Please write a concise (one page) position statement identifying current issues with respect to global business based on curr

MANAGEMENT OF INFORMATION TECHNOLOGY

MSPM1-GC1025

Module One

MANAGEMENT INFORMATION SYSTEMS

MANAGING THE DIGITAL FIRM

SIXTEENTH EDITION

Kenneth C. Laudon New York University

Jane P. Laudon Azimuth Information Systems

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Library of Congress Cataloging-in-Publication Data

Names: Laudon, Kenneth C., author. | Laudon, Jane P. (Jane Price), author. Title: Management information systems: managing the digital firm / Kenneth C. Laudon, New York University, Jane P. Laudon, Azimuth Information Systems. Description: Sixteenth edition. | New York, NY: Pearson, [2020] | Includes bibliographical references and index. Identifiers: LCCN 2018053013| ISBN 9780135191798 | ISBN 0135191793 Subjects: LCSH: Management information systems. Classification: LCC T58.6 .L376 2020 | DDC 658.4/038011–dc23 LC record available at https://lccn.loc.gov/2018053013

ISBN 10: 0-13-519179-3 ISBN 13: 978-0-13-519179-8

iii

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 12 books dealing with electronic commerce, information sys- tems, organizations, and society. Professor Laudon has also written more than 40 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 in- formation 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 understand- ing 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), the Department of Homeland Security, and 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 con- sultant in the information systems area and the author of seven books. Her special inter- ests include systems analysis, data manage- ment, 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 the languages and civilizations of East Asia.

The Laudons have two daughters, Erica and Elisabeth, to whom this book is dedicated.

iv

BRIEF CONTENTS

PART ONE Organizations, Management, and the Networked Enterprise 1

Chapter 1 Information Systems in Global Business Today 2 Chapter 2 Global E-business and Collaboration 40 Chapter 3 Information Systems, Organizations, and Strategy 78 Chapter 4 Ethical and Social Issues in Information Systems 120

PART TWO Information Technology Infrastructure 161 Chapter 5 IT Infrastructure and Emerging Technologies 162 Chapter 6 Foundations of Business Intelligence: Databases and Information

Management 210

Chapter 7 Telecommunications, the Internet, and Wireless Technology 250 Chapter 8 Securing Information Systems 294

PART THREE Key System Applications for the Digital Age 337 Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise

Applications 338

Chapter 10 E-commerce: Digital Markets, Digital Goods 372 Chapter 11 Managing Knowledge and Artificial Intelligence 418 Chapter 12 Enhancing Decision Making 458

PART FOUR Building and Managing Systems 491 Chapter 13 Building Information Systems 492 Chapter 14 Managing Projects 532 Chapter 15 Managing Global Systems 564

Glossary G-1

Indexes I-1

v

COMPLETE CONTENTS

PART ONE Organizations, Management, and the Networked Enterprise 1

Chapter 1 Information Systems in Global Business Today 2 Opening Case: PCL Construction: The New Digital Firm 3 1-1 How are information systems transforming business, and why are they

so essential for running and managing a business today? 5 How Information Systems Are Transforming Business 6 • What’s New in Management Information Systems? 7

Interactive Session | Management Can You Run the Company with Your iPhone? 9

Globalization Challenges and Opportunities: A Flattened World 11 • The Emerging Digital Firm 12 • Strategic Business Objectives of Information Systems 13

1-2 What is an information system? How does it work? What are its management, organization, and technology components? Why are complementary assets essential for ensuring that information systems provide genuine value for organizations? 16 What Is an Information System? 16 • Dimensions of Information Systems 18

Interactive Session | Technology UPS Competes Globally with Information Technology 23

It Isn’t Just Technology: A Business Perspective on Information Systems 24 • Complementary Assets: Organizational Capital and the Right Business Model 26

1-3 What academic disciplines are used to study information systems, and how does each contribute to an understanding of information systems? 28 Technical Approach 28 • Behavioral Approach 29 • Approach of This Text: Sociotechnical Systems 29

1-4 How will MIS help my career? 30 The Company 30 • Position Description 31 • Job Requirements 31 • Interview Questions 31 • Author Tips 31

Review Summary 32 • Key Terms 33 • Review Questions 33 • Discussion Questions 34

Hands-On MIS Projects 34 Collaboration and Teamwork Project 35 Case Study: Did Information Systems Cause Deutsche Bank to Stumble? 36 References: 39

vi Contents

Chapter 2 Global E-business and Collaboration 40 Opening Case: Enterprise Social Networking Helps Sanofi Pasteur

Innovate and Improve Quality 41

2-1 What are business processes? How are they related to information systems? 43 Business Processes 43 • How Information Technology Improves Business Processes 45

2-2 How do systems serve the different management groups in a business, and how do systems that link the enterprise improve organizational performance? 45 Systems for Different Management Groups 46 • Systems for Linking the Enterprise 51

Interactive Session | Organizations Data Changes How NFL Teams Play the Game and How Fans See It 52

• E-business, E-commerce, and E-government 55

2-3 Why are systems for collaboration and social business so important, and what technologies do they use? 56 What Is Collaboration? 56 • What Is Social Business? 57 • Business Benefits of Collaboration and Social Business 58 • Building a Collaborative Culture and Business Processes 60 • Tools and Technologies for Collaboration and Social Business 60

Interactive Session | Technology Videoconferencing: Something for Everyone 62

2-4 What is the role of the information systems function in a business? 66 The Information Systems Department 66 • Organizing the Information Systems Function 68

2-5 How will MIS help my career? 68 The Company 68 • Position Description 68 • Job Requirements 69 • Interview Questions 69 • Author Tips 69

Review Summary 70 • Key Terms 71 • Review Questions 71 • Discussion Questions 72

Hands-On MIS Projects 72 Collaboration and Teamwork Project 73 Case Study: Should Companies Embrace Social Business? 74 References: 77

Chapter 3 Information Systems, Organizations, and Strategy 78 Opening Case: Technology Helps Starbucks Find Better Ways to Compete 79 3-1 Which features of organizations do managers need to know about to

build and use information systems successfully? 81 What Is an Organization? 81 • Features of Organizations 84

3-2 What is the impact of information systems on organizations? 89 Economic Impacts 89 • Organizational and Behavioral Impacts 90 • The Internet and Organizations 93 • Implications for the Design and Understanding of Information Systems 93

Contents vii

3-3 How do Porter’s competitive forces model, the value chain model, synergies, core competencies, and network economics help companies develop competitive strategies using information systems? 94 Porter’s Competitive Forces Model 94 • Information System Strategies for Dealing with Competitive Forces 96

Interactive Session | Organizations Digital Technology Helps Crayola Brighten Its Brand 98

The Internet’s Impact on Competitive Advantage 100 • The Business Value Chain Model 101

Interactive Session | Technology Smart Products—Coming Your Way 102 Synergies, Core Competencies, and Network-Based Strategies 105

3-4 What are the challenges posed by strategic information systems, and how should they be addressed? 109 Sustaining Competitive Advantage 109 • Aligning IT with Business Objectives 109 • Managing Strategic Transitions 110

3-5 How will MIS help my career? 111 The Company 111 • Position Description 111 • Job Requirements 111 • Interview Questions 112 • Author Tips 112

Review Summary 112 • Key Terms 113 • Review Questions 113 • Discussion Questions 114

Hands-On MIS Projects 114 Collaboration and Teamwork Project 115 Case Study: Grocery Wars 116 References: 118

Chapter 4 Ethical and Social Issues in Information Systems 120 Opening Case: Are Cars Becoming Big Brother on Wheels? 121 4-1 What ethical, social, and political issues are raised by information

systems? 123 A Model for Thinking about Ethical, Social, and Political Issues 124 • Five Moral Dimensions of the Information Age 126 • Key Technology Trends that Raise Ethical Issues 126

4-2 What specific principles for conduct can be used to guide ethical decisions? 129 Basic Concepts: Responsibility, Accountability, and Liability 129 • Ethical Analysis 129 • Candidate Ethical Principles 130 • Professional Codes of Conduct 131 • Some Real-World Ethical Dilemmas 131

4-3 Why do contemporary information systems technology and the Internet pose challenges to the protection of individual privacy and intellectual property? 131 Information Rights: Privacy and Freedom in the Internet Age 132 • Property Rights: Intellectual Property 138

4-4 How have information systems affected laws for establishing account- ability and liability and the quality of everyday life? 142 Computer-Related Liability Problems 142 • System Quality: Data Quality and System Errors 143 • Quality of Life: Equity, Access, and Boundaries 144

viii Contents

Interactive Session | Organizations Will Automation Kill Jobs? 148 Health Risks: RSI, CVS, and Cognitive Decline 149

Interactive Session | Technology How Harmful Are Smartphones? 151 4-5 How will MIS help my career? 152

The Company 152 • Position Description 152 • Job Requirements 152 • Interview Questions 153 • Author Tips 153

Review Summary 153 • Key Terms 154 • Review Questions 154 • Discussion Questions 155

Hands-On MIS Projects 155 Collaboration and Teamwork Project 156 Case Study: Facebook Privacy: Your Life for Sale 157 References: 160

PART TWO Information Technology Infrastructure 161

Chapter 5 IT Infrastructure and Emerging Technologies 162 Opening Case: PeroxyChem’s Cloud Computing Formula for

Success 163

5-1 What is IT infrastructure, and what are the stages and drivers of IT infrastructure evolution? 165 Defining IT Infrastructure 165 • Evolution of IT Infrastructure 167 • Technology Drivers of Infrastructure Evolution 171

5-2 What are the components of IT infrastructure? 175 Computer Hardware Platforms 176 • Operating System Platforms 178 • Enterprise Software Applications 178 • Data Management and Storage 179 • Networking/Telecommunications Platforms 179 • Internet Platforms 179 • Consulting and System Integration Services 180

5-3 What are the current trends in computer hardware platforms? 180 The Mobile Digital Platform 180 • Consumerization of IT and BYOD 180

Interactive Session | Technology Is Business Ready for Wearable Computers? 181

Quantum Computing 183 • Virtualization 183 • Cloud Computing 183

Interactive Session | Organizations Look to the Cloud 186 Edge Computing 188 • Green Computing 189 • High-Performance and Power-Saving Processors 190

5-4 What are the current computer software platforms and trends? 190 Linux and Open Source Software 190 • Softwar

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