Case Study 5

Pearson MyLabTM

Improving Results
A proven way to help individual students achieve the
goals that educators set for their course.

Engaging Experiences
Dynamic, engaging experiences that personalize
and activate learning for each student.

An Experienced Partner
From Pearson, a long-term partner with a true grasp
of the subject, excellent content, and an eye on the
future of education.

9 0 0 0 0

9 7 8 0 1 3 4 6 3 5 2 0 0

ISBN-13: 978-0-13-463520-0
ISBN-10: 0-13-463520-5

I N F O R M AT I O N S YS T E M S TO D AY
M A N A G I N G I N T H E D I G I T A L W O R L D

E I G H T H E D I T I O N

Joseph Valacich Christoph Schneider

www.pearsonhighered.com

E I G H T H
E D I T I O N

Valacich
Sch

neider
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MIS: Engage, Apply, Empower

• Learning Catalytics™—is an interactive, student response tool that
uses students’ smartphones, tablets, or laptops to engage them in more
sophisticated tasks and critical thinking as well as collaboration with other
class members. Included with MyLab with eText, Learning Catalytics enables
you to generate classroom discussion, guide your lecture, and promote
peer-to-peer learning with real-time analytics.

• Enhanced eText—keeps students engaged in learning on their own time, while
helping them achieve greater conceptual understanding of course material. The
embedded videos, simulations, and activities bring learning to life.
to apply the very concepts they are reading about. Combining resources that
illuminate content with accessible self-assessment, MyLab with Enhanced eText
provides students with a complete digital learning experience—all in one place.

• Dynamic Study Modules—help students learn the language of MIS by
continuously assessing their activity and performance in real time by adapting to the
student’s knowledge and confidence on each concept. These are available as
graded assignments prior to class, and accessible on smartphones, tablets, and
computers.

• Reporting Dashboard—View, analyze, and report learning outcomes
clearly and easily, and get the information needed to keep
students on track throughout the course with the new Reporting
Dashboard. Available via the MyLab Gradebook and fully mobile-ready,
the Reporting Dashboard presents student performance data at the
class, section, and program levels in an accessible, visual manner.

• Accessibility (ADA)—Pearson is working toward WCAG 2.0 Level AA
and Section 508 standards, as expressed in the Pearson Guidelines for
Accessible Educational Web Media. Moreover, our products support
customers in meeting their obligation to comply with the Americans with
Disabilities Act (ADA) by providing access to learning technology programs
for users with disabilities.

Please email our Accessibility Team at [email protected] for the most
up-to-date information.

• LMS Integration—You can now link from Blackboard Learn, Brightspace by
D2L, Canvas, or Moodle to MyISLab. Professors can acess assignments, rosters,
and resources, and synchronize grades with your LMS gradebook.

Single sign-on provides students access to all the personalized
learning resources that make studying more efficient and effective.

• Branching, Decision-Making Simulations—students take on the role
of manager as they make a series of decisions based on a realistic business
challenge, fostering decision making and problem solving skills.
The simulations change and branch based on their decisions,
creating various scenario paths. At the end of each simulation, students
receive a grade and a detailed report of the choices they made with the
associated consequences included.

• Writing Space—Better writers make better communicators—
who become better managers. Designed to help
develop and assess concept mastery and critical
thinking, the Writing Space offers auto-graded
writing assignments, and assisted auto-graded writing
assignments so students can receive meaningful, personalized
feedback quickly and easily. And because of Intergration with
Turnitin®, Writing Space can check students’ work for improper
citation or plagiarism.

A L W A Y S L E A R N I N G

Office 2016 Grader Projects—Students complete projects in Excel and Access to demonstrate problem
solving, critical thinking, and data analysis skills. Projects are automatically graded and include
feedback. Integrity tokens in each project prevent and detect cheating.

PROBLEM
SOLVING

TEAMWORK DECISION
MAKING

CRITICAL
THINKING

ABILITY
TO APPLY

KNOWLEDGE

COMMUNICATION

NEW

HIR
E

Information systems have become pervasive. Mobile devices, social media,
and cloud computing have transformed organizations and society. The Internet
of Things can generate a wealth of potentially useful Big Data. The rapid
development of transportation and telecommunication technologies, national
and global infrastructures, and information systems as well as a host of other
factors has created a number of pressing societal issues that tremendously
influence the world we live in. These issues include demographic changes,
urbanization, shifts in economic power, resource scarcity, and climate change.
As a consequence, sustainable development will become an ever increasingly
important aspect for organizations. Throughout this revision, we discuss
how organizations can harness radical innovations and other technological
developments, as well as the role of information systems in influencing and
addressing pressing societal issues; further, we added a new chapter element
about the role of Green IT. We designed the book’s cover to emphasize how
IT resides within and influences various societal issues.

• Learning Catalytics™—is an interactive, student response tool that
uses students’ smartphones, tablets, or laptops to engage them in more
sophisticated tasks and critical thinking as well as collaboration with other
class members. Included with MyLab with eText, Learning Catalytics enables
you to generate classroom discussion, guide your lecture, and promote
peer-to-peer learning with real-time analytics.

• Enhanced eText—keeps students engaged in learning on their own time, while
helping them achieve greater conceptual understanding of course material. The
embedded videos, simulations, and activities bring learning to life.
to apply the very concepts they are reading about. Combining resources that
illuminate content with accessible self-assessment, MyLab with Enhanced eText
provides students with a complete digital learning experience—all in one place.

• Dynamic Study Modules—help students learn the language of MIS by
continuously assessing their activity and performance in real time by adapting to the
student’s knowledge and confidence on each concept. These are available as
graded assignments prior to class, and accessible on smartphones, tablets, and
computers.

• Reporting Dashboard—View, analyze, and report learning outcomes
clearly and easily, and get the information needed to keep
students on track throughout the course with the new Reporting
Dashboard. Available via the MyLab Gradebook and fully mobile-ready,
the Reporting Dashboard presents student performance data at the
class, section, and program levels in an accessible, visual manner.

• Accessibility (ADA)—Pearson is working toward WCAG 2.0 Level AA
and Section 508 standards, as expressed in the Pearson Guidelines for
Accessible Educational Web Media. Moreover, our products support
customers in meeting their obligation to comply with the Americans with
Disabilities Act (ADA) by providing access to learning technology programs
for users with disabilities.

Please email our Accessibility Team at [email protected] for the most
up-to-date information.

• LMS Integration—You can now link from Blackboard Learn, Brightspace by
D2L, Canvas, or Moodle to MyISLab. Professors can acess assignments, rosters,
and resources, and synchronize grades with your LMS gradebook.

Single sign-on provides students access to all the personalized
learning resources that make studying more efficient and effective.

A L W A Y S L E A R N I N G

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mailto:[email protected]

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330 Hudson Street, NY NY 10013

I N F O R M A T I O N S Y S T E M S T O D A Y

Joseph Valacich
University of Arizona

Christoph Schneider
City University of Hong Kong

M A N A G I N G I N T H E D I G I T A L W O R L D

E I G H T H E D I T I O N

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VP Editorial Director: Andrew Gilfillan
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Unattributed figures in text: Joseph Valacich, Christoph
Schneider, Information Systems Today, 8Ed., © 2018.
Pearson Education, Inc., New York, NY.

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Library of Congress Cataloging-in-Publication Data
On file with the Library of Congress.

ISBN 10: 0-13-463520-5
ISBN 13: 978-0-13-463520-0

A02_VALA5200_08_SE_FM.indd 4 12/7/16 1:37 PM

http://www.pearsoned.com/permissions/

Dedication

To my mother Mary, you are the best.
—Joe

To Birgit for your love and support.
—Christoph

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vii

Joseph (Joe) Valacich is an Eller Professor of MIS within the Eller College of Management
at the University of Arizona, a Fellow of the Association for Information Systems (2009), and
the Chief Science Officer (CSO) of Neuro-ID, Inc. He was previously on the faculty at Indiana
University, Bloomington, and Washington State University, Pullman. He has had visiting faculty
appointments at City University of Hong Kong, Buskerud College (Norway), the Helsinki School
of Economics and Business, the Norwegian University of Life Sciences, and Riga Technical
University (Latvia). He received a PhD degree from the University of Arizona (MIS) and MBA
and BS (Computer Science) degrees from the University of Montana. Prior to his academic career,
Dr. Valacich worked in the software industry in Seattle in both large and startup organizations.

Dr. Valacich has served on various national task forces designing model curricula for the
information systems discipline, including IS ‘97, IS 2002, and IS 2010: The Model Curriculum
and Guidelines for Undergraduate Degree Programs in Information Systems, where he was
co-chairperson. He also served on the task force that designed MSIS 2000 and 2006: The Master
of Science in Information Systems Model Curriculum. He served on the executive committee,
funded by the National Science Foundation, to define the IS Program Accreditation Standards
and served on the board of directors for CSAB (formally the Computing Sciences Accreditation
Board) representing the Association for Information Systems (AIS). He was the general confer-
ence co-chair for the 2003 International Conference on Information Systems (ICIS) and the 2012
Americas Conference on Information Systems (AMCIS); both were held in Seattle.

Dr. Valacich has conducted numerous corporate training and executive development pro-
grams for organizations, including AT&T, Boeing, Dow Chemical, EDS, Exxon, FedEx, General
Motors, Microsoft, and Xerox. He has served in a variety of editorial roles within various
academic journals and conferences. His primary research interests include human–computer
interaction, deception detection, technology-mediated collaboration, mobile and emerging tech-
nologies, and e-business. He is a prolific scholar, having published more than 200 scholarly
articles in numerous prestigious journals and conferences, including: MIS Quarterly, Information
Systems Research, Management Science, Academy of Management Journal, Journal of MIS,
Decision Sciences, Journal of the AIS, Communications of the ACM, Organizational Behavior
and Human Decision Processes, and Journal of Applied Psychology. He is a coauthor of the
leading textbooks Modern Systems Analysis and Design (8th ed.) and Essentials of Systems
Analysis and Design (6th ed.), both published by Pearson.

In 2016, Dr. Valacich was awarded the University of Arizona, Tech Launch Arizona, “Innova-
tion & Impact Award” for Information Technology. He was awarded the “Distinguished Alumnus
Award” from the University of Montana Alumni Association in 2012 and the “Outstanding Alum-
nus Award” from the University of Montana’s School of Business Administration in 2009. Dr.
Valacich is also ranked as one of the most prolific authors in the history of MIS Quarterly—his
discipline’s top journal—over the life of the journal (1977–2016) (see misq.org). Throughout his
career, he has also won numerous teaching, service, and research awards.

Christoph Schneider is an assistant professor in the Department of Information Systems at
City University of Hong Kong and previously held a visiting faculty appointment at Boise State
University. He earned a Swiss Higher Diploma in Hotel Management at the University Centre
César Ritz in Brig, Switzerland, a BA in Hotel and Restaurant Administration at Washington
State University, and a PhD in Business Administration (Management Information Systems)
at Washington State University. His teaching interests include the management of information
systems and web design.

About the Authors

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http://misq.org

viii ABOUT THE AUTHORS

Dr. Schneider is an active researcher. His primary research interests include human–com-
puter interaction, electronic commerce, and computer-mediated collaboration. His research has
appeared in peer-reviewed journals, such as Information Systems Research, Management Infor-
mation Systems Quarterly, Management Science, and IEEE Transactions on Professional Com-
munication; further, he has presented his research at various international conferences, such as
the International Conference on Information Systems, the European Conference on Informa-
tion Systems, and the Hawaii International Conference on System Sciences. He serves as a
member of the International Steering Committee of the International Conference on Informa-
tion Systems Development (ISD) and as senior editor at Information Systems Journal.

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ix

Preface xix

Chapter 1 Managing in the Digital World 2

Chapter 2 Gaining Competitive Advantage Through Information
Systems 48

Chapter 3 Managing the Information Systems Infrastructure and
Services 90

Chapter 4 Enabling Business-to-Consumer Electronic Commerce 138

Chapter 5 Enhancing Organizational Communication and
Collaboration Using Social Media 182

Chapter 6 Enhancing Business Intelligence Using Big Data and
Analytics 224

Chapter 7 Enhancing Business Processes Using Enterprise Information
Systems 270

Chapter 8 Strengthening Business-to-Business Relationships via Supply
Chain and Customer Relationship Management 306

Chapter 9 Developing and Acquiring Information Systems 344

Chapter 10 Securing Information Systems 390

Technology Briefing Foundations of Information Systems
Infrastructure 442

Acronyms 491

Glossary 493

Name Index 513

Organization Index 514

Subject Index 517

Brief Contents

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xi

Preface xix

Chapter 1 Managing in the Digital World 2
MANAGING IN THE DIGITAL WORLD: Open Innovation 2

Information Systems Today 4
The Emergence of the Digital World 4
Globalization and Societal Issues in the Digital World 7
◾ COMING ATTRACTIONS: Memory Crystals 7
Five IT Megatrends That Shape the Digital Future 10
◾ WHO’S GOING MOBILE: Wearable Technologies 10
◾ GREEN IT: The Green Internet of Things 16

Information Systems Defined 16
Data: The Root and Purpose of Information Systems 18
Hardware, Software, and Telecommunications Networks: The Components of
Information Systems 18
People: The Builders, Managers, and Users of Information Systems 19
◾ SECURITY MATTERS: Ransomware 24
Organizations: The Context of Information Systems 25
◾ WHEN THINGS GO WRONG: Technology Addiction 28

The Dual Nature of Information Systems 29
Case in Point: An Information System Gone Awry: Outages Outrage Gamers 29
Case in Point: An Information System That Works: FedEx 29
Information Systems for Competitive Advantage 30
◾  ETHICAL DILEMMA: The Social and Environmental Costs of the Newest

Gadgets 31
IS Ethics 32

Information Privacy 32
Intellectual Property 36
The Need for a Code of Ethical Conduct 37
◾ INDUSTRY ANALYSIS: Business Career Outlook 38

Key Points Review 39 • Key Terms 39 • Review Questions 40 • Self-
Study Questions 40 • Problems and Exercises 41 • Application
Exercises 42 • Team Work Exercise 42 • Answers to the Self-Study
Questions 43

◾ APPLE 44
◾ HEALTHCARE IS 45

Chapter 2 Gaining Competitive Advantage Through Information
Systems 48

MANAGING IN THE DIGITAL WORLD: Startups and New Business Models 48

Enabling Organizational Strategy through Information Systems 50
Organizational Decision-Making Levels 50
Organizational Functional Areas 52

Contents

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xii CONTENTS

Information Systems for Automating: Doing Things Faster 53
Information Systems for Organizational Learning: Doing Things Better 55
Information Systems for Supporting Strategy: Doing Things Smarter 56
Identifying Where to Compete: Analyzing Competitive Forces 56
Identifying How to Compete: Choosing a Generic Strategy 57
Identifying How to Compete: Resources and Capabilities 58
◾ GREEN IT: The Electric Navy 59
Identifying How to Compete: Analyzing the Value Chain 60
The Role of Information Systems in Value Chain Analysis 60
The Technology/Strategy Fit 61

Business Models in the Digital World 61
◾ WHO’S GOING MOBILE: Digital Nomads 62
Revenue Models in the Digital World 62
◾ WHEN THINGS GO WRONG: The Pains of Uber in China 65
Platform-Based Business Models and the Sharing Economy 65
Service-Based Business Models 67
◾ ETHICAL DILEMMA: The Ethics of the Sharing Economy 68

Valuing Innovations 69
The Need for Constant IS Innovation 71
Successful Innovation Is Difficult 72
Open Innovation 73
Organizational Requirements for Innovation 74
◾ COMING ATTRACTIONS: The CITE Project 75
The Innovation Process 75
◾ SECURITY MATTERS: The Bangladesh SWIFT Theft 78
Startups and Crowdfunding 78
◾ INDUSTRY ANALYSIS: Education 80

Key Points Review 81 • Key Terms 81 • Review Questions 82 • Self-
Study Questions 82 • Problems and Exercises 83 • Application
Exercises 84 • Team Work Exercise 84 • Answers to the Self-Study
Questions 84

◾ GROUPON 85
◾ STREAMING VIDEO 86

Chapter 3 Managing the Information Systems Infrastructure and
Services 90

MANAGING IN THE DIGITAL WORLD: From Google to Alphabet 90

The IS Infrastructure 92
◾ �WHO’S GOING MOBILE: Mobile Payments Are Transforming Developing

Countries 94
Applications and Databases Supporting Business Processes 96
◾ ETHICAL DILEMMA: Putting People’s Lives Online 97

IS Infrastructure Components 98
Hardware 98
System Software 100
Storage 102
◾ COMING ATTRACTIONS: Making Death Optional? 102
Networking 103
◾ GREEN IT: Alphabet Renewables 109
Data Centers 111

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CONTENTS xiii

Issues Associated with Managing the IS Infrastructure 112
Rapid Obsolescence and Shorter IT Cycles 112
Big Data and Rapidly Increasing Storage Needs 115
Demand Fluctuations 115
Increasing Energy Needs 116

Cloud Computing 116
◾ �WHEN THINGS GO WRONG: Old and Dirty Energy Drives Global Internet

Growth 117
What Is Cloud Computing? 117
Managing the Cloud 121
Advanced Cloud Applications 124
◾ SECURITY MATTERS: Car Hacking 126
Green Computing 129
◾ INDUSTRY ANALYSIS: Movie Industry 130

Key Points Review 131 • Key Terms 131 • Review Questions 132 • Self-
Study Questions 132 • Problems and Exercises 133 • Application
Exercises 134 • Team Work Exercise 134 • Answers to the Self-Study
Questions 135

◾ A CATALYST FOR INNOVATION: AMAZON WEB SERVICES 135
◾ THE DARK WEB 136

Chapter 4 Enabling Business-to-Consumer Electronic
Commerce 138

MANAGING IN THE DIGITAL WORLD: Taobao and the World of E-commerce 138

E-Commerce and E-Government 140
Types of Electronic Commerce 140
E-government 141
E-finance 142

Business-To-Consumer E-Commerce 143
◾ COMING ATTRACTIONS: The AI Hedge Fund 144
E-tailing: Capabilities and Opportunities 146
Benefits of E-tailing 149
◾ ETHICAL DILEMMA: The Ethics of Reputation Management 150
Drawbacks of E-tailing 151

Electronic Commerce Websites and Internet Marketing 151
Designing Websites to Meet Online Consumers’ Needs 152
◾ SECURITY MATTERS: Too Small to Be Hacked? 152
Internet Marketing 154
◾ WHEN THINGS GO WRONG: Buying Likes 158

Mobile Commerce, Consumer-To-Consumer EC, and
Consumer-To-Business EC 159

C2C EC 161
C2B EC 162

Securing Payments and Navigating Legal Issues in EC 163
Securing Payments in the Digital World 163
◾ GREEN IT: Green Online Shopping 164
◾ WHO’S GOING MOBILE: Mobile Payments 165
Legal Issues in EC 168
◾ INDUSTRY ANALYSIS: Retailing 171

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xiv CONTENTS

Key Points Review 172 • Key Terms 172 • Review Questions 173 • Self-
Study Questions 173 • Problems and Exercises 174 • Application
Exercises 175 • Team Work Exercise 175 • Answers to the Self-Study
Questions 176

◾ WEB ANALYTICS 177
◾ ROCKET INTERNET—CLONING BUSINESS MODELS 178

Chapter 5 Enhancing Organizational Communication and
Collaboration Using Social Media 182

MANAGING IN THE DIGITAL WORLD: Facebook 182

The Need for Communication and Collaboration 184
Virtual Teams 184
Groupware 185
Videoconferencing 186
◾ GREEN IT: Green IT Fueling Renewable Energy 188
Intranets and Employee Portals 188

The Evolving Web 190
◾ COMING ATTRACTIONS: Dissolvable Electronics 191
Evolving Web Capabilities 191
Evolving Social Interaction 192
The Evolving Workspace 193
Future Web Capabilities 193

Social Media and the Enterprise 194
Enhancing Communication Using Social Media 194
Enhancing Cooperation with Social Media 197
◾ SECURITY MATTERS: Terrorism Is Winning the Social Media Battle 200
Enhancing Collaboration with Social Media 201
◾ WHO’S GOING MOBILE: Going SoLoMo: Yelp 203
Enhancing Connection with Social Media 205
◾ ETHICAL DILEMMA: Anonymity, Trolling, and Cyberharassment 207

Managing Social Media Applications in the Enterprise 208
Organizational Issues 208
◾ WHEN THINGS GO WRONG: Crowdfunding Failures 210
Downsides and Dangers of using Social Media Applications 211
◾ INDUSTRY ANALYSIS: Online Travel 213

Key Points Review 214 • Key Terms 214 • Review Questions 215 • Self-
Study Questions 215 • Problems and Exercises 216 • Application
Exercises 216 • Team Work Exercise 217 • Answers to the Self-Study
Questions 218

◾ LIVING IN A BUBBLE: FACEBOOK, NEWSFEEDS, AND JOURNALISM 218
◾ LIKE FARMING AND CLICKBAIT 219

Chapter 6 Enhancing Business Intelligence Using Big Data and
Analytics 224

MANAGING IN THE DIGITAL WORLD: Intelligence Through Drones 224

Enhancing Organizational Decision Making 226
Why Organizations Need Business Intelligence and Advanced Analytics 226
◾ �GREEN IT: Big Data, Internet of Things, and Analytics Fuel Greener

Facilities 229
Databases: Providing Inputs into Business Intelligence and Advanced
Analytics 229

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CONTENTS xv

◾ WHEN THINGS GO WRONG: Twitter Fever—Look Before You Tweet 233
◾ COMING ATTRACTIONS: Emotion Aware Gaming 239

Business Intelligence and Advanced Analytics 239
Business Intelligence 240
◾ WHO’S GOING MOBILE: Identifying Malaria Hotspots 245
Advanced Analytics 245
◾ ETHICAL DILEMMA: Orwellian Internet of Things 247
◾ �SECURITY MATTERS: Hacktivists Versus Fembots: The Ashley Madison

Case 253
Knowledge Management and Geographic Information Systems 254

Knowledge Management Systems 254
Geographic Information Systems 257
◾ INDUSTRY ANALYSIS: Healthcare 260

Key Points Review 261 • Key Terms 261 • Review Questions 262 • Self-
Study Questions 262 • Problems and Exercises 263 • Application
Exercises 264 • Team Work Exercise 265 • Answers to the Self-Study
Questions 265

◾ NSA: NATIONAL SURVEILLANCE AGENCY? 265
◾ GATHERING SOCIAL INTELLIGENCE 266

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