Chapter 1 MIS and You - Case & Exercise Jason C. H. Chen, Ph.D. Professor of MIS School of Business Gonzaga University Spokane, WA 99258 USA chen@jepson.gonzaga.edu

Part I

USING YOUR KNOWLEDGE (cont.) 2. Consider costs of a system in light of the five components: costs to buy and maintain the hardware; costs to develop or acquire licenses to the software programs and costs to maintain them; costs to design databases and fill them with data; costs of developing procedures and keeping them current; and finally, human costs both to develop and use the system.

a. Over the lifetime of a system, many experts believe that the single most expensive component is people. Does this belief seem logical to you? Explain why you agree or disagree. (Answer) It is likely that this belief is true. An information system is only as good as the people who have developed it and who make use of it to perform their business functions more effectively and efficiently. It is very costly to hire and retain qualified, creative, and motivated people. Without those people, however, even the most technically sophisticated system will be of little value to the organization. - Creating/improving competitive advantage since people are difficult to be replaced/replicated.

b. Consider a poorly developed system that does not meet its defined requirements. The needs of the business do not go away, but they do not conform themselves to the characteristics of the poorly built system. Therefore, something must give. Which component picks up the slack when the hardware and software programs do not work correctly? What does this say about the cost of a poorly designed system? Consider both direct money costs as well as intangible personnel costs. If a system does not meet its requirements, the people and procedures will have to adjust and “pick up the slack.” People will have to change their behaviors to work with the system. This may result in reduced productivity at a minimum. In addition, annoyance and frustration may build to the point where people actually avoid the system in some fashion…they may find a way not to use the system at all (thus defeating its purpose); they may avoid using it by increasing absenteeism; or they may find another job.

c. What implications do you, as a future business manager, take from questions (a) and (b)? What does this say about the need for your involvement in requirements and other aspects of systems development? Who eventually will pay the costs of a poorly developed system? Against which budget will those costs accrue? It is hoped that you (students) will appreciate how important it is that the business professionals play an active role in systems development. Requirements not only must be delineated for the system, but business managers (who are paying the bills) must ensure that the requirements are being fulfilled in the new system. If they are not fulfilled, the business unit not only will have wasted the development costs; it will experience ongoing costs of decreased productivity and possibly higher staff turnover – user involvement. (we will learn more in chapter 10) SDLC – which step? ____________ Analysis

Next Class 1. Complete reading the rest of chapter. 2. Read chapter Case Study 1: The Amazon of Innovation (p.27-29) Prepare answers for questions (1,2,3,5,6) and turn in a hardcopy using MS/Word next class. We will also conduct case discussion. 3. Read Ethics Guide (Situations A,B,C Q:1&2; p.16-17) and prepare for class discussion 4. If you are asked to present your answer for case study (or “Guide”) questions but you do not prepare for them, there will be “10” points off every time from your final course grade.

Part II CASE STUDY-1 What company (organization) is described in the case?

Case Study 1: The Amazon of Innovation (pp. 27-29)

Amazon’s Business Categories Online retailing Own inventory Associates program Consignment Order fulfillment Cloud services

Amazon (cont’d) Operates on very thin margins Drives its employees incredibly hard Amazon Web Services (AWS) Organizations lease time on Amazon’s computer equipment Sells order fulfillment services Elastic Cloud 2 (EC2)

1. In what ways does Amazon, as a company, evidence the willingness and ability to collaborate?  Collaboration is the activity of two or more people working together to achieve a common goal, result, or work product. People who collaborate develop ideas and plans with others. A critical aspect of effective collaboration is the ability to provide and receive critical feedback.   The case study does not talk directly about collaboration within Amazon, but Amazon’s amazing track record of successful and continual innovation suggests that its employees do collaborate effectively. By collaborating, the employees can accomplish more than they could on their own, and in an atmosphere that encourages thoughtful and fearless critiques, the employees’ ideas can be refined and honed into “winning” ideas. Amazon’s successful innovations demonstrate that this is occurring.

2. In what ways does Amazon, as a company, evidence the willingness and ability to experiment?   The textbook defines experimentation as making a reasoned analysis of an opportunity, envisioning potential solutions, evaluating those possibilities, and developing the most promising ones, consistent with the resources you have. Amazon clearly has developed an organizational culture that promotes and encourages experimentation. The pattern of innovation suggests that the company supports its employees as they develop new potential opportunities. BSM: Business System Modernalization

3. In what ways do you think the employees at Amazon must be able to perform abstract and systems thinking?   Systems thinking is the ability to model the components of the system, to connect the inputs and outputs among those components into a sensible whole that reflects the structure and dynamics of the phenomenon observed. Abstract reasoning is the ability to make and manipulate models. These cognitive skills are essential for Amazon employees, who are constantly pushed to innovate and take the company in new, pioneering directions. A person who cannot perform systems thinking and abstract reasoning would be very uncomfortable in an environment like Amazon and likely would not last too long before being shown the door (if he/she ever got in the door in the first place).

#5 - FIGURE 1-7: Innovation at Amazon

5. Choose any five of the innovations in Figure 1-7 and explain how you think Moore’s Law facilitated that innovation.   Because of Moore’s Law, the cost of data communications and data storage is essentially zero. As a result, many of the innovations in Figure 1-7 are possible. Students may choose different examples; here are five that illustrate the effect of Moore’s Law: 1-click shopping – rather than ask a customer to enter shipping and payment information with every order, store this information and enable the customer to buy with only one click.

5. (cont.) Amazon market place (sell goods and optionally have Amazon fulfill your orders) – utilize existing storage and communication to take and fulfill orders for others and reap a small commission on each sale. Amazon Web Services (leasing computer infrastructure) – utilize existing storage and processing infrastructure more fully by leasing extra capacity to other businesses. Search Inside the Book – this feature stores more information about the book and enables a customer to know more about it before purchasing. Amazon Kindle – this device exploits the digitization of books; the ability to store digitized book content on the Kindle, and the ability to transmit digitized books easily over the Internet.

6. Suppose you work for Amazon 6. Suppose you work for Amazon.com or a company that takes innovation as seriously as Amazon does. What do you suppose is the likely reaction to an employee who says to his or her boss, “But, I don’t know how to do that!”?   A company that is serious about innovation would not tolerate employees who are fearful of taking risks and experimenting. Employees in these types of companies will be expected to do things they don’t know how to do all the time! A boss is likely to tell the employee that he/she was hired not for what they already know how to do, but for the new things they can figure out how to do. It is that willingness to push into the unknown that is valued. Employees who can’t tolerate this expectation will not stay employed at that company for long. Learning to Learn and Learning to Change!

Ethics Guide Ethics of Misdirected Information Use (Situations A,B,C Q:1&2; (pp.14-15) GOALS Teach students about the problem of unintentionally revealing sensitive information in public places. Explore ethical issues concerning the use of misdirected information. Differentiate between unethical and illegal

What are the only two questions that a business professional can ask in an elevator? Usually someone will have worked in a law or CPA office and they’ll know. The standard answer is: What floor? How is the weather? That’s it. No other question is allowed in an elevator. Airplanes and public places, like Starbucks in this story, are other places to avoid conversations about sensitive matters.

Guide: Ethics of Misdirected Information Use [Situations A,B,C only and Questions#1,2 only] Situation A: Suppose you overhear a confidential conversation from which you could get information that would give you advantage in real estate negotiations. Should you listen? Do you use that information?

Guide: Ethics of Misdirected Information Use Situation B: Suppose you receive that same information in an email. Perhaps an administrative assistant at the agent’s office confuses you and the other customer and mistakenly sends you the terms of the other party’s offer. Do you read that email? If so, do you use the information that you read to your advantage?

Guide: Ethics of Misdirected Information Use Situation C: Suppose you sell computer software. In the midst of a sensitive price negotiation, your customer accidentally sends you an internal email that contains the maximum amount that the customer can pay for your software. Do you read that email? Do you use that information to guide your negotiating strategy? If your customer discovers that the email may have reached you and asks, “Did you read my email?” how do you answer?

Discussion Questions 1. Answer the questions in situations A & B. Do your answer differ? Does the medium by which the information is obtained make a difference? Is it easier to avoid reading an email than it is to avoid hearing a conversation? If so, does that difference matter?

1. I don’t think the medium should make a difference. Using the lawyer’s criteria mentioned earlier, the use of information in either case is unethical. Also, there’s a difference in that the email server at the real estate office has a record that it sent that email to you. In scenario A, no one could prove you heard. That difference doesn’t change the ethics - it just changes the chance that you might be discovered. Also, in scenario B there is another possibility: If you received the terms of their offer, there’s a good chance the addresses were switched and they received the terms of your offer. From a practical perspective, setting aside the ethical issues, it’s probably best to let your agent know what happened.

Discussion Questions 2. Answer the questions in situations B & C. Do our answers differ? In situation B, the information is for your personal gain; in C, the information is for both your personal and your organization’s gain. Does this difference matter? How do you respond when asked if you have read the email?

2. Scenario C is more complicated. For one, what if the customer wants you to have that information? Or, what if that information is false, the real number is higher, but the customer wants you to think that’s their top number? This could be a mistake or a negotiating ploy. I think notifying the customer is not only ethical, it’s also smart. Nothing is more serviceable than the truth. Maybe it’s not the most convenient, but it’s the easiest in the long run. I don’t think whether the information gives you or your company an advantage is relevant. By the way, your company may have a written ethical policy that governs your behavior here. You could lose your job by not following those guidelines.

Ethics Guide: Ethics of Information from Misdirected Data (Summary) How do you define the difference between legal and ethical? Can something be against corporate policy and still be legal? What is your personal policy about dealing with information that is misdirected to you? Did your thoughts about this matter change as a result of this discussion? If so, how?

Figure displays the four quadrants of ethical and legal behavior Figure displays the four quadrants of ethical and legal behavior. The ideal goal for organizations is to make decisions within quadrant I that are both legal and ethical. Can you name a company that operates in each quadrant? Microsoft (antitrust issue) Amazon Explain to your students that most organizations want to make decisions somewhere in quadrant I, both legal and ethical Obviously this does not always happen, or we would not have examples such as Enron and Martha Stewart Can you name a company that operates in each quadrant? I – Amazon II – Microsoft – the government ruled that Microsoft was breaking antitrust laws and operating a monopoly, although Microsoft felt it was operating ethically and legally III – Some lawyers IV – Drug Dealer Enron Drug Dealer Some lawyer