3 questions

Here is the summary of the content from Chapter 13: Building Information Systems: Laudon, Laudon, and Traver. Management Information Systems: Managing the Digital Firm, 18th Edition, Pearson, ©2026. ISBN-13:  9780138344245

Chapter Case Studies

Signet Jewelers transformed its business model from a traditional in-store sales process to an enhanced e-commerce and omnichannel approach.

The transformation plan, "Path to Brilliance," aimed to improve e-commerce capabilities, which initially accounted for only 8% of revenues.

The Covid-19 pandemic accelerated the need for virtual sales processes, leading to the closure of physical stores and the deployment of new information technology systems.

Virtual consultations were introduced, allowing customers to communicate with sales consultants via text, voice, or video and book one-hour virtual appointments.

Digital photographic tools were implemented to let buyers enlarge diamond photos 40 times to inspect cuts and imperfections.

Visual search and collaborative browsing tools were added, enabling customers to upload images of jewelry they like and find similar products online.

The browsing technology allowed sales agents to access and navigate a customer's browser in real-time, facilitating online interaction and support.

The virtual sales process included completing purchases online and shipping products directly to customers' homes.

Signet's sales consultants adapted to the virtual sales environment, contributing to the company's best holiday sales in nine years during 2020.

The business strategy shifted from TV-centric marketing and expanding physical stores to an omnichannel marketing mix and increased e-commerce sales.

Signet experimented with AI for forecasting and replenishment, using machine learning to reduce lost sales from out-of-stock merchandise.

The company added over 700 full-time digital consultants to continue virtual shopping consultations even after stores reopened.

More than two-thirds of Signet's total sales now involve both in-store and online engagement, demonstrating the success of the omnichannel approach.

The transformation involved analyzing existing systems, assessing information requirements, selecting technology, and redesigning business processes and jobs.

Management oversaw the systems-building effort, evaluating benefits and costs, and incorporating information requirements into the new system design.

13.1 Explain How New Information Systems Can Promote Organizational Change

Building a new information system involves changes in jobs, skills, management, and organization, not just new hardware and software.

Four types of IT-enabled organizational change:

Automation: Uses IT to assist employees in performing tasks more efficiently (e.g., payroll systems, bank teller systems).

Rationalization of procedures: Streamlines standard operating procedures, often following automation, to remove bottlenecks and simplify processes (e.g., Signet Jewelers' virtual sales system).

Business process redesign (BPR): Analyzes, simplifies, and redesigns workflows to cut waste and eliminate repetitive tasks, requiring a new vision of the process.

Paradigm shifts: Involves rethinking the nature of the business and organization, leading to transformative changes (e.g., Schneider National's shift to managing logistics for other companies).

Automation and rationalization are common and carry lower risks but offer modest returns.

Business process redesign and paradigm shifts carry higher risks but can result in significant rewards.

Total Quality Management (TQM) and Six Sigma are methods used in rationalization to achieve continuous quality improvements.

TQM: Focuses on quality as a shared responsibility across the organization.

Six Sigma: Aims for 3.4 defects per million opportunities, used as a goal for quality improvement.

Paradigm shifts and business process redesign can fail due to the difficulty of extensive organizational change, but successful implementations can lead to significant increases in returns on investment or productivity.

13.2 Understand How IT Can Be Used to Manage and Redesign Business Processes

Business Process Management (BPM): BPM involves tools and methodologies to analyze, design, and optimize business processes. It is a continuous process requiring ongoing improvement.

Steps in BPM:

Identify processes for change: Determine which business processes need improvement to enhance overall performance.

Analyze existing processes: Document and model current processes, identifying inefficiencies like redundant steps and bottlenecks.

Design the new process: Create a streamlined process, comparing it with the old one in terms of time and cost.

Implement the new process: Translate the new process into procedures and work rules, possibly requiring new or enhanced information systems.

Continuous measurement: Regularly measure the process to ensure it remains effective and efficient.

Example of Process Redesign:

Physical bookstore: Involves multiple steps and potential trips to the store, making it time-consuming and resource-intensive.

Online bookstore: Simplifies the process with fewer steps, reducing time and effort for the customer and costs for the bookseller.

Radical Change: Sometimes, significant changes are necessary, such as moving from a physical to an online bookstore, which can lead to dramatic improvements in productivity and efficiency.

Challenges in BPM: Organizational culture can be a significant barrier, as employees may resist changes. Effective change management strategies are crucial.

Tools for BPM: Software tools like IBM Workflow Automation, Oracle BPM, and TIBCO BPM Enterprise help document, model, and improve processes, enforce business rules, and integrate systems.

Process Mining: Analyzes event log data from enterprise systems to identify process inefficiencies and variations, creating detailed process maps for improvement.

13.3 Describe the Core Activities in the Systems Development Process

New information systems are developed to solve organizational problems or seize new opportunities.

Systems development involves structured activities: systems analysis, systems design, programming, testing, conversion, and production and maintenance.

Systems analysis includes defining the problem, identifying causes, specifying solutions, and determining information requirements. It involves creating a road map of existing systems, identifying data owners and users, and conducting a feasibility study.

Feasibility study assesses financial, technical, and organizational viability of proposed solutions.

Systems design details how the system will meet information requirements, specifying managerial, organizational, and technological components.

User involvement is crucial in the design process to ensure the system meets business priorities and information needs.

Programming translates design specifications into software code, often outsourced to external vendors.

Testing ensures the system produces correct results, involving unit testing, system testing, and acceptance testing.

Conversion involves transitioning from the old system to the new one using strategies like parallel, direct cutover, pilot study, or phased approach.

Production and maintenance include reviewing the system's performance, making necessary adjustments, and ongoing maintenance to correct errors and improve efficiency.

13.4 Discuss Methods for Building and Acquiring Information Systems

Systems Development Life Cycle (SDLC)

Traditional method for building information systems.

Divides development into sequential stages: systems analysis, systems design, programming, testing, conversion, and production and maintenance.

Emphasizes formal specifications and documentation.

Suitable for large, complex systems requiring rigorous analysis and predefined specifications.

Can be costly, time-consuming, and inflexible; predominantly a "waterfall" approach.

Prototyping

Involves building an experimental system rapidly for user evaluation.

Iterative process: build, test, refine, and repeat until user requirements are met.

Steps: identify user requirements, develop initial prototype, use prototype, revise and enhance.

Encourages user involvement and is useful when requirements are uncertain.

Risks: may overlook essential development steps, leading to inadequate final systems.

Application Software Packages and Cloud Software Services

Many systems use commercially available software packages or SaaS.

Examples: Oracle ERP, Microsoft 365.

Benefits: saves time and money, ongoing maintenance and support from vendors.

Customization possible but can be costly and time-consuming.

Evaluation criteria: functions, flexibility, user-friendliness, hardware/database requirements, installation/maintenance, documentation, vendor quality, cost.

Request for proposal (RFP) used to evaluate software packages.

Outsourcing

External organizations provide system development services.

Types: domestic outsourcing, offshore outsourcing.

Domestic outsourcing driven by specialized skills and resources.

Offshore outsourcing driven by cost savings; significant salary differences between countries.

Risks: hidden costs, cultural differences, human resources issues.

Requires thorough evaluation of project requirements, benefits, costs, and performance metrics.* Offshore outsourcing can lead to additional costs ranging from 15 percent to 57 percent.

In the best-case scenario, a firm spending $10 million on offshore outsourcing will incur an extra 15.2 percent in costs.

In the worst-case scenario, with significant productivity drops and high transition and layoff costs, the extra costs can rise to 57 percent.

13.5 Describe Methods That Enable Rapid Systems Development

Companies are adopting shorter, more informal systems development processes due to rapid changes in technologies and business conditions.

Object-Oriented Design (OOD)

Uses objects as the basic unit of systems analysis and design, combining data and processes.

Objects encapsulate data and methods, allowing access and modification only through associated methods.

Based on class and inheritance concepts, where objects inherit features from their superclass and add unique attributes.

Promotes iterative and incremental development, reusing existing classes and creating new ones as needed.

Reduces time and cost by reusing software objects and frameworks.

Rapid Application Development (RAD)

Focuses on creating workable systems quickly with flexibility to adapt as projects evolve.

Utilizes visual programming, iterative prototyping, and teamwork among end users and specialists.

Allows simultaneous development of key parts, often using prebuilt components.

Joint Application Development (JAD)

Involves clients, consumers, IT specialists, and stakeholders in the design and development process.

Speeds up information requirements generation and increases user involvement.

Often used in agile development for quick task completion and quality outcomes.

Agile Development

Emphasizes rapid delivery of working software through small subprojects completed in short iterations (sprints).

Involves continuous feedback, user involvement, and face-to-face communication.

Features are developed on a priority basis, with continuous integration and testing throughout the process.

Automated testing tools are used to handle continuous testing efficiently.

DevOps

Builds on agile principles to promote collaboration between development and operations teams.

Aims to create a culture of frequent communication and collaboration, ensuring a stable workflow.

Utilizes standardized processes and automated tools to build, test, and release applications rapidly.

Helps organizations like Netflix make frequent software changes efficiently.

13.6 Discuss the Increasing Democratization of Software Development

Democratization of Software Development: The rise of open-source, low-code, and no-code software has broadened participation in software development, accelerating the creation of software and systems.

Open-Source Software (OSS): OSS is distributed with its source code, allowing programmers to modify and improve it. It is often free or low-cost and stored in public repositories. Examples include Linux, Apache HTTP Server, Mozilla Firefox, and Python.

OSS in Major Companies: Tech giants like Google, Facebook, and Microsoft use and contribute to OSS. For instance, Android is based on Linux, and AWS has numerous OSS projects on GitHub.

Advantages of OSS: OSS can save time and money, and its open nature allows for widespread review and quick identification of bugs.

Disadvantages of OSS: OSS can have security risks due to potential bugs and code flaws. Organizations must manage and secure OSS effectively.

Low-Code Development: This approach uses visual modeling to create applications with minimal hand-coding, enabling faster delivery and broader participation. Microsoft Power Platform is a leading example.

No-Code Development: No-code tools allow the creation of software without writing code, suitable for non-IT users. These tools are often limited in functionality but can solve simple business problems.

Citizen Development: Business users, empowered by low-code/no-code tools, can develop applications themselves, reducing the application backlog. Unlike "shadow IT," modern citizen developers collaborate with IT and use approved tools.

Examples of Citizen Development: Employees use no-code and low-code tools to build applications that support their daily work and align with organizational objectives. IT departments may provide guidelines, training, and support for these projects.

Spotlight on Management Case Study

Citizen development involves non-IT employees creating business processes, applications, and IT solutions, expanding the pool of developers within an organization.

Chevron Corporation empowers employees to develop solutions using foundational technologies, ensuring security and efficiency. An example includes an app for rapid damage reporting during flash flooding.

Microsoft’s Power Platform is used by Chevron to support low-code application development, providing four months of instruction and coaching to citizen developers.

ING bank uses citizen developers to build machine learning models due to a shortage of data science expertise. They focus on applications like predicting customer interactions with app messages and email campaigns.

AT&T promotes data analysis through machine-learning models, supporting the entire ML pipeline. The Chief Data Office has mobilized 3000 citizen data scientists across various departments.

Shell Global has a federated governance model for citizen development, with a centralized Center of Expertise and DIY coaches. Projects include automating manual processes and creating a Product Carbon Footprint Calculator.

Shell’s DIY program has led to significant business value and cultural improvements, with plans to double the number of citizen developers and expand their capabilities.

13.7 Understand the Impact of AI on Software Development

AI in software development: AI automates routine tasks, streamlines workflows, and improves accuracy and efficiency. It helps write code faster, identify and fix bugs, optimize performance, test software, ensure security, and make informed design decisions.

Challenges: Key challenges include a shortage of AI expertise among developers, the need for large amounts of high-quality data, and the resource-intensive nature of training AI models.

Pre-trained AI models: Organizations lacking resources can use pre-trained models, which are trained on extensive datasets and can be customized for specific tasks. For example, NVIDIA offers over 600 pre-trained models for various applications, such as computer vision and speech language understanding.

AI as a Service (AIaaS): AIaaS provides scalable, cloud-based machine learning platforms with pre-built tools and frameworks. Benefits include scalability, cost-effectiveness, AI-optimized hardware, and data management. Coca Cola Bottlers Japan used Google’s Vertex AI to optimize vending machine operations, demonstrating the practical application of AIaaS.

13.8 Discuss Approaches for Building Mobile Applications

Mobile Device Usage: Employees and customers expect to use their preferred mobile devices to access information or perform transactions anytime, anywhere.

Mobile Development Options: Companies need to develop mobile websites, mobile web apps, native apps, hybrid apps, and traditional information systems.

Mobile Website: A scaled-down version of a regular website optimized for mobile screens, providing easy access and navigation.

Native App: A standalone application designed for a specific mobile operating system, offering fast performance, reliability, and access to device features. However, they are costly to develop for multiple platforms.

Mobile Web App: An Internet-enabled application accessed via a mobile device’s web browser, residing on a server, and not requiring installation on the device.

Hybrid App: Combines features of both native and mobile web apps, built with web technologies but running on the device and accessing device features.

Designing for Mobile: Mobile app development differs from desktop development due to smaller screens and the need for touch gestures. Apps should be optimized for specific tasks and designed for usability, conserving resources like bandwidth and memory.

Responsive Web Design (RWD): Allows websites to automatically adjust layouts based on the visitor’s screen resolution, using tools like HTML5 and CSS3. Suitable for simple functionality but can be slow on mobile devices.

Adaptive Web Design (AWD): The server detects the device attributes and loads an optimized version of the site, offering faster load times and a better user experience.

Real-World Scenario: Process Analysts Help Carter’s Redesign Its Business Processes

Carter’s is the largest U.S. branded marketer of apparel exclusively for babies and young children.

Carter’s merchandise is sold online, in 980 company stores in the United States and Canada, and in nearly 20,000 department and specialty stores.

The company’s financial systems handle hundreds of thousands of transactions daily from these sources.

Previously, Carter’s used heavily manual systems for processing transactions, which could not keep up with the company’s growth, causing bottlenecks and increasing the chances of human error.

Management aimed to shift the finance function from transaction processing to analyzing financial data and guiding decision making.

To achieve this, Carter’s needed to streamline and simplify financial processes.

Carter’s implemented a centralized enterprise resource planning (ERP) system for financial processes.

The ERP system allowed the transformation of outdated processes into modern ones reflecting best practices for the business and industry.

Users can view all information related to a specific transaction on a single screen at any point in the process life cycle.

Chapter Case Study

Celonis Overview: Celonis is a company that provides process mining software to visualize and improve business processes, helping over 1,400 companies optimize performance, reduce costs, and enhance customer experience.

Process Mining Benefits: The software identifies inefficiencies in real-time, offering solutions for various systems and core company functions like accounts payable, procurement, and inventory management. It works on top of existing systems and is available both on-premise and as SaaS.

Efficiency and Cost Reduction: Celonis helps companies quickly identify and fix inefficiencies, reducing the need for expensive consultants. For example, Deutsche Telekom Services Europe saved over €66 million by addressing inefficiencies in its Procure-to-Pay process.

Execution Management Systems (EMS): Celonis has expanded into EMS, which not only identifies inefficiencies but also provides actionable insights to fix them. This system allows users to make improvements directly through an intuitive interface.

AI Integration: Celonis incorporates AI to enhance process optimization, using machine learning to analyze data, spot patterns, and identify discrepancies. The Machine Learning Workbench (MLWB) and large language models (LLMs) support intelligent decision-making and natural language querying.

Generative AI Tools: Celonis Process Copilot, launched in 2023, uses generative AI to help users find value opportunities in their processes. It features a natural language processing interface and provides insights and recommendations based on key performance metrics.

Digital Twin: Celonis creates a "digital twin" of the business, capturing all objects and events to provide a single source of truth with up-to-date process data. This enhances applications, automation, and AI solutions.

Case Studies:

Avnet: Saved over €6 million in working capital and reduced costs by addressing early supplier deliveries and optimizing Accounts Payable.

Kraft Heinz: Improved cash discount management and reduced overdue payments by 30%.

BMW: Uses Celonis for AI-enhanced process monitoring, expanding access to process mining across the organization.

Review Summary

New information systems can promote organizational change by improving efficiency, enabling new business models, and enhancing decision-making processes.

IT can manage and redesign business processes through automation, streamlining workflows, and integrating systems to improve coordination and reduce costs.

Core activities in the systems development process include planning, analysis, design, implementation, and maintenance.

Methods for building and acquiring information systems involve in-house development, purchasing software packages, and outsourcing.

Rapid systems development can be enabled by agile methodologies, prototyping, and using software development frameworks.

Democratization of software development refers to the increasing accessibility of development tools and platforms, allowing non-technical users to create applications.

AI impacts software development by automating coding tasks, improving testing processes, and enabling more sophisticated data analysis.

Building mobile applications involves considerations for user experience, platform compatibility, and performance optimization.

Review Questions

New information systems can promote organizational change through four kinds of change: automation, rationalization, reengineering, and paradigm shifts.

IT can manage and redesign business processes through business process management (BPM) and process mining.

BPM involves steps like identifying processes, analyzing them, designing new processes, implementing changes, and monitoring results.

Process mining helps businesses extract value by analyzing data from existing processes.

Core activities in the systems development process include:

Systems analysis: identifying problems and requirements.

Systems design: creating specifications for the system.

Information requirements: challenging to determine accurately.

Testing: crucial for ensuring system functionality, involving unit testing, system testing, and user acceptance testing.

Programming, conversion, production, and maintenance are essential stages.

Methods for building and acquiring information systems:

Traditional systems development life cycle (SDLC): structured but can be inflexible.

Prototyping: iterative and user-involved but may lack thoroughness.

Software packages and cloud services: cost-effective but less customizable.

Outsourcing: can save costs but may lead to dependency and security risks.

Rapid systems development methods:

Object-oriented design: promotes reuse and flexibility.

Rapid application development (RAD) and joint application development (JAD): focus on quick development with user involvement.

Agile development: iterative and adaptive.

DevOps: integrates development and operations for faster delivery.

Democratization of software development:

Open-source software: collaborative but may lack support.

Low-code and no-code development: speeds up creation but may limit complexity.

Citizen developers: non-professional developers creating applications, differing from past end-user development by using more advanced tools.

Impact of AI on software development:

AI enhances software development through automation and intelligent tools.

Challenges include complexity and ensuring ethical use.

Building mobile applications:

Mobile application development and responsive web design cater to different devices.

Mobile website: accessible via browsers.

Native app: built for specific platforms.

Mobile web app: web-based but behaves like an app.

Hybrid app: combines elements of native and web apps.

Hands-On MIS Projects

Management Decision Problem: The cosmetic products company faces issues with production planning due to reliance on past order data and manual data entry, leading to inefficiencies and potential stock-outs or excess inventory.

Problems: Inability to adjust production plans for unexpected orders, manual data entry errors, and lengthy planning process (17 business days).

Enterprise System Solution: An enterprise system could automate data entry, integrate sales and production data, and provide real-time updates, reducing planning time and costs.

Cost Reduction: Lower inventory costs, reduced manual labor, and improved accuracy in production planning.

Process Diagram: Implementing enterprise software would streamline data flow, automate updates, and synchronize sales and production targets.

Using a Database to Clarify Business Strategy: Analyzing hotel reservation transactions using database software can help refine business strategy and marketing activities.

Current System Issues: Manual reservation and bookkeeping system lacks immediate operational and revenue data.

Database Queries: Identify room assignments, guest details, average visitors per room type, and average length of stay.

Benefits of New Database System: Provides real-time data, improves decision-making, and enhances strategic planning for Fair Winds Inn.

Analyzing Website Design and Information Requirements: Thoroughly explore a chosen website to analyze its functions and information requirements.

Key Questions: Functions performed, data used, inputs, outputs, processes, design specifications, internal/external system links, and value provided to the firm.

Collaboration and Teamwork Project: Work with classmates to select a web-based system, review its website, and prepare a report on design specifications.