CONTENTS: CASE STUDIES
CASE STUDY 1
Midsouth Chamber of Commerce (A): The Role of the Operating Manager in
Information Systems
CASE STUDY I-1
IMT Custom Machine Company, Inc.: Selection of an Information Technology
Platform
CASE STUDY I-2
VoIP2.biz, Inc.: Deciding on the Next Steps for a VoIP Supplier
CASE STUDY I-3
The VoIP Adoption at Butler University
CASE STUDY I-4
Supporting Mobile Health Clinics: The Children’s Health Fund of New York City
CASE STUDY I-5
Data Governance at InsuraCorp
CASE STUDY I-6
H.H. Gregg’s Appliances, Inc.: Deciding on a New Information Technology
Platform
CASE STUDY I-7
Midsouth Chamber of Commerce (B): Cleaning Up an Information Systems
Debacle
CASE STUDY II-1
Vendor-Managed Inventory at NIBCO
CASE STUDY II-2
Real-Time Business Intelligence at Continental Airlines
CASE STUDY II-3
Norfolk Southern Railway: The Business Intelligence Journey
CASE STUDY II-4
Mining Data to Increase State Tax Revenues in California
CASE STUDY II-5
The Cliptomania™ Web Store: An E-Tailing Start-up Survival Story
CASE STUDY II-6
Rock Island Chocolate Company, Inc.: Building a Social Networking Strategy
CASE STUDY III-1
Managing a Systems Development Project at Consumer and Industrial
Products, Inc.
CASE STUDY III-2
A Make-or-Buy Decision at Baxter Manufacturing Company
CASE STUDY III-3
ERP Purchase Decision at Benton Manufacturing Company, Inc.
CASE STUDY III-4
The Kuali Financial System: An Open-Source Project
CASE STUDY III-5
NIBCO’s “Big Bang”: An SAP Implementation
CASE STUDY III-6
BAT Taiwan: Implementing SAP for a Strategic Transition
CASE STUDY III-7
A Troubled Project at Modern Materials, Inc.
CASE STUDY III-8
Purchasing and Implementing a Student Management System at Jefferson
County School System
CASE STUDY IV-1
The Clarion School for Boys, Inc.– Milwaukee Division: Making Information
Systems Investments
CASE STUDY IV-2
FastTrack IT Integration for the Sallie Mae Merger
CASE STUDY IV-3
IT Infrastructure Outsourcing at Schaeffer (A): The Outsourcing Decision
CASE STUDY IV-4
IT Infrastructure Outsourcing at Schaeffer (B): Managing the Contract
CASE STUDY IV-5
Systems Support for a New Baxter Manufacturing Company Plant in Mexico
CASE STUDY IV-6
The Challenges of Local System Design for Multinationals: The MaxFli Sales
Force Automation System at BAT
CASE STUDY IV-7
Meridian Hospital Systems, Inc.: Deciding Which IT Company to Join
CASE STUDY IV-8
Mary Morrison’s Ethical Issue
Seventh Edition
Managing Information
Technology
Carol V. Brown
Howe School of Technology Management,
Stevens Institute of Technology
Daniel W. DeHayes
Kelley School of Business,
Indiana University
Jeffrey A. Hoffer
School of Business Administration,
The University of Dayton
E. Wainright Martin
Kelley School of Business,
Indiana University
William C. Perkins
Kelley School of Business,
Indiana University
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Library of Congress Cataloging-in-Publication Data
Managing information technology / Carol V. Brown . . . [et al.]. — 7th ed.
p. cm.
Includes bibliographical references and index.
ISBN-13: 978-0-13-214632-6 (alk. paper)
ISBN-10: 0-13-214632-0 (alk. paper)
1. Management information systems. I. Brown, Carol V. (Carol Vanderbilt), 1945T58.6.M3568 2012
658.4'038011—dc22
2010048598
10 9 8 7 6 5 4 3 2 1
ISBN 10:
0-13-214632-0
ISBN 13: 978-0-13-214632-6
BRIEF CONTENTS
Chapter 1
Managing IT in a Digital World
PART I Information Technology
Chapter 2
Chapter 3
Chapter 4
1
17
Computer Systems 19
Telecommunications and Networking
The Data Resource 95
60
PART II Applying Information Technology
Chapter 5
Chapter 6
Chapter 7
Enterprise Systems 189
Managerial Support Systems
E-Business Systems 253
187
223
PART III Acquiring Information Systems 327
Chapter 8
Chapter 9
Chapter 10
Chapter 11
Basic Systems Concepts and Tools 329
Methodologies for Custom Software Development 361
Methodologies for Purchased Software Packages 390
IT Project Management 410
PART IV The Information Management System
Chapter 12
Chapter 13
Chapter 14
Chapter 15
517
Planning Information Systems Resources 519
Leading the Information Systems Function 536
Information Security 561
Social, Ethical, and Legal Issues 575
Glossary 668
Index 691
iii
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CONTENTS
Preface xvii
Chapter 1 Managing IT in a Digital World
1
Recent Information Technology Trends
2
Computer Hardware: Faster, Cheaper, Mobile
2
Computer Software: Integrated, Downloadable, Social 2
Computer Networks: High Bandwidth, Wireless, Cloudy
New Ways to Compete 4
New Ways to Work 5
Managing IT in Organizations
Managing IT Resources
IT Leadership Roles
4
5
5
7
The Topics and Organization of This Textbook
8
Review Questions 9 • Discussion Questions 9 •
Bibliography 9
왘 CASE STUDY 1 Midsouth Chamber of Commerce (A): The Role of the
Operating Manager in Information Systems 10
PART I Information Technology
Chapter 2 Computer Systems
17
19
Basic Components of Computer Systems
20
Underlying Structure 20
Input/Output
20
Computer Memory 21
Arithmetic/Logical Unit
Computer Files
Control Unit
23
23
25
The Stored-Program Concept 25
Types of Computer Systems 28
Microcomputers
29
Midrange Systems
30
Mainframe Computers
Supercomputers
33
34
Key Types of Software 34
Applications Software 36
An Example of an Application Product
Personal Productivity Software
Support Software
37
38
41
The Operating System
Language Translators
41
43
v
vi
Contents
Third Generation Languages
43
Fourth Generation Languages
Markup Languages
46
48
Object-Oriented Programming 49
Languages for Developing Web Applications
Database Management Systems
CASE Tools
51
52
54
Communications Interface Software
Utility Programs
54
54
The Changing Nature of Software 55
The Information Technology Industry 55
Review Questions 56 • Discussion Questions 57 •
Bibliography 58
Chapter 3 Telecommunications and Networking
The Need for Networking
61
Sharing of Technology Resources
Sharing of Data
60
61
61
Distributed Data Processing and Client/Server Systems
Enhanced Communications
62
62
Marketing Outreach 62
An Overview of Telecommunications and Networking 62
Key Elements of Telecommunications and Networking 63
Analog and Digital Signals
63
Speed of Transmission 64
Types of Transmission Lines
Transmission Media
65
65
Topology of Networks
Types of Networks
72
Network Protocols
86
70
The Exploding Role of Telecommunications and Networking 88
Online Operations
Connectivity
88
89
Electronic Data Interchange and Electronic Commerce
89
Marketing 89
The Telecommunications Industry
90
Review Questions 92 • Discussion Questions 92 •
Bibliography 93
Chapter 4 The Data Resource
95
Why Manage Data? 96
Technical Aspects of Managing the Data Resource
The Data Model and Metadata
Data Modeling 98
Database Programming 100
97
97
Contents
Managerial Issues in Managing Data
Principles in Managing Data
101
101
The Data Management Process
106
Data Management Policies 110
Review Questions 114 • Discussion Questions 114 •
Bibliography 114
왘 CASE STUDY I-1 IMT Custom Machine Company, Inc.: Selection
of an Information Technology Platform 116
왘 CASE STUDY I-2 VoIP2.biz, Inc.: Deciding on the Next Steps for
a VoIP Supplier 128
왘 CASE STUDY I-3 The VoIP Adoption at Butler University 144
왘 CASE STUDY I-4 Supporting Mobile Health Clinics: The Children’s Health
Fund of New York City 157
왘 CASE STUDY I-5 Data Governance at InsuraCorp 166
왘 CASE STUDY I-6 HH Gregg: Deciding on a New Information Technology
Platform 170
왘 CASE STUDY I-7 Midsouth Chamber of Commerce (B): Cleaning up an
Information Systems Debacle 177
PART II Applying Information Technology
Chapter 5 Enterprise Systems
189
Application Areas
189
Critical Concepts
187
191
Batch Processing versus Online Processing 191
Functional Information Systems
Vertical Integration of Systems
Distributed Systems
192
Client/Server Systems
Virtualization
192
192
193
194
Service-Oriented Architecture and Web
Services 194
Transaction Processing Systems
Payroll System
196
196
Order Entry System
196
Enterprise Resource Planning Systems
198
An Example ERP System: SAP ERP 199
Data Warehousing 201
Customer Relationship Management
Systems 204
Office Automation 206
Videoconferencing
Electronic Mail
207
208
Groupware and Collaboration 209
An Example Groupware System: Lotus Notes
210
vii
viii
Contents
Intranets and Portals 213
Factory Automation 215
Engineering Systems
216
Manufacturing Administration 216
Factory Operations
Robotics
217
217
Supply Chain Management Systems
217
Review Questions 219 • Discussion Questions 220 •
Bibliography 220
Chapter 6 Managerial Support Systems
223
Decision Support Systems 223
Data Mining 224
Group Support Systems 228
Geographic Information Systems
229
Business Adopts Geographic Technologies
What’s Behind Geographic Technologies
230
231
Issues for Information Systems Organizations
232
Executive Information Systems/Business
Intelligence Systems 234
Knowledge Management Systems 237
Two Recent KMS Initiatives within a Pharmaceutical Firm
KMS Success
240
Artificial Intelligence 241
Expert Systems 241
Obtaining an Expert System 242
Examples of Expert Systems
242
Neural Networks 244
Virtual Reality 245
Review Questions 250 • Discussion Questions 250 •
Bibliography 251
Chapter 7 E-Business Systems
253
Brief History of the Internet
E-Business Technologies
254
254
Legal and Regulatory Environment
257
Strategic E-Business Opportunities (and Threats)
B2B Applications 260
B2C Applications 263
Two Dot-Com Retailers
264
Two Traditional Catalog Retailers
Two Traditional Store Retailers
Summary: B2C Retailing 268
266
267
259
239
Contents
Dot-Com Intermediaries
269
Summary: Successful Online Intermediary Models
273
Special Issue: What Makes a Good Web Site for
Consumers 273
Special Issue: What Makes a Good B2C Social
Media Platform 275
Review Questions 276 • Discussion Questions 276 •
Bibliography 277
왘 CASE STUDY II-1 Vendor-Managed Inventory at NIBCO
279
왘 CASE STUDY II-2 Real-Time Business Intelligence at Continental
Airlines 284
왘 CASE STUDY II-3 Norfolk Southern Railway: The Business Intelligence
Journey 294
왘 CASE STUDY II-4 Mining Data To Increase State Tax Revenues
in California 300
왘 CASE STUDY II-5 The CliptomaniaTM Web Store
308
왘 CASE STUDY II-6 Rock Island Chocolate Company, Inc.: Building a Social
Networking Strategy 321
PART III Acquiring Information Systems 327
Chapter 8 Basic Systems Concepts and Tools
The Systems View
What Is a System?
329
329
330
Seven Key System Elements
Organizations as Systems
330
334
Systems Analysis and Design 335
Business Processes
336
Identifying Business Processes
336
Business Process Redesign 336
Processes and Techniques to Develop Information
Systems 339
The Information Systems Development Life Cycle
339
Structured Techniques for Life-Cycle Development
340
Procedural-Oriented Techniques
341
Techniques for the As-Is Model 343
Techniques for the Logical To-Be Model 344
Techniques for Documenting the Physical To-Be
System 348
Object-Oriented Techniques
351
Core Object-Oriented Concepts
351
Summary of Processes and Techniques to Develop
Information Systems 353
ix
x
Contents
Information Systems Controls to Minimize Business Risks
Types of Control Mechanisms
355
Controls in the Definition and Construction Phases
355
Controls in the Implementation Phase 357
Review Questions 358 • Discussion Questions 359 •
Bibliography 359
Chapter 9 Methodologies for Custom Software Development
361
Systems Development Life Cycle Methodology
361
The SDLC Steps
362
Initiating New Systems Projects
Definition Phase
363
363
Construction Phase
365
Implementation Phase
366
The SDLC Project Team
370
Managing an SDLC Project
371
SDLC Advantages and Disadvantages
Prototyping Methodology
The Prototyping Steps
371
373
373
The Prototyping Project Team 375
Managing a Prototyping Project
375
Prototyping Advantages and Disadvantages
Prototyping Within an SDLC Process
Newer Approaches
375
376
377
Rapid Application Development (RAD)
Agile Methodologies
377
378
Managing Software Projects Using Outsourced Staff 381
Supporting User Application Development (UAD)
382
Advantages and Disadvantages of User-Developed
Applications 382
Assessing the Risks from UAD
384
Guidelines for User Developers 385
Review Questions 387 • Discussion Questions 387 •
Bibliography 388
Chapter 10 Methodologies for Purchased Software Packages
The Make-or-Buy Decision 391
Purchasing Methodology 391
The Purchasing Steps
392
Project Team for Purchasing Packages
Managing a Purchased System Project
400
401
Purchasing Advantages and Disadvantages
Special Case: Enterprise System Packages
Open Source Software 405
402
403
390
354
Contents
New Purchasing Option: Application Service Providers
(ASPs) 406
Review Questions 408 • Discussion Questions 408 •
Bibliography 409
Chapter 11 IT Project Management
410
IT Portfolio Management 411
Project Management Roles 412
Project Manager 412
Project Sponsor and Champion Roles
413
Project Initiation 415
Project Planning 416
Scheduling
Budgeting
Staffing
416
417
418
Planning Documents
420
Project Execution and Control 420
Managing Project Risks
423
Managing Business Change
424
Project Closing 426
Special Issue: Managing Complex IT Projects
Special Issue: Managing Virtual Teams 427
427
Review Questions 430 • Discussion Questions 430 •
Bibliography 431
왘 CASE STUDY III-1 Managing a Systems Development Project at Consumer
and Industrial Products, Inc. 432
왘 CASE STUDY III-2 A Make-or-Buy Decision at Baxter Manufacturing
Company 442
왘 CASE STUDY III-3 ERP Purchase Decision at Benton Manufacturing
Company, Inc. 449
왘 CASE STUDY III-4 The Kuali Financial System: An Open-Source
Project 455
왘 CASE STUDY III-5 NIBCO’s “Big Bang”: An SAP Implementation
468
왘 CASE STUDY III-6 BAT Taiwan: Implementing SAP for a Strategic
Transition 484
왘 CASE STUDY III-7 A Troubled Project at Modern Materials, Inc.
498
왘 CASE STUDY III-8 Purchasing and Implementing a Student Management
System at Jefferson County School System 506
PART IV The Information Management System
Chapter 12 Planning Information Systems Resources
519
Benefits of Information Resources Planning 519
Creating a Context for IS Resource Decisions
Aligning IS and Business Goals
520
520
517
xi
xii
Contents
Balancing the Trade-offs Between Standardization and Agility
Obtaining IT Capital Investment Approvals
520
The Information Resources Planning Process 520
Assessing The Current Information Resources 521
Measuring IS Use and Attitudes
521
Reviewing the IS Organizational Mission 522
Assessing Performance versus Goals
523
Creating an Information Vision 524
Designing the IT Architecture 524
Formulating the Strategic IS Plan 526
The Strategic IS Planning Process
526
Tools for Identifying IT Strategic Opportunities
527
Formulating Operational IS Plans 532
Guidelines for Effective IS Planning 532
Review Questions 534 • Discussion Questions 534 •
Bibliography 534
Chapter 13 Leading the Information Systems Function
536
IS Organization Responsibilities and
Governance 537
Managing IT Service Delivery 539
Chargeback Systems
539
Service Level Agreements (SLAs)
541
IT Service Management with ITIL
542
Supporting Computer Users
543
Strategies for User Computing 543
Support Services
544
Control Policies and Procedures
Supporting Telecommuters
Managing IT Applications
546
546
548
An Applications Portfolio Approach 548
Metrics for IT Applications Management
549
Managing IT Human Resources 549
Managing the Business/IT Relationship 553
Measuring Overall IS Performance 554
Special Issue: IS Management in Global Organizations
Special Issue: Managing IT Outsourcing 556
Review Questions 558 • Discussion Questions 559 •
Bibliography 559
Chapter 14 Information Security
561
Computer Crime 561
The Chief Security Officer Role
565
554
520
Contents
Risk Management for Information Security 565
Compliance with Laws and Regulations 567
Sarbanes-Oxley (SOX)
567
Gramm-Leach-Bliley Act of 1999 (GBLA)
569
Health Insurance Portability and Accountability Act (HIPAA)
The PATRIOT Act
569
Organizational Polices for Information Security
Planning for Business Continuity 571
Electronic Records Management (ERM) 571
569
Review Questions 573 • Discussion Questions 574 •
Bibliography 574
Chapter 15 Social, Ethical, and Legal Issues
575
The Legal Environment 575
Ethics Frameworks 576
Identifying Ethical Problems
Analyzing Ethical Problems
576
577
Social Issues 578
Privacy 579
Privacy Problems
579
E-Commerce Privacy Concerns
580
Workplace Privacy 581
Ethics of Invasion of Privacy 582
Laws on Privacy 582
Identity Theft 583
Impact of Identity Theft 584
Laws on Identity Theft 585
Intellectual Property Rights
585
Software Piracy 586
Copyright Protection
Patent Protection
586
586
Digital Entertainment Piracy 587
Internet File Sharing
587
Ethical Questions
589
Other Social Issues
589
Access to the Technology
589
Freedom of Speech 590
Hazards of Inaccuracy 590
Impact on Workers
The Future
590
591
Review Questions 591 • Discussion Questions 592 •
Bibliography 592
569
xiii
xiv
Contents
왘 CASE STUDY IV-1 The Clarion School for Boys, Inc.—Milwaukee Division:
Making Information Systems Investments 594
왘 CASE STUDY IV-2 FastTrack IT Integration for the Sallie
Mae Merger 611
왘 CASE STUDY IV-3 IT Infrastructure Outsourcing at Schaeffer (A):
The Outsourcing Decision 628
왘 CASE STUDY IV-4 IT Infrastructure Outsourcing at Schaeffer (B):
Managing the Contract 634
왘 CASE STUDY IV-5 Systems Support for a New Baxter Manufacturing
Company Plant in Mexico 642
왘 CASE STUDY IV-6 The Challenges of Local System Design for
Multinationals: The MaxFli Sales Force Automation
System at BAT 647
왘 CASE STUDY IV-7 Meridian Hospital Systems, Inc.: Deciding Which IT
Company to Join 660
왘 CASE STUDY IV-8 Mary Morrison’s Ethical Issue
Glossary 668
Index 691
666
CONTENTS: CASE STUDIES
Case Study 1
Case Study I-1
Case Study I-2
Case Study I-3
Case Study I-4
Case Study I-5
Case Study I-6
Case Study I-7
Case Study II-1
Case Study II-2
Case Study II-3
Case Study II-4
Case Study II-5
Case Study II-6
Case Study III-1
Case Study III-2
Case Study III-3
Case Study III-4
Case Study III-5
Case Study III-6
Case Study III-7
Case Study III-8
Case Study IV-1
Case Study IV-2
Case Study IV-3
Case Study IV-4
Case Study IV-5
Case Study IV-6
Case Study IV-7
Case Study IV-8
Midsouth Chamber of Commerce (A): The Role of the Operating
Manager in Information Systems 10
IMT Custom Machine Company, Inc.: Selection of an Information
Technology Platform 116
VoIP2.biz, Inc.: Deciding on the Next Steps for a VoIP Supplier 128
The VoIP Adoption at Butler University 144
Supporting Mobile Health Clinics: The Children’s Health Fund
of New York City 157
Data Governance at InsuraCorp 166
HH Gregg: Deciding on a New Information Technology
Platform 170
Midsouth Chamber of Commerce (B): Cleaning Up an Information
Systems Debacle 177
Vendor-Managed Inventory at NIBCO 279
Real-Time Business Intelligence at Continental Airlines 284
Norfolk Southern Railway: The Business Intelligence Journey 294
Mining Data to Increase State Tax Revenues in California 300
The Cliptomania™ Web Store 308
Rock Island Chocolate Company, Inc.: Building a Social Networking
Strategy 321
Managing a Systems Development Project at Consumer and
Industrial Products, Inc. 432
A Make-or-Buy Decision at Baxter Manufacturing Company 442
ERP Purchase Decision at Benton Manufacturing Company, Inc. 449
The Kuali Financial System: An Open-Source Project 455
NIBCO’s “Big Bang”: An SAP Implementation 468
BAT Taiwan: Implementing SAP for a Strategic Transition 484
A Troubled Project at Modern Materials, Inc. 498
Purchasing and Implementing a Student Management System at
Jefferson County School System 506
The Clarion School for Boys, Inc.—Milwaukee Division: Making
Information Systems Investments 594
FastTrack IT Integration for the Sallie Mae Merger 611
IT Infrastructure Outsourcing at Schaeffer (A):
The Outsourcing Decision 628
IT Infrastructure Outsourcing at Schaeffer (B):
Managing the Contract 634
Systems Support for a New Baxter Manufacturing Company Plant
in Mexico 642
The Challenges of Local System Design for Multinationals:
The MaxFli Sales Force Automation System at BAT 647
Meridian Hospital Systems, Inc.: Deciding Which IT
Company to Join 660
Mary Morrison’s Ethical Issue 666
xv
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PREFACE
Today’s private and public organizations are increasingly dependent on information technologies
for achieving their strategic and operational objectives. Over the past decade alone, enterprise
systems have been expanded to provide secure, electronic linkages with suppliers and customers,
and the Internet has become a mainstream channel for communications and business transactions. As a result, decision making about information technology resources has also become even
more visible as the roles and accountabilities of the IS function have become important not only
operationally but also strategically.
The overall objectives and targeted audience for this edition remain the same as for the prior
sixth edition: to provide comprehensive coverage of IS management practices and technology trends
for advanced students and managers. Earlier editions of this textbook have been used for courses in
MBA, MS in IS, and executive education programs, as well as in advanced undergraduate courses.
We believe that our approach of providing both up-to-date chapter content and full-length case
studies, written by the same authors, results in a unique set of materials for educators to customize
for students seeking careers as business managers, IS managers, or IS specialists.
NEW TO THIS EDITION
• All 15 chapters in this edition have been revised to reflect up-to-date technology trends and
state-of-the-art IS management practices.
• The total number of chapters has been reduced from 17 to 15 to better match the semester
schedules of many of our textbook adopters.
• Overall topical coverage has been retained, but we have reduced some presentations of the
content as follows:
• Chapter 2 (Computer Systems) includes content from separate chapters on computer
hardware and computer software in the sixth edition.
• The content from Chapter 13 of the sixth edition has now been incorporated into two
chapters in the seventh edition: The discussion of key characteristics of user-developed
applications appears in Chapter 9 (Methodologies for Custom Software Development)
and the discussion of support and control mechanisms for end-user computing appears
in Chapter 13 (Leading the Information Systems Function).
• The in-depth case studies in this edition include five completely new case studies and six
that have been significantly revised.
THE CHAPTER CONTENT
Following an introductory chapter that sets the stage for learning about IS management roles and
technology trends, the textbook chapters are presented in four parts:
Part I—Information Technology provides background knowledge about major information technology components: hardware and software, networks, and data. Depending
on the targeted audience, these chapters may be assigned as background readings as a
kind of “level-setting” for students from different educational and work backgrounds
and experiences.
Part II—Applying Information Technology introduces in detail the capabilities of three
categories of software applications: enterprise systems, managerial support systems, and
e-business systems.
Part III—Acquiring Information Systems prepares the reader for leading and participating in projects to design or select, implement, and support the utilization of software
xvii
xviii Preface
applications—including methodologies for custom-developed systems and purchased
software packages, as well as IT project management.
Part IV—The Information Management System provides knowledge about effectively
planning IS resources for the business, leading IS units responsible for provisioning these
resources, and best practices for addressing information security, as well as larger social,
legal, and ethical issues related to information technologies.
THE TEACHING CASES
To demonstrate real-world IS management challenges, this textbook also includes a set of six to
eight full-length case studies for each of the four parts of the textbook. These full-length case
studies are based on research by academic authors with access to Fortune 500 companies,
midsized companies, and some not-for-profit or government organizations. Some of the
company names are camouflaged, but many are not.
The 30 case studies in this seventh edition provide rich descriptions of both successful
and problematic real-world situations so that students can learn about the challenges of
implementing new information systems, the capabilities of different types of software
applications—including those that leverage the Internet, the difficulties encountered when
managing IS projects with different levels of complexity, and approaches to effectively
address systems integration and other technology leadership challenges—from both IS
manager and non-IS manager perspectives. The five completely new case studies in the
seventh edition address these specific topics:
•
•
•
•
•
implementing technologies to support mobile clinics (Case Study I-4)
deciding on a new enterprise-level IT platform (Case Study I-6)
developing a business intelligence capability (Case Study II-3)
mining data to increase government tax revenues (Case Study II-4)
exploring the potential organizational benefits of social media (Case Study II-6)
Several other case studies have also been significantly revised to take into account new technical
or managerial developments.
THE SUPPLEMENT PACKAGE: WWW.PEARSONHIGHERED.COM/BROWN
A comprehensive and flexible technology support package is available to enhance the teaching
and learning experience. All instructor and student supplements are available on the text’s Web
site. See www.pearsonhighered.com/brown. The Web site also includes a large number of “old
favorite” case studies from earlier editions.
Instructor Resource Center
The following Instructor Resources are available on the secure faculty section of the Brown
Web site:
• Instructor’s Manual The Instructor’s Manual includes syllabi for several courses (both
undergraduate and master’s level) that have used this book. It also includes lecture notes on
each chapter, answers to the review and discussion questions at the end of each chapter,
and teaching notes on the case studies that have been prepared by the authors.
• Test Item File and TestGen Software The Test Item File includes multiple-choice and
True/False questions for each chapter in this textbook. The Test Item File is available in
Microsoft Word and for use with the computerized Prentice Hall TestGen, as well as
WebCT and Blackboard-ready conversions. TestGen is a comprehensive suite of tools for
testing and assessment. Screen wizards and full technical support are available to
instructors to help them create and distribute tests to their students, either by printing and
distributing through traditional methods or by online delivery.
Preface
• PowerPoint Slides The PowerPoint slides that have been developed for this edition
emphasize the key concepts in the text, include many of the figures in the text, and provide
some Web links to enhance student learning. Faculty instructors can customize these
presentations by adding their own slides and links to Web resources and/or by editing the
existing ones.
• The Image Library is a collection of the text art organized by chapter. This collection
includes all of the figures, tables, and screenshots (as permission allows) from the book.
These images can be used to enhance class lectures and PowerPoint slides.
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ACKNOWLEDGMENTS
Our thanks go to our professional colleagues who have used one or more editions of this
textbook and have provided valuable feedback to us directly, or responded to review requests by
our publisher, since the first edition in 1991. The list is too long to provide here, but we hope that
all of you will accept our collective, anonymous Thank You!
Special thanks also go to academic colleagues (mostly current and prior Indiana University
faculty and students) who have coauthored content for specific chapters that can still be found in
this edition: Susan A. Brown, Dong-Gil Ko, Lisa Murphy, Jay Newquist, Madhu Rao, Blaize
Reich, Andrew Urbaczewski, Ramesh Venkataraman, and Dwight Worker. The following
individuals have also collaborated with us on case study research or coauthored the case studies that
appear in this book: Ron Anderson-Lehman, S. Balaji, Greg Clancy, Tony Easterlin, Jane
Fedorowicz, Janis L. Gogan, Dale Goodhue, Vijay Khatri, Scott A. Kincaid, Nicholas Lockwood,
Stephen R. Nelson, Kevin Ryan, John Sacco, Rebecca Scholer, Mohan Tatikonda, Iris Vessey,
Hugh Watson, Taylor Wells, Bradley Wheeler, Michael Williams, and Barbara Wixom.
We have also benefited from several sources of support for our research that have led to the
development of case studies for this textbook—including the IM Affiliates program at the Kelley
School of Business at Indiana University, the EDS Corporation, British American Tobacco,
SAP-America, Teradata Corporation, the Center for Information Systems Research at MIT’s
Sloan School of Management, and the Society for Information Management (SIM). Our deep
appreciation goes out to the reviewers of the sixth edition, who helped make the seventh edition
better: T.C. Bradley, III, Indiana University; Chiang-Nan Chao, St. John’s University; Abbas
Foroughi, University of Southern Indiana; Richard Gram, Worcester Polytechnic Institute;
Georgia Miller, Indiana University-Purdue University at Columbus; Ezra Rhein, Brooklyn
College; Robin Starnes, Texas A&M University; Manouchehr Tabatabaei, Georgia Southern
University; Nolan J. Taylor, Indiana University; and Patricia White, Troy University.
Finally, each author extends their gratitude to the other four for their intellect, professionalism,
and longtime interest in providing quality instructional materials for today’s and tomorrow’s
business managers and IS leaders.
Carol V. Brown
Daniel W. DeHayes
Jeffrey A. Hoffer
E. Wainright Martin
William C. Perkins
October 2010
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CHAPTER
1
Managing IT in a
Digital World
The utilization of information technology (IT) has become pervasive. Businesses not only have information systems
(IS) that connect frontline employees with back-office accounting and production systems but also compete with
dot-com (Internet only) companies via Web-based stores and online customer service channels. Travelers can access
high-speed wireless networks from public transportation, airports, and even in-flight airplanes to keep them
productive. Work teams may never meet face-to-face and regularly use meeting software and video conferencing.
Workers may choose a BlackBerry, iPhone, or other smartphone to access office e-mail anytime, anywhere. And
today’s schoolchildren find resources via Internet searches rather than card catalogs in school libraries.
Today’s consumers also live in what has been called an increasingly “flat world” in which IT linkages across
emerging, developing, and developed economies help to “level” the economic playing field (Friedman, 2005).
Citizens across the globe may have access to world news online. Geographical positioning systems not only help
travelers find the best route to their destination but can also facilitate the identification of a nearby retail store or
restaurant.
The designing and management of computer hardware, software, and networks to enable this pervasive
digital world is the work of IT professionals. However, all business managers, not just IT managers, are
responsible for wisely investing in and effectively utilizing these information technologies for the benefit of their
organizations. By the year 2000, more than half of capital expenditures by businesses in developed countries were
for IT purchases.
The primary objective of this textbook is to increase your knowledge about IT management so that as a
manager you can effectively invest in and utilize new and already in-place information technologies. In the
following chapters we will describe
•
•
•
•
technologies available today and emerging technology trends,
software applications to support business operations and business intelligence,
“best practices” for acquiring and implementing new systems, and
planning and managing an IS department’s resources.
The objective of this first textbook chapter is to set the stage for the remaining 14 chapters and the full-length case
studies that follow.
We use the term information technology (IT) as computer technology (hardware and software) for
processing and storing information, as well as communications technology (voice and data networks) for
transmitting information.
We use the term information systems (IS) department to refer to the organizational unit or department
that has the primary responsibility for managing IT.
1
2
Chapter 1 • Managing IT in a Digital World
Next, we briefly describe some recent IT trends that have led
to (1) new ways for businesses to compete and (2) new ways
for employees to accomplish their work. Then we briefly
introduce the key IT management responsibilities in today’s
organizations and the types of IT assets that need to be
managed in collaboration with business leaders. The chapter
ends with a brief summary of the topics that will be covered
in the remaining Parts I–IV of this textbook.
RECENT INFORMATION TECHNOLOGY
TRENDS
As a personal user of various computer and communication
devices, you are probably already aware of some of the
innovations in computer systems and networks that have
been introduced by IT vendors over the past decade. This
fast-paced technological change makes it difficult to
accurately predict the IT products and services that will be
“winners” tomorrow—and significant mispredictions about
technologies have been common in the past (see the box
“Mispredictions by IT Industry Leaders”). However, it
seems safe to predict that computer and communication devices will continue to touch almost every aspect of our lives.
In Part I of this textbook, we will discuss in detail the
key concepts underlying today’s computer systems (hardware and software) and network technologies. For now, let
us briefly consider some of the technology developments
that have already led to pervasive computing in the first
decades of this twenty-first century.
Computer Hardware: Faster, Cheaper, Mobile
Computer-on-a-chip (microcomputer) technology was available as early as the 1970s, and the introduction of the first
IBM Personal Computer (PC) in 1981 was the beginning of
desktop computing. Today, desktop and portable computers
produced by manufacturers around the world have become
commodity products with processing power that is equivalent to an organization’s entire computing center of the
1960s. The typical computer for individuals to use today has
graphical icons, point-and-click and/or touch screen navigation, and preloaded software to access the Internet—all at a
cheaper price than what the same features would have cost
12 months earlier, with better computer virus protection.
Because of their portability and wireless capabilities, lightweight laptop and notebook computers are replacing larger
desktop machines in offices today. They can be carried into
meetings, taken on business trips, and used at home to
remotely connect to office systems.
Smaller, handheld devices have also continued to improve in functionality and have become indispensable tools
to access e-mail and other applications inside and outside of
the office, on the factory floor, as well as in hospital corridors. In mid-2007, Apple Computer began selling a new
smartphone (iPhone) with touch screen navigation and
scrolling, and simplified calling from an address book,
e-mail and text messaging, visual voice mail, video playing,
and Web browsing via Wi-Fi connectivity. Since then, other
IT vendors have been developing smartphones with similar
features, and Apple has introduced a lightweight notebook
computer (the iPad) with a similar interface.
Computer Software: Integrated,
Downloadable, Social
By the early 1990s, Microsoft Corporation’s Windows software had become the standard operating system for the vast
majority of microcomputers being used as desktop and
portable computer “clients.” By the end of the 1990s,
Microsoft’s Office suite (i.e., word processing, spreadsheet,
database, slideshow presentation, and e-mail software sold
in a single bundle) as well as its Web browser (Internet
Mispredictions by IT Industry Leaders
This “telephone” has too many shortcomings to be seriously considered as a means of communication.
The device is inherently of no value to us.
—Western Union internal memo, 1876
I think there is a world market for maybe five computers.
—Thomas Watson, Chairman of IBM, 1943
But what [is a microchip] good for?
Engineer at the Advanced Computing Systems Division of IBM, 1968
There is no reason anyone would want a computer in their home.
—Ken Olson, President, Chairman, and Founder of Digital Equipment Corp., 1977
640K ought to be enough for anybody.
—Attributed to Bill Gates, Chairman of Microsoft, 1981
[Based on Kappelman, 2001; Jones, 2003]
Chapter 1 • Managing IT in a Digital World
3
The New App Economy
Downloadable software apps have sparked a growth surge in the software industry. Apple introduced
the iPad to U.S. buyers in April 2010, and within a few days after its launch, more than 3,000 new
applications were available for downloading—in addition to the 150,000 apps originally developed for
the iPhone or iTouch—including news apps for the Wall Street Journal, New York Times, and USA
Today. One reason for this rapid growth is that there are virtually no “barriers to entry.” Another is that
in October 2009 iPhone developers were told that they could give away their applications on an experimental basis and ask for payment later. By late 2009, Yahoo didn’t have an App Store, but it listed apps
for downloading on its home page.
[Based on Boehret, 2010; MacMillan et al., 2009]
Explorer) had become the de facto software in use in U.S.
organizations and multinational companies. The presence
of software standards made it easier for their employees to
work and communicate with other employees and business
partners, even when working from multiple office locations.
Today, many large companies and now midsized and
smaller organizations have also made capital investments in
enterprise systems: software packages with integrated
modules that can easily share data across dispersed work
teams, business divisions, and national boundaries in “real
time.” Enterprise systems have now been widely adopted
by manufacturing and service firms of all types and sizes in
the United States and around the globe. Software applications that can access a customer’s database can now be used
more easily by suppliers to replenish materials for that
customer, and customers can check on the status of their
orders via the Internet.
Downloadable applications of bit-size software programs for smartphones and larger programs for other
portable devices have now also become pervasive. Two
years after the iPhone was first introduced, Apple’s
App Store had 85,000 applications that millions of iPhone
owners had downloaded. In fact, the ongoing success of
the iPhone by Apple is to some degree due to the fact that
more software apps are available for this Apple product
than for any of its competitors. Today’s mobile devices
have therefore catalysts for a whole new software industry
market (see the box “The New App Economy”).
Another remarkable software trend has been the
growth of so-called Web 2.0 or social media applications,
such as profile sharing software (e.g., Facebook,
LinkedIn), cogenerated information tools (e.g., Wikis,
blogs), and information messaging tools (e.g., Twitter).
Although initially these software applications were hosted
on Web sites designed for public communities, today these
same tools may be used by a company’s marketing and
public relations groups for branding and other marketing
activities (Culnan et al., 2010). Similar tools are also being
used on internal networks (intranets) for connecting
company employees across time, distance, and divisional
affiliation (Majchrzak et al., 2009). At IBM, for example,
social networking tools are being used to bridge newer and
more senior employees across the globe (see the box
“Social Networking within IBM”).
Social Networking within IBM
Beehive is IBM’s intranet equivalent to Facebook. Within the first 15 months of its launch, more
than 50,000 IBMers had joined and were sharing both work-related and personal information.
ThinkPlace is a virtual forum for employees to suggest, comment on, rate, and route ideas.
Within its first 3 years, more than 18,000 ideas had been suggested; of the 350 ideas actually
implemented, over half had resulted in time savings improvements.
SmallBlue identifies social networks within IBM by analyzing e-mail and electronic chats
between employees who opt to participate. Employees can see visual displays of who knows
what and who knows whom within the knowledge communities that they are a part of.
4
Chapter 1 • Managing IT in a Digital World
Computer Networks: High Bandwidth,
Wireless, Cloudy
The introduction of a Web browser in the mid-1990s that
used an Internet communications standard (TCP/IP) to link
companies and individuals to the Internet has been described as a “killer application” due to its widespread global
impact. Demands for high-speed Internet access have
spurred investments by government and the private sector to
install fiber-optic (high-bandwidth) lines. Today, many
households in developed countries pay a monthly fee for
cable, satellite, or a telephone utility for integrated data,
voice, and perhaps television services in their homes. New
investments by Western countries in high-bandwidth lines to
their own rural areas as well as to emerging nations in Africa
are also being announced as this textbook goes to press.
Satellite and cellular technologies now link remote
workers to central support centers, travelers to travel services, and delivery personnel to transportation schedulers.
Wireless technologies have also enabled some emerging
countries to bypass expensive investments in hardwired
telecommunications lines to more remote areas.
Investments in wireless connectivity to better support
mobile workers inside an organization’s walls have also
recently increased. For example, physicians and nurses
with mobile computer and communications devices have
increased their productivity and service quality by communicating more easily with clinicians on other hospital floors
or at other worksites as well as by accessing electronic
patient records and test results at the patient’s bedside.
Another growing trend has been the usage of the
Internet to obtain remote “hosting” or other IT capabilities
from “the cloud” (Bala and Henderson, 2010). In Softwareas-a-Service (SaaS) models, third-party service providers
deploy, manage, and remotely host software applications on
a rental or lease agreement. This is an especially attractive
option for small organizations, but industry pioneers (such
as salesforce.com) also provide 24*7 access to distributed
organizations and remote workers for Fortune 1000 companies. Other vendors offer computer infrastructure services
(IaaS) via the Internet, such as computer server processing
and data storage, which enable organizations to more effectively handle peak processing loads.
NEW WAYS TO COMPETE
Computers and communication networks enable companies to compete in two primary ways (Porter, 2001):
• Low Cost—competing with other businesses by
being a low-cost producer of a good or a service
• Differentiation—competing with other businesses
by offering products or services that customers
prefer due to a superiority in characteristics such as
product innovativeness or image, product quality, or
customer service
Computers can lower the costs of products or services by
automating business transactions, shortening order cycle
times, and providing data for better operational decision
making. Since the 1980s, a flood of IT innovations have led
to efficiency gains in manufacturing firms alone—such as
shortening the time to develop new products with computeraided design tools; optimizing a plant floor process with
software that implements a human expert’s decision rules;
and speedily changing a production line with computerized
planning systems based on sales information.
IT has also been used by companies to differentiate
their products or services from those of competitors. IT
applications can provide sales personnel with information
to help them better service a specific customer; justin-time replenishments of supplies for business customers
based on inventory levels rather than manually initiated
purchasing orders; and decision support applications with
embedded industry knowledge, such as best practices for
first responders to treat a heart attack or stroke patient.
After the introduction of the Web browser in the
mid-1990s, most companies first began to use the Web to
create a brand “presence” on the Internet: Managers registered memorable names for a URL for their company’s
public Web site and then posted information (initially just
based on hard-copy materials dubbed “brochureware”) for
potential customers, stockholders, and other stakeholders.
By the late 1990s, traditional companies could see how
Amazon.com and other dot-com innovators were using the
Web, and they too began to find innovative ways to use
Web technologies to reach customers. However, since the
features of a public Web site are also visible to competitors
and can be quickly copied by them, it has also become
more difficult for companies to compete by product or
service differentiation via the Web than it perhaps was for
them in an offline world.
For example, a company’s customers may use Web
sites that allow them to easily compare not only their products or services—and their prices—but also those offered
by competitors. Consumers can also request their “own”
price and be electronically alerted to price changes as they
occur. The airline companies in particular have faced severe industry pressures for low prices and have found it
more difficult to differentiate their services.
On the other hand, the Internet can increase a company’s “reach” to new customers and new suppliers, who may
even be on different continents. Airline companies now
have a direct channel to consumers and business customers,
which means they don’t have to pay travel agents or online
Chapter 1 • Managing IT in a Digital World
intermediaries to sell all of their tickets. Advertising via the
Internet has also become increasingly common. Web sites
can be programmed to display screens using a different language, different currency, and even perhaps local pricing,
depending on the user’s browser location or selected preferences. Many businesses also buy, or sell, products using
Web-based auctions with suppliers or business customers
that they may never work with face-to-face.
NEW WAYS TO WORK
Recent IT innovations in computer hardware, software,
and networks have also enabled people to work more productively as employees in an office—as well as working as
telecommuters at a site far from a home office, as members
of “virtual” teams, or even as “free agents” contracted by
organizations for a short-term period.
Sales personnel and other traveling managers have
become telecommuters with portable computers and other
mobile equipment that give them access to company data
anytime (24 hours a day, 7 days a week) and essentially anywhere with an Internet connection. Some cities have also experimented with laws that require businesses to support
telecommuting by implementing work schedules that require
less commuting—such as four days working in the office and
one day working outside it—to help protect the environment.
Some new businesses might not even have a physical office
building or headquarters. Instead, the company might operate
as a “virtual organization” made up of individual professionals scattered across different domestic or global locations.
Working as a member of a virtual team—that is,
teams with members who are separated too far geographically to work face-to-face—has also become increasingly
common. Team members may use software that supports
online team meetings and document sharing as well as perhaps videoconferencing from an online computer or in
specially equipped videoconferencing rooms. Team leaders have learned to motivate workers and coordinate across
different time zones at different work sites on different
continents.
Individuals with specialized skills may also choose
to work independently as free agents who contract out
their services without being a permanent employee of any
organization. Organizations may locate and hire free
agents (from a Web site such as guru.com) to take advantage of time zone differences for designing slideshows,
Web site development, telemarketing, or other specialized
skills that are temporarily needed for a specific project or
only needed periodically. By using free agents, companies
also avoid having to make a long-term commitment to an
employee for salary and expensive benefits (such as health
care insurance).
5
MANAGING IT IN ORGANIZATIONS
Within organizations, supporting these new ways of competing and new ways of working with computer systems
and networks is the responsibility of the information systems (IS) department. Although essentially all modern
organizations today are dependent on IT networks and
applications for processing transactions and managerial
decision-making support, not all organizations have the
same level of dependency on IT. Some organizations may
still use IT primarily for back-office support but rely heavily on person-to-person communications to operate their
business; others may be heavily dependent on information
systems up and running 24 ⫻ 7 for all their business operations but don’t aggressively invest in newer technologies
to enable newer strategies (Nolan and McFarlan, 2005).
Organizations also don’t always have the same level of IT
dependency over time. For example, a change in the
organization’s business leadership may result in more
aggressive IT investments.
Managing IT Resources
Today’s increased dependence on IT by businesses in many
different industries also requires IT leaders who know how
to effectively plan for and manage the organization’s IT
resources, as well as IT-savvy business leaders who can
envision strategic IT utilization (Ross et al., 1996; Weill and
Ross, 2009). In Figure 1.1, we introduce three types of IT
resources, which we discuss in more detail below.
Managing technology
resources requires effective planning, building, and operating of a computer and communications infrastructure—an
information “utility”—so that managers and other employees have the right information available as needed, anytime,
TECHNOLOGY INFRASTRUCTURE
Technology Infrastructure
Computer, software, and networks that enable
an organization to conduct business and share
information across organizational units as well as
business partners
Human Resources
IT professionals and managers who have the needed
mix of technology, business, and interpersonal
skills to plan for, design, and manage the other
IT resources
Business/IT Relationships
Established relationships between business and
IT workers to ensure that the other IT resources are
aligned with business needs
FIGURE 1.1 Three Types of IT Resources
6
Chapter 1 • Managing IT in a Digital World
anywhere. Just like cell phone users expect to be able to
send and receive calls without being “dropped” by the network, computer users expect computers to be up and running, and networks to be available and fast, so that they can
access software applications and data quickly and easily.
Organizations with high operational dependence on IT systems are so dependent on IT that if an information system
fails for a minute or more, or online response time exceeds
a few seconds, employees can’t get their work done. When
customer transactions can’t be processed, and suppliers
can’t receive orders for materials, business revenues suffer.
In a widely read but poorly titled article (called “IT
Doesn’t Matter”) published in the Harvard Business
Review a few years ago, the author argued that the primary
IT management role today is to manage the costs and vulnerabilities of the computing “utility”—the data centers and
networks that provide access to business data and applications (Carr, 2003). However, while this is a critical IT management role, sometimes outsourced to IT vendors, it is not
the only one. Managing IT also requires identifying what
new technologies to invest in and how to specifically tailor
these new IT solutions to improve the way a specific company does business. Effective management of the technology asset therefore requires not only skilled IT managers and
IT professionals—the human resources asset—but also
active participation by business managers as captured by
the third IT asset: the business/IT relationship asset.
Managing the people resources for
any business function requires attention to recruiting, developing, and retaining the best talent available. Today there is
a high demand not just for IT personnel with specialized
technology skills but also for personnel who have both technology skills coupled with business knowledge and interpersonal skills. Business analyst and systems analyst roles
require personnel who can understand the IT needs of
HUMAN RESOURCES
workers in marketing, accounting, manufacturing, and other
business functions, as well as knowledge of an industry
(e.g., financial services or healthcare). IT professionals who
have a business education, as well as technical skills, are
therefore especially in demand for these types of roles.
Business-facing positions such as these are also most effectively sourced by internal employees—not by employees of
an outsourcing firm or by temporary external personnel.
In the United States today, there are growing concerns about whether the supply of new college and university graduates with IT-related majors will be lower than the
demand for entry-level, domestic IT workers. Although
companies in developed countries such as the United States
have increasingly been utilizing IT workers in less developed countries to take advantage of lower labor costs for
software programming tasks in particular, IT professionals
are still critically needed to perform important “in-house”
IT roles. (These will be discussed further in Chapter 13.)
BUSINESS/IT RELATIONSHIPS The importance of this
type of IT resource was first brought to light in the mid1990s as packaged software systems and the Internet were
catalysts for an increase in new IT investments (Ross et al.,
1996). How well an organization uses joint IT-business
decision making for making investments in a firm’s technology assets is so critical today that there needs to be a
“blending” or “fusion” of IT and the business (see the box
“Fusing IT and the Business”). Achieving business value
from IT investments requires aligned goals for strong
working partnerships between business managers and IT
managers (Brown, 2004) to develop the business case for
investing in new IT solutions and skill sets, for specifying
the business requirements that will be used to design new
IT applications, and for effectively implementing these
new IT solutions so that the potential benefits become
realized benefits.
Fusing IT and the Business
When Terry Pearce was an IT manager at a large financial services company several decades ago, he
found that the business managers who refused to help the IT managers understand what new information systems they actually needed were the managers who ended up with the least successful IT projects.
Their projects were delayed and more expensive than planned. He concluded that it wasn’t intentional.
Rather, the business managers just couldn’t appreciate why their involvement was important; they saw IT
as merely a tool—not as integral to their business. But to succeed in today’s digital economy, senior business managers in companies dependent on information need to be “IT-savvy.” When IT is the basis for a
company’s competitive capabilities, business managers need to be confident in their abilities to build their
company’s IT capabilities into a strategic asset.
[Based on Pottruck and Pearce, 2000; Weill and Ross, 2009]
Chapter 1 • Managing IT in a Digital World
7
CEO or
President
Business
Unit #1
Business
Unit #2
Business
Unit #3
VP (IT)
Individual
VP (IT)
Retirement
Services
VP (IT)
Group
CIO
Corporate
Applications
Payroll
HR
Enterprise
Architecture
Planning and
Finance
Systems
Operations
FIGURE 1.2 Typical Example of IS Organization Chart for a Large Company with Multiple Business Units
IT Leadership Roles
Many organizations today have created an officer-level
position for the senior IT executive in the organization: the
chief information officer (CIO). Although in other organizations, the senior IT leader may not be formally designated
as a CIO, all of today’s IT leaders are all expected to work
closely with other senior managers to keep the company’s
IT resources aligned with the goals of the business. Senior
IT leaders may report directly to a president or CEO or may
report to another officer in the company—such as a chief
financial officer (CFO) or chief operating officer (COO).
CIOs and other senior IT leaders come from a variety of backgrounds. Some managers are chosen to lead the
IT organization because of their in-depth technical knowledge, but others may be chosen because of their abilities to
work well with senior business leaders, not because of
their technical know-how.
A typical organization chart for an IS department in a
large company that has multiple business units is shown
in Figure 1.2. Reporting to this CIO are IT managers
responsible for system operations (data centers and
networks), technology and financial planning for the
IS department, designing and building the company’s
IT architecture, and acquiring and maintaining software
applications. The latter includes IT managers over corporate applications (payroll and HR functions) as well as three
IT vice presidents who are responsible for acquiring and
maintaining applications for the company’s three business
units. Unlike the other IT managers, these three vice
presidents have a direct reporting relationship to the CIO
(indicated by the solid lines) as well as a “matrix” reporting
relationship to the general managers of the business units
they support (indicated by the dotted lines). This dual
reporting relationship helps ensure that the IS department’s
resources are well aligned with the business; it is one
approach to establishing and maintaining a strong
business/IT relationship.
Other important new roles for IT managers have also
emerged. For example, some companies have created a
chief security officer (CSO) position to plan for and monitor compliance with new federal laws and reporting
requirements and to ensure that appropriate investments are
made in technologies and procedures to manage IT security
risks. Other new roles at the middle-management level help
ensure that contracts with key outsourcing suppliers have
successful outcomes (Willcocks and Griffiths, 2010).
Senior business managers also play IT leadership
roles by serving on committees that approve and prioritize new IT investments and by sponsoring IT investments for their business areas. Other business managers
may serve as business process experts on IT project
teams to select, design, and implement software packages. All of these business manager roles are critical
because business leaders are the most knowledgeable
about what changes in work processes will be needed to
achieve the greatest business benefits from a new IT solution. Business managers can also best anticipate what
operational obstacles might be encountered when implementing a new software application and actions that can
be taken to avoid them.
8
Chapter 1 • Managing IT in a Digital World
THE TOPICS AND ORGANIZATION
OF THIS TEXTBOOK
The primary objective of this textbook is to increase your
knowledge about IT management so that as a manager you
can effectively invest in and utilize new and old information technologies. The remaining chapters of this textbook
have been grouped into four distinct parts, as described
below. At the end of each part, we provide several fulllength case studies that were primarily written by the authors specifically for this textbook. Although some of the
organization names are camouflaged, all of these cases are
based on real-world practices and events.
Part I. Chapters 2, 3, and 4 on computer systems, networks, and data present fundamental technology concepts and major IT industry developments. As will be
described, business managers are frequently the designated “owners” of systems projects and organizational
data sets (e.g., customer data, product data). Both IT
and business managers therefore share responsibilities
for ensuring data quality and appropriate security levels. Readers who have already studied the technologies described in Part 1 will benefit from the summary
discussions, industry updates, as well as the sections
on newer technology developments such as Web
services, WiMAX networks, and cloud computing.
Part II. Chapters 5, 6, and 7 provide in-depth
descriptions of three different categories of software
applications used by today’s organizations. Chapter
5 focuses on enterprise systems, including supplychain system applications that link a company with
its customers or suppliers, as well as back-office
systems for financial reporting and managing the
company’s human resources. Chapter 6 describes
different types of managerial support systems, which
include applications to support daily operational
decision making as well as strategic decision making
using sophisticated analytical toolsets. Chapter 7
focuses on systems that leverage the Internet,
including business-to-business (B2B) and businessto-consumer (B2C) applications, as well as Web
sites that play intermediary roles (such as search
engines). Successful e-business examples of both
traditional and dot-com companies provide useful
models for how companies in different industries can
leverage the Internet to compete in a digital world.
Part III. The four chapters in Part III describe methods and techniques for developing and implementing
applications and managing IT projects, based
on today’s “best practices.” Chapter 8 introduces
systems thinking concepts and design methods that
are common across the systems development
methodologies described in the subsequent chapters.
Chapter 9 discusses in detail both traditional and
newer methodologies for custom application development. Although the primary focus is on custom
software engineering by IT professionals, user application development methods are also discussed.
Chapter 10 focuses on the selection, design, and
implementation of purchased software packages,
and Chapter 11 presents effective practices for managing IT projects in general. Special project management challenges addressed here include managing
IT projects—including managing IT project risks
and implementing business change as part of an
IT project.
Part IV. Chapters 12, 13, and 14 focus on how to
effectively plan and manage an organization’s
IT assets. Chapter 12 focuses on the strategic IT
planning of information resources from a portfolio
perspective. Chapter 13 describes today’s IS leadership roles and responsibilities in detail, including
alternative IS governance designs and effective
IT outsourcing practices. Chapter 14 focuses on
information security practices, including managerial
practices to help ensure IT security at multiple levels
and IT-related compliance with federal laws and
other regulations.
The final chapter in this textbook, Chapter 15,
addresses issues that extend beyond an organizational setting: social, ethical, and legal issues from
the perspective of individuals and societies.
Included here are the importance of maintaining the
privacy of personal information and reducing vulnerabilities to identity theft crimes. Also discussed
are some “unintended” social impacts of today’s
digital technologies as well as some examples of
IT-related ethical dilemmas faced by managers and
computer users.
As our seventh edition of this textbook is prepared for
publication, we authors take pride in having witnessed the
first decades of a digital age that holds great opportunities
for those in developed countries as well as governments,
organizations, and individuals in developing and emerging
countries across the globe. Yet all of us—in our roles as
managers, IT specialists, consumers, and world citizens—
need to remain vigilant about not only how to effectively
design and use IT but also how to fulfill our social and
environmental responsibilities for the appropriate usage of
today’s and tomorrow’s information technologies.
Chapter 1 • Managing IT in a Digital World
9
Review Questions
1. Define what is encompassed in the term information
technology.
2. What are some of the ways that IT has become “pervasive”?
3. What kinds of portable IT help employees work more efficiently and effectively? What may interfere with productivity?
4. What kinds of IT can help support teams when team members work at different locations?
5. How have some businesses used the Internet to compete
based on low cost, product/service differentiation, or both?
6. What kind of a business might choose to have low levels of
dependence on IT?
7. What three types of IT resources need to be managed well?
8. What are some examples of newer IT manager roles, and
why are they needed today?
9. For what reasons might an IT manager have a reporting
relationship with a CIO as well as with a senior business
manager?
Discussion Questions
1. Provide an example of how a business function with which
you are familiar (e.g., sales, marketing, finance, operations/
production, accounting, human resources) utilizes IT for operational and/or strategic purposes.
2. Describe some ways that you personally use information
technologies differently than you did just a few years ago.
3. Some organizations purposefully select a CIO that has strong
business management backgrounds, not just technical experience. Under what organizational circumstances do you think
this might be an effective choice?
4. Describe a new business for which you think a “virtual
organization”—which has no physical office or headquarters—
could be an effective design. What are some ways that the
organization could use IT to help them effectively run their
business?
5. Would you like to work as a free agent? Why or why not?
6. Using the Internet, identify what is meant by the term digital
divide. What actions do you think could be taken to lessen this
divide—both within your own country and elsewhere in the
world?
7. Identify some Web sites for publications that could be useful
supplementary resources for studying some of the IT topics
in this textbook.
Bibliography
Bala, Iyer, and John C. Henderson. 2010. “Preparing for the
future: Understanding the seven capabilities of cloud computing.” MIS Quarterly Executive 9, 2 (June): 117–131.
Boehret, Katherine. 2010. “For the iPad, Apps with their own
wow factor.” The Wall Street Journal (April 7): D3.
Brown, Carol V. 2004. “Seamless IT alignment” in S. Chowdhury
(ed.), Next Generation Business Handbook. New York: John
Wiley & Sons, 1157–1168.
Carr, Nicholas. 2003. “IT doesn’t matter.” Harvard Business
Review (May): 41–49.
Culnan, Mary J., Patrick J. McHugh, and Jesus I. Zubillaga.
2010. “How large U.S. companies can use twitter and other
social media to gain business value.” MIS Quarterly Executive
9, 4 (December): 243–259.
Friedman, Thomas L. 2005. The World Is Flat: A Brief History of
the Twenty-First Century. New York: Farrar, Strauss and
Giroux.
Jones, Kathryn. 2003. “The Dell way.” Business 2.0
(February): 23.
Kappelman, Leon. 2001. “The future is ours.” Communications
of the ACM 44, 3 (March): 46–47.
MacMillan, Douglas, Peter Burrows, and Spencer E. Ante. 2009.
“The App Economy.” BusinessWeek (November 2): 44–49.
Majchrzak, Ann, Luba Cherbakov, and Blake Ives. 2009. “Social
networking within corporations.” MIS Quarterly Executive 8,
2 (June): 103–108.
Nolan, Richard, and F. Warren McFarlan. 2005. “Information
technology and the board of directors.” Harvard Business
Review 83 (October). HBR Reprint R0510F.
Porter, Michael E. 2001. “Strategy and the internet.” Harvard
Business Review 79 (March): 63–78.
Pottruck, David S., and Terry Pearce. 2000. Clicks and Mortar:
Passion Driven Growth in an Internet Driven World. San
Francisco, CA: Jossey-Bass.
Ross, Jeanne W., Cynthia Mathis Beath, and Dale L. Goodhue.
1996. “Develop long-term competitiveness through IT
assets.” Sloan Management Review 38, 1 (Fall): 31–42.
Weill, Peter, and Jeanne W. Ross. 2009. IT-Savvy. Boston, MA:
Harvard Business Press.
Willcocks, Leslie, and Catherine Griffiths. 2010. “The crucial
role of middle management in outsourcing.” MIS Quarterly
Executive 9, 3 (September): 177–193.
10
Case Study 1 • Midsouth Chamber of Commerce (A)
Case Study 1
Midsouth Chamber of Commerce (A):
The Role of the Operating Manager
in Information Systems
It was 7:30 P.M. on September 22, 2006, and Leon
Lassiter, Vice President of Marketing with the Midsouth
Chamber of Commerce (MSCC), was still in his office,
reflecting on the day’s frustrations. Lassiter had met with
four territory managers, his marketing support supervisor, and a number of other members of his staff. All were
upset about their lack of access to the new computer system and the problems they were having using their old
systems. Lassiter had assured them that the problems
were being addressed. He stressed that patience was
needed during the ongoing conversion to the new system.
Now, during his private moment, Lassiter was beginning to recognize the problems and complexities he
faced with the system conversion. The work of his marketing staff, who were unable to access the new computer system to handle their accounts, had ground to a
halt. Even worse, something had happened to the data
in most of the workstations, which meant that
conference registrations and other functions had to be
done manually. These inconveniences, however, were
minor compared to Lassiter’s uneasy feeling that there
were problems with Midsouth’s whole approach to the
management of information technology. Lassiter knew
that time was of the essence and that he might have to
step in and manage the conversion, even though he had
no information technology background. He wondered
what he should do next.
Background of the MSCC
In the early 1900s, economic development in the
Midsouth area was highly dependent on transportation
systems. As a result of legislative decisions, many
communities in the Midsouth area could not gain
access to reasonable transportation services, thus
retarding business and economic development. With no
one to represent their concerns to the state government,
a group of powerful businesspeople formed the MSCC
to lobby the legislature on the issue of transportation
access.
The MSCC dealt with this single issue until the
1930s, when its charter was changed to include a broader
range of issues affecting the business community, including state banking laws, transportation, industrial development, and business taxes. By the mid-1990s, the MSCC,
under the new leadership of President Jack Wallingford,
became an aggressive advocacy organization for the business community.
The broadening of MSCC’s role brought substantial change to the organization. In 1988 the MSCC had a
staff of 14, a membership of 3,000 businesses and individuals, and an annual budget of $1,720,000. Over the
years, the MSCC had been able to develop a reserve
account of just over $1.5 million.
By 2000, the staff had grown to 24, the $1.5 million
cash reserve had been drawn down to $250,000, and membership had dropped to 2,300, largely because of the loss of
some major manufacturers in the region, the bursting of the
Internet bubble, and the resulting economic slowdown. The
reserve reduction, supported by the Board of Directors, had
fueled considerable internal growth in terms of staff and
capabilities. During this time, the MSCC also moved into
larger offices and upgraded their workstations.
In the early 2000s the MSCC was considered the
most powerful business advocacy organization in the
Midsouth area and one of the most innovative chambers
of commerce in terms of its approaches and techniques
in dealing with problems facing the business community. The greatest problem facing the management of the
MSCC at the time was the growing concern that its
aggressive growth might have to be curtailed because it
could no longer fund its annual operating budget.
Leon Lassiter
In mid-2000, Wallingford was faced with a serious dilemma. The MSCC was projecting a $330,000 deficit for the
2001 fiscal year. Wallingford realized he was going to have
to reduce both the number of staff and the number of programs or find some way to grow revenue more aggressively
in the organization. Wallingford asked his Vice President of
Public Affairs and Operations, Ed Wilson, to find someone
new to lead the sales and marketing function.
Leon Lassiter came to the MSCC in December 2000
with 12 years of experience in sales management and marketing with American Brands, where he had recently
turned down a promotion to regional sales manager. The
MSCC, he reasoned, offered more of an opportunity to
have an impact than at American Brands. As Vice
President of Marketing and Membership, Lassiter reported
directly to Wallingford. After settling in to the organization, he initiated a thorough review of all programs, departments, and processes. He found that the marketing support
functions were better coordinated and managed than the
sales functions. Additionally, although the MSCC had
Case Study 1 • Midsouth Chamber of Commerce (A)
purchased workstations for sales and marketing and had
installed some custom software, the information system
was quite limited in capability. Due to concerns over security, no staff member had access to all the data necessary to
operate the marketing and sales activities of the MSCC.
Each workstation was equipped to perform particular functions with the needed data resident on the workstation.
With his analysis completed, Lassiter began to develop an
entirely new sales and marketing process based on measurable goals, documented operating procedures, and regular
training programs. He knew that eventually a new information system would have to be developed.
activities were to track the activity occurring in membership. Primary uses included:
•
•
•
•
•
•
•
Information Technology Use at the MSCC
The Marketing and Sales Division
For a few years, Lassiter was able to operate his organization’s tasks with the existing set of individual workstations, all of which were connected to a print server. The
marketing division’s primary information technology
•
•
Developing the membership database
Developing the prospective member database
Making daily changes to both databases
Generating a series of letters for personalized mail
contact
Generating prospect and member lists and labels
by industry sector, firm size (sales, employment),
zip code, mailing designator, and other criteria
Processing call-record activity by the territory
managers
Tracking member activities and concerns through a
comment field
Creating audit trails for reviewing changes
General word processing
The marketing support area performed most of the
computing tasks for the marketing division via their local
Board of
Directors
President
(Wallingford)
VP
Economic
Development
VP Human
Resources
VP Public
Affairs
(Wilson)
VP Mktg./
Membership
(Lassiter)
VP Public
Finance
(Hedges)
International
Trade
Personnel
Environment
& Energy
Sales
Library
Services
Conferences
Legislative
Services
Mktg.
Systems Analyst
(Kovecki)
Office
Mgmt.
Communications
Controller
Reception
Print
Operations
EXHIBIT 1
MSCC Organizational Structure
11
12
Case Study 1 • Midsouth Chamber of Commerce (A)
workstations. They filled all requests for labels, lists, and
changes from the sales and marketing staff. Requested
changes to the member database sometimes backed up as
much as two or three days. Lassiter felt this was unacceptable and hoped to achieve a two-hour turnaround on
member-change activity.
Four territory managers, a marketing support supervisor, and five clerical people staffed the marketing division. The territory managers generated 75 to 80 call
records per day that required database changes, letters,
and invoice processing. These requests were processed by
the clerical staff. In addition, the clerical staff processed
commissions on membership sales, member cancellations, and general database maintenance. The clerical staff
also prepared special-letter requests from the territory
managers and performed all normal secretarial duties.
Operations Division
Ed Wilson managed the operations division. Eight managers and support staff worked in operations. This
group was responsible for providing financial information and insuring accounting controls. The operations
staff maintained:
•
•
•
•
•
•
•
The general ledger system
Fund balances
Accrual accounting functions
Payment history tracking
Commission schedules
Membership cancellation tracking
Report generation
Wilson also planned to be able to track legislative
bills from their introduction, through their demise in
committee or chamber, their passage, or their veto by the
governor. This information would be keyed into the system, updated as changes occurred, printed, and sent to
selected staff members on a daily basis.
Human Resources Division
The human resources division, with two managers and
two support staff, was responsible for developing a conference and seminar tracking and reporting mechanism
that would also have the capability of printing out badges
for conference or seminar attendees. The division also
maintained personnel records.
Changing Times
By 2002, as a result of Lassiter’s marketing and sales
reorganization and Wilson’s aggressive management of
expenses, the MSCC was experiencing solid financial
growth. While the two men were primarily responsible
for the success, Wilson and Lassiter clashed on numerous
occasions. Lassiter felt that much of the territory managers’ work and marketing support activities could be
automated to provide the MSCC with a significant reduction in labor and allied costs. Lassiter believed that a fulltime systems analyst should be hired to meet the growing
information needs of the MSCC. Wilson, on the other
hand, was worried about the cost of the MSCC’s information systems. In the past, the MSCC had hired a consultant, Nolan Vassici, to make recommendations on
hardware and software and to develop the custom software used by each division. Wilson felt that continuing to
hire Vassici whenever additional or corrective work was
needed was the best option. He did not want to increase
the number of employees. Wilson knew that as a small,
nonprofit agency, MSCC had limited funds for the expansion of computing capabilities. Adding a full-time systems analyst to the staff would make it significantly more
difficult to respond to growing staff demands in other
areas. Continuing the relationship with Vassici provided
Wilson with the ability to specify exactly what Vassici
worked on and what should be tabled until there was the
time and budget for it.
Although Lassiter and Wilson continued to clash,
Lassiter understood Wilson’s desire to control costs in
light of the limited resources of the MSCC. Lassiter knew
that the slowly growing computer sophistication of the
staff would explode once the tap was fully opened.
However, Lassiter felt that the demand could be dealt with
effectively once the MSCC determined the extent of the
staff’s needs.
In early 2003, Lassiter and Wilson joined forces on
a concept by which the MSCC would offer a health
insurance program to its members, now more than 4,500
businesses and individuals. Although the proposal was
eventually rejected by the Board of Directors, Wilson and
Lassiter, as a result of the study, recognized that there
were many revenue-producing opportunities the MSCC
could pursue that would require a much higher level of
information systems use. Wilson soon hired a systems
analyst to increase the MSCC’s capabilities.
Simon Kovecki, a young computer science graduate with no experience in a membership organization like
the MSCC or with accounting software, joined the
MSCC in June 2003 and spent his first three months on
the job learning the organization and its computing
systems. He worked exceptionally long hours as he
struggled to understand software for which there was no
documentation. Calls to Vassici for help were useless
because his business had closed.
Case Study 1 • Midsouth Chamber of Commerce (A)
Catalyst for Change
By 2005, the MSCC had reached a point where some organizational changes had to occur. Wallingford, at the
urging of the Board of Directors, assigned Lassiter the
additional areas of communications, graphic arts, and
printing operations. Controller duties were assigned to
Harry Taska, and Jeff Hedges, the new Vice President of
Public Finance, was assigned responsibility for computer
operations. Wilson, nearing retirement, retained his public affairs activities and was asked to focus his efforts on
developing an important public affairs project.
Just after the staff changes took place, Kovecki
confided to Lassiter that he was disappointed by the
changes in staff responsibility. He felt he should have
been elevated to manager of information systems and
given additional staff. Hedges, who had little computer
background, was also in charge of research on various
issues of interest to the members of the MSCC as well as
oversight of the Controller’s function. Kovecki was concerned that Hedges would not have the time to manage
the growing computer operations properly.
Lassiter shared Kovecki’s concern over the lack
of top management attention to the information systems area. His concern led him to send out requests for
information to a number of firms servicing the software
needs of organizations like the MSCC. Primarily interested in sales and marketing software, he focused on
software from Cameo, MEI Colorado Association of
Commerce and Industry, Connecticut Business and
Industry Association, TelePro 2000, and Data Link.
Lassiter sent the information he received from these
vendors to other senior managers but received little response. Wilson was involved in his new project, Taska
was learning his new duties as Controller, and Hedges
had little time to examine the computer activities.
In August 2005, Lassiter attended a national association meeting where a session on management software
led to his discovery of a small software firm called UNITRAK. The company had developed a software suite that
Lassiter was convinced would meet the MSCC’s needs.
He based his assessment on the MSCC’s current and anticipated future needs for computing capability that had
been developed by Kovecki in 2004. (See Exhibit 2.)
Planning the New Information Technology
System
Lassiter had identified areas in UNITRAK where he felt
this more powerful information system would allow the
Information
Systems
Capabilities
Marketing
Operations
Public Affairs
Public Finance
Economic Development
Human Resources
Executive
Through early 2004, Wilson continued to manage
the computer systems and, with the help of Kovecki, upgraded the hardware in the workstations. With Kovecki’s
constant attention, the software continued to work relatively well. In 2005 Wilson, with Kovecki’s assistance,
developed an online legislative information system on a
workstation that was considered state of the art in the
chamber of commerce industry. With this application and
the growth in members and types of computer applications, the MSCC senior management began to worry
about the separation of systems for membership and marketing, finance, conferences, and other applications
which required frequent data reentry.
With 2005 dues revenue approaching $2.8 million
and approximately 4,750 member firms, the MSCC was
among the largest statewide chambers of commerce in
the country. The staff had swelled to 42 and the financial
reserve was nearly $2.6 million. Although Lassiter felt
some satisfaction with the MSCC’s growth and financial
strength, he was bothered with the lack of forethought as
to how the MSCC might develop a comprehensive plan
to use information for the future. Wilson, too, recognized
the value of information systems to an organization in the
business of gathering, analyzing, and using information
to affect legislative outcomes.
13
Word Processing
Record Maintenance
Legislative Services
Online Publications
List Processing
Label Generation
Database Management
Financial Controls
Conference Registration
Seminar Registration
Billings/Invoicing
Publication Processing
Data Search/Research
Inventory Tracking
Desktop Publishing
Project Management
X X X X X X X
X
X
X
X
X
X
X
X
X
X X
X
X X
X X
X X X
X
X X
X
X X
X
X
X X
X
X
X X X
X X
EXHIBIT 2
MSCC Information Systems Needs
14
Case Study 1 • Midsouth Chamber of Commerce (A)
MSCC to be more efficient. These improvements would
enable staff members to:
• Input special member information into a notes field
(not then available)
• Generate telemarketing scripts that would allow
“tree scripting” based on various sales objections
(not then available)
• Utilize a statistical inquiry feature that would provide quantitative analysis of sales activity figures
from all marketing activities (not attempted with
the separate workstation systems)
In addition, the new information systems would
allow territory managers to:
• Access their account information from their workstations rather than asking a staff member
• Develop letters and attachments from their workstations, using information in a central database
rather than manually linking information contained
in several separate databases
In a memo to the management group, Lassiter commented, “The UNITRAK system not only meets our
needs now, but it is also powerful enough to provide the
MSCC with the room to grow over the next 5 years.” The
software also appeared to be user friendly, which Lassiter
believed was the key to freeing up Kovecki’s time.
Lassiter explained the software to Hedges, who wanted
the current accounting software left intact but agreed that
now was the time to move forward in finding a more
powerful software solution for the MSCC’s problems.
Hedges also agreed that other modules in the UNITRAK
system could be activated at a later time.
In October 2005, Lassiter contacted Greg Ginder,
President of the UNITRAK Software Corporation, and invited him to the MSCC for a demonstration of the system’s
capabilities. Wilson observed about 30 minutes of the threehour demonstration and told Lassiter, “I’ll support it if you
want it. It will work for my project for public affairs.”
Hedges agreed that the new system would free up Kovecki’s
time and allow him to become more involved in planning
and systems development. Kovecki’s comments were different. He remarked, “Yeah, the software has its strengths
and weaknesses and it probably would save some of my
time. But I don’t like the idea of staff having uncontrolled
access to so much data. It’s not clear what they’ll do with it.”
The Proposal
Lassiter decided to move ahead quickly with a proposal to Wallingford and the Board of Directors. He developed simple flow charts that showed the hours it took
to conduct certain activities, e.g., the staff time new
member sales took with the current workstation
arrangement, versus the time it would take with the
new software. Lassiter knew that the Executive
Committee of the Board would require considerable
justification to approve an “off-budget” capital expenditure that would significantly reduce reserves. He had
also done some calculations to show that if the new
system performed as he hoped, each territory manager
would be able to generate $150,000 in increased sales
through increased contacts. Although Lassiter knew
this goal was aggressive and very difficult to justify, he
wanted to be able to demonstrate a less-than-six-month
payback if challenged by a member of the Executive
Committee.
Lassiter believed that UNITRAK would reduce the
price of the software. The software was new, and UNITRAK had sold it to only one other statewide chamber of
commerce organization, the Northern State Chamber of
Commerce. Jeff Fritzly, Vice President of Marketing and
Development of the NSCC, told Lassiter:
We looked at quite a few software packages as
well as writing our own custom software, but our
consultant chose the UNITRAK software. We
purchased the software from UNITRAK and got
a good discount on the needed new hardware.
They have been very helpful and supportive of
our needs.
A week before the Executive Committee meeting,
Ginder and Lassiter agreed on a price for the software.
Lassiter was pleased that the price was 30 percent
less than Northern State had paid. With the help of
Ginder and a member of the Executive Committee who
headed the local branch office of a computer equipment
manufacturer, Lassiter was also able to achieve an
excellent discount on new server hardware. He felt this
low cost was another justification for approval of the
project. Lassiter also made it a point to meet with both
Wilson and Hedges to keep them abreast of the
negotiation and seek their advice. He felt that by
increasing the level of communication with Hedges and
Wilson, he would be able to gain their interest and
support, which he felt was important to the success of
the project.
When the Executive Committee of the Board met
in November 2005, Lassiter explained that the MSCC
had reached the limit of its current system design, and
that an investment in a central server connected to networked workstations was needed to allow the MSCC to
Case Study 1 • Midsouth Chamber of Commerce (A)
meet current and future opportunities for growth. During
his presentation, Lassiter said:
While the MSCC has made significant and appropriate investments in the workstations necessary
for the MSCC to increase its operational sophistication, we have reached the limit of these smaller
machines. With the spectacular growth in revenue
we’ve enjoyed over the last five years, our requirements and demands have increased dramatically.
Without an immediate investment in increased capability, the MSCC’s continued growth and services will be in jeopardy.
In response to challenges from the Executive
Committee regarding what the new system would mean
to the bottom line and the MSCC’s reserves, Lassiter responded, “I believe we will see a 10–15 percent increase
in sales and a 20 percent increase in staff productivity
once the new system is operational.” With these assurances and a price that would consume only 10–15 percent
of reserves, the members of the Executive Committee
complimented Lassiter on his work and approved the
purchase of the software.
Implementation
Greg Ginder of UNITRAK was ecstatic over the decision
and promised unlimited support at no charge to install the
new system. But Kovecki continued to express concern
about staff members using the new capabilities of the system. He said:
I know that Lassiter expects this new software to be
user friendly, but I’m uncomfortable with how
strongly he feels about training the staff to use as
many of the features as possible. He thinks that
training the staff on whatever they want to learn will
make the MSCC more effective, but I disagree. We
would be opening Pandora’s box and we would lose
control over what was going on. The last thing we
need is for people to be getting into things they
don’t need to be in.
By February 2006, Lassiter had heard nothing
regarding the purchase of the new system. Kovecki told
Lassiter that no one had approved the purchase order.
Lassiter then questioned Hedges, who responded that he
had heard nothing more and had been busy with research
on issues of interest to the MSCC members. “Go ahead and
purchase the software,” Hedges told Lassiter. “It’s your system anyway.” Although Lassiter tried to explain that it was
15
not his responsibility to implement the purchase or conversion, he felt the project would not move forward without his
purchasing the software. After signing the purchase order,
Lassiter handed it to Kovecki and said, “You and Hedges
are the project managers. I shouldn’t be involved at this
point. It’s up to you guys to complete the project.”
Near the end of March, Lassiter asked Kovecki how
the project was proceeding. Kovecki stated that the hardware had been delivered but that he was busy with a project
of Wilson’s and didn’t have time to work on the new software. Lassiter went to Wilson to inquire about the anticipated length of the project Kovecki was working on, and
Wilson indicated it should be finished by mid-April.
Although Lassiter felt uncomfortable about pushing Hedges and Kovecki, he was beginning to feel that he
would have to use his influence to get things moving.
Lassiter held a meeting with his staff, informing them
that a new system had been purchased that would improve operations in several areas. Several staff members
expressed concern that they had not been consulted or
informed of the idea before its approval. Specific questions were asked regarding word processing, new member recruiting, and commission processing. Lassiter,
anticipating that Kovecki had studied the documentation,
asked Kovecki to answer the questions. Kovecki was
unable to answer the questions and indicated he needed
more time to study the documentation.
Lassiter set up an appointment with UNITRAK for
training for Kovecki and himself. After a positive training
visit, Lassiter asked Kovecki to spend half a day with him
to set up a project flow chart and anticipate potential problems, but May and June passed with little forward progress
on the conversion. Lassiter had told the Executive
Committee that the project would be completed by the end
of March 2006, yet little had been accomplished.
Upon Kovecki’s return from a two-week vacation
at the end of June, Lassiter asked Wallingford to intervene and to strongly urge Hedges and Kovecki to complete the project. Lassiter stated:
It really bothered me that I had to go over Hedges’
head but we were coming up on the seventh month
of what should have been an easy three-month project. It’s partly my fault because I didn’t establish
teamwork up front, nor did I make clear early in the
process the responsibilities of those participating.
The Final Phase
With Hedges’ agreement, Lassiter set up two days of staff
training for the third week in August 2006. Kovecki had
assured Lassiter that the system would be up by the last
16
Case Study 1 • Midsouth Chamber of Commerce (A)
day of training so that the staff could immediately use
the new system. Lassiter broke the training into major
segments and had Kovecki set up training sites in two
separate conference rooms for staff. UNITRAK sent a
two-person team that would act as project managers
and trainers.
The training went well with the exception of the conference and seminar segment of the software. The users
brought up significant complaints that the new software
servicing this area was not as functional and user friendly
as the existing custom-written workstation software.
Although Lassiter suspected that a large part of ...
Purchase answer to see full
attachment