Management of Information Systems 5 DISCUSSION

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Week 5 Objectives

Explain why multinational corporations must use global information systems

Provide elementary advice for designing websites for an international audience

Cite the cultural, legal, and other challenges to implementing international information systems

List and explain the phases in decision making

Articulate the difference between structured and unstructured decision making

Describe the typical software components that decision support systems and expert systems comprise

Give examples of how decision support systems and expert systems are used in various domains

Describe the typical elements and uses of geographic information systems

List the benefits and risks of automated decision making

Explain why multinational corporations must use global information systems

Provide elementary advice for designing websites for an international audience

Cite the cultural, legal, and other challenges to implementing international information systems

List and explain the phases in decision making

Articulate the difference between structured and unstructured decision making

Describe the typical software components that decision support systems and expert systems comprise

Give examples of how decision support systems and expert systems are used in various domains

Describe the typical elements and uses of geographic information systems

List the benefits and risks of automated decision making

Multinational Organizations

An increasing number of corporations are becoming multinational

Global information system: a system that serves organizations in multiple countries

Used by multinational corporations

Overseas operations must abide by local laws, yet be sensitive to local cultures and standards

An increasing number of corporations are becoming multinational

A global information system is a system that serves organizations in multiple countries

These information systems are used by multinational corporations

Overseas operations must abide by local laws, yet be sensitive to local cultures and standards

The Web and International commerce. The web has become an important vehicle for B2B and B2C commerce

The ratio of non-English speakers to English speakers on the web is growing. Over 70 percent of Internet users reside in non-English speaking countries

Internet opens enormous global opportunities

Chinese market is expected to be the largest in the future

The web offers opportunities to increase revenue and to save on costs

Online manuals replace paper documents

Web sites and documentation are presented in many languages

Global businesses must be sensitive to local audiences

Accommodate languages other than English

Globalization is designing global sites to cater to local needs and preferences

Example: McDonald’s menu changes to appeal to local palates

Figure 9.3 Imperatives to consider when designing websites for an international audience

Imperatives to consider when designing websites for an international audience

Plan for an international audience

Learn cultural preferences, convention differences, and legal differences, Tailor local sites to the local people’s preferences, what they buy and how they pay.

Translate languages for local audience. Make sure a human translates, or that a person reviews automated translations.

Ensure that all visitors are offered the same level of service. Do not let any visitor feel less important than other visitors.

Avoid cultural imperialism. Give the local audience a homey experience.

International companies must “think globally, act locally”

Acting locally means being sensitive to regional customs and language nuances

Control must be decentralized

Strategic planning should be global, but can be followed with a local flavor

Challenges of Global Information Systems

Global information systems face challenges such as:

Technological barriers

Regulations and tariffs

Electronic payment mechanisms

Different languages and cultures

Economic and political considerations

Different measurement and notation standards

Legal barriers

Different time zones

Global information systems face challenges such as:

Technological barriers

Regulations and tariffs

Electronic payment mechanisms

Different languages and cultures

Economic and political considerations

Different measurement and notation standards

Legal barriers

Different time zones

Technological Challenges

Not all countries have adequate information technology infrastructure to allow companies to build an international IS

Broadband communication lines are needed to support today’s graphics-rich webpages

Companies can offer two versions of their websites to compensate for slower bandwidth

Language is another technological challenge

Eight-bit byte code is not sufficient for languages with large character sets

Unicode allows for 65,536 characters

Must coordinate with databases and applications

Telephone number and postal code formats are different in different countries

Regulations and Tarrifs

Countries have different import regulations and tariffs

Executives may be reluctant because of hassles of learning the laws, taxes, tariffs, and regulations of other countries

Companies must comply with the laws of destination countries

NextLinx software helps importers and exporters using web commerce

Differences in Payment Mechanisms

Easy payment for online purchases is expected

Credit cards are the preferred payment method in North America

Not all countries have adopted this preference

High level of stolen credit cards in Eastern Europe

Europeans prefer debit cards

Most Japanese reluctant to use credit cards

Language Differences

International parties must agree on a common language for communication

Data might not be transmittable internationally in real time because it must first be translated

English is considered the de facto international language

Companies in the forefront of web-based e-commerce translate their original websites into local languages

Cultural Differences

People from different countries vary in their:

Tastes

Gestures

Preferred colors

Treatment of people of certain gender or age

Attitudes about work

Opinions about ethical issues

Conservative groups in other countries may dislike the “Americanization” of their cultures

Web designers must be sensitive to cultural differences

Conflicting Economic, Scientific, and Security Interests

Corporate management’s goal is to seize a large market share and maximize organization profits

National government’s goal is to protect its economic, scientific, and security interests

Scientific information is an important national resource as well as a great source of income for foreign corporations

Occasionally interests conflict

Corporate management’s goal is to seize a large market share and maximize organization profits

National government’s goal is to protect its economic, scientific, and security interests

Scientific information is an important national resource as well as a great source of income for foreign corporations

Occasionally interests conflict

Weapons manufacturers have technical drawings that are valuable to both the company and the security of country

Governments may not allow the exchange of weapon designs

U.S. Customs and Border Protection (CBP) strictly regulates software applications and technologies that present potential danger

May be used against the U.S. in times of warfare or in acts of terrorism

Countries treat trade secrets, patents, and copyrights differently

May hinder the transfer of documents to certain divisions of a multinational corporation

Intellectual property is tightly protected in the U.S. and Western Europe, but less so in other countries

Political challenges

Information is power

Some countries oppose the policy of free access to information as a threat to their sovereignty

Viewed as an opportunity for other nations control indigenous resources

Governments may require that only open source software is used in government operations

Global corporations must ensure compatibility with software adopted by local governments

Some governments limit how the Internet is used

Free speech is not a universal principle

Web content restrictions are common in many countries

Global companies must obey local laws

May require collaboration with the government, resulting in arrest and prosecution of local users

Ethical dilemma: how to balance the business interest with moral principles, and not help dictatorships violate civil rights

Different Standards

Differences in standards must be considered when integrating ISs internationally

Records may be incompatible

United States uses the English system of weights and measures; the rest of the world uses the metric system

NASA lost a $125 million Mars orbiter mission due to an error in a data transfer, caused by a mismatch between U.S. and metric measurements

Differences in standards must be considered when integrating ISs internationally

Records may be incompatible

United States uses the English system of weights and measures; the rest of the world uses the metric system

NASA lost a $125 million Mars orbiter mission due to an error in a data transfer, caused by a mismatch between U.S. and metric measurements

Different standards also exist for:

Dates

Times

Temperatures

Addresses

United States uses month/day/year format; the rest of the world uses day/month/year

Companies must adapt their ISs to changing formal or de facto standards

European Article Number (EAN): bar code that includes an extra number to identify country

Universal Product Code (UPC): American standard without the last extra number

American Uniform Code Council (UCC): promoted the use of European standard

U.S. companies had to adapt ISs to recognize, record, and process the new bar code standard

UCC is now trying to expand product codes to the 14-digit Global Trade Item Numbers (GTINs)

GTINs support global supply chains by allowing many more product ID values

The major push to use RFID tags in the U.S. could expand to the rest of the world

Legal Barriers

Countries have different laws that affect global business in general, and e-commerce in particular

Differing laws pose challenges to:

International transfer of data

Free speech

Location of legal proceedings when disputes arise

Countries have different laws that affect global business in general, and e-commerce in particular

Differing laws pose challenges to:

International transfer of data

Free speech

Location of legal proceedings when disputes arise

Privacy laws

Respect for privacy in international business is an unresolved challenge

The majority of democratic nations try to protect individual privacy

Laws reflect a difference in approach to issue of privacy

European Union practices conflicting with U.S. practices

Personal data

Collected only for specified purposes

Cannot be processed without the unambiguous consent of the subject

Collecting organizations must identify themselves

Subjects have the right to know to whom their data is disclosed

Subjects may object to processing of their personal data

American companies are busy collecting, buying, and selling data for marketing and decision making

Discrepancy between the European and American approaches prevents unrestricted flow of information

EU directive is only a framework

EU countries may have more restrictive laws

Other applicable laws affecting online business include those that address:

Free speech

What can or cannot be displayed online

Gambling

Auctioning

Sale of alcoholic beverages and drugs

Time zone differences

Different global regions require policies for work and information systems

Teleconferencing systems must be available most of the day, sometimes 24 hours per day

Allows employees from different time zones to discuss problems that need immediate resolution

Teams in support centers may work shifts to accommodate clients worldwide

Managers must be aware of incorrect time stamping in different locales

Systems at both locations can be designed to record local times of both locations, or record a single time (that of the company headquarters_

Decision Support

An organization’s success depends on the decisions made by employees

Computer-based systems are beneficial for:

Large amounts of information

Intensive processing

Types of decision support aids

Decision support systems (DSSs)

Expert systems (ESs)

Applications today may combine both types

Provide single optimal solution or set of solutions

An organization’s success depends on the decisions made by employees

Computer-based systems are beneficial for:

Large amounts of information

Intensive processing

Types of decision support aids

Decision support systems (DSSs)

Expert systems (ESs)

Applications today may combine both types

Provide single optimal solution or set of s

Decision support modules today may be part of larger enterprise applications

Also called business analysis tools or business intelligence applications

Designed to streamline the decision-making process

Data warehouses and online processing (OLAP) technologies have enhanced the ability to use data for decision making

A decision must be made whenever more than one possible action is available

It can be difficult to make decisions when many reasonable alternatives are present

In business, there may be dozens, hundreds, or even millions of different courses of actions available to achieve a desired result

Decision making is a three-phase process

Intelligence phase: collect facts, beliefs, and ideas

Design phase: design the method for considering the collected data, to reduce the alternatives to a manageable number

Choice phase: select an alternative from the remaining choices

Businesses collect data internally and externally

A model is an abstraction of reality, such as:

Tabletop representations of buildings

Maps: represent a geographical area

Mathematical equations representing relationships among variables

Managers either choose universal models or design their own models

A structured problem is one in which an optimal solution can be reached through a single set of steps

An Algorithm is a sequence of steps to complete a task

Parameters are categories of data that are considered in an algorithm

Most mathematical and physical problems are structured, but many business problems are not

An Unstructured problem is one for which there is no algorithm that leads to an optimal solution

May not be enough information

May be a large number of potential factors

Unstructuredness is closely related to uncertainty

Examples of unstructured problems

Weather prediction

Stock market prediction

A Semistructured problem is one that is neither fully structured nor totally unstructured

Professionals encounter semistructured problems almost daily in many different industries

The goal is to choose the one alternative that will bring about the best outcome

Decision Support Systems

Decision support system (DSS): a computer-based information system designed to help knowledge workers select one of many alternative solutions to a problem

DSSs can help corporations by:

Increasing market share

Reducing costs

Increasing profitability

Enhancing product quality

Decision support system (DSS) is a computer-based information system designed to help knowledge workers select one of many alternative solutions to a problem

DSSs can help corporations by:

Increasing market share,

Reducing costs,

Increasing profitability,

And Enhancing product quality

Most DSSs consist of three components,

A Data management module,

A Model management module,

And aDialog module

These components help users to

Enter a request in a convenient manner,

Search vast amounts of data,

Process the data through desired models,

And View the results in a desired format

Figure 10.3 The components of a DSS and their interaction © Cengage Learning 2015

A Data management module is a database or data warehouse that provides data for the intelligence phase

It enables access to data

And provides a means to select data by specified criteria

Many DSSs are intertwined with other organizational systems, including data warehouses, data marts, and ERP systems

A Model management module turns data into useful information

A fixed model, a dynamically modified model, or a collection of models may be offered

A dynamically modified model is automatically adjusted based on changing relationships among variables

Models are used to predict output

They are often based on mathematical research

Patterns or models may be unique to a certain a industry, such as:

ATM placement,

Truck route planning,

Airline ticket pricing,

And Car rental pricing

A linear regression model is a general statistical model that is often to find a best-fit linear relationship between two variables

A linear relationship can be translated into a program in a DSS

The actual data points rarely lie directly on the regression line, illustrating the uncertainty

Regression models are not necessarily always straight lines; they may be curves

Models often describe relationships between more than two variables

Some DSSs simulate physical environments

A Dialog module is part of a DSS that allows user interaction with the program

It prompts the user to select a model and data to process

It allows the user to change parameters and view the results of the changes

And it displays the results of the analysis in textual, tabular, or graphical format

Many DSSs are available through the Internet

Figure 10.5 A DSS can help marketers make decisions on how to spend promotion resources

A Sensitivity analysis is conducted to test the degree to which the total profit grows or shrinks if one or more of the factors is increased or decreased

The results indicate the relative sensitivity of the profit to the changes

If a small change in a parameter causes a significant change to the outcome, the sensitivity of the outcome to the parameter is high

If the outcome is affected very little by a large change in a parameter, the sensitivity of the outcome to the parameter is low

Sensitivity analysis is called what-if analysis a DSS can perform sensitivity analysis on multiple parameters simultaneously

DSSs can be used on demand or integrated into a scheme that enforces corporate policy

DSSs help maintain standard criteria in decision making throughout the organization

Automated decision production is becoming very popular

The only labor required is for data entry

DSSs are used in many industries

Book sales and food production and retailing: to forecast the number of patrons, the amount of ingredients to purchase, etc.

Tax planning: tax helper applications such as TurboTax and TaxCut

Web site planning and adjustment: to analyze shopper behavior, and to design Web sites based on page usage

DSSs are used in many industries (cont'd.)

Yield management (revenue management): to maximize revenue from airline trips or lodging

Financial services: to determine loan amounts, and to qualify customers based on credit history

Benefits selection: to allow employees to make decisions about their benefits

Figure 10.6 Components of an expert system; numbers indicate the order of processes

An Expert system (ES) emulates the knowledge of a human expert

Solves problems

Makes decisions in a relatively narrow domain

A Domain a specific area of knowledge

The purpose is to replicate the unstructured and undocumented knowledge of experts, and make that expertise available to novices

A Neural network is a program that emulates how the human brain works

ESs are part of artificial intelligence (AI) research

AI focuses on methods and technologies that emulate how humans learn and solve problems

A Knowledge base is used by an ES

A collection of facts and relationships among them populate the knowledge base

An ES uses an inference engine that is built as a series of IF-THEN rules

Inference engine: software that combines data input by the user with the data relationships in the knowledge base

Neural networks: mimic the way a human brain learns

Used by more sophisticated ESs

Constructed with a set of rules, but then it refines itself based on its decision success rate

Beneficial in detecting fraudulent transactions and claims

Intelligent agent: software that is dormant until it detects a certain event, and then performs a prescribed action

Case-based reasoning: methodology of solving a new problem established on the solutions of similar problems

Applied in case-based ESs

Especially useful in medical decision making

Figure 10.7 IF-THEN rules, different combinations of conditions lead to different conclusions

ESs have been implemented in many industries

Medical diagnosis

Help doctors with the diagnosis of symptoms and treatment advice

Can help enhance the accuracy of Alzheimer’s disease diagnosis

Medical management

Help discern patients’ tests and treatments

Assist with health information management

Implemented in many industries (cont'd.)

Credit evaluation

Used to approve credit card charges

Used to analyze financial reports submitted with credit applications

Local loan officers may periodically update the knowledge base adjusting it for current loan policy

Detection of insider securities trading

Helps prevent trading of stocks based on private information by analyzing the stock’s history

Implemented in many industries (cont'd.)

Detection of common metals

Helps nonexperts identify common metals and alloys outside laboratories

Based on results of simple chemical tests and other information available at the scene

Diagnosis and prediction of mechanical failure

Allows vehicle to diagnose its own mechanical problems

Provides alerts when approaching traffic jam, navigation assistance, Internet service, etc.

Group Decision Support Systems

Group decision support system (GDSS)

Also called a group intelligence system, collaborative system, or group system

Facilitates the contribution of ideas, brainstorming, and choosing promising solutions

Allow participants to define a problem, contribute ideas, then vote on the decision

Help structure the decision-making process while allowing participants to remain anonymous

Group decision support system (GDSS)

Also called a group intelligence system, collaborative system, or group system facilitates the contribution of ideas, brainstorming, and choosing promising solutions

GDSSs allow participants to define a problem, contribute ideas, then vote on the decision

GDSSs help structure the decision-making process while allowing participants to remain anonymous

Geographic Information Systems (GISs)

GIS: aid for map-related decisions

Processes location data

GISs are used to help:

Find shortest paths for deliveries or school bus routes

City planning for police coverage and health care resources

Find oil drilling locations

Locate suitable outdoor recreation sites

Decide placement of ATMs

A Geographic Information System GIS is an aid for map-related decisions

A GIS processes location data

GISs are used to help find the shortest paths for deliveries or school bus routes

They are used in city planning for police coverage and health care resources

GISs are used to find oil drilling locations and to locate suitable outdoor recreation sites

They are also used to decide placement of ATMs

GIS components are a Database of quantitative and qualitative data, a Database of maps, a Program that displays information on maps

Web technology helps promote the use of GISs

Examples are Google Earth, Mapquest, Yahoo Maps

HTML and XML support the presentation of marked maps

GISs are used to aid in sales and government work

Summary

Companies conducting web-based business must accommodate non-English speaking audiences

Companies must tailor to local preferences

Organizations must be aware of cultural differences and payment preferences

Businesses must be aware of tariff and legal issues

Linguistic, cultural, economic, and political challenges must be addressed

Companies conducting web-based business must accommodate non-English speaking audiences

Companies must tailor to local preferences

Organizations must be aware of cultural differences and payment preferences

Businesses must be aware of tariff and legal issues

Linguistic, cultural, economic, and political challenges must be addressed

Laws governing the collection and manipulation of personal data in the U.S. and European Union are different

The U.S. and EU have incompatible data privacy laws, which restrict the flow of personal data between the U.S. and EU

Decision aids include decision support systems, expert systems, group decision support systems, geographic information systems, etc.

Three major phases of decision-making process: intelligence, design, and choice

Types of problems: spectrum from unstructured to structured

Most DSSs have three components: data management module, model management module, and dialog module

Sensitivity analysis measures how parameters affect results, and allow “what if” analysis

Spreadsheets allow users to create DSSs without expertise

Expert systems are designed to emulate the knowledge of an expert, using artificial intelligence techniques

Neural network software may be integrated into an expert system to emulate learning

Expert systems are used in narrow domains where decisions are unstructured

Geographic information systems are used when decisions involve locations and routes

Computerized decision aids may overlook important circumstances, leading to inaccuracies or unfairness to individuals