Chocolate lovers unite a role playing simulation on web analytics

Introduction To Information Of Business

Introduction to Information Systems

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chapter 1 InformatIon SyStemS and PeoPle iii

Introduction to Information Systems

PATRICIA WALLACE Johns Hopkins University

Second Edition

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ISBN 10: 0-13-357175-0 ISBN 13: 978-0-13-357175-2

Library of Congress Cataloging-in-Publication Data Wallace, Patricia. Introduction to Information Systems/Patricia Wallace, Johns Hopkins University—Second edition. p. cm. Includes index. ISBN 978-0-13-357175-2 1. Organizational change. 2. Management information systems. I. Title. HD58.8.W345 2015 658.4'038011—dc23 2013030711

To Callie, Julian, and a bright future of human–centered computing.

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chapter 1 InformatIon SyStemS and PeoPle vii

About the Author

P atricia Wallace is currently Senior Director for Information Technology and Online Programs at Johns Hopkins University Center for Talented Youth. Before joining JHU, she was Chief, Information Strategies, and Executive Director, Center for Knowledge Management, at the Robert H. Smith School of Business, University of Maryland, College Park. She also teaches technology management courses as Adjunct Professor in the MBA Program of the Graduate School of Management and Technology, University of Maryland University College, where she previously served as CIO for 10 years. Wallace earned her Ph.D. in psychology at the University of Texas at Austin and holds an M.S. in Computer Systems Management. She has published 10 books, including The Internet in the Workplace: How New Technologies Transform Work and The Psychology of the Internet, several educational software programs, and numerous scholarly and general articles.

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Brief Contents

Information Systems and People 2

Information Systems and Strategy 32

Information and Communications Technologies: The Enterprise Architecture 62

Databases and Data Warehouses 94

Information Systems for the Enterprise 130

The Web, E-Commerce, and M-Commerce 164

Business Intelligence and Decision Making 196

Collaborating with Technology 226

Knowledge Management and E-Learning 256

Ethics, Privacy, and Security 288

Systems Development and Procurement 320

Project Management and Strategic Planning 348

Facebook and Instagram: Privacy Challenges 378 A Humanitarian Supply Chain for the Red Cross 382 Apple: Can the Company Pull Off Another Disruptive Innovation? 385 Managing the Federal Government’s IT Project Portfolio 388

Glossary 393

Index 400

1 2 3

4 5 6 7 8 9 10 11 12

C H A P T E R

C H A P T E R

C H A P T E R

C H A P T E R

C H A P T E R

C H A P T E R

C H A P T E R

C H A P T E R

C H A P T E R

C H A P T E R

C H A P T E R

C H A P T E R

C A s E s T u d i E s

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Contents

Information Systems and People 2 Learning Objectives 2

Introduction 2

Information Systems in Action 4 MANAGING OPERATIONS 4

SUPPORTING CUSTOMER INTERACTIONS 6

MAKING DECISIONS 6

COLLABORATING ON TEAMS 7

GAINING COMPETITIVE ADVANTAGE 8

IMPROVING INDIVIDUAL PRODUCTIVITY 8

The Nature of Information 9 WHAT MAKES INFORMATION VALUABLE? 9

The Components of an Information System 11 PEOPLE 11

TECHNOLOGY 12

PROCESSES 12

DATA 15

Information Systems, the Discipline 16

Information Systems Throughout the Organization 17 INFORMATION SYSTEMS IN BUSINESS 17

INFORMATION SYSTEMS IN NONPROFITS AND GOVERNMENT 18

INSIDE THE IT DEPARTMENT 18

COLLABORATING ON INFORMATION SYSTEMS 19

IMPROVING YOUR OWN PRODUCTIVITY 21

Promises, Perils, and Ethical Issues 21 PRIVACY BREACHES AND AMPLIFICATION EFFECTS 22

THE ETHICAL FACTOR: Ethical Issues Surrounding Information Systems 23

Online Simulation 23

Chapter Summary 24

Key Terms and Concepts 24

Chapter Review Questions 24

Projects and Discussion Questions 25

Application Exercises 26 EXCEL APPLICATION: MANPOWER PLANNING SPREADSHEET 26

ACCESS APPLICATION: INFORMATION SYSTEMS IN BUSINESS 26

Case Study #1 Nasdaq’s Information Challenges: Facebook’s Botched Public Opening and High Frequency Trading 27

Case Study #2 Breaking News: Twitter’s Growing Role in Emergencies and Disaster Communications 28

Preface xxiii

Acknowledgments xxxi

1C H A P T E R

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xii ContentS

E-Project 1 Analyzing the May 6 “Flash Crash” with Excel Charts 30

E-Project 2 Gathering, Visualizing, and Evaluating Reports from Twitter and Other Sources During a Disaster 30

Chapter Notes 31

2C H A P T E R Information Systems and Strategy 32Learning Objectives 32 Introduction 32

Porter’s Five Competitive Forces 34 THREAT OF NEW ENTRANTS 35

POWER OF BUYERS 36

POWER OF SUPPLIERS 37

THREAT OF SUBSTITUTES 37

RIVALRY AMONG EXISTING COMPETITORS 38

Factors That Affect How the Five Forces Operate 38 DISRUPTIVE TECHNOLOGY AND INNOVATIONS 39

GOVERNMENT POLICIES AND ACTIONS 40

COMPLEMENTARY SERVICES AND PRODUCTS IN THE ECOSYSTEM 41

ENVIRONMENTAL EVENTS AND “WILDCARDS” 42

The Value Chain and Strategic Thinking 43 EXTENDING THE VALUE CHAIN: FROM SUPPLIERS TO THE FIRM TO CUSTOMERS 43

BENCHMARKING COMPONENTS OF THE VALUE CHAIN 44

THE ETHICAL FACTOR: Ethical Responsibility in an Extended Value Chain 45

IT BENCHMARKS 45

Competitive Strategies in Business 46 THE ROLE OF INFORMATION SYSTEMS IN STRATEGY 47

INFORMATION SYSTEMS: RUN, GROW, AND TRANSFORM THE BUSINESS 48

Information Strategies and Nonprofit Organizations 49 FUND-RAISING 50

VOLUNTEERING 50

INFORMATION STRATEGIES AND GOVERNMENT 51

Does IT Matter? 52 SPENDING ON RUNNING, GROWING, AND TRANSFORMING 52

LEVELING UP!: A STRATEGIC ANALYSIS 53

Online Simulation 54

Chapter Summary 55

Key Terms and Concepts 55

Chapter Review Questions 56

Projects and Discussion Questions 56

Application Exercises 57 EXCEL APPLICATION: IT BENCHMARKS 57

ACCESS APPLICATION: TELETHON CALL REPORTS 57

Case Study #1 Can GameStop Survive with Its Brick-and-Mortar Stores? 58

Case Study #2 The Open Internet Coalition and the Battle for Net Neutrality 59

E-Project 1 Identifying Company Strategy with Online Financial Chart Tools 60

E-Project 2 Analyzing Movie Download Times with Excel 60

Chapter Notes 61

ContentS xiii

Information and Communications Technologies: The Enterprise Architecture 62 Learning Objectives 62

Introduction 62

The Hardware 64 INPUT AND OUTPUT 64

PROCESSING 68

STORAGE 69

THE ETHICAL FACTOR: Ethical Implications of Big Data 70

The Software 70 TYPES OF SOFTWARE 70

HOW IS SOFTWARE CREATED? 72

Networks and Telecommunications 74 TRANSMISSION MEDIA AND PROTOCOLS 74

TYPES OF NETWORKS 77

NETWORK PROTOCOLS 79

The Enterprise Architecture 81 TRENDS IN ENTERPRISE ARCHITECTURES 81

GUIDING THE ARCHITECTURE 84

Online Simulation 85

Chapter Summary 86

Key Terms and Concepts 87

Chapter Review Questions 87

Projects and Discussion Questions 87

Application Exercises 88 EXCEL APPLICATION: ANALYZING GROWTH IN COMPUTER STORAGE CAPACITIES 88

ACCESS APPLICATION: MANAGING ICT ASSETS WITH A DATABASE 89

Case Study #1 Google Glass and Wearable Technologies 89

Case Study #2 Rolling Out Its 4G Network, Sprint Nextel Competes with Rivals 90

E-Project 1 Voluntary Distributed Computing 92

E-Project 2 Using Excel to Analyze Cost Effectiveness for 4G Rollouts 92

Chapter Notes 93

4C H A P T E R Databases and Data Warehouses 94Learning Objectives 94 Introduction 94

The Nature of Information Resources 96 STRUCTURED, UNSTRUCTURED, AND SEMI-STRUCTURED INFORMATION 96

METADATA 97

THE QUALITY OF INFORMATION 97

Managing Information: From Filing Cabinets to the Database 99 TABLES, RECORDS, AND FIELDS 99

THE RISE AND FALL OF FILE PROCESSING SYSTEMS 100

DATABASES AND DATABASE MANAGEMENT SOFTWARE 102

Developing and Managing a Relational Database 105 PLANNING THE DATA MODEL 105

ACCESSING THE DATABASE AND RETRIEVING INFORMATION 109

THE ETHICAL FACTOR: Ethical Issues in Database Design: The Case of Ethnic Identification 110

MANAGING AND MAINTAINING THE DATABASE 111

3C H A P T E R

Multiple Databases and the Challenge of Integration 113 SHADOW SYSTEMS 114

INTEGRATION STRATEGIES AND MASTER DATA MANAGEMENT 114

Data Warehouses and Big Data 114 BUILDING THE DATA WAREHOUSE 116

THE CHALLENGE OF BIG DATA 116

STRATEGIC PLANNING, BUSINESS INTELLIGENCE, AND DATA MINING 118

The Challenges of Information Management: The Human Element 119 OWNERSHIP ISSUES 119

DATABASES WITHOUT BOUNDARIES 119

BALANCING STAKEHOLDERS’ INFORMATION NEEDS 120

Online Simulation 120

Chapter Summary 121

Key Terms and Concepts 122

Chapter Review Questions 122

Projects and Discussion Questions 122

Application Exercises 123 EXCEL APPLICATION: MANAGING CATERING SUPPLIES 123

ACCESS APPLICATION: DD-DESIGNS 124

Case Study #1 U.K. Police Track Suspicious Vehicles in Real Time with Cameras and the License Plate Database 125

Case Study #2 Colgate-Palmolive Draws on Its Global Database to Evaluate Marketing Strategies 126

E-Project 1 Identifying Suspects with a License Plate Database: Constructing Queries with Access 127

E-Project 2 Building a Database for Customer Records 128

Chapter Notes 129

5C H A P T E R Information Systems for the Enterprise 130Learning Objectives 130 Introduction 130

Finance Management 132 COMPONENTS OF FINANCIAL INFORMATION SYSTEMS 132

FINANCIAL REPORTING, COMPLIANCE AND TRANSPARENCY 134

Human Capital Management 135 COMPONENTS OF HUMAN CAPITAL MANAGEMENT SYSTEMS 135

HCM METRICS 137

Managing the Supply Chain 137

THE ETHICAL FACTOR: Ethics and Talent Management 138

SUPPLY CHAIN FUNDAMENTALS 138

MEASURING PERFORMANCE IN SUPPLY CHAINS 139

INFORMATION SYSTEMS AND TECHNOLOGY FOR SUPPLY CHAIN MANAGEMENT 141

Customer Relationship Management 144 CRM GOALS AND METRICS 144

CRM STRATEGIES AND TECHNOLOGIES 146

Enterprise Resource Planning (ERP): Bringing It All Together 149 ERP COMPONENTS 150

INTEGRATION STRATEGIES 152

IMPLEMENTATION ISSUES 153

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ContentS xv

6C H A P T E R The Web, E-Commerce, and M-Commerce 164Learning Objectives 164 Introduction 164

Developing a Web Strategy 166 CHOOSING A GOAL 166

NAMING THE WEBSITE 167

Building the Website 170 WEBSITE DESIGN 170

THE ETHICAL FACTOR: Website Accessibility: Why Is Progress So Slow? 174

SOFTWARE DEVELOPMENT STRATEGIES FOR THE WEB 174

E-Commerce 177 THE ONLINE TRANSACTION AND E-COMMERCE SOFTWARE 177

E-COMMERCE SECURITY 177

E-COMMERCE TRUST 178

Mobile Devices and M-Commerce 178 WHY MOBILE MATTERS 178

DESIGNING WEBSITES AND APPS FOR MOBILE DEVICES 179

M-COMMERCE AND MOBILE PAYMENTS 180

Marketing the Website 180 SEARCH ENGINE OPTIMIZATION 180

WEB ADVERTISING 182

Web 2.0 and Beyond 183 CROWDSOURCING AND COLLECTIVE INTELLIGENCE 184

EXPANDING DATA AND SENSORY INPUT: THE “INTERNET OF THINGS” 184

THE LEARNING WEB 185

Online Simulation 186

Chapter Summary 187

Key Terms and Concepts 188

Chapter Review Questions 188

Projects and Discussion Questions 188

Application Exercises 189 WEBSITE APPLICATION: HERITAGE DOGS 189

EXCEL APPLICATION: HERITAGE DOGS WEBSITE METRICS 190

ACCESS APPLICATION: SPRINGFIELD ANIMAL SHELTER 190

Online Simulation 154

Chapter Summary 155

Key Terms and Concepts 156

Chapter Review Questions 156

Projects and Discussion Questions 156

Application Exercises 157 EXCEL APPLICATION: PERFORMANCE BICYCLE PARTS 157

ACCESS APPLICATION: VSI CONSULTANTS 157

Case Study #1 Helping the Homeless: A Customer-Centric Approach with CRM Software 159

Case Study #2 Winning the War for Talent: The Mandarin Oriental’s Talent Management System 160

E-Project 1 CRM for Human Services Agencies 161

E-Project 2 Evaluating Employment and Recruitment Websites 161

Chapter Notes 162

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Case Study #1 Mobile Payments and the Digital Wallet 191

Case Study #2 Pandora Internet Radio: The Net Threatens the Music Business (Again) 192

E-Project 1 Examining Top M-Commerce Sites 193

E-Project 2 Exploring Pandora’s Web Analytics 193

Chapter Notes 194

8C H A P T E R

Business Intelligence and Decision Making 196 Learning Objectives 196

Introduction 196

Levels of Decision Making 198 OPERATIONAL LEVEL 198

TACTICAL LEVEL 198

STRATEGIC LEVEL 199

Sources of Business Intelligence 200 TRANSACTIONAL DATABASES, DATA WAREHOUSES, AND INTERNAL DATA SOURCES 200

EXTERNAL DATA SOURCES AND BIG DATA 200

THE ETHICAL FACTOR: The Ethics of Tagging Faces in Photos 202

Data Mining and Analytics 202 ANALYZING PATTERNS, TRENDS, AND RELATIONSHIPS 202

SIMULATING, OPTIMIZING, AND FORECASTING 205

ARTIFICIAL INTELLIGENCE 207

Web Analytics 210 WEB METRICS 210

ANALYZING TRAFFIC AND ACHIEVING SUCCESS 212

Putting It All Together: Dashboards, Portals, and Mashups 213 DASHBOARDS 213

PORTALS 214

MASHUPS 215

BUSINESS INTELLIGENCE: THE HUMAN ELEMENT 217

Online Simulation 217

Chapter Summary 218

Key Terms and Concepts 218

Chapter Review Questions 219

Projects and Discussion Questions 219

Application Exercises 220 EXCEL APPLICATION: ANALYZING REVENUE AND EXPENSES FOR CITY HOSPITAL SEMINARS 220

ACCESS APPLICATION: MARKETING CITY HOSPITAL SEMINARS 221

Case Study #1 Cracking Fraud with Government’s Big Data 221

Case Study #2 TV and Twitter: How Nielsen Rates Programs with “Social TV” 222

E-PROJECT 1 Detecting Suspicious Activity in Insurance Claims 223

E-PROJECT 2 Analyzing Nielsen TV Ratings with Excel 224

Chapter Notes 225

7C H A P T E R

Collaborating with Technology 226 Learning Objectives 226

Introduction 226

ContentS xvii

The Evolution of Collaborative Technologies 228 EMAIL 228

DISCUSSION FORUMS 230

INSTANT MESSAGING AND TEXTING 230

GROUP DECISION SUPPORT SYSTEMS (GDSS) 232

WEB CONFERENCING 233

INTERACTIVE VIDEO 233

SHARED WORKSPACES 234

Web 2.0 Collaborative Technologies 235 BLOGS 235

WIKIS 236

SOCIAL NETWORKING 237

MICROBLOGGING 238

VIRTUAL WORLDS 239

Unified Communications 241 CAPABILITIES FOR UNIFIED COMMUNICATIONS 241

UNIVERSAL DASHBOARDS 241

The Human Element and Collaborative Technologies 242 PSYCHOLOGICAL CHARACTERISTICS OF ONLINE ENVIRONMENTS 242

THE ETHICAL FACTOR: Flash Mobs and Free Speech: Should Police Block Mobile Messaging Services? 244

MANAGING ONLINE IMPRESSIONS 245

GROUP DYNAMICS IN VIRTUAL TEAMS 245

MAKING VIRTUAL TEAMS WORK 247

Online Simulation 248

Chapter Summary 249

Key Terms and Concepts 249

Chapter Review Questions 249

Projects and Discussion Questions 250

Application Exercises 251 EXCEL APPLICATION: GOING GREEN! 251

ACCESS APPLICATION: CLOUD 9 251

Case Study #1 “Telepresence Robots” Support Remote Collaboration 251

Case Study #2 Yahoo! Bans Telecommuting: Was It the Right Move? 253

E-Project 1 Estimating Breakeven Pricing for Telepresence Robots Using a Spreadsheet 254

E-Project 2 Estimating Savings for Virtual Work Using an Excel Model 254

Chapter Notes 255

9C H A P T E R Knowledge Management and E-Learning 256Learning Objectives 256 Introduction 256

The Nature of Intellectual Capital 258 TYPES OF INTELLECTUAL CAPITAL 258

TYPES OF KNOWLEDGE 258

MANAGING INTELLECTUAL CAPITAL 259

Knowledge Management Strategies and Technologies 260 IDENTIFY THE GOAL 260

LOCATE THE SOURCES 260

CAPTURE THE KNOWLEDGE 263

ORGANIZE, SHARE, AND VALUE KNOWLEDGE 265

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Knowledge Management: Pitfalls and Promises 268 THE HUMAN ELEMENT: WHY SHARE KNOWLEDGE? 268

INCENTIVES FOR KNOWLEDGE SHARING 269

THE ETHICAL FACTOR: Knowledge Sharing in Fast-Paced Industries: The Case of Formula One Racing 269

TECHNOLOGY HURDLES AND CONTENT ISSUES 270

THE SEMANTIC WEB 270

PRACTICAL TIPS FOR LAUNCHING A KNOWLEDGE MANAGEMENT PROJECT 270

E-Learning 271 COMPARING E-LEARNING APPROACHES 271

Creating an E-Learning Program 273 COURSE DEVELOPMENT 273

LEARNING OBJECTS 274

CONTENT AUTHORING TOOLS 274

COLLABORATION TOOLS 275

STRATEGIES TO PREVENT CHEATING 276

LEARNING MANAGEMENT SYSTEMS 277

E-Learning in Education 277 DIFFERENCES BETWEEN CORPORATE AND EDUCATION E-LEARNING 278

COMPARING E-LEARNING AND CLASSROOM LEARNING 278

Online Simulation 280

Chapter Summary 281

Key Terms and Concepts 282

Chapter Review Questions 282

Projects and Discussion Questions 282

Application Exercises 283 EXCEL APPLICATION: TOP TALENT 283

ACCESS APPLICATION: TOP TALENT 283

Case Study #1 Lynda.com: How an E-Learning Entrepreneur Rides Waves of Change 283

Case Study #2 Diplopedia: Managing State Department Knowledge with a Wiki 285

E-Project 1 Exploring the World of Online Courses 286

E-Project 2 Managing the Human Element on Wikipedia with Technology 286

Chapter Notes 287

10C H A P T E R Ethics, Privacy, and Security 288Learning Objectives 288 Introduction 288

Ethics 290 ETHICAL FRAMEWORKS 290

ETHICS AND THE LAW 290

ETHICAL ISSUES AND INFORMATION AND COMMUNICATIONS TECHNOLOGIES 291

Information Ethics 292 INTELLECTUAL PROPERTY AND DIGITAL RIGHTS MANAGEMENT 292

PLAGIARISM 294

Privacy 295 TRADING PRIVACY FOR CONVENIENCE AND FREEBIES 296

ANONYMITY 297

SURVEILLANCE 298

“THE RIGHT TO BE FORGOTTEN” 299

ContentS xix

Information Security 299 RISK MANAGEMENT 299

IDENTIFYING THREATS 299

THE ETHICAL FACTOR: Ethical Dilemmas in a Distributed Denial of Service Attack 302

ASSESSING VULNERABILITY 302

ADMINISTRATIVE SECURITY CONTROLS 303

TECHNICAL SECURITY CONTROLS 304

INFORMATION SECURITY AND CLOUD COMPUTING 307

The Human Element in Information Ethics, Security, and Privacy 307 COGNITIVE ISSUES AND PRODUCTIVITY 307

SOCIAL ENGINEERING AND INFORMATION SECURITY 308

SECURITY AWARENESS AND ETHICAL DECISION MAKING 310

Online Simulation 311

Chapter Summary 312

Key Terms and Concepts 312

Chapter Review Questions 313

Projects and Discussion Questions 313

Application Exercises 314 EXCEL APPLICATION: CITYWIDE COMMUNITY COLLEGE 314

ACCESS APPLICATION: CITYWIDE COMMUNITY COLLEGE 314

Case Study #1 Zynga Kills Petville and Angers Virtual Pet Owners 315

Case Study #2 Community Policing on the Internet: Spamhaus Targets Worldwide Spammers and Draws a Massive Distributed Denial of Service Attack 316

E-Project 1 Tracking the Trackers: Investigating How Third-Party Cookies Steer the Ads You See 317

E-Project 2 Analyzing Spammers by Country, Using Excel Pivot Tables 317

Chapter Notes 318

11C H A P T E R Systems Development and Procurement 320Learning Objectives 320 Introduction 320

Systems Development Life Cycle 322 PLANNING 322

ANALYSIS 323

DESIGN PHASE 325

DEVELOPMENT PHASE 327

TESTING PHASE 328

IMPLEMENTATION 328

MAINTENANCE 330

Software Development Strategies 331

THE ETHICAL FACTOR: Developing Systems That Promote Ethical Decision Making and Social Responsibility 331

WATERFALL SOFTWARE DEVELOPMENT 332

ITERATIVE METHODS 332

AGILE METHODS 333

Comparing Software Development Approaches 334 TYPE OF PROJECT 334

ORGANIZATIONAL CULTURE 334

IS WATERFALL DEAD? 335

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Software Procurement: The “Buy” Strategy 335 PROS AND CONS OF BUILD AND BUY 335

THE PROCUREMENT PROCESS 336

ADAPTATION AND CUSTOMIZATION 337

The Human Element in Systems Development and Procurement 338 CROSS-FUNCTIONAL TEAMS 338

THE ROLE OF SENIOR MANAGEMENT 339

WORKING WITH CONSULTANTS 339

Online Simulation 340

Chapter Summary 341

Key Terms and Concepts 341

Chapter Review Questions 342

Projects and Discussion Questions 342

Application Exercises 343 EXCEL APPLICATION: JAY’S BIKES 343

ACCESS APPLICATION: MANAGING A RECIPE COLLECTION 343

Case Study #1 Baby Steps Toward Scrum: How Babycenter.com Made the Cultural Transition to Agile Software Development 344

Case Study #2 Extreme Programming at the U.S. Strategic Command 345

E-Project 1 Watching Babycenter.com Change over Time with the Internet Archive 346

E-Project 2 Analyzing Software Defect Rates Using Excel 346

Chapter Notes 347

12C H A P T E R Project Management and Strategic Planning 348Learning Objectives 348 Introduction 348

What Is a Project? 350 PROJECTS VS. PROCESSES 350

THE TRIPLE CONSTRAINT: TIME, COST, AND SCOPE 351

Project Management 351 THE FIVE PROJECT MANAGEMENT PROCESSES 352

THE ROLE OF THE PROJECT MANAGER 355

THE ETHICAL FACTOR: Code of Ethics for Project Managers 356

Project Management Software 356 MANAGING TIME 356

MANAGING PEOPLE AND RESOURCES 357

MANAGING COSTS 357

Why Projects Succeed, and Why They Fail 358 WHY DO PROJECTS FAIL? 358

SUCCESS FACTORS FOR PROJECT MANAGEMENT 358

Strategic Planning for Information Systems 359 VISION, PRINCIPLES, AND POLICIES 360

PROJECT PORTFOLIO MANAGEMENT 362

DISASTER RECOVERY AND BUSINESS CONTINUITY 363

TECHNOLOGY AND INDUSTRY TRENDS 364

Planning for the Future: The Human Element 365 COGNITIVE BIASES AND STRATEGIC PLANNING 365

THE BLACK SWAN 367

ContentS xxi

Online Simulation 368

Chapter Summary 369

Key Terms and Concepts 370

Chapter Review Questions 370

Projects and Discussion Questions 370

Application Exercises 371 EXCEL APPLICATION: CREATING A GANTT CHART WITH EXCEL 371

ACCESS APPLICATION: APPRENTICE PROJECT MANAGERS 372

Case Study #1 Predicting the Future: Gartner’s Research Informs Strategic Planning 373

Case Study #2 JetBlue and WestJet: A Tale of Two Software Implementations 374

E-Project 1 Checking on Gartner’s Predictions 376

E-Project 2 Analyzing Airline Performance with Excel Pivot Tables 376

Chapter Notes 377

Case Studies 378

Glossary 393

Index 400

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Preface

What’s New in the 2nd Edition The information systems field is fast-moving, and this 2nd edition introduces and updates many important concepts and technologies. We changed the title to Introduction to Information Systems to better reflect the contents and the course. This edition includes more figures, graphs, and tables to illustrate topics in visual ways, and the references, examples, data, and case studies are all updated. Larger fonts are used for the tables, and the text portion of each chapter has been shortened, most notably by tightening up the chapter introductions to get into the chapter content more quickly. The online simula- tions are converted to HTML5 so they are accessible from iPads and iPhones, and the scores go into the gradebook.

Major new features for the 2nd edition include the following:

▶ Extended coverage of big data and the technologies used to store and analyze it has been added, along with a new “Ethical Factor” box that explores the ethics of big data.

▶ Expanded discussion of mobile devices and m-commerce is featured in Chapter 6, including a review of evolving mobile payment technologies using near field com- munications and strategies for mobile-friendly software development.

▶ The “Internet of Things” is highlighted in several chapters because of its growing impact on network architecture and bandwidth, and its rapidly increasing role in data collection, analysis, privacy, and surveillance.

▶ The 2nd edition expands the discussion of cloud computing, personal clouds, mobil- ity, and the BYOD (bring your own device) trend, especially as they affect strategic planning for the organization.

▶ A new comprehensive case study at the end of the text charts Apple’s disruptive inno- vations, and encourages students to predict the company’s future business strategy.

▶ Twitter’s role in social TV and the “multiscreening” phenomenon are featured in a new case study about Nielsen’s program rating system, so students see how tweeting fits into the entertainment industry’s strategies.

Chapter-Specific Changes CHAPTER 1: INFORMATION SYSTEMS AND PEOPLE

▶ Apple’s Siri and competitive advantage ▶ New self-quiz on student’s use of technology: “How Productive Are You?” ▶ New “Productivity Tip” on digital footprints ▶ Revised case study on Nasdaq OMX to include Facebook’s botched public opening ▶ Five new figures

CHAPTER 2: INFORMATION SYSTEMS AND STRATEGY ▶ Updated examples of disruptive innovations ▶ Examples of new government policies affecting strategy (e.g., Internet tax) ▶ New “Productivity Tip” on personal cloud use ▶ Updated IT expenditure benchmarks ▶ App.net, example of an ad-free social network ▶ Case on GameStop updated with new data

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xxiv InformatIon SyStemS In organIzatIonSxxiv prefaCe

▶ Case on Net Neutrality updated with new events and lawsuits ▶ Four new figures and several charts updated with recent data

CHAPTER 3: INFORMATION AND COMMUNICATIONS TECHNOLOGIES: THE ENTERPRISE ARCHITECTURE

▶ New QR code figure for students to read with smartphone app ▶ In-memory computing is introduced and described as a key term ▶ New “Did You Know?” anecdote on detection of gestures without contact with

the screen ▶ Expanded discussion on why businesses should be concerned with operating system

market shares, especially for mobile devices ▶ Updated figures and charts on operating system market shares ▶ Simplified discussion of last mile ▶ Added 802.11 currently in draft (802.11ac and 802.11ad) ▶ Six new or updated figures ▶ New Case Study #1: Google Glass and Wearable Technologies ▶ Updated Case Study #2 on Sprint Nextel

CHAPTER 4: DATABASES AND DATA WAREHOUSES

▶ Improved discussion of relational databases ▶ New figure showing data definitions in Access ▶ Updated statistics in figures ▶ Updated “Productivity Tips” ▶ New figure describing characteristics of big data ▶ Expanded section on data warehouses to include big data technologies ▶ Data scientist described ▶ Updated case studies

CHAPTER 5: INFORMATION SYSTEMS FOR THE ENTERPRISE ▶ Added discussion of machine-readable financial data to improve transparency ▶ New figure on paperless workflow ▶ Discussion of supply chain fundamentals and collaboration made more concise ▶ Updated discussion of virtual worlds for CRM ▶ Expanded discussion of mobile CRM strategies ▶ New figure describing portals into an ERP for higher education ▶ Improved organization of ERP section with subtitles ▶ Deleted Supply Chain Operations Reference (SCOR) from key terms ▶ Updated case studies with recent information

CHAPTER 6: THE WEB, E-COMMERCE, AND M-COMMERCE ▶ Expanded discussion of how infomediaries take advantage of the growing amount

of information in XML format ▶ Updated discussion on HTML 5 and its features ▶ New discussion of social commerce (s-commerce) relying on social networks ▶ New figure comparing mobile apps and mobile-friendly websites ▶ New figures illustrating mobile-friendly design, and a list of tips to achieve it ▶ Updated discussion of search engine marketing, including Facebook’s Graph Search ▶ Updated examples of crowdsourcing ▶ New key terms: mobile commerce (m-commerce), near field communications ▶ Updated Case Study #3 on mobile payments and the digital wallet ▶ Updated Case Study #2 on Pandora ▶ Clarified steps in E-Project #1

CHAPTER 7: BUSINESS INTELLIGENCE AND DECISION MAKING ▶ Updated discussion of data mining to include predictive analytics ▶ Expanded discussion of data visualization with new figure of interactive map

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▶ New “Did You Know?” anecdote about the use of text mining ▶ Expanded discussion of AI and data from sensors ▶ New figure on website metrics drawn from online simulation (Chocolate

Lovers Unite) ▶ Key term deleted: executive information system ▶ Key term added: predictive analytics ▶ New Case Study #1, “Cracking Fraud with Government’s Big Data” ▶ New E-Project #2: “Analyzing Nielsen TV Ratings with Excel,” with downloadable

TV ratings data for analysis ▶ New “Productivity Tip” on managing your own big data

CHAPTER 8: COLLABORATING WITH TECHNOLOGY ▶ New figure showcasing top corporate blogs ▶ New figure on reasons for taking a break from Facebook ▶ Discussion of recently introduced collaborative technologies such as Vine and

Instagram ▶ Revised section on unified communications to feature critical capabilities ▶ Major revision of Case Study #1, now called “‘Telepresence Robots’ Support

Remote Collaboration” ▶ New Case Study #2, “Yahoo! Bans Telecommuting: Was It the Right Move?”

CHAPTER 9: KNOWLEDGE MANAGEMENT AND E-LEARNING ▶ Expanded discussion about incentives for knowledge sharing ▶ New discussion on technologies to prevent cheating in e-learning courses ▶ New “Did You Know?” anecdote about telepresence robots who attend classes ▶ New discussion about massive open online courses (MOOCs), also added as a key

term ▶ New “Productivity Tip” about taking an online course ▶ New Case Study #1, “Lynda.com: How an E-Learning Entrepreneur Rides Waves

of Change” ▶ Updated Case Study #2, “Diplopedia: Managing State Department Knowledge

with a Wiki”

CHAPTER 10: ETHICS, PRIVACY, AND SECURITY ▶ New discussion of Apple’s unique approach to music piracy with iTunes Match ▶ New figure on recent software piracy survey ▶ New discussion on an emerging “right to be forgotten” law, to ensure people can

erase their digital footprints ▶ New details added to discussion of encryption strategies ▶ Expanded discussion of mobile devices and security ▶ New Case Study #1: “Zynga Kills Petville and Angers Virtual Pet Owners” ▶ Updated Case Study #2 to include recent massive DDoS on Spamhaus ▶ Revised and simplified E-Project #1

CHAPTER 11: SYSTEMS DEVELOPMENT AND PROCUREMENT ▶ New “Did You Know?” anecdote on smartphone app ▶ Updated examples of feasibility studies ▶ New “Productivity Tip” about clarifying the scope of work to avoid disagreements ▶ Updated examples on consulting ▶ Updated Case Study #2 with recent research findings on agile methods

CHAPTER 12: PROJECT MANAGEMENT AND STRATEGIC PLANNING ▶ Tightened up discussion of the five project management processes ▶ New figure showing the top strategic technology trends currently underway ▶ Updated Case Study #1 with current information on technologies and their location

on the hype cycle

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▶ New figure on hype cycle with current technologies ▶ Updated E-Project #1 with more recent Gartner predictions

End-of-Book Comprehensive Case Studies ▶ New Case Study #3: “Apple: Can the Company Pull Off Another Disruptive

Innovation?” (replaces case on Clearwire) ▶ Red Cross case updated to include the Safe and Well Website. ▶ Facebook case updated and revised to include uproar over Instagram’s privacy and

ownership challenges ▶ Updated “Managing the Federal Government’s IT Project Portfolio” to incorporate

recent steps by federal government to get control over IT spending

To the Student Any college student thinking about the job market can’t help but notice how valuable it is to have skills related to information systems. In this course you will learn what infor- mation systems are all about and why they are so fundamental to business and society. It will be an exciting journey, filled with revelations about business strategies, technology trends and innovations, and also tips that will help you work smarter as a student. Here are the main features of this text and its supplements:

Learn by Doing: The Interactive, Online Role-Playing Simulations A course on information systems should tap their power for active, experiential learning. This text includes interactive role-playing simulations in MyMISLab™ (mymislab.com) in which students can apply their knowledge and actually experience what each chapter is about, not just memorize key terms and concepts. You will enter realistic and often tense situations, interacting with the characters via a simulated smartphone or laptop, and using email, text messages, web conferencing, video chat, voicemail, dashboards, ordering screens, and other applications. Each simulation is scored and students receive extensive feedback on the choices they make. Each one also includes key terms from the chapter (with rollover definitions) so you see how they are used in context, which will help you more easily remember their meanings.

The simulations bring the chapter alive, as you enter authentic settings in which people struggle to solve a problem involving information systems. Some examples:

▶ In World of Mammals (Chapter 1), you help the harried director of a wild ani- mal preserve interview candidates for the CIO position, after the former CIO leaves abruptly. What skills does a CIO need? What kind of experience would fit best?

▶ Chocolate Lovers Unite (Chapter 7) challenges you to resolve a heated debate over which online marketing pitch works best by conducting tests, analyzing the results, and drawing on data-driven decision making.

▶ In Green Wheeling, the simulation on software development and procurement (Chapter 11), you join a task force charged with replacing a college’s obsolete fund- raising system. You and your team members weigh the pros and cons of “build” or “buy,” and you will see how the outcome can change based on your decisions.

▶ Vampire Legends drops you into a fast-paced, tense situation in which the material in Chapter 10 (Ethics, Privacy, and Security) comes to life in an online game company that is racing to launch a sequel. When troubling things begin happening that involve the company’s data center and information security, you will have difficult choices to make.

I’ve done research on games and simulations in education, and have led several proj- ects to create software that draws on the compelling features of these environments for learning. While online flash cards, Q&A games, and other interactive applications can help students memorize terms or review the chapter contents, simulations that immerse

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students in a relevant and authentic case can do more. Research shows they create en- gagement, improve learning outcomes, and build critical thinking skills through active, student-centered involvement. You will find it much easier to learn and remember the material in the textbook when you can engage in simulations like this.

The Human Element in Information Systems In addition to the simulations, this text brings a fresh perspective to the introductory course in information systems that combines comprehensive and up-to-date coverage with a stronger focus on the human element in businesses, nonprofits, and other organi- zations. It covers all the major topics for the course in a rigorous way, without skimping on any of the fundamentals. But it enriches those topics with probing discussions about the roles people play in building, shaping, implementing, and sometimes obstructing information systems.

In Chapter 8 on collaborative technologies, for example, students learn how different channels affect the tone of human communications, and how to choose the best channel for each task to support virtual teamwork, management, negotiation, and leadership. Chapter 12 on project management and strategic planning shows how human biases can creep into the process.

The text also stresses the processes and policies that people devise to manage infor- mation systems. Why do some high-tech companies ban telecommuting, even though em- ployees have well-equipped home offices? Why do organizations implement surveillance?

Exploring Technology Battlegrounds Grand battles over technology directions help students understand the close links be- tween competitive business strategies and information systems. The stakes are very high in debates about topics such as net neutrality, 4G standards, wireless spectrum auctions, cloud computing, programming languages, mobile operating systems, mobile payment systems, and social network privacy. Billions of dollars are on the line for winners and losers. Yet most people know little about these battlegrounds because the underlying technology issues are out of reach. After reading this text, students will look at online ads, privacy policies, social networks, and their own smartphones with a new apprecia- tion for the fierce business competitions unfolding before their eyes.

Reaching a Changing Student Body The text recognizes the growth in the number of women, minorities, international stu- dents, online students, and nontraditional students who enroll in this course, drawing on examples and settings that will resonate with them. Devon, for instance, is starting her own web design business, and students learn about relational databases by helping her build one for her small business (Chapter 4). International student Prakash is the cofounder of Leveling UP!, a smartphone app that is the centerpiece for the interactive role-playing simulation on business strategy (Chapter 2). In the chapter on knowledge management and e-learning (Chapter 9), Sally takes an online course in nonprofit man- agement as she nears retirement and helps her own company build an e-learning course for the coworkers she’s leaving behind.

Balancing Coverage of Business, Government, and Nonprofits This text broadens the coverage about information systems to include all the varied set- tings in which students work (or will work). It draws on timely examples from multina- tional corporations, nonprofits, government agencies, midsized businesses, start-ups, charities, volunteer organizations, student clubs, and other settings. The text highlights how these different organizations launch information systems to fulfill their missions, whether that means generating profits, attracting donations, or serving citizens.

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The strategies that underlie cell-phone marketing, for instance, work as effectively for nonprofits that want to mobilize citizens as they do for businesses that tempt new customers with discount coupons. And competitive advantage is not just for business. Charities compete for volunteers and donations, and they benefit from customer relation- ship management systems.

Changing Student Roles Just as students are gaining employment in a wide variety of organizations, they are taking on more varied roles within them. Though some will become information sys- tems managers, many more will become consultants, business analysts, accountants, marketing professionals, talent development specialists, volunteers, virtual team leaders, forensic experts, legal advisors, and project managers. The text introduces emerging pro- fessions, as well, such as data scientist.

Examples in the text, case studies, and simulations feature all these different roles, showing how successful information systems emerge from a broad base of stakehold- ers with different perspectives and specialties. Carlos, for instance, is the instructional designer on a corporate e-learning development team, adding his knowledge of usability and accessibility for people with disabilities (Chapter 9). In Chapter 11, Lily is a senior manager for an online grocery who comes up with a clever website to capture a valuable market—busy singles who forgot to buy groceries.

Emphasizing Ethics Ethical concerns weave throughout the text, touching on very human ethical dilemmas such as the one Wikipedia founder Jimmy Wales faced when asked to delete any posts that mentioned the name of a journalist kidnapped by the Taliban. That action was directly opposed to his site’s fervent commitment to free speech, and Wales raised a fire- storm within the Wikipedia community when he had to make a choice.

A special feature in each chapter titled “The Ethical Factor” explores timely ethical issues such as corporate responsibility in extended supply chains (Chapter 5), or the eth- ics of massive surveillance and collection of big data by governments and corporations (Chapter 3). In Chapter 10 on ethics, privacy, and security, students take a survey to learn more about how they judge situations that touch on information ethics. The online simulation for that chapter immerses students in a tense situation in which security is compromised and they face some difficult ethical dilemmas.

Here is a list of all the “Ethical Factor” boxes:

1. Ethical Issues Surrounding Information Systems, p. 23 2. Ethical Responsibility in an Extended Value Chain, p. 45 3. Ethical Implications of Big Data, p. 70 4. Ethical Issues in Database Design: The Case of Ethnic Identification, p. 110 5. Ethics and Talent Management, p. 138 6. Website Accessibility: Why Is Progress So Slow? p. 174 7. The Ethics of Tagging Faces in Photos, p. 202 8. Flash Mobs and Free Speech: Should Police Block Mobile Messaging

Services? p. 244 9. Knowledge Sharing in Fast-Paced Industries: The Case of Formula One

Racing, p. 269 10. Ethical Dilemmas in a Distributed Denial of Service Attack, p. 302 11. Developing Systems That Promote Ethical Decision Making and Social Respon-

sibility, p. 331 12. Code of Ethics for Project Managers, p. 356

Working Smarter, Not Harder: Productivity Tips for Students Every chapter includes several “Productivity Tips” that suggest ways students can im- prove their own productivity by applying what they’ve learned.

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In Chapter 2 on information systems and strategy, for instance, a tip invites students to check out the software trial versions that came preinstalled on their computers to see how companies leverage this valuable product positioning, and then remove them to save space and improve the computer’s performance. A tip in the section on neural networks in Chapter 7 advises students to alert their credit card companies before traveling abroad because a neural net may trigger a very ill-timed block on the card. Another tip points to solid productivity gains for people who use two monitors, which is especially helpful for students with laptops.

These tips are not only immediately useful. They help you learn chapter material by applying it so you can work smarter, not harder.

Highlighting Globalization and International Contexts Information systems play a key role in globalization, especially through the Internet and all the creative destruction it unleashed. Examples abound throughout the text, high- lighting how Baidu captured the search engine market in China (Chapter 2) or how Ikea manages a global supply chain (Chapter 5). The global financial crises underscore the important work of the International Accounting Standards Board—to promote trans- parent and enforceable financial reporting for companies around the world using XBRL tags—from the XML family of standards (Chapter 5). The international emphasis also unfolds in working relationships across national borders. For example, the chapter on collaboration (Chapter 8) follows a team planning a campaign to launch a string of clubs in several major cities, and the team’s members hail from Dallas, Texas, and Hong Kong. As they use collaborative technologies that span the Pacific, this dynamic virtual team works through differences in time zones, communication styles, and culture.

Inspiring Students to Pursue Promising Careers Finally, an important goal of this text and its supplements is to convey the sheer excite- ment and limitless potential of this field, with an eye toward inspiring students to go fur- ther. Inside are countless examples of how savvy men and women leverage information systems to transform organizations of all stripes, and even build new empires. The text includes many job descriptions, job growth rates, and projected salaries, as well.

Some of the excitement comes from groundbreaking technological advances, such as IBM’s “Watson”—the supercomputer that competed on “Jeopardy!” and soundly de- feated the game’s human champs in a dramatic live broadcast. The disruptive innovations that topple some industries and open star-studded paths for others are also part of the excitement. GPS dealt a crushing blow to map makers, and the Internet did the same to print newspapers. But both events opened up vast new territory for innovative start-ups.

To further stimulate interest, each chapter includes short “Did You Know?” snippets to highlight an engaging or amusing application of the chapter’s topic. For example, the chapter on hardware, software, and networks (Chapter 3) features a coffee shop whose zany owner constantly renames the free wireless network to different messages, such as “BuyAnotherCupYouCheapskate.”

If students catch some of this energy and enthusiasm, they may decide to pursue this field. Those who do will have outstanding career prospects in the private and public sec- tors, and they’ll never be bored.

supplements The following supplements are available at the Online Instructor Resource Center, accessible through www.pearsonhighered.com/wallace:

Instructor’s Manual The Instructor’s Manual, assembled by Jollean Sinclaire and John Hupp, includes a list of learning objectives and answers to all end-of-chapter questions.

www.pearsonhighered.com/wallace
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Test Item File The Test Item File, prepared by ANSR Source, Inc., contains more than 1,300 ques- tions, including multiple choice, true/false, and essay. Each question is followed by the correct answer, the learning objective it ties to, a course learning objective, and difficulty rating. In addition, certain questions are tagged to the appropriate AACSB category.

Powerpoint Presentations The Instructor PowerPoints, prepared by John Hupp, highlight text learning objectives and key topics and serve as an excellent aid for classroom presentations and lectures.

Image Library This collection of the figures and tables from the text offers another aid for classroom presentations and PowerPoint slides.

TestGen Pearson Education’s test-generating software is available from www.pearsonhighered. com/irc. The software is PC/MAC compatible and preloaded with all of the Test Item File questions. You can manually or randomly view test questions and drag-and-drop to create a test. You can add or modify test-bank questions as needed. Our TestGens are converted for use in BlackBoard, WebCT, Moodle, D2L, and Angel. These conversions can be found on the Instructor’s Resource Center. The TestGen is also available in Re- spondus and can be found on www.respondus.com.

CourseSmart CourseSmart eTextbooks were developed for students looking to save on required or recommended textbooks. Students simply select their eText by title or author and pur- chase immediate access to the content for the duration of the course using any major credit card. With a CourseSmart eText, students can search for specific keywords or page numbers, take notes online, print out reading assignments that incorporate lecture notes, and bookmark important passages for later review. For more information or to purchase a CourseSmart eTextbook, visit www.coursesmart.com.

www.pearsonhighered.com/irc
www.pearsonhighered.com/irc
www.respondus.com
www.coursesmart.com
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Acknowledgments

Many thanks go to all the reviewers who took time to comment on manuscripts, sim- ulation storyboards, case studies, and other features of the text. Their feedback and suggestions were extremely valuable, and they help ensure the text and its ancillaries will meet the needs of faculty and students.

Dennis Adams, University of Houston

Joni Adkins, Northwest Missouri State University

Sven Aelterman, Troy University

Solomon Antony, Murray State University

John Appleman, State University of New York College at Brockport

Bay Arinze, Drexel University

Janine Aronson, University of Georgia

John Kirk Atkinson, Western Kentucky University

Robert Balicki, Cleary University

Cynthia Barnes, Lamar University

Stephen Barnes, Regis University

Peggy Batchelor, Furman University

Jon Beard, George Mason University

Hossein Bidgoli, California State University—Bakersfield

Robert Bonometti, MGB Enterprises LLC

Ted Boone, University of Kansas

Uptal Bose, University of Houston; Rainer

David Bradbard, Winthrop University

Jason Chen, Gonzaga University

Joselina Cheng, University of Central Oklahoma

Steve Clements, Eastern Oregon University

Phillip Coleman, Western Kentucky University

Emilio Collar, Jr., Western Connecticut State University

Steve Corder, Williams Baptist College

Dave Croasdell, University of Nevada, Reno

Albert Cruz, National University

Mohammad Dadashzadeh, Oakland University

Don Danner, San Francisco State University

Dessa David, Morgan State University