F o u r t h I n t e r n a t i o n a l E d i t i o n E d i t i o n David M. Kroenke Boston Columbus Indianapolis New York San Francisco Upper Saddle River Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montreal Toronto Delhi Mexico City Sao Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo
PART 1: Introduction to MIS 25 1: Ml! 26 Q1 Why Is Introduction to MIS the Most Important Class in the Business School? 28 Are There Cost-Effective Business Applications of Facebook and Twitter? 29 How Can I Attain Job Security? 29 How Can Intro to MIS Help You Learn Nonroutine Skills? 3 Q2 What Is MIS? 32 Components of an Information System 32 Development and Use of Information Systems 33 Achieving Business Goals and Objectives 33 Q3 How Can You Use the Five-Component Model? 34 The Most Important Component YOU 35 High-Tech Versus Low-Tech Information Systems 35 Understanding the Scope of New Information Systems 35 Using MIS InClass 1: A Group Exercise 36 Components Ordered by Difficulty and Disruption 37 Q4 What Is Information? 37 Definitions Vary 37 Information Is Subjective 37 9 Ethics Guide: Ethics of Misdirected Information Use 38 Q5 What Makes Some Information Better Than Other Information? 4 Accurate 41 Timely 41 Relevant 41 Just Barely Sufficient 41 Worth Its Cost 42 Q6 Why Is the Difference Between Information Technology and Information Systems Important? 42 Q7 221? 43 Guide: Understanding Perspectives and Points of View Guide: Passwords and Password Etiquette 46 wmi Case Study 1: Requirements Creep at the IRS 5 44
12 ' Contents 2: Information Systems for Teamwork 52 Q1 What Is Collaboration? 54 The Importance of Feedback and Iteration 54 Critical Collaboration Drivers 54 Q2 What Are the Components of a Collaboration Information System? 55 Hardware 55 Software 55 Data 56 Procedures 56 People 58 Q3 How Can You Use Collaboration Systems to Improve Team Communication? 59 Q4 How Can You Use Collaboration Systems to Manage Content? 62 Shared Content with No Control 63 Shared Content with Version Management 63 Shared Content with Version Control 66 Using MIS InClass 2: A Group Exercise 67 Q5 How Can You Use Microsoft SharePoint for Team Projects? 69 SharePoint Features Recommended for Student Teams 69 Q6 How Do Businesses Use Collaboration Systems? 73 Using Collaboration Systems for Problem Solving 73 Ethics Guide: Virtual Ethics? 74 Using Collaboration Systems for Project Management 76 Using Collaboration Systems for Decision Making 76 Q7 221? 78 Guide: Securing Collaboration 8 m Guide: Egocentric Versus Empathetic Thinking 82 Case Study 2: Microsoft SharePoint at Intermountain Healthcare 87 Q1 How Does Organizational Strategy Determine Information Systems Structure? 92 Q2 What Five Forces Determine Industry Structure? 92 Q3 How Does Analysis of Industry Structure Determine Competitive Strategy? 94 9
Contents 13 Q4 How Does Competitive Strategy Determine Value Chain Structure? 95 Primary Activities in the Value Chain 95 Support Activities in the Value Chain 96 Value Chain Linkages 96 Using MIS InClass 3: A Group Exercise 97 Q5 How Do Business Processes Generate Value? 97 Q6 How Does Competitive Strategy Determine Business Processes and the Structure of Information Systems? 99 Ethics Guide: Yikes! Bikes 1 Q7 How Do Information Systems Provide Competitive Advantages? 13 Competitive Advantage via Products 13 Competitive Advantage via Business Processes 14 How Does an Actual Company Use IS to Create Competitive Advantages? 14 How Does This System Create a Competitive Advantage? 16 Q8 221? 17 Guide: Limiting Access to Those Who Have Access 18 Guide: Your Personal Competitive Advantage 11 r mmk Case Study 3: Bosu Balance Trainer 115 PART 2: Fundamentals of Technology 117 Q1 What Do Business Professionals Need to Know About Computer Hardware? 12 Basic Components 12 Computer Data 121 In Fewer Than 3 Words, How Does a Computer Work? 123 Why Does a Manager Care How a Computer Works? 123 What Is the Difference Between a Client and a Server? 124 Cloud Computing 125 Ethics Guide: Churn and Burn 126 Q2 What Do Business Professionals Need to Know About Software? 128 What Are the Four Major Operating Systems? 129 Own Versus License 13 Virtualization 13 What Types of Applications Exist, and How Do Organizations Obtain Them? 132 What Is Firmware? 133 Why Are Thin Clients Preferred to Thick Clients? 134 118
14 Contents Q3 Is Open Source Software a Viable Alternative? 135 Why Do Programmers Volunteer Their Services? 135 Using MIS InClass 4: A Group Exercise 136 How Does Open Source Work? 137 So, Is Open Source Viable? 138 Q4 How Can You Use This Knowledge? 138 What Buying Decisions Do You Make? 138 What Process Should I Use to Establish a Computer Budget? 139 Q5 221? 141 9 Guide: Keeping Up to Speed 144 Guide: QuestioningYour Questions 146 Case Study 4: Dell Leverages the Internet, Directly, but for How Long? 152 Q1 What Is the Purpose of a Database? 156 Q2 What Is a Database? 157 What Are Relationships Among Rows? 158 Metadata 16 Using MIS InClass 5: A Group Exercise 161 Q3 What Are the Components of a Database Application System? 162 What Is a Database Management System? 162 Ethics Guide: Nobody Said I Shouldn't 164 Q4 How Do Database Applications Make Databases More Useful? 167 What Are Forms, Reports, and Queries? 167 Why Are Database Application Programs Needed? 168 Multi-User Processing 169 Enterprise DBMS Versus Personal DBMS 169 Q5 How Are Data Models Used for Database Development? 17 What Is the Entity-Relationship Data Model? 171 Q6 How Is a Data Model Transformed into a Database Design? 174 Normalization 174 Representing Relationships 176 Q7 What Is the Users'Role in the Development of Databases? 179 Q8 221? 18 Guide: No, Thanks, I'll Use a Spreadsheet 182 e Guide: Immanuel Kant, Data Modeler 184 mmi Case Study 5: Benchmarking, Bench Marketing, or Bench Baloney 19
Contents 15 Q1 What Is a Computer Network? 194 Q2 What Are the Components of a LAN? 195 ATypicalSOHOLAN 195 Q3 What Are the Alternatives for Connecting to a WAN? 198 DSL Modems 199 Cable Modems 2 WAN Wireless Connection 2 Using MIS InClass 6: A Group Exercise 21 Q4 What Are the Fundamental Concepts You Should Know About the Internet? 22 An Internet Example 22 The TCP/IP Protocol Architecture 23 Application-Layer Protocols 23 TCP and IP Protocols 24 IP Addressing 25 Q5 What Processing Occurs on a Typical Web Server? 26 Three-Tier Architecture 27 Watch the Three Tiers in Action! 28 Hypertext Markup Language (HTML) 29 Ethics Guide: Personal Work at Work? 21 XML, Flash, Silverlight, and HTML 5 213 Q6 How Do Organizations Benefit from Virtual Private Networks (VPNS) and Firewalls? 213 Virtual Private Network 213 Firewalls 215 Q7 221? 216 6 Guide: Thinking Exponentially Is Not Possible, but... 218 Guide: Human Networks Matter More 22 mm Case Study 6: Keeping Up with Wireless 224 PART 3: IS and the Enterprise 227 7: IS and Organizations 228 Q1 How Do Information Systems Vary by Scope? 23 Personal Information Systems 23 Workgroup Information Systems 231 Enterprise Information Systems 232 Interenterprise Information Systems 232
16 Contents Q2 When Are Information Silos a Problem? 232 How Do Information Silos Arise? 232 What Are Common Departmental Applications? 234 What Problems Do Information Silos Cause? 235 Q3 How Do Enterprise Information Systems Eliminate Silos? 237 An Enterprise System at Fox Lake 237 Ethics Guide: Dialingfor Dollars 238 An Enterprise System for Patient Discharge 24 Business Process Reengineering 24 Q4 How Do CRM, ERP, and EAI Support Enterprise Processes? 241 Customer Relationship Management (CRM) 242 Enterprise Resource Planning (ERP) 243 Using MIS InClass 7: A Group Exercise 244 Enterprise Application Integration (EAI) 247 Q5 What Are the Elements of an ERP System? 248 ERP Application Programs 248 ERP Databases 249 Business Process Procedures 249 Training and Consulting 25 Industry-Specific Solutions 251 Q6 How Do the Major ERP Vendors Compare? 251 ERP Vendor Market Ranking 251 ERP Products 252 Q7 What Are the Challenges When Implementing New Enterprise Systems? 254 Collaborative Management 254 Requirements Gaps 254 Transition Problems 255 Employee Resistance 255 Q8 221? 255» Guide: The Flavor-of-the-Month Club 26 Guide: ERP and the Standard, Standard Blueprint 262 iiiii Case Study 7: Process Cast in Stone 268 ^sterns 27 Q1 How Do Organizations Use E-Commerce? 273 E-Commerce Merchant Companies 273 Nonmerchant E-Commerce 274 How Does E-Commerce Improve Market Efficiency? 274 What Economic Factors Disfavor E-Commerce? 275
Contents 17 Q2 How Do Organizations Use Web 2.? 276 What Is Web 2.? 276 How Can Businesses Benefit from Web 2.? 278 Q3 How Do Social Networking Information Systems Increase Social Capital? 279 What Is Social Capital? 279 How Do Social Networks Add Value to Businesses? 28 Using MIS InClass 8: A Group Exercise 281 Using Social Networking to Increase the Number of Relationships 281 Using Social Networks to Increase the Strength of Relationships 284 Connecting to Those with More Assets 285 Ethics Guide: Hiding the Truth? 286 Q4 What Are Business Applications for Facebook, Twitter, and User-Generated Content (UGC)? 288 Facebook 288 Twitter 291 User-Generated Content 293 Q5 How Does Social CRM Empower Customers? 295 What Are the Characteristics of Enterprise 2.? 295 Social CRM Is Enterprise 2. CRM 296 Q6 How Can Organizations Manage the Risks of Social Networking Applications? 296 Problem Sources 297 Responding to Social Networking Problems 298 Q7 221? 298 Guide: Blending the Personal and the Professional 3 Guide: Interorganizational Information Exchange 32 mm Case Study 8: Tourism Holdings Limited (THL) 36 Q1 Why Do Organizations Need Business Intelligence? 31 Q2 What Business Intelligence Systems Are Available? 311 Business Intelligence Tools 311 Tools Versus Applications Versus Systems 312 Q3 What Are Typical Reporting Applications? 312 Basic Reporting Operations 313 RFM Analysis 315 Online Analytical Processing 316 Using MIS InClass 9: A Group Exercise 318 Q4 What Are Typical Data-Mining Applications? 318 Unsupervised Data Mining 32 Supervised Data Mining 321 38
18 v Contents 9 Market-Basket Analysis 321 Decision Trees 323 Ethics Guide: The Ethics of Classification 326 Q5 What Is the Purpose of Data Warehouses and Data Marts? 328 Problems with Operational Data 329 Data Warehouses Versus Data Marts 33 Q6 What AreTypicai Knowledge Management Applications? 331 Sharing Document Content 332 Expert Systems 334 Q7 How Are Business Intelligence Applications Delivered? 336 What Are the Management Functions of a BI Server? 336 What Are the Delivery Functions of a BI Server? 337 Q8 221? 338 Guide: Semantic Security 34 Guide: Data Mining in the Real World 342 mm Case Study 9: THL (cont.) 347 PART 4: MIS Management 351 1: Froe sses for Managing 352 Q1 Why Do Organizations Need to Manage Business Processes? 354 A Sample Ordering Business Process 354 Why Does This Process Need Management? 355 Q2 What Are the Stages in Business Process Management (BPM)? 357 Q3 How Can BPMN Process Diagrams Help Identify and Solve Process Problems? 358 Need for Standard for Business Processing Notation 358 Documenting the As-Is Business Order Process 358 Using Process Diagrams to Identify Process Problems 359 How Can Business Processes Be Improved? 361 Fox Lake Wedding Planning and Facility Maintenance Processes 362 Q4 Which Comes First, Business Processes or Information Systems? 363 How Are Business Processes and Information Systems Related? 364 Which Comes First? 366 And the Answer Is... 367
Contents 19 Q5 What Are Systems Development Activities? 368 Define the System 369 Ethics Guide: Estimation Ethics 37 Determine Requirements 373 Design System Components 374 Implementation Activities 375 What Are the Tasks for System Maintenance? 376 Using MIS InClass 1: A Group Exercise 378 Q6 Why Are Business Processes and Systems Development Difficult and Risky? 378 The Difficulty of Requirements Determination 379 Changes in Requirements 38 Scheduling and Budgeting Difficulties 38 Changing Technology 38 Diseconomies of Scale 38 Q7 What Are the Keys for Successful Process and Systems Development Projects? 381 Create a Work-Breakdown Structure 381 Estimate Time and Costs 381 Create a Project Plan 383 Adjust Plan via Trade-offs 384 Manage Development Challenges 385 Q8 221? 387 Guide: Dealing with Uncertainty 388. Guide: The Real Estimation Process 39 'mm Case Study 1: Slow Learners, or What? 394 11: Managing information Systems 396 Q1 What Are the Functions and Organization of the IS Department? 398 How Is the IS Department Organized? 398 What IS-Related Job Positions Exist? 4 Q2 How Do Organizations Plan the Use of IS? 42 Align Information Systems with Organizational Strategy 42 Communicate IS Issues to the Executive Group 42 Develop Priorities and Enforce Them Within the IS Department 42 Sponsor the Steering Committee 43 Q3 What Tasks Are Necessary for Managing Computing Infrastructure? 43 Align Infrastructure Design with Organizational Structure 43 Ethics Guide: Using the Corporate Computer 44 Create, Operate, and Maintain Computing Infrastructure 47 Establish Technology and Product Standards 47
2 v Contents Track Problems and Monitor Resolutions 48 Manage Computing Infrastructure Staff 48 Using MIS InClass 11: A Group Exercise 49 Q4 What Tasks Are Necessary for Managing Enterprise Applications? 49 Develop New Applications 41 Maintain (Legacy) Systems 41 Adapting Systems to Changing Requirements 41 Tracking User Problems and Monitoring Fixes 41 Integrate Enterprise Applications 41 Manage Development Staff 411 Administer Data 411 Q5 What Are the Advantages and Disadvantages of Outsourcing? 413 Outsourcing Information Systems 414 International Outsourcing 415 What Are the Outsourcing Alternatives? 416 What Are the Risks of Outsourcing? 416 Q6 What Are Your User Rights and Responsibilities? 418 Your User Rights 419 Your User Responsibilities 42 Q7 221? 42 Guide: Is Outsourcing Fool's Gold? 422 9 Guide: What If You Just Don't Know? 424 H Case Study 11: Marriott International, Inc. 428 43 Q1 What Are the Threats to Information Security? 432 What Are the Sources of Threats? 432 What Are the Types of Security Problems? 432 What Are the Components of an Organization's Security Program? 435 Using MIS InClass 12: A Group Exercise 436 Q2 What Is Senior Management's Security Role? 437 The NIST Handbook of Security Elements 437 What Are the Elements of a Security Policy? 438 How Is Risk Managed? 438 9 Ethics Guide: Security Privacy 44 Q3 What Technical Safeguards Are Available? 442 Identification and Authentication 442 Encryption 444 Firewalls 448 Malware Protection 448 Design Secure Applications 451 Q4 What Data Safeguards Are Available? 451
Contents 21 Q5 What Human Safeguards Are Available? 452 Human Safeguards for Employees 452 Human Safeguards for Nonemployee Personnel 454 Account Administration 455 Systems Procedures 456 Security Monitoring 457 Q6 How Should Organizations Respond to Security Incidents? 458 Disaster-Recovery Backup Sites 458 Incident-Response Plan 459 Q7 What Is the Extent of Computer Crime? 459 Q8 221? 461 Guide: Security Assurance, Hah! 462 Guide: The Final, Final Word 464 H ^ Case Study 12: The ChoicePoint Attack 468 The International Dimension 47 Application Exercises 486 Glossary 53 Index 521