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Personal Reflection Assignment

Thirteenth Edition

Ralph M. Stair Professor Emeritus, Florida State University

George W. Reynolds Instructor, Strayer University

Principles of Information Systems

Australia • Brazil • Mexico • Singapore • United Kingdom • United States

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Principles of Information Systems, Thirteenth Edition Ralph M. Stair & George W. Reynolds

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For Lila and Leslie —RMS

To my grandchildren: Michael, Jacob, Jared, Fievel, Aubrey, Elijah, Abrielle, Sofia, Elliot, Serena, and Kendall

—GWR

Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203

Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203

Brief Contents

PART 1 Information Systems in Perspective 1

Chapter 1 An Introduction to Information Systems 2

Chapter 2 Information Systems in Organizations 44

PART 2 Information Technology Concepts 83

Chapter 3 Hardware and Mobile Devices 84

Chapter 4 Software and Mobile Applications 136

Chapter 5 Database Systems and Big Data 192

Chapter 6 Networks and Cloud Computing 238

PART 3 Business Information Systems 295

Chapter 7 Electronic and Mobile Commerce 296

Chapter 8 Enterprise Systems 344

Chapter 9 Business Intelligence and Analytics 382

Chapter 10 Knowledge Management and Specialized Information Systems 408

PART 4 Planning, Acquiring, and Building Systems 455

Chapter 11 Strategic Planning and Project Management 456

Chapter 12 System Acquisition and Development 502 v

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PART 5 Information Systems in Business and Society 559

Chapter 13 Cybercrime and Information System Security 560

Chapter 14 Ethical, Legal, and Social Issues of Information Systems 598

Glossary 636 Subject Index 647 Company Index 657

vi BRIEF CONTENTS

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Contents

Preface xv

PART 1 Information Systems in Perspective 1

1 An Introduction to Information Systems 2 Part 1: Information Systems in Perspective 4 An Introduction to Information Systems 4 Information Systems in Organizations 9

Part 2: Information Technology Concepts 11 Hardware and Mobile Devices 11 Software and Mobile Applications 12 Database Systems and Big Data 13 Networks and Cloud Computing 15

Part 3: Business Information Systems 18 Electronic and Mobile Commerce 20 Enterprise Systems 21 Business Intelligence and Analytics 25 Knowledge Management and Specialized Information Systems 25

Part 4: Planning, Acquiring, and Building Systems 26 Strategic Planning and Project Management 27 System Acquisition and Development 28

Part 5: Information Systems in Business and Society 29 Cybercrime and Information System Security 30 Ethical, Legal, and Social Issues of Information Systems 31

CASE ONE: Connecting Patient Monitoring Devices to EHRs 41

CASE TWO: BMW: Automaker Competes on the Digital Front 41

2 Information Systems in Organizations 44 Organizations and Information Systems 46 Virtual Teams and Collaborative Work 50

Change in the Organization 51 Innovation 52 Reengineering and Continuous Improvement 53 Outsourcing, Offshoring, and Downsizing 54

Organizational Culture and Change 56 Lewin’s Change Model 57 Lewin’s Force Field Analysis 57 Leavitt’s Diamond 59 User Satisfaction and Technology Acceptance 60 Diffusion of Innovation Theory 61

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Careers in Information Systems 62 Roles, Functions, and Careers in IS 66 Typical IS Titles and Functions 67 IS-Related Roles outside the IS Organization 70 Certification 71 Other IS Careers 72 Working in Teams 72 Finding a Job in IS 72

CASE ONE: Railroads Struggle to Implement Positive Train Control 79

CASE TWO: Nordstrom’s Innovation Efforts Recognize the Importance of the Soft Side of Implementing Change 80

PART 2 Information Technology Concepts 83

3 Hardware and Mobile Devices 84 Anatomy of a Computer 86 Processor 87 Memory 91 Secondary Data Storage Devices 93 Enterprise Storage Options 97 Input and Output Devices 100 Output Devices 107

Computer System Types 111 Portable Computers 113 Thin Clients, Desktops, and Workstations 114 Servers, Mainframes, and Supercomputers 116

Server Farms, Data Centers, and Green Computing 119 Server Farms 119 Data Center 120 Green Computing 122

CASE ONE: ARM 130

CASE TWO: Vivobarefoot Upgrades Technology Infrastructure 131

4 Software and Mobile Applications 136 An Overview of Software 138 Software Sphere of Influence 139

Systems Software 141 Operating Systems 141 Utility Programs 155 Middleware 158

Application Software 160 Overview of Application Software 160 Personal Application Software 163 Workgroup Application Software 170 Enterprise Application Software 171 Application Software for Transaction Processing, Business Analytics, and Competitive Advantage 173 Programming Languages 173

viii CONTENTS

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Software Issues and Trends 176 Software Bugs 176 Copyrights and Licenses 177 Freeware and Open-Source Software 177 Software Upgrades 180 Global Software Support 180

CASE ONE: Société de transport de Montréal (STM) Implements Innovative Mobile App 187

CASE TWO: FIMC Launches Mobile App to Provide Enhanced Roadside Assistance Services 188

5 Database Systems and Big Data 192 Data Fundamentals 194 Hierarchy of Data 195 Data Entities, Attributes, and Keys 195 The Database Approach 197

Data Modeling and Database Characteristics 199 Data Modeling 199 Relational Database Model 201 Data Cleansing 204

Relational Database Management Systems (DBMSs) 206 SQL Databases 206 Database Activities 207 Database Administration 212 Popular Database Management Systems 213 Using Databases with Other Software 214

Big Data 215 Characteristics of Big Data 216 Sources of Big Data 216 Big Data Uses 217 Challenges of Big Data 218 Data Management 219

Technologies Used to Process Big Data 222 Data Warehouses, Data Marts, and Data Lakes 222 NoSQL Databases 224 Hadoop 226 In-Memory Databases 227

CASE ONE: WholeWorldBand: Digital Recording Studio 234

CASE TWO: Mercy’s Big Data Project Aims to Boost Operations 235

6 Networks and Cloud Computing 238 Network Fundamentals 241 Network Topology 241 Network Types 242 Client/Server Systems 244 Channel Bandwidth 244 Communications Media 245 Communications Hardware 251 Communications Software 251

The Internet and World Wide Web 253 How the Internet Works 255

CONTENTS ix

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Accessing the Internet 257 How the Web Works 259 Web Programming Languages 261 Web Services 262 Developing Web Content and Applications 262 Internet and Web Applications 263 Intranets and Extranets 274

The Internet of Things 276

Cloud Computing 279 Public Cloud Computing 281 Private Cloud Computing 283 Hybrid Cloud Computing 283 Autonomic Computing 283

CASE ONE: Cloud Helps Fight Cancer 291

CASE TWO: Globacom Invests in Its Mobile Network Infrastructure in Africa 292

PART 3 Business Information Systems 295

7 Electronic and Mobile Commerce 296 An Introduction to Electronic Commerce 298 Business-to-Business E-Commerce 298 Business-to-Consumer E-Commerce 299 Consumer-to-Consumer E-Commerce 302 E-Government 303

Introduction to Mobile Commerce 304 Mobile Commerce in Perspective 305 M-Commerce Web Sites 305 Advantages of Electronic and Mobile Commerce 305 Multistage Model for E-Commerce 307 E-Commerce Challenges 310

Electronic and Mobile Commerce Applications 313 Wholesale e-Commerce 313 Manufacturing 314 Marketing 315 Advertising 316 Bartering 318 Investment and Finance 319 Banking 320 Online Personalized Shopping 321

Strategies for Successful E-Commerce and M-Commerce 322 Defining an Effective E-Commerce Model and Strategy 322 Defining the Functions of a Web Site 322 Establishing a Web Site 323 Building Traffic to Your Web Site 324 Maintaining and Improving Your Web Site 325

Technology Infrastructure Required to Support E-Commerce and M-Commerce 326 Hardware 327 Web Server Software 328 E-Commerce Software 328

x CONTENTS

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Mobile Commerce Hardware and Software 328 Electronic Payment Systems 329

CASE ONE: Facebook Moves into E-Commerce 339

CASE TWO: MobiKash: Bringing Financial Services to Rural Africa 339

8 Enterprise Systems 344 Transaction Processing Systems 346 Traditional Transaction Processing Methods and Objectives 347 Transaction Processing Systems for Entrepreneurs and Small and Medium-Sized Enterprises 352 Transaction Processing Activities 352

Enterprise Systems 356 Enterprise Resource Planning 356 Advantages of ERP 357 Leading ERP Systems 359 Supply Chain Management 361 Customer Relationship Management 363 Product Lifecycle Management 367 Overcoming Challenges in Implementing Enterprise Systems 371 Hosted Software Model for Enterprise Software 372

CASE ONE: Dunkin’ Donuts Prepares for Rapid Growth 379

CASE TWO: Kerry Group Is on Your Table 380

9 Business Intelligence and Analytics 382 What Are Analytics and Business Intelligence? 384 Benefits Achieved from BI and Analytics 385 The Role of a Data Scientist 386 Components Required for Effective BI and Analytics 387

Business Intelligence and Analytics Tools 388 Spreadsheets 388 Reporting and Querying Tools 389 Data Visualization Tools 389 Online Analytical Processing 391 Drill-Down Analysis 392 Linear Regression 393 Data Mining 394 Dashboards 395 Self-Service Analytics 397

CASE ONE: Analytics Used to Predict Patients Likely to Be Readmitted 404

CASE TWO: Sunny Delight Improves Profitability with a Self-Service BI Solution 405

10 Knowledge Management and Specialized Information Systems 408 What Is Knowledge Management? 410 Knowledge Management Applications and Associated Benefits 412 Best Practices for Selling and Implementing a KM Project 413 Technologies That Support KM 415

CONTENTS xi

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Overview of Artificial Intelligence 421 Artificial Intelligence in Perspective 422 Nature of Intelligence 422 Brain-Computer Interface 424 Expert Systems 424 Robotics 428 Vision Systems 429 Natural Language Processing 429 Learning Systems 430 Neural Networks 430 Other Artificial Intelligence Applications 431

Multimedia and Virtual Reality 432 Overview of Multimedia 433 Overview of Virtual Reality 435 Interface Devices 436 Forms of Virtual Reality 437 Virtual Reality Applications 437

Other Specialized Systems 439 Assistive Technology Systems 439 Game Theory 440 Informatics 441

CASE ONE: The NASA Knowledge Map 449

CASE TWO: Doctor on Demand Enables Physicians to Make House Calls 450

PART 4 Planning, Acquiring, and Building Systems 455

11 Strategic Planning and Project Management 456 Strategic Planning 458 Analyze Situation 459 Set Direction 461 Define Strategies 464 Deploy Plan 465 Setting the Information System Organizational Strategy 467 Identifying IS Projects and Initiatives 469 Prioritizing IS Projects and Initiatives 469

Project Management 471 Project Variables 472 What Is Project Management? 475 Project Management Knowledge Areas 475

CASE ONE: UConn’s University Information Technology Services (UITS) Develops a Five-Year Strategic Plan 497

CASE TWO: Webcor: Building Buy-In in the Brick-and-Mortar Business 498

12 System Acquisition and Development 502 Buy versus Build 504

Waterfall System Development Process 506 System Investigation 507 System Analysis 514

xii CONTENTS

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System Design 521 Construction 526 Integration and Testing 529 Implementation 530 System Operation and Maintenance 534

Agile Development 539

Buying Off-the-Shelf Software 542 Package Evaluation Phase 543 Finalize Contract 545 Integration and Testing 546 Implementation 546

CASE ONE: Etsy Uses DevOps for Rapid Deployment 555

CASE TWO: British Telecom Spreading Agile Development across the Globe 556

PART 5 Information Systems in Business and Society 559

13 Cybercrime and Information System Security 560 The Threat Landscape 562 Why Computer Incidents Are So Prevalent 562 Types of Exploits 565 Federal Laws for Prosecuting Computer Attacks 576

Implementing Secure, Private, Reliable Computing 577 Risk Assessment 577 Establishing a Security Policy 579 Educating Employees and Contract Workers 579 Prevention 580 Detection 583 Response 584 Using a Managed Security Service Provider (MSSP) 586 Computer Forensics 586

CASE ONE: Fairplay Turns to a Managed Security Service Provider 593

CASE TWO: Sony’s Response to North Korea’s Cyberattack 594

14 Ethical, Legal, and Social Issues of Information Systems 598 Computer Waste and Mistakes 600 Computer Waste 600 Computer-Related Mistakes 601 Preventing Computer-Related Waste and Mistakes 603

Privacy Issues 606 Privacy and the Federal Government 606 Privacy at Work 609 Privacy and Email 610 Privacy and Instant Messaging 611 Privacy and Personal Sensing Devices 611 Privacy and the Internet 612 Privacy and Internet Libel Concerns 613 Privacy and Fairness in Information Use 614 Privacy and Filtering and Classifying Internet Content 614

CONTENTS xiii

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Corporate Privacy Policies 615 Individual Efforts to Protect Privacy 617

Work Environment 618 Health Concerns 619 Avoiding Health and Environmental Problems 619

Ethical Issues in Information Systems 622 What Is Ethics? 622 Codes of Ethics 624

CASE ONE: FBI Orders Apple to Unlock iPhone 631

CASE TWO: Protecting Health Care Privacy 632

Glossary 636 Subject Index 647 Company Index 657

xiv CONTENTS

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Preface

As organizations and entrepreneurs continue to operate in an increasingly competitive and global marketplace, workers in all business areas includ- ing accounting, customer service, distribution, finance, human resources, information systems, logistics, marketing, manufacturing, research and development, and sales must be well prepared to make the significant contributions required for success. Regardless of your future role, even if you are an entrepreneur, you need to understand what information systems can and cannot do and be able to use them to help you achieve personal and organizational goals. You will be expected to discover opportunities to use information systems and to participate in the design and implementation of solutions to business problems employing informa- tion systems. To be successful, you must be able to view information systems from the perspective of business and organizational needs. For your solutions to be accepted, you must recognize and address their impact on coworkers, customers, suppliers, and other key business part- ners. For these reasons, a course in information systems is essential for students in today’s high-tech world.

Principles of Information Systems, Thirteenth Edition, continues the tradi- tion and approach of previous editions. Our primary objective is to provide the best information systems text and accompanying materials for the first information systems course required for all business students. We want you to learn to use information systems to ensure your personal success in your current or future role and to improve the success of your organization. Through surveys, questionnaires, focus groups, and feedback that we have received from current and past adopters, as well as others who teach in the field, we have been able to develop the highest-quality set of teaching materi- als available to help you achieve these goals.

Principles of Information Systems, Thirteenth Edition, stands proudly at the beginning of the IS curriculum and remains unchallenged in its position as the only IS principles text offering basic IS concepts that every business student must learn to be successful. Instructors of the intro- ductory course faced a dilemma. On one hand, experience in business organizations allows students to grasp the complexities underlying impor- tant IS concepts. For this reason, many schools delayed presenting these concepts until students completed a large portion of their core business requirements. On the other hand, delaying the presentation of IS concepts until students have matured within the business curriculum often forces the one or two required introductory IS courses to focus only on personal computing software tools and, at best, merely to introduce computer concepts.

This text has been written specifically for the introductory course in the IS curriculum. Principles of Information Systems, Thirteenth Edition, addresses the appropriate computer and IS concepts while also providing a strong man- agerial emphasis on meeting business and organizational needs.

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Approach of This Text

Principles of Information Systems, Thirteenth Edition, offers the traditional coverage of computer concepts, but places the material within the context of meeting business and organizational needs. Placing information systems concepts within this context and taking a management perspective has always set this text apart from other computer texts, thus making it appeal- ing not only to MIS majors but also to students from other fields of study. The text is not overly technical, but rather deals with the role that informa- tion systems play in an organization and the key principles a manager or technology specialist needs to grasp to be successful. The principles of IS are brought together and presented in a way that is understandable, rele- vant, and interesting. In addition, the text offers an overview of the entire IS discipline, while giving students a solid foundation for further study in more advanced IS courses such as programming, systems analysis and design, project management, database management, data communications, Web site design and development, information system security, big data and analytics, electronic and mobile commerce, and informatics. As such, it serves the needs of both general business managers and those who aspire to become IS professionals.

The overall vision, framework, and pedagogy that made the previous editions so popular have been retained in the Thirteenth Edition, offering a number of benefits to students and instructors. While the fundamental vision of this market-leading text remains unchanged, the Thirteenth Edition more clearly highlights established principles and draws on new ones that have emerged as a result of business, organizational, technological, and societal changes.

IS Principles First, Where They Belong Exposing students to basic IS principles is an advantage even for those students who take no IS courses beyond the introductory IS course. Since most functional areas of the business rely on information systems, an understanding of IS principles helps students in their other course work. In addition, introducing students to the principles of information systems helps future business managers and entrepreneurs employ information systems successfully and avoid mishaps that often result in unfortunate conse- quences. Furthermore, presenting IS concepts at the introductory level creates interest among students who may later choose information systems as their field of concentration.

Author Team Ralph Stair and George Reynolds have decades of academic and industrial experience. Ralph Stair brings years of writing, teaching, and academic experience to this text. He wrote numerous books and a large number of articles while at Florida State University. George Reynolds brings a wealth of information systems and business experience to the project, with more than 30 years of experience working in government, institutional, and commercial IS organizations. He has written numerous IS texts and has taught the introductory IS course at the University of Cincinnati, Mount St. Joseph University, and Strayer University. The Stair and Reynolds team presents a solid conceptual foundation and practical IS experience to students.

xvi PREFACE

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Goals of This Text

Because Principles of Information Systems, Thirteenth Edition, is written for business majors, we believe that it is important not only to present a realistic perspective on IS in business but also to provide students with the skills they can use to be effective business leaders in their organizations. To that end, Principles of Information Systems, Thirteenth Edition, has three main goals:

1. To provide a set of core IS principles that prepare students to function more efficiently and effectively as workers, managers, decision makers, and organizational leaders

2. To provide insights into the challenging and changing role of the IS pro- fessional so that students can better appreciate the role of this key individual

3. To show the value of the IS discipline as an attractive field of specializa- tion so that students can evaluate this as a potential career path

IS Principles Principles of Information Systems, Thirteenth Edition, although comprehen- sive, cannot cover every aspect of the rapidly changing IS discipline. The authors, having recognized this, provide students with an essential core of guiding IS principles to use as they strive to use IS systems in their academic and work environment. Think of principles as basic truths or rules that remain constant regardless of the situation. As such, they provide strong guid- ance for tough decision making. A set of IS principles is highlighted at the beginning of each chapter. The use of these principles to solve real-world problems is driven home from the opening examples of cutting edge applica- tions to the dozens of real-world examples of organizations applying these principles interspersed throughout each chapter to the interesting and diverse end-of-chapter material. The ultimate goal of Principles of Information Systems, Thirteenth Edition, is to develop effective, thinking, action-oriented students by instilling them with principles to help guide their decision making and actions.

Survey of the IS Discipline Principles of Information Systems, Thirteenth Edition, not only offers the tra- ditional coverage of computer concepts but also provides a broad framework to impart students with a solid grounding in the business uses of technology, the challenges of successful implementation, the necessity for gaining broad adoption of information systems, and the potential ethical and societal issues that may arise. In addition to serving general business students, this book offers an overview of the entire IS discipline and solidly prepares future IS professionals for advanced IS courses and careers in the rapidly changing IS discipline.

Changing Role of the IS Professional As business and the IS discipline have changed, so too has the role of the IS professional. Once considered a technical specialist, today the IS professional operates as an internal consultant to all functional areas of the organization, being knowledgeable about their needs and competent in bringing the power of information systems to bear throughout the entire organization. The IS pro- fessional must view issues through a global perspective that encompasses the entire enterprise and the broader industry and business environment in which it operates.

PREFACE xvii

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The scope of responsibilities of an IS professional today is not confined to just his or her organization but encompasses the entire ecosystem of employ- ees, contractors, suppliers, customers, competitors, regulatory agencies, and other entities, no matter where they are located. This broad scope of responsi- bilities creates a new challenge: how to help an organization survive in our highly interconnected, highly competitive global environment. In accepting that challenge, the IS professional plays a pivotal role in shaping the business itself and ensuring its success. To survive, businesses must strive for the high- est level of customer satisfaction and loyalty through innovative products and services, competitive prices, and ever-improving product and service quality. The IS professional assumes a critical role in determining the organization’s approach to both overall cost and quality performance and therefore plays an important role in the ongoing growth of the organization. This new duality in the role of the IS worker—a professional who exercises a specialist’s skills with a generalist’s perspective—is reflected throughout Principles of Informa- tion Systems, Thirteenth Edition.

IS as a Field of Study Computer science and business were ranked #1 and #4, respectively, in the 2016 Princeton Review list of top 10 college majors based on research covering job prospects, alumni salaries, and popularity. A 2016 U.S. News & World Report study placed computer systems analyst, software developer, and Web developer as three of the top 20 best jobs for 2016 based on hiring demand, median salary, employment rate, future job prospects, stress level, and work– life balance. The U.S. Bureau of Labor Statistics identified software developers, computer systems analysts, and computer support specialists as among the fast- est growing occupations for the period 2012 and 2022. Clearly, the long-term job prospects for skilled and business-savvy information systems professionals is good. Employment of such workers is expected to grow faster than the aver- age for all occupations through the year 2022. Upon graduation, IS graduates at many schools are among the highest paid of all business graduates.

A career in IS can be exciting, challenging, and rewarding! Today, per- haps more than ever before, the IS professional must be able to align IS and organizational goals and to ensure that IS investments are justified from a business perspective. The need to draw bright and interested students into the IS discipline is part of our ongoing responsibility. Throughout this text, the many challenges and opportunities available to IS professionals are highlighted and emphasized.