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Industry experts believe blockchain is a technology that has the
potential to affect the business of most IT professionals in the next five
years. Pick an industry you feel will be most affected by blockchain and how
blockchain may be used in that industry. As an IT manager, how would you
embrace blockchain? For instance, how would training occur for your team, what
strategies might you use, what security methods may you recommend be used?Your Assignment paper
should meet the following requirements:Paper need to be five
to six pages in length, not including the required cover page and reference
page.Must be in APA format, Follow APA6
guidelines. Your paper should include an introduction, a body with fully
developed content, and a conclusion.Support your
answers with the readings from the course and at least three scholarly journal
articles to support your positions, claims, and observations, in addition to
your textbook.Be clearly and
well-written, concise, and logical, using excellent grammar and style
techniques.Note: must be 100% own work and there should be no plagiarism at all.
Please do not refer to any of the previous student papers
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4
TH EDITION
Managing and Using
Information Systems
A Strategic Approach
KERI E. PEARLSON
KP Partners
CAROL S. SAUNDERS
University of Central Florida
JOHN WILEY & SONS, INC.
To Yale & Hana
To Rusty, Russell &Kristin
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This book is printed on acid-free paper.
Copyright  2010 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
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10 9 8 7 6 5 4 3 2 1
!
Preface
Information technology and business are becoming inextricably interwoven. I
don’t think anybody can talk meaningfully about one without the talking about the
other.1
Bill Gates
Microsoft
I’m not hiring MBA students for the technology you learn while in school, but for
your ability to learn about, use and subsequently manage new technologies when
you get out.
IT Executive
Federal Express
Give me a fish and I eat for a day; teach me to fish and I eat for a lifetime.
Proverb
Managers do not have the luxury of abdicating participation in information
systems decisions. Managers who choose to do so risk limiting their future business
options. Information systems are at the heart of virtually every business interaction,
process, and decision, especially when one considers the vast penetration of the
Web in the last few years. Managers who let someone else make decisions about
their information systems are letting someone else make decisions about the
very foundation of their business. This is a textbook about managing and using
information, written for current and future managers as a way of introducing the
broader implications of the impact of information systems.
The goal of this book is to assist managers in becoming knowledgeable participants in information systems decisions. Becoming a knowledgeable participant
means learning the basics and feeling comfortable enough to ask questions. It
does not mean having all the answers nor having a deep understanding of all the
technologies out in the world today. No text will provide managers with everything
they need to know to make important information systems decisions. Some texts
instruct on the basic technical background of information systems. Others discuss
applications and their life cycle. Some take a comprehensive view of the management information systems (MIS) field and offer readers snapshots of current
systems along with chapters describing how those technologies are designed, used,
and integrated into business life.
This book takes a different approach. This text is intended to provide the reader
with a foundation of basic concepts relevant to using and managing information. It
is not intended to provide a comprehensive treatment on any one aspect of MIS,
1
http://www.woopidoo.com/business quotes/authors/bill-gates-quotes.htm.
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iv
Preface
for certainly each aspect is itself a topic of many books. It is not intended to provide
readers with enough technological knowledge to make them MIS experts. It is not
intended to be a source of discussion of any particular technology. This textbook is
written to help managers begin to form a point of view of how information systems
will help, hinder, and create opportunities for their organizations.
The idea for this text grew out of discussions with colleagues in the MIS area.
Many faculty use a series of case studies, trade and popular press readings, and
Web sites to teach their MIS courses. Others simply rely on one of the classic
texts, which include dozens of pages of diagrams, frameworks, and technologies.
The initial idea for this text emerged from a core MIS course taught at the
business school at the University of Texas at Austin. That course was considered an
‘‘appetizer’’ course—a brief introduction into the world of MIS for MBA students.
The course had two main topics: using information and managing information. At
the time, there was no text like this one, hence students had to purchase thick
reading packets made up of articles and case studies to provide them with the basic
concepts. The course was structured to provide the general MBA with enough
knowledge of the field of MIS that they could recognize opportunities to use the
rapidly changing technologies available to them. The course was an appetizer to
the menu of specialty courses, each of which went much deeper into the various
topics. But completion of the appetizer course meant that students were able
to feel comfortable listening to, contributing to, and ultimately participating in
information systems decisions.
Today many students are digital natives—people who have grown up using
information technologies all of their lives. That means that students come to
their courses with significantly more knowledge about things like personal computers, cell phones, texting, the Web, social networking, file downloading, online
purchasing, and social media than their counterparts in school just a few years
ago. This is a significant trend that is projected to continue; students will be
increasingly knowledgeable in personally using technologies. That knowledge has
begun to change the corporate environment. Today’s digital natives expect to find
information systems in corporations that provide at least the functionality they
have at home. At the same time, they expect to be able to work in ways that take
advantage of the technologies they have grown to depend on for social interaction,
collaboration, and innovation. This edition of the text has been completely edited
with this new group of students in mind. We believe the basic foundation is still
needed for managing and using information systems, but we understand that the
assumptions and knowledge base of today’s students is significantly different.
This book includes an introduction, 12 chapters of text and minicases,
and a set of case studies and supplemental readings on a Web site. The
introduction makes the argument introduced in this preface that managers must
be knowledgeable participants in information systems decisions. The first few
chapters build a basic framework of relationships between business strategy,
information systems strategy, and organizational strategy and explore the links
between these strategies. Readers will also find a chapter on how information
Preface
v
systems relate to business transformation. Supplemental materials, including
longer cases from all over the globe, can be found on the Web. Please visit
http://www.wiley.com/college/pearlson for more information.
General managers also need some foundation on how IT is managed if
they are to successfully discuss their next business needs with IT professionals
who can help them. Therefore, the remaining chapters describe the basics of
information architecture and infrastructure, the sourcing of information systems,
the organization and governance of the MIS function, the ethical issues, the funding
of information systems resources, project management, and business analytics and
knowledge management.
No text in the field of MIS is current. The process of writing the chapters,
coupled with the publication process, makes a text somewhat out-of-date prior
to delivery to its audience. With that in mind, this text is written to summarize
the ‘‘timeless’’ elements of using and managing information. Although this text is
complete in and of itself, learning is enhanced by coupling the chapters with the
most current readings and cases. Students are encouraged to search the Web for
examples and current events that further clarify the issues at hand. The format
of each chapter begins with an example case and the basic language for a set
of important management issues. This is followed up with a set of managerial
concerns related to the topic. Each chapter then has a food for thought section on
an additional, but relatively new, topic. The chapter concludes with a set of study
questions, key words, and case studies.
This is the fourth edition of this text, and this version includes several significant
additions and revisions. Gone is the chapter on ‘‘doing business on the Internet’’
because after all, virtually every business now uses the Internet. Instead, this
edition has a new chapter on sourcing. Major changes include a new focus on Web
2.0 (Chapter 2); new framework of managerial levers (Chapter 3); new discussion
on collaboration (Chapter 4); alignment and business processes (Chapter 5); SOA
WOA, SaaS, enterprise architecture, and cloud computing (Chapter 6); sourcing
(Chapter 7); new IT governance framework (Chapter 8); security and compliance
(Chapter 9); new discussion of business cases (Chapter 10); new focus on managing
business projects (Chapter 11); and on business analytics and business intelligence
(Chapter 12). Many of the older cases have been replaced with newer examples
throughout the text, and many of the food for thought issues are new.
Who should read this book? General managers interested in participating
in information systems decisions will find this a good reference resource for the
language and concepts of MIS. Managers in the information systems field will find
this book a good resource for beginning to understand the general manager’s view
of how information systems affect business decisions. And MIS students will be
able to use the readings and concepts in this book as the beginning point in their
journey to become informed and successful business people.
The information revolution is here. Where do you fit in?
Keri E. Pearlson and Carol S. Saunders
!
Acknowledgments
Books of this nature are written only with the support of many individuals. We
would like to personally thank several individuals who helped with this text.
Although we’ve made every attempt to include everyone who helped make this
book a reality, there is always the possibility of unintentionally leaving some off.
We apologize in advance if that is the case here.
Philip Russell Saunders came to our rescue when we were in a pinch by
researching various topics, finding cases, and verifying examples from previous
editions. We really appreciate his efforts. We also appreciate the considerable
efforts of Mihir Parikh at the University of Central Florida. Mihir wrote many of
the new cases that appear in this fourth edition of the text. Thanks also go to Craig
Tidwell who updated the teaching materials.
We also want to acknowledge and thank pbwiki.com. Without their incredible,
and free, wiki, we would have been relegated to e-mailing drafts of chapters back
and forth. For this edition, we wanted to use Web2.0 tools as we wrote about them.
We have been blessed with the help of our colleagues in this and in previous
editions of the book. They helped us by writing cases and reviewing the text. Our
thanks continue to go out to Jonathan Trower, Espen Andersen, Janis Gogan, Ashok
Rho, Yvonne Lederer Antonucci, E. Jose Proenca, Bruce Rollier, Dave Oliver,
Celia Romm, Ed Watson, D. Guiter, S. Vaught, Kala Saravanamuthu, Ron Murch,
John Greenwod, Tom Rohleder, Sam Lubbe, Thomas Kern, Mark Dekker, Anne
Rutkowski, Kathy Hurtt, Kay Nelson, and John Butler. In addition, the students of
the spring 2008 Technology Management and summer 2008 Information Resource
Management classes at the University of Central Florida provided comments that
proved helpful in writing some cases and making revisions. Though we cannot
thank them by name, we also greatly appreciate the comments of the anonymous
reviewers who have made a mark on this edition.
The book would not have been started were it not for the initial suggestion
of a wonderful editor at John Wiley & Sons, Inc., Beth Lang Golub. Her
persistence and patience have helped shepherd this book through many months
of creation, modification, evaluation, and production, and she will shepherd it
through translation into other languages. Special thanks go to Maria Guarascio,
who very cheerfully and very competently helped us through the revision process.
We also appreciate the help of (Jennifer Snyder, Lorraina Raccuia, Gitti Lindner,
and Sujin Hong) and others at Wiley, who have made this edition a reality.
From Keri: Thank you to my husband, Dr. Yale Pearlson, and my daughter,
Hana Pearlson. Their patience with me while I worked on this project was
incredible. They celebrated and commiserated the ups and downs that came with
the process of writing this book. I love you guys!
From Carol: Rusty, thank you for being my compass (always keeping me headed
in the right direction) and my release valve (patiently walking me through stressful
times). I couldn’t do it without you. I love you, Russell, and Kristin very much!
vi
!
About the Authors
Keri E. Pearlson
Dr. Keri E. Pearlson is president of KP Partners, a consultancy specializing in creating leaders skilled in the strategic use of information systems and organizational
design in the Web 2.0 world.
Dr. Pearlson has held various positions in academia and industry. She was a
member of the information systems faculty at the Graduate School of Business
at the University of Texas at Austin, where she taught management information
systems courses to MBAs and executives. She was a research director at the
Research Board, held positions at the Harvard Business School, CSC-Index’s
Prism Group, nGenera (formerly the Concours Group), AT&T, and Hughes
Aircraft Company.
She is co-author of Zero Time: Providing Instant Customer Value—Every
Time, All the Time (John Wiley & Sons, 2000). Her work has been published
in Sloan Management Review, Academy of Management Executive, Information
Resources Management Journal, and Beyond Computing. Many of her case studies
have been published by Harvard Business School Publishing and are used all over
the world.
Dr. Pearlson holds a Doctorate in Business Administration (DBA) in Management Information Systems from the Harvard Business School and both a
Master’s Degree in Industrial Engineering Management and a Bachelor’s Degree
in Applied Mathematics from Stanford University.
Carol S. Saunders
Dr. Carol S. Saunders is professor of MIS at the University of Central Florida in
Orlando, Florida. She served as General Conference Chair of the International
Conference on Information Systems (ICIS) in 1999 and Telecommuting in 1996.
She was the chair of the ICIS Executive Committee in 2000. She was editor-in-chief
of MIS Quarterly and is a Fellow of the Association of Information Systems (AIS).
Her current research interests include the impact of information system on power
and communication, virtual teams, virtual worlds, time, information overload,
sourcing, and interorganizational linkages.
Her research is published in a number of journals including MIS Quarterly, Information Systems Research, Journal of MIS, Communications of the ACM,
Academy of Management Journal, Academy of Management Review, Communications Research, and Organization Science.
vii
!
Contents
Introduction
1
The Case for Participating in Decisions about Information Systems 2
What If A Manager Doesn’t Participate? 5
What Skills Are Needed to Participate Effectively in Information
Technology Decisions? 7
Basic Assumptions 9
Food for Thought: Economics of Information Versus Economics of
Things 16
Summary 18
Key Terms 18
Discussion Questions 19
Case Study I-1: Terry Cannon, MBA 19
Case Study I-2: Anyglobal Company Inc. 21
! CHAPTER 1
The Information Systems Strategy Triangle
22
Brief Overview of Business Strategy Frameworks 25
Brief Overview of Organizational Strategies 34
Brief Overview of Information Systems Strategy 37
Food for Thought: The Halo Effect and Other Business Delusions
Summary 40
Key Terms 40
Discussion Questions 41
Case Study 1-1: Roche’s New Scientific Method 41
Case Study 1-2: Google 43
! CHAPTER 2
Strategic Use of Information Resources
46
Evolution of Information Resources 47
Information Resources as Strategic Tools 48
How Can Information Resources Be Used Strategically? 52
Strategic Alliances 66
Risks 68
Food for Thought: Co-creating IT and Business Strategy 69
viii
38
Contents
Summary 71
Key Terms 71
Discussion Questions 71
Case Study 2-1: Lear Won’t Take A Backseat
Case Study 2-2: Zipcar 74
! CHAPTER 3
ix
73
Organizational Impacts of Information Systems Use
76
Information Technology and Organizational Design 77
Information Technology and Management Control Systems 85
Information Technology and Culture 89
Food for Thought: Immediately Responsive Organizations 92
Summary 93
Key Terms 94
Discussion Questions 94
Case Study 3-1: US Air and America West Merger Case 94
Case Study 3-2: The FBI 96
! CHAPTER 4
Information Technology and the Design of Work
98
Work Design Framework 101
How Information Technology Supports Communication
and Collaboration 102
How Information Technology Changes the Nature of Work 108
How Information Technology Changes Where Work Is Done and Who
Does It 115
Virtual Teams 120
Gaining Acceptance for IT-Induced Change 125
Food for Thought: Security With Remote Workers 127
Summary 129
Key Terms 130
Discussion Questions 130
Case Study 4-1: Automated Waste Disposal, Inc. 131
Case Study 4-2: Virtually There? 132
! CHAPTER 5
Information Technology and Changing Business Processes
Silo Perspective Versus Business Process Perspective 135
The Tools for Change 141
Shared Services 145
Enterprise Systems 147
Integrated Supply Chains 152
Food for Thought: Is ERP a Universal Solution? 155
134
x
Contents
Summary 157
Key Terms 158
Discussion Questions 158
Case Study 5-1: Santa Cruz Bicycles 159
Case Study 5-2: Boeing 787 Dreamliner 160
! CHAPTER 6
Architecture and Infrastructure
162
From Vision to Implementation 163
The Leap from Strategy to Architecture to Infrastructure 165
Architectural Principles 171
Enterprise Architecture 171
Other Managerial Considerations 174
From Strategy to Architecture to Infrastructure: An Example 181
Food for Thought: Cloud Computing 183
Summary 186
Key Terms 187
Discussion Questions 187
Case Study 6-1: Hasbro 188
Case Study 6-2: Johnson & Johnson’s Enterprise Architecture 189
! CHAPTER 7
Information Systems Sourcing
190
Sourcing Decision Cycle Framework 192
Insourcing 193
Outsourcing 193
Outsourcing Abroad 198
Backsourcing 206
Outsourcing Models 207
Food for Thought: Outsourcing and Strategic Networks 211
Summary 212
Key Terms 212
Discussion Questions 213
Case Study 7-1: Sodexho Asia Pacific 213
Case Study 7-2: Overseas Outsourcing of Medical Transcribing
! CHAPTER 8
215
Governance of the Information Systems Organization
Understanding the IS Organization 219
What a Manager Can Expect from the IS Organization 224
What the IS Organization Does Not Do 230
IT Governance 231
Food for Thought: CIO Leadership Profiles 240
218
Contents
Summary 241
Key Terms 242
Discussion Questions 242
Case Study 8-1: IT Governance at UPS 242
Case Study 8-2: The Big Fix at Toyota Motor Sales (TMS)
! CHAPTE …
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