EXERCISE 1: AN INTRODUCTION TO INFORMATION SYSTEMS IN ...

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1

E
XERCISE
1:

A
N
I
NTRODUCTION

T
O
I
NFORMATION
S
YSTEMS IN
O
RGANIZATIONS
(25

QUESTIONS
)

C
ASE
1:

A
DOPTION OF
SAP

SOLUTIONS IN
SME
S

SAP is one of the biggest software companies in the world and the leading provider of business
software systems for supporting enterprise resource planning, business intelligence and related
applications such as supply chain management, customer relationsh
ip management, and
product lifecycle management.
SAP focuses on a better return on information their customers
get from their systems. This goal is achieved by delivering state
-
of
-
the
-
art information
technology solutions which help customers to be prepared

for the turbulent changes in the
market.

Although SAP is usually associated with their SAP R/3 system, it is only one of the products
provided by SAP to their customers. According to the recent market studies SAP holds a market
share of 28% and this numb
er continues to growth. Currently, SAP is presented in more than 90
countries representing around 98% of the world’s economy capacity. SAP’s strategy is based on
its Business Framework technology approach. This strategy shows an aggressive evolution in
SAP
’s product portfolio. It allows the company to develop a family of integrated components,
which can be marketed and customized separately depending on the customer needs and
wishes. It plays an important role for tailoring SAP products for different busine
sses regardless
their size and business domain.

SAP solutions are often considered as useful for large enterprises only. In reality, there is no
evidence to think in this way. According to the report, roughly 75% of SAP’s overall customer
base consists of

small and medium
-
sized enterprises. It is even more important that SMEs
boosts adoption of SAP solutions. From the territorial perspective, the strongest rise in SME
-
related revenue comes from India, Brazil, and Russia. These countries show a constant gro
wth in
using and scaling SAP solutions for a long period of time.

Unlike larger enterprises, SMEs usually have limited resources and sell only one product or a
small range of products to their customers. SMEs also need to compete with larger enterprises,
so their risk tolerance is low. They don’t have much room for error, so optimization of their
business processes is a way for getting competitive advantages. As a company grows and
achieves the right product
-
market fit, it starts to expand to the internati
onal markets. And
again, limited resources and competitors’ actions make it necessary to be flexibly and adaptive
to the changes. This is a niche where SAP solutions provide their business systems supporting
the existing businesses.

Adopted from “SAP Notes

Growing Adoption among SMEs in Q1” by Chris Kanaracus and
http://sap.com


2

D
ISCUSSION
:

1.

What are the main differences in adoption of information systems in SMEs and large
enterprises?

2.

Discuss the advantages and disadvantages of SAP R/3 system for SMEs.

C
RITI
CAL THINKING
:

1.

What benefits might SMEs want to get from adoption of SAP solutions?

2.

Why does SAP pay so much attention to SMEs?

C
ASE
2:

B
ENEFITS OF
W
EB
2.0

FOR COMPANIES

Although the term Web 2.0 is still quite fuzzy, the users of the modern Web 2.0 applica
tions are
enjoying new opportunities for knowledge sharing and more effective marketing. The
companies have started to adopt Web 2.0 technologies and responses of nearly 1700 executives
around the world suggest that most of them have gained measurable busi
ness benefits,
including more innovative products and services, more effective marketing, and lower cost of
doing business. The study also showed that Web 2.0 is a critical success factor for the
companies. They not only integrate Web 2.0 technologies with

the work flows of their
employees but also link themselves with customers and suppliers through the use of Web 2.0
tools. In a longer perspective, the companies’ representatives overwhelmingly say that they will
continue to invest in adoption of modern te
chnologies.

The main benefits emphasized by respondents were opportunities for collaboration and
knowledge sharing. Many companies use a mix of tools such as RSS, podcast, blogging, including
micro blogging, for being closer to their customers. These tools

are also used by consumers and
it makes the company more democratic in collaboration with their customers. Both, blogs and
social networks, allow companies to distribute product information and get a feedback
immediately. It reduces product lifecycle time

and increases opportunities to develop a product
really needed and wished by customers.

Even more important, that the benefits are not specific for high technology industries only.
Regardless of industry, executives report great and measurable benefits f
rom usage of Web 2.0
technologies. Adoption of Web 2.0 also has some difficulties which are related to integration of
these tools into the flow of users’ work. Furthermore, encouraging continuing use requires
approaches other than the traditional financial

or performance incentives deployed as
motivational tools.

During the recession years, many companies around the world cut off their investments in
information technology systems. At the same time, the companies, which have already gained
measurable busin
ess benefits, continue to invest in IT systems in general and Web 2.0 in
particular providing more value to their customers with less efforts and resources.

The main issue in adoption of the modern technologies is to understand what the company
really nee
ds. It has become impossible to copy what your competitors do, because it is a way to

3

be a follower instead of a leader. Therefore, the first step in adoption of any technology is to
analyze and prepare an implementation plan with deep benefits analysis.

Adopted from McKinsey Global Survey Results “How companies are benefitting from Web 2.0”

D
ISCUSSION
:

1.

How do you understand the term Web 2.0?

2.

Discuss the benefits of Web 2.0 for companies

C
RITICAL THINKING
:

1.

If you were a CTO, what steps do you suggest for
adoption of Web 2.0 in your company?

2.

What would you suggest to do with investments in IT systems in the years of recession?

C
ASE
3:

D
ATA
-
D
RIVEN
O
RGANIZATIONS

Managers, departments and the whole organizations have become data
-
driven because it is
fashionabl
y to think about decisions and strategies as if they are based on the collected data.
The organizations also consider data
-
driven approach as a tool for keeping operational costs low
and crafting the best strategies. With increasing of adoption of these pr
actices in the
organizations, they observe that they are not as useful as should be. It is just not enough to
collect and store, so the vast majority of organizations consider themselves as “data rich and
information poor”. It also originates the question
about data reliability, trust, synchronicity, and
quality.

For the successful application of the data
-
drive approach within the organizations, both
technology and expertise have to focus on high
-
quality data, process, people, and culture.
Without these co
mponents, it leads to a situation when it takes time and money to useless
results. To create a data
-
driven culture and make the data more effectively used, the following
four steps are proposed:

1.

Improve the data, or “garbage in, garbage out”. The main feat
ure of the data is that the
results gathered from the collected data cannot be better than on which they are based.
As example, the Wall Street analysts develop sophisticated algorithms to slice, dice, and
price risk into the now infamous collateralized de
bt obligations, but they forget that the
data about underlying mortgages were corrupt. Therefore, to get proper, clear, and
consistent results, you have to improve quality of the data and promote sharing across
the unit. Otherwise, the system will not work

or will produce unreliable results affecting
the decision making process in the organization.

2.

Build “data to discovery to dollars” processes or create processes to put data work
across the enterprise. It includes processes for delivering more to customers

and
seeking out novel data. For example, customer profitability represents the differences
between the revenues earned from and the costs associated with the customer
relationship in a specific period. It is one of the ways to increase profitability in ca
se if
our data are rich. A deep understanding at the customer level leads to establishing new
relationships, changing the price structure, and redirecting the marketing campaigns.

3.

Invest in people. Even if the data are rich enough, it is people who work
with data.
Therefore, to be successful in the data analysis, invest in the high
-
powered analysts.

4

Their new roles are essential, but they cannot execute without wholly different
mindsets. The managers, who use the results of analysts work, also need to cha
nge their
mindset and make their decisions based on the data rather than intuition.

4.

Strive to empower all with data. This step requires changing in employees minds in the
organization. You have to show people how data make them more effective, and
encourag
e experimentation. As a result, you get more confident decisions.

As a data
-
driven culture permeates more broadly, the organization’s decisions will be more
effective. Of course, it requires radical changes in the technologies used in the organization and

people minds but the results will be much better. An ability to collect, store, and, then,
effectively use the data can be considered as one of the competitive advantages of the
organizations and it makes investments in the data
-
driven approach are justif
ied.

Adopted from “Make Data Work throughout Your Organization”, Harvard Business Review

D
ISCUSSION
:

1.

Discuss the role of data in organizations

2.

Explain why these four steps above are so important

3.

Compare a data
-
driven approach with an approach to decision m
aking based on
manager’s intuition

C
RITICAL
T
HINKING
:

1.

What are the benefits of data
-
driven approach?

2.

Describe at least three situations when a data
-
driven approach is useless.

C
ASE
4:

O
N THE
R
OLE OF
B
IG
D
ATA FOR
I
NNOVATION AND
C
OMPETITION

The amount of dat
a in our world increases every day. Therefore, the analysis of large data sets,
also known as big data, is a key for competition and underpinning new waves of productivity
growth and innovation. In the foreseeable future, the amount of data will increase
e
xponentially, so an ability to work with data sets becomes is a must for every employee. The
study of big data in five domains


healthcare in the US, the public sector in Europe, retail in the
US, and manufacturing and personal
-
location data globally, sho
wed that big data can generate
value in each. As example, if the US healthcare used big data creatively and effectively to drive
efficiency and quality, the sector could create more than $300 billion in value every year. The
research is resulted in six key

insights:

1.

Data have swept into every industry and business function and are now an important
factor of production, alongside labor and capital. In average, in 2009, nearly all sectors
in the US economy had at least 200 terabytes of stored data per company

with more
than 1000 employees.

2.

As it was mentioned above, big data can create value. First, big data makes information
transparent and usable at much higher frequency. Second, data collection boosts
performance by analyzing the previous data collected du
ring normal and sick days.
Third, big data allows ever
-
narrower segmentation of customers and therefore much
more precisely tailored products or services. Fourth, sophisticated analytics can
substantially improve decision
-
making. Fifth, big data can be use
d to improve the

5

development of the next generation of products and services. Altogether, these five
factors clearly show that without rich, reliable, and high
-
quality data, the modern
company is not able to survive in the turbulent market environment.

3.

Growth of the company is also depends on the use of big data. The study showed that
established competitors and new entrants usually practice a data
-
driven approach to
innovate and compete. Therefore, the winner has to do it more efficiently and faster
tha
n the competitors.

4.

The use of big data will underpin new waves of productivity growth and consumer
surplus. For example, based on the goods bought previously, the Amazon predicts new
goods which can be bought by customer in the future. This feature is impl
emented on
the analysis of big data collected during the years.

5.

While the use of big data will matter across sectors, some sectors are set for greater
gains. All industries have own specific historical characteristics which affects their
possible ways to u
se big data. Therefore, opportunities and challenges vary from sector
to sector.

6.

The main problems in usage of big data are policies related to privacy, security, and
intellectual property. Another issue is access to data


companies will increasingly nee
d
to integrate information from multiple data sources, often from third parties and the
incentives have to be in place to enable this.

Overall, the usage of big data seems inevitable but many practical issues take place. These issues
include not only techn
ical problems of managing and analyzing of the big data sets, but also
political and security issues which cannot be avoided but have to be regulated by government
authorities.

Adopted from “Big data: the next frontier for innovation, competition, and prod
uctivity”,
McKinsey Global Institute


D
ISCUSSION
:

1.

Discuss at least three example of usage of big data you meet every day. What
advantages do you get?

2.

Discuss the role of big data for information systems in universities

C
RITICAL
T
HINKING
:

1.

Describe the role
of big data in the five year perspective

2.

What solution do you suggest to decrease security issues?

C
ASE
5:

S
ECURITY
T
RENDS IN
H
EALTH
-
C
ARE
IS

Health
-
care is one of the examples of the industry sensible to security and privacy issues.
Although this industry
is quite conservative, there are also trends representing the main
directions in development of new information systems. The research of the trends in the health
-
care industry identified several trends affecting the whole industry.


6

First of all, the amount

of health
-
care data transmitted over the Internet increases every year.
The benefits of instant access to health
-
care information are obvious, but they also create
concerns about transmission of confidential information. In transmission many parties such
as
consumers, providers, hospitals, and other partners are involved that make a dilemma of
obtaining, using, and sharing information to provide care is a serious issue. Of course, there are
many technical solutions developed for encrypting/decrypting patie
nt data, but a people factor
also takes place. Another problem is data reliability.

Secondly, in the health
-
care environment, even a minor loss of information may be life
-
threatening. Therefore, it presents a real issue for health
-
care providers who are r
esponsible for
their patients. One of the typical threats to a health
-
care IS is an unauthorized person gaining
access to patient records, or a power failure that could prohibit the availability of a patient’s
clinical data. In this regard, risk analysis p
lays a significant role in development of health
-
care IS.
The purpose of this analysis is to identify how a system can be broken and to determine its
consequences. This provides justification to the current situation and gives a guideline to the
protection

required.

Since the health
-
care plays an important role for each of citizens, the government protects and
regulates health
-
care strictly. The legislators have internationally recognized the problems and
have taken action by issuing various data protection

acts. Legal issues related to the health
-
care
have been divided into two categories. The first category includes issues pertaining to the
validity and utility of computerized health information. In the second category the issues
pertaining to the privacy
and confidentiality of health
-
care information take place.

Overall, the presented picture shows that radical and incremental changes in the health
-
care
industry are required but these changes cannot be easily adopted due to strict requirements for
securit
y and confidentiality. The study predicts that health care industry will evolve
incrementally rather than radically. Legal and security issues require collaboration and attention
from all parties involved in providing health
-
care services. It makes innovat
ions in health
-
care
are quite difficult due to bureaucracy.

Adopted from E.Smith and J.H.P. Eloff “Security in health
-
care information systems


current
trends”

D
ISCUSSION
:

1.

Compare the IS in health
-
care ten years ago and nowadays. What similarities and
di
fferences do you observe?

2.

Explain the consequences of a lack of health
-
care information

C
RITICAL
T
HINKING
:

1.

List at least three issues which are specific for the IS in health
-
care

2.

What would you suggest to do to improve the situation with privacy in
health
-
care?

C
ASE
6:

T
HE
C
RITIC OF
C
LOUD
C
OMPUTING


7

Nowadays we observe a hype of cloud computing. We often hear that “the future of business is
cloudy!”, “the cloud boom is well underway in the business world!”, and “enterprises are
keeping their heads in
the clouds!” At the same time, we have to understand that each
technology and approach has its own limits. One of the problems enterprises meet in adoption
of cloud computing is that they have collected a lot of core/legacy/custom
-
developed
application the
y have to move to the cloud. This is where PaaS comes into play providing the
necessary cloud capabilities that allow enterprises to fully embrace custom application
development through lowered infrastructure costs, less strain on existing resources and th
e
ability to push IT to innovate rather than maintain. The main problem here is a lack of PaaS
providers while enterprises really need them.

The vast majority of PaaS providers operate as independent software vendors (ISVs) rather than
actual enterprise I
T shops but they are different. First of all, the changes in the enterprise world
are chaotic and are rarely planned for. Therefore, IT departments or third
-
party vendors need to
have the changes implemented yesterday. The enterprise environment is so turb
ulent that ISV
providers are not able to manage these changes effectively. From an ISV perspective, changes
are completely different


they have to be controlled by product management and structured
environment. Typically, ISV providers work with the syste
ms like CRM and ERP. These systems
are quite stable and their changes are more predictable than other systems used in the
enterprises. Overall, ISVs and their PaaS solutions do not need to deal with rapid, chaotic
changes, but rather planned product releas
es. We observe a gap between a solution provided
by ISVs and a need of the enterprises.

The next problem is a management gap. The lifecycle of a particular application for the ISVs
looks like a management lifecycle of the product which makes money for them
. Therefore,
product managers carefully select features to implement. But for the enterprises these systems
do not look like business drivers which generate revenue. These products just support the
company business, so enterprises tend to treat changes wit
h “part
-
time” product managers,
usually make up of a mix of roles including business analysts, developers, and stakeholders.
Therefore, the enterprises have a special need on the PaaS tooling to provide excellent
collaboration capabilities that make it eas
y to capture feedback to support changing
requirements.

Another problem is that a typical enterprise has a majority of “composite applications”, meaning
that they are an extension of another application, system or (worse) older, legacy applications
that ar
e complex and inflexible. It makes a movement to the cloud is a nightmare for engineers
and it can prove to be a huge roadblock for PaaS and the cloud in general.

Adapted from Business Insider, “This is the Reason Cloud Computing Hasn’t Taken Off Yet”,
Pa
ulo Rosado

D
ISCUSSION
:


8

1.

What are the differences between enterprise information systems and desktop
applications?

2.

Why enterprises are so conservative in adoption of new technologies and practices?

C
RITICAL
T
HINKING
:

1.

Compare advantages and disadvantages of P
aaS and SaaS for enterprises

2.

Describe how enterprises have to be changed to move to the cloud faster and more
effective



9

E
XERCISE
2:

H
ARDWARE AND
S
OFTWARE
(25

QUESTIONS
)

C
ASE
1:

E
NTERPRISE
S
OFTWARE

Small and medium
-
size enterprises (SMEs) are significantl
y different from large enterprises (LEs).
Therefore, they have to adopt different approaches in management of software they used to
support their operational activities. From the organizational viewpoint, SMEs are in a better
position because they are more

flexible. Large companies have all necessary resources including
adequate human capital assets but they are unable to react effectively to external change. As
the company grows, organizational processes and business model become well
-
defined. It was
discu
ssed in the previous studies that changes in business models, values, and especially culture,
are difficult, or even impossible, for large established companies. Smaller organizations are
more flexible and their organizational structure can be easily tailo
red to achieve an advantage
over larger organizations.

SMEs spend too much time and efforts on sales and on research and development activities to
survive the coming shakeout. In practice, it is only one way for them to survive in the market
and compete wi
th larger enterprises. These small companies might have reached their sell
-
by
-
date, for the enterprise software industry will consolidate as customers buy products from
fewer vendors. The big companies will get bigger in enterprise software, though not pri
marily
through acquisitions, because the difficulty of integrating the products of two merging
companies can make the price too high. These differences in the approaches practiced by SMEs
and LEs show that it is based on the funds they have and can use for

updating and buying new
software.

From the customer perspectives, which also represent SMEs as well as large enterprises, their
ability to buy is different. Usually large enterprises buy very expensive but flexible software from
the vendors such as Micro
soft, SAP, and Oracle. They are able to hire consultants and customize
the software for their own needs without significant problems in paying bills. In contrast, small
and medium
-
sized enterprises prefer to adopt solutions, which are not well
-
known and,
p
robably, are not flexible but cheap. Sometimes, SMEs write own software products that
support their business activities from scratch.

Overall, we observe two markets representing both sides: small software companies which
support and develop software for
SMEs and large software companies which support and
develop complex solutions suitable for large enterprises. Small and medium
-
sized software
companies can survive outside ecosystems by exploiting niche markets or by subsisting on
maintenance contracts and

upgrades. An installed customer base will keep these industry
orphans alive while offering little opportunity for growth.

Adopted from The McKinsey Quarterly “The outlook for enterprise software”

D
ISCUSSION
:


10

1.

What are the reasons to develop complex
software solutions for large enterprises?

2.

What are the issues faced by small software companies in the competitive markets?

C
RITICAL
T
HINKING
:

1.

Compare small software companies with large software companies and explain their
differences and similarities

2.

Why

do you think some companies develop own software solutions instead of buying
the existing software? Explain the problems they can face.

C
ASE
2:

T
HE ISSUES OF EMBEDDE
D SOFTWARE

Nowadays, software dominates the engineering process in all industries. Softwar
e has become
an important part of hardware development. For example, Siemens employs more software
engineers than large software companies such as Microsoft, Oracle, or SAP. The focus is shifted
from hardware development to software development. The proble
m of embedded software is
that it should be more reliable due to special requirements for hardware solutions, which
cannot be easily patched or replaced. Hardware typically involves less uncertainty about how
the elements of a system work together while so
ftware development involves shades of gray.
These problems are related to the special characteristics of software development. For example,
there are more levels of connectivity and greater integration with other systems; it’s often hard
to uncover all of
the side effects during the testing stage. At the same time, embedded software
is critical because it is used in the automotive industry where the errors are forbidden. To
improve the quality of embedded software carmakers and their suppliers have to find
ways to
improve its quality.

The McKinsey research on this topic showed that there are several steps helping in building
better software. First of all, it is necessary to reduce the complexity of features. The industry
should look hard at the value each of

the features adds to a car, since their complexity has major
implications for quality ratings and warranty costs. The second advice is to adopt more mature
software architecture. Good software architecture consists of modules that are well
-
organized
and p
roperly connected. The study showed that many embedded
-
software developers rely on
architectures that have grown up incrementally and often haphazardly, resulting in what is
sometimes called “spaghetti” code. This observation shows how weak architecture in

embedded
software is regardless of best practices and experience collected during the last twenty years.
The next advice e is to pay more attention to the economics. It refers to the choice of
components for development. One automaker looking to reduce th
e cost of its components had
to analyze whether it would make sense to use less expensive hardware, since this option would
require additional software development and could result in more defects. Therefore, there is
no need to try to reduce the costs of
one part of the products. The automakers should calculate
costs of the whole product rather than try to decrease costs in some parts of the production
process only. The last advice given in the study is to improve development process. Although
software has

evolved very vast in the last twenty years, embedded development is quite
conservative. Software development in embedded systems has lagged behind the industry.

11

Fewer software development tools are available for embedded systems, and those that exist
tend

to focus on parts of the design cycle rather than the whole. Therefore, adoption of modern
software development practices already widely used in the development could help to develop
more reliable and high
-
quality embedded software.

Although these advices

are really useful, their implementation is difficult due to political,
technical, and social issues within the companies. Like other changes, it requires support from
top managers and technical specialist who will use and improve these practices.

Adopted
from McKinsey on IT “Getting better software into manufactured products”

D
ISCUSSION
:

1.

What are the special characteristics of embedded software that distinguish it from other
software?

2.

Why do you think the hardware industry has more reliable practices for b
uilding
complex solutions than the software industry?

3.

What are the problems in development of high
-
quality software products?

C
RITICAL
T
HINKING
:

1.

Describe at least three best practices in software development which cannot be used for
embedded software devel
opment and explain why

2.

Describe the special characteristics of software for the nuclear power plant

C
ASE
3:

SWOT

ANALYSIS OF CLOUD CO
MPUTING

Cloud computing technologies are very popular nowadays but as each of new technologies
cloud computing has not only

strengthens but also weaknesses. In this short overview, we
summarize SWOT analysis conducted by researchers in the field of cloud computing.

The main strength of cloud computing is its ability to scale up services at every short notice
obviates the need
for underutilized servers in anticipation of peak demand. According to the
previous research, the utilization factor of the servers in data centers is varied from 20 to 40
percent. The cloud computing technologies provide an opportunity to increase the uti
lization
factor up to 80
-
90 percent. It has also an ability to request more computing resources on the fly,
so there is no need to buy and install new servers before the need occurs. In addition, cloud
computing allows a company to decrease maintenance cos
ts by outsourcing its hardware. One
of the components of maintenance costs is the management of technology, which is potentially
made much simpler by using a cloud computing service. Preset configuration of servers and
virtual machines can be put in place
with appropriate applications, security and data.

Anyway, cloud computing is not a silver bullet, so the companies have to understand limitations
of this technology. First of all, organizations usually worry about the loss of physical control of
the data t
hat is put on the cloud. The cloud computing providers are not able to guarantee
where the data will be stored because the cloud computing system is distributed between many

12

locations. Large organization are wary of entrusting mission
-
critical application
to a cloud
computing paradigm where providers cannot commit to the high quality of service and
availability guarantees that are demanded in such environments. This problem is usually solved
by agreement called Service Level Agreement or SLA. For example, A
mazon Web Service SLA
currently commits to an annual uptime percentage of 99.95%. Unfortunately, it is not enough
for mission
-
critical applications in large organizations.

Small business represent huge opportunity for cloud computing. Usually, they do not

have
enough money for maintaining own infrastructure. Therefore, an idea of outsourcing IT
infrastructure to the cloud and pay for only the things they really use looks like a good way to
save money and invest them in business rather than business support

activities. Mashups
represent another opportunity in cloud computing. The new type of mashup that we observe
combines different cloud computing services and integrates them into a single service or
application. The next opportunity of cloud computing is r
elated to green IT. According to a
Forrester survey, over 41 percent of people in IT departments believe energy efficiency and
equipment recycling are important factors that need to be considered. Moving to the cloud will
organizations not only reduce thei
r IT infrastructure, but also manage it more effectively.

There are several threats for cloud computing. First of all, we observe a lack of standards. Each
of the cloud computing providers such as Google, Amazon and etc. practices own approaches
and standa
rds in cloud computing. It makes migration from one provider to another practically
impossible. Another biggest threat that will impede the adoption of the cloud computing
paradigm is regulation at the local, national, and international level. The current
laws are not
able to regulate cloud computing because its distributed nature allows data to be saved and
distributed between many countries at the same time.

Adopted from Sean Marston et al “Cloud computing


business perspectives”

D
ISCUSSION
:

1.

Discuss clou
d computing in the frame of disruptive technologies

2.

What are the difficulties of shifting from traditional applications to cloud applications?

C
RITICAL
T
HINKING
:

1.

Compare advantages of PaaS and SaaS for business

2.

What advantages and disadvantages of cloud co
mputing for small and medium
-
sized
companies you know?

C
ASE
4:

M
ARKETING IN
S
AA
S

In the study of sales and marketing of SaaS authors identified that providing SaaS services is
technically cost efficient, but controlling the marketing and sales costs will b
e a major challenge
for profitability of SaaS providers. To clarify this viewpoint, the model of marketing and sales of
Saas has been developed. The model consists of eight dimensions representing eight variables:

13

service provider size, service and impleme
ntation model, customer size, market communication
channel, sales channel, role of buyer, entry transactional size, and customer life
-
cycle value.

Provider size dimension is measured based on the provider size from small to large. According to
the previou
s studies, the size plays an important role for the markets in which the provider
operates. Service and implementation model describes the product strategy of the provider and
the role of services and implementation in the business model. These models can
be
deployment, integration, tailoring, or consultation. Customer size dimension in the model
represents the target group of customers. As we already know, it is challenging to collaborate
with small and large enterprises at the same time. Therefore, custom
er orientation helps
providers to choose its target work and satisfy their needs. Market communication channel
represent the means of a SaaS provider to deliver information about the service to the
customer. Similarly, sales channel dimension describes the

sales solutions of a SaaS firm. Role of
buyer of SaaS represents a person who makes decisions about buying SaaS solutions. It can be
end user, technical buyer, business management or even top management. Entry transaction
size can be comparatively small w
ith traditional software but we have to take into account that
SaaS solutions are usually based on the subscription model. It helps to organize a constant cash
flow. The last dimension customer lifetime value represents relationships between the provider
a
nd the customer. The customer can only try the solution and switch to another provider. Then,
this customer will be called occasional. If the customer uses the SaaS solution for a long period
of time, the customers becomes regular customer. In perspective
regular customers evolves to
top customer who works in close collaboration with the provider.

The presented model was tested using case study method in six organizations. The empirical
results showed that the model can be revised and simplified. Eight dim
ensions were clustered
into four internally interconnected areas with two key performance indicators for each area.
KPIs’ goal is to provide a numerical characteristic for short and long term success of the firm.

Overall, the empirical study of marketing
of SaaS showed that the developed and revised model
is suitable for understanding and improving the business goals of the provider. The dominant
factor to determine the target group of customers was the number of potential users, which is
directly related
to the headcount of the customer organization.

Adopted from P.Ty
rväinen and J.Selin

“How to Sell SaaS: A model for Main Factors of Marketing
and Selling Software
-
as
-
a
-
Service”

D
ISCUSSION
:

1.

What are the differences between business models in SaaS?

2.

What are t
he differences between selling SaaS and non
-
SaaS solutions?

C
RITICAL THINKING
:

1.

How would you consider the fact that the customer can easily switch from one SaaS
provider to another?


14

2.

Compare PaaS and SaaS from the marketing viewpoint. Who are your main customers?
Who are decision makers?

C
ASE
5:

RFID

P
ERSPECTIVES

The radio frequency identification (RFID) systems are widely used nowadays but the idea of RFID
chip was developed in 1935.

Thirty years later the first prototype was developed and in 1973 the
first US patent in this field was published. RFID is an emerging technology for the identification
of object and personnel. Comparing with barcodes RFID chips have some advantages such a
s
rapid identification, flexible method and high intelligent degree. Moreover, RFID chips may work
under a variety of environmental conditions. In the recent years, this technology have been
widely adopted in many industries and applications such as wareho
use management systems,
retail inventory management, toll roads and many others.

RFID is a contact
-
free non
-
line
-
of
-
sight type identification technology consisting of a RFID
transponder, also known as tag, and a RFID interrogator, also known as reader) wi
th an antenna
and data processing unit. The interrogation signal coming from the reader antenna must have
enough power to activate the transponder microchip by energizing the tag antenna, perform
data processing and transmit back the data stored in the chi
p up to the required reading range.
The reader antenna receives the modulated backscattered signal from the tags in field of
antenna and examines the data.

The RFID perspectives are tightly coupled with the problems this technology has. First of all, the
f
requencies used for RFID are not standardized worldwide. It means that the USA chips and
readers are incompatible with those of Europe and Japan. Consequently, the goods with RFID
chips cannot be shipped between these continents with one RFID chip. The nex
t problem is
security. In 2006 it was found out that the tags can be hacked by buffer overflow that could
infect airport terminal RFID databases for baggage and also passport databases to obtain
confidential information on the passport holder. Although the

data transferred between the tag
and the reader are encrypted, there were many precedents when the encryption was broken
very fast. For example, in UK the encryption of the tags in passports was broken in less than 48
hours. The use of RFID technology als
o affects privacy. In many cases, the owner of an item will
not necessary is aware of the presence of an RFID tag. Therefore, movement of each person can
be easily tracked and it becomes possible to gather sensitive data about an individual without
consent
.

Regardless of the issues discussed above, RFID technology is used in the markets and
transportation systems for tracking goods. These concerns about privacy and security are usual
for almost all of new technologies, so there is a hope that these politica
l and social issues will be
solved by improving the technology of the RFID tags production and increasing security of the
tags.

Adopted from A.Mobashsher, M.Islam, and N.Misran “RFID technology: Perspectives and
Technical Considerations of Microstrip Anten
nas for Multi
-
band RFID Reader Operation”.


15

D
ISCUSSION
:

1.

Give three example of RFID usage

2.

What are the problems specific for the RFID technology only?

C
RITICAL
T
HINKING
:

1.

Compare RFID technology with other tracking systems such as GPS. What are
advantages and

disadvantages of each approach?

2.

Describe how RFID systems can be replaced by other systems.

C
ASE
6:

V
IRTUALIZATION

The growth of cloud computing has affected a growth of virtualization technologies, which are
widely used in data centers. Server virtualiza
tion for x86 architecture servers is one of the
hottest trends in IT today. Many SaaS and Paas providers such as Amazon, Google, and
Salesforce rely on virtualization technologies in their business. Therefore, the market of
solutions for virtualization has

become very competitive. The main players are VMWare for
enterprise and Parallels. In addition, open
-
source solutions such as Xen are used by service
providers. Acquisitions and new investments have brought large software vendors like Microsoft
and Oracle

to this market.

The solutions for virtualization can be divided into four categories. The first category includes
hypervisors to create virtual machines. The second category consists of shared operating
systems also called containers for virtualization t
echnologies. The last two categories unite
server virtualization administrative management (base frameworks) and server virtualization
embedded management, correspondingly. Each of these niches is represented by at least three
competitors.

Virtualization
is being used by a growing number of organizations to reduce power consumption
and air conditioning needs and trim the building space and land requirements that have always
been associated with server farm growth. Virtualization also provides high availabi
lity for critical
applications, and streamlines application deployment and migrations. Virtualization can simplify
IT operations and allow IT organizations to respond faster to changing business demands. The
socio
-
political ramifications of global warming
requiring good corporate citizens to meet
greenhouse gas reduction targets, creates an added incentive for virtualization.

The advantages of virtualization include server consolidation and dynamic load balancing. Using
the modern solutions for virtualizati
on, it is not unusual to achieve 10:1 virtual to physical
machine consolidation. This means that ten server applications can be run on a single machine
that had required as many physical computers to provider the unique operating system and
technical speci
fication environment in order to operate. It helps to improve server utilization,
which is usually load by 20
-
40 percent. In addition, VMs solve the problems of updating
platforms. Virtualization technology also enables to use a virtual image, which can be

easily
uploaded to the server in case of crash. It decreases time to recovery and allows the company to
avoid huge economic losses.


16

Currently, VMware is considered as a leader in virtualization. While challenges are emerging,
VMware has a tremendous head

start in this market. The main challenge for them is to maintain
their leadership in all niches that will be difficult in the face of several strong competitors that
are investing heavily and will put pressure on VMware’s business model.

Adopted from “Ma
gic Quadrant for x86 Server Virtualization Infrastructure”, Gartner RAS
Research

D
ISCUSSION
:

1.

What are the reasons to use virtualization in practice?

2.

What kind of virtualization systems do you use?

C
RITICAL
T
HINKING
:

1.

Compare VMware virtualization solutions
with open
-
source solutions such as KVM and
Xen and describe their advantages and disadvantages

2.

What are the benefits of virtualization for the end users?