Summary Business Driven Information Systems

opening case study ©Monty Rakusen/Getty Images RF ©Blend Images/Ariel Skelley/Getty Images RF ©Phil Boorman/Getty Images RF 62 page 4 The Internet of Things Over 20 years ago a few professors at MIT began describing the Internet of Things (IoT), which is a world where interconnected Internet-enabled devices or “things” have the ability to collect and share data without human intervention. Another term for the Internet of Things is machine-to-machine (M2M), which allows devices to connect directly to other devices. With advanced technologies devices are connecting in ways not previously thought possible, and researchers predict that over 50 billion IoT devices will be communicating by 2020. Imagine your toothbrush telling you to visit your dentist because it senses a cavity. How would you react if your refrigerator placed an order at your local grocery store because your milk and eggs had expired? Predictions indicate that over the next decade almost every device you own—and almost every object imaginable—will be connected to the Internet as people share, store, and manage their lives online. Smoke detectors, alarms, refrigerators, stoves, and windows are just a few home devices already connected to the Internet, sharing information on how to make everything in your life more efficient, effective, safe, and healthy. The Internet of Things is reaching further into our daily lives by combining data from sensors in wearable devices and equipment with analytic programs to help improve the performance of individuals by gaining insights that were traditionally impossible to detect. A few examples of the incredible power of the IoT era include: Smart Yoga Mat: Smart yoga mats include sensors that provide feedback on yoga postures and calories burned, and can even provide users with guided practice in the comfort of their own home. Smart Thermostats: IoTs share information in real time to help homeowners manage energy use more efficiently. The system will notify the homeowner if a door is left open, change the temperature in each room when it is occupied, and turn the thermostat up or down depending on the weather and homeowner preferences. Smart Diapers: Pixie Scientific created disposable diapers with sensors that monitor babies’ urine for signs of infection, dehydration, or kidney problems before symptoms appear. Smart Trash Cans: The city of Allentown, Pennsylvania, connected community trash and recycling cans, allowing them to monitor fill rates, which are then used to recommend the most efficient routes for trash pickup services. Smart Tennis Racket: Babolat, a French tennis racket manufacturer, created the Play Pure Drive, a $400 smart tennis racket that has the capability to record data on every single shot a user takes and sends the data along with an analysis to the user’s smart phone. 63 page 5 Smart Frying Pan: Pantelligent is an innovative sensor-embedded frying pan that actually helps its users learn how to cook by measuring the temperature of the food and communicating with a smart phone when to add ingredients, change heat, flip, and cover, and even when the food is done. The future of business will focus on big data as IoT devices create, capture, and share massive amounts of data. The business environment is currently collecting more data from IoT devices in one second than all of the data collected from the beginning of time until the year 2000. In fact, over 90 percent of the data in the world was created over the last 2 years. Every minute over 204 million emails are sent and 200 thousand photos are uploaded to Facebook. The terms analytics, data analysis, and business intelligence are all referring to big data and the massive volumes of data being generated around the globe. Understanding big data will be a critical skill for knowledge workers in every business, regardless of size, focus, or industry. Future managers will be responsible for analyzing data in ways that were not even possible a decade ago, allowing managers to predict customer behaviors, optimize and improve business processes, and analyze multiple variables for trends and patterns. The total amount of business data roughly doubles every 1.2 years. Big data has created an estimated 6 million new jobs and will assist companies in: Understanding consumer behaviors by combining purchasing data with social media data, weather data, competitor data, and economic data. Improving the delivery of products by combining delivery process information with current traffic data, vehicle maintenance data, and map data. Optimizing health care treatments by capturing diagnosis, tracking pharmaceuticals, and eventually predicting diseases. Preventing cyberattacks by analyzing credit card fraud, security system data, and police data.1 section 1.1 | Business Driven MIS LEARNING OUTCOMES 1.1 Describe the information age and the differences among data, information, business intelligence, and knowledge. 1.2 Explain systems thinking and how management information systems enable business communications. 64 COMPETING IN THE INFORMATION AGE LO 1.1: Describe the information age and the differences among data, information, business intelligence, and knowledge. Did you know that . . . The movie Avatar took more than 4 years to create and cost $450 million? Lady Gaga’s real name is Stefani Joanne Angelina Germanotta? Customers pay $2.6 million for a 30-second advertising time slot during the Super Bowl? 2 A fact is the confirmation or validation of an event or object. In the past, people primarily learned facts from books. Today, by simply pushing a button, people can find out anything, from anywhere, at any time. We live in the information age, when infinite quantities of facts are widely available to anyone who can use a computer. The impact of information technology on the global business environment is equivalent to the printing press’s impact on publishing and electricity’s impact on productivity. College student start- ups were mostly unheard of before the information age. Now, it’s not at all unusual to read about a business student starting a multimillion-dollar company from his or her dorm room. Think of Mark Zuckerberg, who started Facebook from his dorm, or Michael Dell (Dell Computers) and Bill Gates (Microsoft), who both founded their legendary companies as college students. You may think only students well versed in advanced technology can compete in the information age. This is simply not true. Many business leaders have created exceptional opportunities by coupling the power of the information age with traditional business methods. Here are just a few examples: Amazon is not a technology company; its original business focus was to sell books, and it now sells nearly everything. Netflix is not a technology company; its primary business focus is to rent videos. Zappos is not a technology company; its primary business focus is to sell shoes, bags, clothing, and accessories. Amazon’s founder, Jeff Bezos, at first saw an opportunity to change the way people purchase books. Using the power of the information age to tailor offerings to each customer and speed the payment process, he in effect opened millions of tiny virtual bookstores, each with a vastly larger selection and far cheaper product than traditional bookstores. The success of his original business model led him to expand Amazon to carry many other types of products. The founders of Netflix and Zappos have done the same thing for videos and shoes. All these entrepreneurs were business professionals, not technology experts. However, they understood enough about the information age to apply it to a particular business, creating innovative companies that now lead entire industries. Over 20 years ago a few professors at MIT began describing the Internet of Things (IoT), a world where interconnected Internet-enabled devices or “things” have the ability to collect and share data without human intervention. Another term commonly associated 65 page 6 with the Internet of Things is machine-to-machine (M2M), which refers to devices that connect directly to other devices. With advanced technologies devices are connecting in ways not previously thought possible, and researchers predict that over 50 billion IoT devices will be communicating by 2020. Kevin Ashton, cofounder and executive director of the Auto-ID Center at MIT, first mentioned the Internet of Things in a presentation he made to Procter & Gamble. Here’s Ashton’s explanation of the Internet of Things: APPLY YOUR KNOWLEDGE BUSINESS DRIVEN DISCUSSION View from a Flat World Bill Gates, founder of Microsoft, stated that 20 years ago most people would rather have been a B student in New York City than a genius in China because the opportunities available to students in developed countries were limitless. Today, many argue that the opposite is now true due to technological advances making it easier to succeed as a genius in China than a B student in New York. As a group, discuss whether you agree or disagree with Bill Gate’s statement.4 To date, the 50 petabytes of data available on the Internet has been captured mostly by humans through such methods as typing, recording, and scanning text, photos, and voice recordings. Data entry is the process of gathering data from business documents and entering it into a computer. A vital process for any business. The issue with human data collection is the fact that humans make mistakes! Numbers are frequently transposed, addresses mistyped, and some files are skipped completely. Inaccurate data in a system will lead to incorrect reports and ultimately bad business decisions. Allowing computers to perform the data entry process greatly reduces human error. Computers are precise and accurate and would know when things need replaced, repaired, or recalled saving time and money for companies.3 IoT is transforming our world into a living information system as we control our intelligent lighting from our smart phone to a daily health check from our smart toilet. Of course with all great technological advances come unexpected risks and you have to be prepared to encounter various security issues with IoT. Just imagine if your devices are hacked by someone who now has the ability to shut off your water, take control of your car, or unlock the doors of your home from thousands of miles away. We are just beginning to 66 understand the security issues associated with IoT and M2M, and you can be sure that sensitive data leakage from your IoT device is something you will most likely encounter in your life. Students who understand business along with the power associated with the information age and IoT will create their own opportunities and perhaps even new industries. Realizing the value of obtaining real-time data from connected “things” will allow you to make more informed decisions, identify new opportunities, and analyze customer patterns to predict new behaviors. Our primary goal in this course is to arm you with the knowledge you need to compete in the information age. The core drivers of the information age include: Data Information Business intelligence Knowledge (see Figure 1.1) Data Data are raw facts that describe the characteristics of an event or object. Before the information age, managers manually collected and analyzed data, a time-consuming and complicated task without which they would have little insight into how to run their business. Structured data has a defined length, type, and format and includes numbers, dates, or strings such as Customer Address. Structured data is typically stored in a traditional system such as a relational database or spreadsheet and accounts for about 20 percent of the data that surrounds us. The sources of structured data include: 67 page 7 page 8 FIGURE 1.1 The Differences among Data, Information, Business Intelligence, and Knowledge Machine-generated data is created by a machine without human intervention. Machine- generated structured data includes sensor data, point-of-sale data, and web log data. Human-generated data is data that humans, in interaction with computers, generate. Human-generated structured data includes input data, click-stream data, or gaming data. Unstructured data is not defined and does not follow a specified format and is typically free-form text such as emails, Twitter tweets, and text messages. Unstructured data accounts for about 80 percent of the data that surrounds us. The sources of unstructured data include: Machine-generated unstructured data, including satellite images, scientific atmosphere data, and radar data. Human-generated unstructured data, including text messages, social media data, and emails. Big data is a collection of large, complex data sets, including structured and unstructured data, which cannot be analyzed using traditional database methods and tools. Lacking data, managers often found themselves making business decisions about how many products to make, how much material to order, or how many employees to hire based on intuition or gut feelings. Walmart handles over 1 million purchase transactions per hour. Facebook processes over 250 million photo uploads every day. There are over 6 billion cell phone users generating text messages, voice calls, and browsing the web daily. As Google CEO Eric Schmidt has noted, the amount of data currently created every 48 hours is equivalent to the entire amount of data created from the dawn of civilization until the year 2003. In the information age, successful managers must be able to compile, analyze, and comprehend massive amounts of data or big data daily, which helps them make more successful business decisions. A snapshot is a view of data at a particular moment in time. Figure 1.2 shows sales data for Tony’s Wholesale Company, a fictitious business that supplies snacks to stores. The data highlight characteristics such as order date, customer, sales representative, product, quantity, and profit. The second line in Figure 1.2, for instance, shows that Roberta Cross sold 90 boxes of Ruffles to Walmart for $1,350, resulting in a profit of $450 (note that Profit = Sales − Costs). These data are useful for understanding individual sales; however, they do not provide us much insight into how Tony’s business is performing as a whole. Tony needs to answer questions that will help him manage his day-to-day operations such as: 68 APPLY YOUR KNOWLEDGE BUSINESS DRIVEN MIS Computers are Everywhere A computer is a programmable machine that responds to a specific set of defined instructions. It consists of hardware (the machinery and housing for its electronics) and software (the programs that contain the data used by the computer). The hardware includes a central processing unit (CPU) that controls an operating system, which directs your inputs (keyboard, mouse), outputs (monitor or printer), memory, and storage. The first computers were enormous slow machines designed to solve complicated mathematical questions. Built in 1954, the ENIAC (Electronic Numerical Integrator and Computer) was one of the first digital computers; it weighed 30 tons and was powered by thousands of vacuum tubes, capacitors, relays, and electrical equipment. IBM president Tom Watson famously remarked, “I think there is a world market for maybe five computers.” Clearly the world market for computers was far more than five! Today’s computers can do almost anything from controlling the temperature in your house and driving your car, to solving advanced analytical equations, and they can be found everywhere; on our desks, in our laps, in our hands, on our wrists, and even in our eyeglasses. And there is so much more coming, including computers that learn on their own, brain-computer interfacing, and quantum computers that utilize fiber optic technology. Think of your life 5 years ago, and list three computing devices you use today that were not invented 5 years ago. What types of computing devices will be introduced over the next five years? How will they change your life? What would life be like today if the computer had never been invented? Who are my best customers? Who are my least-profitable customers? What is my best-selling product? What is my slowest-selling product? Who is my strongest sales representative? Who is my weakest sales representative? What Tony needs, in other words, is not data but information.