1. How are information systems transforming business, and what is their relationship to globalization?
E-mail, online conferencing, smartphones, and tablet computers have become essential tools for conducting business. Information systems are the foundation of fast-paced supply chains. The Internet allows many businesses to buy, sell, advertise, and solicit customer feedback online. Organizations are trying to become more competitive and efficient by digitally enabling their core business processes and evolving into digital firms. The Internet has stimulated globalization by dramatically reducing the costs of producing, buying, and selling goods on a global scale. New information system trends include the emerging mobile digital platform, online software as a service, and cloud computing.
2. Why are information systems so essential for running and managing a business today?
Information systems are a foundation for conducting business today. In many industries, survival and the ability to achieve strategic business goals are difficult without extensive use of information technology. Businesses today use information systems to achieve six major objectives: operational excellence; new products, services, and business models; customer/supplier intimacy; improved decision making; competitive advantage; and day-to-day survival.
3. What exactly is an information system? How does it work? What are its management, organization, and technology components?
From a technical perspective, an information system collects, stores, and disseminates information from an organization’s environment and internal operations to support organizational functions and decision making, communication, coordination, control, analysis, and visualization. Information systems transform raw data into useful information through three basic activities: input, processing, and output.
From a business perspective, an information system provides a solution to a problem or challenge facing a firm and represents a combination of management, organization, and technology elements.
The management dimension of information systems involves issues such as leadership, strategy, and management behavior. The technology dimension consists of computer hardware, software, data management technology, and networking/telecommunications technology (including the Internet).
The organization dimension of information systems involves issues such as the organization’s hierarchy, functional specialties, business processes, culture, and political interest groups.
4. What are complementary assets? Why are complementary assets essential for ensuring that information systems provide genuine value for an organization?
In order to obtain meaningful value from information systems, organizations must support their technology investments with appropriate complementary investments in organizations and management.
These complementary assets include new business models and business processes, supportive organizational culture and management behavior, appropriate technology standards, regulations, and laws. New information technology investments are unlikely to produce high returns unless businesses
make the appropriate managerial and organizational changes to support the technology.
5. What academic disciplines are used to study information systems? How does each contribute to an understanding of information systems? What is a sociotechnical systems perspective?
The study of information systems deals with issues and insights contributed from technical and behavioral disciplines. The disciplines that contribute to the technical approach focusing on formal models and capabilities of systems are computer science, management science, and operations research. The disciplines contributing to the behavioral approach focusing on the design, implementation, management, and business impact of systems are psychology, sociology, and economics. A sociotechnical view of systems considers both technical and social features of systems and solutions that represent the best fit between them.
Business functions, 49
Business model, 43
Business processes, 41
Complementary assets, 57
Computer hardware, 51
Computer literacy, 48
Computer software, 51
Culture, 50
Data, 45
Data management technology, 51
Data workers, 49
Digital firm, 41
Extranets, 51
Feedback, 46
Information, 45
Information system, 45
Information systems literacy, 48
Information technology (IT), 45
Information technology (IT) infrastructure, 51
Input, 46
Internet, 51
Intranets, 51
Knowledge workers, 49
Management information systems (MIS), 48
Middle management, 49
Network, 51
Networking and telecommunications technology, 51
Operational management, 49
Organizational and management capital, 57
Output, 46
Processing, 46
Production or service workers, 49
Senior management, 49
Sociotechnical view, 60
World Wide Web, 51
1. How are information systems transforming business, and what is their relationship to globalization?
• Describe how information systems have changed the way businesses operate and their products and services.
• Identify three major new information system trends.
• Describe the characteristics of a digital firm.
• Describe the challenges and opportunities of globalization in a “flattened” world.
2. Why are information systems so essential for running and managing a business today?
• List and describe six reasons why information systems are so important for business today.
3. What exactly is an information system? How does it work? What are its management, organization, and technology components?
• Define an information system and describe the activities it performs.
• List and describe the organizational, management, and technology dimensions of information systems.
• Distinguish between data and information and between information systems literacy and computer literacy.
• Explain how the Internet and the World Wide Web are related to the other technology components of information systems.
4. What are complementary assets? Why are complementary assets essential for ensuring that information systems provide genuine value for an organization?
• Define complementary assets and describe their relationship to information technology.
• Describe the complementary social, managerial, and organizational assets required to optimize returns from information technology investments.
5. What academic disciplines are used to study information systems? How does each contribute to an understanding of information systems? What is a sociotechnical systems perspective?
• List and describe each discipline that contributes to a technical approach to information systems.
• List and describe each discipline that contributes to a behavioral approach to information systems.
• Describe the sociotechnical perspective on information systems.
1. What are business processes? How are they related to information systems?
A business process is a logically related set of activities that defines how specific business tasks are performed, and it represents a unique way in which an organization coordinates work, information, and knowledge. Managers need to pay attention to business processes because they determine how well the organization can execute its business, and they may be a source of strategic advantage. There are business processes specific to each of the major business functions, but many business processes are cross-functional. Information systems automate parts of business processes, and they can help organizations redesign and streamline these processes.
2. How do systems serve the different management groups in a business?
Systems serving operational management are transaction processing systems (TPS), such as payroll or order processing, that track the flow of the daily routine transactions necessary to conduct business. Management information systems (MIS) produce reports serving middle management by condensing information from TPS, and these are not highly analytical. Decision-support systems (DSS) support management decisions that are unique and rapidly changing using advanced analytical models. All of these types of systems provide business intelligence that helps managers and enterprise employees make more informed decisions. These systems for business intelligence serve multiple levels of management, and include executive support systems (ESS) for senior management that provide data in the form of graphs, charts, and dashboards delivered via portals using many sources of internal and external information.
3. How do systems that link the enterprise improve organizational performance?
Enterprise applications are designed to coordinate multiple functions and business processes. Enterprise systems integrate the key internal business processes of a firm into a single software system to improve coordination and decision making. Supply chain management systems help the firm manage its relationship with suppliers to optimize the planning, sourcing, manufacturing, and delivery of products and services. Customer relationship management (CRM) systems coordinate the business processes surrounding the firm’s customers. Knowledge management systems enable firms to optimize the creation, sharing, and distribution of knowledge. Intranets and extranets are private corporate networks based on Internet technology that assemble information from disparate systems. Extranets make portions of private corporate intranets available to outsiders.
4. Why are systems for collaboration and social business so important and what technologies do they use?
Collaboration is working with others to achieve shared and explicit goals. Social business is the use of internal and external social networking platforms to engage employees, customers, and suppliers, and it can enhance collaborative work. Collaboration and social business have become increasingly important in business because of globalization, the decentralization of decision making, and growth in jobs where interaction is the primary value-adding activity. Collaboration and social business enhance innovation, productivity, quality, and customer service. Tools for collaboration and social business include e-mail and instant messaging, wikis, virtual meeting systems, virtual worlds, cyberlockers, collaboration platforms such as Google Sites/Google Apps, Microsoft SharePoint, and Lotus Notes, and enterprise social networking tools such as Chatter, Yammer, Jive, and IBM Connections.
5. What is the role of the information systems function in a business?
The information systems department is the formal organizational unit responsible for information technology services. It is responsible for maintaining the hardware, software, data storage, and networks that comprise the firm’s IT infrastructure. The department consists of specialists, such as programmers, systems analysts, project leaders, and information systems managers, and is often headed by a CIO.
Business intelligence, 77
Chief information officer (CIO), 99
Chief knowledge officer (CKO), 99
Chief privacy officer (CPO), 99
Chief security officer (CSO), 99
Collaboration, 88
Customer relationship management (CRM)
systems, 86
Cyberlockers, 94
Decision-support systems (DSS), 79
Digital dashboard, 82
Electronic business (e-business), 87
Electronic commerce (e-commerce), 87
E-government, 87
End users, 99
Enterprise applications, 83
Enterprise systems, 83
Executive support systems (ESS), 82
Information systems department, 98
Information systems managers, 99
Interorganizational system, 86
IT governance, 100
Knowledge management systems (KMS), 86
Management information systems (MIS), 77
Portal, 82
Programmers, 99
Social business, 89
Supply chain management (SCM) systems, 85
Systems analysts, 99
Teams, 88
Telepresence, 93
Transaction processing systems (TPS), 76
1. What are business processes? How are they related to information systems?
• Define business processes and describe the role they play in organizations.
• Describe the relationship between information systems and business processes.
2. How do systems serve the different management groups in a business?
• Describe the characteristics of transaction processing systems (TPS) and the roles they play in a business.
• Describe the characteristics of management information systems (MIS) and explain how MIS differ from TPS and from DSS.
• Describe the characteristics of decisionsupport systems (DSS) and how they benefit businesses.
• Describe the characteristics of executive support systems (ESS) and explain how these systems differ from DSS.
3. How do systems that link the enterprise improve organizational performance?
• Explain how enterprise applications improve organizational performance.
• Define enterprise systems, supply chain management systems, customer relationship management systems, and knowledge management systems and describe their business benefits.
• Explain how intranets and extranets help firms integrate information and business processes.
4. Why are systems for collaboration and social business so important and what technologies do they use?
• Define collaboration and social business, and explain why they have become so important in business today.
• List and describe the business benefits of collaboration and social business.
• Describe a supportive organizational culture and business processes for collaboration.
• List and describe the various types of collaboration and social business tools.
5. What is the role of the information systems function in a business?
• Describe how the information systems function supports a business.
• Compare the roles played by programmers, systems analysts, information systems managers, the chief information officer (CIO), chief security officer (CSO), and chief knowledge officer (CKO).
1. Which features of organizations do managers need to know about to build and use information systems successfully? What is the impact of information systems on organizations?
All modern organizations are hierarchical, specialized, and impartial, using explicit routines to maximize efficiency. All organizations have their own cultures and politics arising from differences in interest groups, and they are affected by their surrounding environment. Organizations differ in goals, groups served, social roles, leadership styles, incentives, types of tasks performed, and type of structure. These features help explain differences in organizations’ use of information systems.
Information systems and the organizations in which they are used interact with and influence each other. The introduction of a new information system will affect organizational structure, goals, work design, values, competition between interest groups, decision making, and day-to-day behavior. At the same time, information systems must be designed to serve the needs of important organizational groups and will be shaped by the organization’s structure, business processes, goals, culture, politics, and management. Information technology can reduce transaction and agency costs, and such changes have been accentuated in organizations using the Internet. New systems disrupt established patterns of work and power relationships, so there is often considerable resistance to them when they are introduced.
2. How does Porter’s competitive forces model help companies develop competitive strategies using information systems?
In Porter’s competitive forces model, the strategic position of the firm, and its strategies, are determined by competition with its traditional direct competitors, but they are also greatly affected by new market entrants, substitute products and services, suppliers, and customers. Information systems help companies compete by maintaining low costs, differentiating products or services, focusing on market niche, strengthening ties with customers and suppliers, and increasing barriers to market entry with high levels of operational excellence.
3. How do the value chain and value web models help businesses identify opportunities for strategic information system applications?
The value chain model highlights specific activities in the business where competitive strategies and information systems will have the greatest impact. The model views the firm as a series of primary and support activities that add value to a firm’s products or services. Primary activities are directly related to production and distribution, whereas support activities make the delivery of primary activities possible. A firm’s value chain can be linked to the value chains of its suppliers, distributors, and customers. A value web consists of information systems that enhance competitiveness at the industry level by promoting the use of standards and industry-wide consortia, and by enabling businesses to work more efficiently with their value partners.
4. How do information systems help businesses use synergies, core competencies, and network-based strategies to achieve competitive advantage?
Because firms consist of multiple business units, information systems achieve additional efficiencies or enhance services by tying together the operations of disparate business units. Information systems help businesses leverage their core competencies by promoting the sharing of knowledge across business units. Information systems facilitate business models based on large networks of users or subscribers that take advantage of network economics. A virtual company strategy uses networks to link to other firms so that a company can use the capabilities of other companies to build, market, and distribute products and services. In business ecosystems, multiple industries work together to deliver value to the customer. Information systems support a dense network of interactions among the participating firms.
5. What are the challenges posed by strategic information systems and how should they be addressed?
Implementing strategic systems often requires extensive organizational change and a transition from one sociotechnical level to another. Such changes are called strategic transitions and are often difficult and painful to achieve. Moreover, not all strategic systems are profitable, and they can be expensive to build. Many strategic information systems are easily copied by other firms so that strategic advantage is not always sustainable.
Agency theory, 120
Benchmarking, 133
Best practices, 133
Business ecosystem, 138
Competitive forces model, 124
Core competency, 137
Disruptive technologies, 117
Efficient customer response system, 126
Mass customization, 127
Network economics, 137
Organization, 112
Primary activities, 132
Product differentiation, 125
Routines, 114
Strategic transitions, 142
Support activities, 132
Switching costs, 128
Transaction cost theory, 119
Value chain model, 131
Value web, 135
Virtual company, 138
1. Which features of organizations do managers need to know about to build and use information systems successfully? What is the impact of information systems on organizations?
• Define an organization and compare the technical definition of organizations with the behavioral definition.
• Identify and describe the features of organizations that help explain differences in organizations’ use of information systems.
• Describe the major economic theories that help explain how information systems affect organizations.
• Describe the major behavioral theories that help explain how information systems affect organizations.
• Explain why there is considerable organizational resistance to the introduction of information systems.
• Describe the impact of the Internet and disruptive technologies on organizations.
2. How does Porter’s competitive forces model help companies develop competitive strategies using information systems?
• Define Porter’s competitive forces model and explain how it works.
• Describe what the competitive forces model explains about competitive advantage.
• List and describe four competitive strategies enabled by information systems that firms can pursue.
• Describe how information systems can support each of these competitive strategies and give examples.
• Explain why aligning IT with business objectives is essential for strategic use of systems.
3. How do the value chain and value web models help businesses identify opportunities for strategic information system applications?
• Define and describe the value chain model.
• Explain how the value chain model can be used to identify opportunities for information systems.
• Define the value web and show how it is related to the value chain.
• Explain how the value web helps businesses identify opportunities for strategic information systems.
• Describe how the Internet has changed competitive forces and competitive advantage.
4. How do information systems help businesses use synergies, core competences, and networkbased strategies to achieve competitive advantage?
• Explain how information systems promote synergies and core competencies.
• Describe how promoting synergies and core competencies enhances competitive advantage.
• Explain how businesses benefit by using network economics.
• Define and describe a virtual company and the benefits of pursuing a virtual company strategy.
5. What are the challenges posed by strategic information systems and how should they be addressed?
• List and describe the management challenges posed by strategic information systems.
• Explain how to perform a strategic systems analysis.
1. What ethical, social, and political issues are raised by information systems?
Information technology is introducing changes for which laws and rules of acceptable conduct have not yet been developed. Increasing computing power, storage, and networking capabilities—including the Internet—expand the reach of individual and organizational actions and magnify their impacts.
The ease and anonymity with which information is now communicated, copied, and manipulated in online environments pose new challenges to the protection of privacy and intellectual property. The main ethical, social, and political issues raised by information systems center around information rights and obligations, property rights and obligations, accountability and control, system quality, and quality of life.
2. What specific principles for conduct can be used to guide ethical decisions?
Six ethical principles for judging conduct include the Golden Rule, Immanuel Kant’s Categorical Imperative, Descartes’ rule of change, the Utilitarian Principle, the Risk Aversion Principle, and the ethical “no free lunch” rule. These principles should be used in conjunction with an ethical analysis.
3. Why do contemporary information systems technology and the Internet pose challenges to the protection of individual privacy and intellectual property?
Contemporary data storage and data analysis technology enables companies to easily gather personal data about individuals from many different sources and analyze these data to create detailed electronic profiles about individuals and their behaviors. Data flowing over the Internet can be monitored at many points. Cookies and other Web monitoring tools closely track the activities of Web site visitors. Not all Web sites have strong privacy protection policies, and they do not always allow for informed consent regarding the use of personal information. Traditional copyright laws are insufficient to protect against software piracy because digital material can be copied so easily and transmitted to many different locations simultaneously over the Internet.
4. How have information systems affected everyday life?
Although computer systems have been sources of efficiency and wealth, they have some negative impacts. Computer errors can cause serious harm to individuals and organizations. Poor data quality is also responsible for disruptions and losses for businesses. Jobs can be lost when computers replace workers or tasks become unnecessary in reengineered business processes. The ability to own and use a computer may be exacerbating socioeconomic disparities among different racial groups and social classes. Widespread use of computers increases opportunities for computer crime and computer abuse.
Computers can also create health problems, such as RSI, computer vision syndrome, and technostress.
Accountability, 160
Carpal tunnel syndrome (CTS), 182
Computer abuse, 180
Computer crime, 178
Computer vision syndrome (CVS), 183
Cookies, 166
Copyright, 172
Descartes’ rule of change, 161
Digital divide, 181
Digital Millennium Copyright Act (DMCA), 174
Due process, 160
Ethical “no free lunch” rule, 161
Ethics, 155
Fair Information Practices (FIP), 163
Golden Rule, 161
Immanuel Kant’s Categorical Imperative, 161
Information rights, 156
Informed consent, 165
Intellectual property, 169
Liability, 160
Nonobvious relationship awareness (NORA), 158
Opt-in, 168
Opt-out, 168
Patent, 172
Privacy, 162
Profiling, 157
Repetitive stress injury (RSI), 182
Responsibility, 159
Risk Aversion Principle, 161
Safe harbor, 165
Spam, 178
Spyware, 167
Technostress, 182
Trade secret, 169
Utilitarian Principle, 161
Web beacons, 167
1. What ethical, social, and political issues are raised by information systems?
• Explain how ethical, social, and political issues are connected and give some examples.
• List and describe the key technological trends that heighten ethical concerns.
• Differentiate between responsibility, accountability, and liability.
2. What specific principles for conduct can be used to guide ethical decisions?
• List and describe the five steps in an ethical analysis.
• Identify and describe six ethical principles.
3. Why do contemporary information systems technology and the Internet pose challenges to the protection of individual privacy and intellectual property?
• Define privacy and fair information practices.
• Explain how the Internet challenges the protection of individual privacy and intellectual property.
• Explain how informed consent, legislation, industry self-regulation, and technology tools help protect the individual privacy of Internet users.
• List and define the three different regimes that protect intellectual property rights.
4. How have information systems affected everyday life?
• Explain why it is so difficult to hold software services liable for failure or injury.
• List and describe the principal causes of system quality problems.
• Name and describe four quality-of-life impacts of computers and information systems.
• Define and describe technostress and RSI and explain their relationship to information technology.
1. What is IT infrastructure and what are its components?
IT infrastructure is the shared technology resources that provide the platform for the firm’s specific information system applications. IT infrastructure includes hardware, software, and services that are shared across the entire firm. Major IT infrastructure components include computer hardware platforms, operating system platforms, enterprise software platforms, networking and telecommunications platforms, database management software, Internet platforms, and consulting services and systems integrators.
2. What are the stages and technology drivers of IT infrastructure evolution?
The five stages of IT infrastructure evolution are: the mainframe era, the personal computer era, the client/server era, the enterprise computing era, and the cloud and mobile computing era. Moore’s Law deals with the exponential increase in processing power and decline in the cost of computer technology, stating that every 18 months the power of microprocessors doubles and the price of computing falls in half. The Law of Mass Digital Storage deals with the exponential decrease in the cost of storing data, stating that the number of kilobytes of data that can be stored on magnetic media for $1 roughly doubles every 15 months. Metcalfe’s Law states that a network’s value to participants grows exponentially as the network takes on more members. The rapid decline in costs of communication and growing agreement in the technology industry to use computing and communications standards is also driving an explosion of computer use.
3. What are the current trends in computer hardware platforms?
Increasingly, computing is taking place on a mobile digital platform. Grid computing involves connecting geographically remote computers into a single network to create a computational grid that combines the computing power of all the computers on the network. Virtualization organizes computing resources so that their use is not restricted by physical configuration or geographic location. In cloud computing, firms and individuals obtain computing power and software as services over a network, including the Internet, rather than purchasing and installing the hardware and software on their own computers. A multicore processor is a microprocessor to which two or more processing cores have been attached for enhanced performance. Green computing includes practices and technologies for producing, using, and disposing of information technology hardware to minimize negative impact on the environment. In autonomic computing, computer systems have capabilities for automatically configuring and repairing themselves. Power-saving processors dramatically reduce power consumption in mobile digital devices.
4. What are the current trends in software platforms?
Open source software is produced and maintained by a global community of programmers and is often downloadable for free. Linux is a powerful, resilient open source operating system that can run on multiple hardware platforms and is used widely to run Web servers. Java is an operating-system– and hardware-independent programming language that is the leading interactive programming environment for the Web. HTML5 makes it possible to embed images, audio, and video directly into a Web document without add-on programs. Web services are loosely coupled software components based on open Web standards that work with any application software and operating system. They can be used as components of Web-based applications linking the systems of two different organizations or to link disparate systems of a single company. Companies are purchasing their new software applications from outside sources, including software packages, by outsourcing custom application development to an external vendor (that may be offshore), or by renting online software services (SaaS). Mashups combine two different software services to create new software applications and services. Apps are small pieces of software that run on the Internet, on a computer, or on a mobile phone and are generally delivered over the Internet.
5. What are the challenges of managing IT infrastructure and management solutions?
Major challenges include dealing with platform and infrastructure change, infrastructure management and governance, and making wise infrastructure investments. Solution guidelines include using a competitive forces model to determine how much to spend on IT infrastructure and where to make strategic infrastructure investments, and establishing the total cost of ownership (TCO) of information technology assets. The total cost of owning technology resources includes not only the original cost of computer hardware and software but also costs for hardware and software upgrades, maintenance, technical support, and training.
Android, 207
Application server, 200
Apps, 225
Autonomic computing, 218
Blade servers, 207
Chrome OS, 207
Clients, 199
Client/server computing, 199
Cloud computing, 200
Consumerization of IT, 210
Extensible Markup Language (XML), 221
Green computing, 216
Grid computing, 211
HTML (Hypertext Markup Language), 220
HTML5, 220
Hybrid cloud, 216
iOS, 208
Java, 219
Legacy systems, 209
Linux, 207
Mainframe, 197
Mashup, 225
Minicomputers, 197
Moore’s Law, 201
Multicore processor, 216
Multitiered (N-tier) client/server architecture, 199
Multitouch, 208
Nanotechnology, 202
On-demand computing, 215
Open source software, 219
Operating system, 207
Outsourcing, 224
Private cloud, 215
Public cloud, 215
SaaS (Software as a Service), 224
Scalability, 226
Service level agreement (SLA),224
Server, 199
Service-oriented architecture (SOA), 221
Software package, 223
Storage area network (SAN), 208
Tablet computers, 210
Technology standards, 205
Total cost of ownership (TCO), 227
Unix, 207
Utility computing, 215
Virtualization, 211
Web browser, 220
Web hosting service, 209
Web server, 199
Web services, 221
Windows, 200
Windows 8, 208
Wintel PC, 197
1. What is IT infrastructure and what are its components?
• Define IT infrastructure from both a technology and a services perspective.
• List and describe the components of IT infrastructure that firms need to manage.
2. What are the stages and technology drivers of IT infrastructure evolution?
• List each of the eras in IT infrastructure evolution and describe its distinguishing characteristics.
• Define and describe the following: Web server, application server, multitiered client/server architecture.
• Describe Moore’s Law and the Law of Mass Digital Storage.
• Describe how network economics, declining communications costs, and technology standards affect IT infrastructure.
3. What are the current trends in computer hardware platforms?
• Describe the evolving mobile platform, grid computing, and cloud computing.
• Explain how businesses can benefit from autonomic computing, virtualization, green computing, and multicore processors.
4. What are the current trends in software platforms?
• Define and describe open source software and Linux and explain their business benefits.
• Define Java and HTML5 and explain why they are important.
• Define and describe Web services and the role played by XML.
• Name and describe the three external sources for software.
• Define and describe software mashups and apps.
5. What are the challenges of managing IT infrastructure and management solutions?
• Name and describe the management challenges posed by IT infrastructure.
• Explain how using a competitive forces model and calculating the TCO of technology assets help firms make good infrastructure investments.
1. What are the problems of managing data resources in a traditional file environment and how are they solved by a database management system?
Traditional file management techniques make it difficult for organizations to keep track of all of the pieces of data they use in a systematic way and to organize these data so that they can be easily accessed. Different functional areas and groups were allowed to develop their own files independently.
Over time, this traditional file management environment creates problems such as data redundancy and inconsistency, program-data dependence, inflexibility, poor security, and lack of data sharing and availability. A database management system (DBMS) solves these problems with software that permits centralization of data and data management so that businesses have a single consistent source for all their data needs. Using a DBMS minimizes redundant and inconsistent files.
2. What are the major capabilities of DBMS and why is a relational DBMS so powerful?
The principal capabilities of a DBMS includes a data definition capability, a data dictionary capability, and a data manipulation language. The data definition capability specifies the structure and content of the database. The data dictionary is an automated or manual file that stores information about the data in the database, including names, definitions, formats, and descriptions of data elements. The data manipulation language, such as SQL, is a specialized language for accessing and manipulating the data in the database. The relational database has been the primary method for organizing and maintaining data in information systems because it is so flexible and accessible. It organizes data in two-dimensional tables called relations with rows and columns. Each table contains data about an entity and its attributes.
Each row represents a record and each column represents an attribute or field. Each table also contains a key field to uniquely identify each record for retrieval or manipulation. Relational database tables can be combined easily to deliver data required by users, provided that any two tables share a common data element. Non-relational databases are becoming popular for managing types of data that can't be handled easily by the relational data model. Both relational and non-relational database products are available as cloud computing services.
3. What are some important database design principles?
Designing a database requires both a logical design and a physical design. The logical design models the database from a business perspective. The organization’s data model should reflect its key business processes and decision-making requirements. The process of creating small, stable, flexible, and adaptive data structures from complex groups of data when designing a relational database is termed normalization. A well-designed relational database will not have many-to-many relationships, and all attributes for a specific entity will only apply to that entity. It will try to enforce referential integrity rules to ensure that relationships between coupled tables remain consistent. An entity-relationship diagram graphically depicts the relationship between entities (tables) in a relational database.
4. What are the principal tools and technologies for accessing information from databases to improve business performance and decision making?
Contemporary data management technology has an array of tools for obtaining useful information from all the different types of data used by businesses today, including semi-structured and unstructured big data in vast quantities. These capabilities include data warehouses and data marts, Hadoop, in-memory computing, and analytical platforms. OLAP represents relationships among data as a multidimensional structure, which can be visualized as cubes of data and cubes within cubes of data, enabling more sophisticated data analysis. Data mining analyzes large pools of data, including the contents of data warehouses, to find patterns and rules that can be used to predict future behavior and
guide decision making. Text mining tools help businesses analyze large unstructured data sets consisting of text. Web mining tools focus on analysis of useful patterns and information from the World Wide Web, examining the structure of Web sites and activities of Web site users as well as the contents of Web pages. Conventional databases can be linked via middleware to the Web or a Web interface to facilitate user access to an organization’s internal data.
5. Why are information policy, data administration, and data quality assurance essential for managing the firm’s data resources?
Developing a database environment requires policies and procedures for managing organizational data as well as a good data model and database technology. A formal information policy governs the maintenance, distribution, and use of information in the organization. In large corporations, a formal data administration function is responsible for information policy, as well as for data planning, data dictionary development, and monitoring data usage in the firm.
Data that are inaccurate, incomplete, or inconsistent create serious operational and financial problems for businesses because they may create inaccuracies in product pricing, customer accounts, and inventory data, and lead to inaccurate decisions about the actions that should be taken by the firm. Firms must take special steps to make sure they have a high level of data quality. These include using enterprise-wide data standards, databases designed to minimize inconsistent and redundant data, data quality audits, and data cleansing software.
Analytic platform, 256
Attribute, 241
Big data, 254
Bit, 241
Byte, 241
Data administration, 265
Data cleansing, 267
Data definition, 249
Data dictionary, 249
Data governance, 266
Data inconsistency, 243
Data manipulation language, 250
Data mart, 255
Data mining, 258
Data quality audit, 267
Data redundancy, 243
Data warehouse, 255
Database, 244
Database administration, 266
Database management system (DBMS), 244
Database server, 263
Entity, 241
Entity-relationship diagram, 253
Field, 241
File, 241
Foreign key, 247
Hadoop, 255
In-memory computing, 256
Information policy, 265
Key field, 247
Non-relational database management systems, 247
Normalization, 252
Online analytical processing (OLAP), 257
Primary key, 247
Program-data dependence, 244
Record, 241
Referential integrity, 253
Relational DBMS, 246
Sentiment analysis, 260
Structured Query Language (SQL), 250
Text mining, 260
Tuple, 247
Web mining, 260
1. What are the problems of managing data resources in a traditional file environment and how are they solved by a database management system?
• List and describe each of the components in the data hierarchy.
• Define and explain the significance of entities, attributes, and key fields.
• List and describe the problems of the traditional file environment.
• Define a database and a database management system and describe how it solves the problems of a traditional file environment.
2. What are the major capabilities of DBMS and why is a relational DBMS so powerful?
• Name and briefly describe the capabilities of a DBMS.
• Define a relational DBMS and explain how it organizes data.
• List and describe the three operations of a relational DBMS.
• Explain why non-relational databases are useful.
3. What are some important database design principles?
• Define and describe normalization and referential integrity and explain how they contribute to a well-designed relational database.
• Define and describe an entity-relationship diagram and explain its role in database design.
4. What are the principal tools and technologies for accessing information from databases to improve business performance and decision making?
• Define big data and describe the technologies for managing and analyzing it.
• List and describe the components of a contemporary business intelligence infrastructure.
• Describe the capabilities of online analytical processing (OLAP).
• Define data mining, describing how it differs from OLAP and the types of information it provides.
• Explain how text mining and Web mining differ from conventional data mining.
• Describe how users can access information from a company’s internal databases through the Web.
5. Why are information policy, data administration, and data quality assurance essential for managing the firm’s data resources?
• Describe the roles of information policy and data administration in information management.
• Explain why data quality audits and data cleansing are essential.
1. What are the principal components of telecommunications networks and key networking technologies?
A simple network consists of two or more connected computers. Basic network components include computers, network interfaces, a connection medium, network operating system software, and either a hub or a switch. The networking infrastructure for a large company includes the traditional telephone system, mobile cellular communication, wireless local area networks, videoconferencing systems, a corporate Web site, intranets, extranets, and an array of local and wide area networks, including the Internet.
Contemporary networks have been shaped by the rise of client/server computing, the use of packet switching, and the adoption of Transmission Control Protocol/Internet Protocol (TCP/IP) as a universal communications standard for linking disparate networks and computers, including the Internet.
Protocols provide a common set of rules that enable communication among diverse components in a telecommunications network.
2. What are the different types of networks?
The principal physical transmission media are twisted copper telephone wire, coaxial copper cable, fiber-optic cable, and wireless transmission.
Local area networks (LANs) connect PCs and other digital devices together within a 500-meter radius and are used today for many corporate computing tasks. Wide area networks (WANs) span broad geographical distances, ranging from several miles to continents, and are private networks that are independently managed. Metropolitan area networks (MANs) span a single urban area.
Digital subscriber line (DSL) technologies, cable Internet connections, and T1 lines are often used for high-capacity Internet connections.
3. How do the Internet and Internet technology work, and how do they support communication and e-business?
The Internet is a worldwide network of networks that uses the client/server model of computing and the TCP/IP network reference model. Every computer on the Internet is assigned a unique numeric IP address. The Domain Name System (DNS) converts IP addresses to more user-friendly domain names. Worldwide Internet policies are established by organizations and government bodies, such as the Internet Architecture Board (IAB) and the World Wide Web Consortium (W3C).
Major Internet services include e-mail, newsgroups, chatting, instant messaging, Telnet, FTP, and the Web. Web pages are based on Hypertext Markup Language (HTML) and can display text, graphics, video, and audio. Web site directories, search engines, and RSS technology help users locate the information they need on the Web. RSS, blogs, social networking, and wikis are features of Web 2.0.
Firms are also starting to realize economies by using VoIP technology for voice transmission and by using virtual private networks (VPNs) as low-cost alternatives to private WANs.
4. What are the principal technologies and standards for wireless networking, communication, and Internet access?
Cellular networks are evolving toward high-speed, high-bandwidth, digital packet-switched transmission. Broadband 3G networks are capable of transmitting data at speeds ranging from 144 Kbps to more than 2 Mbps. 4G networks capable of transmission speeds that could reach 1 Gbps are starting to be rolled out.
Major cellular standards include Code Division Multiple Access (CDMA), which is used primarily in the United States, and Global System for Mobile Communications (GSM), which is the standard in Europe and much of the rest of the world.
Standards for wireless computer networks include Bluetooth (802.15) for small personal area networks (PANs), Wi-Fi (802.11) for local area networks (LANs), and WiMax (802.16) for metropolitan area networks (MANs).
5. Why are radio frequency identification (RFID) and wireless sensor networks valuable for business?
Radio frequency identification (RFID) systems provide a powerful technology for tracking the movement of goods by using tiny tags with embedded data about an item and its location. RFID readers read the radio signals transmitted by these tags and pass the data over a network to a computer for processing. Wireless sensor networks (WSNs) are networks of interconnected wireless sensing and transmitting devices that are embedded into the physical environment to provide measurements of many points over large spaces.
3G Networks, 307
4G networks, 307
Bandwidth, 288
Blog, 304
Blogosphere, 304
Bluetooth, 308
Broadband, 280
Cable Internet connections, 288
Chat, 294
Digital subscriber line (DSL), 288
Domain name, 289
Domain Name System (DNS), 289
E-mail, 294
File Transfer Protocol (FTP), 294
Hertz, 287
Hotspots, 310
Hubs, 281
Hypertext Transfer Protocol (HTTP), 299
Instant messaging, 294
Internet Protocol (IP) address, 288
Internet service provider (ISP), 288
Internet2, 291
IPv6, 291
Local area network (LAN), 286
Metropolitan area network (MAN), 287
Microblogging, 304
Modem, 285
Network operating system (NOS), 281
Packet switching, 283
Peer-to-peer, 286
Personal area networks (PANs), 308
Protocol, 284
Radio frequency identification (RFID), 310
Router, 281
RSS, 304
Search engines, 300
Search engine marketing, 302
Search engine optimization (SEO), 302
Semantic Web, 306
Shopping bots, 304
Smartphones, 307
Social networking, 305
Social search, 303
Software-defined networking, 281
Switch, 281
T1 lines, 288
Telnet, 294
Transmission Control Protocol/Internet Protocol (TCP/IP), 284
Unified communications, 298
Uniform resource locator (URL), 299
Virtual private network (VPN), 298
Voice over IP (VoIP), 295
Web 2.0, 304
Web 3.0, 306
Web site, 299
Wide area networks (WANs), 287
Wi-Fi, 309
Wiki, 305
WiMax, 310
Wireless sensor networks (WSNs), 313
What are the principal components of telecommunications networks and key networking technologies?
• Describe the features of a simple network and the network infrastructure for a large company.
• Name and describe the principal technologies and trends that have shaped contemporary telecommunications systems.
2. What are the main telecommunications transmission media and types of networks?
• Name the different types of physical transmission media and compare them in terms of speed and cost.
• Define a LAN, and describe its components and the functions of each component.
• Name and describe the principal network topologies.
3. How do the Internet and Internet technology work, and how do they support communication and e-business?
• Define the Internet, describe how it works, and explain how it provides business value.
• Explain how the Domain Name System (DNS) and IP addressing system work.
• List and describe the principal Internet services.
• Define and describe VoIP and virtual private networks, and explain how they provide value to businesses.
• List and describe alternative ways of locating information on the Web.
• Compare Web 2.0 and Web 3.0.
4. What are the principal technologies and standards for wireless networking, communications, and Internet access?
• Define Bluetooth, Wi-Fi, WiMax, and 3G and 4G networks.
• Describe the capabilities of each and for which types of applications each is best suited.
5. Why are RFID and wireless sensor networks (WSNs) valuable for business?
• Define RFID, explain how it works, and describe how it provides value to businesses.
• Define WSNs, explain how they work, and describe the kinds of applications that use them.
1. Why are information systems vulnerable to destruction, error, and abuse?
Digital data are vulnerable to destruction, misuse, error, fraud, and hardware or software failures. The Internet is designed to be an open system and makes internal corporate systems more vulnerable to actions from outsiders. Hackers can unleash denial-of-service (DoS) attacks or penetrate corporate networks, causing serious system disruptions. Wi-Fi networks can easily be penetrated by intruders using sniffer programs to obtain an address to access the resources of the network. Computer viruses and worms can disable systems and Web sites. The dispersed nature of cloud computing makes it difficult to track unauthorized activity or to apply controls from afar.
Software presents problems because software bugs may be impossible to eliminate and because software vulnerabilities can be exploited by hackers and malicious software. End users often introduce errors.
2. What is the business value of security and control?
Lack of sound security and control can cause firms relying on computer systems for their core business functions to lose sales and productivity. Information assets, such as confidential employee
records, trade secrets, or business plans, lose much of their value if they are revealed to outsiders or if they expose the firm to legal liability. New laws, such as HIPAA, the Sarbanes-Oxley Act, and the
Gramm-Leach-Bliley Act, require companies to practice stringent electronic records management and adhere to strict standards for security, privacy, and control. Legal actions requiring electronic evidence
and computer forensics also require firms to pay more attention to security and electronic records management.
3. What are the components of an organizational framework for security and control?
Firms need to establish a good set of both general and application controls for their information systems. A risk assessment evaluates information assets, identifies control points and control weaknesses, and determines the most cost-effective set of controls. Firms must also develop a coherent corporate security policy and plans for continuing business operations in the event of disaster or disruption. The security policy includes policies for acceptable use and identity management. Comprehensive and systematic MIS auditing helps organizations determine the effectiveness of security and controls for their information systems.
4. What are the most important tools and technologies for safeguarding information resources?
Firewalls prevent unauthorized users from accessing a private network when it is linked to the Internet. Intrusion detection systems monitor private networks from suspicious network traffic and attempts to access corporate systems. Passwords, tokens, smart cards, and biometric authentication are used to authenticate system users. Antivirus software checks computer systems for infections by viruses and worms and often eliminates the malicious software, while antispyware software combats intrusive and harmful spyware programs. Encryption, the coding and scrambling of messages, is a widely used technology for securing electronic transmissions over unprotected networks. Digital certificates combined with public key encryption provide further protection of electronic transactions by authenticating a user’s identity. Companies can use fault-tolerant computer systems or create high-availability computing environments to make sure that their information systems are always available. Use of software metrics and rigorous software testing help improve software quality and reliability.
Acceptable use policy (AUP), 342
Antivirus software, 348
Application controls, 340
Authentication, 346
Biometric authentication, 346
Botnet, 331
Bugs, 335
Business continuity planning, 344
Click fraud, 334
Computer crime, 332
Computer forensics, 339
Computer virus, 328
Controls, 325
Cybervandalism, 330
Cyberwarfare, 334
Deep packet inspection (DPI), 352
Denial-of-service (DoS) attack, 331
Digital certificates, 350
Disaster recovery planning, 344
Distributed denial-of-service (DDoS) attack, 331
Downtime, 351
Drive-by download, 328
Encryption, 349
Evil twin, 333
Fault-tolerant computer systems, 351
Firewall, 347
General controls, 340
Gramm-Leach-Bliley Act, 339
Hacker, 330
High-availability computing, 351
HIPAA, 338
Identity management, 342
Identity theft, 332
Intrusion detection systems, 348
Keyloggers, 330
Malware, 328
Managed security service providers (MSSPs), 352
MIS audit, 344
Online transaction processing, 351
Password, 346
Patches, 337
Pharming, 333
Phishing, 333
Public key encryption, 350
Public key infrastructure (PKI), 350
Recovery-oriented computing, 351
Risk assessment, 341
Sarbanes-Oxley Act, 339
Secure Hypertext Transfer Protocol (S-HTTP), 349
Secure Sockets Layer (SSL), 349
Security, 325
Security policy, 342
Smart card, 346
Sniffer, 331
Social engineering, 335
Spoofing, 331
Spyware, 330
SQL injection attack, 330
Token, 346
Trojan horse, 329
Unified threat management (UTM), 349
War driving, 327
Worms, 328
1. Why are information systems vulnerable to destruction, error, and abuse?
• List and describe the most common threats against contemporary information systems.
• Define malware and distinguish among a virus, a worm, and a Trojan horse.
• Define a hacker and explain how hackers create security problems and damage systems.
• Define computer crime. Provide two examples of crime in which computers are targets and two examples in which computers are used as instruments of crime.
• Define identity theft and phishing and explain why identity theft is such a big problem today.
• Describe the security and system reliability problems created by employees.
• Explain how software defects affect system reliability and security.
2. What is the business value of security and control?
• Explain how security and control provide value for businesses.
• Describe the relationship between security and control and recent U.S. government regulatory requirements and computer forensics.
3. What are the components of an organizational framework for security and control?
• Define general controls and describe each type of general control.
• Define application controls and describe each type of application control.
Describe the function of risk assessment and explain how it is conducted for information systems.
• Define and describe the following: security policy, acceptable use policy, and identity management.
• Explain how MIS auditing promotes security and control.
4. What are the most important tools and technologies for safeguarding information resources?
• Name and describe three authentication methods.
• Describe the roles of firewalls, intrusion detection systems, and antivirus software in promoting security.
• Explain how encryption protects information.
• Describe the role of encryption and digital certificates in a public key infrastructure.
• Distinguish between fault tolerance and high availability computing, and between disaster recovery planning and business continuity planning.
• Identify and describe the security problems posed by cloud computing.
• Describe measures for improving software quality and reliability.
1. How do enterprise systems help businesses achieve operational excellence?
Enterprise software is based on a suite of integrated software modules and a common central database. The database collects data from and feeds the data into numerous applications that can support nearly all of an organization’s internal business activities. When new information is entered by one process, the information is made available immediately to other business processes.
Enterprise systems support organizational centralization by enforcing uniform data standards and business processes throughout the company and a single unified technology platform. The firmwide data generated by enterprise systems helps managers evaluate organizational performance.
2. How do supply chain management systems coordinate planning, production, and logistics with suppliers?
Supply chain management (SCM) systems automate the flow of information among members of the supply chain so they can use it to make better decisions about when and how much to purchase, produce, or ship. More accurate information from supply chain management systems reduces uncertainty and the impact of the bullwhip effect.
Supply chain management software includes software for supply chain planning and for supply chain execution. Internet technology facilitates the management of global supply chains by providing
the connectivity for organizations in different countries to share supply chain information. Improved communication among supply chain members also facilitates efficient customer response and
movement toward a demand-driven model.
3. How do customer relationship management systems help firms achieve customer intimacy?
Customer relationship management (CRM) systems integrate and automate customer-facing processes in sales, marketing, and customer service, providing an enterprise-wide view of customers.
Companies can use this customer knowledge when they interact with customers to provide them with better service or to sell new products and services. These systems also identify profitable or nonprofitable customers or opportunities to reduce the churn rate.
The major customer relationship management software packages provide capabilities for both operational CRM and analytical CRM. They often include modules for managing relationships with
selling partners (partner relationship management) and for employee relationship management.
4. What are the challenges posed by enterprise applications?
Enterprise applications are difficult to implement. They require extensive organizational change, large new software investments, and careful assessment of how these systems will enhance organizational performance. Enterprise applications cannot provide value if they are implemented atop flawed processes or if firms do not know how to use these systems to measure performance improvements. Employees require training to prepare for new procedures and roles. Attention to data management is essential.
5. How are enterprise applications taking advantage of new technologies?
Enterprise applications are now more flexible, Web-enabled, and capable of integration with other systems, using Web services and service-oriented architecture (SOA). They also have open source and on-demand versions and are able to run in cloud infrastructures or on mobile platforms.
CRM software has added social networking capabilities to enhance internal collaboration, deepen interactions with customers, and utilize data from social networking sites. Open source, mobile,
and cloud versions of some of these products are becoming available.
Analytical CRM, 386
Bullwhip effect, 374
Churn rate, 387
Cross-selling, 384
Customer lifetime value (CLTV), 386
Demand planning, 376
Employee relationship management (ERM), 382
Enterprise software, 370
Just-in-time strategy, 374
Operational CRM, 386
Partner relationship management (PRM), 382
Pull-based model, 379
Push-based model, 379
Social CRM, 389
Supply chain, 372
Supply chain execution systems, 376
Supply chain planning systems, 376
Touch point, 381
1. How do enterprise systems help businesses achieve operational excellence?
• Define an enterprise system and explain how enterprise software works.
• Describe how enterprise systems provide value for a business.
2. How do supply chain management systems coordinate planning, production, and logistics with suppliers?
• Define a supply chain and identify each of its components.
• Explain how supply chain management systems help reduce the bullwhip effect and how they provide value for a business.
• Define and compare supply chain planning systems and supply chain execution systems.
• Describe the challenges of global supply chains and how Internet technology can help companies manage them better.
• Distinguish between a push-based and a pull-based model of supply chain management and explain how contemporary supply chain management systems facilitate a pull-based model.
3. How do customer relationship management systems help firms achieve customer intimacy?
• Define customer relationship management and explain why customer relationships are so important today.
• Describe how partner relationship management (PRM) and employee relationship management (ERM) are related to customer relationship management (CRM).
• Describe the tools and capabilities of customer relationship management software for sales, marketing, and customer service.
• Distinguish between operational and analytical CRM.
4. What are the challenges posed by enterprise applications?
• List and describe the challenges posed by enterprise applications.
• Explain how these challenges can be addressed.
5. How are enterprise applications taking advantage of new technologies?
• How are enterprise applications taking advantage of SOA, Web services, open source software, and wireless technology?
• Define social CRM and explain how customer relationship management systems are using social networking.
Review Summary
1. What are the unique features of e-commerce, digital markets, and digital goods?
E-commerce involves digitally enabled commercial transactions between and among organizations
and individuals. Unique features of e-commerce technology include ubiquity, global reach, universal
technology standards, richness, interactivity, information density, capabilities for personalization and
customization, and social technology.
Digital markets are said to be more “transparent” than traditional markets, with reduced information
asymmetry, search costs, transaction costs, and menu costs, along with the ability to change
prices dynamically based on market conditions. Digital goods, such as music, video, software, and
books, can be delivered over a digital network. Once a digital product has been produced, the cost of
delivering that product digitally is extremely low.
2. What are the principal e-commerce business and revenue models?
E-commerce business models are e-tailers, transaction brokers, market creators, content providers,
community providers, service providers, and portals. The principal e-commerce revenue models are
advertising, sales, subscription, free/freemium, transaction fee, and affiliate.
3. How has e-commerce transformed marketing?
The Internet provides marketers with new ways of identifying and communicating with millions of
potential customers at costs far lower than traditional media. Crowdsourcing utilizing the “wisdom of
crowds” helps companies learn from customers in order to improve product offerings and increase
customer value. Behavioral targeting techniques increase the effectiveness of banner, rich media, and
video ads. Social commerce uses social networks and social network sites to improve targeting of
products and services.
4. How has e-commerce affected business-to-business transactions?
B2B e -commerce generates efficiencies by enabling companies to locate suppliers, solicit bids, place
orders, and track shipments in transit electronically. Net marketplaces provide a single, digital marketplace
for many buyers and sellers. Private industrial networks link a firm with its suppliers and other
strategic business partners to develop highly efficient and responsive supply chains.
5. What is the role of m-commerce in business, and what are the most important m-commerce
applications?
M-commerce is especially well-suited for location-based applications, such as finding local hotels
and restaurants, monitoring local traffic and weather, and providing personalized location-based
marketing. Mobile phones and handhelds are being used for mobile bill payment, banking, securities
trading, transportation schedule updates, and downloads of digital content, such as music, games, and
video clips. M-commerce requires wireless portals and special digital payment systems that can handle
micropayments. The GPS capabilities of smartphones make possible geoadvertising, geosocial, and geoinformation
services.
6. What issues must be addressed when building an e-commerce presence?
Building a successful e-commerce site requires a clear understanding of the business objectives to be
achieved by the site and selection of the right technology to achieve those objectives. E-commerce sites can
be built and hosted in-house or partially or fully outsourced to external service providers.
Key Terms
Advertising revenue model, 416
Affiliate revenue model, 420
Behavioral targeting, 421
Business-to-business (B2B), 413
Business-to-consumer (B2C), 413
Co-location, 437
Community providers, 416
Consumer-to-consumer (C2C), 413
Cost transparency, 408
Crowdsourcing, 420
Customization, 409
Digital goods, 411
Direct goods, 430
Disintermediation, 410
Dynamic pricing, 410
Electronic data interchange (EDI), 429
E-tailer, 414
Exchanges, 431
Free/freemium revenue model, 419
Geoadvertising, 433
Geoinformation services, 433
Geosocial services, 433
Indirect goods, 430
Information asymmetry, 409
Information density, 408
Intellectual property, 415
Location-based services, 432
Long tail marketing, 421
Market creator, 415
Market entry costs, 408
Marketspace, 405
Menu costs, 410
Micropayment systems, 419
Mobile commerce (m-commerce), 413
Net marketplaces, 430
Personalization, 408
Podcasting, 415
Prediction market, 421
Price discrimination, 408
Price transparency, 408
Private exchange, 430
Private industrial networks, 430
Revenue model, 416
Richness, 408
Sales revenue model, 418
Search costs, 408
Social graph, 425
Social shopping, 420
Streaming, 415
Subscription revenue model, 419
Transaction costs, 405
Transaction fee revenue model, 419
Wisdom of crowds, 420
Review Questions
1. What are the unique features of e-commerce, digital markets, and digital goods?
• Name and describe four business trends and three technology trends shaping e-commerce today.
• List and describe the eight unique features of e-commerce.
• Define a digital market and digital goods and describe their distinguishing features.
2. What are the principal e-commerce business and revenue models?
• Name and describe the principal e-commerce business models.
• Name and describe the e-commerce revenue models.
3. How has e-commerce transformed marketing?
• Explain how social networking and the “wisdom of crowds” help companies improve their marketing.
• Define behavioral targeting and explain how it works at individual Web sites and on advertising networks.
• Define the social graph and explain how it is used in e-commerce marketing.
4. How has e-commerce affected business-tobusiness transactions?
• Explain how Internet technology supports business-to-business electronic commerce.
• Define and describe Net marketplaces and explain how they differ from private industrial networks (private exchanges).
5. What is the role of m-commerce in business, and what are the most important m-commerce applications?
• List and describe important types of m-commerce services and applications.
6. What issues must be addressed when building an e-commerce presence?
• List and describe each of the factors that go into the building of an e-commerce Web site.
• List and describe four business objectives, four system functionalities, and four information requirements of a typical e-commerce Web site.
• List and describe each of the options for building and hosting e-commerce Web sites.
1. What is the role of knowledge management and knowledge management programs in business?
Knowledge management is a set of processes to create, store, transfer, and apply knowledge in the organization. Much of a firm’s value depends on its ability to create and manage knowledge. Knowledge management promotes organizational learning by increasing the ability of the organization to learn from its environment and to incorporate knowledge into its business processes. There are three major types of knowledge management systems: enterprise-wide knowledge management systems, knowledge work systems, and intelligent techniques.
2. What types of systems are used for enterprise-wide knowledge management and how do they provide value for businesses?
Enterprise-wide knowledge management systems are firmwide efforts to collect, store, distribute, and apply digital content and knowledge. Enterprise content management systems provide databases and tools for organizing and storing structured documents and tools for organizing and storing semistructured knowledge, such as e-mail or rich media. Knowledge network systems provide directories and tools for locating firm employees with special expertise who are important sources of tacit knowledge. Often these systems include group collaboration tools (including wikis and social bookmarking), portals to simplify information access, search tools, and tools for classifying information based on a taxonomy that is appropriate for the organization. Enterprise-wide knowledge management systems can provide considerable value if they are well designed and enable employees to locate, share, and use knowledge more efficiently.
3. What are the major types of knowledge work systems and how do they provide value for firms?
Knowledge work systems (KWS) support the creation of new knowledge and its integration into the organization. KWS require easy access to an external knowledge base; powerful computer hardware that can support software with intensive graphics, analysis, document management, and communications capabilities; and a user-friendly interface. Computer-aided design (CAD) systems, augmented reality applications, and virtual reality systems, which create interactive simulations that behave like the real world, require graphics and powerful modeling capabilities. KWS for financial professionals provide access to external databases and the ability to analyze massive amounts of financial data very quickly.
4. What are the business benefits of using intelligent techniques for knowledge management?
Artificial intelligence lacks the flexibility, breadth, and generality of human intelligence, but it can be used to capture, codify, and extend organizational knowledge. Expert systems capture tacit knowledge from a limited domain of human expertise and express that knowledge in the form of rules. Expert systems are most useful for problems of classification or diagnosis. Case-based reasoning represents organizational knowledge as a database of cases that can be continually expanded and refined.
Fuzzy logic is a software technology for expressing knowledge in the form of rules that use approximate or subjective values. Fuzzy logic has been used for controlling physical devices and is starting to
be used for limited decision-making applications.
Machine learning refers to the ability of computer programs to automatically learn and improve with experience. Neural networks consist of hardware and software that attempt to mimic the thought
processes of the human brain. Neural networks are notable for their ability to learn without programming and to recognize patterns that cannot be easily described by humans. They are being used in
science, medicine, and business to discriminate patterns in massive amounts of data.
Genetic algorithms develop solutions to particular problems using genetically based processes such as fitness, crossover, and mutation. Genetic algorithms are beginning to be applied to problems involving optimization, product design, and monitoring industrial systems where many alternatives or variables must be evaluated to generate an optimal solution.
Intelligent agents are software programs with built-in or learned knowledge bases that carry out specific tasks for an individual user, business process, or software application. Intelligent agents can be programmed to navigate through large amounts of data to locate useful information and in some cases act on that information on behalf of the user.
3-D printing, 459
Agent-based modeling, 473
Artificial intelligence (AI), 463
Augmented reality (AR), 462
Backward chaining, 465
Case-based reasoning (CBR), 466
Communities of practice (COPs), 453
Computer-aided design (CAD), 459
Data, 449
Digital asset management systems, 456
Enterprise content management systems, 455
Enterprise-wide knowledge management systems, 453
Expert systems, 463
Explicit knowledge, 450
Folksonomies, 456
Forward chaining, 465
Fuzzy logic, 467
Genetic algorithms, 472
Hybrid AI systems, 474
Inference engine, 465
Intelligent agents, 473
Intelligent techniques, 454
Investment workstations, 462
Knowledge, 450
Knowledge base, 463
Knowledge discovery, 463
Knowledge management, 451
Knowledge network systems, 456
Knowledge work systems (KWS), 454
Learning management system (LMS), 457
Machine learning, 468
Neural networks, 468
Organizational learning, 451
Social bookmarking, 456
Structured knowledge, 455
Tacit knowledge, 450
Taxonomy, 456
Virtual Reality Modeling Language (VRML), 462
Virtual reality systems, 459
Wisdom, 450
1. What is the role of knowledge management and knowledge management programs in business?
• Define knowledge management and explain its value to businesses.
• Describe the important dimensions of knowledge.
• Distinguish between data, knowledge, and wisdom and between tacit knowledge and explicit knowledge.
• Describe the stages in the knowledge management value chain.
2. What types of systems are used for enterprise wide knowledge management and how do they provide value for businesses?
• Define and describe the various types of enterprise-wide knowledge management systems and explain how they provide value for businesses.
• Describe the role of the following in facilitating knowledge management: portals, wikis, social bookmarking, and learning management systems.
3. What are the major types of knowledge work systems and how do they provide value for firms?
• Define knowledge work systems and describe the generic requirements of knowledge work systems.
• Describe how the following systems support knowledge work: CAD, virtual reality, augmented reality, and investment workstations.
4. What are the business benefits of using intelligent techniques for knowledge management?
• Define an expert system, describe how it works, and explain its value to business.
• Define case-based reasoning and explain how it differs from an expert system.
• Define machine learning and give some examples.
• Define a neural network, and describe how it works and how it benefits businesses.
• Define and describe fuzzy logic, genetic algorithms, and intelligent agents. Explain how each works and the kinds of problems for which each is suited.
1. What are the different types of decisions and how does the decision-making process work?
The different levels in an organization (strategic, management, operational) have different decision-making requirements. Decisions can be structured, semistructured, or unstructured, with structured decisions clustering at the operational level of the organization and unstructured decisions at the strategic level. Decision making can be performed by individuals or groups and includes employees as well as operational, middle, and senior managers. There are four stages in decision making: intelligence, design, choice, and implementation. Systems to support decision making do not always produce better manager and employee decisions that improve firm performance because of problems with information quality, management filters, and organizational culture.
2. How do information systems support the activities of managers and management decision making?
Early classical models of managerial activities stress the functions of planning, organizing, coordinating, deciding, and controlling. Contemporary research looking at the actual behavior of managers has found that managers’ real activities are highly fragmented, variegated, and brief in duration and that managers shy away from making grand, sweeping policy decisions.
Information technology provides new tools for managers to carry out both their traditional and newer roles, enabling them to monitor, plan, and forecast with more precision and speed than ever before and to respond more rapidly to the changing business environment. Information systems have been most helpful to managers by providing support for their roles in disseminating information, providing liaisons between organizational levels, and allocating resources. However, information systems are less successful at supporting unstructured decisions. Where information systems are useful, information quality, management filters, and organizational culture can degrade decision making.
3. How do business intelligence and business analytics support decision making?
Business intelligence and analytics promise to deliver correct, nearly real-time information to decision makers, and the analytic tools help them quickly understand the information and take action.
A business intelligence environment consists of data from the business environment, the BI infrastructure, a BA toolset, managerial users and methods, a BI delivery platform (MIS, DSS, or ESS), and the user interface. There are six analytic functionalities that BI systems deliver to achieve these ends: predefined production reports, parameterized reports, dashboards and scorecards, ad hoc queries and searches, the ability to drill down to detailed views of data, and the ability to model scenarios and create forecasts.
4. How do different decision-making constituencies in an organization use business intelligence?
Operational and middle management are generally charged with monitoring the performance of their firm. Most of the decisions they make are fairly structured. Management information systems (MIS) producing routine production reports are typically used to support this type of decision making.
For making unstructured decisions, middle managers and analysts will use decision-support systems (DSS) with powerful analytics and modeling tools, including spreadsheets and pivot tables. Senior executives making unstructured decisions use dashboards and visual interfaces displaying key performance information affecting the overall profitability, success, and strategy of the firm. The balanced scorecard and business performance management are two methodologies used in designing executive support systems (ESS).
5. What is the role of information systems in helping people working in a group make decisions more efficiently?
Group decision-support systems (GDSS) help people working together in a group arrive at decisions more efficiently. GDSS feature special conference room facilities where participants contribute their ideas using networked computers and software tools for organizing ideas, gathering information, making and setting priorities, and documenting meeting sessions.
Balanced scorecard method, 504
Behavioral models, 488
Business performance management
(BPM), 505
Choice, 488
Classical model of management, 488
Data visualization, 499
Decisional role, 489
Design, 488
Drill-down, 505
Geographic information systems (GIS), 499
Group decision-support systems (GDSS), 505
Implementation, 488
Informational role, 489
Intelligence, 488
Interpersonal role, 489
Key performance indicators (KPIs), 504
Managerial roles, 489
Pivot table, 502
Predictive analytics, 497
Semistructured decisions, 486
Sensitivity analysis, 502
Structured decisions, 486
Unstructured decisions, 486
Implementation, 488
Informational role, 489
Intelligence, 488
Interpersonal role, 489
Key performance indicators (KPIs), 504
Managerial roles, 489
Pivot table, 502
Predictive analytics, 497
Semistructured decisions, 486
Sensitivity analysis, 502
Structured decisions, 486
Unstructured decisions, 486
1. What are the different types of decisions and how does the decision-making process work?
• List and describe the different levels of decision making and decision-making constituencies in organizations. Explain how their decision-making requirements differ.
• Distinguish between an unstructured, semistructured, and structured decision.
• List and describe the stages in decision making.
2. How do information systems support the activities of managers and management decision making?
• Compare the descriptions of managerial behavior in the classical and behavioral models.
• Identify the specific managerial roles that can be supported by information systems.
3. How do business intelligence and business analytics support decision making?
• Define and describe business intelligence and business analytics.
• List and describe the elements of a business intelligence environment.
• List and describe the analytic functionalities provided by BI systems.
• Compare two different management strategies for developing BI and BA capabilities.
4. How do different decision-making constituencies in an organization use business intelligence?
• List each of the major decision-making constituencies in an organization and describe the types of decisions each makes.
• Describe how MIS, DSS, or ESS provide decision support for each of these groups.
• Define and describe the balanced scorecard method and business performance management.
5. What is the role of information systems in helping people working in a group make decisions more efficiently?
• Define a group decision-support system (GDSS) and explain how it differs from a DSS.
• Explain how a GDSS works and how it provides value for a business.
1. How does building new systems produce organizational change?
Building a new information system is a form of planned organizational change. Four kinds of technology-enabled change are (a) automation, (b) rationalization of procedures, (c) business process redesign, and (d) paradigm shift, with far-reaching changes carrying the greatest risks and rewards. Many organizations are using business process management to redesign work flows and business processes in the hope of achieving dramatic productivity breakthroughs. Business process management is also useful for promoting, total quality management (TQM), six sigma, and other initiatives for incremental process improvement.
2. What are the core activities in the systems development process?
The core activities in systems development are systems analysis, systems design, programming, testing, conversion, production, and maintenance. Systems analysis is the study and analysis of problems of existing systems and the identification of requirements for their solutions. Systems design provides the specifications for an information system solution, showing how its technical and organizational components fit together.
3. What are the principal methodologies for modeling and designing systems?
The two principal methodologies for modeling and designing information systems are structured methodologies and object-oriented development. Structured methodologies focus on modeling processes and data separately. The data flow diagram is the principal tool for structured analysis, and the structure chart is the principal tool for representing structured software design. Object-oriented development models a system as a collection of objects that combine processes and data. Objectoriented modeling is based on the concepts of class and inheritance.
4. What are the alternative methods for building information systems?
The oldest method for building systems is the systems life cycle, which requires that information systems be developed in formal stages. The stages must proceed sequentially and have defined outputs; each requires formal approval before the next stage can commence. The systems life cycle is useful for large projects that need formal specifications and tight management control over each stage of systems building, but it is very rigid and costly.
Prototyping consists of building an experimental system rapidly and inexpensively for end users to interact with and evaluate. Prototyping encourages end-user involvement in systems development and iteration of design until specifications are captured accurately. The rapid creation of prototypes can result in systems that have not been completely tested or documented or that are technically inadequate for a production environment.
Using a software package reduces the amount of design, programming, testing, installation, and maintenance work required to build a system. Application software packages are helpful if a firm does not have the internal information systems staff or financial resources to custom develop a system. To meet an organization’s unique requirements, packages may require extensive modifications that can substantially raise development costs.
End-user development is the development of information systems by end users, either alone or with minimal assistance from information systems specialists. End-user-developed systems can be created rapidly and informally using fourth-generation software tools. However, end-user development may create information systems that do not necessarily meet quality assurance standards and that are not easily controlled by traditional means.
Outsourcing consists of using an external vendor to build (or operate) a firm’s information systems instead of the organization’s internal information systems staff. Outsourcing can save application development costs or enable firms to develop applications without an internal information systems staff. However, firms risk losing control over their information systems and becoming too dependent on external vendors. Outsourcing also entails hidden costs, especially when the work is sent offshore.
5. What are new approaches for system building in the digital firm era?
Companies are turning to rapid application design (RAD), joint application design (JAD), agile development, and reusable software components to accelerate the systems development process. RAD uses object-oriented software, visual programming, prototyping, and fourth-generation tools for very rapid creation of systems. Agile development breaks a large project into a series of small subprojects that are completed in short periods of time using iteration and continuous feedback. Component-based development expedites application development by grouping objects into suites of software components that can be combined to create large-scale business applications. Web services provide a common set of standards that enable organizations to link their systems regardless of their technology platform through standard plug- and-play architecture. Mobile application development must pay attention to simplicity, usability, and the need to optimize tasks for tiny screens.
Acceptance testing, 530
Agile development, 544
Automation, 520
Business process management, 522
Business process redesign, 521
Component-based development, 545
Computer-aided software
engineering (CASE), 536
Conversion, 530
Customization, 541
Data flow diagram (DFD), 533
Direct cutover strategy, 531
Documentation, 531
End-user development, 539
End-user interface, 538
Feasibility study, 528
Fourth-generation languages, 539
Information requirements, 528
Iterative, 538
Joint application design (JAD), 544
Maintenance, 532
Object, 534
Object-oriented development, 534
Offshore outsourcing, 542
Paradigm shift, 521
Parallel strategy, 530
Phased approach strategy, 531
Pilot study strategy, 531
Postimplementation audit, 531
Process specifications, 534
Production, 531
Programming, 530
Prototype, 538
Prototyping, 538
Query languages, 540
Rapid application development (RAD), 544
Rationalization of procedures, 521
Request for Proposal (RFP), 541
Responsive Web design, 545
Six sigma, 521
Structure chart, 534
Structured, 532
Systems analysis, 528
Systems design, 528
Systems development, 525
Systems life cycle, 537
System testing, 530
Test plan, 530
Testing, 530
Total quality management (TQM), 521
Unit testing, 530
1. How does building new systems produce organizational change?
• Describe each of the four kinds of organizational change that can be promoted with information technology.
• Define business process management and describe the steps required to carry it out.
• Explain how information systems support process changes that promote quality in an organization.
2. What are the core activities in the systems development process?
• Distinguish between systems analysis and systems design. Describe the activities for each.
• Define information requirements and explain why they are difficult to determine correctly.
• Explain why the testing stage of systems development is so important. Name and describe the three stages of testing for an information system.
• Describe the role of programming, conversion, production, and maintenance in systems development.
3. What are the principal methodologies for modeling and designing systems?
• Compare object-oriented and traditional structured approaches for modeling and designing systems.
4. What are the alternative methods for building information systems?
• Define the traditional systems life cycle. Describe each of its steps and its advantages and disadvantages for systems building.
• Define information system prototyping. Describe its benefits and limitations. List and describe the steps in the prototyping process.
• Define an application software package. Explain the advantages and disadvantages of developing information systems based on software packages.
• Define end-user development and describe its advantages and disadvantages. Name some policies and procedures for managing enduser development.
• Describe the advantages and disadvantages of using outsourcing for building information systems.
5. What are new approaches for system building in the digital firm era?
• Define rapid application development (RAD) and agile development and explain how they can speed up system-building.
• Explain how component-based development and Web services help firms build and enhance their information systems.
• Explain the features of mobile application development and responsive Web design.
1. What are the objectives of project management and why is it so essential in developing information systems?
Good project management is essential for ensuring that systems are delivered on time, on budget, and provide genuine business benefits. Project management activities include planning the work, assessing the risk, estimating and acquiring resources required to accomplish the work, organizing the work, directing execution, and analyzing the results. Project management must deal with five major variables: scope, time, cost, quality, and risk.
2. What methods can be used for selecting and evaluating information systems projects and aligning them with the firm’s business goals?
Organizations need an information systems plan that describes how information technology supports the attainment of their business goals and documents all their system applications and IT infrastructure
components. Large corporations will have a management structure to ensure the most important systems projects receive priority. Key performance indicators, portfolio analysis, and scoring models can
be used to identify and evaluate alternative information systems projects.
3. How can firms assess the business value of information systems projects?
To determine whether an information systems project is a good investment, one must calculate its costs and benefits. Tangible benefits are quantifiable, and intangible benefits that cannot be immediately quantified may provide quantifiable benefits in the future. Benefits that exceed costs should be analyzed using capital budgeting methods to make sure a project represents a good return on the firm’s invested capital. Real options pricing models, which apply the same techniques for valuing financial options to systems investments, can be useful when considering highly uncertain IT investments.
4. What are the principal risk factors in information systems projects?
The level of risk in a systems development project is determined by (1) project size, (2) project structure, and (3) experience with technology. IS projects are more likely to fail when there is insufficient or improper user participation in the systems development process, lack of management support, and poor management of the implementation process. There is a very high failure rate among projects involving business process reengineering, enterprise applications, and mergers and acquisitions because they require extensive organizational change.
5. What strategies are useful for managing project risk and system implementation?
Implementation refers to the entire process of organizational change surrounding the introduction of a new information system. User support and involvement and management support and control of the implementation process are essential, as are mechanisms for dealing with the level of risk in each new systems project. Project risk factors can be brought under some control by a contingency approach to project management. The risk level of each project determines the appropriate mix of external integration tools, internal integration tools, formal planning tools, and formal control tools to be applied.
Capital budgeting, 569
Change agent, 572
Change management, 572
Counterimplementation, 577
Ergonomics, 579
External integration tools, 575
Formal control tools, 575
Formal planning tools, 575
Gantt chart, 575
Implementation, 572
Information systems plan, 564
Intangible benefits, 568
Internal integration tools, 574
Organizational impact analysis, 580
PERT chart, 575
Portfolio analysis, 566
Project, 560
Project management, 560
Project portfolio management, 581
Real options pricing models (ROPMs), 570
Scope, 562
Scoring model, 567
Sociotechnical design, 580
Tangible benefits, 568
User-designer communications gap, 573
User interface, 560
1. What are the objectives of project management and why is it so essential in developing information systems?
• Describe information system problems resulting from poor project management.
• Define project management. List and describe the project management activities and variables addressed by project management.
2. What methods can be used for selecting and evaluating information systems projects and aligning them with the firm’s business goals?
• Name and describe the groups responsible for the management of information systems projects.
• Describe the purpose of an information systems plan and list the major categories in the plan.
• Explain how key performance indicators, portfolio analysis, and scoring models can be used to select information systems projects.
3. How can firms assess the business value of information systems projects?
• List and describe the major costs and benefits of information systems.
• Distinguish between tangible and intangible benefits.
• Explain how real options pricing models can help manages evaluate information technology investments.
4. What are the principal risk factors in information systems projects?
• Identify and describe each of the principal risk factors in information systems projects.
• Explain why builders of new information systems need to address implementation and change management.
• Explain why eliciting support of management and end users is so essential for successful implementation of information systems projects.
• Explain why there is such a high failure rate for implementations involving enterprise applications, business process reengineering, and mergers and acquisitions.
5. What strategies are useful for managing project risk and system implementation?
• Identify and describe the strategies for controlling project risk.
• Identify the organizational considerations that should be addressed by project planning and implementation.
• Explain how project management software tools contribute to successful project management.
1. What major factors are driving the internationalization of business?
The growth of inexpensive international communication and transportation has created a world culture with stable expectations or norms. Political stability and a growing global knowledge base that is widely shared also contribute to the world culture. These general factors create the conditions for global markets, global production, coordination, distribution, and global economies of scale.
2. What are the alternative strategies for developing global businesses?
There are four basic international strategies: domestic exporter, multinational, franchiser, and transnational. In a transnational strategy, all factors of production are coordinated on a global scale.
However, the choice of strategy is a function of the type of business and product.
3. How can information systems support different global business strategies?
There is a connection between firm strategy and information systems design. Transnational firms must develop networked system configurations and permit considerable decentralization of development and operations. Franchisers almost always duplicate systems across many countries and use centralized financial controls. Multinationals typically rely on decentralized independence among foreign units with some movement toward development of networks. Domestic exporters typically are centralized in domestic headquarters with some decentralized operations permitted.
4. What are the challenges posed by global information systems and management solutions for these challenges?
Global information systems pose challenges because cultural, political, and language diversity magnifies differences in organizational culture and business processes and encourages proliferation of disparate local information systems that are difficult to integrate. Typically, international systems have evolved without a conscious plan. The remedy is to define a small subset of core business processes and focus on building systems to support these processes. Tactically, managers will have to coopt widely dispersed foreign units to participate in the development and operation of these systems, being careful to maintain overall control.
5. What are the issues and technical alternatives to be considered when developing international information systems?
Implementing a global system requires an implementation strategy that considers both business design and technology platforms. The main hardware and telecommunications issues are systems integration and connectivity. The choices for integration are to go either with a proprietary architecture or with open systems technology. Global networks are extremely difficult to build and operate. Firms can build their own global networks or they can create global networks based on the Internet (intranets or virtual private networks). The main software issues concern building interfaces to existing systems and selecting applications that can work with multiple cultural, language, and organizational frameworks.
Business driver, 15-4
Cooptation, 15-16
Core systems, 15-14
Domestic exporter, 15-9
Franchisers, 15-9
Global culture, 15-5
International information systems architecture, 15-4
Legitimacy, 15-16
Multinational, 15-9
Particularism, 15-7
Software localization, 15-21
Transborder data flow, 15-7
Transnational, 15-10
1. What major factors are driving the internationalization of business?
• List and describe the five major dimensions for developing an international information systems architecture.
• Describe the five general cultural factors leading toward growth in global business and the four specific business factors. Describe the interconnection among these factors.
• List and describe the major challenges to the development of global systems.
• Explain why some firms have not planned for the development of international systems.
2. What are the alternative strategies for developing global businesses?
• Describe the four main strategies for global business and organizational structure.
3. How can information systems support different global business strategies?
• Describe the four different system configurations that can be used to support different global strategies.
4. What are the challenges posed by global information systems and management solutions for these challenges?
• List and describe the major management issues in developing international systems.
• Identify and describe three principles to follow when organizing the firm for global business.
• Identify and describe three steps of a management strategy for developing and implementing global systems.
• Define cooptation and explain how can it be used in building global systems.
5. What are the issues and technical alternatives to be considered when developing international information systems?
• Describe the main technical issues facing global systems.
• Identify some technologies that will help firms develop global systems.
Management Information Systems - Managing the Digital Firm
Kenneth C. Laudon: New York University
Jane P. Laudon: Azimuth Information Systems
392 Part Three Key System Applications for the Digital Age
http://www.learningace.com/textbooks/9813-it-systems-management-2nd-edition
