnosis, as well as problems related to non-tested ―miracle cures‖ and possible negative interactions with medications a patient may be taking for other conditions.

Level: Section/Learning Objective: Section 1.4/Learning Objective 4 Bloom’s Category: Application AACSB Category: Technology 9. Describe other potential impacts of IT on societies as a whole.

ANSWER: Most of your students have grown up using technology and will not remember a time when it was not around. Open the discussion by asking how many students have Facebook and/or Instagram profiles.

Ask them how they kept up with their friends before Facebook. Then open the discussion as to how they use social media, how often the access their account, how many ―friends‖ they have and do they block any, and how often they post. If any students have hundreds of friends in FB, ask why and do they consider it a problem (why or why not?). Ask how many of the students have smartphones. Ask of and how often they use text messaging and for what. Do they maintain an electronic calendar to remind them of events (including birthdays and medical appointments)? This questions has a number of possibilities.

Level: Medium Section/Learning Objective: Section 1.4/Learning Objective 4 Bloom’s Category: Analysis AACSB Category: Technology

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10. What are the major reasons why it is important for employees in all functional areas to become familiar with IT? ANSWER: Hopefully this course will in the end provide an answer to the question. However the basis of the answer is to help the employee understand what is going on around them within the business and industry so that they might be able to make knowledge-based decisions on ways technology can be used to strategically support or enhance the business process.

Level: Easy Section/Learning Objective: Section 1.3/Learning Objective 3 Bloom’s Category: Application AACSB Category: Technology 11.

Given that information technology is impacting every industry, what does this mean for a company’s employees? Provide specific examples to support your answer.

ANSWER: In order to stay competitive, organizations should look to new advances in the use of information technology. This impacts employees in many ways.

In the case of social media, there has been automation of the employment process by the HR department and, in a growing number of cases, the use of social media to find and track employees.

Employees need to understand social media so they can use it effectively.

Another example is the use of social media for the marketing of the organization’s products or services. While some companies still advertise on search sites such as Google and Yahoo!, they are now using sites as Facebook and Twitter for this.

Another area is data analytics. This is very important area for many companies. Employees not only need to understand data analysis, but how to collect, store, and manage massive amounts of data.

Have your students research other examples.

Level: Medium Section/Learning Objective: Section 1.3/Learning Objective 3 Bloom’s Category: Analysis AACSB Category: Technology 12. Given that information technology is impacting every industry, what does this mean for students attending a college of business? Provide specific examples to support your answer.

ANSWER: New technologies are being announced or released almost every day. In addition, researchers are discovering or developing new ways to use old technologies. Finally, old applications are being updated to utilize these advancements. What this means for business students is that technologies used or learned about as freshman may no longer be around or even be replaced by the time that they graduate.

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Examples of this include how businesses have embraced the use of social media, such as Facebook, and how hiring departments use sites such as LinkedIn to find applicants and use social media as part of their background checks.

Another example is the use of mobile apps. Up until around 2014, students had to use a computer to write research papers using a text processer such as Microsoft Word or Apple’s Pages. Mobile apps are now available so students can now use their tablets or smartphones (if they really want to).

There are smartphone apps for graphing calculators that are just powerful as a stand-alone calculator.

Have your students research other examples.

Level: Medium Section/Learning Objective: Section 1.4/Learning Objective 4 Bloom’s Category: Analysis AACSB Category: Technology 13. Is the vast amount of medical information on the Web a good thing? Answer from the standpoint of a patient and from the standpoint of a physician.

ANSWER: Patient: Good: Provides the patient with information that they can discuss with the doctor. Provides the patient more information and possibly options not mentioned by physician.

Bad: Provides some erroneous or false information that might be misinterpreted by the patient, possibly wasting the physician’s time or causing a misdiagnosis by the patient themselves.

Physician: Good: Provides current trends assisting to diagnosis and treatments. Collaboration with other physicians. If patient records are available online, can view test results that were done at other locations.

Bad: Patient records security issues (i.e., HIPPA) Level: Medium Section/Learning Objective: Section 1.4/Learning Objective 4 Bloom’s Category: Analysis AACSB Category: Technology Problem-solving Activities 1. Visit some websites that offer employment opportunities in IT. Prominent examples are : www.linkedin.com, www.dice.com, www.monster.com, www.collegerecruiter.com, www.careerbuilder.com, www.jobcentral.com, www.job.com, www.career.com, www.simplyhired.com, and www.trucareers.com. Compare the IT salaries offered to accountants, marketing personnel, financial personnel, operations personnel, and human resources personnel. For other information on IT salaries, check Computerworld’s annual salary survey.

ANSWER:

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Students will provide comparisons about IT positions (suggest classifications—analysts, developers, support) and salary ranges using the sites listed.

Level: Easy Section/Learning Objective: Section 1.1/Learning Objective 1 Bloom’s Category: AACSB Category: 2. Go to www.ups.com. a. Find out what information is available to customers before they send a package.

ANSWER: The site provides a detailed interface to interact with the company and information about its multitude of services. b. Find out about the ―package tracking‖ system.

ANSWER: Visit www.ups.com/us/en/services/tracking/information.page to get information about the Tracking system and its policies. c. Compute the cost of delivering a box weighing 40 pounds, from your hometown to Long Beach, California (or to Lansing, Michigan, if you live in or near Long Beach). Compare the fastest delivery against the least cost. How long did this process take? Look into the business services offered by UPS. How do they make this process easier when you are a business customer?

ANSWER: Cost can vary from around $200 for overnight to $42 for slowest option.

Level: Easy Section/Learning Objective: Section 1.1/Learning Objective 1 Bloom’s Category: Knowledge AACSB Category: Technology 3. Search the Web for information about the Department of Homeland Security (DHS). Examine the available information, and comment on the role of information technology in the department.

ANSWER: Students will discuss their findings after searching the Internet.

Level: Easy Section/Learning Objective: Section 1.3/Learning Objective 3 Bloom’s Category: Knowledge AACSB Category: Technology 4. Access www.irobot.com, and investigate the company’s Education and Research Robots. Search the Web for other companies that manufacture robots and compare their products with those of iRobot.

ANSWER: Students will discuss their findings after searching the site.

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Level: Easy Section/Learning Objective: Section 1.1/Learning Objective 1 Bloom’s Category: Knowledge AACSB Category: Technology

Closing Case: Digital Transformation of Equipment Manufacturers Has Negative Consequences 1. Describe how Deere’s and Medtronic’s digital transformations changed their business models.

ANSWER: Both companies had traditional business models based on earning revenue one time, with each sale.

The business models were revised to incorporate post-sales analysis and continual revenue-generating opportunities through the use of embedded technologies.

Level: Easy Section/Learning Objective: Section 1.4/Learning Objective 4 Bloom’s Category: Application AACSB Category: Technology 2. Discuss why Deere’s and Medtronic’s digital transformations are ―not all good news.‖ ANSWER: Due to the advanced technology embedded in the farm equipment (Deere) and ventilators (Medtronic), farmers and hospitals cannot repair the equipment themselves as it runs on copyrightprotected software. This drives up the cost of repairs as they can no longer perform independent repairs—it must be done by a company-approved technician. This has resulted in new proposed legislation called ―right to repair‖ that would allow farmers and hospitals to repair their own equipment without a negative impact to their warranty.

Level: Medium Section/Learning Objective: Section 1.4/Learning Objective 4 Bloom’s Category: Analysis AACSB Category: Technology 3. Discuss the ethicality and the legality of the end-user license agreements that the two companies require their customers to sign.

ANSWER: Students answers will vary on the ethical perspective but should reason on the principles of transparency to customers when selling the equipment and clearly communicating the impact of the end-user agreement.

With regards to the legality, the Class 21 and 27 exemptions discussed in the case should provide relief; however, the technicality of interpretation is debated by Deere and Medtronic and seems to be focusing on the right for third parties to repair the equipment. If restricted, this would amplify the monopoly on the choices available for farmers and hospitals.

Level: Medium Section/Learning Objective: Section 3.1/Learning Objective 1

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Bloom’s Category: Analysis AACSB Category: Technology 4. Discuss the ethicality and the legality of customers who use unlicensed repair shops to repair their equipment using hacked software.

ANSWER: Student answers will vary on the ethical perspective but should reason on the principle that such software is hacked and therefore is an infringement of either company’s copyright. They may argue that the farmers and hospitals have limited options and therefore are ―driven‖ to select this as their only option for affordability and timeliness (not having to wait for a Deere or Medtronic technician).

With regards to the legality, students should highlight that using such software is in fact a violation of the end user agreement that was signed, which transfers the responsibility and accountability to the owner of the equipment, not the hacker who created the software.

Level: Medium Section/Learning Objective: Section 3.1/Learning Objective 1 Bloom’s Category: Analysis AACSB Category: Technology 5. The fundamental tenets of ethics include responsibility, accountability, and liability. Discuss each of these tenets as it applies to John Deere’s Medtronic’s actions toward its customer ANSWER: Students answers will vary on the explanation but should highlight the following: Responsibility: The companies designed the software with copyright and should have been aware of what the consequences would be to the farmers and hospitals. They must accept the negative consequences that were associated with the new technology and if they are comfortable with the outcome, likely assessed that any negative consequence or legal proceeding would be outweighed by the benefits the new technology presents.

Accountability: The companies are holding farmers and hospitals accountable for the restricted access to technology as demonstrated through the introduction of the end user agreement. The companies are not being held accountable for any misleading information as to the limitations on the use of the equipment, as it is included in the end user agreement. As the manufacturer, they continue to design mechanisms to safeguard their rights.

Liability: By providing clarity in writing through the end user agreement, the companies are effectively eliminating the ability to be forced to award damages. In fact, they are positioned to follow up with third parties that have hacked their software and could pursue damages done to them by breaching the copyright.

In addition, students will likely incorporate the further ethical considerations with respect to the COVID-19 pandemic specific to Medtronic.

Level: Medium Section/Learning Objective: Section 3.1/Learning Objective 1 Bloom’s Category: Analysis AACSB Category: Technology

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Chapter 2: Organizational Strategy, Competitive Advantage, and Information Systems

Chapter Outline 2.1 2.2 2.3 2.4

Business Processes Business Process Reengineering, Business Process Improvement, and Business Process Management Business Pressures, Organizational Responses, and Information Technology Support Competitive Advantage and Strategic Information Systems

Learning Objectives Discuss ways in which information systems enable business processes for a single functional area and cross-functional processes.

Differentiate among business process reengineering, business process improvement, and business process management.

Identify effective IT responses to different kinds of business pressures.

Describe the strategies that organizations typically adopt to counter Porter’s five competitive forces.

Teaching Tips and Strategies In this chapter, students are introduced to the basic concepts of information systems in the organization and how businesses use information systems in nearly every facet of their operations.

It is important for students to understand how information systems are critical to a business in obtaining and maintaining a competitive advantage. So it is also important for your students to make the connection between information systems and the success of a business. Making the point that businesses usually fail when they do not keep up-to-date and close-to-state-of-the-art information systems is usually something that helps get students’ attention.

One way to explain this is to illustrate how universal information technology is in companies today.

Explain to your students that they will probably work for a company that utilizes a variety of technologies at various levels of the organization. You might want to open your presentation for this chapter with a discussion about how information technology impacts many aspects of our life. Some examples are: ATM machines and banks in general Grocery store checkout line cash registers with bar code scanners and the ability to use bank cards and credit cards for purchases The ability of those grocery stores’ point-of-sale systems to also update the store’s inventory system in real-time Your college or university relies on IT; for example, in the registrar’s office, financial aid office, and the library Smartphones, tablets, and laptops Explain to your students how the various areas of your school use information technology to perform their tasks. Develop examples of how the office that handles administrative systems (i.e., registration and

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grades, financial aid, etc.) is usually on a different network, because this helps limit the number of users who can modify grades or view student records.

Discuss why by properly managing their data network the school saves money and has the ability to control what information or programs students and faculty members can access. Then explain how companies use access controls to manage information stored on their network. For example, in most organizations, each user has a user ID and pass code. They are usually linked to a level of security clearance, which limits what information the user can access. That access is based on a user’s need, which ensures that they can accomplish their own work but cannot access other parts of the system.

Many tasks that are performed by some employees are the same every week (such as recording hours worked for payroll) and that process can be automated; for example, entering time sheets or calculating hours worked. Discussing payroll-related examples usually gets the students interested in information systems since money is a universal interest, whether students are MIS majors or not.

Unfortunately, in today’s interconnected world we have access to so much information that it is often overwhelming for managers to know where the best data resides and how to access it. Managers can see what products are selling and what products are not. This information can be used to better help management run the day-to-day operations of a business.

This chapter sets the foundation for the importance of information systems discussed through the rest of the book. Your students should begin to realize that this is important for them to understand and will use in their future careers. They need to understand that information technology not only changes the way business is done, but also helps businesses share information and make better-educated decisions, which will in turn help their business thrive in a competitive environment. The students should be able to apply this knowledge to their specific major.

Students should realize that there is need for managers to know what about IT because of the interdependence between businesses and technology.

It is also important for you to emphasize that technology is evolving into open system standards. This means that industries now expect information technology solutions to be seamlessly interconnected and upgradeable. A good example of this is the way the medical industry is automating patient records.

Businesses that can upgrade their systems can save millions of dollars not just on equipment costs, but by not having to retrain customers or employees on new system interfaces when they are implemented.

This chapter should help your students to realize that when they or their place of business are looking at adapting or changing technology, it is not as easy as installing a piece of new hardware or a software program. They must consider and analyze future needs and make sure that programs and technologies will not only work today, but also be able to integrate with new technologies in the future.

Blackboard/CMS suggestions

I again suggest that if you are teaching an online class or are looking for a short video for a lecture class, you can usually find a relevant topic videos at www.youtube.com. The problem is that sometimes they are product demos or sales videos, but they still usually present relevant information or concepts.

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Opening case: The Coronavirus Pandemic Magnifies the Digital Divide

Describe some impacts on individuals and families (not mentioned in the case) resulting from a lack of Internet access.

ANSWER: Student answers will vary.

Level: Easy Section/Learning Objective: Section 2.4 / Learning Objective 4 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

Is affordable broadband Internet access strategically important to cities? Why or why not? Support your answer.

ANSWER: Student answers will vary to some degree; however, they should relate back to the case facts:  Broadband is required to effectively use modern Internet  Vulnerable populations cannot access the services they require from public agencies, including support and access to health care and local city services as a result of not having broadband  Not having broadband limits the ability to work remotely and learn remotely  The Internet is required for employment and educational purposes, which contributes to a city’s well-being and ability to thrive

Level: Easy Section/Learning Objective: Section 2.4 / Learning Objective 4 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

Is affordable broadband Internet access strategically important to the United States? Why or why not? Support your answer.

ANSWER: Students will likely respond in a similar way as they did to #2, including many of the same reference points, but speaking to the broader impact.

Level: Easy Section/Learning Objective: Section 2.4 / Learning Objective 4 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

Does everyone deserve access to affordable high-speed Internet, just as they have for water, sewers, and telephone service? That is, is broadband Internet access a right or privilege? Support your answer.

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ANSWER: Student answers will vary.

Level: Easy Section/Learning Objective: Section 2.4 / Learning Objective 4 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

IT’s About Business - 2.1 NASCAR Uses IT in Its Prerace Inspection

Describe why prerace inspection is a business process for NASCAR. ANSWER: It is a process that begins two days prior to the race. Each car that is entered in the race must go through and pass the inspection to compete. If the car does not pass NASCAR’s inspection on the first try, the team is permitted to fix the problem and go through a second inspection, which also requires the team to go to the back of the line. NASCAR also conducts postqualifying and race-day inspections.

NASCAR’s prerace inspection process is considered a business process because racing is NASCAR’s business. So tracking everything in detail involved in the inspection process is important to a NASCAR race’s outcome.

Level: Easy Section/Learning Objective: Section 2.1 / Learning Objective 1 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

Describe the various benefits that the old app provides NASCAR. ANSWER: The benefits of NASCAR’s app include: The app has simplified the pre-race inspection process The elimination of the paper-based forms previously required Uses a ―default good‖ approach, requiring race officials to now note only those areas where violations are found Provides a method for the collection of data real-time Provides a method to accumulate data that can be used to identify trends and patterns to maintain a level playing field Level: Easy Section/Learning Objective: Section 2.1 / Learning Objective 1 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking

Describe the advantages of the new (2018) app over the previous app.

ANSWER:

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The benefits of the new app are that it is faster and more efficient than the previous process and stores much more data about each car.

Level: Easy Section/Learning Objective: Section 2.1 / Learning Objective 1 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

Refer to section 2.3. Is the app a strategic information system for NASCAR? Why or why not? Support your answer.

ANSWER: This could be considered a strategic information system for NASCAR. The system automates the previous paper-based system. This enables for the consistent tracking and long-term tracking of the data collected. This enables NASCAR to implement their strategic goals and improve the performance and productivity of those involved in the pre-race inspection process.

Level: Medium Section/Learning Objective: Section 2.4 / Learning Objective 4 Bloom’s Category: Application AACSB Category: Reflective Thinking IT’s About Business 2.2 BPR, BPI, and BPM at Chevron

Discuss the primary advantages of BPR at Chevron.

ANSWER: Chevron used a holistic approach to examine the interdependencies between processes executed in different business units. This ultimately improved the company’s overall performance. In a 1996 report, Chevron claimed that the BPR project saved the company $50 million.

Level: Easy Section/Learning Objective: Section 2.2 / Learning Objective 2 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking Why did Chevron adopt BPI? ANSWER: In 1995, Chevron was less than half of its current size, producing roughly 1 million barrels of oil per day across six plants. The company was divided into three major departments: Refining, Marketing, and Supply and Distribution (S&D). Management decided that they needed to improve their supply chain to better integrate their multiple internal processes.

Company leadership decided the best strategy to dramatically improve performance of the company was to reengineer its end-to-end core processes, from the acquisition of crude oil crude through distribution of final products to Chevron customers.

Level: Medium

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Section/Learning Objective: Section 2.2 / Learning Objective 2 Bloom’s Category: Application AACSB Category: Technology How does Chevron apply BPM in its operations today?

ANSWER: Chevron’s current BPM strategy is part of a larger company-wide management system that focuses on operational excellence. The program requires all Chevron operating companies and business units to adopt a continuous improvement perspective, directed by guidelines, metrics, and targets that are reviewed and adapted every year. Apart from process efficiency, Chevron focuses on metrics related to safety, risk, and the environment. All employees participate in operational excellence activities, and managers receive specific operational excellence training to support the continuous improvement culture.

Level: Medium Section/Learning Objective: Section 2.2 / Learning Objective 2 Bloom’s Category: Application AACSB Category: Reflective Thinking IT’s About Business 2.3 Saving Australia’s Great Barrier Reef

Why is saving the Great Barrier Reef strategically important to Australia and our planet? Provide examples to support your answer.

ANSWER: Coral reefs are home to a large number of marine specifies and provide one-sixth of the animal protein consumed by humans. The Great Barrier Reef is important as it is one of the earth’s most diverse ecosystems.

Level: Easy Section/Learning Objective: Section 2.3 / Learning Objective 3 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking

Describe why conservationists must integrate machine learning with their use of drones in their efforts to save the Great Barrier Reef. Why or why not? Support your answer.

ANSWER: A single image can gather thousands of data points about a particular area, requiring the ability to interpret what that data means and how it can be used. Machine learning uses algorithms to meet the challenge.

Level: Easy Section/Learning Objective: Section 2.3 / Learning Objective 3 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking

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IT’s About Business 2.4 Houston Astros Caught Stealing Signs

Describe how the Astros used technology in the team’s sign-stealing scheme.

ANSWER: The Astros used the centerfield camera feed to steal opponents’ signs. The sign would be decoded by a player in the replay review room who would in turn relay the information to the dugout. Someone in the dugout would notify the players or signal it to the runner, who would decipher the catcher’s sign and signal to the batter. They used text messages transmitted to cell phones or smartwatches of a staff member. They also deployed a software program called Codebreaker to steal signs: the sign would be observed on camera, logged into a spreadsheet, and an algorithm would be used to decode it.

Level: Easy Section/Learning Objective: Section 2.3 / Learning Objective 3 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

Describe how the Astros used nontechnological means in the team’s sign-stealing scheme.

ANSWER: One or more players watched the live feed. Then, after decoding the sign, a player would bang a nearby trash can with a bat to communicate the upcoming pitch type to the batter. Generally, one or two bangs corresponded to certain off-speed pitches, while no bang corresponded to a fastball.

Level: Easy Section/Learning Objective: Section 2.3 / Learning Objective 3 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

Information technologies, particularly wireless technologies, continue to rapidly improve. Will such improvements lead to more schemes designed to gain a competitive advantage in baseball? Why or why not? Provide examples to support your answer.

ANSWER: Student answers will vary.

Level: Easy Section/Learning Objective: Section 2.3 / Learning Objective 3 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

IT’s About Business 2.5 NFL Stadiums Deploy Technology to Attract Fans

Consider all the technologies discussed in this case. Taken together, are they

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strategically important to NFL stadiums and NFL teams? Why or why not? Provide specific examples to support your answer.

ANSWER: Yes. The information technologies will help NFL stadiums and NFL teams operate more strategically.

For example, a digital mobile ticket lets them know who is at the games, as well as their behavior in order to more effectively market and tailor to patrons’ needs in future (i.e., purchase behavior, when they arrived, etc.)..

Level: Easy Section/Learning Objective: Section 2.3 / Learning Objective 3 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

Look ahead to the next section and apply the five forces of Porter’s Competitive Forces Model to each technology discussed in this case (individually). Which forces are most applicable to each technology? Support your answer.

ANSWER: Student answers will vary but should specifically list both the force and how it applies. Assess for logic given the assumptions students must make/provide as the basis for their conclusion.

Level: Medium Section/Learning Objective: Section 2.3 / Learning Objective 3 Bloom’s Category: Application AACSB Category: Reflective Thinking

Review Questions: Before You Go On…

Section 2.1

What is a business process?

ANSWER: A business process is an ongoing collection of related activities that create a product or a service of value to the organization, its business partners, and/or its customers. A process has inputs and outputs, and its activities can be measured. Many processes cross functional areas in an organization. For example, product development involves research, design, engineering, manufacturing, marketing, and distribution.

Level: Easy Section/Learning Objective: Section 2.1 / Learning Objective 1 Bloom’s Category: Knowledge AACSB Category: Technology

Describe several business processes carried out at your university.

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ANSWER: These include accounts receivable (tuition), registration, payroll, human resources, etc.

Level: Medium Section/Learning Objective: Section 2.1 / Learning Objective 1 Bloom’s Category: Knowledge

AACSB Category: Technology Define a cross-functional business process and provide several examples of such processes.

ANSWER: This is a process in which no single functional area is responsible for its completion; multiple functional areas collaborate to perform the function.

Level: Easy Section/Learning Objective: Section 2.1 / Learning Objective 1 Bloom’s Category: Knowledge AACSB Category: Technology Pick one of the processes described in Question 2 or 3 and identify its inputs, outputs, customer(s), and resources. How does the process create value for its customer(s)?

ANSWER: Students will contribute responses depending on the process they choose.

Level: Medium Section/Learning Objective: Section 2.1 / Learning Objective 1 Bloom’s Category: Application

AACSB Category: Reflective Thinking 5

What is robotic process automation? Provide examples of its use in organizations.

ANSWER: Robotic process automation (RPA) is a system that enables enterprises to automate business processes and tasks that historically were carried out by employees. Students will use examples from page 45 of the text or examples based on their own research.

Level: Easy Section/Learning Objective: Section 2.1 / Learning Objective 1 Bloom’s Category: Knowledge AACSB Category: Technology

Section 2.2 What is business process reengineering?

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ANSWER: A strategy for improving the efficiency and effectiveness of an organization’s business processes.

The key to BPR is for enterprises to examine their business processes from a ―clean sheet‖ perspective and then determine how they can best reconstruct those processes to improve their business functions.

Level: Easy Section/Learning Objective: Section 2.2 / Learning Objective 2 Bloom’s Category: Knowledge

AACSB Category: Technology What is business process improvement?

ANSWER: Business process improvement is a less radical, less disruptive, and more incremental approach to business process reengineering.

Level: Easy Section/Learning Objective: Section 2.2 / Learning Objective 2 Bloom’s Category: Knowledge

AACSB Category: Technology What is business process management?

ANSWER: Business process management is a management technique that includes methods and tools to support the design, analysis, implementation, management, and optimization of business processes.

Level: Easy Section/Learning Objective: Section 2.2 / Learning Objective 2 Bloom’s Category: Knowledge

AACSB Category: Technology Section 2.3

1.

What are the characteristics of the modern business environment?

ANSWER: It is a combination of the social, legal, economic, physical, and political factors in which businesses conduct their operations.

Level: Easy Section/Learning Objective: Section 2.3 / Learning Objective 3 Bloom’s Category: Knowledge

AACSB Category: Technology

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2.

Discuss some of the pressures that characterize the modern global business environment.

ANSWER: Market pressures are generated by the global economy, intense competition, the changing nature of the workforce, and powerful customers.

Level: Medium Section/Learning Objective: Section 2.3 / Learning Objective 3 Bloom’s Category: Comprehension

AACSB Category: Technology 3.

Identify some of the organizational responses to these pressures. Are any of these responses

specific to a particular pressure? If so, which ones?

ANSWER: Organizations are responding to various pressures by implementing IT such as strategic systems, customer focus, make-to-order and mass customization, and e-business.

Level: Medium Section/Learning Objective: Section 2.3 / Learning Objective 3 Bloom’s Category: Comprehension

AACSB Category: Technology Section 2.4

1.

What are strategic information systems?

ANSWER: Any information system that helps an organization gain a competitive advantage or reduce a competitive disadvantage is a strategic information system.

Level: Easy Section/Learning Objective: Section 2.4 / Learning Objective 4 Bloom’s Category: Knowledge

AACSB Category: Technology 2.

According to Porter, what are the five forces that could endanger a firm’s position in its industry

or marketplaces?

ANSWER: The threat of entry of new competitors

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The bargaining power of suppliers The bargaining power of customers The threat of substitute products or services The rivalry among existing firms in the industry Level: Easy Section/Learning Objective: Section 2.4 / Learning Objective 4 Bloom’s Category: Knowledge

AACSB Category: Technology 3.

Describe Porter’s value chain model. Differentiate between Porter’s competitive forces model

and his value chain model.

ANSWER: Porter’s competitive forces model is focused on analyzing the company’s external environment and how competitive the industry is. The value chain model is focused on the internal operations of the company and is a model to allow the firm to analyze its own processes.

Level: Easy Section/Learning Objective: Section 2.4 / Learning Objective 4 Bloom’s Category: Comprehension

AACSB Category: Technology 4.

What strategies can companies use to gain competitive advantage?

ANSWER: Cost leadership Differentiation Innovation Operational effectiveness Level: Easy Section/Learning Objective: Section 2.4 / Learning Objective 4 Bloom’s Category: Knowledge

AACSB Category: Technology 5. What is business–IT alignment?

ANSWER: Business–IT alignment is the tight integration of the IT function with the strategy, mission, and goals of the organization. That is, the IT function directly supports the business objectives of the organization.

Level: Easy Section/Learning Objective: Section 2.4 / Learning Objective 4 Bloom’s Category: Knowledge

AACSB Category: Technology

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6. Give examples of business–IT alignment at your university, regarding student systems. (Hint: What are the ―business‖ goals of your university with regard to student registration, fee payment, grade posting, etc.?)

ANSWER: Responses will depend on the amount of IT support provided at your school. Hopefully that support is high and links to the overall business strategy of the institution.

Level: Medium Section/Learning Objective: Section 2.4 / Learning Objective 4 Bloom’s Category: Analysis

AACSB Category: Technology Discussion Questions

1. Consider the student registration business process at your university: a. Describe the steps necessary for you to register for your classes each semester. b. Describe how information technology is used (or is not used) in each step of the process.

ANSWER: The responses to this question will be different depending on your school’s processes.

Level: Easy Section/Learning Objective: Section 2.1 / Learning Objective 1 Bloom’s Category: Knowledge

AACSB Category: Technology 2. Why is it so difficult for an organization to actually implement business process reengineering?

ANSWER: There are various internal and external factors that make it difficult to do BPR. These include technical limitations, cost factors, management support, legal and political issues, etc.

Level: Medium Section/Learning Objective: Section 2.1 / Learning Objective 1 Bloom’s Category: Comprehension

AACSB Category: Technology 3. Explain why IT is both a business pressure and an enabler of response activities that counter business pressures.

ANSWER: Rapid changes in information technology and capabilities force businesses to adapt or close. On the other hand, IT assists companies in their efforts to stay up on the latest strategies to provide the best customer service, better quality products, and new and different delivery methods.

Level: Medium

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Section/Learning Objective: Section 2.3 / Learning Objective 3 Bloom’s Category: Comprehension

AACSB Category: Technology 4. What does globalization mean to you in your choice of a major? In your choice of a career? Will you have to be a ―lifelong learner‖? Why or why not?

ANSWER: Globalization means that you need to think about who across the world you might be competing against. You not only will have to think about those in your immediate vicinity, but due to the farreaching impact of the new global, Web-based platform that will continue to grow, you will be competing with anyone who has access to a cell phone or a computer.

You clearly will be a lifelong learner since there will be new devices, new applications, and new ways in which they are used. Anyone who stops learning will be left behind very quickly.

Level: Medium Section/Learning Objective: Section 2.3 / Learning Objective 3 Bloom’s Category: Comprehension

AACSB Category: Technology 5. What might the impact of globalization be on your standard of living?

ANSWER: Resources that were previously very expensive or unattainable will become increasingly more available. Your ability to find inexpensive travel options are a good example.

Level: Easy Section/Learning Objective: Section 2.3 / Learning Objective 3 Bloom’s Category: Comprehension

AACSB Category: Technology 6. Is IT a strategic weapon or a survival tool? Discuss.

ANSWER: It is both. Used to establish a competitive advantage in an industry, IT helps an organization implement its strategic goals and increase its performance and productivity. As a survival tool, it is used to fend off various threats such as new entrants, suppliers and customer bargaining power, substitute products or services, and rivalries among existing firms in the industry.

Level: Hard

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Section/Learning Objective: Section 2.4 / Learning Objective 4 Bloom’s Category: Analysis

AACSB Category: Technology 7. Why might it be difficult to justify a strategic information system?

ANSWER: SISs are often very complex and very expensive to develop, and outcomes may take years to observe and measure.

Level: Medium Section/Learning Objective: Section 2.3 / Learning Objective 3 Bloom’s Category: Comprehension

AACSB Category: Technology 8. Describe the five forces in Porter’s competitive forces model and explain how increased access to highspeed Internet has affected each one.

ANSWER:

 The threat of entry of new competitors: In the CarMax case we saw how the use of  

 

communications and the Internet allow a company to gain an advantage by providing access to its inventory.

The bargaining power of suppliers: Companies can find potential suppliers and compare prices giving buyers a better chance to negotiate terms.

The bargaining power of customers: Customers’ power has increased tremendously with the availability of information on the Internet. Much the same as suppliers above, they have a much more information about sources of goods and services and pricing to help them when they are making purchasing decisions. (The demon customer case drives this point home.)

The threat of substitute products or services: Any industry primarily based on digitized information is at risk and must take the threat of Internet-delivered products and services seriously.

The rivalry among existing firms in the industry: The Internet makes competition more intense. Keeping anything secret is impossible once it is available on the Internet.

Competitors can see the systems and match their features to remain competitive.

Level: Medium Section/Learning Objective: Section 2.4 / Learning Objective 4 Bloom’s Category: Comprehension

AACSB Category: Technology 9. Describe Porter’s value chain model. What is the relationship between the competitive forces model and the value chain model?

ANSWER: The competitive forces model is useful for identifying general strategies; organizations use the value chain model to identify specific activities where they can use competitive strategies for greatest impact.

Level: Medium

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Section/Learning Objective: Section 2.4 / Learning Objective 4 Bloom’s Category: Application

AACSB Category: Technology 10. Describe how IT can be used to support different value chains for different companies.

ANSWER: A value chain is a sequence of activities through which the organization’s inputs, whatever they are, are transformed into more valuable outputs, whatever they are. So, based on this definition, IT can support HR and payroll, accounting, or purchasing for different value chains.

Nearly every company has to have an IT operation that performs these functions even though they have different value chains.

Level: Medium Section/Learning Objective: Section 2.4 / Learning Objective 4 Bloom’s Category: Comprehension

AACSB Category: Technology 11. Discuss the idea that an information system by itself can rarely provide a sustainable competitive advantage.

ANSWER: Information technology is a tool. It is management’s responsibility to use it to sustain a competitive advantage.

Level: Medium Section/Learning Objective: Section 2.4 / Learning Objective 4 Bloom’s Category: Comprehension

AACSB Category: Technology Problem-solving Activities

Surf the Internet for information about the Department of Homeland Security. Examine the available information, and comment on the role of information technologies in the department.

ANSWER: Have the students report what they found.

Level: Easy Section/Learning Objective: Section 2.1 / Learning Objective 1 Bloom’s Category: Knowledge

AACSB Category: Technology Experience mass customization by designing your own shoes at www.nike.com, your car at

www.jaguar.com, your business card at www.iprint.com, and your diamond ring at www.bluenile.com. Summarize your experiences.

ANSWER:

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Before starting this activity, you might consider asking the students if any have already used any of these sites and discuss their experiences.

Level: Easy Section/Learning Objective: Section 2.1 / Learning Objective 1 Bloom’s Category: Knowledge

AACSB Category: Technology Access www.go4customer.com. What does this company do and where is it located? Who are its customers? Provide examples of how a U.S. company would use its services.

ANSWER: The company operates call centers located in India. They do everything from market surveys and debt collections to inbound call center operations. A U.S. company could use them for a number of things, including operating their customer call center, telephone marketing, and market surveys.

Level: Easy Section/Learning Objective: Section 2.1 / Learning Objective 1 Bloom’s Category: Knowledge

AACSB Category: Technology Enter Walmart China (www.walmartchina.com/english/index.htm). How does Walmart China differ from your local Walmart? Consider products, prices, services, etc. Describe these differences.

ANSWER: This site is more of a corporate information site than a marketing site. No products are listed for sale, however there is some information about a few product lines.

Level: Easy Section/Learning Objective: Section 2.2 / Learning Objective 2 Bloom’s Category: Comprehension

AACSB Category: Technology Apply Porter’s value chain model to Costco (www.costco.com). What is Costco’s competitive strategy? Who are Costco’s major competitors? Describe Costco’s business model. Describe the tasks that Costco must accomplish for each primary value chain activity. How would Costco’s information systems contribute to Costco’s competitive strategy, given the nature of its business?

ANSWER: Costco’s business model is to sell premium merchandize at a lower price to members (captive group of shoppers). Sam’s Club is their biggest competitor. They need to procure the right merchandise mix targeting their members by building a strong understanding of their base of members. They need to have an efficient supply chain and then be able to track the success of their promotions and marketing efforts.

Level: Medium Section/Learning Objective: Section 2.4 / Learning Objective 4 Bloom’s Category: Application

AACSB Category: Technology

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Apply Porter’s value chain model to Dell (www.dell.com). What is Dell’s competitive strategy?

Who are Dell’s major competitors? Describe Dell’s business model. Describe the tasks that Dell must accomplish for each primary value chain activity. How would Dell’s information systems contribute to Dell’s competitive strategy, given the nature of its business?

ANSWER: Dells strategy is to offer high-end computers with premium features and components at a lower price and allow for customers to customize their systems using a Web-based interface. Dell must support a highly efficient supply chain system and reduce their inventory costs. They need to track new components and offer them to their customers and then track the quality of their components as they are introduced into their systems.

Level: Medium Section/Learning Objective: Section 2.4 / Learning Objective 4 Bloom’s Category: Application

AACSB Category: Technology Closing Case: The Car Rental Industry

This case has addressed a number of possible solutions for the problems afflicting the car rental industry.

Which solution do you think had the greatest strategic impact on the industry? Provide specific examples to support your answer.

Which solution do you think had the least strategic impact on the industry? Provide specific examples to support your answer.

ANSWER: Student answers will vary based on their interpretation and importance of each example provided in the case.

Level: Easy Section/Learning Objective: Section 2.4 / Learning Objective 4 Bloom’s Category: Comprehension

AACSB Category: Reflective Thinking Apply the five forces of Porter’s competitive forces model to each possible solution discussed in this case (individually). Which forces are most applicable to each solution? Support your answers.

ANSWER: Student answers will vary but should specifically list both the force and how it applies. Assess for logic given the assumptions students must make/provide as the basis for their conclusion.

Level: Medium Section/Learning Objective: Section 2.4/ Learning Objective 4 Bloom’s Category: Application

AACSB Category: Reflective Thinking

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Chapter 3: Ethics and Privacy

Chapter Outline 3.1 3.2

Ethical Issues Privacy

Learning Objectives 3.1 Define ethics, and explain its three fundamental tenets and the four categories of ethical issues related to information technology.

3.2 Discuss at least one potential threat to the privacy of the data in each of three places that store personal data.

Teaching Tips and Strategies

The topics discussed in this and the next chapter (Chapter 4: Information Security) may be some of the most important ones you present to your students.

Business ethics and individual and personal privacy have become some of the most important issues in today’s global business environment.

One of the areas you should emphasize is the difference between personal security and personal privacy.

Since 2013, there has been a lot of news about how the National Security Agency (NSA) monitors, records, and stores electronic communications. However, having this discussion this in class and avoiding it evolving into a political conversation might be difficult. The first case study discusses Edward Snowden and the NSA. You might consider presenting a series of scenarios to your class to emphasize that any e-mail they send really does not go away.

Use the example of a student sending an e-mail to a second student. Pose the question, ―How many digital copies of that e-mail are there?‖ Students usually respond, ―Two.‖ But that is not true. Illustrate on the board how those e-mails had to go through different servers, and possibly networks, to get to their destinations. This illustration will usually make most of the students’ ears perk up.

Then create a different scenario where a student (A) sends an e-mail to a second student (B). They then hire someone to destroy Student B’s computer and wipe (delete) all of the information mail servers that had that e-mail on it. What if we also smash the hard drive in Student A’s computer to remove the e-mail from the computer? Is it possible for the e-mail to still exist? Most students will respond with something like, ―There is no way. Both computers are destroyed and the servers have been cleared.‖ Ask, ―How do

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we know if Student B, when he/she received the e-mail, didn’t e-mail it to someone else?‖ Would all of the activity have gotten rid of those e-mails? Then ask, ―What if Student B put the e-mail on a flash (thumb) drive and mailed it somewhere?‖ Hopefully, your students will begin to see the complications and that an e-mail really does not go away.

Another scenario might be that three years ago you sent someone you called a friend a few dirty jokes (violating company policy) via e-mail. Nothing was said. However, that friend recently got angry with you for something. They go to management with one of those e-mails you sent to them three years ago.

The question is, ―Could you still be fired?‖ Most students will say, ―No. That was three years ago.‖ But the correct response is, ―Yes, you can get fired.‖ The courts have agreed with employers on this issue. It doesn’t matter if it was five years ago. It was still violating company policy. At this point, students should understand that, unlike a few decades ago when workers in break rooms told jokes, unless someone was offended at that moment, the chance of getting in trouble was small. Now if employees are using e-mail, employers have the ability to recover any message.

These examples are not intended to scare students, but to get them to realize that employers can and do monitor them at work. A review of the different software applications that can help employers monitor non-work-related use of the Internet is appropriate at this step. The book has examples of employees that have been fired from major companies for using the Internet for personal use.

The class discussion can end with the following advice. First, never use a computer owned by the business where you work for anything but business-related work. That will take care of 95% of this problem. Second, do not send an e-mail that you wouldn’t want your parents (or spouse) to read. This will take care of the problem of deciding which e-mails are okay to send and which ones aren’t. Third, limit giving your work e-mail address to friends and relatives. This should reduce the number of nonbusiness emails you receive. It also helps avoid having things sent to you that might violate company policy.

Fourth, when using your computer, pretend that someone was hiding behind the screen and watching everything you do. There are applications that can monitor everything done on a computer, down to the keystroke. Some companies use these types of applications to track the possible release of confidential company information by an employee.

A long-held view of ethics and IT can be shared. Most organizations depend on their IT staffing to support the strategic direction of the organization. Virtually all professions—law, medicine, accountancy, and many others—have established a code of professional standards. But is there a professional code of ethics for IT professionals? Currently, several professional organizations have issued their own codes of ethics, but few if any are currently enforceable under the law. It may take a few more years for a general code of ethics to be adopted by the IT profession. It may take even longer for certification and other measures to be mandated by law, like they are now for lawyers, doctors, and teachers. Until these measures are in place, it is incumbent upon IT professionals to think and act ethically about the many issues that are discussed in this chapter.

Blackboard/CMS

In my online classes, I like posting the scenarios above as a discussion topic. The responses usually get very interesting.

As I have mentioned in previous chapters, you can find many videos online on the topics covered in this chapter.

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Opening Case: Student Tracking Apps

Discuss the ethicality and legality of student-tracking apps.

ANSWER: As the requirement to use the app depends on the professor’s choice and not the students, it can be considered unethical since there is little the student can do about it. Opinions will likely differ among students about the legality of the app but there is little precedence on the use of such apps and the how they are used. Likely further experience in institutional use and the way they use the data will impact legality in future.

Level: Easy Section/Learning Objective: Section 3.1/Learning Objective 1 Bloom’s Category: Comprehension AACSB Category: Ethics The fundamental tenets of ethics include responsibility, accountability, and liability.

Discuss each of these tenets as it applies to student-tracking apps.

ANSWER: Responsibility: The professor and institution must accept the consequences of adopting the app and how it is integrated within their courses and academic framework. Students must accept these consequences by way of enrolment in a particular course that uses the app if they are seeking credit.

Accountability: The professor and the institution are accountable for the use of the apps and the app data; however, students are accountable for their actions and consequences (academic penalties and offences) as a result of the data collected in the app.

Liability: There is little to no legal information related to the use of student-tracking apps. While there may be related privacy concerns, increased use of the apps will likely set the tone in terms of legality.

Level: Easy Section/Learning Objective: Section 3.1/Learning Objective 1 Bloom’s Category: Comprehension AACSB Category: Ethics Would you opt out if your university decided to use a student-tracking app? Why or why not?

ANSWER: Student answers will vary.

Level: Easy Section/Learning Objective: Section 3.1/Learning Objective 1 Bloom’s Category: Reflective Thinking AACSB Category: Ethics

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IT’s About Business 3.1 Google and Your Privacy

1. Discuss the ethicality and legality of Google’s data collection and analysis methods.

Be sure to include ―informed consent‖ in your discussion.

ANSWER: Google requires consumers to give informed consent for the collection of their personal data in order to use their platform and underlying apps and features. Legally Google is entitled to collect data from its users and analyze it for purposes of its choosing, so long as it is disclosed in the policy; however, this does not necessarily make it ethical since many consumers do not fully recognize the potential extent of the collection and use of their personal data. As a result, even with informed consent, unless the policy is extremely clear, it is highly unlikely that consumers are fully aware of what they are consenting to. Even the wording is unclear. In the case of using ―private browsing mode‖ consumers would assume a level of privacy; however, data is collected.

Level: Easy Section/Learning Objective: Section 3.1/Learning Objective 3.1 Bloom’s Category: Comprehension AACSB Category: Ethics 2. The fundamental tenets of ethics include responsibility, accountability, and liability.

Discuss each of these tenets as it applies to Google’s data collection and analysis methods.

ANSWER: Responsibility: Google has not explained the extent of their data collection and use of data or clarified the implications of using their service explicitly.

Accountability: Google is not currently accountable for how they are gathering and using sensitive data aside from the increasing awareness that their methods have not been fully disclosed. Consumer advocacy groups are demanding government and regulator intervention.

Liability: Google is facing litigation in Arizona, Australia, and the UK for deceptive and misleading tracking practices. Further antitrust lawsuits were expected to be filed in the summer of 2020 by the U.S. Department of Justice.

Level: Easy Section/Learning Objective: Section 3.1/Learning Objective 3.1 Bloom’s Category: Comprehension AACSB Category: Ethics IT’s About Business 3.2 China’s Social Credit System

1. Discuss the ethics and legality of China’s Social Credit System.

ANSWER: Students answers will vary but will likely take into consideration whether citizens are aware of all of the data points being collected and the transparency of how it is being aggregated to form a basis for social credit evaluations. Likely it is legal for it to be collected as it is being done by the government; however, the limited influence citizens have on government policy and parties will likely further

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support a potential unethical viewpoint on the Social Credit System.

Level: Easy Section/Learning Objective: Section 3.1/Learning Objective 1 Bloom’s Category: Comprehension AACSB Category: Ethics 2. The fundamental tenets of ethics include responsibility, accountability, and liability.

Discuss each of these tenets as it applies to China’s Social Credit System.

ANSWER: Responsibility: The government and the agencies it selects for solutioning and use of the credit system must accept the consequences should it be misused.

Accountability: Both the citizens and the government are accountable in different ways. The government and its agencies will be accountable for the use of the data; however, citizens are accountable for actions they have taken (i.e., criminal records, etc.) that form the basis of the credit scoring system.

Liability – Opponents contend that it oversteps the rule of law and infringes on the legal rights of individuals and organizations, particularly the right to privacy as well as personal dignity. However, it is unlikely that there is an ability to recover any loss for damages incurred as a result of the social credit system. In turn, there is little to no liability exposure for the government and it’s agencies.

Level: Easy Section/Learning Objective: Section 3.1/Learning Objective 1 Bloom’s Category: Comprehension AACSB Category: Ethics

IT’s About Business 3.3 Clearview AI

1. Discuss the ethicality and the legality of Clearview AI’s facial recognition software.

ANSWER: Student answers will vary; however, the following logic from the case facts apply: The issue is the use of the technology that will likely drive the viewpoints on ethicality and legality.

While facial recognition technology is not new, now photos of an individual can be accessed by a broader audience. Individuals may be unaware of who is accessing their photo; the technology also directs them to other sites within the database. Many will likely take the viewpoint that federal agencies (governments) may have a rationale to use such software; however, if the government is corrupt or if there are human rights concerns in that country, is the technology is likely to have negative impacts or be misused. The technology can also make erroneous matches, which could increase the risk of unethical use in terms of incorrect actions or follow-up being taken by users.

From a legality perspective, the use of social media sites to scrape images could be a violation of terms of service.

Level: Easy

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Section/Learning Objective: Section 3.2/Learning Objective 2 Bloom’s Category: Comprehension AACSB Category: Ethics 2. The fundamental tenets of ethics include responsibility, accountability, and liability.

Discuss each of these tenets as it applies to Clearview’s facial recognition software.

ANSWER: Responsibility: Individuals have a responsibility to ask to be removed from the platform if certain conditions are met. Users (clients) have a responsibility to use the software legally. Clearview has a responsibility to respond to individual requests for removal, as well as the appropriate use of scanning technology to only draw on publicly available images and/or what is not illegal.

Accountability: Clearview AI has accountability with regards to the collection, use, and storage of images as well as the due diligence in who they are providing their technology to.

Liability: Clearview may have liability issues if the information is misused or is proven to be violating terms of information sources (i.e., social media sites). Since the images are considered be drawn from publicly available images, individuals may have little legality in this regard to defend themselves and hold the company liable unless a broader law is introduced.

Level: Easy Section/Learning Objective: Section 3.2/Learning Objective 2 Bloom’s Category: Comprehension AACSB Category: Ethics 3. In your opinion, do the benefits of facial recognition systems outweigh the dangers to your privacy? Support your answer.

ANSWER: Student answers will vary.

Level: Easy Section/Learning Objective: Section 3.2/Learning Objective 2 Bloom’s Category: Comprehension AACSB Category: Ethics

Before you go on… Review Questions

Section 3.1

1. What does a code of ethics contain?

ANSWER: A code of ethics is a collection of principles intended as a guide for members of a company or an organization.

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Level: Easy Section/Learning Objective: Section 3.1/Learning Objective 1 Bloom’s Category: Knowledge AACSB Category: Ethics 2. Describe the fundamental tenets of ethics.

ANSWER: Fundamental tenets of ethics include responsibility, accountability, and liability. Responsibility means that you accept the consequences of your decisions and actions. Accountability refers to determining who is responsible for actions that were taken. Liability is a legal concept that gives individuals the right to recover the damages done to them by other individuals, organizations, or systems.

Level: Easy Section/Learning Objective: Section 3.1/Learning Objective 1 Bloom’s Category: Knowledge AACSB Category: Ethics Section 3.2 1. Discuss the issue of privacy as it is affected by IT.

ANSWER: The issue of privacy as it is affected by IT addresses the issues of data collection, data accuracy, and data confidentiality. The proliferation of personal computers, powerful software, large databases, and the Internet have created an entirely new dimension of accessing and using personal data.

Level: Easy Section/Learning Objective: Section 3.2 /Learning Objective 2 Bloom’s Category: Comprehension AACSB Category: Ethics 2. Discuss how privacy issues can impact transborder data flows.

ANSWER: As the number of online users has increased globally, governments throughout the world have enacted many inconsistent privacy and security laws. This highly complex global legal framework is creating regulatory problems for companies. Approximately 50 countries have some form of dataprotection laws. Many of these laws conflict with those of other countries, or they require specific security measures. Other countries have no privacy laws at all.

The absence of consistent or uniform standards for privacy and security obstructs the flow of information among countries, called transborder data flows. The European Union (EU), for one, has

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taken steps to overcome this problem. In 1998 the European Community Commission (ECC) issued guidelines to all its member countries regarding the rights of individuals to access information about themselves. The EU data-protection laws are stricter than U.S. laws and therefore could create problems for multinational corporations, which could face lawsuits for privacy violation.

The transfer of data in and out of a nation without the knowledge of either the authorities or the individuals involved raises a number of privacy issues. Whose laws have jurisdiction when records are stored in a different country for reprocessing or retransmission purposes? For example, if data are transmitted by a Polish company through a U.S. satellite to a British corporation, which country’s privacy laws control the data, and when? Questions like these will become more complicated and frequent as time goes on. Governments must make an effort to develop laws and standards to cope with rapidly changing information technologies in order to solve some of these privacy issues.

Level: Medium Section/Learning Objective: Section 3.2/Learning Objective 2 Bloom’s Category: Comprehension AACSB Category: Ethics Discussion Questions

1.

1. In 2008, the Massachusetts Bay Transportation Authority (MBTA) obtained a temporary restraining order barring three Massachusetts Institute of Technology (MIT) students from publicly displaying what they claimed to be a way to get ―free subway rides for life.‖ Specifically, the 10-day injunction prohibited the students from revealing vulnerabilities of the MBTA’s fare card. The students were scheduled to present their findings in Las Vegas at the DEFCON computer hacking conference.

Were the students’ actions legal? Were their actions ethical? Discuss your answer from the students’ perspective then from the perspective of the MBTA. ANSWER: The students found a way to exploit the system’s vulnerability. Not paying the fare and riding the subway is clearly an unethical activity, if not illegal. It does not matter what perspective one takes; these types of activities cannot be tolerated.

Level: Medium Section/Learning Objective: Section 3.1/Learning Objective 1 Bloom’s Category: Comprehension AACSB Category: Ethics 2.

2. Frank Abagnale, the criminal played by Leonardo di Caprio in the motion picture Catch Me If You Can, ended up in prison. After he left prison, however, he went to work as a consultant to many companies on matter of fraud.

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a. Why do these companies hire the perpetrators (if caught) as consultants? Is this a good idea?

ANSWER: In some cases, they hire the individual who broke into their system, because that person knows the weak spots in the security. Whether it is a good idea or not depends on the situation. Students can offer some opinions on pros and cons. b.

You are the CEO of a company. Discuss the ethical implications of hiring Frank Abagnale as a consultant to your company.

ANSWER: Students can offer some opinions on pros and cons. It may seem as if rewarding a person for their past criminal behavior is not an ethical precedent that a company should set in its hiring policies.

The wrong message may be sent to customers about the quality and background of their employees and endanger other employees working with Frank Abagnale.

Level: Medium Section/Learning Objective: Section 3.1 and 3.2/Learning Objective 1 and 2 Bloom’s Category: Comprehension AACSB Category: Ethics 3.

3. Access various search engines to find information relating to the use of drones (unmanned aerial vehicles (UAVs)) for electronic surveillance purposes in the United States. a. Take the position favoring the use of drones for electronic surveillance. b. Take the position against the use of drones for electronic surveillance.

ANSWER: Your students’ responses will vary.

Level: Easy Section/Learning Objective: Section 3.2/Learning Objective 2 Bloom’s Category: Comprehension AACSB Category: Ethics 4. Research the Volkswagen ―Diesel Dupe.‖ The fundamental tenets of ethics include responsibility, accountability, and liability. Discuss each of these tenets as it applies to the Volkswagen scandal.

ANSWER: Your students’ responses will vary.

Level: Easy Section/Learning Objective: Section 3.2/Learning Objective 2 Bloom’s Category: Comprehension AACSB Category: Ethics

5. Research the Facebook-Cambridge Analytica scandal.

a) Discuss the legality and the ethics of Facebook in the Facebook–Cambridge Analytica incident.

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b) Discuss the legality and the ethics of Cambridge Analytica in the Facebook– Cambridge Analytica incident. c) Describe how each of the fundamental tenets of ethics (responsibility, accountability, and liability) applies to Facebook and then to Cambridge Analytica in this incident.

ANSWER: a) Student answers will vary using case facts but will likely recognize that Facebook did not violate the law in the actions contributing to the scandal; however, they were not transparent in the collection of data and the use of such information with third parties, and that was unethical. b) Cambridge Analytica did not question the source of the data and its original intended use. They legally obtained the data but carried out their business and use of the data in a manner that exploited voters and had significant unintended consequences compared to the original manner of collection: a Facebook account followed by a personality quiz. c) Responsibility

Facebook Did not take initial responsibility for their actions that led to the scandal by failing to fully explain how the data was likely obtained.

Accountability

Should be accountable for not being transparent on the ability for external developers to access data.

Liability

Fined and investigated in multiple jurisdictions globally.

Cambridge Analytica Were not prepared to take responsibility, as the attention was placed on Facebook and there is no indication that they assumed responsibility based on the case facts alone.

Should be accountable for the lack of due diligence in obtaining the data, clarifying how it was obtained and whether users were aware of this intended use.

The company became insolvent and closed, eliminating the potential for recovery.

Level: Medium Section/Learning Objective: Section 3.1/Learning Objective 3.1 Bloom’s Category: Application AACSB Category: Ethics 6. Research Quizlet (www.quizlet.com).

a) Discuss the ethics of students’ use of Quizlet (and similar apps) for exams. b) If students discovered that the actual exam questions were on Quizlet, discuss the ethics of them not telling the professor.

ANSWER: a) Student answers will vary but will likely take into consideration their intent for using the site, which is designed to aid with preparing for an exam or helping with overall understanding of a particular course. Students may reason that once material is used, it is the professor’s responsibility to update it on a regular basis in order to maintain integrity in academic assessments.

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b) There will be some variance in student answers; however, the principle should be that not originally knowing whether the questions would be on the exam was now no longer relevant. They could see they were there and they could communicate after the exam to prevent the situation from happening again and upholding the integrity of all involved.

Level: Medium Section/Learning Objective: Section 3.1/Learning Objective 1 Bloom’s Category: Application AACSB Category: Ethics

Problem-solving Activities

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1. An information security manager routinely monitored Web surfing among her company’s employees. She discovered that many employees were visiting the ―sinful six‖ websites. (Note: The ―sinful six‖ are websites with material related to pornography, gambling, hate, illegal activities, tastelessness, and violence). She then prepared a list of the employees and their surfing histories and gave the list to management. Some managers punished their employees. Some employees, in turn, objected to the monitoring, claiming that they should have a right to privacy. a. Is monitoring of Web surfing by managers ethical? It is legal. Support your answer.

ANSWER: Yes, monitoring of Web surfing is ethical and moreover, it is an important duty of the network security person. Unethical use of the system is only detected by this scrutiny. If this is not done on a professional basis, the company is open to legal action should someone be harmed as a result of an employee’s use of the system. Moreover, there is potential for malware to be introduced into the company’s network. b. Is employee Web surfing on the ―sinful six‖ ethical? Support your answer.

ANSWER: Personal use of the company’s Internet system, while not illegal, is normally stipulated in the company policies as unauthorized, therefore unethical. Employees are supposed to be working, not wasting company resources. Even during their lunch hour or after hours, they are still ―stealing‖ resources, e.g., disk space, bandwidth, etc.

Visiting sites with pornographic material, gambling sites, etc. could also lead to other actions which could jeopardize the company since the tracking of IP addresses is something that would lead an investigation back to the company equipment which was being used at the time. c. Is the security manager’s submission of the list of abusers to management ethical? Why or why not?

ANSWER: While it is not unethical to turn this information over to management, a better way to handle the situation might be to first send a communication out to all employees reiterating what is okay and

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not okay in terms of Internet usage and put them on notice that infraction will be made known to management. If there are employees that continue to operate out of policy, then they would be dealt with by submitting their details to management. d. Is punishing the abusers ethical? Why or why not? If yes, then what types of punishment are acceptable?

Punishment is just as ethical for an infraction of the Internet use policy as it would be for any abuse of company policy, from tardiness to absenteeism to any other stated policy on the books.

Employers need to act in good faith. A policy needs to be circulated among employees with a clear description of what the consequences will be if an employee commits an offense.

Monitoring by upper management to ensure consistent handling by the managers would make future handling fair and consistent. Once the policy and consequences are clear, the security manager should notify the immediate manager and copy upper management with details of problem situations. Possible warning, suspension, and ultimate termination may be appropriate punishment for violation of any company policy not limited to improper Internet usage. e. What should the company do in this situation? (Note: There are a variety of possibilities here.)

The company should institute a policy for personal Internet use and review with their employees. Employees should be allowed some flexibility, such as allowing two or three 15minute intervals of personal surfing during the day. Objectionable sites cannot be visited. This allows for employees to take a break from their work while confining their activity to small blocks of time.

Level: Hard Section/Learning Objective: Section 3.1/Learning Objective 1 Bloom’s Category: Comprehension AACSB Category: Ethics

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2. Access the Computer Ethics Institute’s website at www.cpsr.org/issues/ethics/cei. The site offers the ―Ten Commandments of Computer Ethics.‖ Study these 10 rules and decide if any others should be added.

ANSWER Students should provide a thorough discussion to the above.

Level: Easy Section/Learning Objective: Section 3.1/Learning Objective 1 Bloom’s Category: Knowledge AACSB Category: Ethics

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3. Access the Association for Computing Machinery’s code of ethics for its members (see www.acm.org/code-of-ethics). Discuss the major points of this code. Is this code complete? Why or why not? Support your answer.

ANSWER Students should provide a through discussion to the above.

Level: Medium Section/Learning Objective: Section 3.1/Learning Objective 1

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Bloom’s Category: Analysis AACSB Category: Ethics

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4. Access www.eightmaps.com. Is the use of data on this website illegal? Unethical? Support your answer.

ANSWER To display the personal address of individuals if that information is not publicly available in another place is an important issue. Donations for political causes need to be posted so that the general public is aware of who is behind what initiative.

Level: Medium Section/Learning Objective: Section 3.1/Learning Objective 1 Bloom’s Category: Application AACSB Category: Ethics

•

5. The Electronic Frontier Foundation (www.eff.org) has a mission of protecting rights and promoting freedom in the ―electronic frontier.‖ Review the organization’s suggestions about how to protect your online privacy and summarize what you can do to protect yourself.

ANSWER Students should provide a thorough discussion to the above.

Level: Medium Section/Learning Objective: Section 3.1/Learning Objective 1 Bloom’s Category: Application AACSB Category: Ethics

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6. Access your university’s guidelines for ethical computer and Internet use. Are there limitations as to the types of websites that you can visit and the types of material you can view? Are you allowed to change the programs on the lab computers? Are you allowed to download software from the lab computers for your personal use? Are there rules governing the personal use of computers and email?

ANSWER Hopefully this information is easily accessible. Ask if the students agree or disagree with the policies.

Ask students how these rules might be used in a business environment.

Level: Easy Section/Learning Objective: Section 3.1/Learning Objective 1 Bloom’s Category: Application AACSB Category: Ethics

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7. Access www.albion.com/netiquette/corerules.html. What do you think of this code of ethics?

Should it be expanded? Is it too general?

ANSWER Students will have varying responses, but each should provide support.

Level: Easy

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Section/Learning Objective: Section 3.1/Learning Objective 1 Bloom’s Category: Application AACSB Category: Ethics

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8. Access www.cookiecentral.com and www.epubliceye.com. Do these sites provide information that helps you protect your privacy? If so, then explain how.

ANSWER The first site deals with cookies and how they are used to track and invade privacy. The second, among other things, discusses Internet-based scams.

Level: Easy Section/Learning Objective: Section 3.2/Learning Objective 2 Bloom’s Category: Comprehension AACSB Category: Ethics

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9. Do you believe that your university should be allowed to monitor e-mail sent and received on university computers? Why or why not? Support your answer.

ANSWER Again, bring to the discussion how these rules might differ in in types of businesses.

Level: Easy Section/Learning Objective: Section 3.1/Learning Objective 1 Bloom’s Category: Application AACSB Category: Ethics Closing Case: Restaurant Owners versus Grubhub

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1. Discuss the ethics and the legality of each of Grubhub’s business practices: registering domain names, phone fees, and non-partnered restaurants.

ANSWER: Answers will vary by student but examples are provided for each below: Buying Web domain names: Grubhub may be infringing on the naming rights of the restaurants.

Legally, it may have been allowed based on contract wording despite owners not clearly being aware of the microsites being setup. The intent to closely mirror restaurant names could be interpreted as cybersquatting. The suspicion and resemblance of the activity was significant enough that the practice of automatically creating websites for restaurants was stopped in 2018.

Phone Fees: In addition to the ―rights‖ to imply that the restaurant was associated with the phone number, the automatic charge to the restaurant for each call was not based on fact or the service that the restaurants had offered to partner with Grubhub on. While the details of these calls would not be easily retraceable to reconcile whether charges were appropriate to orders, it would have to be recreated to hold the restaurants liable for the charges if contract wording did not have a general clause allow for charges for all types of calls made and redirected (aside from orders).

Non-partnered restaurants: With regards to the non-partnered restaurants, it can be viewed as

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misrepresentation to offer a service for which there is no partnership agreement/contract established.

Since they are not a party to a contract with Grubhub, failure to disclose reference to their restaurant and only removing them if requested would likely be viewed by most as unethical unless it was simply a sharing of publicly available information (not implied partnership with the restaurant or endorsement from them).

Level: Medium Section/Learning Objective: Section 3.1/Learning Objective 1 Bloom’s Category: Application AACSB Category: Ethics •

2. The fundamental tenets of ethics include responsibility, accountability, and liability. Discuss each of these tenets as it applies to Grubhub’s business practices in this case.

ANSWER: Student answers can vary. Examples are provided below.

Responsibility: The restaurants were responsible for reading and understanding the contracts, including the interpretation of any microsites and phone numbers. Grubhub is responsible for being transparent in the wording of the contract and communicating the intended fee structure and basis for charges.

Accountability: Grubhub is the owner of sites they created and the phone numbers. Therefore, they are accountable for any misrepresentation or infringement as a result of these sites operating.

Liability: Restaurants may be liable for any charges incurred as outlined in the signed contracts; however, Grubhub would have to prove the intended nature of the wording in the contracts and substantiate the charges with evidence.

Level: Medium Section/Learning Objective: Section 3.1/Learning Objective 1 Bloom’s Category: Application AACSB Category: Ethics

Chapter 4: Information Security

Chapter Outline 4.1 4.2 4.3 4.4 4.5

Introduction to Information Security Unintentional Threats to Information Systems Deliberate Threats to Information Systems What Organizations Are Doing to Protect Information Resources Information Security Controls

Learning Objectives

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1. Identify the five factors that contribute to the increasing vulnerability of information

resources and specific examples of each factor.

2. Compare and contrast human mistakes and social engineering, and provide a specific

example of each one.

3. Discuss the 10 types of deliberate attacks.

4. Describe the three risk mitigation strategies, and provide an example of each one in the

context of owning a home.

5. Identify the three major types of controls that organizations can use to protect their information resources, and provide an example of each one.

Teaching Tips and Strategies

Information security is one of the top issues in today’s business environment. Businesses who thought they did not need to spend company resources for information security are now finding out the hard way that they were wrong.

Almost every day there are new stories of businesses that have had their networks or information resources breached. This is a great topic for a class discussion. So check or, as an assignment, have the students check, a few of the business or technology news sites (such as http://computerworld.com or www.cnet.com/online/cybersecurity) for some current security issues before you start this chapter in class.

Unfortunately, many people still use simplistic passwords. While you should NOT ask your students what their passwords are, you can come up with a few good and bad password examples to post on the board. Then have a discussion which ones might be better or worse than others, and why (i.e., because of length, pattern, easily guessed, real word, etc.)

I usually ask which students use passwords on their mobile devices. Bring into the discussion how they secure their smartphones and tablets, in addition to their laptops. While we have not gotten to the telecommunications chapter yet, consider bringing the security of their home WiFi network into the discussion.

There is no way to fully secure an information system against every potential mishap or disaster.

But there are lots of ways to significantly reduce the risks and recover the losses. The best organizations recognize that when there is a disaster, they need to be able to recover quickly. The days are behind us when an organization could continue serving their customers without the aid of IT. Events associated with natural and ―manmade‖ disasters have become risks that organizations can no longer dismiss. A scenario was once noted by a computer expert, who said, ―The only truly secure system is powered off, cast in a block of concrete, and sealed in a lead room with armed guards, and even then I have my doubts.‖ This may be an amusing picture, but the statement is becoming increasingly correct.

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Blackboard/CMS

Due to the importance information security has on organizations there are a continuous stream of news reports of various attacks and security issues. I try to check, especially around the time this chapter is presented, technology news sites such as www.computerworld.com or www.cnet.com/online/cybersecurity to be able to interject current security-related events into the class discussions.

I again suggest checking www.youtube.com or doing a general Google or Bing search for topic relevant videos.

Another source of security-related how-technology-works audio is a weekly podcast from Steve Gibson and Leo Leporte called SecurityNow. The complete archive of the audio version of the shows can be found at www.grc.com/securitynow.htm. However, while the content of the topicspecific shows is usually very good, the two hosts sometimes spend the first part of the podcast talking about some unrelated topics. These podcasts are released under the Creative Commons License. I have used them for my online classes and as more detailed support of specific topics for students in my lecture classes.

Opening Case: Data Breaches

1. What is the common problem in all of the data breaches discussed in this case?

ANSWER Personally identifiable information (sensitive client and/or customer data) was compromised as a result of hacking.

Level: Medium Section/Learning Objective: Section 4.1/Learning Objective 1 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 2. How would you solve the common problem in all of these data breaches?

ANSWER Student answers will vary but should address the cause identified in question #1.

Level: Medium Section/Learning Objective: Section 4.1/Learning Objective 4.1 Bloom’s Category: Application AACSB Category: Reflective Thinking

2. Place yourself as a victim in any of these data breaches. What should you do when you are notified (or when you believe) that your personal data has been compromised?

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ANSWER Answers will vary by student but will likely focus on the need to further protect themselves by changing information where they can (i.e., credit cards, account passwords, etc.) and monitoring for suspicious activity.

Level: Medium Section/Learning Objective: Section 4.1/Learning Objective 4.1 Bloom’s Category: Application AACSB Category: Reflective Thinking

IT’s About Business 4.1 Thieves Steal 100 Luxury Vehicles from Car2Go

1. How could Daimler executives have tested their decision to eliminate background checks before fully implementing it? ` ANSWER The testing strategy suggested by students will vary but should address that trying the new policy on a very small segment of the non-European market would have reduced the risk.

Level: Easy Section/Learning Objective: Section 4.1/Learning Objective 1 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 2. Consider yourself a Daimler executive. Rather than eliminating the background checks altogether, would it be possible to redesign the process so that it took much less time? If so, how would you have done this?

ANSWER Student ideas will vary. One of the approaches could be to set up profiles that would run automated background checks (perhaps subscription to an existing service with a quick response rate). The manual process would be eliminated and a client would only have to go through it once, or on a much less frequent basis.

Level: Easy Section/Learning Objective: Section 4.1/Learning Objective 1 Bloom’s Category: Application AACSB Category: Reflective Thinking 2. Describe how hacking played a role in the theft of luxury vehicles from Car2Go. ANSWER Hackers used lists of stolen e-mail address and passwords to set up fake accounts.

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Level: Easy Section/Learning Objective: Section 4.1/Learning Objective 1 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

IT’s About Business 4.2 Ransomware Is Alive and Well

1. Why has ransomware become such a serious global problem? (Hint: What is a so-called ―victimless crime‖?)

ANSWER Ransomware is a significant problem given the value associated with the data maintained by organizations. Organizations require the data to carry out their functions, and consumers are willing to share data in order to obtain the product or service they want. Failure to maintain such data can result in compromised competitiveness and loss of reputation for an organization. Ransomware attacks leverage this value when attackers use advanced and continuously changing approaches to generate lucrative returns. They recognize that if organizations want to maintain their proprietary data and uphold their reputation, they are willing to pay a price.

Level: Medium Section/Learning Objective: Section 4.3/Learning Objective 4.3 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 2. In many ransomware attacks, the perpetrators ask for far less money than the victims end up paying to recover from the attack. Would it not save money and time for victims to pay the ransom? Why don’t victims simply pay the ransom? Is this a good decision? Draw implications for any organization after a successful ransomware attack. Pay or not pay?

ANSWER Student answers will vary; however, the following list may be reference points: - Company cybersecurity policy (some have a rule they should never pay) - Company culture - Sets a precedent for future attacks May not be initially sure of the extent of the hack or if as an organization they can find a way to ―unlock‖ it themselves.

Level: Medium Section/Learning Objective: Section 4.3/Learning Objective 3 Bloom’s Category: Analysis AACSB Category: Analytic

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3. Describe the different methods that the organizations discussed in this case employed to deal with ransomware attacks. Which methods seem to be the most effective? The least effective?

ANSWER  University of Utah paid the ransom after negotiating to less than half of the originally demanded amount  Norsk Hydro did not respond to the attackers, instead restoring data from backup servers. The manual efforts combined with restoration efforts cost them approximately $70 million.  City of New Orleans—It is unclear whether the ransom was paid, but the attack cost $7 million in damages and a temporary shutdown of service  The Heritage Company—No indication of what was done specifically in the case; however, the IT recovery efforts were not successful.  Brookside—Refused to pay the ransom and had to close the business earlier than planned.

With the exception of Norsk, it appears that the companies that do not pay a ransom struggle with recovery efforts and either have a significant financial loss or even detrimental impact to business, leading to closure.

Level: Easy Section/Learning Objective: Section 4.3/Learning Objective 3 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking IT’s About Business 4.3 A Facial Recognition Failure 1.

Was the mistaken arrest of Mr. Williams the fault of the facial recognition technology itself, the process in which the technology was employed, the police investigation, or some combination of all three? Support your answer with specific examples.

ANSWER There may be some variation in response; however, students should recognize that the technology should augment police investigations. They should be using facial recognition as a tool in the investigation but not rely on it as the sole source of evidence.

Level: Easy Section/Learning Objective: Section 4.5/Learning Objective 5 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 2. Given that we badly need to replace user authentication with username and password

credentials, are you comfortable having facial recognition technology used to authenticate you?

ANSWER

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Student answers will vary.

Level: Easy Section/Learning Objective: Section 4.5/Learning Objective 5 Bloom’s Category: Application AACSB Category: Reflective Thinking 3. Refer to Chapter 14. How do we remove bias from facial recognition technology algorithms?

ANSWER Student answers will vary based on the material presented in Chapter 14.

Level: Easy Section/Learning Objective: Section 4.5/Learning Objective 5 Bloom’s Category: Application AACSB Category: Reflective Thinking

Review Questions: Before you go on…

Section 4.1 2.

Define information security.

ANSWER Information security is the protection of information and information systems from unauthorized access, use, disclosure, disruption, modification or destruction.

Level: Easy Section/Learning Objective: Section 4.1/Learning Objective 1 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 3.

Differentiate among a threat, an exposure, and a vulnerability.

ANSWER A threat to an information resource is any danger to which a system may be exposed. The exposure of an information resource is the harm, loss, or damage that can result if a threat compromises that resource. An information resource’s vulnerability is the possibility that the system will be harmed by a threat.

Level: Easy Section/Learning Objective: Section 4.1/Learning Objective 1 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

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4.

Why are the skills needed to be a hacker decreasing?

ANSWER

The reason is that the Internet contains information and computer programs called scripts that users with few skills can download and use to attack any information system connected to the Internet. (Security experts can also use these scripts for legitimate purposes, such as testing the security of various systems.)

Level: Easy Section/Learning Objective: Section 4.1/Learning Objective 1 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking Section 4.2 1. What is an unintentional threat to an information system?

ANSWER Unintentional threats include human errors, power outages, etc.

Level: Easy Section/Learning Objective: Section 4.2/Learning Objective 2 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 2. Provide examples of social engineering attacks other than the ones just discussed.

ANSWER

There are a number and have grown through the use of social networks.

Level: Easy Section/Learning Objective: Section 4.2/Learning Objective 2 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking Section 4.3 1. Why has the theft of computing devices become more serious over time?

ANSWER

Primarily due to potential of confidential data that may be stored on the devices.

Level: Easy Section/Learning Objective: Section 4.3/Learning Objective 3 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

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2. What are the three types of software attacks?

ANSWER

a. Remote attacks requiring user action b. Remote attacks needing no user action c. Attacks by a programmer developing a system Level: Easy Section/Learning Objective: Section 4.3/Learning Objective 3 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 3. Define alien software and explain why it is a serious problem.

ANSWER

Alien software is clandestine software that is installed on a computer through duplicitous methods. It typically is not as malicious as viruses, worms, or Trojan horses, but it does use up valuable system resources. In addition, it can report on Web surfing habits and other personal behavior.

Level: Easy Section/Learning Objective: Section 4.3/Learning Objective 3 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 4. What is a SCADA system? Why can attacks against SCADA system have catastrophic consequences?

ANSWER

SCADA systems are used to monitor or to control chemical, physical, and transport processes such as oil refineries, water and sewage treatment plants, electrical generators, and nuclear power plants. Essentially, SCADA systems provide the link between the physical world and the electronic world.

Level: Easy Section/Learning Objective: Section 4.3/Learning Objective 3 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking Section 4.4 1. Describe several reasons why it is difficult to protect information resources.

ANSWER - Hundreds of potential threats exist.

- Computing resources may be situated in many locations.

- Many individuals control or have access to information assets.

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- Computer networks can be located outside the organization, making them difficult to protect.

- Rapid technological changes make some controls obsolete as soon as they are installed.

- Many computer crimes are undetected for a long period of time, so it is difficult to learn from experience.

- People tend to violate security procedures because the procedures are inconvenient.

- The amount of computer knowledge necessary to commit computer crimes is usually minimal. As a matter of fact, a potential criminal can learn hacking, free, on the Internet.

- The costs of preventing hazards can be very high. Therefore, most organizations simply cannot afford to protect themselves against all possible hazards.

- It is difficult to conduct a cost-benefit justification for controls before an attack occurs because it is difficult to assess the impact of a hypothetical attack.

Level: Medium Section/Learning Objective: Section 4.4/Learning Objective 4 Bloom’s Category: Application AACSB Category: Reflective Thinking 2. Compare and contrast risk management and risk analysis.

Risk analysis involves three steps: (1) assessing the value of each asset being protected, (2) estimating the probability that each asset will be compromised, and (3) comparing the probable costs of the asset’s being compromised with the costs of protecting that asset. The organization then considers how to mitigate the risk.

In risk mitigation, the organization takes concrete actions against risks. Risk mitigation has two functions: (1) implementing controls to prevent identified threats from occurring, and (2) developing a means of recovery should the threat become a reality. There are several risk mitigation strategies that organizations can adopt. The three most common are risk acceptance, risk limitation, and risk transference.

Level: Easy Section/Learning Objective: Section 4.3/Learning Objective 3 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

Section 4.5 1. What is the single most important information security control for organizations?

ANSWER Access controls, both physical and digital.

Level: Easy Section/Learning Objective: Section 4.5/Learning Objective 5

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Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 2. Differentiate between authentication and authorization. Which one of these processes is always performed first?

ANSWER Authentication confirms the identity of the person requiring access. After the person is authenticated (identified), the next step is authorization. Authorization determines which actions, rights, or privileges the person has, based on his or her verified identity.

Authentication is done first.

Level: Easy Section/Learning Objective: Section 4.5/Learning Objective 5 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 3. Compare and contrast whitelisting and blacklisting.

ANSWER Whitelisting is a process in which a company identifies the software that it will allow to run on its computers. Whitelisting permits acceptable software to run and either prevents any other software from running or lets new software run in a quarantined environment until the company can verify its validity.

A blacklist, then, includes certain types of software that are not allowed to run in the company environment. For example, a company might blacklist peer-to-peer file sharing on its systems. In addition to software, people, devices, and websites can also be whitelisted and blacklisted.

Level: Easy Section/Learning Objective: Section 4.5/Learning Objective 5 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 4. What is the purpose of a disaster recovery plan?

ANSWER Business continuity is the chain of events linking planning to protection and to recovery. The purpose of the business continuity plan is to provide guidance to people who keep the business operating after a disaster occurs.

Level: Easy Section/Learning Objective: Section 4.5/Learning Objective 5 Bloom’s Category: Knowledge

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AACSB Category: Reflective Thinking

Discussion Questions 1. Why are computer systems so vulnerable?

ANSWER The level of complexity makes it difficult to understand all of the vulnerabilities. There are many threats, both internal and external, intentional and unintentional.

Level: Easy Section/Learning Objective: Section 4.1/Learning Objective 1 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 2. Why should information security be of prime concern to management?

ANSWER Most companies would be severely impacted if their systems were interrupted.

Level: Easy Section/Learning Objective: Section 4.2/Learning Objective 2 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 3. Is security a technical issue? A business issue? Both? Support your answer.

ANSWER Both. Technology creates security holes and allows hackers to break in, but businesses must adopt policies and controls to minimize these break-ins.

Level: Medium Section/Learning Objective: Section 4.1/Learning Objective 1 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 4. Compare information security in an organization with insuring a house.

ANSWER We pay for insurance but hope that we never have to worry about using it.

Level: Easy Section/Learning Objective: Section 4.1/Learning Objective 1 Bloom’s Category: Application AACSB Category: Reflective Thinking

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5. Why are authentication and authorization important to e-commerce?

ANSWER Authentication confirms the identity of the individual and authorization determines what they are allowed to do.

Level: Easy Section/Learning Objective: Section 4.4/Learning Objective 4 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 6. Why is cross-border cybercrime expanding rapidly? Discuss possible solutions.

ANSWER International organized crime is taking over cybercrime, which is illegal activity taking place over computer networks. The online commerce industry is not particularly willing to install safeguards that would make it harder to complete transactions. It would be possible to demand passwords or personal ID numbers for all credit card transactions. Companies are developing software and services that deliver early warnings of trouble These early-warning systems are proactive, scanning the Web for new viruses and alerting companies to the danger.

Level: Medium Section/Learning Objective: Section 4.3/Learning Objective 3 Bloom’s Category: Application AACSB Category: Reflective Thinking

7. What types of user authentication are used at your university and/or place of work? Do these measures seem to be effective? What if a higher level of authentication were implemented? Would it be worth it, or would it decrease productivity?

ANSWER Students will answer based on their environments.

Level: Medium Section/Learning Objective: Section 4.4/Learning Objective 4 Bloom’s Category: Application AACSB Category: Reflective Thinking 8. Why are federal authorities so worried about SCADA attacks?

ANSWER Federal authorities are concerned because SCADA (supervisory control and data acquisition) systems are used to monitor and control a plant or equipment in industries such as

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telecommunications, water and waste control, energy, oil and gas refining, and transportation networks.

Level: Medium Section/Learning Objective: Section 4.4/Learning Objective 4 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking Problem-solving Activities

1. A critical problem is assessing how far a company is legally obligated to go in order to

secure personal data. Because there is no such thing as perfect security (i.e., there is always more that one can do), resolving this question can significantly affect cost. a. When are security measures that a company implements sufficient to comply with the

obligations?

ANSWER Security measures are sufficient when the company has completed a comprehensive risk analysis, determined that they have covered all threats that have a reasonable likelihood of happening, and provided protection against those threats. b. Is there any way for a company to know if its security measures are sufficient? Can you

devise a method for any organization to determine if its security measures are sufficient?

ANSWER There is nothing absolute in this world of technology, knowing that some individuals consider it a challenge to see if they can break through any safeguard that is implemented. The only sure way to know is if there are no breaches. Monitoring and staying vigilant are the best ways to protect against intrusions.

Level: Medium Section/Learning Objective: Section 4.4/Learning Objective 4.4 Bloom’s Category: Analysis AACSB Category: Analytic

2.

Visit www.scambusters.org. Find out what the organization does. Learn about e-mail scams and website scams. Report your findings.

ANSWER ―ScamBusters Has Helped People Protect Themselves from Clever Internet Scams, Identity Theft and Urban Legends Since 1994‖ Students responses will vary.

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Level: Easy Section/Learning Objective: Section 1/Learning Objective 4.1 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 3.

Visit dhs.gov (Department of Homeland Security). Search the site for ―National Strategy to Secure Cyberspace,‖ and write a report on their agenda and accomplishments to date.

ANSWER Students will use the search function on the site to locate the document. It is a 76-page document that will provide material for student responses.

Level: Easy Section/Learning Objective: Section 1/Learning Objective 4.1 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 4.

Visit www.alltrustnetworks.com and other vendors of biometrics. Discover the devices they make that can be used to control access into information systems. Prepare a list of products and the major capabilities of each vendor.

ANSWER When students use the link, they can select ―merchants‖ and it will take them to a menu that will allow them to select ―Biopay technology.‖ Level: Easy Section/Learning Objective: Section 4/Learning Objective 4.4 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 5.

Software piracy is a global problem. Access the following websites: www.bsa.org and www.microsoft.com/security. What can organizations do to mitigate this problem? Are some organizations dealing with the problem better than others?

ANSWER Students should search for ―software piracy‖ after entering bsa.org and accessing any number of links on the topic to complete their assignment. The Microsoft site offers a variety of links to explore options available to organizations.

Level: Easy Section/Learning Objective: Section 3/Learning Objective 4.3 Bloom’s Category: Application AACSB Category: Reflective Thinking 6.

Investigate the Sony PlayStation Network hack that occurred in April 2011. b.

What type of attack was it?

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ANSWER It was actually two different attacks. One group slammed the servers with a major denial-of-service attack while other hackers gained access to personal information on the servers. c.

Was the success of the attack due to technology problems at Sony, management problems at Sony, or a combination of both? Provide specific examples to support your answer.

ANSWER In the letter to Congress, Sony said it took several days to determine what had happened at the Sony PlayStation Network, which consisted of approximately 130 servers and 50 software programs. Sony thinks the hackers breached 10 of its servers.

The problem was due to a combination of issues. Some involved funding issues. d. Which Sony controls failed?

ANSWER The PS3 hack is similar to many attacks on security systems. It was not really one hack, but rather an incremental series of attacks made over a period of time that successively defeat various security subsystem features via a variety of techniques. These kinds of attacks often take place over many days or weeks and use knowledge gained in each successful stage to advance to the next stage. For example, one of the earliest initiatives was a physical attack that induced glitches on the memory bus, enabling the hackers to take control of the operating system and perform additional investigations. The PS3 hack can teach designers much about how to approach and plan platform security. (http://www.edn.com/article/518212The_Sony_PlayStation_3_hack_deciphered_what_consumer_electronics_designers_can_ learn_from_the_failure_to_protect_a_billion.php) d. Could the hack have been prevented? If so, how?

ANSWER Students should have a number of suggestions, both systematic and administrative, based on how the attack took place. e. Discuss Sony’s response to the hack.

ANSWER Since the attack, new security has been implemented, the data center has been moved to an undisclosed location, and the company has created a new position: chief information security officer, directly reporting to the chief information officer of Sony Corporation.

Here are some of the new security measures: •

Added automated software monitoring and configuration management to help defend against new attacks

•

Enhanced levels of data protection and encryption

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•

Enhanced ability to detect software intrusions within the network, unauthorized access, and unusual activity patterns

•

The implementation of additional firewalls

(http://arstechnica.com/gaming/news/2011/05/hirai-update.ars) f.

Describe the damages that Sony incurred from the hack.

ANSWER Sony suffered greatly after a hacker attack at the end of April forced it to take down its PlayStation Network online service and rebuild it in a more secure manner, after intruders managed to steal personal information from all the 70+ million PSN users. (http://news.softpedia.com/news/PSN-Attack-Has-Made-Sony-Hyper-Vigilant-AboutSecurity-207544.shtml) Level: Medium Section/Learning Objective: Section 3 and 4/Learning Objective 4.3 and 4.4 Bloom’s Category: Analysis AACSB Category: Analytic 8. Investigate the Equifax hacks in 2017. a. What type of attack was it?

ANSWER Hackers took advantage of an unpatched vulnerability in their Web application server operation system (Apache). b. What actions should Equifax have taken to prevent the breaches? Provide specific

examples to support your answer.

ANSWER The Apache company disclosed the vulnerability of its software prior to the significant breach that occurred at Equifax in mid-May 2017. Equifax should have immediately repaired the vulnerability using the instructions provided by Apache, and if issues arose with the repair, there may have still been time to remediate.

c. Place yourself as a victim in the Equifax breaches. What should you do when you are

notified (or when you think) that your personal data has been compromised?

ANSWER Answers will vary by student but will likely focus on the need to further protect themselves by changing information where they can (i.e., credit cards, account passwords, etc.) and monitoring for suspicious activity. Students may note that they can access their free credit report to review credit that is associated with them and report any fraudulent activity.

d. In light of the Equifax breaches, should all consumers have the option to opt out of

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credit bureaus? Why or why not?

ANSWER Student answers will very. Some will take the position that the nature of the information being collected by the credit bureau significantly increases the risk and should not continue or should be limited further. Others will argue that it acts as a central monitoring agency in some ways and is a source to monitor fraudulent activity or unusual behavior.

Level: Medium Section/Learning Objective: Section 3 and 4/Learning Objective 4.3 and 4.4 Bloom’s Category: Analysis AACSB Category: Analytic

Closing Case – Successful Operations against Cybercrime 1.

Describe the various methods that authorities used in the vignettes in this case to stop illegal cyberactivity and apprehend suspects.

ANSWER Encrochat—Authorities monitored and investigated more than 100 million messages in realtime sent between Encrochat users, which resulted in arrests across Europe.

Microsoft—6 million domains that were likely to be used over the next two years to enable scams were provided in registries around the world so that authorities could monitor them.

WeLinkInfo—The FBI seized WeLinkInfo directly.

Department of Justice/Pornography Website—The authorities followed the trail of Bitcoin (the money) to identify who the wallets were registered to.

Department of Justice/BEC—No details to directly identify how they stopped the activity is included in the case. It may be logical to conclude sourcing the messages and potentially following the money.

Retadup—Analysts at Avast studied the command-and-control communications used by Redatup and identified the hosting to be primarily in France. They were able to identify a vulnerability, which then infected/instructed the malware to delete itself.

Level: Medium Section/Learning Objective: Section 4.4/Learning Objective 4.4 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 2.

Were these methods technical, behavioral, or a combination of both? Provide examples to support your answer.

ANSWER -

Refer back to the response in #1 for details of each. There was a combination of both used.

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Level: Medium Section/Learning Objective: Section 4.4/Learning Objective 4.4 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

Chapter 5: Data and Knowledge Management Chapter Outline 5.1 Managing Data 5.2 The Database Approach 5.3 Big Data 5.4 Data Warehouses and Data Marts 5.5 Knowledge Management 5.6 Appendix: Fundamentals of Relational Database Operations Learning Objectives 5.1 Discuss ways that common challenges in managing data can be addressed using data governance.

5.2 Discuss the advantages and disadvantages of relational databases.

5.3 Define Big Data and its basic characteristics.

5.4 Explain the elements necessary to successfully implement and maintain data warehouses.

5.5 Describe the benefits and challenges of implementing knowledge management systems in organizations.

5.6 Understand the processes of querying a relational database, entity-relationship modeling, and normalization and joins.

Teaching Tips and Strategies We all live in the information age. We all have access to more data than ever before. However, data are useless unless they help individuals find what they need. This issue becomes very clear when we try to research anything on the Internet. The problem is we usually find so much information that we have to modify our search criteria to narrow it down to something usable. We basically have to find ways to transform all of these data into information we can use without reading through hundreds of articles or going to hundreds (if not thousands) of sites. This challenge is no different from the information overload that managers experience in real-time every day.

Students face the same situation. How do they distinguish between meaningful and useless data? This chapter will provide your students with some guidelines that will hopefully help them make these decisions.

Start the chapter discussion by asking your class to recall the last time they bought something in a store.

Ask them what information they provided the cashier, either directly or indirectly. Did the casher ask for their ZIP code or phone number? How did they pay? Cash? Credit or debit card? Do they have a customer loyalty card for the store? Did they use it? Did they have to show any form of ID (i.e., driver’s license)?

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Explain that all of this and more is captured, along with information about the items they bought, in the store’s data management systems.

You can use a similar discussion to explain all the data that is collected during a single online purchase transaction made at a site such as Amazon.

Ask your students how Amazon.com can use all this data to modify its advertising and to contact customers who have not made any recent purchases. This demonstration can illustrate to your students how much data is being collected about them when they make an online purchase. The most important point, however, is how companies can turn that data into information.

Blackboard/CMS suggestions I do not have any specific suggestions other than to repeat those I listed in previous chapters.

Opening Case: Our Genetic Data: A Double-Edged Sword 4.

Should we be willing to sacrifice our privacy to solve crimes? In other words, does the end justify the means?

ANSWER Student answers will vary but opinions should be based on logic.

Level: Medium Section/Learning Objective: Section 5.2/Learning Objective 2 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

5.

You are a candidate for a position at a company. Discuss the positive and negative consequences of that company having access to your DNA results.

ANSWER Student answers will vary. Likely the disadvantages presented will be based on bias profiling of the company. While an advantage could be the ability for the company to see the candidate as low risk for employer sponsored health plans or other benefits. .

Level: Medium Section/Learning Objective: Section 5.1/Learning Objective 5.1 Bloom’s Category: Analysis AACSB Category: Analytic 6.

Would you be willing to have your DNA results made available to law enforcement agencies to help in solving a criminal case? Why or why not? Support your answer.

ANSWER Student answers will vary.

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Level: Medium Section/Learning Objective: Section 5.1/Learning Objective 5.1 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

IT’s About Business 5.1 What to Do with All that Data?

1. Provide examples of the structured data that Enigma collects and analyzes.

ANSWER -

Structured data in the case includes all of the publicly available data listed, which although not stated, appears to be in data repositories.

Level: Medium Section/Learning Objective: Section 5.2/Learning Objective 5.2 Bloom’s Category: Application AACSB Category: Reflective Reasoning 2. Provide examples of unstructured data that Enigma collects and analyzes.

ANSWER Students will need to assume that the ―hard-to-find‖ data is unstructured, requiring collection from websites and underlying documents and aligning them for interpretation. Further examples include the comparisons that are being performed between datasets for financial services and insurers.

Level: Medium Section/Learning Objective: Section 5.2/Learning Objective 5.2 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

IT’s About Business 5.2 Data Lakes 3.

Discuss the advantages and disadvantages of enterprise data warehouses.

ANSWER Advantages: - Suited for well-defined data - End users can access needed data quickly and easily through Web browsers because these data are located in one place - End users can conduct extensive analysis with data in ways that were not previously possible - End users can obtain a consolidated view of organizational data Disadvantages:

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-

Lack of flexibility and limited ability to answer questions due to the need for data to conform to prespecified data model Difficult to manage new sources of data, especially unstructured forms (i.e., Internet of Things, social media data) Overall rigidity that does not effectively support Big Data given the variety, velocity, and volume associated with it

Level: Medium Section/Learning Objective: Section 5.4/Learning Objective 5.4 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 4.

Describe the advantages and disadvantages of data lakes.

ANSWER Data lakes store all of an organization’s data regardless of the source or format in a central repository and can accommodate both structured and unstructured data. Unlike an EDW, the data is not transformed before it is added to the data lake and only needs to be modelled when it is required for use. Advantages include: - Unlimited types of data - Data does not need to be defined in advance; allows for flexibility - Can query the data in multiple ways, providing flexibility and an endless array of questions that could be answered - Provides a single, unified view of the data across the organization Disadvantages: - More expensive - Because data can be stored in any format, it could lead to issues in use - Increased risk in storage (i.e., sensitive data and the need to protect it) - Could create latency issues Level: Hard Section/Learning Objective: Section 5.4/Learning Objective 5.4 Bloom’s Category: Analysis AACSB Category: Analytic 5.

Why don’t organizations use enterprise data warehouse for managing Big Data?

ANSWER EDWs are too rigid to be effective with Big Data, with its huge data volumes, broad variety of data, and high data velocity. As a result of these problems, organizations have begun to realize that EDWs cannot meet all of their business needs.

Level: Medium Section/Learning Objective: Section 5.4/Learning Objective 5.4 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

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Review Questions: Before You Go On… Section 5.1 1.

What are some of the difficulties involved in managing data?

ANSWER • Organizations accumulate huge quantities of data that they must keep for a long time • Data are scattered in multiple locations throughout the organization • External data must be included to support decision-making • Data security, quality, and integrity are essential but are also difficult to ensure Level: Easy Section/Learning Objective: Section 5.1/Learning Objective 5.1 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 2.

Define data governance, master data, and transaction data.

ANSWER Data governance is an approach to managing information across an entire organization. It involves a formal set of business processes and policies that are designed to ensure that data are handled in a certain well-defined fashion. That is, the organization follows unambiguous rules for creating, collecting, handling, and protecting its information. The objective is to make information available, transparent, and useful for the people authorized to access it from the moment it enters an organization until it becomes outdated and is deleted.

Master data are a set of core data—such as customer, product, employee, vendor, and geographic location—that span all of the enterprise’s information systems. It is important to distinguish between master data and transaction data.

Transaction data, which are generated and captured by operational systems, describe the activities, or transactions, of the business. In contrast, master data involve multiple transactions and are used to categorize, aggregate, and evaluate the transaction data.

Level: Easy Section/Learning Objective: Section 5.1/Learning Objective 5.1 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking Section 5.2 5.

What is a data model?

ANSWER A data model is a diagram that represents entities in the database and their relationships to one another.

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Level: Easy Section/Learning Objective: Section 5.2/Learning Objective 5.2 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 6.

What is a primary key? A secondary key?

ANSWER A primary key is the field in a record that uniquely identifies that record so that it can be retrieved, updated, and sorted. A secondary key is any other field that has some identifying information but typically does not identify the specific record.

Level: Easy Section/Learning Objective: Section 5.2/Learning Objective 5.2 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking •

What is an entity? An attribute? An instance?

ANSWER - An entity is a person, a place, a thing, or an event about which information is maintained.

- Entities have attributes, or properties, that describe the entity’s characteristics.

- An instance is related to an entity. It refers to each row in a relationship table, which is a specific, unique representation of the entity.

Level: Easy Section/Learning Objective: Section 5.2/Learning Objective 5.2 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 4. What are the advantages and disadvantages of relational databases?

ANSWER Relational databases provide great flexibility. If the overall design is too complex, however, it can slow down search and access times.

Level: Easy Section/Learning Objective: Section 5.2/Learning Objective 5.2 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking Section 5.3 1.

Define Big Data.

ANSWER Big Data refers to the vast and constantly increasing amounts of data that modern organizations need to capture, store, process, and analyze.

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Big Data is considered a buzzword, or catchphrase, that is used to describe a massive volume of both structured and unstructured data that is so large that it’s difficult to process using traditional database and software techniques.

While the term may seem to reference the volume of data, that isn’t always the case. The term Big Data may refer to the technology (which includes tools and processes) that an organization requires to handle the large amounts of data and storage facilities.

Level: Easy Section/Learning Objective: Section 5.3/Learning Objective 5.3 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 2.

Describe the characteristics of Big Data.

ANSWER Volume: Although the sheer volume of Big Data presents data management problems, it also makes Big Data incredibly valuable to the organization.

Velocity: The rate at which data flow into an organization is rapidly increasing. Velocity is critical because it increases the speed of the feedback loop between a company and its customers.

Variety: Traditional data formats tend to be structured, relatively well described, and change slowly.

Traditional data include financial market data, point-of-sale transactions, and much more. In contrast, Big Data formats change rapidly. They include satellite imagery, broadcast audio streams, digital music files, Web page content, scans of government documents, and comments posted on social networks.

Level: Easy Section/Learning Objective: Section 5.3/Learning Objective 5.3 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 3.

Describe how companies can use Big Data to gain competitive advantage.

ANSWER Product Development: Big Data can help capture customer preferences and put that information to work in designing new products. In this area, both online companies and traditional companies are using Big Data to achieve competitive advantage.

Operations: For years, companies have been using information technology to make their operations more efficient. They can now use Big Data to capture much more information from a wealth of new sources.

Marketing: Marketing managers have long used data to better understand their customers and to target their marketing efforts more directly. Today, Big Data enables marketers to craft much more personalized messages.

Level: Easy Section/Learning Objective: Section 5.3/Learning Objective 5.3 Bloom’s Category: Comprehension

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AACSB Category: Reflective Thinking Section 5.4 1. Differentiate between data warehouses and data marts.

ANSWER A data warehouse is a repository of historical data that are organized by subject to support decision makers in the organization.

A data mart is a low-cost, scaled-down version of a data warehouse that is designed for end-users’ needs in a small organization, a strategic business unit (SBU), or a department in a large organization.

Data marts can be implemented more quickly than data warehouses, often in less than 90 days.

Further, they support local rather than central control by conferring power on the using group.

Typically, groups that need a single or a few BI applications require only a data mart, rather than a data warehouse.

Data warehouses and data marts are read-only, and the extra processing is eliminated because data already in the data warehouse are not updated.

Level: Easy Section/Learning Objective: Section 5.4 /Learning Objective 5.4 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 2. Describe the characteristics of a data warehouse.

ANSWER Organized by business dimension or subject: Data are organized by subject (for example, by customer, vendor, product, price level, and region). This arrangement is different from transactional systems, where data are organized by business process, such as order entry, inventory control, and accounts receivable.

Use online analytical processing: Typically, organizational databases are oriented toward handling transactions. That is, databases use online transaction processing (OLTP), where business transactions are processed online as soon as they occur. The objectives are speed and efficiency, which are critical to a successful Internet-based business operation. In contrast, data warehouses and data marts, which are designed to support decision makers rather than OLTP, use online analytical processing. Online analytical processing (OLAP) involves the analysis of accumulated data by end users.

Integrated: Data are collected from multiple systems and are integrated around subjects. For example, customer data can be extracted from internal (and external) systems and integrated around a customer identifier to create a comprehensive view of the customer.

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Time variant: Data warehouses and data marts maintain historical data. Unlike transactional systems, which maintain only recent data (such as for the last day, week, or month), a warehouse or mart can store years of data. Companies need historical data to detect trends, deviations from trends, and longterm relationships.

Nonvolatile: Data warehouses and data marts are nonvolatile, meaning only IT professionals can change or update the data. Consequently, the warehouse or mart reflects history, which is critical for trend analysis. Warehouses and marts are updated, but through IT-controlled load processes rather than by users.

Multidimensional: Recall that relational databases store data in two-dimensional tables. In contrast, data warehouses and marts store data in a multidimensional structure, which consists of more than two dimensions. A common representation for this structure is the data cube.

Level: Easy Section/Learning Objective: Section 5.4/Learning Objective 5.4 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 3. What are three possible architectures for data warehouses and data marts in an organization?

ANSWER • • 2.

Central enterprise data warehouse (without data marts) Independent data marts Hub and spoke

Level: Easy Section/Learning Objective: Section 5.4/Learning Objective 5.4 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking Section 5.5

2.

What is knowledge management?

ANSWER Knowledge management is a process that helps organizations identify, select, organize, disseminate, transfer, and apply information and expertise that are a part of the organization’s memory and that typically reside within the organization in an unstructured manner.

Level: Easy Section/Learning Objective: Section 5.5/Learning Objective 5.5 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 3.

What is the difference between tacit knowledge and explicit knowledge?

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ANSWER Explicit knowledge is the more objective, rational, and technical type of knowledge. It is knowledge that has been codified in a form that can be distributed to others or transformed into a process or strategy. Tacit knowledge is the cumulative store of the experiences, insights, expertise, know-how, trade secrets, skill sets, understanding, and learning that an organization possesses. Tacit knowledge is highly personal and unstructured and is hard to formalize.

Level: Easy Section/Learning Objective: Section 5.5/Learning Objective 5.5 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 4.

Describe the knowledge management system cycle.

ANSWER The knowledge management system cycle involves six steps that are performed iteratively as knowledge is dynamically refined over time. The steps are: 7. create knowledge 8. capture knowledge 9. refine knowledge 10. store knowledge 11. manage knowledge 12. disseminate knowledge Level: Easy Section/Learning Objective: Section 5.5/Learning Objective 5.5 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking Section 5.6 1.

What is structured query language?

ANSWER SQL is used for the interacting with a database. SQP allows users perform complicated searches by using relatively simple statements or key words.

Level: Easy Section/Learning Objective: Section 5.6/Learning Objective 5.6 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 2.

What is query by example?

ANSWER Using QBE, the user fills out a grid or template (i.e., a form) to construct a simple or description of the data desired. These queries can be constructed quickly and easily by using drag-and-drop features in a DBMS. Level: Easy

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Section/Learning Objective: Section 5.6/Learning Objective 5.6 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 3.

What is an entity? An attribute? A relationship?

ANSWER Entity: A person, place, or thing that can be identified in the user’s working environment Attribute or property: Describe the entities characteristics Relationship: Represents the association between entities Level: Easy Section/Learning Objective: Section 5.6/Learning Objective 5.6 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 4.

Describe one-to-one, one-to-many, and many-to-many relationships.

ANSWER One-to-one relationships (1:1) are relationships where a single-entity instance of one type is related to a single-entity instance of another type.

One-to-many relationships (1:M) are relationships where a single-entity instance of one type is related to a multiple-entity instances of another type.

Many-to-many relationships (M:M) are relationships where a multiple-entity instances of one type is related to multiple-entity instances. However, most DBMS do not support this type of relationship.

Level: Easy Section/Learning Objective: Section 5.6/Learning Objective 5.6 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 5.

What is the purpose of normalization?

ANSWER Normalization is a method for analyzing and reducing a RDB to its most streamlined form to ensure minimum redundancy, maximize data integrity, and optimizing processing performance. (Basically, it is a methodology to reduce or eliminate redundancies in the data base.)

Level: Easy Section/Learning Objective: Section 5.6/Learning Objective 5.6 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 6.

Why do we need the join operation?

ANSWER

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Join operations are used to combine records from two or more tables in a database to obtain information that is located in different tables in that database.

Level: Easy Section/Learning Objective: Section 5.6/Learning Objective 5.6 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking Discussion Questions e.

Is Big Data really a problem on its own, or are the use, control, and security of the data the true problems? Provide specific examples to support your answer.

ANSWER As mentioned in the overview, during the latter part of 2013, there was a lot being discussed about the amounts of data being collected by companies and government agencies. There were also a number of data breaches (Wikileaks, Edward Snowden, etc.) Ask for your student’s opinions, both pros and cons. Ask them to support their answers.

Level: Medium Section/Learning Objective: Section 5.3/Learning Objective 3 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking f.

What are the implications of having incorrect data points in your Big Data? What are the implications of incorrect or duplicated customer data? How valuable are decisions that are made based on faulty information derived from incorrect data?

ANSWER Incorrect data points have the potential of causing the information that is generated to be incorrect, possibly leading to incorrect conclusions and resulting business decisions. Incorrect or duplicated data have the potential to do the same thing. Overall, this has the potential of following the ―garbage in, garbage out‖ model.

Level: Medium Section/Learning Objective: Section 5.3/Learning Objective 3 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking g.

Explain the difficulties involved in managing data.

ANSWER Because the amount of data in organizations is so large and is stored in different systems, databases, formats, and languages, keeping them secure and maintaining their integrity are difficult.

Level: Medium Section/Learning Objective: Section 5.2/Learning Objective 2 Bloom’s Category: Analytical AACSB Category: Reflective Thinking

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h.

What are the problems associated with poor-quality data?

ANSWER They include customer relationship problems, sales problems, and poor decisions based on flawed data.

Level: Medium Section/Learning Objective: Section 5.2/Learning Objective 2 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking i.

What is master data management? What does it have to do with high-quality data?

ANSWER Master data management is a process that provides companies with the ability to store, maintain, exchange, and synchronize a consistent, accurate, and timely ―single version of the truth‖ for the company’s core master data. It ensures that there is one ―source of truth‖ for the data that are being accessed.

Level: Medium Section/Learning Objective: Section 5.2/Learning Objective 2 Bloom’s Category: Application AACSB Category: Reflective Thinking j.

Explain why master data management is so important in companies that have multiple data sources.

ANSWER The format and meaning of the data can be different in different data sources. These disparate formats need to be reconciled for master data management.

Level: Medium Section/Learning Objective: Section 5.2/Learning Objective 2 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking k.

Describe the advantages and disadvantages of relational databases.

ANSWER The major advantage of relational databases is their great flexibility. Other advantages are ease of design, maintenance, and query and reporting capability. If the overall design is too complex, however, it can slow down search and access times.

Level: Easy Section/Learning Objective: Section 5.2/Learning Objective 2 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking l.

Explain why it is important to capture and manage knowledge.

ANSWER

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Knowledge is information that is contextual, relevant, and actionable. The goal of knowledge management is to be aware of individual and collective knowledge so that the organization makes the most effective use of the knowledge. By capturing and managing knowledge, an organization makes the expertise of its human capital widely accessible.

Level: Medium Section/Learning Objective: Section 5.5/Learning Objective 5 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking m. Compare and contrast tacit knowledge and explicit knowledge.

ANSWER Explicit knowledge is the more objective, rational, and technical type of knowledge. It is knowledge that has been codified in a form that can be distributed to others or transformed into a process or strategy. Tacit knowledge is the cumulative store of the organization’s experiences, insights, expertise, know-how, trade secrets, skill sets, understanding, and learning. Tacit knowledge is highly personal and unstructured and is hard to formalize.

Level: Medium Section/Learning Objective: Section 5.5/Learning Objective 5 Bloom’s Category: Analysis AACSB Category: Reflective Thinking 10. Draw the entity–relationship diagram for a company that has departments and employees. In this company, a department must have at least one employee, and company employees may work in only one department.

ANSWER A possible answer is:

Level: Medium Section/Learning Objective: Section 5.6/Learning Objective 6 Bloom’s Category: Analysis AACSB Category: Analytic 11. Draw the entity–relationship diagram for library patrons and the process of checking out books.

ANSWER One possible answer is:

Level: Medium

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Section/Learning Objective: Section 5.6/Learning Objective 6 Bloom’s Category: Analysis AACSB Category: Analytic 12. You are working at a doctor’s office. You gather data on the following entities: PATIENT, PHYSICIAN, PATIENT DIAGNOSIS, and TREATMENT. Develop a table for the entity PATIENT VISIT. Decide on the primary keys and/or foreign keys that you want to use for each entity.

ANSWER Have your students develop a database diagram for this question based on the information provided.

Level: Hard Section/Learning Objective: Section 5.6/Learning Objective 6 Bloom’s Category: Analysis AACSB Category: Analytic 12. Read this article: S. Kliff and M. Sanger-Katz, ―Bottleneck for U.S. Coronavirus Response: The Fax Machine,‖ New York Times, July 13, 2020. Describe which of the problems in managing data (section 5.1) are being emphasized by the COVID-10 pandemic.

ANSWER Have students report their findings.

Level: Hard Section/Learning Objective: Section 5.6/Learning Objective 6 Bloom’s Category: Analysis AACSB Category: Analytic

Problem-solving Activities 1.

Access various employment websites (e.g., www.monster.com and www.dice.com) and find several job descriptions for a database administrator. Are the job descriptions similar? What are the salaries offered in these positions?

ANSWER Students will prepare a report of salaries for types of database administrator positions based on the roles and responsibilities and the technologies involved.

Level: Easy Section/Learning Objective: Section 5.2/Learning Objective 2 Bloom’s Category: Analysis AACSB Category: Analytic 2.

Access the websites of several real estate companies. Find the sites that take you through a step-bystep process for buying a home, that provide virtual reality tours of homes in your price range (say, $200,000 to $250,000) and location, that provide mortgage and interest rate calculators, and that offer financing for your home. Do the sites require that you register to access their services? Can you

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request that an e-mail be sent to you when properties in which you might be interested become available? How does the process outlined influence your likelihood of selecting this company for your real estate purchase?

ANSWER Visit various local agent websites and explore their features. Sign up for e-mail on real estate searches and news.

Level: Easy Section/Learning Objective: Section 5.2/Learning Objective 2 Bloom’s Category: Analysis AACSB Category: Analytic 3.

It is possible to find many websites that provide demographic information. Access several of these sites and see what they offer. Do the sites differ in the types of demographic information they offer?

If so, how? Do the sites require a fee for the information they offer? Would demographic information be useful to you if you wanted to start a new business? If so, how and why?

ANSWER Neilson (www.nielsen.com), and GeoLytics (www.geolytics.com) are example sites. Have students compare theses sites and choose one they would use if they were to start a business. Business planning and identifying potential customers would be a way to use this information.

Level: Medium Section/Learning Objective: Section 5.3/Learning Objective 3 Bloom’s Category: Analysis AACSB Category: Analytic •

Search the web for uses of Big Data in homeland security. Specifically, read about the spying by the U.S. National Security Agency (NSA). What role did technology and Big Data play in this questionable practice?

ANSWER Have your students research and report their findings.

Level: Medium Section/Learning Objective: Section 5.3/Learning Objective 3 Bloom’s Category: Analysis AACSB Category: Analytic •

Search the Web for the article ―Why Big Data and Privacy Are Often at Odds.‖ What points does this article present concerning the delicate balance between shared data and customer privacy?

ANSWER Have your students research and report their findings.

Level: Medium Section/Learning Objective: Section 5.3/Learning Objective 3 Bloom’s Category: Analysis AACSB Category: Analytic

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g.

Access the websites of IBM (www.ibm.com), Microsoft (http://www.microsoft.com), and Oracle (www.oracle.com), and trace the capabilities of their latest data management products, including Web connections.

ANSWER Have your students report their findings.

Level: Medium Section/Learning Objective: Section 5.2/Learning Objective 2 Bloom’s Category: Analysis AACSB Category: Analytic h.

Access the website of the Gartner Group (www.gartner.com). Examine the company’s research studies pertaining to data management. Prepare a report on the state of the art.

ANSWER Have your students report their findings.

Level: Medium Section/Learning Objective: Section 5.4/Learning Objective 4 Bloom’s Category: Analysis AACSB Category: Analytic

i.

Diagram a knowledge management system cycle for a fictional company that sells customized Tshirts to students.

ANSWER Have your students make up some facts about the fictional company for this question. Then have them (or you) diagram that company’s knowledge management system.

Level: Medium Section/Learning Objective: Section 5.5/Learning Objective 5 Bloom’s Category: Analysis AACSB Category: Analytic Closing Case: The Democratic Party Upgrades Its Data Repository and Its Data 1.

Are the data contained in the data warehouse Big Data? Provide specific examples to support your answer.

ANSWER Yes. The data warehouse is collecting and storing a significant amount of data from across the Democratic party and other political groups.

Level: Easy Section/Learning Objective: Section 5.3/Learning Objective 3 Bloom’s Category: Application AACSB Category: Reflective Thinking

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2. Are the data contained in the Data Warehouse structured? Provide specific examples to support your answer.

ANSWER It appears that there is a mix of structured and unstructured data based on the case facts. Structured data includes the demographic and geographic details of voters and previous voting behavior, whereas the unstructured data includes the modeling tool and scoring system.

Level: Easy Section/Learning Objective: Section 5.2/Learning Objective 5.2 Bloom’s Category: Application AACSB Category: Reflective Thinking 3. Describe another application that the Democratic Party could develop for the data warehouse.

ANSWER Answers will vary by student.

Level: Medium Section/Learning Objective: Section 5.3/Learning Objective 5.3 Bloom’s Category: Analysis AACSB Category: Analytic Chapter 6: Telecommunications and Networking

Chapter Outline 6.1 What Is a Computer Network?

6.2 Network Fundamentals 6.3 The Internet and the World Wide Web 6.4 Network Applications: Discovery 6.5 Network Applications: Communication 6.6 Network Applications: Collaboration 6.7 Network Applications: Educational Learning Objectives 6.1 Compare and contrast the two major types of networks.

6.2 Describe the wireline communications media and transmission technologies.

6.3 Describe the most common methods for accessing the Internet.

6.4 Explain the impact that discovery network applications have had on business and everyday life.

6.5 Explain the impact that communication network applications have had on business and everyday life.

6.6 Explain the impact that collaboration network applications have had on business and everyday life.

6.7 Explain the impact that educational network applications have had on business and everyday life.

Teaching Tips and Strategies

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As telecommunications and network technology continues to advance, business models for many corporations also evolving. Businesses have been able to reduce telephone staff because their customers can now access their accounts and place orders online 24/7/365. This not only increases customer satisfaction (no longer have to wait on hold or have to have someone else tell you what your account balance is) it also reduces customer support costs for these businesses.

This chapter is designed to help your students understand the importance of telecommunications to the business process. You could start by discussing how students connect their laptop, tablet, smartphone, or other devices to your campus network. If possible (and if your campus still has them), discuss how the computers in the computer lab are connected to the LAN, which is connected to the campus network, which is connected to your school’s Internet provider, etc.

After the students have a basic understanding of LANs, move the discussion toward their experiences using the Internet at their home, apartment, or dorm room. Most students have access to a high-speed connection where they live. (In August 2013, a home broadband report from the Pew Internet & American Life Project found that 3 percent of American adults were still using dial-up to access the Internet at home.)

Ask your students who use a cable-TV provider as their Internet provider if their Internet connections ever slow down. Explain the reason for the periodic slowdowns is that they are using a shared connection verses a dedicated connection like DSL. With a shared connection, as more users are accessing the Internet and network at the same time, connections begin to slow due to the available bandwidth being used up. Ask if any of your students notice if their at-home connections seem to be slower than other times of the day, week, or semester. Ask if any of the times might correlate with the times more students might be online or people are at home?

You could wrap up the discussion regarding bandwidth by explaining to students the importance of a LAN to a business’s offices, retail, and warehouses operations. Students seem to relate to LANs because most of them have used them, whether they know it or not.

Consider relating the creation of the Interstate system (i.e., Eisenhower Interstate System) started in the 1950s with the creation of the networks that have evolved into what we now know as the Internet. (Both were originally created to support the military in the event of an attack on the US. The reason the Internet didn’t become popular until three decades later was due to lack of the advancements in telecommunications and networks that made it possible. We now have a global economy, and much of its success is directly related to telecommunications and the Internet.

Multinational companies can now know the sales or daily operations at their various global locations in real time. The advent of e-mail has changed the way employees interact. Two decades ago, employees communicated mostly in the region that they worked. To distribute information, the corporate office would send faxes or memos via the postal service. However, one of the main problems was that the information was now distributed to employees at all locations. This in turn caused some employees to not know this information existed, not to mention the time and cost involved in this process.

Students need to understand that in today’s business environment companies are networked together and communicate via e-mail, streaming video, and other electronic media. Through the use of electronic communications, today’s businesses can communicate with their customers, suppliers, and offices across town and around the world.

Blackboard/CMS

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Blackboard is an Internet-based system, so your online classes should be able to better relate to the concept of networks and data communications.

One of the problems I have found with this chapter when taught online is visually getting across concepts.

Wiley does provide some examples on this book’s site. You can also find some short training videos on search sites such as Google and Yahoo!.

Opening Case: The Splinternet •

What are the advantages of the splinternet to a nation? Provide examples to support your answer.

ANSWER The main advantage of the splinternet is that it aligns the use of digital activities to what is recognized as legal by a specific jurisdiction. It can also impose the preferred cultural norms to countries and groups that expect these to be adhered to due to their political and societal systems.

Level: Easy Section/Learning Objective: Section 6.3/Learning Objective 6.3 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking •

What are disadvantages of the splinternet to a nation? Provide examples to support your answer.

ANSWER Disadvantages could manifest in restricting the ability to operate internationally, or the ability to adhere to complex compliance laws. In addition, national citizens are limited in their use. They do not have the advantage to freely choose content they are interested in for personal or business reasons.

Level: Easy Section/Learning Objective: Section 6.3/Learning Objective 6.3 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking Bloom’s Category: Analysis AACSB Category: Analytic •

What are advantages of the splinternet to you as an individual? Provide examples to support your answer.

ANSWER: Student answers will vary.

Level: Easy Section/Learning Objective: Section 6.3/Learning Objective 6.3 Bloom’s Category: Analysis AACSB Category: Analytic •

What are disadvantages of the splinternet to you as an individual? Provide examples to support your answer.

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ANSWER: Student answers will vary.

Level: Easy Section/Learning Objective: Section 6.3/Learning Objective 6.3 Bloom’s Category: Analysis AACSB Category: Analytic

IT’s About Business 6.1 The Surface Web, the Deep Web, and the Dark Web 5.

Discuss the advantages and disadvantages of the surface Web.

ANSWER Advantages: - Allows us to search for and exchange information - Enables e-commerce Disadvantages: - Tracking of user data and use of cookies - Sharing of user data

Level: Easy Section/Learning Objective: Section 6.3/Learning Objective 6.3 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 6.

Discuss the advantages and disadvantages of the deep Web.

ANSWER: Advantages: - Requires credentials to access (better protection) Disadvantages: - Could be a hiding place for illegal activity or other untracked communication

Level: Easy Section/Learning Objective: Section 6.3/Learning Objective 6.3 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 7.

Discuss the advantages and disadvantages of the Dark Web..

ANSWER Advantages: - Can be used for protection for significant security activities (i.e., for the UN, news organizations) - Used by corporations and law enforcement agencies to monitor and search for stolen data and compromised accounts, and hunting criminals

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Disadvantages: - An anonymous area to engage in criminal activity Level: Easy Section/Learning Objective: Section 6.3/Learning Objective 6.3 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

IT’s About Business 6.2 The Evolution of the World Wide Web 6.

Trace the evolution of the Web for you personally along these dimensions: (1) ease of use, (2) overall usefulness, and (3) privacy concerns.

ANSWER Student answers will vary.

Level: Medium Section/Learning Objective: Section 6.3/Learning Objective 6.3 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 7.

Would you use Inrupt, if it were available? Why or why not? Support your answer.

ANSWER Answers will vary by student.

Level: Easy Section/Learning Objective: Section 6.3/Learning Objective 3 Bloom’s Category: Analysis AACSB Category: Analytic

IT’s About Business 6.3 Rolls-Royce Aerospace Collaborates with Its Airline Customers 1. Describe the change in Rolls-Royce’s business model from 2000 to 2020.

ANSWER Rolls-Royce’s market share increased from about 5 percent of the wide-body-aircraft market in 2000 to more than 50 percent of that market in 2020. The business model, TotalCare, changed from a collaboration with customers and focus on collecting airline data to building a more ―intelligent‖ product.

The engine is equipped with sensors and allows the company to monitor, map, and virtualize it. The engines are connected, contextually aware, and comprehending.

Level: Easy Section/Learning Objective: Section 6.6/Learning Objective 6.6 Bloom’s Category: Comprehension

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AACSB Category: Reflective Thinking 2. Discuss the impact of information technologies on the change in Rolls-Royce’s business model.

ANSWER Three areas are highlighted in the case: 1) Connected: There is a transfer of data from the engine to the RR operational center and used to monitor and evaluate performance so that proactive improvements can be made, rather than reactive maintenance.

2) Contextually aware: Software that helps airlines plan flights more effectively based on atmospheric conditions.

3) Comprehending: New software that uses humidity data for every major airport. The data is then used by the airlines to adjust their maintenance schedules.

Level: Easy Section/Learning Objective: Section 6.6/Learning Objective 6.6 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

3. Refer to Chapter 2. Would you consider Rolls-Royce’s digital twins and IntelligentEngine to be strategic systems for the manufacturer? Why or why not? Support your answer.

ANSWER: Yes, they position the company to be not only the provider of a product, but also enable customers to succeed through data exchange and support in maintaining the equipment. This exchange of data and the resulting information will help position RR as a provider of service after the delivery of the product for airlines. That is important because it strategically positions them as a partner and will likely set them apart for some time compared to the competition (as is evidenced via market-share growth). The use of RRs product also helps with efficiency for airlines through flight routes and cost effectiveness through proactive maintenance.

Level: Easy Section/Learning Objective: Section 6.6/Learning Objective 6.6 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

Before you go on… Review Questions

Section 6.1

1. What are the primary business reasons for using networks?

ANSWER

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Networks are used to share devices and data, and to provide connectivity between computers.

Level: Easy Section/Learning Objective: Section 6.1/Learning Objective 1 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking

2. What is the difference between LANs and WANs? ANSWER When businesses have to transmit and receive data beyond the confines of the local area network they must use a wide area network, which connects multiple LANs and is supported by common carriers such as telephone companies and the Internet.

Level: Easy Section/Learning Objective: Section 6.1/Learning Objective 1 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking

3. Describe an enterprise network.

ANSWER Organizations connect multiple LANs and may have multiple WANs, which are interconnected to form an enterprise network.

Level: Easy Section/Learning Objective: Section 6.1/Learning Objective 1 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking

Section 6.2 5.

Compare and contrast the three wireline communications channels.

ANSWER Twisted pair is the most prevalent form, inexpensive, but slow and subject to interference.

Coaxial cable is less susceptible to electrical interference and can carry more data. It is more expensive than twisted pair and more difficult to work with because it is inflexible.

Fiber optics are expensive, but much faster than either of the others. They are more fragile and have a problem with signal strength over a long distance.

Level: Easy Section/Learning Objective: Section 6.2/Learning Objective 2 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 6.

Describe the various technologies that enable users to send high-volume data over any network.

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ANSWER • ISDN is an older international telephone standard that allows users to transmit voice, image, video, and data simultaneously.

• DSL provides high-speed digital data transmission from homes and businesses over existing telephone lines. Special modems are required to handle the digital transmission over analog lines.

• ATM permits almost unlimited bandwidth. It currently requires fiber-optic cable, therefore is more expensive.

• SONET is an interface standard for transporting digital signals over fiber-optic lines to integrate transmission from multiple vendors.

13. T-Carrier is a digital transmission system that defines circuits that operate at different rates.

Level: Medium Section/Learning Objective: Section 6.2/Learning Objective 2 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 7.

Describe the ethernet and TCP/IP protocols.

ANSWER Ethernet is a gigabit per second protocol. The distinguishing characteristic of the TCP/IP protocol is that each transmission is broken into packets, transmitted and then reassembled at the other end.

Level: Easy Section/Learning Objective: Section 6.2/Learning Objective 2 Bloom’s Category: AACSB Category:

Section 6.3 7.

Describe the various ways that you can connect to the Internet.

ANSWER There are several ways to access the Internet: • By way of your university or company LAN • By opening an account with an ISP • By way of internet kiosks n. By cell phones or smartphone Level: Easy Section/Learning Objective: Section 6.3/Learning Objective 3 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 8.

Identify each part of an Internet address.

ANSWER Each computer has an address and IP address composed of 4 sets of numbers. Easier to remember though, is the address consisting of the domain name, top-level domain name, and the particular machine on which the site resides.

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Level: Easy Section/Learning Objective: Section 6.3/Learning Objective 3 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 3.

Describe the difference between the Internet and the World Wide Web.

ANSWER The Internet is a global network of computer networks, using a common communications protocol, TCP/IP. The World Wide Web is a system that stores, retrieves, formats, and displays information accessible through a browser. It is a subset of the Internet.

Level: Easy Section/Learning Objective: Section 6.3/Learning Objective 3 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 8.

What are the functions of browsers?

ANSWER Browsers provide a graphical front-end that enables users to point and click their way across the Web. They are software applications that provide a means of universal access.

Level: Easy Section/Learning Objective: Section 6.3/Learning Objective 3 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking Section 6.4 1. Differentiate between search engines and metasearch engines.

ANSWER A search engine is a computer program that searches for specific information by keyword(s) and then reports the results. It maintains an index of billions of Web pages. It uses that index to find pages that match a set of user-specified keywords.

Metasearch engines search multiple search engines at once then integrate the findings to answer the user queries.

Level: Easy Section/Learning Objective: Section 6.4/Learning Objective 4 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 2. What are some reasons why publication of material in a number of languages is so important?

ANSWER Due to the global nature of the Internet, multilingual websites are a competitive necessity for companies.

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Level: Easy Section/Learning Objective: Section 6.4/Learning Objective 4 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 3. Describe the various reasons that portals are useful.

ANSWER A portal is a Web-based, personalized gateway to information and knowledge that provides relevant information from different IT systems and the Internet using advanced search and indexing techniques.

Portal are useful in that it makes it easier to find needed information, and control access based on user type, interest, industry, etc.

Level: Easy Section/Learning Objective: Section 6.4/Learning Objective 4 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking Section 6.5 1. Discuss the advantages and disadvantages of e-mail.

ANSWER Advantages: - It is generally tied to the means of corporate revenue Disadvantages: - The amount of e-mail received by managers has become overwhelming - Loss of productivity due to high volume Level: Easy Section/Learning Objective: Section 6.5/Learning Objective 5 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 2. Why are many companies bringing their call centers back to the United States?

ANSWER - They felt they had less control of the operation when it was overseas. They were dependent on the vendor company to uphold the company’s standards, such as for service.

- Language difficulties that, at times, created communications problems - Companies that handle sensitive information risk breaching customer confidentiality and security - Call center reps usually work for multiple companies. Therefore they might not deliver service at a level the company requires.

Level: Easy Section/Learning Objective: Section 6.5/Learning Objective 5

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Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 3. Describe Voice-over-Internet Protocol (VoIP).

ANSWER Voice transmissions (phone calls) are treated as just data over the Internet. Your analog voice signal from your phone is digitized, sectioned into packets, and then transmitted over the Internet. The conversion from digital to analog is done by the phone at the other end of your call.

Level: Easy Section/Learning Objective: Section 6.5/Learning Objective 5 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 4. What are the advantages and disadvantages of telecommuting to you as an individual?

ANSWER Advantages: - Employees have reduced stress and improved family life.

- Provides opportunities for home-bound people such as single parents and people with disabilities.

- Employers have seen increased productivity, the ability to retain skilled employees, and the ability to attract employees who do not live within commuting distance.

Disadvantages: - For employees, the increased feeling of isolation, possible loss of fringe benefits, lower pay (in some cases), no workplace visibility, potentially slower promotions, and lack of socialization.

- Employees also may have difficulty ―training‖ their families that they are at work even though they are at home.

7. For employers, probables include training issues and potential data security issues.

Level: Easy Section/Learning Objective: Section 6.5/Learning Objective 5 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking Section 6.6 1. Describe virtual collaboration and why it is important to you.

ANSWER Collaborating virtually allows employees to remotely work with others within and outside the organization to be more productive. It allows them to work and meet remotely in a synchronous when all or most of the team members can meet at the same time or asynchronous mode when team members cannot. Collaborating virtually saves the time and expense in having to travel to meet with others on the team.

Level: Easy Section/Learning Objective: Section 6.6/Learning Objective 6 Bloom’s Category: Comprehension

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AACSB Category: Reflective Thinking 2. Define crowdsourcing and provide two examples of crowdsourcing not mentioned in this section.

ANSWER Crowdsourcing is a collaboration where an organization outsources a task to an undefined, generally large group of people in the form of an open call. The benefits this provides the organization include: (1) crowds can explore problems at a very low cost, (2) organizations can tap a wider range of talent than might be available among their employees, (3) by listening to the crowd, organizations gain firsthand insight into their customer’s desires, (4) crowdsourcing taps into the global world of ideas, potentially helping them through a rapid design process.

One of the sites you can refer your students to is Kickstarter.

Level: Easy Section/Learning Objective: Section 6.6/Learning Objective 6 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 3. Identify the business conditions that have made videoconferencing more important.

ANSWER Increased costs related to air travel, food, and hotels as well as inconveniences and delays related to security in airports are reasons. Also included are increased pressures to be competitive and make quality decisions.

Level: Easy Section/Learning Objective: Section 6.6/Learning Objective 6 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking

Section 6.7

1. Describe the differences between e-learning and distance learning.

ANSWER E-learning refers to learning supported by the Web. Distance learning refers to any learning situation in which the teachers and students do not meet face to face. E-learning can be used in conventional classroom situations. When e-learning is used in situations where students and teachers do not meet face-to-face, it is a type of distance learning.

Level: Medium Section/Learning Objective: Section 6.7/Learning Objective 7 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

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2. What are virtual universities? Would you be willing to attend a virtual university? Why or why not?

ANSWER Virtual universities are online universities from which students take classes from their homes or from any off-site location, via the Internet. Some universities offer thousands of courses and dozens of degrees to students worldwide. Others offer limited courses and degrees but use innovative teaching methods and multimedia support in the traditional classroom.

Level: Easy Section/Learning Objective: Section 6.7/Learning Objective 7 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking Discussion Questions j.

What are the implications of having fiber-optic cable to everyone’s home?

ANSWER The speed in a fiber-optic cable would be very good as well as more secure, but the cost could be very high.

Level: Easy Section/Learning Objective: Section 6.2/Learning Objective 2 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking k.

What are the implications of BitTorrent for the music industry? For the motion picture industry?

ANSWER From Wikipedia: ―A growing number of individuals and organizations are using BitTorrent to distribute their own or licensed material. Independent adopters report that without using BitTorrent technology, with its dramatically reduced demands on networking hardware and bandwidth, they could not afford to distribute their files.‖ BitTorrent Inc. has amassed a number of licenses from Hollywood studios for distributing popular content at the company's website.

Level: Medium Section/Learning Objective: Section 6.3/Learning Objective 3 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking l.

Discuss the pros and cons of P2P networks.

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ANSWER There are three types of P2P networks. The first accesses unused CPU power among networked computers. The second is a real-time, person-to-person collaboration application that uses buddy lists to establish a connection. The third is advanced search and file sharing, for example, on websites such as BitTorrent. This new file-sharing application allows users to access many audio or video files in a way that is different from the older Napster-style sharing. It divides large files into tiny pieces and requires users to upload a file as they are downloading so that it is a more fair way of operating.

Level: Medium Section/Learning Objective: Section 6.2/Learning Objective 2 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking m. Should the Internet be regulated? If so, by whom?

ANSWER There are individuals who would argue that the Internet should be regulated. There are some reasons, such as protecting children from predators that stalk them over the Internet. It is reasonable to want the Internet to be monitored, but regulation is another story. If it would be regulated, it would be extremely difficult to decide who should do it.

Level: Medium Section/Learning Objective: Section 6.3/Learning Objective 3 Bloom’s Category: Application AACSB Category: Reflective Thinking n.

Discuss the pros and cons of delivering this book over the Internet.

ANSWER Setting up an account and allowing students to access this text over the Internet is an option that some would find attractive because the cost is much less than the cost to deliver the book in hard-copy form. However, it is not a convenient option for everyone. Many students still like to have a textbook to read rather than reading on the monitor.

Level: Medium Section/Learning Objective: Section 6.3/Learning Objective 3 Bloom’s Category: Application AACSB Category: Reflective Thinking o.

Explain how the Internet works. Assume you are talking with someone who has no knowledge of information technology (in other words, keep it very simple).

ANSWER In order to use the Internet you must have a device such as a computer, or a cell phone, or smartphone with browser software. You then must have a connection, typically an Internet service provider (ISP), which is your entryway into the Internet, and then you can type in any address that you would like to visit on this interconnected information highway made up of thousands of pathways of connections.

Level: Medium

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Section/Learning Objective: Section 6.3/Learning Objective 3 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking

Problem-solving Activities

3. Calculate how much bandwidth you consume when using the Internet every day. How

many e-mails do you send daily and what is the size of each? (Your e-mail program may have e-mail file size information.) How many music and video clips do you download (or upload) daily and what is the size of each? If you view YouTube often, search the Web to find out the size of a typical YouTube file. Add up the number of e-mail, audio, and video files you transmit or receive on a typical day. When you have calculated your daily Internet usage, determine if you are a “normal” Internet user or a “power” Internet user. What impact does network neutrality have on you as a “normal” user?

As a “power” user?

ANSWER Depending on the individual students, these responses will vary greatly.

Level: Medium Section/Learning Objective: Section 6.2/Learning Objective 2 Bloom’s Category: Analysis AACSB Category: Analytic 4. Access several P2P applications, such as SETI@home. Describe the purpose of each,

and indicate which ones you would like to join.

ANSWER Have students either do a Google search on ―P2P applications‖ or go to ―peer-to-peer‖ in Wikipedia.

The second includes a partial list of P2P applications.

Level: Easy Section/Learning Objective: Section 6.3/Learning Objective 3 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 5. Access www.ipv6.org and www.ipv6news.info and learn about more advantages of

IPv6.

ANSWER Have the students write a short report or presentation.

Level: Easy Section/Learning Objective: Section 6.3/Learning Objective 3 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking

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6. Access www.icann.org and learn more about this important organization.

ANSWER Have the students write a short report or presentation.

Level: Easy Section/Learning Objective: Section 6.3/Learning Objective 3 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 7. You want to set up your own website using your name for the domain name (e.g.,

KellyRainer).

• 3.

Explain the process for registering a domain.

Which top-level domain will you use and why?

ANSWER Have the students write a short report or presentation.

Level: Easy Section/Learning Objective: Section 6.4/Learning Objective 4 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 8. Access www.icann.org and obtain the name of an agency or company that can register a

domain for the TLD that you selected. What is the name of that agency or company?

ANSWER Have the students write a short report or presentation.

Level: Easy Section/Learning Objective: Section 6.4/Learning Objective 4 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 9. Access the website for that agency or company from question 6 to learn the process that

you must use. How much will it initially cost to register your domain name? How much will it cost to maintain that name in the future?

ANSWER Have your students research and present their findings.

Level: Easy Section/Learning Objective: Section 6.4/Learning Objective 4 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 10. Network neutrality is an operating model under which Internet service providers (ISPs)

must allow customers equal access to content and applications, regardless of the source or nature of the content. That is, Internet backbone carriers must treat all Web traffic

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equally rather than charge different rates based on the user, content, site, platform, or application.

On December 14, 2017, the Federal Communications Commission (www.fcc.gov) voted to eliminate network neutrality regulations. The elimination of network neutrality regulations took place on June 11, 2018.       

Why are telecommunications and cable companies (Internet service providers) against network neutrality?

Why are technology companies in favor of keeping network neutrality?

What are fast lanes and slow lanes? What impacts could fast and slow lanes have on businesses and consumers?

How could the end of network neutrality impact consumers?

What is the practice of zero-rating?

What is the relationship between the end of network neutrality and potential censorship?

What is the relationship between network neutrality and innovation?

Would entrepreneurs be in favor of, or opposed to, network neutrality?

ANSWER Students will research network neutrality and provide responses to the above questions.

Level: Medium Section/Learning Objective: Section 6.3/Learning Objective 6.3 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 11. From your own experience or from the vendor’s information, list the major capabilities of IBM Notes.

Do the same for Microsoft Exchange. Compare and contrast the products. Explain how the products can be used to support knowledge workers and managers.

ANSWER Students will research the capabilities of each and prepare a comparison summary with view to supporting knowledge workers and managers.

Level: Medium Section/Learning Objective: Section 6.4/Learning Objective 4 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 12. Visit websites of companies that manufacture telepresence products for the Internet.

Prepare a report. Differentiate between telepresence products and videoconferencing products.

ANSWER

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Telepresence enables people in different locations to collaborate face-to-face as if they were in the same room. Increased features of telepresence over teleconferencing include support for meeting in many rooms at once—up to 48 locations in one meeting and recording high-quality video.

Level: Easy Section/Learning Objective: Section 6.6/Learning Objective 6 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking

13. Access the website of your university. Does it provide high-quality information (right

amount, clear, accurate, etc.)? Do you think a high-school student who is thinking of attending your university would feel the same way as you?

ANSWER Opinions for this will vary, but should be interesting.

Level: Easy Section/Learning Objective: Section 6.7/Learning Objective 7 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking

14. Access the website of the Recording Industry Association of America (www.riaa.com).

Discuss what you find there regarding copyright infringement (that is, downloading music files). How do you feel about the RIAA’s efforts to stop music downloads? Debate this issue from your point of view and from the RIAA’s point of view.

ANSWER The Recording Industry Association of America (RIAA) collects and compiles information on both shipment and purchasing trends of recorded music in the United States. This data is an estimate of the size of the U.S. recorded music industry based on data collected directly from the major music companies (which create and/or distribute about 85% of the music sold in the U.S.) and estimates for other parts of the market. While piracy can be a major burden on the industry and needs to be fought vigorously by players such as the RIAA, legitimate sharing of music should not be put in the same light. Why is sharing music (the right to listen to music) among friends any different from sharing a textbook or sporting equipment? Encourage discussion among students on what the limits are to each of the above.

Level: Medium Section/Learning Objective: Section 6.7/Learning Objective 7 Bloom’s Category: Application AACSB Category: Reflective Thinking 15. Research the companies involved in Internet telephony (Voice-over IP). Compare their

offerings as to price, necessary technologies, ease of installation, etc. Which company is the most attractive to you? Which company might be the most attractive for a large company?

ANSWER

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Selections will vary by region. Students should find different alternatives and use a set of evaluation criteria to compare them. Help the class to come up with common evaluation criteria.

Level: Medium Section/Learning Objective: Section 6.5/Learning Objective 5 Bloom’s Category: Application AACSB Category: Reflective Thinking 16. Access various search engines other than Google. Search for the same terms on several

of the alternative search engines and on Google. Compare the results on breadth (number of results found) and precision (results are what you were looking for).

ANSWER Have your students evaluate the results of common search strings.

Level: Medium Section/Learning Objective: Section 6.4/Learning Objective 4 Bloom’s Category: Analysis AACSB Category: Analytic 17. Second Life (www.secondlife.com) is a three-dimensional online world built and owned

by its residents. Residents of Second Life are avatars who have been created by realworld people. Access Second Life, learn about it, and create your own avatar to explore this world. Learn about the thousands of people who are making “real-world” money from operations in Second Life.

ANSWER Students should list some models to doing business in this online world. How would they engage the community to support their business model?

Level: Medium Section/Learning Objective: Section 6.6/Learning Objective 6 Bloom’s Category: Application AACSB Category: Reflective Thinking 18. Access Microsoft’s Bing translator (www.translator.microsoft.com) or Google Translate

www.translate.google.com). Type in a paragraph in English and select, for example, English-to-French. When you see the translated paragraph in French, copy it into the text box, and select French-to-English. Is the paragraph that you first entered the same as the one you are looking at now? Why or why not? Support your answer.

ANSWER Some interpretation and translation changes may occur. More complex paragraphs will result in more deviations.

Level: Medium Section/Learning Objective: Section 6.7/Learning Objective 7 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

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Closing Case: Internet Shutdowns 1. Of the three methods that governments are using to control Internet access, which is the most effective at controlling citizens?

ANSWER Based on the case and from the perspective of ―control‖ not harm, the Iranian shutdown appears to have the most effective result in controlling citizens, with no indication that protests continued after the restoration of services in one week.

Level: Easy Section/Learning Objective: Section 6.3/Learning Objective 6.3 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 2. Of the three methods that governments are using to control Internet access, which is the least effective in controlling citizens?

ANSWER Based on the case and from the perspective of ―control‖ not harm, the Indian shutdown appears to have the least effective result in controlling citizens, as protests continued after the services were restored.….

Level: Easy Section/Learning Objective: Section 6.3/Learning Objective 6.3 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 3. Is Internet access a fundamental human right? Why or why not? Support your answer. Be sure to include in your answer what your day would look like without Internet access of any kind.

ANSWER Student answers will vary but will likely bring in the harm that shutdowns caused in the jurisdictions outlined in the case. Although the intent by governments was to control, the impact resulted in damages to economic activity (which would then impact citizens). It also impacted access to medical information and assistance; therefore resulting physical harm. Student answers will vary.

Level: Medium Section/Learning Objective: Section 6.3/Learning Objective 6.3 Bloom’s Category: Analysis AACSB Category: Analytic

Chapter 7: E-Business and E-Commerce

Chapter Outline 7.1

Overview of E-Business and E-Commerce

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7.2 7.3 7.4

Business-to-Consumer (B2C) Electronic Commerce Business-to-Business (B2B) Electronic Commerce Ethical and Legal Issues in E-Business

Learning Objectives 7.1 Describe the eight common types of electronic commerce.

7.2 Describe the various online services of business-to-consumer (B2C) commerce, along with specific examples of each one.

7.3 Describe the three business models for business-to-business (B2B) electronic commerce.

7.4 Discuss the ethical and legal issues related to electronic commerce and provide examples.

Teaching Tips and Strategies A few of your students might remember that Amazon.com was the first online book retailer. Some students might even remember that eBay was the first online auction company. To initiate discussion, you might ask students if they have heard of companies such as Etoys.com (online toy store), Pets.com (online pet store), and Borders.com (online bookstore).

Ask students what they think the websites had in common. Their answers will vary, but the point I suggest you want to make is that all of the companies mentioned no longer operate as an e-business (Borders.com is now being run by Barnesandnoble.com). Ask them to speculate the reasons for each these site’s failures. Basically, the business models were all wrong.

Some of these sites were never going to be profitable from day one. For example, when the founders of Pets.com (which has since been bought by PetSmart) were developing their business plan, did anyone consider how much it was going to cost to ship a fifty-pound bag of dog food? Or the more obvious question, will their customers be willing to pay more to have something shipped to them than it would cost to buy the same product at a local store for the same base price and not have to pay shipping costs?

To wrap up this chapter you might ask, ―What will the future of e-commerce be?‖ This tends to get students excited. Some possible suggestions for where e-commerce is heading are in this chapter: online job ads, market research, online payments, and ethical aspects of e-commerce.

E-commerce business models are based on marketing or receiving a commission for getting the word out via online advertising and user ―clicks‖ (i.e., Google). Others are based on exchange or auctions (i.e. eBay), and some are based on membership fees for some type of service (i.e., Amazon Prime, the New York Times, etc.).

The trend is for companies that have brick-and-mortar operations to extend to the Internet and to use the competitive advantages these companies have created to forge ahead with e-commerce. A click-mortar strategy is seen to work better, as customers benefit from the advantages of both channels. (i.e., order something at a store’s online site and pick it up a the buyer’s local store.) Most big-box stores now offer this option.

Consider referring to the previous chapter on knowledge management and linking the collection of consumer data by businesses and ethics.

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Finally, consider mentioning that in addition to credit reports and credit scores, some lenders were using information they found on social media sites (Facebook, Twitter, etc.) to determine the consumer’s credit worthiness. We will discuss more about social media in Chapter 9, but this might be a way to lead the discussion into it.

BlackBoard/CMS In an online class, post for the class to respond to one or more of the discussion questions at the end of this chapter.

You can also ask the class to review and report on a few e-commerce sites.

Finally, check YouTube for videos about e-commerce.

Opening Case: Brick-and-Mortar Retailers Fight the Amazon Effect 1. Describe the nontechnological initiatives that traditional brick-and-mortar companies are employing to compete against Amazon and other electronic retailers.

ANSWER Costco uses purchasing power, memberships, and supply chain efficiency—focused on stocking fewer items but large volumes, ―displayed‖ in the same manner as received (pallets, etc.)

Best Buy allows customers to experience the electronics and offer the services of its staff to guide buyers through the process and helping them identify a product that meets their needs. Also, the Geek Squad offers support to customers for installation and repair of devices. They have also partnered with large electronic companies to lease space and allow them to showcase their products, and they offer price-matching incentives for customers.

Level: Easy Section/Learning Objective: Section 7.2/Learning Objective 7.2 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 2. Describe the technological initiatives that traditional brick-and-mortar companies are employing to compete against Amazon and other electronic retailers.

ANSWER Costco now allows customers to order and have their goods shipped directly, as well as offering clickand-collect services for their customers. They have also partnered with Instacart to offer grocery delivery to customers. Best Buy also offers a click-and-collect option.

Level: Easy Section/Learning Objective: Section 7.2/Learning Objective 7.2 Bloom’s Category: Analysis AACSB Category: Analytical 3. Given your answers to the first two questions, which initiatives are more effective: nontechnological or technological? Provide specific examples from this case to support your answer.

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ANSWER Student answers will vary.

Level: Medium Section/Learning Objective: Section 7.2/Learning Objective 7.2 Bloom’s Category: Analysis AACSB Category: Analytic IT’s About Business 7.1 Chatbots 7.

Discuss how the capabilities of chatbots are expanding through the use of machine learning. (Hint: See Chapter 4.)

ANSWER: Chatbots are expanding through the use of machine learning by discovering patterns in data to make predictions, from which they can respond more effectively and correctly to a wide range of customer interactions and requests. Chatbots are also learning to distinguish between real accounts and robots.

Level: Easy Section/Learning Objective: Section 7.1/Learning Objective 7.1 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 8.

Describe how your university could use a chatbot in its admissions process. Provide specific examples.

ANSWER: Answers will vary by student. Suggestions for possible uses include: chatbots could be available for prospective students interested in learning more about different aspects of the university; a chatbot could help connect prospective students to current students or faculty that share their same interests; etc.

Level: Easy Section/Learning Objective: Section 7.1/Learning Objective 7.1 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

IT’s About Business 7.2 Behavioral versus Contextual Advertising 8.

Refute each of the claims the ad tech companies make regarding effectiveness of behavioral advertising. Use specific examples in your answers.

ANSWER Ad tech companies maintain that behavioral advertising is better for all participants because users prefer more relevant ads, advertisers prefer being able to reach

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potential customers more precisely, and publishers receive more money for ads that produce higher clickthrough rates.

Potential arguments to refute are:  90% of users opted out of cookies for NPO after GDPR  Contextual advertising performed as well or better than microtargeted ads on conversions  Increased revenue, as companies now keep all of the money that advertisers spend rather than giving a large percentage to companies that operate auctions (elimination of the ad technology middlemen)  NPO found that ads served to users who opted out of cookies brought in as much or more money compared to ads served to users who opted in Level: Easy Section/Learning Objective: Section 7.2/Learning Objective 7.2 Bloom’s Category: Knowledge AACSB Category: Technology 9.

What problems could users encounter if companies could not use cookies at all? That is, if companies could not use behavioral advertising?

ANSWER Companies will need to find an alternative method, which will demand a shift in their strategy.

Level: Easy Section/Learning Objective: Section 7.2/Learning Objective 7.2 Bloom’s Category: Knowledge AACSB Category: Technology IT’s About Business 7.3 Amazon’s B2B Marketplace 1. Consider Tulsa Community College, which is using Amazon Business to order test tubes, basketballs, office supplies, and other goods instead of having employees buy them from local retailers or specialty sellers. The daily needs of the college’s 15,000 students translate into about $10,000 of orders per month.

What is the impact of Amazon Business on local wholesalers and retailers in Tulsa?

How could local businesses in Tulsa compete with Amazon Business?

ANSWER The impact of Amazon Business on local wholesalers and retailers in Tulsa is probably significant.

The college accounts for a large portion of business in the area, and stores, especially small, locally owned stores, may suffer. Local businesses in Tulsa could compete with Amazon Business by cementing close partnerships with and providing value-added, personalized services to Tulsa Community College in a way that Amazon Business cannot. They can also launch a PR campaign for loyalty and can promise delivery options, such as same-day service, that Amazon Business cannot.

Level: Easy Section/Learning Objective: Section 7.3/Learning Objective 3 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

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2. Provide other methods for wholesalers to compete with Amazon Business.

ANSWER Industry analysts have identified two possible ways for wholesalers to compete with Amazon Business: - Provide value-added, personalized services to customers. For example, Valin Corporation (www.valinonline.com) has specialized in the oil and gas sector, dispatching engineers to oilfields to help deploy the company’s products that manage output at surface oil wells.

- Go into areas Amazon may fear to tread. Amazon may not be interested in trying to get up to speed in specialized business environments. For example, will Amazon want to sell oxygen tanks or soda pumps? Furthermore, Amazon might not want to manage products that are dangerous or exotic, such as dentists’ chairs, or that require specialists.

Level: Medium Section/Learning Objective: Section 7.3/Learning Objective 3 Bloom’s Category: Application AACSB Category: Reflective Thinking

IT’s About Business 7.4 Amazon and Flipkart Experience Problems in India 3.

Refer back to Chapter 3. Are the Indian government’s actions placing strict regulations on foreign electronic commerce companies ethical? Why or why not?

ANSWER Answers will vary by student; however, they are likely to suggest that the government is making a decision for its population that should be up to each individual to decide (with whom and how they want to do business). They are also potentially disadvantaging them in terms of pricing, cost of living, and availability of goods. On the other hand, it could be argued it is meant to preserve the lifestyle and culture of the citizens.

Level: Easy Section/Learning Objective: Section 7.4/Learning Objective 7.4 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 4.

Discuss the ways in which foreign electronic companies responded to the Indian government’s new regulations. Can you think of any other strategies these companies could employ?

ANSWER They had to change their strategy and attempted to do so as follows: - Tried to extend the surplus of inventory, but it was denied - Removed products from companies they had equity stakes, which resulted in thousands of products being eliminated - Reduced cash-back deals and discounts (accusations of predatory pricing) - Developed India-specific private labels

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Student answers will vary in terms of alternative strategies they could employ. Ideas may include determining whether it is permissible to change the revenue model for goods sold on their website from Indian merchants. Perhaps they use a commission-based model or hosting fee, rather than ―ownership‖ and business interest.

Level: Easy Section/Learning Objective: Section 7.4/Learning Objective 7.4 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

Before you go on… Questions

Section 7.1

1.

Define e-commerce and distinguish it from e-business.

ANSWER Electronic commerce (EC) describes the buying and selling of products, services, and information via computer networks, primarily the Internet. The term electronic business attempts to expand the definition of EC to include more than buying and selling, but also servicing customers, collaborating with business partners, and conducting electronic transactions within an organization. In this book we use the term electronic commerce in its broadest scope, as basically equivalent to e-business.

Level: Easy Section/Learning Objective: Section 7.1/Learning Objective 1 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 2.

Differentiate among B2C, B2B, C2C, and B2E electronic commerce.

ANSWER • Business-to-consumer (B2C) EC involves companies selling directly to consumers over the Internet. A company that has been specifically created to do business on the Internet may do business-to-consumer sales, or an existing company may open its own online business.

• Business-to-business (B2B) EC occurs when two or more businesses make transactions electronically.

• Consumer-to-consumer (C2C) EC occurs when consumers transact business over sites that allow direct selling of goods or services to other consumers, such as eBay.com, or other auction sites.

8. Business-to-employee (B2E) EC occurs when an employer uses EC internally to provide information and services to its employees such as training, discounted insurance, travel packages and tickets to events.

Level: Easy Section/Learning Objective: Section 7.1/Learning Objective 1

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Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 3.

Define e-government.

ANSWER E-government is the use of Internet technology in general and e-commerce in particular to deliver information and public services to citizens, public employees, business partners, and suppliers. It is also an efficient way to do business within the government.

Level: Easy Section/Learning Objective: Section 7.1/Learning Objective 1 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 4.

Discuss forward and reverse auctions.

ANSWER A forward auction is used by sellers as a selling channel to many potential buyers. The buyers competitively bid on the item until the auction closes with the highest bidder winning. In reverse auctions, the buyer, usually an organization, seeks to buy a product or service and suppliers submit bids. Generally, the lowest-priced bidder wins.

Level: Easy Section/Learning Objective: Section 7.1/Learning Objective 1 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 5. Discuss the various online payment mechanisms.

ANSWER The following instruments are acceptable means of electronic payment: electronic credit cards, electronic checks, purchasing cards, electronic cash (stored-value money cards, smart cards, and person-to-person payments), and electronic bill presentation and payment. In B2B, electronic checks are most commonly used for payments.

Micropayments are small payments of a few dollars or less. Smart cards are ideal for making payment of such small amounts needed for coffee shop purchase or train or subway fares.

Level: Easy Section/Learning Objective: Section 7.1/Learning Objective 1 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 6.

Identify some benefits and limitations of e-commerce.

ANSWER

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Benefits • Makes national and international markets more accessible • Lowers the costs of processing, distributing, and retrieving information • Customers are able to access products and services around the clock • A major benefit to society is the ability to easily and conveniently deliver information, services, and products to people in cities, rural areas, and developing countries Limitations • Lack of universally accepted security standards • Insufficient bandwidth • Expensive accessibility • Unresolved legal issues • Perception of being insecure - Lacking in critical mass of sellers and buyers Level: Easy Section/Learning Objective: Section 7.1/Learning Objective 1 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking Section 7.2

4.

Describe electronic storefronts and malls.

ANSWER Electronic storefronts provide consumer and businesses access to electronic retailing, usually by way of an online electronic catalog. Referred to as solo storefronts, these businesses maintain their own Internet name and website and may be extensions of physical stores. An electronic mall, also know as a cybermall, is a collection of individual shops under one Internet address. The basic idea of an electronic mall is the same as that of a regular shopping mall—to provide a one-stop shopping place that offers many products and services.

Level: Easy Section/Learning Objective: Section 7.2/Learning Objective 2 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 5.

Discuss various types of online services, such as cyberbanking, securities trading, job searches, travel services, and so on.

ANSWER Students will describe the features of various online services including the benefits of convenience, fast response, security, confidence, easy and effective search, accurate and up-to-date information, and transaction tracking.

Level: Easy Section/Learning Objective: Section 7.2/Learning Objective 2 Bloom’s Category: Application AACSB Category: Reflective Thinking

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6.

Discuss online advertising, its methods, and its benefits.

ANSWER Online advertising is an attempt to disseminate information by way of the Internet in order to affect a buyer–seller transaction. Online advertising can be customized to make it media-rich, dynamic, and interactive. Online ads can efficiently use the convergence of text, audio, graphics, and animation, and they can be interactive and targeted to specific interest groups and/or individuals. One of the benefits of online advertising is that ads can be updated any time at minimal cost. Online ads can reach a very large number of potential buyers all over the world. Online ads are sometimes cheaper in comparison to print, radio, or television ads. Finally, the use of the Internet itself is growing very rapidly, and more viewers are moving to the Internet at the expense of TV. Level: Medium Section/Learning Objective: Section 7.2/Learning Objective 2 Bloom’s Category: Application AACSB Category: Reflective Thinking 7.

Identify the major issues relating to e-tailing.

ANSWER Channel conflict—Regular distributors may be alienated when a company decides to sell directly online. Companies need to recognize this problem and possibly find a way to restructure distributor relationships.

Conflicts within click-and-mortar organizations—Conflict between the existing organization and the ―click‖ side, resulting in disagreements on pricing, resource allocation, and logistics services.

Order fulfillment and logistics—The task of arranging to fill very small orders to many customers and arrange for the correct handling of returns is difficult.

Viability and risk of online e-tailers—It is very easy to enter into e-tailing, but difficult to stay afloat due to heavy competition and problems associated with order fulfillment and demand forecasting.

Appropriate revenue models—Basing e-tailing success on advertising revenues has not proved to be viable.

Level: Medium Section/Learning Objective: Section 7.2/Learning Objective 2 Bloom’s Category: Application AACSB Category: Reflective Thinking 8.

What are spamming, permission marketing, and viral marketing?

ANSWER Spamming is the indiscriminate distribution of electronic ads without permission of the receiver.

Spamming can be done via e-mail or pop-up/pop-under ads. Spam often contains objectionable content as well. Most computer users are inundated by spam and try to reduce the flow by blocking and filtering software. By contrast, in permission marketing, senders ask recipients’ permission to receive online advertising and e-mail. Users can select in and easily select out. Viral marketing refers to online ―word-of-mouth‖ marketing. It relies on people to forward messages to friends, suggesting that they ―check this out.‖ Level: Medium Section/Learning Objective: Section 7.2/Learning Objective 2

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Bloom’s Category: Comprehension AACSB Category: Reflective Thinking Section 7.3

1.

Briefly differentiate between the sell-side marketplace and the buy-side marketplace.

ANSWER The sell-side marketplace is a B2B model in which organizations sell to other organizations from their own private e-marketplace and/or from a third-party site. Electronic catalogs and forward auctions are used extensively. This is similar to B2C, but the customer is another organization rather than an individual.

The buy-side marketplace is a B2B model in which organizations buy needed products or services from other organizations electronically. This marketplace often uses a reverse auction environment.

Level: Medium Section/Learning Objective: Section 7.3/Learning Objective 3 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 2.

Briefly differentiate among vertical exchanges, horizontal exchanges, and functional exchanges.

ANSWER Exchanges are e-marketplaces in which there are many sellers and many buyers; entry is open to all.

These are frequently owned and operated by third parties or a consortium of the major businesses in the industry. Participants in exchanges can reduce cycle trading time and cost and can find new markets and trading partners around the globe through the exchange.

• •

Vertical exchanges connect buyers and sellers in a given industry.

Horizontal exchanges connect buyers and sellers across many industries and are used mainly for MRO materials.

19. Functional exchanges help businesses when needed services such as temporary help or extra office space are traded on an ―as-needed‖ basis.

Level: Medium Section/Learning Objective: Section 7.3/Learning Objective 3 Bloom’s Category: Analysis AACSB Category: Reflective Thinking Section 7.4

1.

List and explain some ethical issues in EC.

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ANSWER Many of the ethical issues related to IT apply also to EC. Four key issues are privacy, the human element, Web tracking, and disintermediation.

Privacy. Central issues are protecting the buyer’s identity, and monitoring employee use of the Internet.

The human element. The implementation of EC broaches the issue of who is to control the selling process. Commissioned salespeople are accustomed to being in control of the flow of certain information. EC sales can lead to sales personnel dissatisfaction as customers bypass the salesperson and commissions become more distributed throughout the company.

Web tracking. Programs and ―cookie‖ files raise a batch of privacy concerns. These programs and files can be stored on your PC, organized by website, and then accessed every time you revisit that website.

Disintermediation. The use of EC may result in the elimination of some of a company’s employees as well as traditional intermediaries such as brokers and agents. This result is called disintermediation: ―eliminating the intermediary.‖ The way these people, especially employees, are treated may raise ethical issues, such as how to handle their displacement.

Level: Medium Section/Learning Objective: Section 7.4/Learning Objective 4 Bloom’s Category: Application AACSB Category: Reflective Thinking 2.

Discuss the major legal issues associated with EC.

ANSWER • Fraud on the Internet is a major concern, involving deception on the part of the buyers and/or the sellers.

• Among the major legal issues of EC are taxes and other fees. Federal, state, and local authorities are scrambling to figure out how to get a piece of the revenue created electronically. The problem is particularly complex for interstate and international commerce. For example, some claim that even the state in which a server is located deserves to receive some sales tax from an EC transaction. Another opinion is that the state in which the seller is located deserves the entire sales tax.

• In addition to sales tax, there is a question about where (and, in some case whether) electronic sellers should pay business license tax, income tax, franchise fees, gross-receipts tax, excise tax, privilege tax, and utility tax. Moreover, how should the tax be controlled?

• Domain names cause problems when several companies that have similar names compete over a domain name that is not registered trademark.

• Intellectual property in EC, in its various forms, is protected by copyright laws and cannot be used freely.

• Other legal issues are emerging as challenges to the existing system.

• What are the rules of electronic contracting, and whose jurisdiction prevails when buyers, broker, and sellers are in different states and/or countries?

• When are electronic documents admissible as evidence in the courts of law? What is the alternative if they are not?

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• • 9.

Liability of errors, malfunction of software, or theft and fraudulent use of data may be difficult to prove. How is such liability determined?

What is considered misrepresentation? Where should you take legal action against misrepresentation?

The use of multiple networks and trading partners makes the documentation of responsibility difficult. How is such a problem overcome?

Level: Medium Section/Learning Objective: Section 7.4/Learning Objective 4 Bloom’s Category: Application AACSB Category: Reflective Thinking 3.

Describe buyer protection and seller protection in EC.

ANSWER Buyer protection in EC is just a listing of tips for safe electronic shopping.

• Look for reliable brand names at sites like Walmart Online, Disney Online, and Amazon.com.

(Make sure the sites are authentic before purchasing, perhaps by phoning the parent company.)

• Search any unfamiliar site for the company’s address and phone and fax numbers. Call up and quiz the employees about the sellers.

• Check out the seller with the local Chamber of Commerce or Better Business Bureau. Look for seals of authenticity such as TRUSTe. • Investigate how secure the seller’s site is by reading the posted privacy notice, and evaluate how well the site is organized (which might reflect how much effort has gone into its development and subsequent security).

• Examine the money-back guarantees, warranties, and service agreements.

• Compare prices to those in ―on-ground‖ stores; too low prices are too good to be true and some ―catch‖ is probably involved.

• Ask friends what they know. Find testimonials and endorsements.

• Find out what your rights are in case of a dispute.

• Consult the National Fraud Information Center.

14. Check www.consumerworld.org for a listing of useful resources.

Seller protection includes authentication, nonrepudiation, and escrow services. These help protect against: • Consumers who refuse to pay or pay with bad checks • Consumers who claim merchandise did not arrive • Others who use their name 9. The use of their unique words and phrases, slogans, and Web addresses Level: Medium Section/Learning Objective: Section 7.4/Learning Objective 4 Bloom’s Category: Application AACSB Category: Reflective Thinking Discussion Questions o.

Discuss the major limitations of e-commerce. Which of these limitations are likely to disappear?

Why?

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ANSWER Many technical limitations will disappear with the universal acceptance of standards for software features, quality, and security. Bandwidth increases through the new Internet initiative will eliminate much of the current strain that is placed upon networks by multimedia EC applications.

Asynchronous Transfer Mode (ATM) as an architecture for the new high-bandwidth environment will give a needed boost to Internet response time. Internet access will become more ubiquitous as service providers are consolidated and monthly fees are reduced. Students may discuss the anticipated implementation of Internet Protocol (IP) version six (IPv6) under TCP/IP and its potential to eliminate the current shortage of IP addresses.

Non-technical limitations include legal issues as yet unresolved. Many buyers are unwilling to switch from ―on-ground‖ stores to online, and there is a general lack of trust in Internet security. Many sellers and buyers are waiting for EC to stabilize before they participate in electronic transactions; in many product areas there are insufficient number of sellers and buyers needed for profitable EC operations.

As experience accumulates and technology improves, the ratio of EC benefits to cost will increase, resulting in an even greater rate of EC adoption. Effective jurisprudence to address the myriad of legal issues will likely improve as more cases are tried and law schools design curriculum specific to EC. Level: Medium Section/Learning Objective: Section 7.1 and 7.4/Learning Objectives 1 and 4 Bloom’s Category: Application AACSB Category: Reflective Thinking p.

Discuss the reasons for having multiple EC business models.

ANSWER There are multiple EC business models because there are many ways to generate revenues via electronic commerce.

Level: Easy Section/Learning Objective: Section 7.3/Learning Objective 3 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking q.

Distinguish between business-to-business forward auctions and buyers’ bids for RFQs.

ANSWER Business-to-business auctions take place when several companies engage in bartering by selling their products or services to an exchange member. Instead of receiving cash they receive trade dollars (credits). The transaction is much like a credit card transaction with the use of a plastic card and an authorization number requested by the seller for transactions over a prespecified amount. Other members of the trade exchange can then use the trade dollars earned. The trade-dollar system simplifies the old cumbersome barter system that was limited to the exchange of products and services between two parties.

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Buyer’s bids for RFQs involve the bidder entering their offered price and the highest bidder wining the available inventory at their offered price. Typically, the detailed list of all the product specifications, warranties, and so forth is included, and purchases are made using a credit card.

Ebay.com is perhaps among the best examples of buyer’s bidding RFQs via the Web; hundreds of thousands of different items are offered in several types of auctions.

Level: Medium Section/Learning Objective: Section 7.2/Learning Objective 2 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking r.

Discuss the benefits to sellers and buyers of a B2B exchange.

ANSWER Participants in B2B exchanges can reduce cycle trading time and cost as well as find new markets and trading partners around the globe through the exchange.

Level: Easy Section/Learning Objective: Section 7.3/Learning Objective 3 Bloom’s Category: Application AACSB Category: Reflective Thinking s.

What are the major benefits of G2C electronic commerce?

ANSWER One of the major benefits of G2C EC is that it gives people a chance to see what the government does every day and give feedback. For instance, any individual from any state can now contact their senators or representatives with a couple clicks of their mouse.

Level: Easy Section/Learning Objective: Section 7.3/Learning Objective 3 Bloom’s Category: Application AACSB Category: Reflective Thinking t.

Discuss the various ways to pay online in B2C. Which method(s) would you prefer and why?

ANSWER B2C payments can include electronic credit cards and electronic cash (stored value money cards, smart cards, person-to-person payments).

Level: Medium Section/Learning Objective: Section 7.3/Learning Objective 3 Bloom’s Category: Analysis AACSB Category: Reflective Thinking u.

Why is order fulfillment in B2C considered difficult?

ANSWER

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It is difficult to find the products to be shipped quickly, pack the products, deliver products purchased online to the customer quickly, collect payment, and handle returned goods.

Level: Easy Section/Learning Objective: Section 7.3/Learning Objective 3 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking v.

Discuss the reasons for EC failures.

ANSWER • incorrect or no revenue model • lack of strategy and contingency funding • inability to attract enough customers • lack of funding • channel conflict with distributors • too much online competition in standard products • poor order-fulfillment infrastructure p. lack of qualified management Level: Medium Section/Learning Objective: Section 7.3/Learning Objective 3 Bloom’s Category: Analysis AACSB Category: Reflective Thinking w. Should Mr. Coffee sell coffeemakers online? Hint: Take a look at the discussion of channel conflict in this chapter.

ANSWER Channel conflict can be an issue with online sales for click-and-mortar organizations; however, to forego online sales entirely just because it possesses a challenge may not be a wise decision.

Level: Easy Section/Learning Objective: Section 7.2/Learning Objective 2 Bloom’s Category: Analysis AACSB Category: Analytic x.

In some cases, individuals engage in cybersquatting so that they can sell the domain names to companies expensively. In other cases, companies engage in cybersquatting by registering domain names that are very similar to their competitors’ domain names in order to generate traffic from people who misspell Web addresses. Discuss each practice in regard to its ethical nature and legality.

Is there a difference between the two practices? Support your answer.

ANSWER Cybersquatting refers to the practice of registering or using domain names for the purpose of profiting from the goodwill or the trademark that belongs to someone else. The Anti-Cybersquatting Consumer Protection Act (1999) permits trademark owners in the United States sue for damages in such cases.

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Some practices that could be considered cybersquatting are not illegal, although they may well be unethical. The more common of these practices is ―domain tasting.‖ Domain tasting lets registrars profit from the complex money trail of pay-per-click advertising. The practice can be traced back to the policies of the organization responsible for regulating Web names, the Internet Corporation for Assigned Names and Numbers (ICANN) (www.icann.org). In 2000, ICANN established the ―create grace period,‖ a five-day period when a company or person can claim a domain name and then return it for a full refund of the $6 registry fee. ICANN implemented this policy to allow someone who mistyped a domain to return it without cost.

Domain tasters exploit this policy by claiming Internet domains for five days at no cost. These domain names frequently resemble those of prominent companies and organizations. The tasters then jam these domains full of advertisements that come from Google and Yahoo!. Because this process involves zero risk and 100 percent profit margins, domain tasters register millions of domain names every day—some of them over and over again. Experts estimate that registrants ultimately purchase less than 2 percent of the sites they sample. In the vast majority of cases, they use the domain names for only a few days to generate quick profits.

Level: Medium Section/Learning Objective: Section 7.4/Learning Objective 4 Bloom’s Category: Analysis AACSB Category: Analytic y.

Do you think information technology has made it easier to do business? Or has it only raised the bar on what is required to be able to do business in the twenty-first century? Support your answer with specific examples.

ANSWER While IT has made some aspects of doing business easier and more efficient, it has at the same time made some aspects of it more complicated. Based on the personal experiences of your students, they may have differing responses to this question. Ask them about these experiences to support their answers.

Level: Medium Section/Learning Objective: Section 7.4/Learning Objective 4 Bloom’s Category: Analysis AACSB Category: Analytic z.

With the rise of electronic commerce, what do you think will happen to those without computer skills, Internet access, computers, smartphones, and so on? Will they be able to survive and advance by hard work?

ANSWER Hopefully your students understand that they will need some technology skills to be successful in nearly all of their jobs.

Level: Medium Section/Learning Objective: Section 7.1/Learning Objective 1 Bloom’s Category: Analysis AACSB Category: Analytic

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Problem-solving Activities •

Assume you are interested in buying a car. You can find information about cars at numerous websites. Access five websites for information about new and used cars, financing, and insurance.

Decide which car you want to buy. Configure your car by going to the car manufacturer’s website.

Finally, try to find the car from www.autobytel.com. What information is most supportive of your decision-making process? Write a report about your experience.

ANSWER Student responses will vary about their individual experiences online.

Level: Easy Section/Learning Objective: Section 7.1/Learning Objective 1 Bloom’s Category: Analysis AACSB Category: Analytic •

Compare the various electronic payment methods. Specifically, collect information from the vendors cited in this chapter and find vendors using Google. Pay attention to security level, speed, cost, and convenience.

ANSWER Student responses will vary depending on which vendor sites they visit.

Level: Medium Section/Learning Objective: Section 7.2/Learning Objective 2 Bloom’s Category: Analysis AACSB Category: Analytic •

Conduct a study on selling diamonds and gems online. Access such sites as www.bluenile.com, www.jtv.com, www.tiffany.com, and www.jewelryexchange.com. a.

What features do these sites use to educate buyers about gemstones?

ANSWER Several sites have ―education‖ links with comprehensive information about how to evaluate and select gems. b. How do these sites attract buyers?

ANSWER A very powerful way is by simply keying in ―diamonds‖ to Yahoo! and Google, several of the sites appear at the top of the list. c. How do these sites increase customers’ trust in online purchasing?

ANSWER These sites have enhanced security features, making visitors to the site more comfortable with the prospect of doing business with them.

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d. What customer service features do these sites provide?

ANSWER In addition to financing and insurance, some of the sites provide options to design you own jewelry and tell your proposal stories.

Level: Medium Section/Learning Objective: Section 7.3/Learning Objective 3 Bloom’s Category: Analysis AACSB Category: Analytic •

Access www.nacha.org. What is NACHA? What is its role? What is the ACH? Who are the key participants in an ACH e-payment? Describe the ―pilot‖ projects currently underway at ACH.

ANSWER NACHA is an electronic payments system organization with 11,000 financial institutions. ACH is an automated clearinghouse. The key participants in the ACH e-payment process are financial institutions.

One of the pilot institutions is the DCT Pilot. A description from the website follows. ―Today, depository financial institutions that receive image or paper check deposits from their customers may clear them through image exchange with Paying Banks that are image enabled and with which exchange agreements exist. If check images cannot be exchanged, the Collecting Bank must present either the original paper check or a substitute check/Image Replacement Document (IRD) for payment. Image exchange volume is showing rapid growth, but many financial institutions expect that a significant number of paper clearings will remain by 2009. With thousands of Paying Banks unable to accept images for presentment, billions of checks are still processed by exchanging paper. ―The DCT Pilot will help determine what role the ACH Network can play in facilitating the clearing and settlement of low-value consumer paper checks as the industry searches for further cost savings and product enhancements in this period of convergence.‖ Level: Medium Section/Learning Objective: Section 7.3/Learning Objective 3 Bloom’s Category: Analysis AACSB Category: Analytic •

Access www.espn.com. Identify at least five different ways the site generates revenue.

ANSWER Students should list items such as selling links to advertisers and paid memberships to the site.

Level: Medium Section/Learning Objective: Section 7.3/Learning Objective 3 Bloom’s Category: Analysis AACSB Category: Analytic

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•

Access www.queendom.com. Examine its offerings and try some of them. What type of electronic commerce is this? How does this website generate revenue?

ANSWER This B2C site generates its revenue from sponsor advertising and subscriptions. Professionals in various areas, such as human resources, can subscribe and set up testing and results tracking for groups of employees.

Level: Medium Section/Learning Objective: Section 7.3/Learning Objective 3 Bloom’s Category: Analysis AACSB Category: Analytic •

Access www.ediets.com. Prepare a list of all the services the company provides. Identify its revenue model.

ANSWER This site provides many services including recipes, meal plans and meal delivery, and support plans.

Level: Medium Section/Learning Objective: Section 7.3/Learning Objective 3 Bloom’s Category: Analysis AACSB Category: Analytic •

Access www.theknot.com. Identify the site’s revenue sources.

ANSWER Revenues are from business partner advertising on this wedding-oriented website that provides suggestions and advice for wedding planning.

Level: Easy Section/Learning Objective: Section 7.3/Learning Objective 3 Bloom’s Category: Analysis AACSB Category: Analytic •

Access www.mint.com. Identify its revenue model. What are the risks of giving this website your credit and debit card numbers, as well as your bank account number?

ANSWER This revenue model includes marketing and revenues from partner advertising. They sell any type of financial product as well as provide references to financial planners, investment brokers, and setting up financial plans.

Account numbers would be risky to give out, even though it has the Trust sign. Account numbers can be easily stolen, so it is just too risky.

Level: Medium Section/Learning Objective: Section 7.3/Learning Objective 3 Bloom’s Category: Analysis

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AACSB Category: Analytic

•

Visit www.alibaba.com. Identify the site’s capabilities. Look at the site’s private trading room. Write a report. How can such a site help a person who is making a purchase?

ANSWER Have your students research and report their findings.

Level: Easy Section/Learning Objective: Section 7.4/Learning Objective 4 Bloom’s Category: Analysis AACSB Category: Analytic •

Enter www.grubhub.com. Explore the site. Why is the site so successful? Could you start a competing site? Why or why not?

ANSWER Have your students research and report their findings and opinions.

Level: Medium Section/Learning Objective: Section 7.3/Learning Objective 3 Bloom’s Category: Analysis AACSB Category: Analytic •

Enter www.dell.com, go to ―Desktops,‖ and configure a system. Add it to ―My Cart‖ (no obligation).

What calculators are used there? What are the advantages of this process as compared with buying a computer in a physical store? What are the disadvantages?

ANSWER Have your students research and report their findings and opinions.

Level: Section/Learning Objective: Section 7.3/Learning Objective 3 Bloom’s Category: AACSB Category: Reflective Thinking •

Enter http://www.chime.com and http://www.ally.com to identify their services. Prepare a report.

ANSWER Have your students research and report their findings.

Level: Easy Section/Learning Objective: Section 7.3/Learning Objective 3 Bloom’s Category: Analysis AACSB Category: Analytic

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•

Access various travel sites such as www.travelocity.com, www.orbitz.com, www.expedia.com, www.kayak.com, and www.pinpoint.com. Compare these websites for ease of use and usefulness.

Note differences among the sites. If you ask each site for the itinerary, which one gives you the best information and the best deals?

ANSWER Have your students research and report their findings.

Level: Medium Section/Learning Objective: Section 7.3/Learning Objective 3 Bloom’s Category: Analysis AACSB Category: Analytic

Closing Case: The Story of Shopify 1.

Discuss the various services that Shopify provides to merchants. Why wouldn’t merchants develop these services themselves?

ANSWER Merchants can use Shopify to help them with payments, marketing, shipping, inventory levels, and CRM tools. For small businesses to have sufficient expertise and time to be able to research, select and implement these services is rare. Shopify allows small businesses to be up and running and have features that would otherwise have been unattainable or delayed in implementation. Therefore, it is more cost effective and efficient for merchants to rely on Shopify’s research, expertise, and services.

Level: Easy Section/Learning Objective: Section 7.3/Learning Objective 3 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 2.

Discuss why and how the COVID-19 pandemic gave Shopify such a huge boost. How will Shopify’s success be affected as the pandemic recedes?

ANSWER The shift to e-commerce for businesses as a result of the pandemic gave Shopify a huge boost. Merchants likely favor the flexibility that Shopify offers for them to custom build their online stores, rather than having to use the platform rules of and operate on Amazon or eBay. The future cannot be predicted so the answer to the question regarding what will happen as the pandemic recedes will vary based on student perspective. There should be some acknowledgment that businesses are unlikely to fully go back to their traditional models and it is likely that e-commerce will be integrated either in part or in full moving forward. The result is continued demand for Shopify.

Level: Easy Section/Learning Objective: Section 7.3/Learning Objective 3 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

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Chapter 8: Wireless, Mobile Computing, and Mobile Commerce

Chapter Outline 8.1 8.2 8.3 8.4

Wireless Technologies Wireless Computer Networks and Internet Access Mobile Computing and Mobile Commerce The Internet of Things

Learning Objectives 8.1 Identify advantages and disadvantages of each of the four main types of wireless transmission media.

8.2 Explain how businesses can use short-range, medium-range, and long-range networks.

8.3 Provide a specific example of how each of the five major m-commerce applications can benefit a business.

8.4 Describe the Internet of Things, and provide examples of how organizations can use the Internet of Things.

Teaching Tips and Strategies Wireless communications have become so ubiquitous, most students seldom think about it or its implications. So they will, hopefully, not need to be told, ―What’s in it for me?‖ Just about every student has a personal computer with some type of Internet connection. Most of them also have smartphones, so they probably use some mobile applications other than just the phone.

One of the first things they need to understand is the difference between wireless and mobile communications. Explain why the term ―mobile‖ refers to something that changes its location over time.

Also explain that wireless networks can be both mobile (Internet over cell phones) or fixed (Wi-Fi).

I suggest starting the class by having students comparing the mobile applications they use. Ask them if there are any apps that they feel might not work well on a mobile device.

Then focus the discussion on location-based commerce. Ask them to think about what it might mean for businesses if they had access to consumers’ real-time location information. In other words, how would a business have to transform themselves to satisfy consumer demand for mobile applications? Lead into a discussion of the benefits and drawbacks of mobile computing.

Given the privacy discussions that were taking place during 2013, start a discussion on privacy rights associated with mobile computing, especially RFID. Some students will express that the government and employers (and their parents) have no right to monitor their movements and location. This usually will lead to an interesting class discussion. I sometimes break the class into different groups and assign them different perspectives. One point of view would be from the employer. I ask the students if you were an employer of mobile workers (such as service technicians), would you want to pay for an employee to run personal errands while on the job? The other perspective would be the employee’s. Should it be all right to use company time and equipment to stop at the dry cleaners while on the job? When having this

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discussion with students; try to remain impartial, at least at first. This helps students complete their thoughts on the benefits and drawbacks of mobile computing and related privacy concerns.

BlackBoard/CMS If your students are not using it already, have them download BlackBoard’s mobile application or the one for the CMS you are using (if there is one available). Have them discuss the differences between using the mobile app and the browser-based version.

I normally find a recent news article about mobile phone tracking and privacy to start an online discussion.

Opening Case: Hong Kong Pro-Democracy Protesters Turn to Technology 1. Describe the various technologies that Hong Kong activists used to protect themselves from the Chinese government.

ANSWER The technologies used were mesh networks, encrypted messaging apps, a Reddit-like forum, online anonymity measures, a return to cash, and physical destruction of surveillance equipment. Students should describe the use of each of these as presented in the case in their response.

Level: Easy Section/Learning Objective: Section 8.4/Learning Objective 4 Bloom’s Category: Analysis AACSB Category: Analytic 2. Refer to Chapter 3 and discuss the ethicality and legality of Apple’s actions regarding the HKMap app.

In your opinion, was Apple justified in removing the app from its App Store? Why or why not? In your opinion, was Apple’s stated justification the real reason the company removed the app? Why or why not?

ANSWER Student answers will vary. They may indicate that the app presented both advantages and dangers for both sides of the protest (law enforcement and protesters) and it is not Apple’s responsibility to choose how it is to be used or its availability.

Level: Easy Section/Learning Objective: Section 8.4/Learning Objective 8.4 Bloom’s Category: Application AACSB Category: Reflective Thinking IT’s About Business 8.1 Phone Farming

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All technologies are double-edged swords; that is, they have advantages and disadvantages. Explain how this statement relates to smartphones. Provide another example of how smartphones can cause problems.

ANSWER

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Student answers will vary based on their own knowledge, research, or experience. One increasing area of concern is the dependency that individuals are developing on their smartphones. This is impacting their communication with others and work-life balance for professionals and can result in health issues.

Level: Easy Section/Learning Objective: Section 8.1/Learning Objective 1 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

-

Refer to Chapter 3. Discuss the ethics and legality of phone farming.

ANSWER -

The intention of incentivized traffic is for legitimate human interaction. It is unethical to phone farm because it isn’t actually humans that are watching the trailers, ads, etc. Farmers run multiple phones, and even if they are using software to mimic actions, it is likely not genuine responses or the intended nature of interaction.

Level: Easy Section/Learning Objective: Section 8.1/Learning Objective 1 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking IT’s About Business 8.2 Skylo Technologies

10. Why is satellite connectivity so important to Internet of Things networks??

ANSWER - Satellite enables connectivity in places that do not have cell towers or fiber-optic cables, in other words, in remote areas.

Level: Easy Section/Learning Objective: Section 8.2/Learning Objective 8.2 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 11. Why did Skylo choose geostationary satellites for its connectivity? Describe potential problems that could arise from this strategy.

ANSWER The focus of connectivity for Skylo is on logistical applications, such as enabling boats at sea or truckers on rural routes. Given the remote areas, the connectivity selected would be appropriate.

Level: Easy Section/Learning Objective: Section 8.2/Learning Objective 8.2 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

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12. Describe the ways that Skylo keeps the costs down for its service. Refer to Chapter 2. Do these methods constitute a competitive advantage for Skylo? Why or why not?

ANSWER They keep the costs down by using existing satellites rather than creating their own. Additionally, users buy their own antenna and install it themselves.

These may create a competitive advantage at the moment for Skylo but new entrants could create similar partnerships and use existing satellites.

Level: Easy Section/Learning Objective: Section 8.2/Learning Objective 8.2 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

IT’s About Business 8.3 Connecting Africans with Wi-Fi 8.

Discuss the numerous benefits that Internet access provides to underserved people around the world.

ANSWER Benefits in the case include: - Internet access can help educate farmers regarding better agricultural practices, enable transparency into market prices for crops, and expand access to financial services such as credit.

In some areas, farmers’ income has increased by 40 percent.

- Opens up the world of online distance education for underserved areas and for people who are challenged by geographical circumstances (including groups who may not have been able to at all before—such as women) Remote medical diagnosis and prevention education Level: Easy Section/Learning Objective: Section 8.3/Learning Objective 8.3 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 9.

Why would a government hinder Bluetown’s efforts to provide affordable Internet access to its rural citizens?

ANSWER It could be intentional or unintentional. A difficult and complex regulatory environment would hinder efforts. Intentionally, it could be due to losing some control of citizens, controlling the information, or changing the culture of their communities.

Level: Medium Section/Learning Objective: Section 8.3/Learning Objective 8.3 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

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IT’s About Business 8.4 The Internet of Things in the Vineyard 1. Discuss the advantages that the IoT provides vintners.

ANSWER Advantages include: - The ability to assess ripeness and determine the best moment to harvest grapes - Machine-learning algorithms compare each bunch’s ripeness to previous data points, so the vintner can ensure the best grapes are picked and crushed together - Improves water efficiency Level: Easy Section/Learning Objective: Section 8.3/Learning Objective 8.3 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 2. Describe problems that the IoT might cause vintners.

ANSWER It may shift reliance on IoT from vintner knowledge, which creates a dependency on the device.

Students may identify other problems, such as technological connectivity and dependence on related services, as well Level: Medium Section/Learning Objective: Section 8.3/Learning Objective 8.3 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

Before You Go On… Review Questions Section 8.1 …

9.

Describe the most common types of wireless devices.

ANSWER • GPS—global position system, a satellite-based tracking system that enables the determination of a GPS device’s location • Smartphone—Internet-enabled cell phones that can support mobile applications Level: Easy Section/Learning Objective: Section 8.1/Learning Objective 1 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 10. Describe the various types of transmission media.

ANSWER

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Microwave, satellite, and infrared are line-of-sight methods while radio signals travel through the air and can pass through walls.

Level: Easy Section/Learning Objective: Section 8.1/Learning Objective 1 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 11. Describe four threats to the security of wireless transmissions.

ANSWER 1. A rogue access point is an unauthorized access point into a wireless network. The rogue could be someone in your organization who sets up an access point meaning no harm but fails to inform the IT department. In more serious cases, the rogue is an ―evil twin‖—someone who wishes to access a wireless network for malicious purposes.

2. In an evil twin attack, the attacker is in the vicinity with a Wi-Fi–enabled computer and a separate connection to the Internet. Using a hotspotter—a device that detects wireless networks and provides information on them—the attacker simulates a wireless access point with the same wireless network name, or SSID, as the one that authorized users expect. If the signal is strong enough, users will connect to the attacker’s system instead of the real access point. The attacker can then serve them a Web page asking for confidential information such as usernames, passwords, and account numbers.

In other cases, the attacker simply captures wireless transmissions. These attacks are more effective with public hotspots (e.g., McDonald’s and Starbucks) than with corporate networks.

3. War driving is the act of locating WLANs while driving (or walking) around a city or elsewhere.

To war drive or walk, you simply need a Wi-Fi detector and a wireless-enabled computer. If a WLAN has a range that extends beyond the building in which it is located, then an unauthorized user might be able to intrude into the network. The intruder can then obtain a free Internet connection and possibly gain access to important data and other resources.

4. Eavesdropping refers to efforts by unauthorized users to access data that are traveling over wireless networks. Finally, in radio frequency (RF) jamming, a person or a device intentionally or unintentionally interferes with your wireless network transmissions.

Level: Easy Section/Learning Objective: Section 8.1/Learning Objective 1 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking Section 8.2

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What is Bluetooth? What is a WLAN?

ANSWER • Bluetooth is a device used to create small wireless radio-based personal networks for up to 8 devices within 10 meters on low power.

9. Wireless local area networks are local area networks without the cables used to transmit and receive data via radio waves.

Level: Easy

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Section/Learning Objective: Section 8.2/Learning Objective 2 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking

-

Describe Wi-Fi, cellular service, and WiMAX.

ANSWER Wireless Fidelity, known as Wi-Fi:  802.11a transmits up to 54 Mbps within 10-30 meters  802.11b transmits up to 11 Mbps within 30-50  802.11g transmits up to 54 Mbps and is compatible with 802.11b Major benefits are low cost and the ability to provide simple Internet access.

Cellular services: Communicate with radio antenna placed within adjacent areas called cells. It uses digital signals and can transmit voice and data up to 384 Kbps when device is used while walking, 128 Kbps while in a car, and up to 2Mbps when device is in a fixed location.

WiMax: Worldwide interoperability for microwave access has a range of up to 31 miles compared to 300 feet for Wi-Fi and 30 feet for Bluetooth. It has a transfer rate of 75 Mbps.

Level: Easy Section/Learning Objective: Section 8.2/Learning Objective 2 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking Section 8.3 23. What are the major drivers of mobile computing?

ANSWER • Widespread availability of mobile devices • No need for a PC • The ―cell phone culture‖ • Declining prices 10. Bandwidth improvement Level: Easy Section/Learning Objective: Section 8.3/Learning Objective 3 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 24. Describe mobile portals and voice portals.

ANSWER Mobile portals: A customer interaction channel that aggregates content and services for mobile users.

Services include news, sports, e-mail, entertainment, travel information, restaurant and event information, games, TV and movie listings, community services, and stock trading.

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Voice portals: A website with an audio interface. Voice portals are not websites in the normal sense, but rather are phone numbers that connect to a website where you can request information verbally.

The system finds the information and then translates it into a computer-generated voice reply. An example is 511, the travel-information line developed by Tellme.com.

Level: Medium Section/Learning Objective: Section 8.3/Learning Objective 3 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 25. Describe wireless financial services.

ANSWER The services provide a convenient way to transact business regardless of where they are or what time it is. These services include banking, wireless payments and micropayments, wireless wallets, billpayment services, brokerage services, and money transfers.

Level: Medium Section/Learning Objective: Section 8.3/Learning Objective 3 Bloom’s Category: Application AACSB Category: Reflective Thinking 26. Discuss some of the major intrabusiness wireless applications.

ANSWER • There are applications that help owners of rental vehicles, commercial transport, and heavy equipment fleets. They can determine location of the vehicles and control messages sent to and from vehicles.

• Insurance companies use wireless digital cameras to take pictures at accident scenes and transmit to processing centers.

15. Mystery customers who file reports after evaluating locations of a national restaurant franchise use handheld devices to file reports.

Level: Medium Section/Learning Objective: Section 8.3/Learning Objective 3 Bloom’s Category: Analysis AACSB Category: Analytic Section 8.4 10. Define the Internet of Things and RFID. ANSWER The ―Internet of Things‖ is invisible ―everywhere computing‖ that is embedded in the objects around us, including the floor, lights, cars, washing machines, cell phones, our clothes, etc.

RFID is technology that allows manufacturers to attach tags with antennae and computer chips on goods and then track their movement through radio signals. This technology was developed to replace bar codes.

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Wireless sensor networks are networks of interconnected, battery-powered, wireless sensors called motes that are placed into the physical environment. The motes collect data from many points over an extended space. Each mote contains processing, storage, and radio frequency sensors and antennae.

This technology enables more accurate information to be gathered.

Level: Easy Section/Learning Objective: Section 8.4/Learning Objective 4 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 11. Provide two examples (other than those mentioned in this section) of how the Internet of Things benefits organizations (public sector, private sector, for-profit, or not-for-profit).

ANSWER - Pet owners can have RFID chips placed inside their pets to help find them when they are lost - Parents can place RFID tags in their kids clothes or on a bracelet to help locate them if they become lost - Universities can place RFID chips on student or employee IDs to take attendance or track employee work hours Students should be able to come up with more ideas.

Level: Easy Section/Learning Objective: Section 8.4/Learning Objective 4 Bloom’s Category: Application AACSB Category: Reflective Thinking 12. Provide two specific business uses of RFID technology.

ANSWER  Replace bar codes and store additional information that can uniquely identify an item or groups of items 

Embed in credit cards for security and protection against identity theft



Embed in ID cards to confirm card identity and validity, and for controlling area access

Level: Medium Section/Learning Objective: Section 8.4/Learning Objective 4 Bloom’s Category: Application AACSB Category: Reflective Thinking Discussion Questions q.

Given that you can lose a cell phone as easily as a wallet, which do you feel is a more secure way of carrying your personal data? Support your answer.

ANSWER

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There are various, including requiring a password/passcode to access information on the device to encrypting all the data you have stored on your phone. Your students will have more ideas and opinions.

Level: Easy Section/Learning Objective: Section 8.3/Learning Objective 3 Bloom’s Category: Application AACSB Category: Reflective Thinking r.

If mobile computing is the next wave of technology, would you ever feel comfortable with handing a waiter or waitress your cell phone to make a payment at a restaurant the way you currently hand over your credit or debit card? Why or why not?

ANSWER You probably have a few students who have or are working in a restaurant. Start the discussion by asking for their opinions. Then open it up to the rest of your class.

Level: Easy Section/Learning Objective: Section 8.3/Learning Objective 3 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking s.

What happens if you lose your NFC-enabled smartphone or it is stolen? How do you protect your personal information?

ANSWER It depends on how secure you have made your smartphone (i.e., if it has been set up to require a passcode/password to access apps, etc.) Ask your students to provide their opinions.

Level: Easy Section/Learning Objective: Section 8.3/Learning Objective 3 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking t.

In your opinion, is the mobile (or digital) wallet a good idea? Why or why not?

ANSWER Ask your students for their opinions.

Level: Easy Section/Learning Objective: Section 8.3/Learning Objective 3 Bloom’s Category: Application AACSB Category: Reflective Thinking u.

Discuss how m-commerce can expand the reach of e-business.

ANSWER In the traditional computing environment, users have to come to a computer in order to utilize its applications. The need to be linked by wires to computing resources limited their usefulness to people who must be mobile while on the job. M-commerce is a natural extension of e-business, only done in

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a wireless environment. M-commerce serves the needs of an increasingly mobile work force and consumer population.

Level: Medium Section/Learning Objective: Section 8.3/Learning Objective 3 Bloom’s Category: Application AACSB Category: Reflective Thinking v.

Discuss how mobile computing can solve some of the problems of the digital divide.

ANSWER With wireless devices becoming cheaper and cheaper, and the individual’s ability to take those devices to locations where they can connect, often for free, a user who may not have access to a computer at home is able to the Internet.

Level: Medium Section/Learning Objective: Section 8.3/Learning Objective 3 Bloom’s Category: Synthesis AACSB Category: Reflective Thinking w. Explain the benefits that wireless commerce provides to consumers and the benefits that wireless commerce provides to merchants.

ANSWER • Access to expertise: For example, medical service providers in remote locations could communicate real time with specialists in other places to provide specialized consultations.

Consumers would benefit due to better access to specialized expertise without the inconvenience or expense of traveling to a different location for the consultation.

• Access to information: For example, mobile portals provide consumers access to a personalized set of content and services regardless of location. This enables the consumer to always have specified information available regardless of location.

• Customized advertising: For example, location-based advertising can deliver information and coupons to inform consumers about shops, malls, and restaurants close to their current location.

• Access to services: For example, wireless banking enables consumers to carry out various financial transactions from any location, further eliminating the need to go to a bank or an ATM to carry out needed banking business.

Level: Medium Section/Learning Objective: Section 8.3/Learning Objective 3 Bloom’s Category: Application AACSB Category: Reflective Thinking x.

Discuss the ways in which Wi-Fi is being used to support mobile computing and m-commerce.

Describe the ways in which Wi-Fi is affecting the use of cellular phones for m-commerce.

ANSWER Wi-Fi is the technical standard underlying most of today’s wireless local area networks (WLANs). A mobile computing device can connect to the Internet easily from public access points called hotspots.

Mobile computing and m-commerce applications can be delivered easily in this environment at adequate communication speeds. Wi-Fi is reducing the need for wireless wide area networks (WWANs) based on cellular technology.

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Level: Medium Section/Learning Objective: Section 8.2/Learning Objective 2 Bloom’s Category: Analysis AACSB Category: Reflective Thinking y.

You can use location-based tools to help you find your car or the closest gas station. However, some people see location-based tools as an invasion of privacy. Discuss the pros and cons of location-based tools.

ANSWER The benefits of location-based tools include the ability to request and receive information that is tailored to your exact location. The concerns about this capability arise from the fact that ―someone‖ can obtain information about your exact location and movements and could use that information in illicit ways.

Level: Medium Section/Learning Objective: Section 8.3/Learning Objective 3 Bloom’s Category: Analysis AACSB Category: Reflective Thinking z.

Discuss the benefits of telemetry in health care for everyone during the COVID-19 pandemic.

ANSWER Telemetry devices are used for doctors to monitor patients and control medical equipment remotely.

For individuals that are living alone or required to quarantine, they may be able to seek the assistance they need should medical attention be required despite being alone. Devices that are available for seniors to wear around their neck or wrist are examples of telemetry This is valuable for seniors who need emergency assistance after a fall or when there is some other medical problem, if they have limited interaction with others.

Level: Medium Section/Learning Objective: Section 8.3/Learning Objective 3 Bloom’s Category: Analysis AACSB Category: Reflective Thinking aa. Discuss how wireless devices can help people with disabilities.

ANSWER Sensors that assist the disabled with the ability to communicate with their computer and other household devices are helpful in allowing them to interface with their environment when they otherwise would not be able to accomplish even basic activities.

Level: Medium Section/Learning Objective: Section 8.3/Learning Objective 3 Bloom’s Category: Analysis AACSB Category: Reflective Thinking

bb. Which of the applications of the Internet of Things do you think are likely to gain the greatest market acceptance over the next few years? Why?

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ANSWER While student answers will vary, it is likely that applications that add convenience without violating privacy will be the ones to gain market acceptance. For example, an application that provides information about an object for diagnostic and repair purposes would be useful so that the consumer could arrange for repair before the product fails.

Level: Medium Section/Learning Objective: Section 8.4/Learning Objective 4 Bloom’s Category: Analysis AACSB Category: Analytic Problem-solving Activities 4.

Investigate commercial applications of voice portals. Visit several vendors, for example, Microsoft and Nuance. What capabilities and applications do these vendors offer?

ANSWER Students will research voice portals and report their findings.

Level: Medium Section/Learning Objective: Section 8.1/Learning Objective 1 Bloom’s Category: Analysis AACSB Category: Analytic 5.

Examine how new data capture devices such as RFID tags help organizations accurately identify and segment their customers for activities such as targeted marketing. Browse the Web and develop five potential new applications not listed in this chapter for RFID technology. What issues would arise if a country’s laws mandated that such devices be embedded in everyone’s body as a national identification system?

ANSWER Students should enjoy researching this topic and describing these wearable devices.

Level: Medium Section/Learning Objective: Section 8.4/Learning Objective 4 Bloom’s Category: Analysis AACSB Category: Analytic 6.

Investigate commercial uses of GPS. Start with www.neigps.com. Can some of the consumeroriented products be used in industry? Prepare a report on your findings.

ANSWER Students will investigate and list products that can cross over between the consumer and industry markets.

Level: Medium Section/Learning Objective: Section 8.2/Learning Objective 2 Bloom’s Category: Analysis AACSB Category: Analytic

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7.

Visit www.bluetooth.com. Examine the types of products being enhanced with Bluetooth technology.

Present two of these products to the class and explain how they are enhanced by Bluetooth technology.

ANSWER Various categories of products are listed in the website. Students will investigate and prepare a report on two of these products. Students also examine any drawbacks to having Bluetooth used in the product.

Level: Medium Section/Learning Objective: Section 8.2/Learning Objective 2 Bloom’s Category: Analysis AACSB Category: Analytic 8.

Explore www.nokia.com. Prepare a summary of the types of mobile services and applications Nokia currently supports and plans to support in the future.

ANSWER Students will investigate and prepare a report.

Level: Easy Section/Learning Objective: Section 8.3/Learning Objective 3 Bloom’s Category: Analysis AACSB Category: Analytic 9.

Enter www.ibm.com. Search for ―wireless e-business.‖ Research the resulting stories to determine the types of wireless capabilities and applications IBM’s software and hardware supports. Describe some of the ways these applications have helped specific businesses and industries.

ANSWER Students are to look into the published case studies on www.ibm.com under ―Solutions‖ and find some examples of cases that they can share with the class.

Level: Easy Section/Learning Objective: Section 8.2/Learning Objective 2 Bloom’s Category: Analysis AACSB Category: Analytic

10. Visit www.onstar.com. What types of fleet services does OnStar provide? Are these any different from the services OnStar provides to individual car owners? (Play the movie.)

ANSWER Your students will play the movie and report their experiences.

Level: Easy Section/Learning Objective: Section 8.3/Learning Objective 3 Bloom’s Category: Analysis AACSB Category: Analytic

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Closing Case: The Internet of Wild Things 1. Propose additional applications of the living Internet of Things as sensors continue to decrease in size and cost and increase in capabilities.

ANSWER Student answers will vary.

Level: Medium Section/Learning Objective: Section 8.4/Learning Objective 8.4 Bloom’s Category: Analysis AACSB Category: Analytic 2. Oceans cover approximately 70 percent of the Earth’s surface. Research underwater sensors. Can sensors be placed on fish, whales, and dolphins? Why or why not? Would it be important to monitor fish, whales, and dolphins? Why or why not?

ANSWER Students will present responses based on their research.

Level: Medium Section/Learning Objective: Section 8.4/Learning Objective 8.4 Bloom’s Category: Analysis AACSB Category: Analytic

Chapter 9: Social Computing Chapter Outline 9.1 Web 2.0 9.2 Fundamentals of Social Computing in Business 9.3 Social Computing in Business: Shopping 9.4 Social Computing in Business: Marketing 9.5 Social Computing in Business: Customer Relationship Management 9.6 Social Computing in Business: Human Resource Management Learning Objectives 1.

2.

3.

4.

5.

6.

Describe six Web 2.0 tools and two major types of Web 2.0 sites.

Describe the benefits and risks of social commerce to companies.

Identify the methods used for shopping socially.

Discuss innovative ways to use social networking sites for advertising and market research.

Describe how social computing improves customer service.

Discuss different ways in which human resource managers make use of social computing.

Teaching Tips and Strategies Most of our students are familiar with social networking. When starting this chapter’s discussion, ask how many students are members of at least one social networking site. You can then ask how active they are in

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terms of their social networking presence. For example, how often do they check the websites to see other people’s news feeds or to update their status? Visit some of the popular social networking sites such as Facebook, LinkedIn, Twitter, and Instagram. Ask your students if they know of any other social network sites. What are specific purposes or unique features of each of those sites? What makes them useful? Are there any sites that they no longer use or are members of? Finally, what factor do they consider before they make the decision to join a site? This may start an interesting discussion of the positives and negatives of individual sites. (For information on social networking sites, visit http://en.wikipedia.org/wiki/List_of_social_networking_websites.)

Share with your students how Web 2.0 technologies enable social networking sites and other Internetbased applications. Ask them how many have heard about wikis, podcasts, blogs, and RSS, and how many have firsthand experience using or even creating any applications to access these technologies?

Discuss the fundamentals of social computing. Start by describing how social interactions are important when making some purchase decisions. Then explain how companies are quantifying and measuring these interactions. While this data may be beneficial to companies and, in some cases, consumers are also eager to share their preferences, there are some concerns for both sides, including the security and privacy for the customer, and issues with scamming by the companies.

The majority of your students will have already used social media sites for collecting information at some point prior to making a purchase decision. However, they may not realize that at the same time they are participating in market research. Ask them if they have ever posted comments about a product or store, or shared their ideas through product or satisfaction surveys. Explain that these are examples of how they are contributing to market research.

Using social media in a job search may be a new experience for students but is one that should generate great interest and discussion. Ask the class how many students have created a profile on LinkedIn. Ask them to research themselves in a way that the recruiter might research them if they applied for a job.

Describe how they could create a professional profile online for themselves.

If your school does not already have a group set up in LinkedIn, I suggest you work with each of the departments in your school or college of business to set them up. (It does not hurt for any academic clubs set up groups too.) After explaining why it is becoming important when doing a job search to create a profile in LinkedIn (or similar site), encourage your students to join the groups and departments that fit their academic and career direction. It is also a way to maintain a communications link with them after their graduation.

Finally, as I stated in the security chapter, most of us have created accounts at sites we no longer use. A site that provides information about how to delete any old unused social media accounts is http://justdelete.me. I mention this to my students and suggest they delete any old or unused accounts they might have (or remember they have). The problem might be that many of us registered at these sites when online social media started to appear and become popular. Unfortunately, we forgot about those sites as they fell out of fashion. However, some may still around.

Blackboard/CMS suggestions Various companies post videos of their social media marketing plans on their company websites, on YouTube, or other video streaming sites. With a little effort, you should be able to find a few that are directly related to how social media is or can be used by a business’s marketing team. You might also consider making this a class project, where individual students or student groups research and find videos.

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When the video is part of a sales or marketing presentation, I include a disclaimer or reminder that neither the school nor I has a connection with the company. (If, in fact, that is the case.)

Opening Case: Fake Reviews on Amazon 1. Reviews typically consist of five rankings, from five stars (outstanding) to one star (poor). Which ranking do you trust the most? Why? Which ranking do you trust the least? Why? ANSWER: Student answers will vary.

Level: Easy Section/Learning Objective: Section 9.2/Learning Objective 2 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 2. What could Amazon do to govern Amazon Marketplace more efficiently and effectively? What are the possible impacts of poor governance on buyers? On sellers?

ANSWER: Student answers may vary based on their own ideas; however, they are likely to recognize that less reliance on public reviews, or perhaps varying the time permitted to spend on a claim based on repeated action, volume, or some other grouping could be more effective. The way that performance team members are compensated could be creating bias in the decision process. Performance team members’ incentives favor rejecting appeals. A more balanced approach would likely aid in the decision-process. Perhaps the incentives and the claim process should be more adaptable to situations, not a one-size-fits-all approach.

Level: Easy Section/Learning Objective: Section 9.2/Learning Objective 2 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 3. Is it even possible for Amazon to govern such a vast, dynamic entity such as Marketplace? Why or why not?

ANSWER: Student answers will vary but they are likely to recognize that Amazon is not likely to be able to govern perfectly; however, they can establish clear expectations, have effective reporting to monitor the activity, and set an appropriate culture or tone at the top.

Level: Medium Section/Learning Objective: Section 9.2/Learning Objective 2 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking IT’s About Business 9.1 Social Commerce Helps Thailand Deal with COVID-19 1. Discuss the competition between e-marketplaces and social commerce platforms in Thailand.

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ANSWER: E-marketplaces attract small and medium-sized enterprises (SMEs) and they also accommodate a direct-to-consumer (DTC) strategy where brands set up their official branded shops within emarketplaces. E-marketplaces aggregate products from a wide variety of merchants, so they offer more product choices with higher availability than vendor-specific online retail stores. For example, Lazada charges no registration or commission fees and merchants are able to open their online shops in less than five minutes.

Forty percent (40%) of people polled reportedly shopped through Facebook, the main social media platform in Thailand. Very small retailers use social commerce. Much of the activity is through conversational commerce via chatrooms, messaging apps (i.e., Line, Facebook Messenger, and WhatsApp), which enables them to connect quickly and directly with consumers and offers personalized service with minimal upfront investments. Platforms provide convenient shopping within their main apps; however, one disadvantage is that not all platforms have payment systems.

Level: Easy Section/Learning Objective: Section 9.2/Learning Objective 9.2 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 2. Discuss the common, overlapping functions that e-marketplaces and social commerce platforms demonstrate in this case.

ANSWER: Both digital platforms increase sales and are easy to use by retailers.

Level: Easy Section/Learning Objective: Section 9.2/Learning Objective 9.2 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking IT’s About Business 9.2 The Story of Poshmark 1. What is the difference between search-based shopping and discovery-based social shopping?

ANSWER: Search-based shopping enables visitors to use the search bar to shop for products based on the results of their search. Discovery-based social shopping enables shoppers and their friends involved in the shopping experience via social networks.

Level: Easy Section/Learning Objective: Section 9.3/Learning Objective 9.3 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 2. If you were Jeff Bezos (CEO of Amazon), what features might you add to your platform to compete with Poshmark?

ANSWER:

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Student answers will vary.

Level: Easy Section/Learning Objective: Section 9.3/Learning Objective 9.3 Bloom’s Category: Analysis AACSB Category: Reflective Thinking 3. In your opinion, does Poshmark have a strategic advantage over ThredUp and The RealReal? Provide examples to support your answer.

ANSWER: Poshmark has a strategic advantage in some of the features it offers including videos and styling options.

The business model also allows the sellers to make the pricing and sales decisions, which attracts and empowers entrepreneurs as opposed to small-scale (individual) sellers.

Level: Easy Section/Learning Objective: Section 9.3/Learning Objective 9.3 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking IT’s About Business 9.3 Farmers Develop Another Source of Income 1. Describe how farmers are using YouTube in their marketing efforts.

ANSWER: Farmers want to show the work involved in farming. Most farming videos involve livestock and show the reality of what farming is actually about (i.e., moving large grass and alfalfa bales from one area of their farm to another).

Level: Easy Section/Learning Objective: Section 9.4/Learning Objective 9.4 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 2. Describe how farmers generate income from YouTube.

ANSWER: Farmers generate income from YouTube in two ways: 1) advertisements via Google AdSense that appear before, after, or in the middle of a video, and 2) sponsorships or brand deals that include paid product endorsements within a video’s content.

Level: Easy Section/Learning Objective: Section 9.4/Learning Objective 9.4 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking Before you go on… Review Questions Section 9.1

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1. Differentiate between blogs and wikis.

ANSWER: A weblog (blog for short) is a personal website in which the site creator expresses his or her feelings or opinions via a series of chronological entries. A wiki, in contrast, is not a personal website. Rather, anyone can post new material and make changes to already posted material. A microblog is similar to a blog, but there is a limit on how much can be posted in a single entry. Twitter is an example of a microblog: it only allows 140 characters per entry.

Level: Easy Section/Learning Objective: Section 9.1/Learning Objective 1 Bloom’s Category: Knowledge AACSB Category: Technology 2. Differentiate between social networking websites and corporate social networks.

ANSWER: Public social network sites allow anyone to join in, while private social networks are limited to the employees or members of an organization. Private social networks are behind company firewalls and are for the purpose of the employees to network with each other and are not open to the public.

Level: Medium Section/Learning Objective: Section 9.1/Learning Objective 1 Bloom’s Category: Comprehension AACSB Category: Technology Section 9.2 1. Briefly describe the benefits of social commerce to consumers.

ANSWER:  Better and faster vendor responses to complaints, because customers can air their complaints in public (on Twitter, Facebook, and YouTube)  Customers can assist other customers (e.g., in online forums)  Customers’ expectations can be met more fully and quickly  Customers can easily search, link, chat, and buy while staying on a social network’s page Level: Easy Section/Learning Objective: Section 9.2/Learning Objective 2 Bloom’s Category: Compression AACSB Category: Technology 2. Briefly describe the risks of social commerce to businesses.

ANSWER:  It can be problematic to advertise a product, brand, or company on social computing websites where content is user generated and is may not be edited or filtered  Potential of negative posts to business’ site  20–80 rule of thumb, which posits that a minority of individuals (20 percent) contribute most of

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      

the content (80 percent) to blogs, wikis, social computing websites, etc.

Information security concerns of customers Invasion of customer privacy by business Violation of intellectual property and copyright Employees’ reluctance to participate Data leakage of personal information or corporate strategic information Poor or biased quality of users’ generated content Cyberbullying/cyberstalking and employee harassment

Level: Hard Section/Learning Objective: Section 9.2/Learning Objective 2 Bloom’s Category: Analysis AACSB Category: Technology 3. What are the benefits of collaborative consumption to customers?

ANSWER: There are many benefits to customers. In collaborative production, users sell the extra power generated from their solar panels back to the utility company’s grid to help power someone else’s home. Crowdfunding helps raise money from a large number of people, typically through the Internet. Peer-to-peer lending is the practice of lending money to unrelated individuals without using a traditional financial institution such as a bank. Collaborative consumption also has positive environmental impacts. As our population grows, we are using valuable resources— water, food, oil—in a way that is not sustainable. The new model helps us use our natural resources more wisely, by sharing, not owning.

Level: Easy Section/Learning Objective: Section 9.2/Learning Objective 2 Bloom’s Category: Compression AACSB Category: Technology 4. What are the benefits and risks of collaborative consumption to participants (i.e., workers)?

ANSWER: Benefits: Participants cite advantages that include self-management, variety, and the flexibility that comes from being able to set their own schedules. The model can be beneficial for part-time workers, young people such as students, the unemployed, stay-at-home parents, and retired persons. The model allows people to share their underused assets and earn income.

Risks: People working for collaborative consumption services often work seven-day weeks, performing a series of one-off tasks. They have little recourse when the services for which they work change their business models or pay rates. The pay may be less than expected when participants factor in the time spent, expenses, insurance costs, and taxes on self-employment earnings. Participants have no basic employee benefits or protections.

Level: Easy Section/Learning Objective: Section 9.2/Learning Objective 2 Bloom’s Category: Compression AACSB Category: Technology

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Section 9.3 1. Before making a purchase, why are ratings, reviews, and recommendations so important to potential customers?

ANSWER: Ratings, reviews and recommendations are important in social shopping because customers base their purchasing decisions on these factors, as they are based on others’ experiences with the products.

Level: Easy Section/Learning Objective: Section 9.3/Learning Objective 3 Bloom’s Category: Application AACSB Category: Technology 2. Define collaborative consumption and describe how collaborative consumption is a ―green‖ phenomenon.

ANSWER: The premise of collaborative consumption is simple: having access to goods and skills is more important than owning them. There are three types of collaborative consumption:  Product-service systems that enable people to share or rent a product (e.g., car sharing)  Redistribution markets, which enable the re-ownership of a product (e.g., Craigslist)  Collaborative lifestyles in which participants can share assets and skills (e.g., coworking spaces) Collaborative consumption encourages individuals to shift their mobility (transportation) costs shift from being fixed (ownership) to variable (renting). This encourages them to make more efficient decisions about when and how frequently they actually need to drive. Research has demonstrated that the average car sharer drives 40 percent less than the average owner.

Level: Medium Section/Learning Objective: Section 9.3/Learning Objective 3 Bloom’s Category: Analysis AACSB Category: Technology Section 9.4 1. Is social advertising more effective than advertising without a social component? Why or why not?

ANSWER: Social advertising is the first form of advertising to leverage user dynamics such as peer pressure, friend recommendations and likes, and other forms of social influence. Advertisers have tracked the number of visitors on social networks and the amount of time they spend there. As a result, they have become willing to pay to place ads and run promotions on social networks. Advertisers now post ads on all major social networking websites.

Level: Medium Section/Learning Objective: Section 9.4/Learning Objective 4 Bloom’s Category: Analysis AACSB Category: Technology 2. Describe how marketing professionals use social networks to perform marketing research.

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ANSWER: Marketing professionals have historically used demographics compiled by market research firms as one of their primary tools to identify and target potential customers. Obtaining this information was time-consuming and costly, because the marketing professionals had to ask potential customers to provide it. They can now use the information that members of social networks provide voluntarily on their pages. Because of the open nature of social networking, merchants can easily find their customers, see what they do online, and see who their friends are. Word-of-mouth has always been one of the most powerful marketing methods. Social media sites can provide this type of data for numerous products and services.

Level: Easy Section/Learning Objective: Section 9.4/Learning Objective 4 Bloom’s Category: Comprehension AACSB Category: Technology Section 9.5 1. Discuss why social computing is so important in customer relationship management.

ANSWER: Customers have become empowered. They now know how to use the wisdom and power of crowds and social communities to their benefit. These customers are now able choose how they interact with companies and brands. Customers have also elevated their expectations concerning their experiences they have with a company. Customers are actively involved with businesses, not just as purchasers, but also as advocates and influencers. As a result, businesses must now respond to customers quickly and appropriately.

Level: Medium Section/Learning Objective: Section 9.5/Learning Objective 5 Bloom’s Category: Comprehension AACSB Category: Technology 2. Describe how social computing improves customer service.

ANSWER: Social computing empowers the user community to help each other, consequently reducing the burden on customer service. It also gives customers many different platforms to interact/communicate with companies and has a larger influence on the company’s decisions. Since social media is very immediate, companies can respond quickly to unhappy customers.

Level: Easy Section/Learning Objective: Section 9.1/Learning Objective 1 Bloom’s Category: Comprehension AACSB Category: Technology Section 9.6 1. Explain why LinkedIn has become so important in the recruiting process.

ANSWER:

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Both recruiters and job seekers are now using online social networks as recruiting platforms.

Enterprise recruiters are scanning online social networks, blogs, and other social resources to identify and find information about potential employees. If job seekers are online and active, there is a good chance that recruiters will see their profile.

Level: Easy Section/Learning Objective: Section 9.6/Learning Objective 6 Bloom’s Category: Application AACSB Category: Technology 2. If you are looking for a job, what is the major problem in restricting your search to social networks?

ANSWER: In some companies, some jobs may become available that for various reasons, the company may have decided to not formally advertise.

There may be a situation where a current or former employee of a company might post negative comments about working for the company. In some cases, these comments may not be correct or may be outright malicious. In some cases, the comments might not provide accurate content about the company.

Level: Medium Section/Learning Objective: Section 9.6/Learning Objective 6 Bloom’s Category: Application AACSB Category: Technology Discussion Questions 1. How would you describe Web 2.0 to someone who has not taken a course in information systems?

ANSWER: The first generation of the Internet—Web 1.0—focused on creating websites and making content available on the Internet. Web 2.0 is the second generation. It enables users to interact, share, and collaborate on the Internet. Think about Web 1.0 as a scripted performance where audiences watch the show unveil on stage. Web 2.0 can be compared to an improvisation act as audiences participate and provide input to the show content.

Level: Medium Section/Learning Objective: Section 9.1/Learning Objective 1 Bloom’s Category: Comprehension AACSB Category: Communication 2. If you were the CEO of a company, would you pay attention to blogs about your company? Why or why not? If yes, would you consider some blogs to be more important or more reliable than are others? If so, which ones? How would you find blogs relating to your company?

ANSWER: Students can answer yes or no as long as they provide support for their answer. Most likely, the answer will be yes, a company’s CEO should pay attention to information posted on blogs, especially when many reputable blogs mention the same issues. These blogs could indicate

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problems relating to the company’s products or services. Companies can find this feedback by searching for blogs that review products or services in the industry in which the company operates.

Level: Medium Section/Learning Objective: Section 9.2/Learning Objective 2 Bloom’s Category: Analysis AACSB Category: Technology 3.

Do you have a page on a social networking website? If yes, why? If no, what is keeping you from creating one? Is there any content that you definitely would not post on such a page?

ANSWER: Students will answer either yes or no and provide sound arguments to support their answers.

Level: Easy Section/Learning Objective: Section 9.2/Learning Objective 2 Bloom’s Category: Analysis AACSB Category: Technology 4.

How can an organization best employ social computing technologies and applications to benefit its business processes?

ANSWER: The first step is to analyze the organization’s objectives and primary business processes. Then, consider which processes can be improved using social computing technologies. For example, if the company values customer relationships, technologies such as blogs and netcasts can provide additional communication channels with the customers in a less formal setting than traditional customer services such as phone and e-mail.

Level: Medium Section/Learning Objective: Section 9.2/Learning Objective 2 Bloom’s Category: Analysis AACSB Category: Technology 5. What factors might cause an individual, an employee, or a company to be cautious in the use of social networks?

ANSWER: The main factor is the unpredictable outcomes from social networks. If used properly, social networks are a great communication and advertising tool. From the opposite perspective, however, a negative incident might cause more harm to the company than anticipated.

Level: Medium Section/Learning Objective: Section 9.2/Learning Objective 2 Bloom’s Category: Analysis AACSB Category: Ethics 6. Why are advertisers so interested in social networks?

ANSWER:

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The main reason why advertisers are interested in social networks is because it allows advertisers to use word-of-mouth to get their message across to a large number of people very quickly. Social networks are also relatively cheaper and more targeted than traditional advertising platforms.

Level: Easy Section/Learning Objective: Section 9.4/Learning Objective 4 Bloom’s Category: Comprehension AACSB Category: Technology 7. What sorts of restrictions or guidelines should firms place on the use of social networks by employees? Are social computing sites a threat to security? Can they tarnish a firm’s reputation? If so, how? Can they enhance a firm’s reputation? If so, how?

ANSWER: Many organizations have policies prohibiting employees from discussing customers and business practices beyond the workplace. These rules could also be applied to social networks. Web 2.0 provides tools and opportunities for employees to reveal sensitive information easily, whether intentionally or not, which could pose threats to security. These threats could also damage the firm’s reputation. For example, after a long day at work, an employee at a restaurant could update her Facebook status by complaining about a customer who left a small tip. If other people read this complaint, it could damage the restaurant’s reputation of friendly service. This type of damage is very difficult to reverse because the company normally does not know who read the comment. In response, many organizations set up a social network page to directly communicate with customers. They use social networks as an outlet to clarify, apologize, or compensate customers.

Level: Hard Section/Learning Objective: Section 9.4/Learning Objective 2 Bloom’s Category: Application AACSB Category: Ethics 8. Why are marketers so interested in social networks?

ANSWER: Marketers are interested in social networks because they can conduct market research activities more economically and in real time, with their actual customers rather than with focus groups.

Level: Easy Section/Learning Objective: Section 9.1/Learning Objective 1 Bloom’s Category: Comprehension AACSB Category: Technology 9. Why are human resource managers so interested in social networks?

ANSWER: Human resource managers are interested in social networks as they are able to find and learn about potential employees through existing social networks within and outside the companies and not have to rely on key-word matches and sifting through large number of similar applications on jobsearch websites.

Level: Easy Section/Learning Objective: Section 9.1/Learning Objective 1

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Bloom’s Category: Comprehension AACSB Category: Ethics Problem-solving Activities 1. Enter www.programmableweb.com and study the various services that the website offers. Learn how to create mashups and then propose a mashup of your own. Present your mashup to the class.

Answer: Students will be creative and answers may vary widely.

Level: Medium Section/Learning Objective: Section 9.1/Learning Objective 1 Bloom’s Category: Application AACSB Category: Analytic AACSB Category: Technology 2.

Go to Amazon’s Mechanical Turk website (www.mturk.com). View the available Human Intelligence Tasks (HITs). Are there any HITs that you would be interested in to make some extra money? Why or why not?

Answer: Student opinions will vary based on how well they have surveyed the site and the available HITs, as well as on whether they have any interest in and time available to earn some extra money, and what level of trust they have in the site and its users (the HIT requesters).

Level: Medium Section/Learning Objective: Section 9.1/Learning Objective 1 Bloom’s Category: Application AACSB Category: Analytic AACSB Category: Technology

3.

Access Pandora (www.pandora.com). Why is Pandora a social networking site?

Answer: Student answers will vary.

Level: Medium Section/Learning Objective: Section 9.1/Learning Objective 1 Bloom’s Category: Analysis AACSB Category: Analytic 4.

Access ChatRoulette (www.chatroulette.com). What is interesting about this social networking site?

Answer: Some students may find the seemingly very open nature of this ―chatroom‖ very interesting.

Others may enjoy the availability of choice to use text chat or to use webcam and microphone to chat.

Others may delve deeper into the site’s functionality, practices, and safeguards or rules to find other interesting things about using the site.

Level: Medium Section/Learning Objective: Section 9.1/Learning Objective 1 Bloom’s Category: Analysis AACSB Category: Analytic

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5.

Using a search engine, look up the following:  Most popular or most visited blogs. Pick two and follow some of the posts. Why do you think these blogs are popular?  Top10Best Blogsites (www.top10best-blogsites.com). Pick two and consider why they might be the ―best blogs.‖

Answer: Student answers will vary and will reflect the time and effort they have put into their search and review of blogs, as well as on the student’s familiarity and comfort in using blogs. In the ―best blogs‖ answer, students should consider content, following, and technical merit of their choices.

Level: Medium Section/Learning Objective: Section 9.1/Learning Objective 1 Bloom’s Category: Analysis AACSB Category: Analytic AACSB Category: Technology 6.

Research how to be a successful blogger. What does it take to be a successful blogger? What time commitment might be needed? How frequently do successful bloggers post?

Answer: Student answers should reflect their research into how to create a blog, as well as how to attract and maintain followers, and how to create good content with focus and continuity that will facilitate maintaining a regular and growing group of followers.

Level: Medium Section/Learning Objective: Section 9.1/Learning Objective 1 Bloom’s Category: Application AACSB Category: Reflective Thinking AACSB Category: Technology

Closing Case: WhatsApp Creates Problems in India 1. Should WhatsApp provide the Indian government the information it demands (who started the rumor) if authorities have proper warrants? Why or why not?

ANSWER: Student answers will vary.

Level: Medium Section/Learning Objective: Objective: Section 9.2/Learning Objective 9.2 Bloom’s Category: Analysis AACSB Category: Analytic 2. Is it possible for WhatsApp and Facebook to fact-check user generated content? Why or why not?

ANSWER: While these companies may be able to use technology to analyze and identify fake news, given the volume of activity and the follow-up that is required (still dependent in some cases for human intervention), it is not likely that the companies can provide a complete fact-check. There are

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advancements being made such as those listed in the case but will have limitations based on volume and effort required.

Level: Easy Section/Learning Objective: Objective: Section 9.2/Learning Objective 9.2 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 3. If social media platforms are not able to fact-check user-generated content, then speculate on the future of these platforms.

ANSWER: Student answers will vary but will likely consider that individuals will over time determine whether they can rely on the information being shared in these platforms. In some cases, we are already seeing this realized with individuals being more skeptical of information shared on Facebook compared to more reliable sources. It will largely depend on each user and region’s experience, and their tolerance to read and either rely on or question the information they are seeing. Some individuals and cultures are likely more vocal to push back on fake information than others..

Level: Medium Section/Learning Objective: Objective: Section 9.2/Learning Objective 9.2 Bloom’s Category: Analysis AACSB Category: Analytic Chapter 10: Information System within the Organization

Chapter Outline 10.1 Transaction Processing Systems 10.2 Functional Area Information Systems 10.3 Enterprise Resource Planning (ERP) Systems 10.4 ERP Support for Business Processes Learning Objectives 6.

7.

8.

9.

Explain the purpose of transaction processing systems.

Explain the types of support that information systems can provide for each functional area of the organization.

Identify advantages and drawbacks to businesses implementing an enterprise resource planning (ERP) system.

Describe the three main business processes supported by ERP systems.

Teaching Tips and Strategies The focus of this chapter is organizational information systems. Start a discussion with your students by explaining how these systems can become quite complicated from both technical and managerial perspectives. Significant performance and uptime requirements can impose technical challenges on the IT staff, while coordination and usability for a large, diverse group of users can pose managerial challenges.

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With the advancement of technology, companies now have more tools than ever before to successfully deploy information systems that can integrate their operations and reduce processing time. The question is: How does the management of a company manage their processes better? The answer: ▪ By integrating their systems so that all of the departments can talk to each other (including outside vendors) 9. By being able to track relevant data from across the organization in real time. This will help management make crucial decisions regarding resources Help your students understand that it does not matter what their major is, at some point in their careers, they will be asked to be involved in the design or implementation of an information system where they work. So they will need to understand that few off-the-shelf system packages will meet all their needs without the business (1) making changes to their business process, or (2) making changes to the system package so that it will work with the business’s existing processes. When a business does not understand this, the system implementation has the potential of failure.

To address this issue, those involved need to consider a new information system from three perspectives.  The vanilla approach, where the business implements a standard ERP package using the package’s built-in configuration options. This system will deviate only minimally from the package’s standardized settings. This can make the implementation quicker, but the extent to which the software is adapted to the organization’s specific processes is limited.  The custom approach, where the business implements a more customized system by developing new functions designed specifically to meet their needs. Decisions concerning the degree of the system’s customization are specific to each organization. To utilize the custom approach, the organization must carefully analyze its existing business processes to develop a system that conforms to the organization’s particular characteristics and processes. This approach can become expensive and risky because computer code must be written and updated every time the vendor releases a new version. If the customization does not perfectly match the needs of the business, then the system can be very difficult to use.  The best-of-breed approach combines the benefits of the vanilla and customized systems while avoiding the extensive costs and risks associated with complete customization.

In the end, your students should understand that no matter their career, they will come in contact with and more than likely depend on an information system to do their job.

BlackBoard/CMS If you are teaching this class in an online format, consider opening an online discussion for the students using one of the questions at the end of the chapter.

Opening Case: Spinning the Wheels of Bicycle Inventory 1. How did information management help Trek navigate the global bicycle-part supply shortage caused by the COVID-19 pandemic?

ANSWER: Prepandemic, Trek kept 60 days of stock on hand. Through their monitoring of daily global sales in March 2020, they began to see an increase in sales. They used POS system data to predict the increase in global orders. The data led to correct decisions by Trek’s management team to increase inventory through supply-chain channels and have it available to meet demand. Trek’s quick, information-based actions

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illustrate the value of agile, flexible, adaptable information systems.

Level: Easy Section/Learning Objective: Section 10.2/Learning Objective 2 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 2. It took both policy (60-day inventory) and procedure (information management) for Trek to survive.

Discuss the ways these two factors work together to support effective business operations.

ANSWER: While policy helped keep Trek ahead of the competition due to their 60-day inventory, the use of predictive analytics and the resulting informed decisions helped them survive. This included being adaptable with inventory levels and increasing component orders from suppliers so they would have sufficient inventory when demand levels continued to increase and/or persist.

Level: Easy Section/Learning Objective: Section 10.2/Learning Objective 2 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

IT’s About Business 10.1 Small Fintech Banks Know the Show Must Go On 13. How has the growth in the high-speed, wireless, smartphone market impacted Fintech companies? In particular, how will the growth in 5G wireless communications impact Fintech companies?

ANSWER: Increased functionality and use of smartphones, along with increased speed and reliability of networks have resulted in greater demand and adoption of Fintech products/services. Users can readily access the services they require, and do so from virtually anywhere. Continued increase in network speed and reliability will only further the demand and ease of use, especially for small businesses and self-employed individuals.

Level: Easy Section/Learning Objective: Section 10.2/Learning Objective 2 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 14. In what ways does Fintech allow startups to compete with long-established banks?

ANSWER: Traditional banks prioritize larger customers, creating an opportunity for Fintech companies to address the needs of smaller customers (small businesses and self-employed individuals). Fintechs offer similar transactions and in some cases extended services specifically for this group, without the direct interaction a larger customer might expect. Startups are also able to manage and deploy PPP funds faster than a larger financial institution could due to legacy infrastructure. As a result, the advantage Fintechs have is the ability to deploy and adapt more quickly than traditional banks.

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Level: Easy Section/Learning Objective: Section 10.2/Learning Objective 2 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

Before You Go On… Review Questions Section 10.1 5.

Define transaction processing systems (TPS).

ANSWER: Transaction processing involves the capture, storage and monitoring of data generated from all business transactions. These data are input to the organization’s database. TPSs must handle high volumes, avoid errors, and provide a highly secure and stable environment.

Level: Easy Section/Learning Objective: Section 10.1/Learning Objective 1 Bloom’s Category: Knowledge AACSB Category: Critical Thinking 6.

List the key functions of a TPS.

ANSWER: • Handle large volumes of data • Avoid errors • Handle large variations in volume (peak times) • Avoid downtime • Never lose results • Maintain privacy and security Level: Easy Section/Learning Objective: Section 10.1/Learning Objective 1 Bloom’s Category: Knowledge AACSB Category: Critical Thinking Section 10.2 12. Define a functional area information system and list its major characteristics.

ANSWER: A functional area information system is one in which the functionality supports one particular area or department such as HR systems, accounting systems, marketing systems and production systems.

Typically these were developed independent of each other, resulting in ―information silos.‖ They were designed to increase internal effectiveness and efficiency.

Level: Easy Section/Learning Objective: Section 10.2/Learning Objective 2

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Bloom’s Category: Comprehension AACSB Category: Critical Thinking 13. How do information systems benefit the finance and accounting functional area?

ANSWER: Accounting and finance involves managing how money flows into, within, and out of organizations.

This mission is very broad because money is involved in all functions of an organization. Planning activities involve analyzing operational data to help forecast, project, and budget business activities.

These then define the amount of money that is needed to finance the firm’s operations and how that money can be raised from the financial markets and at what cost. All this involves many transactions and data points. To achieve a level of automation in these activities, information systems are necessary.

Level: Easy Section/Learning Objective: Section 10.2/Learning Objective 2 Bloom’s Category: Application AACSB Category: Critical Thinking 14. Explain how POM personnel use information systems to perform their jobs more effectively and efficiently.

ANSWER: The production and operations management (POM) function in an organization is responsible for the processes that transform inputs into useful outputs and for the operation of the business. Because of the breadth and variety of POM functions, we present only four here: in-house logistics and materials management, planning production and operation, computer-integrated manufacturing (CIM), and product life cycle management (PLM). The POM function is also responsible for managing the organization’s supply chain.

Level: Easy Section/Learning Objective: Section 10.2/Learning Objective 2 Bloom’s Category: Comprehension AACSB Category: Critical Thinking 15. What are the most important HRIS applications?

ANSWER: These modules support personnel administration (including workforce planning, employee recruitment, assignment tracking, personnel planning and development, and performance management and reviews), time accounting, payroll, compensation, benefits accounting, and regulatory requirements.

Level: Easy Section/Learning Objective: Section 10.2/Learning Objective 2 Bloom’s Category: Comprehension AACSB Category: Critical Thinking 16. Compare and contrast the three basic types of reports.

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ANSWER: •

• •

Routine reports are produced at scheduled intervals. They range from hourly quality control reports to daily reports on absenteeism rates. Although routine reports are extremely valuable to an organization, managers frequently need special information that is not included in these reports.

Out-of-the-routine reports are called ad-hoc (on-demand) reports.

Exception reports include only information that falls outside certain threshold standards. To implement management by exception, management first creates performance standards. The company then sets up systems to monitor performance (via the incoming data about business transactions such as expenditures), compare actual performance to the standards, and identify exceptions to the standards.

Level: Easy Section/Learning Objective: Section 10.2/Learning Objective 2 Bloom’s Category: Analysis AACSB Category: Critical Thinking

Section 10.3 1. Define ERP and describe its functions.

ANSWER: Enterprise resource planning (ERP) was created to control all major business processes with single software architecture in real time. ERP integrates all department and functional information flows across a company onto a single computer system that can serve all of the enterprise’s needs.

Level: Easy Section/Learning Objective: Section 10.3/Learning Objective 3 Bloom’s Category: Knowledge AACSB Category: Critical Thinking 2.

What are ERP II systems?

ANSWER: ERP II systems are interorganizational ERP systems that provide Web-enabled links between a company’s key business systems (such as inventory and production) and its customers, suppliers, distributors, and others. These links integrate internal-facing ERP applications with the external-focused applications of supply chain management and customer relationship management. Figure 8.3 illustrates the organization and functions of an ERP II system.

Level: Easy Section/Learning Objective: Section 10.3/Learning Objective 3 Bloom’s Category: Comprehension AACSB Category: Critical Thinking

3.

Differentiate between core ERP modules and extended ERP modules.

ANSWER:

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ERP II systems include a variety of modules, which are divided into core ERP modules (financial management, operations management, and human resource management) and extended ERP modules (customer relationship management, supply chain management, business intelligence, and e-business). Table 8.2 describes each of these modules.

Level: Easy Section/Learning Objective: Section 10.3/Learning Objective 3 Bloom’s Category: Comprehension AACSB Category: Critical Thinking 4.

List some drawbacks of ERP software.

ANSWER: ERP systems can be extremely complex, expensive, and time-consuming to implement. Also, companies may need to change existing business process to fit the predefined business process of the software. In addition, companies must purchase the entire software package even if they only want to use a few of the modules.

Level: Easy Section/Learning Objective: Section 10.3/Learning Objective 3 Bloom’s Category: Comprehension AACSB Category: Critical Thinking 5.

Highlight the differences between ERP configuration, customization, and best-of-breed implementation strategies.

ANSWER: • The vanilla approach: In this approach, a company implements a standard ERP package, using the package’s built-in configuration options. When the system is implemented in this way, it will deviate only minimally from the package’s standardized settings. The vanilla approach can make the implementation quicker, but the extent to which the software is adapted to the organization’s specific processes is limited. Fortunately, a vanilla implementation provides general functions that can support the firm’s common business processes with relative ease, even if they are not a perfect fit for those processes.

•

The custom approach: In this approach, a company implements a more customized ERP system by developing new ERP functions designed specifically for that firm. Decisions concerning the ERP’s degree of customization are specific to each organization. To utilize the custom approach, the organization must carefully analyze its existing business processes to develop a system that conforms to the organizations particular characteristics and processes. In addition, customization is expensive and risky because computer code must be written and updated every time a new version of the ERP software is released. Going further, if the customization does not perfectly match the organization’s needs, then the system can be very difficult to use.

10. The best-of-breed approach: This approach combines the benefits of the vanilla and customized systems while avoiding the extensive costs and risks associated with complete customization.

Level: Easy Section/Learning Objective: Section 10.3/Learning Objective 3 Bloom’s Category: Application AACSB Category: Critical Thinking

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Section 10.4 27. What are the three main intraorganizational processes that are typically supported by ERP systems?

ANSWER: • The procurement process, which originates in the warehouse department (need to buy) and ends in the accounting department (send payment).

• The fulfillment process, which originates in the sales department (customer request to buy) and ends in the accounting department (receive payment).

11. The production process, which originates and ends in the warehouse department (need to produce and reception of finished goods) but involves the production department as well.

Level: Easy Section/Learning Objective: Section 10.4/Learning Objective 4 Bloom’s Category: Application AACSB Category: Critical Thinking 28. Why is it important that all steps in each process generate a document that is stored in the ERP system?

ANSWER: The ERP system stores all of the documents created in each step of each process in a centralized database, where they are available as needed in real time. Any exceptions or mistakes made during one or more interdepartmental processes are handled right away by simply querying the ERP system and retrieving a specific document or piece of information that needs to be revised or examined more carefully. It is important to follow each step in each process and to register the corresponding document into the ERP system.

Level: Easy Section/Learning Objective: Section 10.4/Learning Objective 4 Bloom’s Category: Analysis AACSB Category: Critical Thinking 29. What is the difference between intraorganizational and interorganizational processes?

ANSWER: Processes that involve suppliers and customers are considered (together with the production process) intraorganizational processes because they originate and conclude within the company. Processes that originate in one company/organization and conclude in another are called interorganizational processes.

Level: Easy Section/Learning Objective: Section 10.4/Learning Objective 4 Bloom’s Category: Application AACSB Category: Critical Thinking 30. What are the two main ES systems that support interorganizational processes?

ANSWER:

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Supply chain management (SCM) and customer relationship management (CRM) systems.

Level: Easy Section/Learning Objective: Section 10.4/Learning Objective 4 Bloom’s Category: Comprehension AACSB Category: Critical Thinking Discussion Questions 16. Why is it logical to organize IT applications by functional areas?

ANSWER: Data is collected and flows through an organization based on functions of various departments. IT systems that mirror those functions in each department support a smooth operation.

Level: Easy Section/Learning Objective: Section 10.2/Learning Objective 2 Bloom’s Category: Comprehension AACSB Category: Critical Thinking 17. Describe the role of a TPS in a service organization.

ANSWER: Customer orders or requests are entered into the TPS and are then available for the department that will handle the order. Data is passed to other systems such as CRM, DSS, knowledge management, and e-commerce as needed.

Level: Easy Section/Learning Objective: Section 10.1/Learning Objective 1 Bloom’s Category: Comprehension AACSB Category: Critical Thinking 18. Describe the relationship between TPS and FAIS. ANSWER: FAIS provides information primarily to lower- and middle-level managers in the various functional areas. Managers use this information to help plan, organize, and control operations. The information is provided in a variety of reports. Of course, the reports need to be based on data, and the role of the TPS is to generate the data from the business operations.

Level: Easy Section/Learning Objective: Section 10.1/Learning Objective 1 Bloom’s Category: Comprehension AACSB Category: Critical Thinking 19. Discuss how IT facilitates the budgeting process.

ANSWER: The budget allows management to distribute resources in the way that best supports the organization’s mission and goals. Budgeting software supports budget preparation and control and

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facilitates communication, review, and approval among participants in the budget process. These packages can reduce the time involved in the budget process They can automatically monitor exceptions for patterns and trends as well.

Level: Easy Section/Learning Objective: Section 10.2/Learning Objective 2 Bloom’s Category: Comprehension AACSB Category: Critical Thinking 20. How can the Internet support investment decisions?

ANSWER: The internet is a massive repository of company and financial information. There are several websites that provide financial information, which can be used to make investment decisions.

Level: Easy Section/Learning Objective: Section 10.2/Learning Objective 2 Bloom’s Category: Comprehension AACSB Category: Critical Thinking 21. Describe the benefits of integrated accounting software packages.

ANSWER: Integrated accounting packages allow the automation of several business processes—expense management, investment management, control and auditing, managing multiple currencies, and virtual close. By integrating accounting with financial management, many vendors have supported this automation.

Level: Easy Section/Learning Objective: Section 10.2/Learning Objective 2 Bloom’s Category: Comprehension AACSB Category: Critical Thinking 22. Discuss the role that IT plays in support of auditing.

ANSWER: One major reason that organizations go out of business is their inability to forecast and/or secure a sufficient cash flow. Underestimating expenses, overspending, engaging in fraud, and mismanaging financial statements can lead to disaster. Consequently, it is essential that organizations effectively control their finances and financial statements. Auditing has two basic purposes: (1) to monitor how the organization’s monies are being spent, and (2) to assess the organization’s financial health.

Internal auditing is performed by the organization’s accounting/finance personnel. These employees also prepare for periodic external audits by outside CPA firms.

Level: Easy Section/Learning Objective: Section 10.2/Learning Objective 2 Bloom’s Category: Comprehension AACSB Category: Critical Thinking 23. Investigate the role of the Web in human resources management.

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ANSWER: Many HRIS applications are delivered via an HR portal. Key HR functions are recruitment, HR maintenance and development, and HR planning and management.

Recruitment involves finding potential employees, evaluating them, and deciding which ones to hire.

Companies are trying to find appropriate candidates on the Web, usually with the help of specialized search engines. Companies also advertise hundreds of thousands of jobs on the Web. Online recruiting can reach more candidates, which may bring in better applicants. In addition, the costs of online recruitment are usually lower than traditional recruiting methods such as advertising in newspapers or in trade journals. After employees are recruited, they become part of the corporate human resources pool, which means they must be evaluated, maintained, and developed. IT provides support for these activities. IT also plays an important role in training and retraining. Some of the most innovative developments are taking place in the areas of intelligent, computer-aided instruction and the application of multimedia support for instructional activities. For example, much corporate training is delivered over the company’s intranet or via the Web. IT can also provide support for payroll and employees’ records, and benefits administration. This is known as ERM—employee resource management.

Level: Medium Section/Learning Objective: Section 10.2/Learning Objective 2 Bloom’s Category: Application AACSB Category: Critical Thinking 24. What is the relationship between information silos and enterprise resource planning?

ANSWER: ERP allows for integration of business operations and can break silos by sharing data from different parts of the business and integrating business processes.

Level: Medium Section/Learning Objective: Section 10.3/Learning Objective 3 Bloom’s Category: Comprehension AACSB Category: Critical Thinking Problem-solving Activities 13. Finding a job on the Internet is challenging as there are almost too many places to look. Visit the following sites: www.careerbuilder.com, www.craigslist.org, www.linkedin.com, https://usnlx.com, and www.monster.com. What does each of these sites provide you with as a job seeker?

ANSWER: Students will prepare a list of capabilities for each of the sites, including building profiles, searching for jobs, responding to job ads and evaluating the job market.

Level: Easy Section/Learning Objective: Section 10.2/Learning Objective 2 Bloom’s Category: Analysis AACSB Category: Analytic

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14. Enter www.sas.com and access Revenue Optimization. Explain how the software helps in optimizing prices.

ANSWER: SAS is a statistical data analysis package and allows for advanced mining of data to help in business planning.

Level: Easy Section/Learning Objective: Section 10.2/Learning Objective 2 Bloom’s Category: Analysis AACSB Category: Analytic 15. Visit www.eleapsoftware.com and review the product that helps with online training (training systems). What are the most attractive features of this product?

ANSWER: While different features may appeal to different students, tracking progress and completion and multiformat delivery of the content are very attractive capabilities.

Level: Easy Section/Learning Objective: Section 10.2/Learning Objective 2 Bloom’s Category: Analysis AACSB Category: Analytic 16. Examine the capabilities of the following (and similar) financial software packages: Financial Analyzer (from Oracle) and CFO Vision (from SAS Institute). Prepare a report comparing the capabilities of the software packages.

ANSWER: Students should research and prepare a report.

Level: Easy Section/Learning Objective: Section 10.2/Learning Objective 2 Bloom’s Category: Analysis AACSB Category: Analytic 17. Surf the Net and find free accounting software. (Try www.cnet.com and www.tucows.com.)

Download the software and try it. Compare the ease of use and usefulness of each software package.

ANSWER: Students should research and prepare a report.

Level: Easy Section/Learning Objective: Section 10.2/Learning Objective 2 Bloom’s Category: Analysis AACSB Category: Analytic

18. Find Simply Accounting Basic from Sage Software ( https://www.sage.com/en-ca/products/sage50cloud). Why is this product recommended for small businesses?

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ANSWER: Students should research and prepare a report.

Level: Easy Section/Learning Objective: Section 10.2/Learning Objective 2 Bloom’s Category: Analysis AACSB Category: Analytic 19. Enter www.cornerstoneondemand.com and www.sap.com. Examine their software products and compare them.

ANSWER: Students should research and prepare a report.

Level: Easy Section/Learning Objective: Section 10.2/Learning Objective 2 Bloom’s Category: Analysis AACSB Category: Analytic 20. Enter www.iemployee.com and find the support it provides to human resources management activities. View the demos and prepare a report on the capabilities of the products.

ANSWER: Students should research and prepare a report.

Level: Easy Section/Learning Objective: Section 10.2/Learning Objective 2 Bloom’s Category: Analysis AACSB Category: Analytic Closing Case: Western Digital Acquires Companies and Merges Systems aa. Why do you think so many ERP implementations fail? Why is it so difficult to integrate multiple ERPs? ANSWER: ERP systems are complex and time consuming to implement. The ERP implementation at WD was no different considering the scope of the three companies involved. Additionally, despite planning there are often unknowns or ―discoveries‖ identified during the process that further extend the scope, time to completion, and likely cost.

Level: Easy Section/Learning Objective: Section 10.3/Learning Objective 10.3 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking bb. What do you see as the major advantages for WD of moving all three companies to a single platform?

ANSWER:

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Using a single platform would create consistency in the data and reduce data redundancy. It would also help with more effective decision-making by being able to query and using a data source. It also creates efficiency in processes. As noted in the case, some tasks that previously took 17 or 18 steps now required only four or five steps. Additionally, the maintenance would be streamlined with a single ERP solution, making upgrades and even general troubleshooting easier.

Level: Easy Section/Learning Objective: Section 10.1/Learning Objective 10.1 Bloom’s Category: Analysis AACSB Category: Reflective Thinking

Chapter 11: Customer Relationship Management and Supply Chain Management

Chapter Outline 11.1 11.2 11.3 11.4 11.5 11.6

Defining Customer Relationship Management Operational Customer Relationship Management Other Types of Customer Relationship Management Systems Supply Chains Supply Chain Management Information Technology Support for Supply Chain Management

Learning Objectives 11.1 Identify the primary functions of both customer relationship management (CRM) and collaborative CRM strategies.

11.2 Describe how businesses might utilize applications of each of the two major components of operational CRM systems.

11.3 Explain the advantages and disadvantages of mobile CRM systems, on-demand CRM systems, opensource CRM systems, social CRM systems, and real-time CRM systems.

11.4 Describe the three components and the three flows of a supply chain.

11.5 Identify popular strategies to solving different challenges of supply chains.

11.6 Explain the utility of each of the three major technologies that supports supply chain management.

Teaching Tips and Strategies This chapter discusses customer resource management (CRM) and supply-chain management, topics that should be at least indirectly familiar to most students as consumers or customers in their real lives, even though they may not know of the formal terms and system names.

CUSTOMER RESOURCE MANAGEMENT The CRM section of this chapter presents how it is used to build long-term customer relationships. It first defines the CRM concept and then turns to the two major aspects of CRM: operational CRM and analytical CRM. The chapter concludes with a look at additional types of CRM: mobile CRM, on-demand CRM, and open-source CRM. Most students will not be familiar with these types of systems, so focus on

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concepts of the data needed for supporting effective customer service. Students will be familiar with how to perform Internet transactions to order textbooks or other items. As operations become more and more streamlined and firms move away from personalized customer service through humans, computers or CRM are replacing the void created.

CRM is critical to the success of modern businesses as customers are supremely important to all organizations. Regardless of the job students perform after they graduate, they will more than likely have either a direct or an indirect impact on their workplace’s customers. Therefore, it is important that all students possess a working knowledge of CRM. SUPPLY CHAIN MANAGEMENT Present the example of a company such as Proctor & Gamble (P&G). Discuss how they are a consumer products company but sell all of their products through retailers. They package items such as Crest and sell truckloads to different retailers. The retailers then distribute the items to their stores.

With the advent of e-commerce, online e-tailers are in the costly business of sending one or two items to millions of different households. To illustrate the point of how this changes the supply chain, ask the students to consider the former online retailer eToys and processing orders for Barbie dolls. (eToys has since be taken over by Toys R Us.) Use the example of eToys getting a thousand orders for Barbies in one day. Ask the class (or groups of students in the class) what they think would be involved in delivering those Barbies. Your students will usually answer that someone will have to go pick the Barbies in the warehouse, create an address label for each customer, and then box up the order and ship it.

Remind your students that it is even more intricate than that. For example: • The payment process will need to be run (hopefully that system is automated).

• After the workers pick 1,000 Barbies (and in this example we are assuming that all the Barbies ordered are the same) and labels/invoices are printed automatically, Barbie is boxed up, then the package is weighed and postage affixed.

10. Finally UPS or FedEx will be coordinated with to pick up the package.

The above scenario assumes that eToys has 1,000 Barbies in stock. What if they only had 500? Now they have to deal with a backorder. Ask students, ―If 1,000 Barbies were available to you right now with invoices and labels, how long would it take to box those Barbies up and mail them?‖ The answers again vary, but students start to realize that the fulfillment process and supply chain is not as easy as it would seem. So, is it any wonder that eToys couldn’t fulfill all their orders? What happens in the above example when we get another 500 orders the next day for Barbie? What if Mattel suddenly doesn’t ship more Barbies to us on time? It changes everything. This is one of the reasons that companies like Circuit City have created relationships with Amazon.com to handle their online store and the delivery process.

Going over this example (or one like it) should help your students see how important the supply chain in the business environment. The example shows how one company’s supply chain can disturb another company’s supply chain. Your students will hopefully walk away from this chapter with a better understanding of how much companies rely on each other to do business.

With the advancement of technology, companies now have more tools than ever before to successfully manage their supply chain. How do companies manage their supply chains better?

▪ By integrating their systems so that all of the departments can talk to each other (including outside vendors)

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By being able to track inventory and sales in real time. This will help management to make crucial decisions regarding resources BlackBoard/CMS

If you are teaching this class online, ask your students to discuss some of the questions at the end of this chapter.

Opening Case: Digital Freight Brokers 15. Compare Transfix with Uber, Lyft, and Airbnb. Discuss similarities and differences in their business models.

ANSWER: Transfix uses algorithms and machine learning to provide full-load shippers with better prices and truck owners with more efficient routes. Shippers can request drivers and the dispatch will find an appropriate match. It also uses a pricing algorithm to produce the shipping rate.

Uber and Lyft are similar to Transfix in that the end user requests the service required and the pricing is established by the companies themselves. They dispatch the service being requested and drivers (first to respond) are able to take the service.

Transfix differs from AirBnB as hosts on the platform are able to showcase their own property and set the pricing. AirBnB provides hosts with ranges of prices that are relevant based on their own algorithms, but it is up to the host to set the price. Also, future guests use AirBnB as a ―catalogue‖ with regards to searching the properties available in the area of their choosing and then selecting the property they want to stay at.

Level: Medium Section/Learning Objective: Section 11.3/Learning Objective 11.3 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 16. What impacts has the COVID-19 pandemic had on the emergence of digital freight brokerages and their continuing importance?

ANSWER: The pandemic has resulted in an increase in demand by consumers of commodities and general goods. As a result, freight demands have increased and, in some cases, have taken a completely different approach due to lack of capacity in traditional modes (i.e., shipping by flight and sea). The demand for digital freight brokerages is also likely to increase postpandemic as the market will likely remain competitive. The pricing algorithms also provide a better and current representation of factors that contribute to costs and would be beneficial for decision-making moving forward.

Level: Easy Section/Learning Objective: Section 11.1/Learning Objective 1 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

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IT’s About Business 11.1 U.S. Global Food Supply Chain Proves to be Fragile 1. Discuss how vertical farms could increase the food security of the United States.

ANSWER: The following benefits and advantages were included in the case: - Ability to grow food year-round (not weather dependent) - Can be constructed and grown in any climate or location - Higher productivity per area - Use a fraction of the water used in traditional farming - More environmentally friendly - Require less labor and present safer working conditions Level: Easy Section/Learning Objective: Section 11.5/Learning Objective 11.5 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 2. One food industry analyst stated, ―Vertical farms will never be able to feed the United States.‖ Do you agree with this statement? Why or why not? Support your answer.

ANSWER: Student answers will vary but are likely to at least partially agree due to the cost to run vertical farms compared to traditional farms and that farming will need to be scaled up significantly to meet demand.

Level: Easy Section/Learning Objective: Section 11.5/Learning Objective 11.5 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

IT’s About Business 11.2 Flexe, the Airbnb of Warehousing 17. You are the CEO of Amazon. How would you compete with Flexe? Provide specific examples to support your answer.

ANSWER: Amazon’s own branding of products and the lower number of fulfillment centers are the main concern to remain competitive. Amazon could offer a small fee to distributors to remove the branding from their shipments if that is a concern; however, the main focus should be on the number of locations of the fulfillment centers. An opportunity could be to enter into direct contracts with warehouses in key locations to secure the space and expand their storage facilities beyond that of their own fulfillment centers. The reality is that given the nature of Flexe, the goal is not to have as many options, but to have enough to remain competitive and remain an attractive option for sellers.

Students will have their own ideas that should be considered based on the logic and the ability to address the key issue.

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Level: Easy Section/Learning Objective: Section 11.5/Learning Objective 11.5 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 18. Describe how information technology is essential to support Flexe’s business model.

ANSWER: Without information technology, Flexe would not be able to collect information on space that is available, monitor use, and make it available to potential lessees. The website is a critical component of its systems as merchants can directly see what space is available and book it. The business model is not based on any owned physical asset or product that is showcased in a brick-and-mortar space; instead, it is the technology that enables the exchange of service, an available space, to customers (lessees), that is the business itself.

Level: Easy Section/Learning Objective: Section 11.5/Learning Objective 11.5 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 19. How does Flexe help retailers with demand-forecast and bullwhip-effect problems? Provide specific examples to support your answer.

ANSWER: Retailers do not have to commit to storage space that is larger than required. Offering pay-as-you-go options results in the ability for retailers to increase or decrease space based on the actual demand.

Additionally, the geographical demand may vary either as, or differing, from what was forecasted.

Flexe allows retailers to lease storage space in as many geographical areas offered as required, which eliminates the concern with overcommitting to a space that is not reflective of demand and creating inefficiencies in the supply chain.

Level: Easy Section/Learning Objective: Section 11.5/Learning Objective 11.5 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking IT’s About Business 11.3 Emerging Technologies and Supply Chain Management 1. Considering all of these technologies together, is it possible to eliminate supply chains altogether? Why or why not? Support your answer.

ANSWER: All of the technologies listed help to create efficiencies in the supply chain; however, it cannot be eliminated. The supply chain represents a system of people, technology, and organizations that are all involved in moving a product from the supplier to a customer. The technologies highlighted are carrying out the functions of a supply chain.

Level: Easy Section/Learning Objective: Section 11.6/Learning Objective 11.6

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Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 2. Discuss potential disadvantages of robotics, drones, driverless vehicles, and 3D printing.

ANSWER: Student answers will vary in this regard. Overall, they will likely recognize that technologies create efficiencies that may include speed and decreased costs; however, there are some potential disadvantages: - Malfunction and need for maintenance - Reliance on networks that can be intercepted and/or become unavailable - Unknown risks or consequences (i.e., driverless cars) Level: Easy Section/Learning Objective: Section 11.6/Learning Objective 11.6 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

Before You Go On… Review Questions Section 11.1 11. What is the definition of customer relationship management?

ANSWER: Customer relationship management (CRM) is an organizational strategy that is customer-focused and customer-driven. That is, organizations concentrate on satisfying customers by assessing their requirements for products and services and then providing high-quality, responsive service. CRM is not a process or a technology per se; rather, it is a way of thinking and acting in a customercentric fashion.

Level: Easy Section/Learning Objective: Section 11.1/Learning Objective 1 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 12. Why is CRM so important to any organization?

ANSWER: CRM builds sustainable long-term customer relationships that create value for the company as well as for the customer. That is, CRM helps companies acquire new customers, retain existing profitable customers, and grow the relationships with existing customers. Customers are the core of a successful enterprise, and the success of the enterprise depends on effectively managing relationships with them, which CRM allows for.

Level: Easy Section/Learning Objective: Section 11.1/Learning Objective 1 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

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13. Define and provide examples of customer touch points.

ANSWER: Customer touch points include telephone calls, e-mail, chat sessions, promotions, and the company website. Anywhere a customer comes in contact with the organization is a touch point.

Level: Easy Section/Learning Objective: Section 11.1/Learning Objective 1 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking Section 11.2 31. Differentiate between customer-facing applications and customer-touching applications.

ANSWER: Customer-facing CRM applications are those applications where an organization’s sales, field service, and customer interaction center representatives interact directly with customers. These applications include customer service and support, sales force automation, marketing, and campaign management.

Customers interact directly with customer-touching CRM applications or electronic CRM (e-CRM) applications. Customer-touching applications replace technologies or applications that allow the customer to directly interact with a company representative, as is the case with customer-facing applications. With these applications, customers typically are able to help themselves.

Level: Easy Section/Learning Objective: Section 11.2/Learning Objective 2 Bloom’s Category: Analysis AACSB Category: Analytic 32. Provide examples of cross-selling, upselling, and bundling (other than those presented in the text).

ANSWER: Cross-selling is the practice of marketing additional related products to customers based on a previous purchase.

Upselling is a sales strategy in which the businessperson will provide the opportunity to purchase higher-value related products or services as opposed to or along with the consumer’s initial product or service selection.

Bundling is a form of cross-selling in which a business sells a group of products or services together at a price that is lower than the combined individual prices of the products.

Have your students suggest examples of each of the above.

Level: Easy Section/Learning Objective: Section 11.2/Learning Objective 2 Bloom’s Category: Application AACSB Category: Reflective Thinking

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Section 11.3 21. Describe on-demand CRM. ANSWER: An on-demand CRM system is a CRM system that is hosted by an external vendor in the vendor’s data center. This arrangement spares the organization the costs associated with purchasing the system.

In addition, because the vendor creates and maintains the system, the organization’s employees need to know only how to access and utilize it. The concept of on-demand is also known as utility computing or software-as-a-service.

Level: Easy Section/Learning Objective: Section 11.3/Learning Objective 3 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 22. Describe mobile CRM. ANSWER: A mobile CRM system is an interactive CRM system that enables an organization to conduct communications related to sales, marketing, and customer service activities through a mobile medium for the purpose of building and maintaining relationships with its customers.

Level: Easy Section/Learning Objective: Section 11.3/Learning Objective 3 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 23. Describe open-source CRM. ANSWER: Open-source CRM systems are CRM systems whose source code is available to developers and users.

They do not provide more or fewer features or functions than other CRM software, and they may be implemented either on-premise or on-demand.

Level: Easy Section/Learning Objective: Section 11.3/Learning Objective 3 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 4.

Describe social CRM.

ANSWER: Social CRM is the use of social media technology and services to enable organizations to engage their customers in a collaborative conversation in order to provide mutually beneficial value in a trusted and transparent manner.

Level: Easy Section/Learning Objective: Section 11.3/Learning Objective 3 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking

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5.

Describe real-time CRM.

ANSWER: Real-time CRM means that organizations can respond to customer product searches, requests, complaints, comments, ratings, reviews, and recommendations in near real time, 24/7/365.

Level: Easy Section/Learning Objective: Section 11.3/Learning Objective 3 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking

Section 11.4

cc. What is a supply chain?

ANSWER: A supply chain is the flow of materials, information, payments and services from raw material suppliers, through factories and warehouses, to the end customers. It includes the organizations and processes involved. Supply chain management is the planning, organizing, and coordinating of all the supply chain’s activities.

Level: Easy Section/Learning Objective: Section 11.4/Learning Objective 4 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking dd. Describe the three segments of a supply chain.

ANSWER: The supply chain consists of three parts: (1) upstream supply chain, where sourcing or procurement from external suppliers occurs; (2) internal supply chain, where packaging, assembly, or manufacturing takes place; and (3) downstream supply chains, where distribution or dispersal takes place, frequently by external distributors.

Level: Easy Section/Learning Objective: Section 11.4/Learning Objective 4 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking ee. Describe the flows in a supply chain.

ANSWER: There are typically three flows in the supply chain: materials, information, and financial. Material flows are the physical products, raw materials, supplies, and so forth that flow along the chain.

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Material flows also include reverse flows (or reverse logistics)—returned products, recycled products, and disposal of materials or products. Information flows consist of data that are related to demand, shipments, orders, returns, and schedules, as well as changes in any of these data. Finally, financial flows involve money transfers, payments, credit card information and authorization, payment schedules, e-payments, and credit-related data.

Level: Easy Section/Learning Objective: Section 11.4/Learning Objective 4 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking Section 11.5 cc. Differentiate between the push model and the pull model.

ANSWER: In the push model (also known as make-to-stock), the production process begins with a forecast, which is simply an educated guess as to customer demand. The forecast must predict which products customers will want as well as the quantity of each product. The company then produces the amount of products in the forecast, typically by using mass production, and sells, or ―pushes,‖ those products to consumers. Unfortunately, these forecasts are often incorrect. To avoid these inaccuracies, companies can use the pull model. In the pull model—also known as make-to-order—the production process begins with a customer order. Therefore, companies make only what customers want, a process closely aligned with mass customization. A prominent example of a company that uses the pull model is Dell. Dell’s production process begins with a customer order.

Level: Easy Section/Learning Objective: Section 11.5/Learning Objective 5 Bloom’s Category: Analysis AACSB Category: Analytic dd. Describe various problems that can occur along the supply chain.

ANSWER: The problems along the supply chain stem primarily from two sources: (1) uncertainties, and (2) the need to coordinate several activities, internal units, and business partners. A major source of supply chain uncertainties is the demand forecast. Demand for a product can be influenced by numerous factors such as competition, prices, weather conditions, technological developments, economic conditions, and customers’ general confidence. Another uncertainty is delivery times, which depend on factors ranging from production machine failures to road construction and traffic jams. In addition, quality problems in materials and parts can create production delays, which also lead to supply chain problems.

Level: Easy Section/Learning Objective: Section 11.5/Learning Objective 5 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking ee. Discuss possible solutions to problems along the supply chain.

ANSWER:

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Various solutions can be used to address supply chain problems. Vertical integration is a business strategy in which a company buys its upstream suppliers to ensure that its essential supplies are available as soon as they are needed. Building up inventories is another way of solving supply chain problems. Another common way to solve supply chain problems, and especially to improve demand forecasts, is sharing information along the supply chain. Information sharing can be facilitated by electronic data interchange and extranets, topics discussed in the next section. One of the most notable examples of information sharing occurs between large manufacturers and retailers. For example, Walmart provides Procter & Gamble (P&G) with access to daily sales information from every store for every item P&G makes for Walmart. This access enables P&G to manage the inventory replenishment for Walmart’s stores. By monitoring inventory levels, P&G knows when inventories fall below the threshold for each product at any Walmart store. These data trigger an immediate shipment.

Level: Easy Section/Learning Objective: Section 11.5/Learning Objective 5 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking Section 11.6 •

Define EDI and list its major benefits and limitations.

ANSWER: EDI is the communication standard that enables business partners to exchange routine documents using agreed-upon formats. Its major benefits are: • Minimizes data entry errors • The length of the message can be shorted • Messages are secured • Reduces cycle time • Increases productivity • Enhances customer service 11. Minimizes paper usage and storage Major limitations are: • Requires a significant initial investment • Ongoing costs are high due to the use of private VANs • The traditional system is inflexible • Often requires a long startup period • Business process may have to be restructured to fit EDI requirements 3. Multiple standards exist Level: Easy Section/Learning Objective: Section 11.6/Learning Objective 6 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking •

Define an extranet, and explain its infrastructure.

ANSWER:

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An extranet is a series of interconnected intranets for which business partners have given access to certain parts to each other to enable collaborative operations. They use an Internet-based communication channel called a virtual private network (VPN).

Level: Easy Section/Learning Objective: Section 11.6/Learning Objective 6 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking •

List and briefly define the major types of extranets.

ANSWER: There are three major types of extranets.

• A company and its dealers, customers, or suppliers. This type of extranet is centered around a single company. An example is the FedEx extranet that allows customers to track the status of a delivery.

• An industry’s extranet. Just as a single company can set up an extranet, the major players in an industry can team up to create an extranet that will benefit all of them. For example, ANXeBusiness (www.anxebix.anx.com) enables companies to collaborate effectively through a network that provides a secure global medium for B2B information exchange.

2. Joint ventures and other business partnerships. In this type of extranet, the partners in a joint venture use the extranet as a vehicle for communications and collaboration. An example is Bank of America’s extranet for commercial loans. The partners involved in making these loans include a lender, a loan broker, an escrow company, and a title company. The extranet connects lenders, loan applicants, and the loan organizer, Bank of America. A similar case is Lending Tree (www.lendingtree.com), a company that provides mortgage quotes for your home and also sells mortgages online. Lending Tree uses an extranet for its business partners (for example, the lenders).

Level: Easy Section/Learning Objective: Section 11.6/Learning Objective 6 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking •

Differentiate between procurement portals and distribution portals.

ANSWER: There are two basic types of corporate portals: procurement (sourcing) portals for a company’s suppliers (upstream in the supply chain), and distribution portals for a company’s customers (downstream in the supply chain). Procurement portals automate the business processes involved in purchasing or procuring products between a single buyer and multiple suppliers. For example, Boeing has deployed a procurement portal called the Boeing Supplier Portal through which it conducts business with its suppliers. Distribution portals automate the business processes involved in selling or distributing products from a single supplier to multiple buyers.

Level: Medium Section/Learning Objective: Section 11.6/Learning Objective 6 Bloom’s Category: Analysis AACSB Category: Analytic

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Discussion Questions

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How do customer relationship management systems help organizations achieve customer intimacy?

ANSWER: Businesses can use information about each customer (for example, previous purchases, needs, and wants) to create offers that customers are more likely to accept. That is, the CRM approach is designed to achieve customer intimacy. This CRM approach is enabled by information technology.

Level: Easy Section/Learning Objective: Section 11.1/Learning Objective 1 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

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What is the relationship between data consolidation and CRM systems?

ANSWER: Data consolidation and the 360-degree view of the customer enable the organization’s functional areas to readily share information about customers. This sharing of customer information leads to collaborative CRM. Level: Easy Section/Learning Objective: Section 11.1/Learning Objective 1 Bloom’s Category: Analysis AACSB Category: Analytic

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Discuss the relationship between CRM and customer privacy.

ANSWER: CRM collects and uses a lot of data. Without adequate safeguards, this strategy may not work. If the data is not secured then security problems can result.

Level: Easy Section/Learning Objective: Section 11.1/Learning Objective 1 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

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Distinguish between operational CRM systems and analytical CRM systems.

ANSWER: Operational CRM is the component of CRM that supports the front-office business processes. These processes are those that directly interact with customers; that is, sales, marketing, and service.

Analytical CRM systems analyze customer behavior and perceptions in order to provide actionable business intelligence.

Level: Medium Section/Learning Objective: Section 11.2/Learning Objective 2 Bloom’s Category: Analysis

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AACSB Category: Analytic

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Differentiate between customer-facing CRM applications and customer-touching CRM applications.

ANSWER: The two major components of operational CRM are customer-facing applications and customertouching applications. Customer-facing CRM applications are the areas where customers directly interact with the enterprise. These areas include customer service and support, sales force automation, marketing, and campaign management.

Customer-touching applications (also called electronic CRM applications) include those technologies with which customers interact and typically help themselves. These applications include search and comparison capabilities, technical and other information and services, customized products and services, personalized Web pages, FAQs, e-mail and automated response, and loyalty programs.

Level: Medium Section/Learning Objective: Section 11.2/Learning Objective 2 Bloom’s Category: Analysis AACSB Category: Analytic

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Explain why Web-based customer interaction centers are critical for successful CRM systems.

ANSWER: Organizations have implemented customer interaction centers (CIC) through multiple communication channels such as the Web, telephone, fax, and face-to-face interactions to support the communication preferences of customers. The CIC manages several different types of customer interaction. Webbased CIC are low cost and provide the greatest automation for these customer interactions. Hence, they are critical for successful CRM. Level: Easy Section/Learning Objective: Section 11.2/Learning Objective 2 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

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Why are companies so interested in e-CRM applications?

ANSWER: The term electronic CRM (or e-CRM) appeared in the mid-1990s, when organizations began using the Internet, the Web, and other electronic touch points (e.g., e-mail, point-of-sale terminals) to manage customer relationships. Customers interact directly with these technologies and applications rather than with a company representative, as is the case with customer-facing applications. Such applications are called customer-touching CRM applications or electronic CRM (e-CRM) applications. Using these applications, customers typically are able to help themselves.

Level: Medium Section/Learning Objective: Section 11.2/Learning Objective 2 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

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Discuss why it is difficult to justify CRM applications.

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ANSWER: Many CRM applications do not make the company any money, but they are important because they improve the customer experience markedly. These intangible benefits are difficult to quantify and justify for executives.

Level: Easy Section/Learning Objective: Section 11.1/Learning Objective 1 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

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You are the CIO of a small company with a rapidly growing customer base. Which CRM system would you use: on-premise CRM system, on-demand CRM system, or an open-source CRM system?

Remember that open-source CRM systems may be implemented either on-premise or on-demand.

Discuss the pros and cons of each type of CRM system for your business.

ANSWER: Student answers may vary. Some might would use on demand CRM as its demands on infrastructure is smaller. An on-demand CRM system is hosted by an external vendor in the vendor’s data center.

For a small company this is a cheaper and leaner solution.

Level: Easy Section/Learning Objective: Section 11.2/Learning Objective 2 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

10. List and explain the important components of a supply chain.

ANSWER: A supply chain refers to the flow of materials, information, money, and services from raw material suppliers, through factories and warehouses, to the end customers. A supply chain involves three segments: upstream, where sourcing or procurement from external suppliers occurs; internal, where packaging, assembly, or manufacturing takes place; and downstream, where distribution takes place, frequently by external distributors.

Level: Easy Section/Learning Objective: Section 11.5/Learning Objective 5 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 11. Explain how a supply chain approach may be part of a company’s overall strategy.

ANSWER: The supply chain drives the business operations of the company. It has to be closely aligned with its overall strategy. As seen from the previous case studies, the overall business strategy is JIT or low cost. The mechanics of the supply chain needs to reflect the business strategy.

Level: Easy Section/Learning Objective: Section 11.5/Learning Objective 5 Bloom’s Category: Comprehension

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AACSB Category: Reflective Thinking 12. Explain the import role that information systems play in supporting a supply chain strategy.

ANSWER: Information systems are particularly important to ensure efficiency in the supply chain operations. By exchanging information, coordination can be improved among the firms linked in the supply chain.

This can solve a lot of potential problems in the supply chain. For example, information sharing between Walmart and P&G is done automatically. It is part of a vendor-managed inventory strategy.

Vendor-managed inventory (VMI) occurs when a retailer does not manage the inventory for a particular product or group of products. Instead, the supplier manages the entire inventory process.

P&G has similar agreements with other major retailers. The benefit for P&G is accurate and timely information on consumer demand for its products. Thus, P&G can plan production more accurately, minimizing the bullwhip effect.

Level: Medium Section/Learning Objective: Section 11.5/Learning Objective 5 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 13. Would Rolls-Royce Motorcars (www.rolls-roycemotorcars.com) use a push model or a pull model in its supply chain? Support your answer.

Given the limited number of cars that they produce and each one customized to the car’s ultimate customer, they should use a pull model for its supply chain.

Level: Easy Section/Learning Objective: Section 11.6/Learning Objective 6 Bloom’s Category: Application AACSB Category: Reflective Thinking 14. Why is planning so important in supply chain management?

ANSWER: The planning of supply chain management is extremely important because supply and demand can change so fast. Moreover, supply chain problems can result in poor customer satisfaction, lost revenues and reduced profits. Therefore management plays a major role in the supply chain. In many organizations, the production and operations management staff may even lead the supply chain integration process because of their extensive knowledge of the manufacturing components of the organization.

Level: Medium Section/Learning Objective: Section 11.6/Learning Objective 6 Bloom’s Category: Application AACSB Category: Reflective Thinking Problem-Solving Activities

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1.

Access www.ups.com and www.fedex.com. Examine some of the IT-supported customer services and tools provided by the two companies. Compare and contrast the customer support provided on the two companies’ websites.

ANSWER: Student will research, prepare, and present a report.

Level: Medium Section/Learning Objective: Section 11.1/Learning Objective 1 Bloom’s Category: Analysis AACSB Category: Analytic 2.

Enter www.anntaylor.com, www.hermes.com, and www.tiffany.com. Compare and contrast the customer service activities offered by these companies on their websites. Do you see marked similarities? Differences?

ANSWER: Have your student research, then prepare and present a report on their findings.

Level: Medium Section/Learning Objective: Section 11.1/Learning Objective 1 Bloom’s Category: Analysis AACSB Category: Analytic 3.

Access your university’s website. Investigate how your university provides for customer relationship management. (Hint: First decide who your university’s customers are.)

ANSWER: This may lead to an interesting discussion. First, some students may not realize that they are their university’s customers. However, depending on the area of university discussed, each may have different customer groups. Discuss areas such as the library, athletic department, bus line (if your school runs one for the students), registrar’s office, financial department, etc.

Level: Medium Section/Learning Objective: Section 11.1/Learning Objective 1 Bloom’s Category: Analysis AACSB Category: Analytic 4.

Access www.sugarcrm.com and take the interactive tour. Prepare a report on SugarCRM’s functionality to the class.

ANSWER: Have your student research, then prepare and present a report.

Level: Medium Section/Learning Objective: Section 11.2/Learning Objective 2 Bloom’s Category: Analysis AACSB Category: Analytic

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5.

Visit www.ascm.org, www.cio.com, www.findarticles.com, and www.google.com and search for recent information on supply chain management.

ANSWER: Students should prepare and present a report.

Level: Medium Section/Learning Objective: Section 11.7/Learning Objective 7 Bloom’s Category: Analysis AACSB Category: Analytic 6.

Surf the Web to find a procurement (sourcing) portal, and distribution portal, and an exchange (other than the examples presented in this chapter). List the features they have in common and those features that are unique.

ANSWER: Student will prepare and present a report.

Level: Medium Section/Learning Objective: Section 11.6/Learning Objective 6 Bloom’s Category: Analysis AACSB Category: Analytic Closing Case: Amazon’s Global Supply Chain 1.

Perform a strengths, weaknesses, opportunities, and threats (SWOT) analysis of Amazon’s entry into the global logistics business.

ANSWER: Student answers will vary in terms of number of items under each category, as well as how they may identify and describe each item; however, some ideas are included below.

Strengths: - Already have a large portion of ecommerce retailers - Existing knowledge of distribution logistics - Amazon is established and has significant capital resources to leverage and expand rapidly (the ability to compete)

Opportunities: - Use of IT to integrate freight forwarding, parcel delivery, and air cargo businesses - Ability to leverage existing successful elements of their business, such as DSP

Weaknesses: - Reliant on UPS and FedEx (not of adequate scale to compete yet) - Current capital does not support the scale for global logistics (i.e., 40 planes versus >600 for FedEx, and 250 for UPS)

Threats: - Competitors are already in the space and have developed solutions to create efficient freight forwarding business models (i.e., Flexport) - Increasing global competition from successful companies, such as Alibaba

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Level: Easy Section/Learning Objective: Section 11.5/Learning Objective 5 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 2.

What are the disadvantages to Amazon entering the global logistics business?

ANSWER: Student answers will vary based on what they identified in the SWOT analysis as the case does not explicitly present the disadvantages.

Level: Easy Section/Learning Objective: Section 11.5/Learning Objective 5 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 3.

You are the CEO of FedEx or UPS. What strategies would you implement to compete with Amazon?

Provide specific examples to support your answer.

ANSWER: Student answers will vary but should address the threat that Amazon poses in terms of advanced use of technology, and capability for rapid growth.

Level: Medium Section/Learning Objective: Section 11.5/Learning Objective 5 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking Chapter 12: Business Analytics Chapter Outline 12.1 12.2 12.3 12.4 12.5 12.6

Managers and Decision Making The Business Analytics Process Descriptive Analytics Predictive Analytics Prescriptive Analytics Presentation Tools

Learning Objectives 12.1 12.2 12.3 12.4 12.5 12.6

Use a decision support framework to demonstrate how technology supports managerial decision making at each phase of the decision-making process.

Describe each phase of the business analytics process.

Provide a definition and a use case example for descriptive analytics.

Provide a definition and a use case example for predictive analytics.

Provide a definition and a use case example for prescriptive analytics.

Identify and discuss two examples of presentation tools.

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Teaching Tips and Strategies Information overload is a problem that most managers (and people) face on a day-to-day basis. Many managers receive hundreds of e-mails every day, but they may have difficulty knowing which of them should take precedence. Marketing managers may have reams of data showing consumers’ buying habits or brand preferences. But how do they figure out what data is important to their company or brand? This is the paradox of the information revolution. There is so much data, but turning that data into meaningful information is a growing challenge. This chapter conveys the importance of information technology in helping managers make informed decisions.

Students sometimes approach this chapter with indecision and insecurity. They see terms like ―descriptive, predictive, and prescriptive analytics‖ and get a little intimidated or even overwhelmed. So help them relax by explaining how IT has made digging through all the data managers see every day easier.

It should be emphasized that to be successful, managers have to rely on systems and applications that provide them with the information they need to make informed decisions. However, to do that the right data needs to be collected, analyzed, and presented in a usable format.

Remind your students that when bad or incorrect data (i.e., garbage) is entered into the system, they will get bad data out. This will also happen if the model used to analyze the data is not complete or correct.

This could be used to discuss (with caution) how the prediction modules that were used for the 2008 and 2012 presidential elections in the U.S proved to be wrong when they were used to predict the outcome of the 2016 presidential election.

You can probably find various business-related studies in the news every week that could be used to open class discussions.

BlackBoard/CMS For an online or hybrid class, consider assigning some of the discussion questions at the end of this chapter to create an online discussion.

You can also find various business analytics–related studies in the news each week that could be used for online discussions. You might also consider using these as individual student projects, where the students have to explain the kind(s) of analytics used.

Most students take online classes because they work or have other responsibilities, so consider having them report on how where they work (possibly without disclosing the business’s name) uses business analytics.

Opening Case: Spotify 1. What was Spotify’s business problem?

ANSWER The platform had no system in place to recommend music if it had not been performed by a known artist.

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Level: Easy Section/Learning Objective: Section 12.1/Learning Objective 1 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 2. What types of data does Spotify collect? (Hint: Consider songs and users.)

ANSWER Spotify tracks every action that a user takes (i.e., song selection, length of listening, etc.). Spotify also collects the location of users and age that has been important to conclude on user preferences. It also collects data related to the actual songs, genre, playlists, artists, etc.

Level: Medium Section/Learning Objective: Section 12.1/Learning Objective 1 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 3. Describe the descriptive analytics applications of Spotify’s business model.

ANSWER Spotify has developed algorithms to detect covers of songs on the platform that could play instead of the original version of the song that a user actually wanted to hear. A cover is a new performance or recording of a song by someone other than the original artist or composer. After the algorithm has been trained, it is able to distinguish covers from the original song with high accuracy, especially instrumental covers and live performances.

Level: Easy Section/Learning Objective: Section 12.3/Learning Objective 12.3 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 4. Describe the predictive analytics applications of Spotify’s business model.

ANSWER Spotify uses the tracking of demographical data and listening patterns to understand the songs people are likely to listen to in future. This can likely be used for recommendations.

Level: Easy Section/Learning Objective: Section 12.4/Learning Objective 12.4 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking IT’s About Business 12.1 Google Analytics 1. Describe the descriptive analytics applications of Google Analytics.

ANSWER They use a combination of source data and apply scientific expertise to focus on natural resources. Their objective is to quickly provide quality data to the many organizations that must make important decisions

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about natural resources. Their descriptive analytics is embedded in the Kernel tool, which includes a dashboard with key financial indicators by district or county level. Historical yield data can also be examined from the USDA, along with the average change in corn and soy yield estimates on a weekly basis.

Level: Medium Section/Learning Objective: Section 12.3/Learning Objective 12.3 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 2. Describe the predictive analytics applications of Google Analytics. (Remember: Predictive analytics does not predict one possible future, but rather multiple future outcomes based on the decision maker’s actions.)

ANSWER Google Analytics is able to predict year-end figures more accurately than the federal government through the use of algorithms and historical USDA data reflective of a 10-year period. It is also working on a predictive model for wheat, and there is interest in possible uses for analyzing the ability to feed a growing population, manage limited water resources, and manage natural resources given global warming.

Level: Medium Section/Learning Objective: Section 12.3/Learning Objective 12.3 Bloom’s Category: Synthesis AACSB Category: Analytic

IT’s About Business 12.2 Etsy 1. Describe Etsy’s business problem.

ANSWER At Etsy, the search challenge is particularly difficult. The site’s offerings are not mass-produced goods that can easily be categorized. Consequently, if Etsy applied standard search technology to the vast number of products on the site, the results would be vague and disappointing. To improve its search capability, Etsy had to display items that not only matched shoppers’ search terms but also appealed to their particular aesthetic preferences.

Level: Easy Section/Learning Objective: Section 12.4/Learning Objective 12.4 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 2. Describe the various types of data that Etsy collects.

ANSWER

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Etsy has to collect data that defines style. It is based on customer aesthetic preferences and the way a particular item is made. They collect both sales and merchandising data. The latter is based on both textual and visual cues.

Level: Easy Section/Learning Objective: Section 12.4/Learning Objective 12.4 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 3. Describe the descriptive analytics application that Etsy employs.

ANSWER Etsy’s model uses integrated text analysis with an approach to image recognition based on its 43 styles.

This model enables the algorithm to draw conclusions such as identifying a piece of art depicting a whale as being ―nautical‖ in theme, regardless of whether its listing used that term.

Level: Medium Section/Learning Objective: Section 12.4/Learning Objective 12.4 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 3. Describe the predictive analytics application that Etsy employs.

ANSWER The model described in response to the question two uses its conclusions to direct a shopper to other similarly themed products.

Level: Easy Section/Learning Objective: Section 12.4/Learning Objective 12.4 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

IT’s About Business 12.3 Analytics Helps Liverpool Football Club Succeed 1. Describe the descriptive analytics applications employed by Liverpool.

ANSWER There are various examples within the case. For example, ―goalkeeper expected goals‖ calculates shotstopping ability—how many more goals a keeper saved than average keeper would have.

Level: Medium Section/Learning Objective: Section 12.4/Learning Objective 12.4 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 2. Describe the predictive analytics applications employed by Liverpool.

ANSWER There are various examples within the case. For example, for personnel decisions, the model calculates each team’s chance of scoring a goal (or other action) and what chance each team has immediately after the action. It quantifies how much each player affected his team’s chance of winning during the game.

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Level: Medium Section/Learning Objective: Section 12.4/Learning Objective 12.4 Bloom’s Category: Analysis AACSB Category: Analytic

IT’s About Business 12.4 United Parcel Service Uses Three Types of Analytics 1. Explain how DIADs were a descriptive analytics solution for UPS. ANSWER DIADs enabled UPS to capture detailed data that measured the company’s current status. For example, the company measured driving variables in hundredths of a second. Their reasoning was that if they could reduce one mile per driver per day in the United States alone, that process would add up to $50 million to the bottom line annually.

One problem with the DIAD system was that the data were scattered across various locations.

Level: Medium Section/Learning Objective: Section 12.5 /Learning Objective 12.5 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 2. Explain how the Package Flow Technologies system was a predictive analytics solution for UPS. ANSWER With the Package Flow Technologies system, drivers started the day with a DIAD that detailed the packages they were to deliver and the order in which they were to deliver those packages. The DIAD became the drivers’ assistant. The system enabled UPS to reduce total delivery driving by 85 million miles per year. That process saved the firm 8.5 million gallons of fuel and it saved the planet from 85,000 metric tons of carbon dioxide going into the atmosphere.

The downside of the system was that drivers had to provide different services from the same vehicle—for example, deferred service and premium service. They had some packages that had to be delivered by 10:30 a.m., some that had to be delivered by noon, and some that had to be delivered by 2:00 p.m. Drivers therefore had to decide how they were going to service those customers. With so many variables to consider, it was practically impossible for drivers to optimize their routes Level: Medium Section/Learning Objective: Section 12.5 /Learning Objective 12.5 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 3. Explain how the ORION system was a prescriptive analytics solution for UPS. ANSWER The ORION system reorganizes the drivers’ routes based on today’s customers, today’s needs, and

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today’s packages, and it designs deliveries in a very specific, optimized order. ORION takes into account UPS business rules, maps, what time drivers need to be at specific locations, and customer preferences.

ORION enhances UPS customer service with more efficient routing, and it allows UPS to offer innovative services and customized solutions. An example of this type of service is UPS My Choice, which gives customers a one-day alert for the time a package is arriving and allows them to control the timing and location of the delivery.

Level: Medium Section/Learning Objective: Section 12.5 /Learning Objective 12.5 Bloom’s Category: Analysis AACSB Category: Analytic 4. Describe another potential application for the UPS ORION system. That is, what is the next question that UPS managers might ask of the ORION system?

ANSWER Ask your students for their ideas.

One question might be related to projecting short-term and long-term staffing needs. UPS historically hires more help during known busier times of the year. Can ORION project staffing needs based on package volume?

Another question might be if a large truck be used for a route today when a smaller truck could handle the package load. A smaller truck would save fuel.

Level: Medium Section/Learning Objective: Section 12.5/Learning Objective 12.5 Bloom’s Category: Analysis AACSB Category: Analytic 5. Is UPS’s Network Planning Tool a descriptive analytics application, a predictive analytics application, a prescriptive analytics application, or some combination? Support your answer with examples.

ANSWER The planning tool is a combination of all three. It uses descriptive analytics to view the activity at UPS facilities. It uses predictive analytics in the application to forecasts of packaging volume and weight. It uses prescriptive analytics in the simulations that result in plans and schedules.

Level: Medium Section/Learning Objective: Section 12.5/Learning Objective 12.5 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

Before You Go On… Review Questions Section 12.1

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11. Describe the decision-making process proposed by Simon.

ANSWER Simon proposed a three-stage process consisting of: • Intelligence, in which managers examine a situation and identify and define the problem • Design, in which decision makers construct a model that simplifies the problem - Choice, in which a solution is selected Level: Easy Section/Learning Objective: Section 12.1/Learning Objective 12.1 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 12. You are registering for classes next semester. Apply the decision-making process to your decision about how many and which courses to take. Is your decision structured, semi-structured, or unstructured? Support your answer.

ANSWER Hopefully, students will respond, after some thought, that their process is either structured or semistructured.

Level: Medium Section/Learning Objective: Section 12.1/Learning Objective 12.1 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 13. Consider your decision-making process when registering for classes next semester. Explain how information technology supports (or does not support) each phase of this process.

ANSWER Possible responses will include that they check class offerings online, possibly the course catalog to check course descriptions; they may check a website like Ratemyprofessor.com if they do not know anything about the course’s instructor. They may also go online to check what courses they need to graduate.

They may also talk to the friends about a class or instructor. They would probably not need technology to do this, unless they use Twitter or Facebook.

Level: Easy Section/Learning Objective: Section 12.1/Learning Objective 12.1 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking Section 12.2 17. Describe the three business analytics targets.

ANSWER  The development of a single or a few related BA applications

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 

The development of infrastructure to support enterprise-wide BA Support for organizational transformation

Level: Easy Section/Learning Objective: Section 12.2/Learning Objective 12.2 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 18. Describe the business analytics process.

ANSWER Business analytics (BA) is the process of developing actionable decisions or recommendations for actions based upon insights generated from historical data. Business analytics encompasses not only applications, but also technologies and processes. It includes both ―getting data in‖ (to a data mart or warehouse) and ―getting data out‖ (through BA applications).

Level: Easy Section/Learning Objective: Section 12.2/Learning Objective 12.2 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking Section 12.3 10. Describe the purpose of descriptive analytics.

ANSWER Descriptive analytics summarize what has happened in the past and allow decision makers to learn from past behaviors. Descriptive analytics are useful to produce information such as total stock in inventory, average dollars spent per customer, and year-over-year change in sales. Common examples of descriptive analytics are reports that provide historical insights regarding an organization’s production, financials, operations, sales, finance, inventory, and customers.

Level: Easy Section/Learning Objective: Section 12.3/Learning Objective 12.3 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 11. Discuss the BA tools that are commonly used in descriptive analytics.

ANSWER Online analytical processing involves ―slicing and dicing‖ data stored in a dimensional format, ―drilling down‖ in the data to greater detail, and ―rolling up‖ the data to greater summarization (less detail).

Data mining refers to the process of searching for valuable business information in a large database, data warehouse, or data mart. Data mining can perform two basic operations: (1) identifying previously unknown patterns and (2) predicting trends and behaviors. The first operation is a descriptive analytics application and the second is a predictive analytics application.

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Decision support systems (DSSs) combine models and data to analyze semi-structured problems and some unstructured problems that involve extensive user involvement. Models are simplified representations, or abstractions, of reality. DSSs enable business managers and analysts to access data interactively, to manipulate these data, and to conduct appropriate analyses.

Sensitivity analysis examines how sensitive an output is to any change in an input while keeping other inputs constant. Sensitivity analysis is valuable because it enables the system to adapt to changing conditions and to the varying requirements of different decision-making situations.

A model builder must make predictions and assumptions regarding the input data, many of which are based on the assessment of uncertain futures. The results depend on the accuracy of these assumptions, which can be highly subjective. What-if analysis attempts to predict the impact of changes in the assumptions (input data) on the proposed solution.

Goal-seeking analysis represents a ―backward‖ solution approach. Goal seeking attempts to calculate the value of the inputs necessary to achieve a desired level of output.

Level: Easy Section/Learning Objective: Section 12.3/Learning Objective 12.3 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking Section 12.4 7.

Describe the purpose of predictive analytics

ANSWER Predictive analytics examine recent and historical data to detect patterns and predict future outcomes and trends. Predictive analytics provide estimates about the likelihood of a future outcome. The purpose of predictive analytics is not to tell decision makers what will happen in the future. Predictive analytics can only forecast what might happen in the future, based on probabilities.

Level: Easy Section/Learning Objective: Section 12.4/Learning Objective 12.4 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 8.

Discuss the BA tools that are commonly used in predictive analytics.

ANSWER In predictive analytics, data mining is used to predict trends and behaviors.

Level: Easy Section/Learning Objective: Section 12.4/Learning Objective 12.4 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

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Section 12.5 1. Describe the purpose of prescriptive analytics.

ANSWER Prescriptive analytics go beyond descriptive and predictive models by recommending one or more courses of action and showing the likely outcome of each decision. Predictive analytics do not predict one possible future, but rather multiple future outcomes based on the decision maker’s actions. Prescriptive analytics attempt to quantify the effect of future decisions in order to advise on possible outcomes before the decisions are actually made.

Level: Medium Section/Learning Objective: Section 12.5/Learning Objective 12.5 Bloom’s Category: Application AACSB Category: Reflective Thinking 2. Discuss the BA tools that are commonly used in prescriptive analytics.

ANSWER Organizations use a variety of BA tools and statistical procedures in performing prescriptive analytics.

Statistical procedures include optimization, simulation, and decision trees, which were not covered in the text.

Level: Medium Section/Learning Objective: Section 12.5/Learning Objective 12.5 Bloom’s Category: Application AACSB Category: Reflective Thinking Section 12.6 5. Discuss why presentation tools are so valuable in the business analytics process.

ANSWER Data visualization is important to the business analytics process because it makes the results more attractive and understandable to users. The results may be presented after descriptive analytics, predictive analytics, and prescriptive analytics.

Level: Medium Section/Learning Objective: Section 12.6/Learning Objective 12.6 Bloom’s Category: Application AACSB Category: Reflective Thinking 6. What is a dashboard? Why are dashboards so valuable to an organization’s decision makers?

ANSWER A dashboard provides easy access to timely information and direct access to management reports. It is user friendly, supported by graphics, and, most important, enables managers to examine exception reports

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and drill down into detailed data.

Level: Medium Section/Learning Objective: Section 12.6/Learning Objective 12.6 Bloom’s Category: Application AACSB Category: Reflective Thinking Discussion Questions •

Your company is considering opening a new factory in China. List several typical activities involved in each phase of the decision (intelligence, design, and choice).

ANSWER Each of the phases can be used to explain the approach of decision support systems (DSS).

20. Intelligence Phase—the starting point where reality is examined and the problem is defined. o Determine if opening a factory in China is commensurate with organizational objectives o Conduct a search for relevant information about doing business in China o Collect and classify data according to problem definition - Develop a business problem statement • Design Phase—design and construct a model, or simplified representation of reality o Select model according to degree of abstraction required o Validate the model by way of experiments and analysis o Set criteria for evaluation of alternative potential solutions that are identified (attempt to forecast how a factory in China will solve business problem identified in previous phase) o Generate alternative solutions to the problem (how best to conduct business with a factory in China) • Choice Phase—selecting a solution to test ―on paper‖ o Perform testing by experimenting with different ―China business‖ scenarios a. Select best solution and generate criteria to test, i.e., is doing business in China economically feasible?

- Implementation Phase—implement the solution that is most economically feasible Level: Medium Section/Learning Objective: Section 12.1/Learning Objective 12.1 Bloom’s Category: Application AACSB Category: Reflective Thinking •

Recall that a market basket analysis (a type of data mining) of convenience store purchases revealed that customers tended to buy beer and diapers at the same time when they shopped. Now that the analysis showed that this relationship exists, provide a rationale for it. Note: You will have to decide what the next question is.

ANSWER Students will have their own opinions; however, one relationship might be their wife sent them out to get diapers and while they were there they opted to also buy something to drink.

Level: Medium Section/Learning Objective: Section 12.4/Learning Objective 12.4 Bloom’s Category: Application AACSB Category: Reflective Thinking

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•

American Can Company announced that it was interested in acquiring a company in the health maintenance organization (HMO) field. Two decisions were involved in this act: (1) the decision to acquire an HMO and (2) the decision of which HMO to acquire. How can the company use BA to assist it in this endeavor?

ANSWER Dashboards, expert systems, and BA applications support upper management in company acquisition decisions by providing analyses based on the decision maker’s initial definition of the situation including managerial intuition and judgment. The DSS can utilize financial modeling and sensitivity analysis to evaluate multiple interdependent variables.

ES applications can be used to provide consistent expert analyses relevant to the acquisition and selection process. BA systems can help analyze the data and build models to understand the relationships among the variables so to be able to build a more comprehensive picture of the problem and the solution chosen.

Dashboards could be used to provide ―drill down‖ capabilities to locate key information about HMOs under consideration. Drill down is important because it eliminates the need for intermediaries for consultation and analysis of the data. The dashboard can also connect to online information services to seek additional intelligence from external sources.

Level: Medium Section/Learning Objective: Section 12.6/Learning Objective 12.6 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 4. Discuss the strategic benefits of business analytics.

ANSWER These applications consolidate, analyze, and provide access to vast amounts of data to help users make better business decisions.

Level: Easy Section/Learning Objective: Section 12.2/Learning Objective 2 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 5. In early 2012, the New York Times reported the story of a Target data scientist who was able to determine if a customer was pregnant based on her pattern of previous purchases. (A link to this article is http://www.nytimes.com/2012/02/19/magazine/shopping-habits.html. Another article on the topic is http://www.slate.com/blogs/how_not_to_be_wrong/2014/06/09/big_data_what_s_even_creepier_than_tar get_guessing_that_you_re_pregnant.html) a. Describe the business analytics models that the data scientist used.

- data mining - predictive analytics b. Refer to Chapter 3 and discuss the ethics of Target’s analytics process.

The ethical issue of making personal assumptions based on data collected that was related to their buying patterns.

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c. Research the story and note the unintended consequences of Target’s analytics process.

The father of a high school student became upset that his daughter began receiving pregnancy information mailings from Target. He did not know she was pregnant.

Level: Medium Section/Learning Objective: Section 12.3/Learning Objective 12.3 Bloom’s Category: Analysis AACSB Category: Analytic 6. Consider the admissions process at your university. Your university’s admissions process involves the analysis of many variables to decide whom to admit to each year’s freshman class. Contact your admissions office and gather information on the variables used in the admissions process. As you recall from applying to your university, typical variables would include high school attended, high school grade point average, standardized test scores such as ACT or SAT, and many others. (Do not be surprised if there are variables that your admissions office cannot provide.) a. Provide an example of how your admissions office uses descriptive analytics in the admissions process. Use the variables you have found in your example. b. Provide an example of how your admissions office uses predictive analytics in the admissions process. Use the variables you have found in your example. c. Provide an example of how your admissions office uses prescriptive analytics in the admissions process. Use the variables you have found in your example.

ANSWER: Your students’ ability to answer this depends on the willingness of your university’s admission office to meet with them and discuss their process.

Level: Medium to Hard Section/Learning Objective: Section 12.1/Learning Objective 12.1 Bloom’s Category: Analysis AACSB Category: Analytic

Problem-solving Activities 1. Consider a large city that has placed sensors in all its trash dumpsters. The sensors measure how full each dumpster is. o o o

Describe a descriptive application using this sensor data.

Describe a predictive analytics application using this sensor data.

Describe a prescriptive analytics application using this sensor data.

ANSWER Student answers will vary but may include: o Use prior measurement data to determine the size of trash dumpster required by areas, or frequency of pickup. o Using the prior measurement data to determine frequency of pickups required based on days, weeks, or season. o Use prior measurement data to determine the weight of trash to determine the number of staff and/or nature of equipment required to pick it up.

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Level: Medium Section/Learning Objective: Section 12.3, 12.4, 12.5/Learning Objective 12.3, 12.4, 12.5 Bloom’s Category: Analysis AACSB Category: Analytic 2. Consider General Electric’s latest-generation LEAP aircraft engine. Sensors in this engine measure vibration and several different temperatures (depending on the location of the sensor). a. Describe a descriptive analytics application using this sensor data. b. Describe a predictive analytics application using this sensor data. c. Describe a prescriptive analytics application using this sensor data.

ANSWER Student answers will vary.

Level: Medium Section/Learning Objective: Section 12.3, 12.4, 12.5/Learning Objective 12.3, 12.4, 12.5 Bloom’s Category: Analysis AACSB Category: Analytic 3. You are a business analyst for a chain of grocery stores. You analyze retail sales data, perform a descriptive analytics application, and discover that bread and milk are the two products that are purchased together more often than any other pair of products. a. Describe a predictive analytics application using these data. b. Describe a prescriptive analytics application using these data.

ANSWER Student answers will vary but may include: o Determining if and when promotions should be offered for the two products. o Determining what price to sell the items at and when to stock them.

Level: Medium Section/Learning Objective: Section 12.4, 12.5/Learning Objective 12.4, 12.5 Bloom’s Category: Analysis AACSB Category: Analytic 4. Consider Rent the Runway (RTR; www.renttherunway.com). RTR buys designer dresses wholesale and rents them over the Web, charging only a fraction of the price of the dress. When RTR merchandisers decide whether to buy a new dress, they follow a list of 40 data points such as fabric, zippers, stitching, and shape to determine whether the dress will hold up to the rigors of multiple rentals. The longer the lifespan, the higher the return on capital. In mid-2017, RTR was averaging more than 30 turns (rentals) per dress. With every dress it rents, RTR’s analytics algorithms learn more about effective strategies to track the location of each item, forecast demand, select shipping methods, set prices, and control inventory. RTR’s algorithms also examine customer reviews to learn which dresses women are renting for certain occasions. They then forecast demand to determine whether the prepaid shipping label that goes with a dress should require the customer to return the dress overnight or whether a three-day return, which costs less, is sufficient. a. Describe a descriptive analytics application using this sensor data.

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b. Describe a predictive analytics application using this sensor data. c. Describe a prescriptive analytics application using this sensor data.

ANSWER a. A descriptive analytics application is examining customer reviews to learn which dresses women are renting for certain occasions. b. A predictive analytics application is determining the time frame on the prepaid shipping label that goes with a dress for the customer to return the dress. c. A prescriptive application is using the algorithms to set prices and control inventory.

Level: Easy Section/Learning Objective: Section 12.3, 12.4, 12.5/Learning Objective 12.3, 12.4, 12.5 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

Closing Case: Stitch Fix 1. Describe the descriptive analytics applications of Stitch Fix’s business model.

ANSWER Stitch Fix uses descriptive analytics to monitor fashion trends and changes in customer preferences. By using images from social media and other sources as well as scanning imagines on the customers’ Pinterest boards and other social media sites, they can develop a particular understanding of each customer’s sense of style.

Level: Medium Section/Learning Objective: Section 12.3/Learning Objective 3 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 2. Describe the predictive analytics applications of Stitch Fix’s business model.

ANSWER Stitch Fix collects more than 50 pieces of data from each customer and uses an algorithm to predict how likely they will be to keep an item based on various data points and parameters. Additionally, algorithms are used to make predictions based on how many customers are buying pants and then convey that for production purposes.

Level: Medium Section/Learning Objective: Section 12.4/Learning Objective 4 Bloom’s Category: Application AACSB Category: Reflective Thinking 3. What companies and industries are in danger of being disrupted by Stitch Fix? (Hint: Will Stitch Fix change the way that women buy clothes?)

ANSWER

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Clothing retailers are in danger of being disrupted by Stitch Fix. Customers may grow accustomed to the specific focus placed on matching inventory with their preferences, not having to search either online or in store for items that catch their attention. Instead, given the convenience of Stitch Fix, they will get what they want with reduced effort. Customers looking for specific clothing items will likely be satisfied with a model such as Stitch Fix compared to a ―window shopper‖ who might still prefer the brick-and-mortar experience.

Level: Medium Section/Learning Objective: Section 12.4/Learning Objective 4 Bloom’s Category: Analysis AACSB Category: Analytic

Chapter 13: Acquiring Information Systems and Applications

Chapter Outline 13.1 13.2 13.3 13.4

Planning For and Justifying IT Applications Strategies for Acquiring IT Applications Traditional Systems Development Life Cycle Alternative Methods and Tools for Systems Development

Learning Objectives 13.1 Explain the different cost-benefit analyses that companies must take into account when formulating an IT strategic plan.

13.2 Discuss the four business decisions that companies must make when they acquire new applications.

13.3 Enumerate the primary tasks and the importance of each of the six processes involved in the systems development life cycle.

13.4 Describe alternative development methods and the tools that augment these methods.

Teaching Tools and Tips In this chapter, you will be discussing the process organizations use when they develop a new information system. I suggest that you spend some time specifically discussing the opportunities and pitfalls of systems development. Ensure that students gain an appreciation for the human relations side of the development process. Remind them that people are an extremely important component of any information system. However, once a development project is underway, people from different functional areas become involved. Emphasize that project management and communications skills are extremely important for this process to be successful.

It is important for students to understand that when companies are planning new information systems sometimes those involved hit the proverbial wall regarding the process steps of development and implementation. This is because people from different functional areas may have different (and often hidden) agendas for the new system. These hidden agendas may not become apparent until it is too late.

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Companies sometimes embark on a systems development project when they realize they are losing competitive ground due to inefficient business processes or no information systems at all. Top management will initiate a reason for change and throw their unwavering support behind the effort. This usually means the project will get off to a great start; however, the same sense of urgency will typically cause inappropriate shortcuts to be taken by project managers. It is important for top management to let their employees know that time is money, and the project plan is the blueprint for successful development.

You should spend some time describing how some companies struggle to bring order to their system development life cycle (SDLC) process and, unfortunately, that they may allow their users to develop their own applications. Explain the need for the transition from these ―islands of information‖ and ―private databases‖ that are being maintained by users into a well-designed, enterprise-wide information strategy. This is especially true in the all-too-likely case where IS failed to determine the applications that users should and should not develop and the tools they should use.

BlackBoard/CMS This chapter may be difficult to present in an online class. Start with using some of the discussion questions at the end of the chapter. I would also suggest that you record or find some video presentations to visually explain the development process.

Opening Case: Updating the Census After 230 Years 1. Why did the U.S. Census Bureau first decide to use a vendor rather than its internal system?

ANSWER There have been missed deadlines and mission creep in the past. Also there have been many changes in technology and users. The bureau found a vendor product that would work with minimal alternations. IT could do what Primus and the in-house mobile apps could do but cheaper.

Level: Easy Section/Learning Objective: Section 13.2/Learning Objective 13.2 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 2. Why did the bureau switch back to its internal system?

ANSWER In 2018 attackers with Internet protocol addresses from Russia hacked the Pegasystems-built website. Intruders bypassed a firewall and accessed restricted parts of the system. The incident did not result in system damage or stolen data, but it raised alarms among census security staff about the ability of the bureau to defend the system against more sophisticated cyberattacks.

Level: Easy Section/Learning Objective: Section 13.2/Learning Objective 13.2 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

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3. Why do you think the bureau deployed the Pegasystems iPhone app rather than using its internal Primus iPhone app?

ANSWER Student ideas will vary. It may be due to the ability to revert back in-house quickly enough and able to manage after the incident.

Level: Medium Section/Learning Objective: Section 13.2/Learning Objective 13.2 Bloom’s Category: Analysis AACSB Category: Analytic

IT’s About Business 13.1 Hospitals Automate Workflow with Low-Code Systems

1. What is the purpose of workflow automation?

ANSWER The steps, or workflow, of a process are automated.

Level: Easy Section/Learning Objective: Section 13.4/Learning Objective 13.4 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 2.

What is meant by a ―gap‖ between apps?

ANSWER It refers to the lack of interaction or automation between IT solutions, apps.

Level: Medium Section/Learning Objective: Section 13.4/Learning Objective 13.4 Bloom’s Category: Application AACSB Category: Reflective Thinking 3. What are some advantages of monolithic systems?

ANSWER Monolithic systems are comprehensive and support the full process. There isn’t a need to copy and paste data between apps or create manual efforts between tasks.

Level: Medium Section/Learning Objective: Section 13.4/Learning Objective 13.4 Bloom’s Category: Application AACSB Category: Reflective Thinking

Review Questions Before you go on…

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Section 13.1

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What are some problems associated with assessing the costs of IT?

ANSWER One problem is the allocation of fixed costs among different IT projects. Another difficulty is that system costs continue after the system is installed. It is important to calculate the total cost of ownership—a formula for calculating the cost of acquiring, operating, and controlling an IT system.

Level: Medium Section/Learning Objective: Section 13.1/Learning Objective 1 Bloom’s Category: Application AACSB Category: Reflective Thinking

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Why are the intangible benefits from IT so difficult to evaluate?

ANSWER By definition, intangible benefits are very difficult to place an accurate monetary value on. It is important not to ignore these benefits, however, since they are real and valuable to the organization.

Therefore, they must be approximated. Overestimation will result in projects being accepted that do not produce the expected benefits, but underestimation will result in valuable projects being rejected.

Level: Medium Section/Learning Objective: Section 13.1/Learning Objective 1 Bloom’s Category: Application AACSB Category: Reflective Thinking

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Describe the NPV, ROI, break-even analysis, and business case approaches.

ANSWER The NPV method compares the present value of a project’s cash inflows with the present value of its cash outflows, discounted at the organization’s cost of capital. An NPV that is $0 or greater suggests the project is acceptable. The ROI method computes a rate of return that is generated by the project based on the project’s net income divided by the average assets invested in the project. Break-even analysis provides an estimated date when the money spent on the systems development process is recouped from the benefits earned in the business it is used in.

A business case is a written document that is used by managers to garner funding for one or more specific applications or projects. Its major emphasis is the justification for a specific required investment. The business case helps to clarify how the organization can best use its resources to accomplish the IT strategy.

Level: Medium Section/Learning Objective: Section 13.1/Learning Objective 1 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

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Section 13.2 19. Describe the four fundamental business decisions that organizations must make when they acquire information systems.

ANSWER • How much computer code does the company want to write?

• How will the company pay for the application?

• Where will the application run?

12. Where will the application originate?

Level: Easy Section/Learning Objective: Section 13.2/Learning Objective 2 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 20. Discuss each of the seven development methods in this section with regard to the four business decisions that organizations must make.

ANSWER a. b. c. d. e. f. g.

Customize a prewritten application Lease the application Application service providers Software-as-a-service vendors Use open-source software Outsourcing Custom development

Level: Easy Section/Learning Objective: Section 13.2/Learning Objective 2 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking Section 13.3 •

Describe the feasibility study.

ANSWER The feasibility study involves defining the business problem or new opportunity, investigating options available for the best solution, and making a recommendation and estimating the probability of success.

Level: Easy Section/Learning Objective: Section 13.3/Learning Objective 3 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking •

What is the difference between systems analysis and systems design?

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ANSWER Systems analysis is the detailed study and documentation of the ―as is‖ situation and the requirements for the new system. Systems design is the development of a technical specification that details the system inputs, outputs and interfaces, hardware, software, databases, telecommunications, personnel, and procedures needed to provide a solution for the requirements developed in the analysis stage.

Level: Easy Section/Learning Objective: Section 13.3/Learning Objective 3 Bloom’s Category: Analysis AACSB Category: Analytic •

Describe structured programming.

ANSWER In order to establish a uniform approach to programming, one that is understood by successive iterations of staff, structured programming techniques are used.

• Each module has only one function.

• Each module has only one entrance and one exit.

21. GO TO statements are not allowed.

Level: Easy Section/Learning Objective: Section 13.3/Learning Objective 3 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking •

What are the four conversion methods?

ANSWER Parallel—running old and new systems concurrently for a period of time Direct—moving the new system into production at the same time the old system is made inaccessible Pilot—introducing the new system in one part of the organization, and when it is determined that it is stable, it is rolled out to other areas Phased—introducing select components of the new system in stages, and when it is determined that the modules are stable, other parts are rolled out Level: Easy Section/Learning Objective: Section 13.3/Learning Objective 3 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking Section 13.4 •

Describe the tools that augment the traditional SDLC.

ANSWER Prototyping involves building a model of the system based on user feedback. It is an iterative approach that helps users visualize what the new system will look like.

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Joint application development (JAD) involves all of the end users meeting with the IS project team to develop requirements and reach a consensus. It can save a lot of time, but it is intense and will only work well if all departments are represented.

CASE tools are specialized tools that automate many of the tasks in the SDLC. Long-term maintenance on systems developed with CASE tools can be less expensive, however initial development can cost more.

Rapid application development (RAD) can involve the other three tools to produce high-quality systems rapidly. JAD sessions are used to collect requirements. CASE tools are used to structure requirements and develop prototypes.

Level: Medium Section/Learning Objective: Section 13.4/Learning Objective 4 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking •

Describe the alternate methods that can be used for systems development other than the SDLC.

ANSWER End-user development is very popular today because of the availability and familiarity with small databases such as Access and spreadsheet applications.

Object-oriented development is based on a different view of computer systems.

It is based on real-world activity that must be modeled to perform the given task.

Level: Easy Section/Learning Objective: Section 13.4/Learning Objective 4 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking Discussion Questions

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Discuss the advantages of a lease option over a buy option.

ANSWER Leasing has the advantages of lower up-front costs and more flexibility to change and adapt the applications used over time as needs change.

Level: Easy Section/Learning Objective: Section 13.2/Learning Objective 2 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

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Why is it important for all business managers to understand the issues of IT resource acquisition?

ANSWER

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Because information systems are so critical to competitive advantage in so many companies, a system’s timely and careful development is a very high priority. System development is a team effort that should involve the entire organization.

Level: Medium Section/Learning Objective: Section 13.1/Learning Objective 1 Bloom’s Category: Analysis AACSB Category: Analytic

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Why is it important for everyone in business organizations to have a basic understanding of the systems development process?

ANSWER End-user department staff has the business knowledge needed to work with the IS staff to develop all of the components of the system’s design. Without the input of the various departments involved in the operation of the process being designed, there could be logic errors. Assumptions are not a good basis for computer systems; user business knowledge is critical to the design.

Level: Medium Section/Learning Objective: Section 13.1/Learning Objective 1 Bloom’s Category: Analysis AACSB Category: Analytic

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Should prototyping be used on every systems development project? Why or why not?

ANSWER The SDLC provides the basic structure of the development process. Prototyping can be used within that structure to experiment with new technology or clarify requirements. It should not replace the traditional SDLC for highly complex systems.

Level: Medium Section/Learning Objective: Section 13.3/Learning Objective 3 Bloom’s Category: Analysis AACSB Category: Analytic

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Discuss the various types of feasibility studies. Why are they all needed?

ANSWER Technical, economic, behavioral, and organizational feasibilities are different facets of the analysis.

Technical—determines if the current hardware and software platform is appropriate, and whether the system should be developed in house or purchased from a vendor Economic—determines if the project has an acceptable financial risk and whether the organization can afford it Behavioral—determines if the corporate culture is open to the change Organizational—determines whether the organization has any external issues that would preclude the project from being successful and whether the project meshes with the company’s strategic plan

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Level: Easy Section/Learning Objective: Section 13.2/Learning Objective 2 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

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Discuss the issue of assessing intangible benefits and the proposed solutions.

ANSWER Intangible benefits are often very hard to quantify. IS staff responsible for the cost–benefit analysis should collaborate with users of the system to place a value on the benefit, even if it is less than scientific. Very often, it is the quantifying of the intangible benefit that will make the biggest impact on the decision to move ahead with a new system.

Level: Easy Section/Learning Objective: Section 13.1/Learning Objective 1 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

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Discuss the reasons why end-user-developed information systems can be of poor quality. What can be done to improve this situation?

ANSWER Putting development tools in the hands of end users can result in some very innovative work. One of the biggest problems, however, is that in many cases they do not know the most efficient way to design a system. Therefore, when working with a small amount of data, it may seem like everything is okay, but as soon as they try to function in a full-blown production environment, the application grinds to a halt or stops completely.

One way that this problem can be avoided is education. If, for example, the user knows how to design a relational database, they have a better chance of developing an efficient application. Another way would be to have the applications run through a quality-assurance process with IS to ensure that they are not only developing software that can be used, but also documenting their work.

Level: Hard Section/Learning Objective: Section 13.4/Learning Objective 4 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking Problem-solving Activities 14. Find the product review area. Read reviews of three software payment solutions. Assess them as possible components.

ANSWER Students will develop and submit or present a report on their findings.

Level: Easy Section/Learning Objective: Section 13.2/Learning Objective 2 Bloom’s Category: Analysis

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AACSB Category: Analytic 15. Use an Internet search engine to obtain information on CASE and ICASE tools. Select several vendors and compare and contrast their offerings.

ANSWER Students will develop and submit or present a report on their findings.

Level: Medium Section/Learning Objective: Section 13.2/Learning Objective 2 Bloom’s Category: Analysis AACSB Category: Analytic 16. Access www.ning.com. Observe how the site provides components for you to use to build applications. Build a small application at the site.

ANSWER Students should develop and submit or present a report on their findings.

Level: Medium Section/Learning Objective: Section 13.4/Learning Objective 4 Bloom’s Category: Analysis AACSB Category: Analytic 17. Visit www.ibm.com/products/software. Find its WebSphere product. Read recent customers’ success stories. What makes this software so popular?

ANSWER Students should develop and submit or present a report on their findings.

Level: Medium Section/Learning Objective: Section 13.4/Learning Objective 4 Bloom’s Category: Analysis AACSB Category: Analytic 18. Enter the websites of Gartner (www.gartner.com), 451 Research (https://451research.com), and CIO (www.cio.com). Search for recent material about ASPs and outsourcing and prepare a report on your findings.

ANSWER Students should develop and submit or present a report on their findings.

Level: Medium Section/Learning Objective: Section 13.2/Learning Objective 2 Bloom’s Category: Analysis AACSB Category: Analytic 19. StoreFront (www.storefront.net) is a vendor of e-business software. At its site, the company provides demonstrations illustrating the types of storefronts that it can create for shoppers. The site also provides demonstrations of how the company’s software is used to create a store.

33. Run the StoreFront demonstration to see how this is done.

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34. What features does StoreFront provide?

35. Does StoreFront support smaller or larger stores?

36. What other products does StoreFront offer for creating online stores? What types of stores do these products support?

ANSWER Students should develop and submit or present a report on their findings.

Level: Medium Section/Learning Objective: Section 13.4/Learning Objective 4 Bloom’s Category: Analysis AACSB Category: Analytic Closing Case: Etsy Improves Culture and Speeds Deployment with DevOps 12. Etsy facilitates the sales of unique goods on the Web. If they primarily support retail, why do they need such a strong culture of IT development?

ANSWER The Etsy website is the key to its business model. Vendors rely on Etsy to connect with customers, resulting in the need for a strong IT culture. Silos should not exist and there should not be a focus in blaming rather than working toward a united goal or superior product. Vendors and customers would go elsewhere as the model and service they need cannot be relied on. The audiences served by Etsy need a reliable website and timely updates.

Level: Easy Section/Learning Objective: Section 13.4/Learning Objective 13.4 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 2. As a buyer or seller, how long would you continue to use a platform that allowed bugs to remain on their website for multiple days or weeks? Why? ANSWER Student answers will vary but are likely to focus on the negative impact this may have. As a result, they are likely to have shorter time periods expressed in terms of tolerance levels. Each hour the website is down likely results in lost sales, making even a period of days seem intolerable for some vendors.

Level: Easy Section/Learning Objective: Section 13.4/Learning Objective 13.4 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 3. What were the two parts of the IT operation that Etsy ―combined‖ by creating greater collaboration?

ANSWER They brought development and operations together. They collaborated and kept the communication focused on the user’s experience with the platform, reinforcing their common purpose.

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Level: Easy Section/Learning Objective: Section 13.4/Learning Objective 13.4 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking Chapter 14: Artificial Intelligence Chapter Outline 14.1 Introduction to Artificial Intelligence 14.2 Machine Learning and Deep Learning 14.3 Neural Networks 14.4 Artificial Intelligence Applications 14.5 Artificial Intelligence in the Functional Areas 14.6 Appendix Learning Objectives 14.1 Explain the potential value and the potential limitations of artificial intelligence.

14.2 Differentiate among supervised learning, semi-supervised learning, unsupervised learning, reinforcement learning, and deep learning.

14.3 Describe the structure of a neural network and discuss how that structure contributes to the purpose of neural networks in machine learning.

14.4 Provide use case examples of computer vision, natural language processing, robotics, image recognition, and intelligent agents.

14.5 Provide use case examples of artificial intelligence applications in accounting, finance, marketing, production and operations management, human resource management, and management information systems.

14.6 Understand the process by which a neural network transforms data values from the input node to the output node, and then calculates the loss function to initiate the back propagation process.

Teaching Tips and Strategies Intelligent systems are information systems that are designed to make decisions on their own based on data made available to them. Your students have probably used some of type of intelligent system every day, but they do not realize it. Many of us use some systems, like Google or Bing, multiple times every day.

Basically, an intelligent system is a securely managed electronic system that runs a high-level operating system and autonomously (1) connects to the Internet, (2) executes native or cloud-based applications, and (3) analyzes data collected.

Intelligent systems include various categories of applications. These include search engines like Google or Bing, the autocorrect function in text processing applications such as Microsoft Word or Apple’s Pages, and even personal assistants such as Apple’s Siri.

Students may have already experienced an element of self-driving (e.g., Tesla sells a self-driving option for their Model 3).

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BlackBoard/CMS Nothing more than what is above.

Opening Case: Artificial Intelligence in Retail 1. What potential problems can arise from retailers implementing machine learning applications?

Provide examples to support your answer.

ANSWER Students will use different examples from the case in order to support their response; however, regardless of the example they choose, the problems that arise are related to the recognition (capturing images of customers) and the retention of this data. As a result, the most likely problems are customer privacy and data governance for organizations.

Level: Medium Section/Learning Objective: Section 14.1/Learning Objective 14.1 Bloom’s Category: Analysis AACSB Category: Analytic 2. Are machine learning applications more important to physical stores or online stores? Support your choice with examples.

ANSWER Student answers will vary. Potential viewpoints include:  It is more important for online stores as physical stores can have individuals assisting customers (i.e., Sephora can have an employee help a customer find the right foundation).  It is more important for physical stores to create efficiency and continue to draw customers in and compete with online retailers.

Level: Medium Section/Learning Objective: Section 14.1/Learning Objective 14.1 Bloom’s Category: Analysis AACSB Category: Analytic

IT’s About Business 14.1 PepsiCo Uses AI 1. Which type of machine learning applies to the following applications in this case? Support your answer for each application.

• The Snackbot robot • Frito-Lay using lasers to paint chips to determine texture • Frito-Lay using computer vision to determine percent peel of potatoes • PepsiCo using Robot Vera to fill 250 jobs • PepsiCo’s use of BlackSwan Technologies to analyze consumer behavior

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ANSWER Application Snackbot Frito-Lay lasers Frito-Lay computer vision PepsiCo–Robot Vera PepsiCo–BlackSwan

Type of Machine Learning Supervised Learning Unsupervised Learning Unsupervised Learning Deep Learning Deep Learning

Level: Medium Section/Learning Objective: Section 14.2/Learning Objective 14.2 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

Closing Case: AI at McDonald’s 1. Propose another machine learning application for McDonald’s.

ANSWER Student answers will vary.

Level: Medium Section/Learning Objective: Section 14.2/Learning Objective 14.2 Bloom’s Category: Analysis AACSB Category: Analytic 2. Discuss the potential problems that machine learning applications can post for McDonald’s.

ANSWER Student answers will vary; however, may include:  Data governance on the voices and images obtained by the company  Issues with accurate speech recognition (i.e., is there potential bias or discrimination in the programming of accents and languages?)  Lack of accessibility based on case facts for those who are not able to speak Level: Medium Section/Learning Objective: Section 14.1/Learning Objective 14.1 Bloom’s Category: Analysis AACSB Category: Analytic Before you go on… Review Questions 14.1 1.

What is artificial intelligence?

ANSWER

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Intelligent systems describes the various commercial applications of artificial intelligence. Artificial intelligence (AI) is a subfield of computer science that is concerned with studying the thought processes of humans and re-creating the effects of those processes via machines, such as computers and robots.

Level: Easy Section/Learning Objective: Section 14.1/Learning Objective 14.1 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 2.

Differentiate between artificial and human intelligence.

ANSWER Capabilities that are considered signs of intelligence: learning or understanding from experience, making sense of ambiguous or contradictory messages, and responding quickly and successfully to new situations.

The ultimate goal of AI is to build a machine that will mimic human intelligence. A widely used test to determine whether a computer exhibits intelligent behavior was designed by Alan Turing, a British AI pioneer. The Turing test proposes that a human and a computer both pretend to be human, and a human interviewer has to identify which is which. Based on this standard, the intelligent systems exemplified in commercial AI products are far from exhibiting any significant intelligence.

Level: Medium Section/Learning Objective: Section 14.1/Learning Objective 14.1 Bloom’s Category: Analysis AACSB Category: Analytic 3. Differentiate between strong AI and weak AI. ANSWER Strong AI is hypothetical artificial intelligence that matches or exceeds human intelligence—the intelligence of a machine that could successfully perform any intellectual task that a human being can. Strong AI, therefore, could be considered to have consciousness or sentience.

Weak AI (also called narrow AI) performs a useful and specific function that once required human intelligence to perform, and does so at human levels or better (for example, character recognition, speech recognition, machine vision, robotics, data mining, medical informatics, automated investing, and many other functions).

Level: Easy Section/Learning Objective: 14.1/Learning Objective 14.1 Bloom’s Category: Synthesis AACSB Category: Analytic 14.2 1. What is the difference between traditional computer programming and machine learning systems?

ANSWER

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Traditional programming is a structured combination of data and a computer algorithm (computer program) that produces answers. In supervised machine learning, developers train the system with labeled input data and the expected output results. After the system is trained, developers feed it with unlabeled input data and examine the accuracy of the output data.

Level: Easy Section/Learning Objective: Section 14.2/Learning Objective 14.2 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 2. What is the difference between expert systems and machine learning systems?

ANSWER There are significant differences between expert systems and machine learning systems. ESs require human experts to provide the knowledge for the system. In contrast, ML systems do not require human experts.

- Similar to traditional programming, expert systems must be formally structured in the form of rules. By contrast, machine learning algorithms learn from ingesting vast amounts of data and by adjusting hyperparameters and parameters.

Level: Easy Section/Learning Objective: Section 14.2/Learning Objective 14.2 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 3. Describe three types of bias that can negatively impact the development of machine learning systems.

ANSWER 1) Underspecification: multiple models are developed and the process will not know the difference, nor will the developers, until the model is fully employed 2) Developer bias in approaching a problem: the programming is based on a developer’s intuition and approach, which inherently presents a bias 3) Data shift: a mismatch between the data used to train and test the system and the data the system actually encounters in the real world Level: Easy Section/Learning Objective: Section 14.2/Learning Objective 14.2 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 4. Refer back to IT’s About Business 3.3. Why are false positives so important in evaluating the output of machine learning systems in the case of facial recognition?

ANSWER Students should refer back to the cases and reason on their opinion of the ethicality and legality of using facial recognition. The focus will likely be on the transparency of use and storage. Additionally, students may include the accuracy of facial recognition and

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consequences for inaccurate representations and use.

Level: Easy Section/Learning Objective: Section 14.2/Learning Objective 14.2 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking

5. Differentiate between supervised learning, semi-supervised learning, unsupervised learning, reinforcement learning, and deep learning.

ANSWER  Supervised learning: system is given labeled input data and the expected output results  Semi-supervised learning: combines small amount of labeled data with large amount of unlabeled data (creates efficiency)  Unsupervised learning: searching for previously undetected patterns in a data set with minimal human supervision (used when there is no data on a desired outcome)  Reinforcement learning: the system uses trial and error to find solution to a problem and although the designer sets the reward policy, they do not provide suggestions on how to solve the problem  Deep learning: applied to all previous machine learning types if neural networks are used; complex problems are solved through deep learning Level: Easy Section/Learning Objective: Section 14.2/Learning Objective 14.2 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 14.3 1. Describe the structure of a neural network.

ANSWER Neural networks consist of nodes, synapses (connections between nodes), weights, biases, and functions.  A node in a neural network consists of software that has one or more weighted input connections, a bias function, an activation function, and one or more output connections. The nodes are arranged in several layers: one input layer, one or more hidden layers, and one output layer.  The activation functions (AFs) that reside at each node define the output of that node given an input or a set of inputs.  Weights and biases are examples of parameters in a neural network.

Level: Easy Section/Learning Objective: Section 14.3/Learning Objective 14.3 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking

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2. Describe how a neural network operates. That is, describe how developers train neural networks..

ANSWER Neural networks are particularly adept at recognizing subtle, hidden, and newly emerging patterns within complex data, as well as interpreting incomplete inputs.

Note that the network has three levels of interconnected nodes (similar to the human brain): an input layer, middle or hidden layer, and an output layer. As the neural network is trained, the strengths, or weights, of the connections change. In the example from the text, the input nodes are age, income, occupation, marital status, employer, length of time with that employer, amount of mortgage desired, and current interest rate. The neural network has already been trained with data input from many successful and unsuccessful mortgage applications. That is, the neural network has established a pattern as to which input variables are necessary for a successful mortgage application. Interestingly, the neural network can adjust as both mortgage amounts and interest rates increase or decrease.

Level: Easy Section/Learning Objective: Section 14.3/Learning Objective 14.3 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 14.4 1. Describe the advantages of computer vision, natural language processing, and speech recognition.

ANSWER Computer vision refers to the ability of information systems to identify objects, scenes, and activities in images. Computer vision applications are designed to operate in unconstrained environments.

Natural language processing refers to the ability of information systems to work with text the way that humans do. These systems can extract the meaning from text and can generate text that is readable, stylistically natural, and grammatically correct. The practical applications of natural language processing typically address relatively narrow areas such as analyzing customer feedback about a particular product or service, automating discovery in civil litigation or government investigations (e-discovery), and automating writing of formulaic stories on topics such as corporate earnings or sports.

Speech recognition focuses on automatically and accurately transcribing human speech. Applications include medical dictation, hands-free writing, voice control of information systems, and telephone customer service applications.

Level: Easy Section/Learning Objective: Section 14.4/Learning Objective 14.4 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 2. What are cobots?

ANSWER Cobots, or cooperative robots, are robots designed to share jobs with humans on the factory floor.

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Level: Easy Section/Learning Objective: Section 14.4/Learning Objective 14.4 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 3. Describe how you might use intelligent agents, information agents, monitoring and surveillance agents, and user agents.

ANSWER An intelligent agent is a software program that assists you, or acts on your behalf, in per- forming repetitive computer-related tasks.

Information agents search for information and display it to users. The best-known information agents are buyer agents. A buyer agent, also called a shopping bot, helps customers find the products and services they need on a website.

Monitoring and surveillance agents, also called predictive agents, constantly observe and report on some item of interest.

User agents, also called personal agents, take action on your behalf.

Level: Easy Section/Learning Objective: Section 14.4/Learning Objective 14.4 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 14.5 1. Look at the functional areas that corresponds to your major. a. Discuss potential impacts of ML application on your profession. b. Describe additional ML applications not discussed in the text.

ANSWER Student answers will vary.

Level: Medium Section/Learning Objective: Section 14.5/Learning Objective 14.5 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

Discussion Questions 1.

What are the pros and cons of facial recognition as a business policy? As a public policy?

ANSWER Students should research and report their findings.

Level: Medium Section/Learning Objective: Section 14.1/Learning Objective 14.1

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Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 2.

Consider your health care provider’s data.    

Who owns those data?

Who profits from analyzing them?

What are they used for?

Provide an example of an ML system that uses your data.

ANSWER Students should follow the instructions and prepare a summary addressing each of the bulleted items.

Level: Medium Section/Learning Objective: Section 14.4/Learning Objective 14.4 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 3.

You are a passenger in a rented autonomous vehicle that hits a pedestrian. Who or what has the liability for the accident? Support your conclusions.

ANSWER Student responses will vary and will likely depend on:  Student identification of whether there is an ability to override autonomous controls by an alert passenger  The disclosure provided by the rental agency  Manufacturer testing and liability Level: Medium Section/Learning Objective: Section 14.4/Learning Objective 14.4 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 4.

You are a passenger in an autonomous vehicle that you own. While you are riding in the vehicle and reading a report for a business meeting, your vehicle hits a pedestrian. Who or what has the liability for the accident? Support your conclusions.

ANSWER Student response will vary similar to the proceeding question but may also include:  Vehicle manual and instructions  Manufacturer testing and liability (design of AI) Level: Medium Section/Learning Objective: Section 14.4/Learning Objective 14.4 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

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5.

Suppose that your insurance company decides to price your car insurance premium based on data about your driving habits collected by sensors in your car that the firm inputs into an ML system. a. Would you be in favor of this new process? Why or why not? b. Would the cost of your new policy be in your favor? Why or why not? For example, what if you were speeding?

ANSWER Student responses will vary.

Level: Medium Section/Learning Objective: Section 14.4/Learning Objective 14.4 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 6.

Suppose that your health care company decides to price your insurance premiums based on data about your health (e.g., blood pressure, glucose in your blood) and health habits (eating, exercising, sleeping, etc.) obtained from Fitbit sensors, smart watches, and intelligent scales in your bathroom. a. Would you be in favor of this new process? Why or why not? b. Would the cost of your new policy be in your favor? Why or why not? For example, what if you were under stress at your job and your blood pressure increased?

ANSWER Student responses will vary.

Level: Medium Section/Learning Objective: Section 14.4/Learning Objective 14.4 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

Problem-solving Activities 1. Which machine learning algorithm would you use to predict admittance to your university’s freshman class? Describe your algorithm by including your input data and output data.

ANSWER Student responses will vary.

Level: Medium Section/Learning Objective: Section 14.2/Learning Objective 14.2 Bloom’s Category: Analysis AACSB Category: Analytic 2. Which machine learning algorithm would you use to identify an image as a dog or a cat? Describe your algorithm by including your input data and output data.

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ANSWER Student answers will vary and should be assessed based on logical application.

Level: Medium Section/Learning Objective: Section 14.2/Learning Objective 14.2 Bloom’s Category: Analysis AACSB Category: Analytic 3. Which machine learning algorithm would you use to predict the weather? Hint: first define what ―predicting the weather‖ means. Describe your algorithm by including your input data and output data.

ANSWER Student answers will vary and should be assessed based on logical application.

Level: Medium Section/Learning Objective: Section 14.2/Learning Objective 14.2 Bloom’s Category: Analysis AACSB Category: Analytic Technology Guide 1: Hardware

Chapter Outline TG 1.1 Introduction to Hardware TG 1.2 Strategic Hardware Issues TG 1.3 Computer Hierarchy TG 1.4 Input and Output Technologies TG 1.5 The Central Processing Unit Learning Objectives 10. Identify the major hardware components of a computer system.

11. Discuss strategic issues that link hardware design to business strategy.

12. Describe the various types of computers in the computer hierarchy.

13. Differentiate among the various types of input and output technologies and their uses.

14. Describe the design and functioning of the central processing unit.

Teaching Tips and Strategies Computer hardware has become so ubiquitous that some of our students do not realize that even their smartphones, iPods, and tablet computers have powerful processors in them.

Our students have grown up with computers, however it is sometimes surprising how many of them cannot distinguish among the different types of processors, memory, and storage options that are available. For example, they sometimes think that the faster the processor the better. However, as presented in this guide, this is not always the case.

This Technology Guide is designed to help our students better understand the computer hardware decisions they will be making for themselves and possibly where they will be working. The design

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principles presented in this guide apply to most computers. It also covers the dynamics of innovation and costs that can affect personal as well as corporate hardware decisions.

I have found that it is helpful to go over the basics of the binary and hexadecimal number systems, and why it is important to have at least a basic understanding of these in the information age. Trivia like where numbers like 64 and 256 come from and why one megabyte is really not one million bytes seem to interest students.

Many of our students use or have used the ―old‖ gaming machines such as the Xbox360, PlayStation 3, and the Wii. Ask your students if they remember their first game system. Then ask what their thoughts are about the playability and graphics of the machine. Move to a discussion about the older technology that was involved with those machines compared to the newer technology of today. This will pique the interest of some students and help them understand how quickly technology changes and how if they do not keep up they might become like the has-beens of yesterday: Atari, ColecoVision, Intellivision, and Sega Dreamcast. If you have a few older students, they might even remember Motorola’s gaming system from the early 1970s and Pong.

This is a great chapter to show how computers have changed every aspect of our lives and how businesses communicate on a daily basis.

BlackBoard/CMS I normally initiate a number of online discussions about what kind(s) of computers the students use. This usually leads to a discussion of ―what is a computer?‖ IT’s About Business There are no case studies in this Technology Guide.

Before you gone on review questions 14. Decisions about hardware focus on what three factors?

ANSWER The three factors are: capability (power and appropriateness for the task), speed, and cost.

Level: Easy Section/Learning Objective: Section TG1.1/Learning Objective 1 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 15. What are the overall trends in hardware?

ANSWER The overall trends in hardware have been that it has become smaller, faster, cheaper, and more powerful over time. In fact, these trends are so rapid that they make it difficult to know when to purchase (or upgrade) hardware. This difficulty lies in the fact that companies that delay hardware purchases will, more than likely, be able to buy more powerful hardware for the same amount of money in the future.

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Level: Easy Section/Learning Objective: Section TG1.2/Learning Objective 2 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 16. Define hardware and list the major hardware components.

ANSWER Hardware refers to the physical equipment used for the input, processing, output, and storage activities of a computer system. It consists of: • Central processing unit (CPU): Manipulates the data and controls the tasks performed by the other components • Primary storage: Internal to the CPU; temporarily stores data and program instructions during processing • Secondary storage: External to the CPU; stores data and programs for future use • Input technologies: Accept data and instructions and convert them into a form that the computer can understand • Output technologies: Present data and information in a form people can understand - Communication technologies: Provide for the flow of data from external computer networks (e.g., the Internet and intranets) to the CPU, and from the CPU to computer networks Level: Easy Section/Learning Objective: Section TG1.1/Learning Objective 1 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 17. Describe the different types of computers.

ANSWER The computer hierarchy beginning the most powerful and ending with the least powerful: • Supercomputers are the computers with the most processing power. The primary application of supercomputers has been in scientific and military work, but their use is growing rapidly in business as their price decreases. Supercomputers are especially valuable for large simulation models of real-world phenomena, where complex mathematical representations and calculations are required, or for image creation and processing. Example supercomputer applications include weather modeling for better weather prediction, nondestructive weapons testing, aircraft design, and motion picture production. Supercomputers generally operate at 4 to 10 times faster than the next most powerful class, the mainframe.

• Mainframe computers: Large corporations use mainframe computers for centralized data processing and maintaining large databases. Applications that run on a mainframe can be large and complex, allowing for data and information to be shared by thousands of users throughout the organization. Examples of mainframe applications include airline reservation systems, corporate payroll, and student grade calculation and reporting.

• Midrange, also called minicomputers and servers, are relatively small, inexpensive, and compact computers that perform the same function as mainframe computers, but to a more limited extent.

Minicomputers are usually designed to accomplish specific tasks such as process control, scientific research, office automation, and engineering applications. IBM is the market leader with its AS/400 series of computers. Servers are smaller midrange computers that are used to support networks.

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•

Workstations were originally developed for engineers requiring high levels of processing performance. They are typically based on RISC (reduced instruction set computing) architecture and provide both high-speed calculations and high-resolution graphic displays. These machines have found widespread acceptance with the scientific community and, more recently, within the business community.

21. The distinction between workstations and personal computers is rapidly blurring. The latest personal computers have the computing power of recent workstations. Low-end workstations are now indistinguishable from high-end personal computers. o Microcomputers (also called micros, personal computers, or PCs) are the smallest and least expensive category of general-purpose computers. They can be subdivided into four classifications based on their size: desktops, laptops and notebooks, network computers, and palmtops. o Desktop PCs are the typical, familiar microcomputer system that has become a standard tool for business and, increasingly, the home. It is usually modular in design, with separate but connected monitor, keyboard, and CPU. a.

Laptop and notebook computers are small, easily transportable, lightweight microcomputers that fit easily into a briefcase. Notebooks and laptops are designed to be as convenient and easy to transport as possible.

• A netbook is a very small, lightweight, portable computer that is energy efficient and relatively inexpensive. Netbooks are generally optimized for Internet-based services such as Web browsing and e-mailing.

9. A tablet computer, or simply a tablet, is a complete computer contained entirely in a flat touch screen that users operate via a stylus, a digital pen, or a fingertip instead of a keyboard or mouse.

Level: Medium Section/Learning Objective: Section TG1.3/Learning Objective 3 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 18. Distinguish between human data-input devices and source-data automation.

ANSWER Human data-input devices allow people to communicate with the computer. Some of these devices are very common, such as the keyboard and the mouse. Others, such as the touchscreen, stylus, trackball, joystick, and microphone, are used for more specialized purposes.

The objective of source data automation is to input data with minimal human intervention. These technologies speed up data collection, reduce errors, and can gather data at the source of a transaction or other event. Common devices in source data automation are automated teller machines (ATMs), point-of-sale (POS) terminals, bar code scanners, and optical mark readers. Voice recognition systems (VRS) are an emerging source data automation tool used in conjunction with microphones to input speech into computers. Finally, sensors collect data from the environment and input them into a computer system. Examples include heating, ventilating and air-conditioning (HVAC) control sensors in building automation systems, and the myriad types of sensors built into a modern aircraft.

Level: Medium Section/Learning Objective: Section TG1.4/Learning Objective 4 Bloom’s Category: Analysis AACSB Category: Analytic

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19. Briefly describe how a microprocessor functions.

ANSWER A microprocessor fundamentally accepts inputs and stores them until needed, at which point they are retrieved and processed and the output is stored and delivered somewhere.

Level: Easy Section/Learning Objective: Section TG1.5/Learning Objective 5 Bloom’s Category: Easy AACSB Category: Reflective Thinking 20. Distinguish between primary storage and secondary storage.

ANSWER Primary storage: • RAM holds a program and small accounts of data for processing and is volatile • Registers have the least capacity, storing instructions and data for a short time before processing • Cache memory is a type of high-speed memory that enables the computer to temporarily store blocks of data that are used often so the processor can access them more rapidly • ROM is a type of chip where certain critical instructions are safeguarded and is not volatile Secondary storage: • Magnetic media (such as hard disks, floppy disks or tape) 22. Optical media is read by a laser, slower than magnetic drives, but less fragile Primary storage is faster but more costly and has a smaller capacity than secondary storage.

Level: Medium Section/Learning Objective: Section TG1.1/Learning Objective 5 Bloom’s Category: Analysis AACSB Category: Analytic Discussion Questions •

What factors affect the speed of a microprocessor?

ANSWER The speed is commonly measured by the number of instructions the chip processes per second— machine instructions cycles per second, or MIPS. This number depends on the following four factors: • The preset speed of the clock that times all chip activities, measured in megahertz (MHz). The faster the clock speed the faster the chip (a 500 MHz chip is half as slow as a 1.0 GHz chip).

• The word length, which is the number of bits (0s and 1s) that can be processed at any time.

Today’s chips are designed to handle 32-bit or 64-bit word length. The larger the word length, the faster the chip.

• The bus width. The wider the bus (the physical avenues down which the data and information travel as electrical impulses), the more data can be moved and the faster the processing. Buses are measured in microns (millionths of a meter).

- The physical design of the chip. Generally, a greater number of transistors and shorter line width (distance between transistors) give faster processing speeds.

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Level: Medium Section/Learning Objective: Section TG1.5/Learning Objective 5 Bloom’s Category: Synthesis AACSB Category: Analytic •

If you were the CIO of a firm, what factors would you consider when selecting secondary storage media for your company’s records (files)?

ANSWER Factors a CIO might consider when selecting secondary storage media for company records: • Cost per byte of storage • Amount of storage capacity required • Archival storage requirements • Backup considerations • Retrieval speed 20. Portability and cross-platform support Level: Medium Section/Learning Objective: Section TG1.1/Learning Objective 5 Bloom’s Category: Synthesis AACSB Category: Analytic •

Given that Moore’s Law has proven itself over the past two decades, speculate on what chip capabilities will be 10 years in the future. What might your desktop PC be able to do?

ANSWER The brightest prospects for desktop computers in 10 years are in multimedia systems design. While sound, video, and animation are still most important for educational and game software, multimedia PCs has already begun to suffice business applications. The cost of videoconferencing has plummeted while its quality has improved. Film clips and animations are enhancing tutorials and training materials. Shared documents with voice digitized photographs, or 3-D graphics are beginning to make the rounds on company networks. The next-generation Internet initiative will deliver a highly graphical Web, for good or ill, and will be commonplace.

Level: Hard Section/Learning Objective: Section TG1.5/Learning Objective 5 Bloom’s Category: Synthesis AACSB Category: Analytic •

If you were the CIO of a firm, how would you explain the workings, benefits, and limitations of thin clients as opposed to using fat clients?

ANSWER CIOs can focus on the total cost of ownership (TCO) aspect of thin clients versus fat clients. Thin client–based systems are not only less expensive to buy than standard personal computers, but they accrue additional cost benefits over the life of the computer. Savings can be achieved with thin clients through minimizing technical support, less training for users, and less frequent replacement. It is good to have a choice for client computing and it is unlikely that thin clients will make today’s fat client obsolete. There are scenarios where both client systems work best.

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Level: Section/Learning Objective: Section TG1.2/Learning Objective 2 Bloom’s Category: Synthesis AACSB Category: Analytic •

Where might you find embedded computers at home, at school, or at work?

ANSWER • Embedded computers for improved health care and applications based on remote diagnosis of vital health signs.

• Embedded computers and sensors for monitoring all aspects relating to home security, comfort and control.

37. Embedded computers to deliver emergency signals from homes to monitoring stations.

Level: Easy Section/Learning Objective: Section TG1.2/Learning Objective 2 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking •

What does the statement ―hardware is useless without software‖ mean?

ANSWER

Advances in hardware alone do not provide the solutions required for business and their employees. Hardware supports the use of software; therefore, a business must consider what software will be used when determining hardware needs.

Level: Easy Section/Learning Objective: Section TG1.2/Learning Objective 2 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

Problem-solving Activities 1. Access the Web sites of the major chip manufacturers, for example Intel (www.intel.com) and Advanced Micro Devices (www.amd.com), and obtain the latest information regarding new and planned chips. Compare performance and costs across these vendors. Be sure to take a close look at the various multicore chips.

ANSWER Students should research and report their findings.

Level: Medium Section/Learning Objective: Section TG1.5/Learning Objective 5 Bloom’s Category: Analysis AACSB Category: Analytic

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Technology Guide 2: Software

Chapter Outline TG2.1 Software Issues TG2.2 Systems Software TG2.3 Application Software Learning Objectives 15. Discuss the major software issues that confront modern organizations.

16. Describe the general functions of the operating system.

17. Identify the major types of application software.

Teaching Tips and Strategies Computer hardware is generally of no use without an operating system and application software running on it. Computers are only as smart or sophisticated as the programs that are running them. Computers therefore require a clear set of instructions to perform at their best.

One of the biggest system acquisition issues a company has to address is whether to buy an existing one or build it (i.e., develop it) in-house. Developing in-house is usually cheaper than contracting out the software functions to other companies. Developing software in-house can save money and enable them to be self-sufficient rather than rely on outside vendors for help in upgrading and/or replacing the code. One additional benefit from developing code in-house is that the software will be compatible (or should be) with all of the systems in that business.

Many businesses do not have the technical expertise or the resources to design a system from scratch.

These businesses pay developers or consultants to customize their applications to run their business.

Some of the drawbacks to this approach are: (1) expense, (2) sometimes vendors’ software is not compatible with existing software in use (this can lead to serious problems; for example, if the finance department’s software is not compatible with the payroll department’s, it will cause inefficiencies and errors.)

Software vendors have begun marketing their products so that it may appear that a company will be allocating resources properly toward a particular software package. If the company is not clear on its expectations and how they intend to establish, maintain, and then run the software, the end users may find themselves dissatisfied, and with a system that is useless at worst and one with problems at best.

Another issue is the end users who will be using the software. End users can be difficult to fully satisfy, especially if specifications are not clearly defined or have not been verified and agreed upon in advance.

Once the final technical specifications are known and agreed upon, the challenge becomes the final selection based on initial and subsequent costs and other factors.

Keep in mind that this Technology Guide was not designed to recommend whether an individual or company should purchase or develop their own applications or systems. The best solution depends on the circumstances and needs of the company. However, this guide should help your students understand the

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tools used to help them in making better or more informed decisions regarding software and systems acquisitions.

BlackBoard/CMS There are no additional online course suggestions.

IT’s About Business There are no case studies in this Technology Guide.

Before you go on… Review Questions 21. What does the statement ―hardware is useless without software‖ mean?

ANSWER Basically, a computer (hardware) does not have any capabilities without the operating system and application software to utilize the capabilities of the hardware. So by itself, hardware has no inherent capabilities. Hardware can only be made useful through the instructions that are executed on it.

Those instructions are contained in software. Therefore, hardware is ―nothing‖ without software.

Level: Medium Section/Learning Objective: Section TG2.1/Learning Objective 1 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 22. What are the differences between system software and application software?

ANSWER Systems software is a set of instructions that serves primarily as an intermediary between computer hardware and application programs. Systems software enables computer systems to perform selfregulatory functions by loading itself when the computer is first turned on and providing commonly used sets of instructions for all applications.

Application software is a set of computer instructions that provide more specific functionality to a user. This functionality may be broad, such as general word processing, or narrow, such as an organization’s payroll program.

Level: Easy Section/Learning Objective: Section TG2.3 and 4/Learning Objective 3 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking 3. What is open-source software, and what are its advantages? Can you think of any disadvantages?

ANSWER The source code for open-source software is available at no cost to both developers and users. This software is distributed with license terms that ensure that its source code will always be available.

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Open-source software is produced by worldwide ―communities‖ of developers who write and maintain the code. Inside each community, however, only a small group of developers, called core developers, is allowed to modify the code directly. All the other developers must submit their suggested changes to the core developers.

There are advantages to implementing open-source software in an organization. According to OpenSource (www.opensource.org), open-source development produces high-quality, reliable, lowcost software. This software is also flexible, meaning that the code can be changed to meet users’ needs. In many cases, open-source software can be more reliable than proprietary software. Because the code is available to many developers, more bugs are discovered early and quickly, and they are fixed immediately. Technical support for open-source software is also available from firms that offer products derived from the software. An example is Red Hat (www.redhat.com), a major Linux vendor that supplies solutions to problems associated with open-source technology. Specifically Red Hat provides education, training, and technical support for a fee.

Open-source software also has disadvantages, however. The major drawback is that companies that use open-source software depend on the continued goodwill of an army of volunteers for enhancements, bug fixes, and so on, even if they have signed a contract that includes support. Some companies will not accept this risk, although as a practical matter the support community for Linux, Apache, and Firefox is not likely to disappear. Further, organizations that do not have in-house technical experts will have to purchase maintenance-support contracts from a third party. In addition, open-source software poses questions concerning ease of use, the time and expense needed to train users, and compatibility with existing systems either within or outside the organization.

Level: Medium Section/Learning Objective: Section TG2.2/Learning Objective 2 Bloom’s Category: Analysis AACSB Category: Analytic 4. Describe the functions of the operating system.

ANSWER An operating system (OS) is the ―director‖ of your computer system’s operations. It supervises the overall operation of the computer by monitoring the computer’s status, scheduling operations, and managing input and output processes.

The operating system also provides an interface between the user and the hardware. This user interface hides the complexity of the hardware from the user. That is, users do not have to know how the hardware actually operates; users simply have to know what the hardware will do and what needs to be done to obtain the desired results.

The ease or difficulty of the interaction between the user and the computer is determined to a large extent by the graphical user interface (GUI). The GUI allows users to directly control the hardware by manipulating visible objects (such as icons) and actions that replace complex commands.

Level: Easy Section/Learning Objective: Section TG2.4/Learning Objective 3 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

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Discussion Questions

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You are the CIO of your company, and you have to develop an application of strategic importance to your firm. What are the advantages and disadvantages of using open-source software?

ANSWER Open-source software can be an option if a company has programmers that can maintain applications, but there can be compatibility issues as well as support issues with this type of software. The final choice for strategic applications should involve a rigorous needs assessment and subsequent software evaluation and acquisition process and the availability of support for the software as it is deployed.

Level: Medium Section/Learning Objective: Section TG2.2/Learning Objective 2 Bloom’s Category: AACSB Category: Reflective Thinking

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Describe how hardware and software are synergistic.

ANSWER Hardware can only be made useful through the instructions that are executed on it. Those instructions are contained in software. Together they can help an organization achieve their goals and support their daily needs effectively and efficiently.

Level: Medium Section/Learning Objective: Section TG2.1/Learning Objective 1 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking Problem Solving Activities 1. A great deal of free software is available over the Internet. Go to https://100downloads.com/programs/internet and observe all the software available for free. Would you feel safe downloading a software program from this site onto your computer? Why or why not?

ANSWER Student answers will vary.

Level: Medium Section/Learning Objective: Section TG2.2/Learning Objective 2 Bloom’s Category: Analysis AACSB Category: Analytic 2. Visit the IBM website (www.ibm.com) and perform a search on the term ―software.‖ Click on the dropdown box for Products and notice how many software products IBM produces. Is IBM only a hardware company?

ANSWER Have your students, possibly divided into groups, research and prepare presentation on each of the applications.

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Level: Medium Section/Learning Objective: Section TG2.3/Learning Objective 4 Bloom’s Category: Analysis AACSB Category: Analytic Technology Guide 3: Cloud Computing

Chapter Outline TG 3.1 Introduction TG 3.2 The Basics of Cloud Computing TG 3.3 Different Types of Clouds TG 3.4 Cloud Computing Services TG 3.5 The Benefits of Cloud Computing TG 3.6 Concerns and Risks with Cloud Computing TG 3.7 The ―Big Three‖ Cloud Computing Vendors TG 3.8 Web Services and Service-Oriented Architecture Learning Objectives 18. Describe the evolution of the IT function.

19. Describe cloud computing and its key characteristics.

20. Describe each of the four types of clouds.

21. Explain the operational model of each of the three types of cloud services.

22. Identify the key benefits of cloud computing.

23. Discuss the concerns and risks associated with cloud computing.

24. Describe the pros and cons for each of the Big Three cloud computing vendors.

25. Explain the role of Web services in building a firm’s IT applications, providing examples.

Teaching Tips and Strategies Consider asking your students how many of them have (and use) a cloud drive to store their files (or music or movies), and what services they use. Are they services from cloud service companies such as Dropbox, or from companies such as Amazon, Apple or Google?

We live in a world where existing technologies are continually evolving into new markets as users at all levels are adopting new technologies. Most students are probably familiar with the applications on their smartphone, laptop, or tablet. However few understand (or even realize the existence of) the technologies that support those devices and applications where they remotely store or back up their files, or the basic architecture of some of the websites they access.

Most of the technologies discussed in this technology guide were originally designed to function at the enterprise level. However most, such as virtualization and cloud computing, are or have already moved into the consumer market.

Students who use computers running Apple’s OSX may have a virtualization application such as Parallels or Virtual Box (there are others) so they can also run Windows. There are also ways to do this in a

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Windows environment. Point out to your class that corporate IT uses virtual computers to reduce the cost of hosting and managing multiple physical servers.

Virtualization is also being used for storage where multiple computers need access to the same data.

Storing the data on one storage array and giving access to multiple devices ensures all the devices are viewing the same consistent data images.

In many respects, this guide might be one of the more difficult to present in that new technologies are evolving and being announced every week.

BlackBoard/CMS There are not any additional online suggestions.

IT’s About Business There are no case studies in this Technology Guide.

Before You Go On… Review Questions TG 3.1 1. Describe the stages in the evolution of today’s IT infrastructure.

ANSWER - Stand-alone mainframes: Organizations initially used mainframe computers in their engineering and accounting departments. The mainframe was typically housed in a secure area, and only MIS personnel had access to it.

- Mainframe and dumb terminals: Forcing users to go to wherever the mainframe was located was time consuming and inefficient. As a result, firms began placing so-called ―dumb terminals‖—essentially electronic typewriters with limited processing power—in user departments. This arrangement enabled users to input computer programs into the mainframe from their departments, a process called remote job entry.

- Stand-alone personal computers: In the late 1970s, the first personal computers appeared. The IBM PC’s debut in 1981 legitimized the entire personal computer market. Users began bringing personal computers to the workplace to improve their productivity—for example, by using spreadsheet and word processing applications. These computers were not initially supported by the firm’s MIS department. However, as the number of personal computers increased dramatically, organizations decided to support these devices, and they established policies as to which PCs and software they would support.

- Local area networks (client/server computing): When personal computers are networked, individual productivity increases. For this reason, organizations began to connect personal computers into local area networks (LANs) and then connect these LANs to the mainframe, a type of processing known as client/server computing.

- Enterprise computing: In the early 1990s, organizations began to use networking standards to integrate different kinds of networks throughout the firm, thereby creating enterprise computing. As the Internet became widespread after 1995, organizations began using the TCP/IP networking protocol to integrate different types of networks. All types of hardware were networked, including

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mainframes, personal computers, smartphones, printers, and many others. Software applications and data now flow seamlessly throughout the enterprise and between organizations.

Cloud computing and mobile computing: Today, organizations and individuals can use the power of cloud computing. As you will see in this Technology Guide, cloud computing provides access to a shared pool of computing resources, including computers, storage, applications, and services, over a network, typically the Internet.

Level: Easy Section/Learning Objective: Section TG3.1/Learning Objective 1 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking

2. Describe the challenges that traditional IT departments face.

ANSWER Traditionally, organizations have utilized on-premise computing. That is, they own their IT infrastructure (their software, hardware, networks, and data management) and maintain it in their data centers.

On-premise computing incurs expenses for IT infrastructure, the expert staffs needed to build and maintain complex IT systems, physical facilities, software licenses, hardware, and staff training and salaries. Despite all of this spending, however, organizations typically do not use their infrastructure to its full capacity. The majority of these expenses are typically applied to maintaining the existing IT infrastructure, with the remainder being allocated to developing new systems. As a result, on-premise computing can actually inhibit an organization’s ability to respond quickly and appropriately to today’s rapidly changing business environments.

Level: Easy Section/Learning Objective: Section TG3.1/Learning Objective 1 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking TG 3.2 1. Describe the characteristics of cloud computing.

ANSWER - Cloud computing provides on-demand self-service.

- Cloud computing encompasses the characteristics of grid computing.

- Cloud computing encompasses the characteristics of utility computing.

- Cloud computing utilizes broad network access.

- Cloud computing pools computing resources.

23. Cloud computing often occurs on virtualized servers.

Level: Easy Section/Learning Objective: Section TG3.2/Learning Objective 2 Bloom’s Category: Easy AACSB Category: Reflective Thinking 2. Define server virtualization.

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ANSWER Server virtualization uses software-based partitions to create multiple virtual servers—called virtual machines—on a single physical server. The major benefit of this system is that each server no longer has to be dedicated to a particular task. Instead, multiple applications can run on a single physical server, with each application running within its own software environment. As a result, virtualization enables companies to increase server utilization. In addition, companies realize cost savings in two areas. First, they do not have to buy additional servers to meet peak demand. Second, they reduce their utility costs because they are using less energy.

Level: Easy Section/Learning Objective: Section TG3.2/Learning Objective 2 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking TG 3.3 1. What is a public cloud?

ANSWER Public clouds are shared, easily accessible, multi-customer IT infrastructures that are available nonexclusively to any entity in the general public (individuals, groups, or organizations). Public cloud vendors provide applications, storage, and other computing resources as services over the Internet.

These services may be free or offered on a pay-per-usage model.

Level: Easy Section/Learning Objective: Section TG3.3/Learning Objective 3 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 2. What is a private cloud?

ANSWER Private clouds (also known as internal clouds or corporate clouds) are IT infrastructures that can be accessed only by a single entity or by an exclusive group of related entities that share the same purpose and requirements, such as all of the business units within a single organization. Private clouds provide IT activities and applications as a service over an intranet within an enterprise.

Enterprises adopt private clouds to ensure system and data security. For this reason, these systems are implemented behind the corporate firewall.

Level: Easy Section/Learning Objective: Section TG3.3/Learning Objective 3 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 3. What is a hybrid cloud?

ANSWER Hybrid clouds are composed of public and private clouds that remain unique entities, but are nevertheless tightly integrated. This arrangement offers users the benefits of multiple deployment models. Hybrid clouds deliver services based on security requirements, the mission-critical nature of

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the applications, and other company-established policies. For example, customers may need to maintain some of their data in a private cloud for security and privacy reasons while storing other, less-sensitive data in a public cloud because it is less expensive.

Level: Easy Section/Learning Objective: Section TG3.3/Learning Objective 3 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 4. What is a vertical cloud?

ANSWER It is now possible to build cloud infrastructure and applications for different businesses—the construction, finance, or insurance businesses, for example—thus building vertical clouds.

Level: Easy Section/Learning Objective: Section TG3.3/Learning Objective 3 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking TG 3.4 1. Describe infrastructure-as-a-service.

ANSWER With the infrastructure-as-a-service (IaaS) model, cloud computing providers offer remotely accessible servers, networks, and storage capacity. They supply these resources on demand from their large resource pools, which are located in their data centers.

Level: Easy Section/Learning Objective: Section TG3.4/Learning Objective 4 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 2. Describe platform-as-a-service.

ANSWER In the platform-as-a-service (PaaS) model, customers rent servers, operating systems, storage, a database, software development technologies such as Java and .NET, and network capacity over the Internet. The PaaS model allows the customer both to run existing applications and to develop and test new applications.

Level: Easy Section/Learning Objective: Section TG3.4/Learning Objective 4 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 3.

Describe software-as-a-service.

ANSWER

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With the software-as-a-service (SaaS) delivery model, cloud computing vendors provide software that is specific to their customers’ requirements. SaaS is the most widely utilized service model, and it provides a broad range of software applications. SaaS providers typically charge their customers a monthly or yearly subscription fee.

Level: Easy Section/Learning Objective: Section TG3.4/Learning Objective 4 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 4.

Describe function-as-a-service.

ANSWER The function-as-a-service (FaaS) model provides a platform allowing customers to develop, run, and manage applications’ functions without the complexity of building and maintaining the infrastructure typically associated with developing and deploying an app. These functions are triggered by a given event. Functions-as-a-service are a good choice for real-time (event-driven) actions.

Level: Easy Section/Learning Objective: Section TG3.4/Learning Objective 4 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking TG 3.5 1. Describe how cloud computing can help organizations expand the scope of their business operations.

ANSWER Cloud computing offers benefits for both individuals and organizations. It allows companies to increase the scale and power of their IT and the speed at which it can be deployed and accessed. It eliminates administrative problems and it operates across locations, devices, and organizational boundaries.

Level: Easy Section/Learning Objective: Section TG3.5/Learning Objective 5 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 2. Describe how cloud computing can help organizations respond quickly to market changes.

ANSWER Cloud computing allows organizations to use only the amount of computing resources they need at a given time. Therefore, companies can efficiently scale their operations up or down as needed to meet rapidly changing business conditions. Cloud computing is also able to deliver computing services faster than on-premise computing.

Level: Easy Section/Learning Objective: Section TG3.5/Learning Objective 5 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking

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TG 3.6 1. Discuss the various risks of cloud computing.

ANSWER - Legacy IT systems - Reliability - Privacy - Security - The regulatory and legal environment - Criminal use of cloud computing Level: Easy Section/Learning Objective: Section TG3.6/Learning Objective 6 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 2. In your opinion, which risk is the greatest? Support your answer.

ANSWER Probably security, but let your students express their opinion.

Level: Medium Section/Learning Objective: Section TG3.6/Learning Objective 6 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking TG 3.7 1. Describe the similarities among the Big Three cloud computing vendors.

ANSWER All three cloud vendors offer largely similar services. All of the Big Three offer:  managed services around popular container services  excellent networking capabilities with automated server load balancing and connectivity to onpremise systems  support relational databases, NoSQL databases, and data warehouses  support serverless computing  similar pricing Level: Easy Section/Learning Objective: Section TG3.7/Learning Objective 7 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 2. What is the single biggest advantage for each the Big Three cloud computing vendors? Support your choice.

ANSWER

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Amazon Web Services: Breadth and depth of services. Amazon ranks highly on platform configuration options, monitoring and policy features, security, and reliability. Its partner ecosystem and general product strategy are market leading and its AWS Marketplace has a large number of third-party software services.

Microsoft Azure: Popular and familiar with loyal Microsoft customers. It has seamless integration with Office tools and already has a strong presence in many organizations.

Google Cloud: Machine learning and open-source technologies. Google has a good track record with innovative cloud-native companies and a solid standing in the open-source community. The company has strengths in Big Data and analytics applications, machine learning, and cloud-native applications.

Level: Easy Section/Learning Objective: Section TG3.7/Learning Objective 7 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking 3. What is the single biggest disadvantage for each of the Big Three cloud computing vendors? Support your choice.

ANSWER Amazon Web Services: Previously dismissive of hybrid cloud computing. Some companies do not want to contribute to the company’s success and may be threatened by the expanded interest by Amazon in other industries.

Microsoft Azure: Experienced a series of outage and at one point had five times the outage rate of its competitors.

Google Cloud: Google has the smallest footprint of global instances of the Big Three and has no presence in China, one of the world’s largest markets.

Level: Easy Section/Learning Objective: Section TG3.7/Learning Objective 7 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking TG 3.8 1. What are Web services?

ANSWER Web services are applications delivered over the Internet (the cloud) that MIS professionals can select and combine through almost any device, from personal computers to mobile phones.

Level: Easy Section/Learning Objective: Section TG3.8/Learning Objective 8 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking

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2. What is a service-oriented architecture?

ANSWER The collection of Web services that are used to build a firm’s IT applications constitutes a serviceoriented architecture. Businesses accomplish their processes by executing a series of these services.

One of the major benefits of Web services is that they can be reused across an organization in other applications.

Level: Easy Section/Learning Objective: Section TG3.8/Learning Objective 8 Bloom’s Category: Knowledge AACSB Category: Reflective Thinking Discussion Questions

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What is the value of server farms and virtualization to any large organization?

ANSWER The huge number of servers in a server farm provides redundancy and fault tolerance, meaning that if one computer on the grid fails, the application is automatically ―rolled over‖ to another computer.

Server farms require massive amounts of electrical power, air conditioning, backup generators, security, and money. They also need to be located fairly closely to fiber-optic communications links.

Level: Medium Section/Learning Objective: Section TG3.2/Learning Objective 2 Bloom’s Category: Application AACSB Category: Reflective Thinking

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If you were the chief information officer of a firm, how would you explain the workings, benefits, and limitations of cloud computing?

ANSWER Something along the lines of, ―In cloud computing, the tasks are performed by computers that are physically removed from the user. Users can access computers in the cloud over a network, in particular the Internet. The cloud is composed of the computers, the software on those computers, and the network connections among those computers. The computers in the cloud are typically located in data centers, or server farms, which can be located anywhere in the world and accessed from anywhere in the world.‖ Level: Medium Section/Learning Objective: Section TG3.5/Learning Objective 5 Bloom’s Category: Synthesis AACSB Category: Analytic

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What is the value of cloud computing to a small organization?

ANSWER The primary advantage of cloud computing to small organizations is that it dramatically lowers infrastructure costs.

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Level: Easy Section/Learning Objective: Section TG3.5/Learning Objective 5 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking

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What is the value of cloud computing to an entrepreneur who is starting a business?

ANSWER It drastically reduces the startup cost of the IT function of the organization.

Level: Medium Section/Learning Objective: Section TG3.5/Learning Objective 5 Bloom’s Category: Comprehension AACSB Category: Reflective Thinking Problem-solving Activities 1. Investigate the status of cloud computing by researching the offerings of the following leading vendors. Dell (www.dell.com), Oracle (www.oracle.com), IBM (www.ibm.com), Alibaba (www.alibaba.com), and Tencent (http://www.tencent.com). Compare Alibaba and Tencent with American cloud vendors.

ANSWER Have your students research and present what they found.

Level: Medium Section/Learning Objective: Section TG3.7/Learning Objective 7 Bloom’s Category: Analysis AACSB Category: Analytic

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