Integrating Business with Technology By completing the projects in this text, students will be able to demonstrate business knowledge, application software proficiency, and Internet skills. These projects can be used by instructors as learning assessment tools and by students as demonstrations of business, software, and problem-solving skills to future employers. Here are some of the skills and competencies students using this text will be able to demonstrate: Business Application skills: Use of both business and software skills in real-world business applications. Demonstrates both business knowledge and proficiency in spreadsheet, database, and Web page/blog creation tools. Internet skills: Ability to use Internet tools to access information, conduct research, or perform online calculations and analysis. Analytical, writing and presentation skills: Ability to research a specific topic, analyze a problem, think creatively, suggest a solution, and prepare a clear written or oral presentation of the solution, working either individually or with others in a group. * Dirt Bikes Running Case in MyMISLab Business Application Skills Business Skills Software Skills Chapter Finance and Accounting Financial statement analysis Spreadsheet charts Chapter 2* Spreadsheet formulas Spreadsheet downloading and formatting Chapter 9 Pricing hardware and software Spreadsheet formulas Chapter 4 Technology rent vs. buy decision Total Cost of Ownership (TCO) Analysis Spreadsheet formulas Chapter 4* Analyzing telecommunications services and costs Spreadsheet formulas Chapter 6 Risk assessment Spreadsheet charts and formulas Chapter 7 Human Resources Employee training and skills tracking Database design Database querying and reporting Chapter 11* Manufacturing and Production Analyzing supplier performance and pricing Spreadsheet date functions Data fi ltering Database functions Chapter 2 Inventory management Importing data into a database Database querying and reporting Chapter 5 Bill of materials cost sensitivity analysis Spreadsheet data tables Spreadsheet formulas Chapter 10* Sales and Marketing Sales trend analysis Database querying and reporting Chapter 1 Customer reservation system Customer sales analysis Database querying and reporting Database design Chapter 3 Marketing decisions Spreadsheet pivot tables Chapter 10 Customer profi ling Database design Database querying and reporting Chapter 5* Chapter 7: Securing Information Systems You're On Facebook? Watch Out! Stuxnet and the Changing Face of Cyberwarfare How Secure Is Your Smartphone? Sony: The World's Largest Data Breach? Chapter 8: Achieving Operational Excellence and Customer Intimacy: Enterprise Applications Cannondale Learns to Manage a Global Supply Chain Southwest Airlines Takes Off With Better Supply Chain Management Customer Relationship Management Heads to the Cloud Summit Electric Lights Up with a New ERP System Chapter 9: E-commerce: Digital Markets, Digital Goods Groupon's Business Model: Social and Local Walmart, Amazon, eBay: Who Will Dominate Internet Retailing? Social Commerce Creates New Customer Relationships To Pay or Not to Pay: Zagat's Dilemma Chapter 10: Improving Decision Making and Managing Knowledge What to Sell? What Price to Charge? Ask the Data Colgate-Palmolive Keeps Managers Smiling with Executive Dashboards IBM's Watson: Can Computers Replace Humans? Zynga Wins with Business Intelligence Chapter 11: Building Information Systems and Managing Projects A New Ordering System for Girl Scout Cookies Honam Petrochemical's Quest for Better Management Reports DST Systems Scores with Scrum and Application Lifecycle Management JetBlue and WestJet: A Tale of Two IS Projects Chapter 12: Ethical and Social Issues in Information Systems Behavioral Targeting and Your Privacy: You’re the Target Life on the Grid: iPhone Becomes iTrack Too Much Information? When Radiation Therapy Kills Customer service analysis Database design Database querying and reporting Chapter 8 Sales lead and customer analysis Database design Database querying and reporting Chapter 11 Blog creation and design Blog creation tool Chapter 12 Internet Skills Using online software tools for job hunting and career development Chapter 1 Using online interactive mapping software to plan effi cient transportation routes Chapter 2 Researching product information Evaluating Web sites for auto sales Chapter 3 Researching travel costs using online travel sites Chapter 4 Searching online databases for products and services Chapter 5 Using Web search engines for business research Chapter 6 Researching and evaluating business outsourcing services Chapter 7 Researching and evaluating supply chain management services Chapter 8 Evaluating e-commerce hosting services Chapter 9 Using shopping bots to compare product price, features, and availability Chapter 10 Analyzing Web site design Chapter 11 Using Internet newsgroups for marketing Chapter 12 Analytical, Writing, and Presentation Skills * Business Problem Chapter Management analysis of a business Chapter 1 Value chain and competitive forces analysis Business strategy formulation Chapter 3 Employee productivity analysis Chapter 6 Disaster recovery planning Chapter 7 Locating and evaluating suppliers Chapter 8 Developing an e-commerce strategy Chapter 9 Formulating a corporate privacy policy Chapter 12 Essentials of Management Information Systems Tenth Edition Kenneth C. Laudon New York University Jane P. Laudon Azimuth Information Systems 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 Library of Congress Cataloging-in-Publication Information is Available Editorial Director: Sally Yagan Executive Editor: Bob Horan Editorial Project Manager: Kelly Loftus Editorial Assistant: Ashlee Bradbury Director of Marketing: Maggie Moylan Senior Marketing Manager: Anne Fahlgren Senior Managing Editor: Judy Leale Senior Production Project Manager: Karalyn Holland Senior Operations Supervisor: Arnold Vila Operations Specialist: Maura Zaldivar Associate Director of Design: Blair Brown Art Director: Steve Frim Cover Illustrator and Designer: Bobby Starnes Elec- trographics Media Project Manager: Allison Longley Media Project Manager, Production: Lisa Rinaldi Full Service Project Management: Azimuth Interactive, Inc. 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ISBN 10: 0-13-266855-6 ISBN 13: 978-0-13-266855-2 10 9 8 7 6 5 4 3 2 1 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 twelve books dealing with electronic commerce, information systems, organizations, and society. Professor Laudon has also written over forty articles concerned with the social, organizational, and management impacts of infor- mation 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 enter- prise system implementation, computer-related organizational and occupational changes in large organizations, changes in management ideology, changes in public policy, and under- standing 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), Department of Homeland Security, and to 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 manage- ment, 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 Stern School of Business. She maintains a lifelong interest in Oriental lan- guages and civilizations. The Laudons have two daughters, Erica and Elisabeth, to whom this book is dedicated. About the Authors iii iv Brief Contents Preface xi I Information Systems in the Digital Age 1 1 Business Information Systems in Your Career 2 2 Global E-Business and Collaboration 36 3 Achieving Competitive Advantage with Information Systems 74 II Information Technology Infrastructure 107 4 IT Infrastructure: Hardware and Software 108 5 Foundations of Business Intelligence: Databases and Information Management 146 6 Telecommunications, the Internet, and Wireless Technology 178 7 Securing Information Systems 220 III Key System Applications for the Digital Age 259 8 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications 260 9 E-commerce: Digital Markets, Digital Goods 290 10 Improving Decision Making and Managing Knowledge 330 IV Building and Managing Systems 367 11 Building Information Systems and Managing Projects 368 12 Ethical and Social Issues in Information Systems 404 Glossary G-1 References R-1 Index I-1 I Information Systems in the Digital Age 1 1 Business Information Systems in Your Career 2 Chapter-Opening Case: Shortening Lines at Disney World: Technology to the Rescue 3 1.1 The Role of Information Systems in Business Today 5 How Information Systems Are Transforming Business 5 • What’s New In Management Information Systems? 6 Interactive Session: Organizations Running the Business from the Palm of Your Hand 8 Globalization Challenges and Opportunities: A Flattened World 9 • Business Drivers of Information Systems 11 1.2 Perspectives on Information Systems and Information Technology 13 What Is an Information System? 13 • It Isn’t Simply Technology: The Role of People and Organizations 15 • Dimensions of Information Systems 16 1.3 Understanding Information Systems: A Business Problem-Solving Approach 18 Interactive Session: Technology UPS Competes Globally with Information Technology 19 The Problem-Solving Approach 21 • A Model of the Problem- Solving Process 21 • The Role of Critical Thinking in Problem Solving 23 • The Connection Between Business Objectives, Problems, and Solutions 24 1.4 Information Systems and Your Career 25 How Information Systems Will Affect Business Careers 25 • Information Systems and Your Career: Wrap-Up 28 • How This Book Prepares You For the Future 28 Learning Tracks 29 • Review Summary 30 • Key Terms 31 • Review Questions 31 • Discussion Questions 32 • Hands-on MIS Projects 32 Management Decision Problems 32 • Improving Decision Making: Using Databases to Analyze Sales Trends 32 • Improving Decision Making: Using the Internet to Locate Jobs Requiring Information Systems Knowledge 33 Video Cases 33 • Collaboration and Teamwork: Creating a Web Site for Team Collaboration 33 Business Problem-Solving Case Are Electronic Medical Records a Cure for Health Care? 33 2 Global E-Business and Collaboration 36 Chapter-Opening Case: America's Cup 2010: USA Wins with Information Technology 37 2.1 Components of a Business 39 Organizing a Business: Basic Business Functions 39 Business Processes 40 • Managing a Business and Firm Hierarchies 42 • The Business Environment 43 • The Role of Information Systems in a Business 44 2.2 Types of Business Information Systems 45 Systems for Management Decision Making and Business Intelligence 45 Interactive Session: Technology Can Airlines Solve Their Baggage Handling? 47 Systems for Linking the Enterprise 51 Interactive Session: Organizations Piloting Valero with Real- Time Management 52 Intranets and Extranets 55 • E-Business, E-commerce, and E-Government 55 2.3 Systems for Collaboration and Teamwork 56 What is Collaboration? 56 • Business Benefits of Collaboration and Teamwork 57 • Building a Collaborative Culture 57 • Tools and Technologies for Collaboration and Teamwork 59 2.4 The Information Systems Function in Business 65 The Information Systems Department 65 • Information Systems Services 66 Learning Tracks 66 • Review Summary 66 • Key Terms 67 • Review Questions 68 • Discussion Questions 69 • Hands-on MIS Projects 69 Management Decision Problems 69 • Improving Decision Making: Using a Spreadsheet to Select Suppliers 69 • Achieving Operational Excellence: Using Internet Software to Plan Efficient Transportation Routes 70 v Complete Contents vi Video Cases 70 • Collaboration and Teamwork: Describing Management Decisions and Systems 70 Business Problem-Solving Case Collaboration and Innovation at Procter & Gamble 71 3 Achieving Competitive Advantage with Information Systems 74 Chapter-Opening Case: Verizon or AT&T: Which Digital Strategy Will Prevail? 75 3.1 Using Information Systems to Achieve Competitive Advantage 77 Porter’s Competitive Forces Model 77 • Information System Strategies for Dealing with Competitive Forces 79 Interactive Session: Technology Technology Helps Starbucks Find New Ways to Compete 82 The Internet’s Impact on Competitive Advantage 84 • The Business Value Chain Model 85 • Synergies, Core Competencies, and Network- Based Strategies 87 • Disruptive Technologies: Riding the Wave 89 3.2 Competing on a Global Scale 90 The Internet and Globalization 91 • Global Business and System Strategies 91 • Global System Configuration 92 3.3 Competing on Quality and Design 93 What Is Quality? 93 • How Information Systems Improve Quality 94 3.4 Competing on Business Processes 95 What Is Business Process Management? 96 Interactive Session: Organizations Burton Snowboards Speeds Ahead with Nimble Business Processes 99 Learning Tracks 100 • Review Summary 100 • Key Terms 101 • Review Questions 101 • Discussion Questions 102 • Hands-on MIS Projects 102 Management Decision Problems 102 • Improving Decision Making: Using a Database to Clarify Business Strategy 103 • Improving Decision Making: Using Web Tools to Configure and Price an Automobile 103 Video Cases 104 • Collaboration and Teamwork: Identifying Opportunities for Strategic Information Systems 104 Business Problem-Solving Case Will Technology Save the Publishing Industry? 104 II Information Technology Infrastructure 107 4 IT Infrastructure: Hardware and Software 108 Chapter-Opening Case: BART Speeds Up with a New IT Infrastructure 109 4.1 IT Infrastructure: Computer Hardware 111 Infrastructure Components 111 • Types of Computers 113 • Storage, Input, and Output Technology 115 • Contemporary Hardware Trends 116 Interactive Session: Technology Green Data Centers: Good for Business? 121 4.2 IT Infrastructure: Computer Software 123 Operating System Software 123 Application Software and Desktop Productivity Tools 125 • Software for the Web: Java and HTML 129 • HTML5 130 • Web Services 130 • Software Trends 131 4.3 Managing Hardware and Software Technology 133 Capacity Planning and Scalability 133 • Total Cost of Ownership (TCO) of Technology Assets 134 • Using Technology Service Providers 135 • Managing Mobile Platforms 136 • Managing Software Localization for Global Business 136 Interactive Session: People Should You Use Your iPhone for Work? 137 Learning Tracks 139 • Review Summary 139 • Key Terms 140 • Review Questions 141 • Discussion Questions 142 • Hands-on MIS Projects 142 Management Decision Problems 142 • Improving Decision Making: Using a Spreadsheet To Evaluate Hardware and Software Options 142 • Improving Decision Making: Using Web Research to Budget for a Sales Conference 143 Video Cases 143 • Collaboration and Teamwork: Evaluating Server and Mobile Operating Systems 143 Business Problem-Solving Case Should Businesses Move to the Cloud? 144 5 Foundations of Business Intelligence: Databases and Information Management 146 Chapter-Opening Case: Banco de Credito del Peru Banks on Better Data Management 147 vii 5.1 The Database Approach to Data Management 149 Entities and Attributes 149 • Organizing Data in a Relational Database 150 • Establishing Relationships 151 5.2 Database Management Systems 153 Operations of a Relational DBMS 155 • Capabilities of Database Management Systems 157 • Object- Oriented Databases 158 • Databases in the Cloud 159 5.3 Using Databases to Improve Business Performance and Decision Making 159 Data Warehouses 159 • What is a Data Warehouse? 160 Tools for Business Intelligence: Multidimensional Data Analysis and Data Mining 161 • Data Mining 162 Interactive Session: People Asking the Customer by Asking the Database 163 Databases and the Web 165 5.4 Managing Data Resources 166 Establishing an Information Policy 166 Interactive Session: Organizations Controversy Whirls Around the Consumer Product Safety Database 167 Ensuring Data Quality 168 Learning Tracks 170 • Review Summary 170 • Key Terms 171 • Review Questions 171 • Discussion Questions 172 • Hands-on MIS Projects 172 Management Decision Problems 172 • Achieving Operational Excellence: Building a Relational Database for Inventory Management 173 • Improving Decision Making: Searching Online Databases for Overseas Business Resources 173 Video Cases 174 • Collaboration and Teamwork: Identifying Entities and Attributes in an Online Database 174 Business Problem-Solving Case Text Mining For Gold? 174 6 Telecommunications, the Internet, and Wireless Technology 178 Chapter-Opening Case: Hyundai Heavy Industries Creates a Wireless Shipyard 179 6.1 Telecommunications and Networking in Today’s Business World 181 Networking and Communication Trends 181 • What Is a Computer Network? 182 • Key Digital Networking Technologies 184 6.2 Communications Networks 186 Signals: Digital vs. Analog 186 • Types of Networks 186 • Physical Transmission Media 188 6.3 The Global Internet 190 What Is the Internet? 190 • Internet Addressing and Architecture 191 Interactive Session: Organizations The Battle Over Net Neutrality 193 Internet Services and Communication Tools 195 Interactive Session: People Monitoring Employees on Networks: Unethical or Good Business? 197 The Web 200 6.4 The Wireless Revolution 206 Cellular Systems 207 • Wireless Computer Networks and Internet Access 207 • RFID and Wireless Sensor Networks 209 Learning Tracks 212 • Review Summary 212 • Key Terms 213 • Review Questions 214 • Discussion Questions 215 • Hands-on MIS Projects 215 Management Decision Problems 215 • Improving Decision Making: Using Spreadsheet Software to Evaluate Wireless Services 215 • Achieving Operational Excellence: Using Web Search Engines for Business Research 216 Video Cases 216 • Collaboration and Teamwork: Evaluating Smartphones 216 Business Problem-Solving Case Apple, Google, and Microsoft Battle for Your Internet Experience 217 7 Securing Information Systems 220 Chapter-Opening Case: You're On Facebook? Watch Out! 221 7.1 System Vulnerability and Abuse 223 Why Systems Are Vulnerable 223 • Malicious Software: Viruses, Worms, Trojan Horse, and Spyware 226 • Hackers and Computer Crime 228 • Identity Theft 230 • Internal Threats: Employees 232 Interactive Session: Organizations Stuxnet and the Changing Face of Cyberwarfare 233 Software Vulnerability 234 7.2 Business Value of Security and Control 235 Legal and Regulatory Requirements for Electronic Records Management 235 • Electronic Evidence and Computer Forensics 236 viii 7.3 Establishing a Framework for Security and Control 237 Information Systems Controls 237 • Risk Assessment 237 • Security Policy 239 • Disaster Recovery Planning and Business Continuity Planning 240 • The Role of Auditing 241 7.4 Technologies and Tools for Protecting Information Resources 242 Identity Management and Authentication 242 • Firewalls, Intrusion Detection Systems, and Antivirus Software 243 • Securing Wireless Networks 245 • Encryption and Public Key Infrastructure 245 • Ensuring System Availability 247 • Security Issues for Cloud Computing and the Mobile Digital Platform 248 Interactive Session: Technology How Secure Is Your Smartphone? 249 Ensuring Software Quality 250 Learning Tracks 251 • Review Summary 251 • Key Terms 252 • Review Questions 252 • Discussion Questions 253 • Hands-on MIS Projects 253 Management Decision Problems 253 • Improving Decision Making: Using Spreadsheet Software to Perform a Security Risk Assessment 254 • Improving Decision Making: Evaluating Security Outsourcing Services 254 Video Cases 255 • Collaboration and Teamwork Evaluating Security Software Tools 255 Business Problem-Solving Case Sony: The World's Largest Data Breach? 255 III Key System Applications for the Digital Age 259 8 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications 260 Chapter-Opening Case: Cannondale Learns to Manage a Global Supply Chain 261 8.1 Enterprise Systems 263 What Are Enterprise Systems? 263 • Enterprise Software 264 • Business Value of Enterprise Systems 265 8.2 Supply Chain Management Systems 266 The Supply Chain 266 • Information Systems and Supply Chain Management 267 • Supply Chain Management Software 269 • Global Supply Chains and the Internet 270 Interactive Session: Organizations Southwest Airlines Takes Off With Better Supply Chain Management 271 Business Value of Supply Chain Management Systems 273 8.3 Customer Relationship Management Systems 273 What Is Customer Relationship Management? 274 • Customer Relationship Management Software 275 • Operational and Analytical CRM 277 • Business Value of Customer Relationship Management Systems 278 8.4 Enterprise Applications: New Opportunities and Challenges 278 Enterprise Applications Challenges 279 • Next- Generation Enterprise Applications 280 Interactive Session: Organizations Customer Relationship Management Heads to the Cloud 281 Learning Tracks 282 • Review Summary 283 • Key Terms 284 • Review Questions 284 • Discussion Questions 285 • Hands-on MIS Projects 285 Management Decision Problems 285 • Improving Decision Making: Using Database Software to Manage Customer Service Requests 285 • Achieving Operational Excellence: Evaluating Supply Chain Management Services 286 Video Cases 286 • Collaboration and Teamwork Analyzing Enterprise Application Vendors 286 Business Problem-Solving Case Summit Electric Lights Up with a New ERP System 287 9 E-commerce: Digital Markets, Digital Goods 290 Chapter-Opening Case: Groupon's Business Model: Social and Local 291 9.1 E-commerce and the Internet 293 E-commerce Today 293 • Why E-commerce Is Different 296 • Key Concepts in E-commerce: Digital Markets and Digital Goods in a Global Marketplace 298 9.2 E-commerce: Business and Technology 301 Types of E-commerce 301 • E-commerce Business Models 302 • E-commerce Revenue Models 304 Interactive Session: Organizations Walmart, Amazon, eBay: Who Will Dominate Internet Retailing? 305 Web 2.0, Social Networking, and the Wisdom of Crowds 307 • E-commerce Marketing 308 • B2B E-commerce: New Efficiencies and Relationships 313 Interactive Session: People Social Commerce Creates New Customer Relationships 314 9.3 The Mobile Digital Platform and Mobile E-commerce 317 M-commerce Services and Application 318 9.4 Building an E-commerce Presence 320 Pieces of the Site-Building Puzzle 320 • Business Objectives, System Functionality, and Information Requirements 320 • Building the Web Site: In-House Versus Outsourcing 321 Learning Tracks 323 • Review Summary 323 • Key Terms 324 • Review Questions 325 • Discussion Questions 325 • Hands-on MIS Projects 326 Management Decision Problems 326 • Improving Decision Making: Using Spreadsheet Software to Analyze a Dot-Com Business 326 • Achieving Operational Excellence: Evaluating E-commerce Hosting Services 326 Video Cases 327 • Collaboration and Teamwork: Performing a Competitive Analysis of E-commerce Sites 327 Business Problem-Solving Case To Pay or Not to Pay: Zagat's Dilemma 327 10 Improving Decision Making and Managing Knowledge 330 Chapter-Opening Case: What to Sell? What Price to Charge? Ask the Data 331 10.1 Decision Making and Information Systems 333 Business Value of Improved Decision Making 333 • Types of Decisions 333 • The Decision-Making Process 335 • Quality of Decisions and Decision Making 336 10.2 Business Intelligence in the Enterprise 347 What is Business Intelligence? 336 • The Business Intelligence Environment 337 • Business Intelligence and Analytics Capabilities 338 • Business Intelligence Users 340 • Group Decision-Support Systems 343 • Interactive Session: People Colgate-Palmolive Keeps Managers Smiling with Executive Dashboards 344 10.3 Intelligent Systems for Decision Support 346 Expert Systems 346 • Case-Based Reasoning 347 • Fuzzy Logic Systems 348 • Neural Networks 349 • Genetic Algorithms 350 • Intelligent Agents 351 10.4 Systems for Managing Knowledge 352 Interactive Session: Technology IBM's Watson: Can Computers Replace Humans? 353 Enterprise-Wide Knowledge Management Systems 354 • Knowledge Work Systems 357 Learning Tracks 359 • Review Summary 359 • Key Terms 361 • Review Questions 361 • Discussion Questions 362 • Hands-on MIS Projects 362 Management Decision Problems 362 • Improving Decision Making: Using Pivot Tables to Analyze Sales Data 363 • Improving Decision Making: Using Intelligent Agents for Comparison Shopping 363 Video Cases 363 • Collaboration and Teamwork Designing a University GDSS 363 Business Problem-Solving Case Zynga Wins with Business Intelligence 364 IV Building and Managing Systems 367 11 Building Information Systems and Managing Projects 368 Chapter-Opening Case: A New Ordering System for Girl Scout Cookies 369 11.1 Problem Solving and Systems Development 371 Defining and Understanding the Problem 372 • Developing Alternative Solutions 373 • Evaluating and Choosing Solutions 373 • Implementing the Solution 373 11.2 Alternative Systems-Building Approaches 376 Traditional Systems Development Lifecycle 376 • Prototyping 377 ix x Interactive Session: People Honam Petrochemical's Quest for Better Management Reports 378 End-User Development 379 • Purchasing Solutions: Application Software Packages and Outsourcing 380 • Mobile Application Development 382 • Rapid Application Development for E-business 383 11.3 Modeling and Designing Systems 383 Structured Methodologies 383 Interactive Session: Technology DST Systems Scores with Scrum and Application Lifecycle Management 384 Object-Oriented Development 386 • Computer-Aided Software Engineering (CASE) 388 11.4 Project Management 388 Project Management Objectives 388 • Selecting Projects: Making the Business Case for a New System 389 • Managing Project Risk and System-Related Change 391 • Managing Projects on a Global Scale 395 Learning Tracks 397 • Review Summary 398 • Key Terms 399 • Review Questions 399 • Discussion Questions 400 • Hands-on MIS Projects 400 Management Decision Problems 400 • Improving Decision Making: Using Database Software to Design a Customer System for Auto Sales 401 • Achieving Operational Excellence: Analyzing Web Site Design and Information Requirements 401 Video Cases 401 • Collaboration and Teamwork: Preparing Web Site Design Specification 401 Business Problem-Solving Case JetBlue and WestJet: A Tale of Two IS Projects 402 12 Ethical and Social Issues in Information Systems 404 Chapter-Opening Case: Behavioral Targeting: Your Privacy Is the Target 405 12.1 Understanding Ethical and Social Issues Related to Systems 408 A Model for Thinking about Ethical, Social, and Political Issues 409 • Five Moral Dimensions of the Information Age 410 • Key Technology Trends that Raise Ethical Issues 411 12.2 Ethics in an Information Society 413 Basic Concepts: Responsibility, Accountability, and Liability 413 • Ethical Analysis 414 • Candidate Ethical Principles 414 • Professional Codes of Conduct 415 • Some Real-World Ethical Dilemmas 415 12.3 The Moral Dimensions of Information Systems 416 Information Rights: Privacy and Freedom in the Internet Age 416 Interactive Session: Technology Life on the Grid: iPhone Becomes iTrack 423 Property Rights: Intellectual Property 424 • Accountability, Liability, and Control 427 • System Quality: Data Quality and System Errors 428 • Quality of Life: Equity, Access, and Boundaries 429 Interactive Session: People Too Much Information? 434 Learning Tracks 433 • Review Summary 436 • Key Terms 436 • Review Questions 437 • Discussion Questions 437 • Hands-on MIS Projects 437 Management Decision Problems 437 • Achieving Operational Excellence: Creating a Simple Blog 438 • Improving Decision Making: Using Internet Newsgroups for Online Market Research 438 Video Cases 439 • Collaboration and Teamwork Developing a Corporate Ethics Code 439 Business Problem-Solving Case When Radiation Therapy Kills 439 Preface We wrote this book for business school students who want 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 com- prehensive overview of information systems used by business firms today. When interviewing potential employees, business firms often look for new hires who know how to use information systems and technologies to achieve 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 10th edition features all new opening, closing and “Interactive Session” cases. The text, figures, tables, and cases have been updated through November 2011 with the latest sources from industry and MIS research. NEW FEATURES • New Video Cases Package: 24 video case studies (2 per chapter) and 12 instructional videos are available online. • Additional discussion questions are provided for each chapter. • Management checklists are found throughout the book; they are designed to help future managers make better decisions. • Over 40 Learning Tracks are available online for additional coverage. NEW TOPICS • Expanded coverage of business intelligence and business analytics • Expanded coverage of cloud computing and cloud software tools • Private and public clouds • Social graph • Social e-commerce • Social marketing • Social search • Social CRM • Apps ecosystem • Windows 8 • Android, iOS, and Chrome operating systems • Multitouch interface xi xii • Tablet computers • Microblogging • IPv6 • Expanded coverage of collaboration systems and tools • Identity management • Augmented reality • Mobile application development • Cloud and mobile security • HTML5 What’s New in MIS? 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 pro- cesses. (Chapter 1 describes these changes in more detail.) A continuing stream of information technology innovations is transforming the tradi- tional business world. Examples include the emergence of cloud computing, the growth of a mobile digital business platform based on smartphones, tablet computers, and not least, the use of social networks by managers to achieve business objectives. Most of these changes have occurred in the last few years. These innovations are enabling entrepreneurs and inno- vative 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. For instance, the emergence of online media and entertainment stores—driven by mil- lions of consumers who prefer iPods and smartphones—has forever changed the older busi- ness model of distributing music on physical devices, such as records and CDs. Online video rentals are similarly transforming the old model of distributing films through theaters and then through DVD rentals. New high-speed broadband connections to the home have sup- ported these two business changes. E-commerce is back, generating over $310 billion in revenues in 2010, and estimated to grow to over $435 billion in 2015 at about 10% annually. Amazon's revenues grew 40 per- cent in 2010, despite the recession, while offline retail grew by 4 percent. 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, exemplify the new face of e-commerce in the 21st Century. They sell services. Social e-commerce, and social network marketing, where consumers rely on friends for product news and purchases, are increasingly a normal part of business at major Fortune 500 firms. When we think of e-commerce we tend to think of selling physical products. While this iconic vision of e-commerce is still very power- ful and the fastest growing form of retail in the U.S., growing up alongside is a whole new value stream based on selling services, not goods. It’s a services model of e-commerce. Information systems and technologies are the foundation of this new services-based e-com- merce. Likewise, the management of business firms has changed: With new mobile smart- phones, high-speed wireless Wi-Fi networks, and wireless tablet computers, remote sales- people on the road are only seconds away from their managers’ questions and oversight. Managers on the move are in direct, continuous contact with their employees and customers. 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