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ERP, Big Box Retail Wars, And Distribution As ‘The New Manufacturing.’

Chapter 4, Ecommerce,
Chapter 7, EIS, ERP,
IOT, Chapter 9,
Assignment
For this assignment, you will study southern california, and its unique distribution industry. In a three page paper you will address these issues:

How big a role does the distribution industry (warehousing, shipping import, trucking and order management) play in the total microeconomy of southern california?
What major components comprise the distribution industry?
How big a role does the distribution sector play in communities such as Moreno Valley and/or San Bernardino?
How large is the GDP of Riverside County versus those of LA, San Diego, and San Francisco? What role does distribution play in those numbers? What growth has taken place in Riverside County, due to the industry?
What kinds of information systems are required in order to operate a distribution facility?
What kinds of information systems are needed in order to manage a corporation, dedicated to the distribution sector
Full APA format and bibliography required.

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ISBN-13: 978-0-13-463520-0 ISBN-10: 0-13-463520-5

INFORMATION SYSTEMS TODAY M A N A G I N G I N T H E D I G I T A L W O R L D

E I G H T H E D I T I O N

Joseph Valacich Christoph Schneider

www.pearsonhighered.com

E I G H T H E D I T I O N

Valacich Schneider IN

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MIS: Engage, Apply, Empower

• Learning Catalytics™—is an interactive, student response tool that uses students’ smartphones, tablets, or laptops to engage them in more sophisticated tasks and critical thinking as well as collaboration with other class members. Included with MyLab with eText, Learning Catalytics enables you to generate classroom discussion, guide your lecture, and promote peer-to-peer learning with real-time analytics.

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• Dynamic Study Modules—help students learn the language of MIS by continuously assessing their activity and performance in real time by adapting to the student's knowledge and confidence on each concept. These are available as graded assignments prior to class, and accessible on smartphones, tablets, and computers.

• Reporting Dashboard—View, analyze, and report learning outcomes clearly and easily, and get the information needed to keep students on track throughout the course with the new Reporting Dashboard. Available via the MyLab Gradebook and fully mobile-ready, the Reporting Dashboard presents student performance data at the class, section, and program levels in an accessible, visual manner.

• Accessibility (ADA)—Pearson is working toward WCAG 2.0 Level AA and Section 508 standards, as expressed in the Pearson Guidelines for Accessible Educational Web Media. Moreover, our products support customers in meeting their obligation to comply with the Americans with Disabilities Act (ADA) by providing access to learning technology programs for users with disabilities.

Please email our Accessibility Team at disability.support@pearson.com for the most up-to-date information.

• LMS Integration—You can now link from Blackboard Learn, Brightspace by D2L, Canvas, or Moodle to MyISLab. Professors can acess assignments, rosters, and resources, and synchronize grades with your LMS gradebook.

Single sign-on provides students access to all the personalized learning resources that make studying more efficient and effective.

• Branching, Decision-Making Simulations—students take on the role of manager as they make a series of decisions based on a realistic business challenge, fostering decision making and problem solving skills. The simulations change and branch based on their decisions, creating various scenario paths. At the end of each simulation, students receive a grade and a detailed report of the choices they made with the associated consequences included.

• Writing Space—Better writers make better communicators— who become better managers. Designed to help develop and assess concept mastery and critical thinking, the Writing Space offers auto-graded writing assignments, and assisted auto-graded writing assignments so students can receive meaningful, personalized feedback quickly and easily. And because of Intergration with Turnitin®, Writing Space can check students’ work for improper citation or plagiarism.

A L W A Y S L E A R N I N G

Office 2016 Grader Projects—Students complete projects in Excel and Access to demonstrate problem solving, critical thinking, and data analysis skills. Projects are automatically graded and include feedback. Integrity tokens in each project prevent and detect cheating.

•

PROBLEM SOLVING

TEAMWORK DECISION MAKING

CRITICAL THINKING

ABILITY TO APPLY

KNOWLEDGE

COMMUNICATION

NEW

HIR E

Information systems have become pervasive. Mobile devices, social media, and cloud computing have transformed organizations and society. The Internet of Things can generate a wealth of potentially useful Big Data. The rapid development of transportation and telecommunication technologies, national and global infrastructures, and information systems as well as a host of other factors has created a number of pressing societal issues that tremendously influence the world we live in. These issues include demographic changes, urbanization, shifts in economic power, resource scarcity, and climate change. As a consequence, sustainable development will become an ever increasingly important aspect for organizations. Throughout this revision, we discuss how organizations can harness radical innovations and other technological developments, as well as the role of information systems in influencing and addressing pressing societal issues; further, we added a new chapter element about the role of Green IT. We designed the book’s cover to emphasize how IT resides within and influences various societal issues.

• Learning Catalytics™—is an interactive, student response tool that uses students’ smartphones, tablets, or laptops to engage them in more sophisticated tasks and critical thinking as well as collaboration with other class members. Included with MyLab with eText, Learning Catalytics enables you to generate classroom discussion, guide your lecture, and promote peer-to-peer learning with real-time analytics.

• Enhanced eText—keeps students engaged in learning on their own time, while helping them achieve greater conceptual understanding of course material. The embedded videos, simulations, and activities bring learning to life. to apply the very concepts they are reading about. Combining resources that illuminate content with accessible self-assessment, MyLab with Enhanced eText provides students with a complete digital learning experience—all in one place.

• Dynamic Study Modules—help students learn the language of MIS by continuously assessing their activity and performance in real time by adapting to the student's knowledge and confidence on each concept. These are available as graded assignments prior to class, and accessible on smartphones, tablets, and computers.

• Reporting Dashboard—View, analyze, and report learning outcomes clearly and easily, and get the information needed to keep students on track throughout the course with the new Reporting Dashboard. Available via the MyLab Gradebook and fully mobile-ready, the Reporting Dashboard presents student performance data at the class, section, and program levels in an accessible, visual manner.

• Accessibility (ADA)—Pearson is working toward WCAG 2.0 Level AA and Section 508 standards, as expressed in the Pearson Guidelines for Accessible Educational Web Media. Moreover, our products support customers in meeting their obligation to comply with the Americans with Disabilities Act (ADA) by providing access to learning technology programs for users with disabilities.

Please email our Accessibility Team at disability.support@pearson.com for the most up-to-date information.

• LMS Integration—You can now link from Blackboard Learn, Brightspace by D2L, Canvas, or Moodle to MyISLab. Professors can acess assignments, rosters, and resources, and synchronize grades with your LMS gradebook.

Single sign-on provides students access to all the personalized learning resources that make studying more efficient and effective.

A L W A Y S L E A R N I N G

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330 Hudson Street, NY NY 10013

INFORMATION SYSTEMS TODAY

Joseph Valacich University of Arizona

Christoph Schneider City University of Hong Kong

M A N A G I N G I N T H E D I G I T A L W O R L D

E I G H T H E D I T I O N

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VP Editorial Director: Andrew Gilfillan Senior Portfolio Manager: Samantha Lewis Content Development Team Lead: Laura Burgess Program Monitor: Ann Pulido/SPi Global Editorial Assistant: Madeline Houpt Product Marketing Manager: Kaylee Carlson Project Manager: Katrina Ostler/ Cenveo® Publisher Services Text Designer: Cenveo® Publisher Services Cover Designer: Brian Malloy/ Cenveo® Publisher Services

Cover Art: Kanate/Shutterstock; Zera93/Shutterstock; Maglara/Shutterstock; iDesign/Shutterstock; Fine Art/ Shutterstock Full-Service Project Management: Cenveo® Publisher Services Composition: Cenveo® Publisher Services Printer/Binder: RR Donnelley/Menasha Cover Printer: Phoenix Color Text Font: 10/12 Times LT Pro Unattributed figures in text: Joseph Valacich, Christoph Schneider, Information Systems Today, 8Ed., © 2018. Pearson Education, Inc., New York, NY.

Microsoft and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published as part of the services for any purpose. All such documents and related graphics are provided “as is” without warranty of any kind. Microsoft and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all warranties and conditions of merchantability, whether express, implied or statutory, fitness for a particular purpose, title and non-infringement. In no event shall Microsoft and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from the services.

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Dedication

To my mother Mary, you are the best. —Joe

To Birgit for your love and support. —Christoph

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vii

Joseph (Joe) Valacich is an Eller Professor of MIS within the Eller College of Management at the University of Arizona, a Fellow of the Association for Information Systems (2009), and the Chief Science Officer (CSO) of Neuro-ID, Inc. He was previously on the faculty at Indiana University, Bloomington, and Washington State University, Pullman. He has had visiting faculty appointments at City University of Hong Kong, Buskerud College (Norway), the Helsinki School of Economics and Business, the Norwegian University of Life Sciences, and Riga Technical University (Latvia). He received a PhD degree from the University of Arizona (MIS) and MBA and BS (Computer Science) degrees from the University of Montana. Prior to his academic career, Dr. Valacich worked in the software industry in Seattle in both large and startup organizations.

Dr. Valacich has served on various national task forces designing model curricula for the information systems discipline, including IS ‘97, IS 2002, and IS 2010: The Model Curriculum and Guidelines for Undergraduate Degree Programs in Information Systems, where he was co-chairperson. He also served on the task force that designed MSIS 2000 and 2006: The Master of Science in Information Systems Model Curriculum. He served on the executive committee, funded by the National Science Foundation, to define the IS Program Accreditation Standards and served on the board of directors for CSAB (formally the Computing Sciences Accreditation Board) representing the Association for Information Systems (AIS). He was the general confer- ence co-chair for the 2003 International Conference on Information Systems (ICIS) and the 2012 Americas Conference on Information Systems (AMCIS); both were held in Seattle.

Dr. Valacich has conducted numerous corporate training and executive development pro- grams for organizations, including AT&T, Boeing, Dow Chemical, EDS, Exxon, FedEx, General Motors, Microsoft, and Xerox. He has served in a variety of editorial roles within various academic journals and conferences. His primary research interests include human–computer interaction, deception detection, technology-mediated collaboration, mobile and emerging tech- nologies, and e-business. He is a prolific scholar, having published more than 200 scholarly articles in numerous prestigious journals and conferences, including: MIS Quarterly, Information Systems Research, Management Science, Academy of Management Journal, Journal of MIS, Decision Sciences, Journal of the AIS, Communications of the ACM, Organizational Behavior and Human Decision Processes, and Journal of Applied Psychology. He is a coauthor of the leading textbooks Modern Systems Analysis and Design (8th ed.) and Essentials of Systems Analysis and Design (6th ed.), both published by Pearson.

In 2016, Dr. Valacich was awarded the University of Arizona, Tech Launch Arizona, “Innova- tion & Impact Award” for Information Technology. He was awarded the “Distinguished Alumnus Award” from the University of Montana Alumni Association in 2012 and the “Outstanding Alum- nus Award” from the University of Montana’s School of Business Administration in 2009. Dr. Valacich is also ranked as one of the most prolific authors in the history of MIS Quarterly—his discipline’s top journal—over the life of the journal (1977–2016) (see misq.org). Throughout his career, he has also won numerous teaching, service, and research awards.

Christoph Schneider is an assistant professor in the Department of Information Systems at City University of Hong Kong and previously held a visiting faculty appointment at Boise State University. He earned a Swiss Higher Diploma in Hotel Management at the University Centre César Ritz in Brig, Switzerland, a BA in Hotel and Restaurant Administration at Washington State University, and a PhD in Business Administration (Management Information Systems) at Washington State University. His teaching interests include the management of information systems and web design.

About the Authors

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viii ABOUT THE AUTHORS

Dr. Schneider is an active researcher. His primary research interests include human–com- puter interaction, electronic commerce, and computer-mediated collaboration. His research has appeared in peer-reviewed journals, such as Information Systems Research, Management Infor- mation Systems Quarterly, Management Science, and IEEE Transactions on Professional Com- munication; further, he has presented his research at various international conferences, such as the International Conference on Information Systems, the European Conference on Informa- tion Systems, and the Hawaii International Conference on System Sciences. He serves as a member of the International Steering Committee of the International Conference on Informa- tion Systems Development (ISD) and as senior editor at Information Systems Journal.

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ix

Preface xix

Chapter 1 Managing in the Digital World 2

Chapter 2 Gaining Competitive Advantage Through Information Systems 48

Chapter 3 Managing the Information Systems Infrastructure and Services 90

Chapter 4 Enabling Business-to-Consumer Electronic Commerce 138

Chapter 5 Enhancing Organizational Communication and Collaboration Using Social Media 182

Chapter 6 Enhancing Business Intelligence Using Big Data and Analytics 224

Chapter 7 Enhancing Business Processes Using Enterprise Information Systems 270

Chapter 8 Strengthening Business-to-Business Relationships via Supply Chain and Customer Relationship Management 306

Chapter 9 Developing and Acquiring Information Systems 344

Chapter 10 Securing Information Systems 390

Technology Briefing Foundations of Information Systems Infrastructure 442

Acronyms 491

Glossary 493

Name Index 513

Organization Index 514

Subject Index 517

Brief Contents

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Preface xix

Chapter 1 Managing in the Digital World 2 MANAGING IN THE DIGITAL WORLD: Open Innovation 2

Information Systems Today 4 The Emergence of the Digital World 4 Globalization and Societal Issues in the Digital World 7 ◾ COMING ATTRACTIONS: Memory Crystals 7 Five IT Megatrends That Shape the Digital Future 10 ◾ WHO’S GOING MOBILE: Wearable Technologies 10 ◾ GREEN IT: The Green Internet of Things 16

Information Systems Defined 16 Data: The Root and Purpose of Information Systems 18 Hardware, Software, and Telecommunications Networks: The Components of Information Systems 18 People: The Builders, Managers, and Users of Information Systems 19 ◾ SECURITY MATTERS: Ransomware 24 Organizations: The Context of Information Systems 25 ◾ WHEN THINGS GO WRONG: Technology Addiction 28

The Dual Nature of Information Systems 29 Case in Point: An Information System Gone Awry: Outages Outrage Gamers 29 Case in Point: An Information System That Works: FedEx 29 Information Systems for Competitive Advantage 30 ◾  ETHICAL DILEMMA: The Social and Environmental Costs of the Newest

Gadgets 31 IS Ethics 32

Information Privacy 32 Intellectual Property 36 The Need for a Code of Ethical Conduct 37 ◾ INDUSTRY ANALYSIS: Business Career Outlook 38

Key Points Review 39 • Key Terms 39 • Review Questions 40 • Self- Study Questions 40 • Problems and Exercises 41 • Application Exercises 42 • Team Work Exercise 42 • Answers to the Self-Study Questions 43

◾ APPLE 44 ◾ HEALTHCARE IS 45

Chapter 2 Gaining Competitive Advantage Through Information Systems 48

MANAGING IN THE DIGITAL WORLD: Startups and New Business Models 48

Enabling Organizational Strategy through Information Systems 50 Organizational Decision-Making Levels 50 Organizational Functional Areas 52

Contents

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Information Systems for Automating: Doing Things Faster 53 Information Systems for Organizational Learning: Doing Things Better 55 Information Systems for Supporting Strategy: Doing Things Smarter 56 Identifying Where to Compete: Analyzing Competitive Forces 56 Identifying How to Compete: Choosing a Generic Strategy 57 Identifying How to Compete: Resources and Capabilities 58 ◾ GREEN IT: The Electric Navy 59 Identifying How to Compete: Analyzing the Value Chain 60 The Role of Information Systems in Value Chain Analysis 60 The Technology/Strategy Fit 61

Business Models in the Digital World 61 ◾ WHO’S GOING MOBILE: Digital Nomads 62 Revenue Models in the Digital World 62 ◾ WHEN THINGS GO WRONG: The Pains of Uber in China 65 Platform-Based Business Models and the Sharing Economy 65 Service-Based Business Models 67 ◾ ETHICAL DILEMMA: The Ethics of the Sharing Economy 68

Valuing Innovations 69 The Need for Constant IS Innovation 71 Successful Innovation Is Difficult 72 Open Innovation 73 Organizational Requirements for Innovation 74 ◾ COMING ATTRACTIONS: The CITE Project 75 The Innovation Process 75 ◾ SECURITY MATTERS: The Bangladesh SWIFT Theft 78 Startups and Crowdfunding 78 ◾ INDUSTRY ANALYSIS: Education 80

Key Points Review 81 • Key Terms 81 • Review Questions 82 • Self- Study Questions 82 • Problems and Exercises 83 • Application Exercises 84 • Team Work Exercise 84 • Answers to the Self-Study Questions 84

◾ GROUPON 85 ◾ STREAMING VIDEO 86

Chapter 3 Managing the Information Systems Infrastructure and Services 90

MANAGING IN THE DIGITAL WORLD: From Google to Alphabet 90

The IS Infrastructure 92 ◾ �WHO’S GOING MOBILE: Mobile Payments Are Transforming Developing

Countries 94 Applications and Databases Supporting Business Processes 96 ◾ ETHICAL DILEMMA: Putting People’s Lives Online 97

IS Infrastructure Components 98 Hardware 98 System Software 100 Storage 102 ◾ COMING ATTRACTIONS: Making Death Optional? 102 Networking 103 ◾ GREEN IT: Alphabet Renewables 109 Data Centers 111

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CONTENTS xiii

Issues Associated with Managing the IS Infrastructure 112 Rapid Obsolescence and Shorter IT Cycles 112 Big Data and Rapidly Increasing Storage Needs 115 Demand Fluctuations 115 Increasing Energy Needs 116

Cloud Computing 116 ◾ �WHEN THINGS GO WRONG: Old and Dirty Energy Drives Global Internet

Growth 117 What Is Cloud Computing? 117 Managing the Cloud 121 Advanced Cloud Applications 124 ◾ SECURITY MATTERS: Car Hacking 126 Green Computing 129 ◾ INDUSTRY ANALYSIS: Movie Industry 130

Key Points Review 131 • Key Terms 131 • Review Questions 132 • Self- Study Questions 132 • Problems and Exercises 133 • Application Exercises 134 • Team Work Exercise 134 • Answers to the Self-Study Questions 135

◾ A CATALYST FOR INNOVATION: AMAZON WEB SERVICES 135 ◾ THE DARK WEB 136

Chapter 4 Enabling Business-to-Consumer Electronic Commerce 138

MANAGING IN THE DIGITAL WORLD: Taobao and the World of E-commerce 138

E-Commerce and E-Government 140 Types of Electronic Commerce 140 E-government 141 E-finance 142

Business-To-Consumer E-Commerce 143 ◾ COMING ATTRACTIONS: The AI Hedge Fund 144 E-tailing: Capabilities and Opportunities 146 Benefits of E-tailing 149 ◾ ETHICAL DILEMMA: The Ethics of Reputation Management 150 Drawbacks of E-tailing 151

Electronic Commerce Websites and Internet Marketing 151 Designing Websites to Meet Online Consumers’ Needs 152 ◾ SECURITY MATTERS: Too Small to Be Hacked? 152 Internet Marketing 154 ◾ WHEN THINGS GO WRONG: Buying Likes 158

Mobile Commerce, Consumer-To-Consumer EC, and Consumer-To-Business EC 159

C2C EC 161 C2B EC 162

Securing Payments and Navigating Legal Issues in EC 163 Securing Payments in the Digital World 163 ◾ GREEN IT: Green Online Shopping 164 ◾ WHO’S GOING MOBILE: Mobile Payments 165 Legal Issues in EC 168 ◾ INDUSTRY ANALYSIS: Retailing 171

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xiv CONTENTS

Key Points Review 172 • Key Terms 172 • Review Questions 173 • Self- Study Questions 173 • Problems and Exercises 174 • Application Exercises 175 • Team Work Exercise 175 • Answers to the Self-Study Questions 176

◾ WEB ANALYTICS 177 ◾ ROCKET INTERNET—CLONING BUSINESS MODELS 178

Chapter 5 Enhancing Organizational Communication and Collaboration Using Social Media 182

MANAGING IN THE DIGITAL WORLD: Facebook 182

The Need for Communication and Collaboration 184 Virtual Teams 184 Groupware 185 Videoconferencing 186 ◾ GREEN IT: Green IT Fueling Renewable Energy 188 Intranets and Employee Portals 188

The Evolving Web 190 ◾ COMING ATTRACTIONS: Dissolvable Electronics 191 Evolving Web Capabilities 191 Evolving Social Interaction 192 The Evolving Workspace 193 Future Web Capabilities 193

Social Media and the Enterprise 194 Enhancing Communication Using Social Media 194 Enhancing Cooperation with Social Media 197 ◾ SECURITY MATTERS: Terrorism Is Winning the Social Media Battle 200 Enhancing Collaboration with Social Media 201 ◾ WHO’S GOING MOBILE: Going SoLoMo: Yelp 203 Enhancing Connection with Social Media 205 ◾ ETHICAL DILEMMA: Anonymity, Trolling, and Cyberharassment 207

Managing Social Media Applications in the Enterprise 208 Organizational Issues 208 ◾ WHEN THINGS GO WRONG: Crowdfunding Failures 210 Downsides and Dangers of using Social Media Applications 211 ◾ INDUSTRY ANALYSIS: Online Travel 213

Key Points Review 214 • Key Terms 214 • Review Questions 215 • Self- Study Questions 215 • Problems and Exercises 216 • Application Exercises 216 • Team Work Exercise 217 • Answers to the Self-Study Questions 218

◾ LIVING IN A BUBBLE: FACEBOOK, NEWSFEEDS, AND JOURNALISM 218 ◾ LIKE FARMING AND CLICKBAIT 219

Chapter 6 Enhancing Business Intelligence Using Big Data and Analytics 224

MANAGING IN THE DIGITAL WORLD: Intelligence Through Drones 224

Enhancing Organizational Decision Making 226 Why Organizations Need Business Intelligence and Advanced Analytics 226 ◾ �GREEN IT: Big Data, Internet of Things, and Analytics Fuel Greener

Facilities 229 Databases: Providing Inputs into Business Intelligence and Advanced Analytics 229

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◾ WHEN THINGS GO WRONG: Twitter Fever—Look Before You Tweet 233 ◾ COMING ATTRACTIONS: Emotion Aware Gaming 239

Business Intelligence and Advanced Analytics 239 Business Intelligence 240 ◾ WHO’S GOING MOBILE: Identifying Malaria Hotspots 245 Advanced Analytics 245 ◾ ETHICAL DILEMMA: Orwellian Internet of Things 247 ◾ �SECURITY MATTERS: Hacktivists Versus Fembots: The Ashley Madison

Case 253 Knowledge Management and Geographic Information Systems 254

Knowledge Management Systems 254 Geographic Information Systems 257 ◾ INDUSTRY ANALYSIS: Healthcare 260

Key Points Review 261 • Key Terms 261 • Review Questions 262 • Self- Study Questions 262 • Problems and Exercises 263 • Application Exercises 264 • Team Work Exercise 265 • Answers to the Self-Study Questions 265

◾ NSA: NATIONAL SURVEILLANCE AGENCY? 265 ◾ GATHERING SOCIAL INTELLIGENCE 266

Chapter 7 Enhancing Business Processes Using Enterprise Information Systems 270

MANAGING IN THE DIGITAL WORLD: Amazon.com 270

Core Business Processes and Organizational Value Chains 272 Core Business Processes 272 Organizational Activities Along the Value Chain 274 ◾ GREEN IT: Why Your Enterprise Systems Should Be in the Cloud 277 Value Systems: Connecting Multiple Organizational Value Chains 279

Enterprise Systems 279 The Rise of Enterprise Systems 280 Supporting Business Processes 281 ◾ ETHICAL DILEMMA: Too Much Intelligence? RFID and Privacy 282 ◾ �COMING ATTRACTIONS: The Internet of Things Will Transform ERP and

Organizations 285 Enterprise Resource Planning 288

Responding to Compliance and Regulatory Demands 289 Choosing an ERP System 289 ◾ �SECURITY MATTERS: To Update or Not to Update, That Shouldn’t Be the

Question 290 Enabling Business Processes Using ERP Core Components 291 ERP Installation 294 ERP Limitations 294

Achieving Enterprise System Success 294 ◾ WHO’S GOING MOBILE: Big ERP Systems Embracing Small Mobile Devices 295 Secure Executive Sponsorship 295 Get Help from Outside Experts 296 Thoroughly Train Users 296 Take a Multidisciplinary Approach to Implementations 296 Evolve the Implementation 296 ◾ �WHEN THINGS GO WRONG: Software Error Frees Prisoners Early and Is

Linked to Killings 297

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◾ INDUSTRY ANALYSIS: The Automobile Industry 298 Key Points Review 299 • Key Terms 299 • Review Questions 300 • Self- Study Questions 300 • Problems and Exercises 301 • Application Exercises 302 • Team Work Exercise 302 • Answers to the Self-Study Questions 302

◾ SOFTWARE AS A SERVICE: ERP BY THE HOUR 303 ◾  AMAZON’S ORDER FULFILLMENT, AUTOMATION, AND TECHNOLOGICAL

UNEMPLOYMENT 304

Chapter 8 Strengthening Business-to-Business Relationships via Supply Chain and Customer Relationship Management 306

MANAGING IN THE DIGITAL WORLD: Walmart 306

Supply Chain Management 308 What Is a Supply Chain? 308 Business-to-Business Electronic Commerce: Exchanging Data in Supply Networks 308 Managing Complex Supply Networks 311 Benefits of Effectively Managing Supply Chains 312 Optimizing the Supply Chain Through Supply Chain Management 314 ◾ �WHEN THINGS GO WRONG: SpaceX Rocket Failure due to Supply Chain

Failure 315 Developing an SCM Strategy 316 ◾ GREEN IT: Nike’s Green Supply Chain 317 Supply Chain Planning 317 Supply Chain Execution 318 Supply Chain Visibility and Analytics 321

Customer Relationship Management 321 ◾ COMING ATTRACTIONS: Augmenting Supply Chain Success 322 ◾ �SECURITY MATTERS: Disclosing the Customer Data of the Most

Vulnerable 325 Developing a CRM Strategy 325 Architecture of a CRM System 326 ◾ �WHO’S GOING MOBILE: Developing a Mobile CRM App for

Customers 330 ◾ ETHICAL DILEMMA: When Algorithms Discriminate 334 Ethical Concerns with CRM 335 ◾ INDUSTRY ANALYSIS: Manufacturing 335

Key Points Review 336 • Key Terms 336 • Review Questions 337 • Self- Study Questions 337 • Problems and Exercises 338 • Application Exercises 339 • Team Work Exercise 339 • Answers to the Self-Study Questions 339

◾ SUPPLY CHAIN HAVOC 340 ◾ EFFICIENTLY DELIVERING PRODUCTS OVER THE “LAST MILE” 341

Chapter 9 Developing and Acquiring Information Systems 344 MANAGING IN THE DIGITAL WORLD: The Maker Movement 344

Making the Business Case 346 Business Case Objectives 346 The Productivity Paradox 346 Making a Successful Business Case 348 ◾ GREEN IT: Project Natick—Microsoft’s Underwater Data Centers 350

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CONTENTS xvii

◾ COMING ATTRACTIONS: Harvesting Human Energy 352 Presenting the Business Case 354 ◾ ETHICAL DILEMMA: Ethical App Development 356

The Systems Development Process 357 Custom Versus Off-the-Shelf Software 357 Open Source Software 358 Systems Integration: Combining Custom, Open Source, and Off-the-Shelf Systems 359 IS Development in Action 359 The Role of Users in the Systems Development Process 361 Systems Development Controls 361 Steps in the Systems Development Process 361 ◾ WHO’S GOING MOBILE: Creating Mobile Apps 362 Phase 1: Systems Planning and Selection 362 Phase 2: Systems Analysis 363 Phase 3: Systems Design 366 Phase 4: Systems Implementation and Operation 367 Repeating the SDLC: Systems Maintenance 369 ◾ SECURITY MATTERS: Mobile Cybercrime 371 Other Approaches to Designing and Building Systems 371

Acquiring Information Systems 373 External Acquisition 373 ◾ WHEN THINGS GO WRONG: Top Security Threats 374 Outsourcing Systems Development 378 ◾ INDUSTRY ANALYSIS: Broadcasting 380

Key Points Review 381 • Key Terms 381 • Review Questions 382 • Self- Study Questions 382 • Problems and Exercises 383 • Application Exercises 384 • Team Work Exercise 384 • Answers to the Self-Study Questions 385

◾  NEXT GENERATION IDENTIFICATION: FBI, ICE DATABASES EXPAND AND JOIN FORCES 386

◾ BIG DATA, HADOOP, MAP REDUCE 387

Chapter 10 Securing Information Systems 390 MANAGING IN THE DIGITAL WORLD: Not So “Anonymous”—Activists, Hacktivists, or Just Plain Criminals? 390

Computer Crime 392 Hacking and Cracking 392 Types of Computer Criminals and Crimes 392 ◾ �GREEN IT: Anonymous Protests the Killing of Dolphins and Whales in

Japan 396 Computer Viruses and Other Destructive Code 397 ◾ �WHEN THINGS GO WRONG: The Bug That Almost Killed the

Internet 402 Cyberharassment, Cyberstalking, and Cyberbullying 404 Software Piracy 404 Cybersquatting 406 Laws Against Computer Crime 406

Cyberwar and Cyberterrorism 407 ◾ WHO’S GOING MOBILE: Backdoors in Every Mobile Phone? 408 Cyberwar 408 Cyberterrorism 409

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xviii CONTENTS

Foundations of Information Systems Infrastructure 442 Foundational Topics in IS Hardware 443

Input Technologies 443 Processing: Transforming Inputs into Outputs 445 Output Technologies 449

Foundational Topics in IS Software 450 System Software 451 Programming Languages and Development Environments 451

Foundational Topics in Networking 457 Evolution of Computer Networking 457 Types of Networks 459 Packet Switching 462 Network Standards and Protocols 462 Network Technologies 466 The Internet 472

Foundational Topics in Database Management 478 Relational Database Design 478 Advanced Database Models 483

Key Points Review 483 • Key Terms 484 • Review Questions 485 • Self-Study Questions 486 • Problems and Exercises 487 • Answers to the Foundational Hardware Self-Study Questions 489 • Answers to the Foundational Software Self-Study Questions 489 • Answers to the Foundational Networking Self-Study Questions 489 • Answers to the Foundational Database Self-Study Questions 489

Acronyms 491

Glossary 493

Name Index 513

Organization Index 514

Subject Index 517

TECHNOLOGY BRIEFING

◾ �ETHICAL DILEMMA: Ethics and Cyberwar: Just Because We Can, Should We? 412

Managing Information Systems Security 412 Assessing Risks 414 Developing a Security Strategy 416 Implementing Controls and Training 418 ◾ �SECURITY MATTERS: Back to the Future: Analog May Be the Future of

Securing Critical Infrastructure 419 ◾ COMING ATTRACTIONS: Can You Become Your Password? 425 Monitoring Security 428 ◾ INDUSTRY ANALYSIS: Cybercops Track Cybercriminals 431

Key Points Review 432 • Key Terms 432 • Review Questions 433 • Self- Study Questions 433 • Problems and Exercises 434 • Application Exercises 436 • Team Work Exercise 436 • Answers to the Self-Study Questions 437

◾ STOPPING INSIDER THREATS: EDWARD SNOWDEN AND THE NSA 438 ◾ CHINA’S GREAT (FIRE) WALL 439

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xix

Approach Information systems have become pervasive. Mobile devices, social media, and cloud computing have transformed organizations and society. Organizations see the possibilities of the Internet of Things, in that not only computers but various sensors, motors, actuators, or even cameras can generate a wealth of potentially useful data. Businesses face unprecedented opportunities, but also challenges, through the ability to utilize Big Data. What does all this mean? What are the catalysts of these concepts and of all this change? More important, how can organizations thrive in this dynamic and highly competitive marketplace? The answer to these and many similar ques- tions is that information systems and related information technologies are driving innovation, new business models, and hypercompetition. It is little wonder that teaching an introductory course on information systems has never been more crucial—or more challenging.

One of the greatest challenges that we face in teaching information systems courses is how to keep pace in the classroom with what is happening out in the real world. Being relevant to students while at the same time providing the necessary foundation for understanding the breadth, depth, and complexity of information systems has never been more difficult. We wrote Informa- tion Systems Today, Eighth Edition, with this overarching goal in mind, to be both rigorous and relevant. To accomplish this, we want students not only to learn about information systems but also to clearly understand the importance of information systems for individuals, organizations, and society. Additionally, we do not want to simply spoon-feed students with technical terms and the history of information systems. Instead, students must understand exactly what innovative organizations are doing with contemporary information systems and, more important, where things are heading. Finally, we want to empower students with the essential knowledge needed to be successful in the use and understanding of information systems in their careers.

To this end, we wrote Information Systems Today, Eighth Edition, so that it is contemporary, fun to read, and useful, focusing on what business students need to know about information sys- tems to survive and thrive in the digital world.

Audience Information Systems Today, Eighth Edition, is primarily for the undergraduate introductory infor- mation systems course required of all business students. The introductory information systems course typically has a diverse audience of students majoring in many different areas, such as accounting, economics, finance, marketing, general management, human resource management, production and operations, international business, entrepreneurship, and information systems. This book was also written for students studying topics outside of business, especially in the growing and broad area of information sciences. Given the range of students taking this type of course, we have written this book so that it is a valuable guide to all students, providing them with the essential information they need to know. Therefore, this book has been written to appeal to a diverse audience.

Information Systems Today, Eighth Edition, can also be used for the introductory course offered at the graduate level—for example, in the first year of an MBA program. Such usage would be especially appropriate if the course heavily focused on the diverse set of cases provided in each chapter.

What’s New to the Eighth Edition Our primary goal for Information Systems Today, Eighth Edition, was to emphasize the impor- tance of information systems to all business students as the role of information technology and systems continues to expand within organizations and society. Most notably, we extensively

Preface

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xx PREFACE

examine how five big megatrends—mobile, social media, the Internet of Things, cloud comput- ing, and Big Data—are transforming individuals, organizations, and society. Given this clear focus, we are better able to identify those topics most critical to students and future business professionals. Consequently, we have made substantial revisions to the basic content of the chap- ters and pedagogical elements as well as introduced several new elements that we believe help achieve this goal. New or expanded chapter topics include the following:

�■ An extensively revised chapter—Chapter 1, “Managing in the Digital World”—focuses not only on defining what an information system consists of but also provides new content on globalization and societal issues in the digital world as well as the role of five IT mega- trends in fueling and addressing these issues.

�■ An extensively revised chapter—Chapter 2, “Gaining Competitive Advantage Through Information Systems”—provides new content describing how information systems play a key part in enabling different types of innovation and innovative business models.

�■ A revised chapter—Chapter 3, “Managing the Information Systems Infrastructure and Services”—provides updated content on the need for a reliable, adaptable, and scalable infrastructure to support the needs of today’s organizations as well as on essential infra- structure concepts related to hardware, software, storage, networking and the Internet, data centers, and cloud computing.

�■ A revised chapter—Chapter 4, “Enabling Business-to-Consumer Electronic Commerce”— provides updated content related to e-commerce involving the end consumer as well as new and expanded coverage of e-finance, fintech, and related issues.

�■ A revised chapter—Chapter 5, “Enhancing Organizational Communication and Collabora- tion Using Social Media”—centers around various topics related to the need for organiza- tional communication and provides updated content on how individuals and organizations use both traditional communication and collaboration tools and social media for communi- cation, collaboration, cooperation, and connection.

�■ An extensively revised chapter—Chapter 6, “Enhancing Business Intelligence Using Big Data and Analytics”—provides extended coverage on business intelligence and advanced analytics and greatly expanded content on machine learning, predictive modeling, artificial intelligence, unstructured data analytics, and spatial decision support.

�■ A revised chapter—Chapter 8, “Strengthening Business-to-Business Relationships via Supply Chain and Customer Relationship Management”—provides updated content on business-to-business electronic commerce and supply chain management as well as customer relationship management (CRM).

�■ A revised chapter—Chapter 9, “Developing and Acquiring Information Systems”— provides updates to various topics and extended content on alternative system development methodologies.

�■ A revised chapter—Chapter 10, “Securing Information Systems”—provides an update to all topics and deeper coverage on industrial espionage and cyberterrorism.

�■ A revised Technology Briefing covers foundational concepts related to various informa- tion technologies. The Technology Briefing provides the foundations for a deeper under- standing of the topics introduced in Chapter 3 and is intended for use in more technically oriented courses. Each section of this briefing was designed to stand alone—it can be read with or without the other sections.