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It a description of how a business will operate in the real world and it specifies its position in the value chain p p A business model will be used to evaluate how well a business will perform before being exposed to the real world using different assumptions Value proposition p p
how a product or service fulfills the needs of a customer
personalization, customization, reduction of search costs, discount)
Revenue model
how the firm will earn revenue and make a profit
sales, transaction fees, subscriptions
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Business Models Financial Models Production Models Sales Models Process Models Workflow Models Organizational Models IS Models (Data, Systems, etc.) Every aspect of business can be modeled in different ways.
Causeandeffect Relationships
Price affects sales
Feedback Loops
Unit cost affects price Price affects sales Sales affects viable unit costs
Timedelayed Responses
Marketing and advertising Subsequent product sales
Nonlinear Responses
Initial marketing rapid market share growth Expanded marketing saturation and diminishing returns
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Fishbone Process Analysis y
Identified by problem specifics
Who, what, when, where, how
Steps to analysis
Select major categories (personnel) Identify key issues (scheduling) Organize issues by category and root of problem
Spreadsheet based models showing expenses, revenues, cash balances, and other financial metrics over time Revenue model Cash Flow model
Cash Flow (for a company which has no capital expenditures and depreciation)
Year 1 Company g Earnings $ Statutory Tax Rate Less Taxes (EBITA * Tax Rate) $ Free Cash Flow (FCF) $ EBITA ,000 1,000 35% $ Year 2 1,020 ,0 0 35% $ Year 3 1,040 ,0 0 35% $ Year 4 1,061 ,06 35% $ Year 5 1,082 ,08 35%
(350) $ 650 $
(357) $ 663 $
(364) $ 676 $
(371) $ 690 $
(379) 704
Earnings before Interest, Taxes, and Amortization
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Spreadsheet models showing expected production and sales over time and resource requirements Answer Questions like:
What's the most costeffective way to meet unplanned demand? What part of the product's cost is related to the workforce in production? How long would it take to payback (ROI) an investment in a new machine that would increase production capacity by 20%?
Examples:
HR Staffing Model a payroll forecasting model deals with assumptions like how long is a store open, how many employees work on the same shift, how much is an employee making
Production Model deals with operating assumptions like how many shifts per day, how many holidays per year
Usually the necessary steps to complete a task or action and y y p p uses a Flowchart Format Basic Flowchart Symbols
Begin & End Process Decision Connection
Start Do This A or B?
Stop
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When a business model does not have the expected outcome it is important to identify the problem After identifying the problem you need to understand what causes it and what is the effect on your business Example: What is the problem about? Delay in attending to users Who is affected? 1/4 of the patients wait more than 90 min When does it occur? Between Monday and Friday Where does it occur? Registration desk Pareto 80/20 rule 80% of the consequences stem from 20% of the causes
SUCCESS of company depends on good p y p g decision making and processing. Threephase process
Intelligence phase: collect info, translate data and information into knowledge Design phase: method for considering data is designed Choice phase: select alternative
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Decision is made one more than an alternative exists Information is being collected, models are applied and a decision is made by the managers Operational management takes operational decisions Middle management takes tactical decisions Senior management takes strategic decisions
Data Facts Application: Transaction Processing Systems Result: Raw facts (Items produced) Information Meaning Application: Decision Support Systems Result: Facts in Context (Cycle time, Throughput) Knowledge Understanding Application: Expert Systems Result: Actionable Information (Production Methods)
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Structured problem: optimal solution can be reached through single set of steps Algorithm: sequence of steps Parameters: categories of data considered in algorithm Most mathematical and physical problems are structured Unstructured problem an algorithm doesn't exist, is very complex, or requires l i h d ' i i l i an impractical amount of time to solve Many potential factors Complex relationships
Example: Stock Market forecasting
Computerbased information system
designed to help managers select one of many alternative g p g y solutions to a problem
Three types:
Data management module Model management module Dialog module g
Decision Tree used for classification and prediction in DSS
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Data management module: provides data for intelligence phase
Database or data warehouse Accesses data Provides mean to select data by criteria
DSSs tied with other organizational systems
Data warehouses Data marts ERP systems
Model management module: turn data into g useful information and knowledge
Offers fixed, dynamic, or collection of models Dynamic module adjusts based on changing variables Pattern of behavior can become useful model Models often based on mathematical equations Patterns or models may be unique to certain industry
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Dialog module: focused on user interaction g
Assists the user in translating complex information into specific knowledge which can be used for decisions Prompts user to select model Similar to user interface of other applications Many available through Internet Displays results of analysis: Textual, Tabular, or Graphical May include Decision Trees or Expert Systems
Food production and retailing ( forecast no of customers) Agriculture ( picking farm locations) Tax planning ( tax helper applications) Website planning ( analyze shopper behavior) Yield management ( maximize revenue, lodging) Financial services (loan amounts and interest rates)
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Developed to emulate the knowledge of an expert to solve problems and make decisions in a relatively narrow domain Uses: Knowledge base
a collection of facts and the relationship among them
Inference engine
software that combines data inputed by user with the data relationship stored in the Know. Base stored in the Know Base
Neural networks
are designed to mimic the way a human brain learns
Artificial Intelligence
methods and technologies that emulate how human learn and solve problems. Uses expert systems and neural networks.
Medical diagnosis ( help doctors with treatment advice) Medical management (discern which treatment patient should receive) Telephone network maintenance ( diagnose and fix network failures) Credit evaluation ( analyzes credit) Detection of insider securities trading Detection of common metals Irrigation and pest management ( detect toxins)
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Is the combination of activities involved in gathering, organizing, sharing, analyzing and disseminating knowledge to improve an organization's performance Types of Knowledge Explicit Knowledge ("Leaky Knowledge") Objective, rational, and technical (policies and procedures) Tacit Knowledge ("Sticky Knowledge") Subjective, Cognitive, and Experiential
It is about making collaborative decisions while in a group meeting Problems: lack of focus, free riding, domination, fear of speaking, hidden agendas, wrong people, misunderstandings, premature closure Key features: contributor anonymity ( focus on ideas, full disclosure and constructive improvement) parallel processing of discussions ( full contribution and rapid exchange)
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Used to collect data in consumer facing industries ( an extensive amount of data, tight margins, potentially large extensive amount of data tight margins potentially large revenues) Concerns related to privacy when data is collected Knowledge workers: research, prepare and provide information. They can either use specific tools or grab the information They can either use specific tools or grab the knowledge from the web. Business Intelligence : information gleaned with the use of software tools that process data from data warehouses
Data Management Issues ( increasing data volume, inconsistent physical storage, legal data retention inconsistent physical storage legal data retention requirements) Data Quality Issues Intrinsic (accuracy, objectivity, reputation) Accessibility ( timely access, security) Accessibility ( timely access security) Contextual ( relevancy, timeliness, completeness) Representation (consistency, clarity, interpretability)
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Are enterpriselevel large and complex datasets that integrate legacy and production applications Characteristics: Organization ( relevancy) Consistency (encoding) Time Variant (longterm trends) Ti V i t (l t t d ) Nonvolatile ( invariant information) Relational ( defined associations)
Is the process of selecting, exploring and modeling large amounts of data to discover previously unknown relationships p y p that support decision making Techniques: Casebased reasoning, Neural Computing, and Intelligent agents Analysis Methods: Classification characteristics (e.g., sex, age) Clustering physical or temporal proximity Association implication (e.g., A > Sequencing B) temporal ordering of events Forecasting based on historical trends
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An application that exploits data warehouses Extremely fast response E t l f t View combinations of two dimensions Drilling down: start with broad info and get more specific Use Dimensional database: data organized into tables Companies sell multidimensional database packages Extremely valuable for executives
Major effort of business is BI collection Datamining and OLAP software integrated into CRM Web becoming popular for transactions Targeted marketing better than mass marketing Data from customer not complete Third party companies hired to study consumer Doubleclick Engage
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Autocategorization
automates classification of data to provide more precise t t l ifi ti f d t t id i and faster results
Dashboard
interface between Business Intelligence tool and user which is designed to quickly represent specific data with the aid of visual images
It is also called the "waterfall" model, because it consists of several distinct phases that are followed sequentially Four major phases: Analysis Design Implementation Support
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Investigation A step in the analysis process in which a team interviews employees and determines if system is necessary Feasibility Technical ( determines if components exist) Economic ( t/b fit t i E i ( cost/benefit, return on investment) t t) Operational ( determine how new system will be used) Requirements definition ( functions expected from system)
Description Is the first phase in which Dataflow Diagrams (DFD), Is the first phase in which Dataflow Diagrams (DFD) Unified Modeling Language (UML) and Structure and Flow Charts are used Construction Is the second phase in which the completed modules are tested and a simulation of the actual program is executed System testing The phase in which the entire system is being tested
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Data flow diagram (DFD)
describes the flow of data, needs to be simple but it cannot describes the flow of data needs to be simple but it cannot describe system completely
Unified Modeling Language (UML)
standard for diagramming which helps developers communicate features of a system through symbols and notations
Structure Charts Organizational Relationships Flow Charts Temporal Relationships
Conversion is the first step in which an operation switches from using an old system to using a new one
Parallel conversion old system used with the new one for a predetermined period of time Phased conversion large systems can be broken into modules and phased into operation one at a time Cutover conversion old system is discarded Pilot conversion introduce the new system just in one unit for testing purposes
Training occurs before/after conversion and helps employee better adapt to the new system
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The longest phase of the SDLS. It is most of the time ignored, thought it is really important in retaining customers. Duties: Maintenance Post implementation debugging Postimplementation debugging Vendor updates Adding postponed features User help desk and support
Each country is guided by a different law system: common law, civic law, Islamic law This affects business and foreign investments Free speech is affected Harder to internationally transfer data Privacy laws are different Respect for privacy in international business is an unresolved challenge Many nations protect individual privacy at least in part Laws reflect difference in approach to issue of privacy
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US Congress passed legislation prohibiting the use of credit cards, electronic funds transfers, and checks for online gambling. Impact on two UK firms SportingBet PLC stock down 58% PartyGaming PLC stock down 65% Location of the servers: Caribbean, Central America, Europe
Election Process
used for campaign polling and for voters and candidates that can do online research li h
Law Enforcement
PDA help officers write tickets, scan driver license bar codes, download criminal records; Laptops are used to retrieve information while on road
Homeland Security
US VISIT is a database of biometric identifiers used to identify fake documents SEVIS is used to verify foreign student enrolment Canadian border digital camera surveillance Crisis management web based systems that allows information to be viewed in realtime in crisis times
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A software developed by the MIS Department to help Police identify hidden relationships in data y p Allows detectives to see "big picture" : facts, suspects and vehicles You can search for a person, view an incident and use data mining techniques to find a suspect by just using d i i h i fi d b j i 3 leads
CODIS
the database for DNA evidence used by forensic and offender indexes
AFIS
is the electronically stored fingerprint evidence
NCIC
National Crime Information Center is the FBI database of criminal justice information
NICS
National Instant Criminal Background Check System FBI system to help g y y p gun dealers perform background checks on potential buyers
Databases of violent sexual offenders some information is made public online REDFLEX
Red Light Traffic Enforcement in Scottsdale
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LoJack
a wireless radiofrequency transmitter placed in a car to track it in case its stolen
Bait Car
car placed in highcrime areas to record the crime
Amber Alert
system that uses Emergency Alert System technology to broadcasts alert on radio and television if a child is missing
NCMEC
National Center for Missing and Exploited Children provides alerts via email, mobile phone and yahoo messenger if a child is stolen
Security is the protection of information who has access, what is most sensitive,who can manipulate the data Privacy is the appropriate use of information as defined by: Law, public sensitivity, Context
Examples:
Health Insurance Portability and Accountability Act (HIPAA) M di l R Medical Records Information d I f ti GrammLeachBliley Act (GLBA) Financial Records Management Family Educational Rights and Privacy Act (FERPA) Buckley Amendment Student Educational Records
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Many types of resources have more than one critical priority, and some may change priorities with time. Confidentiality who can access information Integrity who can modify/change Availability who is the information available to
1. 2. 3.
Physical Controlling where a system is available Technical Controlling how a system is accessed Administrative Controlling how a system is used g y
Preventative: Firewalls Deterrent: Warning banners Detective: Intrusion Detection Systems Corrective: Antivirus attempting to clean a file Recovery: Backup tapes Compensative: Policies for disciplinary action
Theft of information/Identify theft / y
Keystroke logging
Parental monitoring software
Social engineering (e.g., Pretexting)
HewlettPackard Board of Directors
ManintheMiddle Attacks and Phishing Man in the Middle Attacks and Phishing
Impersonation of a Legitimate Business
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Data alteration/destruction Web defacement (Political Statements) f Computer Viruses/Worms, and Logic Bombs
Viruses require human involvement to spread; worms do not (antivirus software) Logic bombs are software programmed to cause damage at a specific time (or after a specific event) to specific applications/data files li ti /d t fil
Nonmalicious damage
Poor training/backup, human error Realtime Data Mining Video Case Application
Footprinting p g
Identifying the system
Scanning
Identifying the weaknesses
Enumeration
Mapping the resources pp g
Exploitation
Executing the attach
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Firewall: best defense
Hardware and software Blocks access to computing resources Routinely integrated into routers
DMZ: demilitarized zone approach
One end of network connected to trusted network other end to public network d bli k
Proxy server: represent another server
Employs firewall
Identification
Stating an identity Stating an identit Yes, Officer, my name is Jimmy
Authentication
Proving the stated identity using a second piece of evidence Here's my driver's license, Officer
Authorization
References some external source to see if the subject should be permitted the action taken No, Jimmy, you may not drive 95 MPH down this street
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Vulnerability Threat Risk
Weakness (bug) which an attacker may exploit Someone (e.g., hacker) or something (e.g., virus or worm) which poses a danger to a resource
Likelihood of a threat actually exploiting a vulnerability, and the resulting business (economic, image, etc.) loss A safeguard (firewall, antivirus) put into place to reduce the risk, typically by minimizing the vulnerability Remaining risk after applying countermeasures
Countermeasure C Residue risk
Business based decision similar to purchasing insurance (risk mitigation) p g ( g ) Spending (cost of avoiding risk) should be proportional to cost of potential damage (cost of incurring risk) which is defined as: cost of disruption x probability of disruption
Cost of Disruption loss of downtime, customer goodwill, revenue (e.g., eBay, Blackberry, Stock Exchange) Bl kb St k E h ) Probability of Disruption Reliability of hardware systems (MTBF), software applications, single points of failure, physical system security, catastrophic events
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