MANAGING

INFORMATION

TECHNOLOGY
SIXTH EDITION

Carol V. Brown
Howe School of Technology Management, Stevens Institute of Technology

Daniel W. DeHayes
Kelley School of Business, Indiana University

Jeffrey A. Hoffer
School of Business Administration, The University of Dayton

E. Wainright Martin
Kelley School of Business, Indiana University

William C. Perkins
Kelley School of Business, Indiana University

PEARSON

Prentice Hall

Upper Saddle River, New Jersey 07458

CONTENTS: CHAPTERS AND

Preface
CHAPTER l M A N A G I N G IT IN A N E - W O R L D

xvi
Recent Information Technology Trends Computer Hardware: Faster, Cheaper, Mobile Computer Software: Custom and Prewritten, Standardized and Integrated Computer Networks: High Bandwidth, Global, and Wireless New Ways to Compete New Ways to Work Managing IT in Organizations Three IT Assets IT Leadership Roles The Topics and Organization of This Textbook Review Questions Discussion Questions References 1 2 2 2 3 3 4 4 5 6 7 8 8 8 10

Case Study 1

Midsouth Chamber of Commerce (A): The Role of the Operating Manager in Information Systems INFORMATION TECHNOLOGY
COMPUTER HARDWARE

PART I
CHAPTER 2

1 9
21 22 22 23 23 24 24 27 29 29 31 33 35 35 36 37 38 39 42 43 44

Evolution of Computer Systems Mainframes and Minicomputers The Development of Microcomputers Basic Components of Computer Systems Underlying Structure Input/Output Computer Memory Arithmetic/Logical Unit Computer Files Control Unit The Stored-Program Concept Extensions to the Basic Model Cache Memory Multiple Processor Configurations Types of Computer Systems Microcomputers Midrange Systems Mainframe Computers Supercomputers Summary IV

CONTENTS: CHAPTERS AND CASES

Review Questions Discussion Questions References

CHAPTER 3 COMPUTER SOFTWARE

45 45 46
48

Evolution of Computer Programming First and Second Generation Languages Third and Fourth Generation Languages Key Types of Software Applications Software Examples of Applications Products Personal Productivity Software Support Software The Operating System Third Generation Languages Fourth Generation Languages Markup Languages Object-Oriented Programming Languages for Developing Web Applications Database Management Systems CASE Tools Communications Interface Software Utility Programs The Changing Nature of Software Less Concern with Machine Efficiency More Purchased Applications More Programming Using Object-Oriented Languages More Emphasis on Applications That Run on Intranets and the Internet More User Development More Use of Personal Productivity Software The Software Component of the Information Systems Industry Summary Review Questions Discussion Questions References
CHAPTER 4 TELECOMMUNICATIONS AND NETWORKING

48 48 50 51 52 53 55 59 59 64 69 70 72 77 79 83 83 84 84 84 84 85 85 85 85 86 86 87 88 88
9O

The Need for Networking Sharing of Technology Resources Sharing of Data Distributed Data Processing and Client/Server Systems Enhanced Communications Marketing Outreach An Overview of Telecommunications and Networking Key Elements of Telecommunications and Networking Analog and Digital Signals Speed of Transmission Types of Transmission Lines Transmission Media Topology of Networks Types of Networks Network Protocols

91 91 91 92 92 92 92 93 93 95 95 96 100 102 117

VI

CONTENTS: CHAPTERS AND CASES

The Exploding Role of Telecommunications and Networking Online Operations Connectivity Electronic Data Interchange and Electronic Commerce Marketing The Telecommunications Industry Summary Review Questions Discussion Questions References

121 121 121 121 122 123 124 125 125 126
128 129 13 0 130 131 132 134 134 139 142 145 146 146 147

CHAPTER 5

THE DATA RESOURCE Why Manage Data? Technical Aspects of Managing the Data Resource The Data Model and Metadata Data Modeling Database Programming Managerial Issues in Managing Data Principles in Managing Data The Data Management Process Data Management Policies Summary Review Questions Discussion Questions References

Case Study 1-1

Case Study 1-2

IMT Custom Machine Company, Inc.: Selection of an Information Technology Platform VoIP2.biz, Inc.: Deciding on the Next Steps for a VoIP Supplier The VoIP Adoption at Butler University Data Governance at InsuraCorp Midsouth Chamber of Commerce (B): Cleaning Up an Information Systems Debacle APPLYING INFORMATION TECHNOLOGY
ENTERPRISE SYSTEMS

148 160 176 188 192 2O1 2O3

203 205 205 206 206 207 207 208 209 210 210 211 213 216

Case Study 1-3

Case Study 1-4

Case Study 1-5 PART II CHAPTER 6

Application Areas Critical Concepts Batch Processing Versus Online Processing Functional Information Systems Vertical Integration of Systems Distributed Systems Client/Server Systems Service-Oriented Architecture and Web Services Transaction Processing Systems Payroll System Order Entry System Enterprise Resource Planning Systems An Example ERP System: SAP ERP Data Warehousing

CONTENTS: CHAPTERS AND CASES

VII

Customer Relationship Management Systems Office Automation Word Processing and Application Suites Electronic Mail Future Developments Groupware An Example Groupware System: Lotus Notes Intranets and Portals Factory Automation Engineering Systems Manufacturing Administration Factory Operations Robotics Supply Chain Management Systems Summary Review Questions Discussion Questions References
CHAPTER 7 MANAGERIAL SUPPORT SYSTEMS

218 219 221 221 222 224 224 228 230 231 231 231 232 232 233 234 234 235
237

Decision Support Systems Data Mining Group Support Systems Geographic Information Systems Business Adopts Geographic Technologies What's Behind Geographic Technologies Issues for Information Systems Organizations Executive Information Systems/Business Intelligence Systems Knowledge Management Systems Two Recent KMS Initiatives Within a Pharmaceutical Firm KMS Success Artificial Intelligence Expert Systems Obtaining an Expert System Examples of Expert Systems Neural Networks Virtual Reality Summary Review Questions Discussion Questions References
CHAPTER 8 E-BUSINESS SYSTEMS

237 239 242 243 244 245 247 248 251 253 254 254 255 255 256 257 259 262 263 263 264
266

'

Brief History of the Internet E-Business Technologies Legal and Regulatory Environment Strategic E-Business Opportunities (and Threats) B2B Applications B2C Applications Two Dot-Com Retailers Two Traditional Catalog Retailers Two Traditional Store Retailers Summary: B2C Retailing '

267 268 271 272 275 277 278 280 281 282

VIII

CONTENTS: CHAPTERS AND CASES

Dot-Com Intermediaries Summary: Successful Online Intermediary Models Special Issue: What Makes a Good Web Site? Summary Review Questions Discussion Questions References Case Study II-l Case Study II-2 Vendor-Managed Inventory at NIBCO The Challenges of Local System Design for Multinationals: The MaxFli Sales Force Automation System at BAT Real-Time Business Intelligence at Continental Airlines The Cliptomania Web Store: An E-Tailing Start-up Survival Story Meridian Hospital Systems, Inc.: Deciding Which IT Company to Join
ACQUIRING INFORMATION SYSTEMS BASIC INFORMATION SYSTEMS CONCEPTS

284 289 289 292 292 293 293 295

300 313 323 333

339 342

Case Study II-3 Case Study II-4 Case Study H-5

PART I I I
CHAPTER 9

The Systems View What Is a System? Seven Key System Elements Organizations as Systems Systems Analysis and Design Business Processes Identifying Business Processes Business Process Redesign Processes and Techniques to Develop Information Systems The Information Systems Development Life Cycle Structured Techniques for Life Cycle Development Procedural-Oriented Techniques Techniques for the As-Is Model Techniques for the Logical To-Be Model Techniques for Documenting the Physical To-Be System Object-Oriented Techniques Core Object-Oriented Concepts Unified Modeling Language (UML) for O-O Modeling Summary of Processes and Techniques to Develop Information Systems Information Systems Controls to Minimize Business Risks Types of Control Mechanisms Controls in the Definition and Construction Phases Controls in the Implementation Phase Summary Review Questions Discussion Questions References

342 343 344 347 348 349 349 349 352 352 353 354 355 356 361 363 365 366 366 369 369 370 371 373 373 374 374

CONTENTS: CHAPTERS AND CASES

IX

CHAPTER 1O

METHODOLOGIES FOR CUSTOM SOFTWARE DEVELOPMENT

375
375 376 377 377 379 381 383 385 386 387 387 388 389 389 390 391 391 392 395 396 396 397 397

Systems Development Life Cycle Methodology The SDLC Steps Initiating New Systems Projects Definition Phase Construction Phase Implementation Phase The SDLC Project Team Managing an SDLC Project SDLC Advantages and Disadvantages Prototyping Methodology The Prototyping Steps The Prototyping Project Team Managing a Prototyping Project Prototyping Advantages and Disadvantages Prototyping Within an SDLC Process Newer Approaches Rapid Application Development (RAD) Agile Methodologies Managing Software Projects Using Outsourced Staff Summary Review Questions Discussion Questions References CHAPTER 11 METHODOLOGIES FOR PURCHASED SOFTWARE PACKAGES The Make-or-Buy Decision Purchasing Methodology The Purchasing Steps Project Team for Purchasing Packages Managing a Purchased System Project Purchasing Advantages and Disadvantages Special Case: Enterprise System Packages Open Source Software New Purchasing Option: Application Service Providers (ASPs) Summary Review Questions Discussion Questions References
IT PROJECT MANAGEMENT

399 400 400 401 409 410 411 412 414

415 417 417 417 418

CHAPTER

12

IT Portfolio Management Project Management Roles Project Manager Project Sponsor and Champion Roles Project Initiation Project Planning Scheduling Budgeting

419 420 421 421 422 423 424 424 425

CONTENTS: CHAPTERS AND CASES

Staffing Planning Documents Project Execution and Control Managing Project Risks Managing Business Change Project Closing Special Issue: Managing Complex IT Projects . Special Issue: Managing Virtual Teams Summary Review Questions Discussion Questions References CHAPTER 1 3 SUPPORTING COMPUTER USERS Supporting User Application Development (UAD) Advantages and Disadvantages of User-Developed Applications Assessing the Risks from UAD Guidelines for User Developers Providing Desktop Support Strategies for User Computing Support Services Control Policies and Procedures Special Case: Supporting Telecommuters Special Case: Managing Intranets Summary Review Questions Discussion Questions References Managing a Systems Development Project at Consumer and Industrial Products, Inc. Development of an Interorganizational System at Zeus, Inc. A Make-or-Buy Decision at Baxter Manufacturing Company ERP Purchase Decision at Benton Manufacturing Company, Inc. The Kuali Financial System: An Open Source Project Naval Surface Warfare Center, Crane Division: Implementing Business Process Reengineering Recommendations NIBCO's "BigBang": An SAP Implementation BAT Taiwan: Implementing SAP for a Strategic Transition A Troubled Project at Modern Materials, Inc.

426 428 429 430 432 435 435 435 437 438 438 439 44 1 442 442 443 445 447 448 449 451 452 454 455 455 456 456 458 468 476 482 487

Case Study III-l Case Study III-2 Case Study III-3 Case Study III-4 Case Study III-5 Case Study III-6

499 514 530 544

Case Study III-7 Case Study III-8 Case Study III-9

CONTENTS: CHAPTERS AND CASES

XI

Case Study 111-10 Purchasing a Student Management

System at Jefferson County School System (Revised) PART IV THE INFORMATION MANAGEMENT SYSTEM
CHAPTER 14 PLANNING INFORMATION SYSTEMS RESOURCES 563

557

561

The Need for a Direction for Information Resources The Outputs of the Direction-Setting Process Information Resources Assessment Information Vision and Architecture Information Resources Plans The Process of Setting the Direction IS and Business Planning Assessment Vision Strategic Planning Operational Planning Traditional Planning in the IS Organization Assessing Current Information Resources Measuring IS Use and Attitudes Reviewing the IS Organizational Mission Assessing Performance versus Goals Creating an Information Vision Designing the IT Architecture The Strategic IS Plan The Strategic IS Planning Process Tools for Identifying IT Strategic Opportunities The Operational IS Plan Guidelines for Effective IS Planning Benefits of Information Resources Planning Better IS Resource Allocation Communicating Budget Needs with Top Management Creating a Context for IT Decisions Achieving Both Integration and Innovation Evaluating Vendor Options Meeting Management Expectations Summary Review Questions Discussion Questions References
CHAPTER 15

564 564 565 565 565 566 566 566 566 567 567 567 568 568 569 569 570 571 572 572 573 578 580 580 580 580 581 581 581 581 581 581 582 582

LEADING THE INFORMATION SYSTEMS

FUNCTION 584

The Evolving IS Role Designing the IS Organization Structure and Governance Managing IT Service Delivery Chargeback Systems Service Level Agreements (SLAs) Service Delivery Process Improvements with ITIL Outsourcing IT Service Delivery

584 586 587 589 589 590 590

XII

CONTENTS: CHAPTERS AND CASES

Managing IT Applications An Applications Portfolio Approach Metrics for IT Applications Management Managing IT Human Resources Insourcing and Outsourcing IT Skills Managing the IT-Business Relationship Partnering with Horizontal Mechanisms Measuring Overall IS Performance Special Issue: Managing a Global IS Organization Special Issue: Managing Offshore Outsourcing Arrangements Summary Review Questions Discussion Questions References
CHAPTER 16

591 591 592 592 595 596 597 598 599 600 602 603 603 603 6O5 606 609 611 611 612 612 612 613 615 616 617 617 618 618 618
62O

INFORMATION SECURITY E-Crime Information Risk Management Compliance with Current Information Security Laws Sarbanes-Oxley (SOX) Gramm-Leach-Bliley Act of 1999 (GLBA) Health Insurance Portability and Accountability Act(HIPAA) The PATRIOT Act Developing an Information Security Policy Planning for Business Continuity Electronic Records Management (ERM) The Chief Information Security Role Summary Review Questions Discussion Questions References
LEGAL, ETHICAL, AND SOCIAL ISSUES

CHAPTER 17

The Legal Environment Ethics Frameworks Identifying Ethical Problems Analyzing Ethical Problems Privacy Privacy Problems E-Commerce Privacy Concerns Workplace Privacy Ethics of Invasion of Privacy Laws on Privacy Identity Theft Impact of Identity Theft Punishment of Identify Theft Laws on Identity Theft Preventing Identity Theft Intellectual Property Rights Software Piracy Copyright Protection

620 621 621 622 623 624 625 626 627 627 629 630 630 630 631 631 632 632

CONTENTS: CHAPTERS AND CASES

XIII

Patent Protection Digital Entertainment Piracy Internet File Sharing Ethical Questions Other Social Issues Computer Crime Access to the Technology Freedom of Speech Hazards of Inaccuracy Impact on Workers The Future Review Questions Discussion Questions References Case Study IV-1 Case Study IV-2 The Clarion School for Boys, Inc. Milwaukee Division: Making Information Systems Investments Teletron, Inc.: Using Information Technology to Transform a Company Case Study IV-3 Case Study IV-4 Case Study IV-5 Case Study IV-6 FastTrack IT Integration for the Sallie Mae Merger IT Infrastructure Outsourcing at Schaeffer (A): The Outsourcing Decision IT Infrastructure Outsourcing at Schaeffer (B): Managing the Contract Systems Support for a New Baxter Manufacturing Company Plant in Mexico Case Study IV-7 Case Study IV-8 Case Study IV-9 BATAPSS: Shared Services at a Multinational Firm Mary Morrison's Ethical Issue (Revised) A Security Breach on the Indiana University Computer Network Glossary Index

632 633 633 634 635 635 635 636 636 636 637 637 638 638 640

658 672 687 692

699 704 711 713 715 745