contents
CHAPTER 1
I n f o r m a t i o n Systems in Business
Opening Case:
CHAPTER 2
Strategic Decision Making 3 2
1
Opening Case: R e v v i n g U p S a l e s
at Harley-Davidson
3 3
Apple—Merging
INTRODUCTION 5
Section 1.1 Information Systems in Business 5
INFORMATION TECHNOLOGY'S ROLE IN BUSINESS
Information Technology's Impact on Business
Operations 6
INFORMATION TECHNOLOGY BASICS 7
Information 8
IT Resources 8
IT Cultures 9
ROLES AND RESPONSIBILITIES IN INFORMATION
TECHNOLOGY 10
The Gap Between Business Personnel and IT
Personnel 12
MEASURING INFORMATION TECHNOLOGY'S SUCCESS
Efficiency and Effectiveness Metrics 13
Benchmarking—Baseline Metrics 13
The Interrelationship Between Efficiency and
Effectiveness IT Metrics 14
Section 1.2 Business Strategy 16
IDENTIFYING COMPETITIVE ADVANTAGES 16
THE FIVE FORCES MODEL—EVALUATING BUSINESS
SEGMENTS 17
5
12
Buyer Power 18
Supplier Power 18
Threat of Substitute Products or Services 18
Threat of New Entrants 19
Rivalry Among Existing Competitors 19
THE THREE GENERIC STRATEGIES—CREATING A
BUSINESS FOCUS 20
VALUE CHAIN ANALYSIS—TARGETING BUSINESS
PROCESSES 20
Value Creation 21
Key Terms 24
Case Closing One: Say "Charge It" with Your Cell Phone 24
Case Closing Two: Innovative Business Managers 25
Case Closing Three: The World Is Flat—Thomas
Friedman 27
Making Business Decisions
28
INTRODUCTION 37
Section 2.1 Decision-Making Systems 35
DECISION MAKING 37
TRANSACTION PROCESSING SYSTEMS 38
DECISION SUPPORT SYSTEMS 39
EXECUTIVE INFORMATION SYSTEMS 41
Digital Dashboards 41
Artificial Intelligence 43
Data Mining 46
Section 2.2 Enterprise Systems 46
ENTERPRISE SYSTEMS 46
SUPPLY CHAIN MANAGEMENT 47
CUSTOMER RELATIONSHIP MANAGEMENT 48
CRM Strategy 50
BUSINESS PROCESS REENGINEERING 50
Finding Opportunity Using BPR 51
Pitfalls of BPR 52
ENTERPRISE RESOURCE PLANNING 52
ERP Software 53
Finding the Right ERP Solution 53
Key Terms 55
Closing Case One: Consolidating Touchpoints
for Saab 55
Closing Case Two: Made-to-0rder Businesses 56
Closing Case Three: Delta Air Lines Plays Catch-Up
Making Business Decisions 60
57
CHAPTER 3
E-Business 6 3
Opening Case: A m a z o n . c o m — N o t
Vom Average Bookstore 6 4
INTRODUCTION 66
Section 3.1 Business and the Internet 66
DISRUPTIVE TECHNOLOGY 66
Disruptive versus Sustaining Technology
The Internet—Business Disruption 67
EVOLUTION OF THE INTERNET 68
Evolution of the World Wide Web 69
ACCESSING INTERNET INFORMATION 71
66
Intranet 71
Extranet 72
Portal 72
Kiosk 72
PROVIDING INTERNET INFORMATION 73
Internet Service Provider 73
Online Service Provider 74
Application Service Provider 74
Section 3.2 E-Business 76
E-BUSINESS BASICS 76
E-BUSINESS MODELS 77
Business-to-Business (B2B) 78
Business-to-Consumer (B2C) 78
Consumer-to-Business (C2B) 79
Consumer-to-Consumer (C2C) 79
ORGANIZATIONAL STRATEGIES FOR E-BUSINESS 80
Marketing/Sales 80
Financial Services 80
Procurement 83
Customer Service 83
Intermediaries 84
MEASURING E-BUSINESS SUCCESS 85
Web Site Metrics 85
E-BUSINESS BENEFITS AND CHALLENGES 88
NEW TRENDS IN E-BUSINESS: E-GOVERNMENT AND
M-COMMERCE 88
M-Commerce 89
Key Terms 93
Case Closing One: eBay—The Ultimate E-Business 93
Case Closing Two: Direct Groceries 95
Case Closing Three: How Do You Value Friendster? 96
Making Business Decisions 97
CHAPTER 4
Ethics a n d Information Security 1 0 1
O p e n i n g Case:
INTRODUCTION 104
Section 4.1 Ethics 104
ETHICS 104
INFORMATION ETHICS 105
Information Has No Ethics 106
DEVELOPING INFORMATION MANAGEMENT
POLICIES 108
Ethical Computer Use Policy 108
Information Privacy Policy 109
Acceptable Use Policy 109
E-Mail Privacy Policy 109
Internet Use Policy 111
Anti-Spam Policy 111
viii
Contents
ETHICS IN THE WORKPLACE 112
Monitoring Technologies 113
Employee Monitoring Policies 114
Section 4.2
Information Security 115
PROTECTING INTELLECTUAL ASSETS 115
THE FIRST LINE OF DEFENSE—PEOPLE 116
THE SECOND LINE OF DEFENSE—TECHNOLOGY 119
Authentication and Authorization 121
Prevention and Resistance 123
Content Filtering 123
Encryption 123
Firewalls 124
Detection and Response 124
Key Terms 127
Closing Case One: Banks Banking on Security 127
Closing Case Two: Hacker Hunters 128
Closing Case Three: Thinking Like the Enemy 130
Making Business Decisions 131
CHAPTER 5
IT A r c h i t e c t u r e s 1 3 5
O p e n i n g Case:
Breaking Points
onic
1 3 6
INTRODUCTION 139
Section 5.1 Hardware and Software Basics
HARDWARE BASICS 139
Central Processing Unit 139
Primary Storage 142
Secondary Storage 142
Input Devices 144
Output Devices 145
Communication Devices 146
COMPUTER CATEGORIES 146
SOFTWARE BASICS 148
139
System Software 148
Application Software 151
Section 5.2 Managing Enterprise Architectures
ENTERPRISE ARCHITECTURES 152
INFORMATION ARCHITECTURE 153
Backup and Recovery 154
Disaster Recovery 154
Information Security 156
INFRASTRUCTURE ARCHITECTURE 157
Flexibility 157
Scalability 158
Reliability 158
Availability 158
Performance 159
APPLICATION ARCHITECTURE 159
Web Services 159
Open Systems 161
152
Key Terms 162
Closing Case One: Chicago Tribune's Server Consolidation
a Success 162
Closing Case Two: UPS in the Computer Repair Business 163
Closing Case Three: Fear the Penguin 164
Making Business Decisions 166
CHAPTER 7
Networks, Telecommunications, and
Wireless C o m p u t i n g 2 0 8
CHAPTER 6
INTRODUCTION 211
Section 7.1 Networks and Telecommunications
NETWORK BASICS 211
ARCHITECTURE 212
Peer-to-Peer Networks 212
Client/Server Networks 213
TOPOLOGY 214
PROTOCOLS 214
Databases and Data Warehouses 1 6 9
O p e n i n g Case:
INTRODUCTION 174
Section 6.1 Database Fundamentals 174
UNDERSTANDING INFORMATION 174
Information Quality 175
DATABASE FUNDAMENTALS 177
DATABASE ADVANTAGES 178
Increased Flexibility 178
Increased Scalability and Performance 179
Reduced Redundancy 179
Increased Integrity (Quality) 179
Increased Security 180
RELATIONAL DATABASE FUNDAMENTALS 180
Entities, Entity Classes, and Attributes 180
Keys and Relationships 180
DATABASE MANAGEMENT SYSTEMS 182
Data Definition Component 183
Data Manipulation Component 184
Application Generation and Data Administration
Components 186
INTEGRATING DATA AMONG MULTIPLE
DATABASES 187
Section 6.2 Data Warehouse Fundamentals 189
ACCESSING ORGANIZATIONAL INFORMATION 189
HISTORY OF DATA WAREHOUSING 189
DATA WAREHOUSE FUNDAMENTALS 190
Multidimensional Analysis 191
Information Cleansing or Scrubbing 192
BUSINESS INTELLIGENCE 194
Enabling Business Intelligence 195
DATA MINING 195
Cluster Analysis 196
Association Detection 196
Statistical Analysis 197
Key Terms 199
Closing Case One: Fishing for Quality 199
Closing Case Two: Mining the Data
Warehouse 200
Closing Case Three: Harrah's—Gambling Big on
Technology 201
Making Business Decisions 204
O p e n i n g Case:
Hospital 2 0 9
Digital
211
Ethernet 216
Transmission Control Protocol/Internet Protocol 217
MEDIA 219
Wire Media 219
Wireless Media 220
E-BUSINESS NETWORKS 221
Section 7.2 Wireless Computing 222
WIRELESS FIDELITY 223
The Value of Timely Information 223
BUSINESS DRIVERS FOR WIRELESS TECHNOLOGIES 224
ADVANTAGES OF ENTERPRISE MOBILITY 225
Bluetooth 225
Radio Frequency Identification (RFID) 227
Satellite 228
Global Positioning System (GPS) 229
THE FUTURE OF WIRELESS 230
Key Terms 231
Closing Case One: Tracking Students 232
Closing Case Two: UPS versus FedEx: Head-to-Head on
Wireless 232
Closing Case Three: Watching Where You Step—Prada 233
Making Business Decisions 235
CHAPTER 8
Supply Chain Management 2 3 9
O p e n i n g Case: D e l l ' s F a m o u s
Supply Chain 2 4 0
INTRODUCTION 242
Section 8.1 Supply Chain Fundamentals 242
BASICS OF SUPPLY CHAIN 242
INFORMATION TECHNOLOGY'S ROLE IN THE SUPPLY
CHAIN 244
Visibility 245
Consumer Behavior 246
Competition 246
Speed 247
SUPPLY CHAIN MANAGEMENT SUCCESS FACTORS
Contents
247
ix
Make the Sale to Suppliers 248
Wean Employees Off Traditional Business
Practices 248
Ensure the SCM System Supports the Organizational
Goals 248
Deploy in Incremental Phases and Measure and
Communicate Success 249
Be Future Oriented 249
SCM SUCCESS STORIES 249
Section 8.2 Applying a Supply Chain Design 250
USING INFORMATION TECHNOLOGY TO DRIVE THE
SUPPLY CHAIN 251
FACILITIES DRIVER 251
Location 252
Capacity 252
Operational Design 252
INVENTORY DRIVER 252
Cycle Inventory 253
Safety Inventory 254
TRANSPORTATION DRIVER 254
Method of Transportation 254
Transportation Route 255
INFORMATION DRIVER 255
Information Sharing 255
Push versus Pull Information Strategy 256
APPLYING A SUPPLY CHAIN DESIGN 257
FUTURE SUPPLY CHAIN TRENDS 258
Key Terms 259
Closing Case One: BudNet 259
Closing Case Two: Listerine's Journey 260
Closing Case Three: How Levi's Got Its Jeans into
Wal-Mart 262
Making Business Decisions 264
CHAPTER 9
Customer Relationship
Management 2 6 8
Opening
Case:
INTRODUCTION
272
Section 9.1 Customer Relationship Management 272
BUSINESS BENEFITS OF CRM 272
CRM BASICS 273
The Evolution of CRM 273
Operational and Analytical CRM 274
USING INFORMATION TECHNOLOGY TO DRIVE
OPERATIONAL CRM 275
Marketing and Operational CRM 275
Sales and Operational CRM 276
Customer Service and Operational CRM 278
USING INFORMATION TECHNOLOGY TO DRIVE
ANALYTICAL CRM 281
x
Contents
Section 9.2 Customer Relationship Management
Strategies 283
CUSTOMER RELATIONSHIP MANAGEMENT'S EXPLOSIVE
GROWTH 283
CUSTOMER RELATIONSHIP MANAGEMENT SUCCESS
FACTORS 285
CURRENT TRENDS: SRM, PRM, AND ERM 286
Supplier Relationship Management 286
Partner Relationship Management 286
Employee Relationship Management 286
FUTURE CRM TRENDS 287
Key Terms 288
Closing Case One: Fighting Cancer with Information 288
Closing Case Two: Calling All Canadians 289
Closing Case Three: The Ritz-Carlton—Specializing in
Customers 290
Making Business Decisions
292
CHAPTER 10
Enterprise Resource Planning and
Collaboration Systems 2 9 5
O p e n i n g Case: C a m p u s
E R P2 9 6
INTRODUCTION 298
Section 10.1 Enterprise Resource Planning 298
ENTERPRISE RESOURCE PLANNING 298
CORE AND EXTENDED ERP COMPONENTS 299
CORE ERP COMPONENTS 300
Accounting and Finance ERP
Components 300
Production and Materials Management ERP
Components 300
Human Resources ERP Components 300
EXTENDED ERP COMPONENTS 301
Business Intelligence Components 301
Customer Relationship Management
Components 302
Supply Chain Management Components 302
E-Business Components 302
ERP VENDOR OVERVIEW 302
ERP Software 303
Finding the Right ERP Solution 305
ERP BENEFITS AND RISKS (COST) 305
THE CONNECTED CORPORATION—INTEGRATING SCM,
CRM, AND ERP 307
THE FUTURE OF ERP 309
Internet 311
Interface 311
Wireless Technology 312
Section 10.2 Collaboration Systems 312
TEAMS, PARTNERSHIPS, AND ALLIANCES 312
COLLABORATION SYSTEMS 313
KNOWLEDGE MANAGEMENT 316
KM in Business 316
KNOWLEDGE MANAGEMENT SYSTEMS 316
Explicit and Tacit Knowledge 316
KM Technologies 318
KM and Social Networking 318
CONTENT MANAGEMENT SYSTEMS 319
WORKFLOW MANAGEMENT SYSTEMS 320
GROUPWARE SYSTEMS 322
COLLABORATION TRENDS 323
Key Terms 324
Closing Case One: DreamWorks Animation
Collaboration 325
Closing Case Two: Improving Highway Safety Through
Collaboration 326
Closing Case Three: Saving Costs at Costco 327
Making Business Decisions 328
APPENDIX A
BUSINESS BASICS
(on t h eW e b s i t e a t
www.mhhe.com/baltzan)
APPENDIX B
BUSINESS PROCESS
(on t h eW e b s i t e a t
www.mhhe.com/baltzan)
GLOSSARY
NOTES
333
344
PHOTO CREDITS
INDEX
351
349