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GLOBAL EDITION Management Information Systems Managing the Digital Firm For these Global Editions, the editorial team at Pearson has collaborated with educators across the world to address a wide range of subjects and requirements, equipping students with the best possible learning tools. This Global Edition preserves the cutting-edge approach and pedagogy of the original, but also features alterations, customization, and adaptation from the North American version. GLOBAL EDITION Management Information Systems Managing the Digital Firm FIFTEENTH EDITION Kenneth C. Laudon • Jane P. Laudon FIFTEENTH EDITION Laudon Laudon G LO B A L EDITION This is a special edition of an established title widely used by colleges and universities throughout the world. Pearson published this exclusive edition for the benefit of students outside the United States and Canada. If you purchased this book within the United States or Canada, you should be aware that it has been imported without the approval of the Publisher or Author. Pearson Global Edition Laudon_15_129221175X_Final.indd 1 27/04/17 1:42 PM MANAGEMENT INFORMATION SYSTEMS MANAGING THE DIGITAL FIRM FIFTEENTH EDITION GLOBAL EDITION Kenneth C. Laudon New York University Jane P. Laudon Azimuth Information Systems VP Editorial Director: Andrew Gilfillan Senior Portfolio Manager: Samantha Lewis Content Development Team Lead: Laura Burgess Program Monitor: Ann Pulido/SPi Global Editorial Assistant: Michael Campbell Managing Editor, Global Edition: Steven Jackson Senior Project Editor, Global Edition: Daniel Luiz Manager, Media Production, Global Edition: M. Vikram Kumar Senior Manufacturing Controller, Production, Global Edition: Trudy Kimber Product Marketing Manager: Kaylee Carlson Project Manager: Katrina Ostler/Cenveo® Publisher Services Text Designer: Cenveo® Publisher Services Cover Designer: Lumina Datamatics, Inc. Cover Art: LIPING/Shutterstock Full-Service Project Management: Cenveo® Publisher Services Unattributed Figures and Chapter Opener Diagrams: Kenneth C. Laudon, Jane P. Laudon, Management Information Systems, 15 Ed., © 2018, Pearson Education, Inc., New York, NY. Microsoft and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published as part of the services for any purpose. All such documents and related graphics are provided “as is” without warranty of any kind. Microsoft and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all warranties and conditions of merchantability, whether express, implied or statutory, fitness for a particular purpose, title and non-infringement. In no event shall Microsoft and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from the services. 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® Windows®, and Microsoft Office® are registered trademarks of Microsoft Corporation in the U.S.A. and other countries. This book is not sponsored or endorsed by or affiliated with the Microsoft Corporation. Pearson Education Limited Edinburgh Gate Harlow Essex CM20 2JE England and Associated Companies throughout the world Visit us on the World Wide Web at: www.pearsonglobaleditions.com © Pearson Education Limited 2018 The rights of Kenneth C. Laudon and Jane P. Laudon to be identified as the authors of this work have been asserted by them in accordance with the Copyright, Designs and Patents Act 1988. Authorized adaptation from the United States edition, entitled Management Information Systems: Managing the Digital Firm, 15th edition, ISBN 978-0-13-463971-0, by Kenneth C. Laudon and Jane P. Laudon, published by Pearson Education © 2018. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without either the prior written permission of the publisher or a license permitting restricted copying in the United Kingdom issued by the Copyright Licensing Agency Ltd, Saffron House, 6–10 Kirby Street, London EC1N 8TS. All trademarks used herein are the property of their respective owners. The use of any trademark in this text does not vest in the author or publisher any trademark ownership rights in such trademarks, nor does the use of such trademarks imply any affiliation with or endorsement of this book by such owners. ISBN 10: 1-292-21175-X ISBN 13: 978-1-292-21175-6 British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library. 10 9 8 7 6 5 4 3 2 1 14 13 12 11 10 Typeset in 10.5/13 ITC Veljovic by Cenveo® Publisher Services. Printed and bound by Vivar, Malaysia. About the Authors Kenneth C. Laudon is a Professor of Information Systems at New York University’s Stern School of Business. He holds a B.A. in Economics from Stanford and a Ph.D. from Columbia University. He has authored 12 books dealing with electronic commerce, information systems, organizations, and society. Professor Laudon has also written more than 40 articles concerned with the social, organizational, and management impacts of information systems, privacy, ethics, and multimedia technology. Professor Laudon’s current research is on the planning and management of large-scale information systems and multimedia information technology. He has received grants from the National Science Foundation to study the evolution of national information systems at the Social Security Administration, the IRS, and the FBI. Ken’s research focuses on enterprise system implementation, computer-related organizational and occupational changes in large organizations, changes in management ideology, changes in public policy, and understanding productivity change in the knowledge sector. Ken Laudon has testified as an expert before the United States Congress. He has been a researcher and consultant to the Office of Technology Assessment (United States Congress), the Department of Homeland Security, and the Office of the President, several executive branch agencies, and Congressional Committees. Professor Laudon also acts as an in-house educator for several consulting firms and as a consultant on systems planning and strategy to several Fortune 500 firms. At NYU’s Stern School of Business, Ken Laudon teaches courses on Managing the Digital Firm, Information Technology and Corporate Strategy, Professional Responsibility (Ethics), and Electronic Commerce and Digital Markets. Ken Laudon’s hobby is sailing. Jane Price Laudon is a management consultant in the information systems area and the author of seven books. Her special interests include systems analysis, data management, MIS auditing, software evaluation, and teaching business professionals how to design and use information systems. Jane received her Ph.D. from Columbia University, her M.A. from Harvard University, and her B.A. from Barnard College. She has taught at Columbia University and the New York University Graduate School of Business. She maintains a lifelong interest in Oriental languages and civilizations. The Laudons have two daughters, Erica and Elisabeth, to whom this book is dedicated. 3 Brief Contents PART ONE Organizations, Management, and the Networked Enterprise 29 Chapter 1 Chapter 2 Chapter 3 Chapter 4 Information Systems in Global Business Today 30 PART TWO Information Technology Infrastructure 191 Chapter 5 Chapter 6 IT Infrastructure and Emerging Technologies 192 Chapter 7 Chapter 8 Telecommunications, the Internet, and Wireless Technology 276 PART THREE Key System Applications for the Digital Age 363 Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications 364 Chapter 10 Chapter 11 Chapter 12 E-commerce: Digital Markets, Digital Goods 398 PART FOUR Building and Managing Systems 513 Chapter 13 Chapter 14 Chapter 15 Building Information Systems 514 Glossary Indexes 4 Global E-business and Collaboration 68 Information Systems, Organizations, and Strategy 106 Ethical and Social Issues in Information Systems 150 Foundations of Business Intelligence: Databases and Information Management 238 Securing Information Systems 320 619 631 Managing Knowledge 444 Enhancing Decision Making 480 Managing Projects 554 Managing Global Systems 588 Complete Contents PART ONE Organizations, Management, and the Networked Enterprise 29 Chapter 1 Information Systems in Global Business Today 30 Opening Case: Rugby Football Union Tries Big Data 31 1-1 How are information systems transforming business, and why are they so essential for running and managing a business today? 33 How Information Systems Are Transforming Business 34 • What's New in Management Information Systems? 35 Interactive Session: Management The Mobile Pocket Office 37 Globalization Challenges and Opportunities: A Flattened World 39 • The Emerging Digital Firm 40 • Strategic Business Objectives of Information Systems 41 1-2 What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations? 44 What Is an Information System? 44 • Dimensions of Information Systems 46 Interactive Session: Technology Digital Transformation of Healthcare at Singapore's JurongHealth Services 51 It Isn't Just Technology: A Business Perspective on Information Systems 52 • Complementary Assets: Organizational Capital and the Right Business Model 54 1-3 What academic disciplines are used to study information systems, and how does each contribute to an understanding of information systems? 56 Technical Approach 56 • Behavioral Approach 57 • Approach of This Text: Sociotechnical Systems 58 Review Summary 59 • Key Terms 60 • Review Questions 60 • Discussion Questions 61 Hands-On MIS Projects 61 Collaboration and Teamwork Project 62 Case Study: Are Farms Becoming Digital Firms? 62 References: 66 5 6 Contents Chapter 2 Global E-business and Collaboration 68 Opening Case: Enterprise Social Networking Helps ABB Innovate and Grow 69 2-1 What are business processes? How are they related to information systems? 71 Business Processes 71 • How Information Technology Improves Business Processes 73 2-2 How do systems serve the different management groups in a business, and how do systems that link the enterprise improve organizational performance? 74 Systems for Different Management Groups 74 • Systems for Linking the Enterprise 79 Interactive Session: Organizations New Systems Help Plan International Manage Its Human Resources 80 E-business, E-commerce, and E-government 84 2-3 Why are systems for collaboration and social business so important, and what technologies do they use? 85 What Is Collaboration? 85 • What Is Social Business? 86 • Business Benefits of Collaboration and Social Business 87 • Building a Collaborative Culture and Business Processes 87 • Tools and Technologies for Collaboration and Social Business 89 Interactive Session: Technology Collaborating the Glasscubes Way 91 2-4 What is the role of the information systems function in a business? 95 The Information Systems Department 96 • Organizing the Information Systems Function 97 Review Summary 98 • Key Terms 99 • Review Questions 99 • Discussion Questions 100 Hands-On MIS Projects 100 Collaboration and Teamwork Project 101 Case Study: Social Business: Full Speed Ahead or Proceed with Caution? 101 References: 104 Chapter 3 Information Systems, Organizations, and Strategy 106 Opening Case: Tate & Lyle Devise a Global IT Strategy 107 3-1 Which features of organizations do managers need to know about to build and use information systems successfully? 109 What Is an Organization? 110 • Features of Organizations 112 3-2 What is the impact of information systems on organizations? 117 Economic Impacts 117 • Organizational and Behavioral Impacts 118 Interactive Session: Management Can Technology Replace Managers? 120 The Internet and Organizations 122 • Implications for the Design and Understanding of Information Systems 122 Contents 3-3 7 How do Porter's competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems? 123 Porter's Competitive Forces Model 123 • Information System Strategies for Dealing with Competitive Forces 125 • The Internet's Impact on Competitive Advantage 128 • The Business Value Chain Model 129 Interactive Session: Technology Smart Products, Smart Companies 130 Synergies, Core Competencies, and Network-Based Strategies 134 3-4 What are the challenges posed by strategic information systems, and how should they be addressed? 138 Sustaining Competitive Advantage 138 • Aligning IT with Business Objectives 139 • Managing Strategic Transitions 140 Review Summary 140 • Key Terms 141 • Review Questions 141 • Discussion Questions 142 Hands-On MIS Projects 142 Collaboration and Teamwork Project 143 Case Study: Deutsche Bank: The Cost of Legacy Systems 144 References: 147 Chapter 4 Ethical and Social Issues in Information Systems 150 Opening Case: The Dark Side of Big Data 151 4-1 What ethical, social, and political issues are raised by information systems? 153 A Model for Thinking About Ethical, Social, and Political Issues 155 • Five Moral Dimensions of the Information Age 156 • Key Technology Trends that Raise Ethical Issues 156 4-2 What specific principles for conduct can be used to guide ethical decisions? 158 Basic Concepts: Responsibility, Accountability, and Liability 159 • Ethical Analysis 160 • Candidate Ethical Principles 160 • Professional Codes of Conduct 161 • Some Real-World Ethical Dilemmas 161 4-3 Why do contemporary information systems technology and the Internet pose challenges to the protection of individual privacy and intellectual property? 162 Information Rights: Privacy and Freedom in the Internet Age 162 • Property Rights: Intellectual Property 169 4-4 How have information systems affected laws for establishing accountability and liability and the quality of everyday life? 172 Computer-Related Liability Problems 173 • System Quality: Data Quality and System Errors 174 • Quality of Life: Equity, Access, and Boundaries 174 Interactive Session: Technology Monitoring in the Workplace 178 Health Risks: RSI, CVS, and Cognitive Decline 180 Interactive Session: Organizations Are We Relying Too Much on Computers to Think for Us? 181 Review Summary 183 • Key Terms 184 • Review Questions 184 • Discussion Questions 185 Hands-On MIS Projects 185 8 Contents Collaboration and Teamwork Project 186 Case Study: Facebook Privacy: What Privacy? 186 References: 190 PART TWO Information Technology Infrastructure 191 Chapter 5 IT Infrastructure and Emerging Technologies 192 Opening Case: EasyJet Flies High with Cloud Computing 193 5-1 What is IT infrastructure, and what are the stages and drivers of IT infrastructure evolution? 195 Defining IT Infrastructure 195 • Evolution of IT Infrastructure 197 • Technology Drivers of Infrastructure Evolution 201 5-2 What are the components of IT infrastructure? 206 Computer Hardware Platforms 207 • Operating System Platforms 208 • Enterprise Software Applications 208 • Data Management and Storage 209 • Networking/Telecommunications Platforms 209 • Internet Platforms 209 • Consulting and System Integration Services 210 5-3 What are the current trends in computer hardware platforms? 210 The Mobile Digital Platform 210 Interactive Session: Technology Wearable Computers Change How We Work 211 Consumerization of IT and BYOD 212 • Quantum Computing 213 • Virtualization 213 • Cloud Computing 213 Interactive Session: Organizations Glory Finds Solutions in the Cloud 216 Green Computing 219 • High-Performance and Power-Saving Processors 220 5-4 What are the current computer software platforms and trends? 220 Linux and Open Source Software 220 • Software for the Web: Java, HTML, and HTML5 221 • Web Services and Service-Oriented Architecture 222 • Software Outsourcing and Cloud Services 224 5-5 What are the challenges of managing IT infrastructure and management solutions? 226 Dealing with Platform and Infrastructure Change 226 • Management and Governance 227 • Making Wise Infrastructure Investments 227 Review Summary 230 • Key Terms 231 • Review Questions 232 • Discussion Questions 232 Hands-On MIS Projects 232 Collaboration and Teamwork Project 233 Case Study: BYOD: Business Opportunity or Big Headache? 234 References: 237 Chapter 6 Foundations of Business Intelligence: Databases and Information Management 238 Opening Case: BAE Systems 239 6-1 What are the problems of managing data resources in a traditional file environment? 241 Contents 9 File Organization Terms and Concepts 242 • Problems with the Traditional File Environment 243 6-2 What are the major capabilities of database management systems (DBMS), and why is a relational DBMS so powerful? 245 Database Management Systems 245 • Capabilities of Database Management Systems 248 • Designing Databases 250 • Non-relational Databases and Databases in the Cloud 253 6-3 What are the principal tools and technologies for accessing information from databases to improve business performance and decision making? 254 The Challenge of Big Data 254 • Business Intelligence Infrastructure 255 Interactive Session: Organizations Data-Driven Crime Fighting Goes Global 256 Analytical Tools: Relationships, Patterns, Trends 260 • Databases and the Web 263 6-4 Why are information policy, data administration, and data quality assurance essential for managing the firm's data resources? 264 Establishing an Information Policy 264 • Ensuring Data Quality 265 Interactive Session: Management Societe Generale Builds an Intelligent System to Manage Information Flow 267 Review Summary 268 • Key Terms 269 • Review Questions 270 • Discussion Questions 270 Hands-On MIS Projects 270 Collaboration and Teamwork Project 272 Case Study: Lego's Enterprise Software Spurs Growth 272 References: 275 Chapter 7 Telecommunications, the Internet, and Wireless Technology 276 Opening Case: Wireless Technology Makes Dundee Precious Metals Good as Gold 277 7-1 What are the principal components of telecommunications networks and key networking technologies? 279 Networking and Communication Trends 279 • What is a Computer Network? 280 • Key Digital Networking Technologies 282 7-2 What are the different types of networks? 285 Signals: Digital Versus Analog 285 • Types of Networks 285 • Transmission Media and Transmission Speed 287 7-3 How do the Internet and Internet technology work, and how do they support communication and e-business? 287 What is the Internet? 288 • Internet Addressing and Architecture 288 Interactive Session: Organizations The Battle over Net Neutrality 291 Internet Services and Communication Tools 293 Interactive Session: Management Monitoring Employees on Networks: Unethical or Good Business? 296 The Web 298 10 Contents 7-4 What are the principal technologies and standards for wireless networking, communication, and Internet access? 306 Cellular Systems 306 • Wireless Computer Networks and Internet Access 307 • RFID and Wireless Sensor Networks 309 Review Summary 312 • Key Terms 313 • Review Questions 314 • Discussion Questions 314 Hands-On MIS Projects 314 Collaboration and Teamwork Project 315 Case Study: RFID Propels the Angkasa Library Management System 316 References: 319 Chapter 8 Securing Information Systems 320 Opening Case: Hackers Attack Singapore's Telecom Infrastructure 321 8-1 Why are information systems vulnerable to destruction, error, and abuse? 323 Why Systems are Vulnerable 323 • Malicious Software: Viruses, Worms, Trojan Horses, and Spyware 326 • Hackers and Computer Crime 329 • Internal Threats: Employees 333 • Software Vulnerability 334 8-2 What is the business value of security and control? 335 Legal and Regulatory Requirements for Electronic Records Management 335 • Electronic Evidence and Computer Forensics 336 8-3 What are the components of an organizational framework for security and control? 337 Information Systems Controls 337 • Risk Assessment 338 Interactive Session: Organizations Stuxnet and the Changing Face of Cyberwarfare 339 Security Policy 341 • Disaster Recovery Planning and Business Continuity Planning 342 • The Role of Auditing 343 8-4 What are the most important tools and technologies for safeguarding information resources? 343 Identity Management and Authentication 344 • Firewalls, Intrusion Detection Systems, and Antivirus Software 346 • Securing Wireless Networks 348 • Encryption and Public Key Infrastructure 348 • Ensuring System Availability 350 • Security Issues for Cloud Computing and the Mobile Digital Platform 351 • Ensuring Software Quality 352 Interactive Session: Technology BYOD: A Security Nightmare? 353 Review Summary 354 • Key Terms 355 • Review Questions 356 • Discussion Questions 357 Hands-On MIS Projects 357 Collaboration and Teamwork Project 358 Case Study: Information Security Threats and Policies in Europe 358 References: 361 Contents PART THREE Key System Applications for the Digital Age Chapter 9 11 363 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications 364 Opening Case: Alimentation Couche-Tard Competes Using Enterprise Systems 365 9-1 How do enterprise systems help businesses achieve operational excellence? 367 What are Enterprise Systems? 368 • Enterprise Software 369 • Business Value of Enterprise Systems 370 9-2 How do supply chain management systems coordinate planning, production, and logistics with suppliers? 371 The Supply Chain 371 • Information Systems and Supply Chain Management 372 • Supply Chain Management Software 373 • Global Supply Chains and the Internet 375 • Business Value of Supply Chain Management Systems 376 9-3 How do customer relationship management systems help firms achieve customer intimacy? 377 What is Customer Relationship Management? 377 Interactive Session: Management Unilever Unifies Globally with Enhanced ERP 378 Customer Relationship Management Software 381 • Operational and Analytical CRM 383 Interactive Session: Organizations DP World Takes Port Management to the Next Level with RFID 385 Business Value of Customer Relationship Management Systems 387 9-4 What are the challenges that enterprise applications pose, and how are enterprise applications taking advantage of new technologies? 387 Enterprise Application Challenges 387 • Next-Generation Enterprise Applications 388 Review Summary 390 • Key Terms 391 • Review Questions 391 • Discussion Questions 392 Hands-On MIS Projects 392 Collaboration and Teamwork Project 393 Case Study: Customer Relationship Management Helps Celcom Become Number One 394 References: 397 Chapter 10 E-commerce: Digital Markets, Digital Goods 398 Opening Case: Uber Storms Europe: Europe Strikes Back 399 10-1 What are the unique features of e-commerce, digital markets, and digital goods? 401 12 Contents E-commerce Today 402 • The New E-commerce: Social, Mobile, Local 403 • Why E-commerce is Different 405 • Key Concepts in E-commerce: Digital Markets and Digital Goods in a Global Marketplace 408 10-2 What are the principal e-commerce business and revenue models? 412 Types of E-commerce 412 • E-commerce Business Models 412 • E-commerce Revenue Models 415 10-3 How has e-commerce transformed marketing? 417 Behavioral Targeting 418 • Social E-Commerce and Social Network Marketing 422 Interactive Session: Technology Getting Social with Customers 424 10-4 How has e-commerce affected business-to-business transactions? 426 Electronic Data Interchange (EDI) 426 • New Ways of B2B Buying and Selling 427 10-5 What is the role of m-commerce in business, and what are the most important m-commerce applications? 429 Location-Based Services and Applications 430 Interactive Session: Organizations Can Instacart Deliver? 431 Other Mobile Commerce Services 433 10-6 What issues must be addressed when building an e-commerce presence? 433 Develop an E-Commerce Presence Map 434 • Develop a Timeline: Milestones 435 Review Summary 435 • Key Terms 436 • Review Questions 437 • Discussion Questions 437 Hands-On MIS Projects 437 Collaboration and Teamwork Project 438 Case Study: Walmart and Amazon Duke It Out for E-commerce Supremacy 439 References: 442 Chapter 11 Managing Knowledge 444 Opening Case: Fiat: Real Time Management with Business Intelligence 445 11-1 What is the role of knowledge management systems in business? 447 Important Dimensions of Knowledge 448 • The Knowledge Management Value Chain 449 • Types of Knowledge Management Systems 452 11-2 What types of systems are used for enterprise-wide knowledgge management, and how do they provide value for businesses? 453 Enterprise Content Management Systems 453 Interactive Session: Organizations ECM in the Cloud Empowers New Zealand Department of Conservation 454 Locating and Sharing Expertise 456 • Learning Management Systems 456 11-3 What are the major types of knowledge work systems, and how do they provide value for firms? 457 Knowledge Workers and Knowledge Work 457 • Requirements of Knowledge Work Systems 457 • Examples of Knowledge Work Systems 458 11-4 What are the business benefits of using intelligent techniques for knowledge management? 460 Contents 13 Capturing Knowledge: Expert Systems 460 Interactive Session: Technology Will Robots Replace People in Manufacturing? 461 Organizational Intelligence: Case-Based Reasoning 464 • Fuzzy Logic Systems 465 • Machine Learning 467 • Intelligent Agents 470 • Hybrid AI Systems 471 Review Summary 472 • Key Terms 473 • Review Questions 473 • Discussion Questions 474 Hands-On MIS Projects 474 Collaboration and Teamwork Project 475 Case Study: Knowledge Management and Collaboration at Tata Consulting Services 475 References: 479 Chapter 12 Enhancing Decision Making 480 Opening Case: Roche: Managing Diabetes with Big Data and Mobile Apps 481 12-1 What are the different types of decisions, and how does the decisionmaking process work? 483 Business Value of Improved Decision Making 483 • Types of Decisions 483 • The Decision-Making Process 485 12-2 How do information systems support the activities of managers and management decision making? 486 Managerial Roles 486 • Real-World Decision Making 488 • High-Velocity Automated Decision Making 489 12-3 How do business intelligence and business analytics support decision making? 490 What is Business Intelligence? 490 • The Business Intelligence Environment 491 • Business Intelligence and Analytics Capabilities 492 Interactive Session: Technology Singapore Sports Institute Uses Analytics for SEA Games 495 Management Strategies for Developing BI and BA Capabilities 497 Interactive Session: Management Britain's National Health Service Jettisons Choose and Book System 498 12-4 How do different decision-making constituencies in an organization use business intelligence, and what is the role of information systems in helping people working in a group make decisions more efficiently? 500 Decision Support for Operational And Middle Management 500 • Decision Support for Senior Management: Balanced Scorecard and Enterprise Performance Management Methods 503 • Group Decision-Support Systems (GDSS) 504 Review Summary 505 • Key Terms 506 • Review Questions 506 • Discussion Questions 507 Hands-On MIS Projects 507 Collaboration and Teamwork Project 507 Case Study: GE Bets on the Internet of Things and Big Data Analytics 508 References: 512 14 Contents PART FOUR Building and Managing Systems 513 Chapter 13 Building Information Systems 514 Opening Case: Angostura Builds a Mobile Sales System 515 13-1 How does building new systems produce organizational change? 517 Systems Development and Organizational Change 517 • Business Process Redesign 519 13-2 What are the core activities in the systems development process? 522 Systems Analysis 523 • Systems Design 524 • Completing the Systems Development Process 525 13-3 What are the principal methodologies for modeling and designing systems? 528 Structured Methodologies 528 • Object-Oriented Development 530 • Computer-Aided Software Engineering 532 13-4 What are alternative methods for building information systems? 532 Traditional Systems Life Cycle 533 • Prototyping 534 • End-User Development 535 • Application Software Packages, Software Services, and Outsourcing 536 Interactive Session: Organizations Fujitsu Selects a SaaS Solution to Simplify the Sales Process 537 13-5 What are new approaches for system building in the digital firm era? 540 Rapid Application Development (RAD), Agile Development, and DevOps 541 • Component-Based Development and Web Services 542 • Mobile Application Development: Designing for A Multiscreen World 542 Interactive Session: Technology Developing Mobile Apps: What's Different 544 Review Summary 545 • Key Terms 547 • Review Questions 547 • Discussion Questions 548 Hands-On MIS Projects 548 Collaboration and Teamwork Project 549 Case Study: ConAgra's Recipe for a Better Human Resources System 550 References: 553 Chapter 14 Managing Projects 554 Opening Case: Intuit Counts on Project Management 555 14-1 What are the objectives of project management, and why is it so essential in developing information systems? 557 Runaway Projects and System Failure 557 • Project Management Objectives 558 14-2 What methods can be used for selecting and evaluating information systems projects and aligning them with the firm's business goals? 559 Management Structure for Information Systems Projects 559 • Linking Systems Projects to The Business Plan 560 • Information Requirements and Key Performance Indicators 562 • Portfolio Analysis 562 • Scoring Models 563 14-3 How can firms assess the business value of information systems? 564 Information System Costs and Benefits 564 • Capital Budgeting for Information Systems 565 • Limitations of Financial Models 566 Contents 14-4 15 What are the principal risk factors in information systems projects, and how can they be managed? 566 Dimensions of Project Risk 566 • Change Management and the Concept of Implementation 567 Interactive Session: Management Can the National Health Service Go Paperless? 568 Controlling Risk Factors 571 Interactive Session: Technology Hilti AG: Putting Things Together with New Project Management Tools 575 Designing for the Organization 577 • Project Management Software Tools 577 Review Summary 578 • Key Terms 579 • Review Questions 579 • Discussion Questions 580 Hands-On MIS Projects 580 Collaboration and Teamwork Project 581 Case Study: A Shaky Start for Healthcare.gov 581 References: 585 Chapter 15 Managing Global Systems 588 Opening Case: The Bel Group: Laughing All the Way to Success 589 15-1 What major factors are driving the internationalization of business? 591 Developing an International Information Systems Architecture 592 • The Global Environment: Business Drivers and Challenges 593 • State of the Art 596 15-2 What are the alternative strategies for developing global businesses? 597 Global Strategies and Business Organization 597 • Global Systems to Fit the Strategy 598 • Reorganizing the Business 599 15-3 What are the challenges posed by global information systems and management solutions for these challenges? 600 A Typical Scenario: Disorganization on a Global Scale 600 • Global Systems Strategy 601 • The Management Solution: Implementation 603 15-4 What are the issues and technical alternatives to be considered when developing international information systems? 604 Computing Platforms and Systems Integration 605 • Connectivity 605 Interactive Session: Organizations Indian E-commerce: Obstacles to Opportunity 607 Software Localization 608 Interactive Session: Management Steelcase Designs Goes for Global Talent Management 609 Review Summary 611 • Key Terms 612 • Review Questions 612 • Discussion Questions 612 Hands-On MIS Projects 613 Collaboration and Teamwork Project 614 Case Study: Crocs Clambers to Global Efficiency 614 References: 618 Glossary 619 Indexes 631 Business Cases And Interactive Sessions Here are some of the business firms you will find described in the cases and Interactive Sessions of this book: Chapter 1: Information Systems in Global Business Today Rugby Football Union Tries Big Data The Mobile Pocket Office Digital Transformation of Healthcare at Singapore's JurongHealth Services Are Farms Becoming Digital Firms? Chapter 2: Global E-Business and Collaboration Enterprise Social Networking Helps ABB Innovate and Grow New Systems Help Plan International Manage Its Human Resources Collaborating the Glasscubes Way Social Business: Full Speed Ahead or Proceed with Caution? Chapter 3: Information Systems, Organizations, and Strategy Tate & Lyle Devise a Global IT Strategy Can Technology Replace Managers? Smart Products, Smart Companies Deutsche Bank: The Cost of Legacy Systems Chapter 4: Ethical and Social Issues in Information Systems The Dark Side of Big Data Monitoring in the Workplace Are We Relying Too Much on Computers to Think for Us? Facebook Privacy: What Privacy? Chapter 5: IT Infrastructure and Emerging Technologies EasyJet Flies High with Cloud Computing Wearable Computers Change How We Work Glory Finds Solutions in the Cloud BYOD: Business Opportunity or Big Headache? Chapter 6: Foundations of Business Intelligence: Databases and Information Management BAE Systems Data-Driven Crime Fighting Goes Global Societe Generale Builds an Intelligent System to Manage Information Flow Lego's Enterprise Software Spurs Growth Chapter 7: Telecommunications, the Internet and Wireless Technology Wireless Technology Makes Dundee Precious Metals Good as Gold The Global Battle over Net Neutrality Monitoring Employees on Networks: Unethical or Good Business? RFID Propels the Angkasa Library Management System 16 Business Cases and Interactive Sessions Chapter 8: Securing Information Systems Hackers Attack Singapore's Telecom Infrastructure Stuxnet and the Changing Face of Cyberwarfare BYOD: A Security Nightmare? Information Security Threats and Policies in Europe Chapter 9: Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Alimentation Couche-Tard Competes Using Enterprise Systems Unilever Unifies Globally with Enhanced ERP DP World Takes Port Management to the Next Level with RFID Customer Relationship Management Helps Celcom Become Number One Chapter 10: E-commerce: Digital Markets, Digital Goods Uber Storms Europe: Europe Strikes Back Getting Social with Customers Can Instacart Deliver? Walmart and Amazon Duke It Out for E-commerce Supremacy Chapter 11: Managing Knowledge Fiat: Real Time Management with Business Intelligence ECM in the Cloud Empowers New Zealand Department of Conservation Will Robots Replace People in Manufacturing? Knowledge Management and Collaboration at Tata Consulting Services Chapter 12: Enhancing Decision Making Roche: Managing Diabetes with Big Data and Mobile Apps Singapore Sports Institute Uses Analytics for SEA Games Britain's National Health Service Jettisons Choose and Book System GE Bets on the Internet of Things and Big Data Analytics Chapter 13: Building Information Systems Angostura Builds a Mobile Sales System Fujitsu Selects a SaaS Solution to Simplify the Sales Process Developing Mobile Apps: What’s Different ConAgra’s Recipe for a Better Human Resources System Chapter 14: Managing Projects Intuit Counts on Project Management Can the National Health Service Go Paperless? Hilti AG: Putting Things Together with New Project Management Tools A Shaky Start for Healthcare.gov Chapter 15: Managing Global Systems The Bel Group: Laughing All the Way to Success Indian E-commerce: Obstacles to Opportunity Steelcase Designs Goes for Global Talent Management Crocs Clambers to Global Efficiency 17 Preface The Global Edition is written for business school students in Europe, the Middle East, South Africa, Australia, and the Pacific Asian region. Case studies and examples focus on how firms in these regions use information systems. We wrote this book for business school students who wanted an in-depth look at how today's business firms use information technologies and systems to achieve corporate objectives. Information systems are one of the major tools available to business managers for achieving operational excellence, developing new products and services, improving decision making, and achieving competitive advantage. Students will find here the most up-to-date and comprehensive overview of information systems used by business firms today. After reading this book, we expect students will be able to participate in, and even lead, management discussions of information systems for their firms. When interviewing potential employees, business firms often look for new hires who know how to use information systems and technologies for achieving bottom-line business results. Regardless of whether you are an accounting, finance, management, operations management, marketing, or information systems major, the knowledge and information you find in this book will be valuable throughout your business career. What’s New in This Edition Currency The 15th edition features all new opening, closing, and Interactive Session cases. The text, figures, tables, and cases have been updated through September 2016 with the latest sources from industry and MIS research. New Features • New Conceptual Videos collection includes 45 conceptual videos of 3 to 5 minutes in length. Ken Laudon walks students through three of the most important concepts in each chapter using a contemporary animation platform. Available only in the MyLab MIS digital edition • New Video Cases collection: 36 video cases (two or more per chapter) and 10 additional instructional videos covering key concepts and experiences in the MIS world. Video Cases are listed at the beginning of each chapter. • Learning Tracks: 47 Learning Tracks in MyLab MIS for additional coverage of selected topics. New Topics 18 • Big Data and the Internet of Things: In-depth coverage of big data, big data analytics, and the Internet of Things (IoT) in Chapters 1, 6, 7, and 12. Includes big data analytics, analyzing IoT data streams, Preface Hadoop, in-memory computing, non-relational databases, and analytic platforms. • Cloud Computing: Updated and expanded coverage of cloud computing in Chapter 5 (IT infrastructure) with more detail on types of cloud services, private and public clouds, hybrid clouds, managing cloud services, and a new Interactive Session on using cloud services. Cloud computing also covered in Chapter 6 (databases in the cloud), Chapter 8 (cloud security), Chapter 9 (cloud-based CRM and ERP), Chapter 10 (e-commerce), and Chapter 13 (cloud-based systems development). • Social, Mobile, Local: New e-commerce content in Chapter 10 describing how social tools, mobile technology, and location-based services are transforming marketing and advertising. • Social Business: Expanded coverage of social business, introduced in Chapter 2 and discussed in throughout the text. Detailed discussions of enterprise (internal corporate) social networking as well as social networking in e-commerce. • BYOD and mobile device management • Smart products • DevOps • Zero-day vulnerabilities • Machine learning • Chatbots • Near field communication (NFC) • Native advertising • Windows 10 • Microsoft Office 365 • Zero-day vulnerabilities • Platforms • Software-defined storage (SDS) The 15th Edition: The Comprehensive Solution for the MIS Curriculum Since its inception, this text has helped to define the MIS course around the globe. This edition continues to be authoritative but is also more customizable, flexible, and geared to meeting the needs of different colleges, universities, and individual instructors. Many of its learning tools are now available in digital form. This book is now part of a complete learning package that includes the core text, Video Case Package, and Learning Tracks. The core text consists of 15 chapters with hands-on projects covering the most essential topics in MIS. An important part of the core text is the Video Case Study and Instructional Video Package: 36 video case studies (two to three per chapter) plus 10 instructional videos that illustrate business uses of information systems, explain new technologies, and explore concepts. Videos are keyed to the topics of each chapter. In addition, for students and instructors who want to go deeper into selected topics, there are 47 Learning Tracks in MyLab MIS that cover a variety of MIS topics in greater depth. 19 20 Preface The CORE Text The core text provides an overview of fundamental MIS concepts using an integrated framework for describing and analyzing information systems. This framework shows information systems composed of management, organization, and technology elements and is reinforced in student projects and case studies. Chapter Organization Each chapter contains the following elements: • A Chapter Outline based on Learning Objectives • Lists of all the Case Studies and Video Cases for each chapter • A chapter-opening case describing a real-world organization to establish the theme and importance of the chapter • A diagram analyzing the opening case in terms of the management, organization, and technology model used throughout the text • Two Interactive Sessions with Case Study Questions • A Review Summary keyed to the Student Learning Objectives • A list of Key Terms that students can use to review concepts • Review questions for students to test their comprehension of chapter material • Discussion questions raised by the broader themes of the chapter • A series of Hands-on MIS Projects consisting of two Management Decision Problems, a hands-on application software project, and a project to develop Internet skills • A Collaboration and Teamwork Project to develop teamwork and presentation skills with options for using open source collaboration tools • A chapter-ending case study for students to apply chapter concepts • Two assisted-graded writing questions with prebuilt grading rubrics • Chapter references Business Challenges A diagram accompanying each chapter-opening case graphically illustrates how management, organization, and technology elements work together to create an information system solution to the business challenges discussed in the case. • Monitor service level and costs • Plan new IT Management infrastructure • Make IT infrastructure investments • Create new services and business processes • On-premises reservation system • Microsoft Azure cloud computing services Organization Technology • Costly, unwieldy IT infrastructure • Low-cost provider • Highly competitive industry Information System Seat Allocation System • Provide online seat selection service Business Solutions • Improve customer service • Increase revenue Preface Key Features We have enhanced the text to make it more interactive, leading edge, and appealing to both students and instructors. The features and learning tools are described in the following sections. Business-Driven with Real-World Business Cases and Examples The text helps students see the direct connection between information systems and business performance. It describes the main business objectives driving the use of information systems and technologies in corporations all over the world: operational excellence, new products and services, customer and supplier intimacy, improved decision making, competitive advantage, and survival. In-text examples and case studies show students how specific companies use information systems to achieve these objectives. We use only current (2016) examples from business and public organizations throughout the text to illustrate the important concepts in each chapter. All the case studies describe companies or organizations that are familiar to students, such as Nike, Rugby Football Union, Facebook, Walmart, Fiat, Unilever, and GE. Interactivity There’s no better way to learn about MIS than by doing MIS! We provide different kinds of hands-on projects where students can work with real-world business scenarios and data and learn firsthand what MIS is all about. These projects heighten student involvement in this exciting subject. • Online Video Case Package. Students can watch short videos online, either in-class or at home or work, and then apply the concepts of the book to the analysis of the video. Every chapter contains at least two business video cases that explain how business firms and managers are using information systems and explore concepts discussed in the chapter. Each video case consists of one or more videos about a real-world company, a background text case, and case study questions. These video cases enhance students’ understanding of MIS topics and the relevance of MIS to the business world. In addition, there are 10 Instructional Videos that describe developments and concepts in MIS keyed to respective chapters. • Online Conceptual Videos [the digital edition only]. Forty-five video animations where the authors walk students through three concepts from each chapter. • Interactive Sessions. Two short cases in each chapter have been redesigned as Interactive Sessions to be used in the classroom (or on Internet discussion boards) to stimulate student interest and active learning. Each case concludes with case study questions. The case study questions provide topics for class discussion, Internet discussion, or written assignments. • Hands-On MIS Projects. Every chapter concludes with a Hands-On MIS Projects section containing three types of projects: two Management Decision Problems; a hands-on application software exercise using Microsoft Excel, Access, or web page and blog creation tools; and a project that develops Internet business skills. A Dirt Bikes USA running case in MyLab MIS provides additional hands-on projects for each chapter. 21 22 Preface INTERACTIVE SESSION: TECHNOLOGY Getting Social with Customers Each chapter contains two Interactive Sessions on Management, Organizations, or Technology using real-world companies to illustrate chapter concepts and issues. Lowe’s “In-a-Snap” Snapchat series tries to inspire young homeowners and renters to undertake simple home improvement projects such as installing shelves to build a study nook. During the Lowe’s Snapchat story, users can tap on the screen to put a nail in a wall or chisel off an old tile. Lowe’s is working on another series of video tutorials on Facebook and Instagram called “Home School” that uses drawings from chalk artists to animate maintenance projects. Lowe’s social media activities have helped increase brand engagement. Although the company’s social campaigns are designed to teach first-time homeowners or young renters about home improvement, the company is also hoping they will encourage consumers to think differently about the brand beyond its products and services. Management believes millennials who are becoming first-time homeowners want to know the deeper meaning of what a company is trying to stand for, not just the products and services it offers. An estimated 90 percent of customers are influenced by online reviews, and nearly half of U.S. social media users actively seek customer service through social media. As a result, marketing is now placing much more emphasis on customer satisfaction and customer service. Social media monitoring helps marketers and business owners understand more about likes, dislikes, and complaints concerning products, additional products or product modifications customers want, and how people are talking about a brand (positive or negative sentiment). General Motors (GM) has 26 full-time social media customer care advisers for North America alone, covering more than 150 company social channels from GM, Chevrolet, Buick, GMC, and Cadillac, and approximately 85 sites such as automotive enthusiast Businesses of all sizes are finding Facebook, Twitter, and other social media to be powerful tools for engaging customers, amplifying product messages, discovering trends and influencers, building brand awareness, and taking action on customer requests and recommendations. Half of all Twitter users recommend products in their tweets. About 1.6 billion people use Facebook, and more than 30 million businesses have active brand pages, enabling users to interact with the brand through blogs, comment pages, contests, and offerings on the brand page. The “like” button gives users a chance to share with their social network their feelings about content and other objects they are viewing and websites they are visiting. With like buttons on millions of websites, Facebook can track user behavior on other sites and then sell this information to marketers. Facebook also sells display ads to firms that show up in the right column of users’ home pages and most other pages in the Facebook interface such as photos and apps. Twitter has developed many new offerings to interest advertisers, like “promoted tweets” and “promoted trends.” These features give advertisers the ability to have their tweets displayed more prominently when Twitter users search for certain keywords. Many big advertisers are using Twitter’s Vine service, which allows users to share short, repeating videos with a mobile-phone app or post them on other platforms such as Facebook. Lowe’s is using Facebook mobile video and Snapchat image messaging to help first-time millennial home buyers learn home improvement skills. The home improvement retailer launched a new series of social videos in April 2016 to showcase spring cleaning and do-it-yourself projects. Lowe’s believes this is a more immediate and interactive way to reach , Case Study Questions encourage students to apply chapter concepts to real-world companies in class discussions, student presentations, or writing assignments. , CASE STUDY QUESTIONS 1. Assess the management, organization, and technology issues for using social media technology to engage with customers. 2. What are the advantages and disadvantages of using social media for advertising, brand building, market research, and customer service? 3. Give an example of a business decision in this case study that was facilitated by using social media to interact with customers. 4. Should all companies use social media technology for customer service and marketing? Why or why not? What kinds of companies are best suited to use these platforms? • Collaboration and Teamwork Projects. Each chapter features a collaborative project that encourages students working in teams to use Google Drive, Google Docs, or other open source collaboration tools. The first team project in Chapter 1 asks students to build a collaborative Google site. Assessment and AACSB Assessment Guidelines The Association to Advance Collegiate Schools of Business (AACSB) is a notfor-profit corporation of educational institutions, corporations, and other organizations that seeks to improve business education primarily by accrediting university business programs. As a part of its accreditation activities, the AACSB has Preface 23 Management Decision Problems 11-8 U.S. Pharma Corporation is headquartered in New Jersey but has research sites in Germany, France, the United Kingdom, Switzerland, and Australia. Research and development of new pharmaceuticals is key to ongoing profits, and U.S. Pharma researches and tests thousands of possible drugs. The company’s researchers need to share information with others within and outside the company, including the U.S. Food and Drug Administration, the World Health Organization, and the International Federation of Pharmaceutical Manufacturers & Associations. Also critical is access to health information sites, such as the U.S. National Library of Medicine, and to industry conferences and professional journals. Design a knowledge portal for U.S. Pharma’s researchers. Include in your design specifications relevant internal systems and databases, external sources of information, and internal and external communication and collaboration tools. Design a home page for your portal. 11-9 Canadian Tire is one of Canada’s largest companies, with 50,000 employees and 1,100 stores and gas bars (gas stations) across Canada selling sports, leisure, home products, apparel, and financial services as well as automotive and petroleum products. The retail outlets are independently owned and operated. Canadian Tire has been using daily mailings and thick product catalogs to inform its dealers about new products, merchandise setups, best practices, product ordering, and problem resolution, and it is looking for a better way to provide employees with human resources and administrative documents. Describe the problems created by this way of doing business and how knowledge management systems might help. Two real-world business scenarios per chapter provide opportunities for students to apply chapter concepts and practice management decision making. Students practice using software in real-world settings for achieving operational excellence and enhancing decision making. Improving Decision Making: Using Web Tools to Configure and Price an Automobile Software skills: Internet-based software Business skills: Researching product information and pricing 3-11 In this exercise, you will use software at car websites to find product information about a car of your choice and use that information to make an important purchase decision. You will also evaluate two of these sites as selling tools. You are interested in purchasing a new Ford Escape (or some other car of your choice). Go to the website of CarsDirect (www.carsdirect.com) and begin your investigation. Locate the Ford Escape. Research the various Escape models, and choose one you prefer in terms of price, features, and safety ratings. Locate and read at least two reviews. Surf the website of the manufacturer, in this case Ford (www.ford.com). Compare the information available on Ford’s website with that of CarsDirect for the Ford Escape. Try to locate the lowest price for the car you want in a local dealer’s inventory. Suggest improvements for CarsDirect.com and Ford.com. developed an Assurance of Learning Program designed to ensure that schools do in fact teach students what they promise. Schools are required to state a clear mission, develop a coherent business program, identify student learning objectives, and then prove that students do in fact achieve the objectives. We have attempted in this book to support AACSB efforts to encourage assessment-based education. The back end papers of this edition identify student learning objectives and anticipated outcomes for our Hands-On MIS projects. The authors will provide custom advice on how to use this text in colleges with different missions and assessment needs. Please e-mail the authors or contact your local Pearson representative for contact information. Each chapter features a project to develop Internet skills for accessing information, conducting research, and performing online calculations and analysis. 24 Preface For more information on the AACSB Assurance of Learning Program and how this text supports assessment-based learning, please visit the website for this book. Customization and Flexibility: Learning Track Modules Our Learning Tracks feature gives instructors the flexibility to provide in-depth coverage of the topics they choose. There are 47 Learning Tracks in MyLab MIS available to instructors and students. This supplementary content takes students deeper into MIS topics, concepts, and debates; reviews basic technology concepts in hardware, software, database design, telecommunications, and other areas. Author-Certified Test Bank and Supplements • Author-Certified Test Bank. The authors have worked closely with skilled test item writers to ensure that higher-level cognitive skills are tested. Test bank multiple-choice questions include questions on content but also include many questions that require analysis, synthesis, and evaluation skills. • Annotated Slides. The authors have prepared a comprehensive collection of 50 PowerPoint slides for each chapter to be used in your lectures. Many of these slides are the same as used by Ken Laudon in his MIS classes and executive education presentations. Each of the slides is annotated with teaching suggestions for asking students questions, developing in-class lists that illustrate key concepts, and recommending other firms as examples in addition to those provided in the text. The annotations are like an Instructor’s Manual built into the slides and make it easier to teach the course effectively. Student Learning-Focused Student Learning Objectives are organized around a set of study questions to focus student attention. Each chapter concludes with a Review Summary and Review Questions organized around these study questions, and each major chapter section is based on a Learning Objective. Career Resources The Instructor Resources for this text include extensive Career Resources, including job-hunting guides and instructions on how to build a Digital Portfolio demonstrating the business knowledge, application software proficiency, and Internet skills acquired from using the text. The portfolio can be included in a resume or job application or used as a learning assessment tool for instructors. Instructor Resources At the Instructor Resource Center, www.pearsonglobaleditions.com/laudon, instructors can easily register to gain access to a variety of instructor resources available with this text in downloadable format. If assistance is needed, our dedicated technical support team is ready to help with the media supplements that accompany this text. Visit http://support.pearson.com for answers to frequently asked questions and toll-free user support phone numbers. The following supplements are available with this text: • Instructor’s Resource Manual • Test Bank Preface • TestGen® Computerized Test Bank • PowerPoint Presentation • Image Library • Lecture Notes Video Cases and Instructional Videos Instructors can download step-by-step instructions for accessing the video cases from the Instructor Resources Center. Video Cases and Instructional Videos are listed at the beginning of each chapter as well as in the Preface. Learning Tracks Modules There are 47 Learning Tracks in MyLab MIS providing additional coverage topics for students and instructors. See page 26 for a list of the Learning Tracks available for this edition. Video Cases and Instructional Videos Chapter Video Chapter 1: Information Systems in Global Business Today Business in the Cloud: Facebook and eBay Data Centers UPS Global Operations with the DIAD Instructional Video: Tour IBM's Raleigh Data Center Chapter 2: Global E-business and Collaboration Walmart's Retail Link Supply Chain CEMEX: Becoming a Social Business Instructional Video: US Foodservice Grows Market with Oracle CRM on Demand Chapter 3: Information Systems, Organizations, and Strategy GE Becomes a Digital Firm: The Emerging Industrial Internet National Basketball Association: Competing on Global Delivery with Akamai OS Streaming Chapter 4: Ethical and Social Issues in Information Systems What Net Neutrality Means for You Facebook and Google Privacy: What Privacy? The United States v. Terrorism: Data Mining for Terrorists and Innocents Instructional Video: Viktor Mayer Schönberger on the Right to Be Forgotten Chapter 5: IT Infrastructure and Emerging Technologies Rockwell Automation Fuels the Oil and Gas Industry with the Internet of Things (IoT) ESPN.com: The Future of Sports Broadcasting in the Cloud Netflix: Building a Business in the Cloud Chapter 6: Foundations of Business Intelligence: Databases and Information Management Dubuque Uses Cloud Computing and Sensors to Build a Smarter City Brooks Brothers Closes in on Omnichannel Retail Maruti Suzuki Business Intelligence and Enterprise Databases Chapter 7: Telecommunications, the Internet, and Wireless Technology Telepresence Moves out of the Boardroom and into the Field Virtual Collaboration with IBMSametime Chapter 8: Securing Information Systems Stuxnet and Cyberwarfare Cyberespionage: The Chinese Threat Instructional Video: Sony PlayStation Hacked; Data Stolen from 77 Million Users Instructional Video: Meet the Hackers: Anonymous Statement on Hacking SONY Chapter 9: Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Life Time Fitness Gets in Shape with Salesforce CRM Evolution Homecare Manages Patients with Microsoft CRM Instructional Video: GSMS Protects Products and Patients by Serializing Every Bottle of Drugs Chapter 10: E-commerce: Digital Markets, Digital Goods Walmart Takes on Amazon: A Battle of IT and Management Systems Groupon: Deals Galore Etsy: A Marketplace and Community Instructional Video: Walmart's eCommerce Fulfillment Center Network Instructional Video: Behind the Scenes of an Amazon Warehouse Chapter 11: Managing Knowledge How IBM's Watson Became a Jeopardy Champion Alfresco: Open Source Document Management and Collaboration Chapter 12: Enhancing Decision Making PSEG Leverages Big Data and Business Analytics Using GE's PREDIX Platform FreshDirect Uses Business Intelligence to Manage Its Online Grocery. Business Intelligence Helps the Cincinnati Zoo Work Smarter 25 26 Preface Video Cases and Instructional Videos (Continued) Chapter Video Chapter 13 Building Information Systems IBM: Business Process Management in a SaaS Environment IBM Helps the City of Madrid with Real-Time BPM Software Instructional Video: BPM: Business Process Management Customer Story Instructional Video: Workflow Management Visualized Chapter 14 Managing Projects Blue Cross Blue Shield: Smarter Computing Project NASA Project Management Challenges Chapter 15 Managing Global Systems Daum Runs Oracle Apps on Linux Lean Manufacturing and Global ERP: Humanetics and Global Shop Learning Tracks Chapter Learning Tracks Chapter 1: Information Systems in Global Business Today How Much Does IT Matter? Information Systems and Your Career The Mobile Digital Platform Chapter 2: Global E-business and Collaboration Systems From a Functional Perspective IT Enables Collaboration and Teamwork Challenges of Using Business Information Systems Organizing the Information Systems Function Occupational and Career Outlook for Information Systems Majors 2014–2020 Chapter 3: Information Systems, Organizations, and Strategy The Changing Business Environment for IT Chapter 4: Ethical and Social Issues in Information Systems Developing a Corporate Code of Ethics for IT Chapter 5: IT Infrastructure and Emerging Technologies How Computer Hardware Works How Computer Software Works Service Level Agreements The Open Source Software Initiative Comparing Stages in IT Infrastructure Evolution Cloud Computing Chapter 6: Foundations of Business Intelligence: Databases and Information Management Database Design, Normalization, and Entity-Relationship Diagramming Introduction to SQL Hierarchical and Network Data Models Chapter 7: Telecommunications, the Internet, and Wireless Technology Broadband Network Services and Technologies Cellular System Generations Wireless Applications for Customer Relationship Management, Supply Chain Management, and Healthcare Introduction to Web 2.0 LAN Topologies Chapter 8: Securing Information Systems The Booming Job Market in IT Security The Sarbanes-Oxley Act Computer Forensics General and Application Controls for Information Systems Management Challenges of Security and Control Software Vulnerability and Reliability Chapter 9: Achieving Operational Excellence and Customer Intimacy: Enterprise Applications SAP Business Process Map Business Processes in Supply Chain Management and Supply Chain Metrics Best-Practice Business Processes in CRM Software Chapter 10: E-commerce: Digital Markets, Digital Goods E-commerce Challenges: The Story of Online Groceries Build an E-commerce Business Plan Hot New Careers in E-Commerce E-commerce Payment Systems Building an E-commerce Website Chapter 11: Managing Knowledge Challenges of Knowledge Management Systems Chapter 12: Enhancing Decision Making Building and Using Pivot Tables Preface Chapter Learning Tracks Chapter 13: Building Information Systems Unified Modeling Language Primer on Business Process Design and Documentation Primer on Business Process Management Fourth-Generation Languages Chapter 14: Managing Projects Capital Budgeting Methods for Information Systems Investments Enterprise Analysis (Business Systems Planning) and Critical Success Factors Information Technology Investments and Productivity MyLab MIS Available in MyLab MIS • MIS Video Exercises - Videos illustrating MIS concepts, paired with brief quizzes • MIS Decision Simulations - interactive exercises allowing students to play the role of a manager and make business decisions • Assisted-Graded writing exercises - taken from the end of chapter, with a rubric provided • Chapter Warm Ups, Chapter Quizzes - objective-based quizzing to test knowledge • Discussion Questions - taken from the end of chapter • Dynamic Study Modules - on the go adaptive quizzing, also available on a mobile phone • Learning Catalytics - bring-your-own-device classroom response tools • Enhanced eText - an accessible, mobile-friendly eText with Conceptual Animations, which walk students through key concepts in the chapter by making figures come to life • Excel & Access Grader Projects - live in the application auto-graded Grader projects provided inside MyLab MIS to support classes covering Office tools Acknowledgments The production of any book involves valued contributions from a number of persons. We would like to thank all of our editors for encouragement, insight, and strong support for many years. We thank our editor Samantha McAfee Lewis and project manager Katrina Ostler for their role in managing the project. Our special thanks go to our supplement authors for their work, including the following MyLab content contributors: John Hupp, Columbus State University; Robert J. Mills, Utah State University; John P. Russo, Wentworth Institute of Technology; and Michael L. Smith, SUNY Oswego. We are indebted to Robin Pickering for her assistance with writing and to William Anderson and Megan Miller for their help during production. We thank Diana R. Craig for her assistance with database and software topics. Special thanks to colleagues at the Stern School of Business at New York University; to Professor Werner Schenk, Simon School of Business, University of Rochester; to Professor Mark Gillenson, Fogelman College of Business and Economics, University of Memphis; to Robert Kostrubanic, Indiana-Purdue University Fort Wayne; to Professor Lawrence Andrew of Western Illinois University; to Professor Detlef Schoder of the University of Cologne; to Professor 27 28 Preface Walter Brenner of the University of St. Gallen; to Professor Lutz Kolbe of the University of Gottingen; to Professor Donald Marchand of the International Institute for Management Development; and to Professor Daniel Botha of Stellenbosch University who provided additional suggestions for improvement. Thank you to Professor Ken Kraemer, University of California at Irvine, and Professor John King, University of Michigan, for more than a decade-long discussion of information systems and organizations. And a special remembrance and dedication to Professor Rob Kling, University of Indiana, for being our friend and colleague over so many years. We also want to especially thank all our reviewers whose suggestions helped improve our texts. Reviewers for Managing the Digital Firm include: Charles Wankel, St. John's University Ahmed Kamel, Concordia College Deborah E Swain, North Carolina Central University Jigish Zaveri, Morgan State University Robert Gatewood, Mississippi College James Drogan, SUNY Maritime College Amiya Samantray, Marygrove College John Miles, Keuka College Werner Schenk, University of Rochester Shuyuan Mary Ho, Florida State University Brian Jones, Tennessee Technological University Robert Fulkerth, Golden Gate University Osman Guzide, Shepherd University Pearson gratefully acknowledges and thanks the following people for their contribution to the Global Edition: Daniel Ortiz Arroyo, Aalborg University June Clarke, Sheffield Hallam University Andy Jones, Staffordshire University Sahil Raj, Punjabi University Neerja Sethi, Nanyang Technological University Vijay Sethi, Nanyang Technological University K.C.L. J.P.L. PART ONE Organizations, Management, and the Networked Enterprise Chapter 1 Chapter 3 Information Systems in Global Business Today Information Systems, Organizations, and Strategy Chapter 2 Chapter 4 Global E-business and Collaboration Ethical and Social Issues in Information Systems PART ONE introduces the major themes of this book, raising a series of important questions: What is an information system, and what are its management, organization, and technology dimensions? Why are information systems so essential in businesses today? Why are systems for collaboration and social business so important? How can information systems help businesses become more competitive? What broader ethical and social issues are raised by widespread use of information systems? CHAP TER 1 Information Systems in Global Business Today Learning Objectives After reading this chapter, you will be able to answer the following questions: 1-1 How are information systems transforming business, and why are they so essential for running and managing a business today? 1-2 What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations? 1-3 What academic disciplines are used to study information systems, and how does each contribute to an understanding of information systems? MyLab MIS™ Visit mymislab.com for simulations, tutorials, and end-of-chapter problems. CHAPTER CASES Rugby Football Union Tries Big Data The Mobile Pocket Office Digital Transformation of Healthcare at Singapore’s JurongHealth Services Are Farms Becoming Digital Firms? VIDEO CASES Business in the Cloud: Facebook and eBay Data Centers UPS Global Operations with the DIAD Instructional Video: Tour IBM’s Raleigh Data Center 30 Rugby Football Union Tries Big Data I n 1871, twenty-one English clubs decided that their sport, officially called rugby union but commonly referred to simply as rugby, needed an administrative body. The clubs formed The Rugby Football Union (RFU), which today manages the English national team (England Rugby) in partnership with Premier Rugby Limited. Responsible for the promotion of rugby at all levels, the RFU organizes the Six Nations Championship, the unofficial northern hemisphere championship featuring teams from England, Scotland, Wales, Italy, Ireland, and France, and the Heineken Cup, its club-level counterpart. Owned by its member clubs, the RFU’s mission is to maximize profits from international ticket sales and vending so that it can support the more than 60,000 volunteers who organize matches and seminars, help secure loans and insurance policies, fundraise, write grant proposals, provide medical advice and support, and perform the clerical duties that keep the lower-level clubs operating. To succeed in this complicated mission, the RFU entered into a fiveyear deal with IBM to capture and analyze Big Data that will be useful to both fans, and later—it is hoped— the players themselves. The system is called TryTracker. In rugby, a try, worth five points, is the highest scoring opportunity. Teams get possession of the ball through a scrum, a contest for the ball where eight players bind together and push against eight players from the other team. The outcome determines who can control the ball. To score a try, a team must break through the opposition’s defenses, move into their in-goal area, and “ground” the ball. This is done in one of two ways. A player can either hold the ball in one or both hands or arms and then touch it to the ground in the in-goal area, or exert downward pressure on a ball already on the ground using one or both hands or arms or the upper front of the body (from the neck to the waistline). The IBM TryTracker does not just track tries, however. It uses predictive analytics to track three categories of data: keys to the game, momentum, and key players. TryTracker uses over 8,000 measures of performance. Traditional rugby statistics on team and individual performance as well as live ©Michal Sanca/Shutterstock 31 32 Part One Organizations, Management, and the Networked Enterprise text commentary complement the TryTracker data. The keys to the game are determined ahead of a specific contest by analyzing a historical database of past matchups between a pair. For example, in 2015 England’s key was to average at least 3.2 meters per carry in the forwards; attempt an off load from 10 percent of opposition tackles; and make more than 66 percent of total line-breaks in the match. Fans can use their mobile devices to keep track of how their favorite team is faring, concentrating on game elements that will increase its winning chances. Key players for each team are selected after the game by comparing a single score compiled using different criteria for each position. Goal scoring is currently excluded so as not to overvalue kickers and undervalue players who contribute to creating scoring opportunities. Like the IBM SlamTracker used at the Grand Slam tennis tournaments, the goal of TryTracker is to provide data visualization and real-time statistics to draw in fans. To compete with more popular sports such as Premier League football, the RFU hopes that enhanced communication will increase fan engagement. In 2015, IBM TryTracker was an ever-present fixture of EnglandRugby.com’s extensive match coverage. As their understanding of game mechanics and emotional investment in what their team needs to do in order to prevail grows, casual fans will become dedicated fans who return again and again. Beyond marketing strategy, the long-term potential of predictive analysis is that it may provide tactical insights to players and coaches that will improve match play and thus the overall product offered to fans. In 2016 IBM has deployed the same predictive analytics technology to the Australian New South Wales Waratahs Rugby team with an emphasis on predicting player injuries based on their general health, and performance data on the field generated from GPS sensors that players wear. Sources: IBM, “Building a Solid Foundation for Big Data Analytics,” IBM Systems Thought Leadership Paper, 2016; IBM, “IBM Predictive Analytics Reduces Player Injury and Optimises Team Performance for NSW Waratahs Rugby Team,” IBM.com, accessed November 14, 2016; IBM, “3 Ways Big Data and Analytics Will Change Sports,” by Preetam Kumar, IBM Analytics, ibmbigdatahub.com, December 17, 2015; Simon Creasey, “Rugby Football Union Uses IBM Predictive Analytics For Six Nations,” ComputerWeekly.com, 2016; “About Us,” rfu.com, accessed December, 14, 2015; “TryTracker: Rugby Data Analysis,” Telegraph, November 19, 2015; Oliver Pickup, “How Does TryTracker Work,” Telegraph, November 19, 2015; Simon Creasey, “Rugby Football Union Uses IBM Predictive Analytics for Six Nations,” ComputerWeek, September 2015; “IBM Rugby Insight Summer 2015,” MSN.com/sports, September 3, 2015; “Live England vs. Scotland with IBM TryTracker,” www.englandrugby. com, March 15, 2015; “IBM TryTracker Confirms Performance,” www.englandrugby.com/ ibmtrytracker/, November 29, 2014; IBM UK, “IBM TryTracker Rugby Insight: QBE Internationals 2014 England vs. Australia,” IBM Rugby Insight, November 27, 2014; Oliver Pickup, “IBM TryTracker: How Does It Work?” Telegraph, October 31, 2013. T he challenges facing the RFU demonstrate why information systems are so essential today. The RFU is classified as a “Friendly Society,” somewhere between a true company and a charity. It receives both government support and corporate sponsorship money. But it must maximize revenues from ticket sales, hospitality and catering, television rights, and its travel company in order to support both grassroots and elite rugby in England. Chapter 1 Information Systems in Global Business Today The chapter-opening diagram calls attention to important points raised by this case and this chapter. The RFU entered into a strategic partnership with IBM to educate and engage fans. Using the data collected by sports data company Opta and the analytics developed by IBM, it may also be able to improve coaching and game performance as an additional way of cultivating customers. IBM is also helping the RFU to develop a customer relationship management (CRM) system integrated with its Web site. Here are some questions to think about: What role does technology play in the RFU’s success as the administrative head of rugby union in England? Assess the contributions which these systems make to the future of RFU. 1-1 How are information systems transforming global business, and why are they so essential for running and managing a business today? It’s not business as usual in the global economy anymore. Information systems and technologies are transforming the global business environment. In 2015, global firms and governments spent about €3.4 trillion on information systems hardware, software, and telecommunications equipment. In addition, they spent another €544 billion on business and management consulting and services—much of which involves redesigning firms’ business operations to take advantage of these new technologies (Gartner, 2016; IDC 2016; Shumsky, 2016). In fact, most of the business value of IT investment derives from these organizational, management, and cultural changes inside firms (Saunders and Brynjolfsson, 2016). It is not simply the technology that is changing. Figure 1.1 shows that between 2005 and 2015, global investment in information technology 33 Part One Organizations, Management, and the Networked Enterprise consisting of hardware, software, and communications equipment grew from €2.43 trillion to €3.18 trillion and is expected to expand to €3.55 trillion by 2020. While America and Europe account for an estimated 70 percent of this investment, 30 percent is occurring in Asia Pacific, Latin America, the Middle East and North Africa, and Eastern Europe. (Accelerance, 2016; IDC, 2016). As managers, most of you will work for firms that are intensively using information systems and making large investments in information technology. You will certainly want to know how to invest this money wisely. If you make wise choices, your firm can outperform competitors. If you make poor choices, you will be wasting valuable capital. This book is dedicated to helping you make wise decisions about information technology and information systems. How Information Systems Are Transforming Business You can see the results of this large-scale spending around you every day by observing how people conduct business. Changes in technology and new, innovative business models have transformed social life and business practices. Some 2.8 billion people worldwide have smartphones (50 percent of the world’s population), and an estimated 1.26 billion use their smartphones for Internet access. More than 1 billion people use tablet computers, about 15 percent of the global population. In developing and emerging countries, phones and tablets are the primary means of access to the Internet (Pew Research, 2016; eMarketer, 2015). An estimated 2.34 billion people now use social networks, with Facebook accounting for 1.7 billion people alone. Messaging services like WhatsApp, Facebook Messenger, and Twitter collectively have over 2 billion monthly users. Smartphones, FIGURE 1. 1 INFORMATION TECHNOLOGY CAPITAL INVESTMENT €4.00 €3.75 Investment (trllions) 34 €3.50 €3.25 €3.00 €2.75 €2.50 2020201920182017201620 Global investment in information technology has expanded by 30 percent in the period 2005 to 2015. IT investment now accounts for an estimated 20 percent of all capital investment. Source: World Economic Outlook, International Monetary Fund, October 2016; industry sources; author estimates. Chapter 1 Information Systems in Global Business Today social networking, texting, e-mailing, and webinars have all become essential tools of business because that’s where your customers, suppliers, and colleagues can be found (eMarketer, 2016a). By June 2015, more than 150 million businesses worldwide had dot-com Internet sites registered (Curtis, 2015). In 2016 1.62 billion Internet users will purchase online, generating $1.9 billion in sales. Half of these sales will be from mobile devices. While still only 8 percent of total retail global sales, online commerce is growing at 6 percent annually, three times the growth of traditional offline retail (eMarketer, 2016a). In 2015, FedEx moved about 11.5 million packages daily in 220 countries and territories around the world, mostly overnight, and the United Parcel Service (UPS) moved more than 18 million packages daily. Businesses are using information technology to sense and respond to rapidly changing customer demand, reduce inventories to the lowest possible levels, and achieve higher levels of operational efficiency. Supply chains have become more fast-paced, with companies of all sizes depending on just-in-time inventory to reduce their overhead costs and get to market faster. In comparison with the 2.7 billion people who read a print newspaper, online newspapers are read by one billion people, growing at 10 percent annually, far faster than print newspapers (WPT, 2016; Conaghan, 2015). An estimated 1.7 billion people watch videos and feature films online, 100 million post to a blog everyday, and 250 million read a blog, creating an explosion of new writers and new forms of customer feedback that did not exist five years ago. Social networking site Facebook attracted more than 1.7 billion monthly visitors worldwide. Nearly all of the Fortune 2000 global firms now have Facebook pages, Twitter accounts, and Tumblr sites. Global e-commerce and Internet advertising continue to expand. Google’s online ad revenues surpassed €80 billion in 2016, and Internet advertising continues to grow at more than 20 percent a year, reaching more than €194 billion in revenues in 2016 (eMarketer, 2016c). That’s about one-third of all advertising in the world. These changes in information technology and systems, consumer behavior, and commerce have spurred the annual growth of digital information to over 5 exabytes every few days, roughly equivalent to all the libraries in existence (Pappas, 2016). A recent study concluded that the value of information flowing between countries has grown 45 times since 2005, and the value of this information now exceeds the value of goods and finance exchanged (McKenzie, 2016). What’s New in Management Information Systems Plenty. In fact, there’s a whole new world of doing business using new technologies for managing and organizing. What makes the MIS field the most exciting area of study in schools of business is the continuous change in technology, management, and business processes. Five changes are of paramount importance. IT Innovations. A continuing stream of information technology innovations is transforming the traditional business world. Examples include the emergence of cloud computing, the growth of a mobile digital business platform based on smartphones and tablet computers, big data, business analytics, and the use of social networks by managers to achieve business objectives. Most of these 35 36 Part One Organizations, Management, and the Networked Enterprise changes have occurred in the past few years. These innovations are enabling entrepreneurs and innovative traditional firms to create new products and services, develop new business models, and transform the day-to-day conduct of business. In the process, some old businesses, even industries, are being destroyed while new businesses are springing up. New Business Models. For instance, the emergence of online video services like Netflix for streaming, Apple iTunes, Amazon, and many others for downloading video has forever changed how premium video is distributed and even created. Netflix in 2016 attracted more than 75 million subscribers worldwide to what it calls the “Internet TV” revolution. Netflix has moved into premium TV show production with 30 original shows such as House of Cards and Orange Is the New Black, challenging cable and broadcast producers of TV shows, and potentially disrupting cable network dominance of TV show production. Apple’s iTunes now accounts for 67 percent of movie and TV show downloads and has struck deals with major Hollywood studios for recent movies and TV shows. A growing trickle of viewers are unplugging from cable and using only the Internet for entertainment. E-commerce Expanding. E-commerce generated about $600 billion in revenues in 2016 and is estimated to grow to nearly $900 billion by 2020. E-commerce is changing how firms design, produce, and deliver their products and services. E-commerce has reinvented itself again, disrupting the traditional marketing and advertising industry and putting major media and content firms in jeopardy. Facebook and other social networking sites such as YouTube, Twitter, and Tumblr along with Netflix, Apple Beats music service, and many other media firms exemplify the new face of e-commerce in the twenty-first century. They sell services. When we think of e-commerce, we tend to think of selling physical products. While this iconic vision of e-commerce is still very powerful and the fastest-growing form of retail in the United States, growing up alongside is a whole new value stream based on selling services, not goods. It’s a services model of e-commerce. Growth in social commerce is spurred by powerful growth of the mobile platform: 80 percent of Facebook’s users access the service from mobile phones and tablets. Information systems and technologies are the foundation of this new services-based e-commerce. Mobile e-commerce hit $130 billion in 2016 and is growing at more than 30 percent a year. Management Changes. The management of business firms has changed: With new mobile smartphones, high-speed wireless Wi-Fi networks, and tablets, remote salespeople on the road are only seconds away from their managers’ questions and oversight. Business is going mobile, along with consumers. Managers on the move are in direct, continuous contact with their employees. The growth of enterprise-wide information systems with extraordinarily rich data means that managers no longer operate in a fog of confusion but instead have online, nearly instant access to the really important information they need for accurate and timely decisions. In addition to their public uses on the web, wikis and blogs are becoming important corporate tools for communication, collaboration, and information sharing. Changes in Firms and Organizations. Compared to industrial organizations of the previous century, new fast-growing twenty-first-century business firms put less emphasis on hierarchy and structure and more emphasis on employees Chapter 1 Information Systems in Global Business Today 37 INTERACTIVE SESSION: MANAGEMENT The Mobile Pocket Office Can you run your company out of your pocket? Perhaps not entirely, but there are many business functions today that can be performed using an iPhone, iPad, or Android mobile handheld device. The smartphone has been called the “Swiss Army knife of the digital age.” A flick of the finger turns it into a web browser, a telephone, a camera, a music or video player, an e-mail and messaging machine, and, increasingly, a gateway into corporate systems. New software applications for document sharing, collaboration, sales, order processing, inventory management, and production monitoring make these devices even more versatile business tools. Mobile pocket offices that fit into a purse or coat pocket are helping to run companies large and small. Sonic Automotive is one of the largest automotive retailers in the United States with more than 100 dealerships in 14 states. Every year Sonic sells 250,000 new and used cars from approximately 25 different automotive brands, and it also sells auto parts and maintenance, warranty, collision, and vehicle financing services. Sonic Automotive managers and employees do much of their work on the iPhone and iPad. Sonic developed several custom iPhone and iPad applications to speed up sales and service. Virtual Lot, a dealer inventory app, lets sales associates quickly search for vehicles held in inventory by all Sonic dealerships. They have immediate access to vehicle information, pricing, trade-in values, interest rates, special promotions, financing, and what competitors are charging for identical vehicles. The associates can quickly find the best selection for each customer and often offer far more choices than the competition. Dealers are not limited to selling only their own inventory. A mobile app called the Sonic Inventory Management System (SIMS) has speeded up and simplified trade-in appraisals and pricing. Sonic staff use their iPhones or iPads to take photos of a car, input the vehicle identification number (VIN) and mileage, and note any issues. The data are transmitted to corporate headquarters, which can quickly appraise the car. A Service Pad app simplifies the steps in repair and warranty work. In the past, customers with cars requiring repairs had to go inside the dealership and sit at a desk with a Sonic staff member who wrote up the repair order by hand. Now the Sonic staff members go outside to the customer's vehicle and enter the repair order on an iPad on the spot. SKF is a global engineering company headquartered in Gothenburg, Sweden, with 140 manufacturing sites in 32 countries and 48,500 employees worldwide. SKF produces bearings, seals, lubrication systems, and services used in more than 40 industries, including mining, transportation, and manufacturing. SKF has developed more than 30 custom iPhone and iPad applications for streamlining workflows and accessing critical corporate data from anywhere in the world. For example, a virtual reality app uses the iPhone or iPad camera to identify a factory machine and produce a 3-D overlay of the SKF parts it contains. A sensor-driven app called Shaft Align is used by SKF service teams and customers in the field. Shaft Align connects via wireless Bluetooth sensors to a piece of machinery such as a motor-driven fan to ensure that the drive shaft is running in proper alignment. If not, the app generates step-by-step instructions and a 3-D rendering to show how to manually align the motor. Then it checks the work and produces a report. A mobile app called MOST enables factory operators to monitor some SKF factory production lines. MOST links to the back-end systems running the machinery and provides operators with key pieces of data. Operators using this mobile app are able to use secure instant messaging to communicate with managers and each other, update maintenance logs, and track products in real time as they move through the factory line. SKF's Shelf mobile app allows sales engineers and customers to access on demand more than 5,000 pieces of product literature, catalogs, product specifications, and interactive marketing materials. Sales teams can use Shelf to create custom “shelves” to organize, annotate, and share materials with customers right from their iPhones or iPads. The iPhone, iPad, and Shelf app save company sales engineers as much as 25 minutes per day on processes and paperwork, freeing them up to spend more time in the field supporting customers. This increase in productivity is equivalent to putting 200 more sales engineers in the field. SKF auditors perform about 60 audits per year, and each audit used to take more than a month to complete. With the SKF Data Collect app, auditors 38 Part One Organizations, Management, and the Networked Enterprise are able to use their iPads to collect data and present customers with detailed reports instantly. SKF Seals offers specifications and information about SKF's machined and injection-molded seals and plastic parts, while the Seal Select app helps users select seals and accessories using several different input parameters to find the right solution for their needs. Sources: “Sonic Automotive: Driving Growth with iPhone and iPad” and “Driving Innovation in the Factory and in the Field with iOS,” iPhone in Business, www.apple.com, accessed March 31, 2016; www.skf.com, accessed March 31, 2016; www.sonicautomotive.com, accessed March 31, 2016; and “Why the Mobile Pocket Office Is Good For Business,” ITBusinesEdge.com, accessed March 6, 2015. CASE STUDY QUESTIONS 1. What kinds of applications are described here? What business functions do they support? How do they improve operational efficiency and decision making? 2. Identify the problems that businesses in this case study solved by using mobile digital devices. 3. What kinds of businesses are most likely to benefit from equipping their employees with mobile digital devices such as iPhones and iPads? 4. One company deploying iPhones has said, “The iPhone is not a game changer, it's an industry changer. It changes the way that you can interact with your customers” and “with your suppliers.” Discuss the implications of this statement. taking on multiple roles and tasks and collaborating with others on a team. They put greater emphasis on competency and skills rather than position in the hierarchy. They emphasize higher speed and more accurate decision making based on data and analysis. They are more aware of changes in technology, consumer attitudes, and culture. They use social media to enter into conversations with consumers and demonstrate a greater willingness to listen to consumers, in part because they have no choice. They show better understanding of the importance of information technology in creating and managing business firms and other organizations. To the extent organizations and business firms demonstrate these characteristics, they are twenty-first-century digital firms. Whether it’s attending an online meeting, checking orders, working with files and documents, or obtaining business intelligence, Apple's iPhone and iPad offer unlimited possibilities for business users. A stunning multitouch display, full Internet browsing, and capabilities for messaging, video and audio transmission, and document management make each an all-purpose platform for mobile computing. iPhone and iPad Applications for Business 1. 2. 3. 4. 5. 6. 7. 8. Salesforce1 Cisco WebEx Meetings SAP Business One iWork Evernote Adobe Acrobat Reader Oracle Business Intelligence Mobile Dropbox © STANCA SANDA/Alamy Stock Photo Chapter 1 Information Systems in Global Business Today You can see some of these trends at work in the Interactive Session on Management. Millions of managers rely heavily on the mobile digital platform to coordinate suppliers and shipments, satisfy customers, and manage their employees. A business day without these mobile devices or Internet access would be unthinkable. Globalization Challenges and Opportunities: A Flattened World In 1492, Columbus reaffirmed what astronomers were long saying: the world was round and the seas could be safely sailed. As it turned out, the world was populated by peoples and languages living in isolation from one another, with great disparities in economic and scientific development. The world trade that ensued after Columbus’s voyages has brought these peoples and cultures closer. The “industrial revolution” was really a worldwide phenomenon energized by expansion of trade among nations and the emergence of the first global economy. In 2005, journalist Thomas Friedman wrote an influential book declaring the world was now “flat,” by which he meant that the Internet and global communications had greatly reduced the economic and cultural advantages of developed countries. Friedman argued that the United States and European countries were in a fight for their economic lives, competing for jobs, markets, resources, and even ideas with highly educated, motivated populations in low-wage areas in the less developed world (Friedman, 2007). This “globalization” presents both challenges and opportunities for business firms. A significant percentage of the global economy depends on imports and exports. In 2015, about 57 percent of the worlds €74 trillion GDP resulted from imports and exports (World Bank, 2016). Many Fortune 1000 global firms derive more than half their revenues from foreign operations. Tech companies are particularly dependent on offshore revenue: 85 percent of Intel’s revenues in 2015 came from overseas sales of its microprocessors, while Apple earned 60 percent of its revenue outside of the United States. Eighty percent of the toys sold in the United States are manufactured in China, while all iPhones and about 90 percent of the PCs assembled in China use American-made Qualcomm, Intel or AMD chips. It’s not just goods that move across borders; jobs do too, some of them highlevel jobs that pay well and require a college degree. In the past decade, the United States lost 5 million manufacturing jobs to offshore, low-wage producers. But manufacturing is now a very small part of U.S. employment (less than 12 percent of the labor force and declining). Manufacturing jobs in the last decade have been replaced by service and retail jobs even as the value of manufactured goods made in the U.S. has soared by 20 percent in the same period, largely due to highly automated factories and enterprise information systems (Cassel...
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Running head: CHAPTER 4 KEY CONCEPTS

Chapter 4 Key Concepts
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CHAPTER 4 KEY CONCEPTS

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Ethical and Social Issues in Information Systems
In chapter 4, Laudon, & Laudon, (2018) first address the ethical, social, and political
issues that information systems raise. There is a gap between the issues raised by information
systems and the acceptable rules of what is considered the right conduct. With the rise in the
power an...


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