Managing the Digital Firm, Seventh Canadian Edition
Describe the characteristics of executive support systems (ESS) and explain how
these systems differ from DSS.
Executive support systems help senior managers address strategic issues and long–
term trends, both in the firm and in the external environment.
• ESS address nonroutine decisions requiring judgment, evaluation, and insight
3. How do systems that link the enterprise improve organizational performance?
Explain how enterprise applications improve organizational performance.
An organization operates in an ever-increasing competitive and global environment.
Define enterprise systems, supply chain management systems, customer
relationship management systems, and knowledge management systems and
describe their business benefits.
Enterprise systems integrate the key business processes of an organization into a
single central data repository. This makes it possible for information that was
previously fragmented in different systems to be shared across the firm and for
different parts of the business to work more closely together.
Business benefits include:
• Information flows seamlessly throughout an organization, improving
coordination, efficiency, and decision making.
Managing the Digital Firm, Seventh Canadian Edition
In short, supply chain management (SCM) systems help businesses better manage
relationships with their suppliers. Objective of SCM: Get the right amount of
products from the companies’ source to their point of consumption with the least
Business benefits include:
• Decide when and what to produce, store, and move
• Rapidly communicate orders
Customer relationship management (CRM) systems enable a business to better
manage its relationships with existing and potential customers. With the growth of the
Web, potential customers can easily comparison shop for retail and wholesale goods
and even raw materials, so treating customers better has become very important.
Business benefits include:
• CRM systems provide information to coordinate all the business processes that
deal with customers in sales, marketing, and service to optimize revenue,
customer satisfaction, and customer retention. This information helps firms
identify, attract, and retain the most profitable customers; provide better service to
existing customers; and increase sales.
• CRM systems consolidate customer data from multiple sources and provide
analytical tools for answering questions such as: What is the value of a particular
customer to the firm over his/her lifetime?
Knowledge management systems (KMS) enable organizations to better manage
processes for capturing and applying knowledge and expertise. These systems collect
all relevant knowledge and experience in the firm, and make it available wherever
Managing the Digital Firm, Seventh Canadian Edition
and whenever it is needed to improve business processes and management decisions.
They also link the firm to external sources of knowledge.
Business benefits include:
• KMS support processes for acquiring, storing, distributing, and applying
knowledge, as well as processes for creating new knowledge and integrating it
into the organization.
Explain how intranets and extranets help firms integrate information and
business processes.
Because intranets and extranets share the same technology and software platforms as
the Internet, they are easy and inexpensive ways for companies to increase integration
and expedite the flow of information within the company (intranets alone) and with
4. Why are systems for collaboration and social business so important, and what
technologies do they use?
Define collaboration and social business and explain why they have become so
important in business today.
Collaboration is working with others to achieve shared and explicit goals. It focuses
on task or mission accomplishment and usually takes place in a business, or other
Managing the Digital Firm, Seventh Canadian Edition
Collaboration and social business are important because:
• Changing nature of work. More jobs are becoming “interaction” jobs. These kinds
of jobs require face-to-face interaction with other employees, managers, vendors,
and customers. They require systems that allow the interaction workers to
List and describe the business benefits of collaboration and social business.
The general belief is that the more a business firm is collaborative in nature, the more
successful it will be and that collaboration within and among firms is more essential
than in the past. The overall economic benefit of collaboration and social business are
significant.
The business benefits of collaboration are listed in Table 2.2:
• Productivity: people working together accomplish tasks faster, with fewer errors,
than those working alone.
Describe a supportive organization culture and business processes for
collaboration.
Historically, organizations were built on hierarchies which did not allow much
decision making, planning, and organizing at lower levels of management or by
employees. Communications were generally vertical through management levels
rather than horizontal between groups of employees.
Managing the Digital Firm, Seventh Canadian Edition
A collaborative culture relies on teams of employees to implement and achieve results
for goals set by senior managers. Policies, products, designs, processes, and systems
are much more dependent on teams at all levels of the organization to devise, to
List and describe the various types of collaboration and social business systems.
Some of the more common enterprise-wide information systems that businesses can
use to support interaction jobs include:
• Internet-based collaboration environments like Lotus Notes, Groove, and WebEx
provide online storage space for documents, team communications (separated from
email), calendars, and audio-visual tools members can use to meet face-to–face.
• Email and Instant Messaging (IM) are reliable methods for communicating
whenever and wherever around the globe.
5. What is the role of the information systems function in a business?
Describe how the information systems function supports a business.
The information systems department is the formal organizational unit responsible for
information technology services. The information systems department is responsible
for maintaining the hardware, software, data storage, and networks that comprise the
firm’s IT infrastructure.
Managing the Digital Firm, Seventh Canadian Edition
Compare the roles played by programmers, systems analysts, information
systems managers, the chief information officer (CIO), chief security officer
(CSO), and chief knowledge officer (CKO).
• Programmers are highly trained technical specialists who write the software
instructions for computers.
• Systems analysts constitute the principal liaisons between the information systems
groups and the rest of the organization. The systems analyst’s job is to translate
Discussion Questions
1. How could information systems be used to support the order fulfillment process
illustrated in Figure 2-1? What are the most important pieces of information
these systems should capture? Explain your answer.
Today’s systems are built to electronically coordinate all the business functions in an
enterprise. The sales function begins the process by completing a sales order,
2. Identify the steps that are performed in the process of selecting and checking a
book out from your college library and the information that flows among these
Managing the Digital Firm, Seventh Canadian Edition
activities. Diagram the process. Are there any ways this process could be
improved to improve the performance of your library or your school? Diagram
the improved process.
Students should rely on information from Section 2-1, Business Processes and Information
3. Use the Time/Space Collaboration and Social Tool Matrix to classify the
collaboration and social technologies used by TELUS?
First, students should use Table 2-5 to evaluate various enterprise social networking
software capabilities, and Figure 2-8 to help them choose the most appropriate
TELUS employees can take advantage of these social networking capabilities to learn
at their own pace and time:
• Profiles
Hands-on MIS Projects
Management Decision Problems
1. Ben’s Lumber Company: The prices of lumber and other building materials are
constantly changing. When a customer inquires about the price on pre-finished wood
flooring, sales representatives consult a manual price sheet and then call the supplier
for the most recent price. The supplier in turn uses a manual price sheet, which has
Manually updating price sheets leads to slower sales processes, pricing errors if sales
reps are using outdated information, and customer dissatisfaction due to delays in
obtaining information. By putting the data online using an extranet and updating it as
Managing the Digital Firm, Seventh Canadian Edition
2. David’s Hardware: Owners do not keep automated, detailed inventory or sales records.
Invoices are not maintained or tracked (other than for tax purposes). The owners use their
own judgment in identifying items that need to be reordered. What is the business impact
of this situation? How could information systems help the owners run their business?
What data should these systems capture? What decisions could the systems improve?
Improving Decision Making: Using a Spreadsheet to Select Suppliers
Software skills: Spreadsheet date functions, data filtering, DAVERAGE functions.
Business skills: Analyzing supplier performance and pricing.
This exercise requires some student knowledge of spreadsheet database functions. At a
minimum, students should know how to sort the database by various criteria such as item
description, item cost, vendor number, vendor, name, or A/P terms. Students may need to
be told that A/P Terms is expressed as the number of days that the customer has to pay
the vendor for a purchase. In other words, 30 designates net 30 days. The vendor that
allows customers the longest amount of time to pay for an order would, of course, offer
the most favourable payment terms.
Achieving Operational Excellence: Using Internet Software to Plan Efficient
Transportation Routes
Students should compare the shortest amount of time with the shortest difference.
Encourage students to use the Advanced Tools option to quickly change back and forth
between “shortest time” and “shortest distance.” To show how convenient these kinds of
online tools are, ask students to use a regular map and calculator to draw out the two routes.
Managing the Digital Firm, Seventh Canadian Edition
CASE STUDY: SHOULD COMPANIES EMBRACE SOCIAL
BUSINESS?
1. Identify the management, organization, and technology factors responsible for
slow adoption rates of internal corporate social networks.
Management: Employees that are used to collaborating and doing business in more
traditional ways need an incentive to use social software. Most companies are not
providing that incentive: Only 22 percent of social software users believe the
technology to be necessary to their jobs.
Organization: Companies that have tried to deploy internal social networks have
found that employees are used to doing business in a certain way and overcoming
2. Why have each of the companies described in this case been successful in
implementing internal social networks? Explain your answer.
One company, CSC, took a very passive approach when it implemented its social
business networking software platform. The company allowed users to form groups
on their own. Group presidents and other executives set an example by blogging with
the social tool. The company also offered a “virtual water cooler” for non-work-
The third company, Red Robin hamburger restaurant chain, took a viral approach to
drive adoption of its social networking system. The company’s CIO sees a movement
away from email and collaboration portals like SharePoint toward social networking
Managing the Digital Firm, Seventh Canadian Edition
3. Should all companies implement internal enterprise social networks? Why or
why not?