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Data Management, Analytics, And Business Intelligence

Information Technology for Management

On-Demand Strategies for Performance, Growth and Sustainability

Eleventh Edition

Eleventh Edition

Information Technology for Management

On-Demand Strategies for Performance, Growth and Sustainability

EFRAIM TURBAN

CAROL POLLARD Appalachian State University

GREGORY WOOD Canisius College

VP AND EDITORIAL DIRECTOR Mike McDonald EXECUTIVE EDITOR Lise Johnson EDITORIAL ASSISTANT Ethan Lipson EDITORIAL MANAGER Judy Howarth CONTENT MANAGEMENT DIRECTOR Lisa Wojcik CONTENT MANAGER Nichole Urban SENIOR CONTENT SPECIALIST Nicole Repasky PRODUCTION EDITOR Loganathan Kandan PHOTO RESEARCHER Billy Ray COVER PHOTO CREDIT © Ditty_about_summer/Shutterstock

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ISBN: 978-1-118-89079-0 (PBK) ISBN: 978-1-119-39783-0 (EVALC)

Library of Congress Cataloging in Publication Data:

Names: Turban, Efraim, author. | Pollard, Carol (Carol E.), author. | Wood, Gregory R., author. Title: Information technology for management : on-demand strategies for performance, growth and sustainability / Efraim Turban, Carol Pollard, Gregory R. Wood. Description: 11th edition. | Hoboken, NJ : John Wiley & Sons, 2018. | Includes bibliographical references and index. | Identifiers: LCCN 2017037711 (print) | LCCN 2017046158 (ebook) | ISBN 9781118890868 (epub) | ISBN 9781119172390 (pdf) | ISBN 9781118890790 (pbk.) Subjects: LCSH: Management information systems. Classification: LCC T58.6 (ebook) | LCC T58.6 .T765 2017 (print) | DDC 658.4/038011—dc23 LC record available at https://lccn.loc.gov/2017037711

The inside back cover will contain printing identification and country of origin if omitted from this page. In addition, if the ISBN on the back cover differs from the ISBN on this page, the one on the back cover is correct.

v

Brief Contents

PREFACE xiii ACKNOWLEDGMENTS xviii

PART 1 Reshaping Enterprises and Consumers in the On-Demand Economy

1 Disruptive IT Impacts Companies, Competition, and Careers 1

2 Information Systems, IT Architecture, Data Governance, and Cloud Computing 25

3 Data Management, Data Analytics, and Business Intelligence 65

4 Networks, Collaborative Technology, and the Internet of Things 101

5 Cybersecurity and Risk Management Technology 127

PART 2 Winning, Engaging, and Retaining Consumers for Growth

6 Search, Semantic, and Recommendation Technology 165

7 Web 2.0 and Social Technology 199

8 Retail, E-commerce, and Mobile Commerce Technology 240

PART 3 Optimizing Performance, Processes, and Productivity

9 Functional Business Systems 269

10 Enterprise Systems 300

11 Data Visualization and Geographic Information Systems 331

PART 4 Managing Business Relationships, Projects, and Ethical Responsibilities

12 IT Strategy, Sourcing, and Strategic Technology Trends 354

13 Systems Development and Project Management 385

14 IT Ethics, Privacy, and Sustainability 417

GLOSSARY 443 ORGANIZATION INDEX 448 NAME INDEX 450 SUBJECT INDEX 451

vi

PREFACE xiii ACKNOWLEDGMENTS xviii

PART 1 Reshaping Enterprises and Consumers in the On-Demand Economy

1 Disruptive IT Impacts Companies, Competition, and Careers 1

Case 1.1 Opening Case: Uber and Airbnb Revolutionize Business Models in the On-Demand Economy 3

1.1 Doing Business in the On-Demand Economy 4 Growth of the On-Demand Economy 5 Digital Business Models 6 IT’s Role in the On-Demand Economy 7 IT Business Objectives 8

1.2 Business Process Improvement and Competitive Advantage 8 What Is a Business Process? 9 Improving Business Processes 9 Don’t Automate, Obliterate! 10 Gaining a Competitive Advantage 11 Software Support for BPM 13

1.3 IT Innovation and Disruption 13 Social–Mobile–Analytics–Cloud (SMAC) Model 13 Technology Mega Trends 14 Lessons Learned from Companies Using Disruptive Technologies 16

1.4 IT and You 17 On-Demand Workers 17 IT Adds Value to Your Performance and Career 19 Becoming an Informed IT User 21

Case 1.2 Business Case: The Internet of Things Comes to the NFL 23

Case 1.3 Video Case: Knowing More and Doing More 24

2 Information Systems, IT Architecture, Data Governance, and Cloud Computing 25

Case 2.1 Opening Case: Detoxing Location-Based Advertising Data at MEDIATA 27

2.1 IS Concepts and Classification 28

Components of an IS 29 Data, Information, Knowledge, and Wisdom 30 Types of ISs 31 Transaction Processing System (TPS) 32 Management Information System (MIS) 33 Decision Support System (DSS) 34 Executive Information System (EIS) 35 ISS Exist within Corporate Culture 36

2.2 IT Infrastructure, IT Architecture, and Enterprise Architecture 37 EA Helps to Maintain Sustainability 38 Developing an Enterprise Architecture (EA) 41

2.3 Information Management and Data Governance 42 Information Management Harnesses Scattered Data 43 Reasons for Information Deficiencies 43 Factors Driving the Shift from Silos to Sharing and Collaboration 45 Business Benefits of Information Management 45 Data Governance: Maintaining Data Quality and Cost Control 46

2.4 Data Centers and Cloud Computing 48 Data Centers 48 Integrating Data to Combat Data Chaos 50 Cloud Computing 52 Selecting a Cloud Vendor 52 Cloud Infrastructure 54 Issues in Moving Workloads from the Enterprise to the Cloud 54

2.5 Cloud Services and Virtualization 55 Anything as a Service (XAAS) Models 55 Going Cloud 58 Virtualization and Virtual Machines 58

Case 2.2 Business Case: Data Chaos Creates Risk 62 Case 2.3 Video Case: Cloud Computing at Coca-Cola Is

Changing Everything 63

3 Data Management, Data Analytics, and Business Intelligence 65

Case 3.1 Opening Case: Coca-Cola Strategically Manages Data to Retain Customers and Reduce Costs 66

3.1 Data Management and Database Technologies 69 Database Management Systems and SQL 69 DBMS and Data Warehousing Vendors Respond to Latest Data Demands 72

Contents

CONTENTS vii

3.2 Centralized and Distributed Database Architectures 73 Garbage In, Garbage Out 75 Data Ownership and Organizational Politics 76 Data Life Cycle and Data Principles 77 Master Data and Master Data Management 78

3.3 Data Warehouses 79 Procedures to Prepare EDW Data for Analytics 80 Building a Data Warehouse 80 Real-Time Support from an Active Data Warehouse 81

3.4 Big Data Analytics and Data Discovery 83 Human Expertise and Judgment are Needed 85 Data and Text Mining 88 Creating Business Value 88 Text Analytics Procedure 90 Analytics Vendor Rankings 90

3.5 Business Intelligence and Electronic Records Management 91 Business Benefits of BI 92 Common Challenges: Data Selection and Quality 92 Aligning BI Strategy with Business Strategy 92 BI Architecture and Analytics 93 Electronic Records Management 94 Legal Duty to Retain Business Records 94 ERM Best Practices 94 ERM Benefits 95 ERM for Disaster Recovery, Business Continuity, and Compliance 95

Case 3.2 Business Case: Big Data Analytics is the “Secret Sauce” for Revitalizing McDonald’s 98

Case 3.3 Video Case: Verizon Improves Its Customer Experience with Data Driven Decision-Making 99

4 Networks, Collaborative Technology, and the Internet of Things 101

Case 4.1 Opening Case: Sony Builds an IPv6 Network to Fortify Competitive Edge 102

4.1 Network Fundamentals 104 Network Types 104 Intranets, Extranets, and Virtual Private Networks 105 Network Terminology 105 Functions Supported by Business Networks 106 Quality of Service 107

4.2 Internet Protocols (IP), APIs, and Network Capabilities 109

Comparing 3G, 4G, 4G LTE, and 5G Network Standards 110 Circuit versus Packet Switching 111 Application Program Interfaces and Operating Systems 111

4.3 Mobile Networks and Near-Field Communication 113 Increase in Mobile Network Traffic and Users 114 Higher Demand for High-Capacity Mobile Networks 115 Mobile Infrastructure 115 Two Components of Wireless Infrastructure 116 Business Use of Near-Field Communication 117 Choosing Mobile Network Solutions 118

4.4 Collaborative Technologies and the Internet of Things 119 Virtual Collaboration 120 Group Work and Decision Processes 120 The Internet of Things (IoT) 121 IoT Sensors, Smart Meters, and the Smart Grid 121

Case 4.2 Business Case: Google Maps API for Business 125

Case 4.3 Video Case: Small Island Telecom Company Goes Global 126

5 Cybersecurity and Risk Management Technology 127

Case 5.1 Opening Case: Yahoo Wins the Gold and Silver Medal for the Worst Hacks in History! 129

5.1 The Face and Future of Cyberthreats 130 Intentional Threats 132 Unintentional Threats 132 Hacking 133 Cyber Social Engineering and Other Related Web-Based Threats 134 Denial-of-Service 137 Insider and Privilege Misuse 137 Physical Theft or Loss 138 Miscellaneous Errors 138 New Attack Vectors 138

5.2 Cyberattack Targets and Consequences 139 “High-Profile” and “Under-the-Radar” Attacks 139 Critical Infrastructure Attacks 140 Theft of Intellectual Property 141 Identity Theft 142 Bring Your Own Device 142 Social Media Attacks 144

5.3 Cyber Risk Management 146 IT Defenses 146 Business Continuity Planning 149 Government Regulations 149

vii i CONTENTS

5.4 Defending Against Fraud 150 Occupational Fraud Prevention and Detection 151 General Controls 152 Internal Controls 153 Cyber Defense Strategies 153 Auditing Information Systems 155

5.5 Frameworks, Standards, and Models 155 Risk Management and IT Governance Frameworks 155 Industry Standards 157 IT Security Defense-In-Depth Model 157

Case 5.2 Business Case: Lax Security at LinkedIn Exposed 161

Case 5.3 Video Case: Botnets, Malware Security, and Capturing Cybercriminals 163

PART 2 Winning, Engaging, and Retaining Consumers for Growth

6 Search, Semantic, and Recommendation Technology 165

Case 6.1 Opening Case: Mint.com Uses Search Technology to Rank Above Established Competitors 166

6.1 Using Search Technology for Business Success 168 How Search Engines Work 168 Web Directories 168 How Crawler Search Engines Work 169 Why Search Is Important for Business 172

6.2 Organic Search and Search Engine Optimization 178 Strategies for Search Engine Optimization 178 Content and Inbound Marketing 180 Black Hat versus White Hat SEO: Ethical Issues in Search Engine Optimization 181

6.3 Pay-Per-Click and Paid Search Strategies 182 Creating a PPC Advertising Campaign 182 Metrics for Paid Search Advertising 184

6.4 A Search for Meaning—Semantic Technology 184 What Is the Semantic Web? 185 The Language(s) of Web 3.0 185 Semantic Web and Semantic Search 186 Semantic Web for Business 187

6.5 Recommendation Engines 188 Recommendation Filters 189

Case 6.2 Business Case: Deciding What to Watch—Video Recommendations at Netflix 195

Case 6.3 Video Case: Power Searching with Google 196

7 Web 2.0 and Social Technology 199

Case 7.1 Opening Case: Social Customer Service Takes Off at KLM 200

7.1 Web 2.0—The Social Web 201 The Constantly Changing Web 201 Invention of the World Wide Web 202 A Platform for Services and Social Interaction 202 Emergence of Social Applications, Networks, and Services 203 Why Managers Should Understand Web Technology 205 Communicating on the Web 206 Social Media Applications and Services 207 Social Media Is More than Facebook, YouTube, and Twitter 207 With Web 2.0, Markets are Conversations 209

7.2 Social Networking Services and Communities 210 The Power of the Crowd 212 Crowdfunding 212 Social Networking Services 213 Facebook Dominates Social Networking 214 Google Takes on Facebook with G+ 216 Be in the Now with Snapchat 217 And Now for Something Different: Second Life 218 Private Social Networks 219 Future of Social Networking Systems 220

7.3 Engaging Consumers with Blogs and Microblogs 220 What Is the Purpose of a Blog? 220 Blogging and Public Relations 222 Reading and Subscribing to Blogs 222 Blogging Platforms 222 Microblogs 223 Twitter 223 Tumblr Blogs 225

7.4 Mashups, Social Metrics, and Monitoring Tools 226 What Makes a Mashup Social 226 RSS Technology 227 Social Monitoring Services 227

7.5 Enterprise 2.0: Workplace Collaboration and Knowledge Sharing 229 Tools for Meetings and Discussions 230 Social Tools for Information Retrieval and Knowledge Sharing 230 Social Bookmarking Tools 231 Content Creation and Sharing 232

Case 7.2 Business Case: Facebook Helps Songkick Rock the Ticket Sales Industry 236

Case 7.3 Business Case: AT&T’s “It Can Wait” Campaign against Distracted Driving 237

CONTENTS ix

8 Retail, E-commerce, and Mobile Commerce Technology 240

Case 8.1 Opening Case: Macy’s Races Ahead with Mobile Retail Strategies 241

8.1 Retailing Technology 243 Keeping Up with Consumer Demands and Behavior 243 The Omni-Channel Retailing Concept 244

8.2 Business-to-Consumer (B2C) E-commerce 246 Online Banking 246 International and Multiple-Currency Banking 246 Online Recruiting 246 Issues in Online Retailing 250 Online Business and Marketing Planning 250

8.3 Business-to-Business (B2B) E-commerce and E-procurement 251 Sell-Side Marketplaces 251 E-Sourcing 252 E-Procurement 252 Electronic Data Interchange (EDI) Systems 253 Public and Private Exchanges 253

8.4 Mobile Commerce 253 Information: Competitive Advantage in Mobile Commerce 255 Mobile Entertainment 258 Hotel Services and Travel Go Wireless 259 Mobile Social Networking 259

8.5 Mobile Transactions and Financial Services 260 Mobile Payment Systems 260 Mobile Banking and Financial Services 262 Short Codes 263 Security Issues 263

Case 8.2 Business Case: Chegg’s Mobile Strategy 266 Case 8.3 Video Case: Searching with Pictures

Using MVS 267

PART 3 Optimizing Performance, Processes, and Productivity

9 Functional Business Systems 269 Case 9.1 Opening Case: Ducati Redesigns Its

Operations 271 9.1 Business Management Systems and Functional

Business Systems 272 Business Management Systems (BMSs) 273 Management Levels 273 Business Functions vs. Cross-Functional Business Processes 274 Transaction Processing Systems 275

9.2 Production and Operations Management Systems 277 Transportation Management Systems 278 Logistics Management 278 Inventory Control Systems 279 Computer-Integrated Manufacturing and Manufacturing Execution Systems 281

9.3 Sales and Marketing Systems 282 Data-Driven Marketing 284 Sales and Distribution Channels 284 Social Media Customer Service 284 Marketing Management 285

9.4 Accounting, Finance, and Regulatory Systems 286 Financial Disclosure: Reporting and Compliance 286 Fraud Prevention and Detection 289 Auditing Information Systems 291 Financial Planning and Budgeting 291

9.5 Human Resource Systems, Compliance, and Ethics 293 HR Information Systems 293 Management and Employee Development 295 HR Planning, Control, and Management 295

Case 9.2 Business Case: HSBC Combats Fraud in Split- second Decisions 297

Case 9.3 Video Case: United Rentals Optimizes Its Workforce with Human Capital Management 298

10 Enterprise Systems 300 Case 10.1 Opening Case: 3D Printing Drives the “Always-

On” Supply Chain 301 10.1 Enterprise Systems 303

Implementation Challenges of Enterprise Systems 305 Investing in Enterprise Systems 305 Implementation of Best Practices 306 Enterprise Systems Insights 307

10.2 Enterprise Resource Planning (ERP) 307 Brief History of ERP 308 Technology Perspective 308 Achieving ERP Success 311

10.3 Supply Chain Management Systems 313 Managing the Flow of Materials, Data, and Money 315 Order Fulfillment and Logistics 315 Steps in the Order Fulfillment Process 315 Innovations Driving Supply Chain Strategic Priorities 316

10.4 Customer Relationship Management Systems 319 How are CRM Apps Different from ERP? Why are they Different? 319 CRM Technology Perspective 320

x CONTENTS

Customer Acquisition and Retention 320 CRM for a Competitive Edge 320 Common CRM Mistakes: How to Avoid Them 321 Justifying CRM 322

10.5 Enterprise Social Platforms 323 Growth of Enterprise Social Investments and Markets 323 Sharepoint 324 Oracle’s Social Network 326 Jive 326 Chatter 326

Case 10.2 Business Case: Lowe’s Fresh Approach to Supply Chain Management 328

Case 10.3 Video Case: Procter & Gamble: Creating Conversations in the Cloud with 4.8 Billion Consumers 329

11 Data Visualization and Geographic Information Systems 331

Case 11.1 Opening Case: Safeway and PepsiCo Collaborate to Reduce Stock Outages using Data Visualization 332

11.1 Data Visualization and Learning 334 Learning, Exploration, and Discovery with Visualization 336 Data Discovery Market Separates from the BI Market 336 How Is Data Visualization Used in Business? 340 Data Visualization Tools 341

11.2 Enterprise Data Mashups 342 Mashup Architecture 343 Why Do Business Users Need Data Mashup Technology? 344 Enterprise Mashup Technology 344

11.3 Digital Dashboards 345 Dashboards are Real Time 347 How Operational and Strategic Dashboards Work 348 Benefits of Digital Dashboards 348

11.4 Geographic Information Systems and Geospatial Data 349 Geocoding 350 GIS Is Not Your Grandfather’s Map 350 Infrastructure and Location-Aware Collection of Geospatial Data 350 Applying GIS in Business 351

Case 11.2 Visualization Case: Are You Ready for Football? 353

Case 11.3 Video Case: The Beauty of Data Visualization—Data Detective 353

PART 4 Managing Business Relationships, Projects, and Ethical Responsibilities

12 IT Strategy, Sourcing, and Strategic Technology Trends 354

Case 12.1 Opening Case: Intel Reaps Rewards from Sustainable IT Strategy 355

12.1 IT Strategic Planning 357 Value Drivers 358 IT Strategic Plan Objectives 358 IT and Business Disconnects 359 Corporate and IT Governance 359 Reactive Approach to IT Investments Will Fail 359 IT Strategic Planning Process 359

12.2 Aligning IT with Business Objectives 362 Achieving and Sustaining a Competitive Advantage 364

12.3 IT Sourcing Strategies 367 Sourcing and Cloud Services 368 Factors Driving Outsourcing 369 Outsourcing Risks and Hidden Costs 370 Offshoring 370 Outsourcing Life Cycle 371 Managing IT Vendor Relationships 373 Contracts: Get Everything in Writing 373

12.4 Balanced Scorecard 374 The Balanced Scorecard 374 Using the Balance Scorecard 375 Applying the BSC 377

12.5 Strategic Technology Trends 378 Strategic Technology Scanning 380 Finding Strategic Technologies 380

Case 12.2 Business Case: Cisco IT Improves Strategic Vendor Management 382

Case 12.3 Data Analysis: Third-Party versus Company- Owned Offshoring 383

13 Systems Development and Project Management 385

Case 13.1 Opening Case: Denver International Airport Learns from Mistakes Made in Failed Baggage- Handling System Project 386

13.1 System Development Life Cycle 388 Stages of the SDLC 388

13.2 Systems Development Methodologies 391 Waterfall Model 391 Object-Oriented Analysis and Design 392 Agile Methodology 392

CONTENTS xi

The DevOps Approach to Systems Development 394

13.3 Project Management Fundamentals 395 What Is a Project? 396 Choosing Projects 396 The Triple Constraint 397 The Project Management Framework 397

13.4 Initiating, Planning, and Executing Projects 399 Project Initiation 400 Project Planning 400 Project Execution 403

13.5 Monitoring/Controlling and Closing Projects 404 Project Monitoring and Controlling 404 Project Closing or Post Mortem 407 Why Projects Fail 408 IT Project Management Mistakes 410

Case 13.2 Business Case: Steve Jobs’ Shared Vision Project Management Style 412

Case 13.3 Demo Case: Mavenlink Project Management and Planning Software 413

14 IT Ethics, Privacy, and Sustainability 417

Case 14.1 Opening Case: Lessons Learned: How Google Glass Raised Risk and Privacy Challenges 418

14.1 IT Ethics 420 Ethical versus Unethical Behavior 420 Competing Responsibilities 423

14.2 Privacy and Civil Rights 424 Privacy and the New Privacy Paradox 424 Social Media Recruiting 425 Legal Note: Civil Rights 426 Competing Legal Concerns 427 Financial Organizations Must Comply with Social Media Guidelines 428

14.3 Technology Addictions and Focus Management 430 Digital Distractions and Loss of Focus 430 Focus Management 430

14.4 ICT and Sustainable Development 432 Global Temperature Rising Too Much Too Fast 432 IT and Global Warming 433 Technology to Transform Business and Society 436 Next Wave of Disruption Will Be More Disruptive 438

Case 14.2 Business Case: Android Auto and CarPlay Keep Drivers Safe, Legal, and Productive 439

Case 14.3 Video Case: IT Ethics in the Workplace 440

GLOSSARY 443 ORGANIZATION INDEX 448 NAME INDEX 450 SUBJECT INDEX 451

xiii

Information Technology for Management discusses a variety of business strategies and explains how they rely on data, digital technology, and mobile devices to support them in the on- demand economy. Our goal is to provide students from any business discipline with a strong foundation for understand- ing the critical role that digital technology plays in enhancing business sustainability, profitability, and growth and excel in their careers. Enabling technologies discussed in this textbook include the following:

• Performance Combining the latest capabilities in big data analytics, reporting, collaboration, search, and digital com- munication helps enterprises be more agile and cuts costs to optimize business performance and profitability.

• Growth Strategic technologies enable business to create new core competencies, expand their markets, and move into new markets to experience exponential growth in the on-demand economy.

• Sustainability Cloud services are fundamental to sus- taining business profitability and growth in today’s on- demand economy. They play a critical role in managing projects and sourcing agreements, respecting personal pri- vacy, encouraging social responsibility, and attracting and engaging customers across multimedia channels to promote sustainable business performance and growth.