Information Systems for Managers: Text and Cases, 2nd Edition

FOREWORD xi

PART I FOUNDATIONS 1

CHAPTER 1 Information Systems and the Role of General and Functional Managers 3

Introduction 5

General and Functional Managers 6

General and Functional Managers versus End Users 9

The Next Wave of CIOs 10

Fundamental IT Trends: The Staying Power of Moore’s Law 12

Processing Power and Memory Increase 13

Costs of Computing Power Decline 14

Computers Have Become Easier to Use 16

Other IT Trends of Managerial Interest 16

Declining Storage Costs 17

Ubiquitous Network Access 17

Ubiquitous Computing and Digital Data Genesis 17

How Do These Trends Affect Today’s Managers? 21

Why Can’t We Just Hire Good IT People? 22

Summary 23

Study Questions 23

Further Readings 24

Glossary 24

CHAPTER 2 Information Systems Defined 25

Introduction 26

Information Systems: Definition 27

IS, Not IT 27

Information Systems as Sociotechnical Systems 28

The Four Components of an Information System 29

Systemic Effects 32

Why Do Organizations Build Information Systems? 33

Successful Information Systems 34

Information Systems Outcomes 38

Information Systems in the Organizational Context 39

Every Organization is Unique 39

Bringing It All Together 40

Information Systems and Organizational Change 41

First-Order Change: Automate 41

Second-Order Change: Informate 42

Third-Order Change: Transform 43

Culture and Information Systems 45

National Culture 45

Organizational Culture and National Culture 46

How Culture Impacts Structure 47

Implications 49

Don’t Put the Cart before the Horse 49

The Rock in the Pond 50

Information Systems Are in Flux 50

Conclusion 51

Summary 51

Study Questions 51

Further Readings 52

Glossary 52

Case Study: Troubleshooting Information Systems at the Royal Hotel 52

CHAPTER 3 Organizational Information Systems and Their Impact 58

Introduction 59

Categorizing Systems 60

Hierarchical Perspective 60

Functional Perspective 64

Process Perspective 65

The Information System Cycle 69

The Integration Imperative 70

Defining Integration 70

The Dimensions of Integration 70

Enterprise Systems 73

The Genesis of Enterprise Systems 73

Enterprise Systems: Definition 75

The Advantages of Enterprise Systems 78

The Limitations of Enterprise Systems 79

Supply Chain Management 83

A Brief History of Supply Chain Management 84

Modern Supply Chain Management 85

Knowledge Management 87

Knowledge: Definition 87

Knowledge Management: Definition 89

Business Intelligence 90

Business Intelligence: Definition 92

Components of the Business Intelligence Infrastructure 93

The Evolution of Business Intelligence 96

Customer Relationship Management 97

Aspects of CRM 97

The Limitations of CRM 99

Best-of-Breed Integration 99

Enterprise Application Integration (EAI) 100

Ultimate Flexibility: Service-Oriented Architecture 100

Integration: Concluding Remarks 102

Summary 103

Study Questions 104

Further Readings 104

Glossary 105

Case Study: Hilton Hotels—Brand Differentiation through Customer Relationship Management 106

PART II COMPETING IN THE INTERNET AGE 119

CHAPTER 4 The Changing Competitive Environment 121

Introduction 122

Network Economics 123

Networks Are Different: Value in Plentitude 124

Physical and Virtual Networks 124

Key Concepts and Vocabulary 126

Two-Sided Networks 134

Implications for General and Functional Managers 134

The Economics of Information 137

Data and Information 138

Classic Information Goods 138

The Economic Characteristics of Information 139

Implications 143

Information-Intensive Goods 144

Information in Networks 146

The Richness and Reach Trade-Off 147

Implications 149

Obstacles 151

The Internet Changes Everything? 153

A Note about Disruptive Technology 154

Sustaining Technology 154

Disruptive Technology 155

Implications for Managers 156

What to Do? 157

Summary 158

Study Questions 159

Further Readings 159

Glossary 159

Case Study: Online Education 160

CHAPTER 5 Electronic Commerce: New Ways of Doing Business 163

Introduction 166

The Internet 166

Internet Services 168

Distributed Ownership 168

Multiplicity of Devices 169

Open Standards 170

The Network, More than the Internet of Today 170

The eCommerce Vocabulary 172

eCommerce and eBusiness 173

The Enablers 173

Categorizing Electronic Commerce Initiatives 174

Manifestations of eCommerce and eBusiness 180

Business Models: Definition 180

Dominant Business Models 184

The Implications of eCommerce 188

Disintermediation 188

Reintermediation 189

Market Efficiency 189

Channel Conflict 189

Customer and Employee Self-Service 191

eCommerce: From Novelty to the Mainstream 191

The Web 2.0 Phenomenon 192

Web 2.0 Technologies 196

Web 2.0 and Business Innovation 201

Summary 203

Study Questions 203

Further Readings 204

Glossary 204

Case Study: STA Travel Island—Marketing First Life Travel Services in Second Life 205

PART III THE STRATEGIC USE OF INFORMATION SYSTEMS 209

CHAPTER 6 Strategic Information Systems Planning 211

Introduction 212

A Word About Strategic and Operational Planning 213

Strategic Alignment 213

Six Decisions Requiring Managerial Involvement 215

The Purpose of Strategic Information Systems Planning 217

Plans Enable Communication 217

Plans Enable Unity of Purpose 218

Plans Simplify Decision Making over Time 218

The Strategic Information Systems Planning Process 218

Know Who You Are: Strategic Business Planning 219

Know Where You Start: Information Systems Assessment 219

Know Where You Want to Go: Information Systems Vision 221

Know How You Are Going to Get There: Information Systems Guidelines 226

Know How Well-Equipped You Are to Get There: Information Systems SWOT 230

From Planning to Action: Proposed Strategic Initiatives 231

Summary 231

Study Questions 232

Further Readings 232

Glossary 232

Case Study: Outrigger Hotels and Resorts 233

CHAPTER 7 Value Creation and Strategic Information Systems 249

Introduction 250

The Analysis of Added Value 251

The Benefits of Disciplined Analysis 252

The Definition of Value 252

Defining the Components of Value Created 253

Computing the Total Value Created 254

Appropriating the Value Created 256

The Definition of Added Value 257

Added Value in a Competitive Market 258

Pricing Considerations 258

The Relationship between Added Value and Competitive Advantage 259

How Is Added Value Created? 259

Two Ways to Create New Value 260

Some Considerations About the Analysis of Added Value 261

Strategic Information Systems 263

Definition: Strategic Information Systems 263

IT-Dependent Strategic Initiatives 265

Summary 267

Study Questions 268

Further Readings 268

Glossary 268

Case Study: Upscale Markets—Value Creation In a Mature Industry 269

CHAPTER 8 Value Creation with Information Systems 277

Introduction 280

Traditional Models of Value Creation with IT 280

Industry Analysis 280

Value Chain 285

Customer Service Life Cycle 289

Traditional Models, Not ‘‘Old’’ Models 297

Emerging Frameworks 297

Virtual Value Chain 298

Value Creation with Customer Data 304

Crafting Data-Driven Strategic Initiatives 312

Conclusions 315

Summary 315

Study Questions 316

Further Readings 316

Glossary 317

Case Study: Carnival Cruise Lines 317

CHAPTER 9 Appropriating IT-Enabled Value Over Time 344

Introduction 345

Not All IT is Created Equal 346

High-Speed Internet Access in Hotel Rooms 346

Business Intelligence at Caesars Entertainment 347

The Need for A Priori Analysis 348

Appropriating Value Over Time: Sustainability Framework 348

Sustainable Competitive Advantage 348

Resource Based View 349

Response Lag 350

Four Barriers to Erosion 350

The Holistic Approach 360

The Dynamics of Sustainability 361

Applying the Framework 363

Prerequisite Questions 363

Sustainability Questions 364

What Evolutionary Paths Does the Innovation Create? 366

Making Decisions 367

Develop the IT-Dependent Strategic Initiative Independently 367

Develop the IT-Dependent Strategic Initiative as Part of a Consortium 367

Shelve the IT-Dependent Strategic Initiative 367

Summary 368

Study Questions 368

Further Readings 369

Glossary 369

Case Study: Custom Made Apparel and Individualized Service at Lands’ End 369

PART IV GETTING IT DONE 381

CHAPTER 10 Funding and Governance of Information Systems 383

Introduction 384

Information Systems Governance 385

Steering Committee 386

Funding Information Systems 387

Chargeback 387

Allocation 387

Overhead 388

The Budgeting and Project Prioritization Process 388

Making the Budget 388

Funding Information Systems Projects: Making the Business Case 390

Individual Project Risk 396

Portfolio Management 397

Outsourcing 398

Drivers of Outsourcing 399

The Risks of Outsourcing 399

Offshoring 400

Making Optimal Outsourcing Decisions 400

Summary 401

Study Questions 402

Further Readings 402

Glossary 403

Case Study: IT Planning at ModMeters 403

CHAPTER 11 Creating Information Systems 406

Introduction 407

How Hard Can IT Be? 408

Fulfilling Information Processing Needs 410

Three Approaches 410

Make versus Buy 411

Buy and Make 414

Build Your Own: Systems Design and Development 414

Systems Development Life Cycle 414

Prototyping 421

Agile Development 423

Outsourced Development 424

Buying Off-the-Shelf Applications 426

Definition 426

Build 429

Implementation 429

End-User Development 430

The Benefits of End-User Development 430

The Risks of End-User Development 430

Summary 431

Study Questions 432

Further Readings 433

Glossary 433

Case Study: Project Management at MM 434

CHAPTER 12 Information Systems Trends 437

Introduction 439

The Mobile Platform 440

Characteristics of the Mobile Platform 442

Mobile Commerce 443

Location-Based Social Networking 444

Augmented Reality 445

Green IS 447

Digital Data Genesis 448

Analyzing Digital Data Genesis Opportunities 452

The Advent of Supercrunchers 453

Customer-Managed Interactions 454

Open Source 456

Open Source: Definition 456

Open Source Is Open for Business 457

Advantages and Disadvantages of Open Source Software 458

Software as a Service 460

Historical Context 461

SaaS Today 462

Cloud Computing 464

Summary 466

Study Questions 466

Further Readings 467

Glossary 467

Case Study: TripIt—The Traveler’s Agent 467

CHAPTER 13 Security, Privacy, and Ethics 487

Introduction 489

IT Risk Management and Security 490

Why Is Security Not an IT Problem? 491

Risk Assessment 492

Risk Mitigation 493

The Internal Threat 494

The External Threat 495

Responding to Security Threats 501

Managing Security: Overall Guidelines 504

Privacy 506

Privacy Defined 507

Privacy Risks 507

Safeguarding Privacy 510

Ethics 511

Ethics: Definition 511

Information Systems Ethics 512

Ensuring Ethical Uses of Information Systems 513

Summary 514

Study Questions 515

Further Readings 515

Glossary 515

Case Study: Giant Food and Elensys—Looking Out for Customers or Gross Privacy Invasions? 516

Index 525