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Management Information Systems

1. Develop a product service idea.

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Information Technology for Management Advancing Sustainable, Profitable Business Growth

9th Edition

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Information Technology for Management Advancing Sustainable, Profitable Business Growth

9th Edition

EFRAIM TURBAN

LINDA VOLONINO, Canisius College

GREGORY R. WOOD, Canisius College

contributing author:

JANICE C. SIPIOR, Villanova University

FMTOC.qxd 11/26/12 5:09 PM Page iii

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BRIEF CONTENTS

1 A Look Toward the Future of Information Technology 1 2 Information Management and IT Architecture 28 3 Database, Data Warehouse, and Data Mining 56 4 Networks, Collaboration, and Sustainability 85 5 CyberSecurity, Compliance, and Business Continuity 112

6 E-Business & E-Commerce Models and Strategies 145 7 Mobile Technologies and Commerce 191 8 Web 2.0 and Social Media 225

9 Functional Area and Compliance Systems 269 10 Enterprise Systems and Applications 301 11 Performance Management using Data Visualization, Mashups, and

Mobile Intelligence 333

12 IT Strategy, Sourcing, and Vendor Relationships 355 13 Business Process and Project Management 387 14 IT Ethics and Responsible Conduct 418

Glossary G-1

Organizational Index O-1

Name Index N-1

Subject Index S-1

Part I

Maximizing the Value of Data and Information Technology

Part II

Digital, Mobile and Social Commerce

Part III

Enterprise Systems and Analytics

Part IV

IT Planning, Strategy, and Ethics

v

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CONTENTS

Part I Maximizing the Value of Data and Information Technology

1 A Look Toward the Future of Information Technology 1 Case #1, Opening Case: Need Start-up Cash? Try Crowdfunding at Kickstarter.com 2 1.1 IT and Management Opportunities and Challenges 4 1.2 Top Management Concerns and Influential ITs 7 1.3 IT Agility, Consumerization, and Competitive Advantage 13 1.4 Strategic Planning and Competitive Models 15 1.5 Why IT is Important to Your Career, and IT Careers 20 Case #2, Business Case: Building a Sustainable Big City with a Competitive Edge 25 Case #3, Video Case, Public Sector: ACCESS NYC—IT Strategy and Transformation 26 Data Analysis & Decision Making: Evaluating Cost-Savings from Switching to the Cloud 26

2 Information Management and IT Architecture 28 Case #1, Opening Case: Paul McCartney’s Artistic Legacy (and its IT architecture) 29 2.1 Information Management in the 2010s 32 2.2 IT Architecture 36 2.3 Information Systems and IT Infrastructure 38 2.4 Cloud Computing and Services 47 2.5 Virtualization and VM (Virtual Machines) 50 Case #2, Business Case: Online Gamers’ Statistics Stored in the Cloud 54 Case #3, Video Case: Three Cloud Computing Case Studies 54 Data Analysis & Decision Making: DSS to Control and Manage Gasoline Costs 55

3 Database, Data Warehouse, and Data Mining 56 Case #1, Opening Case: Zero-Downtime at BNP Paribas 57 3.1 Database Technology 60 3.2 Data Warehouse and Data Mart Technologies 69 3.3 Data and Text Mining 72 3.4 Business Intelligence (BI) and Analytics 75 3.5 Digital and Physical Document Management 78 Case #2, Business Case: Global Defense Contractor Gains Competitive Edge with Analytics 82 Case #3, Video Case: Privacy vs. Convenience: How We Enable Data Mining 82 Data Analysis & Decision Making: Calculating Document Management Costs 83

4 Networks, Collaboration, and Sustainability 85 Case #1, Opening Case: Mobile Network Gives Haneda Airport Its Competitive Edge 86

4.1 Business IT Networks and Components 88 4.2 Wireless Network Applications and Mobile Infrastructure 93 4.3 Network Management and Search 96 4.4 Collaboration and Communication Technologies 102 4.5 Sustainability and Ethical Issues 104 Case #2, Business Case: Avoiding a Future of Crippling Car Congestion 109 Case #3, Video Case: Advocate Health Care achieves Fast ROI with Business Video 110 Data Analysis & Decision Making: Cost Comparison of Web Conferencing 110

5 CyberSecurity, Compliance, and Business Continuity 112 Case #1, Opening Case: Managing BYOD Security Risks 113 5.1 Up Close Look at Cybercrimes, Criminals, and Motivations 116 5.2 IT Vulnerabilities and Threats 122 5.3 Defending Against Fraud 130 5.4 Information Assurance and Risk Management 131 5.5 Network Security 134 5.6 Internal Control and Compliance 137 5.7 Business Continuity and Auditing 139 Case #2, Business Case: Army Deploys Androids, Securely 143 Case #3, Video Case: Cars, Appliances Could Be Hack Targets 143 Data Analysis & Decision Making: Financial Impact of Breached Protected Health Information 144

Part II Digital, Mobile and Social Commerce

6 E-Business & E-Commerce Models and Strategies 145 Case #1, Opening Case: The Google Universe 147 6.1 E-Business Challenges and Strategies 156 6.2 Business to Consumer (B2C) E-Commerce 166 6.3 Business to Business (B2B) E-Commerce and E-Procurement 169 6.4 E-Government and Public Sector IT Trends 172 6.5 E-Commerce Support Services and Digital Marketing Communications 174

vii

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6.6 E-Business Ethics and Legal Issues 182 Case #2, E-Government: Increasing Productivity and Efficiency with Cloud and Mobile Technologies 187 Case #3, Video Case: Finding Your Dream Home in the Age of E-Commerce 188 Data Analysis & Decision Making: Creating Visualizations Using Public Online Datasets 189

7 Mobile Technologies and Commerce 191 Case #1, Opening Case: Macy’s Races Ahead with Mobile Retail Strategies 192 7.1 Mobile Computing Technology 194 7.2 Mobile Commerce 199 7.3 Mobile Transactions and Financial Services 206 7.4 Location-Based Services and Commerce 210 7.5 Mobile Enterprise Applications 214 Case #2, Business Case: Mobile eTextbooks with Chegg.com 220 Case #3, Video Case: Future Tech: Searching with Pictures using MVS 221 Data Analysis & Decision Making: Estimating Financial Benefits of Increased Customer Loyalty 222

8 Web 2.0 and Social Media 225 Case #1, Opening Case: Organizations WOW Customers with Social Customer Service 226 8.1 Web 2.0 and Social Media 229 8.2 Virtual Communities and Social Networking Services 237 8.3 Enterprise 2.0—Social Networks and Tools for Business 245 8.4 Social Media Metrics 250 8.5 The Future: Web 3.0 256 Case #2, Business Case: Is Google+ a Better Social Network? 264 Case #3, Video Case: Creating Customer Engagement for Danone Activia 265 Data Analysis & Decision Making: Estimating the Value of Social Media 266

Data Analysis & Decision Making: SunWest Foods’ Improved Bottom Line 299

10 Enterprise Systems and Applications 301 Case #1, Opening Case: Managing the U.S. Munitions Supply Chain 302 10.1 Enterprise Systems 304 10.2 Enterprise Resource Planning (ERP) Systems 307 10.3 Supply Chain Management (SCM) Systems 315 10.4 Collaborative Planning, Forecasting, and Replenishment (CPFR) Systems 320 10.5 Customer Relationship Management (CRM) Systems 324 Case #2, Business Case: Supply Chain Collaboration in the Cloud at Lenovo 330 Case #3, Video Case: Supply Chain Performance Management 331 Data Analysis & Decision Making: Assessing the Cost/Benefits of Cloud CRM 331

11 Performance Management using Data Visualization, Mashups, and Mobile Intelligence 333 Case #1, Opening Case: Data Viz iPad App Improves America First’s Performance 334 11.1 Data Visualization and Data Discovery 338 11.2 Enterprise Data Mashups 343 11.3 Business Dashboards 347 11.4 Mobile Dashboards and Intelligence 349 Case #2, Visualization Case: Are You Ready for Some Football? 353 Case #3, Video Case: Mashup-Driven Dashboards and Reporting 353 Data Analysis & Decision Making: Know Your Facebook Fans with Mobile Intelligence 353

Part III Enterprise Systems and Analytics

9 Functional Area and Compliance Systems 269 Case #1, Opening Case: International Speedway Gets Lean 270 9.1 Management Levels and Functional Systems 272 9.2 Manufacturing, Production, and Transportation Systems 276 9.3 Sales and Marketing Systems 282 9.4 Accounting, Finance, and Compliance Systems 285 9.5 Human Resources Systems, Compliance, and Ethics 292 Case #2, Business Case: Station Casinos’ Loyalty Program 298 Case #3, Video Case: Superior Manufacturing Wipes the Competition 299

Part IV IT Planning, Strategy, and Ethics

12 IT Strategy, Sourcing, and Vendor Relationships 355 Case #1, Opening Case: Consumer Banks Reinvent with New Business and IT Strategies 356 12.1 IT Strategy and the Strategic Planning Process 358 12.2 IT Governance 367 12.3 Aligning IT with Business Strategy 369 12.4 IT Operating Plans and Sourcing Strategies 373 12.5 IT Vendor Relationships 380 Case #2, Business Case: PUMA Sources Its Billing Department 383 Case #3, Webinar Case: Strategic Value of Health Info Exchange at UMass Memorial 385 Data Analysis & Decision Making: Third-Party vs. Company-Owned Offshoring 385

viii Contents

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Contents ix

13 Business Process and Project Management 387 Case #1, Opening Case: AutoTrader.com’s Order Process Goes from Fragile to Flexible 388 13.1 Business Process Management (BPM) 390 13.2 Software Architecture and IS Design 399 13.3 IT Project Management 405 13.4 Systems Development 408 Case #2, Business Case: Pep Boys’ IT Planning Process 416 Case #3, Video Case: BlueWorksLive 417 Process Modeling: Modeling a Business Process and Brainstorming a Business Using ARIS Express and Blueprint 417

14 IT Ethics and Responsible Conduct 418 Case #1, Opening Case: Recognizing Corporate Social Media Discrimination 419

14.1 Can IT Cut its Global Carbon Footprint? Can Users? 422 14.2 Responsible Conduct 428 14.3 Connectivity Overload and a Culture of Distraction 431 14.4 On the Verge of a New Tech Revolution 433 Case #2, Business Case: Target’s Big Data Analytics Know Too Much 437 Case #3, Video Case: Backlash against Google Street View 437 Simulation: Global Warming Calculator 437

Glossary G-1

Organizational Index O-1

Name Index N-1

Subject Index S-1

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Mega-forces in Information Technology (IT) are creating

an exciting new world. Leading technology trends—

namely social, mobile, cloud, big data, and analytics—offer unprecedented business opportunities. When these tech-

nologies converge, organizations are able to gain a com-

petitive edge, to expand market reach, to build brands, and

to develop innovative features or ways of doing business.

Today’s managers, leaders, entrepreneurs and knowledge

workers need to know how to leverage the power of inno-

vative technologies, media, networks, platforms, services,

and devices. They now need talents and skills that were not

part of our vocabulary five years ago—or maybe five

months ago.

In this 9th edition, students learn, explore and ana-

lyze the latest information technologies and their impact

on, well, almost everything. Students learn how strategy, operations, supply chains, customer and supplier relation-

ships, collaboration, reporting, recruiting, financing, per-

formance, growth, productivity, and their career success

are driven by and dependent on IT-capabilities. Here are

a few examples of influential IT developments as well as

disruptive impacts of IT covered in this book:

• Big data, or databases so large they can’t be handled with traditional software, is the next frontier for inno- vation, competition, and productivity. Big data is pro-

duced by companies that track all of our Internet

activity, online purchases, and social media interac-

tions. Big data analytics turns ambiguity into clarity

and action.

• Financing is a core component of any business.

Crowdfunding, raising small amounts of money from many people, grew from a $32 million market in May 2010 to a $123 million market by May 2012.

Kickstarter transformed the investment process for investors and entrepreneurs by providing a funding

alternative to turn good business ideas into reality.

• From customer service and qualitative research to pro-

motional support and reinforcing a brand, Facebook is a tremendous marketing tool. The value of social media lies in the fact that it is the most pervasive form of 2 way communication ever created. Social media

helps grow business and create meaningful customer

relationships.

• Twitter enables direct contact with customers. Brands can chat with existing customers and jump into conver-

sations to grow their fan base.

PREFACE

• Mobility and cloud computing are changing how peo- ple and companies interact with information. Mobile

technology has a huge impact on customer behavior

and expectations.

• Sustainability and green business are smart business.

• With data visualization, dashboards, and enterprise mashups, users can better prepare for and respond to unanticipated events and make more effective deci-

sions in complex, dynamic situations.

Engaging Students to Assure Learning Information Technology for Management 9th edition engages students with up-to-date coverage of the most

important IT trends today. Over the years, this leading IT

textbook had distinguished itself with an emphasis on

illustrating the use of cutting edge business technologies

for achieving managerial goals and objectives. The 9th

edition continues this tradition with more hands-on activ-

ities and analyses.

Each chapter contains numerous case studies and

real world examples illustrating how businesses increase

productivity, improve efficiency, enhance communication

and collaboration, and gain a competitive edge through

the use of ITs. Faculty will appreciate a variety of options

for reinforcing student learning, that include:

3 Cases

• Case #1, Opening case • Case #2, Business case • Case #3, Video case

Within chapter learning aids

• Vocabulary in the margins

• Videos references

• Tech notes

End-of-Chapter learning aids

• “Evaluate and Expand Your Learning” sections

1. IT and Data Management Decisions

2. Questions for Discussion & Review

3. Online Activities

4. Collaborative Work

• Data Analysis & Decision Making sections

xi

FMTOC.qxd 11/26/12 5:09 PM Page xi

Other pedagogical features

• Quick Look. The chapter outline provides a quick indication of the major topics covered in the chapter.

• Learning Outcomes. Learning outcomes listed at the beginning of each chapter help students focus

their efforts and alert them to the important con-

cepts that will be discussed.

• IT at Work. The IT at Work boxes spotlight real- world cases and innovative uses of IT.

New and Enhanced Features of 9th Edition The textbook consists of 14 chapters organized into four

parts. Chapters 1 and 11 are new. All other chapters have

new sections as well as updated sections, as shown in

Table P-1.

xii Preface

Overview of New and Expanded IT Issues; and Several of the Innovative Organizations that are Discussed in the Chapters

Chapter New & Expanded Issues Innovative Organizations

TABLE P-1

1: A Look Toward the Crowdfunding

Future of Information Cloud computing Kickstarter.com

Technology The Internet of Things

IT consumerization

2: Information Management Enterprise mashups

and IT Architecture Information management PaulMcCartney.com

Cloud services

Virtualization

Virtual machines (VM)

3: Database, Data Warehouse, Big data

and Data Mining Operational intelligence msnNow

Data ownership

Compliance

4: Networks, Collaboration, Mobile infrastructure

and Sustainability Sustainability Evernote

Machine-to-machine communication

Near-field communication iMindmap Online

SharePoint

5: CyberSecurity, Compliance, BYOD Anonymous & LulzSec

and Business Continuity Hacktivism AT&T Toggle

IT consumerization

Advanced persistent threats

Do not carry policies IT governance

6: E-Business & E-Commerce International e-business Google, Inc.

Models and Strategies Internet Advertising Realtor.com

Search engine marketing (SEM)

7: Mobile Technologies Consumer use of mobile tech Chegg.com

and Commerce Innovation in traditional and Shopkick

web-based retail

Location-based marketing

In-store mobile payments

8: Web 2.0 and Social Media Social media platforms & services Bottlenose

Feature convergence Poolparty.biz

Application Programmint Interfaces (APIs) Google+

Social semantic web services

9: Functional Area and Customer touchpoints SquareUp

Compliance Systems Tag management AdWeek

Interactive data

10: Enterprise Systems On-demand CRM Joint Munitions Command

and Applications Enterprise application integration Kissmetrics.com

(continued)

FMTOC.qxd 11/26/12 5:09 PM Page xii

Preface xiii

• Solid theoretical foundations. Throughout the book, students learn the theoretical foundation necessary for

understanding IT.

• Up-to-date. Every topic in the book has been researched to find the most up-to-date information

and features.

• Economic justification. With the sluggish economic recovery, IT costs and proofs of concept are being

demanded prior to investments. Students learn about

various cost factors, including total cost of ownership

and service level agreements.

• IT Ethics, sustainability, and responsible conduct. IT has become so pervasive, invasive, prevalent, and a

power-guzzler that ethics, sustainability and responsi-

ble conduct need to be addressed. For example, we

clearly explain how contributions from the field of IT

can lead to reduced carbon emissions and global

warming, improving quality of life on the plant now

and for future generations. We also help students to

understand the critical issues related to cyber security,

privacy invasion and other data-related abuses so that

students can and assess characteristics of responsible

conduct.

Supplementary Materials An extensive package of instructional materials is avail-

able to support this 9th edition.

• 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 applica-

tions of concepts, case study elaboration, answers to

end-of-chapter questions, questions for review, ques-

tions for discussion, and Internet exercises.

• Test Bank. The test bank contains over 1,000 questions and problems (about 75 per chapter) consisting of

multiple-choice, short answer, fill-ins, and critical

thinking/essay questions.

• Computerized Test Bank. This electronic version of the test bank allows instructors to customize tests and

quizzes for their students.

• PowerPoint Presentation. A series of slides designed around the content of the text incorporates key points

from the text and illustrations where appropriate.

• Video Series. A collection of video clips provides stu- dents and instructors with dynamic international busi-

ness examples directly related to the concepts

introduced in the text. The video clips illustrate the

ways in which computer information systems are uti-

lized in various companies and industries.

• Textbook Web Site. (wiley.com/college/turban). The book’s Web site greatly extends the content and themes

of the text to provide extensive support for instructors

and students. Organized by chapter, it includes Chapter

Resources: tables, figures, link libraries, exercises, and

downloadable media-enhanced PowerPoint slides.

Acknowledgments Many individuals participated in focus groups or review-

ers. Our sincere thanks to the following reviewers who

Overview of New and Expanded IT Issues; and Several of the Innovative Organizations that are Discussed in the Chapters (continued)

Chapter New & Expanded issues Innovative Organizations

TABLE P-1

11: Performance Management Data visualization Roambi.com

using Data Visualization, Mobile dashboards Tableau software

Mashups, and Mobile User experience AlphaVision

Intelligence D3—data driven documents WeDo Technologies

SoftwareFX

12: IT Strategy, Sourcing, Transparency Mint.com

and Vendor Relationships High-end analytics Prosper.com

SOA Firescope.com

Business processing outsourcing

IT vendor relationships

13: Business Process and BPM mashups BlueWorksLive.com

Project Management Who’s accountable for IT failures AutoTrader.com

ARIS Express

BPM.com

14: IT Ethics and Social discrimination JobVite.com

Responsible Conduct Responsible conduct Social Intelligence

FMTOC.qxd 11/26/12 5:09 PM Page xiii

provided valuable feedback, insights, and suggestions that

improved the quality of this text.

Joni Adkins, Northwest Missouri State University

Karlyn Barilovits, Walden University

Nathan Boyer, Grantham University

Dr. Lewis Chasalow, The University of Findlay

Kuan Chen, Purdue University Calumet

Henry D. Crockett, Tarleton State University

Amir Dabirian, CSU, Fullerton

Norzaidi Mohd Daud, Universiti Teknologi MARA

Michael Donahue, Towson University

Richard Egan, NJIT

Samuel Elko, Seton hill university

Jerry Fjermestad, NJIT

Robert Gordon, Molloy College

Raj Heda, Boston University

Robert Hofkin, Walden University

Lionel M. Holguin Jr., Athens State University

Laurence Laning, Xavier University

Hiram Marrero, Universidad Del Turabo

Stew Mohr, Rutgers University

Barin Nag, Towson University

Mike O’Dowd, Colorado Technical University

Dee Piziak, Concordia University Wisconsin

Mahesh Raisinghani, TWU School of Management

Lisa Rich, Athens State University

Tricia Ryan, Laureate Education/ Walden University

Nancine Vitale, Dowling College

Minhua Wang, SUNY Canton

Charles Wankel, St. John’s University

Gene Wright, UW Milwaukee

We are very thankful for help of Graidi Ainsworth,

our assistant, who carried out countless research, edito-

rial and record keeping tasks.

We are grateful for the expert and encouraging lead-

ership of Christopher Ruel, Beth Golub, and Katherine

Willis. Our sincere thanks for their guidance, patience and

support during the development of this most recent ver-

sion of the book.

Efraim Turban Linda Volonino

Gregory R. Wood Janice C. Sipior

xiv Preface

FMTOC.qxd 11/26/12 5:09 PM Page xiv

1

A Look Toward the Future of Information Technology1

Chapter

Learning Outcomes � Describe IT and management issues, opportunities, and

challenges.

� Identify management’s top concerns and the most

influential ITs.

� Assess the role of IT agility, IT consumerization, and

changes in competitive advantage in the second part of the

Information Age.

� Explain the strategic planning process, SWOT analysis, and

competitive models.

� Realize how IT impacts your career and the positive

outlook for IS management careers.

Quick Look

Case 1, Opening Case: Need Start-up Cash? Try Crowdfunding at Kickstarter.com

1.1 IT and Management Opportunities and Challenges

1.2 Top Management Concerns and the Most Influential ITs

1.3 IT Agility, Consumerization, and Competitive Advantage

1.4 Strategic Planning and Competitive Models 1.5 Why IT Is Important to Your Career, and IT Careers

Key Terms

Chapter 1 Link Library

Evaluate and Expand Your Learning

• IT and Data Management Decisions • Questions for Discussion & Review • Online Activities • Collaborative Work

Case 2, Business Case: Building a Sustainable Big City with a Competitive Edge

Case 3, Video Case, Public Sector: ACCESS NYC—IT Strategy and Transformation

Data Analysis & Decision Making: Online Interactive Demo: Estimating Cost-Savings from Switching to the Cloud

References

Part I Maximizing the Value of Data and Information Technology

c01ALookTowardTheFutureOfInformationTechnology.qxd 11/6/12 10:02 AM Page 1

2

In this opening chapter, you read about management’s top

concerns and the information systems (ISs) they consider

most influential to their organizations. Understanding sen-

ior management’s priorities is a smart starting point for

your career. You learn about the latest information tech-

nology (IT) trends that are important across all industry

sectors—small and medium businesses (SMB), multina-

tionals, government agencies, healthcare, and nonprofits.

Faced with business challenges, as a manager you need to

implement IT solutions and track how well they improve

performance. Faced with the latest new technology, as a

manager you need to be able to determine whether to

invest in it and how to acquire or implement it.

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