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Growing The Business With Search, Semantic, And Recommendation Technologies

Identify an organization that is using at least one online search technology. You may use an organization you know from your personal experience or one that you discover while doing research. Briefly describe the organization, and then answer the following questions:

· Of the various types of search technologies, which ones is the organization utilizing?

· Why is the organization using these technologies? What are the benefits?

· What are some metrics the organization could use to evaluate how effective these technologies are in supporting organizational objectives? Explain.

· Identify areas in which the organization could expand or improve upon using the search technology. Explain what they could do and why they should do it.( questions will be addressed as headlines)

Your well-written report should be 4-5 pages in length, not including the cover and reference pages. Use APA style guidelines, citing at least two references, as appropriate.

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

This book was set in 9.5/12.5 pt Source Sans Pro by SPi Global and printed and bound by Strategic Content Imaging.

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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.

In this 11th edition, students learn, explore, and understand the importance of IT’s role in supporting the three essential components of business performance improvement: technology, business processes, and people.

What’s New in the 11th Edition? In the 11th edition of IT for Management, we present and dis- cuss concepts in a comprehensive yet easy-to-understand for- mat by actively engaging students through a wide selection of case studies, interactive figures, video animations, tech notes, concept check questions, online and interactive exercises, and critical thinking questions. We have enhanced the 11th edition in the following ways:

New Author Dr. Carol Pollard, Professor of Computer Infor- mation Systems at the Walker College of Business and former Executive Director of the Center for Applied Research in Emerg- ing Technologies (CARET) at Appalachian State University in North Carolina, has taken the helm for the 11th edition. Carol

has applied her innovative teaching and learning techniques to create a stronger pedagogical focus and more engaging format for the text. Diverse Audience IT for Management is directed toward undergraduate, introductory MBA courses, and Executive Educa- tion courses in Management Information Systems and General Business programs. Concepts are explained in a straightforward way, and interactive elements, tools, and techniques provide tangible resources that appeal to all levels of students. Strong Pedagogical Approach To encourage improved learn- ing outcomes, we employed a blended learning approach, in which different types of delivery and learning methods, enabled and supported by technology, are blended with traditional learning methods. For example, case study and theoretical content are presented visually, textually, and/or interactively to enable different groups of students to use different learning strategies in different combinations to fit their individual learn- ing style and enhance their learning. Throughout the book, content has been reorganized to improve development of the topics and improve understanding and readability. A large number of images that did not enhance understanding have been removed and replaced with informative and interactive figures and tables that better convey critical concepts. Leading-Edge Content Prior to and during the writing pro- cess, we consulted with a number of vendors, IT professionals, and managers who are hands-on users of leading technologies, to learn about their IT/business successes, challenges, experi- ences, and recommendations. To integrate the feedback of these business and IT professionals, new or updated chapter opening and closing cases have been added to many of the chapters along with the addition of relevant, leading-edge content in the body of the chapters. New Technologies and Expanded Topics New to this edition are the IT framework, business process reengineering, geoco- ding, systems developments methodologies, including Water- fall, object-oriented analysis, Agile and DevOps, advances in Search Technology, the growth of Mobile Commerce and Mobile Payment Systems, the Always-On Supply Chain, and the Project Management framework. In addition, with more purchases and transactions starting online and attention being a scarce resource, students learn how search, semantic, and recommendation technologies function to improve revenue. Table P-1 provides a detailed list of new and expanded topics. Useful Tools and Techniques New to this edition is a feature we call the “IT Toolbox.” This involves the provision of a set of useful tools or techniques relevant to chapter content. Collec- tively, these tools and techniques equip readers with a suite of IT tools that will be useful in their university classes, workplace, and personal life.

Preface

xiv PREFACE

Chapter New and Expanded IT and Business Topics Innovative Enterprises 1. Disruptive IT Impacts

Companies, Competition, and Careers

• IT’s role in the on-demand economy • Business process improvement • Business process re-engineering • SMAC model • Nature of on-demand work • Becoming an informed IT user • Technology mega trends

• Uber • Airbnb • FitBit • NFL • Teradata

2. Information Systems, IT Archi- tecture, Data Governance, and Cloud Computing

• IS concepts and framework • Information, knowledge, wisdom model • Software-defined data center

• Mediata • National Climatic Data center • U.S. National Security Agency • Apple • Uber • WhatsApp • Slack • Vanderbilt University Medical Center • Coca-Cola

TABLE P-1 Overview of New and Expanded Topics and Innovative Enterprises Discussed in the Chapters

Engaging Students to Assure Learning The 11th edition of Information Technology for Management engages students with up-to-date coverage of the most impor- tant IT trends today. Over the years, this IT textbook has dis- tinguished itself with an emphasis on illustrating the use of cutting-edge business technologies for supporting and achiev- ing managerial goals and objectives. The 11th edition contin- ues this tradition with more interactive activities and analyses.

Real-World Case Studies Each chapter contains numerous real-world examples illustrating how businesses use IT to increase productivity, improve efficiency, enhance communication and collaboration, and gain a competitive edge. Faculty will appreciate a variety of options for reinforcing student learning that include three different types of Case Studies (opening case, video case, and business case), along with interactive figures and whiteboard animations that provide a multimedia overview of each chapter. Interactive Figures and Whiteboard Animations The unique presentation of interactive figures and whiteboard anima- tions facilitates reflection on the textual content of the book and provides a clear path to understanding key concepts. The whiteboard animations fit particularly well with the “flipping the classroom” model and complement additional functional- ity and assets offered throughout the 11th edition. The interac- tive figures actively engage the students in their own learning to effectively reinforce concepts. Learning Aids Each chapter contains various learning aids, which include the following:

• Learning Objectives are listed at the beginning of each chapter to help students focus their efforts and alert them to the important concepts that will be discussed.

• IT at Work boxes spotlight real-world cases and innova- tive uses of IT.

• Definitions of Key Terms appear in the margins throughout the book.

• Tech Note boxes explore topics such as “Key Performance Indicators” and “Six Basic Systems Development Guidelines.”

• Career Insight boxes highlight different jobs in the IT for management field.

End-of-Chapter Activities At the end of each chapter, features designed to assure student learning include the following:

• Critical Thinking Questions are designed to facilitate student discussion.

• Online and Interactive Exercises encourage students to explore additional topics.

• Analyze and Decide questions help students apply IT concepts to business decisions.

• Concept Questions test students’ comprehension of each learning objective at the end of each chapter to ensure that the students are clear on the concepts. Students are provided with immediate feedback on their performance.

Details of New and Enhanced Features of the 11th Edition The textbook consists of 14 chapters organized into four mod- ules. All chapters have new or updated sections, as shown in Table P-1.

PREFACE xv

Chapter New and Expanded IT and Business Topics Innovative Enterprises 3. Data Management, Data

Analytics, and Business Intelligence

• Dirty data costs and consequences • Data life cycle • Genomics and big data • Aligning business intelligence with business strategy

• Coca-Cola • Capitol One • Travelocity • First Wind • Argo Corporation • Walmart • Infinity Insurance • DoD and Homeland Security • CarMax • McDonald’s • Verizon

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

• IPv6 protocol • Types of networks • Network terminology • Quality of service • Net neutrality • Mobile networks and near-field communication • Internet of Things

• Sony • AT & T • Time-Warner • Amazon • Warner Music • Proctor & Gamble • Walmart • Ford • Asda • Unilever • Caterpillar • Santander • Google • Isle of Man

5. Cybersecurity and Risk Management Technology

• Data breaches • Major sources of cyberthreats • Classes of hackers • Spear phishing • Crimeware categories • Denial of service • KPMG data loss barometer • Enterprise risk management framework

• Yahoo • Global Payments, Inc. • Government of China • Google • U.S. Chamber of Commerce • Brookings Institution • LinkedIn • Damballa

6. Search, Semantic, and Recom- mendation Technology

• Social search technologies • Personal assistant and voice search • Mobile search and mobile SEO • On-page and off-page SEO factors • Updates to Google’s ranking algorithm • Semantic search technologies

• Mint.com • Google • Microsoft • Yahoo • Netflix • Apple • Amazon • Diigo • World Wide Web Consortium (W3C)

TABLE P-1 Overview of New and Expanded Topics and Innovative Enterprises Discussed in the Chapters (continued)

(continued)

xvi PREFACE

Chapter New and Expanded IT and Business Topics Innovative Enterprises 7. Web 2.0 and Social Technology • Snapchat, the #2 social platform

• Social bookmarking • Social customer service moves from optional

to essential • Role of APIs in development of new Web applications

and functionality • The dominance of Facebook and the demise

of Google+ • Emerging virtual-world technology

• KLM Royal Dutch Airlines • Facebook, Inc. • Myntra • Snap, Inc. • Kickstarter.com • GoFundMe.com • Oculus VR • High Fidelity • Twitter • Social Mention • Diigo • Clipix • Dropbox

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

• Direct and marketplace B2B ecommerce • In-store retail technology • Omni-channel retailing • Growth of mobile commerce • Growth of the mobile gaming market • Mobile payment methods • Mobile visual search

• Macys Department Stores • Amazon.com • Ally Bank • LinkedIn.com • Alibaba.com • Dell, Inc. • The Walt Disney Company • PayPal, Inc. • Chegg.com

9. Functional Business Systems • Business management systems • Cross-functional coordination and integration

of systems • Systems that support supply-chain management • Social customer service • eXtensible Business Reporting Language (XBRL)

• Ducati Motor Holding S.p.A. • Office Depot • Schurman Fine Papers • BAE Systems • Adweek • Salesforce.com • LinkedIn • HSBC Bank • United Rentals

10. Enterprise Systems • 3D printing impact on supply chain • Selecting an ERP vendor • Factors for ERP success • Order fulfillment • Always-on supply chain • Enterprise social platforms

• Organovo • Ferrari • GE • Siemens • Organic Valley Family of Farms • Boers & Co. • Peters Ice Cream • ScanSource • Avanade • Dillards • FoxMeyer Drugs • Joint Munitions Command • Flower.com • Red Robin • Lowe’s • Procter & Gamble

TABLE P-1 Overview of New and Expanded Topics and Innovative Enterprises Discussed in the Chapters (continued)

PREFACE xvii

Supplemental Materials An extensive package of instructional materials is available to support this 11th edition. These materials are accessible from the book companion website at www.wiley.com/college/ turban.

• Instructor’s Manual The Instructor’s Manual presents objectives from the text with additional information to make them more appropriate and useful for the instructor. The manual also includes practical applications of concepts, case-study elaboration, answers to end-of-chapter ques- tions, questions for review, questions for discussion, and Internet exercises.

• Test Bank The test bank contains over 1,000 ques- tions and problems (about 75 per chapter) consisting of multiple-choice, short answer, fill-ins, and critical thinking/ essay questions.

• PowerPoint Presentation A series of slides designed around the content of the text incorporates key points from the text and illustrations where appropriate.

• Chapter Summary Whiteboard Animations A series of video animations that summarize the content of each chapter in an entertaining way to engage the students in grasping the subject matter.

Chapter New and Expanded IT and Business Topics Innovative Enterprises 11. Data Visualization and

Geographic Information Systems

• Increasing reliance on data discovery • Data visualization tools • Enterprise data mashups • Geocoding

• Safeway • PepsiCo • IBM • ADP Corp. • Department of Veterans Affairs • General Motors

12. IT Strategy, Sourcing, and Strategic Technology Trends

• Business–IT alignment • IT strategic planning • Porter’s competitive forces model • Porter’s value chain model • Five-phase outsourcing life cycle • IT sourcing strategies • Strategic technology trends • Technology scanning

• Intel • Nestle Nespresso • LinkedIn • ESSA Academy • Cisco • Citigroup

13. Systems Development and Project Management

• SDLC stages • Systems development methodologies • DevOps • Project management framework • PM core and support knowledge areas • Responsibility matrix

• Denver International Airport • U.S. Census Bureau • Apple • Mavenlink

14. IT Ethics, Privacy, and Sustainability

• Ethical vs. unethical behavior • Privacy paradox • Climate change • Technology addiction • “People-first” approach to technology • Disruptive technologies

• Google • Target • Facebook • SnapChat • NASA • Apple

TABLE P-1 Overview of New and Expanded Topics and Innovative Enterprises Discussed in the Chapters (continued)

xviii PREFACE

Acknowledgments No book is produced through the sole efforts of its authors, and this book is no exception. Many people contributed to its crea- tion, both directly and indirectly, and we wish to acknowledge their contributions.

Special thanks go to the team at John Wiley, particularly Darren Lalonde, Emma Townsend-Merino, Ethan Lipson, and Loganathan Kandan for their ongoing and encouraging edito- rial expertise and leadership. Their guidance, patience, humor, and support during the development and production of this most recent version of the textbook made the process much easier. We couldn’t have done it without you!

Our sincere thanks also go to the following reviewers of the 11th edition. Their feedback, insights, and suggestions were invaluable in ensuring the accuracy and readability of the book:

Joni Adkins, Northwest Missouri State University Ahmad Al-Omari, Dakota State University Rigoberto Chinchilla, Eastern Illinois University Michael Donahue, Towson University Samuel Elko, Seton Hill University Robert Goble, Dallas Baptist University Eileen Griffin, Canisius College Binshan Lin, Louisiana State University in Shreveport Thomas MacMullen, Eastern Illinois University James Moore, Canisius College Beverly S. Motich, Messiah College Barin Nag, Towson University

Luis A. Otero, Inter-American University of Puerto Rico, Metropolitan Campus

John Pearson, Southern Illinois University

Daniel Riding, Florida Institute of Technology

Josie Schneider, Columbia Southern University

Derek Sedlack, South University

Eric Weinstein, The University of La Verne

Patricia White, Columbia Southern University

Gene A. Wright, University of Wisconsin–Milwaukee

Many thanks also go to our dedicated graphic designers, Kevin Hawley and Nathan Sherrill, without whose help we would not have been able to create the innovative Whiteboard Animations, and to Senior Photo Editor, Billy Ray, whose exten- sive and expert research into the images used in the textbook greatly enhanced the overall “look” of this 11th edition.

Extra special thanks go to our families, friends, and col- leagues for the enormous encouragement, support, and under- standing they provided as we dedicated time and effort to creating this new edition.

Finally, we dedicate the 11th edition of Information Technology for Management to the Memory of Dr. Linda Volonino, the driving force behind editions 7 through 10 of IT for Management. Thank you Linda, for all your hard work in providing the foundation for this latest edition of the textbook.

CAROL POLLARD GREGORY WOOD

1

CHAPTER 1

Disruptive IT Impacts Companies, Competition, and Careers

LEARNING OBJECTIVES

1.1 Describe how the on-demand economy is changing the way that business is conducted.

1.2 Explain the role of IT in business process improvement. Understand the concepts of business process reengineering and competitive advantage.

1.3 Describe innovating technologies and explain how they are disrupting enterprises.

1.4 Understand the value of being an “informed user” of IT and the ways in which IT can add value to your career path and performance in the on-demand economy.

CHAPTER OUTLINE

Case 1.1 Opening Case: Uber, Airbnb, and the On-Demand Economy

1.1 Doing Business in the On-Demand Economy

1.2 Business Process Improvement and Competitive Advantage

1.3 IT Innovation and Disruption

1.4 IT and You

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

Case 1.3 Video Case: What Is the Value of Knowing More and Doing More?

Introduction The more digital technology advances, the more it is almost instantly integrated into our daily lives. Many managers and entrepreneurs recognize the need to integrate digital technology into their products and services. For example, it has been estimated that 78% of business

2 CHAPTER 1 Disruptive IT Impacts Companies, Competition, and Careers

leaders expect their organizations to be a digital business by 2020. Outdated and complex application architectures with a mix of interfaces can delay or prevent the release of new products and services, and maintaining these obsolete systems absorbs large portions of the information technology (IT) budget.

Companies such as Uber, Airbnb, Shyp, TaskRabbit, and other participants in the on- demand economy are leveraging IT to create exciting new business models and revolu- tionize the way workers, businesses, and customers interact and compete. Peter Hinssen, a well-known business author, university lecturer, and digital consultant, described the change in digital technology as follows:

Technology used to be nice. It used to be about making things a little bit better, a little bit more efficient. But, technology stopped being nice: it’s disruptive. It’s changing our business models, our consumer markets, our organizations. (MacIver, 2015)

As businesses continue to join the on-demand economy, IT professionals must constantly scan for innovative new technologies to provide business value and help shape the future of the business. For example, smart devices, mobile apps, sensors, and technology platforms— along with increased customer demand for digital interactions and on-demand services—have moved commerce in fresh new directions. We’ve all heard the phrase “there’s an app for that” and that kind of consumer thinking is what drives the on-demand economy.

Business leaders today need to know what steps to take to get the most out of mobile, social, cloud, big data, analytics, visualization technologies, and the Internet of Things (IoT) to move their business forward and enable new on-demand business models. Faced with oppor- tunities and challenges, managers need to know how to leverage IT earlier and more efficiently than their competitors.

A goal of this book is to empower you to improve your use and management of IT at work by raising your understanding of IT terminology, practices, and tools and developing your IT skills to transform you into an informed IT user. Throughout this book, you will learn how digital technology is transforming business and society in the on-demand economy as the IT function takes on key strategic and operational roles that determine an enterprise’s success or failure. You will also be provided with an in-depth look at IT trends that have immediate and future capacity to influence products, services competition, and business relationships. Along the way, we’ll describe many different ways in which IT is being used and can be used in business and provide you with the some of the terminology, techniques and tools that enable organizations to leverage IT to improve growth, performance, and sustainability.

In this opening chapter, you will learn about the powerful impacts of digital technology on people, business, government, entertainment, and society that are occurring in today’s on- demand economy. You will also discover how leading companies are deploying digital tech- nology and changing their business models, business processes, customer experiences, and ways of working. We will present examples of innovative products, services, and distribution channels to help you understand the digital revolution that is currently shaping the future of business, the economy and society and changing management careers. And, we’ll explain why IT is important to you and how becoming an “informed user” of IT will add significant value to your career and overall quality of life.

Introduction 3

Case 1.1 Opening Case THE ON-DEMAND BUSINESS FRAMEWORK

CORE ON-DEMAND SERVICES

Logistics Management Offline Services Move Online Vendor Management Interface Layer

CONSUMER TECHNOLOGY

Ubiquitous Connectivity Mobile Adoption App Marketplace

COMPLIMENTARY RESOURCES

Payment Systems Cloud Services CRM Platforms 1099 Community

CONSUMER BEHAVIOR

THE ON-DEMAND ECONOMY

Convenience Efficiency Simplicity Instant Gratification

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Uber and Airbnb Revolutionize Business Models in the On-Demand Economy If you’ve used Uber or Airbnb, then you have participated in the on-demand economy where speed, convenience, and simplicity are key factors in consumer behavior and purchasing decisions. Michael Boland, author of What’s Driving the Local On-Demand Econ- omy, explains that as consumers, “We’re being conditioned to expect everything on-demand as the mobile device increasingly becomes the remote control for the physical world” (Boland, 2015). For example, the majority of consumers who tap an Uber app to get a ride would not consider dialing an 800 number for a taxi. With all transactions performed by apps and automated processes, the entire process from hailing to paying for a ride is slick, quick, and easy, without cash or credit cards.

Tech Platforms Enabled On-Demand Services to Take Off Decades of technological innovation have given us smartphone apps, mobile payment platforms, GPS and map technology, and social authentication. These technologies are being used to build the infra- structure needed for on-demand services. This infrastructure—also referred to as a technology platform or technology stack—supports the exchange and coordination of staggering amounts of data. The term technology stack reflects the fact that the platform is made up of multiple layers (stacks) of hardware, software, network connectivity, and data analytics capabilities.

In many consumer markets today, companies that do not have iPhone or Android apps or technology platforms that support the exchange of goods and services—no matter how useful their website— may find themselves losing their competitive edge.

On-Demand Economy Requires a New Business Model Uber and Airbnb are popular examples of companies that developed on-demand business models to transform slow-to-innovate indus- tries. A simple definition of business model is the way a company generates revenue and makes a profit. On-demand business mod- els provide real-time fulfillment of goods and services, which have attracted millions of users worldwide. This model fits best when speed and convenience matter the most. The ground transporta- tion, grocery, and restaurant industries are examples of hyper-growth

categories in the on-demand world. Forward-thinking companies are reshaping these industries.

Uber Business Model Uber disrupted the taxi industry with a workforce that is essentially any person with a smartphone and a car. Location-aware smartphone apps bring drivers and passengers together, while in-app accounts make the cashless payment process effortless. By simply opening the Uber app and pressing the middle button for several seconds (a long press), customers can order a ride to their current location, selecting the kind of car they want. Payment is automatically charged to the credit card on file with receipts via email.

The Uber concept developed in response to taxi scarcities. It started on a snowy Paris night in 2008 when the two founders could not get a cab. They wanted a dead-simple app that could get them a car with a tap. On June 1, 2015, the entrepreneurs celebrated Uber fifth anniversary and announced that the company had grown into a transportation network covering 311 cities in 58 countries in North and South Americas, Europe, Africa, Asia Pacific, and the Middle East.

Uber has invested in new and developing technologies and part- nerships. The company partnered with Carnegie Mellon University to build robotic cars and new mapping software. In March 2015, Uber pur- chased deCarta, a 40-person mapping start-up to reduce its depend- ence on Google maps.

Airbnb Business Model Another disruption to a traditional industry occurred when Airbnb blindsided the hotel industry. Airbnb allows anyone with a spare apartment or room—even if only for a day—to run their own bed and breakfast by giving them a technology platform to market themselves to a global market. By 2016, the Airbnb site had over 1.5 million list- ings in 190 countries and 34,000 cities. Over 40 million guests have used Airbnb worldwide. For comparison, Hilton, InterContinental, and Marriott, the largest hotel chains in the world, have less than 1 million rooms each.

Uber and Airbnb do not own inventory. Instead, they scale up (expand) by improving their ability to acquire and match customers and service providers.

4 CHAPTER 1 Disruptive IT Impacts Companies, Competition, and Careers

1.1 Doing Business in the On-Demand Economy The on-demand economy is revolutionizing commercial activities in businesses around the world. The businesses in this new economy are fueled by years of technology innovation and a radical change in consumer behavior. As companies become more highly digitized, it becomes more and more apparent that what companies can do depends on what their IT and data man- agement systems can do. For over a decade, powerful new digital approaches to doing business have emerged. And there is sufficient proof to expect even more rapid and dramatic changes due to IT breakthroughs and advances.

In market segment after market segment, mobile communications and technology stacks make it financially feasible for companies to bring together consumers and providers of prod- ucts and services. These capabilities have created the on-demand economy. As Ev Williams, cofounder of Twitter says,

The internet makes human desires more easily attainable. In other words, it offers convenience. Convenience on the internet is basically achieved by two things: speed, and cognitive ease. If you study what the really big things on the internet are, you realize they are masters at making things fast and not making people think.

On-demand economy is the economic activity created by technology companies that fulfill consumer demand through the immediate provisioning of products and services.

Business Success in Terms of Company Growth and Valuation The ride-hailing app Uber and the housing rental app Airbnb are two of the most valuable start-ups, as displayed in Figure 1.1. Valuation of a company at its early stages is based heavily on its growth potential and future value. In contrast, the valuation of an established company is based on its present value, which is calculated using traditional financial ratios and techniques related to revenues or other assets.

Uber’s massive market value—estimated at $60 billion—is greater than 80% of all Standard & Poor (S&P) 500 companies, many of which have been around for 25, 50, or 100 years. Investors valued Airbnb at $24 billion—higher than the value of the hotel giant Marriott

International. These companies would never have been able to grow in the old way as a traditional organization, with their own inventory of products, services, and workforce and traditional forms of technology.

Questions 1. In what ways are the Uber and Airbnb business similar or

different?

2. How did Uber achieve its new business model? 3. To what extent do you think changing their business models con-

tributed to the success of Uber and Airbnb?