T E N T H E D I T I O N

G LO B A L E D I T I O N

Using MIS
David M. Kroenke
Randall J. Boyle

Harlow, England • London • New York • Boston • San Francisco • Toronto • Sydney • Dubai • Singapore • Hong Kong
Tokyo • Seoul • Taipei • New Delhi • Cape Town • Sao Paulo • Mexico City • Madrid • Amsterdam • Munich • Paris • Milan

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 CONTENTS

Part 1: Why MIS?

1: The Importance of MIS 37

Q1-1 Why Is Introduction to MIS the Most Important Class in the

Business School? 39
The Digital Revolution 39
Evolving Capabilities 40
Moore’s Law 40
Metcalfe’s Law 41
Other Forces Pushing Digital Change 42
This Is the Most Important Class in the School of Business 43

Q1-2 How Will MIS Affect Me? 43

How Can I Attain Job Security? 43
How Can Intro to MIS Help You Learn Nonroutine Skills? 44
What Is the Bottom Line? 48

Q1-3 What Is MIS? 48

Components of an Information System 48
Management and Use of Information Systems 49
Achieving Strategies 50

Q1-4 How Can You Use the Five-Component Model? 50

The Most Important Component—You 51
All Components Must Work 51
High-Tech Versus Low-Tech Information Systems 51
• So What? A Is for Alphabet 52
Understanding the Scope of New Information Systems 53
Components Ordered by Difficulty and Disruption 53

Q1-5 What Is Information? 53

Definitions Vary 54
Where Is Information? 54

Q1-6 What Are Necessary Data Characteristics? 55

Accurate 55
Timely 55
Relevant 56
Just Barely Sufficient 56
Worth Its Cost 56

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Q1-7 2027? 56
• Ethics Guide: Ethics and Professional Responsibility 57
• Security Guide: Passwords and Password Etiquette 60
• Career Guide: Five-Component Careers 62
Case Study 1: Tesco 67

2: Collaboration Information Systems 71

Q2-1 What Are the Two Key Characteristics of

Collaboration? 73
Importance of Constructive Criticism 74
Guidelines for Giving and Receiving Constructive Criticism 74
Warning! 75

Q2-2 What Are Three Criteria for Successful Collaboration? 76

Successful Outcome 76
Growth in Team Capability 77
Meaningful and Satisfying Experience 77

Q2-3 What Are the Four Primary Purposes of Collaboration? 77

Becoming Informed 78
Making Decisions 78
Solving Problems 80
Managing Projects 80

Q2-4 What Are the Requirements for a Collaboration Information

System? 82
The Five Components of an IS for Collaboration 82
Primary Functions: Communication and Content Sharing 83

Q2-5 How Can You Use Collaboration Tools to Improve Team

Communication? 83

Q2-6 How Can You Use Collaboration Tools to Manage Shared

Content? 87
Shared Content with No Control 89
Shared Content with Version Management on Google Drive 89
Shared Content with Version Control 92
• Ethics Guide: Big Brother Wearables 94

Q2-7 How Can You Use Collaboration Tools to Manage

Tasks? 96
Sharing a Task List on Google Drive 96
Sharing a Task List Using Microsoft SharePoint 96
• So What? Augmented Collaboration 97

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Q2-8 Which Collaboration IS Is Right for Your Team? 99

Three Sets of Collaboration Tools 100
Choosing the Set for Your Team 101
Don’t Forget Procedures and People! 102

Q2-9 2027? 103

• Security Guide: Evolving Security 104
• Career Guide: Software Product Manager 106
Case Study 2: Eating Our Own Dog Food 109

3: Strategy and Information Systems 115

Q3-1 How Does Organizational Strategy Determine Information

Systems Structure? 117

Q3-2 What Five Forces Determine Industry Structure? 118

Q3-3 How Does Analysis of Industry Structure Determine

Competitive Strategy? 119
• Ethics Guide: The Lure of Love Bots 120

Q3-4 How Does Competitive Strategy Determine Value Chain

Structure? 122
Primary Activities in the Value Chain 122
Support Activities in the Value Chain 123
Value Chain Linkages 123

Q3-5 How Do Business Processes Generate Value? 124

Q3-6 How Does Competitive Strategy Determine Business

Processes and the Structure of Information Systems? 126

Q3-7 How Do Information Systems Provide Competitive

Advantages? 127
Competitive Advantage via Products 127
• So What? The Autonomous Race 128
Competitive Advantage via Business Processes 129
How Does an Actual Company Use IS to Create Competitive Advantages? 130
How Does This System Create a Competitive Advantage? 131

Q3-8 2027? 133

• Security Guide: Hacking Smart Things 134
• Career Guide: Director of Architecture 137
Case Study 3: The Amazon of Innovation 140

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 Contents 13

Part 2: Information Technology

4: Hardware, Software, and Mobile Systems 147

Q4-1 What Do Business Professionals Need to Know About

Computer Hardware? 149
Hardware Components 149
Types of Hardware 150
Computer Data 151

Q4-2 How Can New Hardware Affect Competitive

Strategies? 153
Internet of Things 153
Digital Reality Devices 155
Self-driving Cars 156
3D Printing 159

Q4-3 What Do Business Professionals Need to Know About

Software? 160
What Are the Major Operating Systems? 161
Virtualization 163
Own Versus License 165
What Types of Applications Exist, and How Do Organizations Obtain Them? 165
What Is Firmware? 166

Q4-4 Is Open Source Software a Viable Alternative? 167

Why Do Programmers Volunteer Their Services? 167
• So What? New from CES 2016 168
How Does Open Source Work? 169
So, Is Open Source Viable? 170

Q4-5 What Are the Differences Between Native and Web

Applications? 170
Developing Native Applications 170
Developing Web Applications 171
Which Is Better? 173

Q4-6 Why Are Mobile Systems Increasingly Important? 173

Hardware 174
Software 175
Data 175
• Ethics Guide: Free Apps For Data 176
Procedures 178
People 178

Q4-7 What Are the Challenges of Personal Mobile Devices

at Work? 179
Advantages and Disadvantages of Employee Use of Mobile Systems at Work 179
Survey of Organizational BYOD Policy 180

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Q4-8 2027? 181

• Security Guide: Poisoned App-les 182
• Career Guide: Technical Account Manager 184
Case Study 4: PSA: Cruising with Information Systems 189

5: Database Processing 193

Q5-1 What Is the Purpose of a Database? 195

Q5-2 What Is a Database? 197

Relationships Among Rows 198
Metadata 199
• Ethics Guide: Querying Inequality? 200

Q5-3 What Is a Database Management System (DBMS)? 202

Creating the Database and Its Structures 202
Processing the Database 203
Administering the Database 203
• So What? Slick Analytics 204

Q5-4 How Do Database Applications Make Databases More

Useful? 206
Traditional Forms, Queries, Reports, and Applications 206
Browser Forms, Reports, Queries, and Applications 208
Multi-user Processing 209

Q5-5 How Are Data Models Used for Database Development? 210
What Is the Entity-Relationship Data Model? 211

Q5-6 How Is a Data Model Transformed into a Database Design? 214

Normalization 215
Representing Relationships 216
Users’ Role in the Development of Databases 218

Q5-7 How Can Falcon Security Benefit from a Database

System? 220

Q5-8 2027? 221

• Security Guide: Big Data . . . Losses 222
• Career Guide: Database Engineer 224
Case Study 5: Searching for Classic and Vintage Car Parts . . . 228

6: The Cloud 235

Q6-1 Why Are Organizations Moving to the Cloud? 237

Cloud Computing 238
Why Do Organizations Prefer the Cloud? 239
When Does the Cloud Not Make Sense? 240

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Q6-2 How Do Organizations Use the Cloud? 241

Resource Elasticity 241
Pooling Resources 242
Over the Internet 243
Cloud Services from Cloud Vendors 243
Content Delivery Networks 246
Using Web Services Internally 247

Q6-3 What Network Technology Supports the Cloud? 248

What Are the Components of a LAN? 249
• Ethics Guide: Cloudy Profit? 250
Connecting Your LAN to the Internet 252

Q6-4 How Does the Internet Work? 254

The Internet and the U.S. Postal System 254
Step 1: Assemble Package (Packets) 255
Step 2: Put Name on Package (Domain Names) 255
Step 3: Look Up Address (IP Address) 255
Step 4: Put Address on Package (IP Address on Packet) 256
Step 5: Put Registered Mail Sticker on Package (TCP) 256
Step 6: Ship Package (Packets Transported by Carriers) 257

Q6-5 How Do Web Servers Support the Cloud? 258

Three-Tier Architecture 259
Watch the Three Tiers in Action! 259
Service-Oriented Architecture (SOA) 260
A SOA Analogy 260
SOA for Three-Tier Architecture 262
Internet Protocols 263
TCP/IP Protocol Architecture 263

Q6-6 How Can Falcon Security Use the Cloud? 265

SaaS Services at Falcon Security 265
PaaS Services at Falcon Security 266
IaaS Services at Falcon Security 266

Q6-7 How Can Organizations Use Cloud Services

Securely? 266
Virtual Private Networks (VPNs) 267
Using a Private Cloud 267
Using a Virtual Private Cloud 269
• So What? Quantum Learning 270

Q6-8 2027? 271

• Security Guide: From Anthem to Anathema 272
• Career Guide: Senior Network Manager 275
Case Study 6: Cloud Solutions and Infrastructure That Safely Test
for Consumer Risk and Financial Stability 279

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Part 3: Using IS for

Competitive Advantage
7: Processes, Organizations, and Information Systems 285

Q7-1 What Are the Basic Types of Processes? 287

How Do Structured Processes Differ from Dynamic Processes? 288
How Do Processes Vary by Organizational Scope? 289

Q7-2 How Can Information Systems Improve Process Quality? 291

How Can Processes Be Improved? 292
How Can Information Systems Improve Process Quality? 292

Q7-3 How Do Information Systems Eliminate the Problems of

Information Silos? 293
What Are the Problems of Information Silos? 294
How Do Organizations Solve the Problems of Information Silos? 295
An Enterprise System for Patient Discharge 296

Q7-4 How Do CRM, ERP, and EAI Support Enterprise Processes? 296
The Need for Business Process Engineering 297
Emergence of Enterprise Application Solutions 297
Customer Relationship Management (CRM) 298
Enterprise Resource Planning (ERP) 299
• So What? Workflow Problems 300
• Ethics Guide: Paid Deletion 302
Enterprise Application Integration (EAI) 304

Q7-5 What Are the Elements of an ERP System? 306

Hardware 306
ERP Application Programs 307
ERP Databases 307
Business Process Procedures 307
Training and Consulting 308
Industry-Specific Solutions 309
Which Companies Are the Major ERP Vendors? 310

Q7-6 What Are the Challenges of Implementing and Upgrading

Enterprise Information Systems? 310
Collaborative Management 310
Requirements Gaps 310
Transition Problems 311
Employee Resistance 311
New Technology 311

Q7-7 How Do Inter-enterprise IS Solve the Problems of Enterprise

Silos? 312

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Q7-8 2027? 313

• Security Guide: It’s Not Me . . . It’s You 314
• Career Guide: IT Technical Manager 316
Case Study 7: A Tale of Two Interorganizational IS 322

8: Social Media Information Systems 327

Q8-1 What Is a Social Media Information System (SMIS)? 329

Three SMIS Roles 329
SMIS Components 332

Q8-2 How Do SMIS Advance Organizational Strategy? 334

Social Media and the Sales and Marketing Activity 334
Social Media and Customer Service 335
Social Media and Inbound and Outbound Logistics 336
Social Media and Manufacturing and Operations 336
Social Media and Human Resources 337

Q8-3 How Do SMIS Increase Social Capital? 337

What Is the Value of Social Capital? 338
How Do Social Networks Add Value to Businesses? 338
Using Social Networking to Increase the Number of Relationships 339
• So What? Enhanced Golf Fan 340
Using Social Networks to Increase the Strength of Relationships 341
Using Social Networks to Connect to Those with More Resources 342

Q8-4 How Do (Some) Companies Earn Revenue from Social

Media? 343
You Are the Product 343
Revenue Models for Social Media 343
Does Mobility Reduce Online Ad Revenue? 344
• Ethics Guide: Synthetic Friends 346

Q8-5 How Do Organizations Develop an Effective SMIS? 347

Step 1: Define Your Goals 348
Step 2: Identify Success Metrics 348
Step 3: Identify the Target Audience 349
Step 4: Define Your Value 349
Step 5: Make Personal Connections 350
Step 6: Gather and Analyze Data 350

Q8-6 What Is an Enterprise Social Network (ESN)? 351

Enterprise 2.0 351
Changing Communication 352
Deploying Successful Enterprise Social Networks 352

Q8-7 How Can Organizations Address SMIS Security

Concerns? 353
Managing the Risk of Employee Communication 353
Managing the Risk of Inappropriate Content 354

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Q8-8 2027? 356

• Security Guide: Digital is Forever 359
• Career Guide: International Content Director 361
Case Study 8: Sedona Social 364

9: Business Intelligence Systems 369

Q9-1 How Do Organizations Use Business Intelligence (BI)

Systems? 372
How Do Organizations Use BI? 373
What Are Typical BI Applications? 373

Q9-2 What Are the Three Primary Activities in the BI Process? 375
Using Business Intelligence to Find Candidate Parts 375

Q9-3 How Do Organizations Use Data Warehouses and Data

Marts to Acquire Data? 380
Problems with Operational Data 382
Data Warehouses Versus Data Marts 383
• Ethics Guide: MIS-diagnosis 384

Q9-4 How Do Organizations Use Reporting Applications? 386

Basic Reporting Operations 386
RFM Analysis 386
Online Analytical Processing (OLAP) 387

Q9-5 How Do Organizations Use Data Mining Applications? 389

Intelligent Machines 390
Unsupervised Data Mining 391
Supervised Data Mining 391
Market-Basket Analysis 392
Decision Trees 393

Q9-6 How Do Organizations Use Big Data Applications? 395

MapReduce 395
• So What? BI for Securities Trading? 396
Hadoop 397

Q9-7 What Is the Role of Knowledge Management Systems? 398

What Are Expert Systems? 398
What Are Content Management Systems? 400
What Are the Challenges of Content Management? 400
What Are Content Management Application Alternatives? 401
How Do Hyper-Social Organizations Manage Knowledge? 401
Hyper-Social KM Alternative Media 402
Resistance to Knowledge Sharing 402

Q9-8 What Are the Alternatives for Publishing BI? 403

Characteristics of BI Publishing Alternatives 403
What Are the Two Functions of a BI Server? 404

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Q9-9 2027? 405

• Security Guide: Semantic Security 406
• Career Guide: Manager, Data and Analytics 408
Case Study 9: Hadoop the Cookie Cutter 412

Part 4: Information Systems

Management
10: Information Systems Security 417

Q10-1 What Is the Goal of Information Systems

Security? 420
The IS Security Threat/Loss Scenario 420
What Are the Sources of Threats? 421
What Types of Security Loss Exist? 422
Goal of Information Systems Security 424

Q10-2 How Big Is the Computer Security Problem? 424

Q10-3 How Should You Respond to Security Threats? 426

Q10-4 How Should Organizations Respond to Security

Threats? 428
• So What? New from Black Hat 2015 429

Q10-5 How Can Technical Safeguards Protect Against Security

Threats? 430
Identification and Authentication 430
Single Sign-on for Multiple Systems 431
Encryption 431
• Ethics Guide: Securing Privacy 432
Firewalls 435
Malware Protection 436
Design for Secure Applications 437

Q10-6 How Can Data Safeguards Protect Against Security

Threats? 438

Q10-7 How Can Human Safeguards Protect Against Security

Threats? 439
Human Safeguards for Employees 439
Human Safeguards for Nonemployee Personnel 441
Account Administration 441
Systems Procedures 443
Security Monitoring 443

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Q10-8 How Should Organizations Respond to Security

Incidents? 444

Q10-9 2027? 445

• Security Guide: Exhaustive Cheating 446
• Career Guide: Senior Consultant 448
Case Study 10: Hitting the Target 452

11: Information Systems Management 457

Q11-1 What Are the Functions and Organization of the IS

Department? 459
How Is the IS Department Organized? 460
Security Officers 461
What IS-Related Job Positions Exist? 461

Q11-2 How Do Organizations Plan the Use of IS? 463

Align Information Systems with Organizational Strategy 463
• So What? Managing the IS Department 464
Communicate IS Issues to the Executive Group 465
Develop Priorities and Enforce Them Within the IS Department 465
Sponsor the Steering Committee 465

Q11-3 What Are the Advantages and Disadvantages of

Outsourcing? 465
• Ethics Guide: Training Your Replacement 466
Outsourcing Information Systems 467
International Outsourcing 469
What Are the Outsourcing Alternatives? 470
What Are the Risks of Outsourcing? 471

Q11-4 What Are Your User Rights and Responsibilities? 473

Your User Rights 473
Your User Responsibilities 474

Q11-5 2027? 475

• Security Guide: Watching the Watchers 476
• Career Guide: Senior Data Analyst 478
Case Study 11: Automating Labor 481

12: Information Systems Development 485

Q12-1 How Are Business Processes, IS, and Applications

Developed? 487
How Do Business Processes, Information Systems, and Applications Differ and
Relate? 488
Which Development Processes Are Used for Which? 489

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Q12-2 How Do Organizations Use Business Process Management

(BPM)? 491
Why Do Processes Need Management? 491
What Are BPM Activities? 492

Q12-3 How Is Business Process Modeling Notation (BPMN) Used

to Model Processes? 494
Need for Standard for Business Processing Notation 494
Documenting the As-Is Business Order Process 494

Q12-4 What Are the Phases in the Systems Development Life Cycle
(SDLC)? 497
Define the System 499
• Ethics Guide: Estimation Ethics 500
Determine Requirements 502
Design System Components 504
System Implementation 505
Maintain System 506

Q12-5 What Are the Keys for Successful SDLC Projects? 507
Create a Work Breakdown Structure 507
Estimate Time and Costs 508
Create a Project Plan 509
Adjust Plan via Trade-offs 510
Manage Development Challenges 512

Q12-6 How Can Scrum Overcome the Problems of the SDLC? 513
• So What? Banking on IoT 514
What Are the Principles of Agile Development Methodologies? 515
What Is the Scrum Process? 516
How Do Requirements Drive the Scrum Process? 518

Q12-7 2027? 520

Fetch! 520
User-Driven Systems 521
Industry Will Push Change 521
• Security Guide: Psst. There’s another Way, You Know… 522
• Career Guide: Developing Your Personal Brand 524
Case Study 12: When Will We Learn? 529

The International Dimension 532

Application Exercises 553
Glossary 572
Index 589

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