Managing IT Professionals

  

In a minimum of 1,200 words using at least three scholarly sources, explain the Michael Porter model of five competitive forces to discuss how the Internet has impacted (or could impact) the structure of a given firm’s industry. Name the industry and give examples.A01_BROW6326_07_SE_FM.QXD
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Seventh Edition
Managing Information
Technology
G
U
N Brown
Carol V.
N
Howe School of Technology Management,
, of Technology
Stevens Institute
G DeHayes
Daniel W.
E of Business,
Kelley School
Indiana N
University
N
Jeffrey IA. Hoffer
S Administration,
School of Business
E of Dayton
The University
E. Wainright
Martin
1
4 of Business,
Kelley School
Indiana 1University
7
William T
C. Perkins
Kelley School
S of Business,
Indiana University
Prentice Hall
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Library of Congress Cataloging-in-Publication Data
Managing information technology / Carol V. Brown . . . [et al.]. — 7th ed.
p. cm.
Includes bibliographical references and index.
ISBN-13: 978-0-13-214632-6 (alk. paper)
ISBN-10: 0-13-214632-0 (alk. paper)
1. Management information systems. I. Brown, Carol V. (Carol Vanderbilt), 1945T58.6.M3568 2012
658.4’038011—dc22
2010048598
10 9 8 7 6 5 4 3 2 1
ISBN 10:
0-13-214632-0
ISBN 13: 978-0-13-214632-6
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CHAPTER
1
Managing IT in a
Digital World
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The utilization of information technology (IT) has become pervasive.
Businesses not only have information systems
(IS) that connect frontline employees with back-office accounting
and
production systems but also compete with
N
dot-com (Internet only) companies via Web-based stores and online customer service channels. Travelers can access
, airports, and even in-flight airplanes to keep them
high-speed wireless networks from public transportation,
productive. Work teams may never meet face-to-face and regularly use meeting software and video conferencing.
Workers may choose a BlackBerry, iPhone, or other smartphone to access office e-mail anytime, anywhere. And
G than card catalogs in school libraries.
today’s schoolchildren find resources via Internet searches rather
Today’s consumers also live in what has been called an
Eincreasingly “flat world” in which IT linkages across
emerging, developing, and developed economies help to “level” the economic playing field (Friedman, 2005).
N
Citizens across the globe may have access to world news online. Geographical positioning systems not only help
Nfacilitate the identification of a nearby retail store or
travelers find the best route to their destination but can also
restaurant.
I
The designing and management of computer hardware, software, and networks to enable this pervasive
S all business managers, not just IT managers, are
digital world is the work of IT professionals. However,
responsible for wisely investing in and effectively utilizingEthese information technologies for the benefit of their
organizations. By the year 2000, more than half of capital expenditures by businesses in developed countries were
for IT purchases.
The primary objective of this textbook is to increase
1 your knowledge about IT management so that as a
manager you can effectively invest in and utilize new and already in-place information technologies. In the
4
following chapters we will describe




1 trends,
technologies available today and emerging technology
software applications to support business operations 7
and business intelligence,
“best practices” for acquiring and implementing new systems, and
planning and managing an IS department’s resources.T
S
The objective of this first textbook chapter is to set the stage for the remaining 14 chapters and the full-length case
studies that follow.
We use the term information technology (IT) as computer technology (hardware and software) for
processing and storing information, as well as communications technology (voice and data networks) for
transmitting information.
We use the term information systems (IS) department to refer to the organizational unit or department
that has the primary responsibility for managing IT.
1
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Chapter 1 • Managing IT in a Digital World
Next, we briefly describe some recent IT trends that have led
to (1) new ways for businesses to compete and (2) new ways
for employees to accomplish their work. Then we briefly
introduce the key IT management responsibilities in today’s
organizations and the types of IT assets that need to be
managed in collaboration with business leaders. The chapter
ends with a brief summary of the topics that will be covered
in the remaining Parts I–IV of this textbook.
RECENT INFORMATION TECHNOLOGY
TRENDS
As a personal user of various computer and communication
devices, you are probably already aware of some of the
innovations in computer systems and networks that have
been introduced by IT vendors over the past decade. This
fast-paced technological change makes it difficult to
accurately predict the IT products and services that will be
“winners” tomorrow—and significant mispredictions about
technologies have been common in the past (see the box
“Mispredictions by IT Industry Leaders”). However, it
seems safe to predict that computer and communication devices will continue to touch almost every aspect of our lives.
In Part I of this textbook, we will discuss in detail the
key concepts underlying today’s computer systems (hardware and software) and network technologies. For now, let
us briefly consider some of the technology developments
that have already led to pervasive computing in the first
decades of this twenty-first century.
Computer Hardware: Faster, Cheaper, Mobile
Computer-on-a-chip (microcomputer) technology was available as early as the 1970s, and the introduction of the first
IBM Personal Computer (PC) in 1981 was the beginning of
desktop computing. Today, desktop and portable computers
produced by manufacturers around the world have become
commodity products with processing power that is equivalent to an organization’s entire computing center of the
1960s. The typical computer for individuals to use today has
graphical icons, point-and-click and/or touch screen navigation, and preloaded software to access the Internet—all at a
cheaper price than what the same features would have cost
12 months earlier, with better computer virus protection.
Because of their portability and wireless capabilities, lightweight laptop and notebook computers are replacing larger
desktop machines in offices today. They can be carried into
meetings, taken on business trips, and used at home to
remotely connect to office systems.
G Smaller, handheld devices have also continued to improve in functionality and have become indispensable tools
U
to access e-mail and other applications inside and outside of
N
the office, on the factory floor, as well as in hospital corridors.
N In mid-2007, Apple Computer began selling a new
smartphone (iPhone) with touch screen navigation and
,scrolling, and simplified calling from an address book,
e-mail and text messaging, visual voice mail, video playing,
and Web browsing via Wi-Fi connectivity. Since then, other
G
IT vendors have been developing smartphones with similar
features,
and Apple has introduced a lightweight notebook
E
computer (the iPad) with a similar interface.
N
Computer Software: Integrated,
N
Downloadable, Social
I
By the early 1990s, Microsoft Corporation’s Windows softS
ware had become the standard operating system for the vast
majority
of microcomputers being used as desktop and
E
portable computer “clients.” By the end of the 1990s,
Microsoft’s Office suite (i.e., word processing, spreadsheet,
database, slideshow presentation, and e-mail software sold
1
in a single bundle) as well as its Web browser (Internet
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1
7
Mispredictions by IT Industry Leaders
T
This “telephone” has too many shortcomings to be seriously considered as a means of communication.
S
The device is inherently of no value to us.
—Western Union internal memo, 1876
I think there is a world market for maybe five computers.
—Thomas Watson, Chairman of IBM, 1943
But what [is a microchip] good for?
Engineer at the Advanced Computing Systems Division of IBM, 1968
There is no reason anyone would want a computer in their home.
—Ken Olson, President, Chairman, and Founder of Digital Equipment Corp., 1977
640K ought to be enough for anybody.
—Attributed to Bill Gates, Chairman of Microsoft, 1981
[Based on Kappelman, 2001; Jones, 2003]
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Chapter 1 • Managing IT in a Digital World
3
The New App Economy
Downloadable software apps have sparked a growth surge in the software industry. Apple introduced
the iPad to U.S. buyers in April 2010, and within a few days after its launch, more than 3,000 new
applications were available for downloading—in addition to the 150,000 apps originally developed for
the iPhone or iTouch—including news apps for the Wall Street Journal, New York Times, and USA
Today. One reason for this rapid growth is that there are virtually no “barriers to entry.” Another is that
in October 2009 iPhone developers were told that they could give away their applications on an experimental basis and ask for payment later. By late 2009, Yahoo didn’t have an App Store, but it listed apps
for downloading on its home page.
[Based on Boehret, 2010; MacMillan et al., 2009]
G
U
Explorer) had become the de facto software in use in U.S.
organizations and multinational companies. The presenceN
of software standards made it easier for their employees toN
work and communicate with other employees and business
partners, even when working from multiple office locations.,
Today, many large companies and now midsized and
smaller organizations have also made capital investments in
enterprise systems: software packages with integratedG
modules that can easily share data across dispersed workE
teams, business divisions, and national boundaries in “real
N
time.” Enterprise systems have now been widely adopted
by manufacturing and service firms of all types and sizes inN
the United States and around the globe. Software applicaI
tions that can access a customer’s database can now be used
more easily by suppliers to replenish materials for thatS
customer, and customers can check on the status of theirE
orders via the Internet.
Downloadable applications of bit-size software programs for smartphones and larger programs for other1
portable devices have now also become pervasive. Two
years after the iPhone was first introduced, Apple’s4
App Store had 85,000 applications that millions of iPhone1
owners had downloaded. In fact, the ongoing success of
the iPhone by Apple is to some degree due to the fact that
more software apps are available for this Apple product
than for any of its competitors. Today’s mobile devices
have therefore catalysts for a whole new software industry
market (see the box “The New App Economy”).
Another remarkable software trend has been the
growth of so-called Web 2.0 or social media applications,
such as profile sharing software (e.g., Facebook,
LinkedIn), cogenerated information tools (e.g., Wikis,
blogs), and information messaging tools (e.g., Twitter).
Although initially these software applications were hosted
on Web sites designed for public communities, today these
same tools may be used by a company’s marketing and
public relations groups for branding and other marketing
activities (Culnan et al., 2010). Similar tools are also being
used on internal networks (intranets) for connecting
company employees across time, distance, and divisional
affiliation (Majchrzak et al., 2009). At IBM, for example,
social networking tools are being used to bridge newer and
more senior employees across the globe (see the box
“Social Networking within IBM”).
7
T
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Social Networking within IBM
Beehive is IBM’s intranet equivalent to Facebook. Within the first 15 months of its launch, more
than 50,000 IBMers had joined and were sharing both work-related and personal information.
ThinkPlace is a virtual forum for employees to suggest, comment on, rate, and route ideas.
Within its first 3 years, more than 18,000 ideas had been suggested; of the 350 ideas actually
implemented, over half had resulted in time savings improvements.
SmallBlue identifies social networks within IBM by analyzing e-mail and electronic chats
between employees who opt to participate. Employees can see visual displays of who knows
what and who knows whom within the knowledge communities that they are a part of.
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Chapter 1 • Managing IT in a Digital World
Computer Networks: High Bandwidth,
Wireless, Cloudy
The introduction of a Web browser in the mid-1990s that
used an Internet communications standard (TCP/IP) to link
companies and individuals to the Internet has been described as a “killer application” due to its widespread global
impact. Demands for high-speed Internet access have
spurred investments by government and the private sector to
install fiber-optic (high-bandwidth) lines. Today, many
households in developed countries pay a monthly fee for
cable, satellite, or a telephone utility for integrated data,
voice, and perhaps television services in their homes. New
investments by Western countries in high-bandwidth lines to
their own rural areas as well as to emerging nations in Africa
are also being announced as this textbook goes to press.
Satellite and cellular technologies now link remote
workers to central support centers, travelers to travel services, and delivery personnel to transportation schedulers.
Wireless technologies have also enabled some emerging
countries to bypass expensive investments in hardwired
telecommunications lines to more remote areas.
Investments in wireless connectivity to better support
mobile workers inside an organization’s walls have also
recently increased. For example, physicians and nurses
with mobile computer and communications devices have
increased their productivity and service quality by communicating more easily with clinicians on other hospital floors
or at other worksites as well as by accessing electronic
patient records and test results at the patient’s bedside.
Another growing trend has been the usage of the
Internet to obtain remote “hosting” or other IT capabilities
from “the cloud” (Bala and Henderson, 2010). In Softwareas-a-Service (SaaS) models, third-party service providers
deploy, manage, and remotely host software applications on
a rental or lease agreement. This is an especially attractive
option for small organizations, but industry pioneers (such
as salesforce.com) also provide 24*7 access to distributed
organizations and remote workers for Fortune 1000 companies. Other vendors offer computer infrastructure services
(IaaS) via the Internet, such as computer server processing
and data storage, which enable organizations to more effectively handle peak processing loads.
NEW WAYS TO COMPETE
Computers and communication networks enable companies to compete in two primary ways (Porter, 2001):
• Low Cost—competing with other businesses by
being a low-cost producer of a good or a service
• Differentiation—competing with other businesses
by offering products or services that customers
prefer due to a superiority in characteristics such as
product innovativeness or image, product quality, or
customer service
Computers can lower the costs of products or services by
automating business transactions, shortening order cycle
times, and providing data for better operational decision
making. Since the 1980s, a flood of IT innovations have led
to efficiency gains in manufacturing firms alone—such as
shortening the time to develop new products with computeraided design tools; optimizing a plant floor process with
software that implements a human expert’s decision rules;
and speedily changing a production line with computerized
planning
systems based on sales information.
G
IT has also been used by companies to differentiate
U
their products or services from those of competitors. IT
N
applications
can provide sales personnel with information
to
help
them
better service a specific customer; justN
in-time replenishments of supplies for business customers
,
based
on inventory levels rather than manually initiated
purchasing orders; and decision support applications with
embedded industry knowledge, such as best practices for
G responders to treat a heart attack or stroke patient.
first
E After the introduction of the Web browser in the
mid-1990s, most companies first began to use the Web to
N a brand “presence” on the Internet: Managers regiscreate
tered
N memorable names for a URL for their company’s
public Web site and then posted information (initially just
I
based
on hard-copy materials dubbed “brochureware”) for
potential
customers, stockholders, and other stakeholders.
S
By the late 1990s, traditional companies could see how
E
Amazon.com and other dot-com innovators were using the
Web, and they too began to find innovative ways to use
Web technologies to reach customers. However, since the
1
features of a public Web site are also visible to competitors
4 can be quickly copied by them, it has also become
and
more
1 difficult for companies to compete by product or
service differentiation via the Web than it perhaps was for
7 in an offline world.
them
T For example, a company’s customers may use Web
sites that allow them…
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