SYS210

Managing Technology and Innovation

Textbook: Business Driven Technology by Paige Baltzan

Final Summary
2019-2020 1st

Chapters included: 6, 7, 9 and 13.

By Salem S. B. Muneef
[email protected]
Chapter 6. Valuing and Storing Organizational Information—Databases

6.1. Explain the four primary traits that determine the value of information.
Information is a powerful tool for measuring operations’ current performance and
estimating future performance. Analyzing and understanding information is key to
success and growth in any industry.
Information comes in different levels (Individual, department and enterprise), formats
(Document, presentation, spreadsheet & database) and granularities (Detail, summary,
aggregate). After sorting information, it is important to determine their value, so
managers look at four primary traits in them: Information type (transactional &
analytical), Information timeliness, Information quality and Information governance.
Information type: Transactional information is all the information used for a single
business process. Its purpose is to support daily tasks and repetitive decisions like sales
reports or purchase confirmation. For example, any given supermarket handles at least
thousands of purchase transactions every day.
Analytical information is all the information used for managerial analysis and decision
making. It allows businesses to spot trends, predict future growth, view product statistics
and sales projections. For example, using analytical information, Walmart discovered that
demand for Pop-Tarts increases in the storm season. Another example is how phone
manufacturers, like Xiaomi, create phones tailored for the Indian market based on
analytics that showed it values mid-range products with good specs.
Information timeliness examines contexts in which information can be either (1) time-
sensitive, meaning it becomes irrelevant rather quickly, or (2) still be relevant even after
a while. Some organizations, like police response centers, banks and stocks require up-to-
the-second information. Others like insurance and construction companies could require
only daily or even weekly information. This aspect changes with business needs, however
more managers are implementing real-time information tracking to make faster
decisions, decision-makers have to account for different contexts and not rely on real-
time information all the time, as it may result in poor decisions, and realize that faster
isn’t always better.

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Information quality drives business decision-making quality. Information integrity
measures the quality of information, and there are five characteristics to consider:
accuracy, completeness, consistency, timeliness and uniqueness. Accuracy determines if
all values are correct. Example – is the name spelled correctly? Completeness determines
if any values are missing. Example - is the address complete? Consistency ensures that
aggregate or summary information is in agreement with detailed information. Example –
do totals equal the true total of the individual fields? Uniqueness ensures that each
transaction, entity, and event is represented only once in the information. Example – are
there any duplicate customers? Timeliness determines if the information is current with
respect to the business requirement. Example – is the information updated weekly?
Using the wrong information can lead to making the wrong decision. Making the wrong
decision can cost time, money, and even reputations. Low quality information leads to
low quality business decisions. High quality information can significantly improve the
chances of making a good business decision.
Information governance is, in essence, the correct management of information. A firm’s
overall management of the availability, usability, integrity, and security of data is
important in decision-making, as managers, employees and legal authorities could
require access to information, accessibility levels must be identified, and information
must be monitored closely to remain accurate, consistent and complete. Establishing
accountability is essential for tracing data qualities and sources. All these processes must
comply with government regulations. For example, firms in the US must comply with the
Sarbanes-Oxley (SOX) law that requires them to be financially transparent.

6.2. Describe a database, a database management system, and the relational

database model.
The core component of any system, regardless of size, is a database and a database
management system. Broadly defined, a database maintains information about various
types of objects (inventory), events (transactions), people (employees), and places
(warehouses). A database management system (DBMS) creates, reads, updates, deletes
and retrieves data in a database while controlling access and security.
Managers send requests to the DBMS, and the DBMS performs the actual manipulation
of the data in the database. Companies store their information in databases, and
managers access these systems to answer operational questions such as how
manycustomers purchased Product A in December or what were the average sales by
region. Examples of DBMS include MySQL, Microsoft Access, SQL Server, and Oracle.

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FIGURE 6.6 Relationships of Database, DBMS and User.

Data models are logical data structures that detail the relationships among data elements
using graphics or pictures. DBMS use three primary data models for organizing
information—hierarchical, network, and the relational database, the most prevalent. A
relational database model stores information in the form of logically related two-
dimensional tables in which data can be accessed or reassembled in many different ways
without having to reorganize the tables. A relational database management system
allows users to create, read, update, and delete data in a relational database.

6.3. Identify the business advantages of a relational database.

Increased flexibility. While a database has only one physical view, it can easily support
multiple logical views that provides for flexibility, meaning that while the data is fixed,
different analysis can occur from different users depending on their needs. For example:
In a festival’s ticket sales breakdown, one user could analyze the tables to determine
which activities inside the festival sold most tickets during the night, while another user
could use the tables to see which age and gender group bought the most tickets for the
roller coaster.
Increased scalability and performance. It is easily scalable to handle the massive
volumes of information and the large numbers of users who are expected to use it, all
while performing under heavy use and with minimal data latency.
Reduced information redundancy. Redundant data can cause storage issues and data
integrity issues, making it difficult to determine which values are the most current or
most accurate. Information redundancy is eliminated by recording each piece of
information in only one place in the database.

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Increased information integrity (quality). The enforcement of integrity constraints
produces higher-quality information that will provide better support for business
decisions. Relational integrity constraints are rules that enforce basic and fundamental
information-based constraints. For example, a relational integrity constraint would not
allow someone to create an order for a nonexistent customer. Business-critical integrity
constraints enforce business rules vital to an organization’s success and often require
more insight and knowledge than relational integrity constraints.
Organizations that establish specific procedures for developing integrity constraints
typically see an increase in accuracy.
Increased information security. Databases offer many security features including
passwords to provide authentication, access levels to determine who can access the data,
and access controls to determine what type of access they have to the information. For
example, customer service representatives might need read-only access to customer
order information so they can answer customer order inquiries. Another example is when
managers might require access to employee files, but they should have access only to
their own employees’ files, not all the employees In the company.

FIGURE 6.9 Business Advantages of a Relational Database.

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Review Questions (Optional)

1. How does a database turn data elements into information?

A database stores the information in logical tables connected by keys allowing
information to be organized into structures that can be analyzed.
2. Why does a business need to be concerned with the quality of its data?
Without high-quality data, no matter how good the business is running the decision
managers make will be inaccurate and incorrect.
3. Why would a company care about the timeliness of its data?
With data that is out-of-date the company will make incorrect decisions.
4. What are the five characteristics common to high-quality information?
The five characteristics for high-quality information include accurate, complete,
consistent, timely, and unique.
5. What is data governance and its importance to a company?
Data governance refers to the overall management of the availability, usability, integrity,
and security of company data. A company that supports a data governance program has
a defined a policy that specifies who is accountable for various portions or aspects of the
data, including its accuracy, accessibility, consistency, timeliness, and completeness.
6. What are the four primary traits that help determine the value of information?
The four primary traits of the value of information include information type, information
timeliness, information quality, and information governance.
7. What is the difference between an entity and an attribute?
An entity stores information about a person, place, thing, transaction, or event. An
attribute includes the data elements associated with an entity.
8. What are the advantages of a relational database?
A relational database stores information in the form of logically related two-dimensional
tables allowing for increased scalability, decreased data redundancy, and increased
flexibility, integrity, and security.
9. What are the advantages of a data-driven website?
A data-driven website is an interactive website kept constantly updated and relevant to
the needs of its customers using a database. Data-driven websites are easy to manage
content, easy to store large amounts of data, and easy to eliminate human errors.

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Chapter 7. Accessing Organizational Information—Data Warehouses

7.1. Describe the roles and purposes of data warehouses and data marts in an
organization.
A data warehouse is a logical collection of information—gathered from many different
databases—that supports business analysis and decision-making. The purpose of a data
warehouse is to combine strategic information into a single repository to allow their use
by managers or employees to make decisions and conduct business analysis.
The data warehouse enables business users, typically managers, to be more effective in
many ways, including:
■ Developing customer profiles.
■ Identifying new-product opportunities.
■ Improving business operations.
■ Identifying financial issues.
■ Analyzing trends.
■ Understanding competitors.
■ Understanding product performance.
A data mart is a subset of a data warehouse oriented to a specific business line
(department). Data marts contain repositories of summarized data collected for analysis
on a specific unit within an organization, for example, the sales department.
In a data warehouse and data mart, information is multidimensional. The ability to look
at information from different dimensions can add valuable business insight.

An organization must maintain high quality information in the data warehouse.

Information cleansing and scrubbing is a process that weeds out and fixes or discards
inconsistent, incorrect, or incomplete information. Without high quality information the
organization will be unable to make good business decisions.

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FIGURE 7.3 Model of a Typical Data Warehouse.

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Chapter 9. Enabling the Organization—Decision Making
9.1. Explain the importance of decision making for managers at each of the three
primary organization levels along with the associated decision characteristics.
Decision-making skills are essential for all business professionals, at every company level,
who make decisions that run the business. The process of making decisions plays a crucial
role in communication and leadership for operational, managerial, and strategic projects.
At the operational level, employees develop, control, and maintain core business
activities required to run the day-to-day operations. Operational decisions are considered
structured decisions, which arise in situations where established processes offer
potential solutions. Structured decisions are made frequently and are almost repetitive in
nature; they affect short-term business strategies. Reordering inventory, creating the
employee staffing and weekly production schedules are examples of routine structured
decisions.
At the managerial level, employees are continuously evaluating company operations to
hone the firm’s abilities to identify, adapt to, and leverage change. Managerial decisions
cover short- and medium-range plans, schedules, and budgets along with policies,
procedures, and business objectives for the firm. These types of decisions are considered
semistructured decisions; they occur in situations in which a few established processes
help to evaluate potential solutions, but not enough to lead to a definite recommended
decision. For example, decisions about producing new products or changing employee
benefits range from unstructured to semistructured.
At the strategic level, managers develop overall business strategies, goals, and objectives
as part of the company’s strategic plan. They also monitor the strategic performance of
the organization and its overall direction in the political, economic, and competitive
business environment. Strategic decisions are highly unstructured decisions, occurring in
situations in which no procedures or rules exist to guide decision makers toward the
correct choice. They are infrequent, extremely important, and typically related to long-
term business strategy. Examples include the decision to enter a new market or even a
new industry over, say, the next three years. In these types of decisions, managers rely
on many sources of information, along with personal knowledge, to find solutions.

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FIGURE 9.3 Common Company Structure

9.2. Classify the different operational, managerial and strategic support systems,
and explain how managers can use these systems to make decisions and gain
competitive advantages.
Being able to sort, calculate, analyze, and slice-and-dice information is critical to an
organization’s success. Without knowing what is occurring throughout the organization
there is no way that managers and executives can make solid decisions to support the
business. The different operational, managerial, and strategic support systems include:
• Operational: A transaction processing system (TPS) is the basic business system that
serves the operational level (analysts) in an organization. The most common example of a
TPS is an operational accounting system such as a payroll system or an order-entry
system.
• Managerial: A decision support system (DSS) models information using OLAP, which
aids in evaluating and choosing among different courses of action. DSSs enable high-level
managers to examine and manipulate large amounts of detailed data from different
internal and external sources. For example, insurance companies also use a DSS to gauge
the risk of providing insurance to drivers who have imperfect driving records.

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• Strategic: An executive information system (EIS) is a specialized DSS that supports
senior level executives and unstructured, long-term, nonroutine decisions requiring
judgment, evaluation, and insight. These decisions do not have a right or wrong answer,
only efficient and effective answers. A DSS differs from an EIS in that an EIS requires data
from external sources to support unstructured decisions

FIGURE 9.5 Primary Types of MIS Systems for Decision Making.

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Review Questions (optional)

1. What are the three different levels found in a company? What types of decisions are
made at each level?
A few key concepts about organizational structure will help our discussion of MIS
decision making tools. The structure of a typical organization is similar to a pyramid, and
the different levels require different types of information to assist in decision making,
problem solving, and opportunity capturing. The operational level supports transactional
information, the managerial level supports analytical information and the strategic level
supports executive information systems.
2. Define transaction processing systems and describe the role they play in a business.
Transactional information encompasses all the information contained within a single
business process or unit of work, and its primary purpose is to support the performance
of daily operational or structured decisions. Transactional information is created, for
example, when customers are purchasing stocks, making an airline reservation, or
withdrawing cash from an ATM. Managers use transactional information when making
structured decisions at the operational level, such as when analyzing daily sales reports
to determine how much inventory to carry.
3. Define decision support systems and describe the role they play in a business.
Decision support systems (DSSs) model information using OLAP, which provides
assistance in evaluating and choosing among different courses of action. DSSs enable
high-level managers to examine and manipulate large amounts of detailed data from
different internal and external sources. Analyzing complex relationships among
thousands or even millions of data items to discover patterns, trends, and exception
conditions is one of the key uses associated with a DSS.
4. Define expert systems and describe the role they play in a business.
Expert systems are computerized advisory programs that imitate the reasoning processes
of experts in solving difficult problems. Typically, they include a knowledge base
containing various accumulated experience and a set of rules for applying the knowledge
base to each particular situation. Expert systems are the most common form of AI in the
business arena because they fill the gap when human experts are difficult to find or
retain or are too expensive. The best-known systems play chess and assist in medical
diagnosis.

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5. What are the capabilities associated with digital dashboards?
Executive information systems use visualization to deliver specific key information to top
managers at a glance, with little or no interaction with the system. A common tool that
supports visualization is a digital dashboard, which tracks KPIs and CSFs by compiling
information from multiple sources and tailoring it to meet user needs.
6. What are the common DSS analysis techniques?
Consolidation is the aggregation of data from simple roll-ups to complex groupings of
interrelated information. For example, data for different sales representatives can then
be rolled up to an office level, then a state level, then a regional sales level. Drill-down
enables users to view details, and details of details, of information. This is the reverse of
consolidation; a user can view regional sales data and then drill down all the way to each
sales representative’s data at each office. Drill-down capability lets managers view
monthly, weekly, daily, or even hourly information. Slice-and-dice is the ability to look at
information from different perspectives. One slice of information could display all
product sales during a given promotion. Another slice could display a single product’s
sales for all promotions. Slicing and dicing is often performed along a time axis to analyze
trends and find time-based patterns in the information.
7. How does an electronic spreadsheet program, such as Excel, provide decision support
capabilities?
Excel can create DSS that can logically answer difficult optimization questions. Goal seek,
scenario manager, and solver are all DSS tools included in Excel.
8. What is artificial intelligence?
Artificial intelligence (AI) simulates human thinking and behavior, such as the ability to
reason and learn. Its ultimate goal is to build a system that can mimic human intelligence.
AI systems increase the speed and consistency of decision making, solve problems with
incomplete information, and resolve complicated issues that cannot be solved by
conventional computing.
9. What are the five types of AI systems? What applications of AI offer the greatest
business value?
Artificial intelligence (AI) simulates human thinking and behavior, such as the ability to
reason and learn. Its ultimate goal is to build a system that can mimic human intelligence.
AI systems increase the speed and consistency of decision making, solve problems with
incomplete information, and resolve complicated issues that cannot be solved by
conventional computing. There are many categories of AI systems; five of the most
familiar are (1) expert systems, (2) neural networks, (3) genetic algorithms, (4) intelligent
agents, and (5) virtual reality.

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Chapter 13. Creating Innovative Organizations

13.1. Compare disruptive and sustaining technologies, and explain how the Internet
and WWW caused business disruption.
A disruptive technology is a new way of doing things that initially does not meet the
needs of existing customers. Disruptive technologies tend to open new markets and
destroy old ones.

A sustaining technology, on the other hand, produces an improved product customers

are eager to buy, such as a faster car or larger hard drive. Sustaining technologies tend to
provide us with better, faster, and cheaper products in established markets. Incumbent
companies most often lead sustaining technology to market, but they virtually never lead
in markets opened by disruptive technologies.
Disruptive technologies typically enter the low end of the marketplace and eventually
evolve to displace high-end competitors and their reigning technologies. Sony is a perfect
example. Sony started as a tiny company that built portable, battery-powered transistor
radios. quality was poor, but customers were willing to overlook that for the convenience
of portability. With the experience and revenue stream from the portables, Sony
improved its technology to produce cheap, low-end transistor amplifiers that were
suitable for home use and invested those revenues in improving the technology further,
which produced still-better radios.

The Internet and WWW caused business disruption by allowing people to communicate
and collaborate in ways that were not possible before the information age. The Internet
and WWW completely disrupted the way businesses operate, employees communicate,
and products are developed and sold. That disruption established E-Business, and that
opened up a new marketplace for any company willing to move its business operations
online. E-business created a paradigm shift*, transforming entire industries and changing
enterprise-wide business processes that fundamentally rewrote traditional business
rules.

* A paradigm shift occurs when a new radical form of business enters the market that reshapes the way
companies and organizations behave.

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FIGURE 13.2 Companies That Capitalized on Disruptive Technologies

FIGURE 13.5 E-business Disruption of Traditional Industries

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Review Questions (optional)

1. What is the different between sustaining and disruptive technology?

A disruptive technology is a new way of doing things that initially does not meet the
needs of existing customers. Disruptive technologies tend to open new markets and
destroy old ones. A sustaining technology, on the other hand, produces an improved
product that t customers are eager to buy, such as a faster car or larger hard drive.
Sustaining technologies tend to provide us with better, faster, and cheaper products in
established markets. Incumbent companies most often lead sustaining technology to
market, but they virtually never lead in markets opened by disruptive technologies
2. What is a paradigm shift and what is its relation to ebusiness?
A paradigm shift occurs when a new radical form of business enters the market that
reshapes the way companies and organizations behave. E-business created a paradigm
shift, transforming entire industries and changing enterprise wide business processes
that fundamentally rewrote traditional business rules. Deciding not to make the shift to
business proved fatal for many companies.
3. What is the difference between information richness and information each?
Easy access to real-time information is a primary benefit of ebusiness. Information
richness refers to the depth and breadth of details contained in a piece of textual,
graphic, audio, or video information. Information reach measures the number of people a
firm can communicate with all over the world. Buyers need information richness to make
informed purchases, and sellers need information reach to properly market and
differentiate themselves from the competition.
4. Do you consider the Internet and WWW forms of sustaining or disruptive technology?
The WWW and the Internet are both disruptive technologies.
5. How has the Internet and WWW created a global platform for business?
As people began learning about the WWW and the Internet, they understood that it
enabled a company to communicate with anyone, anywhere, at any time, creating a new
way to participate in business. The competitive advantages for first movers would be
enormous, thus spurring the beginning of the Web 1.0 Internet boom. Web 1.0 (or
Business 1.0) is a term to refer to the World Wide Web during its first few years of
operation between 1991 and 2003.
6. How do disintermediation, reintermediation, and cybermediation differ?
• Disintermediation - Occurs when a business sells directly to the customer online and
cuts out the intermediary

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• Reintermediation - Steps are added to the value chain as new players find ways to add
value to the business process.
• Cybermediation - Refers to the creation of new kinds of intermediaries that simply
could not have existed before the advent of ebusiness, including comparison-shopping
sites such as Kelkoo and bank account aggregation services such as Citibank

7. What are the four ebusiness advantages?

Expanding global reach, Opening new markets, Reducing costs and Improving
effectiveness.
8. How can a business use clickstream data to help improve website efficiency?
The ultimate outcome of any advertisement is a purchase. Organizations use metrics to
tie revenue amounts and number of new customers created directly back to the websites
or banner ads. Through clickstream data they can observe the exact pattern of a
consumer’s navigation through a site.
9. How can a company use disintermediation to achieve a competitive advantage?
Disintermediation occurs when a business sells directly to the customer online and cuts
out the intermediary. Anytime a company can reduce one phase in the supply chain it can
save money. Each phase increases costs to make a profit. Reducing middlemen will
always help the process be more profitable.
10. What is the difference between ebusiness and ecommerce?
Ecommerce is the buying and selling of goods and services over the Internet. Ecommerce
refers only to online transactions. Ebusiness includes ecommerce along with all activities
related to internal and external business operations such as servicing customer accounts,
collaborating with partners, and exchanging real-time information. During Web 1.0,
entrepreneurs began creating the first forms of ebusiness.

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