Information systems essentials third edition

>

CURRENT .

COMPREHENSIVE . //

The third edition of Information Systems Essentials delivers just
enough material in a style that speaks to students – not at them –
making it easier to see the relevance of information systems.
Coverage of essential business and managerial applications of MIS
and IT focuses a wide-angle lens on today’s business environment.
The text’s combination of real-life examples, application exercises,
individual and group projects, and case studies offers students a
well-balanced repository of information aimed at developing business
professionals for today’s highly competitive world.

_stephen haag / maeve cummings / 3E //

MISource for Office 2007

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/// / // /
ISBN 978-0-07-337675-2
MHID 0-07-337675-2

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EAN

MD DALIM 978842 8/12/08 CYAN MAG YELO BLACK

McGraw-Hill’s MISource is a student’s best resource for success.
An optional online tool that helps refresh Excel, Access, and
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information systems essentials

> CONCISE .

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information systems essentials

_st e p h en
haag
/ maeve
cummings
/ ///
_stephen

haag
/ maeve
cummings
/ ///
/// / third edition
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Information Systems Essentials

THIRD EDITION

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Information Systems Essentials

THIRD EDITION

Stephen Haag
DANIELS COLLEGE OF BUSINESS

ApagoUNIVERSITY
PDF OF
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DENVER

Maeve Cummings
COLLEGE OF BUSINESS
PITTSBURG STATE UNIVERSITY

Boston Burr Ridge, IL Dubuque, IA New York San Francisco St. Louis
Bangkok Bogotá Caracas Kuala Lumpur Lisbon London Madrid Mexico City
Milan Montreal New Delhi Santiago Seoul Singapore Sydney Taipei Toronto

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INFORMATION SYSTEMS ESSENTIALS
Published by McGraw-Hill/Irwin, a business unit of The McGraw-Hill Companies, Inc., 1221 Avenue of
the Americas, New York, NY, 10020. Copyright © 2009, 2008, 2006 by The McGraw-Hill Companies,
Inc. All rights reserved. No part of this publication may be reproduced or distributed in any form or by any
means, or stored in a database or retrieval system, without the prior written consent of The McGraw-Hill
Companies, Inc., including, but not limited to, in any network or other electronic storage or transmission,
or broadcast for distance learning.
Some ancillaries, including electronic and print components, may not be available to customers outside the
United States.
This book is printed on acid-free paper.
1 2 3 4 5 6 7 8 9 0 CCI/CCI 0 9 8
ISBN 978-0-07-337675-2
MHID 0-07-337675-2
Publisher: Paul Ducham
Development editor II: Trina Hauger
Markting manager: Natalie Zook
Manager of photo, design & publishing tools: Mary Conzachi
Lead production supervisor: Micahel R. McCormick
Senior photo research coordinator: Jeremy Cheshareck
Photo researcher: Jennifer Blankenship
Media project manager: Suresh Babu, Hurix Systems Pvt. Ltd
Cover and interior design: Cara Hawthorne
Type face: 11/13 Bulmer MT
Compositor: Laserwords Private Limited
Printer: Courier Kendallville

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Library of Congress Cataloging-in-Publication Data

Haag, Stephen.
Information systems essentials / Stephen Haag, Maeve Cummings. — 3rd ed.
p. cm.
Includes index.
ISBN-13: 978-0-07-337675-2 (alk. paper)
ISBN-10: 0-07-337675-2 (alk. paper)
1. Management information systems. 2. Information technology. I. Cummings,
Maeve. II. Title.
T58.6.H17 2009
658.4´038—dc22
2008035199

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D E D I C AT I O N

For Darian and Trevor: You are my
children, my youth, and my smile.
Stephen Haag
To the memory of my late husband,
Slim: When I saw myself through his
eyes I saw the woman I would like to
be—and could be. That made everything possible.

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BRIEF CONTENTS

CHAPTER ONE

2

The Information Age in Which You Live:
Changing the Face of Business

CHAPTER TWO
Major Business Initiatives: Gaining
Competitive Advantage with IT

CHAPTER NINE

252

Emerging Trends and Technologies:
Business, People, and Technology Tomorrow

62

Databases and Data Warehouses:
Building Business Intelligence

APPENDIX A

280

Computer Hardware and Software

APPENDIX B
CHAPTER FOUR

222

Protecting People and Information:
Threats and Safeguards
36

CHAPTER THREE

CHAPTER EIGHT

94

Decision Support and Artificial Intelligence:
Brainpower for Your Business

308

Network Basics

APPENDIX C

340

Careers in Business

CHAPTER FIVE

126
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PROJECTS

Electronic Commerce: Strategies
for the New Economy

CHAPTER SIX

Group Projects
Electronic Commerce Projects
158

Systems Development: Phases, Tools,
and Techniques

CHAPTER SEVEN

364

GLOSSARY

400

NOTES

414

PHOTO CREDITS

420

INDEX

421

192

Enterprise Infrastructure, Metrics, and Business
Continuity Planning: Building and Sustaining
the Dynamic Enterprise

vi

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TA B L E O F C O N T E N T S

CHAPTER TWO

Preface xiv

CHAPTER ONE

2

The Information Age in Which You Live:
Changing the Face of Business
OPENING CASE STUDY: IS YOUR SOCIAL
SECURITY NUMBER WORTH $98?

3

INTRODUCTION

4

MANAGEMENT INFORMATION SYSTEMS

6

Information as a Key Resource 6

People as a Key Resource in MIS 11
Information Technology as a Key Resource
in MIS 14
PORTER’S FIVE FORCES MODEL: ASSESSING THE
STATE OF THE COMPETITION

36

Major Business Initiatives: Gaining
Competitive Advantage with IT
OPENING CASE STUDY: A SMACK—A GROUP
OF JELLYFISH OR SOCIAL COMMERCE SHOPPING?

37

INTRODUCTION

38

SUPPLY CHAIN MANAGEMENT

38

Strategic and Competitive Opportunities
with SCM 40
IT Support for Supply Chain Management

41

CUSTOMER RELATIONSHIP MANAGEMENT

16

Strategic and Competitive Opportunities
with CRM 43
IT Support for Customer Relationship
Management 44
E-COLLABORATION

Buyer Power 17
Supplier Power 18
Threat of Substitute Products or Services 18
Threat of New Entrants 19
Rivalry among Existing Competitors 19

41

45

Work Activities with Integrated Collaboration
Environments 46
Knowledge Management with Knowledge
Management Systems 46
Social Networking with Social Networking
Systems 46
Learning with E-Learning Tools 47
Informal Collaboration to Support Open-Source
Information 47
Strategic and Competitive Opportunities with
E-Collaboration 47

IT Support for E-Collaboration 48

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PORTER’S THREE GENERIC STRATEGIES:
BUILDING BUSINESS STRATEGY

20

Overall Cost Leadership 21
Differentiation 22
Focus 22
Two Interesting and Complementary Strategy
Frameworks 22
IDENTIFYING IMPORTANT BUSINESS PROCESSES:
VALUE-CHAIN ANALYSIS

IT CULTURE—AN ORGANIZATIONAL PERSPECTIVE

26

Identifying Processes That Add Value 27
Identifying Processes That Reduce Value 28

48

IT Culture—Structuring the IT Function 49
IT Culture—Philosophical Approach to IT 51
ENTERPRISE RESOURCE PLANNING—BRINGING IT ALL
TOGETHER

52

29

SUMMARY: STUDENT LEARNING OUTCOMES REVISITED

55

CLOSING CASE STUDY ONE: EXPLORING YOUR
SPACE AT MYSPACE.COM

30

CLOSING CASE STUDY ONE: IS ERP THE ANSWER FOR A
COMPANY THAT HASN’T MADE A PROFIT IN SIX YEARS?

56

CLOSING CASE STUDY TWO: IS THE WORLD
DUMPING DATA ON YOU?

31

CLOSING CASE STUDY TWO: IT’S ALL ABOUT CUSTOMER
RELATIONS IN THE FINANCIAL SERVICES MARKET

57

KEY TERMS AND CONCEPTS

32

KEY TERMS AND CONCEPTS

58

SHORT-ANSWER QUESTIONS

33

SHORT-ANSWER QUESTIONS

59

ASSIGNMENTS AND EXERCISES

33

ASSIGNMENTS AND EXERCISES

59

DISCUSSION QUESTIONS

34

DISCUSSION QUESTIONS

60

Chapter Projects

35

Chapter Projects

61
vii

SUMMARY: STUDENT LEARNING OUTCOMES
REVISITED

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viii

Table of Contents

CHAPTER THREE

62

Databases and Data Warehouses:
Building Business Intelligence

102

GEOGRAPHIC INFORMATION SYSTEMS

104

EXPERT SYSTEMS

What Expert Systems Can and Can’t Do

105
107

NEURAL NETWORKS AND FUZZY LOGIC

OPENING CASE STUDY: CAN COMPANIES KEEP YOUR
PERSONAL INFORMATION SECURE AND PRIVATE?

63

INTRODUCTION

64

GENETIC ALGORITHMS

110

THE RELATIONAL DATABASE MODEL

66

INTELLIGENT AGENTS

111

70

Data Definition Subsystem 71
Data Manipulation Subsystem 72
Application Generation Subsystem 75
Data Administration Subsystem 75

112

MULTI-AGENT SYSTEMS AND AGENT-BASED MODELING 115

Ant Colonies and Swarm Intelligence

116

SUMMARY: STUDENT LEARNING OUTCOMES REVISITED 118

77

DATA WAREHOUSES AND DATA MINING

What Is a Data Warehouse? 77
What Are Data-Mining Tools? 79

Data Marts: Smaller Data Warehouses 80
Data Mining as a Career Opportunity 81
Important Considerations in Using
a Data Warehouse 82
BUSINESS INTELLIGENCE REVISITED

108

Information Agents 112
Monitoring-and-Surveillance Agents
Data-Mining Agents 114
User Agents 114

Collections of Information 66
Created with Logical Structures 66
With Logical Ties within the Information 68
With Built-In Integrity Constraints 69
DATABASE MANAGEMENT SYSTEM TOOLS

Fuzzy Logic

CLOSING CASE STUDY ONE: CRYSTAL BALL,
CLAIRVOYANT, FORTUNE TELLING . . . CAN
PREDICTIVE ANALYTICS DELIVER THE FUTURE?

119

CLOSING CASE STUDY TWO: CLOSING THE GREAT
HEALTH CARE DIVIDE WITH PATTERN RECOGNITION
AND DATA-MINING TECHNOLOGIES

120

KEY TERMS AND CONCEPTS

122

SHORT-ANSWER QUESTIONS
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122

ASSIGNMENTS AND EXERCISES

122

DISCUSSION QUESTIONS

123

Chapter Projects

124

86

CHAPTER FIVE

126

CLOSING CASE STUDY ONE: BEN & JERRY’S, BIGELOW
TEAS, AND BUSINESS INTELLIGENCE

87

Electronic Commerce: Strategies for the
New Economy

CLOSING CASE STUDY TWO: MINING DINING DATA

89

KEY TERMS AND CONCEPTS

90

SHORT-ANSWER QUESTIONS

91

ASSIGNMENTS AND EXERCISES

91

DISCUSSION QUESTIONS

92

Chapter Projects

93

CHAPTER FOUR

94

84

INFORMATION OWNERSHIP

Strategic Management Support 84
Sharing Information with Responsibility
Information Cleanliness 85

85

SUMMARY: STUDENT LEARNING OUTCOMES REVISITED

Decision Support and Artificial Intelligence:
Brainpower for Your Business
OPENING CASE STUDY: VISUALIZING INFORMATION
IN MAP FORM CAN AID IN DECISION MAKING

95

INTRODUCTION

96

DECISION SUPPORT SYSTEMS

98

Components of a Decision Support System

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99

OPENING CASE STUDY: WHAT’S REPLACING THE DAY
AFTER THANKSGIVING FOR SHOPPING SALES?

127

INTRODUCTION

128

E-COMMERCE BUSINESS MODELS

129

Business to Business (B2B) E-Commerce 129
Business to Consumer (B2C) E-Commerce 130
Consumer to Business (C2B) E-Commerce 130
Consumer to Consumer (C2C) E-Commerce 131
Business to Government (B2G) E-Commerce 131
Consumer to Government (C2G) E-Commerce 131

Government to Business (G2B) E-Commerce 132
Government to Consumer (G2C) E-Commerce 132
Government to Government (G2G) E-Commerce 132
UNDERSTAND YOUR BUSINESS, PRODUCTS, SERVICES,
AND CUSTOMERS

133

Who Are Your Customers? 133
What Is the Value of Your Products and Services
as Perceived by Your Customers? 134

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FIND CUSTOMERS AND ESTABLISH RELATIONSHIPS

138

Business to Consumer 138
Business to Business 139
MOVE MONEY EASILY AND SECURELY

141

147

Youth 147
M-Commerce 148
The Long Tail 148
SUMMARY: STUDENT LEARNING OUTCOMES REVISITED 150
CLOSING CASE STUDY ONE: WHEN YOU’RE BIG, YOU
CAN BE YOUR OWN B2B E-MARKETPLACE

152

CLOSING CASE STUDY TWO: E-BUSINESS TREND: FAR-EAST
E-COMMERCE EXPLOSION
153

174

The Prototyping Process 175
The Advantages of Prototyping 177
The Disadvantages of Prototyping 177
OUTSOURCING

Business to Consumer Payment Systems 141
Business to Business Payment Systems 143
Security: The Pervading Concern 145
E-BUSINESS TRENDS

PROTOTYPING

ix

178

The Outsourcing Process 180
The Service Level Agreement 182
Geopolitical Outsourcing Options 182
The Advantages and Disadvantages of
Outsourcing 184
SUMMARY: STUDENT LEARNING OUTCOMES REVISITED

185

CLOSING CASE STUDY ONE: GETTING ON THE RIGHT
TRACK AT GENERAL MOTORS

186

CLOSING CASE STUDY TWO: SHOULD
AN ORGANIZATION OUTSOURCE SECURITY?

187

KEY TERMS AND CONCEPTS

188

KEY TERMS AND CONCEPTS

155

SHORT-ANSWER QUESTIONS

189

SHORT-ANSWER QUESTIONS

155

ASSIGNMENTS AND EXERCISES

189

ASSIGNMENTS AND EXERCISES

155

DISCUSSION QUESTIONS

190

DISCUSSION QUESTIONS

156

Chapter Projects

191

Chapter Projects

157

CHAPTER SEVEN
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CHAPTER SIX

158

Systems Development: Phases, Tools,
and Techniques
OPENING CASE STUDY: SAVING LIVES THROUGH
SYSTEMS DEVELOPMENT AND INTEGRATION

159

INTRODUCTION

160

INSOURCING AND THE SYSTEMS DEVELOPMENT LIFE CYCLE 160

Phase 1: Planning 162
Phase 2: Analysis 163
Phase 3: Design 164
Phase 4: Development 164
Phase 5: Testing 165
Phase 6: Implementation 165
Phase 7: Maintenance 166
COMPONENT-BASED DEVELOPMENT

SELFSOURCING (END-USER DEVELOPMENT)

The Selfsourcing Process 171
The Advantages of Selfsourcing 172
Potential Pitfalls and Risks of Selfsourcing 173
Which Applications for IT to Offload 173
The Right Tool for the Job 174

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Enterprise Infrastructure, Metrics, and
Business Continuity Planning: Building
and Sustaining the Dynamic Enterprise
OPENING CASE STUDY: NEITHER RAIN NOR SNOW NOR DARK
OF NIGHT . . . IT’S NOT THE POST
OFFICE—IT’S THE IRS
193
INTRODUCTION

167

170

194

Customers 194
End Users 195
Software Development 196
Information Needs 196
Hardware Requirements 196
HARDWARE AND SOFTWARE INFRASTRUCTURE

Rapid Application Development Methodology 167
Extreme Programming Methodology 168
Agile Methodology 170
Service-Oriented Architecture—An Architecture
Perspective 170

192

197

Enterprise Resource Planning (ERP) Revisited 197
Supporting Network Infrastructures 202
IT SUCCESS METRICS

206

Efficiency and Effectiveness Metrics 206
Web-centric Metrics 208
Call Center Metrics 208
Financial Metrics 209
Service Level Agreements Revisited 210
BUSINESS CONTINUITY PLANNING

211

Phase 1: Organizational Strategic Plan 211
Phase 2: Analysis 212
Phase 3: Design 212
Phase 4: Implementation 213

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Table of Contents
Phase 5: Testing 213
Phase 6: Maintenance 213

CHAPTER NINE

SUMMARY: STUDENT LEARNING OUTCOMES REVISITED
CLOSING CASE STUDY ONE: INTERNATIONAL TRUCK
MAKES A HUGE BET ON A SERVICE-ORIENTED
ARCHITECTURE

214

216

CLOSING CASE STUDY TWO: ROGER WILLIAMS MEDICAL
CENTER BOOSTS ITS IT INFRASTRUCTURE
217
KEY TERMS AND CONCEPTS

218

SHORT-ANSWER QUESTIONS

218

ASSIGNMENTS AND EXERCISES

219

DISCUSSION QUESTIONS

220

Chapter Projects

220

CHAPTER EIGHT

222

Protecting People and Information:
Threats and Safeguards
OPENING CASE STUDY: THEY KNOW ABOUT
96 PERCENT OF AMERICAN HOUSEHOLDS

223

INTRODUCTION

224

252

Emerging Trends and Technologies:
Business, People, and Technology Tomorrow
OPENING CASE STUDY: CAN AN E-SOCIETY REPLACE
OUR REAL SOCIETY?

253

INTRODUCTION

254

THE CHANGING INTERNET

255

Software-as-a-Service 255
Push, Not Pull, Technologies and Personalization 256
F2b2C: A New E-Commerce Business Model 257
Voice over Internet Protocol (VoIP) 258
Web 2.0 258
E-Society 259
260

PHYSIOLOGICAL INTERACTION

Automatic Speech Recognition 260
Virtual Reality 260
Cave Automatic Virtual Environments 261

Haptic Interfaces 262
Biometrics 262
265

THE WIRELESS ARENA

The Next Generation of Cell Phone Technology 266
RFID (Radio Frequency Identification) 267

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TECHNOLOGY

ETHICS

Two Factors That Determine How You Decide
Ethical Issues 225
Intellectual Property 226

Nanotechnology 269
Multi-state CPUs 269
Holographic Storage Devices
227

PRIVACY

Privacy and Other Individuals 227
Identity Theft 229

Privacy and Employees 231
Privacy and Consumers 233
Privacy and Government Agencies 238
Laws on Privacy 239
SECURITY

270

MOST IMPORTANT CONSIDERATIONS

271

The Necessity of Technology 271
Closing the Great Digital Divide 271
Technology for the Betterment of Society 271
Exchanging Privacy for Convenience 272
Ethics, Ethics, Ethics 272
240

Security and Employees 241
Security and Outside Threats 241
Security Precautions 244
SUMMARY: STUDENT LEARNING OUTCOMES REVISITED

269

SUMMARY: STUDENT LEARNING OUTCOMES REVISITED

272

CLOSING CASE STUDY ONE: THE NBA GOES NFC

274

CLOSING CASE STUDY TWO: TRACKING YOUR CHILDREN 275
KEY TERMS AND CONCEPTS

276

SHORT-ANSWER QUESTIONS

276

ASSIGNMENTS AND EXERCISES

277

DISCUSSION QUESTIONS

278

Chapter Projects

279
280

246

CLOSING CASE STUDY ONE: CAUTIONARY TALES
OF INDISCREET E-MAIL

247

CLOSING CASE STUDY TWO: THE PROBLEM OF
INFORMATION PROTECTION

248

KEY TERMS AND CONCEPTS

249

SHORT-ANSWER QUESTIONS

249

APPENDIX A

ASSIGNMENTS AND EXERCISES

250

Computer Hardware and Software

DISCUSSION QUESTIONS

250

A QUICK TOUR OF TECHNOLOGY

281

Chapter Projects

251

CATEGORIES OF COMPUTERS BY SIZE

283

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Table of Contents
Personal Digital Assistants (PDAs) 283
Tablet PCs 283
Notebook Computers 284
Desktop Computers 284
Minicomputers, Mainframe Computers,
and Supercomputers 284
SOFTWARE: YOUR INTELLECTUAL INTERFACE

Other Security Threats: Malware

286

Application Software 286
System Software 288
HARDWARE: YOUR PHYSICAL INTERFACE

330
331

THE CLIENT/SERVER SOFTWARE MODEL

Client/Server—A Business View

332

SUMMARY: STUDENT LEARNING OUTCOMES REVISITED

336

KEY TERMS AND CONCEPTS

338

SHORT-ANSWER QUESTIONS

338

ASSIGNMENTS AND EXERCISES

338

APPENDIX C

340

290

Common Input Devices 291
Common Output Devices 293
Common Storage Devices 295
CPU and RAM 297
Connecting the Hardware Outside to the
Hardware Inside 299

Careers in Business

SUMMARY: STUDENT LEARNING OUTCOMES REVISITED

303

KEY TERMS AND CONCEPTS

304

SHORT-ANSWER QUESTIONS

305

ASSIGNMENTS AND EXERCISES

305

APPENDIX B

308

INTRODUCTION

341

ACCOUNTING

342

Typical Job Titles and Descriptions 342
Information Technology Skills You Should Pursue 343
345

FINANCE

Typical Job Titles and Descriptions 345
Information Technology Skills You Should Pursue 346
HOSPITALITY AND TOURISM MANAGEMENT

Network Basics
INTRODUCTION

310
MANAGEMENT

311

MARKETING

Hubs 312
Switches 312
Routers 314

LANs, WANs, and MANs
INTERNET

REAL ESTATE AND CONSTRUCTION MANAGEMENT

NETWORK COMMUNICATIONS MEDIA

323

Wired Communications Media 323
Wireless Communications Media 324
NETWORK SECURITY

Principles of Computer Security 327
Firewalls and Intrusion Detection Systems 328
Encrypted Communications: SSL and Virtual
Private Networks 329

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326

360

Typical Job Titles and Descriptions 360
Information Technology Skills You Should Pursue 361

315

Bandwidth 316
Internet Connection Types 317
Voice over IP 322

358

Typical Job Titles and Descriptions 358
Information Technology Skills You Should Pursue 359

315

315

355

Typical Job Titles and Descriptions 356
Information Technology Skills You Should Pursue 357
PRODUCTION AND OPERATIONS MANAGEMENT

CLASSIFYING NETWORKS BY DISTANCE

352

Typical Job Titles and Descriptions 353
Information Technology Skills You Should Pursue 354

312

NETWORK COMPONENTS

350

Typical Job Titles and Descriptions 351
Information Technology Skills You Should Pursue 351

Basic Principles of Networks 309

Network Cards in Each Computer 310
Wired and Wireless Transmission Media 310
Home Internet Service and Broadband Routers
Network Software 312

347

Typical Job Titles and Descriptions 347
Information Technology Skills You Should Pursue 348

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309

HOME NETWORKS

xi

ASSIGNMENTS AND EXERCISES

363

Group Projects

364

Electronic Commerce Projects

388

Glossary

400

Notes

414

Photo Credits

420

Index

421

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F E AT U R E S

GROUP PROJECTS
1. Assessing the Value of Customer Relationship Management: Trevor Toy Auto Mechanics 364
2. Analyzing the Value of Information: Affordable Homes Real Estate 365
3. Executive Information System Reporting: Political Campaign Finance 366
4. Building Value Chains: Helping Customers Define Value 367
5. Using Relational Technology to Track Projects: Foothills Construction 369
6. Building a Decision Support System: Creating an Investment Portfolio 370
7. Advertising with Banner Ads: HighwaysAndByways.com 371
8. Assessing the Value of Outsourcing Information Technology: Creating Forecasts 372
9. Demonstrating How to Build Web Sites: With HTML 373
10. Making the Case with Presentation Software: Information Technology Ethics 374
11. Building a Web Database System: Web-Based Classified System 375
12. Creating a Decision Support System: Buy Versus Lease 376
13. Developing an Enterprise Resource Planning System: Planning, Reporting, and Data Processing
14. Assessing a Wireless Future: Emerging Trends and Technology 378
15. Evaluating the Next Generation: Dot-Com ASPs 379
16. Analyzing Strategic and Competitive Advantage: Determining Operating Leverage 381
17. Building a Decision Support System: Break-Even Analysis 382
18. Creating a Financial Analysis: Qualification and Amortization Worksheets 383
19. Building a Scheduling Decision Support System: Airline Crew Scheduling 384
20. Creating a Database Management System: Mountain Bike Rentals 384
21. Evaluating the Security of Information: Wireless Network Vulnerability 386
22. Assessing the Value of Supply Chain Management: Optimizing Shipments 387

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xii

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Table of Contents

xiii

ELECTRONIC COMMERCE PROJECTS
1. Best in Computer Statistics & Resources 388
2. Consumer Information 388
3. Interviewing and Negotiating Tips 389
4. Meta Data 389
5. Bureau of Labor and Statistics 390
6. Demographics 390
7. Free and Rentable Storage Space 391
8. Gathering Competitive Intelligence 391
9. Ethical Computing Guidelines 392
10. Exploring Google Earth 392
11. Financial Aid Resources 393
12. Finding Hosting Services 393

13. Global Statistics & Resources 394
14. Gold, Silver, Interest Rates, and Money 394
15. Privacy Laws & Legislation 395
16. Protecting Your Computer 395
17. Learning About Investing 396
18. Locating Internships 396
19. Small Business Administration 397
20. Stock Quotes 397
21. Researching Storefront Software 398
22. Searching for Shareware and Freeware 398
23. Searching Job Databases 399
24. Searching for MBA Programs 399

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P R E FAC E
The business world hires only the best knowledge workers—equipped with a wellbalanced repository of IT skills and business knowledge. Information Systems Essentials, 3e, provides your students with tools to help them prepare for a seamless transition
to that professional world.
Nine chapters cover the essential business and managerial applications of MIS and IT,
from strategic and competitive technology opportunities to the organization and management of information using databases and data warehouses. The first two appendixes—
Appendix A Computer Hardware and Software and Appendix B Network Basics—provide your students a technical glimpse into the world of IT. Appendix C Careers in Business identifies why MIS is important in each business profession and encourages your
students to explore how MIS will impact their future careers.
The text contains a variety of real-life examples from both industry and global perspectives, applications exercises requiring Web exploration and Excel/Access/PowerPoint skill development, individual and group projects, an extensive end-of-chapter

assortment, and three case studies per chapter, aimed at transforming your undergraduates into technology- and information-literate knowledge workers.

Changes for The Third Edition
Throughout the text, you’ll find new or updated opening and closing case studies, Industry Perspectives, Global Perspectives, and Electronic Commerce and Group Projects, as
well as new or expanded coverage of such topics as:

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Call center success metrics
Ad-supported e-commerce model
Blogs

Web-centric success metrics
Botnets
Business continuity planning
Component- based development
(CBD)
Crowdsourcing
Porter’s three generic strategies
Digital immigrants
Digital natives
Drones
GIGO
Infrastructure-centric metrics
Intrusion prevention systems
Invisible backlog
IT culture
Location mashups

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•

The Long Tail
Mashups
Microsoft Windows Vista
Nanotechnology
Near Field Communication
Open-source information
Path-to-profitability (P2P)
Pharming
Podcasting
Predictive analytics
Requirement recovery document
RSS feeds
Screenagers
Service level agreements
Service-oriented architecture
Technology innovation failure
Web 2.0
Wiki
Zombie

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CHAPTER 1
The Information Age in Which You Live

CHAPTER 2

Broad foundation for the management
and deployment of an organization’s
three most important resources—people,
information, and technology.
IT support for customer relationship
management, supply chain management,
business intelligence, and e-collaboration.

Major Business Initiatives
CHAPTER 3

Management of information with
databases and DBMSs and the generation
and use of business intelligence with data
warehouses and data-mining tools.

Databases and Data Warehouses

CHAPTER 4

Decision Support and Artificial Intelligence

CHAPTER 5

Role of technology in support of the
business decision-making process, including
DSSs, GISs, and AI tools such as genetic
algorithms and agent-based modeling.
Fundamental differences in Business
to Business, Business to Consumer, and
all forms of e-government electronic
commerce.

Electronic Commerce

CHAPTER 6

The role knowledge workers play in
the systems development process, with
expanded coverage of onshore, nearshore,
and offshore outsourcing.

Systems Development

CHAPTER 7
Enterprise Infrastructure, Metrics, and
Business Continuity Planning

Infrastructure components for supporting
the needs of today’s modern corporation,

including Web services, n-tier infrastructures,
and service-oriented architectures.

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CHAPTER 8
Protecting People and Information
CHAPTER 9
Emerging Trends and Technologies

APPENDIX A
Computer Hardware and Software
APPENDIX B
Network Basics

APPENDIX C
Careers in Business
PROJECTS

Ethics, security, and privacy issues related to
the management and protection of people,
information, and technology.
Glimpse into the future of technology,
including such leading-edge innovations
as CAVEs, biometrics, wearable computers,
software-as-a-service, and RFID.
Detailed overview of hardware and
software terminology using personal
technologies as the platform.
Essential network topics, including

communications media, client/server
networks, and how to install a home or
dorm room network.
Engaging information on careers in
business and what IT skills are needed to
compete effectively in the job market.
24 electronic commerce and 22 hands-on
projects that require your students to use
technology to solve a problem or take
advantage of an opportunity.

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Assurance of Learning Ready
All educational institutions today are focused on the notion of assurance of learning, the
demonstration that students are indeed learning in the classroom. Assurance of learning
is key in accreditation and in assuring all constituents (employers, prospective students,
the parents of prospective students, institutional administration, and so on) that the
value of the educational dollar is very high.
Information Systems Essentials, 3e, is designed specifically to support your assurance of
learning initiatives. It does so in simple, yet powerful, fashion . . .
Information Systems Essentials, 3e, maps each test bank question to a learning
outcome for the chapter or appendix. The instructor can use the test bank software

to easily query for learning outcome questions that relate directly to the learning
objectives for the course. The instructor can then use the reporting features of
the software to aggregate results in similar fashion, making the collection and
presentation of assurance of learning information simple and easy.
If you’re just starting your assurance of learning initiatives, take a close look at the
diagram on the opposite page.
1. School Mission—start here to clearly define and understand the focus of your
educational institution in delivering its undergraduate degree.
2. Program Learning Goals—from your school’s mission, derive a list of program
learning goals. Each of these usually maps to a specific business functional area.
For example, a program learning goal for MIS might be: “Understand the use of
information technology in business (and other types of organizations, i.e., notfor-profit, etc.) (1) to create and sustain a competitive advantage, (2) to be more
efficient in operations, (3) to make more effective decisions, and (4) to transform
the organization to remain viable in the marketplace.”
3. Courses—map each program learning goal to one or more courses delivered in
your undergraduate degree business core curriculum. This will tell you in which
courses you need to provide assurance of learning for each program learning goal.
4. Course Objectives—for each course, develop a list of course objectives. You
probably already have these and include them in your syllabus to inform students
of what they will be learning.
5. Learning Outcomes by Chapter/Appendix—map your course objectives to
the learning outcomes for each chapter and appendix in Information Systems
Essentials, 3e. Some of your course objectives may cross more than one chapter or
appendix or they may be inclusive of just one chapter or appendix.
6. Testing Software—use the testing software provided with the text to query for
questions by the learning outcomes you identified in the previous step. Choose
the questions most appropriate to you. Use the reporting features of the testing
software to aggregate results by learning outcome.

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AACSB Statement

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The McGraw-Hill Companies is a proud corporate member of AACSB International.
Understanding the importance and value of AACSB accreditation, Information Systems
Essentials, 3e, has sought to recognize the curricula guidelines detailed in the AACSB
standards for business accreditation by connecting selected questions in the test bank to
the general knowledge and skill guidelines found in the AACSB standards.
The statements contained in Information Systems Essentials, 3e, are provided only
as a guide for the users of this text. The AACSB leaves content coverage and assessment

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1. School Mission
Clearly define the focus of your institution's undergraduate
degree

2. Program Learning Goals
From the mission, derive a list of program learning goals

3. Courses
Map each program learning goal to one or more courses
delivered in your undergraduate business degree core curriculum

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4. Course Objectives
For each course, develop a list of course objectives

5. Learning Outcomes by Chapter/Appendix
Map your course objectives to the learning outcomes for each
chapter and appendix in Information Systems Essentials, 3e

6. Testing Software
Use the testing software to query for the appropriate questions
and use the testing software to aggregate the results

within the purview of individual schools, the mission of the school, and the faculty. While
Infomation Systems Essentials, 3e, and the teaching package make no claim of any specific AACSB qualification or evaluation, we have, within Infomation Systems Essentials,
3e, labeled selected questions according to the six general and skills area.
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Guided Tour
Student Engagement and Enrichment Support
Learners exhibit three different learning styles:
1. Auditory (hearing)
2. Visual (seeing)

3. Tactile (doing and experiencing)
To be at your best in the classroom, you need engagement and enrichment support that fosters learning within each of
the three different styles. Information Systems Essentials, 3e, provides you with a vast array of engagement and enrichment support for all learning styles, including:
High-quality, relevant videos
An opening case study and two closing case studies per chapter
24 electronic commerce projects
22 Group Projects requiring your students to use technology to solve a problem or take advantage
of an opportunity
• Concept reinforcement boxes with software exercises (these appear in the Instructor’s Manual)
•
•
•
•

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Use high-quality videos covering
such topics as Hurricane Katrina,
Motley Fool, Spawn.com, and
Digital Domain to challenge your
students to define the role of IT
and MIS in real-life situations.

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E T H I C A L C O M P U T I N G GUI DE L I NE S
Ethical computing encompasses many topics: privacy, intellectual property, abuse of resources,
character defamation, to name just a few. Unethical behavior can be as mild as rudeness in an
e-mail or as lethal as stalking and death threats. Some unethical behavior is illegal, but not all
of it is.
The Computer Ethics Institute Web site at www.brook.edu/its/cei/cei_hp.htm has a list of
10 commandments to guide the use of information technology and the Association for Computer
Machinery (ACM) specifies a code of ethical behavior as do many other organizations.
Find answers to the following questions on the Web:
A. Find a code of ethics from an organization of your choosing. What do you think are the
best five guiding principles from all the tips that you found?
B. Are chain letters good or bad? Are they illegal? Summarize the opposing arguments you
find.
C. How does anonymous e-mail work and why would you use it?
D. What are five ways that e-mail use can be unethical?
E. Why is the deliberate spreading of viruses unethical? Name at least five reasons.
E X P L O R I N G G O O G L E E A RT H
Google Earth is a free virtual globe program that uses satellite and aerial images combined with a
geographic information system. It allows you to pick a place on the globe and zoom in to see all
sorts of features like the locations of schools, sports venues, coffee shops, shopping malls, movie/
DVD rental stores, etc. The list is very long.
You can even layer multiple searches and save your results. The site also hosts a large Google
Earth Community that shares information and annotations.
The image resolution varies across regions, but most large cities around the world are depicted
in high-resolution detail showing buildings and streets and trees and other features.
Download the Google Earth application from and answer the following questions:

P RO J E C TS

A. In the area where you live, how is the resolution compared to the resolution for
Washington, D.C.?
B. Can you see your own street? How about individual houses?
C. Zoom in to your home county and mark elementary schools. How many are there? Less
than 10? More than 10? More than 50?
D. Choose a university location and zoom in. How clearly can you see the buildings? How
about the cars in the parking lots?
E. Can you find the Eiffel Tower in Paris, France; the Brandenburg Gate (Brandenburger
Tor) in Berlin, Germany; and Buckingham Palace in London, England?

Group Projects
CAS E 1 :
AS S E S S ING T HE VALUE O F CUS T O ME R
RE LAT IO NS HIP MANAGE ME NT

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TREVOR TOY AUTO MECHANICS

Trevor Toy Auto Mechanics is an automobile repair shop in Phoenix, Arizona. Over the past
few years, Trevor has seen his business grow from a two-bay car repair shop with only one other
employee to a 15-bay car repair shop with 21 employees.
Trevor wants to improve service and add a level of personalization to his customers. However,
Trevor has no idea who his best customers are, the work that is being performed, or which
mechanic is responsible for the repairs. Trevor is asking for your help. He has provided you with
a spreadsheet file, TREVOR.xls, that contains a list of all the repairs his shop has completed over
the past year including each client’s name along with a unique identifier. The spreadsheet file
contains the fields provided in the table below.
Column

Have your students apply
their knowledge with
24 electronic commerce projects
and 22 software-focused
group projects.

Name

Description

A

CUSTOMER #

A unique number assigned to each customer.

B

CUSTOMER NAME

The name of the customer.

C

MECHANIC #

A unique number assigned to the mechanic who
completed the work.

D

CAR TYPE

The type of car on which the work was completed.

E

WORK COMPLETED

What type of repair was performed on the car.

F

NUM HOURS

How long in hours it took to complete the work.

G

COST OF PARTS

The cost of the parts associated with completing the
repair.

H

TOTAL CHARGE

The amount charged to the customer for the repair.

Your analysis should include (1) Trevor’s best customers (top 10 in terms of volume and revenue); (2) Trevor’s worst customers (bottom 10 in terms of lowest volume and lost revenue); and
(3) the mechanics that perform the repairs for each customer.
SOME PARTICULARS YOU SHOULD KNOW

1. As you consider the information provided to you, think in terms of what information
is important. You might need to use the existing information to create new
information.
2. In your analysis, provide examples of the types of marketing campaigns Trevor should
offer his most valuable customers.
3. Upon completing your analysis, please provide concise yet detailed and thorough
documentation (in narrative, numeric, and graphic forms) that justifies your
recommendations.
4. File: TREVOR.xls (Excel file).

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X

24. Searching for MBA Programs

23. Searching Job Databases

22. Searching for Shareware and Freeware

21. Researching Storefront Software

20. Stock Quotes

X

X
X

X

X

7

X

X

X

X

X

X

X

8

X

X

X

X

X

9

X

X

X

X

X

A

B

X

X

X

X

X

X

X

X

X

X

C

X

X

X
X

X

X

X

X

X

X

X

X

X

X

X

X

X

6
X

X
X

X

X

X

X

X

X

X

5

19. Small Business Administration

X

X

X

X

4
X

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18. Locating Internships

17. Learning About Investing

16. Protecting Your Computer

15. Privacy Laws & Legislation

14. Gold, Silver, Interest Rates, and Money

13. Global Statistics & Resources

X

X

11. Financial Aid Resources

12. Finding Hosting Services

X
X

X
X

10. Exploring Google Earth

9. Ethical Computing Guidelines

8. Gathering Competitive Intelligence
X

6. Demographics
X

X
X

5. Bureau of Labor and Statistics

7. Free and Rentable Storage Space

X

X

4. Meta Data

3. Interviewing and Negotiating Tips

X

X

3

2. Consumer Information

2

X

1

1. Best in Computer Statistics and Resources

CHAPTER/APPENDIX

These projects each have a singular focus and can be applied to many different chapters and appendixes. They are located at the end of the text after Appendix C. Each
chapter and appendix includes a closing box that denotes which electronic projects are most appropriate to use. As a quick reference, please refer to the table below.

Projects—Electronic Commerce

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X

X

22. Assessing the Value of Supply Chain Management

21. Evaluating the Security of Information
X

X

X

19. Building a Scheduling Decision Support System

20. Creating a Database Management System

X

18. Creating a Financial Analysis
X

X

X

17. Building a Decision Support System

16. Analyzing Strategic and Competitive Advantage

X

15. Evaluating the Next Generation

X

X

X

X

X

5

X

X

X

6

X

X

X

X

7

CHAPTER/APPENDIX

X

X

X

X

X

X

X

4

14. Assessing a Wireless Future

13. Developing an Enterprise Resource Planning System

12. Creating a Decision Support System

11. Building a Web Database System

10. Making the Case with Presentation Software

9. Demonstrating How to Build Web Sites

8. Assessing the Value of Outsourcing Information
Technology

7. Advertising with Banners Ads

6. Building a Decision Support System

X

5. Using Relational Technology to Track Projects

X

3

X

X

2

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4. Building Value Chains

X

X

2. Analyzing the Value of Information

3. Executive Information System Reporting

X

1. Assessing the Value of Information

1

X

X

X

X

8

X

X

X

9

X

X

A

X

X

X

X

X

B

After Appendix C in the text, you’ll find 22 Group Projects. These require your students to use technology to solve a problem or take advantage of an opportunity.
A quick warning to instructors: Some of these take an entire weekend to solve. Be careful not to assign too many at one time. These projects can be applied to many
different chapters and appendices. As a quick reference, please refer to the table below.

Projects—Group Projects

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Supplements:
• Online Learning
Center
• Instructor’s

Manual
• EZ Test

The Support Package
We realize that no text is complete without a well-rounded and value-added support
package. Our support package is designed to ease your teaching burden by providing
you with a Web site full of valuable information, a test bank with more than 1,000 questions and easy-to-use test generating software, an Instructor’s Manual that walks you
through each chapter and appendix and provides value-added teaching notes and suggestions, and PowerPoint presentations.

• PowerPoint
Presentations

ONLINE L E AR NI NG C E NT E R AT W W W. MHHE . C O M / H A A G

• MISource

The Web site for Information Systems Essentials, 3e, contains information and all supplements for both the instructor and the student.

• Classroom
Performance
System

INS T RU C T O R ’ S MANUAL

• Videos
• MBA MIS Cases

The Instructor’s Manual is provided to you in an effort to help you prepare for your class
presentations. In its new format, you will find a separate box for each PowerPoint slide.
In that box, you will find an overview of the slide and a list of key points to cover. This

enables you to prepare your class presentation by working solely with the Instructor’s
Manual because you also see the PowerPoint slide presentations. We’ve also provided
embedded links within each Instructor’s Manual document to the various in-text pedagogical elements including:
• The Global and Industry Perspectives boxes—how to introduce them, key
points to address, possible discussion questions to ask, etc.

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At the beginning of each Instructor’s Manual document you’ll find other useful information including the appropriate author to contact if you have questions or comments, a list
of the Group Projects that you can cover, and a list of any associated data files.
P OWE R P O I NT P R E S E NTAT I O NS
The PowerPoint presentations are ready for you to use in class. In preparing to use these,
you simply work through the Instructor’s Manual which includes thumbnails of each
slide and important points to cover. Of course, we realize that you’ll probably want to
customize some of the presentations. So, we’ve made available to you most of the images
and photos in the text.
T E S T B ANK
For each chapter, there are approximately 125 multiple-choice, true/false, and fill-in-theblank questions aimed at challenging the minds of your students. McGraw-Hill’s EZ Test
is a flexible and easy-to-use electronic testing program. The program allows instructors
to create tests from book-specific items. It accommodates a wide range of question types
and instructors may add their own questions. Multiple versions of the test can be created
and any test can be exported for use with course management systems such as WebCT,
BlackBoard, or PageOut. EZ Test Online is a new service and gives you a place to easily
administer your EZ Test–created exams and quizzes online. The program is available for
Windows and Macintosh environments.

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VIDE OS
New videos will be downloadable from the instructor side of the OLC. Selections from
our archive of videos from previous years will be delivered upon request.
MBA MIS CAS E S
Developed by Richard Perle of Loyola Marymount University, these 14 comprehensive
cases allow you to add MBA-level analysis to your course. Visit our Web site to review a
sample case.
O N L INE COURS E S
Content for the Third Edition is available in WebCT, Blackboard, and PageOut formats
to accommodate virtually any online delivery platform.
USE OUR EZ TEST ONLIN E T O HE L P Y O UR S T UDE NT S
PREPARE TO S UCCEED W I T H AP P L E I P O D ® I Q UI Z .
Using our EZ Test Online you can make test and quiz content available for a student’s
Apple iPod®.
Students must purchase the iQuiz game application from Apple for 99¢ in order to
use the iQuiz content. It works on the iPod fifth generation iPods and better.
Instructors only need EZ Test Online to produce iQuiz ready content. Instructors
take their existing tests and quizzes and export them to a file that can then be made available to the student to take as a self-quiz on their iPods. It’s as simple as that.

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Empowered Instruction

Classroom Performance System
Engage students and assess real-time
lecture retention with this simple yet
powerful wireless application. You
can even deliver tests that instantly
grade themselves.

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PowerPoint Presentation
Robust, detailed, and designed to
keep students engaged.

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