Introduction to information systems

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Introduction to

Information Systems

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Introduction to

Information Systems

Third Edition

R. Kelly Rainer Jr.

Casey G. Cegielski

John Wiley & Sons, Inc.

rain_fm_i-xvii-hr.qxd 22-10-2009 13:15 Page v

VICE PRESIDENT & EXECUTIVE PUBLISHER Don Fowley

EXECUTIVE EDITOR Beth Lang Golub

EXECUTIVE MARKETING MANAGER Christopher Ruel

CREATIVE DIRECTOR Harry Nolan

ART DIRECTOR Jeof Vita

SENIOR ILLUSTRATION EDITOR Anna Melhorn

SENIOR PHOTO EDITOR Lisa Gee

EDITORIAL ASSISTANT Mike Berlin

SENIOR MEDIA EDITOR Lauren Sapira

SENIOR PRODUCTION EDITOR Patricia McFadden

PRODUCTION MANAGEMENT SERVICES Ingrao Associates

This book was set in 10.5/15 Minion Pro by Prepare and printed and bound by Quebecor World Versailles. The cover was printed

by Quebecor World Versailles. This book is printed on acid free paper.

Copyright © 2007, 2009, 2011 John Wiley & Sons, Inc. All rights reserved. No part of this publication may be reproduced, stored

in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning or

otherwise, except as permitted under Sections 107 or 108 of the 1976 United States Copyright Act, without either the prior writ￾ten permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Cen￾ter, Inc. 222 Rosewood Drive, Danvers, MA 01923, website www.copyright.com. Requests to the Publisher for permission should

be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030-5774, (201)748-6011,

fax (201)748-6008, website http://www.wiley.com/go/permissions.

To order books or for customer service please, call 1-800-CALL WILEY (225-5945).

ISBN-13 978-0470-47352-8

ISBN-10 0470473525

Printed in the United States of America

10 9 8 7 6 5 4 3 2 1

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preface

vii

What does Information Systems have

to do with business?

Rainer, Cegielski Introduction to Information Systems will answer this question for you. In every chap￾ter, you will see how real global businesses use technology and information systems to increase their

profitability, gain market share, improve their customer service, and manage their daily operations.

In other words, information systems provide the foundation for business.

Our goal is to teach all business majors, especially undergraduate ones, how to use IT to master

their current or future jobs and to help ensure the success of their organization. Our focus is not on

merely learning the concepts of information technology but rather on applying those concepts to facil￾itate business processes. We concentrate on placing information systems in the context of business,

so that students will more readily grasp the concepts presented in the text.

The theme of this book is What’s In IT for Me? This question is asked by all students who take this

course. Our book will show you that IT is the backbone of any business, whether you’re in Account￾ing, Finance, Marketing, Human Resources, or Production/Operations Management. We also include

an icon for the Management Information Systems (MIS) major.

New to This Edition

There are many exciting additions and changes in Rainer 3e. These changes make our book more

interesting and readable for students of all majors, while still providing the most current informa￾tion possible in the rapidly changing field of information systems.

Overall

• A new chapter on Customer Relationship Management (Chapter 9).

• A new chapter on Supply Chain Management (Chapter 10).

• All new chapter opening and closing cases.

• All new IT’s About Business in every chapter.

• All new examples in every chapter.

What’s in IT for me?

ACC FIN MKT OM HRM MIS

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• Video clips accompanying Chapters 1 and 2. The videos contain interviews with a Chief Execu￾tive Officer concerning issues raised in the first two chapters of the book.

• Video clips accompanying Chapters 3 through 12. The videos contain interviews with practicing

managers in Accounting, Finance, Marketing, Production/Operations, and Human Resources. In

the video clips, each manager responds to questions covering the major topics of the book. For

example, in the video clips accompanying Chapter 3, each manager relates how ethical issues, pri￾vacy issues, and information security concerns impact their company and its employees.

• New Case Archive containing all chapter opening and closing cases, and the “IT’s About Business”

boxes from previous editions.

• New and updated PowerPoint slides incorporating extensive images and video.

• New and updated Test Bank with questions labeled according to difficulty: easy, medium, and hard.

Specifically

Chapter 1 contains a new section on business processes, business process reengineering, and busi￾ness process management has been added.

Chapter 5 has an expanded discussion of IT-enabled collaboration and collaboration software prod￾ucts.

Chapter 8 includes expanded, in-depth sections on functional area information systems and enter￾prise resource planning systems.

Chapter 12 adds a section on project management. The remainder of the chapter has been exten￾sively rewritten, simplified, and shortened for added readability.

Technology Guide 1 has been rearranged for increased readability and impact. Strategic hardware

issues are now at the beginning of the Tech Guide and the more technical material is at the end.

The Tech Guide covers the latest technologies such as server farms, virtualization, and cloud com￾puting. Discussions of these technologies are accompanied by examples.

Technology Guide 2 has been rearranged for increased readability and impact. Software issues are

now at the beginning of the Tech Guide and the more technical material is at the end.

Key Features

We have been guided by the following goals that we believe will enhance the teaching and learning

experience.

Cross-functional Approach

We show why IT is important by calling attention in each chapter to how that chapter’s IT topic relates

to students in each major. Icons guide the reader to relevant issues for their specific functional area—

accounting (ACC), finance (FIN), marketing (MKT), Operations Management (OM), Management

Information Systems (MIS), and human resources management (HRM). In addition, chapters end

with a summary of how the concepts relate to each functional area (‘What’s in IT for Me?’).

Active Learning

We recognize the need to actively involve students in problem solving, creative thinking, and capi￾talizing on opportunities. Every chapter includes a variety of hands-on exercises, activities, and mini￾cases, including exercises that ask students to use software application tools. Through these activities

and an interactive Web site, we enable students to actually do something with the concepts they learn,

such as how to improve a business through IT, to configure products, and to use spreadsheets to facil￾itate problem solving.

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Diversified and Unique Examples from Different Industries

Extensive use of vivid examples from large corporations, small businesses, and government and not￾for-profit organizations helps to enliven concepts by showing students the capabilities of IT, its cost

and justification, and innovative ways that real corporations are using IT in their operations. Each

chapter constantly highlights the integral connection between IT and business. This is especially evi￾dent in the ‘IT’s about Business’ boxes. In addition to the icons noted above, other icons highlight

government (GOV) and service-company (SVC) examples.

Successes and Failures

Like other textbooks, we present many examples of IT success. But, we also provide numerous exam￾ples of IT failures, in the context of lessons that can be learned from such failures. Misuse of IT can

be very expensive, as we illustrate.

Innovation and Creativity

In today’s rapidly changing environment, creativity and innovation are necessary for a business to

operate effectively and profitably. Throughout the book we show how these concepts are facilitated

by IT.

Global Focus

Since an understanding of global competition, partnerships, and trading is essential to success in

business, we provide a broad selection of international cases and examples. We discuss how IT facil￾itates export and import, the management of multinational companies, and electronic trading around

the globe. These global examples are highlighted with the global icon.

Focus on Ethics

With corporate scandals in the headlines and news daily, ethics and ethical questions have come to

the forefront of business people’s minds. In addition to a chapter that concentrates on ethics and secu￾rity (Chapter 3), we have included examples and cases that focus on business ethics throughout the

chapters. These examples are highlighted with the ethics icon.

Pedagogical Structure

Other pedagogical features provide a structured learning system that reinforces the concepts through

features such as chapter-opening organizers, section reviews, frequent applications, and hands-on

exercises and activities.

Chapter Opening organizers include the following pedagogical features:

• The Learning Objectives gives an overview of the key elements students should come away with

after reading the chapter.

• Web Resources highlight ancillary materials available on the book companion site and within Wiley￾PLUS for both instructors and students.

• The Chapter Outline lists the major concepts covered in the chapter.

• An opening case identifies a business problem faced by an actual company, describes the IT solu￾tion applied to the business problem, presents the results of the IT solution, and summarizes what

students can learn from the case.

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Study Aids are provided throughout each chapter. These include the following:

• IT’s about Business boxes provide real-world applications, with questions that relate to concepts

covered in the text. Icons relate these sections to the specific functional areas.

• Highlighted Examples interspersed throughout the text show the use (and misuse) of IT by real￾world organizations and help illustrate the conceptual discussion.

• Tables list key points or summarize different concepts.

• End of section reviews (Before You Go On . . .) prompt students to pause and test their

understanding of concepts before moving on to the next section.

End-of-Chapter Study Aids provide extensive opportunity for the reader to review and actually ‘do

something’ with the concepts they have just studied:

• What’s in IT for Me? is a unique chapter summary section that shows the relevance of topics for

different functional areas (accounting, finance, marketing, production/operations management,

and human resources management).

• The Chapter Summary, keyed to learning objectives that were listed at the beginning of the chap￾ter, enables students to review the major concepts covered in the chapter.

• End of Chapter Glossary. This study tool highlights the importance of the vocabulary within the

chapters and facilitates studying.

• Discussion Questions, Problem-Solving Activities, and Team Assignments provide practice through

active learning. These exercises are hands-on opportunities to use the concepts discussed in the

chapter.

• A Case presents a case organized around a business problem and shows how IT helped to solve it;

questions at the end of the case relate it to concepts discussed in the chapter.

• “Interactive Case: Ruby’s Club” gives the student an assignment as an intern for Ruby’s Club, a

downtown music venue that needs help redesigning its website and overhauling its technological

infrastructure, among other things. Students are referred to WileyPLUS or the Student Compan￾ion Site for support information and assignments.

Online Supplements

www.wiley.com/college/rainer

This book also facilitates the teaching of an Introduction to IT course by providing extensive sup￾port materials for instructors and students. Go to www.wiley.com/college/rainer to access the Student

and Instructor Web Sites.

Instructor’s Manual

The Instructor’s Manual created by Biswadip Ghosh at Metropolitan State University includes a chap￾ter overview, teaching tips and strategies, answers to all end-of-chapter questions, supplemental mini￾cases with essay questions and answers, experiential exercises that relate to particular topics.

Test Bank

The Test Bank, written by Kelly Rainer, is a comprehensive resource for test questions. It contains

per chapter multiple choice, true/false, short answer, and essay questions. The multiple choice and

true/false questions are labeled as to each one’s difficulty: easy, medium, or hard.

The test bank is available for use in Respondus’ easy-to-use software. Respondus is a powerful

tool for creating and managing exams that can be printed to paper or published directly to Black￾board, WebCT, Desire2Learn, eCollege, ANGEL and other eLearning systems. For more informa￾tion on Respondus and the Respondus Test Bank Network, please visit www.respondus.com.

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PowerPoint Presentations

The Media Enriched PowerPoint Presentations created by Kelly Rainer consist of a series of slides for

each chapter of the text that are designed around the text content, incorporating key points from the

text and all text illustrations as appropriate. In addition, they include links out to relevant web sites,

videos, and articles to enhance classroom discussion. The PowerPoints make extensive use of images

and video clips.

Media Resource Library

The Media Resource Library provides instructors with a wealth of links to web sites and videos which

can be used in-class to help engage students. The library is a compilation of suggestions from the

author as well as many information systems instructors and comes complete with discussion ques￾tions to be used in class after viewing each resource.

Image Library

All textbook figures are available for download from the Web Site. These figures can easily be added

to PowerPoint presentations.

BusinessExtra Select

This feature allows instructors to package the text with software applications, lab manuals, cases, arti￾cles, and other real-world content from sources such as INSEAD, Ivey and Harvard Business School

cases, Fortune, The Economist, The Wall Street Journal, and much more. You can combine the book

with the content you choose to create a fully customized textbook. For additional information, go

to www.wiley.com/college/bxs.

On-line Quizzes

These practice tests for students to help prepare for class tests are provided as an online resource

within the text Web site. Once students have completed a particular quiz, they can submit it elec￾tronically and receive feedback regarding any incorrect responses.

Clicker Questions

Clicker questions updated by William Neumann at the University of Arizona deliver a variety of mul￾tiple choice and true/false questions to use in class in order to assess students’ learning throughout

the course.

WileyPLUS

This online teaching and learning environment integrates the entire digital textbook with the most

effective instructor and student resources to fit every learning style.

With WileyPLUS:

• Students achieve concept mastery in a rich, structured environment that’s available 24/7.

• Instructors personalize and manage their course more effectively with assessment, assignments,

grade tracking, and more.

WileyPLUS can complement your current textbook or replace the printed text altogether.

Preface xi

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For Students

Different learning styles, different levels of proficiency, different levels of preparation—each of your

students is unique. WileyPLUS empowers them to take advantage of their individual strengths.

• Integrated, multi-media resources—including audio and visual exhibits, demonstration problems,

and much more—provide multiple study-paths to fit each student’s learning preferences and

encourage more active learning. Resources include

- Student lecture slides in PowerPoint,

- Author podcasts,

- Interactive Case: Ruby’s Club,

- Manager Videos,

- Microsoft Office 2007 lab manual and projects, prepared by Craig Piercy, Mark Huber, and

Patrick McKeown,

- How-to animations for Microsoft Office.

• WileyPLUS includes many opportunities for self-assessment linked to the relevant portions of the

text. Students can take control of their own learning and practice until they master the material.

Resources include

- Automatically-graded practice questions from the Test Bank,

- Pre- and post-lecture quizzes,

- Vocabulary flash cards and quizzes.

For Instructors

WileyPLUS empowers you with the tools and resources you need to make your teaching even more

effective:

• You can customize your classroom presentation with a wealth of resources and functionality. You

can even add your own materials to your WileyPLUS course. Resources include

- Media-enriched PowerPoint presentations,

- Media Resource Library,

- Optional “Hot Topics” modules, for example, “Green IS”.

• With WileyPLUS you can identify those students who are falling behind and intervene accordingly,

without having to wait for them to come to office hours.

• WileyPLUS simplifies and automates such tasks as student performance assessment, making assign￾ments, scoring student work, keeping grades, and more.

Acknowledgments

Creating, developing, and producing a new text for the introduction to information technology

course is a formidable undertaking. Along the way, we were fortunate to receive continuous eval￾uation, criticism, and direction from many colleagues who regularly teach this course. We would

like to acknowledge the contributions made by the following individuals.

We would like thank the Wiley team: Beth Lang Golub, Executive Editor; Lauren Sapira, Media

Editor; Chris Ruel, Executive Marketing Manager; and Mike Berlin, Editorial Assistant. We also thank

the production team, including Dorothy Sinclair, Production Manager; Trish McFadden, Senior Pro￾duction Editor; and Suzanne Ingrao of Ingrao Associates. And thanks to Jeof Vita, Art Director; Lisa

xii Preface

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Gee, Photo Editor; and Anna Melhorn, Illustrations Editor. We also would like to thank Robert Weiss

for his skillful and thorough editing of the manuscript.

Reviewers

Ihssan Alkadi, University of Louisiana, Lafayette

Mark Best, University of Kansas

Donna Davis, University of Southern Mississippi

Dursun Delen, Oklahoma State University

Biswadip Ghosh, Metropolitan State College of Denver

Edward J. Glantz, Pennsylvania State University

Jun He, University of Michigan, Dearborn

Chang-tseh Hsieh, University of Southern Mississippi

Diane Lending, James Madison University

Nicole Lytle, California State University, San Bernardino

Richard Klein, Clemson University

Efrem Mallach, University of Massachusetts, Dartmouth

Purnendu Mandal, Lamar University

Earl McKinney, Bowling Green State University

Patricia McQuaid, California State Polytechnic University, San Luis Obispo

Rodger Morrison, Troy University

Nannette Napier, Georgia Gwinnett College

William T. Neumann, University of Arizona

Bradley Prince, University of West Georgia

Harry Reif, James Madison University

Carl M. Rebman, Jr., University of San Diego

Thomas Rienzo, Western Michigan University

Sachi Sakthivel, Bowling Green State University

William P. Wagner, Villanova University

Yue Zhang, California State University, Northridge

And thanks to all the Wiley focus group attendees at AMCIS 2008, DSI 2008, and ICIS 2008 who

saw early versions of the Media Resource Library and gave invaluable suggestions to make the plat￾form and content most useful for future users, including

Shamel Addas, McGill University

JE Aronson, University of Georgia

Jack Becker, University of North Texas

Timothy M. Bergquist, Northwest Christian University

Jacques Bulchand-Gidumal, University of Las Palmas de Gran Canaria

Mike Canniff, University of the Pacific

Thomas Case, Georgia Southern University

Yogesh K. Dwivedi, Swansea University, Wales, UK

Jerry Flatto, University of Indianapolis

Jun He, University of Michigan-Dearborn

Carolyn Jacobson, Mount St. Mary’s University

Jay Jarman, University of South Florida

Beverly K. Kahn, Suffolk University

Dan Kim, University of Houston-Clear Lake

Nelson King, American University of Beirut

Richard Klein, Clemson University

David Lewis, University of Massachusetts, Lowell

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