Chapter 3: Software

Upon successful completion of this chapter,

you will be able to:

• Define the term software;

• Identify and describe the two

primary categories of software;

• Describe the role ERP software

plays in an organization;

• Describe cloud computing and its

advantages and disadvantages for
use in an organization; and

• Define the term open-source and

identify its primary characteristics.

Introduction
The second component of an information system is software, the set
of instructions that tells the hardware what to do. Software is
created by developers through the process of programming
(covered in more detail in Chapter 10). Without software, the
hardware would not be functional.

Information Systems for Business and Beyond (2019) pg. 44

 Types of Software
Software can be broadly divided into two categories: operating
systems and application software. Operating systems manage the
hardware and create the interface between the hardware and the
user. Application software performs specific tasks such as word
processing, accounting, database management, video games, or
browsing the web.

Operating Systems

An operating system is first loaded into the computer by the boot

program, then it manages all of the programs in the computer,
including both programs native to the operating system such as
file and memory management and application software.
Operating systems provide you with these key functions:

1. managing the hardware resources of the computer;

2. providing the user-interface components;

Information Systems for Business and Beyond (2019) pg. 45

 3. providing a platform for software developers to write
applications.

All computing devices require an operating system. The most

popular operating systems for personal computers are: Microsoft
Windows, Apple’s Mac OS, and various versions of Linux.
Smartphones and tablets run operating systems as well, such as
iOS (Apple), Android (Google), Windows Mobile (Microsoft), and
Blackberry.

Microsoft provided the first operating system for the IBM-PC,

released in 1981. Their initial venture into a Graphical User
Interface (GUI) operating system, known as Windows, occurred in
1985. Today’s Windows 10 supports the 64-bit Intel CPU. Recall
that “64-bit” indicates the size of data that can be moved within the
computer.

Apple introduced the Macintosh computer 1984 with the first

commercially successful GUI. Apple’s operating system for the
Macintosh is known as “Mac OS” and also uses an Intel CPU
supporting 64-bit processing. Mac OS versions have been named after
mountains such as El Capitan, Sierra, and High Sierra. Multitasking,
virtual memory, and voice input have become standard features of both
operating systems.
The Linux operating system is open source, meaning individual
developers are allowed to make modifications to the programming
code. Linux is a version of the Unix operating. Unix runs on large
and expensive
minicomputers. Linux
develop Linus Torvalds, a
professor in Finland and the
creator of Linux, wanted to
find a way to make Unix run
on less expensive personal
computers. Linux has many Linux Ubuntu desktop
variations and now powers a
large percentage of web servers in the world.

Information Systems for Business and Beyond (2019) pg. 46

 Sidebar: Why Is Microsoft
Software So Dominant in the
Business World?
If you’ve worked in business, you may have noticed that almost all
computers in business run a version of Microsoft Windows.
However, in classrooms from elementary to college, there is almost
a balance between Macs and PCs. Why has this not extended into
the business world?

As discussed in Chapter 1, many businesses used IBM mainframe

computers back in the 1960s and 1970s. When businesses migrated to
the microcomputer (personal computer) market, they elected to stay
with IBM and chose the PC. Companies took the safe route, invested
in the Microsoft operating system and in Microsoft
software/applications.

Microsoft soon found itself with the dominant personal computer

operating system for businesses. As the networked PC began to
replace the mainframe computer, Microsoft developed a network
operating system along with a complete suite of programs focused

on business users. Today Microsoft Office in its various forms

1
controls 85% of the market.

Application Software
The second major category of software is application software.

Information Systems for Business and Beyond (2019) pg. 47

 Application software is utilized directly today to accomplish a
specific goal such as word processing, calculations on a
spreadsheet, or surfing the Internet using your favorite browser.

The “Killer” App

When a new type of digital device is invented, there are

generally a small group of technology enthusiasts who will
purchase it just for the joy of figuring out how it works. A “killer”
application is one that becomes so essential that large numbers of
people will buy a

,' •1 ...
1 y Y = x2
'
2 4
' 3 9
25 S,2S
/~

.
'
4 16 20
15
4, 16 ✓

-~·
5 25
3,9 /
10
~

~1
0 X

Image of Microsoft Excel

device just to run that application. For the personal computer, the
killer application was the spreadsheet.

The first spreadsheet was created by an MBA student at Harvard

University who tired of making repeated calculations to determine
the optimal result on a problem and decided to create a tool that
allowed the user to easily change values and recalculate formulas.
The result was the spreadsheet. Today’s dominant spreadsheet is
Microsoft Excel which still retains the basic functionality of the first
spreadsheet.

Productivity Software

Along with the spreadsheet, several other software applications

have become standard tools for the workplace. Known as
productivity software, these programs allow office employees to

Information Systems for Business and Beyond (2019) pg. 48

 complete their daily work efficiently. Many times, these
applications come packaged together, such as in Microsoft’s Office
suite. Here is a list of some of these applications and their basic
functions:

• Word processing Users can create and edit documents

using this class of software. Functions include the ability to
type and edit text, format fonts and paragraphs, as well as
add, move, and delete text throughout the document. Tables
and images can be inserted. Documents can be saved in a
variety of electronic file formats with Microsoft Word’s
DOCX being the most popular. Documents can also be
converted to other formats such as Adobe’s PDF (Portable
Document Format) or a .TXT file.

• Spreadsheet This class of software provides a way to do

numeric calculations and analysis, displaying the result in
charts and graphs. The working area is divided into rows and
columns, where users can enter numbers, text, or formulas. It
is the formulas that make a spreadsheet powerful, allowing the
user to develop complex calculations that can change based
on the numbers entered. The most popular spreadsheet
package is Microsoft Excel, which saves its files in the
XLSX format.

• Presentation Users can create slideshow presentations using

this class of software. The slides can be projected, printed, or
distributed to interested parties. Text, images, audio, and
visual can all be added to the slides. Microsoft’s PowerPoint
is the most popular software right now, saving its files in
PPTX format.

• Some office suites include other types of software. For

example, Microsoft Office includes Outlook, its e-mail
package, and OneNote, an information-gathering
collaboration tool. The professional version of Office also
includes Microsoft Access, a database package. (Databases
are covered more in Chapter 4).
Information Systems for Business and Beyond (2019) pg. 49
 Microsoft popularized the idea of the office-software
productivity bundle with their release of the Microsoft Office
Suite. This package continues to dominate the market and most
businesses expect employees to know how to use this software.
However, many competitors to Microsoft Office do exist and are
compatible with the file formats used by Microsoft (see table
below). Microsoft also offers a cloud-based version of their
office suite named Microsoft Office 365. Similar to Google
Drive, this suite allows users to edit and share documents online
utilizing cloud-computing technology.

Word Spreadsheet Presentation Other

Processing
Sui.te :
Micro soft Wor d Excel PowerP oint Outlook (email ),
Office Access (dat abase ) ,
OneNote (information
gather ing)
App le Pages Numbers Keynote Integrates with
iWor k iTunes, iCJoud, and
other Apple software

OpenOffice Wri ter Cale Imp ress Base (databa se), Draw
(draw ing) , Math

Goo gle Document Spre a dsheet Presen tation

Drive

Utility Software and Programming Software

Utility software includes programs that allow you to fix or

modify your computer in some way. Examples include anti-
malware software and programs that totally remove software you
no longer want installed. These types of software packages were
created to fill shortcomings in operating systems. Many times, a
subsequent release of an operating system will include these
utility functions as part of the operating system itself.

Programming software’s purpose is to produce software. Most of

these programs provide developers with an environment in

Information Systems for Business and Beyond (2019) pg. 50

 which they can write the code, test it, and convert/compile it into
the format that can then be run on a computer. This software is
typically identified as the Integrated Development Environment
(IDE) and is provided free from the corporation that developed
the programming language that will be used to write the code.

Sidebar: “PowerPointed” to
Death

Screen shot of Tableau (click to

-
enlarge)
As presentation software - ,:
has gained acceptance as the
primary method to formally
present information to a group
or class, the art of giving an engaging presentation is becoming
rare. Many presenters now just read the bullet points in the
presentation and immediately bore those in attendance, who can
already read it for themselves. The real problem is not with
PowerPoint as much as it is with the person creating and
presenting. Author and chief evangelist Guy Kawasaki developed
the 10/20/30 rule for PowerPoint users. Just remember: 10
2
slides, 20 minutes, 30-point font.” If you are determined to
improve your PowerPoint skills, read Presentation Zen by Garr
Reynolds. New digital presentation technologies are being
developed that go beyond PowerPoint. For example, Prezi uses
a single canvas for the presentation, allowing presenters to place
text, images, and other media on the canvas, and then navigate
between these objects as they present. Tools such as Tableau
allow users to analyze data in depth and create engaging
interactive visualizations.

Information Systems for Business and Beyond (2019) pg. 51

 Sidebar: I Own This Software,
Right? Well…
When you purchase software and install it on your computer,
are you the owner of that software? Technically, you are not!
When you install software, you are actually just being given a
license to use it. When you first install a package, you are asked
to agree to the terms of service or the license agreement. In that
agreement, you will find that your rights to use the software are
limited. For example, in the terms of the Microsoft Office
software license, you will find the following statement: “This
software is licensed, not sold. This agreement only gives you
some rights to use the features included in the software edition
you licensed.”

For the most part, these restrictions are what you would expect. You
cannot make illegal copies of the software and you may not use it
to do anything illegal. However, there are other, more unexpected
terms in these software agreements. For example, many software
agreements ask you to agree to a limit on liability. Again, from
Microsoft: “Limitation on and exclusion of damages. You can
recover from Microsoft and its suppliers only direct damages up to
the amount you paid for the software. You cannot recover any other
damages, including consequential, lost profits, special, indirect or
incidental damages.” This means if a problem with the software
causes harm to your business, you cannot hold Microsoft or the
supplier responsible for damages.

Applications for the Enterprise

Information Systems for Business and Beyond (2019) pg. 52
 As the personal computer proliferated inside organizations, control
over the information generated by the organization began
splintering. For instance, the customer service department creates
a customer database to keep track of calls and problem reports, and
the sales department also creates a database to keep track of
customer information. Which one should be used as the master list
of customers? Or perhaps someone in sales might create a
spreadsheet to calculate sales revenue, while someone in finance
creates a different revenue document that meets the needs of their
department, but calculates revenue differently. The two
spreadsheets will report different revenue totals. Which one is
correct? And who is managing all of this information?

Enterprise Resource Planning

SAP Trademark Logo

In the 1990s the need to bring an organization’s information

back under centralized control became more apparent. The
Enterprise Resource Planning (ERP) system (sometimes just called
enterprise software) was developed to bring together an entire
organization within one program. ERP software utilizes a central
database that is implemented throughout the entire organization.
Here are some key points about ERP.

• A software application. ERP is an application that is used by

many of an organization’s employees.

• Utilizes a central database. All users of the ERP edit and

save their information from the same data source. For
example, this means there is only one customer table in the
Information Systems for Business and Beyond (2019) pg. 53
 database, there is only one sales (revenue) table in the
database, etc.

• Implemented organization-wide. ERP systems include

functionality that covers all of the essential components of a
business. An organization can purchase modules for its ERP
system that match specific needs such as order entry,
manufacturing, or planning.

ERP systems were originally marketed to large corporations.

However, as more and more large companies began installing
them, ERP vendors began targeting mid-sized and even smaller
businesses. Some of the more well-known ERP systems include
those from SAP, Oracle, and Microsoft.

In order to effectively implement an ERP system in an organization,

the organization must be ready to make a full commitment. All
aspects of the organization are affected as old systems are replaced
by the ERP system. In general, implementing an ERP system can
take two to three years and cost several million dollars.

So why implement an ERP system? If done properly, an ERP

system can bring an organization a good return on their investment.
By consolidating information systems across the enterprise and
using the software to enforce best practices, most organizations see
an overall improvement after implementing an ERP. Business
processes as a form of competitive advantage will be covered in
Chapter 9.

Customer Relationship Management

A Customer Relationship Management (CRM) system manages an

organization’s customers. In today’s environment, it is important
to develop relationships with your customers, and the use of a well-
designed CRM can allow a business to personalize its relationship with
each of its customers. Some ERP software systems include CRM
modules. An example of a well-known CRM package is Salesforce.
Information Systems for Business and Beyond (2019) pg. 54
Supply Chain Management
nternal supply chain

Suppliers Customers

Supply Chain

Many organizations must deal with the complex task of managing

their supply chains. At its simplest, a supply chain is the linkage
between an organization’s suppliers, its manufacturing facilities,
and the distributors of its products. Each link in the chain has a
multiplying effect on the complexity of the process. For example, if
there are two suppliers, one manufacturing facility, and two
distributors, then the number of links to manage = 4 (2 x 1 x 2).
However, if two more suppliers are added, plus another
manufacturing facility, and two more distributors, then the number
of links to manage = 32 (4 x 2 x 4). Also, notice in the above
illustration that all arrows have two heads, indicating that
information flows in both directions. Suppliers are part of a
business’s supply chain. They provide information such as price,
size, quantity, etc. to the business. In turn, the business provides
information such as quantity on hand at every store to the supplier.
The key to successful supply chain management is the information
system.

A Supply Chain Management (SCM) system handles the

interconnection between these links as well as the inventory of the
products in their various stages of development. As discussed
previously much of Walmart’s success has come from its ability to
identify and control the supply chain for its products. Walmart invested
heavily in their information system so they could communicate with
their suppliers and manage the thousands of products they sell.

Information Systems for Business and Beyond (2019) pg. 55

 Walmart realized in the 1980s that the key to their success was
information systems. Specifically, they needed to manage their
complex supply chain with its thousands of suppliers, thousands
of retail outlets, and millions of customers. Their success came
from being able to integrate information systems to every entity
(suppliers, warehouses, retail stores) through the sharing of sales
and inventory data. Take a moment to study the diagram
above…look for the double-headed arrow. Notice that data flows
down the supply chain from suppliers to retail stores. But it also
flows up the supply chain, back to the suppliers so they can be
up to date regarding production and shipping.

Mobile Applications
Just as with the personal computer, mobile devices such as
smartphones and electronic tablets also have operating systems and
application software. These mobile devices are in many ways just
smaller versions of personal computers. A mobile app is a software
application designed to run specifically on a mobile device.

As shown in Chapter 2, smartphones are becoming a dominant form

of computing, with more smartphones being sold than personal
computers. A greater discussion of PC and smartphone sales
appears in Chapter 13, along with statistics regarding the decline in
tablet sales. Businesses have adjusted to this trend by increasing
their investment in the development of apps for mobile devices. The
number of mobile apps in the Apple App Store has increased from
3
zero in 2008 to over 2 million in 2017.- Building a mobile app will
be covered in Chapter 10.

Information Systems for Business and Beyond (2019) pg. 56

 Cloud Computing
Historically, for software to run on a computer an individual
copy of the software had to be installed on the computer. The
concept of “cloud” computing changes this.

Cloud Computing
The “cloud” refers to applications, services, and data storage
located on the Internet. Cloud service providers rely on giant server
farms and massive storage devices that are connected via the
Internet. Cloud computing allows users to access software and data
storage services on the Internet.

You probably already use cloud computing in some form. For

example, if you access your e-mail via your web browser, you are
using a form of cloud computing if you are using Google Drive’s
applications. While these are free versions of cloud computing,
there is big business in providing applications and data storage over
the web. Cloud computing is not limited to web applications. It can
also be used for services such as audio or video streaming.

Advantages of Cloud Computing

• No software to install or upgrades to maintain.

• Available from any computer that has access to the

Internet.

• Can scale to a large number of users easily.

• New applications can be up and running very quickly.

• Services can be leased for a limited time on an as-needed

basis.

• Your information is not lost if your hard disk crashes or your

laptop is lost or stolen.

• You are not limited by the available memory or disk space

Information Systems for Business and Beyond (2019) pg. 57

 on your computer.

Disadvantages of Cloud Computing

• Your information is stored on someone else’s computer.

• You must have Internet access to use it.

• You are relying on a third-party to provide these services.

Cloud computing has the ability to really impact how

organizations manage technology. For example, why is an IT
department needed to purchase, configure, and manage personal
computers and software when all that is really needed is an
Internet connection?

Using a Private Cloud

Many organizations are understandably nervous about giving up
control of their data and some of their applications by using cloud
computing. But they also see the value in reducing the need for
installing software and adding disk storage to local computers. A
solution to this problem lies in the concept of a private cloud. While
there are various models of a private cloud, the basic idea is for the
cloud service provider to section off web server space for a specific
organization. The organization has full control over that server
space while still gaining some of the benefits of cloud computing.

Virtualization
Virtualization is the process of using software to simulate a
computer or some other device. For example, using virtualization
Information Systems for Business and Beyond (2019) pg. 58
 a single physical computer can perform the functions of several
virtual computers, usually referred to as Virtual Machines (VMs).
Organizations implement virtual machines in an effort to reduce the
number of physical servers needed to provide the necessary services
to users. This reduction in the number of physical servers also
reduces the demand for electricity to run and cool the physical
servers. For more detail on how virtualization works, see this
informational page from VMWare.

Software Creation
{

','01 J "..J',Hel ~.:J() {

'i:,..,rr•.-rout prtnt\n( "lif'\lo Wor\d 1 " };

Example program “Hello World” written in Java

Modern software applications are written using a programming
language such as Java, Visual C, C++, Python, etc. A programming
language consists of a set of commands and syntax that can be
organized logically to execute specific functions. Using this
language, a programmer writes a program (known as source
code) that can then be compiled into machine-readable form, the
ones and zeroes necessary to be executed by the CPU. Languages
such as HTML and JavaScript are used to develop web pages.

Open-Source Software
When the personal computer was first released, computer
enthusiasts banded together to build applications and solve
problems. These computer enthusiasts were motivated to share any
programs they built and solutions to problems they found. This
collaboration enabled them to more quickly innovate and fix
problems.

Information Systems for Business and Beyond (2019) pg. 59

 As software began to become a business, however, this idea of
sharing everything fell out of favor with many developers. When
a program takes hundreds of hours to develop, it is
understandable that the programmers do not want to just give it
away. This led to a new business model of restrictive software
licensing which required payment for software, a model that is
still dominant today. This model is sometimes referred to as
closed source, as the source code is not made available to others.

There are many, however, who feel that software should not be
restricted. Just as with those early hobbyists in the 1970s, they
feel that innovation and progress can be made much more rapidly
if they share what has been learned. In the 1990s, with Internet
access connecting more people together, the open-source
movement gained steam.

to
OpenOffice.org

....
Open-source software makes the source code available for anyone
to copy and use. For most people having access to the source code
of a program does little good since it is challenging to modify
existing programming code. However, open-source software is also
available in a compiled format that can be downloaded and
installed. The open-source movement has led to the development
of some of the most used software in the world such as the Firefox
browser, the Linux operating system, and the Apache web server.

Many businesses are wary of open-source software precisely

because the code is available for anyone to see. They feel that

Information Systems for Business and Beyond (2019) pg. 60

 this increases the risk of an attack. Others counter that this
openness actually decreases the risk because the code is exposed
to thousands of programmers who can incorporate code changes
to quickly patch vulnerabilities.

There are thousands of open-source applications available for

download. For example, you can get the productivity suite from
Open Office. One good place to search for open-source software
is sourceforge.net, where thousands of programs are available for
free download.

Summary
Software gives the instructions that tell the hardware what to do.
There are two basic categories of software: operating systems
and applications. Operating systems interface with the computer
hardware and make system resources available. Application
software allows users to accomplish specific tasks such as word
processing, presentations, or databases. This group is also
referred to as productivity software. An ERP system stores all
data in a centralized database that is made accessible to all
programs and departments across the organization. Cloud
computing provides access to software and databases from the
Internet via a web browser. Developers use various programming
languages to develop software.

Study Questions
1. Develop your own definition of software being certain to
explain the key terms.

2. What are the primary functions of an operating system?

3. Which of the following are operating systems and which are

Information Systems for Business and Beyond (2019) pg. 61

 applications: Microsoft Excel, Google Chrome, iTunes,
Windows, Android, Angry Birds?

4. What is your favorite software application? What tasks does it

help you accomplish?

5. How would you categorize the software that runs on mobile

devices? Break down these apps into at least three basic
categories and give an example of each.

6. What does an ERP system do?

7. What is open-source software? How does it differ from

closed- source software? Give an example of each.

8. What does a software license grant to the purchaser of the

software?

Exercises
1. Find a case study online about the implementation of an
ERP system. Was it successful? How long did it take? Does
the case study tell you how much money the organization
spent?

2. If you were running a small business with limited funds for

information technology, would you consider using cloud
computing? Find some web-based resources that support your
decision.

3. Go to sourceforge.net and review their most downloaded

software applications. Report on the variety of applications
you find. Then pick one that interests you and report back
on what it does, the kind of technical support offered, and
the user reviews.

4. Review this article on the security risks of open-source

software. Write a short analysis giving your opinion on the
different risks discussed.

5. List three examples of programming languages? What

features in each language makes it useful to developers?

Information Systems for Business and Beyond (2019) pg. 62

 Lab
1. Download Apache Open Office and create a document. Note: If
your computer does not have Java Runtime Environment (JRE) 32-
bit (x86) installed, you will need to download it first from site. Open
Office runs only in 32-bit (x86) mode. Here is a link to the Getting
Started documentation for Open Office. How does it compare to
Microsoft Office? Does the fact that you got it for free make it feel
less valuable?

1. Statista. (2017). Microsoft – Statistics & Facts. Retrieved

from https://www.statista.com/topics/823/microsoft/

2. Kawasaki, G. (n.d.). The 10/20/30 Rules for PowerPoint.

Retrieved from
https://guykawasaki.com/the_102030_rule/.↵

3. Statista. (2018). Number of apps in Apple App Store July

2008 to January 2017. Retrieved from
https://www.statista.com/ statistics/263795/number-of-
available-apps-in-the-apple- app-store/.↵

Information Systems for Business and Beyond (2019) pg. 63