Contents
Module I Foundation Concepts
Chapter 1
Foundations of Information Systems in Business 3
Section I: Foundation Concepts: Information Systems in Business 4
Introduction 4
The Real World of Information Systems 4
Real World Case 1: The 2004 Athens Olympics Network: Faster, Stronger?and
Redundant 5
What Is an Information System? 6
Information Technologies 6
What You Need to Know 6
An IS Framework for Business Professionals 6
The Fundamental Roles of IS in Business 8
Trends in Information Systems 9
The Role of e-Business in Business 11
Types of Information Systems 12
Operations Support Systems 13
Management Support Systems 14
Other Classifications of Information Systems 14
Managerial Challenges of Information Technology 16
Success and Failure with IT 16
Developing IS Solutions 17
Challenges of Ethics and IT 19
Challenges of IT Careers 20
The IS Function 21
Section II: Foundation Concepts: The Components of Information Systems 22
System Concepts: A Foundation 22
What Is a System? 22
Real World Case 2: Lufthansa: Taking Mobile Computing to the Skies While Keeping
the Mobile Workforce Connected 23
Feedback and Control 24
Other System Characteristics 24
Components of an Information System 26
Information System Resources 27
People Resources 27
Hardware Resources 28
Software Resources 28
Data Resources 28
Network Resources 29
Information System Activities 30
Input of Data Resources 30
Processing of Data into Information 30
Output of Information Products 31
Storage of Data Resources 31
Control of System Performance 31
Recognizing Information Systems 31
Real World Case 3: Aviall Inc.: From Failure to Success with Information
Technology 37
Real World Case 4: Continental Airlines: This Call Is
Being Monitored 38
Chapter 2
Competing with Information Technology 39
Section I: Fundamentals of Strategic
Advantage 40
Strategic IT 40
Competitive Strategy Concepts 40
Real World Case 1: GE, Dell, Intel, and Others: The Competitive Advantage of
Information
Technology 41
Competitive Forces and Strategies 42
Strategic Uses of Information Technology 43
Other Competitive Strategies 43
Building a Customer-Focused Business 47
The Value Chain and Strategic IS 49
Value Chain Examples 49
Section II: Using Information Technology for Strategic Advantage 51
Strategic Uses of IT 51
Reengineering Business Processes 51
Real World Case 2: The U.S. Department of Commerce: Using IT to Tap Experts?
Know-How Through Knowledge Management 52
The Role of Information Technology 53
Becoming an Agile Company 54
Creating a Virtual Company 56
Virtual Company Strategies 56
Building a Knowledge-Creating Company 57
Knowledge Management Systems 58
Real World Case 3: Shareware Grows Up: CIOs Are Saving Money by Pooling
Resources and Software 64
Real World Case 4: CDW and Harrah?s Entertainment: Developing Strategic
Customer-Loyalty Systems 65
Module II Information Technologies
Chapter 3
Computer Hardware 67
Section I: Computer Systems: End User and Enterprise Computing 68
Types of Computer Systems 68
Real World Case 1: Mobile Devices and Wireless Technologies Are a Must-Have:
Return on Investment Is No Longer a Concern 69
Microcomputer Systems 70
Computer Terminals 72
Network Computers 72
Information Appliances 73
Midrange Systems 74
Mainframe Computer Systems 75
Supercomputer Systems 76
Technical Note: The Computer System Concept 77
Computer Processing Speeds 79
Section II: Computer Peripherals: Input, Output, and Storage Technologies 80
Peripherals 80
Input Technologies 80
Real World Case 2: Delta and Northwest Airlines: The Business Value of Customer
Self-Service Kiosks 81
Pointing Devices 82
Pen-Based Computing 83
Speech Recognition Systems 84
Optical Scanning 85
Other Input Technologies 87
Output Technologies 88
Video Output 88
Printed Output 89
Storage Trade-Offs 90
Computer Storage Fundamentals 90
Direct and Sequential Access 92
Semiconductor Memory 93
Magnetic Disks 93
Types of Magnetic Disks 94
RAID Storage 94
Magnetic Tape 94
Optical Disks 95
Business Applications 96
Real World Case 3: Verizon Communications: Advances in Speech Recognition
Software Are Extending the Utility of Traditional Applications 101
Real World Case 4: Wisconsin Physicians Service and Winnebago: Moving to Linux
on the Mainframe 102
Chapter 4
Computer Software 103
Section I: Application Software: End User Applications 104
Introduction to Software 104
What Is Software? 104
Types of Software 104
Real World Case 1: Microsoft: Looking at How Companies Do Business?and Writing
Software
for the Processes 105
Application Software for End Users 106
Business Application Software 107
Software Suites and Integrated Packages 108
Web Browsers and More 109
Electronic Mail and Instant Messaging 109
Word Processing and Desktop Publishing 110
Electronic Spreadsheets 111
Presentation Graphics 113
Personal Information Managers 114
Groupware 114
Software Alternatives 115
Application Service Providers 116
Software Licensing 117
Section II: System Software: Computer System Management 118
System Software Overview 118
Overview 118
Operating Systems 118
Real World Case 2: Amazon and eBay: The New Face of Web Services 119
Operating System Functions 120
Microsoft Windows 122
UNIX 122
Linux 122
Mac OS X 123
Other System Management Programs 123
Programming Languages 124
Machine Languages 124
Assembler Languages 125
High-Level Languages 125
Fourth-Generation Languages 126
Object-Oriented Languages 126
Web Languages and Services 127
HTML 128
XML 128
Java 128
Web Services 128
Programming Software 131
Language Translator Programs 131
Programming Tools 131
Real World Case 3: Merrill Lynch and Others: The Growth of Linux in Business
137
Real World Case 4: Mark?s Work Wearhouse and Others: Using Java in Business 138
Chapter 5
Data Resource Management 139
Section I: Managing Data Resources 140
Data Resource Management 140
Foundation Data Concepts 140
Real World Case 1: Argosy Gaming Co.: Challenges in Building a Data Warehouse
141
Character 142
Field 142
Record 142
File 142
Database 142
Types of Databases 143
Operational Databases 143
Distributed Databases 144
External Databases 144
Hypermedia Databases 144
Data Warehouses and Data Mining 145
Data Mining 147
Traditional File Processing 148
Problems of File Processing 149
The Database Management Approach 150
Database Management Software 151
Database Interrogation 153
Database Maintenance 154
Application Development 154
Section II: Technical Foundations of
Database Management 155
Database Management 155
Database Structures 155
Hierarchical Structure 155
Real World Case 2: Harrah?s Entertainment and Others: Protecting the Data Jewels
156
Network Structure 157
Relational Structure 158
Multidimensional Structure 158
Object-Oriented Structure 158
Evaluation of Database Structures 159
Database Development 162
Data Planning and Database Design 163
Real World Case 3: Henry Schein Inc.: The Business Value of a Data Warehouse
169
Real World Case 4: Emerson and Sanofi: Data Stewards Seek Data Conformity 170
Chapter 6
Telecommunications and Networks 171
Section I: The Networked Enterprise 172
Networking the Enterprise 172
Trends in Telecommunications 172
Real World Case 1: Celanese Chemicals and Others: Wireless Business Applications
173
Industry Trends 174
Technology Trends 175
Business Application Trends 175
Internet2 176
The Business Value of Telecommunications
Networks 176
The Internet Revolution 177
Internet Applications 178
Business Use of the Internet 179
The Business Value of the Internet 180
The Role of Intranets 181
The Business Value of Intranets 181
The Role of Extranets 183
Business Value of Extranets 183
Section II: Telecommunications Network Alternatives 185
Telecommunications Alternatives 185
A Telecommunications Network Model 185
Real World Case 2: The State of Maryland: Serving Its Citizens Without Using
Wires 186
Types of Telecommunications Networks 188
Wide Area Networks 188
Local Area Networks 188
Virtual Private Networks 189
Client/Server Networks 190
Network Computing 191
Peer-to-Peer Networks 192
Telecommunications Media 193
Twisted-Pair Wire 193
Coaxial Cable 193
Fiber Optics 194
Wireless Technologies 194
Terrestrial Microwave 194
Communications Satellites 195
Cellular and PCS Systems 195
Wireless LANs 196
The Wireless Web 196
Telecommunications Processors 197
Modems 197
Multiplexers 198
Internetwork Processors 199
Telecommunications Software 199
Network Management 200
Network Topologies 200
Network Achitectures and Protocols 201
The OSI Model 202
The Internet?s TCP/IP 203
Bandwidth Alternatives 204
Switching Alternatives 205
Real World Case 3: UPS, Wells? Dairy, Novell,
and GM: The Business Value and Challenges of
Wi-Fi Networks 210
Real World Case 4: Boeing Company and Others: Converging Voice and Data Using
Voice Over IP 211
Module III Business Applications
Chapter 7
Electronic Business Systems 213
Section I: Enterprise Business Systems 214
Introduction 214
Cross-Functional Enterprise Applications 214
Real World Case 1: Hilton Hotels Corporation: Data-Driven Hospitality 215
Enterprise Application Architecture 216
Enterprise Application Integration 218
Transaction Processing Systems 220
The Transaction Processing Cycle 220
Enterprise Collaboration Systems 222
Tools for Enterprise Collaboration 223
Section II: Functional Business Systems 226
Introduction 226
IT in Business 226
Real World Case 2: GE Power Systems and Corporate Express: The Business Case for
Enterprise Application Integration 227
Marketing Systems 228
Interactive Marketing 229
Targeted Marketing 229
Sales Force Automation 230
Manufacturing Systems 231
Computer-Integrated Manufacturing 232
Human Resource Systems 234
HRM and the Internet 235
HRM and Corporate Intranets 235
Accounting Systems 236
Online Accounting Systems 236
Financial Management Systems 238
Real World Case 3: Brunswick Corporation: Improving Supply-Chain Results 245
Real World Case 4: Lowe and HP: The Business Case for Swarming Collaboration
246
Chapter 8
Enterprise Business Systems 247
Section I: Customer Relationship Management: The Business Focus 248
Introduction 248
Real World Case 1: Mitsubishi Motor Sales: Implementing Customer Relationship
Management Systems 249
What Is CRM? 250
Contact and Account Management 250
Sales 250
Marketing and Fulfillment 251
Customer Service and Support 251
Retention and Loyalty Programs 251
The Three Phases of CRM 253
Benefits and Challenges of CRM 254
CRM Failures 255
Trends in CRM 255
Section II: Enterprise Resource Planning:
The Business Backbone 258
Introduction 258
What Is ERP? 258
Real World Case 2: Agilent Technologies and Russ Berrie: Challenges of
Implementing ERP Systems 259
Benefits and Challenges of ERP 262
The Costs of ERP 262
Causes of ERP Failures 263
Trends in ERP 264
Section III: Supply Chain Management: The Business Network 267
Introduction 267
What Is SCM? 267
Real World Case 3: TaylorMade Golf and HON Industries: The Business Value of
Supply Chain Management 268
Electronic Data Interchange 270
The Role of SCM 272
Benefits and Challenges of SCM 274
Trends in SCM 275
Real World Case 4: H-P, Eastman Chemical, and Others: The Benefits and
Challenges of SCM Systems 281
Real World Case 5: Wal-Mart and Mattel: Supply Chain Management Best Practices
282
Chapter 9
Electronic Commerce
Systems 283
Section I: Electronic Commerce
Fundamentals 284
Introduction to e-Commerce 284
Real World Case 1: eBay Inc.: Managing Success in a Dynamic Online Marketplace
285
The Scope of e-Commerce 286
e-Commerce Technologies 286
Categories of e-Commerce 286
Essential e-Commerce Processes 288
Access Control and Security 288
Profiling and Personalizing 289
Search Management 290
Content and Catalog Management 290
Workflow Management 291
Event Notification 293
Collaboration and Training 293
Electronic Payment Processes 293
Web Payment Processes 293
Electronic Funds Transfer 294
Secure Electronic Payments 294
Section II: e-Commerce Applications
and Issues 296
e-Commerce Application Trends 296
e-Commerce Trends 296
Real World Case 2: Keihin Aircon NA Inc.: Lean Manufacturing Is a Process Whose
Time Has Come 297
Business-to-Consumer e-Commerce 298
e-Commerce Success Factors 299
Web Store Requirements 302
Developing a Web Store 302
Serving Your Customers 304
Managing a Web Store 304
Business-to-Business e-Commerce 305
e-Commerce Marketplaces 306
Clicks and Bricks in e-Commerce 308
e-Commerce Integration 309
Other Clicks and Bricks Strategies 309
e-Commerce Channel Choices 310
Real World Case 3: E-Trade and Wells Fargo: The Business Case for Clicks and
Bricks e-Commerce 317
Real World Case 4: Microsoft and Dell: The WWW Is
Anything but Business as Usual 318
Chapter 10
Decision Support Systems 319
Section I: Decision Support in Business 320
Introduction 320
Information, Decisions, and Management 320
Real World Case 1: Allstate Insurance, Aviva Canada, and Others: Centralized
Business Intelligence at Work 321
Information Quality 322
Decision Structure 323
Decision Support Trends 324
Decision Support Systems 326
DSS Components 326
Management Information Systems 328
Management Reporting Alternatives 328
Online Analytical Processing 329
Geographic Information and Data
Visualization Systems 331
Using Decision Support Systems 333
What-If Analysis 333
Sensitivity Analysis 334
Goal-Seeking Analysis 335
Optimization Analysis 335
Data Mining for Decision Support 336
Executive Information Systems 338
Features of an EIS 338
Enterprise Portals and Decision Support 339
Enterprise Information Portals 339
Knowledge Management Systems 341
Section II: Artificial Intelligence Technologies in Business 343
Business and AI 343
An Overview of Artificial Intelligence 343
Real World Case 2: Wal-Mart, BankFinancial, and HP:
The Business Value of AI 344
The Domains of Artificial Intelligence 345
Expert Systems 348
Components of an Expert System 348
Expert System Applications 349
Benefits of Expert Systems 350
Limitations of Expert Systems 350
Developing Expert Systems 352
Knowledge Engineering 353
Neural Networks 354
Fuzzy Logic Systems 355
Fuzzy Logic in Business 356
Genetic Algorithms 356
Virtual Reality 356
VR Applications 358
Intelligent Agents 359
Real World Case 3: Procter & Gamble and Others: Using Agent-Based Modeling for
Supply Chain Management 366
Real World Case 4: Boehringer Ingelheim: Using Web-Based Tools for Financial
Analysis and Reporting 367
Module IV Development Processes
Chapter 11
Developing Business/
IT Strategies 369
Section I: Planning Fundamentals 370
Introduction 370
Real World Case 1: The Rowe Cos. and Merrill Lynch: The ROI Process in
Business/IT Planning 371
Organizational Planning 372
The Scenario Approach 373
Planning for Competitive Advantage 374
SWOT Analysis 374
Business Models and Planning 375
Business/IT Planning 378
Information Technology Architecture 378
Identifying Business/IT Strategies 379
Business Application Planning 381
Business/IT Architecture Planning 382
Section II: Implementation Challenges 384
Implementation 384
Implementing Information Technology 384
Real World Case 2: Johnson Controls and Bank of
New York: The Challenges of Global Application Integration 385
End User Resistance and Involvement 387
Change Management 389
A Change Management Process 391
Real World Case 3: Corning Inc.: Business/IT Planning Strategies in Challenging
Times 397
Real World Case 4: Cincinnati Bell: Change Management Challenges of Business
Convergence 398
Chapter 12
Developing Business/
IT Solutions 399
Section I: Developing Business Systems 400
IS Development 400
The Systems Approach 400
Real World Case 1: Blue Cross, AT&T Wireless, and CitiStreet: Development
Challenges of Self-Service
Web Systems 401
Systems Thinking 402
The Systems Development Cycle 402
Prototyping 403
The Prototyping Process 403
Starting the Systems Development Process 406
Feasibility Studies 406
Systems Analysis 407
Organizational Analysis 408
Analysis of the Present System 408
Functional Requirements Analysis 409
Systems Design 409
User Interface Design 410
System Specifications 411
End User Development 411
Focus on IS Activities 412
Doing End User Development 413
Section II: Implementing Business Systems 416
Implementation 416
Implementing New Systems 416
Real World Case 2: InterContinental Hotels, Del Taco, and Cardinal Health:
Implementation Strategies 417
Evaluating Hardware, Software, and Services 419
Hardware Evaluation Factors 420
Software Evaluation Factors 420
Evaluating IS Services 421
Other Implementation Activities 421
Testing 421
Data Conversion 422
Documentation 422
Training 423
Conversion Methods 423
IS Maintenance 424
Real World Case 3: Du Pont and Southwire: Implementing Successful Enterprise
Information Portals 430
Real World Case 4: Wyndham International and Amazon.com: Cost-Effective IT 431
Module V Management Challenges
Chapter 13
Security and Ethical
Challenges 433
Section I: Security, Ethical, and Societal Challenges of IT 434
Introduction 434
Business/IT Security, Ethics, and Society 434
Real World Case 1: F-Secure, Microsoft, GM, and Verizon:
The Business Challenge of Computer Viruses 435
Ethical Responsibility of Business Professionals 436
Business Ethics 436
Technology Ethics 437
Ethical Guidelines 438
Computer Crime 439
Hacking 441
Cyber Theft 442
Unauthorized Use at Work 443
Software Piracy 445
Piracy of Intellectual Property 445
Computer Viruses and Worms 446
Privacy Issues 447
Privacy on the Internet 448
Computer Matching 450
Privacy Laws 450
Computer Libel and Censorship 450
Other Challenges 450
Employment Challenges 450
Computer Monitoring 451
Challenges in Working Conditions 452
Challenges to Individuality 452
Health Issues 453
Ergonomics 453
Societal Solutions 454
Section II: Security Management of
Information Technology 455
Introduction 455
Real World Case 2: Geisinger Health Systems and
Du Pont: Security Management 456
Tools of Security Management 457
Internetworked Security Defenses 458
Encryption 458
Firewalls 458
Denial of Service Defenses 461
e-Mail Monitoring 462
Virus Defenses 462
Other Security Measures 464
Security Codes 464
Backup Files 464
Security Monitors 464
Biometric Security 465
Computer Failure Controls 465
Fault Tolerant Systems 465
Disaster Recovery 467
System Controls and Audits 467
Information System Controls 467
Auditing IT Security 468
Real World Case 3: The Federal Reserve Bank: Creating a Sound Software Patch
Management Strategy 473
Real World Case 4: Online Resources, Lehman Brothers, and Others: Managing
Network Security Systems 474
Chapter 14
Enterprise and Global Management of Information Technology 475
Section I: Managing Information
Technology 476
Business and IT 476
Real World Case 1: Chicago Board of Trade: From Failure to Success in Managing
Information Technology 477
Managing Information Technology 478
Business/IT Planning 479
Information Technology Architecture 480
Managing the IS Function 481
Organizing IT 481
Managing Application Development 483
Managing IS Operations 483
Human Resource Management of IT 484
The CIO and Other IT Executives 484
Technology Management 485
Managing User Services 486
Failures in IT Management 486
Management Involvement and Governance 487
Section II: Managing Global IT 489
The International Dimension 489
Global IT Management 489
Real World Case 2: Global Exchange Services and
Allstate: Challenges and Solutions in Offshore
Systems Development 490
Cultural, Political, and Geoeconomic Challenges 491
Global Business/IT Strategies 493
Global Business/IT Applications 494
Global IT Platforms 495
The Internet as a Global IT Platform 497
Global Data Access Issues 498
Internet Access Issues 499
Global Systems Development 500
Systems Development Strategies 500
Real World Case 3: Bio-ERA and Burlington Northern Santa Fe: The Business Case
for Global Collaborative Development 507
Real World Case 4: Avon Products and Guardian Life Insurance: Successful
Management of IT Projects 508
Appendix: Real World Case Studies 509
Review Quiz Answers 538
Selected References 541
Glossary for Business Professionals 551
Name Index 570
Company Index 574
Subject Index 578