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obr76817_fm_i-xxxiv_1.indd Page i 8/25/10 2:00 PM F-497 MANAGEMENT INFORMATION SYSTEMS /Users/F-497/Desktop/Tempwork/AUGUST 2010/18:08:10/FREE036:Volhart:VYN This page intentionally left blank obr76817_fm_i-xxxiv_1.indd Page iii 8/25/10 2:00 PM F-497 MANAGEMENT INFORMATION SYSTEMS Tenth Edition James A. O’Brien College of Business Administration Northern Arizona University George M. Marakas KU School of Business University of Kansas /Users/F-497/Desktop/Tempwork/AUGUST 2010/18:08:10/FREE036:Volhart:VYN obr76817_fm_i-xxxiv_1.indd Page iv 01/10/10 11:01 AM user-f494 /208/MHBR180/obr76817_disk1of1/0073376817/obr76817_pagefiles MANAGEMENT INFORMATION SYSTEMS Published by McGraw-Hill/Irwin, a business unit of The McGraw-Hill Companies, Inc., 1221 Avenue of the Americas, New York, NY, 10020. Copyright © 2011, 2009, 2008, 2006, 2004, 2002, 1999, 1996, 1993, 1990 by The McGraw-Hill Companies, Inc. All rights reserved. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of The McGraw-Hill Companies, Inc., including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning. Some ancillaries, including electronic and print components, may not be available to customers outside the United States. This book is printed on acid-free paper. 1 2 3 4 5 6 7 8 9 0 DOW/DOW 10 9 8 7 6 5 4 3 2 1 0 ISBN 978-0-07-337681-3 MHID 0-07-337681-7 Vice president and editor-in-chief: Brent Gordon Editorial director: Paul Ducham Director of development: Ann Torbert Senior development editor: Trina Hauger Vice president and director of marketing: Robin J. Zwettler Marketing manager: Sarah Schuessler Vice president of editing, design and production: Sesha Bolisetty Senior project manager: Bruce Gin Buyer II: Debra R. Sylvester Senior designer: Mary Kazak Sander Senior photo research coordinator: Jeremy Cheshareck Photo researcher: Poyee Oster Media project manager: Cathy L. Tepper Cover design: Gino Cieslik Interior design: Maciej Frolow / Brand X Pictures Typeface: 10/12 Janson Compositor: Aptara®, Inc. Printer: R. R. Donnelley Library of Congress Cataloging-in-Publication Data O’Brien, James A., 1936–2007 Management information systems / James A. O’Brien, George M. Marakas.—10th ed. p. cm. Includes Index. Includes bibliographical references and index. ISBN-13: 978-0-07-337681-3 (alk. paper) ISBN-10: 0-07-337681-7 (alk. paper) 1. Management information systems. I. Marakas, George M. II. Title. T58.6.O26 2011 658.4⬘038011—dc22 2010027295 www.mhhe.com obr76817_fm_i-xxxiv_1.indd Page v 8/25/10 2:00 PM F-497 /Users/F-497/Desktop/Tempwork/AUGUST 2010/18:08:10/FREE036:Volhart:VYN Dedicated to our families and our friends. You make everything possible. The world of information systems presents new and exciting challenges each and every day. Creating a textbook to capture this world is a formidable task, to be sure. This, the 10th edition of Management Information Systems, represents the best we have to offer. We take pride in delivering this new edition to you, and we thank all of you for your loyalty to the book and the input you provided that was instrumental in its development. Your continued support fills us with joy and a sense of both accomplishment and contribution. We are also pleased and excited to welcome a new member to our writing family. Miguel Aguirre-Urreta has joined us in the creation of the materials contained herein. His work and effort on the Real World Cases and blue boxes will be apparent as we bring you new cases in every chapter of the book. Please join us in welcoming Miguel to our family. On behalf of Jim, Miguel, and myself, please accept our sincere appreciation for your support and loyalty. As always, we hope you enjoy and benefit from this book. obr76817_fm_i-xxxiv_1.indd Page xi 8/25/10 2:01 PM F-497 /Users/F-497/Desktop/Tempwork/AUGUST 2010/18:08:10/FREE036:Volhart:VYN Real Life Lessons Use Your Brain Traditional case study questions promote and provide opportunity for critical thinking and classroom discussion. obr76817_ch03_076-128.indd Page 80 7/24/10 1:00 PM user-f498 /Users/user-f498/Desktop/MHBR178:Slavin 80 ● Module II / Information Technologies that the complexity can be conquered, while protecting or improving IT’s service levels. By creating a standard desktop configuration and consistent management processes, Hercules reduced total cost of ownership to $76 per month per desktop, from more than $240. In 2004, with the CEO’s support, Alistair Jacques, then SVP of UHG-IT, launched Hercules, focusing it on standardizing and streamlining the processes behind desktop management: procurement, configuration, installation, life cycle, and asset management. In addition to this focus on process, two techniques stand out as key to the program’s success. Working with finance, IT developed a chargeback model that imposes a premium on nonstandardized desktop configurations: $170 per month versus $45 per month for a standard configuration. This value price encourages business managers to choose the more efficient infrastructure. UHG also reduced costly on-site support by reorganizing it: A central IT team manages high-level support activities, completing 95 percent remotely, while select, on-site end users (often non-IT administrative staff trained by IT) provide basic support to colleagues. UHG-IT treated desktop management as a business process challenge rather than a technology issue. This approach freed them to use tactics like non-IT staff for desktop support and value pricing. To date, UHG has converted 75,000 out of 90,000 devices to the new standards, delivering $42 million in annual savings. UHG can now manage nearly four times the number of end users with the same number of IT personnel as in 2004, all while actually improving—not diminishing—service levels. IT now deploys 99.4 percent of releases, updates, and patches in three hours, instead of 65 percent in three weeks. Indeed, companies that blow off asset management do so at their own peril. At the same time, 99 percent of companies that her organization comes across don’t have a proper asset management process in place, according to Elisabeth Vanderveldt, vice president of business development at Montreal-based IT services and consulting firm Conamex International Software Corp. That’s a staggering number, considering the value that life-cycle management can bring to an organization. And it’s CASE STUDY QUESTIONS indicative of the widespread lack of respect for this important aspect of IT operations. The ideal time to start considering an asset management program is before the business and its IT infrastructure is even up and running, but the common scenario is that corporations look to asset management after they’ve encountered a problem running the infrastructure. Businesses’ mentality about asset management is evolving, however. Companies used to consider only reliability, availability, and overall equipment effectiveness in the equation. But now, he said, there is recognition of factors like continuing pressures on cost and green technology. “It really requires a mature organization to understand what’s going to be needed to assess and execute a life-cycle management strategy,” says Don Barry, associate partner in global business services in the supply chain operations and asset management solutions at IBM. Why is a life-cycle management program important? For one thing, it puts IT in much better control of its assets, and this can have a number of benefits. “IT can make really intelligent decisions around what they should get rid of, and they might even find they have more money in the budget and they can start taking a look at newer technology and see if they can bring it in-house. Without that big picture, they just end up spending more and more money than had they been proactive,” says Vanderveldt. Life-cycle management also has value as a risk management tool, and it aids in the disaster recovery process as well, she adds. “It’s also beneficial for those moments that are just completely out of your control, like mergers. acquisitions and uncontrolled corporate growth, either organic or inorganic,” says Darin Stahl, an analyst at London, Ontario based Info-Tech Research Group. “IT leaders without this tool set are now charged with pulling all this information together on short notice. That could be diminished considerably in terms of turnaround time and effort for IT guys if they have a holistic asset management program in place.” The Real World Activities section offers possibilities for hands-on exploration and learning. Source: Adapted from Bob Evans, “Global CIO Quick Takes: AstraZeneca Saves Millions with BDNA,” InformationWeek, February 22, 2010; Rick Swanborg, “ Desktop Management: How UnitedHealth Used Standardization to Cut Costs,” CIO.com, April 28, 2009; and Kathleen Lau, “Asset Management: Do You Know What You’ve Got?,” CIO Canada, August 13, 2008. REAL WORLD ACTIVITIES 2. What are the business benefits of implementing strong IT asset management programs? In what ways have the companies discussed in the case benefited? Provide several examples. 1. An important metric in this area considered by companies is the Total Cost of Ownership ( TCO) of their IT assets. Go online and research what TCO is and how it is related to IT asset management. How are companies using TCO to manage their IT investments? Prepare a presentation to share your research with the rest of your class. 3. One of the companies in the case, UnitedHealth Group, tackled the issue by imposing standardization and “charging” those stepping outside standard models. How should they balance the need to standardize with being able to provide business units with the technologies best suited to their specific needs? Justify your answer. 2. What does Don Barry of IBM mean by “life-cycle” in the context of this case? How would this life-cycle management work when it comes to IT assets? Break into small groups with your classmates and create a working definition of life-cycle management and how it works as you understand it from the case. 1. What are the companies mentioned in the case trying to control, or manage, through these projects? What is the problem? And how did they get there? Use Your Hands xi obr76817_fm_i-xxxiv_1.indd Page xii 8/25/10 2:01 PM F-497 /Users/F-497/Desktop/Tempwork/AUGUST 2010/18:08:10/FREE036:Volhart:VYN Strategy, Ethics . . . Competitive Advantage Chapter 2 focuses on the use of IT as a way to surpass your competitor’s performance. obr76817_ch02_045-075.indd Page 45 7/24/10 1:04 PM user-f498 /Users/user-f498/Desktop/MHBR178:Slavin Management Challenges CHAPTER 2 Business Applications Module I Development Processes COMPETING WITH INFORMATION TECHNOLOGY obr76817_ch02_045-075.indd Page 46 7/24/10 1:04 PM user-f498 46 ● /Users/user-f498/Desktop/MHBR178:Slavin Module I / Foundation Concepts SECTION I Strategic IT Information Technologies Foundation Concepts C h ap t e r H i g h l i g h t s L e ar n i n g O bj ec ti v es Section I Fundamentals of Strategic Advantage 1. Identify several basic competitive strategies and explain how they use information technologies to confront the competitive forces faced by a business. 2. Identify several strategic uses of Internet technologies and give examples of how they can help a business gain competitive advantages. 3. Give examples of how business process reengineering frequently involves the strategic use of Internet technologies. 4. Identify the business value of using Internet technologies to become an agile competitor or form a virtual company. 5. Explain how knowledge management systems can help a business gain strategic advantages. Fundam e ntals of StrStrategic ateITgic Competitive Strategy Concepts Advantage Real World Case: How to Win Friends and Influence Business People: Quantify IT Risks and Value Technology is no longer an afterthought in forming businessUses strategy, but the actual cause Strategic of Information Technology and driver. Building a Customer-Focused Business The Value Chain and Strategic IS This chapter will show you that it is important to view information systems as more than a set of technologies that support efficient business operations, workgroup Section II and enterprise collaboration, or effective businessUsing decision making. Information techInformation Technology for Strategic nology can change the way businesses compete. You should also view information Advantage systems strategically, that is, as vital competitive networks, Strategic Usesas of aITmeans of organizational renewal, and as a necessary investment in Reengineering technologies; Business such technologies help Processes a company adopt strategies and business processes that enable it to reengineer or reinReal World Case: For Companies Both Big and Small: vent itself to survive and succeed in today’s dynamic business environment. Running a Business on Smartphones Section I of this chapter introduces fundamental competitive strategy concepts that Becoming an Agile Company underlie the strategic use of information systems. Section II then discusses several maCreating a Virtual Company jor strategic applications of information technology used by many companies today. Building a Knowledge-Creating Company Read the Real World Case regarding how to quantify the risks (and value) of Real World Wachoviato and Others: obr76817_ch13_526-578.indd Page 529 Trading 7/24/10 1:08 PM user-f498 investing in IT. We can learn a lot about how IT can bestCase: be managed provide Securities at the Speed of Light superior returns on investment from this case. See Figure 2.1. /Users/user-f498/Desktop/MHBR178:Slavin Real World Case: IT Leaders: Reinventing IT as a Strategic Business Partner Competitive Strategy Concepts In Chapter 1, we emphasized that a major role of information systems applications in business is to provide effective support of a company’s strategies for gaining competitive advantage. This strategic role of information systems involves using information technology to develop products, services, and capabilities that give a company major advantages over the competitive forces it faces in the global marketplace. This role is accomplished through a strategic information architecture: the collec- 45 Ethics & Security Chapter 13 discusses the issues surrounding these topics and the challenges IT faces. obr76817_ch13_526-578.indd Page 529 7/24/10 1:08 PM user-f498 /Users/user-f498/Desktop/MHBR178:Slavin Chapter 13 / Security and Ethical Challenges REAL WORLD CASE T 1 Se c u ri t y, E t h i c al , an d Soc i e t al Ch al l e n g e s of IT Introduction of their business systems. Now let’s look at a real-world example. Read the Real World Case on the next page. We can learn a lot from this case about the security and ethical issues that result from the pervasive use of IT in organizations and society today. See Figure 13.1. Business/IT Security, Ethics, and Society xii 529 Texas Health Resources and Intel: Ethics, IT, and Compliance he IT staff at Texas Health Resources Inc. must deliver more than technical functionality. And it needs to deliver more than the business requirements: It also has to meet the organization’s ethical standards. To that end, its systems must help ensure that Texas obr76817_ch13_526-578.indd Page 528 7/24/10 1:08 PM user-f498 /Users/user-f498/Desktop/MHBR178:Slavin Health complies with laws and regulations. And they also have to promote the right behaviors and F I G U Rones, E 1says 3 .Michael 1 Alverson, vice prevent or flag undesirable president and deputy CIO at the Arlington-based nonprofit health care system. Consider the challenge of handling patients’ medical records. Even though the federal Health 528 ● Module V / Management Challenges Insurance Portability and Accountability Act mandates that agencies keep those records private, caregivers still need to access them—when appropriate. So the organization’s electronic health records system “gives doctors and nurses who are caring directly for patients quick access when they use the right authentication,” Alverson says. But additional authentication is required to get records for patients who aren’t under the provider’s immediate care. The records who gets access to what, allowing officials to There is no question that the use of information technology in businesssystem presents major audit review cases to ensure there’s no inappropriate access. security challenges, poses serious ethical questions, and affects society inand significant “The IT staff holds itself to similar ethical standards, too,” ways. Therefore, in this section, we explore the threats to businesses and individuals as Alverson says. The department has policies that prohibit taking a result of many types of computer crime and unethical behavior. In Section II,endorsing we will vendors, to help guarantee that workers gifts and examine a variety of methods that companies use to manage the security and integrity decisions based only on quality and needs. make procurement SECTION I ● And when there’s any question—such as when a vendor proposes a deep discount if Texas Health agrees to be an early adopter of new technology—IT leaders can turn to the systemwide Business and Ethics Council for guidance. “If we really want everyone to subscribe to the idea that working at Texas Health is special, then we have to have peo“The decisions ple actively believe in doing the right thing,” Alverson says. were easier in ics were favorable, Companies are increasingly looking at their ethics poli-but the choic cies and articulating specific valuesited that address rangeformer of now,” asays CIO Jo issues, from community commitment to environmental susconsultancy JG Stevenson Associ tainability, which employees can use to guide their work. you to do versus how mu The need to comply with federal laws andafford regulations drives some of this, while consumer expectations, demandsStevenson say don’temployee get burned.” and economic pressures also play a part. toward certain ethical goals be Information technology consultant Dena L. Smith lays those goals out a hypothetical dilemma: Should whether an IT department hire a involved gre g more expensive vendor because thesponsibility vendor sharesprograms—aren’t its own company’s ethics standards, or should it gohaven’t with a lower-cost they done that yet, it ge provider that doesn’t? spend more money than we have Companies with established ethical standards that guide “Companies use the term how they conduct business frequently confront this kind of question, Smith says, but it’s a particularly tough question many different things. In many today, given the recession. With ITjority, departments forced to it means compliance with cut budgets and staff, CIOs will find it difficult to allocate In other organizatio dollars for applications that promotestandards. corporate ethics. of corporate valu “The decisions were easier in thedefining days when a theset econom The use of information technologies in business has had a major impact on society and thus raises ethical issues in the areas of crime, privacy, individuality, employment, health, and working conditions. See Figure 13.2. It is important to understand that information technology has had beneficial results, as well as detrimental effects, on society and people in each of these areas. For example, computerizing a manufacturing process may have the beneficial result of improving working conditions and producing products of higher quality at lower cost, The pervasive use of information technology in but it also has the adverse effect of eliminating people’s jobs. So your job as a manager organizations and society presents individuals with or business professional should involve managing your work activities and those of new ethical challenges and dilemmas. others to minimize the detrimental effects of business applications of information technology and optimize their beneficial effects. That would represent an ethically responsible use of information technology. Source: © Punchstock. they go about business,” says Ki Hanson, executive director Applied Ethics at Santa Clara U Either way, CIOs have an technology can further their com “Policy decisions at the very tivity that IT experts can bring “CIOs will know the capabilitie tribute that to corporate strateg misuses of those capabilities an prevent the organization from s Hanson cites a 15-year-ol workers at a large telephone com to develop a list of customers w obr76817_fm_i-xxxiv_1.indd Page xiii 8/25/10 2:01 PM F-497 obr76817_ch14_579-620.indd Page 598 7/24/10 1:10 PM user-f498 obr76817_ch14_579-620.indd Page 599 7/24/10 1:11 PM user-f498 . . . and Beyond /Users/user-f498/Desktop/MHBR178:Slavin Go Global with IT 598 ● Module V / Management Challenges SECTION II The International Dimension /Users/user-f498/Desktop/MHBR178:Slavin /Users/F-497/Desktop/Tempwork/AUGUST 2010/18:08:10/FREE036:Volhart:VYN M anag i ng Gl ob al IT This text closes with Chapter 14, an in-depth look at IT across borders. Whether they are in Berlin or Bombay, Kuala Lumpur or Kansas, San Francisco or Seoul, companies around the globe are developing new models to operate competitively in a digital economy. These models are structured, yet agile; global, yet local; and they concentrate on maximizing the risk-adjusted return from both knowledge and technology assets. International dimensions have become a vital part of managing a business enterprise in the inter-networked global economies and markets of today. Whether you become a manager in a large corporation or the owner of a small business, you will be affected by international business developments and deal in some way with people, products, or services whose origin is not your home country. Read the Real World Case on the next page. We can learn a lot about the challenges facing senior IT executives who operate in a globalized world. See Figure 14.11. It s an extreme example, but supporting business in d oping regions rarely lends itself to cookie-cutter IT. Mor the importance of emerging markets today means IT le can’t fob off secondhand technology to non-Western loca Figure 14.12 illustrates the major dimensions of the job of managing global informa“The strategy of many corporations was basically t tion technology that we cover in this section. Notice that all global IT activities must velop things in major markets then hand down those be adjusted to take into account the cultural, political, and geoeconomic challenges that exist in the international business community. Developing appropriate business tions to the emerging markets,” Shurts says. “Hey, this l and IT strategies for the global marketplace should be the first step in global informais two years old, maybe we pass that down, too.” tion technology management. Once that is done, end users and IS managers can move That’s not the case at Cadbury, explains Shurts. “I on to developing the portfolio of business applications needed to support business/IT to deliver strategies that address the specific needs of em strategies; the hardware, software, and Internet-based technology platforms to suping markets. It requires some creativity and new thinki port those applications; the data resource management methods to provide necessary Understanding your company’s business model fo databases; and finally the systems development projects that will produce the global veloping markets is critical. “Will there be manufactu information systems required. obr76817_ch11_446-480.indd Page 452 7/24/10 1:13 PM user-f498 Will you distribute from this market? How will your force engage customers and what is their role whil gaged?” says Ed Holmes, vice president of Global IT 1:15 PM user-f498 /Users/user-f498/Desktop/MHBR178:Slavin Stiefel, an $812 million dollar skin care company, acq We seem to have reached a point where virtually every CIO is a global CIO—a by GlaxoSmithKline, that operates in 28 countries. leader whose sphere of influence (and headaches) spans continents. The global CIO’s most common challenge, according to CIO Executive Council members, is managYou may end up providing technology and services ing global virtual teams. In an ideal world, HR policies across the global IT team lar to those you supply in established markets, Holmes Emerging economies are increasingly demanding— should be consistent, fair, and responsive. Titles and reporting structures (if not and getting—IT executives’ attention. “but you must challenge the baseline assumptions in compensation) should be equalized. to ensure that your solution will fit the market both The council’s European members, representing Royal Dutch Shell, Galderma, nomically and culturally.” F I GU R E 14.11 Global IT Management obr76817_ch11_446-480.indd Page 467 7/24/10 Global Teams: It’s Still a Small World Olympus, and others, commissioned a globalization playbook that collects and codifies best practices in this and other globalization challenges. Obtain local HR expertise. Companies must have a local HR person in each country to deal with local laws. “Hiring, firing, and training obligations must be managed very differently in each location, and you need someone with local expertise on the laws and processes,” says Michael Pilkington, former chief information officer of Euroclear, the Brussels-based provider of domestic and cross-border settlement for bond, equity, and fund transactions. Create job grade consistency across regions. Euroclear is moving toward a job evaluation methodology that organizes job types into vertical categories, such as managing people/process, product development, business support, and project management. This provides a basis for comparing and managing roles and people across locations. Grade level is not the same thing as a title; people’s titles are much more subject to local conventions. /Users/user-f498/Desktop/MHBR178:Slavin Source: © Getty Images. obr76817_ch11_446-480.indd Page 454 7/24/10 1:13 PM user-f498 /Users/user-f498/Desktop/MHBR178:Slavin Expand Your Knowledge Blue boxes in each chapter provide brief, in-depth examples of how corporations apply IS concepts and theories. Risk Assessment and Mitigation CIOs are frequently asked, “What are our IT risks?” Unfortunately, this question is /Users/user-f498/Desktop/MHBR178:Slavin too generic because there are multiple kinds of risk. Before starting any risk assessment, IT needs to understand both the concern prompting the request and which risks need to be assessed. Moreover, everyone needs to understand that nearly all risks that affect an IT organization affect the entire business. Risks fall into four categories that require different mitigation tools: Business operations risk. An assessment determines the risks involved in addressing or ignoring a particular competitive threat. Analyzing competitive threats helps the company decide whether to invest the resources necessary to combat the threat. Determining appropriate responses to competitive threats from nontraditional sources can be particularly difficult. The appropriate mitigation tool is a good business case that evaluates all associated risks. For new business opportunities, a thorough risk assessment may be as important to success as accurate financial projections. Program risk. For approved or existing programs, management concerns focus on whether the program or project will be delivered on time, within budget, and with quality. Effective projectLtd. management andmarket regular monitoring mitigate risk. Bristow Helicopters started losing share in the 1990s, executives Bristow Helicopters: highWhen Business interruption . Thisacross type of affects the company’s ability to moved to improve businessrisk processes therisk Redhill, England-based company. Technologycontinue operating under difficult Scenarios run the efficiencies gamut from a “We needed to change facilities andcircumstances. maintenance processes, improve Supported SWOT, failed of server the staff, the building. interface between sales and clients,” sayscauses John minor Cloggie, to aimprove destroyed In most cases, a failed server probdirector at the unit building of Houston-based Bristow Group opand Much More lemstechnical for certain people. InEuropean contrast, business a destroyed can bring all company Inc., which provides helicopter services to the oil andthat gas industry. erations to a halt. A continuity-of-operations plan describes how the business A key goal of this reengineering effort was tomitigates cut severalrisk. million dollars from the will function in the event of various difficulties operating budget of Bristow Helicopters. The company managed the project using Market risk. This category is divided into geopolitical and industry-specific risks. MindGenius, “mind-mapping” software from East Kilbride, Scotland-based Gael Geopolitical risks include war, terrorism, and epidemics, as well as nationalization and Ltd. The product enabled it to conduct a SWOT analysis (an assessment of its import restrictions. These risks vary and depending theout country, the comreengiplexity of strengths, weaknesses, opportunities, threats), on carve various process the neering corporate supply and the to importance the industry to political leadership. tasks, and chain, delegate them appropriateofgroups. Each team then took the Industry-specific risksofalso planning risk by developing responses high-level version thevary. map Scenario and created its ownmitigates subcategories, tasks, and deadlines obr76817_ch11_446-480.indd Page 461 7/24/10 1:13 PM user-f498 Société de Transport de Montréal: Smooth Ride after a Bumpy Start Suburban sprawl might make a great business case for a transit agency, but when it came to servers, Canada’s Société de Transport de Montréal (STM) drew the line. Mike Stefanakis, senior systems engineer at STM, says that the main reason he started looking at virtualization technology was to prevent server sprawl. He wanted consolidation, particularly for development servers at the agency, which provides more than 360 million bus and metro rides each year. “We crunched the numbers and realized that our growth was going to cause a few problems in the near future,” he says. If things kept going as they had, the agency would need an additional 20 to 30 servers each year, on top of its existing base of 180 primarily Wintel machines. “Too many servers were going to be needed to feed the needs of our users and clients,” Stefanakis says. But even though staffers were convinced of virtualization’s benefits pretty early on, the agency’s end users didn’t necessarily feel the same way. Several factors contributed to the initial resistance. For starters, there was a fear of the unknown. There were e-Business Strategy Examples Expand Your Horizons Globe icons indicate examples with an international focus so that your knowledge makes you truly worldly. for its designated work segment. Since beginning the project in 2004, says Cloggie, the company has managed to cut $6 million from its operating budget. “Mind mapping, of course, didn’t directly create our $6 million savings, but it did allow us to control the project while it was being delivered,” he says. “The speed Market creator . Use Internet define knowledge a new market by identifying with which you can mapthe processes andtocapture is a huge return.” a unique customer need. This model requires you to be among the first to market and to remain ahead of competition by continuously innovating. Examples: Amazon.com and E*TRADE. Channel reconfiguration. Use the Internet as a new channel to access customers, make sales, and fulfill orders directly. This model supplements, rather than replaces, physical distribution and marketing channels. Example: Cisco and Dell. Transaction intermediary. Use the Internet to process purchases. This transactional model includes the end-to-end process of searching, comparing, selecting, and paying online. Examples: Microsoft Expedia and eBay. Infomediary. Use the Internet to reduce the search cost. Offer the customer a unified process for collecting information necessary to make a large purchase. Examples: HomeAdvisor and Auto-By-Tel. Self-service innovator. Use the Internet to provide a comprehensive suite of services that the customer’s employees can use directly. Self-service affords employees a direct, personalized relationship. Examples: Employease and Healtheon. Supply chain innovator. Use the Internet to streamline the interactions among all parties in the supply chain to improve operating efficiency. Examples: McKesson and Ingram Micro. Channel mastery. Use the Internet as a sales and service channel. This model supplements, rather than replaces, the existing physical business offices and call centers. Example: Charles Schwab. xiii obr76817_fm_i-xxxiv_1.indd Page xiv 8/25/10 2:01 PM F-497 /Users/F-497/Desktop/Tempwork/AUGUST 2010/18:08:10/FREE036:Volhart:VYN What’s New? The Tenth Edition includes significant changes to the Ninth Edition’s content that update and improve its coverage, many of them suggested by an extensive faculty review process. Highlights of key changes for this edition include the following: • Real World Cases provide current, relevant, and in-depth examples of IS theory • • • • • • • • • • • • • • xiv applications. A combination of Case Study Questions and Real World Activities allows you to engage students on a variety of levels. More new Real World Cases: More than two-thirds of the cases are new to the Tenth Edition. These up-to-date cases provide students with in-depth business examples of the successes and challenges that companies are experiencing in implementing the information technology concepts covered in each chapter. Chapter 1: Foundations of Information Systems in Business provides an expanded discussion of IS careers and the job market outlook. Chapter 2: Competing with Information Technology has added coverage of the strategic uses of IS/IT. Chapter 3: Computer Hardware provides an expanded history of computing section and updated coverage of the iPhone. Chapter 4: Computer Software includes two brand-new sections that cover cloud computing and application virtualization. It also includes added coverage of Windows Server 2008 and an updated Java discussion to reflect the most recent version, Java EE 5. Chapter 5: Data Resource Management expands the discussions of Facebook, YouTube, and strategic data management. Chapter 6: Telecommunications and Networks updates the discussions of Internet2, the number of Internet users, and metropolitan area networks. Chapter 7: e-Business Systems includes a new discussion on the relationship between SCM, CRM, and ERP with regard to supporting corporate strategy. There is also an expanded discussion of SCM as a top strategic objective of modern enterprises and a new discussion of the use of digital billboards in targeted marketing. Chapter 9: e-Commerce Systems provides a new section and discussion of search engine optimization, new data relating to top retail web sites and online sales volume, and increased coverage and discussion of e-commerce success factors. Chapter 10: Decision Support Systems includes an additional discussion with regard to the strategic value of business intelligence activities in the modern organization. Chapter 11: Developing Business/IT Strategies has added coverage of system implementation challenges, user resistance, end-user development, and logical versus physical models. Chapter 12: Developing Business/IT Solutions has increased coverage of system implementation challenges, user resistance, and end-user development. Chapter 13: Security and Ethical Challenges includes a new section on cyberterrorism. Additionally, it provides updated coverage of software piracy economic impacts, increased coverage of HIPAA, and a significant increase in discussion of current state of cyber law. Chapter 14: Enterprise and Global Management of Information Technology provides expanded in-depth coverage of COBIT and IT governance structures in organizations, as well as an added section on trends in outsourcing and offshoring.