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www.downloadslide.net www.downloadslide.net www.downloadslide.net www.downloadslide.net Management Information Systems Moving Business Forward Fourth Edition KELLY RAINER BRAD PRINCE HUGH WATSON with contributions by Alina M. Chircu, Bentley University Marco Marabelli, Bentley University www.downloadslide.net VICE PRESIDENT AND DIRECTOR DIRECTOR EXECUTIVE EDITOR ASSISTANT DEVELOPMENT EDITOR SENIOR CONTENT MANAGER SENIOR PRODUCTION EDITOR SENIOR MARKETING MANAGER ASSOCIATE PRODUCT DESIGNER SENIOR DESIGNER SENIOR PHOTO EDITOR COVER DESIGNER PRODUCTION MANAGEMENT SERVICES COVER CREDIT George Hoffman Veronica Visentin Darren Lalonde Emma Townsend-Merino Dorothy Sinclair Jane Lee Kaddu Chris DeJohn Wendy Ashenberg Maureen Eide Billy Ray Maureen Eide Thomson Digital Aleksandarvelasevic © Getty Images This book was set in Source Sans Pro 9.5/12.5 by Thomson Digital and printed and bound by Courier/ Kendallville. This book is printed on acid free paper. Founded in 1807, John Wiley & Sons, Inc., has been a valued source of knowledge and understanding for more than 200 years, helping people around the world meet their needs and fulfill their aspirations. Our company is built on a foundation of principles that include responsibility to the communities we serve and where we live and work. In 2008, we launched a Corporate Citizenship Initiative, a global effort to address the environmental, social, economic, and ethical challenges we face in our business. Among the issues we are addressing are carbon impact, paper specifications and procurement, ethical conduct within our business and among our vendors, and community and charitable support. For more information, please visit our Web site: www.wiley.com/go/citizenship. Copyright © 2017 John Wiley & Sons, Inc. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning or otherwise, except as permitted under Sections 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923 (Web site: www.copyright.com). Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030-5774, (201) 748-6011, fax (201) 748-6008, or online at: www.wiley.com/go/permissions. ISBN-13: 978-1-119-32109-5 The inside back cover will contain printing identification and country of origin if omitted from this page. In addition, if the ISBN on the back cover differs from the ISBN on this page, the one on the back cover is correct. Library of Congress Cataloging-in-Publication Data Names: Rainer, R. Kelly, Jr., 1949Title: Management information systems / R. Kelly Rainer, Jr., Brad Prince, Hugh Watson. Description: Fourth edition. | Hoboken, NJ : John Wiley & Sons, Inc., 2017. | Includes bibliographical references and index. Identifiers: LCCN 2016034800 (print) | LCCN 2016035388 (ebook) | ISBN 9781118890486 (paperback : acid-free paper) | ISBN 9781118890431 (pdf) | ISBN 9781119321095 (epub) Subjects: LCSH: Management information systems. Classification: LCC HD30.213 .R35 2017 (print) | LCC HD30.213 (ebook) | DDC 658.4/038011--dc23 LC record available at https://lccn.loc.gov/2016034800 Printed in the United States of America. 10 9 8 7 6 5 4 3 2 1 www.downloadslide.net To The Student Dear Student, Why are you here? We are not asking you a philosophical ques­ tion—that is a different course. We are asking, “Why are you about to spend an entire term learning about information sys­ tems? Why are you—an accounting major, or a marketing or management major—being required to study this topic?” You may be asking, “What’s in IT for me?” The short answer is that “IT’s About Business,” and the longer answer is the goal of this book. Information systems are making the world a very small place and are contributing to rapidly increasing global competi­ tion. As a result, organizations are constantly trying to find ways to gain a competitive advantage—by achieving operational excellence, developing new products and services, developing new business models, providing superb customer service, im­ proving decision making, and so on. It should be obvious, then, that an introductory course in information systems is critically important for success in your chosen career. Rapid advances in information systems mean that, as business students, change will be the only constant you will encounter in today’s dynamic digital business environment. We wrote this book for business students of all majors who will soon become business professionals. We have three goals in mind: 1. To help you be immediately successful when you join your organization 2. To help you understand the importance of information sys­ tems for individuals, organizations, and society as a whole 3. To enable you to become informed users of your organiza­ tion’s information systems To accomplish these goals, we have tried to provide the essen­ tial, relevant knowledge that you need to understand to effec­ tively use information systems in your careers. The way we propose to do this is by keeping you actively involved in the material. Every section of the chapters has an activity that asks you to do something beyond just reading the textbook that will help you see why the content is useful for your future business career. We hope you will enjoy this active approach and success­ fully complete the course with a richer understanding of what’s in IT for you. KELLY RAINER, BRAD PRINCE, AND HUGH WATSON www.downloadslide.net To The Instructor Dear Instructor, We are like you. All of us who teach the introductory course in information systems realize that it is difficult for students to understand the importance and relevance of the topics in the course. As a result, students often memorize the content just before the exam, and then forget it as soon as the exam is over. We all want to engage students at a much deeper level. We know that the best way to accomplish this objective is through hands-on active learning, leading to increased student engage­ ment in our course content. Accordingly, active learning and student engagement are key principles of our new book. We recognize the need to actively involve students in problem solving, creative thinking, and capitalizing on opportunities. Every section of every chap­ ter includes extensive hands-on exercises, activities, and minicases. End-of-chapter material also includes exercises that require students to use software application tools. Through these activities, we enable students to understand how to do something with the concepts they learn, such as meet business goals using information systems, configure products, and use spreadsheets and databases to facilitate problem solving. The preface on the next page further outlines the goals, features, and support material provided with our new text. We hope you will enjoy teaching with this approach! KELLY RAINER, BRAD PRINCE, AND HUGH WATSON www.downloadslide.net Preface Chapter Organization Each chapter contains the following elements: • Chapter Outline: Lists the major concepts covered in each chapter. • Learning Objectives: Provide an overview of the key learning goals that students should achieve after reading the chapter. • Chapter-Opening Case: A short case that focuses on a small or start-up company that is using information systems to solve a business problem. Cases in introductory informa­ tion systems textbooks typically involve very large organiza­ tions. In contrast, our chapter-opening cases demonstrate that small and start-up companies also have business prob­ lems that they address using information systems. Students will see that small firms usually have to be quite creative in building and implementing IS solutions, because they do not have MIS departments or large budgets. These small-busi­ ness cases also add an entrepreneurial flavor to each chapter for students who are planning to start their own businesses. • Apply the Concept Activities: This book’s unique peda­ gogical structure is designed to keep students actively en­ gaged with the course material. Reading material in each chapter subsection is immediately followed by an “Apply the Concept” activity that is directly related to a chapter objec­ tive. These activities include links to online videos and arti­ cles and other hands-on activities that require students to immediately apply what they have learned. Via WileyPLUS, instructors can assign a section of text along with an Apply the Concept activity. Each Apply the Concept has the follow­ ing elements: • Background (places the activity in the context of relevant reading material) • Examples: Interspersed throughout the text, these high­ light the use (and misuse) of information systems by re­ al-world organizations, thereby illustrating the concepts dis­ cussed in the chapter. • What’s in IT for Me?: A unique end-of-chapter summary that demonstrates the relevance of each key chapter topic to different functional areas, including accounting, finance, marketing, production/operations management, human resources management, and management information sys­ tems. This cross-functional focus makes the book accessible for students from any major. • Summary: Keyed to the Learning Objectives listed at the beginning of the chapter, the summary enables students to review major concepts covered. • Discussion Questions and Problem-Solving Activities: Provide practice through active learning. These exercises are hands-on opportunities to apply the concepts discussed in the chapter. • Collaboration Exercises: Team exercises that require stu­ dents to take on different functional roles and collaborate to solve business problems using Google Drive. These exercises allow students to get first-hand experience solving business problems using Cloud-based tools while also experiencing an authentic business team dynamic. • Closing Cases: Each chapter concludes with two cases about business problems faced by actual companies and how they used IS to solve those issues. The cases are broken down into three parts: a description of the problem, an over­ view of the IS solution implemented, and a presentation of the results of the implementation. Each case is followed by discussion questions, so that students can further explore the concepts presented in the case. • Deliverable (various tasks for students to complete as they perform the activity) • Spreadsheet Activity: Every chapter includes a hands-on spreadsheet project that requires students to practice their Excel skills within the context of the chapter material. WileyPLUS Learning Space includes an Excel Lab Manual for stu­ dents who need introductory coverage or review. • IT’s About Business: Short cases that demonstrate realworld applications of IT to business. Each case is accompa­ nied by questions relating the case to concepts covered in the chapter. Icons relate these boxes to the specific function­ al areas. • Database Activity: Every chapter includes a hands-on da­ tabase project that requires students to practice their Access skills while using concepts learned in the chapter. WileyPLUS Learning Space includes an Access Lab Manual for students who need introductory coverage or review. • IT’s Personal: Sprinkled throughout the chapters, these short vignettes explain the relevance of MIS concepts to stu­ dents’ daily lives. • Internship Activity: Every chapter includes an Internship Activity which presents a business problem found in one of four recurring industries (healthcare, banking, manufactur­ ing, and retail.) STUDENTS are directed to various software demos that provide useful tools for addressing the business problem. Then the students must act as interns and apply • Activity (a hands-on activity that students carry out) • Before You Go On: End-of-section reviews prompt stu­ dents to pause and test their understanding of concepts be­ fore moving on to the next section. www.downloadslide.net viii P REFACE the concepts they learned in the chapter to provide a solu­ tion to the business problem. of lessons that can be learned from such failures. Misuse of in­ formation systems can be very expensive. • Glossary: A study tool that highlights vocabulary within the chapters and facilitates studying. Global Focus An understanding of global competition, Key Features partnerships, and trading is essential to success in a modern business environment. Therefore, we provide a broad selec­ tion of international cases and examples. We discuss the role of information systems in facilitating export and import, the management of international companies, and electronic trad­ ing around the globe. Student Engagement As discussed in the note addressed to instructors at the beginning of this preface, one of the chief goals of this text is to engage students at a level beyond recog­ nition of key terms. We believe the best way to achieve this goal is through hands-on, active learning that will lead to increased student engagement with the course and its content. Accordingly, every section of every chapter provides re­ sources that actively involve students in problem solving, crea­ tive thinking, and capitalizing on opportunities. Every chapter includes extensive hands-on exercises, activities, and minicases, including exercises that require students to solve busi­ ness problems using Excel and Access. Cross-Functional Approach We emphasize the importance of information systems by calling attention in every chapter to how that chapter’s topic relates to each business major. Icons guide students to relevant issues for their specific functional area—accounting (ACC), fi nance (FIN), marketing (MKT), pro­ duction operations management (POM), human resources man­ agement (HRM), and management information systems (MIS). Chapters conclude with a detailed summary (entitled “What’s in IT for Me?”) of how key concepts in the chapter relate to each functional area. ACCT FIN MKT POM HRM MIS Diversified and Unique Examples from Different In­ dustries Extensive use of vivid examples from large corpo­ rations, small businesses, and government and not-for-profit organizations enlivens the concepts from the chapter. Th e ex­ amples illustrate everything from the capabilities of informa­ tion systems, to their cost and justification and the innovative ways that corporations are using IS in their operations. Small businesses have been included in recognition of the fact that many students will work for small-to mid-sized companies, and some will even start their own small business. In fact, some students may already be working at local businesses, and the concepts they are learning in class can be readily observed or put into practice in their part-time jobs. Each chapter constant­ ly highlights the integral connection between business and IS. This connection is especially evident in the chapter-opening and closing cases, the “IT’s About Business” boxes, and the highlighted examples. Innovation and Creativity In today’s rapidly changing business environment, creativity and innovation are necessary for a business to operate effectively and profitably. Throughout our book, we demonstrate how information systems facilitate these processes. Focus on Ethics With corporate scandals appearing in the headlines almost daily, ethics and ethical questions have come to the forefront of business people’s minds. In addition to de­ voting an entire chapter to ethics and privacy (Chapter 6), we have included examples and cases throughout the text that fo­ cus on business ethics. A Guide to Icons in This Book As you read this book, you will notice a variety of icons inter­ spersed throughout the chapters. These icons highlight material relating to different functional areas. MIS concepts are relevant to all business ca­ reers, not just careers in IT. The functional area icons help stu­ dents of different majors quickly pick out concepts and exam­ ples of particular relevance to them. Below is a quick reference of these icons. ACCT For the Accounting Major highlights content rele­ vant to the functional area of accounting. FIN For the Finance Major highlights content relevant to the functional area of finance. MKT For the Marketing Major highlights content rele­ vant to the functional area of marketing. POM For the Production/Operations Management Major highlights content relevant to the functional area of production/operations management. HRM For the Human Resources Major highlights con­ tent relevant to the functional area of human resources. Successes and Failures Many textbooks present examples of the successful implementation of information systems, and our book is no exception. However, we go one step beyond by also providing numerous examples of IS failures, in the context MIS For the MIS Major highlights content relevant to the functional area of MIS. www.downloadslide.net P R EFACE What’s New in the Fourth Edition? Content changes include: • Chapter 5: Completely rewritten chapter on Business Analyt­ ics. Chapter provides a visual overview of the Analytics pro­ cess (Figure 5.3), and extensive coverage of descriptive ana­ lytics, predictive analytics, and prescriptive analytics. • Plug IT In 5: Completely rewritten Plug IT In on Artificial In­ telligence. This Plug In differentiates between weak AI and strong AI and then addresses AI technologies such as expert systems, machine learning, deep learning, and neural net­ works. The Plug In continues with a discussion of AI applica­ tions, including machine vision, natural language process­ ing, robotics, speech recognition, and intelligent agents. • Chapter 3 contains expanded coverage of Big Data. • Plug IT In 1 provides expanded coverage of business processes. • All new or updated IT’s About Business, chapter-opening and closing cases, and examples. • Pedagogical changes include: • Revised and streamlined “Apply the Concept” activities now relate directly to chapter objectives. • New “Internship Activities” replace the Ruby’s Club ac­ tivities from previous editions. Each Internship Activity includes a software demo that requires students to apply new tools to business problems. • Revised “Collaboration Exercises” now each require use of Google Drive. • Revised and streamlined database and spreadsheet ex­ ercises for every chapter. These include references to les­ sons in the WileyPLUS lab manual for students who need instruction or review. Online Resources www.wiley.com/college/rainer Our book also facilitates the teaching of an Introduction to Information Systems course by providing extensive support materials for instructors and students. Visit www.wiley.com/ college/rainer to access the Student and Instructor Companion Sites. Instructor’s Manual The Instructor’s Manual includes a chapter overview, teaching tips and strategies, answers to all end-of-chapter questions, supplemental mini-cases with essay questions and answers, and experiential exercises that relate to particular topics. It also includes answers and solutions to all spreadsheet and database activities, along with a guide to teaching these exercises, and links to the separate Excel and Ac­ cess starter and solutions files. Test Bank The test bank is a comprehensive resource for test questions. Each chapter contains multiple choice, true/false, ix short answer, and essay questions. In addition, each chapter includes “Apply Your Knowledge” questions that require more creative thought to answer. Each multiple choice and true/false question is labeled to indicate its level of difficulty: easy, medi­ um, or hard. The test bank is available for use in Respondus’ easy-to­ use software. Respondus® is a powerful tool for creating and managing exams that can be printed or published directly to Blackboard, WebCT, Desire2Learn, eCollege, ANGEL, and other learning systems. For more information on Respondus® and the Respondus Test Bank Network, please visit www.respondus .com. Reading Quizzes These multiple choice conceptual ques­ tions can be used by instructors to evaluate a student’s under­ standing of the reading. They are available in Respondus, the WileyPLUS course, and the Book Companion Site. PowerPoint Presentations The PowerPoint Presentations consist of a series of slides for each chapter. The slides are de­ signed around each chapter’s content, incorporating key points from the chapter and chapter illustrations as appropriate, as well as real-life examples from the Web. Image Library All textbook figures are available for down­ load from the Web site. These figures can easily be added to PowerPoint presentations. Weekly Updates (http://wileyinformationsystemsupdates .com) Weekly updates, harvested from around the Internet by David Firth of the University of Montana, provide you with the latest IT news and issues. These are posted every Monday morning throughout the year at http://wileyinformationsystemsupdates .com/. They include links to current articles and videos as well as discussion questions to assign or use in class. OfficeGrader Office GraderTM is an Access-Based VBA Macro that enables automatic grading of Office assignments. The macros compare Office files and grade them against a master file. OfficeGraderTM is available for Word, Access, Excel, and Pow­ erPoint for Office 2010 and 2013. For more information, contact your Wiley sales representative or visit http://www.wiley.com /college/sc/office2013/officegrader.html. WileyPLUS Learning Space WileyPLUS Learning Space is an easy way for students to learn, collaborate, and grow. With WileyPLUS Learning Space, stu­ dents create a personalized study plan, assess progress along the way, and make deeper connections as they interact with the course material and each other. Through a combination of dynamic course materials and visual reports, this collaborative learning environment gives you and your students immediate