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Find more at www.downloadslide.com GLOBAL EDITION Management Information Systems Managing the Digital Firm THIRTEENTH EDITION /IRRIXL'0EYHSRˆ.ERI40EYHSR Find more at www.downloadslide.com Management Information Systems MANAGING THE DIGITAL FIRM THIRTEENTH EDITION GLOBAL EDITION Kenneth C. Laudon New York University Jane P. Laudon Azimuth Information Systems Boston Columbus Indianapolis New York San Francisco Upper Saddle River Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montreal Toronto Delhi Mexico City Sao Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo Find more at www.downloadslide.com Editor in Chief: Stephanie Wall Executive Editor: Bob Horan Editorial Assistant: Ashlee Bradbury International Publisher: Laura Dent International Programme Editor: Leandra Paoli Director of Marketing: Maggie Moylan Executive Marketing Manager: Anne Fahlgren International Marketing Manager: Dean Erasmus Senior Managing Editor: Judy Leale Senior Production Project Manager: Karalyn Holland Senior Manufacturing Controller, Production, International: Trudy Kimber Creative Director: Blair Brown Senior Art Director: Janet Slowik Cover Designer: Jodi Notowitz Cover Image: Marco Rosario Venturini Autieri/Getty Media Editor: Denise Vaughn Media Project Manager: Lisa Rinaldi Full-Service Project Management: Azimuth Interactive, Inc. Pearson Education Limited Edinburgh Gate Harlow Essex CM20 2JE England and Associated Companies throughout the world Visit us on the World Wide Web at: www.pearson.com/uk © Pearson Education Limited 2014 The rights of Kenneth C. Laudon and Jane P. Laudon to be identified as authors of this work have been asserted by them in accordance with the Copyright, Designs and Patents Act 1988. Authorised adaptation from the United States edition, entitled Management Information Systems: Managing the Digital Firm, 13th Edition, ISBN: 978-0-13-305069-1 by Kenneth C. Laudon and Jane. P. Laudon, published by Pearson Education © 2014. All rights reserved. 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Microsoft and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time. Partial screen shots may be viewed in full within the software version specified. Microsoft® and Windows® are registered trademarks of the Microsoft Corporation in the U.S.A. and other countries. This book is not sponsored or endorsed by or affiliated with the Microsoft Corporation.. Credits and acknowledgments borrowed from other sources and reproduced, with permission, in this textbook appear on the appropriate page within the text. ISBN 13: 978-0-273-78997-0 ISBN 10: 0-273-78997-X British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library 10 9 8 7 6 5 4 3 2 1 17 16 15 14 13 Typeset in 10.5/13 ITC Veljovic Std Book by Azimuth Interactive, Inc. Printed and bound by Courier/Kendallville in The United States of America The publisher's policy is to use paper manufactured from sustainable forests. Find more at www.downloadslide.com About the Authors Kenneth C. Laudon is a Professor of Information Systems at New York University’s Stern School of Business. He holds a B.A. in Economics from Stanford and a Ph.D. from Columbia University. He has authored twelve books dealing with electronic commerce, information systems, organizations, and society. Professor Laudon has also written over forty articles concerned with the social, organizational, and management impacts of information systems, privacy, ethics, and multimedia technology. Professor Laudon’s current research is on the planning and management of large-scale information systems and multimedia information technology. He has received grants from the National Science Foundation to study the evolution of national information systems at the Social Security Administration, the IRS, and the FBI. Ken’s research focuses on enterprise system implementation, computer-related organizational and occupational changes in large organizations, changes in management ideology, changes in public policy, and understanding productivity change in the knowledge sector. Ken Laudon has testified as an expert before the United States Congress. He has been a researcher and consultant to the Office of Technology Assessment (United States Congress), Department of Homeland Security, and to the Office of the President, several executive branch agencies, and Congressional Committees. Professor Laudon also acts as an in-house educator for several consulting firms and as a consultant on systems planning and strategy to several Fortune 500 firms. At NYU’s Stern School of Business, Ken Laudon teaches courses on Managing the Digital Firm, Information Technology and Corporate Strategy, Professional Responsibility (Ethics), and Electronic Commerce and Digital Markets. Ken Laudon’s hobby is sailing. Jane Price Laudon is a management consultant in the information systems area and the author of seven books. Her special interests include systems analysis, data management, MIS auditing, software evaluation, and teaching business professionals how to design and use information systems. Jane received her Ph.D. from Columbia University, her M.A. from Harvard University, and her B.A. from Barnard College. She has taught at Columbia University and the New York University Graduate School of Business. She maintains a lifelong interest in Oriental languages and civilizations. The Laudons have two daughters, Erica and Elisabeth, to whom this book is dedicated. 3 Find more at www.downloadslide.com Brief Contents Part One Organizations, Management, and the Networked Enterprise 31 Chapter 1 Chapter 2 Chapter 3 Chapter 4 Information Systems in Global Business Today 32 Part Two Information Technology Infrastructure 191 Chapter 5 Chapter 6 IT Infrastructure and Emerging Technologies 192 Chapter 7 Chapter 8 Telecommunications, the Internet, and Wireless Technology 276 Part Three Key System Applications for the Digital Age 365 Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications 366 Chapter 10 Chapter 11 Chapter 12 E-Commerce: Digital Markets, Digital Goods 400 Part Four Building and Managing Systems 515 Chapter 13 Chapter 14 Chapter 15 Building Information Systems 516 Global E-Business and Collaboration 70 Information Systems, Organizations, and Strategy 108 Ethical and Social Issues in Information Systems 150 Foundations of Business Intelligence: Databases and Information Management 238 Securing Information Systems 322 Managing Knowledge 446 Enhancing Decision Making 482 Managing Projects 556 Managing Global Systems 590 (available on the Web at www.pearsonglobaleditions.com/laudon) References 591 Glossary 607 Indexes 621 4 Find more at www.downloadslide.com Complete Contents Part One Organizations, Management, and the Networked Enterprise 31 Chapter 1 Information Systems in Global Business Today 32 ◆Opening Case: Efficiency in Wood Harvesting with Information Systems 33 1.1 The Role of Information Systems in Business Today 35 How Information Systems are Transforming Business 35 • What’s New in Management Information Systems? 36 • Globalization Challenges and Opportunities: A Flattened World 38 ◆Interactive Session: Management Running the Business from the Palm of Your Hand 39 The Emerging Digital Firm 41 • Strategic Business Objectives of Information Systems 42 1.2 Perspectives on Information Systems 45 What Is an Information System? 45 • Dimensions of Information Systems 48 • It Isn’t Just Technology: A Business Perspective on Information Systems 52 ◆Interactive Session: Technology UPS Competes Globally with Information Technology 53 Complementary Assets: Organizational Capital and the Right Business Model 56 1.3 Contemporary Approaches to Information Systems 58 Technical Approach 58 • Behavioral Approach 58 • Approach of This Text: Sociotechnical Systems 59 Learning Track Modules: How Much Does IT Matter?, Information Systems and Your Career, The Mobile Digital Platform 61 Review Summary 62 • Key Terms 63 • Review Questions 63 • Discussion Questions 64 • Hands-On MIS Projects 64 • Video Cases 65 • Collaboration and Teamwork Project 65 ◆Case Study: Mashaweer 66 Chapter 2 Global E-business and Collaboration 70 ◆Opening Case: Telus Embraces Social Learning 71 2.1 Business Processes and Information Systems 73 Business Processes 73 • How Information Technology Improves Business Processes 75 2.2 Types of Information Systems 75 Systems for Different Management Groups 76 ◆Interactive Session: Technology Schiphol International Hub 78 5 Find more at www.downloadslide.com 6 Contents Systems for Linking the Enterprise 83 ◆Interactive Session: Management Piloting Procter & Gamble from Decision Cockpits 84 E-Business, E-Commerce, and E-Government 87 2.3 Systems for Collaboration and Social Business 88 What is Collaboration? 88 • What Is Social Business? 89 • Business Benefits of Collaboration and Social Business 90 • Building a Collaborative Culture and Business Processes 91 • Tools and Technologies for Collaboration and Social Business 92 2.4 The Information Systems Function in Business 98 The Information Systems Department 99 • Organizing the Information Systems Function 100 Learning Track Modules: Systems from a Functional Perspective, IT Enables Collaboration and Teamwork, Challenges of Using Business Information Systems, Organizing the Information Systems Function, Occupational and Career Outlook for Information Systems Majors 2012–2018 100 Review Summary 101 • Key Terms 102 • Review Questions 102 • Discussion Questions 103 • Hands-On MIS Projects 103 • Video Cases 104 • Collaboration and Teamwork Project 104 ◆Case Study: Modernization of NTUC Income 105 Chapter 3 Information Systems, Organizations, and Strategy 108 ◆Opening Case: Will Sears’s Technology Strategy Work This Time? 109 3.1 Organizations and Information Systems 111 What Is an Organization? 112 • Features of Organizations 114 3.2 How Information Systems Impact Organizations and Business Firms 119 Economic Impacts 119 • Organizational and Behavioral Impacts 120 • The Internet and Organizations 123 • Implications for the Design and Understanding of Information Systems 123 3.3 Using Information Systems to Achieve Competitive Advantage 123 Porter’s Competitive Forces Model 124 • Information System Strategies for Dealing with Competitive Forces 125 • The Internet’s Impact on Competitive Advantage 128 ◆Interactive Session: Organizations Technology Helps Starbucks Find New Ways to Compete 129 The Business Value Chain Model 131 ◆Interactive Session: Technology Automakers Become Software Companies 134 Synergies, Core Competencies, and Network-Based Strategies 136 3.4 Using Systems for Competitive Advantage: Management Issues 140 Sustaining Competitive Advantage 140 • Aligning IT with Business Objectives 141 • Managing Strategic Transitions 142 Learning Track Module: The Changing Business Environment for Information Technology 142 Review Summary 142 •Key Terms 143 • Review Questions 143 • Discussion Questions 144 • Hands-On MIS Projects 144 • Video Cases 146 • Collaboration and Teamwork Project 146 Find more at www.downloadslide.com Contents 7 ◆Case Study: Can This Bookstore Be Saved? 147 Chapter 4 Ethical and Social Issues in Information Systems 150 ◆Opening Case: Ethical Issues Facing the Use of Technologies for the Aged Community 151 4.1 Understanding Ethical and Social Issues Related to Systems 153 A Model for Thinking About Ethical, Social, and Political Issues 155 • Five Moral Dimensions of the Information Age 155 • Key Technology Trends That Raise Ethical Issues 156 4.2 Ethics in an Information Society 159 Basic Concepts: Responsibility, Accountability, and Liability 159 • Ethical Analysis 160 • Candidate Ethical Principles 161 • Professional Codes of Conduct 161 • Some Real-World Ethical Dilemmas 162 4.3 The Moral Dimensions of Information Systems 162 Information Rights: Privacy and Freedom in the Internet Age 162 • Property Rights: Intellectual Property 169 ◆Interactive Session: Technology Life on the Grid: iPhone Becomes iTrack 170 Accountability, Liability, and Control 174 • System Quality: Data Quality and System Errors 176 • Quality of Life: Equity, Access, and Boundaries 176 ◆Interactive Session: Organizations Monitoring in the Workplace 179 Learning Track Module: Developing a Corporate Code of Ethics for Information Systems 183 Review Summary 184 • Key Terms 184 • Review Questions 185 • Discussion Questions 185 • Hands-On MIS Projects 185 • Video Cases 187 • Collaboration and Teamwork Project 187 ◆Case Study: Facebook: It’s About the Money 188 Part Two Information Technology Infrastructure 191 Chapter 5 IT Infrastructure and Emerging Technologies 192 ◆Opening Case: Reforming the Regulatory System for Construction Permits 193 5.1 IT Infrastructure 195 Defining IT Infrastructure 195 • Evolution of IT Infrastructure 197 • Technology Drivers of Infrastructure Evolution 201 5.2 Infrastructure Components 206 Computer Hardware Platforms 207 • Operating System Platforms 207 • Enterprise Software Applications 208 • Data Management and Storage 208 • Networking/Telecommunications Platforms 208 • Internet Platforms 209 • Consulting and System Integration Services 209 5.3 Contemporary Hardware Platform Trends 210 Find more at www.downloadslide.com 8 Contents The Mobile Digital Platform 210 • Consumerization of IT and BYOD 210 • Grid Computing 211 • Virtualization 211 ◆Interactive Session: Management Should You Use Your iPhone for Work? 212 Cloud Computing 213 • Green Computing 216 • High-Performance and Power-Saving Processors 216 ◆Interactive Session: Organizations Nordea Goes Green with IT 217 Autonomic Computing 218 5.4 Contemporary Software Platform Trends 219 Linux and Open Source Software 219 • Software for the Web: Java, HTML, and HTML5 219 • Web Services and Service-Oriented Architecture 221 • Software Outsourcing and Cloud Services 223 5.5 Management Issues 225 Dealing with Platform and Infrastructure Change 225 • Management and Governance 226 • Making Wise Infrastructure Investments 226 Learning Track Modules: How Computer Hardware and Software Work, Service Level Agreements, The Open Source Software Initiative, Comparing Stages in IT Infrastructure Evolution, Cloud Computing 229 Review Summary 230 • Key Terms 231 • Review Questions 231 • Discussion Questions 232 • Hands-On MIS Projects 232 • Video Cases 233 • Collaboration and Teamwork Project 233 ◆Case Study: Should Businesses Move to the Cloud? 234 Chapter 6 Foundations of Business Intelligence: Databases and Information Management 238 ◆Opening Case: BAE Systems 239 6.1 Organizing Data in a Traditional File Environment 241 File Organization Terms and Concepts 241 • Problems with the Traditional File Environment 242 6.2 The Database Approach to Data Management 244 Database Management Systems 244 • Capabilities of Database Management Systems 249 • Designing Databases 251 6.3 Using Databases to Improve Business Performance and Decision Making 254 The Challenge of Big Data 254 • Business Intelligence Infrastructure 254 • Analytical Tools: Relationships, Patterns, Trends 257 ◆Interactive Session: Technology Big Data, Big Rewards 261 Databases and the Web 262 ◆ Interactive Session: Organizations Controversy Whirls Around the Consumer Product Safety Database 264 6.4 Managing Data Resources 265 Establishing an Information Policy 265 • Ensuring Data Quality 266 Learning Track Modules: Database Design, Normalization, and EntityRelationship Diagramming, Introduction to SQL, Hierarchical and Network Data Models 267 Find more at www.downloadslide.com Contents Review Summary 268 • Key Terms 269 • Review Questions 269 • Discussion Questions 270 • Hands-On MIS Projects 270 • Video Cases 272 • Collaboration and Teamwork Project 272 ◆Case Study: Lego: Embracing Change by Combining BI with a Flexible Information System 273 Chapter 7 Telecommunications, the Internet, and Wireless Technology 276 ◆Opening Case: RFID and Wireless Technology Speed Up Production at Continental Tires 277 7.1 Telecommunications and Networking in Today’s Business World 279 Networking and Communication Trends 279 • What Is a Computer Network? 280 • Key Digital Networking Technologies 282 7.2 Communications Networks 285 Signals: Digital vs. Analog 285 • Types of Networks 286 • Transmission Media and Transmission Speed 287 7.3 The Global Internet 288 What Is the Internet? 288 • Internet Addressing and Architecture 288 ◆Interactive Session: Organizations The Battle over Net Neutrality 292 Internet Services and Communication Tools 293 ◆Interactive Session: Management Monitoring Employees on Networks: Unethical or Good Business? 296 The Web 298 7.4 The Wireless Revolution 307 Cellular Systems 307 • Wireless Computer Networks and Internet Access 308 • RFID and Wireless Sensor Networks 310 Learning Track Modules: LAN Topologies, Broadband Network Services and Technologies, Cellular System Generations, Wireless Applications for Customer Relationship Management, Supply Chain Management, and Healthcare, Web 2.0 313 Review Summary 314 • Key Terms 315 • Review Questions 315 • Discussion Questions 316 • Hands-On MIS Projects 316 • Video Cases 317 • Collaboration and Teamwork Project 317 ◆Case Study: Apple, Google, and Microsoft Battle for Your Internet Experience 318 Chapter 8 Securing Information Systems 322 ◆Opening Case: You’re on LinkedIn? Watch Out! 323 8.1 System Vulnerability and Abuse 325 Why Systems Are Vulnerable 325 • Malicious Software: Viruses, Worms, Trojan Horses, and Spyware 328 • Hackers and Computer Crime 330 • Internal Threats: Employees 335 • Software Vulnerability 335 ◆Interactive Session: Organizations Stuxnet and the Changing Face of Cyberwarfare 336 8.2 Business Value of Security and Control 338 9