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California State University, Chico Information: The Currency of Modern Business The text book for BSIS 105 Jim Mensching 7/21/2014

Information: The Currency of Modern Business

Introduction

This text is specifically designed for the BSIS 105 course. This is the beginning BSIS course in the curriculum and is designed to introduce students to the way in which businesses operate. The emphasis of this course is not just business, but also how technology affects business. There are many textbooks available for beginning business courses; however none of them take the approach that we will be taking in this class.

Other textbooks approach the course from the functional point of view. That is, they’re looking at departmental functions and discuss how each department operates. While companies are still divided into functional areas, that is not the way modern organizations operate. Instead, they look at business processes and operate with respect to a series of business processes, which cut across functional boundaries. In this text we will be looking at business processes and will describe how those business processes are handled by the various people throughout the organization.

( Figure 1 Assembly Line Photo Source: http://greenbusinessmatters.com/2012/02/25/add-clean-to-lean-manufacturing/ ) One way to look at this situation is to think about the old way of doing things is what I would call the “bird’s eye view” and the way in which we’re going to look at it would be the “worm’s eye view”. With respect to the bird’s eye view what the bird sees is just the thing that it’s hovering over or the thing that it’s flying over. While with respect to the worm’s eye view as the worm goes through the ground, it sees everything that goes on from the beginning point to the end point. That is, they see the entire process not just specific parts of a process. Another way to look at this is with respect to an assembly line. In an assembly line each worker is given a specific task to do. All each worker is concerned with is doing their assigned job well. Hence, whatever happened before that worker and what happens after that worker is of no concern to each specific worker. In many cases the worker doesn’t really understand the entire process. The problem with this type of approach is that no matter how well each worker performs their task, if one worker fails at doing their task appropriately, than the end product will be flawed. So under these circumstances the only way to determine whether or not the product is of high quality is to do time consuming and costly testing and inspection at the end of the process. However, in a business process oriented approach everyone understands the entire process and has access to data about the entire process. So in the functional approach it is very difficult to streamline and improve a process since very few people see and understand the entire process. In some cases some or all of what an employee is doing may no longer be necessary or useful. Changes in technology or the way the product is produced may make certain parts of a process unnecessary, but under the functional view of the business the process may not change.

So let’s look at an example of this. Let’s say a customer calls the service department with a problem. The service representative will ask the customer about a specific problem. Under the old way of doing business, the service representatives will ask about the specific problem the customer is having and route the customer to the appropriate department to handle the problem. For example, if the problem has to do with the credit department, then the customer will be routed to the credit department and the credit representatives will request additional information. However, if the credit problem is really a billing problem, then the customer will have to be routed over to the accounting department. As you can see, this could be a serious problem if the customer ends up being rerouted many times. This may result in a very disgruntled customer, one who may not want to do business with the company in the future. However, if this is looked upon as a business process, then one person will have all of the information available to handle the customer’s problem since they will have visibility of the entire business process. This should result in a satisfied customer.

( Figure 2 Example Functional Departments with Overlapping Business Processes )This probably seems pretty intuitive to you and you may ask why wasn’t this done this way all the time? The answer is simple, there just wasn’t good enough technology to allow this to happen. Everything was done with paper documents and the person responsible for that document was the one responsible for that part of the process. Even when computer technology was first introduced into business, the manual procedures were pretty much duplicated on the computer. While this resulted in a substantial increase in productivity, the emphasis was not on designing the best overall process, but on designing the separate functional parts of the process. This is now known as legacy computer systems.

But with the computer technology that’s available to businesses presently, the integrated business process approach is the way most businesses now operate. So as you’ll see as the course progresses, computer technology has enabled businesses to streamline their processes and introduce tremendous efficiencies into their systems. So the approach we will take in this book is to look at some of the individual business processes and discuss how technology enables the process.

Unfortunately, the academic world has been slow to adjust to these changes in business. As you will see as you go through the curriculum, many of the courses take the bird’s eye view of looking at a specific functional area and ignoring to a good extent the other functions involved in business. For example, you will take courses in economics, finance, human resource management, production, accounting, etc. Most of these courses will concentrate strictly on the topic involved in the course and will not look at the entire business process involved in a successful business. While in the academic world this isn’t a gigantic problem, you must always keep in the back of your mind that this is not the way in which businesses operate. So the specific knowledge of each of these courses must be blended so that you’ll understand all of the aspects of business. This is our goal throughout the Business Information Systems curriculum and we think that when you graduate, you will have a firm grasp of this perspective. Not only does this perspective help you understand business, this perspective is what our business partners, those companies that hire our graduates, say they need and it is one of the primary reasons they look so favorably on the CSU Chico BIS degree students.

The Information Age

The title of this textbook needs a little explanation. When we say that information is the currency of the modern business, what we’re trying to convey is the fact that most businesses today are very dependent on information coming from their computer systems. Many people call this period of time “the information age” because of the fact that there is such a wealth of information available to companies from their information systems that companies that try to operate without appropriate information are at a distinct disadvantage. The days in which decisions in business are made based on intuition or what many people would term business experience are primarily a thing of the past. Today decisions are made using the data from their information system. This is termed being “data driven”. What we’re saying is that most decisions in a business environment must be backed up with data from the information system.

For example, if your boss asks you to do some research into solving a problem, the expectation would be not to just give a recommendation as to what action to take, but to provide a detailed analysis showing the data that backs up whatever recommendations you make. So let’s say that your boss, the store manager, asks you to determine who the best customers have been for the previous business year. If you gave your boss just a list of the customer’s you think are the best customers, that would not be ample justification. What your boss would want to see is a recommendation plus the data that you used to compile your recommendation list with a detailed analysis of that data. For this example you might show a rank ordered list of the customers by total purchases, number of store visits, total profit from the sales, etc. (the list of possible data items could be quite long).

Before information was as readily available as it is today, the store manager might have come to the conclusion that the best customers were the ones that the manager saw in the store most frequently. Of course, this may not be a very good measure for a variety of reasons. The manager may not be in the store the entire time it is open. The customer that frequents the store may not buy very much or whatever they buy they tend to return. However, using the data to make this decision will provide a much better view of who may be described as a “best customer”.

Many decision makers will now say that whoever has the most data and the highest quality data will make the best decisions and will have the best performance as far as their companies are concerned. As you will see as the course goes on, there are many sources of data within a business. In fact the real problem nowadays is not in gathering the data but in analyzing the data and determining what data should be used. Just to give you a little glimpse into what we will discuss in the course, there are three major sources of data within most big companies. The first and probably the most important is the operational data that runs the company on a day-to-day basis. To give an example of this type of data it would be all of the transactional data that occurs for every transaction the company does. So from this data we can see how much each customer purchased, what they purchased and when they purchased it.

The second source of data is historical data that is used to make longer-term decisions. This data is usually stored in what is called a data warehouse. This is summary data that can go back for years and many times decades. This data is used to make strategic decisions such as building a new building, increasing the capacity of a warehouse, whether or not to sell a new product, and other decisions such as these.

The third form of data is what is called “big data”. This is a new emerging capability of computer systems that store and process non-numeric data that is tremendously voluminous. Examples of this type of data would be things such as emails, telephone calls, social media, video, and other data that can’t be put into numeric digital form. We will discuss all of these data types later in the course.

Data Type	Description
Operational Data	The most important data available to a company. This data is necessary for a company’s daily activities.
Historical Data	Dated summary data used for strategic decisions. Not as detailed as Operational Data.
Big Data	Non-numeric data of large proportions. This data can be analyzed to provide information useful for a company’s competitive advantage.

( Figure 3 Three Major Data Source Descriptions )

Not only have computers changed business from the point of view of the availability of information, they have totally changed the way in which businesses operate and even the way many people live their lives. The Internet has been the force that has caused this seismic shift in business and also in our culture. We will be addressing these issues also in this text.

Micro vs. Macro Business View

In this book we will be taking what I’m going to call the micro view of business. What this means is that we’ll be talking primarily about the internal functions of a business and how businesses operates internally. This is quite different than most beginning business textbooks in that they primarily deal with what might be termed the macro view of business. The macro view deals with how businesses compete against each other and how they deal with the various governmental agencies that affect them. While these are important topics, they’ll be covered in other courses. So in this course we will look at how businesses are organized and function strictly based on internal procedures. You’ll find that throughout your business education many of your courses will primarily deal with a more macro view.

So the emphasis in this course will be looking at how companies deal with their customers, their vendors and other stakeholders. We will look at the ways in which companies communicate with these stakeholders and also how departments communicate with each other within the company. We will first look at paper-based systems and the documents that are involved in this type of processing. Then we will extend this to computer-based systems. You’ll see that these processes can be quite complex and very often they will be different from one company to the next.

We will not only be discussing these topics, but we will also be using sophisticated software to illustrate how real companies do their transactions. The software that we will use will be state of the art software that many of the major companies in the world use to run their businesses. While this will only be an introduction to this software, you should find it very helpful in understanding how businesses actually operate and also very helpful in future courses.

Organization of the Text

The text will be organized in such a way that we will discuss each of the three major business processes that most companies have. Each business process will be discussed in its own separate chapter. However, we start the text with an introductory chapter that takes a rather general look at how businesses operate. Most of the chapters will end with a technical section that discusses some technical aspect of an information system. The following provides a very brief description of each of the chapters of the textbook.

Chapter 1

This chapter will be a general discussion of businesses, how they are organized and introduce some of the business processes to be discussed later in the text. The chapter will conclude with a discussion of the Visio tool and its use in describing business processes.

Chapter 2

This chapter discusses in detail the sales business process. It breaks the business process into a series of sub processes and also discusses the documents that would be used throughout the process. We will first look at a manual system. Then the chapter concludes with an introduction to the SAP system and an assignment that will deal with the sales process within the SAP system.

Chapter 3

This chapter discusses the purchasing business process. Again it breaks this process into a series of sub processes and also discusses the documents involved in the process. As in the previous chapter, we will be doing work on the SAP system with respect to the purchasing business process. In addition, we will take a look at some of the career paths available to BIS majors.

Chapter 4

This chapter deals with one of the more complex business processes of an organization, the production process. Again, we’ll be looking at the process and breaking it into sub processes and examining some of the documents involved in the process. However, because of the complexity of the process we will only demonstrates some of the attributes of the SAP system with respect to the process. We will also look at how to use some of the intermediate functions of the Excel spreadsheet system.

Chapter 5

This chapter deals with the way companies make decisions and the types of data used in making decisions. We will discuss the role of the operational system and the decision support systems used in business and will see how data within these systems can be analyzed and will use Excel to analyze some data.

Chapter 6

An introduction to computer operations will be covered in this chapter. We discuss primarily hardware components of a computer system and the role of software, especially the operating system. We will introduce the role of programmers in designing systems.

Chapter 7

This chapter describes the way computer technology is changing business and the various emerging technologies. We will discuss how the business environment is adapting to these changes and discuss some implications of these changes. We introduce Web page construction and have an associated assignment in which you build a personal Web site.

Chapter 8

This final chapter ties up any loose ends in the course. We summarize some of the other chapters and discuss additional topics that were missed in the previous chapters.

The plan is to update this textbook every semester. So if you have ideas with respect to improving the text, I would be very appreciative if you shared them with me. I hope you find BIS an interesting and challenging area of study and find this book useful in achieving your learning goals.

Special Note:

You may have already noticed that certain terms in this introduction have been highlighted. That means that the term is defined in the glossary at the end of the text. This will not only help you in defining unfamiliar terms, but should also be helpful in studying for exams.

Information: The Currency of Modern Business

Chapter 1 – An Overview of Business 1.1

This chapter gives you a broad overview of how businesses are organized and how they operate. As you become more familiar with the business world, you will find that there are many things that at a cursory view are common to almost all organizations whether they are businesses, not-for-profit organizations or governmental units. For example, they all have to hire and pay employees. They have to provide a good or a service. They have to keep records and account for their activities. However, at a lower level most companies, even those in the same industry, will have differences in their business processes. In some cases these differences can be based on giving that company a competitive advantage over their competitors. In other cases it may be that their business is just different than other businesses. For our present discussion we will deal in broad generalities and leave the important differences to be discussed in subsequent courses.

Business Objectives 1.2

The objective of any business is to make a profit. This is obvious. However, the best way to make a profit is a complex question that involves many factors. Most of these types of decisions are strategic in nature, so we will not explore them in depth. However, many decisions of this type will need in depth analysis of data from the information system.

While we will not discuss this aspect of business in detail, a few examples may be useful to understand the complexity of the decision making process. There are various strategies to maximize profit. One strategy may be to have the lowest prices and to attempt to sell a high volume of goods. Another approach may be to provide a high quality product and provide quality service, but have higher prices. Other options are to concentrate on only a limited segment of the market and develop a customer base just in that market segment or to service a limit geographical area and provide customer convenience.

However, there are some strategies that may appear good, but are not. First of all trying to maximize profits in the short term may lead to decisions that jeopardize future profits and may threaten the very existence of the company. For example, failing to invest in research and development may reduce expenses and increase profits in the present, but may destroy the company in the long term. In addition, achieving customer satisfaction in many cases leads to a loyal customer base and may result in increased revenues in the future. This may be an incentive to keep prices relatively low and product and service quality high. Again, this will not maximize profits in the short term, but could result in substantially more profit in the longer term. Determining the appropriate price and assuring and even measuring the quality of service are not easy tasks.

Of course, what a company does is greatly influenced by the actions of their competitors. Intense data gathering and data analysis is usually necessary in making all of these types of decisions. This means that not only must the information system have detailed data about the operations of our company, but must also retrieve and store data on events occurring outside of the company. More than likely, your responsibility in a company will be to gather and analyze the data and suggest the best options, but you probably, at least early in your career, will not make these strategic decisions.

Business Organization 1.3

There are many different ways businesses can be organized. From a legal point of view businesses can be sole proprietorships, partnerships and corporations. A sole proprietorship is where essentially one person owns and runs the company. Generally these are very small companies. A partnership is where a fixed group of owners are involved in the business and share the control and the profit and losses of the business. Generally, these are smaller to medium size companies. Corporations, on the other hand, are companies that issue stock and the owners are the holders of the stock. Corporations can actually be of various legal forms, but we will be primarily concentrating on large corporations (also referred to as C Corporations) whose stock is traded in the stock market. The reason for this orientation in this text is that we don’t want to spend too much time discussing various forms of organization, which will be done in other courses and larger organizations usually have more well defined business processes.

We will first look at the organizational structure of a business from the top down. Remember that what details are presented are just broad generalizations and that almost all companies will have unique organizational structures.

Your typical C Corporation will be controlled by a Board of Directors. These are people elected by the stockholders and they oversee the activities of the company. The board will appoint the executives of the company and will set the high-level policies. They do not participate in the day-to-day control of the company. The execute officers control the company on a day-to-day basis. The Chief Executive Officer (CEO) is the highest-ranking executive. Underneath the CEO are other C-level executives. This may include the Chief Operations Officer (COO), the Chief Financial Officer (CFO) and the Chief Information Officer (CIO) to name a few. These people would report directly to the CEO and they would run their respective parts of the organization. Looking at the organization chart in Figure 1.1 below you can see that the CEO reports to the Board of Directors and the other C-level officers report to the CEO.

Figure 1.1 Corporation Organization Chart

The CIO is the technology leader in the above organization structure. This person is responsible for the operation of the information systems (IS) area. Since the information system is so important to all of the other parts of the company, the CIO must also coordinate the activities of the IS area with all of the other areas in the company.

Companies can be organizationally structured in many different ways. As you look further down the organization structure, the most traditional way is by functional units. That means that each lower level unit is based on what work they do. However, some companies will be structured by geographical locations, for example North American operations, European operations, and Pacific Rim operations. Other companies may organize by line of business or product lines. Larger corporations can be combinations of all of these organizational structures. These structures can have a significant influence on how the company conducts business and how successful a company will be. While the high-level organizational structure of a company has strategic significance, in the early years of your professional career it will have little impact on your career.

Figures 1.2 and 1.3 show the high-level organizational structures of the CSU System and CSU Chico respectively. Even though these are not-for-profit organizations, they have similar organizational structures to that of for-profit companies.

One thing to note in Figure 1.2 is that some positions (such as University Auditor) have a solid line, meaning direct reporting responsibilities and also a dashed line, meaning an indirect reporting responsibility.

Figure 1.2 California State University Organization Chart

Figure 1.3 Section of CSU, Chico Organization Chart

Business Processes 1.4

The preceding was just a very high level view of how companies can be organized. We now take a closer look at how companies operate by briefly discussing business processes.

There are two distinctly different activities in any company. There are primary activities that are directly related to making a profit for a company and there are support activities that enable the primary activities to operate efficiently and effectively. Many people think of the primary activities as being a chain of events whose end result is generating a profit for the company. As the old saying goes “a chain is only as strong as its weakest link” is a useful way of also thinking about the chain of events in a business. Each primary activity must be executed well in order for the company to be successful. The possible primary activities include:

Inbound logistics – This is where goods are ordered, received and stored for either further processing or for sale to customers.

Operations – This is the processing of raw materials and turning them into finished goods ready for sale to customers.

Marketing – This is the direct interface with the customer and this is the activity that generates the company’s revenue.

Outbound logistics – This is how goods get delivered to the customer.

You should note that not all companies have each of these activities and many companies have primary activities that don’t quite fit into these categories. An example of a company that has all of these activities is any company that manufactures goods, such an automotive manufacturer like Ford Motor Company, a computer manufacturer like Hewlett Packard, and a food producer like Foster Farms. Some companies, such as retailers, don’t manufacture anything, so they don’t have operations activities. Some companies are service-oriented companies, such as a consulting firm, who don’t use inbound or outbound logistical activities or manufacturing operations. So you can just think of this as a framework that you can use to think about how a business operates.

Pepsi Co.

Inbound logistics: PepsiCo. obtains beverage ingredients and packaging materials from outside suppliers.

Operations: PepsiCo. combines proper amounts of ingredients together to form different soft drinks. Once the final product is created, it will be packaged in cans or bottles.

Marketing: Creating promotions and advertising campaigns designed to bring customers to stores which sell Pepsi products.

Outbound logistics: PepsiCo. ships finished products to stores all over the world, where the consumer will make the purchase.

Foster Farms

Inbound logistics: Foster Farms receives top quality breeding chickens from farms.

Operations: These chickens lay eggs, which will then be brought to incubators. Once hatched, they will be sent to chicken coops. Grown chickens are then sent to processing plants to be butchered and packed for the consumer.

Marketing: The marketing team at Foster Farms builds the brand name through packaging and advertisement.

Outbound logistics: Foster Farms owns their fleet of refrigerated trucks, which deliver fresh chicken to supermarkets.

Target

Inbound logistics: Target receives all retail goods from outside manufacturers.

Operations: Target is a retailer which does not create goods from raw materials.

Marketing: Target’s marketing team creates advisements through many different media forms (television commercials, newspaper ads, etc). They also collaborated with celebrities to brand some products.

Outbound logistics: Target sends goods to their Target store locations from their distribution centers.

The support activities would include the service areas of the company. They would be:

Corporate management – This includes the corporate leadership and their support staff which includes corporate planning, legal, and financial management.

Human capital management – This includes all of the employment and personnel activities within the firm.

Accounting – This includes all of the financial record keeping activities within a company.

Information systems – This includes the processing and storage of all of the data within the company.

You may want to picture these activities as shown in Figure 1.4 below. As is shown, the primary activities are a chain of events with one feeding the next and the support activities are underneath them lending assistance to the primary activities.

Figure 1.4 Primary activities with supporting activities

So we have taken a very high level look at the primary activities of a company. Within these activities we can separate the activities into business processes. A business process is a set of related activities that has a definite beginning and a definite end. For example the sales to cash business process is all of the business activities that are involved in selling goods to a customer and subsequently collecting payment from that customer. The main point of breaking a business’s activities into individual business processes is to simplify their analysis. For most businesses there are a vast number of activities that can be occurring at one time. Trying to understand and analyze all of these activities as a whole would be extremely difficult. So instead we can break all of these activities into smaller groups of activities that are all related. That is the objective of defining business processes.

In this text we will only look at three major business processes: sales to cash, purchase to pay and raw materials to finished goods. The next three chapters will cover each of these business processes in more detail. As you will see, each of these business processes can have many different variants.

One of the common ways to analyze business processes is to produce diagrams that explain the process. Besides discussing the business process we will use flowcharts to describe each business process. The flowcharts we use in this course will be quite simple. However, in future courses in the curriculum you will be using much more detailed and sophisticated methods. For example, in the database class (MINS 235) you will develop entity-relationship diagrams and in the analysis and design class (MINS 350) you will be using the Unified Modeling Language (UML).

Using a very simplified process model, the sales to cash business process is presented in Figure 1.5 below.

First we must explain the diagram methodology. The symbol represents an external entity. In this case the customer. The symbol represents a document. The symbol represents a business processing activity. The symbol represents a physical item. The connecting lines represent activity flows where the arrowhead denotes the direction of the flow.

Now let’s explain the flowchart. The customer triggers the beginning of the process by initiating an order for goods. This is usually termed the triggering event. The order is received by the company, the goods are picked from the available inventory and shipped to the customer. Upon shipping, the customer is sent a bill for payment. When the customer pays the bill, the company receives the cash. As we stated a couple of times, this is an overly simplified model. For example, we ignore the fact that we may not have the goods presently in inventory. How would we handle that situation? In addition, what if the customer doesn’t pay us? Also how do we record all of this activity? We discuss these considerations in the next chapter, which deals with the sales to cash business process in more detail.

In this text we consider three very important business processes, but in most businesses there are many times hundreds of different business processes. The information systems professional must understand many of these processes, since ultimately they will be involved in the automation of these processes. While it is almost impossible for one person to understand all of the processes in a company, there will be teams of information system specialists who will deal with groups of these processes. For example, there may be a team of I.S. professionals that deal with accounting issues, there will be a team to deal with human capital management issues, another team to deal with logistics, there may be a team to deal with marketing and sales, etc. The important thing in the BIS curriculum is not to understand in depth all of the processes of a business, but how to go about analyzing and understanding a business process.

Exhibit 1.6 below lists a few of the possible business processes involved in most businesses that are not part of the primary business activities that we will discuss in more detail in later chapters.

In the human capital management area: Hiring an employee. Firing an employee. Promoting an employee. Determining employee compensation.

In the accounting area: Determining the cost to manufacture a product. Paying employees. Producing the financial statements. Closing the books for a period.

In the finance area: Borrowing money to finance the company’s operations. Declaring dividends on stock. Issuing new shares of stock.

In the marketing area: Conducting industry research. Designing products. Communicating with customers. Updating social networking sites.

In the sales area: Finding leads. Contacting potential clients. Communicating products/services to prospects. Follow up with current customers.

In the information systems area: Researching user needs. Translating needs to technical requirements. Implementing and monitoring technical solutions. Supporting business needs.

Figure 1.6 Possible Business Processes

Technical Section – Visio 1.5

In each chapter we will end the chapter by examining a technical topic. In this chapter we discuss the Microsoft Visio documentation and charting tool. This is a tool that is free to students at CSU Chico and is a powerful and easy way of generating different types of diagrams that can be used to analyze business situations. In fact Figure 1.5 in this chapter was produced in just a few minutes using this tool.

Visio is part of the Microsoft Office suite. When Visio is first opened, it allows the user to select the template they would like to use. This is just a way of helping to organize the symbols that are available. Each template will use a specific set of symbols and shapes. However, the user is not restricted to use just these items. There is a vast array of symbols and shapes that can be employed with respect to any type of diagram. Figure 1.7 shows how the beginning screen appears.

Figure 1.7 Visio Template Selections

If you select the Basic Flowchart, it appears as follows in Figure 1.8 below.

Figure 1.8 New Basic Flowchart

The middle section is like a blank sheet of paper. The symbols that can be selected are on the left and can be simply dragged onto the sheet of paper. The three items at the top of the screen circled in red are important functions. The top most circle is the pointer tool icon. This is the normal state that the system is in when it first starts. In this state you can drag and drop symbols, move them around, and resize them. The middle circled icon is the connector tool. This is used to draw the flow lines from one object on the drawing to another object. The bottom most circled icon is the text tool that allows you to place text anywhere on the sheet. All of these functions will be demonstrated in class.

In addition, there is a video available that introduces the Visio product. That video discusses how to use the tools, but also talks about developing a little more complex flowchart called a document flowchart. This type of flowchart will be used later in the course. For now we will be developing simple business process flowcharts like the one in Figure 1.5.

The video can be viewed at: http://www.youtube.com/watch?v=PbBOSK1l17A&feature=youtu.be

Information: The Currency of Modern Business

Chapter 2 – Sales to Cash Business Process

2.1 Introduction

This chapter starts a more detailed analysis of the primary business processes. We took a brief peek at the sales to cash business process in the previous chapter. Now we will go into more depth. First, the name of the business process may be different in other textbooks. Some people refer to it as the revenue business process since it is the main source of revenue for most companies. Whatever you want to call it, the process includes the same elements.

Before we begin to analyze the process we must explain how we will approach each of the business processes. The perspective that we take will be from a business to business (referred to as B to B or B2B) point of view as opposed to a business to consumer (B to C or B2C) point of view. The reason for this approach is that the B to B situation is usually more formal and provides greater documentation and audit trail. While you will no doubt be much more familiar with the B to C environment which you encounter on a daily basis, that will not be the environment you will find in your professional career.

For most major business processes it is easiest to break them into sub-processes and then analyze each of the sub-processes. Figure 2.1 shows the sub-processes for the sales to cash process.

Figure 2.1 Sales to Cash Sub-Processes

We will look at each of these sub-processes separately and in more detail.

2.2 Pre-Sales

The pre-sales sub-process is the point in which a company captures the interest of potential customers and attempts to retain their existing customers. This is usually part of the marketing operation of the company. This is a complex and very competitive area for most companies and the way it is done is changing rapidly for many companies. The process is so complex that an entire independent computer system is usually devoted to just these activities. These are Customer Relationship Management (CRM) systems. They trace all of the activity for each customer of a company and all sales contacts with these customers. For example, all contact information and professional information will be stored so that a close relationship can be established between the sales representative and the customer. Determined by the situation this could include some personal data such as the names of the family members of the customer and important dates in their lives. Social media is now starting to play an important role in the CRM space. You should cover this activity in more detail in your marketing class. So we will not go into this in any more detail.

Before we discuss the next sub-process it is a good time to discuss the two major categories of data for which you will be dealing. They are master data and transactional data. Master data is the data we will store that describes the attributes of a person, place or thing. For example, there will be master data records with respect to customers, employees, warehouses, departments, products, etc. Transaction data is the data that is recorded whenever a transaction occurs. That data contains the time and date of the transaction and the units or dollar amounts involved in the transaction. The main differences between the two types of data are that the master data is rather stable data that does not change very frequently while transaction data is very volatile (i.e. it changes quite a bit and very quickly). Master data when compared to transaction data is quite small in volume.

So master data describes the objects involved in transactions, but the transaction data describes the actual transaction. So for every sale to every customer for each product sold by each employee would be recorded as a transaction, but the data on the customer, the product and the employee would only be recorded once. This is an important distinction which you will explore in more detail when you take the database course. Referring back to the pre-sales discussion, much of the information in a CRM system is focused on master data.

2.3 Sales

The sales sub-process is the point at which the customer gives an order to the company. The order will normally come in the form of a purchase order. This is a formal document that specifies who the customer is, what they want to order, when they want the goods and where the goods should be delivered. While the information on the form will be the same, each customer will have their own purchase order form. For that reason our company would want to put all of this information onto a standard form so that as the transaction is processed, it is easy for everyone in the company to know where on the form the pertinent information is placed. This internal form is called a sales order. So the customer’s purchase order is transcribed to the sales order. Figure 2.2 shows an example of a purchase order. Note that a typical purchase order has information about the company making the order, the vendor accepting the order, the location to which the goods are to be sent and a listing of the requested goods.

Figure 2.2 Sample Purchase Order

However, before we usually accept and process the order it is necessary to verify that the order can be filled. This is done by checking inventory levels of the desired goods. In addition, if this is a credit sale, that is the customer will pay us a little time after receiving the goods, then we must check the customer’s credit rating. Figure 2.3 presents a logic flowchart outlining a possible process for checking available inventory. Note that there are many other ways that this situation could be handled. However, examining this diagram should start to show you that while on the surface the process of just selling a customer some goods sounds rather simple, it can be much more complex.

The two major decisions that have to made in this situation is whether the customer will accept a partial order when all of the goods are not in stock and whether the customer is willing to wait for out of stock goods to be delivered later (i.e. accept backorders). Looking at the logic flowchart for checking inventory may bring to mind some questions. For example, why would a customer not want to accept a partial shipment? Why would a customer not want to accept backorders? We will discuss these and other questions in class.

Figure 2.3 Checking Inventory Availability

Figure 2.4 shows a possible process for handling an established customer’s request for credit. However, if this was a new customer for which we have no credit history that would be a much more complex business process that we will not address in this text. Even this situation could be more complex if the customer that doesn’t have sufficient credit requests a credit extension which again would necessitate the use of a different process to determine whether or not to grant that extension.

The flowchart does not specify a procedure for actually checking the credit. In actual practice that would have to be documented. In most situations, that procedure is quite straight forward. It would involve a person looking at the customer’s record to see the customer’s available credit and see if that amount would cover the amount of the purchase. For a good integrated computer system, this would be programmed into the system and would happen automatically.

Once the sales order is created, in a well designed system, the goods in the sales order will be reserved to fill that customer’s order. If this isn’t done, then it would be possible to promise the same goods to another customer before the goods are pulled from inventory to satisfy the first customer’s order. This could result in a very dissatisfied customer when notified that the goods aren’t actually available.

Figure 2.4 Checking Customer Credit

At this point we will discuss how automation affects the processes. If this was an entirely manual system, then all of the documents involved in the process would be paper documents. Determined by the amount of automation involved, some or all of the documents would be electronic. If the customer and the vendor computer systems are linked electronically, all of this activity can be done by the computer systems with little or no human intervention. In a manual system the procedures to be followed are supposed to be documented and the employees should be thoroughly trained in how the process should be done. In reality this is a real weakness in manual systems. Different employees can adopt different procedures and a given employee may not even use a uniform procedure all of the time. Computerized systems are much more precise. The procedures are programmed into the system and the system will perform exactly the same procedure each time. The major problem with computerized systems is that all variations that may occur have to be programmed into the system. As you may be getting the sense already that the number of different ways business can be done can be quite prolific. That is one of the reasons why there is such a high demand for people with the skills you will have when you graduate because you will have the skills needed to design and implement complex systems.

From now on we will be looking at what is considered only the “mainstream” situations and not the exceptions. For example, in the sales sub-process we will assume that the inventory is available and that the customer has sufficient credit.

2.4 Picking and Shipping

The next step in the process is to pick the items from inventory and prepare them for shipping. A picking list is first generated and sent to the warehouse for fulfilling the sales order. The picking list will usually list the items to be picked and the number of items to be picked without the prices of the goods. The price is usually not included since this is something the warehouse people don’t need to know to do their job. An example of a picking list is shown in Figure 2.5.


Account No.	Purchase Order No.						Picking List No.
55555555555	1						1010101

Vendor:			Ship To:
Jane Dough Sample Vendor 5555 Vendor Drive Vendor City, CA 90909 555-555-5555		John Doe Sample Client 1234 Anonymous Ln Chicago, IL 54321 555-280-5555

Item #	Description	Unit	Location	P.O. Qty	On Hand Qty	Qty Picked	Picker
12343245	Color Copies	EA.	Shelf E12	1000.00	5000.00	1000.00	Sue Smith
23485496	Office Equipment	EA.	Shelf H32	1.00	1.00	1.00	Sue Smith
48549540	Custom Pens	EA.	Shelf Y67	500.00	200.00	200.00	Sue Smith
34985430	Custom Signs	EA.	Shelf A01	2.00	1000.00	2.00	Sue Smith

Figure 2.5 Sample Picking List

There is the possibility that even though the records say that the goods are in inventory, they may in fact not be there. This can happen in many ways. For example the inventory records may not have been properly updated, the goods may be stored in the wrong location or there may have been pilferage of the goods (i.e. theft). Of course, if this is the case then the order cannot be properly filled. This obviously would be a problem that has to be resolved. Since in a well designed system, this is a very infrequent occurrence, we will not consider what actions should be taken.

Once the goods have been picked, they must be packaged for delivery. Immediately upon picking, a packing slip should be generated and placed inside of the package. Also at the same time the inventory will be decremented by the goods to be shipped. Since the goods were previously reserved for the customer, we are just removing the reserved goods from the inventory.

The packing slip is a document for use by the customer. The customer will use the packing slip upon opening the package to confirm that the goods shipped were indeed the goods they ordered. Figure 2.6 shows an example packing slip.

Figure 2.6 Sample Packing Slip

The goods are now ready for shipping. There are different documents that could possibly be used when the goods are shipped, determined by the shipping method. There are various legal considerations with respect to shipping (such as who has legal title to the goods) which we will not address and these issues will determine the necessary shipping documents. We will state that a bill of lading is the document that will accompany the goods. This is like a more robust form of a packing slip that is not sealed in the package with the goods. Instead, it can be presented as evidence to anyone requesting formal documentation on what is being shipped.

2.5 Billing

Billing is the first step in the process of collecting payment from the customer. For most businesses the billing process happens after the goods ship. However, there are some markets where it is not normal to extend credit and billing is done before shipping. We will not consider those situations and will deal only with the post shipping billing process. There are two primary ways in which billing can be done. The first is called invoice billing. This is where the invoice sent to the customer appears very similar to the sales order used to process the sale. That is, the amount the customer is billed is for the amount of the goods for that specific shipment. Of course tax and shipping costs would also be included on the invoice.

The second method of billing is termed balance-forward billing. It is also termed cycle billing since usually every month on a certain date a given customer will be billed for all transactions during that month. This is the way credit card transactions are billed. Since different customers are billed on different days, the work of the billing staff can be divided over the entire month.

Invoice billing is usually done when the purchases are large and infrequent. Balance-forward billing is done when there are many transactions and the dollar amounts of the transactions are not that significant.

2.6 Cash Collection

The final step of the sales to cash business process is to receive the payment from the customer. This step is primarily involved with recording the payment transaction. However, it should be noted that the payment may actually come in various forms. It may be in cash, by check, by bank transfer or via a credit card transaction. Each payment method will entail slightly different processing. But the central part of the transaction is to record the payment in the customer’s account. As you will learn in your beginning financial accounting class, the customer account is termed an account receivable. The payment by the customer reduces that account receivable on the company books.

Since in this step we are dealing with cash, a very liquid asset, care must be exercised to make sure that it is protected from being mishandled and stolen. The usual method of protection is to be sure that two people are involved in the transaction where one person handles the cash and the other person deals with recording the transaction. In that way the cash balance can always be reconciled against the recorded amount.

2.7 Organizational Considerations

So far we have discussed what has to be done, but we haven’t yet addressed who should be doing each of the tasks. With a business this means that we have to determine what department does each of the tasks. First let’s discuss the situation in a manual environment.

In a manual sales environment everything is done using paper documents. While most companies no longer operate this way, it is still useful to see how the information flows through the company and the documents that are used. Even though a computerized system eliminates most of the paper documents, the same document information is stored in electronic form and appears on screen in much the same format as the paper documents. Computerized systems also reduce the number of people involved in the transaction and empower those involved with more information that is real time.

On the following page, Figure 2.7 shows a document flowchart of a typical sales to cash process. This is a simplified version that ignores the finer points such as partial shipments, backorders, insufficient credit, etc. As you may imagine, the analysis of a real business process would contain much more detail.

Information: The Currency of Modern Business Page 25

As you can see from the flowchart, in a manual system there are many people and lots of paper involved in the transaction. As the system gets more computerized, the primary tasks done by people boils down to convincing the customer to buy our products and the physical handling of the goods. Even then, some material handling systems are now robotized and even much of the picking, packing and shipping activity has limited employee involvement. In addition, with Internet shopping as a customer contact point, the sales staff may also not be necessary for many transactions.

2.8 Technical Section – SAP ERP System

SAP is the dominant Enterprise Resource Planning (ERP) vendor in the world. A very large majority of the Fortune 500 companies rely on the SAP ERP system to run their businesses. As you will see, it is a massive software system that encompasses almost all of the business processes that most businesses have. While the system is very complex and expansive, don’t be intimidated. We will slowly walk you through the system and guide you through each of the assigned tasks. The first SAP assignment deals with the sales to cash cycle. However, the amount of work you will have to do will be very limited. As you progress through the BIS program you will deal with the SAP system in much more depth. The objective is not for you to strictly learn the SAP system, but we will be using this system to illustrate the practical application of the theory we discuss in class. Also, the knowledge that you gain by using the SAP system is transferable to other vendor’s ERP products. You will find that the job market for graduates with this type of background is extremely good, even in the present depressed economy.

The main objective of this section is to introduce you to the SAP system and to show you the important features you will need to know in order to navigate around within the system. The assignments will provide the detailed instructions on what to do in order to execute specific transactions. So that will not be shown here. Let’s get started with the system.

The first thing you need to do is to get logged into the system. Each student has their own system logon. This is made available in the grades section of the Blackboard system.

You start logging onto the SAP by first access the SAP GUI application which is titled SAP Logon as shown in Figure 2.8 below.

Figure 2.8 Accessing SAP GUI

You will then see the screen shown below in Figure 2.9.

Figure 2.9 SAP Logon Screen

You then need to select the system you will be using to do your work. For this class we have been assigned the Warsaw system. In SAP terminology this is called the Riga instance. Just double click on this instance and you will be routed to the screen shown in Figure 2.10.

Figure 2.10 Riga Logon Screen

You need to enter the correct logon information into this screen. First you must enter the assigned client, which for our class is client 515. In addition, you need to enter your user ID which is AIS-0XX where the XX is your assigned number. You can determine what your number is by going to the grades section of the Blackboard system and looking for your SAP Number. It is a two digit number, where you must use both digits when logging on. For example, if your number is 01, you must enter 01 and not just 1. The initial password the first time you log in will be SAP4US. The password is case sensitive, so you must use capital letters. This password will only be used the first time you log into the system. When you hit the enter key, you will be required to select a new password and then confirm that new password. BE SURE TO REMEMBER THIS PASSWORD. This is the password you will use for the remainder of the semester. If you forget this password, then you will have to contact me to reset the password.

After you have changed your password, you will see the screen shown in Figure 2.11. This is what is termed the standard SAP menu. This is the menu from which we will be doing our assignments.

Figure 2.11 Standard SAP Menu

Looking at the above menu you will see that if you wish to expand out a menu path that you can simply click on the right facing arrow next to that item. In doing this you will see that there are a huge number of possible transactions that you can execute. However, this will not be a problem for you since we will tell you exactly what transaction needs to be executed to complete your assignments. In subsequent classes as you become more familiar with the SAP system, you will be navigating through the system on your own.

There are two important areas that we have circled in red. The first is at the top of the page. This is a short cut way to execute a transaction. You can simply enter the transaction code in this box and hit the green arrow to the left of it or hit the enter key on the keyboard and that transaction will start. This can save you a good amount of time since the menu paths can expand out to many levels of detail before you can actually execute the transaction. In the assignments we will supply you with both the menu path and the transaction code.

The second circled area is at the bottom of the page. This is where the system will write messages about what is occurring as you work. Some of these messages will be informational, informing you that a given action was successful. Other messages may be warnings or errors. You should make sure that you check for messages in this area to be sure things are working as you would expect.

Now we will execute a transaction in order to show you other important features of the system that you need to know. Look at Figure 2.12 below.

Figure 2.12 Sample Transaction

The items within the red outline are important navigation options. The arrows on the tool bar control navigation within the system. The left most green arrow will send the user back to the previous screen. The middle yellow arrow allows the user to leave the transaction and the red “X” kills the transaction. The diskette icon is the way in which you save the data you entered into the transaction. We have already discussed the role of the transaction entry box and the left most green check mark which means that you wish to execute the next step in the transaction.

This should give you enough information to begin working on your assignment. There are a series of videos that you can view that discuss this material and offer some additional information. We will spend a good amount of class time going through these functions and showing you how to start working on your SAP assignments.

You can watch the first video at:

http://www.youtube.com/watch?v=Q7qB3VdnlF0

Information: The Currency of Modern Business

Chapter 3 – Purchase to Pay Business Process

3.1 Introduction

In this chapter we will look at the procedures a company uses to purchase goods. This is termed the purchase to pay process. Many of the terms will be familiar since they were used in the previous chapter dealing with the sales to cash process. The difference is that we are now assuming the role of the company that was the customer in the previous chapter.

A purchase is always motivated by a need for a product or a service. The need can come in many forms determined by the type of company and how it does business. If we are dealing with a manufacturing company, then one very important need is for raw materials which are used to manufacture the finished products. However, all companies need to acquire some type of good or service that will be used in the normal course of business. For example, they will need office supplies, computer equipment, office furniture, etc.

Again we will break the process into a series of sub-processes as shown in Figure 3.1.

Figure 3.1 Purchase to Pay Sub-Processes

3.2 Order Goods

As mentioned above, there are two major avenues of determining that goods need to be ordered. The first involves the eventual resale of the goods. In a production oriented company this can be the ordering of raw materials. In a retail situation this is the ordering of finished product from a vendor for resale. In both cases the origination of the order comes from the inventory control area. The process is primarily based on a set of reorder rules that dictate at what inventory level more goods need to be ordered. As with most things we discuss, this isn’t as straightforward as it may first appear. The inventory level, called the reorder point, and the reorder quantity are based on factors such as the amount of time it takes for the goods to be delivered, the expected demand for the good between ordering and delivery and the penalties involved if demand is not met due to an out of stock situation.

The penalty for an out of stock situation may be lost sales in the case of retail sales. The penalty for out of stock in the raw materials case may be a shutdown of the entire assembly line. That is, in some cases the penalty is so high that risking an out of stock condition may be unacceptable.

The inventory control employee responsible for ordering that good will monitor the stock level to minimize potential penalties for out of stock goods. When the inventory reaches the reorder level, then the goods are ordered. As we said, the amount of the goods to be ordered can be based on various factors. Whatever that amount is, a purchase requisition is written and sent to the purchasing department. This is a document only used within the company and should be the same for all departments in the company.

The second situation of ordering goods is for internal use by the company. That is, the goods will not be used as raw materials in manufacturing a finished good or for resale to customers. There are many different types of goods that fit into this category. They could be office supplies used by the white collar employees such as desktop computers, printers, pens, paper, etc. Or they may be machines used to manufacture or package or deliver goods to customers. This would include heavy machinery, vehicles, tools, etc.

The second situation is different in that a given department would initiate the order, not the inventory control area. The usual scenario is that an employee sees a need for some good to be ordered, let’s say a new desktop computer. That employee fills out a purchase requisition requesting the good. If the department head approves the purchase, then the approved purchase requisition is sent on to the purchasing department. If the department head does not approve the purchase requisition, then the process stops there and the employee doesn’t get their new computer.

Determined by the situation, the purchasing department could pool the purchase requisitions or simply order the goods immediately. The reason for pooling the purchase requisitions would be to get more favorable terms from the vendor. For example, if in the case of the desktop computer each computer was order separately, the company would not have as good negotiating power as when they order a batch of computers all at once. For a large company that may mean hundreds and maybe even thousands of computers may be ordered at one time.

The primary function of the purchasing agent is to find the best vendor to buy from and then write a purchase order to buy the goods. There are many factors involved in determining the best vendor. Price is not the only issue. The delivery schedule, the quality of the product, the financing terms and other issues can also influence the decision. These issues will be discussed in your supply chain management class when you take it. The final step in the process is to issue the purchase order to the selected vendor. The purchase order will contain some of the same information as the purchase requisition, but will contain additional information about both the purchasing company and the vendor company. Samples of a purchase requisition and a purchase order are shown in Figures 3.2 and 3.3.

					No. 93043
Purchase Requisition

Date Prepared: 1/04/2013	Prepared by: David Peterson	Suggested Vendor: Jane Dough Sample Vendor
Deliver To: Break Room			Date Needed: 2/25/2013
Item No.	Quantity	Description	Unit Price	Total
1029	25	Table	$200.00	$5,000.00
2434	100	Chair	$40.00	$4,000.00

				Total:	$9,000.00

Approved by:	Department:	Date Approved:	Account No.
Sue Smith	Facilities Admin	1/15/2013	55555555555

Figure 3.2 Purchase Requisition

						No. 38495
Purchase Order

To		Ship To
Jane Dough		John Doe
Sample Vendor		Sample Client
5555 Vendor Drive		4564 West First St
Vendor City, CA 90909		Chicago, IL 54321
555-555-5555		555-280-5555

Vendor No.	Order Date	Requisition No.	Buyer	Terms
38403	1/20/2013	93043	John Doe	2/10 net/30

Delivery Date	Ship Via		Comments
2/8/2013	FedEx

Item	Item No.	Quantity	Description	Unit Price	Total
1	1029	25	Table	$200.00	$5,000.00
2	2434	100	Chair	$40.00	$4,000.00




					Total:	$9,000.00
Approved by:	Jane Smith

Figure 3.3 Purchase Order

3.3 Receive Goods

The next event will be the goods arriving at the purchasing company. Generally this will happen in the receiving department. Their job is to inspect the goods and make sure that the goods that arrived are the goods that were ordered. One way to do this is to open the package, remove the packing slip and count the goods. The usual method of recording this action is by creating a receiving report. This is a document that lists each good and the number of items received. While the packing slip could be used to verify the receipt, there are a couple of problems using it instead of creating a receiving report. One problem is that each vendor will have their own form of packing slip. Having a uniform receiving report eliminates any confusion since no matter the vendor; all of the information will be in the same place on the report.

Another problem with using just the vendor’s packing slip is that there is a tendency by many employees not to actually count the goods, but to do a cursory inspection and accept the packing slip as being correct. If there was an error when the vendor pulled the goods for shipping, then chances are it will not be caught and the error will be entered into the records. Figure 3.4 is an example of a receiving report.

Receiving Report


					DATE			SHIFT
				CHECK CARRIER
					UNITED PARCEL SVC			SHIPPER'S TRUCK
					PARCEL POST (USPS)			AIR EXPRESS
					TRUCK			EXPRESS MAIL
					RAIL			OTHER
SHIPPED FROM			CHECK PAYMENT
					PREPAID			COLLECT

OUR ORDER NUMBER	DATE SHIPPED		SHIPPED TO ATTENTION OF		LOCATION	PHONE


					NUMBER	WEIGHT	WEIGHT	CARTON	REC'D BY
QTY	DESCRIPTION	OF CARTONS	EACH	TOTAL	CONDITION	INTLS
	Product A				65	87		5655
	Product B				12	32		384







SHIPMENT:	TOTAL NUMBER		TOTAL		NUMBER & CONDITION OF ITEMS:
COMPLETE or PARTIAL	OF CARTONS		WEIGHT			OKAY		DAMAGED
		77			6039

RECEIVED BY				DATE	CHECKED BY				DATE

Figure 3.4 Receiving Report

Before the goods are placed into inventory it may be necessary for them to be inspected and tested. This is more likely when dealing with raw materials that must meet specific quality control standards. The final step in receiving is to put the goods into inventory and to update the inventory records.

Many of the steps in the receiving process can now be automated if radio frequency identification (RFID) technology is used. This is where RFID tags are placed on the goods and the shipment can be scanned without even opening the original box and when goods are placed in inventory, the inventory records are automatically updated.

3.4 Receive Invoice

The usual procedure is that once the goods ship the vendor will then send the invoice. No matter if the vendor does open order billing or cycle billing, the invoice is needed by the customer in order to confirm that the goods that were shipped were actually ordered. The vendor will usually be directed to send the invoice to the accounting department. Upon receipt of the invoice, an accounting employee (usually someone from accounts payable) will compare the purchase order with the receiving report and the invoice to make sure that they are being billed for something the company ordered and received. This important procedure is called the three way match. The end result of this matching process is a voucher package. This is a document verifying the debt owed to the vendor. Payment should only be made when a voucher package confirms the debt.

Figure 3.5 Voucher Package

A common fraud is for a person to send a bill for goods that were never ordered or received. If the bill is for a low dollar amount, a company with a poor accounts payable procedure will pay the bill without verifying the debt. This type of problem can also occur if a vendor company sends goods that were never ordered. This is another common occurrence especially when a sales person has to meet a monthly quota and randomly has goods shipped to customers with poor accounting practices. Many times these companies pay for the goods even though they didn’t order them.

Once the authenticity of the invoice is verified, then the documentation will be sent to the cashier for payment. That means that the voucher package is sent to the treasurer’s department.

3.5 Pay Invoice

The matched documents verify that the bill is valid and must be paid. However, the timing of the payment can be an important business decision. In order to maintain a good credit rating the company must pay their bills by the due date. That is obvious. But many companies offer their customers discounts if they pay their bills early. This helps the cash flow of the company receiving the early payments and it usually is a financial advantage for the company paying early. One of the standard payment terms is called 2/10 net/30. This means if you pay the bill before ten days after invoice date, then you will receive a two percent discount from the total amount of the bill. If you pay within 30 days, the entire amount is due at payment. Anything after 30 days would be considered late and could possibly have penalties associated with late payment.

The available cash is normally the determinant of whether or not a company can take advantage of an early payment discount. If the cash is available, then it is a wise choice to pay early. The lack of taking advantage of early payment discounts is many times the sign of either financial difficulty of a company or it shows that the company’s accounting and payment system is poorly designed and organized.

When the payment is made, there can be many methods of payment. The standard method is by a check drawn on the company’s bank. The check will usually be signed by an executive who will verify that the payment is valid by inspecting the voucher package. If the amount of the payment is substantial, most companies have a policy that two executives must sign the check in order for it to be valid. This is a control to prevent fraud.

Within a computerized environment, the payment will most likely be done electronically. The computer software does the comparison of the documents prior to making the payment to make sure the payment is valid.

3.6 Organizational Considerations

As we discussed in the previous chapter, the employees that handle the transactions and the departments involved will be different determined by the degree of automation. The creation of the purchase requisition and the subsequent purchase order may be done by the computer. Since the inventory level can be tracked by the computer, when the level dips below the reorder point, the computer can automatically begin the purchasing process.

In a similar way, an individual can request items by submitting a purchase requisition online and the request is electronically routed to the department head. The department head can then approve the request and it will be automatically sent to purchasing. This is all programmed into the computer using a procedure termed workflow. This allows many types of transactions to be done with little or no paperwork and with a minimum of human intervention.

The manual procedures are summarized in Figure 3.6. Again, we have discussed only the commonly occurring situations that are involved in purchasing. Situations such as the wrong goods are delivered or the count of goods delivered does not match the packing slip or that the goods we ordered are not presently available, etc. are not discussed in detail here. However, if you are designing a computer system to handle purchasing, all of these situations would have to be considered and designed into the system.

Information: The Currency of Modern Business Page 45

Figure 3.6 Purchase to Pay Document Flowchart

3.7 Technical Section – Examination of possible BIS Jobs

Since one of your assignments is to talk to possible employers at the career fair, it is an appropriate time to discuss some of the jobs that may be available when you graduate.

Even during these recessionary times there is still a strong demand for people in the I.T. area. The reason for this continuing and to some extent increasing demand for people with I.T. skills is that the technology revolution is in full swing with all types of organizations updating their computer systems. In many areas of business the competition is intense and application of technology can make a substantial difference in a company either being successful or falling behind the competition.

While there are many different types of jobs involving I.T., we will divide them into two major categories: technical positions and business oriented positions. We will first discuss the various technical positions. You will get a better idea of what these involve as you go through the curriculum since there are specific courses that deal with the activities done by the people in these positions.

Technical Positions

The technical positions in I.T. are the jobs that keep the computing infrastructure functioning. These are the behind the scenes people that make sure that the end users are able to do their jobs. These positions include network administrators – the people who keep the organization’s network functioning. You can take a networking course that will give you a much better idea of the complexity of this type of job. There are database administrators (DBAs) – an organization’s data is probably the single most valuable asset a company has and the DBA manages the data making sure it is secure and the system is delivering the required performance. You will discuss some of this in the database course that you take. System administrators are the people responsible for the operating systems and application systems of an organization. These are generally the people who respond to problems users encounter. All of these positions involve a deep knowledge of specific technical areas. Employers find BIS majors attractive for these positions because not only do they have the technical skills, they also understand the business environment.

Business Oriented Positions

These are the primary positions for which BIS majors are recruited. While some of these positions have a heavy technical component, they also demand that the person has a good knowledge of business and can interact with other business people. There are so many different positions that it is truly impossible to describe all of them. However, we can describe in general what these positions involve.

A business analyst is a person who investigates the requirements of a business problem and helps design the computerized solution to solve that problem. Determined by the scope of the position, it could also involve writing the code to solve the problem or assist in configuring existing software. The analysis and design course and the programming courses in the BIS curriculum are focused on these skills.

These skills are also important in positions of application specialists or I.T. liaison employees. These are individuals who have a deeper background in a business specialty and deal directly with the users in that area. For example, the BIS supply chain management major would be a great candidate to fill one of these positions and in fact these students are aggressively recruited by our industry partners.

The last major area of opportunity for BIS majors is probably the fastest growing of all areas in I.T. and maybe even in business. It is the position of data analyst. In this job the employee must have a deep understanding of business processes and also a very good knowledge of how data is stored in the computer systems and then be able to do statistical analysis that can be used to make strategic business decisions. While there are courses in the BIS curriculum where this topic is discussed, there is an elective course that specializes in this area. This area has a series of different names: business intelligence, big data analysis, data mining and data warehousing are all in some way involved. We will do a little work in this area toward the end of this course.

Information: The Currency of Modern Business

Chapter 4 – Production Business Process

4.1 Introduction

The production process is one of the most complex processes within a business. Unlike sales and purchasing processes that almost all companies have, not all companies produce things. Because the production process is more complex, computer technology has been used extensively to streamline and improve the process. In this chapter we will take a quick look at some of the major steps in the production process. When you take your supply chain management course, you will cover these topics in much more detail.

The production process can be broken into two sub processes as shown in Figure 4.1. And each of these can be broken down into their own sub processes.

Figure 4.1 Production Sub Processes

4.2 Pre-production Process

The pre-production phase of the business process is dominated by engineers. In this sub process the product is planned and developed. The initial part of the process stems from research and development activities. Research scientists and engineers develop an idea into a product with assistance and advice from production engineers. The production engineers determine the best way of producing the product. In order to minimize cost and increase production efficiency there may be changes suggested by the production engineers to the original engineering design. Accountants also get involved to determine the cost of producing the product. When the design is finalized, engineering drawings are produced and also two important planning documents are produced- the bill of materials and the routings.

The bill of materials (sometimes termed a material BOM) is a structured list of all of the components needed to make a product. The list looks like an inverted tree structure with the finished product at the top and then all of the subassemblies needed to build the finished product and the subassemblies needed to build those subassemblies and so on until the tree terminates with the needed raw materials. Figure 4.2 illustrates a bill of materials.

Figure 4.2 Example Bill of Materials

The bill of materials is used in ordering the raw materials for production and also as a guide to the assembly sequence of the product.

The other important planning document is the routings (also called the operations list). This is a detailed listing of all of the work stations with specific machinery and operators that are needed to produce and assemble the product and the amount of time that is needed at that station. The routing for a subassembly would state the first operation necessary to produce that subassembly, the work center necessary to build it, and the amount of time needed at that work center. The same information would be provided for the second operation and all remaining operations. This information would be provided for each subassembly and the finished good. Figure 4.3 illustrates a routing.

Table Routings
Workstation	Machine #	Operation	Setup Time	Machine Time	Labor
B	1	Cut table top	00.05	00:08	00:15
B	3	Cut leg	00:05	00:10	00:30
D	2	Turn leg on lathe	00:10	00:05	00:25
A	5	Assembly	00:05	00:10	00:25
E	1	Painting	00:15	00:10	00:40
				Total:	02:15

Figure 4.3 Example Routing

The material BOM and the routing can then be used to begin planning the production schedule. One critical piece of information is missing before we can do production scheduling. We need to know how many units of finished goods we need to manufacture. This is a function of inventory levels, the number of finished goods presently in inventory, and the anticipated demand for the good. This is termed the master production schedule (MPS). There are various methods to determine the demand and we will not go into them here, but with this information about all of the different goods we manufacture we can schedule the shop floor and also determine the number of units of raw materials needed.

( Boeing invested in CAD/CAM (computer aided design/computer aided manufacturing) in the mid-1980s. They believed th is investment would cut down on the cost and time associated with creating physical mock-ups of airplanes. In 1990, the Boeing 777 twinjet was created using CAD and other new engineering technologies. These new technologies helped Boeing: Improve accuracy in part design and assembly Instantaneous communicate capability Improve the quality of airplane design Reduce of the time required to introduce new airplanes into the marketplace Figure 4.4 CAD /CAM Example http://www.boeing.com/commercial/777family/compute/compute2.html )As you may imagine, for companies that produce multiple products the number of calculations are phenomenal. That’s why computers have become an essential part of the entire production process including almost all the pre-production activities. This starts with the initial design of the product which is now done on computer-aided design (CAD) software and then these designs are transferred over to the computer-aided manufacturing (CAM) software which feeds instructions to computer numerically controller machines.

The planning of the ordering and use of raw materials and scheduling of the work floor part of the pre-production process is also very much a computer-aided situation. Manufacturing resource planning (MRP II) systems are essential for this activity. Only extremely small manufacturing operations can be successful without these computerized tools.

4.3 Production

Before the actual production can begin, the raw materials have to be ready to go into production. This is part of the MRP II process that involves estimated sales, the present inventory level and the lead time for delivery of raw materials. We discussed this briefly in the previous chapter, but didn’t go into very much detail since there are different approaches to handling this problem. Again, you will cover this in much more detail in you supply chain management course.

The trigger that starts actual production is the production work order. This is a document that states what finished good is to be produced, the number of units needed, and the time the units are needed. Figure 4.5 show an example of a production work order.

Production Work Order No. 596067
Order No. 100349	Product No. 1029	Description: Table	Production Quantity: 25
Approved by: JD	Release Date: 01/24/2013	Issue Date: 01/25/2013	Completion Date: 01/30/2013	Deliver to: Shipping
Workstation No.	Machine No.	Quantity	Operation	Start Date & Time	Finish Date & Time
B	1	30	Cut table top	1/28	7:00	1/28	10:15
B	3	110	Cut legs	1/28	10:15	1/29	20:45
D	2	105	Turn legs on lathe	1/29	20:45	1/29	2:30
A	5	28	Assembly	1/29	2:30	1/29	11:00
E	1	26	Painting	1/29	11:00	1/30	21:45
E	5	20	Transfer to shipping	1/30	22:00	1/30	23:30

Figure 4.5 Production Work Order

The production work order is an important document since it allows for the tracking of the work being done and also accumulates the costs incurred at each point of the production operation. One common example of this type of document is the bill you get when you have your car repaired. When you first bring the car in, the mechanic will record information on you and your car such as your name, address, etc. and the details about the car including make, model, mileage, etc. In addition, the production work order for your car would include the work that needs to be done. As the work is done, the labor and materials are accumulated on the production work order. That is the way the final bill is produced. Figure 4.6 Production Floor Source: http://www.quality-assembly-logistics.com/about_us.php

The actual production starts with the raw materials being requested to be delivered to the shop floor to a specific work station. As we stated in the pre-production section above, where the materials go is dictated by the routing and the amount of the materials needed is directed by the BOM. The request for raw materials is initiated by a material requisition. Figure 4.7 shows an example of a material requisition form. The form shows what raw materials are needed, where the materials are going and the responsible person. The material requisition is not to be confused with the purchase requisition. The material requisition is an internal document used to track the flow of materials within the company. As discussed in the previous chapter, the purchase requisition is a document sent from inventory control to purchasing to request that additional raw materials be purchased from a supplier.

Materials Requisition	No. 93043

Issued To: Store Room	Issue Date: 1/25/2013	Production Order Number: 100349
Part Number	Description	Quantity	Unit Cost $	Total Cost $
857	5' x 8' Plywood Board	30	2.00	60.00
124	Wood	50	10.00	500.00
345	Glue	5	0.50	2.50
586	Metal Corner Brace	105	0.25	26.25
563	Bolts	410	0.02	8.20
860	Nuts	205	0.02	4.10
Issued by:	JS				$601.05
Received by:	CD	Costed by:	RB

Figure 4.7 Material Requisition

The idea of the material requisition and the production order is to track all activity involved in the manufacture so that at any time it is possible to both see the progress of the work and also be able to determine the amount of accumulated costs involved in the manufacture. So the material requisition is a record of the raw materials going into production and will be traced to a specific production order. Besides the materials, the production work order will also track the labor and overhead expended in producing the good. That means that every time the shop floor initiates a material requisition, the information from the material requisition is transferred to the production work order. With a computerized system, all of this is done automatically by the system.

As the work is moved from one workstation to another, there is usually a move ticket that tracks the flow to the next workstation. Again this is a way to keep track of where the work that is being processed is located and how much of the work has been completed. Figure 4.8 shows an example of a move ticket.

Move Ticket No.39485
Production Order Number: 100349	Date Transferred: 01/29/2013
From: Assembly Workstation: A Machine: 5	To: Painting Workstation E Machine: 1
Operation to Perform	Completed	Date	Time
Prepare	X	1/29	12:00
Paint
Package
Comments:

Figure 4.8 Move Ticket

The information on each move ticket is recorded on the production order. When the product completes its final operation, it is ready to be transferred off of the shop floor and into finished goods inventory control. Again, a move ticket documents this activity and the production order is then closed (i.e. completed). This completes the production cycle. However, this process has to be completed for each subassembly before the finished good can be completed. Like we stated in the beginning, this is not a simple process.

4.4 The Role of Information Technology

We have already discussed some of the ways computer technology is involved in the pre-production process, but it will usually be heavily involved in the production process also. As materials and subassemblies move into, around and out of the shop, it is very time consuming to be filling out material requisition forms and move tickets. Instead of using these documents, scanner technology is employed to track all of the movements.

The scanning could be bar code based or RFID tag based. For bar codes it would be necessary for the operator to physically scan the items as they enter and leave the work station. For RFID the scanning is passive, so as the item enters or leaves a work area the system can automatically scan the item. This information is then relayed to the information system. If an ERP system is used such as SAP ERP, then all of the information would be instantaneously available in all parts of the system. For example, if a customer calls to determine the status of a production order, any employee with the access and authorization to query that part of the system can tell the customer exactly where the order is on the shop floor, how many more operations are left to do to complete the order and even estimate when the order will be completed. Figure 4.9 Barcode Source: http://en.wikipe dia.org/wiki/Barcode

Figure 4.10 RFID Tag

Source: http://www.hive76.org/tag/rfid

4.5 Technical Section – Intermediate Level Excel

By this time in your academic career you should be familiar with the rudimentary functions of using spreadsheets. In this section of the chapter we will be looking at some of what are classified as intermediate level Excel functions.

There are four different functions we will examine. They include:

· Static and dynamic references

· Linking of spreadsheets

· IF statements

· VLOOKUP function

Static and Dynamic References

When you reference a cell, that cell reference can be fully dynamic, partially dynamic or static. The usual reference is fully dynamic. For example, if you reference cell A1 in the spreadsheet, that is you want some other cell, say cell C7, to use the value in cell A1, the dynamic version of that reference is simply A1. Being dynamic means that if you copy cell C7 to cell D9, then the reference will no longer be to cell A1, but to B3 since the system added one to the letter sequence (going from C to D) and two to the number sequence (going from 7 to 9). However, there are times when you don’t want the reference to change. In this case if you preface the part of the reference you don’t want to change with a dollar sign ($), then that part of the reference will be static. Using the example above, if the reference in cell C7 was $A1, then copying C7 to D9 would result in a reference of A3 in cell D9. If the reference in C7 was A$1, then D9 would reference B1. The value $A$1 in cell C7 remains referencing A1 in cell D9. This is demonstrated in a YouTube video you can view.

Click here to view the video on Static and Dynamic References.

Linking Spreadsheets

Above we discussed referencing cells in the same spreadsheet. You can also reference cells in other spreadsheets. While it is possible to reference spreadsheets in a workbook other than the one in which you are working, this generally is not a good idea since that file must be available on a specific device and not be moved or open when the reference activity is occurring. So we will only discuss referencing different spreadsheets in the same workbook (that is, it is in a different tab in the same workbook). The reference to another tab is the following format ‘tabname’! with the cell reference appended behind it. So if you are in a tab called tab2 and you wish to reference cell B5 in the tab named tab1, then the reference would be ‘tab1’!B5. This is illustrated in a YouTube video and you will find that actual mechanics of doing it are quite simple.

Click here to view the video on Linking Spreadsheets.

IF Statements

If multiple actions can be taken determined by the value stored in a cell, then Excel IF statements can be used to determine the appropriate action to take. For example, if when cell B3 is greater than cell B4, you want the value stored in cell C5 to be 100, otherwise the value in cell C5 is 0. This is accomplished by having the IF statement in cell C5 of

=IF(B3 > B4, 100,0)

The general form is IF(logical_test, value_if_true, value_if_false). The logical test is a statement that results in a logical conclusion of either TRUE or FALSE. The form of the logical statement is VALUE Operator VALUE where the operator can be greater than (>), less than (<), equal to (=), greater than or equal to (>=), less than or equal to (<=) and lastly not equal to (<>).

For complex relationships it may be necessary to nest IF statements where either the value_if_true or the value_if_false or both are IF statements. Extreme care must be taken with nested IF statements, since if they are nested too deeply, the logic becomes quite complex.

Again, there is a YouTube video dealing with IF statements.

Click here to view the video on IF Statements.

VLOOKUP Function

The VLOOKUP function is a table referencing tool within Excel. The V in the name stands for vertical. In a vertical table the computer scans the table starting at the top and goes down. There is also a HLOOKUP function in which the computer scans from left to right. Other than the scanning method, the two functions are identical. So we will only discuss VLOOKUP.

VLOOKUP allows us to substitute one value in a table for another value. For example, if we had three different values a cell could have, such as high, medium and low, we could substitute the values 9, 6 and 3 for the respective value. That is the substitution table would look as follows:

Cell Value	New Value
High	9
Medium	6
Low	3

We can do the same operation using a series of deeply nested IF statement, but the VLOOKUP function is much more direct and easier to understand. The form of the function is:

VLOOKUP(lookup_value, table_array, col_index_num, [range_lookup])

The lookup_value is the cell that you want to convert. In the example above, it would be the cell that contains the value of either High, Medium or Low. The table_array is the area in the spreadsheet that holds the lookup table. For the example above it would be the six cells that hold the High, Medium, Low, 9, 6 and 3. This would be referenced starting with the cell of the upper left hand corner and the cell of the lower right hand corner of the table with a colon between them. If in our example the cell containing High was A1 and the cell containing 3 is B3, then the table_array would be A1:B3. The col_index_num is the column of the table where you want to find the search result. In this case it would be column 2. It should be noted that the first column of the table must always be the column where the lookup value is searched. The [range_lookup] value determines if the table must be sorted. It is optional, but I suggest that you use a value of FALSE, since that means the table does not have to be sorted. For our example the function would be:

VLOOKUP(F5,A1:B3,2,FALSE)

Where F5 is the cell that contains the value of either High, Medium or Low, the table is located in cells A1, A2, A3, B1, B2, and B3 and the second column in the table is the value that is returned by the function.

This sounds a little complicated, but after you use it a while you will get comfortable with it. Again, there is a YouTube video dealing with this.

Click here to view the video on VLOOKUP.

Information: The Currency of Modern Business

Chapter 5 – Decision Making

5.1 Introduction

Data is the life blood of any business organization. The company data is one of the most important assets of a company. Just having data is not good enough if it can’t be used properly or if some of it is in error. The way in which a company stores its data will many times determine the ultimate usefulness of that data.

Some of the aspects of good data management are as follows:

· Accuracy

· Timeliness

· Relevance

· Accessibility

· Usability

· Integrity

· Completeness

What these attributes imply is that the data represents reality, is data that is useful to the company and is available when needed. One of the most important data aspects is that of data integrity. This means that first of all the data is initially correct when entered into the system and then remains accurate throughout its useful life. An important concept of data integrity is the lack of data redundancy. If the same data item is stored multiple times, then there is a good chance that this data item will have inconsistent values. For example, when multiple systems in a company store a person’s address, almost always when an address is changed in one system it will not be correctly changed in the other systems. So even though the data was correct when initially entered, it lost integrity because of inconsistent handling of the data. Consequently, the same person will have at least two different addresses with at least one of them wrong. Of course, for data fields that are frequently changed this will be an even more serious problem.

5.2 Data Uses

The data is used for record keeping and reporting purposes and to make decisions. The record keeping and reporting data is primarily used to measure a company’s performance. Some of this measurement and reporting is mandated by government laws and regulations. For example, for a corporation there are reports that must be filed with the Internal Revenue Service, the Securities and Exchange Commission, state and local taxing agencies, etc. In addition, there are reports that are only used internally to monitor, control and govern the company. For example, determining the profit margins on the products a company sells is an important measure of whether the company will be successful. This type of data is only used internally and its disclosure outside of the company would actually be harmful to the company because it would allow competitors access to information they could use to better compete against them.

Much of this same data that is used in reporting can also be used in decision making. With respect to decision making there are different types of decisions that will use different types of data. The standard classification of decision types is usually represented as a pyramid structure with the operational decisions on the bottom of the pyramid, the tactical decisions in the middle and the strategic decisions at the top. Figure 5.1 shows the decision pyramid.

Figure 5.1 The Decision Pyramid

Note that on the left side of the diagram are the types of decisions and on the right side of the diagram are the types of data used in making those types of decisions. Operational decisions are the typical day-to-day decisions made in running a business. We have already discussed many of these types of decisions in the previous chapters. An example of an operational decision is whether we have enough inventory to fill an order, whether a customer has enough credit for us to sell goods to them on credit, whether we have enough money available to take advantage of early payment discounts, etc. These are all decisions that can be directly answered with the data available in the systems we use to run the current operations of the company. This data is termed structured data, because it is of a fixed format and readily available internal data. In addition, when dealing with operational decisions, the decision can be made using only the available structured data. In our data pyramid scheme in Figure 5.1 the base of the pyramid is broader than the layers above it. This represents the fact that many of the decisions of a company are operational decisions. Since these decisions use structured data, we can easily automate the decision making process so the information system can make these decisions without human intervention. One additional aspect of operational decisions is that many employees in a company will be involved in making these decisions.

The next layer up is the tactical decision making layer. Tactical decisions will usually have more impact on the company than operational decisions, but are not as influential as strategic decisions. In a sense, tactical decisions are sort of the middle of the road types of decisions. They are normally more important than operational decisions and will have a longer term impact on the company when compared to operational decisions. On the other hand, tactical decisions are not as important and do not have as long an impact as strategic decisions.

Examples of tactical decisions are hiring new employees, determining work schedules, managing departmental budget decisions, etc. These decisions are primarily management decisions, but lower-level managers can be involved in the decision-making. While these decisions should be made using data from the information system, they also involve other aspects. Hence, the data that is used is termed semi-structured data. Some of it is structured as with operational decision making, but some of it is unstructured.

Let’s take the hiring of an employee as an example. The structured data component involves the perspective employee’s education, the work background of the person, recommendation letters, the company’s previous history with employees with this background, etc. For example, some employers of CSU Chico BIS majors have done tracking studies of their hires and have found that in general BIS majors are promoted more quickly, are more loyal to the firm and tend to be more productive than similar graduates from other schools. The unstructured component in a hiring decision involves factors such as how well the person interviews, the perspective employee’s personality and just general impressions of the person. These are traits that are very difficult to quantify. That is why these data components are termed unstructured data.

Strategic decisions are those made at the highest-level of an organization and generally will have a long-term impact on the company. Examples of strategic decisions are whether to build a new production facility, whether to develop and introduce a new product line, the hiring or dismissal of high-level executives, etc. Each of these decisions can have a significant influence on the success and maybe even the survival of the company. Because of the broad nature of these types of decisions, they are made using more unstructured data and also data external to the company, such as the general economic condition of the region, the industry, the entire country and now with the globalization of business, the economic condition of the entire world.

5.3 Data Repositories

While many people think of the data in a company as being a mass of data all stored in one place, this is not the case. In a well managed information system different types of data are stored in different places where people needing access to that data can easily access it. In a not very well managed information system the data may be scattered throughout the company and it is very difficult to even find the needed data, no less access it.

A little history may be helpful here. As mentioned in the introduction to this text, data used to be stored in functional areas within the company. The sales data was stored in a sales system or even many times multiple different sales related systems. The purchasing data was in another set of systems. The production data was stored in another set of systems and so on. This is what we now term legacy systems.

If someone needed data that cut across multiple functional areas, let’s say sales data and related production data, then it was quite a task to find the data and extract the data from the systems involved. In some ways this was a technical problem since the systems holding the data may have stored the data in different formats, but it was an even bigger political problem since each functional area owned their data and those people were generally reluctant to share it.

For most companies the transition to enterprise resource planning (ERP) systems has made a big difference. An ERP system covers almost all areas of a business and stores all of the data in a single unified database. In addition these systems are designed to almost totally eliminate data redundancy. Another benefit of these systems is that they enforce uniform business processes throughout the company. Under a legacy environment, different areas of the company would use different procedures. Not only would that cause problems with storing and accessing the data, but it also caused inconsistent policies to be enforced in different areas of the company. For example, one region of the company may have used a computer system different from that of another region. The policy on customer return of merchandise may have been treated differently on one system from that on the other system. Inconsistencies like this can cause major customer relationship problems and also be confusing to the employees.

ERP systems are operational systems. These systems are referred to as online real time transaction processing systems (OLTP systems). They are used to run the business on a day-to-day basis. Hence, with respect to decision making they are primarily involved in the operational decision making of a company and their data is strictly structured data. Most of the routine operational decisions are programmed into the ERP system. So decisions dealing with inventory levels, customer credit levels, product delivery dates, etc. are all automatically handled by the system.

Since a large majority of the operations of a business and almost all of the employees are using these OLTP systems, the performance of the system is extremely important. For example, slow response time in the system will mean that customers will have to wait for the system to complete a transaction and employees will not be as productive since their work will also be slowed by having a sluggish system.

( To illustrate the complexity and the size of these OLTP systems, the SAP ERP system has over 80,000 entities (tables). While the SAP system is probably the largest and most complex OLTP system, all commercial grade systems are quite large, some being measured in pedabytes (a thousand terabytes) of stored data. )The data in an OLTP system is stored using a series of tables that are linked together. As you will learn in your database class, these tables are called entities and they are linked together using what is termed relationships. There are a series of reasons for using this type of data structure, but the two main reasons are to reduce or eliminate redundancy and also to optimize the speed of writing new and updated data to the database. This entity/relationship structure, usually called a normalized database structure, accomplishes both the reduction of redundancy and optimized write speed very well. However, there is one major problem with this structure, as the database gets bigger, its response time slows dramatically. Hence, one thing that a database administrator must do is to purge old data from the system to keep performance acceptable.

Figure 5.2 is a very simplified example of how the data is represented in entity/relationship structure. We will briefly discuss this model in lecture, but this example will be discussed in great detail in your database course. Also, we will spend a little more time on this structure in the final chapter in this text.

FIGURE03_01_ERD_2002_0828

Figure 5.2 Example of Entity/Relationship Model

5.4 OLAP Systems

The data that is purged from an OLTP system will be the transactions that have been completed and are no longer needed on the system. This historic data is not just thrown away; it can be of great value in decision making. While this data is stored in a special archive file, the usual way the archive can be employed is to reload the data into the OLTP system. Normally that is not acceptable because is causes performance problems due to the volume of data being reloaded.

The way in which all historical data is handled is to be placed in a completely different system. These systems are termed online analytical processing systems (OLAP). These systems will store massive amounts of data that may go back with decades of historic data. They are designed differently than the OLTP systems in that they are optimized for reading and not writing. The data storage area is usually referred to as a data warehouse. Since the data warehouse structure emphasizes read efficiency, unlike the entity/relationship model used in OLTP systems, there will be much data redundancy in OLAP systems. The general rule is that OLAP systems will be somewhere around 100 times bigger than a corresponding OLTP system.

The basic structure involved in building a data warehouse is a series of star schemas. These are simple two dimensional data structures that are subject oriented (for example, hiring in human capital management, sales activity by product line in marketing, accounts receivable management in accounting, etc.). While these structures can store large amounts of data, their simple structure allows for relatively fast access. Figure 5.3 shows an example of a star schema. In a typical commercial data warehouse there will be hundreds of these structures that service different decision making areas of the company.

Figure 5.3 Example of a Star Schema

As the name implies an OLAP system is primarily used for decision making (Analytical Processing). While the OLTP system is used in making operational decisions, the OLAP system is used in making tactical and strategic decisions. So that means that the primary users of the OLAP systems are management level employees. So substantially less activity will be on OLAP systems when compared to an OLTP system. Also, since tactical and strategic decisions are more long term, the performance of the system is not as critical as that in an OLTP system. For example, if you are trying to decide whether or not to sell a customer goods on credit, that operational decision has to be made immediately. While if you are trying to determine whether or not to build a new production facility, this strategic decision might take weeks or even months to decide.

Another difference between OLTP and OLAP systems is that OLTP systems will hold detailed information about every transaction that a company has made. On the other hand, because of the nature of the decisions being made on an OLAP system, primarily summary data is stored. OLAP systems also come with a whole set of analysis tools that can be used in making complex decisions. The decisions in an OLTP system are primarily based on reports and screens designed in the system and have very limited analytical tools. However, for the OLAP system the combination of the data warehouse storage system and the associated analysis tools can be used to make tactical and strategic decisions. This combination of data and tools is commonly referred to as business intelligence (BI).

Another field that has developed in this arena is that of data mining. While the traditional role of business intelligence tools has been to investigate business activities that are well understood and whose data can be collected and analyzed in an established manner, the field of data mining explores massive amounts of traditional data to search for patterns in the data that were not previously known. This research area employs a different set of statistical tools that can be used to analyze the data in the data warehouse. This type of analysis can open competitive opportunities that a firm never even knew existed.

5.5 Big Data

( Google was the prime mover in collecting and analyzing large amounts of data. From every term ‘ Googled ’, video viewed on YouTube, route planned on Google Maps, etc., data is being stored and analyzed from every Google user. )There is a whole class of new data that is being collected and analyzed by progressive companies. This is termed “Big Data” and involves primarily non-numeric data such as emails, voice recordings, videos, social networking data, etc. As the name implies, there is a tremendous amount of this type of data being stored.

Simply due to the nature and volume of the data, new methods of storing and accessing the data are being employed and are being deployed on very expensive hardware specifically designed to process this type of data. In addition, a whole series of new tools is being developed to analyze this data. While this field is presently in its infancy, it is predicted that tens of thousands of new jobs will be created in order to reap the benefits of analyzing this data. In many ways the BIS majors will be in the forefront of this revolution. Industry predictions are that the number of career positions in this area in the next decade will far surpass the number of people to fill these roles. While predictions such as this have been pretty accurate over the last couple of decades, only time will tell with respect to big data.

5.6 Decision Making Examples

So far we discussed theoretically what data is analyzed in different types of situations and how different types of data are stored. Let’s now look at some specific situations and discuss the data and the analysis that may be involved. For operational decisions we already discussed determining the inventory level when making a sale, whether it is possible to sell goods on credit for a specific customer and also determining when to replenish inventory. For each of these the data in the OLTP system can be used immediately to make the decision. But there are less straightforward decisions that can also be resolved by using an OLTP system. For example, if a customer wishes to buy a product that we produce and our finished goods inventory is not adequate, the system can calculate how long it will take before the goods can be available to the customer. These are complex calculations that involve raw material inventories, machine and labor availability, and production and delivery times. This is a great example of what an integrate OLTP system (such as SAP ERP) can do at an operational level. That type of instantaneous analysis would not be possible with nonintegrated (legacy) systems or in manual situations.

At the tactical level many times there isn’t just one question to be answered, but a whole series of questions. In fact, the process usually starts with an initial investigation of the data and the results of that query simply leads to additional questions that need to be answered. For example, a manager may be interested in determining why goods are returned by customers for refunds. The first question may be are there any goods that are returned more often than other goods? Looking at the data may show that clothes are most frequently returned. With that the question may be is there a difference in the return rates for women and men? In addition, are some manufacturer’s goods returned more often than others? Do some of our stores have more returns than other stores? Do some times of the year have a higher frequency of returns? For some of these questions there are preconceived ideas of what the answer should be and the data is primarily used to confirm the expected answer. In the case of returns by gender, the expected answer is that women return items more frequently than men and that there are more returns right after Christmas than at other times of the year. However, the data may show that what was expected is not what our company experiences. That is the reason why this type of analysis is important to businesses.

Once the data has been analyzed, that is only the beginning of the process. Remember we said that tactical decisions rely on semi-structured data. The unstructured part of the process is to discover why the situation is occurring. This usually involves observing the situation, interviewing people involved in the transactions, do investigations on the Internet, etc. In our example if we found that a specific store had a higher percentage of returns, we should interview that store manager and see if they are doing things differently at that store. It may not be a bad thing to have more returns. You may find that the customer base is more loyal because of this return policy. Only more investigation can disclose this type of information.

The process of data analysis for strategic decisions is similar to that of making tactical decisions, but these investigations are more complex and require analysis of much more unstructured data. Take for example the decision of whether to build a new production facility. One obvious input into this decision is the demand for the products to be produced at the new facility and the capacity of the present production facilities. Is the demand increasing over the long term? Historic data can be used to answer this question. However, if there are other events anticipated in the future that will change demand, these must also be considered. For example, maybe a major competitor has just withdrawn from the market and we expect their customers to want our products. Or it may be that the market penetration of the product is anticipated to broaden. These are not things our historic data will disclose.

The demand for the product is only one factor to consider. We would also want to determine the appropriate time to build the facility. We would need to investigate the real estate market and the construction industry to see what the costs would be. Of course, there will be many alternatives to constructing a new facility. We may decide to lease existing factory space or buy an existing building. In addition, we may decide that the risk of expanding capacity may be too great and we may decide to have another company do some of our production to compensate for the lack of our own capacity. As you can imagine, there are lots of alternatives and while we will be using some internal data in the decision making process, there are many other sources that will have to be tapped until the decision can be made.

The field of big data analytics is still developing, but the opportunities look very attractive. For example, by scanning social media companies can glean information about their products before there are wide spread problems. If people are finding problems and posting the problems on blogs, we can have our product engineers contact the people to see what the problem is and how it can be fixed.

From a marketing perspective, we can determine people that have certain interests, such as sports or gardening, etc. and then scan the social media to see who is in their group of friends. From that we may be able to find additional sales contacts that have similar interests.

( The launch of Google Maps Street View in the United Kingdom caused legal actions to be taken against Google by the British government. Approximately 200 UK residents were identifiable in Street View images, some who were taking part in activities they wished to not have displayed online. Google had assured the UK Information Commissioner’s Office (ICO) that faces and license plates would be blurred, though the blurring system had failed. The failure to not blur faces fell under the UK Data Protection legislation, meaning that Google would need to obtain permission to use the images by each person identifiable. The UK ICO ruled that Google Street View should not be stopped due to the small risk of privacy invasion. Source: http://en.wikipedia.org/wiki/Google_Street_View_privacy_concerns )The use of these big data techniques are in some sense scary since they have the potential for the evasion of privacy. This is especially true since computers have become the central focus of communication for many people. In addition, in many cases the data people send is captured without the person’s knowledge.

5.7 Technical Section – Excel Pivot Tables

Pivot tables are a quick and easy way to summarize data in a spreadsheet and is a common tool used to analyze data in a data warehouse. It is a powerful tool that can be used to do multidimensional analysis. Multidimensional analysis is really just a fancy term for being able to look at data from many different perspectives. It is also termed slicing and dicing the data.

Following is an explanation of how to use Excel pivot tables. I will use sample data in this explanation that I will have available on Blackboard so that you can follow this presentation by doing the work yourself.

Open up the Highway_Patrol_Sample.xlsx spreadsheet. This is just a made up document that shows details about a set of traffic violations. First highlight the data area as shown below. This is not necessary, but will save you a little time. You then want to be in the Insert tab on the top and you will select PivotTable in the left most position in the Tables section. See circled items in Figure 5.4 below.

Figure 5.4 – Sample Excel Screen

The PivotTable selection has two options, select the PivotTable option. The selection box as shown in Figure 5.5 will appear. Since you already had the data area selected, this will be filled in by the system. If you didn’t have the data area selected, then you will have to fill in the Table/Range entry. While it is a matter of choice, you will select placing the pivot table on a new worksheet for the class assignment. You will then hit the OK button.

Figure 5.5 – Create Pivot Table Information Box

You will now see the screen in Figure 5.6. This allows you to select the data you wish to analyze by selecting the various data items into either rows or columns of the report.

Figure 5.6 – Pivot Table Screen

If we wish to see the total amount of fines levied by each officer, first check the Officer box on the right and then check the Fine box. That gives you the following result (see Figure 5.7 below).

Figure 5.7 – Total Fines for Each Officer

The system automatically selects the sum for a numeric field. However, this can be changed by right clicking on the Sum of Fine field (see Figure 5.8) and selecting Value Field Settings (see Figure 5.9). That will give you a series of choices. I selected Average and got the result shown in Figure 5.10.

Figure 5.8 – Changing the Field Function

Figure 5.9 – Value Field Settings

Figure 5.10 – Displaying the Average Fines

So far we have only shown a few things you can do with pivot tables. What if we wanted to know how many of each type of ticket was issued? This is shown in Figure 5.11. We selected the Violation and the Ticket #. The Ticket # was selected because it is a unique identifier and counting it will give the number of unique tickets that were issued.

Figure 5.11 – Count of Ticket Types

So if we want to limit the types of tickets displayed to those in which the operator was driving poorly and endangering other drivers, then we can click on the arrow to the right of Row Labels and you can then select only those items you wish to display. Figure 5.12 shows this selection process and Figure 5.13 shows the result of the selection. This is termed “slicing” the data since only part of the data is being displayed.

Figure 5.12 – Limiting the Display

Figure 5.13 – Result of Limiting the Data

We have covered some of the major features of pivot tables, but there are other things that you can do. I would encourage you to investigate some of these other features by going to Microsoft help and seeing what else is available. There is a YouTube video I made that reviews what was just done here with respect to pivot tables.

Click here to view the video on Pivot Tables.

Information: The Currency of Modern Business

Chapter 6 – Computer Operations

6.1 Introduction

In this chapter we look at how a computer functions at a very basic level. While different types and brands of computers are different as to their capabilities, at the lowest level they function in the same way. While you probably will not be working with computers at the level we discuss here, understanding these concepts will be useful in understanding and possibly solving problems you encounter.

In general computers have two major components that work together – hardware and software. Neither is of any use without the other. We first discuss the hardware components and then we discuss software. We will not get very technical, but hopefully you will get a reasonable understanding of how a computer system operates.

6.2 Hardware

Unlike other pieces of machinery, computer hardware can be configured in almost an infinite number of ways by changing the software. This is what is termed the stored program concept and it is the single aspect of computers that make them so universal.

Let’s start our examination by looking at the major components of a typical desktop PC. As shown in Figure 6.1 there is a motherboard that contains the main logic and storage components of the system. There are internal drive bays that hold peripheral devices (i.e. input/output devices) such as hard disk drives, DVD/CD drives and other specialized devices. There are also card slots that can hold logic cards for other types of input/output (I/O) devices.

Figure 6.1 Internal View of a Typical Desktop Computer

The heart of the system is the motherboard. It contains the central processing unit (CPU), main memory and the connections (called buses) to all of the peripheral devices. The CPU is the “thinking” part of the system. It contains the arithmetic logic unit (ALU), the control unit and very fast memory locations called registers. All of these parts communicate with each other and then they communicate with the remaining components of the system through the memory bus to access main memory (also termed random access memory or RAM) and all of the other devices through the I/O bus. Figure 6.2 represents these connections.

Figure 6.2 CPU Bus Structure

Looking at Figure 6.3 shows how the typical motherboard is configured. The CPU (also referred to as the chip set) is denoted as number 1. That connects to the main memory, denoted by the number 2, via the memory bus. The remaining connections are attached to the I/O bus. Items 3, 4 and 5 are slots for I/O card controllers that attach to different types of devices. Connectors 7 and 8 are for hard disk drives and DVD/CD drives. Connector 9 is for audio input and output (microphone and speakers). It should be understood that each manufacturer can configure their boards differently and may have different components on the board. We will open up some desktop machines and take a look at them during an in-class assignment.

Figure 6.3 Typical Motherboard Configuration

At a very high level these components operate in the following manner. Programs reside primarily on the disk drive and are loaded into main memory through the I/O bus prior to being executed. During execution the CPU executes the program by accessing the program in main memory through the memory bus. Any data needed by the program is also fetched into main memory from an I/O device through the I/O bus and is then passed on to the CPU through the memory bus. When the program produces output, the path is reversed. The output first is stored in main memory via the memory bus and then passed to an output device (for example a printer) through the I/O bus.

When we discuss software, we will describe in more detail how all of these hardware components operate. However, before that we discuss one of the most important peripheral devices, the hard disk drive. This is the main high quantity, high availability storage device. Modern disk drives can store terabytes of data and retrieve that data quite quickly. The basis of this device is that the data is stored as magnetic images on the drive. These magnetic images are interpreted by the device as either a one or a zero. That is a one is represented as being magnetized and a zero is not. These are called binary digits or bits. The bits are organized into groups called bytes, where eight bits equal one byte. We will not go into too much detail with respect to binary arithmetic. That is covered in depth in your networking course, but when we discuss machine operation we will cover this topic in a little more depth.

So the disk drive holds the magnetic images that represent the data and programs in the system. This is accomplished by the surface of the disk platter being covered with iron oxide (i.e. rust) which can be magnetized. This is why many people refer to disk drives as “brown and round”. The disk platters are stacked on top of each other and they are spun by a motor (see Figure 6.4 below). The read/write heads can sense the magnetic images and are swung to the correct position on the disk on an actuator arm. The read/write heads are located so that they can access both the top and bottom surfaces of each disk platter. As the disk is spinning, the read/write heads can sense where on the disk surface they are positioned and they can read or write the desired data when the disk spins to the correct position.

Figure 6.4 Disk Drive

If you observe a disk drive in action, it may appear that all of this is happening very quickly. However, to the computer processor, the response time of a disk drive is incredibly slow. Electricity travels at the speed of light (299,792,458 meters per second) and the processor involves only movement of electrons. A disk drive spins at approximately 7,000 revolutions per minute. The difference in accessing data in the main processor and that on a disk drive is at least a factor of a million times faster within the processor. While a large majority of the data used in business processing resides on disk drives, managing the use of that data within the processor is extremely important to efficient use of the system components.

6.3 System Operation

We now take a simplistic look at how a computer system operates. (Disclaimer: What is presented is reasonably accurate, but many important aspects have been omitted for the sake of simplicity.) Before we go further in the discussion, we need to state a few basic facts that may help you understand what is happening. A computer can hold both instructions and data in its memory. The software (i.e. the operating system) knows which areas of memory contain instructions and which areas contain data. So the hardware does not need to differentiate between which memory positions are data and which are instructions. This is called the “stored program concept” and it is what makes computers so powerful and versatile. Obviously, if the system attempted to execute data mistaking it for instructions, there would be a major problem (i.e. MicroSoft’s blue screen of death).

The programs and data are stored in a series of memory areas. The primary memory is the random access memory (RAM or also called main memory or real memory). This is the largest memory area (gigabytes) and is the slowest memory. As we discussed in the previous section, it is connected to the CPU via the memory bus. Specialized memory is also used by the system. There are general purpose registers (GPR’s – usually 32 or 64 of them) that usually hold data that is being immediately processed. There are also special registers that control the functioning of the system. Since these memory locations reside in the CPU they are much faster than RAM. In addition, special programs, such as those used in initial program loading (i.e. booting) are stored in read only memory (ROM) which is usually stored on a separate memory chip.

No matter what the system is doing, only instructions and data within the registers or RAM can be processed by the CPU. Data stored on other devices such as disk drives, CD drives, memory sticks, etc. must have their data moved into real memory before it can be processed by the CPU.

The general idea is that there is a data hierarchy in which there are few of the fastest, most expensive memory positions – registers, but lots of the slower memory – RAM and then a whole bunch of relatively really slow memory – disk drives, DVD/CD drives, etc.. If the computer system is designed properly, then almost all instructions and data that need to be executed will be in fast data storage areas such as the registers. This is termed the “hit rate”. Determined by what the system is doing, this hit rate could be as high as 99%.

The “brain” of system is the CPU. The processing of computer instructions is done by the arithmetic/logic unit (ALU), the control unit and the system clock. There is also a very important data storage unit (i.e. register) involved in this processing; this is termed the program status word (PSW) or the control register. It holds much of the status information the system needs in order to operate. The following discussion deals with the lowest level functioning of a computer and it centers on the PSW.

A computer executes in cycles. A simplistic view is that each instruction cycle takes one cycle of the clock. So for our simplistic view, if you have a 1GHz system, you execute one billion instructions per second. In each instruction cycle three different things happen:

1. The control unit queries the PSW to find the memory address of the next instruction and that instruction is loaded into the ALU,

2. The address stored in the PSW is incremented to point to the next serial instruction in the executing program,

3. The ALU executes the loaded instruction.

In a 1GHz processor, this sequence is performed one billion times each second.

The other CPU components, such as the main memory (RAM) and read only memory (ROM) are physically separate from the processing unit and connected to the processor via the memory bus. The registers are encased in the same chip as the processing unit. This is the main reason there is a substantial difference in performance from doing register operations and real memory operations.

The basic instructions within a computer can be put into one of five categories:

1. Load instructions that move data from RAM into a general purpose register (GPR).

2. Store instructions that move data from a GPR to RAM.

3. Addition instructions that add (subtraction, multiplication and division are all variants of addition) one GPR to another.

4. Compare instructions that compare the value in one GPR to another and store the result (less than, equal to or greater than) in the PSW.

5. Branch instructions that change the address in the PSW to point to a different instruction in the program based on the comparison value in the PSW.

This doesn’t sound like the computer can do very much with just these instructions, which is all any computer can do at its most fundamental level. However, by combining these functions, extremely sophisticated operations can result.

6.4 Sample Program Execution

Let’s go through an example of a program execution.

The program steps that you want to execute (in an imaginary programming language) are

A = A + B In a programming language this says add A and B and store the result in A

If (A GT C) C = A. If the value A is greater than the value C, make C equal to A

A compiler is a program that takes these human readable instructions and turns them into machine instructions (machine readable), which are held in binary code in memory. The above code is in a high level computer language such as Java or C. There is a lower level coding language called assembly language that is a one to one match with machine language instructions, but is easily understandable by humans. So we first break these high level instructions into their corresponding assembly language instructions (human readable).

The first instruction: A = A + B. converts into

Mv A,3 - Move the value in the memory location that is holding the value A into GPR 3.

Mv B,4 - Ditto value B into GPR 4.

Ad 4,3 - Add the value in GPR 3 to the value in GPR 4 and store the result in GPR 3.

St 3,A - Move the value in GPR 3 into the memory location represented by A.

The second instruction If (A GT C) C = A converts into

Mv A,3 - Move the value A into GPR 3.

Mv C,4 - Move the value C into GPR 4.

Cm 3,4 - Compare the value in GPR 3 with the value in GPR 4.

Br NG,NEXT – If the result of the above operation resulted in A greater than C then do nothing, if it is not greater (NG) then branch to the instruction stored in a memory location referenced by NEXT.

St 3,C - Move the value in GPR 3 to the memory location represented by C.

The instruction immediately following our portion of code would be referenced by the location pointer NEXT. This means that the last assembly instruction would only be executed when A > C.

This assembly language program would then be converted to machine language. If you were to examine the actual machine language code stored in memory, it would be difficult to determine what the system was actually doing since all of this would be converted to binary code.

So now let’s look at what could be stored in memory and how it is executed. Figure 6.5 gives a possible example. However, before we look at that we have to discuss how memory bytes in a computer are represented. Remember, a byte contains 8 bits (binary digits). In order to represent a byte in human readable form we break a byte into two four binary digit nibbles. Each nibble can assume a value from 0 to 15. In order to represent the nibble using only a single digit we represent the numbers 10 through 15 by the letters A through F. We will discuss this more in class.

Let’s look at the memory map in Figure 6.5. If this was actually coming off of a computer’s memory it would contain many pages of data and would be referred to as a memory dump. We now look at what our simple program above will look like using an imaginary computer instruction set.

Figure 6.5 – Memory Map

Notice that the instructions (i.e. the program) are stored in a different location than the data. The compiler will build the program in this way. Also, note that the storage locations are numbered using hexadecimal arithmetic (i.e. numbers 0 through F). Each byte of storage has its own unique address. A byte is represented as two spaces. Since a hexadecimal digit represents 4 bits, it takes two of them to represent a byte (8 bits). This is termed byte addressable memory and all RAM and ROM memory is byte addressable.

Computer instructions can take many forms, but they generally have a structure similar to the following:

XX – Operation code, what we want the computer to do.

XXXXXX – Operand #1, the 1st storage location or register to be used.

XXXXXX - Operand #2, the 2nd storage location or register to be used.

Looking at the first instruction in main memory, the first byte has a value of 10, which is the operation code for this processor to move data from memory address 00B000C2 (operand #1) to register 03 (operand #2). When the processor executes this instruction, the address of the instruction 00A570A0 is held in the PSW. This instruction is moved from real memory to the ALU. The PSW is then incremented to point to the next instruction at byte 00A570A6. The system then takes the value at address 00B000C2 (i.e. F1F2F3F4 which represents the number 1234) and moves it into register 03.

The next instruction starts at address 00A570A6, the value held in the PSW. It is another move statement. In this case, we are moving data from address 00B000C6 (i.e. F0F1F2F3 which represents the value 0123) to register 04. Of course, the PSW would be incremented to 00A570AC, the address of the next instruction.

This instruction has the operation code of 01, which is the code for adding two register values together. In this case, it is adding register 04 to register 03. For this instruction, the result is stored in register 03 (this functionality is determined by the engineer who designed this chip). This means that the value F1F3F5F7 (the number 1357) would be stored in register 03. The PSW is incremented to the address of the next instruction 00A570AF.

The last instruction has an operation code of 12, which represents a store operation. Hence, the value in register 03 (F1F3F5F7) would be moved to memory location 00B000C2. The rest of the instructions should be obvious if you know that operation code 3B is the compare register operation and the 59 operation code is branch when not greater.

At this point, we want you to answer the following questions to see if you understand the preceding explanation.

Question 1: Was the instruction at address 00A570C8 executed?

Question 2: What value is stored at position 00B000CA when all of the code is executed?

Question 3: When all of this is done, what value is stored in the PSW?

One thing that we didn’t discuss is that the PSW is not always incremented by the same amount. Some computers, such as Intel based processors and mainframes use complex instruction sets (called CISC computers), while most Unix machines are reduced instruction set machines (called RISC computers). The CISC machines have different length instructions while in the RISC machines all instructions are of the same length. The instruction set that we just looked at is obviously CISC.

6.5 The Operating System

Hopefully, we haven’t overloaded your brain at this point. We now look at the program that runs the computer, the operating system. We won’t go into great detail, but the operating system is the single most important piece of software to any computer. The operating system controls all of the functions of the hardware. Generally anything a human or an application program wants to do on the system is actually performed by going through the operating system. That is, the operating system is a layer between the human or application program and the computer hardware. So the operating system manages all of the hardware resources of the system. By doing this, the system can appear to run many programs simultaneously (termed multi-tasking) even though it only has a single CPU that can only execute one thing at a time. This is accomplished by the operating system giving each program only a little bit of processor time and rotating the programs using the processor by using complex algorithms to determine which program is “most important”. This is termed priority, round robin queuing.

Another example of how an operating system manages hardware is the way in which main memory is managed. In many cases the amount of memory needed by all of the programs running exceeds the total amount of RAM available. This isn’t a problem for the operating system since it breaks all programs into small chunks termed pages (usually 4K in size) and also breaks real memory into the same size small chunks. The operating system stores all of the pages of all of the programs that are being executed in a special area of a disk drive called the page pool (or also called virtual memory) and only those parts of a program that are actually executing at any time are loaded into real memory. At any time, the large majority of the parts of executing programs will remain in the page pool and will not be loaded into real memory. In this way the operating system can optimally use the system’s memory. This is termed virtual memory management and every modern operating system employs it.

So how does the operating system affect the way you, as the system user, use the computer? The answer is that almost everything you do on a computer is controlled by the operating system. What you see on the computer screen is the user interface of the operating system. As you move the mouse or type on the keyboard, you are sending commands to the operating system. The graphical user interface (GUI) that you see on the screen is just a picture generated by the operating system to make the user’s life easier. As you point and click, the operating system interprets these actions into commands for the computer to execute. For example, if you want to execute a program and double click on that program icon, the operating system forms that into a command that instructs the computer to load that program and to start executing it. In essence, the operating system adds layers of functionality that reduces the amount of work the end user has to do.

There are many different types of operating systems. Different types of computers will use different operating systems. For Intel based machines, Microsoft Windows operating systems are most popular. However, these operating systems are usually not appropriate for higher end servers. They use Linux and Unix based operating systems. Very high powered mainframe computers use very sophisticated IBM operating systems. While at the lowest level all of these operating systems accomplish the same tasks, they are very different in the way in which they are structured and the ways in which the user can interface with them and control them.

There is much more to operating systems, but at this point we have given you at least an idea of how they work. As with the hardware descriptions, we don’t have the time in this course to cover this material in very much depth.

So let’s review at a higher level how a computer system works. When the system starts, a very low level program called the boot program (or initial program load - IPL) which is stored in a read only memory (ROM) chip is loaded into main memory. This program then loads the operating system from the disk drive or wherever the operating system resides. Once the operating system loads into main memory and begins to execute, then application programs that are stored on a disk drive in binary form (machine readable form) can be loaded by the operating system into virtual memory (i.e. a special area reserved for the operating system on a disk drive). As these programs execute, the operating system loads the active parts into main memory from virtual memory for execution. Any data needed by the executing program is moved from a storage device into main memory. As output is produced by the executing program, it is moved from main memory onto the I/O bus to the desired output device. This is just a basic view of the operations, but understanding this will help you in understanding more complex issues involved in computing. Don’t worry if some of this is a little fuzzy, as you progress through the curriculum, these concepts will become clearer.

We will be doing some work in class dealing with computer hardware and we will also talk more about the operating system and other computer software. Please ask questions in class about these topics.

Information: The Currency of Modern Business

Chapter 7 – Emerging Technologies

7.1 Introduction

To say that the world of information technology is changing is a gross understatement. The pace of change in technology is not just rapid, it also is accelerating. For some companies this presents some very real opportunities to gain a competitive advantage. For other companies there are substantial risks involved in trying to keep up with these changes. In this chapter we will examine some of the changes that are taking place and discuss their impact. As you become information system professionals, one important task that you must do is to continually scan the technical environment by reading the industry publications and talking to others in the industry. This environmental scanning is a key to your technologic survival and should also impress your peers and your boss that you are a serious professional.

7.2 Change is Everywhere

One aspect of technology change is not just the introduction of new technology, but the fact that computer technology is now totally pervasive. All companies, all industries and all organizations are affected by computer technology. For example, in most cases the survival of an organization, not just a company but almost all organizations including government agencies, not for profit organizations and even social organizations must have an effective web presence. But this is only one small aspect of the change. For manufacturers, computers are being embedded into almost all manufactured goods and are also critical to the manufacturing process. Looking at the example of automobiles, they have become an entire storehouse of computers. Computers control the functioning of the engine and other parts of the drive train. In fact there is software now that you can buy to transform the way your car functions including the valve and ignition timing, gear shifting speeds, braking parameters and many other operating aspects. Of course, those are the changes that most drivers don’t see. The apparent ones involve the creature comforts and usability features involving things like navigation, entertainment, interior environment, safety, etc. of the car. All of these involve embedded computer technology.

As computer technology becomes so ubiquitous, companies have to decide where they will position themselves in this fast paced world of change. This is primarily a question of how much risk the company is willing to accept. Of course, there is risk no matter what the company does in this regard, but those risks are different determined by how the company is positioned. Some companies decide to be early adopters of technology. If the new technology is a success, then the reward to the company can be substantial. They can gain a competitive advantage over others in the industry and can also position themselves for greater change in the future. However, the probability of failure is also a major issue with new technology. If the technology is not generally accepted and eventually must be abandoned, then the costs can be great and it may also place the company at a competitive disadvantage. These risk taking companies are usually termed “leading edge” technology companies and in the extreme they are termed “bleeding edge” companies.

Many companies will adopt a middle ground strategy in which they wait to see if the technology is going to be successful and once indications are that it will be successful, then they begin to adapt to the change. While this approach will not generally give the company a competitive advantage, it usually will not put the company in a distinct competitive disadvantage. Then there are the companies that are extremely risk adverse to technology and wait until the success of the technology is a certainty. At this point adopting technology becomes a defensive strategy. They have been put at a competitive disadvantage and their only choice is to commit to the new technology. These companies are termed “trailing edge” adopters. As we discuss some of the changes in technology, we will also discuss how various companies have approached the technology.

We now examine some of the major changes that are occurring in the I.T. world.

7.3 ERP Systems

( Hersey’s ERP Failure The Hersey Company had what is thought of as the worst ERP failure to date. Up until this point, analysts were unsure if a failed ERP system implementation could take down a Fortune 500 company, but this confirmed it was possible. Hersey’s implementation involved an upgrade to SAP R/3 4.6, along with new supply chain and CRM software (a $112 million project!). The largest downfall of the Hersey implementation is thought to be timing. The ERP system went live in 1999, not long before their Halloween candy orders were due to come in. At this time, they realized that there was a problem with the order-tracking and product distribution systems, causing them to lose $100 million of sales that year. Source: www.cio.com )While this technology is not cutting edge by any measure, it is the first technology change we discuss because of its importance. The early adoption of this complex technology occurred about two decades ago. However, this is a great illustration of how risky new technology can be and how it can produce a substantial competitive advantage. ERP systems have the potential to totally change the way a company does business. Some early adopters of ERP systems realized that and were in a great competitive position in their industry. Other companies that approached the transition as strictly a change in computer technology and not a fundamental change in the way they primarily did business failed miserably.

( After analyzing competing software, the CSU system found PeopleSoft to be the best ERP system for their needs. All 23 CSU campuses would be transitioning to the new software. Campuses were able to request if they would like to be one of the first campuses to have the software implemented, middle, or last. The pricing would be the same no matter when the implementation took place. CSU, Chico did not see a competitive advantage in implementing the software first, so they requested to be one of the last implementations. Campuses that requested to be first typically had software that wasn’t fulfilling their business needs. Since CSU, Chico was running fine, implementing last was a benefit. By the time CSU, Chico was transitioning to PeopleSoft, many of the implementation difficulties were already found and resolved during the implementation of earlier CSU campuses. ) ( HP’s ERP Implementation Success HP’s approach to implementing an ERP system was focused on business process re-engineering. They started the implementation of SAP at the division level. That meant that each division of the company started converting their legacy systems to the SAP system. They did this in a phased strategic implementation. For example, they first went live with the system in one country and worked out the problems before spreading the system to a broader group of users. For example they would go live in Germany and once that operation was running smoothly, they would extent the system to the rest of Europe. Based on that success, they then implemented in the Pacific Rim (Japan, China, Australia, etc.) and finally in their biggest market, North America. In so doing they guaranteed the success of the initiative. Management estimated that in transitioning from the legacy environment to the ERP environment over 90% of the workforce had their jobs change significantly, with a tremendous improvement in both efficiency and effectiveness. )Those companies that were successful in the transition to ERP systems reaped many benefits; while those not going through the transition soon realized that there business success was going to be very much dependent on adopting the technology and doing it as soon as possible. At present, almost every major organization has transitioned and they are very much dependent on their ERP systems. For the early adopters, the ERP system gave them a platform from which they could exploit many other technology changes. Those companies without ERP systems found that adopting other technological advances in computing was very difficult or even impossible without these ERP systems in place.

7.4 The Internet

( History of the Internet The Internet is a product of the ARPANET (Advanced Research Projects Agency Network) project. ARPANET was funded by DARPA (Defense Advanced Research Projects Agency) with the intention of be ing used by universities and research laboratories in the United States. The first successful message sent over the Internet was from UCLA to the Stanford Research Institute in 1969. The first communications over the Internet were very different from the way we interact with the Internet today. In the early days of the Internet, computer programmers would program messages on large Mainframe Processors to be sent to other universities. In 1990, the first public Web Browser was released, making the Internet available to anyone. )While the Internet is not a new technology it has such a deep impact on both business and society as a whole that we can’t ignore it. The Internet is still evolving and many of the new technologies would not be happening without the Internet. However, while the Internet has had a substantial positive change with respect to business activity, it also has introduced some major risks into the business community. Obviously, those companies that don’t have a presence on the Internet are in serious trouble, if not already doomed. But probably the biggest risk involving the Internet is the security risks that have been introduced by its popularity and growth.

Prior to the opening of the Internet to business and the general public, the primary computer security problems involved only people that had physical access to your computing facilities. That meant that if you allowed only employees access to your systems, then only insider computer fraud and security issues were of concern. Now just about anybody in the world with the right tools and knowledge has access to your systems and are potential security threats.

There are other important issues involving the Internet that may have a great impact on companies and individuals. One of the biggest factors is the struggle for control of Internet content and the pervasive access to all communication within the Internet by various governments. The legal issues involved with these issues could have a very serious influence on businesses. This is occurring at all levels of government, national governments, state governments and even local governments. These issues are far from being resolved, but could be extremely important in the future.

( Some country’s governments have put regulations in place which restrict access to certain content on the Internet. Figure 7.1 details a study done by OpenNet Initiative describing the degree of Internet filtering around the world. Some governments block entire websites, while others have laws that enable them to censor content. For example, Russia passed a law in November of 2012 which allows the government to remove Internet content on Facebook and Twitter if it is deemed harmful for children. Many countries, the United States included, have laws allowing the government to monitor Internet activity. In the United States, all phone calls and Internet traffic can be monitored at real-time by the Federal law enforcement agencies, with the intentions of finding criminal activity. Source: www.dailytech.com )Figure 7.1 Global Internet Censorship Map

One of the emerging trends concerning the Internet is what is termed the Internet of Things (IoT). This refers to the linking through the Internet of everyday devices which are not normally thought of as computers. This includes things such as household appliances (stoves, refrigerators, microwaves, etc.), sporting equipment (such as golf clubs, tennis rackets, bicycles, etc.), trucks and automobiles, and many other categories of goods. The idea is that all of these items would have sensors and embedded computers that allow the collection of information on the Internet and then either the person being alerted to take some action or the device will take action automatically.

To some extent this is already occurring at a basic level in some devices such as home security systems that can lock doors, turn lights on and off, and adjust the home temperature. This is also happening in some higher-end cars where the car will report where it is located and if the owner believes the car has been stolen, this information can be sent to the police and at the same time the car can be directed to stop the engine and slowly apply the brakes.

Some experts have predicted that within the next five years there will be tens of billions of these types of devices connected to the Internet.

( Sales tax is another pressing issue for Internet usage. Companies such as Amazon have been in conflict with governments over not paying sales tax for transactions with customers in certain states. Sales tax is normally dependent on the location the sale takes place, which is an interesting factor added to online purchasing. Where does the sales transaction take place? Should tax be based on the location of the retailer or the customer? In September of 2012, after much negotiation with the California government, Amazon began collecting sales tax from their California customers. Source: LA Times http://articles.latimes.com/2012/sep/15/business/la-fi-amazon-sales-tax-20120915 ) 7.5 RFID

Radio frequency identification is rapidly replacing bar codes as the preferred method of identifying goods. There are some major advantages to these tags. While bar codes represent the manufacturer and type of a product, RFID tags uniquely identify a specific individual unit. For example, if you buy a book that has a bar code. The bar code describes the book by publisher, title and author. Hence, two books with the same publisher, title and author will have the same bar code. However, with RFID tags, each individual copy of a book has a unique RFID code. Hence, if you lost your book and knew the RFID then you could tell whether another book by the same publisher, title and author was actually yours. That can’t be done with bar codes.

There are two basic types of RFID tags – active and passive. The active tag has a battery and it broadcasts a signal with identifying information. A passive tag has no battery, but is activated by a reader sending a signal that makes the RFID tag reply with an electro-magnetic pulse that contains the identifying information. Since none of these tags have to be visible, the contents of a package can be scanned without opening the package. This is revolutionizing shipping, receiving and inventory control procedures. Doing things such as receiving goods used to involve workers opening the shipping container and verifying the contents. Not only does RFID reduce the amount of labor, it also reduces the opportunity for theft of and damage to the products.

While the benefits of RFID are substantial, some companies have been slow in implementing the technology. As we stated before, if a company doesn’t have an ERP system, they may have difficulty in employing other advanced technology. RFID is a good example of this situation. To track goods throughout their lifecycle, highly integrated software is required. Legacy environments do not offer this integration. Another factor is the cost of the RFID tags. While those costs are coming down, it may not be economically feasible to tag individual units of product. Some passive tags are as low as $.15 each. If you are selling something for a dollar, individual tags can’t be justified. However, if the goods are shipped in bulk, then putting an RFID tag on a palette of goods is easily cost justified.

( Wal-Mart was one of the first companies to transition to using RFID tags. This has drastically streamlined their supply chain by eliminating the need to scan barcodes. Transitioning to RFID was a huge undertaking for Wal-Mart. Not only did they need the technology and knowledge themselves, but they also needed to work with their vendors to make sure none of the products they carry would interfere with the reading of their passive RFID tags. Wal-Mart’s benefits from supply chain improvements include time savings, faster inventory turnover, increased warehouse space and accurate forecasting of inventory needs. They have been such a success that the U.S. military sends personnel to Wal-Mart to receive training on supply chain efficiency. Source: Arkansas Business http://www.arkansasbusiness.com/article/85508/wal-mart-used-technology-to-become-supply-chain-leader?page=all )The real downside of this type of technology is the possible privacy issue risks. If individual units of a product can be identified and that product can be easily traced back to the purchaser, then tracking that person becomes an easy task of simply tracking the good. For example, if a person buys a pair of shoes that have an RFID tag imbedded in them and uses their credit card for the purchase, then that tag can be passively read at any time the person wearing those shoes is near an appropriate reader, which could be anywhere and because of the credit card data, the person is easily identified. In theory people could be tracked wherever they go.

While the technology has tremendous promise for companies to streamline their material handling processes, the privacy issues are of great concern to many people. There has been a discussion of forcing the deactivation of the tags once the product is in the consumer’s hands, but that is still open to debate.

7.6 Virtualization

Virtualization is a methodology in which either one physical computer can be made to appear to be multiple computers or many computers can appear to be one computer. For example, this allows the installation of many different operating systems to be installed on a single computer. In addition, by using virtualization it is possible to expand performance of a system by simply assigning an additional processor to increase the capabilities of the system. This has enabled companies to be extremely flexible with respect to their computing facilities. In addition it saves a substantial amount of money.

The area of system development has been a great beneficiary of this technology. It used to be that separate systems were necessary to use in developing the application systems, at least one separate system to test the application and then a different system had to be used to run the system. With virtualization multiple applications can be developed, tested and run independently on the same physical computer. Another benefit of virtualization is that virtualized images of systems can be developed and then used to create new systems in a matter of minutes. This is a powerful technology which is enabling other advances in technology. For example, cloud computing is very dependent on virtualization.

( Chico State offers SAP services to over 100 other universities throughout the world. This is done through the SAP Hosting Center here on campus. As we have already discussed, the SAP system is a very large system. The hosting center has over 50 instances of SAP installed. It used to take two to three days to install an additional system. Additionally, each time a university needed a new client; it would take hours to generate that new client. With virtualization most of these tasks now take just a few minutes. )7.7 Mobile Devices

All you have to do is look around and you can see that smart mobile devices now dominate society. Of course, businesses are also involved in this transition. These devices are changing the way businesses conduct their business. They allow employees to be much more productive and responsive to the company’s suppliers and customers.

( Companies allowing BYOD need to be able to support a large number of technologies. The table below lists out some of the major brands of mobile products. Product Brand Tablet Apple, Samsung, Amazon, Lenovo, Microsoft, Acer, Asus, Barnes & Noble, HP, Coby , Kaser , Etc. Smartphone Apple, Samsung, HTC, Blackberry, LG, Motorola, Nokia, Palm, Sony, Dell, Etc. Many times, companies that produce tablets and smartphone also produce multiple varieties of these products. Smartphones and tablets can also come with a variety of operating systems. For example, HP’s TouchPad tablet is capable of running HP webOS , several different versions of Android or Ubuntu OS. For companies to allow employees to use their own devices, a large amount of software is needed to interface the mobile devices with the company’s enterprise systems. )However, this is causing some very big problems for companies. A few years ago when mobile devices were much more expensive, companies would provide the device only to employees absolutely needing the technology, such as sales people. In this way a single type of device, such a one manufacturer’s model, could be deployed in a limited manner.

With the dramatic price reductions in these devices, almost everyone can now afford a smart phone and/or a tablet computer. So for many professional business people this meant that they had to manage both a personal device and a business device that was to be used only for business purposes. To most this is not acceptable and workers now want to use only their personal devices and be allowed to conduct company business from this device. Upon initial examination, this looks like a real cost saver for the companies. The devices are supplied by the employee and the company does not have to spend the money. However, there are many problems associated with this.

This movement toward personal smart devices is termed “bring your own device” (BYOD) and many companies are struggling to support a wide range of different technologies and keep the company’s data safe and secure. While there is specialized software called mobile device management (MDM) software that can be installed on mobile devices that segregates the business activity from the personal activity, the risks are still of concern. Of course, like all other situations as the technology advances, those wishing to exploit and attack that new technology will develop new methodologies. This will remain an area in which the information technology areas of companies will continue to wrestle with the developing problems, but it is also an area where smart companies will employ the technological advances to be more competitive.

7.8 Cloud Computing

Cloud computing is one of those technology areas that has been hyped so extensively that almost every technology vendor has some variation of a cloud product. In many ways some of these companies feel that no matter what the product does, putting cloud in its name will make it more attractive.

Cloud computing is a variation of an older technology, service oriented architecture (SOA). The general idea behind these concepts is that the business has access to an application or other services through the network. An analogy that one can use is that of using electricity. Over a century ago, many companies generated their own electricity and there were few standards with respect to how the power was delivered. Presently, the standard in the U.S. of 110 volts is delivered out of most outlets and the users have absolutely no idea of where or how that power is generated. Cloud computing is similar in that the location of the system you are using is usually unknown. In theory, the company just requests an information system service and it gets delivered. Of course as you may guess, theory and practice never quite line up.

There are three basic models of cloud computing. They are software as a service (SaaS), infrastructure as a service (IaaS) and platform as a service (PaaS). We won’t go into detail with respect to each of these, but will briefly describe each.

SaaS – This is the situation where a vendor on the Internet provides all services to the customer including running the software and anything dealing with supporting the application. Workday, a company that heavily recruits here at CSU Chico, is an SaaS provider. They provide services with respect to human resource management. So their customers run their HRM processes strictly on the Workday systems and Workday does the processing, stores the data and backs up the data for all of their customers. SaaS is the most complete of the cloud services offered.

( Workday is the leading provider of cloud solutions for human capital management and financial management. Being a SaaS solution, users easily interact with software through a web browser. The customer does not need to worry about data storage, performance or maintenance issues, usually associated with HR and Financial software. Since it is in the cloud, updates are automatically pushed to customers when they are ready. Every customer is running using the same exact software code, configured to their business needs. )IaaS – This is less complete than the SaaS cloud service. In this situation the customer gets access to a computer that is configured with respect to everything except for the application software. The customer is responsible for installing all applications and also manages their maintenance and use. This is a good option for companies that are developing software, but don’t want to deal with configuring the operating system, networking, database, etc. All of that basic functionality is the responsibility of the cloud supplier.

PaaS – This is the least functional way of providing cloud services. The cloud provider is essentially providing the hardware to the customer. The customer is responsible for installing the operating system, database software, all other supporting software and the applications. Again, this is a way that developers can access computer resources without having to physically manage the hardware.

7.9 Social Media

The advent of social media such a Facebook, Twitter, blogs, etc. has had a definite influence on society as a whole, but businesses are also finding that social media can be very important. For business, this is a two edged sword. While there can be great benefits, there are also risks introduced by social media.

The most apparent business use of social media is in the area of sales. This is a new way to approach and attract new customers. However, it can also be a way to stay in communication with existing customers and determine their level of satisfaction with the goods and services provided by your company. This is a developing area in which companies see a good amount of potential.

( Apple’s iPhone 4 release was known as the biggest tech fail ure of 2010 by CNN. Known as ‘ Antennagate ’, the iPhone 4’s reception bars would decrease if the phone was held a certain way. Apple initially tried to brush off the problem as being a small software problem. Customers went to Twitter, Facebook , blogs, etc. to express their feelings about the problem. Finally, Apple held a press conference explaining the problem, offering free cases to every customer who purchased an iPhone 4 and promised software updates would be coming soon. This cost Apple millions of dollars. Scanning social media could have helped them detect the problem soon after the release and corrective action could have begun earlier. )The internal use of social media is another avenue that companies are exploiting. They can use these tools internally to assist communication within teams that may be physically dispersed and allow employees to access information quickly.

On the negative side, employees can easily post negative comments about the company on social media or inadvertently release confidential information on their personal social space. This type of activity becomes extremely difficult to monitor and can be very damaging to the company.

The entire area of business use of social media is still evolving and will no doubt be quite a bit different by the time you graduate.

7.10 Big Data

In chapter 5 we already had some discussion of big data. So we won’t repeat that information. However, this is something that many experts are predicting will be a tidal wave of activity over the next decade. So we just need to emphasize that this is definitely an emerging area that may have a major influence on your future professional career. In addition, there is tremendous opportunity for abuse of this technology from the privacy point of view. So it may also affect you personally and not just professionally.

7.11 3-D Printing

An emerging technology that has the potential to change many aspects of business and much of society is the development of affordable 3-D printing technology. This is a technology that started decades ago with very expensive CAD/CAM prototyping machines. These machines were able to build 3-D models of parts to be manufactured. These models were generally fragile, but allowed engineers to see and handle the product they designed on the computer.

With the advent of high-tech materials, it now is possible to build real parts by “printing” them on a 3-D printer. These printers use the digital computer designed part schematic as input and “prints” the part by laying down a series of two dimensional layers, stacking them to form the three dimensional part. While historically these printers were extremely expensive, the prices are now reasonable enough that they are affordable for home use.

It doesn’t take much imagination to see how this technology can impact business and society as a whole. For example, if you need a part for your car, just log on to the Internet, download the digital design for that part and print it immediately. There would be no delay in waiting for it to be shipped, no trip to the parts store and the expense would be minimal. This has the potential to have a massive impact on all of manufacturing, shipping, sales, etc. The potential is great, but as with most technology, we have to wait to see its ultimate impact.

If you are having problems grasping these concepts, here is a video that shows a 3-D printer in action:

http://www.youtube.com/watch?v=8aghzpO_UZE

7.12 Information Systems Security

While this chapter focuses on emerging technologies, system security cannot be strictly classified as an emerging technology. However, it would be remiss to not also cover one of the most important areas in computing during this discussion. While it isn’t emerging, the security issues continue to evolve. If companies don’t focus their attention on security, it is almost guaranteed to be a major problem.

This topic is covered in many of your MINS and BSIS courses so we won’t spend substantial time on it here. However, security should be considered in almost all decision making in the information technology area. If you ask chief information officers (CIO – the top I.T. manager), about their most pressing concerns, security will be near the top of their list, if not the very first thing on the list.

There are two security perspectives that must be considered by an information system professional. The first involves all individuals in both their business and personal computer interactions. The second perspective is from that of an information system professional who must protect the computer systems from security compromises. With this in mind, there are two assignments in this course each one dealing with one of these two perspectives. A homework assignment deals with your actions to avoid security problems in a simulated work environment. The second assignment is an in-class assignment in which you play the role of a system administrator who must protect the computer systems from attacks. These assignments should provide a good introduction to many important security issues.

As the other technologies discussed above evolve, the security aspects with respect to them will also evolve. Each one of the above issues has its own set of security exposures that must be considered.

7.13 Technical Section - Web Programming

One skill that you will need to know quite thoroughly by the time you graduate is how to develop Web sites. In this course we will start that process with a very simplistic approach to Web site construction. This discussion will also serve as a very cursory introduction to programming languages. The basis of Web site development is the HTML scripting language. Hypertext markup language (HTML) is technology termed a scripting language. While you may not know it, you have used other markup languages before, but you haven’t actually seen the tags that are used in the language because they are hidden. The best example is Microsoft Word. When you are typing in MSWord, what you view is the displayed results of the markup language used by MSWord.

So let’s take a look at how HTML works. The basis of any markup language is the tags that one can use to define the actions you wish to take. The general form of HTML tags is

<tag> CONTENT </tag>

Where the first tag defines the action you wish to take, such as bold <B> with whatever you wanted in bold, in this case “CONTENT” and ending with the tag that ends the bolding, </B>. While many commands have an end tag, not all tags need an end. For example the <br> tag means skip to the next line and there is no end tag required.

So as you are building a Web page you are giving instructions to the system on how to present the page to the viewers. As the word hypertext implies, the content cannot only be words, but it can link to other content including pictures, videos, other Web pages, etc. All of this is accomplished using the tags within HTML. These tags are predefined and must be used in a specific way like any human spoken language. In essence, HTML is a language that “talks” to Web browsers and instructs them on how to display the content.

You will also hear the term XML used when discussing Web pages. This stands for extensible markup language. It is also a tag-based language, but unlike HTML the user can define their own tags. XML is primarily used to store data in a standardized format. We will not use XML in this course, but you will work with it in later courses. You may want to note that the Microsoft Office products store their files in XML format.

In assignment 7 you will be building Web pages. These pages will be stored on a Web server, which is a computer that runs Web services. Your pages will have a URL (Uniform Resource Locator) address associated with them. This is the way in which the browsers on other computer systems can reach your Web pages. Not to get too technical, but the information communicated by the Web server is sent to the requesting computer using the hypertext transfer protocol (HTTP). This is a networking protocol by which computer systems communicate with each other. You should note that the URL’s you will use start with HTTP.

So how do you build Web pages? Before you start to design your Web page, you need to understand the process. Since the Web page will reside on a server, you first need to create an account on that server. This process is explained in the assignment. Once you have that Web account, you will need to develop the code on your own computer (or a lab computer) and then move that code over to the correct directory on the Web server. You will use a file transfer program to copy the code to the server. Again this is described in the assignment.

Development of the HTML code will be done using a text editor. Using a word processor would embed its own tags into the saved file which makes the program unreadable to the Web browser. So the only thing left to do is to actually write the code and the content for your Web page. If this is your first time to build a Web page, you should start with a limited group of tags and first build a rather simplistic Web page. The assignment gives you a template to use and also provides a group of tags that are sufficient to build your page. One way to learn more is to look at other people’s Web pages and examine the source code for those pages. This is easily done from a browser.

Now that you have written your code, the process becomes an iterative one. I would suggest that you start with very simple content and tags, test that to see what it looks like and then add more and more functionality and content to your page. So the iterative process is as follows:

1. Write your code in the text editor.

2. Save the code to a file on your computer using the correct naming convention.

3. Copy the file to the right directory on the Web server using the file transfer program.

4. Look at your Web page in the browser of your choice.

By doing this and improving the code with each iteration, you will be able to build an impressive set of Web pages.

Following is a YouTube video that describes this process.

Click here to view the video on creating a Web Page.

Information: The Currency of Modern Business

Chapter 8 – Additional Topics

8.1 Introduction

There are many issues that you will cover throughout your educational career in BIS. We have covered some of them already, but you will be exposed to most of those issues in much more depth in other BSIS and MINS courses. In this chapter we cover some issues that we haven’t yet covered in this text. Again, you will cover these issues in much more depth throughout the remainder of your academic adventure here at CSU Chico.

8.2 Internationalization

Business is now and has been for quite a while an international arena. Goods and services we consume come from all over the world and goods and services from the U.S. are consumed in almost every other country on the globe. While international trade has been established for many centuries, the advent of high speed computer communication and processing has brought this to an incredible level where even work groups are spread over many countries and many time zones.

The revolutions occurring in information technology are affecting almost all aspects of business. With the universal exposure provided by the Internet, even an individual living in a small rural community can do business with people around the world. Just take eBay as an example. An individual can market their goods to the world on eBay. The only restriction involves the physical delivery of the merchandise. Only if the merchandise is too large and heavy is there a problem with delivery of goods, even overseas.

However, in business the changes are even more dramatic. Because of the fast transmission speeds that fiber optic cables allow, work can be done in geographically diverse places. For the information systems area that means some functions like the help desk function may be outsourced to a company operating in another part of the world.

However, there are significant differences in cultures in different parts of the world. These differences go well beyond just different languages. From an everyday point of view, the life style of the people can be quite different, including things such as the hours they work, eat, play, etc. and also their social interaction. But the business world in these countries can also be greatly influenced by different business processes including the laws regulating business and the customary way in which business is transacted. Also tax laws and laws dealing with how both data and money can flow in and out of a country can have a major influence on how business is transacted.

( Years ago, CSU, Chico students were given the opportunity to experience internationalization first hand. Hewlett Packard hired a group of BIS students as interns to work locally part time while they attended school. They were responsible for the management and execution of SAP data archiving world-wide for HP. They had to attend meetings very early in the morning dealing with HP units in Europe and very late at night when dealing with Pacific Rim units. They found it to be a very interesting and challenging experience dealing with a diverse group of people. )No doubt you will experience much of this in your career. In some ways it is very interesting, but it can also be very challenging. With many businesses having operations around the world, that means that you may need to be involved with the business during what would normally be considered “off hours”. In essence, the 9 to 5 work day is a thing of the past in many situations and also the times in which the computer system can be “down” for maintenance or reconfiguration are becoming very narrow. We as information system specialists cannot ignore these changes and in many ways the changes in technology have been the driving force behind these changes.

8.3 Business Ethics

( Enron had been recognized by Fortune as the most innovative company in corporate America for several years in a row. They specialized in energy, commodities and services. In the early 2000’s, the company’s stock price had plummeted and they filed for bankruptcy. This was caused by financial troubles that were hid den inside the company and not exposed to the public. The executives found ways to hide billion dollar losses and failed projects. They convinced auditors to overlook these areas. Many stockholders lost a great amount of money they had invested. It was the largest bankruptcy up until that point. Some of the executives were sent to prison for their unethical actions. Enron shut down, along with the auditing firm that overlooked the unethical behavior. Sources: http://en.wikipedia.org/wiki/Enron , http://money.cnn.com/2006/05/29/news/enron_guiltyest/ )Ethics is a very challenging area of business. Recent fraudulent business practices that have been exposed have highlighted the concern many have over the topic of business ethics. While many of these frauds involved criminal actions against the participants, ethics does not just involve complying with the law. In many cases the ethical action is more of a question of whether the employee’s action is consistent with the company’s stated policies and also if it is treating others fairly and with personal integrity. One common measure is what is termed the golden rule; that is to treat others as you would want to be treated yourself.

( WorldCom is another example of executives acting unethically. WorldCom was a telecommunications company, which was later sold to Verizon and operates under a different name after emerging from bankruptcy. WorldCom started to go under when it was realized that their stock was overvalued. The stock price began to decline. An internal audit showed that the accounting department underreported costs and inflated revenues with bogus accounting entries. The auditors informed the board of directors. The Securities and Exchange Commission began an investigation, which found that the company’s total assets had been inflated by $11 billion. Many employees were charged with criminal penalties. The CEO began serving his 25 year prison sentence in 2006. Sources: http://voices.yahoo.com/worldcom-scandal-look-back-one-biggest-225686.html?cat=3 , http://en.wikipedia.org/wiki/MCI_Inc. )

( The 2008 financial crisis was also influenced by unethical behavior. As housing prices grew, financial institutions were motivated to sell more homes. To gain more customers, these financial services allowed customers to take mortgages that they would have a difficult time paying back. Some of the loans would start at a very low interest rate and increase with the market. When customers couldn’t afford their homes, they would stop making mortgage payments. The US government bailed out some of the major financial institutions. Many people lost their houses, investments, etc. )Pessimists claim that trying to teach ethics to college level students is not effective, that their moral background has already been set in their childhood. They point to the amount of cheating that takes place in school and use that as a measure of the lack of integrity of some individuals. Optimists believe that in many cases the lack of ethical behavior is a matter of people not knowing what constitutes ethical behavior and that education is the answer to setting ethical standards. While the pessimists may be right about some individuals, we will take the optimistic point of view in our discussion.

Before going any further it is necessary to define business ethics. In simplistic terms it is best to say that ethical behavior is being able to discriminate between right and wrong and taking the correct action based on that judgment. In many cases the correct and ethical action is obvious. However, even if the ethical action is obvious, the circumstances may be such that the benefits to either the business or the individual of not making the ethically correct choice may be very attractive. Resisting this temptation is really the key to business ethics.

Most textbooks deal with ethics at the highest level of the organization by discussing major corporate frauds and swindles and describe the actions that were taken to execute the fraud. While the corporate commitment to ethical behavior begins with the leadership of the company, we will address ethical situations that occur lower down the organizational ladder. Almost all organizations have policies and procedures that define the company’s commitment to good corporate citizenship. Having these stated policies is not of very much value if the management does not support and enforce these policies. In general this is described as “tone at the top”, meaning that if the leadership doesn’t believe in true ethical behavior, then subordinates will have little support to enforce these policies.

While all ethical lapses do not involve fraud, that is one aspect of the situation. There are two types of fraud: financial fraud and common fraud. Financial fraud involves the misstatement of the company’s financial records and financial statements and is used to deceive investors and creditors. These frauds almost always involve the top level administration of the company and are usually the ones that are so large that they make the national news if they are discovered. Common fraud directly benefits an individual or a small group of people and usually the frauds are substantially smaller in their impact on the company. While there are many different types of common fraud, some examples include theft of goods, changing accounting records to benefit an individual, such as changing the payroll records, overstating sales in order to increase a sales person’s commissions, cheating on expense reports, etc. Generally both financial fraud and common fraud can be prevented or detected by having good internal controls.

However, many of the ethical situations do not involve fraud or are in a gray area in which most times there is little or no penalty involved. For example, your manager may tell you not to report all of the hours you worked in order to keep a project below budget or your boss promised you a raise but wages at the company are frozen, so you are told that it’s okay to overstate your travel expenses to compensate you for the raise you deserve. Determined by state and local laws, some of these actions may be illegal, but even if they are not, they are probably against company policy and may be sufficient cause for dismissal. However, this puts the employee in the very uncomfortable position of either taking unethical actions or going against their manager’s orders.

These types of ethical situations are not as difficult as they first appear. There are laws that enable an employee to report these types of conflicts and be protected from retribution. They are termed “whistle blower” laws and they are at both the federal and state levels. For publicly held corporations one of the important laws is the Sarbanes/Oxley Act of 2002. One section of that law makes it mandatory that companies set up anonymous channels by which whistle blowers can report illegal and unethical actions by higher level individuals in the company.

For most employees the backbone of ethical behavior is the company’s code of ethics. Each company will have their own code of ethics so it is important that employees read the code and are familiar with what actions are allowed under the code. When in doubt, the employee should consult with the human resource department with regard to specific situations.

The John Deere Company, a manufacturer of farm equipment, has a good reputation for ethical behavior. Their code of business conduct can be found at

http://www.deere.com/en_US/docs/Corporate/investor_relations/pdf/corporategovernance/code_of_business_conduct.pdf

( Ethical employment decisions will start before your first day of work. Many BIS students will have the opportunity to interview with various companies and receive multiple job offers. Though this seems like a good situation to be in, your ethnics need to be at play. Every job you accept means that other candidates were turned down for the position. Once you sign a job offer, you have committed yourself to that company. Additional job offers and even interviews should be refused. Many companies will invest a substantial amount of money for a candidate. Some will send you to their headquarters, sometimes out of state. Just because they’ll pay for your flight and hotel doesn’t mean this is a free vacation. If you’re already committed to a company, additional interviews should be turned down. Unethical behavior puts the reputation of not only you, but the BIS program and the university as a whole in question. )While this document is comprehensive and has quite a bit of detail, the central theme is that people affiliated with John Deere, be they employees, suppliers or agents, must have high moral standards, treat others fairly and that any appearance of conflict of interest be totally avoided. The last point needs some explaining. The company believes that the offering or the acceptance of any gifts by any employee from or to any business associate no matter the size of the gift may give the appearance of a bribe. Hence, the company strongly discourages any such activity. This stresses an important point that in business it is difficult to measure intent of the person involved, hence appearances become the best measure of intent. For example, inviting a major customer to be a guest at a company golf outing, may be just a friendly act of appreciation for their business. It can also be construed to be a bribe to generate more business. Companies like John Deere highly discourage doing this or conversely have an employee accept a gratuity such as this.

So far we have concentrated on ethical decisions, but good corporate citizenship has broader implications. The company should also be a member of the community. That means that the company supports local charities, doesn’t pollute the air and water and allows its employees to participate in activities that help the community. Not only is this being a “good neighbor”, but in many cases it is good business, since local people will appreciate the actions by the company. Also, as an employee, you can be proud to ( Many companies have programs in place to give back to their communities, whether locally or globally. Here are a few examples of good citizen companies that recruit from CSU Chico. Workday Chevron Foster Farms Workday has an employee match program, meaning that they’ll match any donation an employee makes to a charity which they are involved. The co-founder, Dave Duffield, also started Maddie’s Fund, which helps homeless animals from being euthanized. http://www.workday.com/company/about_workday/community_giving.php Chevron is a very global company and a great neighbor to have. Chevron operated many of its global locations in desolate areas where oil fields, refineries, etc. are located. Chevron works with the local governments and nonprofit organizations to help protect and encourage the health, education and economic development of these areas. http://www.chevron.com/about/inthecommunity/ Foster Farms holds the holiday giving tradition all year around. Their employees first established “Christmas Kids”, where a group would put together gift and food baskets. They have now expanded to senior groups as well and distribute baskets year round. They also have a long list of community, business, education and non-profit organizations which they support. http://www.fosterfarms.com/about/commitments.asp )work for a company that takes its role as a citizen seriously.

8.4 Database Management

If you are a BIS major, the next technical course you will take is the database management course (MINS 235). This is a foundational course in the BIS curriculum and your I.T. professional career.

As we have emphasized throughout this text, data is the key component in optimally running a business and making quality business decisions. However, the way this data is stored is key to the usefulness of this data. If the data is stored in such a way that it can be analyzed and used in many different ways, then that increases the value of that data. Another objective of good data management is that you retain data integrity throughout the process. That means that initially the data entered into the system is correct and throughout its life it remains correct. While this appears rather obvious, it can be very difficult to accomplish without storing the data in a very specific way.

Let’s look at a typical example. Under a poorly designed system when your personal information is entered into the system, this data may be stored multiple times. This data redundancy is in fact a typical characteristic of legacy systems. While initially this data may be entered correctly, if changes are made, they may be entered in one place where the data is stored, but in the other places the data may not be changed. Again, if the data is stored in different places and different people have custody of that data, then it is very difficult to coordinate changes. Under these circumstances it becomes very difficult to determine “the truth”, that is what the real value of a data item truly is.

The key to optimally storing data in an operational database (that is an OLTP system as defined in chapter 5) is to be sure the data is stored in normalized form. The technical definition of this is left until the database course, but in simple terms it means that the data involved in every transaction is broken up and stored in a series of interlinked tables that have no redundancy. One way to look at this is to say that each separate master data object, for example people, places or things, have a separate table. For example, there would be a table that contains customers, another that would contain employees, one for products, etc. In addition there are tables that contain the data that describes each transaction. When these tables are combined by the database system, the end result is a full and complete description of the business transactions. Designing the database structure based on the needs of the company is one of the major design tasks of I.T. professionals.

A technical diagram called an entity relationship diagram (ERD) is used to describe the database structure. Figure 8.1 shows the ERD for the highway patrol database we will be using in assignment 8.

Figure 8.1 Highway Patrol Database ERD

For this example we have five entities in which four of them are master data and only one, the Citation entity is transaction data. The small key icon next to the first item in each entity is the primary key for that table. The primary key is the unique identifier for each row in the table. That means that trying to enter the same primary key for two different rows will produce an error. That is one way databases enforce data integrity.

The relationships are represented by the lines connecting the entities. These are formed by connecting the primary key in one table to what is termed a foreign key in another table. As an example the primary key in the Officer table is Badge_Num and that is also the foreign key in the Citation table. That links the two tables together by forming a relationship. The notation on the two ends of the relationships denotes that the relationship is a one to many relationship. For example an officer can write many citations, but any single citation is written by only one officer.

There is one other important integrity concept that we need to discuss. That is the concept of referential integrity. What this means is that when entering the foreign key in a table, such as the Citation table, the corresponding primary key must exist in the other table being referenced. For example, if we enter officer badge number 123 in the Citation table, then an officer with badge number 123 must exist in the Officer table, otherwise an error will occur. This is another important way databases maintain data integrity.

So once the data is entered into the database how do we know all of the details involved with a given citation? The answer is that the database system can take the data in the Citation table and using the foreign keys link all of the corresponding data in the other tables to form a complete description of the transaction. This linking operation has a formal name. It is called doing a join operation and it is a key function in making databases powerful and useful.

So let’s look at how this database structure can be a very efficient and effective way of handling data. As we stated earlier, in this model the Citation table holds the transaction data and the other tables hold the master data. If this was a real situation, almost all of the master data would be present in the database when a citation was to be issued. For example, the Officer table would be filled when the officers were hired. The Fines table would be determined by the laws passed by the legislature, the Vehicle table would be filled as cars are registered and the Driver table would be filled when the driver’s license was issued. That means when a citation is issued there is only a need to enter the data into the Citation table. Where only the keys for the other four tables would be entered and all of the characteristics of those entities would already be in the database. Notice that there is no need to enter redundant data such as the characteristics of the officer, the driver, the vehicle, etc. All of that is already in the database and there is no chance of it being entered again and possibly being in error. Compare that to entering data into an Excel spreadsheet where all of the data would have to be entered multiple times with a very high probability of error.

This was just a quick introduction to databases. You will learn substantially more about how to design, build and access databases in your MINS 235 course.

8.5 Computer Networking

If database is one of the fundamental building blocks of business computer systems, networking is the glue that holds everything together. With today’s technology, computers that are not attached to a network are so limited in functionality as to be almost useless. In fact, the previous statement may not be strong enough, since the Internet is so important that a connection to not just a network, but also the Internet may be considered absolutely necessary.

From an I.T. perspective networking is different than databases and some of the other fundamental I.T. technologies. The functioning of networks is usually hidden from the I.T. professional and the users. There are I.T. network specialists that manage and control the networks, of which BIS majors are excellent candidates, but the typical I.T. professional in most cases doesn’t deal with the technical aspects of networking directly. Instead they must understand how networks function, and be able to tell when a specialist needs to be involved in order to resolve a problem.

Computer networks link different computers together. There are different physical ways in which computers can be linked. They can be connected by networking cables which primarily includes copper wires and optical fiber connections or connections can be wireless which includes using different wave lengths of the transmission medium. Also, networks can use different protocols to communicate. A networking protocol is simply a set of rules that each part of the network follows in order to understand the other component’s transmissions. Right now one set of transmission protocols is dominant in most companies. That protocol set is the TCP/IP protocol set, the protocol set used by the Internet. In addition, for local area networks the Ethernet standard is the dominant technology for the physical network connection.

Connecting one computer resource to another computer resource usually involves a series of different types of networks. Usually computers in the same building will be connected via a local area network (LAN). Computers in different buildings owned by the same company will have the two or more local area networks attached to a backbone network. To communicate with the world beyond the company or in remote locations the backbone network will attach to a wide area network (WAN). Figures 8.2, 8.3 and 8.4 show a possible configuration for a company. We will discuss this configuration in class in more detail.

Figure 8.2 Local Area Network (LAN) Configuration

Figure 8.3 Wide Area Network (WAN) Configuration

Figure 8.4 Wide Area Network (WAN) Configuration cont.

The specific way in which the machines communicate is determined by the protocol used. Instead of sending all of the message at once, the system will divide the message into a series of small parts called packets. Each packet is sent individually through the network until it is received by the other computer. When received the packets are reassembled into the original message. In that way, long messages, such a large file transfers, will not “hog” the network. In general each computer will be assigned an address. In TCP/IP the address is termed the IP address. The communication from one computer to the next is done using the address of the other computer in the messages being sent. So each packet will contain both the sending and receiving addresses. All networking protocols will do all of these functions, but can do them differently and may also do them in a different order. This is just a quick overview of networking. You will cover all of this in much more detail in the networking course (MINS 345).

8.6 Technical Section: Database Management Systems

For the final assignment in the class you will be analyzing data from a Microsoft Access database. This database system is designed for use by individuals or very small businesses. It is an easy database to use and it is a good tool to use to introduce you to how a database functions. In your database class you will not be using Access, but will use the Oracle database, a database designed for large enterprises that is much more powerful than Access.

The best way to start Access is to download the assignment database file from Blackboard and save it on your system. Then start the system by double clicking on the file. You will see the following screen:

If you wish to examine the ERD, under Database Tools click on Relationships. At that point you will see what is in Figure 8.1.

If you wish to enter data into one of the tables, then just select the table and double click on it. For example, if you do that to the Citation table, you will get the following screen.

Running a query is done in the same way. Simply double click on it and it will execute.

To build a query by using the Query by Example (QBE) tool, select the create tab and then the Query Design icon as highlighted in red on the next screen.

This will bring you to the screen that allows you to select the tables you wish to use in your query. See the screen shot below.

Once you have selected all of the tables you will use in the query, then you can select the columns you want in the query. As an example, I selected the Citation and Driver tables. Now for each column you can select the table and the field you want in each column of the report as shown below.

Then save the report and double click on it to display the results. It is as simple as that.

This gives you a quick look at the Access database tool. You will learn more complex methods and the SQL language that is a powerful database construction and access methodology.

There is a YouTube video dealing with using the Access database for this assignment. It can be viewed at:

http://www.youtube.com/watch?v=bWU_ahCgCkY&feature=youtu.be

Glossary

BABY BLUE = Introduction

LAVENDER = Ch. 3

GREEN = Ch. 6

NAVY BLUE = Ch. 1

ORANGE = Ch. 4

RED = Ch. 7

FUSCHIA = Ch. 2

ROYAL BLUE = Ch. 5

PLUM = Ch. 8

#

2/10 net/30: Is one of the standard payment terms. This means if you pay the bill before ten days after invoice date, then you will receive a two percent discount from the total amount of the bill. If you pay within 30 days, the entire amount is due at payment. Anything after 30 days would be considered late and could possibly have penalties associated with late payment.

3-D printing technology: Is the process of making a three-dimensional solid object of virtually any shape from a digital model. 3D printing is achieved using an additive process, where successive layers of material are laid down in different shapes. 3D printing is also considered distinct from traditional machining techniques, which mostly rely on the removal of material by methods such as cutting or drilling subtractive processes. The 3D printing technology is used for both prototyping and distributed manufacturing with applications in industrial design, architecture, construction, automotive, military, etc.

A

Accessibility: In regards to data, it’s having the data available to the people authorized to use the data when these people need to use the data. With many companies operating worldwide this means that the system must be available and accessible almost 24 hours a day 7 days a week.

Accounting: This includes all of the financial record keeping activities within a company.

Account receivable: (Also termed the customer account) is money owed by customers (individuals or corporations) to another entity in exchange for goods or services that have been delivered or used, but not yet paid for. The payment by the customer reduces that account receivable on the company books.

Accuracy: Data accuracy is collecting data with freedom from mistake or error.

Active tag: Tags that use batteries as a partial or complete source of power to boost the effective operating range of the tag and to offer additional features over passive tags, such as temperature sensing. Active tags have an internal battery to power them and are usually RW (tag data can be rewritten and/or modified). Active tags generally can transmit their data over a longer distance, the tag itself is larger than a passive tag, and has a limited operational lifespan.

Actuator arm: (Same as access arm) it’s the mechanical arm that moves the read/write head across the surface of a disk. The access arm is directed by instructions in the operating system to move the read/write head to a specific track on the disk. The rotation of the disk positions the read/write head over the required sector.

Arithmetic logic unit (ALU): An ALU is an integrated circuit within a CPU or GPU that performs arithmetic and logic operations. Arithmetic instructions include addition, subtraction, and shifting operations, while logic instructions include Boolean comparisons, such as AND, OR, XOR, and NOT operations. ALUs are designed to perform integer calculations. Therefore, besides adding and subtracting numbers, ALUs often handle the multiplication of two integers, since the result is also an integer.

Assembly language: A very simple type of computer programming language. Assembly language closely approximates binary machine code and uses equivalent symbols to communicate with the computer language of a specific machine. It is one step removed from machine language. It is easily understandable by humans.

Audit trail: A step-by-step record by which data can be traced to their source. Audit records typically result from scientific research, financial transactions, or communications by systems, people, or accounts. This is the technique used to track improper market activity.

B

Backbone network (BN): Computers in different buildings owned by the same company will have the two or more local area networks attached to a backbone network. BN are a large network to which many networks within an organization are connected. It usually is a network that interconnects all networks on a single site, but it can be larger if it connects all the organization’s terminals, computers, mainframes, LANs and other communication equipment.

Backorders: A customer order that has not been fulfilled. A back order generally indicates that customer demand for a product or service exceeds a company's capacity to supply it. The percentage of items backordered and the number of backorder days are important measures of the quality of a company's customer service. Total back orders, also known as backlog, may be expressed in terms of units or dollar amount.

Balance-forward billing: (Also termed cycle billing) is the second method of billing. It is the balance outstanding from the previous bill. This is the way credit card transactions are billed. Since different customers are billed on different days, the work of the billing staff can be divided over the entire month. Balance-forward billing is done when there are many transactions and the dollar amounts of the transactions are not that significant.

Bar code: (Also called universal product code UPC) is a machine-readable code in the form of numbers and a pattern of parallel lines of varying widths, printed on and identifying a product.

Big Data: Non-numeric data of large proportions. This data can be analyzed to provide information useful for a company’s competitive advantage.

Bill of lading: A legal document between the shipper of a particular good and the carrier detailing the type, quantity and destination of the good being carried. The bill of lading also serves as a receipt of shipment when the good is delivered to the destination. The document must be with the shipped goods and signed by the authorized representative.

Bill of materials: The bill of materials (sometimes termed a material BOM) is a structured list of all of the components needed to make a product. The comprehensive list contains raw materials, components and assemblies required to build or manufacture a product. A bill of materials (BOM) is usually in a hierarchical format, with the topmost level showing the end product, and the bottom level displaying individual components and materials. A manufacturing BOM is of vital importance in materials requirement planning (MRP) and enterprise resource planning (ERP) systems.

Binary digits: One of two digits (0 or 1) used in a binary system of numeration.

Bits: A bit is the basic unit of information in computing and digital communications. A bit can have only one of two values, and may therefore be physically implemented with a two-state device. The most common representation of these values are 0 and1. The term bit is a contraction of binary digit.

Bleeding edge: Is technology that is acquired almost immediately after its release, regardless of the increased cost or risk involved. Bleeding edge technology is most popular among innovators and early adopters, and is often seen as related to terms "leading edge" and "cutting edge." But it is not to be confused with leading edge or cutting edge.

Board of Directors: These are people elected by the stockholders and they oversee the activities of the company. The board will appoint the executives of the company and will set the high-level policies. They do not participate in the day-to-day control of the company.

Bring your own device (BYOD): BYOD is a phrase that has become widely adopted to refer to employees who bring their own computing devices: smartphones, laptops and PDAs to the workplace for use and connectivity on the corporate network. It’s the policy of permitting employees to bring personally owned mobile devices to their workplace, and use those devices to access privileged company information and applications.

Business analyst: Is a person who investigates the requirements of a business problem and helps design the computerized solution to solve that problem. Determined by the scope of the position, it could also involve writing the code to solve the problem or assist in configuring existing software.

Business intelligence (BI): Is a broad term that refers to applications, infrastructure and tools, and best practices that transforms raw data into meaningful and useful information for business purposes. BI can handle large amounts of information to help identify and develop new opportunities. BI improves decisions and the performance of an organization. Most experts define BI as being based on a data warehouse structure.

Business oriented positions: These are the primary positions for which BIS majors are recruited. While some of these positions have a heavy technical component, they also demand that the person has a good knowledge of business and can interact with other business people.

Business processes: Are structured tasks or activities with predefined objectives that entail all events from the beginning to the end of the process. For example the sales to cash business process is all of the business activities that are involved in selling goods to a customer and subsequently collecting payment from that customer.

Business processing activity: The business processing activity flowchart symbol represents a processing step for the business end. For example, the business receives the customer’s order and processes it for the next phase in completing the transaction.

Business to business (referred to as B to B or B2B): A B to B is a commerce transaction that exists between businesses. It’s business that is conducted between companies. An example that illustrates the B to B concept is mobile phone manufacturing. Many of the phone’s components are manufactured independently and the mobile manufacturer must purchase these parts separately. For instance, the shell, batteries, electronics, glass and speakers may be manufactured elsewhere and sold directly to the phone manufacturer.

Business to consumer (B to C or B2C): A transaction conducted directly between a company and a consumer who are the end-users of its product or service. B to C as a business model differs significantly from the B to B model. B to C is the most common model for everyday consumers. For example, when a consumer purchases a product from a retailer such as Wal-Mart they played a role in the B to C model.

Byte: A byte is a unit of measurement used to measure data. One byte contains eight binary bits, or a series of eight zeros and ones. Therefore, each byte can be used to represent 2^8 or 256 different values.

Byte addressable memory: Refers to random access memory (RAM) that can be accessed at the byte level such as the common DRAM and SRAM chips used in all computers. A single character can be read from or written into any memory byte. Byte addressing is essential to working on individual items of data. It enables fields in a record and characters in a field to be identified and processed independently of the rest. All RAM and ROM memory is byte addressable.

C

Card slots: There are two completely different types of card slots in most computers. The memory card slots are used primarily to add memory to RAM, in the form of memory cards. Extra memory can be used in the processing of instructions and data. Access card slots (also called I/O card slots) are used to add peripheral devices to a system. This can include graphics cards, sound cards, networking cards, etc. These cards have external access so that the related devices can be attached to the system.

Central processing unit (CPU): Is the hardware within a computer that carries out the instructions of a computer program by performing the basic arithmetical, logical, and input/output operations of the system. This is the pretty much the brain of your computer (the thinking part of the system). It processes everything from basic instructions to complex functions. Any time something needs to be computed, it gets sent to the CPU. The CPU can also be referred to simply as the "processor." In terms of computing power, the CPU is the most important element of a computer system.

Chief Executive Officer (CEO): Is the highest-ranking executive. The CEO reports to the Board of Directors. The CEO’s primary responsibilities include developing and implementing high-level strategies, making major corporate decisions and managing the overall operations and resources of the company.

Chief Financial Officer (CFO): The CFO is the senior manager responsible for overseeing the financial activities of the organization. The CFO manages the financial planning and monitoring of the company’s cash flow. The CFO oversees the accounting and finance departments while ensuring that the company’s financial reporting is accurate and completed on time.

Chief Information Officer (CIO): The CIO is the senior technology leader of the organization. This person is responsible for the operation of the information systems (IS) area. Since the information system is so important to all of the other parts of the company, the CIO must also coordinate the activities of the IS area with all of the other areas in the company. The CIO manages the implementation of the useful technology to increase information accessibility and integrated systems management.

Chief Operations Officer (COO): The COO is the senior manager responsible for managing the day-to-day operations while reporting them directly to the CEO. This person oversees production quotas and day-to-day activities. The COO has a close working relationship with the CEO. It is their primary duty to keep the CEO updated with current organizational events.

C-level Executives: The highest-ranking executives are called C-level Executives and report directly to the CEO. They consist of but not limited to the Chief Operations Officer (COO), Chief Financial Officer (CFO) and Chief Information Officer (CIO). They are in charge of their respective departments in the organization.

Client: In the SAP environment, a client is an entity with independent information and data.

Cloud computing: Is a type of computing that relies on sharing computing resources rather than having local servers or personal devices to handle applications. Cloud computing is the next stage in the Internet's evolution, providing the means through which everything — from computing power to computing infrastructure, applications, business processes to personal collaboration — can be delivered to you as a service wherever and whenever you need it.

Code of ethics: Each company will have their own code of ethics so it is important that employees read the code and are familiar with what actions are allowed under the code. Ethical codes are adopted by organizations to assist members in understanding the difference between 'right' and 'wrong' and in applying that understanding to their decisions. An ethical code generally implies documents at three levels: codes of business ethics, codes of conduct for employees and codes of professional practice.

Compiler: Is a computer program that translates a program written in a high-level language into another language, usually machine language.

Completeness: Is essentially data of high quality. It is complete when it fits the demands of the intended user in operations, decision-making and planning. Data is considered complete when it represents reality.

Complex Instruction Set Computing (CISC) computers: Is a processor where each instruction can perform several low-level operations such as memory access, arithmetic operations or address calculations. The CISC architecture contains a large set of computer instructions that range from very simple to very complex and specialized. Though the design was intended to compute complex instructions in the most efficient way, it was later found that many small, short instructions could compute complex instructions more efficiently. This led to a design called Reduced Instruction Set Computing (RISC), which is now the other major kind of microprocessor architecture. Intel Pentium processors are mainly CISC-based, with some RISC facilities built into them, whereas the PowerPC processors are completely RISC-based.

Computer-aided design (CAD): CAD is the use of computer systems to assist in the creation, modification, analysis or optimization of a design. CAD software is used to increase the productivity of the designer, improve the quality of design, improve communications through documentation and to create a database for manufacturing.

Computer-aided manufacturing (CAM): CAM is the use of computer software to control machine tools and related machinery in the manufacturing of work pieces. CAM may also refer to the use of a computer to assist in all operations of a manufacturing plant, including planning, management, transportation and storage. Its primary purpose is to create a faster production process and components and tooling with more precise dimensions and material consistency.

Control unit: A control unit (CU) handles all processor control signals. It directs the flow of data between the Central Processing Unit (CPU) and the other devices. It directs all input and output flow, fetches code for instructions from micro-programs and directs other units and models by providing control and timing signals. A CU component is considered the processor brain because it issues orders to just about everything and ensures correct instruction execution.

Corporate management: This includes the corporate leadership and their support staff which includes corporate planning, legal and financial management.

Corporation: Corporations (also referred to as C Corporations) are companies that issue stock and are an independent legal entity owned by the shareholders. Corporations are more complex than other business structures because of complex tax and legal requirements. However, unlike other business formations, the corporation itself, not the shareholders (owners), is held legally responsible for all debts the business incurs.

Customer Relationship Management (CRM) systems: An IS system that traces all of the activities for each customer of a company and all sales contacts with these customers. For example, all contact information and professional information will be stored so that a close relationship can be established between the sales representative and the customer. Determined by the situation this could include some personal data such as the names of the family members of the customer and important dates in their lives. Social media is now starting to play an important role in the CRM space.

Cycle billing: (Also termed balance-forward billing) is the practice of billing different customers based on a scheduled cycle rather billing everyone all at once. Cycle billing allows companies to develop a set schedule and track which customers have and have not yet been billed. It provides companies an efficient way of monitoring their financials.

D

Database administrators (DBAs): DBA manages the data making sure it is secure and the system is delivering the required performance. DBAs set up databases according to a company’s needs, and make sure they operate efficiently, fine-tuning, upgrading and testing modifications as needed. They are also responsible for implementing security measures to safeguard the company's most sensitive data.

Data driven: As a manger makes a business decision he or she needs to have data to support their actions. This data is commonly extracted from the information system. A detailed analysis on the data is necessary to support the actions taken. Such a method to making decisions is a data driven approach.

Data warehouse: Is a database that stores current and historical data that is used for reporting and data analysis.

Direct reporting responsibility: Direct reporting (or solid line reporting) structure ensures a well-defined relationship between a leader and a subordinate. The subordinate directly reports to a clearly defined manager or leader who has full authority. For example, the University Auditor reports directly to the Board of Trustees.

Disk platters: (Or disk) is the circular disk on which magnetic data is stored in a hard disk drive. The rigid nature of the platters in a hard drive is what gives them their name (as opposed to the flexible materials which are used to make floppy disk). Hard drives typically have several platters, which are mounted on the same spindle. A platter can store information on both sides, requiring two heads per platter. Magnetic metal or ceramic disk located inside the computer hard drive that holds the actual data.

Document: The document flowchart symbol is for a process step that produces a document.

Drive bays: A space in a personal computer where a storage device such as a disk drive or CD-ROM drive can be installed. It’s a standard-sized area for adding hardware (peripheral devices) to a computer. Most drive bays are fixed to the inside of a case, but some can be removed.

E

Early adopters of technology: An individual or business who uses a new product or technology before others. An early adopter is likely to pay more for the product than later adopters, but accepts this premium if using the product improves efficiency, reduces cost, increases market penetration or simply raises the early adopter's social status.

Embedded computer technology: An embedded system is a computer system with a dedicated function within a larger mechanical or electrical system, often with real-time computing constraints. It is embedded as part of a complete device often including hardware and mechanical parts.

Enterprise Resource Planning (ERP): Is business management software that allows an organization to use a system of integrated applications to manage their business. ERP software integrates all functions of an operation, including finance and accounting, customer relationship management (CRM), product planning, development, manufacturing processes, sales and marketing.

Enterprise resource planning (ERP) systems: An ERP system covers almost all areas of a business and stores all of the data in a single unified database. In addition, these systems are designed to almost totally eliminate data redundancy. Another benefit of these systems is that they enforce uniform business processes throughout the company.

Entity relationship diagram (ERD): It’s a technical diagram that is used to describe the database structure.

Entity/relationship structure: Usually called normalized database structure, accomplishes both the reduction of redundancy and optimized write speed very well. The ER structure is the relationship of entities to each other. An entity is a piece of data (an object or concept about which the data is stored). A relationship is how the data is shared between entities. There are three types of relationships between entities: one-to-one, one-to-many and many-to-many.

Environmental scanning: Careful monitoring of an organization's internal and external environments for detecting early signs of opportunities and threats that may influence its current and future plans.

Ethernet standard: For local area networks (LANs) the Ethernet standard is the dominant technology for the physical network connection. Ethernet was standardized as IEEE 802.3.

External entity: The external entity flowchart symbol represents sources of data to the system or destinations of data from the system. For example, the customer request goods. That is a source of data to the system to initiate the process.

F

Foreign key (FK): A FK is a column or combination of columns that is used to establish and enforce a link between the data in two tables. You can create a foreign key by defining a FK constraint when you create or modify a table. In a foreign key reference, a link is created between two tables when the column or columns that hold the primary key value for one table are referenced by the column or columns in another table. This column becomes a foreign key in the second table.

Functional areas: A business organization is divided into departments know as functional areas. For example, the marketing or accounting departments are functional areas of the organization.

G

Graphical user interface (GUI): Is a type of user interface that allows users to interact with electronic devices through graphical icons and visual indicators. The actions in GUI are usually performed through direct manipulation of the graphical elements. It makes the program easier to use and operate.

H

Hard disk drives: A hard disk drive (HDD) is a data storage device used for storing and retrieving digital information using rapidly rotating disks (platters) coated with magnetic material. An HDD retains its data even when powered off. Data is read in a random-access manner, meaning individual blocks of data can be stored or retrieved in any order rather than sequentially.

Hardware: Computer hardware refers to the physical parts or components of a computer such as monitor, keyboard, computer data storage, hard drive disk, mouse, CPU (graphic cards, sound cards, memory, motherboard and chips), etc. all of which are physical objects that you can actually touch.

Historical data: Dated summary data used for strategic decisions. Not as detailed as Operational Data. Generally this data is stored in a date warehouse.

Hit rate: Is the rate of processing of data and instructions. If the computer system is designed properly, then almost all instructions and data that need to be executed will be fast data storage areas such as the registers.

Human capital management: This includes all of the employment and personnel activities within the firm.

Hypertext markup language (HTML): Defines the structure and layout of a Web document by using a variety of tags and attributes. It’s the main markup language for creating web pages and other information that can be displayed in a web browser.

Hypertext transfer protocol (HTTP): It’s the underlying protocol used by the World Wide Web. HTTP defines how messages are formatted and transmitted, and what actions Web servers and browsers should take in response to various commands. For example, when you enter a URL in your browser, this actually sends an HTTP command to the Web server directing it to fetch and transmit the requested Web page.

I

Inbound logistics: This is where goods are ordered, received and stored for either further processing or for sale to customers.

Indirect reporting responsibility: Indirect reporting (or dashed line reporting) is used in more complex organizational structures. These apply to situations in which a subordinate interfaces with a supervisor in another department on a frequent basis and that supervisor has the authority to request a special project from that employee such as preparation of a progress or financial report.

Information systems: This includes the processing and storage of all of the data within the company.

Infrastructure as a service (IaaS): Is a standardized, highly automated offering, where compute resources, complemented by storage and networking capabilities are owned and hosted by a service provider and offered to customers on-demand. Customers are able to self-provision this infrastructure, using a Web-based graphical user interface that serves as an IT operations management console for the overall environment.

Initial program loading: (IPL - Also known as booting up) is the initial set of operations that a computer system performs when electrical power to the CPU is switched on or when the computer is reset. The process begins when a computer is turned on for the first time or is re-energized after being turned off or when it is reset, and ends when the computer is ready to perform its normal operations. The main task of IPL is to load the operating system.

Input/output (I/O) bus: Is a communication system that transfers data between components inside a computer, or between computers. The I/O bus is the pathway used for input and output devices to communicate with the computer processor.

Input/output (I/O) devices: An input/output (I/O) device is a hardware device that has the ability to accept inputted, outputted or other processed data. It also can acquire respective media data as input sent to a computer or send computer data to storage media as storage output. I/O is the communication between an information processing system (such as a computer) and the outside world, possibly a human or another information processing system. Inputs are the signals or data received by the system, and outputs are the signals or data sent from it.

Instance: An SAP instance defines a group of resources such as memory, work processes and so on, usually in support of a single application server or database server within a client/server environment. SAP instances are defined during the installation of the SAP system.

Integrity: One of the most important data aspects is that of data integrity. This means that first of all the data is initially correct when entered into the system and then remains accurate throughout its useful life. An important concept of data integrity is the lack of data redundancy. If the same data item is stored multiple times, then there is a good chance that this data item will have inconsistent values.

Invoice: An itemized list of goods shipped typically specifying the price and the terms of sale. A bill is an example.

Invoice billing: One possible way billing can be conducted. This is where the invoice sent to the customer appears it is very similar to the sales order used to process the sale. That is, the amount the customer is billed is for the amount of the goods for that specific shipment. Of course tax and shipping costs would also be included on the invoice. Invoice billing is usually done when the purchases are large and infrequent.

IP (Internet Protocol) address: In TCP/IP the address is termed the IP address. The communication from one computer to the next is done using the address of the other computer in the messages being sent.

J

Join operation: (A linking operation) it is a key function in making databases powerful and useful. A join of two data sources is the association of objects in one data source with objects that share a common attribute in another data source.

Joining is an important operation in queries that target data sources whose relationships to each other cannot be followed directly.

L

Leading edge: Leading and innovative IT industry organizations are often referred to as "cutting edge." Cutting edge technology refers to technological devices, techniques or achievements that employ the most current and high-level IT developments.

Legacy computer systems: Is an outdated or historic technology, method, or computer system. This typically involves non-integrated computer systems that service individual functional areas. This does not allow for data sharing throughout the organization.

Local area network (LAN): Usually computers in the same building will be connected via LAN. It’s a network that is located in a small geographic area, such as an office, a building, or a campus, and whose communication technology provides a high-bandwidth, low-cost medium to which many nodes can be connected.

M

Machine language: A set of instructions for a specific central processing unit (CPU), designed to be usable by a computer without being translated. It’s the set of symbolic instruction codes usually in binary form that is used to represent operations and data in a machine.

Macro view of business: Focuses on external forces that affect an organization. For example: governmental, regulatory, or competitive forces that require a business to change a procedure, policy, or how it does business.

Main memory: (Also termed random access memory or RAM) is directly or indirectly connected to the central processing unit (CPU) via a memory bus. Computer data storage, often called storage or memory, is a technology consisting of computer components and recording media used to retain digital data. It is a core function and fundamental component of computers. This is the largest memory area (gigabytes) connected directly to the CPU and it is slower than registers, but much faster than disk drive memory.

Manufacturing resource planning (MRP II): MRP II is a method for the effective planning of all resources of a manufacturing company. It addresses operational planning in units, financial planning and has a simulation capability to answer "what-if" questions.

Marketing: This is the direct interface with the customer and this is the activity that generates the company’s revenue.

Master data: Master data is information that is key to the operation of a business. This key business information may include data about customers, products, employees, materials, suppliers etc. While it is often non-transactional in nature, it is not limited to non-transactional data, and often supports transactional processes and operations. For example, analysis and reporting is greatly dependent on an organization's master data. Because of this, master data should be handled carefully when modifications are made. Master data has many forms: reference data, master data, enterprise master data and market master data. Master data is rather stable data that does not change very frequently. Master data when compared to transaction data is quite small in volume.

Master production schedule (MPS): MPS is a plan for individual commodities to produce in each time period such as production, staffing, inventory, etc. It is usually linked to manufacturing where the plan indicates when and how much of each product will be demanded. This plan quantifies significant processes, parts and other resources in order to optimize production, to identify bottlenecks and to anticipate needs and completed goods.

Material requisition: Is a form that shows what raw materials are needed, where the materials are going and the responsible person. The material requisition is not to be confused with the purchase requisition. The material requisition is an internal document used to track the flow of materials within the company.

Memory bus: The memory bus is the computer bus, which connects the main memory to the memory controller in computer systems. The memory bus connects the memory system and the northbridge area of the chipset. This section of the chipset also connects directly to the central processing unit (CPU) and the graphics system.

Memory dump: Consists of the recorded state of the working memory of a computer program at a specific time, generally when the program has terminated abnormally (crashed). Whenever this comes up it actually means that whatever files and programs that are running at the time of the dump are put onto a sort of hidden file to be analyzed at a later date.

Microsoft Access: This database system is designed for use by individuals or very small businesses. It is an easy database to use and it is a good tool to use to introduce you to how a database functions.

Microsoft Visio: Is a documentation and charting tool. This is a tool that is free to students at CSU Chico and is a powerful and easy way of generating different types of diagrams that can be used to analyze business situations. Visio is part of the Microsoft Office suite.

Micro view of business: For this course, it’s the focus on the internal functions of an organization and how the business operates internally.

Middle ground strategy: Is an approach in which companies wait to see if a new technology is going to be successful and once indications are that it will be successful, then they begin to adapt to the change. While this approach will not generally give the company a competitive advantage, it usually will not put the company in a distinct competitive disadvantage.

Mobile device management (MDM): Is a type of security software used by an IT department to monitor, manage and secure employee's mobile devices that are deployed across multiple mobile service providers and across multiple mobile operating systems being used in the organization. Mobile device management software is often combined with additional security services and tools to create a complete mobile device and security management solution.

Motherboard: (Mainboard or logic board) is the main printed circuit board (PCB) found in computers and other expandable systems. It holds many of the crucial electronic components of the system, such as the central processing unit (CPU) and memory, and provides connectors for other peripherals. If you ever open your computer, the biggest piece of silicon you see is the motherboard. Attached to the motherboard, you'll find the CPU, ROM, memory RAM expansion slots, PCI slots, and USB ports.

Move ticket: As the work is moved from one workstation to another, there is usually a move ticket that tracks the flow to the next workstation. This is a way to keep track of where the work that is being processed is located and how much of the work has been completed.

Multidimensional analysis: Is really just a fancy term for being able to look at data from many different perspectives. It is also termed slicing and dicing the data. Microsoft’s pivot table analysis is an example of multidimensional analysis.

Multi-tasking: The concurrent performance of several jobs by a computer. Computers (of a single CPU) can execute two or more programs that appear to be simultaneous.

N

Network administrators: The people who keep the organization’s network functioning.

Networking protocol: A networking protocol is simply a set of rules that each part of the network follows in order to understand the other component’s transmissions.

Nibbles: Is a four-bit aggregation, or half an octet (8 bits). As a nibble contains 4 bits, there are sixteen (16) possible values, so a nibble corresponds to a single hexadecimal digit. A full byte (octet) is represented by two hexadecimal digits; therefore, it is common to display a byte of information as two nibbles. Each nibble can assume a value from 0 to F.

Normalized database structure: Is the process of organizing the fields and tables of a relational database to minimize redundancy and dependency. Normalization usually involves dividing large tables into smaller (and less redundant) tables and defining relationships between them.

Normalized form: In simple terms it means that the data involved in every transaction is broken up and stored in a series of interlinked tables that have no redundancy. One way to look at this is to say that each separate master data object, for example people, places or things, have a separate table.

O

Online analytical processing systems (OLAP): These systems will store massive amounts of data that may go back with decades of historic data. They are designed differently than the OLTP systems in that they are optimized for reading and not writing. The data storage area is usually referred to as a data warehouse. Since the data warehouse structure emphasizes read efficiency, unlike the entity/relationship model used in OLTP systems, there will be much data redundancy in OLAP systems. The general rule is that OLAP systems will be somewhere around 100 times bigger than OLTP system.

Online real time transaction processing systems (OLTP systems): They are used to run the business on a day-to-day basis. Hence, with respect to decision-making they are primarily involved in the operational decision making of a company and their data is strictly structured data. Most of the routine operational decisions are programmed into the ERP system. So decisions dealing with inventory levels, customer credit levels, product delivery dates, etc. are all automatically handled by the system.

Operating system (OS): An OS is software that communicates with the hardware and allows other programs to run. It is comprised of system software, or the fundamental files your computer needs to boot up and function. Every desktop computer, tablet and smartphone includes an operating system that provides basic functionality for the device. Operating systems perform basic tasks, such as recognizing input from the keyboard, sending output to the display screen, keeping track of files and directories on the disk, and controlling peripheral devices such as disk drives and printers.

Operational data: The most important data available to a company. This data is necessary for a company’s daily activities.

Operational decisions: Are the typical day-to-day decisions made in running a business.

Operations: This is the processing of raw materials and turning them into finished goods ready for sale to customers.

Oracle database: In sum, it is a database designed for large enterprises.

Organizational structure: The hierarchical arrangement of lines of authority, task allocation, communications and duties of an organization. It determines how the roles and responsibilities are assigned, controlled and coordinated throughout the organization. It also determines how the information flows between the different levels of management (top down). Each structure of an organization depends on the business objectives and strategy. An organizational chart illustrates the organizational structure.

Outbound logistics: This is how goods get delivered to the customer.

P

Packets: A group of binary digits, including data and control signals, that is switched as a composite whole. The data, control signals, and error-control information are arranged in a specific format. A packet often is a 128-character block of data. Each packet is sent individually through the network until it is received by the other computer. When received the packets are reassembled into the original message. In that way, long messages, such a large file transfers, will not ‘hog’ the network.

Packing slip: Is a shipping document that is attached with the delivered package. It is a detailed list of the package but usually does not include the customer pricing. The customer will use the packing slip upon opening the package to confirm that the goods shipped were indeed the goods they ordered.

Page pool: (Or also called virtual memory) is the memory pool on a disk drive used to hold programs and data that are being executed. The operating system moves pages from virtual memory to real memory only when that part of a program or data is needed for program execution.

Pages: Is a fixed-length contiguous block of virtual memory, and it is the smallest unit of data (usually 4K in size) for the following: memory allocation performed by the operating system for a program; and transfer between main memory and any other auxiliary store, such as a hard disk drive.

Partnership: A partnership is where a fixed group of owners are involved in the business and share the control and the profits and losses of the business. Generally, these are smaller to medium size companies. There are three types of partnership arrangements: general, limited and joint venture.

Passive tag: Are smaller and lighter than active tags but have a shorter communication range and require a high-powered reader. Passive tags are generally read-only and as such, once it is programmed with data, that data cannot be modified. Passive tags contain no internal power source. They are externally powered and typically derive their power from the carrier signal radiated from the scanner.

Peripheral devices: A computer peripheral is any external device that provides input and output (I/O) for the computer. They expand the capabilities of a computer. For example, a keyboard and mouse are input peripherals, while a monitor and printer are output peripherals. Computer peripherals, or peripheral devices, are sometimes called "I/O devices" because they provide input and output for the computer. There are three different types of peripherals: Input, used to interact with, or send data to the computer (mouse, keyboards, etc.), output, which provides output to the user from the computer (monitors, printers, etc.) and storage, which stores data processed by the computer (hard drives, flash drives, etc.).

Physical item: The physical flowchart symbol represents a physical item. For example, the actual goods the customer requested.

Picking list: The picking list specifies the items to be picked and the number of items to be picked without the prices of the goods. The price is usually not included since this is something the warehouse people don’t need to know to do their job.

Platform as a service (PaaS): Is a category of cloud computing services that provides a computing platform and a solution stack as a service. Along with SaaS and IaaS, it is a service model of cloud computing. In this model, the consumer creates the software using tools and/or libraries from the provider. The consumer also controls software deployment and configuration settings. The provider provides the networks, servers, storage and other services.

Primary activities: Primary activities are directly related to making a profit for a company. Many people think of the primary activities as being a chain of events whose end result is generating a profit for the company. Each primary activity must be executed well in order for the company to be successful.

Primary key (PK): The PK is the unique identifier for each row in a database table. That means that trying to enter the same primary key for two different rows will produce an error. That is one way databases enforce data integrity.

Production process: Is one of the most complex processes within a business. Unlike sales and purchasing processes that almost all companies have, not all companies produce things. Because the production process is more complex, computer technology has been used extensively to streamline and improve the process. The production process can be broken into two sub processes: pre-production and production.

Production work order: This is a document that states what finished good is to be produced, the number of units needed and the time the units are needed.

Program status word (PSW): (Or the control register) it holds much of the status information the system needs in order to operate. It’s a collection of information that encapsulates the basic execution state of a program at any instant. It permits an interrupted process to resume operation after the interrupt has been handled.

Purchase order: This is a formal document that specifies who the customer is, what they want to order, when they want the goods and where the goods should be delivered. While the information on the form will be the same, each customer will have their own purchase order form. Note that a typical purchase order has information about the company making the order, the vendor accepting the order, the location to which the goods are to be sent and a listing of the requested goods.

Purchase requisition: Is a document generated by a user department to notify the purchasing department of items it needs to order, the required quantity and the timeframe. This is a document only used within the company and should be the same for all departments in the company.

Purchase to pay process: A purchase is always motivated by a need for a product or service. All companies need to acquire some type of good or service that will be used in the normal course of business. The purchase to pay process consists of many elements: order goods, receive goods, receive invoice and pay invoice.

Q

Query by Example (QBE): Is a feature included with various database applications that provides a user-friendly method of running database queries. Typically without QBE, a user must write input commands using correct SQL syntax. The Query By Example feature provides a simple interface for a user to enter queries instead of writing an entire SQL command.

R

Radio frequency identification (RFID): Is a modern tracking technology that uses radio-frequency electromagnetic fields to wirelessly transfer data between objects. RFID technology is used to track and automatically identify the location and movement of an object.

Read only memory (ROM): Is memory containing hardwired instructions that the computer uses when it boots up, before the system software loads. The instructions are read from a small program in the ROM, called the BIOS (Basic Input/Output System). ROM is usually stored on a separate memory chip.

Read/write heads: Disk read/write heads are the small parts of a disk drive, that move above the disk platter and transform the platter's magnetic field into electrical current (read the disk) or vice versa – transform electrical current into magnetic field (write the disk).

Receiving report: This is a document that lists each good and the number of items received.

Reduced Instruction Set Computing (RISC) computers: It is arguably the fastest and most efficient microprocessor technology available today. It’s a computer architecture that reduces chip complexity by using simpler instructions. RISC compilers have to generate software routines to perform the equivalent processing performed by more comprehensive instructions in CISC computers. Most Unix machines are reduced instruction set machines.

Referential integrity: Is a relational database concept, which states that table relationships must always be consistent. In other words, any foreign key field must agree with the primary key that is referenced by the foreign key. It’s another way databases enforce data integrity.

Registers: Are a special high-speed storage area within the CPU. All data must be represented in a register before it can be processed. For example, if two numbers are to be multiplied, both numbers must be in registers, and the result is also placed in a register. (The register can contain the address of a memory location where data is stored rather than the actual data itself).

Relationship: Is the act of linking two tables together in a database. There are several types of database relationships: One to one, one to many and many to one, and many to many.

Relevance: In regards to data, it’s data that can be retrieved that satisfies the needs of the user.

Reorder point: Inventory level of an good which signals the need for placement of a replenishment order, taking into account the consumption of the item during order lead time and the quantity required for the safety stock. It is based on factors such as the amount of time it takes for the goods to be delivered, the expected demand for the good between ordering and delivery and the penalties involved if demand is not met due to an out of stock situation.

Reorder quantity: The required quantity of an item needed to fulfill the inventory level. It is based on factors such as the amount of time it takes for the goods to be delivered, the expected demand for the good between ordering and delivery and the penalties involved if demand is not met due to an out of stock situation.

RFID tag: The tags contain electronically stored information. Some tags are powered by and read at short ranges typically a few meters via magnetic fields (electromagnetic induction). RFID tags are used in many industries. An RFID tag attached to a mobile device during production can be used to track its progress through the assembly line.

Routings: (An important planning document) routings are also called the operations list. This is a detailed listing of all of the work stations with specific machinery and operators that are needed to produce and assemble the product and the amount of time that is needed at that station. The routing for a subassembly would state the first operation necessary to produce that subassembly, the work center necessary to build it and the amount of time needed at that work center.

S

Sales order: (An Internal form) the sales order, sometimes abbreviated as SO, is a standardized document used within the company. The customers’ purchase orders are transcribed to sales orders. In this way all of the information from any purchase order will be consistently in the same places on the form.

Sales to cash business process: Is the primary source of revenue for most companies. It’s a revenue business process that consists of many elements: pre-sales, sales, picking and shipping, billing and cash collection.

SAP: SAP is the dominant Enterprise Resource Planning (ERP) vendor in the world. A very large majority of the Fortune 500 companies rely on the SAP ERP system to run their businesses. It is a massive software system that encompasses almost all of the business processes that most businesses have.

Semi-structured data: Some of it is structured as with operational decision-making, but some of it is unstructured. The entities belonging to the same class may have different attributes even though they are grouped together, and the attributes' order is not important.

Social media: A term used to describe a variety of Web-based platforms, applications and technologies that enable people to socially interact with one another online. It refers to the interactions among people in which they create, share, and exchange information and ideas in virtual communities and networks.

Software: Computer software is a general term that describes computer programs. Related terms such as software programs, applications, scripts and instruction sets all fall under the category of computer software.

Software as a service (SaaS): Is software that is owned, delivered and managed remotely by one or more providers. The provider delivers the software based on one set of common code and data definitions that is consumed in a one to many model by all contracted customers at anytime on a pay-for-use basis or as a subscription based on use metrics. SaaS is typically accessed by users using a thin client via a web browser. SaaS allows organizations to access business functionality at a cost typically less than paying for licensed applications since SaaS pricing is based on a monthly fee.

Sole Proprietorship: A sole proprietorship is where essentially one person owns and runs the company. It is the simplest and most common structure chosen to start a business. The owner is entitled to all the profits as well as being responsible for all the debts, losses and liabilities. Generally these are very small companies.

SQL (Structured Query Language): Is a standardized query language for requesting information from a database. Originally based upon relational algebra and tuple relational calculus, SQL consists of a data definition language (DDL) and a data manipulation language (DML). The scope of SQL includes data insert, query, update and delete, schema creation and modification, and data access control. SQL is a 4th generation language.

Star schemas: The basic structure involved in building a data warehouse is a series of star schemas. These are simple two dimensional data structures that are subject oriented (for example, hiring in human capital management, sales activity by product line in marketing, accounts receivable management in accounting, etc.). While these structures can store large amounts of data, their simple structure allows for relatively fast access.

Stockholders: A stockholder (also referred to as a shareholder) is an individual or institution that owns a share of stock in a corporation.

Stored program concept: It’s storage of instructions in computer memory to enable it to perform a variety of tasks in sequence or intermittently. The software (OS) knows which areas of memory contain instructions and which areas contain data. So the hardware does not need to differentiate between which memory positions are data and which are instructions. Stored program concept is what makes computers so powerful and versatile.

Strategic decisions: Are those made at the highest-level of an organization and generally will have a long-term impact on the company. Examples of strategic decisions are whether to build a new production facility, whether to develop and introduce a new product line, the hiring or dismissal of high level executives, etc. Each of these decisions can have a significant influence on the success and maybe even the survival of the company.

Structured data: Is a fixed format that is readily available internal data. When dealing with operational decisions, the decision can be made using only the available structured data.

Sub-processes: One or more tasks that accomplish a significant portion or stage of a process.

Support activities: Support activities enable the primary activities to operate efficiently and effectively.

System administrators: Are the people responsible for the operating systems and application systems of an organization. These are generally the people who respond to problems users encounter.

T

Tactical decisions: Tactical decisions are sort of the middle of the road types of decisions. They are normally more important than operational decisions and will have a longer term impact on the company when compared to operational decisions. On the other hand, tactical decisions are not as important and do not have as long an impact as strategic decisions.

TCP/IP (Transmission Control Protocol/Internet Protocol): Is probably the oldest networking standard, developed for ARPANET, and now used on the Internet. It is one of the most commonly used network protocols.

Technical positions: The technical positions in I.T. are the jobs that keep the computing infrastructure functioning. These are the behind the scenes people that make sure that the end users are able to do their jobs.

The information age: With advancements in modern technology, due to the Digital Revolution, many companies have access to information that was never possible before. Organizations are very dependent on such information to survive in this new era of doing business. The traditional way of doing business is becoming obsolete and a thing of the past. Information is essential when making a business decision.

Three way match: Is an important fraud prevention procedure that legitimizes the billing of goods. Upon receipt of the invoice, an accounting employee (usually someone from accounts payable) will compare the purchase order with the receiving report and the invoice to make sure that they are being billed for something the company ordered and received.

Timeliness: In regards to data, it’s having the data readily available in a suitable time. At present time this usually means that data is captured, stored and accessed in real time.

Trailing edge: Is waiting for the last minute to commit to a new technology. It refers to companies that are extremely risk adverse to technology and wait until the success of the technology is a certainty. At this point adopting technology becomes a defensive strategy. They have been put at a competitive disadvantage and their only choice is to commit to the new technology.

Transactional data: Transaction data is the data that is recorded whenever a transaction occurs. That data contains the time and date of the transaction and the units or dollar amounts involved in the transaction. Transaction data is very volatile (i.e. it changes quite a bit and very quickly).

Transaction Code: Is a set of numbers, letters or a combination of both that is entered into a command field. It is a short cut way to execute a transaction in the SAP ERP environment.

Triggering event: The triggering event is initiated upon the customer requesting an order for the goods. It begins the process of completing the transaction.

U

Unstructured data: Refers to information that either does not have a pre-defined data model or is not organized in a pre-defined manner. It’s the data that is used to assist in strategic decisions.

Usability: In regards to data, its data that is convenient and practicable for use. It’s useful data to the company.

User interface: Is the space where interaction between humans and machines occurs. The goal of this interaction is effective operation and control of the machine on the user's end, and feedback from the machine, which aids the operator in making operational decisions.

URL (Uniform Resource Locator): To use a browser to access a Web server, you must enter the server’s addresses or URL. Web addresses begin with seven characters: http://.

V

Virtualization: Is a methodology in which either one physical computer can be made to appear to be multiple computers or many computers can appear to be one computer.

Virtual memory: Virtual memory increases the available memory your computer has by enlarging the address space, or places in memory where data can be stored. It does this by using hard disk space for additional memory allocation. You can think of virtual memory as an alternate set of memory addresses. Programs use these virtual addresses rather than real addresses to store instructions and data. When the program is actually executed, the virtual addresses are converted into real memory addresses.

Virtual memory management: The purpose of virtual memory is to enlarge the address space, the set of addresses a program can utilize. The virtual memory management objective is to allow the operating system to optimally use the system’s memory.

Voucher package: This is a document verifying the debt owed to the vendor. Payment should only be made when a voucher package confirms the debt.

W

Wide area network (WAN): To communicate with the world beyond the company or in remote locations the backbone network will attach to a wide area network (WAN). It is a network spanning a large geographical area. Its nodes can span city, state, or national boundaries. WANs typically use circuits provided by common carriers.

Workflow: Consists of a sequence of connected steps where each step follows without delay or gap and ends just before the subsequent step begins. This allows many types of transactions to be done with little or no paperwork and with a minimum of human intervention.

X

XML (Extensible Markup Language): Is a markup language that defines a set of rules for encoding documents in a format that is both human-readable and machine-readable. It allows designers to create their own customized tags, enabling the definition, transmission, validation, and interpretation of data between applications and between organizations.

Information: The Currency of Modern Business Page 143

Building 1 LAN -Main Campus

Building 2 LAN -Main Campus

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Building 3 LAN Network 2 -Main Campus

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Section Header

Data

Building 1 LAN - Main Campus

Workstation

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Building 2 LAN - Main Campus

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Outbound

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Human Capital Management

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Bill of lading

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Voucher PackageVendorInvoiceReceiverPurchase OrderInvoice InformationUnit: ABCDVoucher ID: 203940Budget Status: ValidPost Status: PostedComments: Vendor: Pay Terms:Invoice Date: Acctg Date:Invoice No:324235Name:Sample VendorLocation:Address: Sample Vendor 5555 Vendor Drive Vendor City, CA 90909 555-555-555511Total: Balance: 0.00100012305/20/200205/21/2002Net Zero3,456.45Curr:USDVoucher ImageFax Cover

Voucher Package Vendor Invoice Receiver Purchase Order Invoice Information Unit: ABCD Voucher ID: 203940 Budget Status: Valid Post Status: Posted Comments: Vendor: Pay Terms: Invoice Date: Acctg Date: Invoice No: 324235 Name: Sample Vendor Location: Address: Sample Vendor 5555 Vendor Drive Vendor City, CA 90909 555-555-5555 1 1 Total: Balance: 0.00 1000123 05/20/2002 05/21/2002 Net Zero 3,456.45 Curr: USD Voucher Image Fax Cover

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Start Needs More Goods Purchase Requisition Purchase Requisition Create Purchase Order Deliver Goods Receive Purchase Order Determine Appropriate Vendor Purchase Order Purchase Order Goods Goods Goods Send Invoice Invoice Count Goods Receiving Report Store Goods Receiving Report Invoice Purchase Order Do Three Way Match Voucher Voucher Send Payment to Vendor $ $ Vendor Inventory Control or Department End of Process Cashier Accounting Inventory Receiving Purchasing Purchase to Pay Document Flowchart

Pre-productionProduction

Pre-production

Production

TableTable Top(1)Legs(4)Nuts(8)Bolts(16)Metal Corner Brace(4)5' x 8' Plywood Board(1)Oak Laminate(1)

Table Table Top (1) Legs (4) Nuts (8) Bolts (16) Metal Corner Brace (4) 5' x 8' Plywood Board (1) Oak Laminate (1)

OperationTacticalStrategicDecisionsDataUnstructured Semi-Structured Structured

Operation Tactical Strategic Decisions Data Unstructured Semi-Structured Structured

BABY BLUE = Introduction	LAVENDER = Ch. 3	GREEN = Ch. 6
NAVY BLUE = Ch. 1	ORANGE = Ch. 4	RED = Ch. 7
FUSCHIA = Ch. 2	ROYAL BLUE = Ch. 5	PLUM = Ch. 8