//Chapter 1

Information Systems in Global Business Today

Case Study: Did Information Systems Cause Deutsche Bank to Stumble?

1-12 Identify the problem described in this case study. What people, organization, and
technology factors contributed to this problem?

People: The Commodity Futures Trading Commission (CFTC) charged that Deutsche Bank
submitted incomplete and untimely credit default swap data, failed to properly supervise
employees responsible for swap data reporting, and lacked an adequate business continuity and
disaster recovery plan.

Organization: The CFTC complaint also alleged that Deutsche Bank’s system outage and
subsequent reporting problems occurred in part because Deutsche Bank failed to have an
adequate business continuity and disaster recovery plan and other appropriate supervisory
systems in place. The bank is now struggling with seismic changes in the banking industry,
including recent regulatory change.

Technology: The CFTC complained that on April 16, 2016, Deutsche Bank’s swap data
reporting system experienced a system outage that prevented Deutsche Bank from reporting any
swap data for multiple asset classes for approximately five days. Deutsche Bank’s subsequent
efforts to end the system outage repeatedly exacerbated existing reporting problems and led to
the discovery and creation of new reporting problems.

Swap data reported before and after the system outage revealed persistent problems with the
integrity of certain data fields, including numerous invalid legal entity identifiers. U.S. regulators
have identified Deutsche Bank’s antiquated technology as one reason why the bank was not
always able to provide the correct information to the agency.. Poor information systems may
have even contributed to the 2008 financial crisis. Banks often had trouble untangling the
complex financial products they purchased and sold to determine their underlying value.

1-13 What was the role of information technology at Deutsche Bank? How was IT related
to the bank’s operational efficiency, decision-making capability and business strategy?

It turns out that Deutsche Bank, like other leading global financial companies, had undergone
decades of mergers and expansion. When these banks merged or acquired other financial
companies, they often did not make the requisite (and often far-reaching) changes to integrate
their information systems with those of their acquisitions. The effort and costs required for this
integration, including a need for coordination across many management teams, were too great.
So, the banks left many old systems in place to handle the workload for each of their businesses.
This created what experts call “spaghetti balls” of overlapping and often incompatible
technology platforms and software programs. These antiquated legacy systems were designed to
handle large numbers of transactions and sums of money, but they were not well suited to
managing large bank operations. They often did not allow information to be shared easily among
departments or provide senior management with a coherent overview of bank operations.

1-14 Was Deutsche Bank using technology effectively to pursue its business strategy?
Explain your answer.

No, Deutsche Bank was not using technology to pursue its business strategy.

Individual teams and traders each had their own incompatible platforms. The bank employed a
deliberate strategy of pitting teams against each other to spur them on, but this further
encouraged the use of different systems because competing traders and teams were reluctant to
share their data. Yet the bank ultimately had to reconcile the data from these disparate systems,
often by hand, before trades could be processed and recorded.

1-15 What solution for Deutsche Bank was proposed? How effective do you think it will be?
Explain your answer.

The solutions that Deutsche Bank is pursuing can be effective in resolving the many problems
associated with its technology and organizational structure.

In July 2015, John Cryan became Deutsche Bank’s CEO. He has been trying to reduce costs and
improve efficiency, laying off thousands of employees. He is focusing on overhauling Deutsche
Bank’s fragmented, antiquated information systems, which are a major impediment to
controlling costs and finding new sources of profit and growth. Cryan noted that the bank’s cost
base was swollen by poor and ineffective business processes, inadequate technology, and too
many tasks being handled manually. He has called for standardizing the bank’s systems and
procedures, eliminating legacy software, standardizing and enhancing data, and improving
reporting.

In February 2015, Deutsche Bank announced a 10-year, multibillion-dollar deal with Hewlett-
Packard (HP) to standardize and simplify its IT infrastructure, reduce costs, and create a more
modern and agile technology platform for launching new products and services. Deutsche Bank
is migrating to a cloud computing infrastructure where it would run its information systems in
HP’s remote computer centers. HP will provide computing services, hosting, and storage.
Deutsche Bank will still be in charge of application development and information security
technologies, which it considers proprietary and crucial for competitive differentiation.

Deutsche Bank is withdrawing from high-risk client relationships, improving its control
framework, and automating manual reconciliations. To modernize its IT infrastructure, the bank
will reduce the number of its individual operating systems that control the way a computer works
from 45 to four, replace scores of outdated computers, and replace antiquated software
applications.

Thousands of applications and functions will be shifted from Deutsche Bank’s mainframes to HP
cloud computing services. Automating manual processes will promote efficiency and better
control. These improvements are expected to reduce “run the bank” costs by 800 million euros.
Eliminating 6,000 contractors will create a total savings of 1 billion euros. Deutsche Bank has
also opened four technology centers to work with financial technology startups. In March 2017,
the bank opened a new center in New York to work with financial technology startups to
improve its technology.

Chapter 2
Global E-Business and Collaboration

Case Study: Should Companies Embrace Social Business?

2-13 Identify the management, organization, and technology factors affecting adoption 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 a small number of social software users believe the technology to be necessary to their jobs.
A successful social business strategy requires leadership and behavioral changes. Just sponsoring
a social project is not enough—managers need to demonstrate their commitment to a more open,
transparent work style.

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 the organizational inertia
and culture can prove difficult. Enterprise social networking systems were not at the core of how
most of the surveyed companies collaborate. The social media platform that will work best
depends on its specific business purpose. Firms should first identify how social initiatives will
actually improve work practices for employees and managers. Most importantly, social business
requires a change in thinking and in most cases, employees can’t be forced to use social business
apps.

Technology: Ease of use and increased job efficiency are more important than peer pressure in
driving adoption of social networking technologies. Content on the networks needs to be
relevant, up-to-date, and easy to access; users need to be able to connect to people who have the
information they need, and that would otherwise be out of reach or difficult to reach.

2-14 Compare the experiences implementing internal social networks of the organizations
described in this case. Why were some successful? What role did management play in this
process?

NASA’s Goddard Space Flight Center abandoned its enterprise social network called Spacebook
because no one knew how the tools would help people do their jobs better and more efficiently.
It didn’t focus enough on people. It didn’t take into consideration the organization’s culture and
politics.
Covestro succeeded with its social networking journey because it made the tools more
accessible, demonstrated the value of the tools in pilot projects, employed a reverse mentoring
program for senior executives, and trained employee experts to spread know-how of the new
social tools and approaches within the company. It also demonstrated the tools’ usefulness to
employees. Because of its correct approach, 50 percent of Covestro’s employees are now
routinely active in the company’s enterprise social network.

ModCloth started piloting Yammer with a small test group and used a People Team to promote
the tool. Yammer caught on quickly with employees and was soon being used by over 250
employees across four offices in the United States. Every new ModCloth employee is introduced
to Yammer on his or her first day of work. Yammer helps new hires learn their coworkers’
names and feel they are part of the company. Yammer has proved very useful for connecting
people and ideas, saving ModCloth considerable time and money. Yammer has helped save
teams from duplicating work that has already been done.

The Esquel Group is based in Hong Kong; its core business is making cotton tops for fashion
brands such as Lacoste, Ralph Lauren, and Nike. It was attracted to internal social networking as
a way to unite its different lines of business in various locations. Esquel chose Microsoft
Yammer as its enterprise social networking tool. Esquel employees communicate in a variety of
languages, so it especially appreciated Yammer’s translation capabilities. Management sees
many benefits in being able to “listen” to its workforce. When people post complaints on the
network, management is able to find innovative solutions and new ideas. For example, workers
in Esquel’s garment operation posted a complaint on Yammer about having to wait in a long line
to recharge their cards for purchasing meals in the company cafeteria. Four months later, the
company had a solution—a kiosk that instantly transferred funds from payroll to the meal card.

Ideas posted on Yammer were used to improve Esquel’s quality control process. Instead of using
measuring tape to ensure that sleeves and collars matched specifications, an employee in the
quality control department used Yammer to float the idea of an electric uler. The concept was
refined through more Yammer discussion. Instead of taking measurements and writing numbers
down, staff can capture measurements faster and more accurately electronically.

2-15 Should all companies implement internal enterprise social networks? Why or why
not?
Yes, companies should implement internal enterprise social networks, if for no other reason than
they are cheaper and easier than other systems to operate and reduce expenses in other areas. The
systems also improve productivity, in some cases dramatically. Companies should provide
incentives if they must to encourage adoption of the new collaboration methods. Executives
should be the first to use them which will speed their adoption. Executives must also tie these
networks to financial results. Management must also encourage the necessary organizational
cultural changes to help make the social networking tools a success.
 Chapter 3
Information Systems, Organizations, and Strategy

Case Study: Grocery Wars

3-13 Analyze Walmart and Amazon.com using the competitive forces and value chain
models.
Walmart: It is a traditional competitor with strong supplier intimacy. It continually works to
develop and strengthen its customer intimacy by offering low prices on a wide variety of
products that may or may not be offered elsewhere. It relies on its low-cost leadership to bring
customers back. Its continuous supply replenishment chain with its efficient customer response
system is based on using information technology to strengthen its value chain concentrated in its
primary activities including inbound logistics, operations, sales and marketing, and service.
Amazon: It is a new market entrant that uses substitute products and services to draw in new
customers and keep old ones coming back. Using a lot of third-party suppliers, Amazon often
plays the role of middle-man by simply taking orders and having the supplier ship the goods to
the customer. That strategy requires strong relationships with suppliers. It does use product
differentiation in its strategy to individually tailor products and services under mass
customization. It focuses on market niches for many of its products especially with books and
music preferences recorded and stored for individual customers. By offering its Amazon Prime
shipping service, it has increased switching costs for customers who may order from another site.
Its value chain also relies on efficient information systems that improve inbound and outbound
logistics, sales and marketing, and service.
3-14 Compare the role of grocery sales in Amazon and Walmart’s business strategies.
Walmart has built its empire through 4,000-plus brick-and-mortar stores. It has not been that
involved in online shopping but now it’s being forced to increase its Internet presence based on
Amazon’s success. Walmart is the largest seller of groceries in the United States. Grocery
accounts for 56 percent of Walmart’s total sales, and grocery shopping is a major driver of store
traffic and customer loyalty.
The company is intent on maintaining its position as the leading U.S. grocer. Walmart
has invested and tested in click-and-collect programs, stand-alone grocery pick-up sites, and
scanning and paying for items with smartphones. Grocery is where Walmart really shines. If
Walmart loses the grocery battle to Amazon, it has no chance of ever overtaking Amazon as the
world’s largest e-commerce player.

Online grocery sales were a key part of Walmart’s e-commerce sales growth in 2017, and
management expects online grocery expansion to be the main driver of Walmart’s sales growth
going forward. But if Walmart wants to meet their goal of 40 percent growth in online sales in
2018, it will have to do even more. Management rolled out same-day grocery delivery to 100
markets by the end of 2018, covering 40 percent of U.S. households. Deliveries are handled by
Uber Technologies and other providers, with a $9.95 service fee for a minimum $30 purchase.
Walmart’s online order and pickup service was available at 2,000 stores by the end of 2018.
Management is hoping growth will continue to increase year over year with rollout of new stores
into the online order and pickup program.
Amazon originally could concentrate all its corporate resources on its web business because it
didn’t have to support traditional brick-and-mortar stores. With the addition of Whole Foods
traditional stores, that has changed. However, Amazon is combining the offline and online in
very innovative ways.

In February 2018, Amazon and Whole Foods launched a test to deliver groceries and other goods
directly from Whole Foods in four cities across the United States. Whole Foods was basically
used as an Amazon depot. Customers could order fresh produce, seafood, meat, flowers, baked
goods, and dairy products for delivery, with items arriving at their doorstep within two hours.
The company plans to roll out the service through Prime Now to more cities.

Later in February 2018, Amazon extended its 5 percent cash-back benefit to Prime members
shopping at Whole Foods with the Amazon Prime Rewards Visa Card. Selected Whole Foods
stores have begun selling Amazon technology products, including the Amazon Echo voice-
controlled speaker system, Echo Dots, Fire TV, Kindle e-readers, and Fire tablets.

Whole Foods announced that Amazon Prime would replace Whole Foods’ loyalty program. And
Whole Foods goods are now available on Amazon.com, AmazonFresh (Amazon’s grocery
delivery service), Prime Pantry, and Prime Now. Some Whole Foods stores have added Amazon
Lockers, allowing customers to have their Amazon.com orders delivered to a secure location
inside certain Whole Foods stores until it’s time to pick them up. Customers can also use lockers
to return Amazon items. Amazon and Whole Foods are integrating their point-of-sale systems to
enable more of Amazon’s brands to be available at Whole Foods, and vice versa

3-15 What role does information technology play in these strategies?

Walmart is crafting a strategy that gives consumers the best of both worlds—what is called an
omnichannel approach to retailing. Walmart’s management believes the company’s advantage is
that it is not a pure-play e-commerce retailer and that customers want some real interaction with
physical stores as well as digital. Walmart will sell vigorously through the web and also in its
physical stores, retaining its hallmark everyday low prices and wide product assortment in both
channels and using its large network of stores as distribution points. Walmart will closely
integrate online shopping and fulfillment with its physical stores so that customers can shop
however they want, whether it’s ordering on their mobile phones for home delivery, through in-
store pickup, or by wandering down the aisles of a Walmart superstore. Walmart is aiming to be
the world’s biggest omnichannel retailer.

Walmart’s web site monitors prices at other retailers and lowers its online prices if necessary. It
is also increasing the number of third-party retailers to compete with Amazon’s vast field of
suppliers. That helps increase the number of items available to customers without Walmart
having to create new shipping logistics chains.

It looks like Amazon is trying to innovate in physical retail store sales as well as online. Amazon
has opened retail bookstores in Seattle, Chicago, San Diego, and other U.S. locations featuring
Amazon electronic devices as well as books. It is thinking about moving into the grocery
business as well as retail stores for furniture and appliances. These are retail experiences that
lend themselves less easily to online purchasing because customers like to see and feel these
types of goods in person.

Amazon set up a physical grocery store in downtown Seattle called Amazon Go that is designed
around an app that is able to place the items customers buy in a digital shopping cart so they can
leave the store without waiting in a checkout line. The system automatically charges the credit
card linked to the customer’s Amazon account and even knows when that person puts something
back.

Amazon is also increasing the number of order fulfillment centers, especially near urban areas
that allows it to offer same-day delivery of purchases. It has a supply chain optimized for online
commerce that Walmart just can’t match.

3-16 Which company is more likely to dominate grocery retailing? Explain your answer.
Student answers will vary. The winner of this epic struggle will be the company that leverages its
advantage better. While Walmart is struggling to improve its online presence, its real focus
remains its brick-and-mortar stores. While Amazon appears to be ahead of Walmart in the e-
commerce battle, it still doesn’t have as many physical stores to serve its customers.

Amazon is working on expanding its selection of goods to be as exhaustive as Walmart’s.

Amazon has allowed third-party sellers to sell goods through its web site for several years, and it
has dramatically expanded product selection through acquisitions such as its 2009 purchase of
online shoe shopping site Zappos.com to give Amazon an edge in footwear and the Whole Foods
acquisition.

There are other forces at work affecting Amazon–Whole Foods, Walmart, and the grocery
industry’s competitive landscape. Money spent on dining out has surpassed grocery sales.
Instead of shopping weekly at the supermarket for groceries to prepare meals at home,
consumers are increasingly snacking and using prepared foods. Companies in the $1.5 billion
meal kit industry (such as Blue Apron) have moved into the market, though grocery chains are
creating their own prepackaged food kits as well.
Grocers are also adapting to surging consumer demand for fresher items, personalized options,
and use of technology to improve the food-buying experience. Deloitte researchers found an
overwhelming majority of shoppers are deploying digital devices to research the groceries they
intend to buy. Deloitte also found that shoppers spend more when using digital tools.

Chapter 4
Ethical and Social Issues in Information Systems
Case: Facebook Privacy: Your Life for Sale

4-13 Perform an ethical analysis of Facebook. What is the ethical dilemma presented by
this case?
The stakeholders involved in an ethical analysis of Facebook include Facebook (obviously),
advertisers, device makers, data collecting agencies, Electronic Privacy Information Center
(EPIC), governments and individual users.

Facebook collects an incredible amount of personal data on its users. It is using its ability to track
online activity of its members to develop a frighteningly accurate picture of their lives. It gathers
personal information about users, both with and without their consent, which can be used against
them in other ways. It also collects data of friends of users without their knowledge or consent.
All the data on users and users’ friends is available for sale.

Facebook’s goal is to get its users to share as much data as possible, because the more Facebook
knows, the more accurately it can serve relevant advertisements and thus, charge higher fees to
advertisers.

Facebook’s critics are concerned that the repository of personal data of the size that Facebook
has amassed requires protections and privacy controls that extend far beyond those that
Facebook currently offers.

4-14 What is the relationship of privacy to Facebook’s business model?

The less privacy Facebook offers to its users, the more valuable and useful its business model
becomes. By providing more privacy to its users, the less data it collects, stores, and provides to
advertisers. That makes its business model less valuable because advertisements cannot be as
fully developed for individual users.
Facebook CEO Mark Zuckerberg says that people want the world to be more open and
connected. He also wants the world to be more open and connected because his company stands
to make more money in that world.
While Facebook has shut down several of its more egregious privacy-invading features, and
enhanced its consent process, the company’s data use policies make it very clear that, as a
condition of using the service, users grant the company wide latitude in using their personal
information in advertising. The default option for users is “opt-in”; most users do not know how
to control use of their information; and they cannot “opt out” of all sharing if they want to use
Facebook. This is called the “control paradox” by researchers: even when users are given
controls over the use of their personal information, they typically choose not to use those
controls. Although users can limit some uses of their information, an advanced degree in
Facebook data features is required.

Facebook also had data-sharing partnerships with at least 60 device makers all of whom could
capitalize on the data and make more money for their companies. Data sharing restrictions
placed on software developers from collecting information about customers’ friends did not
extend to device makers.

4-15 Describe the weaknesses of Facebook’s privacy policies and features. What
management, organization, and technology factors have contributed to those weaknesses?
Management: Ninety-three percent of people polled believe that Internet companies should be
forced to ask for permission before using their personal information much like European
countries require. Seventy-two percent want the ability to opt out of online tracking. Executives
and managers must develop policies and procedures that address those concerns at the same time
they are developing a competitive strategy to effectively use personal information to increase the
company’s value to advertisers. Privacy advocate groups like the Electronic Privacy Information
Center want Facebook to restore its more robust privacy settings from 2009. If it does that, some
of its value to advertisers will diminish.
Organization: Facebook’s value and growth potential are determined by how effectively it can
leverage the personal data that is aggregated about its users to attract advertisers. It also stands to
gain from managing and avoiding the privacy concerns raised by its users and government
regulators.
Technology: Facebook does not have a good history when it comes to privacy violations and
missteps that raise doubts about whether it should be responsible for the personal data of
hundreds of millions of people. It has settled lawsuits with the Federal Trade Commission in
which they were barred from misrepresenting the privacy or security of its users’ personal
information. It was charged with deceiving its users by telling them they could keep their
information on Facebook private, then repeatedly allowing it to be shared and made public. It has
also come under fire for collecting information about users who are not even logged into
Facebook or do not have accounts with the company. It keeps track of activity on other sites that
have “Like” buttons or “recommendations” widgets, and records the time of your visit and your
IP address when you visit a site with those features, regardless of whether or not you click

4-16 Will Facebook be able to have a successful business model without invading privacy?
Explain your answer. Are there any measures Facebook could take to make this possible?

Opinions will vary on this question. Certainly, Facebook’s ability to leverage as much as
possible from advertisers may be diminished if it cannot collect every nugget of information
about its users to sell to advertisers. However, it could make up some of the lost revenue by
charging users a premium fee for the company to not collect as much information and restore a
higher level of privacy to those who are willing to pay for it.
For the first time since its founding, Facebook is facing a serious existential crisis, and
potentially a threat to its business model. Facebook’s current crisis follows from a history of
privacy abuses in its short 14-year life. However, there are some signs that Facebook might
become more responsible with its data collection processes, whether by its own volition or
because it is forced to do so. As a publicly traded company, Facebook now invites more scrutiny
from investors and regulators. The company can also allow users to view all the data it collects
on them and allow them to delete information they deem necessary. They can also allow users to
opt-out of the tracking systems much like European users already can.
Facebook should continue to explore additional revenue streams outside of what it already has in
advertising.
Critics have asked Facebook why it doesn’t offer an ad-free service—like music streaming sites
—for a monthly fee. Others want to know why Facebook does not allow users just to opt out of
tracking. But these kinds of changes would be very difficult for Facebook because its business
model depends entirely on the largely unfettered use of its users’ personal private information,
just as it declares in its data use policy. That policy states very openly that if you use Facebook
you agree to their terms of service, which enable it to share your information with third parties.

Chapter 5
IT Infrastructure and Emerging Technologies

Case Study: Is BYOD Good for Business?

5-14 What are the advantages and disadvantages of allowing employees to use their
personal smartphones for work?

Advantages: Employees using their own smartphones would allow companies to enjoy all of the
same benefits of a mobile workforce without spending company funds on the devices. Mobility
experts can help a company leverage mobility more effectively. Employees can be more
productive and happier with a BYOD policy in place.

Disadvantages: IT departments need to overcome several logistical hurdles before allowing

employees to use their own smartphones, including security, inventory management, support,
integrating mobile devices into pre-existing IT functions and systems, and measuring return on
investment. When employees are not able to access critical data or encounter other problems
with their mobile devices, they will need assistance from the information systems department.
Some devices are much more prone to hackers thereby threatening the security of corporate
networks. (Learning Objective 5-3: What are the current trends in computer hardware platforms

5-15 What management, organization, and technology factors should be addressed when
deciding whether to allow employees to use their personal smartphones for work?

Management: When employees make changes to their personal phone, such as switching
cellular carriers, changing their phone number, or buying a new mobile device, companies will
need to quickly and flexibly ensure that their employees are still able to remain productive.

Organization: A significant portion of corporate IT resources is dedicated to managing and

maintaining a large number of devices within an organization. In the past, companies tried to
limit business smartphone use to a single platform, making it easier to keep track of each mobile
device and to roll out software upgrades or fixes. Firms need an efficient inventory management
system that keeps track of which devices employees are using, where the device is located,
whether it is being used, and what software it is equipped with. For unprepared companies,
keeping track of who gets access to what data could be a nightmare.
Technology: The mobile digital landscape is very complicated, with a variety of devices and
operating systems on the market that do not have well-developed tools for administration and
security. BYOD requires a significant portion of corporate IT resources dedicated to managing
and maintaining a large number of devices within the organization. Providing adequate technical
support for every employee could be difficult. Mobility introduces a new layer of variety and
complexity to tech support that companies need to be prepared to handle.

5-16 Evaluate how the companies described in this case study dealt with the challenges of
BYOD.

Intel and SAP successfully implemented BYOD. Intel managed a potential lack of trust between
workers and management when management has access to personal data on employee devices by
establishing clear-cut guidelines informing employees about exactly what information can and
can’t be seen. Intel allows employees to choose among different levels of mobile access to
corporate systems, with each tier accompanied by different levels of security. SAP created a
security system for decommissioning a mobile device within a minute whenever a smartphone or
tablet is lost or stolen.

Blackstone placed limitations on the types of devices employees can use limiting the devices to
Apple products that are the easiest to support and require little maintenance compared to other
mobile tools.

At Venafi, a cybersecurity company, employees have the option of bringing their own
smartphones, tablets, and notebooks to work with them or using company-issued devices. The
company has a well-developed BYOD policy. Venafi’s IT department does not support
employees’ hardware devices because it would be too difficult to handle all the different mobile
devices and software available to consumers. That means employees are responsible for
troubleshooting and repairs of their personal equipment. However, Venafi does ensure that each
device each device is securely connected to the corporate network.

5-16 Allowing employees to use their own smartphones for work will save the company
money. Do you agree? Why or why not?

Allowing employees to use their own smartphones won’t necessarily save money when you
consider the TCO and the extra efforts required on the part of the IT staff, especially if the
smartphone becomes a point of entry for malware. There are significant concerns with securing
company information accessed with mobile devices.

By using virtualization, employees can access their entire desktop on their smartphones and
mobile handhelds and thus are able to use the same programs on the road that they use in the
office. Placing virtualization software on employees’ personal tablets is less expensive than
outfitting them with company-purchased laptops.

Chapter 6
Foundations of Business Intelligence: Database
and Information Management

Case Study: How Reliable is Big Data?

6-13 What business benefits did the organizations described in this case achieve by
analyzing and using big data.

Big data helps streaming music service Spotify create a service that feels personal to each of its
75 million global users. Spotify uses the big data it collects on user listening habits (more than
600 gigabytes daily) to design highly individualized products that captivate its users around a
particular mood or moment in time, rather than offering the same tired genres. By constantly
using big data to fine-tune its services, Spotify hopes to create the perfect user experience.

Several services have emerged to analyze big data to help consumers. There are now online
services to enable consumers to find the lowest price on autos, computers, mobile phone plans,
clothing, airfare, hotel rooms, and many other types of goods and services. Big data is also
providing benefits in sports, education, science, healthcare, and law enforcement.

New York city analyzes all the crime-related data it collects to lower the crime rate. Its
CompStat crime-mapping program uses a comprehensive citywide database of all reported
crimes or complaints, arrests, and summonses in each of the city’s 76 precincts to report weekly
on crime complaint and arrest activity at the precinct, patrol borough, and citywide levels.
CompStat data can be displayed on maps showing crime and arrest locations, crime hot spots,
and other relevant information to help precinct commanders quickly identify patterns and trends
and deploy policemen where they are most needed.

Healthcare companies are currently analyzing big data to determine the most effective and
economical treatment for chronic illnesses and common diseases and provide personalized care
recommendations to patients.
6-14 Identify two decisions at the organizations described in this case that were improved
by using big data and two decisions that were not improved by using big data.

Improved:
 Police organizations can quickly identify crime hot spots and crime and arrest locations
to help precinct commanders know quickly where to deploy officers.
 The United Kingdom National Health Service (NHS) has used its findings from big data
analysis to create dashboards identifying patients taking 10 or more medications at once,
and which patients are taking too many antibiotics. Compiling very large amounts of data
about drugs and treatments given to cancer patients and correlating that information with
patient outcomes has helped NHS identify more effective treatment protocols.

Not Improved:
 2016 presidential candidate Hillary Clinton’s campaign and many political pollsters and
pundits severely underestimated and misunderstood big data during the election. Tons of
data had been analyzed by political experts and the candidates’ campaign teams. Clinton
ran an overwhelmingly data-driven campaign. Clinton’s team connected personal data
from traditional sources, such as reports from pollsters and field workers, with other data
from social media posts and other online behavior as well as data used to predict
consumer behavior. The Clinton team assumed that the same voters who supported
 President Obama’s previous elections would turn out for their candidate and focused on
identifying voters in areas with a likelihood of high voter turnout. However, turnout for
Clinton among the key groups who had supported Obama—women, minorities, college
graduates, and blue-collar workers—fell short of expectations. (Trump had turned to big
data as well but put more emphasis on tailoring campaign messages to targeted voter
groups.) Political experts were misled into thinking Clinton’s victory was assured
because some predictive models lacked context in explaining potentially wide margins of
error. There were shortcomings in polling, analysis, and interpretation, and analysts did
not spend enough time examining how the data used in the predictive models were
created. Many polls used in election forecasts underestimated the strength of Trump’s
support. State polls were off, perhaps failing to capture Republicans who initially refused
to vote for Trump and then changed their minds at the last moment. Polls from Wisconsin
shortly before the election had put Clinton well ahead of Trump. Polls are important for
election predictions, but they are only one of many sources of data that should be
consulted. Predictive models were unable to fully determine who would actually turn out
to vote as opposed to how people think they will vote.

 Google used an algorithm to collect data from web searches to determine exactly how
many people had influenza and how the disease was spreading. However, the service
consistently overestimated flu rates.

6-15 List and describe the limitations to using big data.

A number of companies have rushed to start big data projects without first establishing a
business goal for this new information. Swimming in numbers and other data doesn’t necessarily
mean that the right information is being collected or that people will make smarter decisions.
Experts in big data analysis believe too many companies, seduced by the promise of big data,
jump into big data projects with nothing to show for their efforts. They start amassing and
analyzing mountains of data without no clear objective or understanding of exactly how
analyzing big data will achieve their goal or what questions they are trying to answer. Companies
don’t know what they’re looking for because they think big data alone will solve their problem.

It often takes a lot of work for a company to combine data stored in legacy systems with data
stored in Hadoop. Although Hadoop can be much faster than traditional databases for some
tasks, it often isn’t fast enough to respond to queries immediately or to process incoming data in
real time (such as using smartphone location data to generate just-in-time offers).

It is difficult to find enough technical IT specialists with expertise in big data analytical tools,
including Hive, Pig, Cassandra, MongoDB, or Hadoop. On top of that, many business managers
lack numerical and statistical skills required for finding, manipulating, managing, and
interpreting data. Even with big data expertise, data analysts need some business knowledge of
the problem they are trying to solve with big data.

6-16 Should all organizations try to analyze big data? Why or why not? What
management, organization, and technology issues should be addressed before a company
decides to work with big data?
Just because an organization has data doesn’t mean it has good information. There’s a stark
difference. Organizations must first determine a business goal for the information and then
process the data towards that goal.

Management: Many times, decisions made from data can be based on faulty context as was the
case with Google’s analysis of the flu outbreak. Managers must first determine the questions
they are trying to answer before they begin analyzing data.

Organization: Having a lot of data without the organizational structure to support it doesn’t
accomplish much. People must be trained in using big data tools like Hadoop. Big data analysis
doesn’t necessarily show causation or which correlations are meaningful.

Technology: It takes a lot of work and time for a company to combine data stored in legacy
systems with data stored in big data tools and programs like Hadoop. Sometimes the programs
are not the right tool for the job. Big data poses challenges to information security and privacy