Use this quote to discuss why research is important in a time of change.

Business research plays an important role in an environment that emphasizes

measurement. Return on investment (ROI) is the calculation of the financial
return for all business expenditures and it is emphasized more now than ever
before. Business research expenditures are increasingly scrutinized for their
contribution to ROMI.
Business research is a systematic inquiry that provides information to guide
business decisions. The text definition is provided in the slide.

Ask students to offer examples of types of decision-making situations that

could be addressed using business research.
Use this ad to talk about the different types of risk that organizations face.
Students usually have no difficulty identifying financial/economic risk, but must
stretch to identify other types of risks. Some of these include social risks
(preserving their reputation), physical risk (represented by dangers to living
things: product recalls in pet food and human food, pharmaceuticals, etc.
provide examples.), environmental risk (preserving the organization’s
relationship with their physical environment), technological risk (falling
behind—or having the opportunity to leap ahead—of their competition).

Several factors increase the relevance for studying business research.

Information overload. While the Internet and its search engines present
extensive amounts of information, its quality and credibility must be
continuously evaluated. The ubiquitous access to information has brought
about the development of knowledge communities and the need for
organizations to leverage this knowledge universe for innovation—or risk
merely drowning in data. Stakeholders now have more information at their
disposal and are more resistant to business stimuli.
Technological connectivity. Individuals, public sector organizations, and
businesses are adapting to changes in work patterns (real-time and global),
changes in the formation of relationships and communities, and the realization
that geography is no longer a primary constraint.
Shifting global centers of economic activity and competition. The rising
economic power of Asia and demographic shifts within regions highlight the
need for organizations to expand their knowledge of consumers, suppliers,
talent pools, business models, and infrastructures with which they are less
familiar.
Increasingly critical scrutiny of big business. The availability of information has
made it possible for all a firm’s stakeholders to demand inclusion in company
decision making, while at the same time elevating the level of societal
suspicion.
More government intervention. As public-sector activities increase in order to
provide some minimal or enhanced level of social services, governments are
becoming increasingly aggressive in protecting their various constituencies by
posing restrictions on the use of managerial and business research tools.
Battle for analytical talent. Managers face progressively complex decisions,
applying mathematical models to extract meaningful knowledge from volumes
of data and using highly sophisticated software to run their organizations. The
shift to knowledge-intensive industries puts greater demand on a scarcity of
well-trained talent with advanced analytical skills.
Computing Power and Speed. Lower cost data collection, better visualization
tools, more computational power, more and faster integration of data, and
real-time access to knowledge are now manager expectations…not wistful
visions of a distant future.
New Perspectives on Established Research Methodologies. Older tools and
methodologies, once limited to exploratory research, are gaining wider
acceptance in dealing with a wider range of managerial problems.
An organization’s mission drives its business goals, strategies, and tactics and,
consequently, its need for business decision support systems and business
intelligence. Students need to understand the differences in these concepts
to fully understand what drives a manager to seek solutions through research.

Selecting business strategies and tactics often drive research.

A business strategy is defined as the general approach an organization will
follow to achieve its business goals. A strategy might describe how an
organization can best position itself to fulfill customer needs or establish a
general approach to gaining brand equity. Haagen-Daz positioned itself with its
super-premium ice-cream strategy.
Business tactics are specific, timed activities that execute a business strategy.
Haagen-Daz designed its ice-cream to be rich and creamy with flavors like
“Peanut Butter Fudge Chunk.” It packaged the ice cream in pint size
containers with signature gold and burgundy colors. It distributes the ice cream
in grocery stores and franchised stores.
When elements of data are organized for retrieval, they collectively constitute a
business decision support system (DSS). This data is often shared over an
intranet or an extranet.
An intranet is a private network that is contained within an enterprise and is not
available to the public at large. It may consist of many interlinked local area
networks. It typically includes connections through one or more computers to
the Internet. The main purpose of an intranet is to share company information
and computing resources among internal audiences.
An extranet is a private network that uses the Internet protocols and the public
telecommunication system to share an organization’s information, data, or
operations with external suppliers, vendors, or customers. An extranet can be
viewed as the external portion of a company’s intranet.
A business intelligence system (BIS) is designed to provide ongoing
information about events and trends in the technological, economic, political
and legal, demographic, cultural, social, and competitive areas.

Exhibit 1-1
Exhibit 1-1 shows some sources of business intelligence.
Sources of government information include speeches by elected officials,
recordings of public proceedings, press releases, and agency websites.
Sources of competitive information include presentations at conferences,
literature searches, press releases, syndicated industry studies, web sites,
clipping services, and business research.
Sources of economic information include literature searches and government
reports.
Sources of cultural and social information include syndicated studies, public
opinion organizations, business research, and government reports.
Sources of technological information include patent filings, web sites,
syndicated industry studies, presentations at conferences, literature searches,
and clipping services.
Sources of demographic information include syndicated studies, government
reports, and business research.

Remind your students that they have an extensive list of business sources on
the CD that accompanied their textbook. It’s a valued resource that will be
useful if you assign projects within your course structure.

Exhibit 1-2

Exhibit 1-2 illustrates the hierarchy of business decision makers.

In the bottom tier, most decisions are based on past experience or instinct.
Decisions are also supported with secondary data searches.
In the middle tier, some decisions are based on business research.
In the top tier, every decision is guided by business research. Firms develop
proprietary methodologies and are innovative in their combination of
methodologies. There is access to research data and findings throughout the
organization.
Eastman Kodak has an internal research department.

Business research is only valuable when it helps management make better

decisions. A study may be interesting, but if it does not help improve
decision-making, its use should be questioned. Research could be appropriate
for some problems, but insufficient resources may limit usefulness.
Computers and telecommunications lowered the costs of data collection.
Data management is now possible and necessary given the quantity of raw
data.
Models reflect the behavior of individuals, households, and industries.
A DSS integrates data management techniques, models, and analytical tools
to support decision making.
Data must be more than timely and standardized; it must be meaningful.
These are all characteristics of the information value chain.

Exhibit 1-4
Exhibit 1-4 introduces the research process model used throughout the text
and the PowerPoint slides.

Instructors are encourage to give it a brief overview here, as a more detailed

look is offered in chapter 4, and individual stages are discussed in subsequent
chapters.
Exhibit 1-5 presents the characteristics of good business research and also
explains what managers should look for in research done by others.

You might wish to discuss the concepts here, before you discuss who actually
conducts research…or you might want to discuss who conducts research first,
followed by this slide to summarize.

Applied research applies research to discovering solutions for immediate

problems or opportunities.
Basic (or pure) research aims to solve perplexing questions or obtain new
knowledge of an experimental or theoretical nature that has little direct or
immediate impact on action, performance, or policy decisions.
Reporting studies provide a summation of data, often recasting data to achieve
a deeper understanding or to generate statistics for comparison.
A descriptive study tries to discover answers to the questions who, what, when,
where, and, sometimes, how.
An explanatory study attempts to explain the reasons for the phenomenon that
the descriptive study only observed
A predictive study attempts to predict when and in what situations an event will
occur. Studies may also be described as applied research or basic research.

New federal security and accounting laws that require companies to store
e-mail for 5 years have spurred the growth of digital information, which is
increasing at a rate of 5 exabytes annually. Students may be surprised to learn
that 5 exabytes of data is equivalent to 37,000 Libraries of Congress. Ask the
students to think about what difference it makes to the world economy, or the
U.S. economy, if global operations become much less expensive? What are
the challenges to American suppliers of goods and services, and to labor?
Emphasize to students that total investment is more than one trillion dollars in
2012, and that more than 540 billion dollars of that was invested in information
technology. You could ask them why it is that the percentage of total
investment devoted to IT has increased so much since 1980. Other kinds of
capital investment are machinery and buildings. Why would firms increase IT
investment faster than machinery and buildings? The answer is capital
substitution: the price of IT capital has been falling exponentially, whereas the
price of machine and buildings has been growing at slightly more than the rate
of inflation. Wherever possible, firms would much rather invest in more IT than
machinery or buildings because the returns on the investment are greater.

Time shifting and space shifting are connected to globalization. You could ask
students to explain why a digital firm is more likely to benefit from globalization
than a traditional firm. One answer is that by allowing business to be
conducted at any time (time shifting) and any place (space shifting), digital
firms are ideally suited for global operations which take place in remote
locations and very different time zones.

In the opening case, the UPS Interactive Session later in the chapter, and with
many of the Interactive Sessions and opening cases in the book, it will be
useful to ask students to explain how various information systems succeeded
or failed in achieving the six strategic business objectives. You might ask the
students to think about some other business objectives and think about how IT
might help firms achieve them. For instance, speed to market is very important
to firms introducing new products. How can IT help achieve that objective?
The basic point of this graphic is that in order to achieve its business objectives,
a firm will need a significant investment in IT. Going the other direction (from
right to left), having a significant IT platform can lead to changes in business
objectives and strategies. Emphasize the two-way nature of this relationship.
Businesses rely on information systems to help them achieve their goals; a
business without adequate information systems will inevitably fall short. But
information systems are also products of the businesses that use them.
Businesses shape their information systems and information systems shape
businesses.

Walmart is the most efficient retailer in the industry and exemplifies operational
excellence. You could ask students to name other businesses that they believe
exhibit a high level of operational excellence. Do customers perceive
operational excellence? Does it make a difference for customer purchasing?
What Web sites strike students as really excellent in terms of customer service?
If you have a podium computer, you might want to visit the Walmart site and
the Amazon site to compare them in terms of ease of use.
You could ask students to name other new products or business models that
they’ve encountered and how they might relate to new information systems or
new technology. One way to encourage participation is ask students to help
you list on the blackboard some really interesting recent digital product
innovations. Discussing “green technologies” such as wind, solar, and hybrid
vehicles is always fun. In this context, what role will IT be playing in the
development of these technologies?

You could ask students what types of companies might rely more on customer
and supplier intimacy more than others and which companies they feel have
served them exceptionally well. Ask the students to identify online sites that
achieve a high degree of customer intimacy. Sites to visit would include Netflix,
Amazon, and other sites which have recommender systems to suggest
purchase ideas to consumers.
You could ask students if they have ever been recipients of exceptional service
from a company made possible by improved decision making and whether or
not information systems contributed to that level of service. For example,
perhaps they had a power outage and it took a very short (or very long) time
for the utility company to correct the error.

Ask students if they can name any examples of companies that failed to
survive due to unwillingness or inability to update their information systems.
The Sarbanes-Oxley Act (2002) requires that public firms keep all data,
including e-mail, on record for 5 years. The Dodd-Frank Act (2010) requires
financial services firms to develop extensive new compliance reports. You
could ask students if they appreciate why information systems would be useful
toward meeting the standards imposed by these new federal statutes.
These are some basic background understandings needed for the course. A
system refers to a set of components that work together (hopefully). Can
students think of systems other than information systems? The point of an
information system is to make sense out all the confusing data in the
environment, and put the data into some kind of order. Information is an
ordered set of data that you can understand and act on. If the students want to
get a sense of raw data, show them a stock ticker on a Web financial site (or
Yahoo/finance). Ask them to tell you what it means? Then show them the
current value of the Dow Jones Industrial Index and the S&P 500, and its daily
trend (or for that matter switch to a one year view of either of these indexes).
Looking at the indexes students can quickly get a grasp of whether the market
is up or down, and they could act on that information.

Emphasize the distinction between information and data. You could, for
example, ask several students to list their ages and write the numbers on one
side of the board—then you could calculate the average age of those students
on the other side, oldest student, youngest student, and so forth, to illustrate
the difference between raw data and meaningful information.

Use an example similar to the one given in the previous slide to illustrate the
three activities involved in the function of an information system. Continuing
with that example, the process of asking students their age would represent
input, calculating the average age and determining the oldest and youngest
age would represent processing, and writing that information on the board
would represent output.

Explain to students how the “house” analogy works: assuming that a

successful information system is like a completed “house”, computers and
software represent only the tools and materials used to build the house. Tools
and materials don’t just suddenly become a completed house—outside
(human) input is required. Systems need to be designed to fit the firms and the
humans who work with the systems.
The point of this diagram is first of all to highlight the three basic activities of
information systems, so that students can understand what an information
system is doing at its most fundamental level. But the diagram also puts
information systems into the context of organizations (firms), and then puts the
firm into its respective environment composed of shareholders, higher level
authorities (government), competitors, suppliers, and customers. Suddenly,
students should see that information systems play a central role mediating and
interacting with all these players. Hence, systems play a key role in the
operations and survival of the firm.

You could also explain this diagram by relating it back to the opening case, as
the book does. The two types of input into the Synergy system are manually
entered data as well as video. The system processes that data and creates the
output, video, and statistics about specific types of players and plays.
These three themes (management, organizations, and technology) will
reappear throughout the book. Understanding the interaction among these
factors and information systems is known as information system literacy.
Knowing how to optimize the relationship between technology, organizations,
and management is the purpose of this book and course.

Pages 18 and 19 in the text provide more specific details on each level of this
hierarchy. You can ask students to talk about an organization where they
currently work, or have worked in the past. What was their contact with senior
management, middle management, and operational (supervisory)
management? Many younger students will have had little or no contact with
senior and middle management. Older students most likely will have
experience. You might need to provide more description about exactly what
senior managers do for the firm (and middle managers).

Ask students to think about how information systems would factor into the
day-to-day jobs of each of the three types of workers in the pyramid.
The point of this slide is to let students know there are many organizational
factors that will shape information systems. A common observation is that
“Every business is different.” Does this mean every business will have different
information systems? Every business has its unique culture and politics.
Systems reflect these business cultures.

For an example of how information systems shed light on a firm’s unique

business processes and culture, you might describe the UPS Interactive
Session later in the chapter. The company’s package tracking systems
exemplify their commitment to customer service and putting the customer first.

How might information systems assist managers in the development of new

products and services? What is meant by re-creating the organization? Why
do organizations need to be continually re-created? The answer is that they
quickly become obsolete unless they continue to change. Ask students to help
you list some organizations that have recently failed, or are about to fail.
Information technology is at the heart of information systems. Although
organization and management are important too, it’s the technology that
enables the systems and the organizations and managers who use the
technology.

The distinction between the Internet and intranets and extranets has to do with
their scope. Intranets are private networks used by corporations and extranets
are similar except that they are directed at external users (such as customers
and suppliers). In contrast, the Internet connects millions of different networks
across the globe. Students may not immediately understand this distinction.

You could ask students to consider how this view of information systems might
contrast with the sociotechnical view or other views. You could also ask them
to consider the circumstances under which information systems might not
result in increased productivity and revenue.
During this and the next slide, emphasize that the end result of the business
information value chain will always be profitability.
Questions for students: What aspects of the business perspective might be
lacking? Are there other perspectives that might provide a different picture?
(sociotechnical)

The information value chain is one way to visualize the relationship among
information activities, business processes, and management activities. You
could also ask students if they could imagine any reason to create an
information system besides profitability or strategic positioning (it’s not likely
that they will think of one, which will prove the point). One reason to create a
system that is not primarily profit-oriented is to meet the information reporting
requirements of government and other authorities.
Connect this slide to the previous slide. Many firms make significant
investments in IT for very little benefit to the bottom line. Discuss why
companies experience a wide variety of outcomes in their efforts to invest in IT.
Consider the factors we use in this book: organizational and management
factors.

Emphasize that firms that make significant investment in complementary

assets tend to derive greater benefit from information technology investment
than those that do not. Consideration of complementary assets should be a
part of any firm’s broader view of how to create and implement their
information systems. Stress to students that managers must consider
dimensions such as complementary assets in order to derive benefit from
information systems and be successful.
Ask students which of the two major types of approaches, behavioral and
technical, they find to be most appropriate or accurate. Why do they feel this
way? Emphasize that the technical approach does not ignore behavior and the
behavioral approach does not ignore technology, but that they are indeed two
distinct approaches.

You might ask the students whether they think it’s possible to adopt only one of
the two approaches to information systems and be successful. Then
emphasize that the most accurate position is that there is no single approach
that can truly capture the full scope and importance of information systems by
itself.
Ask students to describe some of the relationships between the four main
actors. For example, business firms look to acquire the components of their
information systems from suppliers of hardware and software. The firm’s
environment may dictate the type of software a company uses as well as the
kind of employees that work there.

This graphic illustrates the interplay between technology and the organization.
The two continue to grow closer together until an approach satisfying both
perspectives is reached. Ensure that students understand that the two sides
do not always need to form an equal compromise. Sometimes highly advanced
technology may be more acceptable than at other times. As they will see with
packaged software solutions and enterprise systems, firms are often required
to change greatly in order to make the software applications work.