Information and
Communication Technologies
Pre Reading- Chapter 12
Read all
of the chapter, but pay particular attention to the sections on the
Internet, the World Wide Web, and databases.
Lecture Notes
Lecture Summary
·
Databases - they
hold all your company records about your customers, your sales, your orders,
and your employees. If you lose those
records, you lose an important part of your business (and in fact some
businesses have been driven to bankruptcy by an inability to access fundamental
records).
·
Application
Software - computer programs that access and update those records such as
point-of-sale software, or payroll programs.
·
Telecommunications
- channels like the Internet that move data from your customers and supplier to
you.
·
Security – How
do we protect all our records and customer information?
Major Points
Databases –
Storage of
company records. Common examples are personnel records, bill
of materials, customer records. The
typical arrangement is a table:
Lname |
Fname |
Street |
City |
State |
Zip |
Income |
Smith |
Lois |
2445 |
|
WI |
54901 |
18900 |
Jones |
William |
|
|
WI |
54902 |
23599 |
Each column is called a FIELD
and holds a kind of information we wish to gather on each customer: name, zip
code, income, or such things as last purchase.
Each row is called a RECORD
and represents information about a single customer, product, or employee.
Activity 1: If you wished to keep information about your
customers, what kinds of information would you keep? Why?
What would a customer record look like?
Activity 2: What information would you store about your
employees? What would an employee record
look like?
Activity 3: Accountants need to track costs of goods
being sold (COGS) in order to know what profit the company is making and
where it is making it (which products generate the most profit). For a simple product like a computer, the Bill
of Materials might look something like this:
Pname |
CPU cost |
RAM |
Keyboard |
Case |
Disk Drive |
Motherboard |
List Price |
Model 100 |
56.88 |
44.70 |
34.50 |
9.77 |
44.56 |
89.56 |
495.00 |
Model 200 |
66.59 |
55.78 |
34.50 |
9.77 |
44.56 |
98.77 |
595.00 |
Which costs are the same for
all models (fixed costs)? Which costs
vary with each model (marginal costs)? Which
model generates more profits for the company?
Activity 4: The business you are planning produces a good
or a service. Create a table with a
breakdown of Costs of Goods Sold for your product or service, with
several models or levels of service.
Data Mining:
Once a collection of data
has been created for a business, most information systems connect to the
database to answer questions:
Asking questions of this
kind is called a Query. As
databases grow larger, it is possible to ask more advanced questions. Such questions are referred to as “data
mining.” Such questions may involve
trends, or may involve correlations.
Here are several examples:
Such questions have been
asked in the past to reveal that peak beer sales in stores are on Friday
afternoon, and as hurricanes approach, people stock up on strawberry Poptarts.
Activity 5: Assume you have a database that shows you the
purchasing history of all your customers over the last five years. What are five questions you could ask that
track trends or make correlations?
Information Collection
Information systems are
designed to store or retrieve information.
In the past, that information was mostly in standard databases like the
example above and was entered by clerks.
Now information can be collected in many more ways. Here are a few that are having an impact on
consumers and on employees alike:
Keyboard logging –
Software monitors every
keystroke on a computer system so a supervisor knows what web sited you went
to, when you were actually working, and how much time you devoted to every
task.
GPS –
While you want GPS to help
you when you are lost, there are also GPS tracking devices that can tell your
employer where you are at all times. If
you are a trucker, they can use it to determine how many more hours it will
take you to get to your delivery site, and they can use it to determine if you
are sacked out at a truck stop. If you
are a salesman, they can tell if you visited company X this afternoon or went
golfing.
RFID-
Radio Frequency
Identification is replacing bar codes as a way of tracking products. It is easier to scan than a bar code, and can
be done from a distance. But since these
RFID tags an be put in individual products, they can also be tracked
post-sales, so you could be scanned as you walked through a mall to see what
you bought and what kind of customer you might be.
Cookies-
As you visit sites on the
web, some sites will store a bit of information about you on your
computer. This bit of information is
called a “cookie.” It might say where
you went on the web site, what you bought, and how long you looked at a
particular item. Then when you return to
the site, it can read the cookie and make suggestions about ideal products for
you. Of course it can also track what
advertisements would be most persuasive to you.
Activity 6
Which of these information
collecting technologies were you already aware of? How might you respond to them?
Communications Technologies
Communicating within a company:
Business systems typically
link many computing devices together to share information. For example, retail stores will have Point-of-Sale
terminals that identify and record what was sold linked to servers that
calculate things like discounts and taxes linked to databases that record
customer information and inventory information (and possibly a personnel
database to record sales for commissions).
POS
-> Sales
server -> customer DB
§
inventory DB
§
personnel DB
These connections are made
over a network. If the network runs in
the same store, it will be called a “local area network (LAN)”. If the network needs to
access information from a greater distance (like corporate headquarters), it
will run over a “wide area network (WAN).”
The links can be
accomplished by wire (copper or coaxial), by optical fiber, or by wireless
technologies (radio waves).
Activity 7: Assume you run a manufacturing company. Whenever an order comes in, what information
might have to be communicated to various business systems in your company?
Communicating with suppliers:
Systems can also link to
suppliers. In systems like “vendor managed Inventory,” when a product is sold
in a store, the supplier of that product is automatically notified. If the product runs below a certain level
(“safety stock”), the vendor will automatically ship another quantity of the
product to the store. These links can be
done directly from the store to each supplier, but more recently,
these links are done over the Internet.
How the Internet Works:
As communication systems at
a company grow, it is normal to purchase a “router.” The primary function of a router is to direct
messages onto the internet. It works by looking at the address on the
message. If the address is local, it
ignores the message and lets it proceed to the local server or database. If it is not local, it will put the message
into an Internet packet, and send it off to the internet using an outside
communications line.
The internet itself is a
collection of lines and routers owned by a variety of Internet Service
Providers. Each time a message arrives at
a router, its address is checked, and it is sent down any available line that
gets it closer to its destination. A
message may take 5-10 hops down various lines before it reaches its
destination.
Since the lines and routers
of the Internet are shared by millions of users and billions of messages, costs
are low for users, but there are some risks in some messages being read along
the way. To prevent the loss of private
information, businesses typically encrypt messages before sending them out onto
the Internet.
Communicating with customers:
These days many businesses
communicate via email with customers.
Email messages are simply encoded packets that are sent over the
Internet directly to the customer. In
1995 a new way of presenting messages to customers was invented. Called the World Wide Web, it is not a
separate web at all, but simply a way of more attractively linking and
presenting information sent over the Internet.
How the World Wide Web
works:
Almost all computers sold
today include a piece of software called a “web browser.” This software takes information coming in
from the internet and displays it attractively on your screen. Encoded in the message are instructions to
the browser to make some text larger, include a picture, link to other internet
addresses, etc. When a company wants to
build a web site to show products, it adds these display codes to text, and
sends the text to a public “web server.”
The address of the server is shared with customers, put in advertising,
or linked to other web sites.
Business web sites can be
passive or very active. A passive site
might just display information about your company, give a phone number to use
if people wish to purchase something, or show pictures of your staff and
products. This is what most early web
sites did. More recently, businesses
wish to make it possible for customers to buy the products they see on the web
site. These more active sites require
that a business collect all the usual purchase information needed for a sale:
customer name and address, credit card information, the product desired, best
delivery method. This requires that the
web site have links back to company databases.
Activity 8: Think back to the last product you ordered
via the web. What information did the
web site ask for? What company databases
do you think it was accessing? What
business systems used that information?
Security
As consumers we are aware of
such security threats as identity theft, on-line fraud, and destruction via
viruses. For companies, security risks
are greater. First, they face both
external threats (fraud, viruses, information theft), and internal threats
(employees who wish to steal or damage company records). They also face a range of damages from web
site defacing and denial of service attacks, to critical damage such as “logic
bombs” that can cripple a system, or security
penetrations that may give competitors access to customer records or
proprietary information. As a
consequence, most companies have employees dedicated to maintaining security of
corporate information systems, and yet even so, they face continual problems.
Responses include “fire
walls” (barriers between company systems and the internet), virus scans
(software that checks email to see if viruses are embedded), password
protections (limits of access to parts of the company records), audit trails
(records kept on who accessed particular company information), and backup
systems (records made and kept off-site in case databases are corrupted or
destroyed).
Activity #9: Make a list of the three worst ways a
company’s information systems could be attacked. How would you prevent each attack or minimize
the damage from each attack?
Business Plan Application:
What records will you be keeping? How will
you use that information? Begin with the obvious – how will you identify your
best customers, and your best selling products?
How will you know when a product has begun to reach the end of its
life-cycle? As a manager, it is your job
to understand your business. What
records will you keep so that you can do your job?