module 06

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Module 6: Networks of networks: Internet, extranet, intranet, and Web 2.0 Overview The first decade of the new millennium has seen phenomenal growth in the use of the Internet and in the technologies that support and enhance its use. The Internet has had an enormous impact on most organizations, providing new ways to transact business with customers and suppliers, spawning new products and delivery mechanisms such as online music and books, and opening new markets around the world. No matter the size of the organization or its industry, every business must take the Internet into account. There are three important issues to consider. How does the Internet influence your organization? What are the possible advantages that can be leveraged from the proper use of Internet technologies? How might your competitors use the Internet against you? This module briefly reviews the technologies of the Internet, and introduces how they can be used to support both the operational and strategic goals of a business. At the end of this module, you should be able to select and use appropriate business technology tools in the workplace and evaluate and advise on the impact of new technologies on business processes. You will also learn to evaluate the social costs and benefits of securing resources to meet the organization’s objectives. 6.1 The Internet as a business tool 6.2 Use of the Internet to streamline operations 6.3 Technologies to support decisions and virtual meetings 6.4 Intranet and extranet 6.5 Strategic uses of Internet technologies 6.6 Web 2.0 and beyond Module summary Print this module 6.1 The Internet as a business tool Learning objective Evaluate the use of the Internet as a business tool for organizations. (Level 1)

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Page 1: Module 06

Module 6: Networks of networks: Internet, extranet,

intranet, and Web 2.0

Overview

The first decade of the new millennium has seen phenomenal growth in the use of the Internet and in the technologies that support and enhance its use. The Internet has had an enormous impact on most

organizations, providing new ways to transact business with customers and suppliers, spawning new products and delivery mechanisms such as online music and books, and opening new markets around the

world. No matter the size of the organization or its industry, every business must take the Internet into account.

There are three important issues to consider. How does the Internet influence your organization? What

are the possible advantages that can be leveraged from the proper use of Internet technologies? How might your competitors use the Internet against you? This module briefly reviews the technologies of the

Internet, and introduces how they can be used to support both the operational and strategic goals of a business.

At the end of this module, you should be able to select and use appropriate business technology tools in the workplace and evaluate and advise on the impact of new technologies on business processes. You

will also learn to evaluate the social costs and benefits of securing resources to meet the organization’s

objectives.

6.1 The Internet as a business tool

6.2 Use of the Internet to streamline operations

6.3 Technologies to support decisions and virtual meetings

6.4 Intranet and extranet

6.5 Strategic uses of Internet technologies

6.6 Web 2.0 and beyond

Module summary

Print this module

6.1 The Internet as a business tool

Learning objective

Evaluate the use of the Internet as a business tool for organizations. (Level 1)

Page 2: Module 06

Required reading

Chapter 7, Section 7.3, The Internet, Its Technologies, and How They Work

Module scenario: Communications beyond an inbox

The Operations Manager, John Ahab, stops you in the hall. ―Look,‖ he says, ―e-mail is out of control. I

can’t read it all; I can’t keep up, and it is taking up too much of my time on ridiculous things. Only one out of every ten e-mails I receive is important. I have three main projects on the go, and the amount of

duplicate e-mail relating to those projects is crazy! How can you help me?‖

You remember how fast and efficient e-mail was when you first introduced it in your company 15 years

ago. Over the years, the programs have changed but the concept hasn’t, and that’s where the problem is. E-mail is an information system, but it can’t differentiate knowledge from noise. You can filter

messages, but you can’t efficiently thread a message between numerous people over a long period. It’s

good when it’s used for quick responses.

You turn and face John. ―Remember when we created the MIS system to standardize your daily reports?

Well, that was our first attempt at standardizing and coordinating your information. Then we created ―Thomas,‖ our decision support system that gave you more flexibility to create your own reports. Your

team uses it all the time.‖

―Yes,‖ says John, ―that’s been a great system, but it’s e-mail that’s killing me.‖

―I know. But what if for your key projects, we take the communications out of e-mail. What if we build you three self-contained sites on our intranet: three wikis. You tell us who should have access, who can

just read, and who can post. This way everything, including attachments, can be focused in one area,

communications in one area, timelines, discussions, documents — whatever you want, all centralized outside of e-mail.‖

―Great,‖ says John. ―Have it ready in an hour and I’ll come by to see you.‖

LEVEL 1

The Internet is a global collection of interconnected networks using a common set of protocols —

specifically TCP/IP (Transmission Control Protocol/Internet Protocol), which is a set of communications protocols. Protocols are rules that govern how communication takes place between networks. By sharing

the TCP/IP protocol suite, disparate global networks can communicate seamlessly, acting as one big

network. It is important to remember that the Internet is not a physical place; there is no up or down, and no one body overseeing its development. The Internet is the global structure of interconnected

computer networks. The software that we run using the Internet (including e-mail, web browsers, peer-to-peer file sharing, and VOIP) provides businesses with exciting ways to connect with customers, and

opportunities for integration and data storage beyond what were once standard business practices.

Advantages of the Internet

The Internet as a business tool can be positioned in two ways:

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Organizations can use the Internet as a platform for doing business.

The Internet becomes part of the business structure of the organization.

Most organizations view the Internet as a tool to support existing business practices; however, the Internet can be used in all aspects of the organization and may represent the organization’s only public

presence. Amazon is a good example. Amazon only exists because of the Internet and is an example of a

pure-play business, which only exists on the Internet. However, in 2012, Amazon CEO Jeff Bezos said to Charlie Rose (an American television talk-show host), ―We would love to open Amazon retail stores.‖ This

has not yet happened.

Following the dot-com crash in 2001 — the significant loss of value in stocks of Internet-based companies

— there was much skepticism among senior managers about the potential for the Internet as a business tool. Many analysts now view the dot-com crash as more of a correction, and a way to weed out the false

players from those invested in the Internet for long-term business. Developments in the succeeding years

have shown the Internet to have an important, ongoing role in a number of key areas.

Expand global markets

The Internet is a business tool that can expand a business into new global markets. However, it is

important to put the word ―global‖ into perspective when it comes to Internet use. In 2011, the International Telecommunications Union, an agency of the United Nations that studies information and

communications technologies, released Internet usage statistics that estimated both the number of people in the world and the number of Internet users. Their studies claim that of the 7 billion inhabitants

of the world, 65% are without Internet connectivity and 35% have it.1 These statistics are important for

understanding just how global the Internet really is, yet in no way do the numbers correlate to its impact. The Internet is global in that it has connections in most parts of the world, but less than half the world’s

population is connected to it.

Tom Friedman, in his book The World is Flat, argues that the development of the World Wide Web, along

with other technological advances (related to collaborative applications) and political developments, was the genesis moment for the flattening of the world economy. This is when certain location-based

advantages began to level out. It would take more time to converge and really become flat, but this is

the moment when people started to feel that something was changing. Suddenly, more people from more different countries found that they could collaborate with other people on different kinds of work,

and share different kinds of knowledge than ever before.

In the flat world Friedman describes, geographic location is no longer a barrier to global commerce. Thus,

for example, companies in Asia with capacity for high volume and low cost production can supply

products across a huge range of product categories around the world. Companies in India or the U.K. can provide specialized IT services and support to multinationals with head offices in North America or

Europe. Location is simply no longer an issue.

Supports different ways to communicate

The Internet as a tool for improving communications is extremely versatile. It supports multiple ways to

communicate, including text, voice, and video, and can do so economically. Because the Internet connects a variety of smaller networks, and because of the way that traffic is handled over the Internet,

the cost of communication for business is limited to the cost of connecting to the local Internet

connection. The Internet has provided a great leveling of telecommunications costs for organizations. If

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companies had to fund the infrastructure of a global network themselves, there would still be a large

amount of unconnected businesses, focused only on local suppliers/customers.

Supports different business practices

Organizations can use the Internet to support a variety of business practices, including using it to sell

goods and services. They can sell directly over the Internet in a B2C or B2B transaction, or provide information about the nature of the goods and where they can be purchased. Examples include hosted

sites such as eBay and Kijiji, which offer consumers a way to buy/sell used products; sites like Airbnb.com, which provide consumers with a place to search for home accommodations worldwide; and

oDesk.com, where various online jobs (software development, web, sales and marketing) are posted and

bid on by contractors. Coursera.com (a MOOC, or massive open online course) is a way that the Internet is affecting the area of education by offering free university level courses to its enrolled students.

Carpooling (Zimride.com), skill swaps (Skillshare.com), crowd-funding (Kickstarter.com), and many other models of business have been created because of the Internet.

The Internet can also support the logistics involved in the delivery of products and services. Organizations such as FedEx and Purolator offer customers the technologies of the Internet to track

packages and receive e-mail notifications on the status of their packages. Consumer goods companies,

pharmaceutical companies, and many others employ websites to assist people with the use of a variety of products with text and video presentations. Web applications like Facebook and Twitter are also used as

method of strengthening customer ties and building communities of like-minded people.

Provides cost-effective solutions for organizations

Businesses and organizations can use the Internet to improve the efficiencies of their operations and

reduce costs. Walmart built a proprietary supply chain for all its suppliers to join. Organizations can also

align the technologies of the Internet with their business strategies to discover new ways to support the goals of the organization. Each of these advantages will be elaborated later in this module.

Challenges of the Internet

Where the Internet offers tremendous advantages to organizations, it also offers a number of challenges.

Some of these challenges are based on existing models of business, others on feasibility.

Limited markets are available online

If the only presence of your business is the Internet, you automatically limit your potential market size to

only those people with computers and Internet access. While this limitation is rapidly diminishing in certain geographic regions, there are still large segments of the population with limited or no Internet

access. As of 2012, only 35% of the world’s population are actually connected to the Internet.2

E-commerce opportunities and challenges

The Internet cannot replace people, especially those in customer service and support. However, it can do

a good job of coming in second by supporting those positions, and offering new ways to engage

customers. Sites like Twitter and Facebook allow companies to extend their presence beyond a normal web customer service page. For example, in 2009 Dell reported over $3 million in revenue generated by

offering special discounts to its customers through its Twitter feed.3 And Kickstarter.com has successfully crowd-funded over 89,000 projects to a total of $509 million.4

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However, e-commerce has some common challenges faced by all venturing to do business online.

Payment issues (What payment methods do you offer?), security issues (What type of security enhancements does your site support?) privacy issues (How are you protecting your customer’s privacy?),

processing issues (How responsive is your site to customer requests? Is it both fast and accurate?), shipping issues (What delivery options are there, and is the price prohibitive compared to the item

bought?), transfer pricing issues (based on tax jurisdictions). A thorough understanding of these issues is

required before an e-commerce site is constructed.

Not a replacement for good business practices

One challenge of the Internet is that it is not a replacement for good business practices. There are some

pure-play Internet companies like Amazon, eBay, and AbeBooks that have built customers through word-of-mouth, but many successful web companies began as physical stores. This way good business

practices were already adopted and in place long before an Internet presence was decided on. Many companies, including Sears, Best Buy, and Walmart used the knowledge they had about running a

successful physical business and moved it online. Furthermore, Lee Valley Tools already had a successful

catalogue and phone-order business, so the web was simply a new channel in which to expand their business.

In the early days of e-commerce, companies were more concerned with market share than with profit, arguing that being first to the market was necessary because the first mover would snap up all of the

market and leave no room for anyone else. This was not true. Measures of site usage (hit rates) replaced financial and operational analysis in evaluating a company’s potential value. Eventually, it became clear

that "eyeballs" (slang for customer attention) were not more important than operating profit. Today,

search engine optimization (SEO ), analytics (such as Google Analytics), and other reporting tools are common methods used by businesses to measure who visits a website, when they visit, from where,

why, and how. The greater or more particular knowledge that a retailer can capture about its customers through various website analytics, the more the message can be tailored to that customer.

Even though the technology has had a profound effect on how companies operate, the ―rules of the game‖ have not fundamentally changed. The first (and perhaps most important) rule that has been

reintroduced is that the Internet should be a complementary part of your existing business. It is not a

stand-alone strategy, but part of an integrated strategy; one of many such parts that a company should consider.

Lack of consumer trust

The lack of consumer trust also creates ongoing challenges in using the Internet for e-commerce. Companies that do business over the Internet are faceless. It isn’t like walking into a store where you can

judge the quality of the business by the storefront, the signage, and the people who work there.

Creating a slick-looking website is relatively easy, but it does not guarantee consumer trust. In 2010, an

Internet business called DecorMyEyes made headlines for its poor business and customer services

practices. When questioned, its response was that even negative online comments boosted its ranking in Google Search. Google then revised its page ranking algorithm to ignore negative reviews, and dropped

the company from a generic eyewear search.5

How do you convince your customers that you are a legitimate business and not a fake website? How do

you convince them that when they send you their credit card information, you will actually ship them the products they have ordered, and that you will protect their credit card information and not allow it to be

used to rack up thousands of dollars in charges at other businesses? These are questions that all new

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web-based businesses face, and existing businesses continuously revisit. Some of the ways companies

can reduce buyer fear include posted policies, e-mail addresses, faces or people in the organization, company addresses, and phone numbers. Making a site legitimate also has to do with weak ties, for

example, ―friends‖ on social networks that have already purchased from the online vendor, and have posted a positive experience. Some believe that the display of web seals and trust logos on e-commerce

sites convince users to purchase, but the evidence in support of this claim is conflicting.

Activity 6.1-1: Consumer trust and the Internet

Visit three websites that engage in business-to-consumer electronic commerce (for example, book stores, clothing stores, and electronics stores). What signals do they use on their websites to enhance your trust

in them? Do you think these signals work? If so, how do they enhance trust? If not, can you think of any solutions?

Solution

Legal challenges

Another major challenge associated with using the Internet for business relates to the legal status of

commerce on the Internet. Because it is a global medium, regulating Internet content essentially gets relegated to the search engines that categorize the content for us. However, no one wants Google,

Yahoo, or Bing to have the say in what people can and can’t view online.

For example, in 2010, Google threatened to pull its search engine from China due to government censorship demands and cyber-attacks against its Chinese search site and Gmail users. However, the

global nature of the Internet makes it difficult to know which jurisdiction is at fault when an Internet crime occurs.

A number of years ago, a Canadian Member of Parliament tried to introduce legislation that would enforce Canadian content regulations (the rules that require Canadian media operators to provide a

certain percentage of Canadian content in order to protect our cultural distinctiveness) over the Internet.

How such restrictions could be enforced was the question. Are the Internet service providers (ISPs), such as Sympatico and Rogers, responsible for the content that is received over the channel? Are Bell Canada

and Telus responsible for your losses from fraudulent telemarketers? The case law regarding the phone company has been quite clear: the provider is not responsible. While this principle has been argued for

ISPs as well, the picture is a little less clear in the new environment.

More recently, the Recording Industry Association of America (RIAA), an industry advocacy group that

tries to protect the intellectual property of recording companies, has been trying to force ISPs to divulge

the names of its subscribers who are using the Internet to share music files that might include copyrighted material. The responsibility of the ISP to its customers — to protect their privacy — conflicts

with the right of the organizations trying to protect their copyrighted material from unauthorized distribution. Whatever you think of the recording companies in this situation, it is clear from the success

of many of the peer-to-peer file sharing applications and protocols like BitTorrent that millions of people are sharing copyrighted material without paying royalties to the owners of that material. Again, the legal

issues are murky. A couple of years ago, a Belgian court ruled that an ISP must take responsibility for

stopping illegal file sharing on its network. Whether this ruling will have a global effect on the record industry remains to be seen.6 As of 2013, it has not.

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Socio-economic factors

The digital divide, which is the socio-economic gap between those who can access the Internet and those

who cannot, continues to widen. The reasons for the lack of access may be financial, a lack of capability to use the technology, or a lack of infrastructure. As more business is conducted over the Internet, there

is concern that people who lack access may be economically and socially disadvantaged as a result. This is a matter of concern to government policy makers, whose responsibility is to ensure equality of

opportunity for its citizens.

1 The World in 2011: ITC Facts and Figures, International telecommunications Union, accessed March 6,

2013 http://www.itu.int/ITU-D/ict/facts/2011/material/ICTFactsFigures2011.pdf

2 Internet World Stats. Accessed April 15, 2013, http://www.internetworldstats.com/stats.htm

3 Twitter helps Dell rake in sales, Reuters, accessed July 23, 2013, http://www.reuters.com/article/idUSTRE55B0NU20090612

4 Kickstarter Stats, accessed March 6, 2013: http://www.kickstarter.com/help/stats

5 A Bully Finds a Pulpit on the Web, The New York Times, accessed July 18, 2011,

http://www.nytimes.com/2010/11/28/business/28borker.html?_r=1

6 Belgian court rules ISP responsible for stopping file-sharing, Canadian Music Week, accessed July 18,

2011, http://www.cmw.net/media/industry_news_2129/

Activity 6.1-1 solution

Although your responses to the questions will vary depending on which sites you visited, a sampling of various signals to enhance consumer trust includes

Showing the date that the business was established to make it clear this is not a new business (for

example, the Eddie Bauer website)

Providing a company information page

Providing information about bricks and mortar stores (if extant), including maps and directions

Clearly stating the privacy policy

Offering a toll-free number for customer support

Obtaining and displaying a third-party seal of approval (Verisign, TrustE, BBB)

Offering a satisfaction guarantee on purchases (for example, Amazon.ca)

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Ensuring that the overall site is designed well and easy to navigate (This enhances our trust

because it appears that a significant amount of effort has gone into building the business.

Something that appears slapped together may look more suspicious.)

Providing alternative ordering mechanisms (For example, you can view online and set up the

order, but then call a phone number to give your credit card information.)

Displaying affiliate sites (For example, Amazon displays its "international" sites to make it seem

like a larger company, which may increase trust.)

Providing links to other sites that you trust (For example, the Internet Movie Database links to

Amazon because it is an Amazon.com company.)

Providing a consistent navigation speed so that page links within a website are fast and without

errors. The purchase page must be clear and concise and only show what the purchaser needs to know. When the Proceed or Purchase button is pressed, the return result should be quick and

error free.

These techniques work in a number of different ways. Some sites, for example, use the trust that you

may have developed with another company as a starting point. If you trust the Better Business Bureau,

and if this site is rated by them, then you would expect it to be a trustworthy site. Others operate by making it look less likely that suspicious activity is going on. The bigger the investment in the website or

the more information that can be checked through other means, the less likely it appears that the website would be there for fraudulent reasons. Finally, others operate by minimizing your risk — for

example, providing alternative ordering or satisfaction guarantees.

All of these techniques can still be fraudulent, so there are no simple solutions to the problem of trust. Establishing an ongoing relationship with customers and a reputation as a trustworthy vendor are still

indispensable parts of an online business strategy. Consistency is a key to this strategy, as trust continues to be one of the most significant challenges faced by online retailers.

6.2 Use of the Internet to streamline operations

Learning objective

Analyze the ways in which the Internet streamlines business operations. (Level 2)

No required reading

LEVEL 2

This topic looks at how an organization can use the Internet to streamline its operations to run more

effectively and efficiently. The methods presented are not always directly related to cost cutting, although

that is a potential outcome; they are also related to improving the productivity and effectiveness of the people and procedures in the organization.

Improved communications

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One of the most obvious areas where the Internet can be used to streamline operations in organizations

is communications. Although a vast and far-reaching subject, in this context communications refers to the number of people that you can reach and the speed at which you can communicate with them.

There are the everyday communications that business users rely on in their jobs. E-mail, still the most widely used method of communicating online, is being challenged by talk options and by browser-based

chat-based tools like those available on Facebook and Twitter. Businesses have a variety of communication choices to offer employees and customers alike; they can, for example, replace travel

with online meetings (GoToMeeting, WebEX), sign employees up for online training (GoToTraining,

Lynda.com), provide access to information sites (Quora, Wikipedia, Yahoo! Answers), and so on.

Improved communication also allows for improvements in customer service. Instant messaging software

enables dialogues with customers. Several companies offer instant messaging connections on their websites, through which they can provide immediate answers to questions. Many companies also include

social media connections, choosing from a variety of ways to keep in touch with their customers, and provide on-screen buttons to follow them on Facebook, Twitter, LinkedIn, Google+, and RSS feeds. Blogs

and other versions of online journals or diaries provide a means of communicating one-to-many. Some

employees use corporate blogs to record important information about their business activities. Blogs provide a forum for communicating with employees, customers, and other stakeholders. They also

provide a means for communicating very publicly about organizations — perhaps when faced with poor customer service — and thus they are an important vehicle for managers to understand customer

opinion. Companies that allow and respond to negative postings are respected, versus those who only

allow postings of positive comments.

The mobility side of communications is also advancing how we connect with business data. With 3G and

4G LTE mobile networks, smartphones are connecting to networks at increasing speeds and access to business data through web-service apps is a reality. This has also enabled the advancement of mobile

commerce, where companies such as Intuit’s GoPayment, GigaOM’s Square, and VeriFone’s PAYware give consumers the ability to use their credit cards for purchases through their mobile phones. In 2013,

Square (www.squareup.com) appears to be the market leader in mobile payment technology, offering

free mobile payments (Android and IOS) and a less expensive swipe rate to retailers than traditional card readers. Security and privacy questions are always associated with such payment options, and Square

provides advanced auditing systems and application design security where transactions are monitored as they are received. In 2013, Square introduced Square Wallet, a way for Android and iOS smart devices to

store their credit/debit card information directly on their devices. Such wallet applications have been tried before by Microsoft and Google, both without success, but as technology improves, consumer trust for

such applications may increase.

Data centralization and access

One of Gartner’s predictions for 2010 was more data centralization. The support for this prediction was through cloud computing, which enables organizations to offload the physical storage and distribution of

data to a cloud provider (Internet-hosted and web-accessible), either public or private. Since then, cloud

services continue to expand. Today, there are three main cloud offerings: SaaS, where applications, data backup, and archiving are accessed via the cloud, and charged on a pay-as-you-go basis; IaaS, where

infrastructure improvements such as processing demand are offered when needed; and PaaS, where development platforms such as Windows, Linux, and MAC OSX, are accessed from a cloud server when

needed.

The ability of the Internet to centralize data for businesses, and still provide access to users anywhere, anytime, is a further benefit to operations. For years, the Internet has provided access to technical

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manuals (and other documentation). Intranets allow businesses to place company information on their

internal web servers, and extranets allow customers and suppliers access to company networks. With cloud computing, data can be accessed by users anywhere there is an Internet connection. Research

findings from R&D departments can be made available to a wide range of stakeholders in the firm so that multiple perspectives on new opportunities can be sought. Forms (for example, travel claims, staff

benefits claims, and staff information changes) can be maintained and submitted online, with the

administration outsourced to an external company, thus reducing the need for staff to process these forms. Software applications, enterprise applications, and office productivity applications (for example,

Google Docs) are facing the possibility of not being local or defined by location, but by having global accessibility. At one point, only front office applications such as our standard desktop apps (MS-Office, e-

mail, browsers) were being ported to the cloud; now, back office applications (enterprise systems, HR applications, web servers) are also finding a place outside of the IS department.

Offloading data entry

Using the Internet as a means of doing business also streamlines processing by offloading data entry

activities onto customers. For example, when you use web banking to pay bills you enter the information about what bill is to be paid, on what date, from what account, and in what amount. Formerly, this

information would be written on a cheque or other payment advice that the bank would receive in paper

form. The first step in processing the payment would then have been to enter the information. Now, the information has already been entered and checked for accuracy by the person most affected by data

inaccuracy — the customer. Web banking thus provides enhanced service to customers, allowing them an alternate means to handle their financial transactions. It also reduces the need for bank staff to enter and

verify data while processing of transactions, which reduces the bank’s costs and processing time.

A similar effect is found with any Internet-based ordering system, where, formerly, paper orders were

sent between companies or between customers and companies. The data entry task is now undertaken

by the customer. This benefit is not unique to the Internet. Electronic data interchange (EDI) allowed for this type of communication between different firms long before the Internet became available for

commercial use. But EDI required the adoption of proprietary technologies that limited its availability and applicability. Although considered an old technology, EDI is still popular in the B2B (business to business)

realm, as much of today’s use of EDI for new entrants is through the web, using standards like XML to

handle the data exchange.

E-procurement, or the ability to automate an organization’s buying processes, is also a way to offload and

streamline purchasing. Companies purchasing across the Internet as a part of a B2B strategy can improve their buying processes without changing their work processes. Merging all aspects of a

purchasing system into one web-based e-procurement process helps companies better control their purchasing, which can result in faster procurement cycles and lower inventories.

Some industries, such as journalism, have felt the impact of offloading. Consumers are willing to pay for the physical delivery of a newspaper, but not as willing to pay for news online. The competition is high

amongst new agencies especially as consumers are able to perform simple web searches for news items.

The offloading of the news to a digital service has had a devastating impact on news reporting and delivery. Paywalls, or a system of preventing user access to web content without a paid subscription, are

one way news agencies are trying to survive online. But the offloading of news is not only digital; it is also transitioning from professional agencies to independent jour nalists, affecting the exclusivity of news

and the development of its content.

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6.3 Technologies to support decisions and virtual

meetings

Learning objective

Identify the different types of decision support technologies used by businesses and the situations they support. (Level 1)

Required reading

Chapter 14, Section 14.2, Systems for Decision-Support

Chapter 15, Managing Knowledge (excluding 15.4, ―Intelligent Techniques‖)

LEVEL 1

Decision Support through information systems

When Thomas Friedman describes the global flattening of economies through technologies like the Internet, he is trying to extend the concept of groups. He explains how geography, as a limiting factor to

delivering business services of any kind (accounting/bookkeeping, taxes, product tracking) in the past,

has been replaced with open standards that have provided open communications with all connected countries in the world. Information, highly prized and protected within businesses, has become a global

commodity that is easily shared and obtainable online and in real time. The idea of groups of people connected through a country, then through a business, then through social interactions, has continued to

shrink collaboration between groups of people to the size of the individual. Each person is now an information node on the Internet. The technologies needed to connect like-minded and interested people

through the web, are also a part of our businesses. This opens up how we make business decisions to

collaborations, where the support systems in place are greater and more global than ever before, through the promise of such new analytic data sets as big data.

Where management information systems (MIS) were once the tools with which managers monitored and controlled business (usually shop floor) performance, they were replaced in the 1990s by more advanced

decision support systems (DSS). These DSS not only report on what is happening within the four walls of

a business; they also allow managers to model changes and run ―what-if‖ scenarios to test the impact of changes in a controlled setting first. As the databases that held the data to support decisions grew, new

tools were created to analyze the contents. Examples include extensions like OLAP (online analytical processing), a way to query large amounts of data, often within the frame of a pivot (like Excel’s pivot

table approach); and data mining, the ability to look through large sets of data for patterns that cannot be seen in standard row and column approaches. Both analysis tools became key tools in a growing

segment of information tools called business intelligence.

To provide a perspective on how these tools assist managers with decision making, four instances of support systems will be described, and their use in today’s business environment will be explained.

Pivot tables

Small and medium enterprises (SMEs) have always been at the tail-end of adapting to information technologies. The cost of IT and the resources available within the organization have always played a

Page 12: Module 06

role in how much technology could be afforded. Desktop tools like Microsoft Office gave insight into some

data patterns, but only displayed the data in rows and columns. Advanced functions (scenarios, what-if analysis, SUMIF, DSUM, and so on) and formulas allowed managers to use Excel to support decisions, but

only in predictable, tabular patterns.

Pivot tables changed that. A pivot table is a table in Excel that allows a user to display information in

different dimensions. This means that column data can be summarized, row and column data can be reversed, and values can be calculated against any numeric field. A pivot table helps a manager see

patterns and extract meaningful information otherwise unnoticed in standard tables.

Exhibit 6.3-1: Sample list of books for sale from an Abebooks.com reseller

Exhibit 6.3-1 shows 29 records of a book database used by a typical Abebooks.com reseller. For each

book we know the genre, language, number of pages, retail price, release date, purchase date, and title. A manager could sort the range of books, subtotal at section breaks, and perform other types of analysis

on the range of data. However, a pivot table could answer more interesting questions about the data:

Which genre has the most books for sale?

Which genre has the highest average retail price?

Is there a connection between price and number of pages in a book?

Does release date affect the retail price?

With more columns of data, more information can be compared and extracted from the data. The

advantage is that Excel is a common tool, and is accessible by IS departments, managers, and end users

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alike. Excel supports multiple import formats and connections with other applications — server-based,

web-based, and data from enterprise applications.

Exhibit 6.3-2: A pivot table that shows the total investment in different genres

Visualizing text data in a pivot table is one way that managers can include data from multiple sources in a single worksheet, and discover real context for otherwise static data. For example, summarize the

average retail price by book category, then pull in other columns, sort, select, and filter data until you can discover relationships not always visible in a first exposure to data.

Web and location-based support

While the web continues to increase in importance in communications and in commerce, businesses have found extensions into new areas through the web. Customer decision support systems (CDSS), found on

websites where customers are allowed to choose and configure significant features, are common in the

computer hardware (Dell) and automotive industries (GM, Ford, Toyota, Honda, and so on).

Location-based services provide businesses with access to information and individuals on a geographic

basis. Many apps for mobile devices frequently request access to user locations (through GPS and other means) as a way of further categorizing users. Trends in age and income are one thing, but trends in

geographic location represent a whole new marketing possibility.

When Google released Google Maps and included application programming interfaces (APIs) into its

geographic discovery system, it opened up new ways to connect (or mash) two or more different ideas

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onto a single mapping frame. Mashups, the newest form of geographic information systems (GIS) using

Google Maps can now tell us:

The location of homes for sale in a city with direct location mapping of those homes

The proliferation of baby names by city

Restaurant or hotel locations within a city/street view

Disease and sickness breakouts in a country/city

This is only the beginning. Mobility locations, as determined through the GPS within each smartphone,

are considered an opportunity for m-commerce. Knowing the exact location of an individual through his or her smartphone provides marketers with value knowledge that can be translated into client coupons

pushed to the mobile device as the individual approaches a specific location. Downloadable applications like FourSquare, which allows users to share their minute-to-minute location with friends, and Yelp, a

location-based app with a direct link to Facebook, are setting new standards for location-based information. Extending the significance of these applications to an enterprise world, shipment and

container tracking is already available through most delivery systems, but part/material suppliers by

location, customers with similar services/products by location, location tracking for lost or stolen vehicles — all these opportunities provide new information that can extend the decision-making process beyond

the walls of a business.

Group meetings and collaborations

Recent security installments at airports and borders have made physical travel a time-consuming

adventure. Today, the web allows for improved methods of communications, for example with virtual

meetings.

Virtual meetings can be held online through web browsers using USB cameras and software, for a

fraction of the cost of travel. Also, where corporate clients once connected boardrooms using sophisticated conference hardware with dedicated high-throughput phone lines, now the Internet handles

all the new web-based conferencing tools. Examples of these tools include GoToMeeting, MegaMeeting, Lotus Sametime, Microsoft Office Live Meeting, WebEX, and Apple iChat. All these tools provide online

meetings with presentations, drawing tools, live and text chat, and other individual enhancements to

customize their own particular solutions. Some are browser-based offerings; others require installed software. All are part of the group meeting market where information becomes a group dynamic

independent of physical location. As travels costs increase, both the tangible and intangible benefits of these tools can be measured through the quality of information, the cost of meeting, and the ability to

easily connect and disconnect virtual teams as required. The ease of management and use of these tools becomes equivalent to logging on to a website, or composing and sending e-mail.

Education is also experimenting with a virtual component. The motivation is that if a standard, physical

post-secondary classroom holds approximately 40 students, imagine how many students could attend a virtual classroom held online. The answer is tens of thousands. Coursera, Udacity, and edX are all

examples of MOOCs, that offer free education to students worldwide, through 8-to-12-week virtual classes by well-known colleges and universities.

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Social media information

From the cavalier days of MySpace to the more structured dynamics of Facebook and Twitter, social

information has been a difficult subject to categorize. The difference between information and noise has been hard to distinguish, and mining tools lacked the sophistication to sort through what appears as

commonplace chatter, to discern patterns in topics, trends, locations, or preferences. Plus, we are dealing with unstructured data, unlike the structured relational database model that has been in place for years.

Associative information is a term that describes how preferences between such supposedly unconnected

collections like Facebook friends can be mined to determine a lot about our likes and dislikes. Amazon uses a similarity analysis to determine your purchase/viewing patterns with those of other users, and

then offers you links to products that, associatively, may be of interest. Predictive analysis is a modern branch of analytics tools, with big data at its core. Facebook boasts over 500 million users. The potential

to mine Facebook social data to discover trends in consumer product purchases, politics, activities, and many other categories, is vast and potentially telling.

Part of the issue of social media has been how to categorize it, and a simple self-categorizing solution

called ―tagging‖ has been put into place. It is not scientific, but tagging allows the person posting the information to ―tag‖ or label their post with a category name, either listed or created by the poster. Tags

can be shared, and grouped into bookmarks called folksonomies, a term that identifies the tags as user created and not professionally created. User tags are how Wikipedia categorizes its own entries. And

managing tags is becoming a business in its own right, with such products as Google Tag Manager and Ensighten leading the way.

Using search to support decision making knowledge

The commoditization of information is one of the consequences of the web. Like the toothbrushes in the

grocery aisle that must constantly reinvent their particular advantages over the competition, information gets buried, hidden, distorted, or lost in a medium that is global and ever-growing. The importance of

information on the web has almost become reflexive, giving way instead to the application of information

to decision making, better known as knowledge. Where information is a commodity, knowledge is not. The tools that can separate and support the search for knowledge are already emerging within the next

generation of context-based web search known as the Semantic Web.

This developmental offshoot of the web is concerned with describing things in ways that computer

applications can understand them. Not through hypertext links, but through relationships and properties,

in a sense similar to the associative framework discussed with social media. In his 1999 book Weaving the Web, Tim Berners-Lee, the founder of the web, wrote ―if HTML and the web made all the online

documents look like one huge book, RDF, schema, and inference languages will make all the data in the world look like one huge database.‖1

The implications of context information on decision making are far reaching. Changes to our existing search strings and methods would require engines that can extract the meaning for the word sequence,

possibly through both what is stated and what is omitted. Web-based search engines today, including

Google, Bing, and Yahoo!, may become more than portals to information; they may become the levelers of knowledge. As Friedman spoke of the flattening of economies due to the web, a searchable semantic

web may become the flattener of knowledge — already compared, associated, and made relevant for anyone’s business purpose.

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1 Berners-Lee, Tim. Weaving the Web: The Original Design and Ultimate Destiny of the World Wide Web by Its Inventor. HarperCollins, 1999.

6.4 Intranet and extranet

Learning objective

Distinguish between an intranet and an extranet and assess the advantages and disadvantages of each. (Level 1)

No required reading

LEVEL 1

What is an intranet?

An intranet is a private website aimed at an organization’s internal staff. Internet websites are aimed at the public at large, and intranets are aimed at a controlled set of internal LAN users. An intranet includes

content and information that is only of use and value for the members of that organization. The need to have an intranet is driven by the need for centralized access to company forms, documents, and

information that is of interest and assistance to employees. Security, privacy, and controlled access are

features of an Intranet.

Much of the information within an organization is private: that is, it is intended for use only within the

organization or only by certain members of staff. Organizations need to communicate some information solely to their staff. Intranets were born in response to these needs when organizations opted to build

websites within the internal networks protected by their firewalls. An intranet is a private version of the Internet: same applications, same standards. The organization is responsible for the content and

maintenance, and the users of an intranet are the employees.

Intranets have followed the various stages of web development. Initially they were simple publishing

websites, used mostly for unidirectional communication. With the advent of integrated collaboration

platforms, intranets have become customizable portals where the staff can find valuable information related to human resources, finance, and various projects. They can also use intranets to interact on

collaborative projects.

Companies use intranets to share a wide range of information. For example, Cisco Systems uses its

intranet to provide new employees with quick access to information about the company structure,

policies, and operation, as well as training and completing human resources paperwork. For a company that has grown extensively by acquisition, the ability to bring new employees up to speed quickly was of

critical importance. Intranets can also be used to provide access to meeting minutes, key presentations that might be reused by different sales people, and information on the current status of manufacturing

operations — in short, any document-based information that might be usefully shared between organizational members.

What is an extranet?

An extranet is similar to an intranet except that it allows secured access by selected users from outside

the company, and beyond the company’s firewall, to the company’s data and people. An extranet

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essentially shares the accomplishments of the intranet by extending its access to partners, suppliers, and

businesses outside the company walls. B2B connections between companies will often use extranets as a way to grant its partners access to restricted data.

For example, Li & Fung1, a global sourcing company that supplies companies like The Limited and Abercrombie & Fitch, uses an extranet to connect its partners in manufacturing, sourcing, and

distribution. By providing shared access to documents through the use of groupware tools, Li & Fung is able to manage quality in a global manufacturing operation that it does not directly control. Goods in a

plant in China can be viewed over videoconferencing technology by managers in Hong Kong, for

example, in order to quickly resolve design and quality challenges. This results in lower travel costs, faster servicing of customer orders, and improved quality.

Collaborative private exchanges like the automotive-focused Covisint, provide an extranet-based connection between customers and suppliers. Secured and private logins provide access to the site, while

maintaining privacy among users.

Benefits of intranets and extranets

The alternative to an intranet or extranet is often a collection of other proprietary systems. Rather than building HTML pages to support document sharing, an organization could adopt a proprietary document

management system to act as central storage and distribution. Or it could adopt a private e-mail system instead of using Internet e-mail programs, and only exchange information with those that are internal

and directly connected to its network. These technologies were used extensively before the adoption of

TCP/IP as the exclusive Internet communications protocol, and before other data standards like HTTP and HTML. From a business perspective, it is the use of these global standards that has made the

Internet and the features of the web so enticing. Without standards, the Internet would never have gained business prominence because the communications cost of global connectedness was too great.

Standards have made it easier for organizations to take the technical knowledge they gained through

Internet connectivity, and apply it in-house.

There are many other advantages to intranets and extranets. Here are some of the key benefits:

Cost-effectiveness

Intranets and extranets are significantly cheaper to operate than an alternative proprietary network, and can contribute to lower overall communications costs. When dedicated or switched leased-lines were the

only option to connect remote divisions or branches, it was not uncommon to see monthly communications charges in the tens of thousands of dollars. Today, a single business connection to an

Internet Service Provider (ISP), using a T1 line (up to 50 users) or a T3 line (100+ users), will cost less

than $5,000/month, and when the cost is divided among the number of users, the results can be measured in pennies per day.

Also, because an intranet or extranet uses a TCP/IP infrastructure (an open rather than proprietary standard), application development and support are cheaper. Skills already developed for Internet

websites transfer to internal developments as well. Also, if most people in the organization are familiar with Internet software and how to use it, there will be lower training costs.

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Easy publication and sharing of information

Information can be easily published and shared using development technologies already in use on the

web. The software can be readily learned and used to develop and post documents to appropriate locations for ease of access. Maintaining the information is also much easier because it resides in a single

location or a small set of defined locations. Most of the common desktop applications today (Microsoft Office, Google Docs) have formats that allow users to save documents as HTML files, and can also post

the documents directly to an intranet, with the correct configurations in place. Blogs and wikis are also

used to provide a more social touch to online information, and offer the opportunity for leaving comments, providing interaction between the document creator and the reader. Also, browsers can open

many common file types such as docx, pdf, xlsx and jpeg for direct viewing of files.

Extranets, however, pose more security issues with regard to information access. Although publications

are no more difficult — some extranets are subsections of intranets, but with greater information accessibility based on security clearance — securing not only the data access but the connection to those

data is the challenge. Many organizations adopt VPN (Virtual Private Network) solutions for extranet

access. Both encryption and security keys, coupled with a user’s unique ID, password, and personal firewall, provide a level of privacy in the connection that is almost impossible to hack.

Scalable applications

The scalability of intranets and extranets is also an advantage over proprietary technologies. Adding users is simple and requires little administration work. This is also true for extranets, where you can

quickly and easily add new suppliers or customers by following established security and privacy policies to connect them. New suppliers just need an Internet connection, a browser, and security permission to

access your extranet to start interacting with their own particular segments of your network.

The scalability of applications is also an advantage. Most intranets and extranets develop incrementally. They start out with a few applications and add functionality as needs and opportunities are required.

Adding features does not require reinstalling programs and upgrading versions. Once the features are in place on the server, every user with proper clearance for accessing the intranet or extranet can use the

new features.

Easy monitoring of use

The nature of the technology allows relatively simple monitoring of use. It is possible to determine what

content is being accessed, by whom, and through what pathways. This can be beneficial in learning what

information is being shared or not shared through the organization and in enhancing the design of services. This area of computing is collectively referred to as Customer Relationship Management (CRM),

and is concerned with all aspects of a customer’s web experience — Internet or extranet. CRM applications can track a customer’s access, monitor their presence, collect and profile their movements

(interests and disinterests), and allow the site owner to better customize the site experience to the user.

From a business perspective, CRM helps companies like Amazon tailor your experience of its website to your specific interests through buying patterns and page clicks.

Over the last decade, several branches of support for the online customer experience have been created. These include SEO (search engine optimization), which aims to improve a website’s ranking in the listed

results of a search query; analysis tools, including Google Analytics, Coremetrics, and Webtrends, which help interpret website traffic patterns; and web-monitoring software, such as SpectorSoft and InterGuard,

which monitors web usage within an organization and identifies abuse.

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Challenges of intranets and extranets

While intranets and extranets provide unique opportunities for businesses to connect with and share

information with their customers and suppliers, they are not without their challenges. Keeping content current, monitoring security, and issues with evolving standards and integration all play an important role

in maintaining the relevance of shared sites.

Content maintenance

Content on intranets and extranets comes from the organization, not the Internet. The business must create and maintain this information for the site to remain relevant to customers. Maintaining content is

costly and requires dedication of resources to ensure the accuracy, reliability, and timeliness of the information. Out of date content is a threat to the organization as it means that decisions are made

based on inaccurate information.

Content Management Systems (CMS) have evolved to assist in maintaining site information. A CMS is a

set of procedures (and templates) for adding, managing, or maintaining the information on an Internet

website, intranet, or extranet. Employees with content access can easily publish updated information directly, without webmaster clearance. Tagging posted information with metadata is also a CMS feature

that helps provide search relevance to postings. There are open-source CMSs like TYPO3, WordPress, Moveable Type, Frog, Drupal, and Joomla, and some proprietary systems like Microsoft’s Sharepoint

Server, Adobe’s Business Catalyst, and OpenText, which positions its products as enterprise information

management.

There are several reasons why companies adopt CMS, including ease of maintaining website content both

on the web and on an intranet. Also, many CMS provide a way to manage workflow collaboratively between users. As systems that help with website management , CMS offer revision control of

documents, search, indexing, and format management. Joomla is one of the most popular CMS and is open source, with a huge installed base of active users and a thriving support network. Thousands of

websites have been created using Joomla in industries including automotive, construction, finance, retail,

and healthcare.

The discussion for business is whether content should be the focus of site effort as opposed to

community. Many businesses see the social aspects of an online community as more beneficial to creating long relationships with customers over a straight information-based approach. Following the

previous line of thought that claimed information to be a commodity on the web, community seems to be the choice many businesses are adopting. However, the role of community as a business strategy and,

therefore, a means of driving value is still an issue without a clear answer. Increasing customer retention,

differentiation from competition, and access to better market data and customer feedback, are some of the reasons businesses give for creating online communities. According to Ryan Holmes, CEO of

HootSuite, ―Social media is poised to become an office productivity tool, much the same way that email did in the late 1990s.‖2 Lulu.com, for example, has become a successful community for independent

authors.

Security violations

Extranets, while they are private, are intended to be accessed by people outside the company. Because they are often linked to internal systems, if someone gains access to the network, potentially they also

gain access to the information on it. Encryptions, firewalls, and RSA tokens are features that help protect an extranet and its content from unauthorized access by verifying a user through more than a single ID

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and password. Third-party businesses offer integrated VPN solutions, and Internet Protocol Security

(IPSec) is an open-standard communications protocol that offers better encryption and authentication.

Industry organizations, like Gartner, predict that the proliferation of social media and mobility will have a

negative impact on a company’s ability to retain its own confidential information. Take as an example VP and Gartner Fellow Daryl Plummer’s top predictions for 2013: ―By 2017, 40% of enterprise contact

information will have leaked into Facebook via employees’ increased use of mobile device collaboration applications. Extensive application integration between address books and applications like Facebook

makes it relatively easy for users to pour lots of contact data into the social networking world. Once

there, it’s far more likely that it will be used by those up to no good than when it’s safely stored in a corporate directory.‖ (Source: Carousel Connect blog, October 26, 2012:

http://blogs.carouselindustries.com/security/gartner-talks-up-cloud-mobile-information-and-social-nexus-and-what-it-means-for-it/ Accessed March 27, 2013.). Privacy is no longer just an individual concern but

also a corporate one.

Connection/collaborative issues

Compared to the proprietary tools that provide similar services (for example, Lotus Notes and MS Exchange), collaborative applications such as, Salesforce.com, 37signals, Google Docs, and TWiki provide

open collaborations far superior and more cost effective than their proprietary counterparts. Where methods of data replication were once important to accommodate offline users, now customers,

employees, and suppliers are in an always-on state. Content created offline can easily be transmitted when online. The issue of connectivity is still one of location; the global nature of the Internet must be

viewed through the countries where connectivity is available.

Evolution of standards and technology

There are always risks associated with the emerging nature of web-based technologies. Programming standards for the web are in place (W3C.org is one such web standards entity), but are not routinely

enforced. The top three web browsers — Internet Explorer, Firefox, and Chrome — all adopt different standards as evident through compliance Acid 3 testing. This means pages displayed on one browser may

not display on another. This can result in the need to redevelop applications as standards evolve. Consider web pages themselves. Several years ago, frames were the latest in web development. They

allowed content to change in one part of a window while remaining constant in another.

Today, frames-based pages are out of fashion, due to both style and functionality issues. Such changes in Internet standards create the need for updating intranets and extranets as well. An example of

changing or evolving standards is HTML5, the fifth revision of the markup language used to create and structure content for web pages. One new syntax feature directly handles audio <audio>, video

<video>, and content tags for more semantic control. This evolution has been built straight into web pages without the assistance of third-party add-ons. Developers continue to debate the use of HTML5

versus Adobe’s Flash. Most modern browsers support both; in 2013, Flash boasts more current browser

support, but HTML5 is capable of running on tablets and mobile phones while Flash has a more limited range.

Lack of back-end integration

The Internet developed largely as a communication and access tool. Because the web began largely as a means of posting document-based information, the back-end integration (linking applications running on

the intranet/extranet to other corporate systems, such as the enterprise modules of general ledger,

manufacturing, inventory control, human resources, and so on) remains an issue. Several methods of

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integration, from APIs to custom-built or purchased middleware and MQ applications, all provided

solutions at the cost of complexity.

From 2000 to 2010, service-oriented architecture (SOA) provided an approach of redesigning business

processes as web services, to be called upon and used as programs require them. This web-based approach to back-end integration requires technical knowledge that is often beyond SME IT

departments. Consequently, many large enterprise systems vendors created SOA versions of their own application suites (Oracle, SAP) as a way to provide web services.

Today, however, integration revolves more around external data sets as opposed to whole application

suites. SOA began as an all-or-nothing approach to integration, and many companies chose nothing. The approach is now scaled down to more specific integrations that solve problems. This means a greater

emphasis on cloud computing, where the integration issue returns to data integration, as opposed to application integration, as the platform already integrates the apps.

1 Source: McFarlan, F.W., & Young, F., ―Li & Fung (A): Internet Issues,‖ Harvard Business School Case 9-301-009, 2001.

2 Forbes.com article: 5 Ways Social Media Will Change The Way You Work in 2013, Guest post written by

Ryan Holmes, 12/11/2012. http://www.forbes.com/sites/ciocentral/2012/12/11/5-ways-social-media-will-

change-the-way-you-work-in-2013/ (Accessed March 27, 2013)

6.5 Strategic uses of Internet technologies

Learning objective

Evaluate how the Internet contributes to cost reduction, differentiation, customer lock-in, and

strategic alliances, and how it supports the value chain of an organization. (Level 1)

No required reading

LEVEL 1

In Module 1, you learned about the strategic impact of information technology, including technologies

related to the Internet. You learned that organizations can use information systems to reduce costs, differentiate their products or services, lock in suppliers and/or customers, create new products or

services, and create and sustain alliances with other organizations. Here you will learn more about the

specific contributions of the Internet and the web to strategic IS. IS investments can support the various elements of an organization’s value chain and can enhance the linkages between value chain activities.

Cost reduction

The Internet can be used to help organizations reduce expenses by providing communication at a lower

cost, streamlining processes, and reducing the duplication of data entry throughout the organization. Applications and data can be geographically dispersed and located where costs are most beneficial.

Alternatively, cloud computing and all its three platform layers (SaaS, IaaS, and PaaS) can provide cost

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benefits to both new and established organizations. For an organization that competes directly on price,

such uses of the Internet can be considered strategic.

Development of strategic alliances

You have seen how the use of extranets can contribute to the development of alliances with other

organizations. The ability to open information, and to create communities and not just content, makes for

stronger alliances between suppliers and customers. The use of common technologies enables communication, information sharing, and joint processes, making alliances easier to create, develop, and

maintain.

Differentiation of products or services

Similarly, the Internet can support differentiation of products or services and the creation of new products and services. For example, Dell Computer uses the Internet as one method of providing

customers with the ability to custom design their own personal computers. This additional service originally differentiated Dell from its competitors, some of whom have since added the ability to allow

customers to design new systems as well.

News organizations, such as the New York Times, allow subscribers access to back issues of the

newspaper through the Internet, enhancing service and creating customer loyalty. They also provide

customized news to pay-wall subscribers over the Internet — a new product of sorts. Users can decide what kind of news they most want to receive (local, national, business, sports, and so on) and can have it

delivered to their desktop daily. They can also ask to receive alerts about breaking news events. New platforms like tablet PCs have also impacted the delivery of news, as have blogs, Facebook, Twitter, and

many other social networks where non-professional journalists report events instantaneously. By late

2012, Facebook recorded over 1 billion active accounts. The online Huffington Post spoke of a readership of 9.8 million unique visitors in December 2009.1 The largest circulation for a U.S. newspaper was the

Wall Street Journal with over 2 million subscribers at March 31, 2010.2 Not only new platforms but also the speed of reporting ―news‖ has become a major challenge for news agencies. The Internet clearly

offers product differentiation.

The auction services of eBay and other online auctions are another form of products and services. While

auctions have been around for a long time, they have been confined to a same-time, same-place format

that limits the size of the audience. Online auctions, by contrast, can be accessed worldwide for extended periods of time, thus enhancing the size of the audience and — the seller’s hope — the prices paid for

goods. Plus the advent of local auctions, through such web-based services as Kijiji, has brought the concept of a citywide garage sale to the web. Where newspaper classifieds once held dominance over

such ―for sale‖ announcements, the online world is now the location for local used purchases.

Customer loyalty

The effectiveness of the Internet in locking in customers is debatable when we compare it to old business measurements. The Internet and the web are prone to change much faster than physical environments

where people established brand loyalty and stuck with it for years. As an example, ten years in physical loyalty may represent two years in online loyalty. Both are equally intense, but are spread over a shorter

duration. No one can say Microsoft, Google, Facebook, and YouTube, have not established customer

loyalty on the Internet. It’s true that the Internet helps maintain relationships with customers at a relatively low cost through such techniques as RSS feeds or e-mail updates, which mimic mass mailings

to subscribed customers, while personalization technologies allow companies to gather information about

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customers (either personal characteristics or browsing behaviours on the company website) and use it to

enhance customer experiences.

For example, after visiting Amazon.ca several times, you notice that the welcome screen includes a link to

recommendations — selections based on your history of browsing on the site, and your previous purchases. This type of personalization may contribute to customer loyalty and lock-in. After all, if it’s

easier for customers to find what they want on your site, that should be a barrier to switching.

But at the same time, the Internet also permits customers an easy search of available options.

Aggregators (such as TweetDeck, Google Alerts, and mySimon.com) provide a convenient way to group

like searches into a single source. Commerce aggregators provide cost comparisons of products from various vendors. Since the Internet offers easy information searching and the ability to shop around for

the best price, it is more difficult for companies to retain customers. The openness of the Internet seems to decrease the potential for IS to lock in customers on price alone. However, Business Wire reported in

2011 that online shopping is ―surprisingly consolidated‖, claiming that over 50% of all retail visitor volumes were on Amazon, eBay or Alibaba.3

Value chain

In terms of the value chain, you learned in Module 1 how IS can support individual elements of the value

chain or the linkages between them. Using the Internet to connect with customers can enhance the sales function, the outbound logistics function (for delivery of products such as software that can be sent over

the Internet), and the after-sales service function. Also, the communication enabled by the Internet and

groupware technologies is key to enhancing the links between value-chain functions. Linking customers and suppliers directly into your company through extranets and sharing information throughout the

organization means that the processes that take place are more tightly linked.

Amazon.com has developed expertise in a particular area of online business, and offers its expertise to

other web-based businesses as web services designed for resizable computing capacity in the cloud. Both Unix and Windows Server platforms are supported. This venture is an extension of Amazon.com’s

services to the business community. Amazon.com is an example of an Internet company that, through

investing in its own technology, now offers diverse value to other web businesses. Many companies today, needing computing expertise but not having the budget for internal staff, look to Amazon Web

Services (AWS) and others to host, backup, serve, and maintain their systems.

Planning for strategic uses of the Internet

You can use the Internet strategically to support your organization, gaining from its benefits but also taking into consideration a number of specific lessons:

Business needs and strategy must drive the initiatives.

Succeeding in e-business, like any other aspect of IS, requires a holistic approach driven by the organization’s overall strategy. Too many dot-coms learned this the hard way. The Internet does not

fundamentally redefine strategy or its role in organizations. Rather, it is a tool like many others, to be

used to achieve strategic objectives. Even if it is a disruptive technology (one that fundamentally changes or disrupts the dynamics of business like the sidelining of travel agents in the airline industry), the broad

framework of business still exists.

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Companies still create value for their customers through the processes by which they turn their inputs

into outputs, and the way they support those outputs after sales (that is, the value chain). If the customer does not value the product or service provided by the organization or does not value it as

highly as it is priced, then he or she simply will not buy. Many dot-coms learned that while customers would visit their sites for free goods and services, they were unwilling to pay for those services, at least

not in direct monetary terms. In personal information like e-mail and/or home addresses, they were more

willing.

Increased integration has both benefits and costs.

The Internet blurs the line between front-office and back-office systems and requires all corporate

functions to work more closely around the technologies that link the business. Historically, the order-taking and order-processing aspects of a business were quite separate. Customers would be buffered

from the order-processing system by company staff, who would aid them in their selections. This was true of traditional retail operations, mail-order operations, and telephone-ordering operations.

Today, customers are linked directly or indirectly into the company’s information systems to place an order. This creates challenges for security and systems design, because the design of a customer-facing

system must be quite different from that of an internal system. Customers lack the language and training

of company employees in how processes are described. However, web-based ordering as a part of the B2C process provides customers with step-by-step virtual equivalents to the physical shopping

experience, with adding items to a shopping cart, choosing where they are to be sent, deciding how to pay, and then receiving back a screen verification of a successful order placed. The increased integration

offers tremendous opportunities for streamlining corporate processes and enhancing customer value.

Adhere to IT standards.

The elaboration, use, and adherence to IT standards enable a firm to rapidly incorporate new technologies and migrate to emerging systems. Many of the benefits of intranets and extranets come

from their reliance on open IT standards such as TCP/IP, HTTP, and HTML. Standard technologies are easier for IS departments to learn and adapt, and they tend to be cheaper to operate. Moreover, because

of the availability of larger pools of developers working in that environment, it is often easier to develop new technologies in environments with widely adopted standards. It does not matter whether the

standards are formal (like the TCP/IP standard) or whether they are de facto standards (like Microsoft

Office as a standard for office productivity software); the dominance of the standard approach encourages the development of new ideas, and further strengthens the Internet through Metcalfe’s

network effects.

Pursue an evolutionary learning strategy.

Finally, successful use of the Internet for competitive advantage is best thought of as an evolutionary

activity. As the technology evolves, it is not possible for organizations to think through all the options

beforehand. Trying to create the ―ultimate‖ solution for a company all at once is inadvisable and impossible. An incremental approach, testing different options and making adjustments based on

experience and backed by data, is more likely to produce successful results. For continued success, organizations need to adopt an attitude of continuous improvement for their Internet strategy, no

different than the shop floor.

For example, a major pharmaceutical company may test various means of communicating with its

customers over the Internet (for example, e-mail, web communities, Facebook pages, or Twitter) to

determine which approaches are the most likely to generate value and customer loyalty. The process of

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testing is fairly formal, using groups of customers to target different kinds of results, and then formally

measuring the impact through customer research. This formality helps the company to understand the influence of its spending in this area, and to analyze the costs and benefits of its customer relationship

management initiative with greater accuracy than its competition.

Such formal testing is not the only approach. The main point is to think of using the Internet for

competitive advantage as an ongoing learning process. As the technology matures, customer needs and preferences change, the dynamics of the marketplace adjust, new opportunities emerge, and old

methods lose their impact. An incremental learning approach enables the organization to adjust as the

market changes.

1 Source: http://www.mediabistro.com/fishbowlny/huffington-posts-traffic-more-than-doubles-year-over-year_b13548

2 Source: http://www.huffingtonpost.com/2010/04/26/top-25-newspapers-by-circ_n_552051.html#s84768&title=undefined

3 Source: http://www.businesswire.com/news/home/20110823005719/en/Fifty-Percent-Global-Online-Retail-Visits-Amazon, accessed March 10,2013.

6.6 Web 2.0 and beyond

Learning objective

Evaluate recent Internet and web trends and their impact on the organization, using Web 2.0 as an example. (Level 1)

Required reading

Chapter 5, Section 5.4, Contemporary Software Platform Trends (subsection on "Software for the

Web: Java and Ajax"

Reading 6-1: What Is Web 2.0: Design Patterns and Business Models for the Next Generation of

Software

LEVEL 1

Definition

The term Web 2.0 refers to the second generation of Internet applications that employ user interaction and collaboration. The term was coined by Tim O’Reilly, founder of O’Reilly Media, at the first Web 2.0

Conference in 2004.

Web 1.0 was predominantly based on technologies that allowed website publishing in a mostly unidirectional way, with a limited level of collaboration. Whereas the earliest Internet applications focused

more on stable data and on one-to-many communications (such as websites), more recent applications

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focus on many-to-many communications such as blogs, and on user control in the form of applications

such as Wikipedia. If you contrast Wikipedia with the encyclopedia Britannica online (its Web 1.0 equivalent) you see all of these differences: user-generated content as opposed to vetted academic

entries, possible minute-by-minute enhancements versus strict fact checking and timed updates, and conceived free user service versus forced free service.

Britannica online contains data developed by teams of experts and remains stable through carefully planned editing cycles. The company posts the data for consumption by others (one-to-many). If a user

wishes to contest the content, he or she would presumably contact Britannica and make an argument,

which would be considered in the next cycle of content editing.

In Wikipedia, by contrast, the content is developed collaboratively by anyone who wants to be involved.

There is an editorial structure, but its aim is not to control the content but rather to monitor the process, identify areas for development, and resolve serious disagreements over content. If you want to contest

content on Wikipedia, you need to register, and then you can edit the content yourself. Another user could further modify what you had written, and then you could develop it further yourself. This is a

many-to-many approach, with a higher degree of personal control and lack of control over the credibility

and appropriateness of the content.

Collaboration

Web 2.0 applications provide further developments in the collaborative nature of the Internet. If the key drivers of the initial web applications were content (making data available online) and communication

(allowing users to connect with others), the latest trends are about collaboration (working together to build content) and service (creating collaborative applications that create real value). The text and the

O’Reilly reading provide a good overview of the various Web 2.0 applications and examples. These applications raise new opportunities and challenges, and have important implications for organizations in

the following ways:

1. The increased level of personal control that Web 2.0 offers individual users means a similar

decrease in control for organizations. If your customers decide to create a Facebook group

devoted to your product, the customers will control the content and your marketing message will become diluted. You may be able to join in the discussion, but often such moves are viewed with

suspicion by customers. Even if the discussion is positive, this loss of control is uncomfortable for organizations.

2. There is a blurring of the distinction between public and private lives. For individuals, this can

result in lower levels of personal privacy and greater visibility to the world. For organizations, it means the private actions of employees can reflect back on the organization. For example, a

producer at CNN was dismissed because of comments he made on his personal blog about several issues regarding CNN and other networks. Companies are creating new rules about what is and is

not permissible behaviour with regards to sites like Twitter and Facebook, and these rules extend beyond just Internet surfing during work hours.

3. Blogs have also changed the dynamic between customers and companies. It is much easier for

customers to exchange information and experiences, both positive and negative. An excellent example was a Blogger, Buzz Machine, who published his customer service experiences with Dell

online. He called the blog entry Dell Hell, and included mp3 recordings of his conversations with Dell customer service representatives. The blog generated so much bad publicity that Dell changed

some of its customer service procedures in response to the criticism. There are new product and

new market opportunities here too. New products, in the form of mashups (combinations of data

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and applications from different sources to create a new product), create new value for customers

and present new entrepreneurs with opportunities to build businesses using creative combinations of existing content.

4. The visibility of data about customers provides further ways to segment customer markets and moves us closer to the ideal of segments of one. Having more data about individual customers

(through their registration on a variety of sites and their activities throughout the web) makes it

possible for businesses to tailor marketing offers more and more narrowly. And it is possible for such offers to be profitable because the customers’ use of self-service applications incur virtually

zero marginal cost for the organization.

In 2013, Gartner Inc. predicted the following trends:

Mobility is king. In 2013, mobile devices will overtake PCs as the most common device for web

access.

Personal clouds will become mainstream as users sync multiple devices. The services will begin to

take importance over the device.

The Internet of Things will continue to expand. Sensors, image recognition, and NFC (near field

communications — devices that can communicate and exchange data by touching them together or by proximity) will have over 20 billion ‖Things‖ by 2020. Gartner predicts that by 2015,

enterprises will have a dedicated position to handle all connected things.

Strategic big data and actionable analytics, two areas of new and exciting analysis, will begin to

focus organizations on data outside and not just inside.

Source: Gartner: Top 10 Strategic Technology Trends For 2013, Forbes, Accessed on March 11, 2013,

http://www.forbes.com/sites/ericsavitz/2012/10/23/gartner-top-10-strategic-technology-trends-for-2013/

Module 6 self-test

1. Define and explain the difference between intranets and extranets. Explain how they provide value to businesses.

Source: Kenneth C. Laudon, Jane P. Laudon, and Mary Elizabeth Brabston, Management Information Systems: Managing the Digital Firm, Fifth Canadian Edition (Toronto: Pearson Canada, 2011), page 234. Reproduced with permission from Pearson Canada.

Solution

2. How do decision-support systems (DSS) differ from management information systems (MIS), and how do they provide value to the business?

Source: Kenneth C. Laudon, Jane P. Laudon, and Mary Elizabeth Brabston, Management Information Systems: Managing the Digital Firm, Fifth Canadian Edition (Toronto: Pearson Canada,

2011), page 452. Reproduced with permission from Pearson Canada.

Solution

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3. What is the role of knowledge management and knowledge management programs in business?

Source: Kenneth C. Laudon, Jane P. Laudon, and Mary Elizabeth Brabston, Management Information Systems: Managing the Digital Firm, Fifth Canadian Edition (Toronto: Pearson Canada, 2011), page 482. Reproduced with permission from Pearson Canada.

Solution

4. Describe some advantages and disadvantages of using the Internet as a business tool.

Source: Kenneth C. Laudon, Jane P. Laudon, and Mary Elizabeth Brabston, Management Information Systems: Managing the Digital Firm, Second Canadian Edition (2005, Toronto: Pearson Education Canada), page 490. Reproduced with permission from Pearson Education

Canada.

Solution

5. Read the Window on Management ―Managing with Web 2.0‖ on pages 468–469 of your textbook

and complete questions 1 and 2 under the heading ―To Think About‖.

Source: Kenneth C. Laudon, Jane P. Laudon, and Mary Elizabeth Brabston, Management Information Systems: Managing the Digital Firm, Fifth Canadian Edition (Toronto: Pearson Canada,

2011), pages 468-469. Reproduced with permission from Pearson Canada.

Solution

6. Complete the Management Decision problem #2 regarding Sprint Nextel on pages 483-484 of your textbook.

Source: Kenneth C. Laudon, Jane P. Laudon, and Mary Elizabeth Brabston, Management Information Systems: Managing the Digital Firm, Fifth Canadian Edition (Toronto: Pearson Canada,

2011), page 483-484. Reproduced with permission from Pearson Canada.

Solution

Module 6 self-test solution

Question 1 solution

Web technology and Internet networking standards provide the connectivity and interfaces for internal

private intranets and private extranets that can be accessed by many different kinds of computers inside and outside the organization.

Intranet is an internal (private) organizational network that provides access to data across the enterprise and is protected from public users by firewalls. It uses the existing company network infrastructure along

with Internet connectivity standards and software developed for the World Wide Web. Intranets create

networked applications that can run on many different kinds of computers throughout the organization, including mobile handheld computers and wireless remote access devices.

Extranet is an intranet that is restricted to authorized outside users like customers and suppliers. A company uses firewalls to ensure that access to its internal data is limited and remains secure. They may

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also employ other security measures like a VPN through the use of secured tokens (public-key

cryptography).

Both intranets and extranets reduce operational costs by providing connectivity for coordinating disparate

business processes within the firm (access to shared reports, common employee forms and submissions, project updates), and for linking electronically to customers and suppliers. Extranets often are employed

for collaborating with other companies for supply chain management, product design and development, and training efforts.

Source: Adapted from Dale Foster, Instructor’s Manual to accompany Management Information Systems: Managing the Digital Firm, Fifth Canadian edition, Pearson Canada, 2011, Chapter 7, page 255. Reproduced with the permission of Pearson Canada.

Module 6 self-test solution

Question 2 solution

Management information systems (MIS) provide routine reports and summaries of transaction-level data

to middle and operational level managers to provide answers to structured and semi-structured decision

problems. MISs provide information on the firm’s performance to help managers monitor and control the business. They typically produce fixed, regularly-scheduled reports based on data extracted and

summarized from the firm’s underlying transaction processing systems. The formats for these reports are often specified in advance, and answer direct questions previously agreed on by area managers.

Decision-support systems (DSS) provide analytical models or tools for analyzing large quantities of data and supportive interactive queries for middle managers who face semi-structured situations. DSSs

emphasize change, flexibility, and rapid responses. With a DSS there is less of an effort to link users to

structured information flows, and a correspondingly greater emphasis on models, assumptions, ad-hoc queries, and display graphics. The manager is involved in the selection of what they want answered,

rather than receiving a static, predefined report.

Source: Adapted from Dale Foster, Instructor’s Manual to accompany Management Information Systems: Managing the Digital Firm, Fifth Canadian edition, Pearson Canada, 2011, Chapter 14, pages 523-524. Reproduced with the permission of Pearson Canada.

Module 6 self-test solution

Question 3 solution

Knowledge management is the set of processes developed in an organization to create, gather, store, maintain, transfer, apply, and disseminate the firm’s knowledge. Knowledge management promotes

organizational learning and incorporates knowledge into its business processes and decision making. As the textbook points out, knowledge management enables the organization to learn from its environment

and incorporate this new knowledge into its business processes. Knowledge management helps firms do

things more effectively and efficiently, and cannot be easily duplicated by other organizations. This ―in-house‖ knowledge is a very valuable asset and is a major source of profit and competitive advantage.

Although there are specific programs dedicated to knowledge management, an intranet or Wikipedia, for example, represent valuable current instances of knowledge management.

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Source: Adapted from Dale Foster, Instructor’s Manual to accompany Management Information Systems: Managing the Digital Firm, Fifth Canadian edition, Pearson Canada, 2011, Chapter 15, page 555. Reproduced with the permission of Pearson Canada.

Module 6 self-test solution

Question 4 solution

Most organizations view the Internet as a tool to support existing business practices; however, in some

cases, the Internet can be used in all aspects of the organization and can represent the organization’s

only public presence. The Internet as a business tool has the following advantages and disadvantages:

Advantages

Expands global markets: The Internet as a business tool can expand a business into new global

markets. For example, companies in India can provide specialized IT services and support to multinational companies with head offices in North America.

Supports different ways to communicate: The Internet as a tool supports multiple ways to

communicate, including text, voice, and video, and is economical.

Supports different business practices: The Internet as a tool supports business practices, such as

selling goods and services. Companies can sell directly over the Internet using B2B, or B2C.

Provides cost-effective solutions for organizations: The Internet as a tool can improve efficiencies

of operations and reduce costs. For example, WalMart built a proprietary supply chain for all its suppliers.

Disadvantages

Limited markets are available online: If the only presence of your business is the Internet, you

limit your potential market size to those with Internet access.

E-commerce is not suitable for all transactions: The Internet cannot replace people especially in

customer service and support.

Not a replacement for good business practices: Good business practices should be adopted first

and adhered to when you have Internet presence.

Lack of consumer trust: Companies that do business over the Internet are faceless. Building trust

is harder to accomplish because consumers can’t judge the quality of the business by the

storefront or the people who work there. However, building a good website helps to build trust.

Legal challenges: The global nature of the Internet makes it difficult to know which jurisdiction is

at fault when an Internet crime occurs.

Source: Kenneth C. Laudon, Jane P. Laudon, and Mary Elizabeth Brabston, Management Information Systems: Managing the Digital Firm, Fifth Canadian Edition (Toronto: Pearson Canada, 2011), pages 468-

469. Reproduced with permission from Pearson Canada.

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Module 6 self-test solution

Question 5 solution

1. How do Web 2.0 tools help companies manage knowledge, coordinate work, and enhance decision making?

Blogs, wikis, and social networking are emerging as powerful tools to boost communication and

productivity in the corporate workforce. Workers and managers are using wikis to store

information and share memos. IBM created a wiki to help 50 of its experts collaborate on an intellectual property manifesto. Another IBM manager uses wikis to give him ―a single view of the

projects and their status‖ without sending numerous e-mails to each of his workers. IBM is also using social networking to help employees communicate better with each other. Dresdner

Kleinwort investment bank uses corporate wikis for collaborating on materials related to meetings,

supporting brainstorming sessions, and developing presentations.

2. What business problems do blogs, wikis, and other social networking tools help solve?

These tools reduce the need for e-mail and its inherent problems like storage, transmission

bandwidth, and lack of searchability. Information is stored in one place with blogs and wikis.

Employees and managers can communicate and collaborate with each other faster and easier. Decision making is enhanced by the speed with which these tools allow managers to research and

gather information. Because the tools are easier and cheaper to deploy, companies reduce the

costs of knowledge management and decision making.

Source: Adapted from Dale Foster, Instructor’s Manual to accompany Management Information Systems: Managing the Digital Firm, Fifth Canadian edition, Pearson Canada, 2011, Chapter 15, page 540. Reproduced with the permission of Pearson Canada.

Module 6 self-test solution

Question 6 solution

Management Decision Problem 2: Sprint Nextell

Sprint Nextel has the highest rate of customer churn in the cell phone industry. Management wants to

know why so many customers are leaving Sprint and what can be done to woo them back. How can the company use tools for online collaboration and communication to help find the answer? What

management decisions could be made using information from these sources?

Knowledge acquisition is the key to answering management’s questions. The company must create new

knowledge by discovering patterns in corporate data. The data from the company’s transaction processing system that tracks customer orders, payments, and service cancellations can provide part of

the knowledge. Data from external sources like industry reports, government statistics, and industry

metrics can also add to the knowledge base. Capturing and mining data from blogs, wikis, and social networking sites is another source of information. Managers can then decide to adjust pricing, offer

special incentives to customers and employees, expand services, or change elements in promotional offers.

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Source: Adapted from Dale Foster, Instructor’s Manual to accompany Management Information Systems: Managing the Digital Firm, Fifth Canadian edition, Pearson Canada, 2011, Chapter 15, page 563. Reproduced with the permission of Pearson Canada.

Module 6 summary

Networks of networks: Internet, extranet, intranet, and Web 2.0

Evaluate the use of the Internet as a business tool for organizations.

Advantages:

For some organizations, the Internet is its public presence and the organization only exists

because of the Internet. Most organizations, however, use the Internet to support existing

business practices and processes. The Internet can also

o expand organizations’ reach and markets

o support multiple ways of communicating both internally and externally

o support or replace different business practices o be a cost effective way for organizations to use the infrastructure already in place

Challenges:

The Internet cannot replace people.

Many people in the world do not have Internet access.

Using the Internet is not a solution for bad business practices or processes.

There is still a lack of consumer trust, especially around security and privacy.

There are legal issues around content, product liability, and copyright.

Web 2.0 applications provide further developments in the collaborative nature of the Internet,

which raises new opportunities and challenges for organizations.

Analyze the ways in which the Internet streamlines business operations.

Internet tools like e-mail, chat, and instant messaging can improve communications through o centralized data and improved access

o using websites to off-load customer data entry and the need for physical sites (such as online banking and electronic tax filing)

Identify the different types of decision support technologies used by businesses and the situations they support.

You can divide decision support technologies for managers into four categories: o Pivot tables

o Web- and location-based support

o Group meetings and collaborations o Social media information

Exhibits 6.3-1 and 6.3-2 show the use of a pivot table within Microsoft Excel.

The proper use of web search is another tool that can assist managers in building decision support

systems that are more global than local in scope.

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Distinguish between an intranet and an extranet and assess the advantages and disadvantages of each.

An intranet is a private network that uses the same protocols and software as the Internet but is

created and controlled by a single organization, with no access for people outside of the organization.

An extranet is the same as an intranet but access to the network is given to certain external

groups like suppliers or strategic partners. It is still not open to the general public.

Advantages:

o Intranets and extranets are cost-effective because they use readily available tools and most people already know how to use them.

Challenges:

o Content maintenance is ongoing and requires more resources as it evolves. o Extranets are potential security risks because they allow people external to your

organization to have access to your network. o They are not as sophisticated as proprietary tools like Lotus Notes, especially around data

replication and connections.

o Internet standards and software are evolving. o There is a potential for lack of integration with other internal systems.

Evaluate how the Internet contributes to cost reduction, differentiation, customer lock-in, and strategic alliances,

and how it supports the value chain of an organization.

The Internet can reduce costs by streamlining processes, reducing duplication, and lowering data capturing costs.

The use of extranets makes it easier to create and maintain strategic alliances.

The Internet can contribute to differentiation of products by enhancing products or by offering

new products.

You can increase the loyalty of customers by customizing web screens based on past visits to the website.

The Internet can enhance the sales function of an organization or it can be used to streamline and

add value to a process, such as linking suppliers to the manufacturing function to automate parts

ordering. Understanding organizational needs and strategies must initiate the process of developing

strategic uses of the Internet.

Integration is needed to improve the benefits of using the Internet and to reduce costs.

You must adhere to IT standards to take advantage of the evolving Internet.

Ensure that you pursue an evolutionary, learning strategy.

Evaluate recent Internet and web trends and their impact on the organization, using Web 2.0 as an example.

Web 2.0 refers to the latest generations of Internet applications and the evolving approaches to using the Internet for interaction, entertainment and business.

It includes technologies such as weblogs (blogs), wikis, social networking software, and mashups.

Web 2.0 differs from earlier web applications in its focus on collaborative, user-driven content.

Key implications of Web 2.0 include

o Risks to individual privacy due to the blurring of public and private spaces o More customer ―voice‖ at the expense of a corporate voice

Advances in big data and analytics will move businesses toward the power of external and not just

internal data for decision making.