The Vest Pocket Guide To Information Technology

TEAM LinG

THE

VEST

POCKET

GUIDE TO

INFORMATION

TECHNOLOGY

Second Edition

ffirst.fm Page i Thursday, August 4, 2005 5:46 PM

ffirst.fm Page ii Thursday, August 4, 2005 5:46 PM

THE

VEST

POCKET

GUIDE TO

INFORMATION

TECHNOLOGY

Second Edition

Jae K. Shim, Ph.D.

Chief Financial Officer

NBRF Incorporated

Professor of Accounting and Finance

California State University, Long Beach

Joel G. Siegel, Ph.D., CPA

Financial Consultant

Professor of Accounting and Finance

Queens College of the City University of

New York

John Wiley & Sons, Inc.

ffirst.fm Page iii Thursday, August 4, 2005 5:46 PM

This book is printed on acid-free paper.

Copyright © 2005 by John Wiley & Sons, Inc. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

No part of this publication may be reproduced, stored in a retrieval

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Limit of Liability/Disclaimer of Warranty: While the publisher and

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disclaim any implied warranties of merchantability or fitness for a

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Library of Congress Cataloging-in-Publication Data:

Shim, Jae K.

The vest pocket guide to information technology / Jae K. Shim,

Joel G. Siegel.--2nd ed.

p. cm.

Includes index.

ISBN-13 978-0-471-72500-8

ISBN-10 0-471-72500-5 (pbk.)

1. Information technology—Handbooks, manuals, etc.

2. Management information systems—Handbooks, manuals, etc.

I. Siegel, Joel G. II. Title.

T58.5.S54 2005

658.4’038--dc22

2005043953

Printed in the United States of America

10 9 8 7 6 5 4 3 2 1

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v

ABOUT THE AUTHORS

Jae K. Shim, Ph.D., is a Professor of Business Administra￾tion at California State University, Long Beach. Dr. Shim

received his MBA and Ph.D. degrees from the University of

California at Berkeley (Haas School of Business). He is the

President of the National Business Review Foundation, a

management and computer consulting firm. Dr. Shim has

published about 50 articles in professional journals, includ￾ing Journal of Systems Management, Financial Management,

Journal of Operational Research, Omega, Data Management,

Management Accounting, Simulation and Games, Long Range

Planning, Journal of Business Forecasting, Decision Sciences,

Management Science, and Econometrica. Dr. Shim has over 50

books to his credit and is a recipient of the 1982 Credit

Research Foundation Outstanding Paper Award for his arti￾cle on financial modeling. He is also a recipient of a Ford

Foundation Award, Mellon Research Fellowship, and

Arthur Andersen Research Grant. Dr. Shim has been for

over 20 years an industrial consultant in the areas of infor￾mation systems development and applications, corporate

planning modeling, business forecasting, and financial

modeling.

Joel G. Siegel, Ph.D., CPA, is a computer consultant to

businesses and Professor of Accounting, Finance, and Infor￾mation Systems at Queens College of the City University of

New York. He was previously associated with Coopers and

Lybrand, CPAs, and Arthur Andersen, CPAs. He served as a

consultant to numerous organizations including Citicorp,

International Telephone and Telegraph, Person-Wolinsky

Associates, and the American Institute of CPAs. Dr. Siegel

is the author of 50 books. His books have been published

by Prentice Hall, Richard Irwin, McGraw-Hill, Harper￾Collins, John Wiley, Macmillan, Probus, International Pub￾lishing, Barron’s, and the American Institute of CPAs. He

has authored approximately 200 articles on business topics

including many articles in the area of computer applications

to business. His articles have appeared in various journals

including Computers in Accounting, Decision Sciences,

Financial Executive, Financial Analysts Journal, The CPA

Journal, National Public Accountant, and Practical Accountant.

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vi About the Authors

In 1972, he received the Outstanding Educator of America

Award. Dr. Siegel is listed in Who’s Who Among Writers

and Who’s Who in the World. Dr. Siegel is the former chair￾person of the National Oversight Board.

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vii

HOW THIS BOOK CAN HELP YOU

The book covers information systems in all phases of busi￾ness and in all functional areas to analyze and solve busi￾ness problems in the real world. The practical and efficient

use of computer technology, both software and hardware, is

highlighted. All types of business applications are covered.

The importance of databases, networking, and telecom￾munications is clearly presented. Popular accounting, tax,

finance, management, manufacturing, and marketing soft￾ware is explained for easy use. Software for decision sup￾port systems (DSSs), executive information systems (EISs),

and artificial intelligence (AI) (e.g., financial modeling, bud￾geting, strategic planning and control, forecasting, data

analysis, inventory planning, and optimization software) is

covered with real-life examples. What-if analysis and the

effects of changing assumptions are discussed.

The purpose of the book is to provide a wealth of current

and essential information to managers in all types of orga￾nizations so that they may make optimum decisions. It

gives the businessperson all he or she needs to know in the

computerized financial application and modeling environ￾ment. Emerging trends in information technology are antici￾pated and discussed. In other words, expected developments

in computers are presented so that managers can properly

plan ahead. The professional success of a business manager

depends on keeping abreast of the latest thinking and appli￾cations in information technology. This surely gives a com￾petitive edge.

The book is written for business professionals in a prac￾tical, reader-friendly manner including clear illustrations.

We have simplified difficult computer terminology and

usage. Important topics include management information

systems (MISs), selection of the best software and hardware

for particular applications, business application software

(e.g., accounting, finance, management, tax, marketing, and

manufacturing), databases, telecommunications and online

services (e.g., Internet, AOL, MSN, Dow Jones, Westlaw,

AICPA), and computer security and auditing. The latest

multimedia trends are covered. New developments in artifi￾cial intelligence and expert systems, decision support sys￾tems, and executive information systems are covered.

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viii How This Book Can Help You

The audience for this book includes accountants, tax pre￾parers, financial managers, general managers, marketing

executives, production/operations managers, purchasing

managers, personnel managers, business analysts, forecast￾ers, budget analysts, chief financial officers (CFOs), chief

executive officers (CEOs), chief operating officers (COOs),

chief information officers (CIOs), chief technology officers

(CTOs), project managers, consultants, systems analysts, and

computer support staff. Businesspeople in large, medium,

and small companies will benefit. Private and nonprofit enti￾ties will find the material of equal value.

The following are some representative topics, among

others discussed in the book, of vital interest to business￾people:

❍ Strategic uses of the information system and techno￾logy.

❍ The use of software in planning and control.

❍ The applications of telecommunication technologies

and how digitized computer signals can take advan￾tage of these technologies.

❍ Accounting and information systems and packages

showing how applications can be made to record keep￾ing, reporting, and financial statement presentation.

❍ The Sarbanes-Oxley compliance software

❍ An explanation of what a decision support system

(DSS) is about and how it is useful to business deci￾sion makers to improve the quality of their analysis

and evaluation. It improves problem solving.

❍ The use of artificial intelligence and expert systems in

making decisions.

❍ Computerized security (e.g., protecting files, service

contracts, backups, insurance coverage, and security

devices). It includes preventing fraud.

❍ Database management involving organizing and

managing information so that it can be retrieved and

utilized in an effective and efficient way.

❍ What a management information system (MIS) is,

and what its applications and benefits are.

❍ The use of online databases (e.g., World Wide Web,

Dow Jones, Westlaw, Lexis) in making business deci￾sions.

❍ The use of the Intranet within a company as an impor￾tant information source.

❍ Available accounting and financial software and how

they improve financial reporting and analysis.

❍ The use of networking to operate smarter and be more

efficient in a computer environment.

❍ The use of computer conferencing.

❍ Financial modeling and what-if analysis in budget￾ing, forecasting, and general decision making.

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How This Book Can Help You ix

❍ Manufacturing information systems packages to aid

in inventory record keeping, inventory management

and control, and production planning.

❍ Executive information systems (EISs).

❍ Marketing information systems to aid in sales plan￾ning, sales forecasting, market research, and advertis￾ing effectiveness.

❍ Selecting the best hardware for the particular applica￾tion needs and to enhance productivity.

❍ Value chain management software.

Chapter 1 discusses what management information sys￾tems are about and presents MIS techniques. The different

types of MISs are explained, including when each type

would be most appropriate. Chapter 2 covers MISs in busi￾ness decision making and explains decision models. Chapter

3 introduces basic hardware components and how to buy

the “right” hardware combination for each user’s require￾ments. Chapter 4 presents systems software and explains the

functions and terminology of different types of systems soft￾ware. Chapter 5 covers application software and how such

software can be used to improve profitability and enhance

productivity. Chapter 6 discusses the use of database soft￾ware, including query languages. Chapter 7 presents data

communications. Chapter 8 discusses the different types of

online databases and the information available on them.

State-of-the-art communication technologies and popular

network applications are also presented. Chapter 9 discusses

how to use an Intranet within the business. Chapter 10 pre￾sents accounting, audit, and tax software and their business

applications. Chapter 11 shows how MISs can be applied to

financial management to improve the management of assets

and liabilities, and to help plan the financing of debt and

equity. The role of the MIS in forecasting is also explained.

Chapter 12 discusses manufacturing information systems

and packages. It includes applications to production plan￾ning so as to improve manufacturing activity and inventory

management. Marketing information systems and packages

are presented in Chapter 13. The chapter shows how soft￾ware is used in marketing management, sales planning,

and advertising effectiveness. The use of decision support

systems (DSSs) to aid in management decision making by

making it more accurate and reliable is the subject of Chap￾ter 14. Chapter 15 deals with the use of artificial intelli￾gence software to imitate the human mind process. It aids

in managerial analysis and decision making. Chapter 16 is

directed toward computer security and auditing. It pre￾sents protective data systems and information technology

to safeguard the integrity of information. Ways to prevent

misappropriation of resources and fraudulent transactions

are enumerated.

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x How This Book Can Help You

Chapter 17 deals with wireless technology, which pro￾vides businesses with enhanced connectivity and flexibility.

Chapter 18 touches upon a strategic issue regarding the eco￾nomic feasibility study of an Information Technology (IT)

project. Finally, Chapter 19 addresses how to manage an IT

project. In a project, you usually deal with unique problems,

have a set of constraints, and often work with deadlines.

A glossary of MIS terms is included. The presentation is

generic in nature. The reader does not need to know pro￾gramming. There are many checklists, charts, tables, and

graphs. In the index, a specific area of interest may easily be

found.

In conclusion, the book shows clearly how computers

can aid business managers in efficiently performing their

functions. Their success depends on being up-to-date in the

computer environment and having all information immedi￾ately available to make successful decisions.

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xi

CONTENTS

About the Authors v

How This Book Can

Help You vii

One What Are Management

Information Systems? 1

What Are Information Systems?

• 1

Computer Hardware

• 2

Personal Computers

• 2

Servers

• 2

Minicomputers

• 3

Mainframe Computers

• 3

Supercomputers

• 3

Computer Software

• 3

System Software

• 4

Application Software

• 4

Data

• 4

Trained Personnel

• 4

Procedures

• 5

When to Use Transaction Processing

Systems (TPSs)

• 5

When to Use Management Reporting

(Information) Systems (MRSs)

• 5

When to Use Decision Support

Systems (DSSs)

• 6

When to Use Office Information

Systems (OISs)

• 7

When to Use Executive Information

Systems (EISs)

• 7

Why Do You Need MISs to Solve

Your Business Problems?

• 7

What Computer Technologies Are

Available for Business?

• 8

How Will You Manage Your

Information Resources?

• 8

Advantages of Outsourcing

• 9

Risks of Outsourcing

• 10

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xii Contents

What is the Role of the Information

Systems in the Development

of the Strategic Plan?

• 11

Two Management Information Systems

and Decision-Making Models 13

What is the Management

Information System (MIS)?

• 13

Management

• 14

Planning

• 14

Organizing and Coordinating

• 14

Controlling

• 14

Decision Making

• 14

Information

• 14

Systems

• 15

Classifying Management

Information Systems in Terms of

the Type of Output Provided

• 15

MISs and Organizational Levels

• 17

Levels of Management: What Kinds

of Decisions Are Made?

• 18

Lower Management

• 18

Middle Management

• 19

Top Management

• 20

Modeling a Real-Life System

• 21

Narrative Models

• 22

Physical Models

• 22

Graphical Models

• 22

Mathematical Models

• 22

The Model Base

• 23

Financial Models

• 23

Statistical Models

• 23

Optimization Models

• 24

Formulation of LP

• 25

Decision Analysis Models

• 28

Standard Deviation

• 28

Decision Matrix

• 29

Decision Tree

• 30

Graphical Models

• 31

Project Planning and Management

Models

• 31

Simulation Models

• 32

Three How to Select the Best

Microcomputer System 35

Microcomputers, Large-System

Computing, and Network

Computing

• 35

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Contents xiii

Microcomputers • 35

Computers on the Go • 36

Internet Appliances • 36

Large-System Computing • 36

Network Servers • 37

Computer System Unit • 37

System Board • 37

CPU • 37

Main Memory • 38

Cache Memory • 38

RAM • 38

ROM • 38

System Clock • 38

Power Supply • 39

Expansion Slots and Boards • 39

Bus Lines • 39

Ports • 40

How to Select Laptops • 40

How Do CPUs Affect Your

Computing Power? • 41

Input Technologies • 42

Keyboard • 43

Mouse • 43

Trackball • 43

Bar Code Readers • 44

Penbased Input • 44

Image Scanner • 44

Voice Recognition Device • 44

Magnetic Ink Character Recognition

(MICR) • 44

Video Capture • 44

Touch Screens • 44

What Input Devices Do You

Need? • 44

Output Technologies • 45

Text Format • 45

Graphical Format • 45

Video Format • 45

Audio Format • 45

What Output Technologies

Do You Need? • 45

Regular Computer Users • 46

Retailers • 46

Cartoon/Movie Makers • 46

Information Help Center • 46

Publishers • 46

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xiv Contents

Video Conferences

• 46

Architect

• 46

Secondary Storage

• 46

Magnetic Tape

• 47

Magnetic Disk

• 47

Floppy Disk

• 47

Hard Disk

• 47

Optical Disk

• 48

CD-ROM

• 48

CD-RW

• 48

DVD-R, DVD-RW

• 48

USB Keychain Hard Drives

• 48

Four What Is Systems Software? 49

The Operating System, Utility

Programs, and Language

Translators

• 49

The Operating System (OS)

• 49

Booting

• 50

Housekeeping Tasks

• 50

User Interface

• 50

Managing Computer Resources

• 50

Managing Files

• 50

Managing Tasks

• 50

Utility Programs

• 51

Programming Language Processors

• 51

IBM-Compatible Operating

Systems

• 52

Windows XP

• 52

Macintosh Operating Systems

• 53

Other Operating Systems

• 53

Unix

• 53

Netware

• 54

Linux and the Open-Source

Revolution

• 54

Single-User Versus Multiuser

Systems

• 54

Single-Tasking Systems Versus

Multitasking Systems

• 55

Single Tasking

• 55

Multitasking

• 55

Evolution of Programming

Languages

• 55

First-Generation Programming

Language

• 55

Second-Generation Programming

Language

• 56

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