Business driven information systems 3e by baltzan

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title in Australia to offer such adaptive technology to maximise student productivity and
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business-driven information systems

BUSINESS-DRIVEN INFORMATION SYSTEMS 3e continues the excellent work
undertaken in the second edition to revise and update the developing area
of Information Systems. With a completely revised design that allows for easy
navigation and close correlation to key topics in many tertiary courses, it is
a must-have for students studying Business-Driven Information Systems.
The approach provides both theoretical and practical discussion on
concepts that await today’s graduates, including mobile technologies,
cloud computing, privacy, security and social networking.

business-driven
information
systems


BUSINESS-DRIVEN

INFORMATION SYSTEMS

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Dedication
To all our past students who have become IS professionals and respected experts
in their field around the globe – we are proud of you.
Kathy and Julie

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BUSINESS-DRIVEN
INFORMATION SYSTEMS
3e
Paige Baltzan • Kathy Lynch • Julie Fisher

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Copyright © 2015 McGraw-Hill Education (Australia) Pty Ltd
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Enquiries should be made to the publisher via www.mcgraw-hill.com.au or marked for the attention of the permissions
editor at the address below.
Creator: Baltzan, Paige, author.
Title:Business-driven information systems / Paige Baltzan, Kathy Lynch, Julie Fisher.
Edition: Third edition.
ISBN: 9781743760741 (paperback)
Notes: Includes index.
Subjects:Industrial management—Data processing.

Information technology—Management.

Electronic commerce.

Business--Computer programs.
Other Creators/Contributors:

Lynch, Kathy, 1950- author.

Fisher, Julie, author.
Dewey Number: 658.4038011
Published in Australia by
McGraw-Hill Education (Australia) Pty Ltd
Level 2, 82 Waterloo Road, North Ryde NSW 2113
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Printed in China by CTPS on 70gsm matt art

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CONTENTS IN BRIEF
PART

ONE

PART
TWO

Information systems are business
CHAPTER 1

BUSINESS INFORMATION SYSTEMS

6

CHAPTER 2

A BRAVE NEW CONNECTED WORLD

43

CHAPTER 3

E-BUSINESS AND MOBILE BUSINESS

70

CHAPTER 4

DECISIONS AND PROCESSES

Essentials of information systems
CHAPTER 5

TECHNICAL FUNDAMENTALS

142

CHAPTER 6

SYSTEMS DEVELOPMENT AND
PROJECT MANAGEMENT

178

ENTERPRISE ARCHITECTURE AND SECURITY

213

CHAPTER 7

PART
THREE

PART
FOUR

PART
FIVE

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102

Enterprise information systems
CHAPTER 8

QUALITY DATA AND BUSINESS INTELLIGENCE

262

CHAPTER 9

ENTERPRISE INFORMATION SYSTEMS: ERP AND SCM

302

CHAPTER 10

ENTERPRISE INFORMATION SYSTEMS: CRM AND
COLLABORATION SYSTEMS

333

Business and transformation
CHAPTER 11

ETHICS, PRIVACY, SOCIAL MEDIA AND
FUTURE TRENDS

372

Expand your knowledge modules

ABOUT THE MODULES

407

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CONTENTS IN FULL
Authors 
xv
Prefacexvi
Acknowledgementsxviii

Highlights of this edition
Text at a glance 
Digital resources

xix
xxiii

xxv

PART 1  INFORMATION SYSTEMS ARE BUSINESS2
CHAPTER 1 BUSINESS INFORMATION SYSTEMS 6
OPENING CASE STUDY
Google: king of search (and therefore
information)7

SECTION 1.1 // INFORMATION
SYSTEMS IN BUSINESS

9

Business in the information age
9
Information technology versus
information systems
10
Data, information, business
intelligence and knowledge
11
Data11
Information12
Business intelligence
14
Knowledge14
Common functional areas in an
organisation14
A systems-thinking approach to
information technology

16
IT resources
16
People: IT cultures
17
People: roles and responsibilities in
information technology
18
The IS team
19
The gap between business personnel and IT
personnel20
Fundamental information systems
in business
20
Transaction processing systems
20

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Decision support systems
Strategic support systems

21
24

SECTION 1.2 // BUSINESS STRATEGY

26

Identifying competitive advantages
26
Porter’s Five Forces Model—evaluating
industry attractiveness
27
Buyer power
28
Supplier power
29
Threat of substitute products or services
29
Threat of new entrants
29
Rivalry among existing competitors
30
Using the Five Forces Model to analyse the airline
industry30
Porter’s three generic strategies—
choosing a business focus
30
Value chain analysis—executing
business strategies
32
Value creation
32
Global IT
34
Business in the global environment
35
CLOSING CASE STUDIES

Closing Case Study 1.1: e-Exam trial at CQU37
Closing Case Study 1.2: Apple—
complications made simple

38

Critical business thinking39
Apply your knowledge
40

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Contents in Full

CHAPTER 2 A BRAVE NEW CONNECTED WORLD43
OPENING CASE STUDY
Disruptive technologies shape the world

SECTION 2.1 // OUR CONNECTED WORLD

44

45

The Web changed the world
45
The Internet changed business
45
Benefits of a connected world

46
Sharing resources
47
Providing opportunities
48
Reducing travel
48
Challenges of a connected world
49
Security49
Legal issues
49
Social, ethical and political issues
50
SECTION 2.2 // THE INTERNET AND
THE WEB: A TECHNOLOGY REVOLUTION

51

Disruptive and sustaining technologies
Disruptive versus sustaining technology
A Web evolution
Web 1.0
Web 2.0

52
52
54
55
55

Content sharing through open sourcing
55
User-generated content56
Collaboration inside the organisation
56
Collaboration outside the organisation
57
Networking communities with Web 2.0
technologies58
Web 2.0, social media and business
60
Blogs60
Wikis60
Web 3.0
61
The semantic Web
61
The Internet of Things62

CLOSING CASE STUDIES
Closing Case Study 2.1: Like us on
Facebook! The rise of social business
innovation63
Closing Case Study 2.2: Barcelona
Smart City

64

Critical business thinking66

Apply your knowledge
67

CHAPTER 3 e-BUSINESS AND MOBILE BUSINESS70
OPENING CASE STUDY
Paywalls and the business future
of newspapers

71

SECTION 3.1 // E-BUSINESS

73

Advantages of e-business
Expanding global reach
Opening new markets
Reducing costs
Improving operations
Improving effectiveness
e-Business models
Business-to-business (B2B)
Business-to-consumer (B2C)
Consumer-to-business (C2B)

73
74
74
75
76

76
77
77
79
79

Consumer-to-consumer (C2C)
79
e-Business forms and revenue-generating
strategies80
Organisational strategies for e-business
81
Marketing/sales81
Financial services
82
Procurement83
Customer service
83
Intermediaries84
e-Business tools used to connect and
communicate84
Measuring e-business success
85
Website metrics
86
Web analytics
87
e-Business challenges and benefits
87
Protecting consumers

87

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Contents in Full

Leveraging existing systems
87
Increasing liability
87
Providing security
87
Adhering to taxation rules
87
Trends in e-business: e-government and
m-business88
e-Government88
SECTION 3.2 // MOBILITY: THE BUSINESS
VALUE OF A WIRELESS WORLD

90

m-Business: supporting ‘anywhere’
business90
Benefits of business mobility
90
Enhances mobility
91
Provides immediate data access
91

Increases location and monitoring capability
Improves workflow
Provides mobile business opportunities
Provides an alternative to wiring
Challenges of business mobility
Protecting against theft
Protecting wireless connections

92
92
92
93
93
94
94

CLOSING CASE STUDIES
Closing Case Study 3.1: Grocery shopping
online96
Closing Case Study 3.2: Shoes of Prey

Critical business thinking
Apply your knowledge

97

98
99

CHAPTER 4 DECISIONS AND PROCESSES102
OPENING CASE STUDY
Content streaming on demand

103

SECTION 4.1 // DECISION-MAKING
SYSTEMS105
Decision making
105
The decision-making process
105
Decision-making essentials
106
Operational107
Managerial107
Strategic108
Metrics: measuring success
109
Efficiency and effectiveness metrics
110

The interrelationship between efficiency
and effectiveness MIS metrics
112
Benchmarking—baseline metrics
112
Visualisation113
The future: artificial intelligence
115
Expert systems
115
Neural networks
116
Genetic algorithms
116
Intelligent agents
117
Virtual reality
118

SECTION 4.2 // BUSINESS
PROCESSES118
Evaluating business processes
Support: changing business
processes with MIS
Business process improvement
Business process re-engineering
Business process management
Is BPM for business or IT?
BPM risks and rewards
Business process modelling

The future: business process
modelling and management

118
120
121
123
126
127
127
128
131

CLOSING CASE STUDIES
Closing Case Study 4.1: True confessions—
of an airline revenue manager
133
Closing Case Study 4.2: Using virtual
reality to improve business decisions

134

Critical business thinking135
Apply your knowledge
136

ix

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Contents in Full

PART 2  ESSENTIALS OF INFORMATION SYSTEMS138
CHAPTER 5 TECHNICAL FUNDAMENTALS142
OPENING CASE STUDY
Supercell: concentrates on games not
infrastructure143

SECTION 5.1 // HARDWARE AND
SOFTWARE BASICS

145

The business benefits of a solid MIS
infrastructure145
Hardware basics
146
Central processing unit
146
Primary storage
147
Secondary storage
148
Input devices
149
Output devices
150

Communication devices
150
Computer categories
151
Software basics
151
System software
151
Application software
152
SECTION 5.2 // COMMUNICATION
NETWORKS153
Networks153
Network components
153
Architecture154

Topology155
Protocols155
Media157
Network types
160
Local area network (LAN)
160
Wide area network (WAN)
160
Metropolitan area network (MAN)
161
Wireless networks
161

Network transmission speeds
164
Broadband connection types
166
Network security
167
Network providers
167
Networks and mobile phones
168
Addressing privacy concerns around
RFID and LBS
169
CLOSING CASE STUDIES
Closing Case Study 5.1: Everything to do
with IT changes all the time: keeping up
after you graduate

171

Closing Case Study 5.2: Advanced
computing infrastructure may lower
the price of your next cuppa

172

Critical business thinking174
Apply your knowledge
175

CHAPTER 6 SYSTEMS DEVELOPMENT AND PROJECT
MANAGEMENT178
OPENING CASE STUDY
Australia Post: staying relevant in the
e-business era

179

SECTION 6.1 // DEVELOPING ENTERPRISE
APPLICATIONS181
Developing software
181
The systems development
life cycle
182
Traditional software development
methodology184
Waterfall methodology
184

Agile software development
methodologies185
Implementing agile methodologies
187
Developing successful software
189
Having unclear or missing business
requirements189
Poor communication between management
and the development team

189
Inadequate project management
189
Skipping SDLC phases
189
Changing technology
189
Catering for the cost of finding
errors in the SDLC
189

x

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Contents in Full

SECTION 6.2 // PROJECT MANAGEMENT

191

Managing software development
projects191

The triple constraint
192
Project participants
193
Choosing strategic projects
194
Understanding project planning
195
Project charter
195
Project plan
196
Managing projects
198
Managing people
198
Managing communications
198
Managing change
199

Outsourcing projects
Outsourcing benefits
Outsourcing challenges

200
202
203

CLOSING CASE STUDIES

Closing Case Study 6.1: Why do large
government IT projects fail? HealthSMART
project lets Victorian health services down 205
Closing Case Study 6.2: myki: an integrated
travel card for Victoria
206

Critical business thinking
207
Apply your knowledge208

CHAPTER 7 ENTERPRISE ARCHITECTURE AND SECURITY213
OPENING CASE STUDY
Sony hack stops the world:
well, Sony’s world

214

SECTION 7.1 // ENTERPRISE
ARCHITECTURE215
The business benefits of solid enterprise
architecture215
Supporting operations: information
architecture216
Backup and recovery
217
Disaster recovery
218
Business continuity planning
220

Supporting change: infrastructure
architecture222
Accessibility223
Availability223
Maintainability223
Portability223
Reliability224
Scalability224
Usability224
Supporting the environment:
sustainable enterprise architecture
225
Cluster computing
225
Grid computing
225

Cloud computing
227
Virtualisation233
Making enterprise architecture
green(er)236
Increased electronic waste
237
Increased energy consumption
240
Increased carbon emissions
240
SECTION 7.2 // ENTERPRISE SECURITY

241

Protecting intellectual assets
The first line of defence: people
The second line of defence: technology
People: authentication and authorisation
Data: prevention and resistance
Attacks: detection and response
Hackers and viruses
Preventing viruses on a mobile device

241
242
244
244
246
248
248
251

CLOSING CASE STUDIES
Closing Case Study 7.1: Developing an
enterprise-wide architecture within
Insurance Australia Group252
Closing Case Study 7.2: Migration to
Google docs: Bleeding Technology Pty Ltd 253

Critical business thinking
254
Apply your knowledge255

xi

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Contents in Full

PART 3  ENTERPRISE INFORMATION SYSTEMS258
CHAPTER 8 QUALITY DATA AND BUSINESS INTELLIGENCE262
Information cleansing or scrubbing

OPENING CASE STUDY
Chupa Chups: how sweet it is

263

SECTION 8.1 // DATA, INFORMATION AND
DATABASES264
The business value of high-quality
information264
Information type—transactional or
analytical265
Information timeliness
266
Information quality
266
Information governance

268
Storing data
269
Storing data elements: entities and attributes 271
Keys to data
272
The business benefits of a relational
database272
Increased flexibility
272
Increased scalability and performance
273
Reduced information redundancy
274
Increased information integrity (quality)
274
Increased information security
274
Integrating information among multiple
databases275
Integration tools
276
The drawback of not integrating databases
277
Data warehousing
278
Multidimensional analysis
278

280

SECTION 8.2  BUSINESS INTELLIGENCE (BI) 283
Data mining
Data mining tools
Cluster analysis
Statistical analysis
Association detection
Big data 
Relationship between data warehousing
and data mining
Business intelligence (BI)
Business benefits of BI
BI software/tools
Data management tools
Data discovery tools
Reporting tools
BI, business analytics and data science:
similar but different

283
284
285
286
286
287
287
288
289
291
292

292
292
292

CLOSING CASE STUDIES
Closing Case Study 8.1: XBRL and business
information supply chains: enhancing
business-to-government reporting
294
Closing Case Study 8.2: Data-driven
innovation (DDI)—set to lead the way!

296

Critical business thinking298
Apply your knowledge
299

CHAPTER 9 ENTERPRISE INFORMATION SYSTEMS: ERP AND SCM302
OPENING CASE STUDY
Still sick after $1.25 billion:
Queensland Health ERP

SECTION 9.1 // ENTERPRISE RESOURCE
PLANNING (ERP)

303

305

ERP fundamentals305
The evolution of ERP
309

ERP components
310
Core ERP components
311
Extended ERP components
313
e-Business313
Business intelligence (BI)
313
Supply chain management (SCM)
313
Customer relationship management (CRM)
313
Integrating ERP
314
ERP metrics
315

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Contents in Full

Choosing ERP software
Challenges of ERP
The future of ERP

317
318
318

SECTION 9.2 // SUPPLY CHAIN
MANAGEMENT (SCM)

SCM metrics
The challenges of SCM
The future of SCM
Cloud computing and SCM

319

CLOSING CASE STUDIES

Supply chain fundamentals
Seven principles of SCM
The benefits of SCM
Improved visibility
Improve collaboration

Increased profitability

319
322
322
322
323
323

324
324
325
326

Closing Case Study 9.1: GoPro goes
into the cloud

327

Closing Case Study 9.2: ERP system takes
ATE tankers to the next level

328

Critical business thinking
Apply your knowledge

330
331

CHAPTER 10 ENTERPRISE INFORMATION SYSTEMS: CRM
AND COLLABORATION SYSTEMS333
OPENING CASE STUDY
Bosch—power from the people

334

SECTION 10.1 // CUSTOMER RELATIONSHIP
MANAGEMENT (CRM)
336
CRM fundamentals
Phases in CRM
Types of CRM
Operational CRM
Analytical CRM
Collaborative CRM
The benefits of CRM
CRM metrics
The challenges of CRM
The future of CRM
SECTION 10.2 // COLLABORATION
SYSTEMS AND TECHNOLOGIES

336
337
338
339
343
344
345

345
346
347
348

What is collaboration?
348
Collaborators348

Collaboration systems
349
Knowledge management systems
350
Content management systems
352
Workflow management systems
353
Groupware systems
354
Collaboration technologies
355
File storage and sharing
356
Email356
Wikis356
Instant messaging
357
Conferencing357
Social networking analysis
358

CLOSING CASE STUDIES
Closing Case Study 10.1: Creating
enterprise resource planning (ERP)
software beautifully

360

Closing Case Study 10.2: CRM systems: giving
customers that uncanny valley feeling
361

Critical business thinking
362
Apply your knowledge363

PART 4  BUSINESS AND TRANSFORMATION368
CHAPTER 11 ETHICS, PRIVACY, SOCIAL MEDIA AND FUTURE TRENDS372
OPENING CASE STUDY
B
  itcoin: a currency revolution?

373

SECTION 11.1 // ETHICS AND PRIVACY

375

Information ethics
Information does not have ethics; people do

375
377

xiii

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Contents in Full

Privacy in the information age:
an overview
378
Privacy in Australia
380
Developing information management
policies
380
Ethical computer use policy
380
Information privacy policy
381
Acceptable use policy
382
Internet use policy
382
Email privacy policy
383

Anti-spam policy
384
Social media use in business
385
Workplace monitoring policy
386
Monitoring technologies
387
Protecting privacy: handling
personal information
388
Privacy statements
388
Third-party privacy programs
388
Global information privacy issues
389
Europe389
The United States
390
Cloud computing and trans-border
privacy considerations
390
SECTION 11.2 // SOCIAL MEDIA

392

Social media and today’s business
Managing social media

392
392

SECTION 11.3 // FUTURE TRENDS

393

Reasons to watch trends
393
Trends shaping the future of business
394
The world’s population projected to be
9 billion by 2050
394
People in developed countries are living longer 395
Advances in communication technologies are
changing the way we live and work
396
The growth in information industries is
creating a knowledge-dependent global
society396
The global economy is becoming more
integrated396
The economy and society are dominated by
technology397
The pace of technological innovation is
increasing398
Time is becoming one of the world’s most
precious commodities
398

CLOSING CASE STUDIES
Closing Case Study 11.1: The Facebook
experiment: legal—yes, but ethical?

399

Closing Case Study 11.2: Privacy, copyright
and online piracy of Dallas Buyers Club400

Critical business thinking
401
Apply your knowledge402

PART 5 EXPAND YOUR KNOWLEDGE MODULES406
ABOUT THE MODULES

407

GLOSSARY424
INDEX441

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AUTHORS
PAIGE BALTZAN—US EDITION

Paige Baltzan teaches in the Department of Information Technology and Electronic Commerce at the
Daniels College of Business at the University of Denver. She holds a BSBA specialising in Accounting/MIS
from Bowling Green State University and an MBA specialising in MIS from the University of Denver. She is
a co-author of several books including Business Driven Technology, Essentials of Business Driven Information
Systems, I-Series, and a contributor to Management Information Systems for the Information Age.
Before joining the Daniels College faculty in 1999, Paige spent several years working for a large
telecommunications company and an international consulting firm, where she participated in client
engagements in the United States as well as South America and Europe. Paige lives in Lakewood, Colorado,
with her husband, Tony and daughters Hannah and Sophie.

KATHY LYNCH
Dr Kathy Lynch is a freelance education consultant and a retired Information Systems academic. Her academic
employment was most recently as an Associate Professor in ICT Research and Development at the University
of the Sunshine Coast (Queensland), prior to this she was in the Faculty of Information Technology, Monash
University. Her first academic appointment was as a lecturer in the Faculty of Education at Monash University.
Kathy holds a PhD (cross-discipline Information Systems and Education) and a Master of IT (Research) from
Monash University. Additionally, she holds several other postgraduate and undergraduate qualifications in
both IT and Education.
Kathy has taught IT-related subjects in the secondary, vocational and university sectors across Australia.
She is on numerous international and national review panels for grants, promotions and academic papers,
and has been a past Editor-in-Chief of the Australian Journal of Information Systems, and The Interdisciplinary
Journal of Management, Systems and Information.
She has instigated and led a broad range of practical business-driven information systems projects ranging
from one of the first web-database systems in the Australian vocational sector in the early 90s, to portals for
indigenous language reconciliation, augmented reality, and e- and mobile-learning initiatives She has also
managed large enterprise-wide systems in both the tertiary and vocational sectors.
Kathy’s research interests focus on the effective and efficient use of IT regardless of the domain, with a
specific interest in e-learning in developing countries. She is an Honorary Research Associate in numerous IT
faculties across the globe (Australia, Uganda and South Africa).

JULIE FISHER
Dr Julie Fisher is a Professor in the Faculty of Information Technology at Monash University, Australia. She
has worked and conducted research in the information systems field for the last 25 years. Julie is passionate
about teaching and has taught information systems to both undergraduate and postgraduate students.
For much of her academic life Julie has conducted research in user interface design and usability, areas
which are both critical for developing effective and efficient systems. She has led projects involving the
usability testing of small business websites, the implementation of mobile devices in a hospital ward and
assisted with the development of health and other portals. Julie has published widely in leading international
and national journals and conferences.

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PREFACE
WINNER OF THE APA AUSTRALIAN EDUCATIONAL PUBLISHING AWARD 2010 FOR TERTIARY (ADAPTATION)
TEACHING AND LEARNING IN ITS FIRST EDITION

The Australian and New Zealand edition of
Business-Driven Information Systems discusses
various business initiatives first, and how
technology supports those initiatives second. The
premise for this unique approach is that business
initiatives should drive technology choices.
Therefore every discussion first addresses the
business needs and then addresses the technology
that supports those needs.
This text provides the foundation that will
enable students to achieve excellence in business,

whether they major in operations management,
manufacturing, sales, marketing, finance, human
resources, accounting or virtually any other
business discipline. Business-Driven Information
Systems is designed to give students the ability
to understand how information technology and
information systems can be a point of strength for
an organisation.
Unlike many texts currently available, this
third edition has been regionalised in order to best
reflect the needs of instructors and students in the
Asia–Pacific region. The text therefore not only
provides many more regional examples and case
studies, but also reflects our business environments
with a focus on Small and Medium Enterprises
(SMEs).
Common business goals associated with
information technology projects include reducing
costs, improving productivity, improving customer
satisfaction and loyalty, creating competitive
advantages, streamlining supply chains, global
expansion and so on. Achieving these results is not
easy and this text aims to explore some of these issues.
Implementing a new accounting system or
marketing plan is not likely to generate long-term
growth or reduce costs across an entire organisation.
Businesses must undertake enterprise-wide initiatives
to achieve broad general business goals such as
reducing costs.
Information systems play a critical role

in deploying such initiatives by facilitating
communication and increasing business intelligence.

Any individual anticipating a successful career in
business (whether it is in the functional areas of
accounting, finance, human resources or operations,
or in the systems area—specifically writing,
administering or upgrading the organisation’s
information systems) must understand the basics of
information systems that can be found in this text.
We have found tremendous success teaching
information systems (IS) courses by demonstrating
the correlation between business and IT. Students
who understand this tight correlation will therefore
understand the power of this course. Students learn
10 per cent of what they read, 80 per cent of what
they personally experience and 90 per cent of what
they teach others.
The business-driven approach in this text takes
the difficult and often intangible IS concepts, brings
them to the students’ level and applies them using
a hands-on approach to reinforce the concepts.
Teaching IS with a business-driven focus helps to:
• add credibility to IS
• open students’ eyes to IS opportunities
• attract students to study a major in IS
• engage students.

FEATURES
Business-Driven Information Systems is state-of-theart in its discussions, presents concepts in an easyto-understand format and allows students to be

active participants in learning. The dynamic nature
of information technology requires all students,
and more specifically business students, to be
aware of both current and emerging technologies.
Students are facing complex subjects and need a
clear, concise explanation to be able to understand
and use these concepts successfully throughout
their careers.
By engaging students through the use of
numerous case studies, exercises, projects and
questions that enforce concepts, Business-Driven
Information Systems creates a unique learning
experience for both teaching staff and students.

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Highlights of the text and features that
differentiate it from other texts in the same field are:

including Microsoft Excel® Microsoft Accessđ and
Dreamweaverđ, and include full pedagogical support.

ã in-text and chapter opening/closing cases
situated in the global, Australian, New Zealand
or Australasian context
• comprehensive ethics, privacy and information
security focus in various chapters of the text,
tailored to the needs of the business practitioners
of tomorrow
• Graduate spotlights presented throughout the
text. A number of graduates who have completed
an Information Systems degree in Australia or
New Zealand, and who are information systems
practitioners or professionals, share their stories,
reflect on their studies in relation to their career,
and offer insights into where they are now
• a handy reference to the AACSB standards
in each chapter for instructors and students,
identifying which graduate attributes/skills will
be developed by completing the chapter and
exercises

MATERIAL TO ENCOURAGE
DISCUSSION

AUDIENCE
Business-Driven Information Systems is designed for
use in undergraduate or introductory MBA courses
in Information Systems, which are required in
many Business Administration or Management
programs as part of the common body of

knowledge for all business majors. Its contents are
sufficient to be the grounding text for a course in
Information Systems.

LOGICAL LAYOUT
Students and teaching staff will find the text well
organised with the topics flowing logically from
one chapter to the next. A definition of each term
is provided before it is covered in the chapter and
an extensive glossary is included at the back of
the text.
Each chapter offers a comprehensive opening
case study, introduction, learning outcomes, closing
case studies, key terms, critical business thinking
questions, and practical business projects.
The teachings in Business-Driven Information
Systems are extended to Part 5 through the Expansion
Pack Modules or ‘technology plug-ins’, which offer
online learning about core business applications

All chapters contain a diverse selection of case studies
and individual and group problem-solving activities
as they relate to the use of information systems in
business in Australia and New Zealand and other
parts of the world. The comprehensive closing case
studies at the end of each chapter reinforce content
and encourage students to consider the concepts
presented and then apply those concepts to a
situation they might find in an organisation.
This text also includes integrated Discuss box

features. Different people in an organisation can
view the same facts from different points of view
and the cases will encourage students to consider
some of those views.

THOROUGH EXPLANATIONS
Complete coverage is provided for each topic that
is introduced. Explanations are written so that
students can understand the ideas presented and
relate them to other concepts.

SOLID THEORETICAL BASE
The text draws on current theory and practice
of information systems related to the business
environment. Current academic and professional
journals cited throughout the text are found in the
notes at the end of each chapter—creating a road
map for additional, pertinent readings that can be the
basis for learning beyond the scope of the chapters.

INTEGRATIVE THEMES
Several integrative themes recur throughout the
text ensuring a cohesive learning experience.
Among these themes are value-added techniques
and methodologies, ethics and social responsibility,
globalisation and gaining a competitive advantage.
Such topics are essential to gaining a full
understanding of the strategies that a business must
recognise, formulate and in turn implement. In
addition to addressing these in the chapter material,

many illustrations are provided for their relevance to
business practice.

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ACKNOWLEDGMENTS
Adapting a book of this scale has been a daunting
task, made easier by the quality of the US edition and
its approach to the coverage of the subject matter—
thank you to Paige and Amy. A similar approach has
been adopted for this Australian and New Zealand
edition, the main focus having been on the relevance
of the real-world examples and cases used. It has
also been an enlightening experience, dare we say,
even fun!
Nothing of this magnitude can be undertaken
successfully alone; it has been a team effort and the
text has benefited from the thoughtful criticisms and
insights of instructors from institutions throughout
the Pacific region. Particular thanks go to the
following people who took part in our Management
Information Systems symposium, participated in
our survey or reviewed the text—all of whom very
generously took the time to offer constructive and
invaluable suggestions on the regional market needs

and about the existing and proposed book content.
We wish to thank our case contributors for
adding significant regional flavour and to the digital
resource authors that added their expertise to this
book:
Peter Blakey, formerly of Massey University
Dr Yvette Blount, Macquarie University

Dr Pari Delir Haghighi, Monash University
Dr Francis Gacenga, University of Southern
Queensland
Dr Heather Gray, Griffith University
Kenneth Howah, Central Queensland University
Associate Professor Christian Jones, University
of the Sunshine Coast
Dr Tanya Linden, University of Melbourne
Dr Kim MacKenzie, Queensland University of
Technology
Dr Alistair Robb, University of Queensland
Pamela Spink, Monash University
Dr Lorraine Staehr, La Trobe University
Susan Sutherland, Consultant, Information
Systems Canberra Pty Ltd
Dr Indrit Troshani, University of Adelaide
Marie van der Klooster, formerly of Deakin
University
Finally, particular thanks must extend to the
McGraw-Hill team who provided support and a
helping hand at every stage of development. We
would like to specifically acknowledge publisher

Jillian Gibbs, senior product developer Lisa
Coady and senior production editor Daisy Patiag.
Their hard work and determination was much
appreciated.

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HIGHLIGHTS OF THIS EDITION
The text has been revised so as to show the change and growth in business-driven information systems and the
technologies that underpin them. Some content has been moved from one chapter and inserted into a different
chapter; some content has been deleted. This has been a result of feedback from academics currently teaching
IS, as well as global trends in IS degrees.
This edition has an additional content author, Professor Julie Fisher from Monash University, bringing
further expertise and collaboration to the text. Julie and Kathy have worked, researched and taught IS
together and individually for many years. This collaboration enhances this edition of Business-Driven
Information Systems.

New and enhanced learning resources in the book
and online include:
• New or updated Opening Case studies for all chapters have been written by either Kathy Lynch or Julie Fisher,
who have ensured the Opening Cases stimulate interest in the chapter prior to working through it. Opening

Case study questions now immediately follow the case, as do any reference notations.
• New or updated Closing Case studies for all chapters have been written by academics involved in teaching
information systems. Closing case study questions have also been included.
• Graduates who were spotlighted in previous editions have updated their profile to show where their degree
has taken them. Further, additional Graduate Spotlights have been included too. Together, these show the
career diversity a degree in IS can bring.
• Discuss feature boxes have replaced the innovation or ethics feature boxes. The intention of these Discuss
boxes is to highlight a real-world business issue related to the chapter, providing an opportunity for group
debate or discussion.
• Critical business thinking questions or activities are new, updated or deleted. The intentions of these are to
challenge students to take the IS concepts presented in the chapter and apply them to business scenarios.
• Apply your knowledge projects are new, updated or deleted. These projects encourage students to take IS
concepts and apply them using a hands-on approach to reinforce concepts, demonstrating the correlation
between business and technology.
• The reach of Business-Driven Information Systems is extended with the Expand your knowledge modules,
a package containing 12 Technology plug-ins/modules that teach students how to solve business problems
using essential business applications like Microsoft ExcelđAccessđ and Dreamweaverđ.

CHAPTER

HIGHLIGHTS
BUSINESS INFORMATION SYSTEMS

1

ã A fresh look at IS in business including the fundamental information systems used in
business (previously in Chapter Four).
• New Opening Case on Google illustrates how one innovation can change the
world, and questions students to view Google’s business through Porters’ business
strategies.

• Two new Closing Cases; e-Exams and the Apple Watch, each demonstrating the
strategic importance of business-driven information systems.

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OUR BRAVE NEW CONNECTED WORLD

2

• Updated content on the importance of connectivity and the business value of a network
connected world.
• Expanded coverage of Web 2.0 and its role in business today.
• Expanded coverage of Web 3.0, including the Internet of Things.
• New Opening Case on 3D printing illustrates one of the latest disruptive technologies
in business today, and questions students to explore not only the business opportunities
it brings, but also its legal implications.
• Two new Closing Cases on Facebook and the Internet of Things, each demonstrating the
business advantages (and concerns) of connectivity through the Internet.

E-BUSINESS AND MOBILE BUSINESS

3

• Updated coverage of e-business, including how to measure e-business success,
organisational strategies for e-business and expanded coverage of e-government.

m-Business content has also been updated.
• The Opening Case on paywalls has been updated (previously in Chapter 2) and looks
at print versus online news content. It questions students to explore the business of limited
free viewing of online newspapers, and its future.
• Two new Closing Cases, on online grocery shopping and Shoes of Prey, each
demonstrating how businesses have changed due to e- and m-business models.

DECISIONS AND PROCESSES

4

• Updated coverage of business decision making and business processes.
• Content on the fundamental types of Information Systems (transaction processing
systems, decision support systems and strategic support systems) have been moved to
Chapter One to ensure that the basics of IS are covered very early on in the text.
• The Opening Case on Quickflix/Netflix has been updated to take a closer look at the
impact on business when a decision is made to go (or not to go) online.
• The Closing Case on the airline industry has been revised, and a new case on virtual
reality has been added, each demonstrating the role information systems play in
business decision making.

TECHNICAL FUNDAMENTALS

5

• Content in this chapter has been updated and re-organised to present a better logical
flow of information.
• Network security, in particular when using mobile devices, has been included as well as
privacy concerns.
• New Opening Case on Supercell illustrates the robust and reliable technological

infrastructure required for online games, and questions students to explore the company’s
network and data security requirements, and the business reasons of why Supercell
develops for mobile-only games.
• Two new Closing Cases, on keeping up to date with new technology post-graduaduation
and the impact of advanced computing infrastructure on the price of coffee, each
demonstrating the fundamental information technology used in business is rapidly
changing and the need to keep current with these changes.

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SYSTEMS DEVELOPMENT AND PROJECT MANAGEMENT

6

• Content has been updated where required, including user-centered design, usability,
and outsourcing.
• The Opening Case on Australia Post has been slightly modified. It illustrates how
companies have to manage technological advances and customer wishes to deliver
efficient services and products.
• One new Closing Case on HealthSMART and a revised case on Myki, both of which
present reasons as to why projects fail.

ENTERPRISE ARCHITECTURE AND SECURITY

7

• This chapter contains the content on enterprise security that was previously in
Chapter 11. It has been updated and moved to strengthen the focus on enterprise-wide
systems and technology.
• New Opening Case on the Sony hack illustrates the lengths some people will go to
make a point; how the hack was done is a lesson for all. The case questions students
regarding legislation, regulations and business requirements in data retention, recovery
and backup.
• Two new Closing Cases, on developing an enterprise-wide architecture and migrating
to google apps, each demonstrating the need to examine and implement information
technology and systems across an enterprise rather than independently.

QUALITY DATA AND BUSINESS INTELLIGENCE

8

• Content in this chapter has been updated and re-organised to present a better logical
flow of information. It looks at the attributes and importance of quality data and
databases, and then at data warehousing, data mining and business intelligence. The
concept of Big Data, and the relationship between BI, business analytics and data
science is explored.
• New Opening Case on Chupa Chups illustrates the need to access reliable, useful and
complete data across a large global company, and questions students to explore basic
database schema and business intelligence tools.
• Two new Closing Cases on XBRL and supply chains and data-driven innovation, each
demonstrating how large amounts of quality data are being prepared and used.

ENTERPRISE INFORMATION SYSTEMS: ERP AND SCM

9

• Content in this chapter has been updated and re-organised to present a better logical
flow of information. ERP and SCM are grouped together as they are commonly the
initial enterprise information systems implemented in a large business.
• New Opening Case on Queensland Health illustrates what can go wrong during an ERP
implementation, and questions the implications involved in implementing a governmentwide ERP system as well as the tendering process.
• Two new Closing Cases, on GoPro and ATE tankers, both of which explore the
importance of ERP and SCM, and how they can be effectively conducted and
implemented.

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ENTERPRISE INFORMATION SYSTEMS:
CRM AND COLLABORATION SYSTEMS

10

• Content in this chapter has been updated and re-organised to present a more logical
flow of information. CRM and collaboration systems such as groupware and knowledge
management systems are grouped together in this chapter as they are common enterprise
information systems implemented in a large business.

• New Opening Case on Bosch illustrates how a large global company is using
collaboration systems within their organisation and with their clients, and questions the
collation of user profiles, user-generated content and the use of this content in business.
• Two new Closing Cases, one on Apple’s ERP systems which explores the importance of
user experience in software development, and one that looks at the data contained in
CRM systems from a legal perspective.

ETHICS, PRIVACY, SOCIAL MEDIA AND FUTURE TRENDS

11

• Content in this chapter has been updated and re-organised to present a more logical
flow of information.
• Social media has a dedicated section due to the uptake of it throughout the business
world as a business tool. Further, Future Trends from Chapter 12 in the previous edition
is now incorporated into this chapter as many of these trends and policies relate to
ethics, privacy and social media.
• New Opening Case on Bitcoin illustrates the use of online currency to purchase goods,
and questions students as to business concerns regarding the use of bitcoins rather than
cold hard cash (or credit).
• Two new Closing Cases, one on Facebook and one on online privacy and copyright,
both demonstrating the legal and ethical implications when using online sources to
generate, download or stream content.

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A brave new
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CHAPTER 1 Information systems in business

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nformation is everywhere. The amount of data and information in the world today is hard to estimate
– however, it is a lot and is growing at a terrific rate. We are generating data from computers,
sensors, cameras, phones, so much so that we are surpassing the capacity of the devices that store
it, let alone retrieve it. Information technology and the systems allow for the logical and useable retrieval
of data. But with this much data, business decisions need to be made as to what data and information
needs to be retrieved, or alternatively, the end user be given the ‘power’ to decide themselves what data
or information they require.
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making.
manipulates
multiple
variables
and
in

some
cases
even
hundreds
of
variables
illustrating
information
systems
in
action
in
the
from multiple
sources
products to New Zealand and seven international markets that of improved inventory control and management. Project fish has
business strategists of the 21st century. Research Michael Porter o
such
as suppliers,
including
suchrevenue
itemsforasthe
interest
rates, aweather
conditions
and
even
petrol
prices
(BI

is
covered
in
Chapter
truly integrated
ERP platform
for our
business.’
resulted
in over NZ$433
million in sales
year delivered
Tony
the Internet for interviews, additional articles and Who
new orisupdate
business
world.
Each
case
study
is
designed
to
customers,
competitors,
sanford’s ability to service export markets has also improved.
ending
september 2010.
business
8). Tony can use BI to analyse internal

data such as company sales, along with external data about
the strategies.
since
the early 1990s, the company has grown organically The company has increased insight into exactly what product is
is Tony
partners and
industries
Create a summary of your findings to share What
with your
clas
contextualise
the
content
to
be
covered
in
the
chapter.
environment
such
asNZX.
competitors,
weather,
holidays
evenpre-sell
sporting events. Both internal
to market from
fishing vessels
and canand

confidently
and through
acquisitions,
and is now listed
on the
One comingfinances,
that analyses
patterns,
How can learning about people such as Thomas friedman an
What
is
Tony
fish before they even hit the shore. Marel production data from atconsequence
of the acquisitions
strategy
was
inheriting
disparate
trends and
relationships
Michael
Porter
help
prepare
you
for
a
career
in
business?

Nam
and external variables affect snack sales, and
analysing
variables
can help
Tony determine
ordering
Closing
casethese
studies
reinforce
concepts,
themes
information systems and, in early 2005, sanford had to integrate sea-processing trawlers is sent daily via satellite to the shore office
three additional business professionals you should
followistoTony
hel
for strategic
decision
What
levelsplatform,
and sales
forecasts.
For and
instance,
BIinto
can
inventory
requirements
for Tony’s business

for
then loaded
the predict
system. ‘With
integrated real-time
internet
its information management
a visionary
companyprepare for your career in business.
and
issues
discussed
in
the
chapter.
These
case
making
data, we can instantly see which market worldwide is giving a

wide enterprise resource
(ERP) initiative
it dubbed
theplanning
week before
the AFL
Grand Final if, say, the home team is playing, average temperature is above
30
What is Tony
2 renting movies

‘Project fish’. Believed to be a world first for the fishing industry, high return on a certain product and may even make a decision
degreesofand
thecore
stock
This isofBI
at itsit.’
finest,
incorporating
all types of internal
airfreight more well.
stock instead
shipping
Wisefish
allows
sanford achieved a transformation
the very
of itsmarket
business istoperforming
The movie rental industry is fiercely competitive. Who
Customers
hav
is Tony
the marketers
to see performance.
exactly what product is on board any vessel
infrastructure and, through
integratingto
several
andharnessing
externalandvariables

anticipate
business
their choice of renting a movie by driving to a video shop (e.g
software applications, has taken the lead in innovative and at sea and in processing on shore, which makes it now feasible
Who
is Tonyo
Blockbuster), ordering through the mail (e.g. from
Quickflix),
to pre-sell fish. Given the unique supply situation of this industry,
sustainable business practices.
watching directly from their television (e.g. streaming from AB
Increasing customer service demands and growing regulatory with the uncertain and seasonal supply of any specific fish variety
What is the
iView).
requirements, combined with sanford’s commitment to the and the short shelf-life of fresh fish, the real-time information that
Using Porter’s five forces Model (buyer power, supplie
sustainability of New Zealand’s seafood supplies, had made it Wisefish provides also gives the customer confidence in sanford’s
Who
is theanb
power, threat of new entrants, threat of substitute
products
apparent that the existing standalone software applications were ability to consistently supply on time and on order.
competition), evaluate the attractiveness of entering the movi
Another positive outcome from the project has been the
What
is the
no longer sufficient. since then, sanford has continued to grow,
rental business. Be sure to include product differentiation, switchin
and now not only owns 11 inshore fishing vessels for fresh fish, six breaking down of the traditional ‘silo’ mentality. This development
costs and loyalty programs in your analysis.

Who is the b
at-sea scampi processing trawlers, four deep-sea vessels and three has resulted in increased communication between branches
‘super seiner’ tuna vessels, but also runs four large 50 to 75 metre and the opportunity for staff to add value to their roles. ‘At an
3 Working for the best
charter trawlers that typically have a crew of 40 and stay out at administration level, we’ve opened up the opportunity for our
Each year, Fortune magazine creates a list of the top 10
sea for 35 days. The fishing fleet is complemented by eight land staff to become business analysts instead of number crunchers,’
companies to work for. find the most recent list. What types o
based processing facilities across New Zealand, from stewart says Borrell. sanford can also provide the Ministry of fisheries
data do you think Fortune analysed to determine its compan
Island and Bluff in the south to Auckland and Kaeo in the North. and the New Zealand food safety Authority with faster access to
rankings? What issues could occur if the analysis of the data wer
These plants, though owned by sanford, also process catch landed information via direct electronic data transfer. The scope of Project
inaccurate? What types of information can you gain by analysin
by independent local or even overseas fishing vessels coming here fish continues to evolve as its users become more familiar with its
the list? Create five questions a student performing a job searc
capabilities. selected customers can now look up their contracts
from the still fish-rich south-Pacific and Antarctic waters.
could answer by analysing this list.
Before 2005, Marel, a tracking system developed in Iceland, via the internet, see online when their stock has been assigned
was used to track the fish as it was processed and packed in these and loaded, and track the container to its delivery point. The
4 job surveys
plants. However, no system other than the sharing of spreadsheets quantum leap sanford has achieved in its information and business
Research the Internet for current Is jobs. Which types of jobs ar
enabled a complete overview of the business and its inventory infrastructure integration since late 2005 continued in 2012 with
on the rise? If there are any jobs you are unfamiliar with, researc
across all plants. This process involved a lot of repetitive data re- the company announcing a NZ$100 million investment in a high
the Internet to determine the job characteristics. List the top thre
entry and also led to numerous spreadsheets being held in various technology project looking at more eco-friendly ways of catching
jobs you would want if you were to pursue a career in Is. What d

locations. ‘Marel gave us great detail of each plant’s processing fish and more efficiently moving it to market.
you find interesting about these jobs? What skills can you build t
and packing but it was not presented in the context of the whole
help you prepare for these jobs?3
CASe
STuDY
QueSTIONS
company,’ explains Teresa Borrell, project leader on Project fish.
‘We were also operating one financial system in the North Island Q1 for the university, what business benefits and costs could
5 communication is key
and another in the south Island with little integration between the two
accrue from switching from all paper exams to all electronic
The ability to clearly communicate with your peers, team member
systems. One of our key drivers for the project was to introduce a
exams? for students, what are the advantages and
managers and end users is critical skill for all those involved i
new level of organisation-wide inventory control and management.’
disadvantages?
the IT business. However, good communication skills do not com
sanford subsequently achieved this goal with the introduction of Q2 What other issues or questions not directly discussed in the
easily for many. The 2013 movie “The Internship” (http://www
another product developed in Iceland—Wisefish, an information
Case could you suggest might arise during this period of
theinternshipmovie.com/)
about PM
two salesmen, Vince an
08/20/15is 05:55
management and finance system. ‘Wisefish was the final piece
feasibility testing and evaluation?
Owen, who lots their jobs, however, they do not give up and app

in our puzzle,’ says Borrell. ‘We knew we had the foundation for Q3 An example was given of how an e-exam might bring more
for an internship with Google.
increased business intelligence and transparency with Marel, but
authenticity to a medical exam. Can you think of several
Watch the film (or at least the trailer) and list the communicatio

studies illustrate how the core concepts covered in
each chapter have been implemented by prominent
organisations and businesses.

xxiii

baL60744_fm_i-1.indd xxiii


11

CHAPTER 1 Information systems in business

ll versed in advanced technology can compete in the information age.
ness leaders have created exceptional opportunities by coupling the
traditional business methods. Here are just a few examples:

discuss

Pluses and minuses
The line famously quoted in the film Spider-Man, ‘With great power comes great responsibility’, applies to every
type of technology you encounter in business. Technology provides countless opportunities for businesses, but can
also lead to pitfalls and traps. Online trading, for instance, brought many companies profits but has cost many
individual investors their life savings through fraud. Ponzi schemes, for example, attract inexperienced investors

with promises of high yield investments but no real profits are generated. Online anonymity means the promoters
disappear when the schemes end. sites such as Craigslist and eBay allow anyone to become a provider of goods
or services and a few unethical individuals have even used it to run online prostitution rings 7.
A manager must be able to analyse the good and the bad associated with technology.
Review some companies that primarily operate on the Internet, such as Kogan, eBay, Craigslist or Amazon,
and compile a list of the business opportunities and the potential pitfalls associated with doing business online.

mpany; its original business focus was to sell books, and it now sells

pany; its primary business focus is to rent videos.
mpany; its primary business focus is to sell shoes, bags, clothing and

t first saw an opportunity to change the way people purchase books.
n age to tailor offerings to each customer and speed the payment
ns of tiny virtual bookstores, each with a vastly larger selection and
al bookstores. The success of his original business model led him to
er types of products. The founders of Netflix and Zappos have done
. All these entrepreneurs were business professionals, not technology
enough about the information age to apply it to a particular business,
now lead entire industries.

Data, information, business intelligence and knowledge

DISCUSS

LO 1.3

Students who understand business along with the power associated with IT are well placed to create

theirthroughout

own opportunities the
and perhaps
new industries—just
co-founders
Chris DeWolfeof
andinformation systems problems,
Discuss features appear
text, even
presenting
real asworld
examples
Tom Anderson did with MySpace, Mark Zuckerberg did with Facebook, and as Ruslan Kogan did with
Kogan.com.
Our
primary
goal
in
this
book
is
to
arm
you
with
the
knowledge
you
need
to
compete

in
y versus information systems
ethics and innovations. Covering a range of topics, these boxed features are the
designed to promote critical
information age. The core drivers of the information age are data, information, business intelligence and
mation systems are two closely related fields – each are required in
knowledge.and debate.
thinking
through discussion
n technology is primarily concerned with hardware and
software

stems, web services, code, devices, networks (see Chapter 5), and
Data
concerned with the people, processes and the technology – it is a
Data are raw facts that describe the characteristics of an event or object. Before the information age,
stems designed to create, gather, store, manipulate or disseminate
managers manually collected
and2 analysed
data,
a time-consuming
and complicated task without which
CHAPTER
Information
systems
in business
37
btaining, storing and retrieving information, for example, the Dewey
they would have little insight into how to run their business. Lacking data, managers often found
ks, protocols and terminology for product identification, customer

themselves
making
business
decisions
about
how
many
products
to
make, how much material to order
orkplace communication.
or how many employees to hire based on intuition or gut feelings. In the information age, successful
nts frequently ask, ‘Why do we need to study information technology
managers
compile,
analyse
and
comprehend
massive
amounts
of
data
daily, which helps them make
BUsINEss
r is simple: Of
they
are everywhere
in every business. They affect nearly
UNIVERsITy
AUCKLAND,

NZ
sTRATEGy
more successful business decisions.
he processes of work, rest and play through improvements in software,
The
amount
of
data
that
we
use
or
generate
today
is
growing
exponentially,
and thus too much for
ng them provides great insight to anyone learning about business.
1 Pursuing Porter
aid on the amount of fish caught using the information
just released
an that
operating
system
that plans
to compete
withretrieve the data. Big data is the term
the traditional IT has
based

systems
store,
collate,
correlate,
and
ole of information technology in business by reviewing a paper
or
om Wisefish. Borrell says, ‘sanford has achieved its goal
Microsoft’s
operating
systems.
your
company
has
a
significant
There is no doubt that Michael Porter is one ofused
the more
forinfluential
data sets that are so large and complex it is difficult to process the data using traditional data
magazine
such as
Business
NZ
d inventory control
andBusinessWeek,
management. Project
fish hasReview Weekly (BRW) or
business strategists of the 21st century. Research Michael Porter on amount of capital invested in Microsoft. your boss, Kellee Lazarus,
processing applications. Data sets grow in size in part because they are increasing being gathered by for

truly integrated
ERP platform for
business.’
articles
are dedicated
toour
technology
in business. These are business
the Internet for interviews, additional articles and new or updated has asked you to compile a Porter’s five forces analysis for
d’s ability to service export markets has also improved.
Microsoft
ensure your
company’s
Microsoft
is not
mobile devices, web
logs,tosoftware
logs,
cameras,
andinvestment
RFID readers.
The ‘size’ of big data is indefinable,
business strategies.
nes,
yet
they
are
filled
with
technology.

Students
who
understand
ny has increased insight into exactly what product is
at risk.
Create a summary of your findings to share
with your
class.
as what
is big
for one organisation may not be big for another. Regardless of the big data size, a business
market from fishing vessels and can confidently pre-sell
usiness.
How can learning about people such as Thomas friedman and 7 Complanency can result in lost competitive
they even hit the shore. Marel production data from atto understand
its data, what it needs to do with it, when, how quickly and in what format. (see
Michael Porter help prepare you for a careerneeds
in business?
Name
ypically
discuss
such
topics
as
databases,
customer
relationship
advantage
ing trawlers is sent daily via satellite to the shore office
three additional business professionals you should

follow8 to
help
Chapter
for
more on big data)
chain
‘big data’,
security,
aded
intomanagement,
the system. ‘With integrated
real-time
internetethics, business intelligence
In 2004, a few years before Apple introduced it first iPhone, Nokia
prepare for your career in business.
Table 1.1 shows
dataa for
Tony’s
Snack
Company,
a fictitious
business that supplies snacks to
an instantly systems.
see which market
worldwide
is giving
a topics in detail, along with
had sales
developed
phone

prototype
that was
Internet ready
and
ormation
This text
explores
these
2 renting movies
on a certain product and may even make a decision
touch screen. However
it was not until
many
later,
and long
stores. The data highlights
characteristics
such
asyears
order
date,
customer, sales representative, product,
pportunities
andofchallenges.
IT andallows
IS can be important enablers of
t more stock instead
shipping it.’ Wisefish
after Apple claimed the crown as a first-mover and thus gaining
The movie rental industry is fiercely competitive.

Customers
have
quantity
and
profit.
ers toissee
exactly
whatthat
product
is onequal
board business
any vessel success and innovation, or
This
not
to say
they
their choice of renting a movie by driving to a video shop (e.g. it competitive advantage, that Nokia release its first comparable
in processing on shore, which makes it now feasible
The
secondorline
in Table
shows
Roberta
sold
phone.
It has 1.1,
missed
a greatthat
opportunity
(andCross

revenue)
due90
to boxes of Twisties to Coles for $1350,
Blockbuster), ordering through the mail (e.g. from
Quickflix),
sfish.
and
innovation. They are most useful when they leverage the talents
Given the unique supply situation of this industry,
“management
the product
could
a costlyThis data is useful for understanding
directly from their television (e.g. streaming
resultingfrom
inABC
a profit
of $450[being]worried
(note thatthat
profit 
=  sales 
— becosts).
s the and
right
people
know
how
to use
and manage it effectively. watching
certain

seasonal
supply
of any
specific
fish variety
flop….. [the] organization so swollen by its early success that it
iView).
individual
sales
but
does
not
provide
much
insight
into
how
Tony’s
business is performing as a whole.
ort
shelf-life
of
fresh
fish,
the
real-time
information
that
36
grew

complacent,
slow
and
removed
from
consumer
desires”
.
em (MIS) is a business function just as marketing, finance, operations
Using Porter’s five forces Model (buyer power, supplier
ovides also gives the customer confidence in sanford’s
Name three
products his
that day-to-day
today could operations,
be
Tony products
needs to
tocompanies
help himormanage
such as:
power, threat of new entrants, threat of substitute
andask questions
management are business functions. Formally defined, management

Data
raw facts that describe
the characteristics of an
event or object

CRITICAL BUSINESS THINKING

Critical business thinking

onsistently supply on time and on order.

competition), evaluate the attractiveness of entering the movie

classed as having the first-mover advantage; what is their business

positive outcome
has been
the
ar general
name from
for the
theproject
business
function
and academic discipline
strategy;
are they global or local; who founded the organisation
rental business. Be sure to include product differentiation,
• Whoswitching
are my best
customers?
own of the traditional ‘silo’ mentality. This development
(how old are they and their country of residence); who is their
costs and loyalty programs in your analysis.
le, technologies and procedures—collectively called information

ed in increased communication between branches
• Who are my least
profitable
closest
competition customers?
(or rival). for one of the companies/products
iness problems.
To perform
the
MIS
effectively, almost
pportunity
for staff to add
value to their
roles.
‘At function
an
3 all
Working for the best
generate
a Porter’s
five forces analysis.
• What is my best-selling
product?
ion level,
opened up the
opportunity
for internal
our
rge

and we’ve
medium-sized
ones,
have an
IT department, Each
oftenyear, Fortune magazine creates a list of the top 100 8 Applying the Three generic Strategies
come business analysts instead of number crunchers,’

•

What
is
my
slowest-selling
product?
companies to work for. find the most recent list. What types of
),
Information
or ofManagement
Information Systems
l. sanford
can also Systems
provide the (IS)
Ministry
fisheries
38
Information
This chapter
discussed
several examples of companies that pursue

data do youPART
think 1Fortune
analysedsystems
to determine
its company
•are
business
Who
is my strongest
sales
representative?
ew
food
safety Authority
with faster access
outZealand
IT, it is
important
to understand
theto relationships between rankings?
data, What issues could occur if the analysis
of the data were differentiated strategies so that they are not forced into positions
via direct electronic data transfer. The scope of Project
•gain
Who
is my weakest
salesmust
representative?
where they
compete solely based on price. In a team,

inaccurate? What types of information can you
by analysing
and knowledge.

ues to evolve as its users become more familiar with its
. selected customers can now look up their contracts
ernet, see online when their stock has been assigned
d, and track the container to its delivery point. The
ap sanford has achieved in its information and business
e integration since late 2005 continued in 2012 with
ny announcing a NZ$100 million investment in a high
project looking at more eco-friendly ways of catching
re efficiently moving it to market.

uDY QueSTIONS

university, what business benefits and costs could
e from switching from all paper exams to all electronic
s? for students, what are the advantages and
vantages?
other issues or questions not directly discussed in the
could you suggest might arise during this period of
ility testing and evaluation?
ample was given of how an e-exam might bring more
nticity to a medical exam. Can you think of several
an e-exam could make an ICT exam more ‘authentic’?
were on the evaluation team for this trial, what do you
could be some of the business, organisational or technical
that might be raised following the successful trial?
and Opt-out are often issues relating to IT and

ess ethics particularly relating to online facilities.
do you see as the pro’s and con’s of “opt-in” or “optwhen it comes to e-exams?
ow to ‘sell’ the idea to reluctant students?

the list? Create five questions a student performing a job search choose an industry and find and compare two companies—one
What Tony needs,that
in isother
words,
is not
dataand
but
information.
competing
based
on price
another
that is pursuing
could answer by analysing this list.
a differentiated strategy enabled by the creative use of IT. some
BUsINEss
4 job surveys
industries you may want to consider are clothing retailers,
PROJECTs
Research the Internet for current Is jobs. Which types of jobs are supermarkets, airlines and personal computers.
Prepare a presentation for the class on the ways the company
on the rise? If there are any jobs you are unfamiliar with, research
the Internet
to determine
the job characteristics.
List the

top three is using IT to help it differentiate and compete against the low-cost
prOJeCt
ONe Capitalising
on your
career
jobs you would want if you were to pursue a career in Is. What do provider.
you find interesting about these jobs? What skills can you build to 9 Top five things you will say to your
Business leaders need to be comfortable with management information systems (MIs) for the following (primary) reasons.
help you prepare for these jobs?3

Apply your knowledge

grandchildren
•The sheer magnitude of the dollars spent on MIs must be managed
to ensure business value.
communication
is key
•Research consistently shows that when top managers are active Wired
in supporting
MIs,recently
they realise
a number
of the
benefits
suchthings
as gaining
magazine
posted
a list of
top 10

you
a competitive
advantage, streamlining
business
processes
and even
transforming
entire industries.
The ability
to clearly communicate
with your peers,
team
members,
will say
to your grandchildren,
five are repeated here. for each
•When
leaders
are notskill
involved
MIs, systems
revenue isbelow,
lost andtryentire
companies
fail because
of it
managers
andbusiness
end users
is critical

for allinthose
involvedfail
in andexpression
to identify
whatcan
it iseven
referring
to and why
poorly managed
systems.
the IT business.
However,
good communication skills do not come will be considered outdated.37
easily for
many.
The 2013getmovie
“The involved
Internship”
(http://www.
1 Backpositive
in my day,
weisonly
neededpersonal
140 characters.
How
do companies
managers
in MIs?
One of the biggest
factors

managers’
experience with MIs
theinternshipmovie.com/)
is about
two salesmen,
andseminars.
2 Televised
gave cash
prizes to
whoever
store
and MIs education, including
university
classes andVince
executive
As sooncontests
as managers
understand
MIs
throughcould
experience
Owen,
lots theirthey
jobs,are
however,
theytodolead
not their
give companies
up and apply
the business

most datasuccess
in theirthrough
head. MIs.
andwho
education,
more likely
in achieving
for an internship with Google.
2 Well, the screens were bigger, but they only showed the
Watch the film (or at least the trailer) and list the communication
movies at certain times of day.
search
Internet
forpossess
examples
theother
typesapplicants
of technologies
used in the field or industry that you plan to pursue. for
skills 1that
Vincetheand
Owen
thatofthe
(and currently
4 We all had one, but nobody actually used it. Come to think
if you aredoplanning
a career in accounting or finance, you should become familiar with financial systems such as Oracle
some ofexample,
the employees),
not.

of it, I bet my LinkedIn profile is still out there on the web
financials. for a career in logistics or distribution, research supply chain management systems. If marketing appeals to you,
somewhere.
6 The
Five customer
Forcesrelationship
Model atmanagement
work
research
systems, blogs, e-marketing
and social networking.
5 you used to keep files right on your computer, and you had to
As a competitive
can differentiate
your 2team
is working tool,
for MIs
a small
investment products,
companyservices
that and prices from competitors’ offerings by improving product quality,
go backproducts
to that same
computer
to improving
access them!
shortening
product development
time, creating
new MIs-based

and services,
and
customer service
specialises
in technology
investments. or
A delivery
new company,
Geyser,
before, during and after a transaction. search the Internet for examples of companies in the industry where you plan to work that
have achieved a competitive advantage through MIs.
3 Create a brief report of your findings. Include an overview of the type of technologies you found and how companies are using
them to achieve a competitive advantage.
5

prOJeCt tWO

Achieving alignment

Most companies would like to be in the market-leading position of Jetstar or Dell, which have used MIs to secure their respective spots
in the marketplace. These companies are relentless about keeping the cost of technology down by combining the best of MIs and
business leadership. The future belongs to those organisations perceptive enough to grasp the significance of MIs and resourceful
enough to coordinate their business and MIs.
Use any resource to answer the question, ‘Why is it challenging for businesses to align MIs and their other operations?’ Use the
following questions to begin your analysis.
1
2
3
4

How do companies monitor competitive intelligence and create competitive advantages?
What are some of the greatest MIs challenges for most firms?
What drives MIs decisions?
Who or what is the moving force behind MIs decisions for most companies?

BERNADETTE
Name
Bernadette Kropman
prOJeCt FOUr

Big data
data sets that are so

large andchapter,
complex it is
At the end of each
the Critical
difficult to process the
data using traditional
data feature
processing
business thinking
provides students
applications
with an opportunity to apply critical thinking
skills and chapter concepts to business
problems.

UPDATED
GRADUATE

SPOTLIGHT

Porter’s five forces

Degree studied

setting strategic direction for a business is a challenge for even seasoned professionals. The good news is that many tools are
Bachelor to
of help
Business
(Information
available
you find
competitive advantages, including Porter’s five forces. Porter’s five forces Model analyses the competitive
Systems)
andthe
Master
of Information
forces
within
environment
in which a company operates to assess the potential for profitability in an industry. Its purpose is to
Technology
combat
these competitive forces by identifying opportunities, competitive advantages and competitive intelligence. If the forces are
strong, they increase competition; if the forces are weak, they decrease competition.

Current position
Partner/Owner Prime PMG

Porter’s five forces Model is a good framework for understanding market forces. Break into groups and choose a comparison from
the list below to perform a Porter’s five forces analysis.

Employer

•Prime
Notebook
computer
and tablet
computer
Process
Management
Group
• smart phone (eg iPhone) and non smart mobile phone
• iTunes and spotify
•What
GPs device
and street did
directory
job/position
you have when you were interviewed for the 2nd edition?
• Digital books and printed books

At the time of the 2nd edition, I held the same position as I do now—Partner at PRIME Process Management
Group. At the time we had been established only a few years. Our organisation provides consultancy, training
and software in the Business Process Management space. Our clients call upon us to document their existing
business processes, analyse and improve these, then implement the changes into their organisation.

CHAPTER 2 Information systems in business

39

APPLY YOUR KNOWLEDGE
The Apply your
projects invite
Adding knowledge
value
students to use the concepts from each
chapter in order to engage in a variety of
business scenarios.
prOJeCt FIVe

To identify competitive advantages, Michael Porter created value chain analysis, which views a firm as a series of business processes
that each add value to the product or service. Value chain analysis is a useful tool for determining how to create the greatest possible
value for customers. The goal of value chain analysis is to identify processes in which the firm can add value for the customer and
create a competitive advantage for itself, with a cost advantage or product differentiation.
Cafe chain Gloria Jeans has employed you after your graduation for a temporary position that could turn into a full-time opportunity.
With new cafes popping up on every corner, coupled with the global recession, Gloria Jeans is worried about losing market share to
competitors. your boss, Heather sweitzer, is out of ideas for ways to improve the company’s profitability. you decide that one of the
most useful tools for identifying competitive advantages is Porter’s value chain analysis. Of course, you do not yet have the detailed
knowledge to complete all of the elements required, but you know enough to get started and plan to take your draft to Heather next
week.
Using your knowledge of Gloria Jean’s, create a value chain analysis. feel free to make assumptions about operations; just be sure to
list any that you make. Also, be sure to write an overview of the tool and its potential value so Heather can understand how it works.
prOJeCt SIX

Flat competition

‘When I was growing up in Minneapolis, my parents always said, “Tom, finish your dinner. There are people starving in China and
India.” Today I tell my girls, “finish your homework, because people in China and India are starving for your jobs.” And in a flat

world, they can have them, because there’s no such thing as an American job anymore’ (Thomas friedman).
In his book The world is flat , Thomas friedman describes the unplanned cascade of technological and social shifts that effectively
levelled the economic world, and ‘accidentally made Beijing, Bangalore, and Bethesda next-door neighbors’. The video of Thomas
friedman’s lecture at MIT discussing the flat world is available at If you want
to be prepared to compete in a ‘flat world’, you should watch this video and answer the following questions.
1 Do you agree or disagree with friedman’s assessment that the world is flat?
2 What are the potential impacts of a flat world for a student performing a job search?
3 What can students do to prepare themselves for competing in a flat world?
prOJeCt SeVeN

Garbage in – garbage out

GRADUATE SPOTLIGHTS

Electronic health records and computerized systems are being hailed as the best way to make the health system safer and more
efficient. But the rush to implement these systems might be doing more harm than good.
Genesis Burkett was born 16 weeks prematurely but was thriving in the neonatal intensive care unit. When he was 40 days old, a
pharmacy technician administered a routine IV bag of sodium chloride and calcium. But there was a problem: When the technician
entered the prescription information into the electronic system that told an automated machine how much of each solution to include,
he punched in the wrong dose of sodium—administering more than 60 times the amount Genesis’s tiny body could handle. Within
hours, the infant suffered a heart attack and died.38
Australia is rolling out an online eHealth system ( Individuals eHealth records allows you and your
doctors, hospitals and other healthcare providers to view and share your health information to provide you with the best possible care.
Explore the web site to determine the risk of data ‘garbage in / garbage out’ situations. suggest several ways for both the individual
and the medical professionals could this overcome this problem?

Graduate spotlights, located at the start of each part
of the book, present IT graduates’ stories. They share
their experiences of studying business information
systems and how those experiences have informed

their career choices. What’s wrong with this bathroom?

We know that people use IT to work with information. Knowing this, how could these types of errors occur? What could happen if you
decided to use Wikipedia to collect BI for a research paper? What could Wikipedia do to help prevent these types of errors?
prOJeCt eIGht

If you were the CEO of a global financial company that was experiencing a financial crisis, would you invest $1 million to renovate
your office? Probably not, and you are possibly wondering if this is a foolish and irrelevant question. Guess what, this is a true story!
John Thain, the former CEO of Merrill Lynch, decided to spend Us $1.2 million refurbishing his office—well after Merrill Lynch
posted huge financial losses. Thain personally signed off all of the following (all in Us dollars):
•rug: $87 784
•mahogany pedestal table: $25 713
•19th-century credenza: $68 179

What did your job/position involve?
In the earlier days, my job was more focused on the development of our product and services. This was
establishing, trialling and refining the product and services which would satisfy our customers. This was
in addition to the day-to-day activities such as managing client projects, recruitment and retention and of
course getting out there and selling our product and services.

xxiv

What do you enjoy most about your job?
I get great satisfaction out of establishing teams, setting an objective and working with the team to achieve
that. I like bringing out the best in people. I also enjoy doing strategic planning activities for the business.
This gives room for creative thinking, making plans and working towards achieving our objectives.

What are your thoughts on the future of information systems?
I’m feeling positive. I have seen the application of IT, hence the use of information systems, adopted in
a variety of industries—some faster than others. There is so much more room for IT and information

systems, let alone the continuous improvement of these.

What advice would you give to recent graduates looking to work in information
systems?

baL60744_fm_i-1.indd xxiv

I mentioned this in my write-up for the 2nd edition of this book and I feel it still holds true. Anything
that can be offshored will be offshored. It is a good specialisation, but ensure you also develop excellent
communication and interpersonal skills. Focus on customer-facing roles where you can use your technical,
business, communication and interpersonal skills, as these cannot be offshored so easily.

08/20/15 05:55 PM