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FOREWORD xi
PART I FOUNDATIONS 1
CHAPTER 1 Information Systems and the Role of General and Functional Managers 3
Introduction 5
General and Functional Managers 6
General and Functional Managers versus End Users 9
The Next Wave of CIOs 10
Fundamental IT Trends: The Staying Power of Moore’s Law 12
Processing Power and Memory Increase 13
Costs of Computing Power Decline 14
Computers Have Become Easier to Use 16
Other IT Trends of Managerial Interest 16
Declining Storage Costs 17
Ubiquitous Network Access 17
Ubiquitous Computing and Digital Data Genesis 17
How Do These Trends Affect Today’s Managers? 21
Why Can’t We Just Hire Good IT People? 22
Summary 23
Study Questions 23
Further Readings 24
Glossary 24
CHAPTER 2 Information Systems Defined 25
Introduction 26
Information Systems: Definition 27
IS, Not IT 27
Information Systems as Sociotechnical Systems 28
The Four Components of an Information System 29
Systemic Effects 32
Why Do Organizations Build Information Systems? 33
Successful Information Systems 34
Information Systems Outcomes 38
Information Systems in the Organizational Context 39
Every Organization is Unique 39
Bringing It All Together 40
Information Systems and Organizational Change 41
First-Order Change: Automate 41
Second-Order Change: Informate 42
Third-Order Change: Transform 43
Culture and Information Systems 45
National Culture 45
Organizational Culture and National Culture 46
How Culture Impacts Structure 47
Implications 49
Don’t Put the Cart before the Horse 49
The Rock in the Pond 50
Information Systems Are in Flux 50
Conclusion 51
Summary 51
Study Questions 51
Further Readings 52
Glossary 52
Case Study: Troubleshooting Information Systems at the Royal Hotel 52
CHAPTER 3 Organizational Information Systems and Their Impact 58
Introduction 59
Categorizing Systems 60
Hierarchical Perspective 60
Functional Perspective 64
Process Perspective 65
The Information System Cycle 69
The Integration Imperative 70
Defining Integration 70
The Dimensions of Integration 70
Enterprise Systems 73
The Genesis of Enterprise Systems 73
Enterprise Systems: Definition 75
The Advantages of Enterprise Systems 78
The Limitations of Enterprise Systems 79
Supply Chain Management 83
A Brief History of Supply Chain Management 84
Modern Supply Chain Management 85
Knowledge Management 87
Knowledge: Definition 87
Knowledge Management: Definition 89
Business Intelligence 90
Business Intelligence: Definition 92
Components of the Business Intelligence Infrastructure 93
The Evolution of Business Intelligence 96
Customer Relationship Management 97
Aspects of CRM 97
The Limitations of CRM 99
Best-of-Breed Integration 99
Enterprise Application Integration (EAI) 100
Ultimate Flexibility: Service-Oriented Architecture 100
Integration: Concluding Remarks 102
Summary 103
Study Questions 104
Further Readings 104
Glossary 105
Case Study: Hilton Hotels—Brand Differentiation through Customer Relationship Management 106
PART II COMPETING IN THE INTERNET AGE 119
CHAPTER 4 The Changing Competitive Environment 121
Introduction 122
Network Economics 123
Networks Are Different: Value in Plentitude 124
Physical and Virtual Networks 124
Key Concepts and Vocabulary 126
Two-Sided Networks 134
Implications for General and Functional Managers 134
The Economics of Information 137
Data and Information 138
Classic Information Goods 138
The Economic Characteristics of Information 139
Implications 143
Information-Intensive Goods 144
Information in Networks 146
The Richness and Reach Trade-Off 147
Implications 149
Obstacles 151
The Internet Changes Everything? 153
A Note about Disruptive Technology 154
Sustaining Technology 154
Disruptive Technology 155
Implications for Managers 156
What to Do? 157
Summary 158
Study Questions 159
Further Readings 159
Glossary 159
Case Study: Online Education 160
CHAPTER 5 Electronic Commerce: New Ways of Doing Business 163
Introduction 166
The Internet 166
Internet Services 168
Distributed Ownership 168
Multiplicity of Devices 169
Open Standards 170
The Network, More than the Internet of Today 170
The eCommerce Vocabulary 172
eCommerce and eBusiness 173
The Enablers 173
Categorizing Electronic Commerce Initiatives 174
Manifestations of eCommerce and eBusiness 180
Business Models: Definition 180
Dominant Business Models 184
The Implications of eCommerce 188
Disintermediation 188
Reintermediation 189
Market Efficiency 189
Channel Conflict 189
Customer and Employee Self-Service 191
eCommerce: From Novelty to the Mainstream 191
The Web 2.0 Phenomenon 192
Web 2.0 Technologies 196
Web 2.0 and Business Innovation 201
Summary 203
Study Questions 203
Further Readings 204
Glossary 204
Case Study: STA Travel Island—Marketing First Life Travel Services in Second Life 205
PART III THE STRATEGIC USE OF INFORMATION SYSTEMS 209
CHAPTER 6 Strategic Information Systems Planning 211
Introduction 212
A Word About Strategic and Operational Planning 213
Strategic Alignment 213
Six Decisions Requiring Managerial Involvement 215
The Purpose of Strategic Information Systems Planning 217
Plans Enable Communication 217
Plans Enable Unity of Purpose 218
Plans Simplify Decision Making over Time 218
The Strategic Information Systems Planning Process 218
Know Who You Are: Strategic Business Planning 219
Know Where You Start: Information Systems Assessment 219
Know Where You Want to Go: Information Systems Vision 221
Know How You Are Going to Get There: Information Systems Guidelines 226
Know How Well-Equipped You Are to Get There: Information Systems SWOT 230
From Planning to Action: Proposed Strategic Initiatives 231
Summary 231
Study Questions 232
Further Readings 232
Glossary 232
Case Study: Outrigger Hotels and Resorts 233
CHAPTER 7 Value Creation and Strategic Information Systems 249
Introduction 250
The Analysis of Added Value 251
The Benefits of Disciplined Analysis 252
The Definition of Value 252
Defining the Components of Value Created 253
Computing the Total Value Created 254
Appropriating the Value Created 256
The Definition of Added Value 257
Added Value in a Competitive Market 258
Pricing Considerations 258
The Relationship between Added Value and Competitive Advantage 259
How Is Added Value Created? 259
Two Ways to Create New Value 260
Some Considerations About the Analysis of Added Value 261
Strategic Information Systems 263
Definition: Strategic Information Systems 263
IT-Dependent Strategic Initiatives 265
Summary 267
Study Questions 268
Further Readings 268
Glossary 268
Case Study: Upscale Markets—Value Creation In a Mature Industry 269
CHAPTER 8 Value Creation with Information Systems 277
Introduction 280
Traditional Models of Value Creation with IT 280
Industry Analysis 280
Value Chain 285
Customer Service Life Cycle 289
Traditional Models, Not ‘‘Old’’ Models 297
Emerging Frameworks 297
Virtual Value Chain 298
Value Creation with Customer Data 304
Crafting Data-Driven Strategic Initiatives 312
Conclusions 315
Summary 315
Study Questions 316
Further Readings 316
Glossary 317
Case Study: Carnival Cruise Lines 317
CHAPTER 9 Appropriating IT-Enabled Value Over Time 344
Introduction 345
Not All IT is Created Equal 346
High-Speed Internet Access in Hotel Rooms 346
Business Intelligence at Caesars Entertainment 347
The Need for A Priori Analysis 348
Appropriating Value Over Time: Sustainability Framework 348
Sustainable Competitive Advantage 348
Resource Based View 349
Response Lag 350
Four Barriers to Erosion 350
The Holistic Approach 360
The Dynamics of Sustainability 361
Applying the Framework 363
Prerequisite Questions 363
Sustainability Questions 364
What Evolutionary Paths Does the Innovation Create? 366
Making Decisions 367
Develop the IT-Dependent Strategic Initiative Independently 367
Develop the IT-Dependent Strategic Initiative as Part of a Consortium 367
Shelve the IT-Dependent Strategic Initiative 367
Summary 368
Study Questions 368
Further Readings 369
Glossary 369
Case Study: Custom Made Apparel and Individualized Service at Lands’ End 369
PART IV GETTING IT DONE 381
CHAPTER 10 Funding and Governance of Information Systems 383
Introduction 384
Information Systems Governance 385
Steering Committee 386
Funding Information Systems 387
Chargeback 387
Allocation 387
Overhead 388
The Budgeting and Project Prioritization Process 388
Making the Budget 388
Funding Information Systems Projects: Making the Business Case 390
Individual Project Risk 396
Portfolio Management 397
Outsourcing 398
Drivers of Outsourcing 399
The Risks of Outsourcing 399
Offshoring 400
Making Optimal Outsourcing Decisions 400
Summary 401
Study Questions 402
Further Readings 402
Glossary 403
Case Study: IT Planning at ModMeters 403
CHAPTER 11 Creating Information Systems 406
Introduction 407
How Hard Can IT Be? 408
Fulfilling Information Processing Needs 410
Three Approaches 410
Make versus Buy 411
Buy and Make 414
Build Your Own: Systems Design and Development 414
Systems Development Life Cycle 414
Prototyping 421
Agile Development 423
Outsourced Development 424
Buying Off-the-Shelf Applications 426
Definition 426
Build 429
Implementation 429
End-User Development 430
The Benefits of End-User Development 430
The Risks of End-User Development 430
Summary 431
Study Questions 432
Further Readings 433
Glossary 433
Case Study: Project Management at MM 434
CHAPTER 12 Information Systems Trends 437
Introduction 439
The Mobile Platform 440
Characteristics of the Mobile Platform 442
Mobile Commerce 443
Location-Based Social Networking 444
Augmented Reality 445
Green IS 447
Digital Data Genesis 448
Analyzing Digital Data Genesis Opportunities 452
The Advent of Supercrunchers 453
Customer-Managed Interactions 454
Open Source 456
Open Source: Definition 456
Open Source Is Open for Business 457
Advantages and Disadvantages of Open Source Software 458
Software as a Service 460
Historical Context 461
SaaS Today 462
Cloud Computing 464
Summary 466
Study Questions 466
Further Readings 467
Glossary 467
Case Study: TripIt—The Traveler’s Agent 467
CHAPTER 13 Security, Privacy, and Ethics 487
Introduction 489
IT Risk Management and Security 490
Why Is Security Not an IT Problem? 491
Risk Assessment 492
Risk Mitigation 493
The Internal Threat 494
The External Threat 495
Responding to Security Threats 501
Managing Security: Overall Guidelines 504
Privacy 506
Privacy Defined 507
Privacy Risks 507
Safeguarding Privacy 510
Ethics 511
Ethics: Definition 511
Information Systems Ethics 512
Ensuring Ethical Uses of Information Systems 513
Summary 514
Study Questions 515
Further Readings 515
Glossary 515
Case Study: Giant Food and Elensys—Looking Out for Customers or Gross Privacy Invasions? 516
Index 525
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