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
xi
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
xvi ContentS
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