contents CHAPTER 1 Information Systems in Business 1 INTRODUCTION 5 Apple Merging Section 1.1 Information Systems in Business 5 INFORMATION TECHNOLOGY'S ROLE IN BUSINESS 5 Information Technology's Impact on Business Operations 6 INFORMATION TECHNOLOGY BASICS 7 Information 8 IT Resources 8 IT Cultures 9 ROLES AND RESPONSIBILITIES IN INFORMATION TECHNOLOGY 10 The Gap Between Business Personnel and IT Personnel 12 MEASURING INFORMATION TECHNOLOGY'S SUCCESS 12 Efficiency and Effectiveness Metrics 13 Benchmarking Baseline Metrics 13 The Interrelationship Between Efficiency and Effectiveness IT Metrics 14 Section 1.2 Business Strategy 16 IDENTIFYING COMPETITIVE ADVANTAGES 16 THE FIVE FORCES MODEL EVALUATING BUSINESS SEGMENTS 17 Buyer Power 18 Supplier Power 18 Threat of Substitute Products or Services 18 Threat of New Entrants 19 Rivalry Among Existing Competitors 19 THE THREE GENERIC STRATEGIES CREATING A BUSINESS FOCUS 20 VALUE CHAIN ANALYSIS TARGETING BUSINESS PROCESSES 20 Value Creation 21 Key Terms 24 Case Closing One: Say "Charge It" with Your Cell Phone 24 Case Closing Two: Innovative Business Managers 25 Case Closing Three: The World Is Flat Thomas Friedman 27 Making Business Decisions 28 CHAPTER 2 Strategic Decision Making 32 Revving Up Sales at Harley-Davidson 33 INTRODUCTION 37 Section 2.1 Decision-Making Systems 35 DECISION MAKING 37 TRANSACTION PROCESSING SYSTEMS 38 DECISION SUPPORT SYSTEMS 39 EXECUTIVE INFORMATION SYSTEMS 41 Digital Dashboards 41 Artificial Intelligence 43 Data Mining 46 Section 2.2 Enterprise Systems 46 ENTERPRISE SYSTEMS 46 SUPPLY CHAIN MANAGEMENT 47 CUSTOMER RELATIONSHIP MANAGEMENT 48 CRM Strategy 50 BUSINESS PROCESS REENGINEERING 50 Finding Opportunity Using BPR 51 Pitfalls of BPR 52 ENTERPRISE RESOURCE PLANNING 52 ERP Software 53 Finding the Right ERP Solution 53 Key Terms 55 Closing Case One: Consolidating Touchpoints for Saab 55 Closing Case Two: Made-to-0rder Businesses 56 Closing Case Three: Delta Air Lines Plays Catch-Up 57 Making Business Decisions 60 CHAPTER 3 E-Business 63 Amazon.com Not Vom Average Bookstore 64 INTRODUCTION 66 Section 3.1 Business and the Internet 66 DISRUPTIVE TECHNOLOGY 66 Disruptive versus Sustaining Technology 66 The Internet Business Disruption 67 EVOLUTION OF THE INTERNET 68 Evolution of the World Wide Web 69 ACCESSING INTERNET INFORMATION 71
Intranet 71 Extranet 72 Portal 72 Kiosk 72 PROVIDING INTERNET INFORMATION 73 Internet Service Provider 73 Online Service Provider 74 Application Service Provider 74 Section 3.2 E-Business 76 E-BUSINESS BASICS 76 E-BUSINESS MODELS 77 Business-to-Business (B2B) 78 Business-to-Consumer (B2C) 78 Consumer-to-Business (C2B) 79 Consumer-to-Consumer (C2C) 79 ORGANIZATIONAL STRATEGIES FOR E-BUSINESS 80 Marketing/Sales 80 Financial Services 80 Procurement 83 Customer Service 83 Intermediaries 84 MEASURING E-BUSINESS SUCCESS 85 Web Site Metrics 85 E-BUSINESS BENEFITS AND CHALLENGES 88 NEW TRENDS IN E-BUSINESS: E-GOVERNMENT AND M-COMMERCE 88 M-Commerce 89 Key Terms 93 Case Closing One: ebay The Ultimate E-Business 93 Case Closing Two: Direct Groceries 95 Case Closing Three: How Do You Value Friendster? 96 Making Business Decisions 97 CHAPTER 4 Ethics and Information Security 101 INTRODUCTION 104 Section 4.1 Ethics 104 ETHICS 104 INFORMATION ETHICS 105 Information Has No Ethics 106 DEVELOPING INFORMATION MANAGEMENT POLICIES 108 Ethical Computer Use Policy 108 Information Privacy Policy 109 Acceptable Use Policy 109 E-Mail Privacy Policy 109 Internet Use Policy 111 Anti-Spam Policy 111 ETHICS IN THE WORKPLACE 112 Monitoring Technologies 113 Employee Monitoring Policies 114 Section 4.2 Information Security 115 PROTECTING INTELLECTUAL ASSETS 115 THE FIRST LINE OF DEFENSE PEOPLE 116 THE SECOND LINE OF DEFENSE TECHNOLOGY 119 Authentication and Authorization 121 Prevention and Resistance 123 Content Filtering 123 Encryption 123 Firewalls 124 Detection and Response 124 Key Terms 127 Closing Case One: Banks Banking on Security 127 Closing Case Two: Hacker Hunters 128 Closing Case Three: Thinking Like the Enemy 130 Making Business Decisions 131 CHAPTER 5 IT Architectures 135 onic Breaking Points 136 INTRODUCTION 139 Section 5.1 Hardware and Software Basics 139 HARDWARE BASICS 139 Central Processing Unit 139 Primary Storage 142 Secondary Storage 142 Input Devices 144 Output Devices 145 Communication Devices 146 COMPUTER CATEGORIES 146 SOFTWARE BASICS 148 System Software 148 Application Software 151 Section 5.2 Managing Enterprise Architectures 152 ENTERPRISE ARCHITECTURES 152 INFORMATION ARCHITECTURE 153 Backup and Recovery 154 Disaster Recovery 154 Information Security 156 INFRASTRUCTURE ARCHITECTURE 157 Flexibility 157 Scalability 158 Reliability 158 Availability 158 Performance 159 APPLICATION ARCHITECTURE 159 Web Services 159 Open Systems 161 viii
Key Terms 162 Closing Case One: Chicago Tribune's Server Consolidation a Success 162 Closing Case Two: UPS in the Computer Repair Business 163 Closing Case Three: Fear the Penguin 164 Making Business Decisions 166 CHAPTER 6 Databases and Data Warehouses 169 INTRODUCTION 174 Section 6.1 Database Fundamentals 174 UNDERSTANDING INFORMATION 174 Information Quality 175 DATABASE FUNDAMENTALS 177 DATABASE ADVANTAGES 178 Increased Flexibility 178 Increased Scalability and Performance 179 Reduced Redundancy 179 Increased Integrity (Quality) 179 Increased Security 180 RELATIONAL DATABASE FUNDAMENTALS 180 Entities, Entity Classes, and Attributes 180 Keys and Relationships 180 DATABASE MANAGEMENT SYSTEMS 182 Data Definition Component 183 Data Manipulation Component 184 Application Generation and Data Administration Components 186 INTEGRATING DATA AMONG MULTIPLE DATABASES 187 Section 6.2 Data Warehouse Fundamentals 189 ACCESSING ORGANIZATIONAL INFORMATION 189 HISTORY OF DATA WAREHOUSING 189 DATA WAREHOUSE FUNDAMENTALS 190 Multidimensional Analysis 191 Information Cleansing or Scrubbing 192 BUSINESS INTELLIGENCE 194 Enabling Business Intelligence 195 DATA MINING 195 Cluster Analysis 196 Association Detection 196 Statistical Analysis 197 Key Terms 199 Closing Case One: Fishing for Quality 199 Closing Case Two: Mining the Data Warehouse 200 Closing Case Three: Harrah's Gambling Big on Technology 201 Making Business Decisions 204 CHAPTER 7 Networks, Telecommunications, and Wireless Computing 208 Hospital 209 Digital INTRODUCTION 211 Section 7.1 Networks and Telecommunications 211 NETWORK BASICS 211 ARCHITECTURE 212 Peer-to-Peer Networks 212 Client/Server Networks 213 TOPOLOGY 214 PROTOCOLS 214 Ethernet 216 Transmission Control Protocol/Internet Protocol 217 MEDIA 219 Wire Media 219 Wireless Media 220 E-BUSINESS NETWORKS 221 Section 7.2 Wireless Computing 222 WIRELESS FIDELITY 223 The Value of Timely Information 223 BUSINESS DRIVERS FOR WIRELESS TECHNOLOGIES 224 ADVANTAGES OF ENTERPRISE MOBILITY 225 Bluetooth 225 Radio Frequency Identification (RFID) 227 Satellite 228 Global Positioning System (GPS) 229 THE FUTURE OF WIRELESS 230 Key Terms 231 Closing Case One: Tracking Students 232 Closing Case Two: UPS versus FedEx: Head-to-Head on Wireless 232 Closing Case Three: Watching Where You Step Prada 233 Making Business Decisions 235 CHAPTER 8 Supply Chain Management 239 Dell's Supply Chain 240 Famous INTRODUCTION 242 Section 8.1 Supply Chain Fundamentals 242 BASICS OF SUPPLY CHAIN 242 INFORMATION TECHNOLOGY'S ROLE IN THE SUPPLY CHAIN 244 Visibility 245 Consumer Behavior 246 Competition 246 Speed 247 SUPPLY CHAIN MANAGEMENT SUCCESS FACTORS 247 ix
Make the Sale to Suppliers 248 Wean Employees Off Traditional Business Practices 248 Ensure the SCM System Supports the Organizational Goals 248 Deploy in Incremental Phases and Measure and Communicate Success 249 Be Future Oriented 249 SCM SUCCESS STORIES 249 Section 8.2 Applying a Supply Chain Design 250 USING INFORMATION TECHNOLOGY TO DRIVE THE SUPPLY CHAIN 251 FACILITIES DRIVER 251 Location 252 Capacity 252 Operational Design 252 INVENTORY DRIVER 252 Cycle Inventory 253 Safety Inventory 254 TRANSPORTATION DRIVER 254 Method of Transportation 254 Transportation Route 255 INFORMATION DRIVER 255 Information Sharing 255 Push versus Pull Information Strategy 256 APPLYING A SUPPLY CHAIN DESIGN 257 FUTURE SUPPLY CHAIN TRENDS 258 Key Terms 259 Closing Case One: BudNet 259 Closing Case Two: Listerine's Journey 260 Closing Case Three: How Levi's Got Its Jeans into Wal-Mart 262 Making Business Decisions 264 CHAPTER 9 Customer Relationship Management 268 INTRODUCTION 272 Section 9.1 Customer Relationship Management 272 BUSINESS BENEFITS OF CRM 272 CRM BASICS 273 The Evolution of CRM 273 Operational and Analytical CRM 274 USING INFORMATION TECHNOLOGY TO DRIVE OPERATIONAL CRM 275 Marketing and Operational CRM 275 Sales and Operational CRM 276 Customer Service and Operational CRM 278 USING INFORMATION TECHNOLOGY TO DRIVE ANALYTICAL CRM 281 Section 9.2 Customer Relationship Management Strategies 283 CUSTOMER RELATIONSHIP MANAGEMENT'S EXPLOSIVE GROWTH 283 CUSTOMER RELATIONSHIP MANAGEMENT SUCCESS FACTORS 285 CURRENT TRENDS: SRM, PRM, AND ERM 286 Supplier Relationship Management 286 Partner Relationship Management 286 Employee Relationship Management 286 FUTURE CRM TRENDS 287 Key Terms 288 Closing Case One: Fighting Cancer with Information 288 Closing Case Two: Calling All Canadians 289 Closing Case Three: The Ritz-Carlton Specializing in Customers 290 Making Business Decisions 292 CHAPTER 10 Enterprise Resource Planning and Collaboration Systems 295 Campus ERP 296 INTRODUCTION 298 Section 10.1 Enterprise Resource Planning 298 ENTERPRISE RESOURCE PLANNING 298 CORE AND EXTENDED ERP COMPONENTS 299 CORE ERP COMPONENTS 300 Accounting and Finance ERP Components 300 Production and Materials Management ERP Components 300 Human Resources ERP Components 300 EXTENDED ERP COMPONENTS 301 Business Intelligence Components 301 Customer Relationship Management Components 302 Supply Chain Management Components 302 E-Business Components 302 ERP VENDOR OVERVIEW 302 ERP Software 303 Finding the Right ERP Solution 305 ERP BENEFITS AND RISKS (COST) 305 THE CONNECTED CORPORATION INTEGRATING SCM, CRM, AND ERP 307 THE FUTURE OF ERP 309 Internet 311 Interface 311 Wireless Technology 312 Section 10.2 Collaboration Systems 312 TEAMS, PARTNERSHIPS, AND ALLIANCES 312 COLLABORATION SYSTEMS 313 KNOWLEDGE MANAGEMENT 316 x
KM in Business 316 KNOWLEDGE MANAGEMENT SYSTEMS 316 Explicit and Tacit Knowledge 316 KM Technologies 318 KM and Social Networking 318 CONTENT MANAGEMENT SYSTEMS 319 WORKFLOW MANAGEMENT SYSTEMS 320 GROUPWARE SYSTEMS 322 COLLABORATION TRENDS 323 Key Terms 324 Closing Case One: DreamWorks Animation Collaboration 325 Closing Case Two: Improving Highway Safety Through Collaboration 326 Closing Case Three: Saving Costs at Costco 327 Making Business Decisions 328 APPENDIX A BUSINESS BASICS (on the Web site at www.mhhe.com/baltzan) APPENDIX B BUSINESS PROCESS (on the Web site at www.mhhe.com/baltzan) GLOSSARY 333 NOTES 344 PHOTO CREDITS 349 INDEX 351