Chocolate lovers unite a role playing simulation on web analytics

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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chapter 1 InformatIon SyStemS and PeoPle ix

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

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4 5 6 7 8 9 10 11 12

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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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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

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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