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Total Points: 50.0

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Unformatted Attachment Preview

CH AP T ER 1 INFORMATION SYSTEMS AND PEOPLE Introduction to Information Systems Second Edition PATRICIA WALLACE Johns Hopkins University Boston Columbus Indianapolis New York San Francisco Upper Saddle River Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montreal Toronto Delhi Mexico City São Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo iii Editor in Chief: Stephanie Wall Executive Editor: Bob Horan Program Manager Team Lead: Ashley Santora Program Manager: Denise Vaughn Editorial Assistant: Kaylee Rotella Executive Marketing Manager: Anne K. Fahlgren Project Manager Team Lead: Judy Leale Project Manager: Ilene Kahn Procurement Specialist: Michelle Klein Creative Director: Blair Brown Senior Art Director: Janet Slowik Text Designer: Wanda Espana Cover Designer: Wanda Espana Cover Photos: © NetPics/Alamy, Flydragon/Shutterstock, © Peter Arnold, Inc./Alamy, Iain Masterton/Alamy, Kevin Foy/Alamy, Lourens Smak/Alamy, Ocean/Corbis, Andresr/Shutterstock, © Carol and Mike Werner/Alamy, TomBham/Alamy, marco cappalunga/Shutterstock, © Emmanuel LATTES/Alamy VP, Director of Digital Strategy & Assessment: Paul Gentile Digital Editor: Brian Surette Digital Development Manager: Robin Lazrus Digital Project Manager: Alana Coles MyLab Product Manager: Joan Waxman Digital Production Project Manager: Lisa Rinaldi Full-Service Project Management: S4Carlisle Publishing Services Composition: S4Carlisle Publishing Services Printer/Binder: R.R. Donnelley/Willard Cover Printer: Lehigh-Phoenix Color/Hagarstown Text Font: Times New Roman MT Std Credits and acknowledgments borrowed from other sources and reproduced, with permission, in this textbook appear on the appropriate page within text. Microsoft and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published as part of the services for any purpose. All such documents and related graphics are provided “as is” without warranty of any kind. Microsoft and/ or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all warranties and conditions of merchantability, whether express, implied or statutory, fitness for a particular purpose, title and non-infringement. In no event shall Microsoft and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from the services. The documents and related graphics contained herein could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Microsoft and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time. Partial screen shots may be viewed in full within the software version specified. Microsoft® and Windows®, and Microsoft Office® are registered trademarks of the Microsoft Corporation in the U.S.A. and other countries. This book is not sponsored or endorsed by or affiliated with the Microsoft Corporation. Copyright © 2015, 2013 by Pearson Education, Inc., One Lake Street, Upper Saddle River, New Jersey 07458. All rights reserved. Manufactured in the United States of America. This publication is protected by Copyright, and permission should be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise. To obtain permission(s) to use material from this work, please submit a written request to Pearson Education, Inc., Permissions Department, One Lake Street, Upper Saddle River, New Jersey 07458, or you may fax your request to 201-236-3290. Many of the designations by manufacturers and sellers to distinguish their products are claimed as trademarks. Where those designations appear in this book, and the publisher was aware of a trademark claim, the designations have been printed in initial caps or all caps. Library of Congress Cataloging-in-Publication Data Wallace, Patricia. Introduction to Information Systems/Patricia Wallace, Johns Hopkins University—Second edition. p. cm. Includes index. ISBN 978-0-13-357175-2 1. Organizational change. 2. Management information systems. I. Title. HD58.8.W345 2015 658.4'038011—dc23 2013030711 10 9 8 7 6 5 4 3 2 1 ISBN 10: 0-13-357175-0 ISBN 13: 978-0-13-357175-2 To Callie, Julian, and a bright future of human–centered computing. This page intentionally left blank CH AP T ER 1 INFORMATION SYSTEMS AND PEOPLE vii About the Author P atricia Wallace is currently Senior Director for Information Technology and Online Programs at Johns Hopkins University Center for Talented Youth. Before joining JHU, she was Chief, Information Strategies, and Executive Director, Center for Knowledge Management, at the Robert H. Smith School of Business, University of Maryland, College Park. She also teaches technology management courses as Adjunct Professor in the MBA Program of the Graduate School of Management and Technology, University of Maryland University College, where she previously served as CIO for 10 years. Wallace earned her Ph.D. in psychology at the University of Texas at Austin and holds an M.S. in Computer Systems Management. She has published 10 books, including The Internet in the Workplace: How New Technologies Transform Work and The Psychology of the Internet, several educational software programs, and numerous scholarly and general articles. vii This page intentionally left blank CH AP T ER 1 INFORMATION SYSTEMS AND PEOPLE ix Brief Contents CHAPTER CHAPTER CHAPTER CHAPTER CHAPTER CHAPTER CHAPTER CHAPTER CHAPTER CHAPTER CHAPTER CHAPTER 1 2 3 4 5 6 7 8 9 10 11 12 CASE STUDIES Information Systems and People 2 Information Systems and Strategy 32 Information and Communications Technologies: The Enterprise Architecture 62 Databases and Data Warehouses 94 Information Systems for the Enterprise 130 The Web, E-Commerce, and M-Commerce 164 Business Intelligence and Decision Making 196 Collaborating with Technology 226 Knowledge Management and E-Learning 256 Ethics, Privacy, and Security 288 Systems Development and Procurement 320 Project Management and Strategic Planning 348 Facebook and Instagram: Privacy Challenges 378 A Humanitarian Supply Chain for the Red Cross 382 Apple: Can the Company Pull Off Another Disruptive Innovation? 385 Managing the Federal Government’s IT Project Portfolio 388 Glossary 393 Index 400 ix This page intentionally left blank CH AP T ER 1 INFORMATION SYSTEMS AND PEOPLE xi Contents Preface xxiii Acknowledgments CHAPTER 1 xxxi Information Systems and People 2 Learning Objectives 2 Introduction 2 Information Systems in Action MANAGING OPERATIONS 4 4 SUPPORTING CUSTOMER INTERACTIONS MAKING DECISIONS 6 6 COLLABORATING ON TEAMS 7 GAINING COMPETITIVE ADVANTAGE 8 IMPROVING INDIVIDUAL PRODUCTIVITY The Nature of Information 8 9 WHAT MAKES INFORMATION VALUABLE? 9 The Components of an Information System PEOPLE TECHNOLOGY PROCESSES DATA 11 11 12 12 15 Information Systems, the Discipline 16 Information Systems Throughout the Organization INFORMATION SYSTEMS IN BUSINESS INFORMATION SYSTEMS IN NONPROFITS AND GOVERNMENT INSIDE THE IT DEPARTMENT 17 17 18 18 COLLABORATING ON INFORMATION SYSTEMS IMPROVING YOUR OWN PRODUCTIVITY Promises, Perils, and Ethical Issues 19 21 21 PRIVACY BREACHES AND AMPLIFICATION EFFECTS 22 THE ETHICAL FACTOR: Ethical Issues Surrounding Information Systems 23 Online Simulation 23 Chapter Summary 24 Key Terms and Concepts 24 Chapter Review Questions 24 Projects and Discussion Questions Application Exercises 25 26 EXCEL APPLICATION: MANPOWER PLANNING SPREADSHEET ACCESS APPLICATION: INFORMATION SYSTEMS IN BUSINESS 26 26 Case Study #1 Nasdaq’s Information Challenges: Facebook’s Botched Public Opening and High Frequency Trading 27 Case Study #2 Breaking News: Twitter’s Growing Role in Emergencies and Disaster Communications 28 xi xii CO N TEN T S E-Project 1 Analyzing the May 6 “Flash Crash” with Excel Charts 30 E-Project 2 Gathering, Visualizing, and Evaluating Reports from Twitter and Other Sources During a Disaster 30 Chapter Notes CHAPTER 2 31 Information Systems and Strategy 32 Learning Objectives Introduction 32 32 Porter’s Five Competitive Forces THREAT OF NEW ENTRANTS POWER OF BUYERS 34 35 36 POWER OF SUPPLIERS 37 THREAT OF SUBSTITUTES 37 RIVALRY AMONG EXISTING COMPETITORS 38 Factors That Affect How the Five Forces Operate DISRUPTIVE TECHNOLOGY AND INNOVATIONS GOVERNMENT POLICIES AND ACTIONS 38 39 40 COMPLEMENTARY SERVICES AND PRODUCTS IN THE ECOSYSTEM ENVIRONMENTAL EVENTS AND “WILDCARDS” 41 42 The Value Chain and Strategic Thinking 43 EXTENDING THE VALUE CHAIN: FROM SUPPLIERS TO THE FIRM TO CUSTOMERS BENCHMARKING COMPONENTS OF THE VALUE CHAIN 43 44 THE ETHICAL FACTOR: Ethical Responsibility in an Extended Value Chain 45 IT BENCHMARKS 45 Competitive Strategies in Business 46 THE ROLE OF INFORMATION SYSTEMS IN STRATEGY 47 INFORMATION SYSTEMS: RUN, GROW, AND TRANSFORM THE BUSINESS Information Strategies and Nonprofit Organizations FUND-RAISING 48 49 50 VOLUNTEERING 50 INFORMATION STRATEGIES AND GOVERNMENT Does IT Matter? 51 52 SPENDING ON RUNNING, GROWING, AND TRANSFORMING LEVELING UP!: A STRATEGIC ANALYSIS Online Simulation 54 Chapter Summary 55 Key Terms and Concepts 55 Chapter Review Questions 56 Projects and Discussion Questions Application Exercises 52 53 56 57 EXCEL APPLICATION: IT BENCHMARKS 57 ACCESS APPLICATION: TELETHON CALL REPORTS 57 Case Study #1 Can GameStop Survive with Its Brick-and-Mortar Stores? 58 Case Study #2 The Open Internet Coalition and the Battle for Net Neutrality 59 E-Project 1 Identifying Company Strategy with Online Financial Chart Tools 60 E-Project 2 Analyzing Movie Download Times with Excel Chapter Notes 61 60 CONTENTS CHAPTER 3 xiii Information and Communications Technologies: The Enterprise Architecture 62 Learning Objectives Introduction 62 The Hardware 64 INPUT AND OUTPUT PROCESSING STORAGE 62 64 68 69 THE ETHICAL FACTOR: Ethical Implications of Big Data 70 The Software 70 TYPES OF SOFTWARE 70 HOW IS SOFTWARE CREATED? 72 Networks and Telecommunications TRANSMISSION MEDIA AND PROTOCOLS TYPES OF NETWORKS NETWORK PROTOCOLS 74 74 77 79 The Enterprise Architecture 81 TRENDS IN ENTERPRISE ARCHITECTURES GUIDING THE ARCHITECTURE Online Simulation 85 Chapter Summary 86 81 84 Key Terms and Concepts 87 Chapter Review Questions 87 Projects and Discussion Questions Application Exercises 87 88 EXCEL APPLICATION: ANALYZING GROWTH IN COMPUTER STORAGE CAPACITIES ACCESS APPLICATION: MANAGING ICT ASSETS WITH A DATABASE 88 89 Case Study #1 Google Glass and Wearable Technologies 89 Case Study #2 Rolling Out Its 4G Network, Sprint Nextel Competes with Rivals E-Project 1 Voluntary Distributed Computing E-Project 2 Using Excel to Analyze Cost Effectiveness for 4G Rollouts Chapter Notes CHAPTER 4 90 92 92 93 Databases and Data Warehouses 94 Learning Objectives Introduction 94 94 The Nature of Information Resources 96 STRUCTURED, UNSTRUCTURED, AND SEMI-STRUCTURED INFORMATION METADATA 96 97 THE QUALITY OF INFORMATION 97 Managing Information: From Filing Cabinets to the Database TABLES, RECORDS, AND FIELDS THE RISE AND FALL OF FILE PROCESSING SYSTEMS 100 DATABASES AND DATABASE MANAGEMENT SOFTWARE Developing and Managing a Relational Database PLANNING THE DATA MODEL 99 99 102 105 105 ACCESSING THE DATABASE AND RETRIEVING INFORMATION 109 THE ETHICAL FACTOR: Ethical Issues in Database Design: The Case of Ethnic Identification 110 MANAGING AND MAINTAINING THE DATABASE 111 xiv CO N TEN T S Multiple Databases and the Challenge of Integration SHADOW SYSTEMS 113 114 INTEGRATION STRATEGIES AND MASTER DATA MANAGEMENT Data Warehouses and Big Data 114 114 BUILDING THE DATA WAREHOUSE 116 THE CHALLENGE OF BIG DATA 116 STRATEGIC PLANNING, BUSINESS INTELLIGENCE, AND DATA MINING 118 The Challenges of Information Management: The Human Element OWNERSHIP ISSUES 119 119 DATABASES WITHOUT BOUNDARIES 119 BALANCING STAKEHOLDERS’ INFORMATION NEEDS Online Simulation 120 Chapter Summary 121 Key Terms and Concepts 122 Chapter Review Questions 122 Projects and Discussion Questions Application Exercises 120 122 123 EXCEL APPLICATION: MANAGING CATERING SUPPLIES ACCESS APPLICATION: DD-DESIGNS 123 124 Case Study #1 U.K. Police Track Suspicious Vehicles in Real Time with Cameras and the License Plate Database 125 Case Study #2 Colgate-Palmolive Draws on Its Global Database to Evaluate Marketing Strategies E-Project 1 Identifying Suspects with a License Plate Database: Constructing Queries with Access 127 E-Project 2 Building a Database for Customer Records Chapter Notes CHAPTER 5 128 129 Information Systems for the Enterprise 130 Learning Objectives Introduction 130 130 Finance Management 132 COMPONENTS OF FINANCIAL INFORMATION SYSTEMS 132 FINANCIAL REPORTING, COMPLIANCE AND TRANSPARENCY Human Capital Management COMPONENTS OF HUMAN CAPITAL MANAGEMENT SYSTEMS HCM METRICS 134 135 135 137 Managing the Supply Chain 137 THE ETHICAL FACTOR: Ethics and Talent Management 138 SUPPLY CHAIN FUNDAMENTALS 138 MEASURING PERFORMANCE IN SUPPLY CHAINS 139 INFORMATION SYSTEMS AND TECHNOLOGY FOR SUPPLY CHAIN MANAGEMENT Customer Relationship Management CRM GOALS AND METRICS 144 144 CRM STRATEGIES AND TECHNOLOGIES 146 Enterprise Resource Planning (ERP): Bringing It All Together ERP COMPONENTS 150 INTEGRATION STRATEGIES 152 IMPLEMENTATION ISSUES 153 149 141 126 CONTENTS Online Simulation 154 Chapter Summary 155 Key Terms and Concepts 156 Chapter Review Questions 156 Projects and Discussion Questions Application Exercises 156 157 EXCEL APPLICATION: PERFORMANCE BICYCLE PARTS ACCESS APPLICATION: VSI CONSULTANTS 157 157 Case Study #1 Helping the Homeless: A Customer-Centric Approach with CRM Software 159 Case Study #2 Winning the War for Talent: The Mandarin Oriental’s Talent Management System E-Project 1 CRM for Human Services Agencies 161 E-Project 2 Evaluating Employment and Recruitment Websites Chapter Notes CHAPTER 6 161 162 The Web, E-Commerce, and M-Commerce 164 Learning Objectives Introduction 164 164 Developing a Web Strategy CHOOSING A GOAL 166 166 NAMING THE WEBSITE 167 Building the Website WEBSITE DESIGN 170 170 THE ETHICAL FACTOR: Website Accessibility: Why Is Progress So Slow? 174 SOFTWARE DEVELOPMENT STRATEGIES FOR THE WEB E-Commerce 174 177 THE ONLINE TRANSACTION AND E-COMMERCE SOFTWARE E-COMMERCE SECURITY 177 177 E-COMMERCE TRUST 178 Mobile Devices and M-Commerce WHY MOBILE MATTERS 178 178 DESIGNING WEBSITES AND APPS FOR MOBILE DEVICES M-COMMERCE AND MOBILE PAYMENTS Marketing the Website 179 180 180 SEARCH ENGINE OPTIMIZATION WEB ADVERTISING 180 182 Web 2.0 and Beyond 183 CROWDSOURCING AND COLLECTIVE INTELLIGENCE 184 EXPANDING DATA AND SENSORY INPUT: THE “INTERNET OF THINGS” THE LEARNING WEB 185 Online Simulation 186 Chapter Summary 187 Key Terms and Concepts 188 Chapter Review Questions 188 Projects and Discussion Questions Application Exercises xv 188 189 WEBSITE APPLICATION: HERITAGE DOGS 189 EXCEL APPLICATION: HERITAGE DOGS WEBSITE METRICS ACCESS APPLICATION: SPRINGFIELD ANIMAL SHELTER 190 190 184 160 xvi CO N TEN T S Case Study #1 Mobile Payments and the Digital Wallet 191 Case Study #2 Pandora Internet Radio: The Net Threatens the Music Business (Again) E-Project 1 Examining Top M-Commerce Sites 193 E-Project 2 Exploring Pandora’s Web Analytics 193 Chapter Notes CHAPTER 7 194 Business Intelligence and Decision Making 196 Learning Objectives Introduction 196 196 Levels of Decision Making OPERATIONAL LEVEL TACTICAL LEVEL 198 198 198 STRATEGIC LEVEL 199 Sources of Business Intelligence 200 TRANSACTIONAL DATABASES, DATA WAREHOUSES, AND INTERNAL DATA SOURCES EXTERNAL DATA SOURCES AND BIG DATA 200 200 THE ETHICAL FACTOR: The Ethics of Tagging Faces in Photos 202 Data Mining and Analytics 202 ANALYZING PATTERNS, TRENDS, AND RELATIONSHIPS SIMULATING, OPTIMIZING, AND FORECASTING ARTIFICIAL INTELLIGENCE Web Analytics 202 205 207 210 WEB METRICS 210 ANALYZING TRAFFIC AND ACHIEVING SUCCESS 212 Putting It All Together: Dashboards, Portals, and Mashups DASHBOARDS PORTALS MASHUPS 213 213 214 215 BUSINESS INTELLIGENCE: THE HUMAN ELEMENT 217 Online Simulation 217 Chapter Summary 218 Key Terms and Concepts 218 Chapter Review Questions 219 Projects and Discussion Questions Application Exercises 219 220 EXCEL APPLICATION: ANALYZING REVENUE AND EXPENSES FOR CITY HOSPITAL SEMINARS ACCESS APPLICATION: MARKETING CITY HOSPITAL SEMINARS Case Study #1 Cracking Fraud with Government’s Big Data 221 Case Study #2 TV and Twitter: How Nielsen Rates Programs with “Social TV” E-PROJECT 1 Detecting Suspicious Activity in Insurance Claims E-PROJECT 2 Analyzing Nielsen TV Ratings with Excel Chapter Notes CHAPTER 8 224 225 Collaborating with Technology 226 Learning Objectives Introduction 226 226 220 221 223 222 192 CONTENTS The Evolution of Collaborative Technologies EMAIL DISCUSSION FORUMS 230 INSTANT MESSAGING AND TEXTING 230 GROUP DECISION SUPPORT SYSTEMS (GDSS) WEB CONFERENCING 233 SHARED WORKSPACES 234 Web 2.0 Collaborative Technologies WIKIS 232 233 INTERACTIVE VIDEO BLOGS 228 228 235 235 236 SOCIAL NETWORKING 237 MICROBLOGGING 238 VIRTUAL WORLDS 239 Unified Communications 241 CAPABILITIES FOR UNIFIED COMMUNICATIONS UNIVERSAL DASHBOARDS 241 241 The Human Element and Collaborative Technologies PSYCHOLOGICAL CHARACTERISTICS OF ONLINE ENVIRONMENTS 242 242 THE ETHICAL FACTOR: Flash Mobs and Free Speech: Should Police Block Mobile Messaging Services? 244 MANAGING ONLINE IMPRESSIONS 245 GROUP DYNAMICS IN VIRTUAL TEAMS MAKING VIRTUAL TEAMS WORK 245 247 Online Simulation 248 Chapter Summary 249 Key Terms and Concepts 249 Chapter Review Questions 249 Projects and Discussion Questions Application Exercises 250 251 EXCEL APPLICATION: GOING GREEN! ACCESS APPLICATION: CLOUD 9 251 251 Case Study #1 “Telepresence Robots” Support Remote Collaboration Case Study #2 Yahoo! Bans Telecommuting: Was It the Right Move? 251 253 E-Project 1 Estimating Breakeven Pricing for Telepresence Robots Using a Spreadsheet E-Project 2 Estimating Savings for Virtual Work Using an Excel Model Chapter Notes CHAPTER 9 254 255 Knowledge Management and E-Learning 256 Learning Objectives Introduction 256 256 The Nature of Intellectual Capital TYPES OF INTELLECTUAL CAPITAL TYPES OF KNOWLEDGE 258 258 258 MANAGING INTELLECTUAL CAPITAL 259 Knowledge Management Strategies and Technologies IDENTIFY THE GOAL 260 LOCATE THE SOURCES CAPTURE THE KNOWLEDGE 260 263 ORGANIZE, SHARE, AND VALUE KNOWLEDGE 265 260 254 xvii xviii CO N TEN T S Knowledge Management: Pitfalls and Promises THE HUMAN ELEMENT: WHY SHARE KNOWLEDGE? INCENTIVES FOR KNOWLEDGE SHARING 268 268 269 THE ETHICAL FACTOR: Knowledge Sharing in Fast-Paced Industries: The Case of Formula One Racing 269 TECHNOLOGY HURDLES AND CONTENT ISSUES THE SEMANTIC WEB 270 270 PRACTICAL TIPS FOR LAUNCHING A KNOWLEDGE MANAGEMENT PROJECT E-Learning 270 271 COMPARING E-LEARNING APPROACHES 271 Creating an E-Learning Program COURSE DEVELOPMENT LEARNING OBJECTS 273 273 274 CONTENT AUTHORING TOOLS COLLABORATION TOOLS 274 275 STRATEGIES TO PREVENT CHEATING 276 LEARNING MANAGEMENT SYSTEMS 277 E-Learning in Education 277 DIFFERENCES BETWEEN CORPORATE AND EDUCATION E-LEARNING COMPARING E-LEARNING AND CLASSROOM LEARNING Online Simulation 280 Chapter Summary 281 Key Terms and Concepts 278 278 282 Chapter Review Questions 282 Projects and Discussion Questions Application Exercises 282 283 EXCEL APPLICATION: TOP TALENT ACCESS APPLICATION: TOP TALENT 283 283 Case Study #1 Lynda.com: How an E-Learning Entrepreneur Rides Waves of Change Case Study #2 Diplopedia: Managing State Department Knowledge with a Wiki E-Project 1 Exploring the World of Online Courses 286 E-Project 2 Managing the Human Element on Wikipedia with Technology Chapter Notes CHAPTER 10 287 Ethics, Privacy, and Security 288 Learning Objectives Introduction Ethics 288 288 290 ETHICAL FRAMEWORKS ETHICS AND THE LAW 290 290 ETHICAL ISSUES AND INFORMATION AND COMMUNICATIONS TECHNOLOGIES Information Ethics 292 INTELLECTUAL PROPERTY AND DIGITAL RIGHTS MANAGEMENT PLAGIARISM Privacy 294 295 TRADING PRIVACY FOR CONVENIENCE AND FREEBIES ANONYMITY SURVEILLANCE 297 298 “THE RIGHT TO BE FORGOTTEN” 299 296 292 291 286 285 283 CONTENTS Information Security RISK MANAGEMENT xix 299 299 IDENTIFYING THREATS 299 THE ETHICAL FACTOR: Ethical Dilemmas in a Distributed Denial of Service Attack 302 ASSESSING VULNERABILITY 302 ADMINISTRATIVE SECURITY CONTROLS TECHNICAL SECURITY CONTROLS 303 304 INFORMATION SECURITY AND CLOUD COMPUTING 307 The Human Element in Information Ethics, Security, and Privacy COGNITIVE ISSUES AND PRODUCTIVITY SOCIAL ENGINEERING AND INFORMATION SECURITY SECURITY AWARENESS AND ETHICAL DECISION MAKING Online Simulation 311 Chapter Summary 312 Key Terms and Concepts 307 307 308 310 312 Chapter Review Questions 313 Projects and Discussion Questions Application Exercises 313 314 EXCEL APPLICATION: CITYWIDE COMMUNITY COLLEGE ACCESS APPLICATION: CITYWIDE COMMUNITY COLLEGE 314 314 Case Study #1 Zynga Kills Petville and Angers Virtual Pet Owners 315 Case Study #2 Community Policing on the Internet: Spamhaus Targets Worldwide Spammers and Draws a Massive Distributed Denial of Service Attack 316 E-Project 1 Tracking the Trackers: Investigating How Third-Party Cookies Steer the Ads You See E-Project 2 Analyzing Spammers by Country, Using Excel Pivot Tables Chapter Notes CHAPTER 11 317 318 Systems Development and Procurement 320 Learning Objectives Introduction 320 320 Systems Development Life Cycle PLANNING ANALYSIS 322 322 323 DESIGN PHASE 325 DEVELOPMENT PHASE TESTING PHASE IMPLEMENTATION MAINTENANCE 327 328 328 330 Software Development Strategies 331 THE ETHICAL FACTOR: Developing Systems That Promote Ethical Decision Making and Social Responsibility 331 WATERFALL SOFTWARE DEVELOPMENT ITERATIVE METHODS AGILE METHODS 332 332 333 Comparing Software Development Approaches TYPE OF PROJECT 334 ORGANIZATIONAL CULTURE IS WATERFALL DEAD? 335 334 334 317 xx CO N TEN T S Software Procurement: The “Buy” Strategy PROS AND CONS OF BUILD AND BUY THE PROCUREMENT PROCESS 335 335 336 ADAPTATION AND CUSTOMIZATION 337 The Human Element in Systems Development and Procurement CROSS-FUNCTIONAL TEAMS THE ROLE OF SENIOR MANAGEMENT WORKING WITH CONSULTANTS Online Simulation 340 Chapter Summary 341 339 339 Key Terms and Concepts 341 Chapter Review Questions 342 Projects and Discussion Questions Application Exercises 338 338 342 343 EXCEL APPLICATION: JAY’S BIKES 343 ACCESS APPLICATION: MANAGING A RECIPE COLLECTION 343 Case Study #1 Baby Steps Toward Scrum: How Babycenter.com Made the Cultural Transition to Agile Software Development 344 Case Study #2 Extreme Programming at the U.S. Strategic Command 345 E-Project 1 Watching Babycenter.com Change over Time with the Internet Archive E-Project 2 Analyzing Software Defect Rates Using Excel Chapter Notes CHAPTER 12 346 346 347 Project Management and Strategic Planning 348 Learning Objectives Introduction 348 348 What Is a Project? 350 PROJECTS VS. PROCESSES 350 THE TRIPLE CONSTRAINT: TIME, COST, AND SCOPE Project Management 351 351 THE FIVE PROJECT MANAGEMENT PROCESSES THE ROLE OF THE PROJECT MANAGER 352 355 THE ETHICAL FACTOR: Code of Ethics for Project Managers 356 Project Management Software MANAGING TIME MANAGING PEOPLE AND RESOURCES MANAGING COSTS 356 356 357 357 Why Projects Succeed, and Why They Fail WHY DO PROJECTS FAIL? 358 358 SUCCESS FACTORS FOR PROJECT MANAGEMENT 358 Strategic Planning for Information Systems VISION, PRINCIPLES, AND POLICIES 360 PROJECT PORTFOLIO MANAGEMENT 362 359 DISASTER RECOVERY AND BUSINESS CONTINUITY TECHNOLOGY AND INDUSTRY TRENDS 363 364 Planning for the Future: The Human Element COGNITIVE BIASES AND STRATEGIC PLANNING THE BLACK SWAN 367 365 365 CONTENTS Online Simulation 368 Chapter Summary 369 Key Terms and Concepts 370 Chapter Review Questions 370 Projects and Discussion Questions Application Exercises 370 371 EXCEL APPLICATION: CREATING A GANTT CHART WITH EXCEL ACCESS APPLICATION: APPRENTICE PROJECT MANAGERS 371 372 Case Study #1 Predicting the Future: Gartner’s Research Informs Strategic Planning Case Study #2 JetBlue and WestJet: A Tale of Two Software Implementations E-Project 1 Checking on Gartner’s Predictions 376 E-Project 2 Analyzing Airline Performance with Excel Pivot Tables Chapter Notes 377 Case Studies Glossary Index 378 393 400 376 374 373 xxi This page intentionally left blank CH AP T ER 1 INFORMATION SYSTEMS AND PEOPLE xxiii Preface What’s New in the 2nd Edition The information systems field is fast-moving, and this 2nd edition introduces and updates many important concepts and technologies. We changed the title to Introduction to Information Systems to better reflect the contents and the course. This edition includes more figures, graphs, and tables to illustrate topics in visual ways, and the references, examples, data, and case studies are all updated. Larger fonts are used for the tables, and the text portion of each chapter has been shortened, most notably by tightening up the chapter introductions to get into the chapter content more quickly. The online simulations are converted to HTML5 so they are accessible from iPads and iPhones, and the scores go into the gradebook. Major new features for the 2nd edition include the following: ▶ Extended coverage of big data and the technologies used to store and analyze it has been added, along with a new “Ethical Factor” box that explores the ethics of big data. ▶ Expanded discussion of mobile devices and m-commerce is featured in Chapter 6, including a review of evolving mobile payment technologies using near field communications and strategies for mobile-friendly software development. ▶ The “Internet of Things” is highlighted in several chapters because of its growing impact on network architecture and bandwidth, and its rapidly increasing role in data collection, analysis, privacy, and surveillance. ▶ The 2nd edition expands the discussion of cloud computing, personal clouds, mobility, and the BYOD (bring your own device) trend, especially as they affect strategic planning for the organization. ▶ A new comprehensive case study at the end of the text charts Apple’s disruptive innovations, and encourages students to predict the company’s future business strategy. ▶ Twitter’s role in social TV and the “multiscreening” phenomenon are featured in a new case study about Nielsen’s program rating system, so students see how tweeting fits into the entertainment industry’s strategies. Chapter-Specific Changes CHAPTER 1: INFORMATION SYSTEMS AND PEOPLE ▶ ▶ ▶ ▶ ▶ Apple’s Siri and competitive advantage New self-quiz on student’s use of technology: “How Productive Are You?” New “Productivity Tip” on digital footprints Revised case study on Nasdaq OMX to include Facebook’s botched public opening Five new figures CHAPTER 2: INFORMATION SYSTEMS AND STRATEGY ▶ Updated examples of disruptive innovations ▶ Examples of new government policies affecting strategy (e.g., Internet tax) ▶ New “Productivity Tip” on personal cloud use ▶ Updated IT expenditure benchmarks ▶ App.net, example of an ad-free social network ▶ Case on GameStop updated with new data xxiii xxiv PREFAC xxiv I N F O RMEAT I ON SYS T EM S IN O RGAN IZ ATI O N S ▶ Case on Net Neutrality updated with new events and lawsuits ▶ Four new figures and several charts updated with recent data CHAPTER 3: INFORMATION AND COMMUNICATIONS TECHNOLOGIES: THE ENTERPRISE ARCHITECTURE ▶ New QR code figure for students to read with smartphone app ▶ In-memory computing is introduced and described as a key term ▶ New “Did You Know?” anecdote on detection of gestures without contact with the screen ▶ Expanded discussion on why businesses should be concerned with operating system market shares, especially for mobile devices ▶ Updated figures and charts on operating system market shares ▶ Simplified discussion of last mile ▶ Added 802.11 currently in draft (802.11ac and 802.11ad) ▶ Six new or updated figures ▶ New Case Study #1: Google Glass and Wearable Technologies ▶ Updated Case Study #2 on Sprint Nextel CHAPTER 4: DATABASES AND DATA WAREHOUSES ▶ Improved discussion of relational databases ▶ New figure showing data definitions in Access ▶ Updated statistics in figures ▶ Updated “Productivity Tips” ▶ New figure describing characteristics of big data ▶ Expanded section on data warehouses to include big data technologies ▶ Data scientist described ▶ Updated case studies CHAPTER 5: INFORMATION SYSTEMS FOR THE ENTERPRISE ▶ Added discussion of machine-readable financial data to improve transparency ▶ New figure on paperless workflow ▶ Discussion of supply chain fundamentals and collaboration made more concise ▶ Updated discussion of virtual worlds for CRM ▶ Expanded discussion of mobile CRM strategies ▶ New figure describing portals into an ERP for higher education ▶ Improved organization of ERP section with subtitles ▶ Deleted Supply Chain Operations Reference (SCOR) from key terms ▶ Updated case studies with recent information CHAPTER 6: THE WEB, E-COMMERCE, AND M-COMMERCE ▶ Expanded discussion of how infomediaries take advantage of the growing amount of information in XML format ▶ Updated discussion on HTML 5 and its features ▶ New discussion of social commerce (s-commerce) relying on social networks ▶ New figure comparing mobile apps and mobile-friendly websites ▶ New figures illustrating mobile-friendly design, and a list of tips to achieve it ▶ Updated discussion of search engine marketing, including Facebook’s Graph Search ▶ Updated examples of crowdsourcing ▶ New key terms: mobile commerce (m-commerce), near field communications ▶ Updated Case Study #3 on mobile payments and the digital wallet ▶ Updated Case Study #2 on Pandora ▶ Clarified steps in E-Project #1 CHAPTER 7: BUSINESS INTELLIGENCE AND DECISION MAKING ▶ Updated discussion of data mining to include predictive analytics ▶ Expanded discussion of data visualization with new figure of interactive map PREFACE ▶ New “Did You Know?” anecdote about the use of text mining ▶ Expanded discussion of AI and data from sensors ▶ New figure on website metrics drawn from online simulation (Chocolate Lovers Unite) ▶ Key term deleted: executive information system ▶ Key term added: predictive analytics ▶ New Case Study #1, “Cracking Fraud with Government’s Big Data” ▶ New E-Project #2: “Analyzing Nielsen TV Ratings with Excel,” with downloadable TV ratings data for analysis ▶ New “Productivity Tip” on managing your own big data CHAPTER 8: COLLABORATING WITH TECHNOLOGY ▶ New figure showcasing top corporate blogs ▶ New figure on reasons for taking a break from Facebook ▶ Discussion of recently introduced collaborative technologies such as Vine and Instagram ▶ Revised section on unified communications to feature critical capabilities ▶ Major revision of Case Study #1, now called “‘Telepresence Robots’ Support Remote Collaboration” ▶ New Case Study #2, “Yahoo! Bans Telecommuting: Was It the Right Move?” CHAPTER 9: KNOWLEDGE MANAGEMENT AND E-LEARNING ▶ Expanded discussion about incentives for knowledge sharing ▶ New discussion on technologies to prevent cheating in e-learning courses ▶ New “Did You Know?” anecdote about telepresence robots who attend classes ▶ New discussion about massive open online courses (MOOCs), also added as a key term ▶ New “Productivity Tip” about taking an online course ▶ New Case Study #1, “Lynda.com: How an E-Learning Entrepreneur Rides Waves of Change” ▶ Updated Case Study #2, “Diplopedia: Managing State Department Knowledge with a Wiki” CHAPTER 10: ETHICS, PRIVACY, AND SECURITY ▶ New discussion of Apple’s unique approach to music piracy with iTunes Match ▶ New figure on recent software piracy survey ▶ New discussion on an emerging “right to be forgotten” law, to ensure people can erase their digital footprints ▶ New details added to discussion of encryption strategies ▶ Expanded discussion of mobile devices and security ▶ New Case Study #1: “Zynga Kills Petville and Angers Virtual Pet Owners” ▶ Updated Case Study #2 to include recent massive DDoS on Spamhaus ▶ Revised and simplified E-Project #1 CHAPTER 11: SYSTEMS DEVELOPMENT AND PROCUREMENT ▶ New “Did You Know?” anecdote on smartphone app ▶ Updated examples of feasibility studies ▶ New “Productivity Tip” about clarifying the scope of work to avoid disagreements ▶ Updated examples on consulting ▶ Updated Case Study #2 with recent research findings on agile methods CHAPTER 12: PROJECT MANAGEMENT AND STRATEGIC PLANNING ▶ Tightened up discussion of the five project management processes ▶ New figure showing the top strategic technology trends currently underway ▶ Updated Case Study #1 with current information on technologies and their location on the hype cycle xxv xxvi PRE FAC E ▶ New figure on hype cycle with current technologies ▶ Updated E-Project #1 with more recent Gartner predictions End-of-Book Comprehensive Case Studies ▶ New Case Study #3: “Apple: Can the Company Pull Off Another Disruptive Innovation?” (replaces case on Clearwire) ▶ Red Cross case updated to include the Safe and Well Website. ▶ Facebook case updated and revised to include uproar over Instagram’s privacy and ownership challenges ▶ Updated “Managing the Federal Government’s IT Project Portfolio” to incorporate recent steps by federal government to get control over IT spending To the Student Any college student thinking about the job market can’t help but notice how valuable it is to have skills related to information systems. In this course you will learn what information systems are all about and why they are so fundamental to business and society. It will be an exciting journey, filled with revelations about business strategies, technology trends and innovations, and also tips that will help you work smarter as a student. Here are the main features of this text and its supplements: Learn by Doing: The Interactive, Online Role-Playing Simulations A course on information systems should tap their power for active, experiential learning. This text includes interactive role-playing simulations in MyMISLab™ (mymislab.com) in which students can apply their knowledge and actually experience what each chapter is about, not just memorize key terms and concepts. You will enter realistic and often tense situations, interacting with the characters via a simulated smartphone or laptop, and using email, text messages, web conferencing, video chat, voicemail, dashboards, ordering screens, and other applications. Each simulation is scored and students receive extensive feedback on the choices they make. Each one also includes key terms from the chapter (with rollover definitions) so you see how they are used in context, which will help you more easily remember their meanings. The simulations bring the chapter alive, as you enter authentic settings in which people struggle to solve a problem involving information systems. Some examples: ▶ In World of Mammals (Chapter 1), you help the harried director of a wild animal preserve interview candidates for the CIO position, after the former CIO leaves abruptly. What skills does a CIO need? What kind of experience would fit best? ▶ Chocolate Lovers Unite (Chapter 7) challenges you to resolve a heated debate over which online marketing pitch works best by conducting tests, analyzing the results, and drawing on data-driven decision making. ▶ In Green Wheeling, the simulation on software development and procurement (Chapter 11), you join a task force charged with replacing a college’s obsolete fundraising system. You and your team members weigh the pros and cons of “build” or “buy,” and you will see how the outcome can change based on your decisions. ▶ Vampire Legends drops you into a fast-paced, tense situation in which the material in Chapter 10 (Ethics, Privacy, and Security) comes to life in an online game company that is racing to launch a sequel. When troubling things begin happening that involve the company’s data center and information security, you will have difficult choices to make. I’ve done research on games and simulations in education, and have led several projects to create software that draws on the compelling features of these environments for learning. While online flash cards, Q&A games, and other interactive applications can help students memorize terms or review the chapter contents, simulations that immerse PREFACE students in a relevant and authentic case can do more. Research shows they create engagement, improve learning outcomes, and build critical thinking skills through active, student-centered involvement. You will find it much easier to learn and remember the material in the textbook when you can engage in simulations like this. The Human Element in Information Systems In addition to the simulations, this text brings a fresh perspective to the introductory course in information systems that combines comprehensive and up-to-date coverage with a stronger focus on the human element in businesses, nonprofits, and other organizations. It covers all the major topics for the course in a rigorous way, without skimping on any of the fundamentals. But it enriches those topics with probing discussions about the roles people play in building, shaping, implementing, and sometimes obstructing information systems. In Chapter 8 on collaborative technologies, for example, students learn how different channels affect the tone of human communications, and how to choose the best channel for each task to support virtual teamwork, management, negotiation, and leadership. Chapter 12 on project management and strategic planning shows how human biases can creep into the process. The text also stresses the processes and policies that people devise to manage information systems. Why do some high-tech companies ban telecommuting, even though employees have well-equipped home offices? Why do organizations implement surveillance? Exploring Technology Battlegrounds Grand battles over technology directions help students understand the close links between competitive business strategies and information systems. The stakes are very high in debates about topics such as net neutrality, 4G standards, wireless spectrum auctions, cloud computing, programming languages, mobile operating systems, mobile payment systems, and social network privacy. Billions of dollars are on the line for winners and losers. Yet most people know little about these battlegrounds because the underlying technology issues are out of reach. After reading this text, students will look at online ads, privacy policies, social networks, and their own smartphones with a new appreciation for the fierce business competitions unfolding before their eyes. Reaching a Changing Student Body The text recognizes the growth in the number of women, minorities, international students, online students, and nontraditional students who enroll in this course, drawing on examples and settings that will resonate with them. Devon, for instance, is starting her own web design business, and students learn about relational databases by helping her build one for her small business (Chapter 4). International student Prakash is the cofounder of Leveling UP!, a smartphone app that is the centerpiece for the interactive role-playing simulation on business strategy (Chapter 2). In the chapter on knowledge management and e-learning (Chapter 9), Sally takes an online course in nonprofit management as she nears retirement and helps her own company build an e-learning course for the coworkers she’s leaving behind. Balancing Coverage of Business, Government, and Nonprofits This text broadens the coverage about information systems to include all the varied settings in which students work (or will work). It draws on timely examples from multinational corporations, nonprofits, government agencies, midsized businesses, start-ups, charities, volunteer organizations, student clubs, and other settings. The text highlights how these different organizations launch information systems to fulfill their missions, whether that means generating profits, attracting donations, or serving citizens. xxvii xxviii PREFACE The strategies that underlie cell-phone marketing, for instance, work as effectively for nonprofits that want to mobilize citizens as they do for businesses that tempt new customers with discount coupons. And competitive advantage is not just for business. Charities compete for volunteers and donations, and they benefit from customer relationship management systems. Changing Student Roles Just as students are gaining employment in a wide variety of organizations, they are taking on more varied roles within them. Though some will become information systems managers, many more will become consultants, business analysts, accountants, marketing professionals, talent development specialists, volunteers, virtual team leaders, forensic experts, legal advisors, and project managers. The text introduces emerging professions, as well, such as data scientist. Examples in the text, case studies, and simulations feature all these different roles, showing how successful information systems emerge from a broad base of stakeholders with different perspectives and specialties. Carlos, for instance, is the instructional designer on a corporate e-learning development team, adding his knowledge of usability and accessibility for people with disabilities (Chapter 9). In Chapter 11, Lily is a senior manager for an online grocery who comes up with a clever website to capture a valuable market—busy singles who forgot to buy groceries. Emphasizing Ethics Ethical concerns weave throughout the text, touching on very human ethical dilemmas such as the one Wikipedia founder Jimmy Wales faced when asked to delete any posts that mentioned the name of a journalist kidnapped by the Taliban. That action was directly opposed to his site’s fervent commitment to free speech, and Wales raised a firestorm within the Wikipedia community when he had to make a choice. A special feature in each chapter titled “The Ethical Factor” explores timely ethical issues such as corporate responsibility in extended supply chains (Chapter 5), or the ethics of massive surveillance and collection of big data by governments and corporations (Chapter 3). In Chapter 10 on ethics, privacy, and security, students take a survey to learn more about how they judge situations that touch on information ethics. The online simulation for that chapter immerses students in a tense situation in which security is compromised and they face some difficult ethical dilemmas. Here is a list of all the “Ethical Factor” boxes: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. Ethical Issues Surrounding Information Systems, p. 23 Ethical Responsibility in an Extended Value Chain, p. 45 Ethical Implications of Big Data, p. 70 Ethical Issues in Database Design: The Case of Ethnic Identification, p. 110 Ethics and Talent Management, p. 138 Website Accessibility: Why Is Progress So Slow? p. 174 The Ethics of Tagging Faces in Photos, p. 202 Flash Mobs and Free Speech: Should Police Block Mobile Messaging Services? p. 244 Knowledge Sharing in Fast-Paced Industries: The Case of Formula One Racing, p. 269 Ethical Dilemmas in a Distributed Denial of Service Attack, p. 302 Developing Systems That Promote Ethical Decision Making and Social Responsibility, p. 331 Code of Ethics for Project Managers, p. 356 Working Smarter, Not Harder: Productivity Tips for Students Every chapter includes several “Productivity Tips” that suggest ways students can improve their own productivity by applying what they’ve learned. PREFACE In Chapter 2 on information systems and strategy, for instance, a tip invites students to check out the software trial versions that came preinstalled on their computers to see how companies leverage this valuable product positioning, and then remove them to save space and improve the computer’s performance. A tip in the section on neural networks in Chapter 7 advises students to alert their credit card companies before traveling abroad because a neural net may trigger a very ill-timed block on the card. Another tip points to solid productivity gains for people who use two monitors, which is especially helpful for students with laptops. These tips are not only immediately useful. They help you learn chapter material by applying it so you can work smarter, not harder. Highlighting Globalization and International Contexts Information systems play a key role in globalization, especially through the Internet and all the creative destruction it unleashed. Examples abound throughout the text, highlighting how Baidu captured the search engine market in China (Chapter 2) or how Ikea manages a global supply chain (Chapter 5). The global financial crises underscore the important work of the International Accounting Standards Board—to promote transparent and enforceable financial reporting for companies around the world using XBRL tags—from the XML family of standards (Chapter 5). The international emphasis also unfolds in working relationships across national borders. For example, the chapter on collaboration (Chapter 8) follows a team planning a campaign to launch a string of clubs in several major cities, and the team’s members hail from Dallas, Texas, and Hong Kong. As they use collaborative technologies that span the Pacific, this dynamic virtual team works through differences in time zones, communication styles, and culture. Inspiring Students to Pursue Promising Careers Finally, an important goal of this text and its supplements is to convey the sheer excitement and limitless potential of this field, with an eye toward inspiring students to go further. Inside are countless examples of how savvy men and women leverage information systems to transform organizations of all stripes, and even build new empires. The text includes many job descriptions, job growth rates, and projected salaries, as well. Some of the excitement comes from groundbreaking technological advances, such as IBM’s “Watson”—the supercomputer that competed on “Jeopardy!” and soundly defeated the game’s human champs in a dramatic live broadcast. The disruptive innovations that topple some industries and open star-studded paths for others are also part of the excitement. GPS dealt a crushing blow to map makers, and the Internet did the same to print newspapers. But both events opened up vast new territory for innovative start-ups. To further stimulate interest, each chapter includes short “Did You Know?” snippets to highlight an engaging or amusing application of the chapter’s topic. For example, the chapter on hardware, software, and networks (Chapter 3) features a coffee shop whose zany owner constantly renames the free wireless network to different messages, such as “BuyAnotherCupYouCheapskate.” If students catch some of this energy and enthusiasm, they may decide to pursue this field. Those who do will have outstanding career prospects in the private and public sectors, and they’ll never be bored. Supplements The following supplements are available at the Online Instructor Resource Center, accessible through www.pearsonhighered.com/wallace: Instructor’s Manual The Instructor’s Manual, assembled by Jollean Sinclaire and John Hupp, includes a list of learning objectives and answers to all end-of-chapter questions. xxix xxx PRE FAC E Test Item File The Test Item File, prepared by ANSR Source, Inc., contains more than 1,300 questions, including multiple choice, true/false, and essay. Each question is followed by the correct answer, the learning objective it ties to, a course learning objective, and difficulty rating. In addition, certain questions are tagged to the appropriate AACSB category. Powerpoint Presentations The Instructor PowerPoints, prepared by John Hupp, highlight text learning objectives and key topics and serve as an excellent aid for classroom presentations and lectures. Image Library This collection of the figures and tables from the text offers another aid for classroom presentations and PowerPoint slides. TestGen Pearson Education’s test-generating software is available from www.pearsonhighered. com/irc. The software is PC/MAC compatible and preloaded with all of the Test Item File questions. You can manually or randomly view test questions and drag-and-drop to create a test. You can add or modify test-bank questions as needed. Our TestGens are converted for use in BlackBoard, WebCT, Moodle, D2L, and Angel. These conversions can be found on the Instructor’s Resource Center. The TestGen is also available in Respondus and can be found on www.respondus.com. CourseSmart CourseSmart eTextbooks were developed for students looking to save on required or recommended textbooks. Students simply select their eText by title or author and purchase immediate access to the content for the duration of the course using any major credit card. With a CourseSmart eText, students can search for specific keywords or page numbers, take notes online, print out reading assignments that incorporate lecture notes, and bookmark important passages for later review. For more information or to purchase a CourseSmart eTextbook, visit www.coursesmart.com. CH AP T ER 1 INFORMATION SYSTEMS AND PEOPLE xxxi Acknowledgments Many thanks go to all the reviewers who took time to comment on manuscripts, simulation storyboards, case studies, and other features of the text. Their feedback and suggestions were extremely valuable, and they help ensure the text and its ancillaries will meet the needs of faculty and students. Dennis Adams, University of Houston Barbara Edington, St. Francis College Joni Adkins, Northwest Missouri State University Sven Aelterman, Troy University Solomon Antony, Murray State University John Appleman, State University of New York College at Brockport Kurt Engemann, Iona College John Erickson, University of Nebraska at Omaha William Figg, Dakota State University David Firth, The University of Montana Anne Formalarie, Plymouth State University Saiid Ganjalizadeh, The Catholic University of America Richard Glass, Bryant University Tanya Goette, Georgia College & State University Sandeep Goyal, University of Southern Indiana Martin Grossman, Bridgewater State University Bin Gu, University of Texas at Austin Laura Hall, University of Texas—El Paso Rosie Hauck, Illinois State University Jun He, University of Michigan—Dearborn Devanandham Henry, Stevens Institute of Technology Michelle Hepner, University of Central Oklahoma John Hupp, Columbus State University Jerry Isaacs, Carroll University Brian Janz, University of Memphis Jon (Sean) Jasperson, Texas A&M University Bay Arinze, Drexel University Janine Aronson, University of Georgia John Kirk Atkinson, Western Kentucky University Robert Balicki, Cleary University Cynthia Barnes, Lamar University Stephen Barnes, Regis University Peggy Batchelor, Furman University Jon Beard, George Mason University Hossein Bidgoli, California State University—Bakersfield Robert Bonometti, MGB Enterprises LLC Ted Boone, University of Kansas Uptal Bose, University of Houston; Rainer David Bradbard, Winthrop University Jason Chen, Gonzaga University Joselina Cheng, University of Central Oklahoma Steve Clements, Eastern Oregon University Phillip Coleman, Western Kentucky University Emilio Collar, Jr., Western Connecticut State University Steve Corder, Williams Baptist College Brian Jones, Tennessee Technological University Junghwan Kim, Texas Tech University Philip Kim, Walsh University Dave Croasdell, University of Nevada, Reno Albert Cruz, National University Sung-kwan Kim, University of Arkansas at Little Rock Charles S. Knode, University of Maryland University College Mohammad Dadashzadeh, Oakland University Don Danner, San Francisco State University Dessa David, Morgan State University Brian Kovar, Kansas State University Bill Kuechler, University of Nevada at Reno Louis LeBlanc, Berry College Carolyn Dileo, Westchester Community College Albert Lederer, University of Kentucky Michael Douglas, Millersville University Doris Duncan, California State University—East Bay Ingyu Lee, Troy University Mary Locke, Greenville Technical College xxxi xxxii ACKN OW L E D G ME NT S Sanchita Mal-Sarkar, Cleveland State University Nancy Martin, Southern Illinois University Carbondale Aaron Schorr, Fashion Institute of Technology Paul Seibert, North Greenville University Prosenjit Mazumdar, George Mason University Roger McHaney, Kansas State University Narcissus Shambare, College of St. Mary Larry Smith, Charleston Southern University William McMillan, Madonna University Tonya Melvin-Bryant, North Carolina Central University Toni Somers, Wayne State University Todd Stabenow, Hawkeye Community College Kimberly Merritt, Oklahoma Christian University Allison Morgan, Howard University Fui Hoon (Fiona) Nah, University of Nebraska—Lincoln James Stewart, University of Maryland University College Joe Teng, Troy University Troy Campus Evelyn Thrasher, Western Kentucky University Sandra Newton, Sonoma State University Ravi Paul, East Carolina University Jan Tucker, Argosy University Jonathan Whitaker, University of Richmond Adriane Randolph, Kennesaw State University Betsy Ratchford, University of Northern Iowa Bruce White, Quinnipiac University Anita Whitehill, Mission College Mandy Reininger, Chemeketa Community College Nicolas Rouse, Phoenix College Paula Ruby, Arkansas State University Werner Schenk, University of Rochester Daniel Schmidt, Washburn University G. W. Willis, Baylor University Charles Willow, Monmouth University Marie Wright, Western Connecticut State University Jigish Zaveri, Morgan State University Chen Zhang, Bryant University Thanks also go to the excellent work of Ilene Kahn and Kaylee Rotella at Pearson Education, and Emily Bush at S4Carlisle Publishing Services also deserves special mention. As in any organization, there are many people behind the scenes whose efforts make all the difference in a project like this, and though unnamed, they deserve recognition and thanks. I also want to thank Jollean K. Sinclaire of Arkansas State University and John Hupp of the Columbus State University who made the end-of-chapter materials and Instructor’s Manual into the best resources I’ve seen for a text like this. They are filled with thoughtful questions, engaging projects, and useful material for both students and faculty. Many thanks to Bob Horan, my editor, whose commitment to this project has always been unwavering. He eagerly supported the development of the online simulations, even when they were just sample storyboards loaded with branching scripts and “if-then” pseudocode. Bob knows the introductory MIS world better than anyone, and his instincts about what works for students and faculty are right on target. And finally, thanks to Julian and Callie, and also Keiko, Lili, and Marlene, a list that includes my very supportive human family and our four-footed companions. Your Feedback Is Welcome To all of you who are using this book, as professors, teaching assistants, and students, I welcome your thoughts and feedback. Please email your comments, questions, and suggestions, and I’ll be eager to hear how your course goes. Patricia Wallace, Ph.D. pwallace@jhu.edu Introduction to Information Systems CHAPTER 1 Information Systems and People LEARNING OBJECTIVES 1 Describe the main roles that information systems play in organizations. 2 Compare the terms data, information, and knowledge, and describe three characteristics that make information valuable. 3 Describe the four main components of an information system and the role that each plays. 4 Identify several research areas in the discipline of management information systems (MIS). 5 Provide examples of how business, nonprofit, and government managers, as well as information technology departments, depend on information systems knowledge. 6 Explain how information systems present both promises and perils, and pose ethical questions. An online, interactive decision-making simulation that reinforces chapter contents and uses key terms in context can be found in MyMISLab™. INTRODUCTION AT THE HEART OF EVERY ORGANIZATION IS ITS INFORMATION SYSTEMS, and that is what this course is all about. Google, Twitter, Microsoft, and Facebook are all popular companies on the cutting edge of technology, and their innovations and competitive battles make front page news. But even organizations that don’t seem very high tech—from a familyowned restaurant to a fitness gym—can hardly do without information systems, or without people who know how to build and manage them. Consider The World of Mammals, for example, the animal preserve featured in the interactive simulation for this chapter. Director Yolanda Whalen is a veterinarian, but she knows very well that this preserve won’t succeed without top notch information systems and a qualified person to provide leadership. She is asking you, as an enthusiastic volunteer and a student learning about information systems, to help interview potential candidates and join the team that will decide who is best suited for this role. What skills, knowledge, and abilities should this person have—beyond managing payroll and ticket sales—to take advantage of innovative technologies that will make The World of Mammals the most successful preserve in the country? This opening chapter highlights information systems in action, the nature of information itself, and the four main 3 C HAP TE R 1 INFORMATION SYSTEMS AND PEOPLE MyMISLab Online Simulation The World of Mammals Shutterstock. A Role-Playing Simulation on Choosing a New CIO for an Animal Preserve components of every information system. You will see how the information systems (IS) discipline is changing and growing, and why a solid understanding of this subject will give you a critical edge, regardless of your major or career path. Finally, the chapter examines the promises and perils of information systems and the many ethical issues that arise with the phenomenal power within everyone’s reach. nformation is an organization’s most important asset. Creating, capturing, organizing, storing, retrieving, analyzing, and acting on information are fundamental activities in every organization. The skill with which you carry out those tasks will be the deciding factor for not just your company’s success, but for your own as well. This book is about information and the systems that people develop and manage to perform all those tasks and more. I You will see how these systems work, why they are created, how they have become the organization’s central nervous system, and why they sometimes fail. You will also learn to tap the power of information systems to help your company compete or your organization become more effective. Finally, you will become more productive yourself—working smarter, not harder—in college, in your career, at home, and throughout your life. Like the information they manage, information systems cover a very broad scope and contribute to many different activities in an organization. What roles do they play and how do they transform work? The next section shows the enormous variety of settings in which innovative information systems play a role, well beyond the very useful Google searches. 4 I N T R O D U CTIO N TO INFO RM AT IO N SYS TE MS Describe the main roles that information systems play in organizations. 1 INFORMATION SYSTEMS IN ACTION ▶ Dancing with the Stars became a smash reality TV hit by engaging millions of viewers in judging the contestants. Hopeful celebrity couples compete each week with a novel dance routine, and audience members cast a vote for their favorite by phoning, sending text messages, or logging into the show’s website. An information system on the back end tallies the results, which count for half the couple’s score. The system must be able to handle enormous incoming volume in a very short time period to get accurate tallies. ▶ Hurricane Sandy arrived just before the November 2012 elections in the United States, and many voters could not make it to the polls. Officials in New Jersey decided to let people vote by email, but county clerks were overwhelmed by the volume in their inboxes. Although glitches and security concerns are not uncommon with electronic voting, information systems are playing a more important role every year. Disabled voters, for instance, can now use tablets to vote, eliminating the need for expensive custom-made voting machines. ▶ Walmart, with some $446 billion in net sales in 2012, pioneered the globe’s most efficient information system to track shipments as they move from supplier factories to warehouses to retail stores. Tags attached to pallets transmit information wirelessly, so Walmart execs know exactly where merchandise is in the supply chain and can spot trouble immediately. FIGURE 1-1 The major roles of information systems in organizations. Supporting Customer Interactions Managing Operations Improving Individual Productivity The Six Major Roles of Information Systems Gaining Competitive Advantage Making Decisions Collaborating on Teams When those bulky computers first entered company basements in the 1970s, the term information system brought up images of payroll programs, general ledgers, invoice tracking, and inventory management. Those back-office functions are still critically important, but today’s information systems have migrated into every facet of an organization, touching every employee from the mail clerk to the CEO. They also extend well beyond the company’s boundaries, reaching out to customers, clients, suppliers, partners, citizens, and all kinds of stakeholders. Their hardware might be as vast as Google’s data centers or far smaller than Walmart’s pallet tags. And their connections could be the thick fiber-optic cables on the ocean floor or electromagnetic waves in the air around you. Multinational firms, small businesses, nonprofits, governments, volunteer organizations, self-employed entrepreneurs, universities, and other organizations rely on information systems for a host of reasons, and they continue to adapt, expand, and interconnect them to achieve their strategic objectives. These systems play critical roles in six major areas (Figure 1-1). Managing Operations Every successful organization must excel at operations management, which involves the design, operation, and improvement of the systems and processes the organization uses to deliver its goods and services. Some of these deal with several very basic functions that are part of every business. Information systems are crucial for tracking employee payroll, taxes, benefits, and timesheets. Accounting information systems are essential to track accounts receivable, to process transactions, to procure goods and services, and to pay the suppliers. Organizations also must manage their assets and inventories, from the computers and the desks they sit on to the massive factories and equipment located in far corners of the globe. Eric Schmidt, former CEO of Google, once remarked that he had no idea how many data centers Google actually managed. He might not have known, but his backoffice information systems certainly did. Information systems designed to handle the processes involved in these functions must also meet compliance standards set by governments and other regulatory agencies, CH AP T ER 1 INFORMATION SYSTEMS AND PEOPLE which may change from time to time and also vary by country or state. Reports must be filed, audits passed, and changing regulations followed. Extensive regulations put into place after the global financial crisis of 2009, for example, set tighter standards for accounting practices—particularly in banking—and demanded more transparent reporting. Many organizations choose commercially produced information systems to handle their back-office information needs, relying on software packages such as SAP, Oracle, NetSuite, or QuickBooks. Some organizations are moving these functions to service providers or even outsourcing them entirely. India became known as the world’s “back office” because so many companies moved these applications there,1 and now the Philippines is becoming the world’s biggest operator of call centers.2 Depending on their missions, organizations also need information systems to manage industry-specific operations, such as these: ▶ Manufacturers need systems to manage assembly lines, product quality, production schedules, and just-in-time supply deliveries (Figure 1-2). ▶ Colleges and universities need systems to manage student academic records, class scheduling, faculty assignments, and student financial aid (Figure 1-3). ▶ Transportation companies rely on information systems equipped with GPS to track their fleets, optimize routes, and conserve gas. ▶ Companies that buy products from suppliers around the globe need real-time updates on their global supply chains to manage inventories and reduce costs. Achieving excellence in operations can provide enormous cost savings and competitive advantage, as companies shave every ounce of fat out of their processes without sacrificing quality. UPS drivers, for instance, know to avoid left turns on their delivery routes when possible, because they take a few seconds longer, wasting time and gas. Systems that support operations are discussed in Chapter 5. Production Volume by Hour Production Volume 70 Safety Metrics Temperature 60 50 40 30 20 10 0 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Hour Production Volume by Category 70 Production Volume Humidity FIGURE 1-2 Manufacturing information system displaying production volumes and other metrics. Quality Metrics 60 50 A 40 Rejected B 30 High 26 C 20 D 10 0 15 25 7 8 9 10 1 11 1 12 1 13 1 14 1 1 15 16 1 17 1 18 1 19 1 20 2 21 2 2 22 23 2 24 2 Hour operations management The area of management concerned with the design, operation, and improvement of the systems and processes the organization uses to deliver its goods and services. 23 Medium Low 5 6 I N T R O D U CTIO N TO INFO RM AT IO N SYS TE MS FIGURE 1-3 Student information system with online services for students and faculty. MyCollege MyTools Update contact info View schedules Submit request View requirements Register for courses MyClasses MyProfile Course Days Time Location Bus 111 MW 14:00–15:00 Macintyre Bus 111 MW 15:00–16:00 Doyle Bus 112 T-TH 9:00–10:45 Student Services Bus 112 - - Online Bus 112 M 9:00–11:45 Garcia Bus 113 W 1:00–2:45 Doyle Supporting Customer Interactions Interactions with customers, clients, students, patients, taxpayers, citizens, and others who come to your organization desiring a product or service are fundamental to success. Your customers pay the bills. Customer relationship management (CRM) systems, discussed in Chapter 5, build and maintain relationships and support all the processes that underlie them. A brick-and-mortar retail store, for example, needs a sales system that identifies each product in the shopper’s basket, tallies the total, feeds the data to the inventory system, and accepts various kinds of payment. Shoppers want fast checkouts, and they get annoyed by clumsy, inefficient processes. When an item lacks its barcode, impatient customers may just abandon it rather than wait for a salesclerk to track it down. Strategies to prevent theft, such as the check on weights added to the bag, also anger shoppers when they do not function properly. Web-based shopping and self-service transform relationships with customers, freeing them from time-consuming phone calls. These web-based processes often mimic the brick-and-mortar versions, with “shopping carts” and “checkouts” clearly labeled. A web application offers many opportunities to build stronger relationships and also better understand the motives and desires of each person who visits. Scattered throughout Amazon.com’s site, for example, are recommendations based on previous purchases, encouragements to “review this book” or “rate this item,” special discounts and coupons, storage space for your wish lists and gift ideas, and many other innovative features to map out your preferences and build a stronger relationship. All of this data contributes to Amazon’s customer relationship management excellence and the company’s understanding of what each customer wants. Infinite variations in customer interaction exist, from American Idol’s cell-phone voting to the Internal Revenue Service’s e-file system. Developing these relationships is not just about improving sales and collecting receipts. It is about building long-term loyalty and satisfaction by listening to customers and learning what is most important to them. That also includes sensitivity to their privacy concerns, as we discuss in Chapter 10. Making Decisions How should a restaurant manager make decisions like the ones in Figure 1-4? Managers make decisions every day, and many rely mainly on their own judgment. In fact, researchers surveyed 250 executives and learned that 40% of major corporate decisions were based on gut instincts.3 Smart managers, however, know that information systems support data-driven decision making, which draws on the billions of pieces of data to reveal important trends and patterns. For example, the sales system will show how much the restaurant makes in the last hour of business, and that data will help the manager make a good decision about closing early. Business intelligence refers to all the information managers use to make decisions, and it can come from many sources beyond the organization’s own information systems. # 149079 Cust: Pearson Au: Wallace Pg. No. 6 Title: Introduction to Information Systems/ 2e Server: C/M/Y/K Short / Normal DESIGN SERVICES OF S4CARLISLE Publishing Services CH AP T ER 1 INFORMATION SYSTEMS AND PEOPLE 7 FIGURE 1-4 How do managers answer questions like these? Where should we open another branch of our restaurant? Should we add more fish to the menu? Can we save money by closing an hour earlier? Source: Aaron Amat/Shutterstock Should we offer free wifi to customers? The restaurant manager, for example, might combine customer records with publicly available information about income levels by zip code to help make a smart decision about where to open another branch. Decision support systems and business intelligence, discussed in Chapter 7, encompass a growing and varied category that blends rapid analysis of information sources with artificial intelligence and human knowledge. For knowlYour online behavior is one of the most important sources of business intelligence. edge workers, in particular, the value The sites you visit and the links you click reveal your interests and intentions, and of knowing how to draw upon those marketers try to display ads that match just what you are looking for. Spending vast mountains of information to make wise decisions is extremely high. for digital ads should top $55 billion by 2016.4 Did You Know? Collaborating on Teams Collaboration and teamwork have considerable support from innovative information systems that allow people to work together at any time and from any place. Regardless of where they live and work, participants can hold online meetings, share documents and applications, and interact using microphones, video cameras, and whiteboards. Social networking sites support online communities of people who create profiles for themselves, form ties with others with whom they share interests, and make new connections based on those ties. These social groups exploded in popularity as people jumped at the chance to share news, photos, videos, and tidbits. Figure 1-5 shows usage rates for the larger social networking sites. Services that target business users, such as Microsoft’s Sharepoint, offer additional useful services such as shared calendars and group document editing. The huge success of social networks prompts many corporations to launch experiments to see how their collaborative features could support business. Research analysts predict that 50% of large companies will depend heavily on internal social networks for customer relationship management (CRM) system An information system used to build customer relationships, enhance loyalty, and manage interactions with customers. data-driven decision making Decision making that draws on the billions of pieces of data that can be aggregated to reveal important trends and patterns. business intelligence The information managers use to make decisions, drawn from the company’s own information systems or external sources. social networking sites Online communities of people who create profiles for themselves, form ties with others with whom they share interests, and make new connections based on those ties. 8 I N T R O D U CTIO N TO INFO RM AT IO N SYS TE MS FIGURE 1-5 Social networking sites and their demographics. Sources: Duggan, M., & Brenner, J. (February 14, 2013). The demographics of social media users – 2012. http://pewinternet .org/Reports/2013/Social-mediausers.aspx, accessed March 25, 2013. Carlson, N. (February 27, 2012). Infographic: Who really uses LinkedIn? Business Insider, http:// www.businessinsider.com/infographicwho-really-uses-linkedin-2012-2, accessed March 25, 2013. % Internet Users Who Use . . . Any social networking site 67% Facebook 67% LinkedIn 20% Twitter 16% Pinterest 15% Instagram 13% Tumblr 6% their employees by 2016, and that, for many of them, the network will be at least as important as email is now.5 Developing information systems for collaboration takes ingenuity and attention to the ways in which people really do work together. The possibilities are endless, and different groups have different preferences. In online university courses, for example, debates about whether students should turn on their webcams during virtual class sessions are common. Many prefer to keep them turned off, valuing the privacy that invisibility creates. (One can doze off in a virtual class with little concern for detection.) The information systems that support virtual teamwork, discussed in Chapter 8, are in some respects still in their infancy—especially compared to the more mature systems used to manage operations. Expect many improvements as we learn more about what features work best for different people and different situations. Gaining Competitive Advantage Information systems play what could be their most valuable role when they are tied closely to strategy and to the major initiatives that will help achieve competitive advantage—a topic we take up in Chapter 2. Competitive advantage, which is anything that gives a firm a lead over its rivals, can be gained through the development and application of innovative information systems. Information systems are a fundamental part of a company’s strategic vision. Indeed, the vision itself is often shaped by what these systems can achieve today and what is possible for the future. Consider how Apple’s iPhone got the jump on smartphone competitors with Siri, the intelligent personal assistant. Siri responds to spoken commands such as “Tell my brother I’ll be late,” and also answers questions like “Any Italian restaurants near here?” The iPhone’s market share rose to over 50%, in part because no other smartphone had anything like Siri. But competitive advantage can be fleeting, and IBM has plans to develop a supercharged personal assistant for mobile phones based on “Watson,” the supercomputer that surprised the world by defeating two Jeopardy champions.6 Time will tell which personal assistant wins the most hearts. Strategy is equally important to nonprofit organizations and government agencies, and their information systems break new ground by offering new services to the public, streamlining operations, and improving decision making. For instance, U.S. citizens can apply for social security benefits online, rather than wait in line. Government strategies to combat terrorism also involve information systems—and analysis of immense volumes of data. Those strategies raise important ethical dilemmas, discussed in Chapters 3 and 10. Improving Individual Productivity Tools to help people improve their own productivity abound, from the smartphones that combine voice calls with web browsing, contact databases, email, music, and games, to the many software applications that eliminate tedious work. Even word processing has transformed work in every organization, and many students aren’t aware of all the ways that software can make them more productive. You can, for example, automatically create and properly format your term paper references by integrating a bibliographic manager such as EndNote or RefNote. Online libraries and reference databases offer links to export the # 149079 Cust: Pearson Au: Wallace Pg. No. 8 Title: Introduction to Information Systems/ 2e Server: C/M/Y/K Short / Normal DESIGN SERVICES OF S4CARLISLE Publishing Services CH AP T ER 1 INFORMATION SYSTEMS AND PEOPLE citation in any format, so typing is unnecessary. To improve productivity at work, people can choose from a bewildering variety of computer software and electronic devices, but more is not necessarily better. You should select carefully, with an eye to the functions you need most, ease of use, and short learning curves. No one likes reading thick instruction manuals. Throughout this book, you will see productivity tips in boxes—like the ones on this page—that will help you improve your own productivity. PRODUCTIVITY TIP Time management experts advise that you process your email inbox to zero, flagging important messages and rerouting others by using automated filtering tools. Stop devoting time to tasks that technology can do for you, and don’t be a slave to your email. PRODUCTIVITY TIP Many colleges and universities have agreements with software companies to offer discounts to their students. Before you buy software, check with your IT department. Once you leave student status behind, you’ll be hard-pressed to find deals like the ones you can get now. Compare the terms data, information, and knowledge, and describe three characteristics that Except for words like the, a, and, if, and it, the word information was once one of the most make information valuable. common words on the Internet. No wonder people called the net an “information” storehouse. The term information is critical to understanding how information systems work, but it can be very slippery. Facts, data, intelligence, knowledge, and even tips are synonyms for information, and they all touch on characteristics of the “stuff ” that information systems can manage. For our purposes, the term data refers to individual facts or pieces of information, and information refers to data or facts that are assembled and analyzed to add meaning and usefulness. A patient’s single high-temperature reading at a 24-hour walk-in clinic in Maryland is one piece of data. But entered into the clinic’s information system, and combined with the patient’s other symptoms and previous medical records, it becomes far more valuable as a diagnostic tool. We gain even more from this one temperature reading by combining it with data from other patients entering all clinics that week. The patterns may warn of a flu outbreak, or even a major epidemic. The health staff at the Centers for Disease Control in Atlanta, Georgia, draw on data like this to map the spread of diseases and take swift action to protect the public. Refining, analyzing, and combining information makes it more and more useful and meaningful, and the effort adds to our ability to use it to make decisions and take action. The path from data to information, and then to knowledge, is a continuum, and Figure 1-6 shows some examples. No clear dividing lines separate these categories; they blend together and form a continuum as more meaning and usefulness are created through skillful analysis and human insight. THE NATURE OF INFORMATION 2 What Makes Information Valuable? Separating useful information from the trivial is no easy task given the sheer volume of information on the planet. Three characteristics stand out, however, that contribute to making some information very valuable: (1) timeliness, (2) accuracy, and (3) completeness (Figure 1-7). Timeliness matters a great deal in some settings, and near real-time information often costs more. For example, people pay monthly fees to financial services to get up-to-the minute stock prices, rather than the delayed price reports shown on free stock tickers you competitive advantage Anything that gives a firm a lead over its rivals; it can be gained through the development and application of innovative information systems. data Individual facts or pieces of information. information Data or facts that are assembled and analyzed to add meaning and usefulness. 9 10 I N T R O D U CTIO N TO INFO RM AT IO N SYS TE MS FIGURE 1-6 Examples of the continuum from data to information to knowledge, as meaning and usefulness grow. FIGURE 1-7 What makes information valuable? Timeliness Accuracy Completeness Data Information Knowledge Patient’s temperature at walk-in clinic on Dec. 15 = 103.9º F. Table showing flu diagnoses in region during month of December Worldwide map of flu outbreaks suggesting pandemic 01010011 01001111 01010011 Binary code for SOS HELP!!! Microsoft (MSFT) closing stock price Graph of Microsoft highs and lows for one year Combined with analysis of other information, leads to broker’s recommendation to buy, hold, or sell stock CWOT Complete Waste of Time (text messaging abbreviation) May be interpreted as an insult GPS coordinates Map showing location with push pin Location of Taj Mahal in India Invoice #259 Total Amount = $139.23 Total Sales for Southern Region in First Quarter = $2,156,232 Fastest growing sales region; consider broader marketing campaign can add to your own browser. Riswan Khalfan of TD Securities says his system can handle a breathtaking 5 million pieces of data per second, far more than most other banks. He points out that “if you fall behind, you’re dealing with stale data and that puts you at a disadvantage.” With timely, up-to-date trading data, Khalfan’s systems can make quicker decisions, which he argues are better (Figure 1-8).7 Accuracy may seem like an obvious feature of valuable information, but there actually are degrees of accuracy. The more accurate you want the information to be, the longer it may take to obtain, making extreme accuracy a trade-off to timeliness. A CEO who wants to know how much competitors charge for a rival product, for example, might wait too long for staff to scour all the distribution channels and assemble the data. An approximate but timely answer is more valuable. Completeness adds value, particularly as a means to avoid bias or spin. A marketing survey that polls customers as they enter a store will completely miss those who shop online, for example. The survey results would be incomplete without taking greater care to assess the interests of all the customers. Striving for complete information, however, may also introduce delays that affect timeliness. FIGURE 1-8 Timeliness is a critical attribute for certain kinds of information, such as stock prices.“If you fall behind, you’re dealing with stale data.” –Riswan Khalfan Source: Shutterstock # 149079 Cust: Pearson Au: Wallace Pg. No. 10 Title: Introduction to Information Systems/ 2e Server: C/M/Y/K Short / Normal DESIGN SERVICES OF S4CARLISLE Publishing Services CH AP T ER 1 INFORMATION SYSTEMS AND PEOPLE THE COMPONENTS OF AN INFORMATION SYSTEM 3 11 Describe the four main components of an information system and the role that each plays. An information system, whether it is that speed camera network, a company’s payroll system, or a social networking service, brings together four critical components to collect, process, manage, analyze, and distribute information: (1) people, (2) technology, (3) processes, and (4) data (Figure 1-9). People The design, development, launch, and maintenance of any information system involves teams of people. They play a number of different roles—as visionaries, developers, and managers of information systems, and also as analysts, liaisons, users, customers, contributors, and sometimes roadblocks. Often underestimated, the human element plays a crucial role in the success or failure of most information systems, and you will see many examples of that throughout this book. Leaders may be first to propose a system that will accomplish an important strategic objective for the company. However, innovative ideas for such systems come from every level, provided the organization’s culture openly encourages people to think about how information systems can help. Managers and staff from many departments participate on teams with technologists to design a new system or evaluate commercial systems that might be purchased. The information technology team usually works closely with staff in marketing, finance, human resources, and other functional areas to launch user-friendly, people-oriented systems. Many systems draw from a much wider pool of people, involving users as contributors and developers, not just customers or clients. User-generated content (UGC), for example, makes up most of the information in systems such as Wikipedia, eBay, Craigslist, YouTube, Facebook, and Twitter. These systems would not exist without generous contributions from the community. UGC is an important ingredient in Web 2.0, the second generation of FIGURE 1-9 The four components of an information system. People Processes information system A system that brings together four critical components to collect, process, manage, analyze, and distribute information; the four components are people, technology, processes, and data. Technology Data user-generated content (UGC) The content contributed to a system by its users. Web 2.0 The second generation of web development that facilitates far more interactivity, end-user contributions, collaboration, and information sharing compared to earlier models. 12 I N T R O D U CTIO N TO INFO RM AT IO N SYS TE MS web development that facilitates far more interactivity, end-user contributions, collaboration, and information sharing compared to earlier models. Social networking and virtual meetings are all features of Web 2.0. The people who manage systems that tap UGC work hard to promote the positive contributions and even harder to keep the criminals and pranksters from taking over. For instance, scammers in Texas copied photos from legitimate “Home For Sale” ads, then posted them as “For Rent” on Craigslist. People who wanted to rent one of the houses sent in their deposits to the fake landlord who was “out of town,” only to learn later the home was never for rent at all. Craigslist founder Craig Newmark tirelessly helps the organization deal with issues like that one. The number one tip is to “deal locally with folks you can meet in person.” Technology Information technology (IT) includes hardware, software, and telecommunications. IT is one of the four components of an information system, though people often use the terms interchangeably. Rack after rack of servers in Google’s windowless data centers are examples of this component, along with all the desktop computers, laptops, netbooks, tablets, cell phones, navigation devices, digital cameras, scanners, and sensors. Anything capable of collecting, processing, storing, or displaying electronic data is potentially part of an information system. The transponder chip on your car’s windshield that allows electronic toll collection is another example. The batterypowered device sends a signal to the tollbooth; in some areas, drivers don’t even need to slow down. Software ranges from the code needed to boot up a computer to programs with artificial intelligence and their own learning capabilities. The Internet and the World Wide Web unleashed an explosion of software creativity, transforming businesses around the globe. Organizations can create applications that their partners, suppliers, and customers can access anywhere on the planet. Telecommunications and networks are also part of IT, and the term information and communications technology (ICT) is often used to refer to the broader collection. The main role of the telecommunications component is to move electronic signals from one place to another, route traffic, and add features to improve transmission speeds, eliminate noise, increase security, or analyze traffic patterns. The infrastructure includes both wired and wireless transmission. Increasingly, people favor wireless transmission because of its flexibility and reduced cost, though speed still lags. Many developing countries that can’t afford to build wired networks are transforming their communications and expanding Internet access through wireless transmission. In much of sub-Saharan Africa, for example, copper wiring may never be deployed at all. Wireless is also more likely to stay up and running during storms that bring down utility poles and wires. While the “people” component and UGC play key roles in Web 2.0 developments, technology is a major driver of what some call “Web 3.0.” As hundreds of millions of sensors are embedded in vehicles, doorways, livestock, warehouse shelves, ocean buoys, and anything else, and all are connected to the net, we begin to glimpse the power of “the Internet of things.” The sensors can pick up geographic location, temperature, motion, wind speed, pollution indicators, heart rate, and much more. When combined with traditional data sources and UGC, these immense, rapidly growing collections are known as “big data,” and they offer stunning opportunities for innovation. As the web continues to evolve, new skills and tools will be needed to analyze big data intelligently.8 Processes A business process is a set of activities designed to achieve a task. Organizations implement information systems to support, streamline, and sometimes eliminate business # 149079 Cust: Pearson Au: Wallace Pg. No. 12 Title: Introduction to Information Systems/ 2e Server: C/M/Y/K Short / Normal DESIGN SERVICES OF S4CARLISLE Publishing Services CH AP T ER 1 INFORMATION SYSTEMS AND PEOPLE 13 processes. Countless decisions are made about how each process should operate, what rules it should follow, how information should be handled from input to output, and especially how the information system will support the process. For example, should the system log every change an employee makes to the data? Will the system require supervisors to electronically approve all purchases or just those above a certain value? What decisions can the information system make on its own based on incoming data and rules, and which ones require human judgment? Managers develop policies that affect information system processes and the systems can enforce those policies. A major policy category involves security. How will the system authenticate the user, and what access will he or she be granted? If the system requires a password, how long should it be, and when will it expire? The steps in any process are affected by thousands of decisions people make, and these are influenced by the way people look at process improvements. For example, some organizations try to design systems that just reproduce what employees were doing, thereby reducing labor. In a college registrations office, employees might send letters to students who could not enroll in a class that they selected to explain why they were denied. One improvement might be to design a feature that automatically generates form letters to those students with their name and address, the class they selected, and a list of the most common reasons they could not register. Instead of typing the letter, the employees can check the reason and stuff the letter into an envelope (Figure 1-10). The staff would be pleased with this handy new efficiency, though students might think the new letters are a bit mechanical. A closer look at the process, however, might lead to far more radical changes. Moving to online registrations, for instance, could eliminate the process entirely. If a class is full, or if the student isn’t eligible to take it, the registration system should not allow the student to choose it, thus eliminating the need to send letters at all. This new FIGURE 1-10 NARA SELLERS 143 LA GUARDIA STREET JACKSON, AZ Although automatically generating letters like this one provides some process improvement, information systems can do much more. This process could be eliminated entirely. Dear Student: We are sorry to inform you that we are unable to confirm your registration for the class listed below for the reason checked: FALL BMGT 322 ◻ The class is full. ◻ Your records show you have not fulfilled the prerequisites. ◻ The class is only open to juniors or seniors. ◻ Your tuition payment has not yet been received. ◻ Other_________________________________ SECTION 5 Please contact the Registrations Office if you have any questions. Sincerely, Registrations information technology (IT) The hardware, software, and telecommunications that comprise the technology component of information systems; the term is often used more broadly to refer to information systems. information and communications technology (ICT) The term encompasses the broad collection of information processing and communications technologies, emphasizing that telecommunication technology is a significant feature of information systems. business process A set of activities designed to achieve a task; organizations implement information systems to support, streamline, and sometimes eliminate business processes. 14 I N T R O D U CTIO N TO INFO RM AT IO N SYS TE MS FIGURE 1-11 Process diagram for a smarter registration system. Student logs into registration system System retrieves student records and class records Is class full? No Is student eligible to take class? Yes Yes System does not allow student to choose class No System does not allow student to choose class System allows student to choose class design, shown in Figure 1-11, would please students because they would get instant confirmation that their class choices were available. Also, they would no longer receive frustrating form letters that foil their academic plans. Registrations staff, however, may worry about layoffs. Business process management (BPM) is the field that focuses on designing, optimizing, and streamlining processes, taking into account the human element. Analysts look at processes from many different angles to weigh input from all stakeholders, suggest innovative approaches that leverage the power of information systems, and propose tweaks at every step. Software is available to simulate business processes and conduct “what if ” experiments to assist with the analysis. Efforts to manage business processes also take into account the overall organizational culture and its approach to information systems. Does the organization need very tight controls over every piece of information and employees’ use of it? Banks, hospitals, military units, and many other institutions bear heavy responsibilities to develop crystal clear policies. They must safeguard sensitive information, and their missions affect the way processes are designed. Free use of the Internet may not be permitted, and employees may not be able to take files home on portable USB flash drives to catch up over the weekend. Some organizations even push epoxy glue into the desktop computers’ USB ports to prevent anyone from copying data. In contrast, people involved in a free-wheeling start-up or a volunteer organization may not be too concerned with where or when people work, how secure their information is, or whether staff post party photos on the company servers. Business processes and organizational policies must also be reviewed frequently because circumstances change quickly. Numerous corporate scandals, for example, have led to stiff laws about retaining electronic documents. If there is a pending legal case, businesses have a duty to preserve electronic files that might be relevant, including email. E-discovery refers to the processes by which electronic data that might be used as legal evidence are requested, secured, and searched. Electronic documents that might be relevant to a case cover a very wide scope, and they can be quite slippery to manage as people edit, cut and paste, and make copies–not just on the company’s computers but on their own smartphones and tablets.9 # 149079 Cust: Pearson Au: Wallace Pg. No. 14 Title: Introduction to Information Systems/ 2e Server: C/M/Y/K Short / Normal DESIGN SERVICES OF S4CARLISLE Publishing Services CH AP T ER 1 INFORMATION SYSTEMS AND PEOPLE FIGURE 1-12 Examples of data. Photos: © Maxim Pavlov/Alamy, © D. Hurst/Alamy, ©Sandra Baker/Alamy, © PaulPaladin/Alamy, © StockShot/Alamy, © Picture Press/Alamy. Data Data are the grist for every information system, and these raw facts can present themselves in an enormous variety of shapes and forms. Figure 1-12 shows many examples of data that become part of information systems. Using a mercury thermometer, for example, a patient’s temperature reading would appear as the height of the mercury bar in a glass tube. Data reflecting time intervals might appear as seconds on a stopwatch. Data from spoken language are becoming especially important for smartphones and other technologies that accept and analyze voice commands. VoicePrism, a Chicagobased company that creates information systems to analyze vocal patterns, focuses on the streams of data contained i...
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