Information technology for management

I

I

Henry C. Lucas, Jr.
Leonard N. Stern School of Business
New York University

_Irwin
_ McGraw-Hili
Boston

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INFORMATION TECHNOLOGY FOR MANAGEMENT
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Library of Congress Cataloging-in-Publication Data
Lucas, Henry C.
Information technology for management / Henry C. Lucas, Jr. -7th
ed.
cm.
p.
ISBN 0-07-229763-8
1. Management information systems. 2. Information technology­

Management. 1. Title.
T58.6.L815 2000
658.4'038'011-dc21
INTERNATIONAL EDITION ISBN 0-07-116967-9
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99-14924


To Scott and Jonathan



TO THE STUDENT

Information technology surrounds you-on your campus and in local businesses.
When you order merchandise over the telephone, chances are your sales represen­
tative is using an information system to check inventory and to trigger the ship­
ment of your goods. Increasingly you will order products using the Internet, dis­
pensing with the telephone and becoming a participant in electronic commerce.
When you use an automatic teller machine, make an airline reservation, or rent a
car, information technology (IT) is working for you again.
Information technology is pervasive in modem organizations-from the largest
manufacturing firms to your comer drugstore, and the stakes are high, as busi­
nesses confronted with global competition strive to succeed. Some organizations
will flourish; others will fail. Those that succeed will understand how to use and

manage information technology to their advantage.
The purpose of Information Technology for Management, Seventh Edition, is to
help you learn enough about technology to play an active role in managing infor­
mation technology. It is important to understand the strategic uses of IT and how
to apply technology when developing a corporate strategy. You will see how cre­
ative organizations have integrated technology with strategy, allowing them to gain
and sustain a competitive advantage. What role does the Internet play for your
firm? What are the advantages your business can obtain from implementing In­
tranets and Extranets? How does technology facilitate the operations of global
firms?
v


vi

PREFACE

You will also see how to use information technology to transform the organiza­
tion and to create new lines of business and new relationships with other firms. The
text stresses how you as a manager can use information technology-enabled organi­
zational design variables to create new organizational structures, including the
T-Form firm. This new structure takes advantage of electronic communications and
linking, technological matrixing, technological leveling, virtual components, elec­
tronic workflows, production automation, and electronic customer-supplier relation­
ships to create a flat organization closely linked to other organizations. It uses tech­
nology to reduce the number of administrative levels, to decentralize decision
making, and generally to design a highly efficient and effective organization.
You will learn how to exploit technology to enhance your professional and per­
sonal productivity. Information technology is a resource. It enables you to re­
design the organization, change the firm's relationship with customers and suppli­

ers, as well as its communications patterns. Technology is a variable that you as a
manager will be able to manipulate to effect significant improvements in what the
organization and its employees can accomplish.
A theme throughout the book is that information technology brings change to
organizations, individuals, work groups, relationships among companies, and even
national governments. Information technology provides the manager with a pow­
erful resource for bringing about change.
Once you have completed your course, look through a newspaper or business
publication. You will be surprised at your understanding of many of the issues
raised in articles dealing with information technology.
In sum, this text is designed to prepare you for the important role of managing
information technology, to give you and your company a competitive edge.
TO THE INSTRUCTOR

This book is designed for business students with no particular background in in­
formation systems. Its primary goal is to help prepare students to assume an active
and significant role in the management, design, and use of information technology.
This edition stresses the changes enabled by IT. Each chapter begins with a short
Focus on Change because technology is creating dramatic changes in the way in­
dividuals, work groups, organizations, and even governments function.
The Objectives of This Text

During the past decade, computers and communications technologies have prolif­
erated in offices and homes. Organizations distribute the responsibility for tech­
nology to all levels of management and to different geographic locations. As a re­
sult, managers from supervisor to CEO encounter information technology on a
daily basis. Every day managers make decisions that determine how much value
the firm obtains from its investment in technology.
Organizations have the opportunity to become more efficient and competitive.
Skilled and creative managers are required to accomplish these goals. Today's

MBAs need the knowledge and confidence to deal with issues related to technology.


PREFACE

They must apply technology aggressively if they are to compete successfully in our
global economy. They must take advantage of the ability that IT gives them to
change the way work is done, communications patterns, and the very structure of the
organization.
One of the most important parts of using the technology is the design of informa­
tion systems. Much of the distribution of technology to users results from the rapid
diffusion of personal computers or workstations. Applications once considered per­
sonal are being shared across networks. Knowledge workers access a number of dif­
ferent applications on different computers through a LAN and the Internet.
Knowledge workers may design systems for themselves alone, or they may be
one of many users of a system designed by others. The design of multiuser appli­
cations is much more complex than the design of a personal computer system for
an individual user. Many more people are involved in the process, each with
unique and often conflicting needs and expectations.
Recent graduates are likely to find themselves on design teams for multiuser
systems. Thus, it is critical that a course in information systems prepare students
to play an active role in the development of new applications that will affect their
productivity and their company's competitiveness.
Based on the discussion above, this book is designed to help students meet
these three major objectives:
1. To understand the emerging technological issues facing management so stu­
dents can effectively manage information systems in organizations
2. To play an active role in applying technology through the analysis, design, and
implementation of multiuser systems that will meet the information needs of
the organization

3. To learn how to use technology to transform the organization and create new
relationships, structures, and entirely new organizations
ORGANIZATION

The text is organized into six major parts to help students meet these objectives:
Part One The Role of Managers in Information Technology

The purpose of Part One is to emphasize to students the value of information as a
corporate asset and illustrate the myriad information systems applications they
will face as graduates. Frameworks help them understand the role of technology in
business.
Part Two

Organizational Issues

In Part Two we deal with the impact of information technology on the organiza­
tion. The book stresses the use of IT design variables in creating new kinds of or­
ganization structures. In particular, I advocate developing T-Form organizations in
order to be successful in the highly competitive environment of the twenty-first
century. This section also discusses how the firm can use technology as part of its

vii


viii

PREFACE

strategy to gain a competitive advantage. This discussion of key managerial issues
surrounding the technology and its application helps motivate student learning.

Part Three

Information Technology

Important managerial decisions increasingly require an understanding of the tech­
nology. Therefore, graduates need to have knowledge of hardware and software
fundamentals. In Part Three I have included the technical information I consider
most important and relevant to future managers.
Part Four Systems Analysis and Design

Poorly designed systems are responsible for many information system problems.
When information needs are not met, users are alienated and the value of the sys­
tem diminishes. Part Four prepares graduates to participate in the development of
multiuser systems and make an immediate contribution to their employer.
Part Five

Exciting Directions in Systems

Part Five deals with alternatives to traditional transactions processing applications
such as decision-support systems, expert systems, groupware, multimedia, and ar­
tificial intelligence. An understanding of these emerging applications offers stu­
dents great potential to enhance their organizations' competitiveness.
Part Six

Issues for Senior Management

At the end of the text, we return to the issues facing management currently. Man­
agers need to be concerned with security and control, and how to achieve the max­
imum benefits possible for the firm's investment in technology. Part Six encour­
ages students to evaluate the problems-and opportunities-that changing societal

conditions and technological advances will create for their businesses. The table
below arrays our three objectives against the six major parts of the text.

Part

One
Two
Three
Four
Five
Six

The role of managers in IT
Organizational issues
I nformation technology
Systems analysis and design
EXCiting directions in systems
Management control of IS

Managing
technology

Applying
technology

Transform the
organization

[Xl
[Xl

[Xl
[Xl
[Xl
[Xl

[ 1
[Xl
[Xl
[Xl
[Xl
[ 1

[Xl
[Xl
[ 1
[Xl
[Xl
[ 1

Note that the first objective-managing information technology-is a theme
woven throughout every chapter. To manage technology effectively, students must
understand its strategic significance and potential impact on the organization. In
addition to these underlying organizational issues, managers must understand the
related technical issues.
The second objective-learning to apply technology through a systems analy­
sis and design team-is supported by Parts Two, Three, Four, and Five. These


PREFACE

parts cover the fundamentals of systems development from a managerial perspec­
tive. Using the Simon Marshall case, which is found throughout the book, stu­
dents complete the logical design of a system. This exercise encourages students
to confront the myriad decisions and trade-offs that constitute the design of a
multiuser system and gain a "real world" understanding of what otherwise would
remain abstract.
The third and final objective-transforming the organization-is a theme
throughout the text. It is a significant component of Parts One, Two, Four, and
Five. In one sense, the entire text is devoted to preparing students to use technol­
ogy to change the way organizations are structured and operate.
Learning Tools for Your Students

The text has a number of features designed to facilitate student learning, including
the following:
Management Problems and topical vignettes
Most chapters contain Man­
agement Problems and topical vignettes. Management Problems are "mini­
cases" for students to ponder alone or in groups; some instructors use the
problems to stimulate class discussion. The vignettes illustrate the many dif­
ferent ways that information technology is used. They are intended to help the
student become more creative in discovering how to benefit from information
systems.
• Chapter Summary
A summary of each chapter in the form of a numbered list
containing the most important points in the chapter is found at the end of each
chapter.
• Implications for Management Another feature is a paragraph after the Chapter
Summary that contains my thoughts on the implications of the chapter material
for a manager. This personal statement explains the importance of the material
the student has just read.

• Chapter Projects Most chapters contain a Chapter Project. The projects are de­
signed to help students apply concepts discussed in the chapter. Some projects
require the student to conduct research or contact an organization to find out
more about its information processing. I usually use one of the systems design
projects as a group assignment. Students report that the experience of designing
the logic of a system helps pull together much of the material in the course.
• The Simon Marshall case
Several of the chapter projects involve the Simon
Marshall case. There is a systems analysis and design problem for Simon Mar­
shall that involves PCs, a server, a local area network, a mainframe data source,
and a satellite distribution system. This assignment, carried out as a group proj­
ect, helps students master the technical and design material in the text.
•

Instructor's Manual

The Instructor's Manual contains a course outline, teaching hints, and answers to
selected questions. Also included are a discussion of all the Management Prob­
lems and sample course syllabi.

ix


X

PREFACE

OVERVIEW OF THE SEVENTH EDITION

The seventh edition of Information Technology for Management reflects current

thinking about the role of IT in management. In particular, it stresses the fact that
managers implement new technology to change something: the organization, the
nature of work, relationships with other organizations, or some other facet of busi­
ness. The student should look at IT as a resource that he or she can employ to
make major improvements in the organization.
Compared with the previous edition, the seventh edition contains less emphasis
on the technical details and more on the managerial issues of IT and state-of-the­
art topics. The tremendous growth of the Internet and Web has had a major influ­
ence on the text. Material on the value of information technology and how man­
agement should decide on IT investments is greatly expanded. There are also
many new topical vignettes in each chapter.
Over the years, we have seen major changes in the way leading firms use infor­
mation technology. Transactions processing systems helped improve efficiencies.
Strategic systems provide some companies with a competitive advantage. Now,
with workgroup technology, group DSS, and extensive connectivity, we have the
ability to use IT to transform the organization. This theme of change is reflected
throughout this current edition.
The text has been extensively updated to reflect advances in technology and in
its application. There are many more examples of applications and systems in the
text to supplement the topical vignettes that are ruled off in the text.
The first chapter sets the stage for the text and attempts to motivate students to
study information technology. The next two chapters discuss the nature of infor­
mation and frameworks for IT. Frameworks help students understand the role of
technology in the firm.
Chapter 4 is extremely important; it discusses the impact of information tech­
nology on the organization. Consistent with the theme of change, the chapter pre­
sents examples of how technology has dramatically changed organizations. It also
presents an approach to actively using technology in the design of new organiza­
tional forms. Chapter 5 on the strategic use of IT stresses the difficulty of sustain­
ing an advantage once it is achieved. This chapter also contains a lengthy descrip­

tion of a firm that has used the technology over the years to develop a clear
competitive advantage. The section on the issues in managing information tech­
nology is now clearer and more streamlined.
Globalization is now a major trend in business. Trade barriers are falling, and
firms are expanding their markets beyond their own borders. Chapter 6 explores
the implications of globalization for information technology. What can IT con­
tribute to the international firm? What are the special IT problems created by try­
ing to operate globally?
Part Three of the text is devoted to information technology; it attempts to pro­
vide the student with sufficient familiarity with technology so that he or she can
make good management decisions.
Chapter 8 places the different types of computers available today in perspective.
It discusses the different generations of Intel chips and the features that are used to


PREFACE

increase the speed of these processors. I have attempted to provide a balanced and
realistic picture of the role and future of mainframes, both in this chapter and
throughout the text Chapter 9 contains a discussion of the major operating sys­
tems choices today: Windows 98, Unix, and Windows NT.
Chapter 10 presents the fundamentals of database management and describes
how the organization uses a DBMS for transactions processing and to extract in­
formation to be used in managing the firm. The chapter also stresses how the stu­
dent can use a DBMS for his or her own personal productivity.
Chapter l I on communications emphasizes the role of this technology in trans­
forming organizations. The chapter features more material on networks and connec­
tivity along with examples of how firms are using communications technology in
creative ways. Chapter 12 on networks covers topics ranging from EDI to the Inter­
net Networks are one of the fastest growing phenomena in the field, and this chapter

tries to excite the reader about their potential. Chapter 12 contains much new mate­
rial on electronic commerce and the new models of business that IT enables.
There is a great deal of confusion about what kind of architecture is best for a
given application or organization. Chapter 13 attempts to clarify any confusion the
student may have about people who use the different types of technology de­
scribed in earlier chapters. This chapter discusses the role of large, medium, and
small computers and illustrates them with examples of different systems, ranging
from a centralized, mainframe airline reservations system to a highly decentral­
ized, client-server system at Chevron Canada. New to this edition is a discussion
of Travelocity, a Web site that allows a user with a browser to connect to an exist­
ing mainframe reservations system.
A key objective of the text is to prepare students to apply technology through
participation in systems analysis and design projects. We have encountered users
who developed their own systems on PCs that served as the specifications for the
same system to be developed for the entire corporation! The manager who under­
stands how to build systems is at a distinct advantage.
Chapter 15 introduces systems analysis and design while Chapter 16 covers
some design details. One of the highlights of this section is the appendix to the
chapter. This appendix presents a high-level design for a system for the Hardserve
company. There are complete DFDs for the retail store component of the system
and for the subsystem in the company's warehouse. This in-depth example should
provide students with a good understanding of the output of the design process and
the way in which one describes a system. A second example of object-oriented de­
sign for a hypothetical community hospital is also in an appendix to this chapter.
Chapter 17 talks about enhancements to the traditional life-cycle approach to
developing a system, especially packages and prototyping. Chapter 1 8 is devoted
to the popular topic of business process reengineering. This chapter presents two
examples of process reengineering and two examples where IT design variables
have been used to reengineer the entire organization.
Implementation is concerned with how you bring about change in the organi­

zation. You are trying to see, at the level of the individual system, that systems
provide the maximum return from the firm's investment in IT. In using IT design

xi


xii

PREFACE

variables, you are likely to be trying to change the structure of the entire organi­
zation, a major challenge. Chapter 19 is devoted to implementation; it is still true
that systems are underutilized and that users take advantage of only a fraction of
the capabilities of existing, installed technology. Chapter 19 integrates research
findings to produce an implementation framework to help the student understand
and manage this process.
When the first edition of this text was published, there were no hands-on users
outside of the IS department. We have moved from no contact to terminals to
workstations on the user's desk. Chapter 20 discusses the range of knowledge
worker interaction with technology and suggests ways to encourage it. The evolv­
ing model of client-server computing means that users on workstations will obtain
the data and programs they need to answer their questions from the server.
Chapter 21 describes how IT can be used in nontraditional ways to enhance the
effectiveness of individuals and organizations. The DSS part of the chapter con­
tains examples of how these applications contribute to improving productivity.
Material on EIS and group DSS is also found in the chapter. Groupware is one of
the most exciting applications for transforming organizations and is discussed in
this chapter. A section on multimedia stresses how this technology can be used for
business, as opposed to entertainment, purposes.
Chapter 22 on intelligent systems contains an in-depth example of an expert

system we developed at the American Stock Exchange. There is also material on
neural networks and coverage of case-based reasoning and genetic algorithms.
Part Six deals with management issues. Chapter 24 includes a discussion of
several different models of IT in the firm and an in-depth discussion of the role of
the CIG. It also contains guidelines or steps for diagnosing and improving the IT
effort in an organization. New to this chapter is an extensive discussion of how the
firm can make decisions about investing in information technology, including cov­
erage of the IT Value Equation and the IT Investment Equation. Chapter 25 pre­
sents framework for categorizing social issues and a discussion of ethics. It also
includes a discussion about living with future technology.
CONCLUSION

This seventh edition of the text is intended to help your students appreciate the
contribution of information technology and learn how to manage it.


I am indebted to a number of students and colleagues whose comments and rec­
ommendations have greatly influenced the original text and its revisions. Mr. Won­
seok Oh at NYU helped conduct research for the book; I am grateful for his ef­
forts. The following reviewers have helped in making the major changes found in
this edition of the text:
Mark Frolick, the University of Memphis; James L. Haner, City University;
Lorin M. Hitt, the University of Pennsylvania; and A. B. Schwarzkopf, the Univer­
sity of Oklahoma.
I would like to thank the following people at IrwinlMcGraw-Hill who worked
very hard to design and produce this text: Rick Williamson, Carrie Peters, Chris­
tine Vaughan, and JoAnne Schopler.
Finally, I gratefully acknowledge the invaluable support of my wife, Ellen, and
family, who encourage and tolerate the idiosyncrasies of an author.
Henry C. Lucas, Jr.

New York University

xiii



Preface
Acknowledgments

v

xiii

The Challenge of Change

16

Six Major Trends

17

A Preview of the Book

19

2. INTERPRETING AND
UNDERSTANDING INFORMATION

PART ONE

The Nature of Information
What Is Information?

How People Interpret Information
1. USING TECHNOLOGY
TO TRANSFORM
THE ORGANIZATION

The Senior Manager
Information Technology
in the Workplace

A Model for Interpreting Information
Characteristics of Information
5
6
6

A Visit to Brun Pas sot in France

10

What Is Information Technology?

11

Transforming Organizations
Information Technology
and the Manager

13
15

From Information to Knowledge
The Decision-Making Process
Problem Finding and Solving
Types of Decisions

How Do Individuals Make Decisions?
Stages in the Decision-Making Process

25
26
26
26
28
30
31
34
34
34
35
35

The Influence of the Organization

38

A Scenario for the Not-Too-Distant
Future

39

xv


xvi

CONTENTS

3. INFORMATION TECHNOLOGY
IN PERSPECTIVE

Frameworks for Information
Technology
Decision-Oriented Frameworks
A Synthesized Framework
Adding Organizations and Decisions
to a Framework

A Framework Based on IT
Changing Technology and Applications
Processing Transactions
Decision Support, Executive IS,
and Expert Systems
Knowledge Work Support
Supporting Groups and Cooperative
Work-Groupware
Interorganizational Systems
Key Technologies: Communications,

Networking, and Database
A More Contemporary Framework

The Basics of Information Systems
Some Generic Types of Systems
Using Diff

Is There Value in IT?
Investment Opportunities Matrix
What Is Value?

The Case of Chrysler

46
47
47
48

Creating New Types of Organizations

49

Building a T-Form Organization

51
51
51
52
52
52

53
53
53
55
55
55
57
58
65
66

PART TWO

4. THE IMPACT OF INFORMATION
TECHNOLOGY ON THE
ORGANIZATION

Modern Organizations
Organizational Structure and Design
What Is Organizational Flexibility?
Impact on Flexibility
Information Technology Runs the Airline
Co-opting the Travel Agent

Technology Transforms
the Securities Industry
Natural Growth Generates an Impact
Conclusions

75

76
76
78
79
79
81

Examples ofDesigns Using IT Variables
Adding People to the Design
People in the T-Form
Other Design Possibilities
Adopting the T-Form: An Example

5. STRATEGIC ISSUES OF
INFORMATION TECHNOLOGY

Information Technology
and Corporate Strategy
Some Examples of Technology
and Strategy
The Value Chain
Some Generic Strategies
A Frameworkfor the Strategic Use
of IT
Capitalizing on Information
Technology

Creating and Sustaining
a Competitive Edge
Using Resources to Advantage

Protecting an IT Innovation
An Example of Technology
for Competitive Advantage

82
83
83
84
86
91
94
94
94
96
104
105
106
107
108
109
111
112
112
113
114

Integrating Technology
with the Business Environment

116

Managing Information Technology

118

A Vision of the Organization
and Technology
Technology for Structuring
the Organization
Integrating Technology
and Decision Making
A Corporate Plan for Strategy
Alliances and Partnerships

119
119
120
120
121


CONTENTS

New IT Initiatives
The IT Infrastructure
Ongoing Management of IT

122
122
123

6. INTERNATIONAL BUSINESS AND
INFORMATION TECHNOLOGY
127

The Impact of Globalization
on Business
International Business Strategies
Multinational
Global
International
Transnational

Key Issues in an International
Environment
Information Needs
Implementing International IT

Managing Information Technology
Internationally
Concentrate on Interorganizational
Linkages
Establish Global Systems
Development Skills
Build an Infrastructure
Take Advantage of Liberalized
Electronic Communications
Strive for Uniform Data
Develop Guidelines for Shared
versus Local Systems

Three Examples
Standard Pharmaceuticals International
Asea Brown Boveri
VeriFone

128
129
130
130
130
130
130
130
131
134
135
135
135
136
136
137
138
138
139
140

Transnational Virtual Firms and IT

144

Business Models and IT Management

145
145
146
147
147

Independent Operations
Headquarters Driven
Intellectual Synergy
Integrated Global IT

The Internet, Imperialism,
and Developing Countries

PART THREE

7. THE FUNDAMENTALS

The Components of a Personal
Computer
Primary Memory or RAM
The Arithmetic Basis of Computers
How Memory Is Organized
Memory Technology
The Central Processing Unit
Doing Arithmetic
How Does the CPU Work?

An Instruction Set

157
158
160
160
162
163
164
165
165
167

CISC versus RISC

167

What Makes a Chip Perform?

169
171
172
173
176
177

What Techniques Increase Speed?
Input and Output
Input-Only Devices
Output Devices

Reducing a Bottleneck

8. A PROLIFERATION
OF COMPUTERS

182

Implications for Managers

183

The Computers of Today

183
184
187
188

The Rise of the Mainframe
Powerful Supercomputers
Minis: The Beginning of the Revolution
The Personal Computer Has Changed
Everything
The Server
The Network PC versus the Under
$IOOOPC
Massively Parallel Computers
A Personal Assistant
Conclusions
Why So Many Types of Computers?

9. SOFTWARE IS THE KEY
149

xvii

Managerial Concerns
Programming Languages

188
189
189
190
190
191
192
196
197
198


xviii

CONTENTS

The Contribution of Higher-Level
Languages
An Example of a Special-Purpose
Language
Fourth-Generation Languages Ease

Programming
Package Programs Are Another
Alternative
The Web Browser and Internet
Standards
The Operating System
Early Systems
The Next Steps
Evolutionary Advances
Operating Systemsfor Personal
Computers

10. DATABASE MANAGEMENT

File Elements
Data
Direct-Access Files
Storage Media
Finding Data on the File
More Complex Access

200
210
210
212
214
215
215
219
220

221
228
229
229
230
230
232
232

Enter Database Management Software 234
Benefits of the Relational Model
An Example
Normalization
Object-Oriented Databases

Databases in Systems Design
Data Modeling
The Role of the Database Administrator
DBMSs in Building Systems
Oracle: An Enterprise DBMS
Distributed Databases
The Data Warehouse
Data Mining
Changing Database Markets

11. COMMUNICATIONS

Communications between Computers
Codes
Transmission Modes

235
236
238
240
241
241
244
244
245
246
246
249
250
258
260
260
261

Direction of Transmission
How Are Signals Represented?
Speed of Transmission
What Is a Protocol?
Summary

Networks

261
262
264

265
266

Network Configurations
Local Area Networks
TCPIIP: A Network Protocol
Going Wireless
Voice Considerations

266
268
269
271
272
274

The Advantages of Networks
for Business

274

What Are the Alternatives for Wide Area
Communications?
Why Develop Private Networks?
Worries about Network Security

275
279
280

The Contribution of Communications

281

Electronic Mail As a Communications
Tool
Electronic Data Interchange
Beyond the Model T
Building an Electronic Market

281
282
283
285

Transforming Organizations
and the Economy

285

12. NETWORKS AND ELECTRONIC
COMMERCE

294

The Impact of Communications
Technology

296

Building Networks
Commercial Network Providers

A National Network Infrastructure:
The Minitel System
Internet: A Case of Phenomenal
Growth
Intranets and Extranets

The Potential of Electronic
Commerce
The Nature ofMarkets
New Business Models

296
298
299
302
309
311
315
321


CONTENTS

13. INFORMATION TECHNOLOGY
ARCHITECTURES

What Is Hardware and Software

Architecture?
Mainframes for High Volume
The Midrange Computer Is (Usually)
Smaller
The PC Is Totally Different
How Do You Share?
Power to the Desktop with a Friendly
Interface
Moving toward the Client-Server Model
What Is Infrastructure?
The Advantages and Disadvantages
of Standards

Examples of Different Architectures
Competitive Reservation Systems
Travelocity: Interfacing a CRS
to the Web
A Broker Workstation
Chevron Canada Client-Server Model
Comparing the Applications

Matching Design to an Architecture
When the Architecture Is a Given
Suggested Guidelines
Dealing with the Problem ofData

Contemporary Trends in Architecture
14. SYSTEM ALTERNATIVES
AND ACQUISITION

Dealing with Obsolescence
328
329
330
332
332
334
335
335
337
338

Establishing Criteria
Making a Final Decision

Packages for PCs

370
371

An Example
PART FOUR

15. BUILDING SYSTEMS: CREATIVITY
379
WITH TECHNOLOGY

340
342
344

344

A Systems Design Life Cycle

346
346
347
348

User-Oriented Design

353
354

To Buy or Not: Major Applications
The Decision Context
Processing

355
355
357

The Services Industry

358

What Sources Should Be Selected?

359
359

361

The Pros and Cons of Outsourcing

362

Strategies for Acquiring Equipment
and Services
Evaluating Performance
Acquiring Computers

363
364
364

366
368
369
370

The Design Task

348

366

Enterprise Software Packages

338
338

The Industry

Hardware
Software

Dedicated Applications Packages

xix

What Is a System?
Multiuser versus Single-User Design

The Roles of Managers, Users,
and Designers
Potential Pitfalls in the Life Cycle
Problems with the Conventional View
Design Team

The Spiral Model of Development
Data Collection for Analysis
and Design
Observation
Interviews
Questionnaires
Comparing the Alternatives

Structured versus Object-Oriented
Design

380
380
383
383
387
390
391
391
392
392
394
394
394
394
395

The Role of Structured Design
Data Flow Diagrams
An Example of Structured Design
Object-Oriented Design
A Comparison ofApproaches

395
396
396
397
401
406

16. BUI LDING SYSTEMS: FURTHER

DEVELOPMENTS

412

Systems Analysis

413


XX

CONTENTS

Survey and Feasibility Study
Costs and Benefits of New Systems
Identifying Systems Alternatives
Organizational Impact
Technological Feasibility
Contents and Formatfor a Study

Determining Feasibility
Selection Committee

416
416
418
419
419
420
420

420

Selecting an Alternative

421

Undertaking Systems Analysis

423

Undertaking Systems Design

423
423

Results of the Design Process

General Design Considerations
Client-Server Design
Graphical User Inteifaces
Designing Web Sites
The Input Bottleneck
Handling Errors
Backup

424
425
425
426
428

429
430

Computer-Aided Software Engineering 430
Upper CASE
Lower CASE
Is Rapid Application Development
a Solution?
What Is Conversion Effectiveness?

431
431
432
433

APPENDIX A DESIGNING A
DISTRIBUTED CLlENT·SERVER
SYSTEM: THE HARDSERVE CASE
STUDY
441
Goals

The Existing System
Problems
Decision Considerations
Information Flows

A Distributed System
Systems Design
System Specifications

Systems Overview: The Local Store
Sales
Inventory Control
Connecting to the Warehouse

441
442
442
442
442
442
442
446
446
447
448
450

Inquiries
Systems Overview: The Warehouse
Filling Orders
Purchasing
Other Processes
The Database
Input and Output
Summary

451
451
452

454
455
455
458
458

APPENDIX B AN OBJECT·ORIENTED
EXAMPLE
460

Objects and Classes
Creating Subsystems
Observations

460
466
469

17. ENHANCING THE LIFE CYCLE:
PACKAGES AND OTHER
NONTRADITIONAL TECHNIQUES

470

For Whom Are These Approaches
Intended?

471

High-Level Design Tools

472

General Packages

473

Dedicated Packages

474
474
475
476

Advantages of Packages
Disadvantages of Packages
Package Design
A Classification Framework
for Packages
An Example of a Package
Acquiring Packages
Implementing Packages
Conclusions

Prototyping
How to Develop a Prototype
An Example

A Range of Alternatives
18. REENGINEERING: CHANGING

BUSINESSES AND BUSINESS
PROCESSES

477
480
481
482
484
484
485
487
488

493

What Is Reeingineering?

494

What Is a Process?

496


CONTENTS

Reengineering a Process at Mutual
Benefit Life
Reengineering a Process
at Merrill Lynch

The Old System
A New System
Evaluation

497
498
499
503
507

Reengineering the Entire Firm at Oticon 508
Reengineering the Entire Firm
at Lithonia Lighting
Implications
Reengineering: Success or Failure?

19. IMPLEMENTING CHANGE

Implementation
What Is Implementation?
Success or Failure

Research on Implementation
A Model of Implementation
The Implementation Process

An Implementation Strategy
The Role ofDesign Teams
An Implementation Framework
Some Examples

Emergent Change

512
514
515
518
520
520
521
522
523
525
526
527
527
530
532

Implementing IT-Based Transformation
of the Organization
533
Analyzing the Costs and Benefits
of Change
Motivating Organizational Change
A Change Program

Beyond Structural Change

535
537

538
541

Supporting Knowledge Workers
The Data Warehouse

553
553

Policy Issues for Management

553
553
554
555
555
555

Support
Making Mistakes
Standards
Data Access
Is Computing the Right Use of Time?

Benefits from Encouraging
Knowledge Workers

Decision-Support Systems
DSS Design

Examples of DSSs
Yield Management: How
to Overbook Gracefully
Distributing the Gas at APC

Will Knowledge Workers Design
the Entire System?

549

552

562
566

Executive Information Systems

568

Group Decision-Support Systems

570
571

Technology-Assisted Meetings

Groupware and Organizational
Knowledge

572

What Are the Options?

580

Multimedia for Business, Education,
and Entertainment
What Is Digital Convergence?
Hypertext: The Engine for Multimedia?

Expert Systems: Applied AI

550

562

568

AI versus Traditional Programs

The Range of User Activities

560
560

The Promise of DSSs

Artificial Intelligence

20. SUPPORTING KNOWLEDGE

WORKERS

556

21. ORGANIZATION SUPPORT SYSTEMS:
DSSs, GDSSs,
EISs, GROUPWARE,
559
AND MULTIMEDIA

22. INTELLIGENT SYSTEMS

PART FIVE

xxi

Components of Expert Systems
Knowledge Representation
The Inference Engine
Systems Development
Four Examples

582
586
588
594
595
595
595
597

597
597
598
600


xxii

CONTENTS

Knowledge Discovery

614

Neural Networks

614
617
618
620

Case-Based Reasoning
Genetic Algorithms
Intelligent Agents
PART SIX

23. MANAGEMENT CONTROL OF
INFORMATION TECHNOLOGY

Management Control

Control Theory
Control in the Organization
Failure of Control
Infonnation and Control

629
630
630
631
633
633

Control of Systems Development

635

Control of Operations

637

Control and Electronic Commerce

640

Auditing Information Systems

641

Management Issues

642

Security Issues: Viruses, Worms,
and Other Creatures

642

24. INFORMATION TECHNOLOGY ISSUES
FOR MANAGEMENT
650

Management in a Technological
Environment
What Do CEOs Think?
A Political Model ofInfonnation
Technology
The Chief Infonnation Of

651
651
651
653

The Corporate IS Department
A Vision and Plan for IT
Outsourcing as a Strategy
How Much to Invest in IT
Estimating Value
Making the Investment Decision
A Summary of Issues in Managing IT

655
656
659
662
662
665
669

The Changing World of Information

669

Action Plan

670

Use IT Design Variables to Structure
the Organization
Determine and Communicate
Corporate Strategy

25. SOCIETAL IMPLICATIONS
AND THE FUTURE
WITH TECHNOLOGY

Social Responsibilities
Technology
Applications of IT
The Impact of IT

Some Suggested Solutions

Ethics and Information Technology

671
671

675
676
676
679
681
687
691

The Future with Information
Technology

693

Change Revisited

693

Glossary

700

Bibliography

713

Sources for Applications Briefs

719

Index

721



Management of
information technology
policy and strategy

2